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1
As filed with the Securities and Exchange Commission on April 30, 1999
File No. 33-31375
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE
[X] SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. ____
[X] Post-Effective Amendment No. 17
and/or
REGISTRATION STATEMENT UNDER THE
[X] INVESTMENT COMPANY ACT OF 1940
[X] Amendment No. 18
(Check appropriate box or boxes)
AUL AMERICAN UNIT TRUST
(Exact Name of Registrant)
AMERICAN UNITED LIFE INSURANCE COMPANY(R)
(Name of Depositor)
One American Square, Indianapolis, Indiana 46282
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number: (317) 285-1877
Richard A. Wacker, One American Square, Indianapolis, Indiana 46282
(Name and Address of Agent for Service)
Title of Securities Interests in group variable annuity
Being Registered: contracts
It is proposed that this filing will become effective (Check appropriate Space)
immediately upon filing pursuant to paragraph (b) of Rule 485
X on May 1, 1999 pursuant to paragraph (b) of Rule 485
_____ -----------
_____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
_____ on (date) pursuant to paragraph (a)(1) of Rule 485
_____ 75 days after filing pursuant to paragraph (a)(2)
_____ on (date) pursuant to paragraph (a)(2) of Rule 485
_____ this post-effective amendment designates a new effective date for a
previously filed amendment.
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<TABLE>
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CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus) and Part B (Statement of Additional
Information) of Registration Statement of Information Required by Form N-4
PART A - PROSPECTUS
Item of Form N-4 Prospectus Caption
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1. Cover Page ...........................Cover Page
2. Definitions ..........................Definitions
3. Synopsis .............................Summary; Expense Table
4. Condensed Financial Information ......Condensed Financial Information
5. General Description ..................Information About AUL, The Variable
Account, and the Funds; Voting of
Shares of the Funds
6. Deductions and Expenses ..............Charges and Deductions
7. General Description of Variable
Annuity Contracts ...................The Contracts; Contributions and
Contract Values During the
Accumulation Period; Cash
Withdrawals and the Death Benefit;
Summary
8. Annuity Period .......................Annuity Period
9. Death Benefit ........................Cash Withdrawals and The Death Benefit
10. Purchase and Policy Values ...........Contributions and Contract Values
During the Accumulation Period
11. Redemptions ..........................Cash Withdrawals and The Death Benefit
12. Taxes ................................Federal Tax Matters
13. Legal Proceedings ....................Other Information
14. Table of Contents for the Statement
of Additional Information ...........Statement of Additional Information
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PART B - STATEMENT OF ADDITIONAL INFORMATION
<S> <C>
Statement of Additional Statement of Additional
Information Item of Form N-4 Information Caption
- ---------------------------- -------------------
15. Cover Page ...........................Cover Page
16. Table of Contents ....................Table of Contents
17. General Information and History ......General Information and History
18. Services .............................Custody of Assets; Independent
Accountants
19. Purchase of Securities Being Offered .Distribution of Contracts;
(Prospectus) Charges and
Deductions
20. Underwriters .........................Distribution of Contracts
21. Calculation of Performance Data ......Performance Information
22. Annuity Payments .....................(Prospectus) Annuity Period
23. Financial Statements .................Financial Statements
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PART C - OTHER INFORMATION
Item of Form N-4 Part C Caption
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24. Financial Statements and Exhibits ....(Statement of Additional Information)
Financial Statements and Exhibits
25. Directors and Officers of the
Depositor ...........................Directors and Officers of AUL
26. Persons Controlled By or Under
Common Control with Depositor
or Registrant .......................Persons Controlled By or Under Common
Control With Registrant
27. Number of Policyowners ...............Number of Contractholders
28. Indemnification ......................Indemnification
29. Principal Underwriters ...............Principal Underwriters
30. Location of Accounts and Records .....Location of Accounts and Records
31. Management Services ..................Management Services
32. Undertakings .........................Undertakings
Signatures................................Signatures
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PROSPECTUS
for
AUL American Unit Trust
AUL American Series Fund, Inc.
Dated May 1, 1999
Sponsored by:
AUL (LOGO)
American United Life Insurance Company(R)
P.O. Box 6148, Indianapolis, Indiana 46206-6148
http://www.aul.com
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1
Prospectus
AUL American Unit Trust
GROUP VARIABLE ANNUITY CONTRACTS
Offered By
American United Life Insurance Company(R)
One American Square
Indianapolis, Indiana 46282
(800) 249-6269
Annuity Service Office Mailing Address:
P.O. Box 6148, Indianapolis, Indiana 46206-6148
The date of this Prospectus is May 1, 1999
This Prospectus describes group annuity contracts ("Contracts") offered by
American United Life Insurance Company(R) ("AUL" or the "Company"). Any
employer, association, or other group may enter into the Contracts and
specialized plans that do not qualify for favorable tax treatment, such as
non-qualified Section 457 plans may also be sold.
This Prospectus describes contracts that allow ongoing contributions that
can vary in amount and frequency ("Recurring Contribution Contracts") and
contracts that allow only a single contribution to be made ("Single Contribution
Contracts"). All of the Contracts provide for the accumulation of values on
either a variable basis, a fixed basis, or both. The Contracts also provide
several options for fixed annuity payments to begin on a future date.
A Participant may allocate contributions to the AUL American Unit Trust, a
separate account of AUL (the "Variable Account"). The Variable Account, in turn,
invests in shares of mutual fund portfolios. The Participant does not own shares
of the mutual fund, only units in the Variable Account. The Variable Account is
divided into Investment Accounts. These Investment Accounts invest in the
corresponding Portfolios offered by the mutual funds. For example, if a
Participant decides to allocate his contributions to the AUL American Equity
Investment Account, those contributions would buy units of the Variable Account
which, in turn, would buy shares of the AUL American Series Fund Equity
Portfolio. Contributions allocated to a variable Investment Account of the
Variable Account fluctuate in value depending on the investment performance of
the corresponding mutual fund portfolio. These amounts are not guaranteed. In
the alternative, a participant may allocate contributions to AUL's Fixed
Account. These contributions will earn interest at rates that are paid by AUL as
described in "The Fixed Account." A Participant may allocate contributions to
one or more of the Investment Accounts, but not all of the Investment Accounts
may be available under a specific Contract.
The Mutual Fund Portfolios that may be offered under the contracts are:
<TABLE>
<CAPTION>
<S> <C>
AUL American Equity Portfolio Fidelity Equity-Income Portfolio
AUL American Bond Portfolio Fidelity Growth Portfolio
AUL American Managed Portfolio Fidelity High Income Portfolio
AUL American Money Market Portfolio Fidelity Index 500 Portfolio
AUL American Tactical Asset Allocation Portfolio Fidelity Overseas Portfolio
AUL American Conservative Investor Portfolio Janus Flexible Income Portfolio
AUL American Moderate Investor Portfolio Janus Growth Portfolio
AUL American Aggressive Investor Portfolio PBHG Growth II Portfolio
Alger American Growth Portfolio PBHG Technology & Communications Portfolio
American Century VP Capital Appreciation Portfolio SAFECO RST Equity Portfolio
Calvert Social Mid Cap Growth Portfolio SAFECO RST Growth Portfolio
Fidelity Asset Manager Portfolio T. Rowe Price Equity Income Portfolio
Fidelity Contrafund Portfolio
</TABLE>
This Prospectus provides information about the Contracts and the Variable
Account that a prospective investor should know before investing. Additional
information is contained in a Statement of Additional Information ("SAI") dated
May 1, 1999, which has been filed with the Securities and Exchange Commission
(the "SEC"). The SAI is incorporated by reference into this Prospectus. A
prospective investor may obtain a copy of the SAI without charge by calling or
writing AUL at the telephone number or address indicated above. The table of
contents of the SAI is located at the end of this Prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the Prospectus. Any representation to the contrary is a
criminal offense.
This Prospectus should be accompanied by a current Prospectus for each fund
being considered. Each of these prospectuses should be read carefully and
retained for future reference.
The date of this Prospectus is May 1, 1999.
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2
TABLE OF CONTENTS
Description Page
DEFINITIONS............................................. 3-4
SUMMARY................................................. 5-7
Purpose of the Contracts.............................. 5
Types of Contracts.................................... 5
The Variable Account and the Funds.................... 5
Fixed Account......................................... 6
Contributions......................................... 6
Transfers............................................. 6
Withdrawals........................................... 6
The Death Benefit..................................... 6
Annuity Options....................................... 6
Charges............................................... 6
Withdrawal Charge.................................... 6
Premium Tax Charge................................... 7
Mortality and Expense Risk Charge.................... 7
Administrative Charge................................ 7
Expenses of the Funds................................ 7
Ten-Day Free Look..................................... 7
Termination by the Owner.............................. 7
Contacting AUL........................................ 7
EXPENSE TABLE........................................... 8-12
CONDENSED FINANCIAL INFORMATION......................... 12-14
PERFORMANCE OF THE INVESTMENT
ACCOUNTS.............................................. 15-16
INFORMATION ABOUT AUL, THE VARIABLE
ACCOUNT, AND THE FUNDS................................ 17-20
American United Life Insurance Company(R)............. 17
Variable Account...................................... 17
The Funds............................................. 17
AUL American Series Fund, Inc........................ 18
Alger American Fund.................................. 18
American Century Variable Portfolios, Inc............ 18
Calvert Variable Series.............................. 19
Fidelity Variable Insurance Products Fund............ 19
Fidelity Variable Insurance Products Fund II......... 19
Janus Aspen Series................................... 20
PBHG Insurance Series Fund, Inc...................... 20
SAFECO Resource Series Trust......................... 20
T. Rowe Price Equity Series, Inc..................... 20
THE CONTRACTS........................................... 21
General............................................... 21
CONTRIBUTIONS AND CONTRACT VALUES
DURING THE ACCUMULATION PERIOD........................ 21-23
Contributions under the Contracts..................... 21
Ten-Day Free Look..................................... 21
Initial and Single Contributions...................... 21
Allocation of Contributions........................... 21
Subsequent Contributions Under Recurring
Contribution Contracts............................... 22
Transfers of Account Value............................ 22
Participant's Variable Account Value.................. 22
Accumulation Units................................... 22
Accumulation Unit Value.............................. 22
Net Investment Factor................................ 23
DOLLAR COST AVERAGING................................... 23
CASH WITHDRAWALS AND THE DEATH
BENEFIT............................................... 24-27
Cash Withdrawals...................................... 24
Systematic Withdrawal Service for 403(b) and
408 Programs......................................... 24
Constraints on Withdrawals............................ 24
General.............................................. 24
403(b) Programs...................................... 25
Texas Optional Retirement Program.................... 25
The Death Benefit..................................... 25
Termination by the Owner.............................. 26
Termination by AUL.................................... 26
Payments from the Variable Account.................... 27
CHARGES AND DEDUCTIONS.................................. 27-29
Premium Tax Charge.................................... 27
Withdrawal Charge..................................... 27
Mortality and Expense Risk Charge..................... 28
Variable Investment Plus Factor....................... 28
Administrative Charge................................. 29
Other Charges......................................... 29
Variations in Charges................................. 29
Guarantee of Certain Charges.......................... 29
Expenses of the Funds................................. 29
ANNUITY PERIOD.......................................... 30-31
General............................................... 30
Annuity Options....................................... 30
Option 1 - Life Annuity.............................. 30
Option 2 - Certain and Life Annuity.................. 30
Option 3 - Survivorship Annuity...................... 30
Option 4 - Installment Refund Life Annuity........... 30
Option 5 - Fixed Periods............................. 30
Selection of an Option................................ 30
THE FIXED ACCOUNT....................................... 31-33
Interest.............................................. 31
Withdrawals and Transfers............................. 31
Transfer of Interest Option........................... 32
Contract Charges...................................... 32
Payments from the Fixed Account....................... 33
Loans from the Fixed Account.......................... 33
MORE ABOUT THE CONTRACTS................................ 33-34
Designation and Change of Beneficiary................. 33
Assignability......................................... 34
Proof of Age and Survival............................. 34
Misstatements......................................... 34
Acceptance of New Participants or Contributions....... 34
FEDERAL TAX MATTERS..................................... 34-37
Introduction.......................................... 34
Tax Status of the Company and
the Variable Account................................. 34
Tax Treatment of Retirement Programs.................. 34
Employee Benefit Plans................................ 35
403(b) Programs....................................... 35
408 Programs.......................................... 35
457 Programs.......................................... 35
Tax Penalty........................................... 36
Withholding........................................... 36
Effect of Tax-Deferred Accumulation................... 36
OTHER INFORMATION....................................... 37-38
Voting of Shares of the Funds......................... 37
Substitution of Investments........................... 38
Changes to Comply with Law and Amendments............. 38
Reservation of Rights................................. 38
Periodic Reports...................................... 38
Legal Proceedings..................................... 38
Legal Matters......................................... 38
YEAR 2000 READINESS DISCLOSURE.......................... 39
PERFORMANCE INFORMATION................................. 39-40
STATEMENT OF ADDITIONAL
INFORMATION........................................... 40
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3
DEFINITIONS
Various terms commonly used in this Prospectus are defined as follows:
ACCOUNT DATE - The date on which a Participant's initial contribution is applied
to a Participant's Account and on which AUL begins to determine account values.
It is the date used to determine Account Years and Account Anniversaries.
ACCUMULATION PERIOD - The period commencing on a Participant's Account Date and
terminating when the Participant's Account is closed, either through a
surrender, withdrawal(s), annuitization, payment of charges, payment of the
death benefit, or a combination thereof.
ACCUMULATION UNIT - A unit of measure used to record amounts of increases to,
decreases from, and accumulations in the Investment Accounts of the Variable
Account during the Accumulation Period.
ANNUITANT - The person or persons on whose life annuity payments depend.
ANNUITY - A series of payments made by AUL to an Annuitant or Beneficiary during
the period specified in the Annuity Option.
ANNUITY COMMENCEMENT DATE - The first day of any month in which an annuity
begins under a Contract, which shall not be later than the required beginning
date under applicable federal requirements.
ANNUITY OPTIONS - Options under a Contract that prescribe the provisions under
which a series of annuity payments are made to an Annuitant, contingent
Annuitant, or Beneficiary.
ANNUITY PERIOD - The period during which annuity payments are made.
AUL - American United Life Insurance Company(R)
BENEFICIARY - The person having the right to the death benefit, if any, payable
during the Accumulation Period, and the person having the right to benefits, if
any, payable upon the death of an Annuitant during the Annuity Period under any
Annuity Option other than a survivorship option (i.e., Option 3 - under which
the contingent Annuitant has the right to benefits payable upon the death of an
Annuitant).
BUSINESS DAY - A day on which AUL's Home Office is customarily open for
business. Traditionally, in addition to federal holidays, AUL is not open for
business on the day after Thanksgiving and either the day before or after
Christmas or Independence Day.
CERTIFICATE - The document for each Participant that evidences the coverage of
the Participant under a Contract.
CONTRACT DATE - The date shown as the Contract Date in a Contract. It will not
be later than the date any contribution is accepted under a Contract, and it is
the date used to determine Contract Months, Contract Years, and Contract
Anniversaries.
CONTRACT YEAR - A period beginning with one Contract Anniversary, or, in the
case of the first Contract Year, beginning on the Contract Date, and ending the
day before the next Contract Anniversary. The first Contract Year may, at the
request of the Owner, be less than 12 months so that the Contract Year will
coincide with the Owner's accounting year. Thereafter, each Contract Year will
consist of a 12 month period.
CONTRIBUTIONS - Any amount deposited under a Contract by a Participant or by an
Owner or other duly authorized entity on behalf of a Participant under a 403(b)
Program, a 408 Program, an Employee Benefit Plan, or by an Employer in
connection with a 457 Program. Depending on the type of Contract, contributions
may be made on a recurring basis or on a single premium basis.
EMPLOYEE BENEFIT PLAN - A pension or profit sharing plan established by an
Employer for the benefit of its employees and which is qualified under Section
401 of the Internal Revenue Code.
EMPLOYER - A tax-exempt or public school organization or other employer with
respect to which a Contract has been entered into for the benefit of its
employees. In some cases, a trustee or custodian may act as the Owner for
Participants. In this case, rights usually reserved to the Employer will be
exercised either directly by the employees or through such trustee or custodian,
which will act as the agent of such employees.
EMPLOYER SPONSORED 403(B) PROGRAM - A 403(b) Program to which an Employer makes
contributions on behalf of its employees by means other than a salary reduction
arrangement, or other 403(b) Program that is subject to the requirements of
Title I of the Employee Retirement Income Security Act of 1974, as amended.
FIXED ACCOUNT - An account that is part of AUL's General Account in which all or
a portion of a Participant's Account Value may be held for accumulation at fixed
rates of interest paid by AUL.
FUNDS - AUL American Series Fund, Inc., Alger American Fund, American Century
Variable Portfolios, Inc., Calvert Variable Series, Fidelity Variable Insurance
Products Fund, Fidelity Variable Insurance Products Fund II, Janus Aspen Series,
PBHG Insurance Series Fund, Inc., SAFECO Resource Series Trust, and T. Rowe
Price Equity Series. Each of the Funds is a diversified, open-end management
investment company commonly referred to as a mutual fund.
GENERAL ACCOUNT - All assets of AUL other than those allocated to the Variable
Account or to any other separate account of AUL.
HOME OFFICE - The Annuity Service Office at AUL's principal business office, One
American Square, Indianapolis, Indiana 46282.
HR-10 PLAN - An Employee Benefit Plan established by a self-employed person in
accordance with Section 401 of the Internal Revenue Code.
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4
INVESTMENT ACCOUNT - A sub-account of the Variable Account that invests in
shares of a specific Portfolio of AUL American Series Fund, Inc., Alger American
Fund, American Century Variable Portfolios, Inc., Calvert Variable Series,
Fidelity Variable Insurance Products Fund, Fidelity Variable Insurance Products
Fund II, Janus Aspen Series, PBHG Insurance Series Fund, Inc., SAFECO Resource
Series Trust, and T. Rowe Price Equity Series, Inc. Not all of the Investment
Accounts may be available under a particular Contract and some of the Investment
Accounts are not available for certain types of Contracts.
OWNER - The employer, association, trust, or other entity entitled to the
ownership rights under the Contract and in whose name or names the Contract is
issued. A trustee or custodian may be designated to exercise an owner's rights
and responsibilities under a Contract in connection with a retirement plan that
meets the requirements of Sections 401, 408, or 457 of the Internal Revenue
Code. An administrator, custodian, or other person performing similar functions
may be designated to exercise an Owner's responsibilities under a Contract in
connection with a 403(b) Program. The term "Owner," as used in this Prospectus,
shall include, where appropriate, such a trustee, custodian, or administrator.
PARTICIPANT - An eligible employee, member, or other person named in the
Certificate who is entitled to benefits under the Plan as determined and
reported to AUL by the Owner or other duly authorized entity.
PARTICIPANT'S ACCOUNT - An account established for each Participant.
PARTICIPANT'S ACCOUNT VALUE - The current value of a Participant's Account under
a Contract, which is equal to the sum of a Participant's Fixed Account Value and
Variable Account Value. Initially, it is equal to the initial contribution, and
thereafter will reflect the net result of contributions, investment experience,
charges deducted, loans, and any partial withdrawals taken.
PARTICIPANT'S FIXED ACCOUNT VALUE - The total value of a Participant's interest
in the Fixed Account.
PARTICIPANT'S VARIABLE ACCOUNT VALUE - The total value of a Participant's
interest in the Investment Accounts of the Variable Account.
PARTICIPANT'S WITHDRAWAL VALUE - A Participant's Account Value minus the
applicable withdrawal charge and minus the Participant's outstanding loan
balances, if any, and any expense charges due thereon.
PLAN - The retirement plan or plans in connection with which the Contract is
issued and any subsequent amendment to such a plan.
VALUATION DATE - Each date on which the Variable Account is valued, which
currently includes each Business Day that is also a day on which the New York
Stock Exchange is open for trading.
VALUATION PERIOD - A period used in measuring the investment experience of each
Investment Account of the Variable Account. The Valuation Period begins at the
close of one Valuation Date and ends at the close of the next succeeding
Valuation Date.
VARIABLE ACCOUNT - AUL American Unit Trust, which is a separate account of AUL,
and whose assets and liabilities are maintained separately from those of AUL's
General Account.
403(B) PROGRAM - An arrangement by a public school organization or a charitable,
educational, or scientific organization that is described in Section 501(c)(3)
of the Internal Revenue Code under which employees are permitted to take
advantage of the Federal income tax deferral benefits provided for in Section
403(b) of the Internal Revenue Code.
408 PROGRAM - A plan of individual retirement accounts or annuities, including a
simplified employee pension plan or SIMPLE IRA plan established by an employer,
that meets the requirements of Section 408 of the Internal Revenue Code.
457 PROGRAM - A plan established by a unit of a state or local government or a
tax-exempt organization under Section 457 of the Internal Revenue Code. Certain
457 plans that do not qualify for favorable tax treatment under Section 457,
such as Plans for highly compensated employees, may be referred to as
non-qualified 457 Plans.
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5
SUMMARY
This summary is intended to provide a brief overview of the more
significant aspects of the Contracts. Later sections of this Prospectus, the
Statement of Additional Information, and the Contracts themselves provide
further detail. Unless the context indicates otherwise, the discussion in this
summary and the remainder of the Prospectus relates to the portion of the
Contracts involving the Variable Account. The pertinent Contract and "The Fixed
Account" section of this Prospectus briefly describe the Fixed Account.
PURPOSE OF THE CONTRACTS
The group variable annuity contracts ("Contracts") described in this
Prospectus were generally designed by AUL for use with group retirement plans
that qualify for favorable tax-deferred treatment as retirement programs under
Sections 401, 403(b), 408, or 457 of the Internal Revenue Code (collectively,
the "Plans"). A Contract presents a dynamic concept in retirement planning
designed to give employers and employees and other Participants in Plans
flexibility to attain their investment goals. A Contract provides for the
accumulation of values on a variable basis, a fixed basis, or both, and provides
several options for fixed annuity payments. During the Accumulation Period, a
Participant can allocate contributions to the various Investment Accounts of the
Variable Account or to the Fixed Account. See the Section "The Contracts" later
in this Prospectus.
TYPES OF CONTRACTS
AUL offers several types of contracts that are described in this
Prospectus. With Recurring Contribution Contracts, contributions may vary in
amount and frequency, subject to the limitations described below. Recurring
Contribution Contracts are available for use in connection with retirement plans
that meet the requirements of Sections 401, 403(b), 408, or 457 of the Internal
Revenue Code. AUL also offers single contribution contracts which require a
minimum contribution of at least $25,000. Currently, single contribution
contracts are only available for use in connection with retirement plans that
meet the requirements of Sections 403(b), and 408 of the Internal Revenue Code.
THE VARIABLE ACCOUNT AND THE FUNDS
AUL will allocate contributions designated to accumulate on a variable
basis to the Variable Account. See the Section "Variable Account" later in this
Prospectus. The Variable Account is currently divided into subaccounts referred
to as Investment Accounts. Each Investment Account invests exclusively in shares
of one of the portfolios of the following mutual funds:
<TABLE>
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Investment Accounts and
Corresponding Mutual Fund
Portfolios Mutual Fund Investment Adviser
- -------------------------- ----------- ------------------
AUL American Equity AUL American Series Fund, Inc. American United Life Insurance Company(R)
AUL American Bond AUL American Series Fund, Inc. American United Life Insurance Company(R)
AUL American Managed AUL American Series Fund, Inc. American United Life Insurance Company(R)
AUL American Money Market AUL American Series Fund, Inc. American United Life Insurance Company(R)
AUL American Tactical Asset Allocation AUL American Series Fund, Inc. American United Life Insurance Company(R)
AUL American Conservative Investor AUL American Series Fund, Inc. American United Life Insurance Company(R)
AUL American Moderate Investor AUL American Series Fund, Inc. American United Life Insurance Company(R)
AUL American Aggressive Investor AUL American Series Fund, Inc. American United Life Insurance Company(R)
Alger American Growth Alger American Fund Fred Alger & Company
American Century VP Capital Appreciation American Century Variable Portfolios, Inc. American Century Investment Management, Inc.
Calvert Social Mid Cap Growth Calvert Variable Series Calvert Asset Management Corporation
Fidelity Asset Manager Fidelity Variable Insurance Products Fund II Fidelity Management & Research Company
Fidelity Contrafund Fidelity Variable Insurance Products Fund II Fidelity Management & Research Company
Fidelity Equity-Income Fidelity Variable Insurance Products Fund Fidelity Management & Research Company
Fidelity Growth Fidelity Variable Insurance Products Fund Fidelity Management & Research Company
Fidelity High Income Fidelity Variable Insurance Products Fund Fidelity Management & Research Company
Fidelity Index 500 Fidelity Variable Insurance Products Fund II Fidelity Management & Research Company
Fidelity Overseas Fidelity Variable Insurance Products Fund Fidelity Management & Research Company
Janus Aspen Series Flexible Income Janus Aspen Series Janus Capital Corporation
Janus Aspen Series Worldwide Growth Janus Aspen Series Janus Capital Corporation
PBHG Growth II PBHG Insurance Series Fund, Inc. Pilgrim Baxter & Associates, Ltd.
PBHG Technology & Communications PBHG Insurance Series Fund, Inc. Pilgrim Baxter & Associates, Ltd.
SAFECO RST Equity SAFECO Resource Series Trust SAFECO Asset Management Company
SAFECO RST Growth SAFECO Resource Series Trust SAFECO Asset Management Company
T. Rowe Price Equity Income T. Rowe Price Equity Series, Inc. T. Rowe Price Associates, Inc.
</TABLE>
<PAGE>
6
Each of the Funds has a different investment objective. A Participant may
allocate contributions to one or more of the Investment Accounts available under
a Contract. Contributions allocated to a particular Investment Account will
increase or decrease in dollar value depending upon the investment performance
of the corresponding mutual fund portfolio in which the Investment Account
invests. These amounts are not guaranteed. The Participant bears the investment
risk for amounts allocated to an Investment Account of the Variable Account.
FIXED ACCOUNT
The Participant may allocate contributions to the Fixed Account, which is
part of AUL's General Account. Amounts allocated to the Fixed Account earn
interest at rates periodically determined by AUL. These rates are guaranteed to
be at least an effective annual rate of either 3% or 4%, depending on the
Contract. See the Section "The Fixed Account" later in this Prospectus.
CONTRIBUTIONS
For Recurring Contribution Contracts, contributions may vary in amount and
frequency. A Plan may impose maximum and minimum contribution limits depending
on the type of Plan. In a Single Contribution Contract, Participants must make
contributions of at least $25,000. See the Section "Contributions under the
Contracts" later in this Prospectus.
TRANSFERS
A Participant may transfer his or her Variable Account Value among the
Investment Accounts or to the Fixed Account at any time during the Accumulation
Period. A Participant may transfer part of his or her Fixed Account Value to one
or more of the available Investment Accounts during the Accumulation Period,
subject to certain restrictions. The minimum transfer amount from any one
Investment Account or from the Fixed Account is $500. If the Account Value in an
Investment Account or the Fixed Account prior to a transfer is less than $500,
then the minimum transfer amount is the Participant's remaining Account Value in
that account. If, after any transfer, the remaining Account Value would be less
than $500, then AUL will treat that request as a request for a transfer of the
entire Account Value in that account. Amounts transferred from the Fixed Account
to an Investment Account during any given Contract Year cannot exceed 20% of the
Participant's Fixed Account Value as of the beginning of that Contract Year.
However, if a Participant's Fixed Account Value at the beginning of the Contract
Year is less than $2,500, the amount that may be transferred for that Contract
Year from the Fixed Account is the lesser of $500 or the entire Fixed Account
Value as of the date the transfer request is received by AUL at its Home Office.
In certain contracts the 20% restriction on transfers may be waived if certain
conditions are met. For a more detailed explanation, please refer to the Section
"Transfers of Account Value" later in this Prospectus.
WITHDRAWALS
The Participant may surrender or take a partial withdrawal from the Account
Value at any time before the Annuity Commencement Date. Withdrawals and
surrender are subject to the limitations under any applicable Plan, the Contract
and applicable law. The minimum withdrawal amount from any one Investment
Account or from the Fixed Account is $500. If the Account Value in an Investment
Account or the Fixed Account prior to a withdrawal is less than $500, then the
minimum withdrawal amount is the Participant's remaining Account Value in that
account. If, after any withdrawal, the remaining Account Value would be less
than $500 in that account, then AUL will treat that request as a request for a
withdrawal of the entire Account Value in that account. See the Section "Cash
Withdrawals" later in this Prospectus.
Certain retirement programs, such as 403(b) Programs, are subject to
constraints on withdrawals and full surrenders. See "Constraints on
Withdrawals." In addition, distributions under certain retirement programs may
result in a tax penalty. See the Section "Tax Penalty" later in this Prospectus.
A withdrawal or surrender may also be subject to a withdrawal charge. See the
Section "Withdrawal Charge" later in this Prospectus.
THE DEATH BENEFIT
If a Participant dies during the Accumulation Period, AUL will pay a death
benefit to the Beneficiary. The amount of the death benefit is equal to the
vested portion of the Participant's Account Value minus any outstanding loan
balances and any due and unpaid charges on those loans. A death benefit will not
be payable if the Participant dies on or after the Annuity Commencement Date,
except as may be provided under the Annuity Option elected. See the Sections
"The Death Benefit" and "Annuity Options" later in this Prospectus.
ANNUITY OPTIONS
The Contracts provide for several fixed Annuity Options, any one of which
may be elected if permitted by the applicable Plan and applicable law. AUL will
pay fixed and guaranteed payments under the Annuity Options. See the Section
"Annuity Period" later in this Prospectus.
CHARGES
AUL will deduct certain charges in connection with the operation of the
Contracts and the Variable Account:
WITHDRAWAL CHARGE - AUL does not impose a sales charge at the time a
contribution is made to a Participant's Account under a Contract. If a
Participant makes a cash withdrawal or surrenders the contract, AUL may assess a
withdrawal charge (which may also be referred to as a contingent deferred sales
charge) where the Participant's Account has not been in existence for a certain
period of time (see chart below). AUL will not assess a withdrawal charge upon
the payment of a death benefit under a Contract. Under certain Contracts known
as "benefit responsive" Contracts, AUL will not impose withdrawal charges under
certain circumstances. See the Section "Withdrawal Charge" later in this
Prospectus.
<PAGE>
7
Charge on Withdrawal Exceeding 10% Allowable Amount
---------------------------------------------------
11 or
Account Year 1 2 3 4 5 6 7 8 9 10 more
- ------------ - - - - - - - - - -- ----
Recurring
Contribution
Contracts 8% 8% 8% 8% 8% 4% 4% 4% 4% 4% 0%
Single
Contribution
Contracts 6% 5% 4% 3% 2% 1% 0% 0% 0% 0% 0%
For the first two Contract Years that a Participant's Account exists, AUL
will not subject 10% of the Account Value plus contributions made during the
year to withdrawal charges. After the first two Contract Years, and until the
withdrawal charge has decreased to 0%, AUL will not subject 10% of the Account
Value to withdrawal charges.
If a non-benefit responsive benefit is paid causing a surrender or a
withdrawal in excess of this 10% allowable amount, AUL will assess a withdrawal
charge on the amount in excess of the 10% allowable. The chart above illustrates
the amount of the withdrawal charge that applies to the different types of
contracts based on the number of years that the Account has been in existence.
However, the total withdrawal charge will never exceed 9% of total contributions
made by or on behalf of a Participant. See the Section "Withdrawal Charge" later
in this Prospectus.
PREMIUM TAX CHARGE - Various states and municipalities impose a tax on
premiums received by insurance companies. AUL assesses a premium tax charge to
reimburse itself for premium taxes that it incurs, which usually will be
deducted at the time annuity payments commence. Premium taxes currently range
from 0% to 3.5%, but are subject to change by such governmental entities. See
the Section "Premium Tax Charge" later in this Prospectus.
MORTALITY AND EXPENSE RISK CHARGE - AUL deducts a daily charge in an amount
equal to an annual rate of 1.25% of the average daily net assets of each
Investment Account of the Variable Account for mortality and expense risks that
AUL assumes in connection with the Contracts. Certain contracts may elect to
have a portion of this charge offset in the form of a credit of Accumulation
Units to Participant Accounts, provided certain conditions are met. See the
Sections "Mortality and Expense Risk Charge" and "Variable Investment Plus
Option" later in this Prospectus.
ADMINISTRATIVE CHARGE - Under some Recurring Contribution Contracts, AUL
deducts from a Participant's Account an administrative charge equal to the
lesser of 0.5% of the Participant's Account Value or $7.50 per quarter. AUL will
assess the charge every quarter on a Participant Account if the account exists
on the quarterly Contract Anniversary. The charge is only assessed during the
Accumulation Period. An administrative charge will not be imposed on Recurring
Contribution Contracts if the value of a Participant's Account is equal to or
more than $25,000 on the quarterly Contract Anniversary. Benefit Responsive
Contracts that are converted to no-load Section 408 IRA Contracts will be
assessed an Administrative Charge of $3 each quarter if the value of
Participant's Account is less than $10,000 on that date. Except for this type of
Contract, there are no Administrative Charges applied to Single Contribution
Contracts and on some types of Recurring Contribution Contracts. See the Section
"Administrative Charge" later in this Prospectus.
EXPENSES OF THE FUNDS - Each Investment Account of the Variable Account
purchases shares of the corresponding Portfolio of one of the Funds. The price
of the shares reflect investment advisory fees and other expenses paid by each
Portfolio. See the Funds' Prospectuses for a description of these fees and
expenses.
TEN-DAY FREE LOOK
Under 403(b) and 408 Contracts, the Owner has the right to return the
Contract for any reason within ten days of receipt. If this right is exercised,
the Contract will be considered void from its inception and AUL will fully
refund any contributions.
TERMINATION BY THE OWNER
An Owner of a Contract acquired in connection with an Employee Benefit
Plan, a 457 Program, or an Employer Sponsored 403(b) Program may terminate the
Contract by sending proper written notice of termination to AUL at its Home
Office. Upon termination of such a Contract, the Owner may elect from two
payment options. Under one option, AUL will assess an Investment Liquidation
Charge (or in some Contracts, a Market Value Adjustment) on a Participants'
Fixed Account Withdrawal Value. Under the second payment option, AUL will not
assess an Investment Liquidation Charge or Market Value Adjustment. However,
amounts attributable to the aggregate Withdrawal Values derived from the Fixed
Account of all Participants under the Contract shall be paid in six or seven
equal annual installments, depending on the Contract. For more information on
termination by an Owner, including information on the payment options and the
Investment Liquidation Charge (or the Market Value Adjustment), see the Section
"Termination by the Owner" later in this Prospectus.
CONTACTING AUL
Individuals should direct all inquiries, notices, and forms required under
these Contracts to AUL at the address of the Annuity Service Office provided in
the front of this Prospectus.
<PAGE>
8
<TABLE>
<CAPTION>
EXPENSE TABLE
The purpose of the following table is to assist investors in understanding
the various costs and expenses that Participants in the Contracts bear directly
and indirectly. The table reflects expenses of the Variable Account as well as
the Funds. Expenses of the Variable Account shown under "Participant Transaction
Expenses" (including the withdrawal charge and annual contract fee) and
"Variable Account Annual Expenses" are fixed and specified under the terms of
the Contract. Expenses of the Funds as shown under "Fund Annual Expenses" are
not fixed or specified under the terms of the Contract and may vary from year to
year. The fees in this Expense Table have been provided by the Funds and have
not been independently verified by AUL. The table does not reflect premium taxes
that may be imposed by various jurisdictions. See the Section "Premium Tax
Charge" later in this Prospectus. The information contained in the table is not
generally applicable to amounts allocated to the Fixed Account or to annuity
payments under an Annuity Option.
For a complete description of a Contract's costs and expenses, see "Charges
and Deductions" later in this Prospectus. For a more complete description of the
Funds' costs and expenses, see the Funds' Prospectuses.
<S> <C>
Participant Transaction Expenses
Maximum Deferred Sales Load (withdrawal charge) ........................................................................ 8%
Recurring Contribution Contracts (as a percentage of account value, see footnote 1 below).............................. 8%
Single Contribution Contracts (as a percentage of account value, see footnote 2 below)................................. 6%
Maximum administrative charge (per year)(see footnote 3 below)........................................................... $30
Separate (Variable) Account Annual Expenses (as a percentage of average account value)
Mortality and Expense Risk Fees (see footnote 4 below)...................................................................... 1.25%
Total Fund Annual Expenses After Expense Limitation (as a percentage of average net assets of each Portfolio)
<S> <C> <C> <C> <C>
Management/ Other 12b-1 Total Portfolio
Portfolio Advisory Fee Expenses Fees Annual Expenses
- --------- ------------ --------- ----- ---------------
AUL American Series Fund, Inc.:
Equity Portfolio 0.50%(5) 0.12% -- 0.62%
Bond Portfolio 0.50%(5) 0.12% -- 0.62%
Managed Portfolio 0.50%(5) 0.12% -- 0.62%
Money Market Portfolio 0.40%(5) 0.11% -- 0.51%
Tactical Asset Allocation Portfolio 0.80%(5) 0.20% -- 1.00%
Conservative Investor Portfolio 0.70%(5) 0.25% -- 0.95%
Moderate Investor Portfolio 0.70%(5) 0.24% -- 0.94%
Aggressive Investor Portfolio 0.70%(5) 0.25% -- 0.95%
<FN>
(1) For the first two Contract Years that a Participant's Account exists, the
amount withdrawn during a Contract Year that will not be subject to an otherwise
applicable withdrawal charge is 10% of (a) the total of all contributions made
during the year that the withdrawal is being made, plus (b) the Participant's
Account Value at the beginning of the Contract Year. After the first two
Contract Years, and until the withdrawal charge has decreased to 0%, the amount
withdrawn during a Contract Year that will not be subject to a withdrawal charge
is 10% of the Participant's Account Value at the beginning of the Contract Year
in which the withdrawal is being made. The withdrawal charge, which is applied
to amounts withdrawn in excess of the 10% allowable amount, decreases from 8% to
4% for Account years 6 through 10, and to 0% thereafter. See the Section
"Withdrawal Charge" later in this Prospectus.
(2) For the first two Contract Years that a Participant's Account exists, the
amount withdrawn during a Contract Year that will not be subject to an otherwise
applicable withdrawal charge is 10% of (a) the total of all contributions made
during the year that the withdrawal is being made, plus (b) the Participant's
Account Value at the beginning of the Contract Year. After the first two
Contract Years, and until the withdrawal charge has decreased to 0%, the amount
withdrawn during a Contract Year that will not be subject to a withdrawal charge
is 10% of the Participant's Account Value at the beginning of the Contract Year
in which the withdrawal is being made. The withdrawal charge, which is applied
to amounts withdrawn in excess of the 10% allowable amount, decreases by 1% in
each account Year until it is 0% in Account Year 7 and thereafter. See the
Section "Withdrawal Charge" later in this Prospectus.
(3) The Administrative Charge may be less than $30.00 per year, based on the
type of Contract or on the size of the Participant's Account. Generally, the
maximum charge imposed will be the lesser of 0.5% of the Participant's Account
Value or $30.00 per year. An administrative charge will not be imposed on
Recurring Contribution Contracts if the value of a Participant's Account is
equal to or more than $25,000 on the quarterly Contract Anniversary. Benefit
Responsive Contracts that are converted to no-load Section 408 IRA Contracts
will be assessed an Administrative Charge of $3 each quarter if the value of
Participant's Account is less than $10,000 on that date. Except for this type of
Contract, there are no Administrative Charges applied to Single Contribution
Contracts and on some types of recurring contribution contracts.
(4) This charge may be less than 1.25% for certain Contracts. In these
Contracts, a portion of the mortality and expense risk charge may be credited
back to Participant's accounts in the form of Accumulation Units. The number of
Accumulation Units credited will depend on the aggregate variable investment
account assets on deposit and the type of Contract purchased.
(5) AUL has currently agreed to waive its advisory fee if the ordinary expenses
of a Portfolio exceed 1% and, to the extent necessary, assume any expenses in
excess of its advisory fee so that the expenses of each Portfolio, including the
advisory fee but excluding extraordinary expenses, will not exceed 1% of the
Portfolio's average daily net asset value per year. The Adviser may terminate
the policy of reducing its fee and/or assuming Fund expenses upon 30 days
written notice to the Fund and such policy will be terminated automatically by
the termination of the Investment Advisory Agreement. During 1998, AUL reduced
its advisory fee for the Tactical Asset Allocation and for the LifeStyle
Portfolios.
</FN>
<PAGE>
9
<CAPTION>
EXPENSE TABLE (CONTINUED)
<S> <C> <C> <C> <C>
Management/ Other 12b-1 Total Portfolio
Portfolio Advisory Fee Expenses Fees Annual Expenses
- --------- ------------ -------- ----- ---------------
Alger American Fund
Alger American Growth Portfolio 0.75% 0.04% -- 0.79%
American Century Variable Portfolios, Inc.
VP Capital Appreciation 1.00% 0.00% -- 1.00%(6)
Calvert Variable Series
Calvert Social Mid Cap Growth Portfolio 0.90% 0.16% -- 1.06%(7)
Fidelity Variable Insurance Products Fund
Equity-Income Portfolio 0.49% 0.09% -- 0.58%(8)
Growth Portfolio 0.59% 0.09% -- 0.68%(8)
High Income Portfolio 0.58% 0.12% -- 0.70%
Overseas Portfolio 0.74% 0.17% -- 0.91%(8)
Fidelity Variable Insurance Products Fund II
Asset Manager Portfolio 0.54% 0.10% -- 0.64%(8)
Contrafund Portfolio 0.59% 0.11% -- 0.70%(8)
Index 500 Portfolio 0.24% 0.11% -- 0.35%(8)
Janus Aspen Series
Flexible Income Portfolio 0.65% 0.08% -- 0.73%
Worldwide Growth Portfolio 0.65% 0.07% -- 0.72%(9)
PBHG Insurance Series Fund, Inc.
Growth II Portfolio 0.51% 0.69% -- 1.20%(10)
Technology & Communications Portfolio 0.49% 0.71% -- 1.20%(10)
SAFECO Resource Series Trust
Equity Portfolio 0.74% 0.04% -- 0.78%
Growth Portfolio 0.74% 0.06% -- 0.80%
T. Rowe Price Equity Series, Inc.
T. Rowe Price Equity Income Portfolio 0.85% 0.00% -- 0.85%(11)
<FN>
(6) American Century VP Capital Appreciation fees are 1.00% on the first
$500,000,000 of net assets; 0.95% on the next $500,000,000; and, 0.90%
thereafter.
(7) The figures above are based on expenses for fiscal year 1998, and have
been restated to reflect the elimination of the performance adjustment in CVS
Mid Cap Portfolio. The restatement includes the addition of 0.01%.
(8) A portion of the brokerage commissions that certain funds pay was used
to reduce fund expenses. In addition, certain funds, or FMR on behalf of certain
funds, have entered into arrangements with their custodian whereby credits
realized as a result of uninvested cash balances were used to reduce custodian
expenses. Including these reductions, the total operating expenses, after
reimbursement for Index 500 Portfolio, presented in the table would have been:
Equity-Income Portfolio .57%; Growth Portfolio .66%; Overseas Portfolio .89%;
Asset Manager Portfolio .63%; Index 500 Portfolio .28%; and, Contrafund
Portfolio .66%.
(9) All expenses are stated with contractual waivers and fee reductions by
Janus Capital. Fee reductions for the Worldwide Growth reduce the Management Fee
to the level of the corresponding Janus retail fund. Other waivers, if
applicable, are first applied against the Management Fee and then against Other
Expenses. Janus Capital has agreed to continue the other waivers and fee
reductions until at least the next annual renewal of the advisory agreement.
(10) The Investment Adviser agreed to reimburse a portion of the funds'
expenses during the period. Without this reimbursement, the funds' management
fee, other expenses and total expenses would have been 0.85%, 0.69% and 1.54%
respectively, for the PBHG Growth II Portfolio and 0.85%, 0.71% and 1.56%
respectively, for the PBHG Technology and Communications Portfolio.
(11) This is an annual all-inclusive fee paid to the advisor.
</FN>
</TABLE>
<PAGE>
11
EXAMPLES (FOR ANY INVESTMENT ACCOUNT)
The following examples show expenses that a Participant would pay at the
end of one, three, five, or ten years if at the end of those time periods, the
Account is (1) surrendered, or (2) not surrendered. Example (2) will also apply
to a Participant Account that is annuitized at the end of the applicable time
period. The information below represents expenses on a $1,000 contribution and
assumes a 5% return per year. For an account that is surrendered, the example
shows expenses for Recurring Contribution Contracts, and Single Contribution
Contracts. Expenses will be the same for all Contracts if not surrendered. These
examples should not be considered a representation of past or future expenses.
Actual expenses may be greater or less than those shown. The assumed 5% return
is hypothetical and should not be considered a representation of past or future
returns, which may be greater or less than the assumed amount. For Recurring
Contribution Contracts, the Administrative charge used in these examples is
based on an estimated average Participant Account of $10,000. A pro-rata portion
of the annual Administrative Charge has, therefore, been used in the
calculations for Recurring Contribution Contracts.
<TABLE>
<CAPTION>
<S> <C> <C>
(2) If your Contract
is not Surrendered
(1) If your Contract is Surrendered or is Annuitized
----------------------------------- ----------------
<S> <C> <C> <C>
Recurring Single
Contribution Contribution
Contracts Contracts All Contracts
--------- --------- -------------
Investment Account
AUL American Equity
1 year $ 95.93 $ 77.44 $ 21.95
3 years 145.56 106.50 67.43
5 years 197.67 135.77 115.14
10 years 292.41 245.02 245.02
AUL American Bond
1 year 95.93 77.44 21.95
3 years 145.56 106.50 67.43
5 years 197.67 135.77 115.14
10 years 292.41 245.02 245.02
AUL American Managed
1 year 95.93 77.44 21.95
3 years 145.56 106.50 67.43
5 years 197.67 135.77 115.14
10 years 292.41 245.02 245.02
AUL American Money Market
1 year 94.91 76.40 20.85
3 years 142.49 103.30 64.10
5 years 192.52 130.28 109.53
10 years 281.52 233.60 233.60
AUL American Tactical Asset Allocation
1 year 99.46 81.03 25.76
3 years 156.14 117.52 78.90
5 years 215.28 154.55 134.31
10 years 329.19 283.59 283.59
AUL American Conservative Investor
1 year 99.02 80.58 25.28
3 years 154.82 116.15 77.47
5 years 213.10 152.22 131.93
10 years 324.68 278.85 278.85
AUL American Moderate Investor
1 year 98.92 80.48 25.17
3 years 154.52 115.83 77.14
5 years 212.59 151.69 131.38
10 years 323.63 277.76 277.76
AUL American Aggressive Investor
1 year 99.02 80.58 25.28
3 years 154.82 116.15 77.47
5 years 213.10 152.22 131.93
10 years 324.68 278.85 278.85
Alger American Growth
1 year 97.53 79.06 23.67
3 years 150.36 111.49 72.63
5 years 205.67 144.30 123.85
10 years 309.22 262.65 262.65
<PAGE>
11
<CAPTION>
EXAMPLES (FOR ANY INVESTMENT ACCOUNT) (CONTINUED)
<S> <C> <C>
(2) If your Contract
is not Surrendered
(1) If your Contract is Surrendered or is Annuitized
----------------------------------- ----------------
<S> <C> <C> <C>
Recurring Single
Contribution Contribution
Contracts Contracts All Contracts
--------- --------- -------------
Investment Account
American Century VP Capital Appreciation
1 year $ 99.46 $ 81.03 $ 25.76
3 years 156.14 117.52 78.90
5 years 215.28 154.55 134.31
10 years 329.19 283.59 283.59
Calvert Social Mid Cap Growth
1 year 100.03 81.62 26.38
3 years 157.86 119.31 80.76
5 years 218.13 157.59 137.41
10 years 335.06 289.74 289.74
Fidelity VIP Equity-Income
1 year 95.56 77.06 21.55
3 years 144.44 105.32 66.21
5 years 195.79 133.76 113.08
10 years 288.43 240.85 240.85
Fidelity VIP Growth
1 year 96.51 78.03 22.57
3 years 147.30 108.31 69.32
5 years 200.57 138.86 118.30
10 years 298.53 251.44 251.44
Fidelity VIP High Income
1 year 96.68 78.20 22.76
3 years 147.81 108.84 69.87
5 years 201.42 139.77 119.22
10 years 300.32 253.32 253.32
Fidelity VIP Overseas
1 year 98.64 80.20 24.88
3 years 153.71 114.99 76.26
5 years 211.25 150.25 129.92
10 years 320.84 274.83 274.83
Fidelity VIP II Asset Manager
1 year 96.14 77.64 22.17
3 years 146.18 107.14 68.10
5 years 198.70 136.86 116.25
10 years 294.58 247.29 247.29
Fidelity VIP II Contrafund
1 year 96.68 78.20 22.76
3 years 147.81 108.84 69.87
5 years 201.42 139.77 119.22
10 years 300.32 253.32 253.32
Fidelity VIP II Index 500
1 year 93.42 74.87 19.23
3 years 137.96 98.58 59.19
5 years 184.92 122.18 101.26
10 years 265.30 216.59 216.59
Janus Flexible Income
1 year 96.95 78.48 23.05
3 years 148.63 119.69 70.75
5 years 202.79 141.23 120.71
10 years 303.18 256.31 256.31
Janus Worldwide Growth
1 year 96.88 78.41 22.98
3 years 148.42 119.48 70.53
5 years 202.45 140.86 120.33
10 years 302.47 255.56 255.56
<PAGE>
12
<CAPTION>
EXAMPLES (FOR ANY INVESTMENT ACCOUNT) (CONTINUED)
<S> <C> <C>
(2) If your Contract
is not Surrendered
(1) If your Contract is Surrendered or is Annuitized
----------------------------------- ----------------
<S> <C> <C> <C>
Recurring Single
Contribution Contribution
Contracts Contracts All Contracts
--------- --------- -------------
Investment Account
PBHG Growth II
1 year $ 101.32 $ 82.93 $ 27.76
3 years 161.68 123.29 84.91
5 years 224.45 164.33 144.30
10 years 348.03 303.34 303.34
PBHG Technology & Communications
1 year 101.32 82.93 27.76
3 years 161.68 123.29 84.91
5 years 224.45 164.33 144.30
10 years 348.03 303.34 303.34
SAFECO RST Equity
1 year 97.43 78.96 23.56
3 years 150.05 111.18 72.30
5 years 205.16 143.76 123.29
10 years 308.16 261.54 261.54
SAFECO RST Growth
1 year 97.63 79.17 23.78
3 years 150.66 111.81 72.96
5 years 206.18 144.85 124.40
10 years 310.29 263.76 263.76
T. Rowe Price Equity Income
1 year 98.07 79.62 24.26
3 years 151.98 113.19 74.39
5 years 208.38 147.19 126.80
10 years 314.88 268.58 268.58
</TABLE>
<PAGE>
CONDENSED FINANCIAL INFORMATION
The following table presents Condensed Financial Information with respect to
each of the Investment Accounts of the Variable Account for the period from the
date of first deposit on April 12, 1990 through December 31, 1998. The following
table should be read in conjunction with the Variable Account's financial
statements, which are included in the Variable Account's Annual Report dated as
of December 31, 1998. The Variable Account's financial statements have been
audited by PricewaterhouseCoopers LLP, the Variable Account's independent
accountants.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Accumulation Unit Value Accumulation Unit Value Number of Accumulation Units
Investment Account At Beginning of Period At End of Period Oustanding At End of Period
- ------------------ ----------------------- ----------------------- ----------------------------
AUL American Equity
1998 $ 2.698 $ 2.858 14,376,727
1997 2.107 2.698 12,586,036
1996 1.790 2.107 10,589,355
1995 1.518 1.790 9,332,222
1994 1.497 1.518 7,471,155
1993 1.321 1.497 3,727,950
1992 1.215 1.321 2,576,500
1991 0.980 1.215 620,180
1990(1) 1.000 0.980 3,471
AUL American Bond
1998 $ 1.720 $ 1.847 7,003,232
1997 1.615 1.720 4,937,428
1996 1.600 1.615 4,535,171
1995 1.375 1.600 3,613,483
1994 1.444 1.375 2,640,900
1993 1.321 1.444 784,086
1992 1.247 1.321 544,295
1991 1.085 1.247 191,389
1990(1) 1.000 1.085 1,023
(1) For the period from April 12, 1990 through December 31, 1990.
<PAGE>
13
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<S> <C> <C> <C>
Accumulation Unit Value Accumulation Unit Value Number of Accumulation Units
Investment Account At Beginning of Period At End of Period Oustanding At End of Period
- ------------------ ----------------------- ----------------------- ----------------------------
AUL American Managed
1998 $ 2.197 $ 2.348 12,020,235
1997 1.838 2.197 10,816,324
1996 1.664 1.838 10,087,186
1995 1.415 1.664 9,242,020
1994 1.446 1.415 8,146,955
1993 1.296 1.446 2,935,365
1992 1.215 1.296 1,979,513
1991 1.054 1.215 399,535
1990(1) 1.000 1.054 1,612
AUL American Money Market
1998 $ 1.275 $ 2.320 8,101,398
1997 1.230 1.275 5,765,433
1996 1.189 1.230 3,931,272
1995 1.144 1.189 2,066,492
1994 1.118 1.144 1,083,828
1993 1.107 1.118 253,762
1992 1.088 1.107 161,750
1991 1.042 1.088 81,498
1990(1) 1.000 1.042 2,051
AUL American Tactical Asset Allocation
1998 $ 1.120 $ 1.175 35,696
1997(2) 0.982 1.120 100
AUL American Conservative
Investor
1998(3) $ 1.004 $ 1.046 96,638
AUL American Moderate
Investor
1998(3) $ 1.003 $ 1.039 184,334
AUL American Aggressive
Investor
1998(3) $ 1.002 $ 1.037 138,936
Alger American Growth
1998 $ 1.750 $ 2.259 16,282,040
1997 1.409 1.750 10,920,405
1996 1.259 1.409 6,674,992
1995(4) 1.000 1.259 1,028,839
American Century VP Capital Appreciation
1998 $ 1.172 $ 1.131 1,905,162
1997 1.225 1.172 1,970,129
1996 1.297 1.225 1,785,854
1995 1.002 1.297 747,779
1994(5) 1.000 1.002 254,316
Calvert Social Mid Cap Growth
1998 $ 1.639 $ 2.100 2,283,661
1997 1.343 1.639 1,070,537
1996 1.266 1.343 940,440
1995(4) 1.000 1.266 71,033
Fidelity VIP Equity-Income
1998 $ 1.750 $ 1.925 9,537,700
1997 1.380 1.750 6,959,675
1996 1.223 1.380 4,243,458
1995(4) 1.000 1.223 762,132
Fidelity VIP Growth
1998 $ 2.080 $ 2.864 32,435,920
1997 1.705 2.080 26,493.376
1996 1.505 1.705 22,560,070
1995 1.126 1.505 14,966,606
1994 1.138 1.126 9,247,290
1993(6) 1.000 1.138 2,051.512
Fidelity VIP High Income
1998 $ 1.681 $ 1.588 11,188,244
1997 1.447 1.681 8,053,332
1996 1.285 1.447 6,679,227
1995 1.078 1.285 4,719,928
1994 1.108 1.078 3,013,462
1993(6) 1.000 1.108 598,051
(1) For the period from April 12, 1990 through December 31, 1990.
(2) For the period from May 1, 1997 through December 31, 1997.
(3) For the period from May 1, 1998 through December 31, 1998.
(4) For the period from April 28, 1995 through December 31, 1995.
(5) For the period from May 1, 1994 through December 31, 1994.
(6) For the period from May 1, 1993 through December 31, 1993.
<PAGE>
14
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<S> <C> <C> <C>
Accumulation Unit Value Accumulation Unit Value Number of Accumulation Units
Investment Account At Beginning of Period At End of Period Oustanding At End of Period
- ------------------ ----------------------- ----------------------- ----------------------------
Fidelity VIP Overseas
1998 $ 1.524 $ 1.697 10,094,671
1997 1.383 1.524 9,308,550
1996 1.237 1.383 8,245,189
1995 1.142 1.237 6,385,519
1994 1.136 1.142 4,748,284
1993(6) 1.100 1.136 872,248
Fidelity VIP II Asset Manager
1998 $ 1.631 $ 1.852 37,980,070
1997 1.368 1.631 30,831,927
1996 1.209 1.368 26,868,078
1995 1.047 1.209 22,931,562
1994 1.129 1.047 19,540,376
1993(6) 1.000 1.129 5,859,606
Fidelity VIP II Contrafund
1998 $ 1.859 $ 2.385 13,160,702
1997 1.516 1.859 8,965,623
1996 1.266 1.516 4,656,175
1995(4) 1.000 1.266 691,978
Fidelity VIP II Index 500
1998 $ 2.285 $ 2.896 30,592,950
1997 1.744 1.285 18,374,733
1996 1.437 1.744 9,841,199
1995 1.061 1.437 3,976,682
1994 1.068 1.061 1,966,816
1993(6) 1.000 1.068 507,196
Janus Aspen Series Flexible Income
1998 $ 1.184 $ 1.170 2,204,070
1997(2) 0.996 1.184 289,354
Janus Aspen Series Worldwide Growth
1998 $ 1.142 $ 1.451 8,357,911
1997(2) 1.009 1.142 2,126,372
PBHG Growth II
1998 $ 1.066 $ 1.138 412,873
1997(2) 1.000 1.066 58,505
PBHG Technology & Communications
1998 $ 1.032 $ 1.347 214,047
1997(2) 1.000 1.032 101,585
SAFECO RST Equity
1998 $ 1.161 $ 1.431 2,034,751
1997(2) 0.983 1.161 186,090
SAFECO RST Growth
1998 $ 1.408 $ 1.412 6,688,427
1997(2) 0.934 1.408 1,069,115
T. Rowe Price Equity Income
1998 $ 1.848 $ 1.990 19,081,441
1997 1.452 1.848 11,646,682
1996 1.230 1.452 4,259,154
1995(4) 1.000 1.230 388,732
<FN>
(1) For the period from April 12, 1990 through December 31, 1990.
(2) For the period from May 1, 1997 through December 31, 1997.
(3) For the period from May 1, 1998 through December 31, 1998.
(4) For the period from April 28, 1995 through December 31, 1995.
(5) For the period from May 1, 1994 through December 31, 1994.
(6) For the period from May 1, 1993 through December 31, 1993.
Note: The Fidelity High Income, Growth, Overseas, Asset Manager, and Index 500
Investment Accounts first became available on May 1, 1993. The American Century
VP Capital Appreciation Investment Account (then known as TCI Growth) first
became available on May 1, 1994. The Alger American Growth, Calvert Social Mid
Cap Growth (then known as Calvert Capital Accumulation), Fidelity Contrafund and
Equity-Income, and the T. Rowe Price Equity Income Investment Accounts first
became available on April 28, 1995. The AUL American Tactical Asset Allocation,
the Janus Aspen Series Flexible Income, Janus Aspen Series Worldwide Growth,
PBHG Growth II, PBHG Technology & Communications, SAFECO RST Equity and SAFECO
RST Growth Investment Accounts first became available on May 1, 1997. The
Conservative, Moderate, and Aggressive Investor Portfolios first became
available on May 1, 1998. Therefore, for these portfolios, there is no
information available for any period prior to these dates, respectively.
</FN>
</TABLE>
<PAGE>
15
PERFORMANCE OF THE INVESTMENT ACCOUNTS
The following tables present the return on investment for each of the
Investment Accounts. The return on investment figures in the first and second
tables (including charges) represents a change in an Accumulation Unit allocated
to an Investment Account and takes into account Variable Account charges such as
the mortality and expense risk charge, withdrawal charges, and a pro-rata
portion of the administrative charge. The return on investment figures in the
third table (excluding charges) include the mortality and expense risk charge,
but do not reflect the deduction of withdrawal charges or a pro rata portion of
the administrative charge. For the periods that a particular Investment Account
has been in operation (see the Inception Date of Investment Account column), the
figures represent actual performance. Therefore, the performance figures for the
one year and three year periods ending 12/31/98 and the Lessor of 5 Years or
Since Inception represent actual performance. For the periods that precede the
creation of the Investment Account, if the mutual fund portfolio was in
existence (see Inception Date of Mutual Fund column), results represent
hypothetical returns that the Investment Accounts that invest in the
corresponding Mutual Fund Portfolios would have achieved had they invested in
such Portfolios for the periods indicated. Therefore, the performance figures
for the 5 year period ending 12/31/98, the Lessor of 10 Years or Since
Inception, and the Cumulative Returns for the Lessor of 10 Years or Since
Inception may be hypothetical, or they may represent actual performance, based
on the inception date of a particular Investment Account and the mutual fund
portfolio.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Performance (including charges) for Single Contribution Contracts
ACTUAL PERFORMANCE | ACTUAL/HYPOTHETICAL PERFORMANCE
|
Average | Average
Average Average Annual | Average Annual Cumulative
Annual Annual Return on | Annual Return on Return on
Return on Return on Investment| Return on Investment Investment
Inception Inception Investment Investment for lesser| Investment for lesser for lesser
Date of Date of for Year for 3 Years of 5 Years| for 5 Years of 10 Years of 10 Years
Investment Account Mutual Investment ending ending or Since | Ending or Since or Since
Investment Account Fund Account 12/31/98 12/31/98 Inception | 12/31/98 Inception Inception
- ------------------ --------- ---------- ---------- ----------- ----------| ----------- ----------- -------------
|
AUL American Equity 4/10/90 4/12/90 -0.37% 15.29% 13.34% | 13.34% 12.79% 185.61%
AUL American Bond 4/10/90 4/12/90 0.95% 3.50% 4.63% | 4.63% 7.28% 84.55%
AUL American Managed 4/10/90 4/12/90 0.59% 10.65% 9.74% | 9.74% 10.28% 134.72%
AUL American Money |
Market 4/10/90 4/12/90 -2.57% 2.17% 2.97% | 2.97% 3.24% 32.05%
AUL American Tactical |
Asset Allocation 8/01/95 5/01/97 -0.44% 9.82% 8.21% | n.a. 10.74% 41.74%
AUL American Con- |
servative Investor 3/31/98 5/01/98 n.a. n.a. n.a. | n.a. n.a. -1.60%
AUL American |
Moderate Investor 3/31/98 5/01/98 n.a. n.a. n.a. | n.a. n.a. -2.28%
AUL American |
Aggressive Investor 3/31/98 5/01/98 n.a. n.a. n.a. | n.a. n.a. -2.51%
Alger American Growth 1/09/89 4/28/95 37.46% 24.96% 26.49% | 21.87% 20.51% 543.41%
American Century VP |
Capital Appreciation 11/20/87 5/01/94 -9.17% -5.74% 2.04% | 1.56% 7.36% 103.43%
Calvert Social |
Mid Cap Growth 7/16/91 4/28/95 20.48% 16.79% 20.80% | 14.80% 13.60% 158.88%
Fidelity VIP |
Equity-Income 10/09/86 4/28/95 3.62% 14.75% 17.82% | 16.82% 14.19% 276.95%
Fidelity VIP Growth 10/09/86 5/01/93 29.49% 22.25% 19.79% | 19.79% 17.93% 420.29%
Fidelity VIP |
High Income 9/19/85 5/01/93 -11.19% 5.88% 7.03% | 7.03% 9.70% 152.39%
Fidelity VIP |
Overseas 1/28/87 5/01/93 4.67% 9.60% 7.93% | 7.93% 8.72% 130.72%
Fidelity VIP II |
Asset Manager 9/06/89 5/01/93 6.80% 13.73% 9.96% | 9.96% 11.57% 177.32%
Fidelity VIP II |
Contrafund 1/03/95 4/28/95 20.66% 21.87% 24.07% | n.a. 26.03% 152.13%
Fidelity VIP II |
Index 500 8/27/92 5/01/93 19.13% 24.59% 21.58% | 21.58% 19.63% 211.91%
Janus Flexible |
Income 9/13/93 5/01/97 1.54% n.a. 6.89% | 8.52% 8.28% 52.44%
Janus Worldwide |
Growth 9/13/93 5/01/97 19.53% n.a. 21.03% | 19.34% 22.23% 189.76%
PBHG Growth II 5/01/97 5/01/97 0.43% n.a. 4.84% | n.a. 4.84% 8.20%
PBHG Technology |
& Communications 5/01/97 5/01/97 22.72% n.a. 15.99% | n.a. 15.99% 28.05%
SAFECO RST Equity 11/06/86 5/01/97 15.94% n.a. 21.27% | 20.22% 17.67% 408.93%
SAFECO RST Growth 1/07/93 5/01/97 -5.71% n.a. 25.53% | 23.03% 25.14% 282.60%
T. Rowe Price |
Equity Income 3/31/94 4/28/95 1.25% 15.82% 18.94% | n.a. 18.48% 123.78%
* For the periods that a particular Investment Account has been in existence
(see Inception Date of Investment Account column) the performance is actual
performance and not hypothetical in nature.
<PAGE>
16
PERFORMANCE OF THE INVESTMENT ACCOUNTS (CONTINUED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Performance (including charges) for Recurring Contribution Contracts
ACTUAL PERFORMANCE | ACTUAL/HYPOTHETICAL PERFORMANCE
|
|
Average | Average
Average Average Annual | Average Annual Cumulative
Annual Annual Return on | Annual Return on Return on
Return on Return on Investment| Return on Investment Investment
Inception Inception Investment Investment for lesser| Investment for lesser for lesser
Date of Date of for Year for 3 Years of 5 Years| for 5 Years of 10 Years of 10 Years
Investment Account Mutual Investment ending ending or Since | Ending or Since or Since
Investment Account Fund Account 12/31/98 12/31/98 Inception | 12/31/98 Inception Inception
- ------------------ --------- ---------- ---------- ----------- ----------| ----------- ----------- -------------
|
AUL American Equity 4/10/90 4/12/90 -2.78% 13.33% 11.59% | 11.59% 11.92% 166.96%
AUL American Bond 4/10/90 4/12/90 -1.49% 1.73% 3.00% | 3.00% 6.46% 72.60%
AUL American Managed 4/10/90 4/12/90 -1.84% 8.76% 8.04% | 8.04% 9.43% 119.40%
AUL American Money |
Market 4/10/90 4/12/90 -4.93% 0.43% 1.37% | 1.37% 2.45% 23.50%
AUL American Tactical |
Asset Allocation 8/01/95 5/01/97 -2.85% 7.95% 5.81% | n.a. 8.73% 33.13%
AUL American Con- |
servative Investor 3/31/98 5/01/98 n.a. n.a. n.a. | n.a. n.a. -3.91%
AUL American |
Moderate Investor 3/31/98 5/01/98 n.a. n.a. n.a. | n.a. n.a. -4.57%
AUL American |
Aggressive Investor 3/31/98 5/01/98 n.a. n.a. n.a. | n.a. n.a. -4.80%
Alger American Growth 1/09/89 4/28/95 34.13% 22.84% 24.30% | 19.98% 19.66% 499.53%
American Century VP |
Capital Appreciation 11/20/87 5/01/94 -11.37% -7.35% 0.36% | -0.02% 6.60% 89.48%
Calvert Social |
Mid Cap Growth 7/16/91 4/28/95 17.56% 14.80% 18.70% | 13.02% 12.64% 143.00%
Fidelity VIP |
Equity-Income 10/09/86 4/28/95 1.12% 12.80% 15.77% | 15.01% 13.39% 251.36%
Fidelity VIP Growth 10/09/86 5/01/93 26.36% 20.16% 17.93% | 17.93% 17.10% 384.81%
Fidelity VIP |
High Income 9/19/85 5/01/93 -13.34% 4.07% 5.37% | 5.37% 8.93% 135.22%
Fidelity VIP |
Overseas 1/28/87 5/01/93 2.13% 7.74% 6.25% | 6.25% 7.95% 114.90%
Fidelity VIP II |
Asset Manager 9/06/89 5/01/93 4.22% 11.79% 8.25% | 8.25% 10.76% 159.12%
Fidelity VIP II |
Contrafund 1/03/95 4/28/95 17.74% 19.79% 21.92% | n.a. 24.00% 136.28%
Fidelity VIP II |
Index 500 8/27/92 5/01/93 16.24% 22.46% 19.69% | 19.69% 18.50% 193.68%
Janus Flexible |
Income 9/13/93 5/01/97 -0.92% n.a. 4.53% | 6.84% 7.33% 45.49%
Janus Worldwide |
Growth 9/13/93 5/01/97 16.63% n.a. 18.35% | 17.49% 21.17% 176.69%
PBHG Growth II 5/01/97 5/01/97 -2.00% n.a. 2.52% | n.a. 2.52% 4.24%
PBHG Technology |
& Communications 5/01/97 5/01/97 19.75% n.a. 13.42% | n.a. 13.42% 23.35%
SAFECO RST Equity 11/06/86 5/01/97 13.13% n.a. 18.58% | 18.36% 16.84% 374.15%
SAFECO RST Growth 1/07/93 5/01/97 -7.99% n.a. 22.75% | 21.12% 24.12% 264.32%
T. Rowe Price |
Equity Income 3/31/94 4/28/95 -1.20% 13.85% 16.88% | n.a. 16.56% 107.07%
Performance (excluding charges)for All Contracts
ACTUAL PERFORMANCE | ACTUAL/HYPOTHETICAL PERFORMANCE
|
Average | Average
Average Average Annual | Average Annual Cumulative
Annual Annual Return on | Annual Return on Return on
Return on Return on Investment| Return on Investment Investment
Inception Inception Investment Investment for lesser| Investment for lesser for lesser
Date of Date of for Year for 3 Years of 5 Years| for 5 Years of 10 Years of 10 Years
Investment Account Mutual Investment ending ending or Since | Ending or Since or Since
Investment Account Fund Account 12/31/98 12/31/98 Inception | 12/31/98 Inception Inception
- ------------------ --------- ---------- ---------- ----------- ----------| ----------- ----------- -------------
|
AUL American Equity 4/10/90 4/12/90 5.99% 16.87% 13.80% | 13.80% 12.79% 185.61%
AUL American Bond 4/10/90 4/12/90 7.40% 4.92% 5.05% | 5.05% 7.28% 84.55%
AUL American Managed 4/10/90 4/12/90 7.01% 12.17% 10.19% | 10.19% 10.28% 134.72%
AUL American Money |
Market 4/10/90 4/12/90 3.64% 3.57% 3.38% | 3.38% 3.24% 32.05%
AUL American Tactical |
Asset Allocation 8/01/95 5/01/97 5.92% 11.33% 11.59% | n.a. 11.73% 46.12%
AUL American Con- |
servative Investor 3/31/98 5/01/98 n.a. n.a. n.a. | n.a. n.a. 4.68%
AUL American |
Moderate Investor 3/31/98 5/01/98 n.a. n.a. n.a. | n.a. n.a. 3.96%
AUL American |
Aggressive Investor 3/31/98 5/01/98 n.a. n.a. n.a. | n.a. n.a. 3.71%
Alger American Growth 1/09/89 4/28/95 46.23% 26.68% 27.55% | 22.36% 20.51% 543.41%
American Century VP |
Capital Appreciation 11/20/87 5/01/94 -3.37% -4.45% 2.48% | 1.97% 7.36% 103.43%
Calvert Social |
Mid Cap Growth 7/16/91 4/28/95 28.17% 18.39% 21.81% | 15.27% 13.60% 158.88%
Fidelity VIP |
Equity-Income 10/09/86 4/28/95 10.24% 16.33% 18.80% | 17.30% 14.19% 276.95%
Fidelity VIP Growth 10/09/86 5/01/93 37.76% 23.92% 20.28% | 20.28% 17.93% 420.29%
Fidelity VIP |
High Income 9/19/85 5/01/93 -5.52% 7.33% 7.46% | 7.46% 9.70% 152.39%
Fidelity VIP |
Overseas 1/28/87 5/01/93 11.35% 11.11% 8.36% | 8.36% 8.72% 130.72%
Fidelity VIP II |
Asset Manager 9/06/89 5/01/93 13.62% 15.29% 10.40% | 10.40% 11.57% 177.32%
Fidelity VIP II |
Contrafund 1/03/95 4/28/95 28.36% 23.54% 25.11% | n.a. 27.00% 159.98%
Fidelity VIP II |
Index 500 8/27/92 5/01/93 26.73% 26.29% 22.07% | 22.07% 19.63% 211.91%
Janus Flexible |
Income 9/13/93 5/01/97 8.02% n.a. 10.24% | 8.96% 8.49% 54.02%
Janus Worldwide |
Growth 9/13/93 5/01/97 27.16% n.a. 24.82% | 19.82% 22.47% 192.79%
PBHG Growth II 5/01/97 5/01/97 6.84% n.a. 8.12% | n.a. 8.12% 13.90%
PBHG Technology |
& Communications 5/01/97 5/01/97 30.56% n.a. 19.61% | n.a. 19.61% 34.78%
SAFECO RST Equity 11/06/86 5/01/97 23.34% n.a. 25.06% | 20.71% 17.67% 408.93%
SAFECO RST Growth 1/07/93 5/01/97 0.31% n.a. 29.45% | 23.53% 25.35% 286.46%
T. Rowe Price |
Equity Income 3/31/94 4/28/95 7.71% 17.41% 19.94% | n.a. 18.98% 128.30%
* For the periods that a particular Investment Account has been in existence
(see Inception Date of Investment Account column) the performance is actual
performance and not hypothetical in nature.
</TABLE>
<PAGE>
17
INFORMATION ABOUT AUL, THE VARIABLE ACCOUNT, AND THE FUNDS
AMERICAN UNITED LIFE INSURANCE COMPANY(R)
AUL is a legal reserve mutual life insurance company existing under the
laws of the State of Indiana. It was originally incorporated as a fraternal
society on November 7, 1877 under the laws of the Federal government, and
reincorporated under the laws of the State of Indiana in 1933. It is qualified
to do business in 48 states and the District of Columbia. As a mutual company,
it is owned by and operated exclusively for the benefit of its policyowners. AUL
has its principal business office located at One American Square, Indianapolis,
Indiana 46282.
AUL conducts a conventional life insurance, reinsurance, and annuity
business. At December 31, 1998, AUL had admitted assets of $9,224,084,608 and a
policyowners' surplus of $734,099,854.
The principal underwriter for the Contracts is AUL, which is registered
with the SEC as a broker-dealer.
VARIABLE ACCOUNT
AUL American Unit Trust was established by AUL on August 17, 1989, under
procedures established under Indiana law. The income, gains, or losses of the
Variable Account are credited to or charged against the assets of the Variable
Account without regard to other income, gains, or losses of AUL. AUL owns the
assets in the Variable Account and is required to maintain sufficient assets in
the Variable Account to meet all Variable Account obligations under the
Contracts. AUL may transfer to its General Account assets that exceed
anticipated obligations of the Variable Account. All obligations arising under
the Contracts are general corporate obligations of AUL. AUL may invest its own
assets in the Variable Account, and may accumulate in the Variable Account
proceeds from Contract charges and investment results applicable to those
assets.
The Variable Account is currently divided into sub-accounts referred to as
Investment Accounts. Each Investment Account invests exclusively in shares of a
specific mutual fund or in a specific Portfolio of one of the Funds.
Contributions may be allocated to one or more Investment Accounts available
under a Contract. Not all of the Investment Accounts may be available under a
particular Contract and some of the Investment Accounts are not available for
certain types of Contracts. AUL may in the future establish additional
Investment Accounts of the Variable Account, which may invest in other
Portfolios of the Funds or in other securities, mutual funds, or investment
vehicles.
The Variable Account is registered with the SEC as a unit investment trust
under the Investment Company Act of 1940 (the "1940 Act"). Registration with the
SEC does not involve supervision by the SEC of the administration or investment
practices of the Variable Account or of AUL.
THE FUNDS
Each of the Funds is a diversified, open-end management investment company
commonly referred to as a mutual fund. Each of the Funds is registered with the
SEC under the 1940 Act. Such registration does not involve supervision by the
SEC of the investments or investment policies or practices of the Fund. AUL
American Series Fund, Inc. currently has eight separate investment portfolios
that it offers to the Variable Account, namely: the Equity, Bond, Managed, Money
Market, Tactical Asset Allocation, Conservative Investor, Moderate Investor, and
Aggressive Investor. The Alger American Fund offers the Alger American Growth
Portfolio. American Century Variable Portfolios, Inc. offers the VP Capital
Appreciation Portfolio. Calvert Variable Series offers the Calvert Social Mid
Cap Growth Portfolio. The Fidelity Variable Insurance Products Fund offers the
Equity-Income, Growth, High Income, and Overseas Portfolios. The Fidelity
Variable Insurance Products Fund II offers the Asset Manager, Contrafund, and
Index 500 Portfolios. The Janus Aspen Series offers the Worldwide Growth and
Flexible Income Portfolios. The PBHG Insurance Series Fund, Inc. offers the PBHG
Growth II and the PBHG Technology & Communications Portfolios. The SAFECO
Resource Series Trust offers the Equity and Growth Portfolios. T. Rowe Price
Equity Series, Inc. offers the Equity Income Portfolio. Each Portfolio has its
own investment objective or objectives and policies. The shares of each mutual
fund Portfolio are purchased by AUL for the corresponding Investment Account at
the Portfolio's net asset value per share, i.e., without any sales load. All
dividends and capital gain distributions received from a Portfolio are
automatically reinvested in such Portfolio at net asset value, unless AUL
instructs otherwise. AUL has entered into agreements with the
Distributors/Advisers of Alger Management, Inc., American Century Variable
Portfolios, Inc., Calvert Variable Series, Fidelity Management & Research
Company, Janus Capital Corporation, Pilgrim Baxter & Associates, SAFECO Asset
Management Company, and T. Rowe Price Equity Series, Inc., under which AUL has
agreed to render certain services and to provide information about these funds
to its Contractowners and/or Participants who invest in these Funds. Under these
agreements and for providing these services, AUL receives compensation from the
Distributor/Adviser of these funds, ranging from zero basis points until a
certain level of fund assets have been purchased to twenty-five basis points on
the net average aggregate deposits made.
AUL serves as investment adviser to each Portfolio of the AUL American
Series Fund, Inc. Fred Alger & Company acts as investment adviser to the Alger
American Fund. American Century Investment Management, Inc. acts as investment
adviser to American Century Variable Portfolios, Inc. Calvert Asset Management
Corporation acts as investment adviser to the Calvert Variable Series. Fidelity
Management & Research Company acts as investment adviser to the Fidelity
Variable Insurance Products Fund and to the Fidelity Variable Insurance Products
Fund II. Janus Capital Corporation acts as investment adviser to the Janus Aspen
Series. Pilgrim Baxter & Associates, Inc. acts as investment adviser to PBHG
Insurance Series Fund, Inc.
<PAGE>
18
T. Rowe Price & Associates, Inc. acts as investment adviser to T. Rowe Price
Equity Series, Inc.
A summary of the investment objective or objectives of each Portfolio of
each of the Funds is provided below. There can be no assurance that any
Portfolio will achieve its objective or objectives. More detailed information is
contained in the Prospectuses for the Funds, including information on the risks
associated with the investments and investment techniques of each Portfolio.
AUL AMERICAN SERIES FUND, INC.
AUL AMERICAN EQUITY PORTFOLIO
The primary investment objective of the AUL American Equity Portfolio is
long-term capital appreciation. The Portfolio seeks current investment income as
a secondary objective. The Portfolio attempts to achieve these objectives by
investing primarily in equity securities selected on the basis of fundamental
investment research for their long-term growth prospects.
AUL AMERICAN BOND PORTFOLIO
The primary investment objective of the AUL American Bond Portfolio is to
provide a high level of income consistent with prudent investment risk. As a
secondary objective, the Portfolio seeks to provide capital appreciation to the
extent consistent with the primary objective. The Portfolio attempts to achieve
these objectives by investing primarily in corporate bonds and other debt
securities.
AUL AMERICAN MANAGED PORTFOLIO
The investment objective of the AUL American Managed Portfolio is to
provide a high total return consistent with prudent investment risk. The
Portfolio attempts to achieve this objective through a fully managed investment
policy utilizing publicly traded common stock, debt securities (including
convertible debentures), and money market securities.
AUL AMERICAN MONEY MARKET PORTFOLIO
The investment objective of the AUL American Money Market Portfolio is to
provide a high level of current income while preserving assets and maintaining
liquidity and investment quality. The Portfolio attempts to achieve this
objective by investing in short-term money market instruments that are of the
highest quality.
AUL AMERICAN TACTICAL ASSET ALLOCATION PORTFOLIO
The investment objective of the Tactical Asset Allocation Portfolio is
preservation of capital and competitive investment returns. The Portfolio seeks
to achieve its objective by investing primarily in stocks, United States
Treasury bonds, notes and bills, and money market funds.
AUL AMERICAN CONSERVATIVE INVESTOR PORTFOLIO
The investment objective of the AUL American Conservative Investor
Portfolio is high current income, with opportunities for capital appreciation.
The Portfolio seeks this objective by investing in a strategically allocated
portfolio consisting primarily of bond and money market instruments with the
remainder of the Portfolio invested in equities. The Portfolio's emphasis on
bonds and money market securities is intended to help provide gains through
income accumulation and a measure of principal protection in the event that the
stock market is in decline.
AUL AMERICAN MODERATE INVESTOR PORTFOLIO
The investment objective of the AUL American Moderate Investor Portfolio is
a blend of capital appreciation and income. The Portfolio seeks this objective
by investing in a strategically allocated portfolio of equities, bonds and money
market instruments with a weighting that normally is slightly heavier in
equities. The asset mix for this Portfolio is intended to provide long-term
growth and some regular income, while helping to moderate losses in the event of
stock market declines.
AUL AMERICAN AGGRESSIVE INVESTOR PORTFOLIO
The investment objective of the AUL American Aggressive Investor Portfolio
is long-term capital appreciation. The Portfolio seeks this objective by
investing in a strategically allocated portfolio consisting primarily of
equities. Current income is not a primary consideration. The asset mix for this
Portfolio is intended to provide long-term growth, together with a small amount
of income to help cushion the volatility of the equity securities.
FOR ADDITIONAL INFORMATION CONCERNING AUL AMERICAN SERIES FUND, INC. AND ITS
PORTFOLIOS, PLEASE SEE THE AUL AMERICAN SERIES FUND, INC. PROSPECTUS, WHICH
SHOULD BE READ CAREFULLY BEFORE INVESTING.
ALGER AMERICAN FUND
ALGER AMERICAN GROWTH PORTFOLIO
The Alger American Growth Portfolio is a growth portfolio that seeks to
obtain long-term capital appreciation by investing in a diversified, actively
managed portfolio of equity securities. Except during temporary defensive
periods, the Portfolio invests at least 65% of its total assets in equity
securities of companies that, at the time of purchase, have a total market
capitalization of one billion dollars or greater.
FOR ADDITIONAL INFORMATION CONCERNING THE ALGER AMERICAN FUND AND ITS PORTFOLIO,
PLEASE SEE THE ALGER AMERICAN FUND PROSPECTUS, WHICH SHOULD BE READ CAREFULLY
BEFORE INVESTING.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
AMERICAN CENTURY VP CAPITAL APPRECIATION
The American Century VP Capital Appreciation Portfolio seeks capital growth
by investing primarily in common stocks (including securities convertible into
common stocks and other equity equivalents) and other securities that meet
<PAGE>
19
certain fundamental and technical standards of selection and have, in the
opinion of the Fund's investment manager, better than average potential for
appreciation. The Fund tries to stay fully invested in such securities,
regardless of the movement of prices generally. This Portfolio is not currently
available to AUL Participants under 457 Contracts.
FOR ADDITIONAL INFORMATION CONCERNING AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
AND ITS PORTFOLIO, PLEASE SEE THE AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING.
CALVERT VARIABLE SERIES
CALVERT SOCIAL MID CAP GROWTH PORTFOLIO
The Calvert Social Mid Cap Growth Portfolio is a socially responsible
growth Portfolio that seeks long-term capital appreciation by investing
primarily in the stock of medium sized companies. To the extent possible,
investments are made in enterprises that make a significant contribution to
society through their products and services and through the way they do
business.
FOR ADDITIONAL INFORMATION CONCERNING CALVERT VARIABLE SERIES AND THE CALVERT
SOCIAL MID CAP GROWTH PORTFOLIO, PLEASE SEE THE CALVERT VARIABLE SERIES
PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
EQUITY-INCOME PORTFOLIO
The VIP Equity-Income Portfolio seeks reasonable income. The fund will also
consider the potential for capital appreciation. The fund seeks a yield which
exceeds the composite yield on the securities comprising the S&P 500. The
Adviser normally invests at least 65% of the fund's total assets in
income-producing equity securities. The Adviser may also invest the fund's
assets in other types of equity securities and debt securities, including
lower-quality debt securities. The Adviser may also invest in securities of
foreign issuers in addition to securities of domestic issuers.
GROWTH PORTFOLIO
The VIP Growth Portfolio seeks capital appreciation. The Adviser normally
invests the fund's assets primarily in common stocks. The Adviser invests the
fund's assets in companies that it believes have above-average growth potential.
Growth may be measured by factors such as earnings or revenue. The Adviser may
invest the fund's assets in securities of foreign issuers in addition to
securities of domestic issuers.
HIGH INCOME PORTFOLIO
The VIP High Income Portfolio seeks to obtain a high level of current
income while also considering growth of capital. The Adviser normally invests at
least 65% of the fund's total assets in income-producing debt securities,
preferred stocks and convertible securities, with an emphasis on lower-quality
debt securities. Many lower-quality debt securities are subject to legal or
contractual restrictions limiting the Adviser's ability to resell the securities
to the general public. The Adviser may also invest the fund's assets in
non-income producing securities, including defaulted securities and common
stocks. The Adviser intends to limit common stocks to 10% of the fund's total
assets. The Adviser may invest in companies whose financial condition is
troubled or uncertain and that may be involved in bankruptcy proceedings,
reorganization or financial restructurings.
OVERSEAS PORTFOLIO
The VIP Overseas Portfolio seeks long-term growth of capital. The Adviser
normally invests at least 65% of the fund's total assets in foreign securities.
The Adviser normally invests the fund's assets primarily in stocks. The adviser
normally diversifies the fund's investments across different countries and
regions. In allocating the fund's investments across countries and regions, the
Adviser will consider the size of the market in each country and region relative
to the size of the international market as a whole.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
ASSET MANAGER PORTFOLIO
The VIP II Asset Manager Portfolio seeks high total return with reduced
risk over the long-term by allocating its assets among domestic and foreign
stocks, bonds and short-term instruments. The Adviser allocates the fund's
assets among the following classes, or types, of investments. The stock class
includes equity securities of all types. The bond class includes all varieties
of fixed-income securities, including lower-quality debt securities, maturing in
more than one year. The short-term/money market class includes all types of
short-term and money market instruments.
CONTRAFUND
The VIP II Contrafund Portfolio seeks long-term capital appreciation. The
Adviser normally invests the fund's assets primarily in common stocks. The
Adviser invests the fund's assets in securities of companies whose value the
Adviser believes is not fully recognized by the public. The types of companies
in which the fund may invest include companies experiencing positive fundamental
change such as a new management team or product launch, a significant
cost-cutting initiative, a merger or acquisition, or a reduction in industry
capacity that should lead to improved pricing; companies whose earnings
potential has increased or is expected to increase more than generally
perceived; companies that have enjoyed recent market popularity but which appear
to have temporarily fallen out of favor for reasons that are considered
non-recurring or short-term; and companies that are undervalued in relation to
securities of other companies in the same industry.
INDEX 500 PORTFOLIO
The VIP II Index 500 Portfolio seeks investment results
<PAGE>
20
that correspond to the total return of common stocks publicly traded in the
United States, as represented by the S&P 500. The Adviser's principal investment
strategies include investing at least 80% of assets in common stocks included in
the S&P 500 and lending securities to earn income for the fund.
FOR ADDITIONAL INFORMATION CONCERNING FIDELITY'S VARIABLE INSURANCE PRODUCTS
FUND AND FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II AND THEIR PORTFOLIOS,
PLEASE SEE THE FIDELITY VARIABLE INSURANCE PRODUCTS FUND AND FIDELITY VARIABLE
INSURANCE PRODUCTS FUND II PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE
INVESTING.
JANUS ASPEN SERIES
FLEXIBLE INCOME PORTFOLIO
The Flexible Income Portfolio is a diversified portfolio that seeks to
maximize total return from a combination of income and capital appreciation by
investing primarily in income-producing securities. This Portfolio may have
substantial holdings of lower rated debt securities or "junk" bonds.
WORLDWIDE GROWTH PORTFOLIO
The Worldwide Growth Portfolio is a diversified portfolio that seeks
long-term growth of capital by investing primarily in common stocks of foreign
and domestic issuers.
FOR ADDITIONAL INFORMATION CONCERNING JANUS ASPEN SERIES FUND AND ITS PORTFOLIO,
PLEASE SEE THE JANUS ASPEN SERIES FUND PROSPECTUS, WHICH SHOULD BE READ
CAREFULLY BEFORE INVESTING
PBHG INSURANCE SERIES FUND, INC.
PBHG GROWTH II PORTFOLIO
The investment objective of the PBHG Growth II Portfolio is capital
appreciation. The Portfolio will normally invest in growth securities of small
and medium sized companies with market capitalizations or annual revenues
between $500 million and $10 billion. The growth securities in the Portfolio are
primarily common stocks that the Adviser believes have strong earnings growth
and capital appreciation potential. The PBHG Growth II Portfolio is managed by
Jeffrey A. Wrona, who is responsible for managing other mid-cap institutional
accounts and the PBHG Technology & Communications Fund of The PBHG Funds, Inc..
PBHG TECHNOLOGY & COMMUNICATIONS PORTFOLIO
The primary objective of the PBHG Technology & Communications Portfolio is
long-term growth of capital. Current income is incidental to the Portfolio's
objective. The Portfolio will normally invest in common stocks of companies
which (1) rely extensively on technology or communications in their product
development or operations; (2) are experiencing exceptional growth in sales and
earnings driven by technology or communications related products and services;
and (3) are expected to benefit from technological advances and improvement. The
Portfolio is co-managed by Jeffrey A. Wrona, CFA, and Michael Hahn, CFA.
FOR MORE COMPLETE INFORMATION, INCLUDING INFORMATION ON CHARGES AND EXPENSES,
CONCERNING THE PBHG INSURANCE SERIES FUND, INC. PLEASE CALL (800) 433-0051 OR
WRITE THE PBHG INSURANCE SERIES FUND, INC. FOR A PROSPECTUS, WHICH SHOULD BE
READ CAREFULLY BEFORE INVESTING.
SAFECO RESOURCE SERIES TRUST
EQUITY PORTFOLIO
The Equity Portfolio has as its investment objective to seek long-term
capital and reasonable current income. The Equity Portfolio ordinarily invests
principally in common stocks selected for long-term appreciation and/or dividend
potential.
GROWTH PORTFOLIO
The Growth Portfolio has as its investment objective to seek growth of
capital and the increased income that ordinarily follows from such growth. The
Growth Portfolio ordinarily invests a preponderance of its assets in common
stocks selected for potential appreciation.
FOR ADDITIONAL INFORMATION CONCERNING SAFECO RESOURCE SERIES TRUST AND ITS
PORTFOLIOS, PLEASE SEE THE SAFECO RESOURCE SERIES TRUST PROSPECTUS, WHICH SHOULD
BE READ CAREFULLY BEFORE INVESTING.
T. ROWE PRICE EQUITY SERIES, INC.
T. ROWE PRICE EQUITY INCOME PORTFOLIO
The T. Rowe Price Equity Income Portfolio seeks to provide substantial
dividend income as well as long-term capital appreciation through investments in
common stocks of established companies.
FOR ADDITIONAL INFORMATION CONCERNING T. ROWE PRICE EQUITY SERIES, INC. AND ITS
PORTFOLIO, PLEASE SEE THE T. ROWE PRICE EQUITY SERIES, INC. PROSPECTUS, WHICH
SHOULD BE READ CAREFULLY BEFORE INVESTING.
THERE IS NO ASSURANCE THAT THE STATED OBJECTIVES AND POLICIES OF ANY OF THE
FUNDS WILL BE ACHIEVED.
<PAGE>
21
THE CONTRACTS
GENERAL
The Contracts are offered for use in connection with retirement plans that
meet the requirements of Sections 401, 403(b), 408, or 457 of the Internal
Revenue Code. Certain Federal tax advantages are currently available to
retirement plans that qualify as (1) self-employed individuals' retirement plans
under Section 401, such as HR-10 Plans, (2) pension or profit-sharing plans
established by an Employer for the benefit of its employees under Section 401,
(3) annuity purchase plans sponsored by certain tax-exempt organizations or
public school organizations under Section 403(b), (4) individual retirement
accounts or annuities, including those established by an employer as a
simplified employee pension plan or SIMPLE IRA plan, under Section 408, or (5)
deferred compensation plans for employees established by a unit of a state or
local government or by a tax-exempt organization under Section 457. Some
Contracts may also be made available to plans that do not qualify for favorable
tax treatment, such as unfunded deferred compensation Plans for highly
compensated employees, which may be referred to as non-qualified 457 Plans.
A Contract is issued to the Owner. Generally, persons eligible to
participate in the Owner's Plan are eligible to become Participants under the
Contract. The Owner shall be responsible for determining persons who are
eligible to become Participants and for designating such persons to AUL. AUL
will issue to the Owner for delivery to each Participant (or may deliver
directly to each Participant) a Certificate that evidences the Participant's
participation in the Contract. For purposes of determining benefits under a
Contract, an account called a Participant's Account is established for each
Participant during the Accumulation Period.
The Owner of the Contract is generally responsible for providing all
communications and instructions concerning Participant Accounts to AUL. However,
in some instances a Participant may communicate directly with AUL. For example,
a Participant in a 403(b) Program may request a partial withdrawal directly from
AUL. While the Owner generally is responsible for transmitting contributions and
instructions for Participants, the Participant may be permitted or required to
make certain decisions and elections under the Contract, as specified by the
Owner in the Plan, trust, or other appropriate document. The pertinent Plan
document and, if applicable, the Employer's plan administrator should be
consulted with any questions on benefits under the Contract.
CONTRIBUTIONS AND CONTRACT VALUES DURING THE ACCUMULATION PERIOD
CONTRIBUTIONS UNDER THE CONTRACTS
Contributions under Recurring Contribution Contracts may be made by or on
behalf of a Participant at any time during the Participant's life and before the
Participant's Annuity Commencement Date. Contributions must be at least equal to
the minimum required contribution under the Plan. In Single Contribution
Contracts, the minimum contribution for each Participant is $25,000. AUL may
establish the minimum contributions permitted under a Contract, but any such
change shall apply only to Participant Accounts established on or after the
effective date of the change. AUL may, at its discretion, waive any minimum
required contribution.
Annual contributions under any of the Plans are subject to maximum limits
imposed by the Internal Revenue Code. See the Statement of Additional
Information for a discussion of these limits, or consult the pertinent Plan
document.
TEN-DAY FREE LOOK
Under 403(b) and 408 Contracts, the Owner has the right to return the
Contract for any reason within ten days of receipt. If a particular state
requires a longer free-look period, Owners in that state will be allowed the
longer statutory period in which to return the Contract. If this right is
exercised, the Contract will be considered void from its inception, and any
contributions will be fully refunded.
INITIAL AND SINGLE CONTRIBUTIONS
Initial contributions received for a Participant will be credited to the
Participant's Account no later than the end of the second Business Day after it
is received by AUL at its Home Office if it is preceded or accompanied by a
completed annuity enrollment form for the Participant that contains all the
information necessary for opening the Participant's Account. The enrollment form
will be provided by AUL. If AUL does not receive a complete enrollment form for
a Participant, AUL will notify the individual that AUL does not have the
necessary information to open the account. If the necessary information is not
provided to AUL within five Business Days after AUL first receives the initial
contribution, AUL will return the initial contribution to the contributing
party. However, if the Contract so allows, AUL may retain the contribution, if
consent is received, until the earliest of: the time the enrollment form for the
Participant is made complete, or 25 days after receipt at AUL's Home Office.
ALLOCATION OF CONTRIBUTIONS
Initial and subsequent contributions under the Contracts will be allocated
among the Investment Accounts of the Variable Account and the Fixed Account as
instructed by the Owner or Participant and as provided by the terms of the
Contract. The investment allocation of the initial contribution is to be
designated on an investment allocation form at the time the annuity enrollment
form is completed, and the completed allocation form should accompany the
enrollment form to open an account for a Participant. Depending on the type of
Contract, the enrollment application specifies that in the absence of an
investment allocation form or other instructions, initial and subsequent
contributions shall be allocated to the AUL American Money Market Investment
<PAGE>
22
Account or to a Suspense Account in AUL's General Account. A Participant's
Account Value that has been initially allocated to the Money Market Investment
Account or to a Suspense Account may be transferred to other available
investment options upon receipt by AUL at its Home Office of an investment
allocation form or other proper request. Under some Contracts, allocation to any
Investment Account or the Fixed Account must be made in increments of 10%, 25%,
or 33 1/3% of any contribution. Neither the Fixed Account nor all of the
Investment Accounts may be available under a particular Contract. In addition,
some of the Investment Accounts are not available for certain types of
Contracts.
Any change in allocation instructions will be effective upon receipt by AUL
at its Home Office and will continue in effect until subsequently changed.
Changes in the allocation of future contributions have no effect on amounts
already contributed on behalf of a Participant. Such amounts, however, may be
transferred among the Investment Accounts of the Variable Account or the Fixed
Account in the manner described in "Transfers of Account Value."
SUBSEQUENT CONTRIBUTIONS UNDER RECURRING CONTRIBUTION CONTRACTS
When forwarding contributions to AUL, the amount being contributed on
behalf of each Participant must be specified. The contributions shall be
allocated among the Investment Accounts of the Variable Account that are
available under a Contract and the Fixed Account (if available) as described
above in "Allocation of Contributions." Contributions (other than the initial
contribution for each Participant) are credited as of the end of the Valuation
Period in which they are received by AUL at its Home Office at such time as AUL
has received full payment for the contribution, the information needed to
establish the Participant's account, and proper instructions regarding the
application and allocation of the contributions among Participants.
TRANSFERS OF ACCOUNT VALUE
All or part of a Participant's Variable Account Value may be transferred
among the Investment Accounts of the Variable Account that are available under a
Contract or to the Fixed Account (if available under a Contract) at any time
during the Accumulation Period upon receipt of a proper written request by AUL
at its Home Office. Transfers may be made by telephone if a Telephone
Authorization Form has been properly completed and received by AUL at its Home
Office. The minimum transfer from any Investment Account or from the Fixed
Account is the lesser of $500 or a Participant's entire Account Value in that
Investment Account or in the Fixed Account as of the date the transfer request
is received by AUL at its Home Office, provided however, that amounts
transferred from the Fixed Account to an Investment Account during any given
Contract Year cannot exceed 20% of the Participant's Fixed Account Value as of
the beginning of that Contract Year. However, if a Participant's Fixed Account
Value at the beginning of the Contract Year is less than $2,500, the amount that
will be transferred for that Contract Year from the Fixed Account is the lesser
of $500 or the entire Fixed Account Value as of the date the transfer request is
received by AUL at its Home Office. If, after any transfer, the Participant's
remaining Account Value in an Investment Account or in the Fixed Account would
be less than $500, then such request will be treated as a request for a transfer
of the entire Account Value. Transfers may also be subject to other limitations
provided in a Plan document and in the Contract. The 20% restriction on
transfers during any given Contract Year from the Fixed Account to an Investment
Account shall not apply to Employer Sponsored 403(b) Programs, Employee Benefit
Plans, Employee Benefit Plans in a combined Contract for an Employee Benefit
Plan and Employer Sponsored 403(b) Plan, or 408 SEP or SIMPLE IRA Contracts if:
(1) the Owner (or Plan Sponsor) selects the Fixed Interest Account as an
Investment Option to Participants under the Contract; (2) the Owner (or Plan
Sponsor) does not select the AUL American Money Market Investment Account as an
available Investment Option to Participants under the Contract, and (3)
following a transfer from the Fixed Account to the Variable Account by a
Participant, a transfer back to the Fixed Account shall be allowed only after 90
days have elapsed since the previous transfer from the Fixed Account. Except as
noted previously, generally, there are no limitations on the number of transfers
between Investment Accounts available under a Contract or the Fixed Account. In
addition, no charges are currently imposed upon transfers. AUL reserves the
right, however, at a future date, to change the limitation on the minimum
transfer, to assess transfer charges, to change the limit on remaining balances,
to limit the number and frequency of transfers, and to suspend the transfer
privilege or the telephone transfer authorization. Any transfer from an
Investment Account of the Variable Account shall be effective as of the end of
the Valuation Date in which AUL receives the request in proper form.
PARTICIPANT'S VARIABLE ACCOUNT VALUE
ACCUMULATION UNITS
Contributions to be allocated to the Investment Accounts available under a
Contract will be credited to the Participant's Account in the form of
Accumulation Units. Except for allocation of a Participant's initial
contribution, the number of Accumulation Units to be credited is determined by
dividing the dollar amount allocated to the particular Investment Account by the
Accumulation Unit value for the particular Investment Account at the end of the
Valuation Period in which the contribution is received by AUL at its Home
Office. The number of Accumulation Units so credited to the account shall not be
changed by a subsequent change in the value of an Accumulation Unit, but the
dollar value of an Accumulation Unit may vary from Valuation Date to Valuation
Date depending upon the investment experience of the Investment Account and
charges against the Investment Account.
ACCUMULATION UNIT VALUE
AUL determines the Accumulation Unit value for each Investment Account of
the Variable Account on each Valuation Date. The Accumulation Unit value for
each Investment Account was initially set at one dollar ($1) when operations
commenced. Subsequently, the Accumulation
<PAGE>
23
Unit value for each Investment Account is determined by multiplying the Net
Investment Factor for the particular Investment Account by the Accumulation Unit
value for the Investment Account as of the immediately preceding Valuation
Period. The Accumulation Unit value for each Investment Account may increase,
decrease, or remain the same from Valuation Period to Valuation Period in
accordance with the Net Investment Factor.
NET INVESTMENT FACTOR
The Net Investment Factor is used to measure the investment performance of
an Investment Account from one Valuation Period to the next. For any Investment
Account for a Valuation Period, the Net Investment Factor is determined by
dividing (a) by (b) and then subtracting (c) from the result where
(a) is equal to:
(1) the net asset value per share of the Portfolio of the Fund in which
the Investment Account invests, determined as of the end of the
Valuation Period, plus
(2) the per share amount of any dividend or other distribution, if any,
paid by the Portfolio during the Valuation Period, plus or minus
(3) a credit or charge with respect to taxes paid, if any, or reserved for
by AUL during the Valuation Period that are determined by AUL to be
attributable to the operation of the Investment Account (although no
Federal income taxes are applicable under present law and no such
charge is currently assessed).
(b) is the net asset value per share of the Portfolio, determined as of
the end of the preceding Valuation Period; and
(c) is a daily charge factor determined by AUL to reflect the fee assessed
against the assets of the Investment Account for the mortality and
expense risk charge.
DOLLAR COST AVERAGING PROGRAM
Contract Owners and Participants who wish to purchase units of an
Investment Account over a period of time may do so through the Dollar Cost
Averaging ("DCA") Program. The theory of dollar cost averaging is that greater
numbers of Accumulation Units are purchased at times when the unit prices are
relatively low than are purchased when the prices are higher. This has the
effect, when purchases are made at different prices, of reducing the aggregate
average cost per Accumulation Unit to less than the average of the Accumulation
Unit prices on the same purchase dates. However, participation in the Dollar
Cost Averaging Program does not assure a Contract Owner or Participant of
greater profits from the purchases under the Program, nor will it prevent or
necessarily alleviate losses in a declining market.
For example, assume that a Contract Owner or Participant requests that
$1,000 per month be transferred from the Money Market Investment Account to the
AUL American Equity Investment Account. The following Table illustrates the
effect of dollar cost averaging over a six month period.
Transfer Unit Units
Month Amount Value Purchased
----- -------- ----- ---------
1 $1,000 $20 50
2 $1,000 $25 40
3 $1,000 $30 33.333
4 $1,000 $40 25
5 $1,000 $35 28.571
6 $1,000 $30 33.333
The average price per unit for these purchases is the sum of the prices
($180) divided by the number of monthly transfers (6) or $30. The average cost
per Accumulation Unit for these purchases is the total amount transferred
($6,000) divided by the total number of Accumulation Units purchased (210.237)
or $28.54. THIS TABLE IS FOR ILLUSTRATIVE PURPOSES ONLY AND IS NOT
REPRESENTATIVE OF FUTURE RESULTS.
Under a DCA Program, the owner deposits premiums into the AUL American
Money Market Investment Account or the Fixed Account (if available under the
Contract) and then authorizes AUL to transfer a specific dollar amount for a
specific length of time from such Account into one or more other Investment
Accounts at the unit values determined on the dates of the transfers. This may
be done monthly, quarterly, semi-annually, or annually on the last business day
of such period. These transfers will continue automatically until the earliest
of: the date AUL receives notice to discontinue the Program; until there is not
enough money in the Money Market Investment Account or the Fixed Account to
continue the Program; until the expiration of the length of time selected; or if
the transfers are being drawn from the Fixed Account, until the time a transfer
would exceed the 20% limitation on transfers from the Fixed Account.
Currently, the minimum required amount of each transfer is $100, although
AUL reserves the right to change this minimum transfer amount in the future. DCA
transfers to the Fixed Account and to the Money Market Investment Account are
not permitted under the Dollar Cost Averaging Program. At least ten days advance
written notice to AUL is required before the date of the first proposed transfer
under the DCA Program. AUL offers the Dollar Cost Averaging Program to Contract
Owners and Participants at no charge, and the Company reserves the right to
temporarily discontinue, terminate, or change the Program at any time. Contract
Owners and Participants may discontinue participation in the Program at any time
by providing written notice to AUL, provided that AUL must receive written
notice of such a change at least five days before a previously scheduled
transfer is to occur.
Contract Owners or Participants may initially elect to participate in the
DCA Program, and if this election is made at the time the Contract is applied
for, the Program will take effect on the first monthly, quarterly, semi-annual,
or annual transfer date following the premium receipt by AUL at its Home Office.
The Contract Owner or Participant may select the month, quarter, or year that
the transfers are to be made and such transfers will automatically be performed
on the last business day of such period. To participate in the Program, a
minimum balance of $10,000 in the Money Market Investment Account or in the
Fixed Account is required.
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24
CASH WITHDRAWALS AND THE DEATH BENEFIT
CASH WITHDRAWALS
During the lifetime of the Participant, at any time before the Annuity
Commencement Date and subject to the limitations under the applicable Plan and
applicable law, a Participant's Account may be surrendered or a partial
withdrawal may be taken from a Participant's Account Value. A surrender or
withdrawal request will be effective as of the end of the Valuation Date that a
proper written request in a form acceptable to AUL is received by AUL at its
Home Office.
A full surrender of a Participant's Variable Account Value will result in a
withdrawal payment equal to the value of the Participant's Variable Account
Value as of the end of the Valuation Period during which a proper withdrawal
request is received by AUL at its Home Office, minus any applicable withdrawal
charge. A partial withdrawal may be requested for a specified percentage or
dollar amount of a Participant's Variable Account Value. A request for a partial
withdrawal will result in a payment by AUL equal to the amount specified in the
partial withdrawal request. Upon payment, the Participant's Variable Account
Value will be reduced by an amount equal to the payment and any applicable
withdrawal charge. If a partial withdrawal is requested that would leave a
Participant's Variable Account Value in any Investment Account less than $500,
then such partial withdrawal request will be treated as a request for a full
withdrawal from the Investment Account.
The minimum amount that may be withdrawn from a Participant's Variable
Account Value in an Investment Account is the lesser of $500 or the
Participant's entire Account Value in the Investment Account as of the date the
withdrawal request is received by AUL. However, if after the withdrawal, the
amount or value of the Investment Account would be less than $500, then the
request will be treated as a request for a withdrawal of the entire Account
Value of the Investment Account.
The amount of a partial withdrawal will be taken from the Investment
Accounts and the Fixed Account as instructed. A partial withdrawal will not be
effected until proper instructions are received by AUL at its Home Office.
A surrender or a partial withdrawal may result in the deduction of a
withdrawal charge. See "Withdrawal Charge."
In addition, distributions under certain retirement programs may result in
a tax penalty. See "Tax Penalty."
SYSTEMATIC WITHDRAWAL SERVICE FOR 403(b) AND 408 PROGRAMS
A Participant in a Contract used in connection with a 403(b) plan (other
than an Employer Sponsored 403(b) plan) or 408 Program who is at least age 59
1/2 can arrange to have systematic cash withdrawals from his or her Account
Value paid on a regular monthly, quarterly, or annual basis. Each withdrawal
payment must be at least equal to $100. An application form containing details
of the service is available upon request from AUL. The service is voluntary and
can be terminated at any time by the Participant or Owner. AUL does not
currently deduct a service charge for withdrawal payments, but reserves the
right to do so in the future and similarly, reserves the right to increase the
minimum required amount for each withdrawal payment.
Participants will pay a withdrawal charge in connection with the systematic
cash withdrawals to the extent the withdrawal charge is applicable (e.g., for a
Recurring Contribution Contract, during the first ten Account Years and
excluding the 10% allowable amount each Contract Year). Systematic withdrawals
of up to 10% of (a) the total of all contributions made during the year that the
withdrawal is being made, plus (b) the Participant's Account Value at the
beginning of the Contract Year may begin in the year the Participant's Account
is established. After the first two Contract Years, and until the withdrawal
charge has decreased to 0%, the amount withdrawn during a Contract Year that
will not be subject to a withdrawal charge is 10% of the Participant's Account
Value at the beginning of the Contract Year in which the withdrawal is being
made. See "Withdrawal Charge." In addition, receipt of the cash withdrawals may
result in the receipt of taxable income to the Participant. See "Federal Tax
Matters." No withdrawal charges are applied to "benefit responsive" Contracts
for payment of retirement, death, disability, termination of employment,
hardship, loan, age 70 1/2 required minimum distribution benefits or benefits
upon attainment of age 59 1/2 (provided that the age 59 1/2 benefit is a taxable
distribution paid to the Participant and not to any other person or entity,
including any alternative or substitute funding medium). For certain other
Contracts known as "modified benefit responsive" Contracts, withdrawal charges
are not imposed for cash lump-sum payments of death benefits. For Modified
Benefit Responsive Contracts, withdrawal charges are not imposed for cash
lump-sum payments provided the Participant has (1) attained age 55 and has 10
years of service with the employer identified in the Plan, or (2) attained age
62, and is receiving benefits for retirement, disability, termination of
employment, hardships, loans, or required minimum distribution benefits pursuant
to Internal Revenue Code Section 401(a)(9) and Regulations issued thereunder, or
for benefits upon attainment of age 59 1/2 (provided that such benefit upon
attainment of age 59 1/2 is a taxable distribution paid to the Participant and
not to any other person or entity, including any alternative or substitute
funding medium).
However, even in benefit responsive or modified benefit responsive
contracts, withdrawal charges will be applied to any withdrawal to pay a Plan
benefit prior to notification of Contract termination if the benefit is payable
because of, or the underlying reason for payment of the benefit results in, the
termination or partial termination of the Plan, as determined under applicable
IRS guidelines.
CONSTRAINTS ON WITHDRAWALS
GENERAL
Since the Contracts offered by this Prospectus will be issued in connection
with retirement plans that meet the
<PAGE>
25
requirements of Section 401, Section 403(b), Section 408, or Section 457 of the
Internal Revenue Code, reference should be made to the terms of the particular
Plan or Contract for any limitations or restrictions on cash withdrawals. A
surrender or withdrawal that results in receipt of proceeds by a Participant may
result in receipt of taxable income to the Participant and, in some instances,
in a tax penalty. The tax consequences of a surrender or withdrawal under the
Contracts should be carefully considered. See "Federal Tax Matters."
403(b) PROGRAMS
Section 403(b) of the Internal Revenue Code permits public school employees
and employees of certain types of charitable, educational, and scientific
organizations specified in Section 501(c)(3) of the Internal Revenue Code to
purchase annuity contracts, and, subject to certain limitations, to exclude the
amount of purchase payments from gross income for federal tax purposes. Section
403(b) imposes restrictions on certain distributions from tax-sheltered annuity
contracts meeting the requirements of Section 403(b) that apply to tax years
beginning on or after January 1, 1989.
Section 403(b) requires that distributions from Section 403(b)
tax-sheltered annuities that are attributable to employee contributions made
after December 31, 1988 under a salary reduction agreement not begin before the
employee reaches age 59 1/2, separates from service, dies, becomes disabled, or
incurs a hardship. Furthermore, distributions of income or gains attributable to
such contributions accrued after December 31, 1988 may not be made on account of
hardship. Hardship, for this purpose, is generally defined as an immediate and
heavy financial need, such as paying for medical expenses, the purchase of a
principal residence, or paying certain tuition expenses.
A Participant in a Contract purchased as a tax-deferred Section 403(b)
annuity contract will not, therefore, be entitled to exercise the right of
surrender or withdrawal, as described in this Prospectus, in order to receive
his or her Account Value attributable to contributions made under a salary
reduction agreement or any income or gains credited to such Participant after
December 31, 1988 under the Contract unless one of the above-described
conditions has been satisfied, or unless the withdrawal is otherwise permitted
under applicable federal tax law. In the case of transfers of amounts
accumulated in a different Section 403(b) contract to this Contract under a
Section 403(b) Program, the withdrawal constraints described above would not
apply to the amount transferred to the Contract attributable to a Participant's
December 31, 1988 account balance under the old contract, provided that the
amounts transferred between contracts qualifies as a tax-free exchange under the
Internal Revenue Code. A Participant's Account Withdrawal in a Contract may be
able to be transferred to certain other investment alternatives meeting the
requirements of Section 403(b) that are available under an Employer's Section
403(b) arrangement.
TEXAS OPTIONAL RETIREMENT PROGRAM
AUL intends to offer the Contract within the Texas Optional Retirement
Program. Under the terms of the Texas Optional Retirement Program, if a
Participant makes the required contribution, the State of Texas will contribute
a specified amount to the Participant's Account. If a Participant does not
commence the second year of participation in the plan as a "faculty member," as
defined in Title 110B of the State of Texas Statutes, AUL will return the
State's contribution. If a Participant does begin a second year of
participation, the Employer's first-year contributions will then be applied as a
contribution under the Contract, as will the Employer's subsequent
contributions.
The Attorney General of the State of Texas has ruled that under Title 110B
of the State of Texas Statutes, withdrawal benefits of contracts issued under
the Optional Retirement Program are available only in the event of a
participant's death, retirement, termination of employment due to total
disability, or other termination of employment in a Texas public institution of
higher education. A Participant under a Contract issued in connection with the
Texas Optional Retirement Program will not, therefore, be entitled to exercise
the right of surrender or withdrawal to receive the Account Value credited to
such Participant unless one of the foregoing conditions has been satisfied. The
Withdrawal Value of such Participant's Account may, however, be transferred to
other contracts or other carriers during the period of participation in the
program.
THE DEATH BENEFIT
If a Participant dies during the Accumulation Period, AUL will pay a death
benefit to the Beneficiary upon receipt of due proof of the Participant's death
and instructions regarding payment to the Beneficiary. If there is no designated
Beneficiary living on the date of death of the Participant, AUL will pay the
death benefit in one sum to the estate of the Participant upon receipt of due
proof of death of both the Participant and the designated Beneficiary and
instructions regarding payment. If the death of the Participant occurs on or
after the Annuity Commencement Date, no death benefit will be payable under the
Contract except as may be provided under the Annuity Option elected.
The amount of the death benefit equals the vested portion of the
Participant's Account Value minus any outstanding loan balances and any due and
unpaid charges on those loans. Under Contracts acquired in connection with 408
Programs, 457 Programs, and 403(b) Programs other than Employer Sponsored 403(b)
Programs, the vested portion of a Participant's Account Value shall be the
Participant's entire Account Value. Under Employee Benefit Plans and Employer
Sponsored 403(b) Programs, the vested portion of a Participant's Account Value
is the amount to which the Participant is entitled upon death or separation from
service under a vesting schedule contained in the pertinent Plan. If the death
benefit is less than a Participant's Account Value, the death benefit shall be
paid pro rata from the Investment Accounts and the Fixed Account, and the
remainder of the Account Value shall be distributed to the Owner or as directed
by the Owner. Prior to such distribution, any remaining Account Value in the
Investment Accounts shall be transferred to AUL's General Account. In the case
of a 457 Program, the Owner of the Contract shall be the Beneficiary.
<PAGE>
26
The death benefit will be paid to the Beneficiary in a single sum or under
one of the Annuity Options, as directed by the Participant or as elected by the
Beneficiary. If the Beneficiary is to receive annuity payments under an Annuity
Option, there may be limits under applicable law on the amount and duration of
payments that the Beneficiary may receive, and requirements respecting timing of
payments. A tax adviser should be consulted in considering payout options.
TERMINATION BY THE OWNER
An Owner of a Contract acquired in connection with an Employee Benefit
Plan, a 457 Program, or an Employer Sponsored 403(b) Program may terminate the
Contract by sending proper written notice of termination to AUL at its Home
Office. Termination shall be effective as of the end of the Valuation Date that
the notice is received by AUL at its Home Office. Proper notice of termination
must include an election of the method of payment or payments from AUL, an
indication of the person or persons to whom payment is to be made, and the
Owner's agreement (and the Plan Sponsor's agreement, if the Contract is issued
in connection with an Employee Benefit Plan or an Employer Sponsored 403(b)
Program) that AUL shall not be held responsible for any losses or claims that
may arise against AUL in connection with making a payment or payments upon
termination.
Upon termination of such a Contract used in connection with an Employee
Benefit Plan, a 457 Program, or Employee Benefit Plan contributions in a
combined Contract for an Employee Benefit Plan and Employer Sponsored 403(b)
Plan, the Owner (and the Plan Sponsor, if the Contract is issued in connection
with an Employee Benefit Plan) may elect from two payment options. Under one
option, AUL will pay an amount equal to the aggregate Withdrawal Values of all
of the Participant Accounts under the Contract determined as of the end of the
Valuation Date that the termination is effective, minus any applicable
Investment Liquidation Charge ("ILC") for a 457 Program or plus or minus any
Market Value Adjustment ("MVA") for Employee Benefit Plans. The ILC or MVA
applies only to Participants' Fixed Account Values under these Contracts. The
ILC or MVA is equal to a certain percentage, as described below, multiplied by
the Withdrawal Value derived from the Fixed Account of each Participant under a
Contract. The ILC percentage is determined by the following formula: 6(x - y),
where "x" is the Current Rate of interest, as described under "Interest," being
credited by AUL to new Contributions allocated to the Fixed Account as of the
effective date of termination, and "y" is the average rate of interest being
credited by AUL to various portions of a Participant's Fixed Account Value as of
the effective date of termination. The MVA percentage is determined by the
following formula: When "x" is greater than "y", the MVA percentage is 5(x-y),
and is deducted from the amount paid. When "y" is greater than "x", the MVA
percentage is 4(x-y), and is added to the amount paid. Payment under this option
shall be made as described under "Payments from the Variable Account," except
that payment of amounts attributable to the Fixed Account may be delayed for up
to six months after the effective date of termination.
Under the second payment option for a 457 Program Contract, AUL will pay an
amount equal to the aggregate Withdrawal Values derived from the Variable
Account of all Participants under the Contract determined as of the end of the
Valuation Date on which termination is effective. Payment of this amount shall
be made as described under "Payments from the Variable Account." AUL will also
pay an amount equal to the aggregate Withdrawal Values derived from the Fixed
Account of all Participants under the Contract as of the Contract Anniversary
immediately succeeding the effective date of termination. This amount shall be
payable in six equal annual installments, the first of which shall be paid on
the Contract Anniversary immediately succeeding the effective date of
termination. As of this date, AUL shall have the right to refuse to accept
further contributions and shall cease to maintain individual Participant
Accounts, and amounts remaining under the Contract after each annual installment
shall be paid interest by AUL at an annual effective rate that shall be equal to
the lesser of (a) the weighted average of each of the various Current Rates of
interest being credited to amounts held in the Fixed Account under the Contract
determined as of the Contract Anniversary immediately succeeding the effective
date of termination, or (b) the interest rate for U.S. Government Security
Treasury Constant Maturity for three years (as set forth in the Federal Reserve
Statistical Releases), as determined on the Business Day coincident with or next
following the Contract Anniversary immediately succeeding the effective date of
termination. Interest earned during the Contract Year following payment of any
annual installment shall be paid by AUL on the next succeeding Contract
Anniversary.
Under the second payment option for an Employee Benefit Plan Contract, or
for the Employee Benefit Plan contributions in a combined Contract for an
Employee Benefit Plan and Employer Sponsored 403(b) Plan, AUL will pay an amount
equal to the aggregate Withdrawal Values derived from the Variable Account of
all Participants under the Contract determined as of the end of the Valuation
Date on which termination is effective. Payment shall be made as described under
"Payments from the Variable Account." AUL will also pay amounts derived from the
Fixed Account in six annual installments over five years. Until all funds have
been paid by AUL, the average Current Rates of interest, as determined by AUL on
the first installment payment date, less 1%, will be credited to the remaining
Withdrawal Values. Interest shall be paid with each installment payment.
Upon termination of a Contract used in connection with an Employer
Sponsored 403(b) Program or a combined Contract for an Employee Benefit Plan and
Employer Sponsored 403(b) Plan, AUL shall have the right to refuse to accept
further contributions. Upon such a termination, amounts attributable to Employer
Sponsored 403(b) contributions will be paid by AUL as described in the prior
paragraph.
TERMINATION BY AUL
AUL has the right, subject to applicable state law, to terminate any
Participant's Account established under a Contract acquired in connection with
an Employee Benefit
<PAGE>
27
Plan, a 457 Program, or an Employer Sponsored 403(b) Program at any time during
the Contract Year if the Participant's Account Value falls below $300 ($200 for
an Employer Sponsored 403(b) Program or for a Contract with both 403(b) and
401(a) funds) during the first Contract Year, or $500 ($400 for an Employer
Sponsored 403(b) Program or for a Contract with both 403(b) and 401(a) funds)
during any subsequent Contract Year, provided that at least six months have
elapsed since the Owner's last contribution to the Contract. AUL will give
notice to the Owner and the Participant that the Participant's Account is to be
terminated. Termination shall be effective six months from the date that AUL
gives such notice, provided that any contributions made during the six month
notice period are insufficient to bring the Participant's Account Value up to
the applicable minimum. Single Contribution Contracts have a minimum required
contribution of $25,000.
Upon termination of a Participant's Account by AUL, AUL will pay an amount
equal to the Participant's Account Value as of the close of business on the
effective date of termination. Payment of this amount will be made within seven
days from such effective date of termination.
AUL may, at its option, terminate any Contract if there are no Participant
Accounts in existence under the Contract.
PAYMENTS FROM THE VARIABLE ACCOUNT
Payment of an amount from the Variable Account resulting from a surrender,
cash withdrawal, transfer from a Participant's Variable Account Value, payment
of the death benefit, or payment upon termination by the Owner will be made
within seven days from the date a proper request is received at AUL's Home
Office. However, AUL can postpone the calculation or payment of such an amount
to the extent permitted under applicable law, which is currently permissible
only for any period: (a) during which the New York Stock Exchange is closed
other than customary week-end and holiday closings, (b) during which trading on
the New York Stock Exchange is restricted as determined by the SEC, (c) during
which an emergency, as determined by the SEC, exists as a result of which (1)
disposal of securities held by the Variable Account is not reasonably
practicable, or (2) it is not reasonably practicable to determine the value of
the assets of the Variable Account, or (d) for such other periods as the SEC may
by order permit for the protection of investors. For information concerning
payment of an amount from the Fixed Account, see "The Fixed Account" and
"Termination by the Owner."
CHARGES AND DEDUCTIONS
PREMIUM TAX CHARGE
Various states and municipalities impose a tax on premiums received by
insurance companies. Whether or not a premium tax is imposed will depend upon,
among other things, the Owner's state of residence, the Annuitant's state of
residence, and the insurance tax laws and AUL's status in a particular state.
AUL assesses a premium tax charge to reimburse itself for premium taxes that it
incurs. This charge will be deducted as premium taxes are incurred by AUL, which
is usually when an annuity is effected. Premium tax rates currently range from
0% to 3.5%, but are subject to change by such governmental entities.
WITHDRAWAL CHARGE
No deduction for sales charges is made from contributions for a Contract.
However, if a cash withdrawal is made, a Participant's Account is surrendered,
or the Contract is terminated by the Owner, then, depending on the type of
Contract, a withdrawal charge (which may also be referred to as a contingent
deferred sales charge) may be assessed by AUL if the Participant's Account has
not been in existence for a certain period of time. For the first two Contract
Years that a Participant's Account exists, the amount withdrawn during a
Contract Year that will not be subject to a withdrawal charge is 10% of (1) the
total of all contributions made during the year that the withdrawal is being
made, plus (2) the Participant's Account Value at the beginning of the Contract
Year. After the first two Contract Years, and until the withdrawal charge has
decreased to 0%, the amount withdrawn during a Contract Year that will not be
subject to an otherwise applicable withdrawal charge is 10% of the Participant's
Account Value at the beginning of the Contract Year in which the withdrawal is
being made.
The chart below illustrates the amount of the withdrawal charge that applies to
the different types of Contracts based on the number of years that the Account
has been in existence.
Charge on Withdrawal Exceeding 10% Allowable Amount
---------------------------------------------------
11 or
Account Year 1 2 3 4 5 6 7 8 9 10 more
- -------------- - - - - - - - - -- ----
Recurring
Contribution
Contracts 8% 8% 8% 8% 8% 4% 4% 4% 4% 4% 0%
Single
Contribution
Contracts 6% 5% 4% 3% 2% 1% 0% 0% 0% 0% 0%
Withdrawal charges are not imposed for many benefits provided under
"benefit responsive" Contracts. A "benefit responsive" Contract can be
distinguished from a Contract that is not "benefit responsive" by the
contractual condition that under a "benefit responsive" Contract, withdrawal
charges are not imposed for payment of retirement, death,
<PAGE>
28
disability, termination of employment, hardship, loan, age 70 1/2 required
minimum distribution benefits, or benefits upon attainment of age 59 1/2
(provided that the age 59 1/2 benefit is a taxable distribution paid to the
Participant and not to any other person or entity, including any alternative or
substitute funding medium). Under certain circumstances, withdrawal charges are
not imposed under "modified benefit responsive" Contracts. A "modified benefit
responsive" Contract can be distinguished from a Contract that is not "modified
benefit responsive" by the contractual condition that under a "modified benefit
responsive" Contract, withdrawal charges are not imposed for cash lump-sum
payments of death benefits, or, provided the Participant has (1) attained age 55
and has 10 years of service with the employer identified in the Plan, or (2)
attained age 62 for Plan benefits due to retirement, disability, termination of
employment, hardships, loans, or required minimum distribution benefits pursuant
to Internal Revenue Code Section 401(a)(9) and Regulations issued thereunder, or
for benefits upon attainment of age 59 1/2 (provided that such benefit upon
attainment of age 59 1/2 is a taxable distribution paid to the Participant and
not to any other person or entity, including any alternative or substitute
funding medium).
However, even in benefit responsive or modified benefit responsive
contracts, withdrawal charges will be applied to any withdrawal to pay a Plan
benefit prior to notification of Contract termination if the benefit is payable
because of, or the underlying reason for payment of the benefit results in, the
termination or partial termination of the Plan, as determined under applicable
IRS guidelines.
In no event will the amount of any withdrawal charge, when added to any
withdrawal charges previously assessed against any amount withdrawn from a
Participant's Account, exceed 9% of the contributions made by or on behalf of a
Participant under a Contract. In addition, no withdrawal charge will be imposed
upon payment of a death benefit under the Contract.
The withdrawal charge will be used to recover certain expenses relating to
sales of the Contracts, including commissions paid to sales personnel and other
promotional costs. AUL reserves the right to increase the withdrawal charge for
any Participant Accounts established on or after the effective date of the
change, but the withdrawal charge will not exceed 9% of the contributions made
by or on behalf of a Participant.
MORTALITY AND EXPENSE RISK CHARGE
AUL deducts a daily charge from the assets of each Investment Account for
mortality and expense risks assumed by AUL. The charge is equal to an annual
rate of 1.25% of the average daily net assets of each Investment Account. This
amount is intended to compensate AUL for certain mortality and expense risks AUL
assumes in offering and administering the Contracts and in operating the
Variable Account. The 1.25% charge was originally based on estimates of .40% for
expense risk and .85% for mortality risk.
The expense risk is the risk that AUL's actual expenses in issuing and
administering the Contracts and operating the Variable Account will be more than
the charges assessed for such expenses. The mortality risk borne by AUL is the
risk that Annuitants, as a group, will live longer than the Company's actuarial
tables predict. AUL may ultimately realize a profit from this charge to the
extent it is not needed to address mortality and administrative expenses, but
AUL may realize a loss to the extent the charge is not sufficient. AUL may use
any profit derived from this charge for any lawful purpose, including any
distribution expenses not covered by the withdrawal charge.
VARIABLE INVESTMENT PLUS OPTION
Certain Contracts, such as Employer Sponsored 403(b) Contracts, 457
Contracts, and Combination Contracts used in connection with an Employee Benefit
Plan and Employer Sponsored 403(b) contributions may, at the option of the
Contract Holder, receive a portion of the Mortality and Expense Risk Charge in
the form of Accumulation Units credited to Participant Accounts. If this Option
is elected by the Contract holder, and if the total amount of assets invested in
variable investment options meets certain underwriting minimums, then the Plus
Factor used to credit units on an annual basis will be as follows:
<TABLE>
<S> <C> <C> <C>
Month End Aggregate Annual Monthly
Participant Variable Plus Equivalent of
Investment Assets Factor Plus Factor
--------------------- ------- -------------
Up to $500,000 0.00% 0.00000%
$500,001-$1,000,000 0.25% 0.02081%
$1,000,001-$3,000,000 0.35% 0.02912%
$3,000,001-$5,000,000 0.40% 0.03327%
$5,000,001-$6,000,000 0.50% 0.04157%
Over $6,000,000 0.75% 0.06229%
</TABLE>
Under this Option, the appropriate Plus Factor for aggregate Participant
Variable Investment Assets of less than $500,000 is 0%. Therefore, if the
aggregate Participant Variable Investment Assets were $1,000,000 at the end of a
particular month, an annual Plus Factor of 0% would be applied to the first
$500,000 received. For that particular month, a monthly Plus Factor of .02081%
would be applied to the next $500,000 and the ratio of $104.05/$1,000,000 or
0.0001041 would be multiplied by each Participant's month-end Variable Account
Value for each Variable Investment Option and the resulting amount for each
Variable Investment Option would be applied by AUL to purchase Accumulation
Units in each Variable Investment Option for that Participant under the
Contract. Units will be credited to Participant Accounts on a monthly basis and
purchased at the Accumulation Unit Value next computed following the calculation
of the appropriate Factor. Accumulation Units purchased will be reported to
Participants as Earnings.
To qualify for this Option, contracts must have a minimum of $220,000 in
contributions during the first contract year. Up to 10% of any assets
transferred into a Contract may qualify to meet the required first year
contribution minimum and ongoing contributions after the first contract year
must be at least $50,000 per year.
Under different Contracts for Employer Sponsored 403(b) and 457 Programs,
the VIP Option may require different
<PAGE>
29
minimum contributions during the first contract year and for subsequent years.
As an example, some Contracts will only require a minimum of $40,000 in
contributions during the first contract year and $30,000 in ongoing subsequent
contributions. Up to 10% of any assets transferred into a Contract of this type
may qualify to meet the required first year contribution minimum and ongoing
contributions after the first contract year must be at least $30,000. For larger
Contractholders, a different option requires a minimum of $1,000,000 in first
year contributions and $75,000 contributions in subsequent years. In this
instance, 100% of any assets transferred into a Contract may qualify to meet the
required first year contribution minimum and $25,000 in subsequent contributions
will be required annually thereafter. Various Contractholder fees may be
required under these Contracts including Installation Fees, Annual
Administrative Fees, Form 5500 Reporting Assistance Fees, and a fee for not
using electronic means for Participant contributions. The amount of the VIP
Factor for different options will vary, based on the amount of the contributions
(both first year and for subsequent years) and the scale of the Withdrawal
Charge under the Contract. Generally, if a Contract has a lower Withdrawal
Charge scale, the amount of the VIP Factor will be lower than for Contracts with
a higher Withdrawal Charge scale.
AUL reserves the right at any time to change the aggregate investment
amounts, the Plus Factor and the underwriting minimums.
ADMINISTRATIVE CHARGE
Under some recurring contribution contracts, AUL deducts an administrative
charge from each Participant's Account equal to 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 the account exists on the quarterly Contract
Anniversary, and is assessed only during the Accumulation Period. When a
Participant annuitizes or surrenders on any day other than a quarterly Contract
Anniversary, a pro rata portion of the charge for that portion of the quarter
will not be assessed. The charge is deducted proportionately from the
Participant's Account Value allocated among the Investment Accounts and the
Fixed Account. An administrative charge will not be imposed on Recurring
Contribution Contracts if the value of a Participant's Account is equal to or
more than $25,000 on the quarterly Contract Anniversary. Benefit Responsive
Contracts that are converted to no-load Section 408 IRA Contracts will be
assessed an Administrative Charge of $3 each quarter if the value of
Participant's Account is less than $10,000 on that date. Except for this type of
Contract, there are no Administrative Charges applied to Single Contribution
Contracts and on some types of recurring contribution contracts. The purpose of
this charge is to reimburse AUL for the expenses associated with administration
of the Contracts and operation of the Variable Account.
The Administrative charge may, at the Employer's option, be billed directly
to and paid directly by, the Employer in lieu of being deducted from a
Participant's Account under Employer Sponsored 403(b) Contracts or under
combined Contracts containing an Employee Benefit Plan and Employer Sponsored
403(b) contributions, or the charge may be paid on any other basis mutually
agreed upon by the Employer and AUL. AUL does not expect to profit from this
charge.
OTHER CHARGES
AUL may charge the Investment Accounts of the Variable Account for the
federal, state, or local income taxes incurred by AUL that are attributable to
the Variable Account and its Investment Accounts. No such charge is currently
assessed. An Investment Liquidation Charge or a Market Value Adjustment charge,
which applies only to Participants' Fixed Account Values under a Contract, may
be imposed upon termination by an Owner of a Contract acquired in connection
with an Employee Benefit Plan or 457 Program. See "Termination by the Owner."
VARIATIONS IN CHARGES
AUL may reduce or waive the amount of the withdrawal charge, the
administrative charge, or the mortality and expense risk charge for a Contract
where the expenses associated with the sale of the Contract or the
administrative costs associated with the Contract are reduced. A reduction in
the mortality and expense risk charge will generally be made by offsetting the
charge by applying the Variable Investment Plus Option. As an example, these
charges may be reduced in connection with acquisition of the Contract in
exchange for another annuity contract or in exchange for another annuity
contract issued by AUL. AUL may also reduce or waive these charges on Contracts
sold to the directors or employees of AUL or any of its affiliates or to
directors or any employees of any of the Funds.
GUARANTEE OF CERTAIN CHARGES
AUL guarantees that the mortality and expense risk charge shall not
increase. AUL also guarantees that through the year 2000, the administrative
charge may not increase to more than $15.00 per quarter. After the year 2000,
AUL may increase the fee but only to the extent necessary to recover the
expenses associated with administration of the Contracts and operation of the
Variable Account.
EXPENSES OF THE FUNDS
Each Investment Account of the Variable Account purchases shares at the net
asset value of the corresponding Portfolio of one of the Funds. The net asset
value reflects the investment advisory fee and other expenses that are deducted
from the assets of the Portfolio. The advisory fees and other expenses are more
fully described in the Funds' Prospectuses.
<PAGE>
30
ANNUITY PERIOD
GENERAL
On the Annuity Commencement Date, the adjusted value of the Participant's
Account may be applied to provide an annuity under one of the options described
below. The adjusted value will be equal to the value of the Participant's
Account as of the Annuity Commencement Date, reduced by any applicable premium
or similar taxes and any outstanding loan balances and unpaid expense charges on
those loans.
Generally, the Contracts provide for five annuity options, any one of which
may be elected if permitted by the particular Plan or applicable law. A lump-sum
distribution may also be elected under most Plans. Other Annuity Options may be
available upon request at the discretion of AUL. All Annuity Options are fixed
and the annuity payments remain constant throughout the Annuity Period. Annuity
payments are based upon annuity rates that vary with the Annuity Option selected
and the age of the Annuitant (except that in the case of Option 5, the Fixed
Period Option, age is not a consideration). The annuity rates are based upon an
assumed interest rate of 2%, compounded annually. If no Annuity Option has been
selected for a Participant, annuity payments will be made to the Annuitant under
an automatic option. For 403(b) (other than Employer Sponsored 403(b) Programs)
and 457 Programs, the automatic option shall be an annuity payable during the
lifetime of the Annuitant with payments certain for 120 months. For an Employee
Benefit Plan or Employer Sponsored 403(b) Program, the automatic option shall be
an annuity payable during the lifetime of the Annuitant with payments certain
for 120 months or, for a married Annuitant, a Survivorship Annuity as described
in Option 3 below. For 408 Programs, the automatic option for unmarried
Participants shall be a 10 Year Certain and Life Annuity; for married
Participants, the automatic option shall be a 50% Survivorship Annuity. For
"benefit responsive" Employer Sponsored 403(b) Contracts, and for an Employee
Benefit Plan combined with an Employer Sponsored 403(b) Contract, there is no
automatic annuity option.
Once annuity payments have commenced, a Participant cannot surrender his or
her annuity and receive a lump-sum settlement in lieu thereof and cannot change
the Annuity Option. If, under any option, monthly payments are less than $25
each, AUL has the right to make either a lump-sum settlement or to make larger
payments at quarterly, semi-annual, or annual intervals. AUL also reserves the
right to change the minimum payment amount. AUL will not allow annuitization of
a Participant's Account if the total Account Value is less than the amount
specified in the Contract. Should this occur, a Participant will receive the
Account Value in a lump-sum settlement.
Annuity payments will begin on the Annuity Commencement Date. No withdrawal
charge will be applied on this Date.
A Participant or, depending on the Contract, an Owner on behalf of a
Participant, may designate an Annuity Commencement Date, Annuity Option,
contingent Annuitant, and Beneficiary on an Annuity Election Form that must be
received by AUL at its Home Office at least 30 days prior to the Annuity
Commencement Date. AUL may also require additional information before annuity
payments commence. During the lifetime of the Participant and up to 30 days
prior to the Annuity Commencement Date, the Annuity Option, the Annuity
Commencement Date, or the designation of a contingent Annuitant or Beneficiary,
if any, under an Annuity Option may be changed. To help ensure timely receipt of
the first annuity payment, a transfer of a Participant's Variable Account Value
should be made to the General Account at least two weeks prior to the Annuity
Commencement Date.
ANNUITY OPTIONS
OPTION 1 - LIFE ANNUITY
An annuity payable monthly during the lifetime of the Annuitant that ends
with the last monthly payment before the death of the Annuitant.
OPTION 2 - CERTAIN AND LIFE ANNUITY
An annuity payable monthly during the lifetime of the Annuitant with the
promise that if, at the death of the Annuitant, payments have been made for less
than a stated period, which may be five, ten, fifteen, or twenty years, as
elected, annuity payments will be continued during the remainder of such period
to the Beneficiary.
OPTION 3 - SURVIVORSHIP ANNUITY
An annuity payable monthly during the lifetime of the Annuitant, and, after
the death of the Annuitant, an amount equal to 50%, 66 2/3%, or 100% (as
specified in the election) of such annuity will be paid to the contingent
Annuitant named in the election if and so long as such contingent Annuitant
lives.
An election of this option is automatically cancelled if either the
Participant or the contingent Annuitant dies before the Annuity Commencement
Date.
OPTION 4 - INSTALLMENT REFUND LIFE ANNUITY
An annuity payable monthly during the lifetime of the Annuitant that ends
with the last payment due prior to the death of the Annuitant, except, that at
the death of the Annuitant, the Beneficiary will receive additional annuity
payments until the amount paid to purchase the annuity has been distributed.
OPTION 5 - FIXED PERIODS
An annuity payable monthly for a fixed period (not less than 5 years or
more than 30 years) as elected, with the guarantee that if, at the death of the
Annuitant, payments have been made for less than the selected fixed period,
annuity payments will be continued during the remainder of said period to the
Beneficiary.
SELECTION OF AN OPTION
Participants should carefully review the Annuity Options with
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their financial or tax advisers, and reference should be made to the terms of a
particular Plan for pertinent limitations respecting annuity payments and other
matters. For instance, under requirements for retirement plans that qualify for
treatment under Sections 401, 403(b), 408, or 457 of the Internal Revenue Code,
annuity payments generally must begin no later than April 1 of the calendar year
following the calendar year in which the Participant reaches age 70 1/2,
provided the Participant is no longer employed. For Options 2 and 5, the period
elected for receipt of annuity payments under the terms of the Annuity Option
generally may be no longer than the joint life expectancy of the Annuitant and
Beneficiary in the year that the Annuitant reaches age 70 1/2 and must be
shorter than such joint life expectancy if the Beneficiary is not the
Annuitant's spouse and is more than 10 years younger than the Annuitant. Under
Option 3, if the contingent Annuitant is not the Annuitant's spouse and is more
than 10 years younger than the Annuitant, the 66 2/3% and 100% elections
specified above may not be available.
THE FIXED ACCOUNT
Contributions or transfers to the Fixed Account become part of AUL's
General Account. The General Account is subject to regulation and supervision by
the Indiana Insurance Department as well as the insurance laws and regulations
of other jurisdictions in which the Contracts are distributed. In reliance on
certain exemptive and exclusionary provisions, interests in the Fixed Account
have not been registered as securities under the Securities Act of 1933 (the
"1933 Act") and the Fixed Account has not been registered as an investment
company under the 1940 Act. Accordingly, neither the Fixed Account nor any
interests therein are generally subject to the provisions of the 1933 Act or the
1940 Act. AUL has been advised that the staff of the SEC has not reviewed the
disclosure in this Prospectus relating to the Fixed Account. This disclosure,
however, may be subject to certain generally applicable provisions of the
federal securities laws relating to the accuracy and completeness of statements
made in the Prospectus. This Prospectus is generally intended to serve as a
disclosure document only for aspects of a Contract involving the Variable
Account and contains only selected information regarding the Fixed Account. For
more information regarding the Fixed Account, see the Contract itself or a
Participant's Certificate.
INTEREST
A Participant's Fixed Account Value earns interest at fixed rates that are
paid by AUL. The Account Value in the Fixed Account earns interest at one or
more interest rates determined by AUL at its discretion and declared in advance
("Current Rate"), which are guaranteed to be at least an annual effective rate
of either 3% or 4% per year ("Guaranteed Rate") depending on the Contract. AUL
will determine a Current Rate from time to time, and any Current Rate that
exceeds the Guaranteed Rate will be in effect for a period of at least one year.
If AUL determines a Current Rate in excess of the Guaranteed Rate, contributions
or transfers to a Participant's Account during the time the Current Rate is in
effect are guaranteed to earn interest at that particular Current Rate for at
least one year. AUL may declare a different Current Rate for a particular
contract based on costs of acquisition to AUL or the level of service provided
by AUL. Transfers from other AUL annuity contracts may be transferred at a rate
of interest different than the Current Rate.
Except for transfers from other AUL annuity contracts, amounts contributed
or transferred to the Fixed Account earn interest at the Current Rate then in
effect. Amounts transferred from other AUL annuity contracts may not earn the
Current Rate, but may, at AUL's discretion, continue to earn the rate of
interest which was paid under the former Contract. If AUL changes the Current
Rate, such amounts contributed or transferred on or after the effective date of
the change earn interest at the new Current Rate; however, amounts contributed
or transferred prior to the effective date of the change may earn interest at
the prior Current Rate or other Current Rate determined by AUL. Therefore, at
any given time, various portions of a Participant's Fixed Account Value may be
earning interest at different Current Rates for different periods of time,
depending upon when such portions were originally contributed or transferred to
the Fixed Account. AUL bears the investment risk for Participant's Fixed Account
Values and for paying interest at the Current Rate on amounts allocated to the
Fixed Account.
For certain Contracts, AUL reserves the right at any time to change the
Guaranteed Rate of interest for any Participant Accounts established on or after
the effective date of the change, although once a Participant Account is
established, the Guaranteed Rate may not be changed for the duration of that
Account.
WITHDRAWALS AND TRANSFERS
A Participant (or a Contract Owner on behalf of a Participant) may make a
full surrender or a partial withdrawal from his or her Fixed Account Value
subject to the provisions of the Contract. A full surrender of a Participant's
Fixed Account Value will result in a withdrawal payment equal to the value of
the Participant's Fixed Account Value as of the day the surrender is effected,
minus any applicable withdrawal charge and minus the Participant's outstanding
loan balance(s), if any, and any expense charges due thereon. A partial
withdrawal may be requested for a specified percentage or dollar amount of the
Participant's Fixed Account Value, except, where a Participant has outstanding
loans under a Contract, a partial withdrawal will be permitted only to the
extent that the Participant's remaining Withdrawal Value in the Fixed Account
equals twice the total of the outstanding loans under the Participant's account.
The minimum amount that may be withdrawn from a Participant's share of the Fixed
Account is the lesser of $500 or the Participant's entire Fixed Account Value as
of the date the withdrawal request is received by AUL at its Home Office. If a
partial withdrawal is requested that would leave the Participant's Fixed Account
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Value less than $500, then such partial withdrawal request will be treated as a
request for a full withdrawal from the Fixed Account. If a Participant has more
than one Account, then the Account from which the partial withdrawal is to be
taken must be specified and any withdrawal restrictions shall be effective at an
Account level. For a further discussion of surrenders and partial withdrawals as
generally applicable to a Participant's Variable Account Value and Fixed Account
Value, see "Cash Withdrawals."
A Participant's Fixed Account Value may be transferred from the Fixed
Account to the Variable Account subject to certain limitations. Where a
Participant has outstanding loans under a Contract, a transfer will be permitted
only to the extent that the Participant's remaining Withdrawal Value in the
Fixed Account equals twice the total of the outstanding loans under the
Participant's Account. The minimum transfer from any Investment Account or from
the Fixed Account is the lesser of $500 or a Participant's entire Account Value
in that Investment Account or in the Fixed Account as of the date the transfer
request is received by AUL at its Home Office, provided, however, that amounts
transferred from the Fixed Account to an Investment Account during any given
Contract Year cannot exceed 20% of the Participant's Fixed Account Value as of
the beginning of that Contract Year. However, if a Participant's Fixed Account
Value at the beginning of the Contract Year is less than $2,500, the amount that
will be transferred for that Contract Year from the Fixed Account is the lesser
of $500 or the entire Fixed Account Value as of the date the transfer request is
received by AUL at its Home Office. If, after any transfer, the Participant's
remaining Account Value in an Investment Account or in the Fixed Account would
be less than $500, then such request will be treated as a request for a transfer
of the entire Account Value. Transfers and withdrawals of a Participant's Fixed
Account Values will be effected on a first-in, first-out basis. If a Participant
has more than one Account, then the Account from which the transfer is to be
taken must be specified and any transfer restrictions shall be effective at an
Account level. The 20% restriction on transfers during any given Contract Year
from the Fixed Account to an Investment Account shall not apply to Employer
Sponsored 403(b) Programs, Employee Benefit Plans, Employee Benefit Plans in a
combined Contract for an Employee Benefit Plan and Employer Sponsored 403(b)
Plan, or 408 SEP or SIMPLE IRA Contracts if: (1) the Owner (or Plan Sponsor)
selects the Fixed Interest Account as an Investment Option to Participants under
the Contract; (2) the Owner (or Plan Sponsor) does not select the AUL American
Money Market Investment Account as an available Investment Option to
Participants under the Contract, and (3) following a transfer from the Fixed
Account to the Variable Account by a Participant, a transfer back to the Fixed
Account shall be allowed only after 90 days have elapsed since the previous
transfer from the Fixed Account. Except as noted previously, generally, there
are no limitations on the number of transfers between Investment Accounts
available under a Contract or the Fixed Account. In addition, no charges are
currently imposed upon transfers. AUL reserves the right, however, at a future
date, to change the limitation on the minimum transfer, to assess transfer
charges, to change the limit on remaining balances, to limit the number and
frequency of transfers, and to suspend the transfer privilege or the telephone
transfer authorization. Any transfer from an Investment Account of the Variable
Account shall be effective as of the end of the Valuation Date in which AUL
receives the request in proper form. For a discussion of transfers as generally
applicable to a Participant's Variable Account Value and Fixed Account Value,
see "Transfers of Account Value."
TRANSFER OF INTEREST OPTION
Participants may elect to use interest earned in their Fixed Account to
purchase Accumulation Units in one or more Variable Accounts. Upon receipt at
AUL's Home Office of properly executed written instructions to do so, AUL will,
on the last business day of each month and monthly thereafter, use the interest
earned in the Fixed Account during that month to purchase Accumulation Units at
the corresponding Accumulation Unit Value on each date that a purchase is made.
To elect this Option, the Participant must have previously provided AUL with
instructions specifying the Variable Investment Account or Accounts to be
purchased and a percentage allocation among Investment Accounts if more than one
Investment Account has been elected. If no such instructions are received by
AUL, then the Participant's prior investment allocation instructions will be
used by AUL to allocate purchases under this Option.
To participate in this Option, a Participant's Fixed Account Value must be
greater than $10,000. Amounts transferred out of the Fixed Account under this
Option will be considered a part of the 20% maximum amount that can be
transferred from the Fixed Account to a Variable Account during any given
Contract Year.
CONTRACT CHARGES
The withdrawal charge will be the same for amounts surrendered or withdrawn
from a Participant's Fixed Account Value as for amounts surrendered or withdrawn
from a Participant's Variable Account Value. In addition, the administrative
charge will be the same whether or not a Participant's Account Value is
allocated to the Variable Account or the Fixed Account. The charge for mortality
and expense risks will not be assessed against the Fixed Account, and any
amounts that AUL pays for income taxes allocable to the Variable Account will
not be charged against the Fixed Account. In addition, the investment advisory
fees and operating expenses paid by the Funds will not be paid directly or
indirectly by Participants to the extent the Account Value is allocated to the
Fixed Account; however, such Participants will not participate in the investment
experience of the Variable Account. See "Charges and Deductions."
An Investment Liquidation Charge or Market Value Adjustment, depending on
the Contract, may be imposed upon termination by an Owner of a Contract acquired
in connection with an Employee Benefit Plan or 457 Program. See "Termination by
the Owner."
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PAYMENTS FROM THE FIXED ACCOUNT
Surrenders, withdrawals, and transfers from the Fixed Account and payment
of a death benefit based upon a Participant's Fixed Account Value may be delayed
for up to six months after a written request in proper form is received by AUL
at its Home Office. During the period of deferral, interest at the applicable
interest rate or rates will continue to be credited to the Participant's Fixed
Account Value. For information on payment upon termination by the Owner of a
Contract acquired in connection with an Employee Benefit Plan, an Employer
Sponsored 403(b) Program, or a 457 Program, see "Termination by the Owner."
LOANS FROM THE FIXED ACCOUNT
A Participant under a 403(b) Program, other than an Employer Sponsored
403(b) Program, who has a Participant Account Value in the Fixed Account may
borrow money from AUL using his or her Fixed Account Value as the only security
for the loan by submitting a proper written request to AUL's Home Office. A loan
may be taken any time prior to the Annuity Commencement Date. The minimum loan
that can be taken at any time is $2000, unless a lower minimum loan amount is
specified by state law or Department of Labor regulations. The maximum amount
that can be borrowed at any time is an amount which, when combined with the
largest loan balance during the prior 12 months, does not exceed the lesser of
(1) 50% of the Participant's Withdrawal Value in the Fixed Account, or (2)
$50,000. The Participant's Withdrawal Value in the Fixed Account, which must be
at least twice the amount of the outstanding loan balance, shall serve as
security for the loan, and shall continue to earn interest as described under
"Interest." Payment by AUL of the loan amount may be delayed for up to six
months. If a Participant has more than one Participant Account invested in the
Fixed Account, then the account in which funds are to be held as security for
the loan must be specified, and any loan restrictions shall be effective at an
Account level.
Interest will be charged for the loan, and will accrue on the loan balance
from the effective date of any loan. The interest rate will be declared by AUL
at the beginning of each calendar quarter, or, with respect to Contracts or
Participants in some states, annually. The interest charged will be determined
under a procedure specified in the loan provision of the Contract; the interest
rate generally follows the Moody's Corporate Bond Yield Average-Monthly Average
Corporates as published by Moody's Investors Service. However, no change from a
previously established rate will be made in an amount less than .50% in any
periodic adjustment. The Contract should be consulted for more information. The
loan balance shall also be subject to a loan expense charge equal to 2% of each
loan repayment unless such a charge is prohibited by state law.
Loans to Participants must be repaid within a term of five years, unless
the Participant certifies to AUL that the loan is to be used to acquire a
principal residence for the Participant, in which case the term may be longer.
Loan repayments must be made at least quarterly. Upon receipt of a repayment,
AUL will deduct the 2% expense charge from the repayment and will apply the
balance first to any accrued interest and then to the outstanding loan
principal.
If a loan either remains unpaid at the end of its term, or if at any time
during the Accumulation Period, 102% of the total of all the Participant's loan
balances equals the Participant's Withdrawal Value allocated to the Fixed
Account, then AUL will deduct these loan balances, as well as an expense charge
equal to 2% of the outstanding loan balances, from the Participant's Fixed
Account Value to the extent permitted by law. If a Participant has outstanding
loans, then withdrawals or transfers to the Variable Account will be permitted
only to the extent that the remaining Participant's Withdrawal Value in the
Fixed Account equals or exceeds twice the total of any outstanding loans under
the Contract. All loan balances plus the 2% expense charge must be paid or
satisfied in full before any amount based upon a Participant's Fixed Account
Value is paid upon surrender, as a death benefit, upon annuitization, or other
permitted distribution.
The restrictions or limitations stated above may be modified, or new
restrictions and limitations added, to the extent necessary to comply with
Section 72(p) of the Internal Revenue Code or its regulations, under which a
loan will not be treated as a distribution under a 403(b) Program, or other
applicable law as determined by AUL. It should be noted that the Internal
Revenue Service has issued regulations which cause the outstanding balance of a
loan to be treated as a taxable distribution if the loan is not repaid in a
timely manner.
MORE ABOUT THE CONTRACTS
DESIGNATION AND CHANGE OF BENEFICIARY
The Beneficiary designation contained in an enrollment form application to
open a Participant's Account will remain in effect until changed. Payment of
benefits to any Beneficiary are subject to the specified Beneficiary surviving
the Participant. Unless otherwise provided, if no designated Beneficiary is
living upon the death of the Participant prior to the Annuity Commencement Date,
the Participant's estate is the Beneficiary. Unless otherwise provided, if no
designated Beneficiary under an Annuity Option is living after the Annuity
Commencement Date, upon the death of the Annuitant, the Annuitant's estate is
the Beneficiary.
Subject to the rights of an irrevocably designated Beneficiary, the
designation of a Beneficiary may be changed or revoked at any time while the
Participant is living by filing with AUL a written beneficiary designation or
revocation in such form as AUL may require. The change or revocation will not be
binding upon AUL until it is received by AUL at its Home Office. When it is so
received, the change or revocation will be effective as of the date on which the
beneficiary designation or revocation was signed, but the change or revocation
will be without prejudice to AUL if any payment has been made or any action has
been taken by AUL prior to receiving the change or revocation.
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Reference should be made to the terms of the particular Plan and any
applicable law for any restrictions on the beneficiary designation. For
instance, under an Employee Benefit Plan or Employer Sponsored 403(b) Program,
the Beneficiary (or contingent Annuitant) must be the Participant's spouse if
the Participant is married, unless the spouse properly consents to the
designation of a Beneficiary (or contingent Annuitant) other than the spouse.
ASSIGNABILITY
No benefit or privilege under a Contract may be sold, assigned, discounted,
or pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose to any person or entity other than AUL.
PROOF OF AGE AND SURVIVAL
AUL may require proof of age or survival of any person on whose life
annuity payments depend.
MISSTATEMENTS
If the age of an Annuitant or contingent Annuitant has been misstated, the
correct amount paid or payable by AUL shall be such as the Participant's Account
Value would have provided for the correct age.
ACCEPTANCE OF NEW PARTICIPANTS OR CONTRIBUTIONS
AUL reserves the right to refuse to accept new Participants or new
Contributions to a Contract at any time.
FEDERAL TAX MATTERS
INTRODUCTION
The Contracts described in this Prospectus are designed for use by
Employer, association, and other group retirement plans under the provisions of
Sections 401, 403, 408, and 457 of the Internal Revenue Code ("Code"). The
ultimate effect of Federal income taxes on values under a Contract, the
Participant's Account, on annuity payments, and on the economic benefits to the
Owner, the Participant, the Annuitant, and the Beneficiary or other payee may
depend upon the type of Plan for which the Contract is purchased and a number of
different factors. The discussion contained herein and in the Statement of
Additional Information is general in nature. It is based upon AUL's
understanding of the present Federal income tax laws as currently interpreted by
the Internal Revenue Service ("IRS"), and is not intended as tax advice. No
representation is made regarding the likelihood of continuation of the present
Federal income tax laws or of the current interpretations by the IRS. Moreover,
no attempt is made to consider any applicable state or other laws. Because of
the inherent complexity of such laws and the fact that tax results will vary
according to the particular circumstances of the Plan or individual involved,
any person contemplating the purchase of a Contract, or becoming a Participant
under a Contract, or receiving annuity payments under a Contract should consult
a qualified tax adviser.
AUL DOES NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS, FEDERAL, STATE, OR
LOCAL, OF ANY CONTRACT OR PARTICIPANT'S ACCOUNT OR ANY TRANSACTION INVOLVING THE
CONTRACTS.
TAX STATUS OF THE COMPANY AND THE VARIABLE ACCOUNT
AUL is taxed as a life insurance company under Part I, Subchapter L of the
Code. Because the Variable Account is not taxed as a separate entity and its
operations form a part of AUL, AUL will be responsible for any Federal income
taxes that become payable with respect to the income of the Variable Account.
However, each Investment Account will bear its allocable share of such
liabilities. Under current law, no item of dividend income, interest income, or
realized capital gain attributable, at a minimum, to appreciation of the
Investment Accounts will be taxed to AUL to the extent it is applied to increase
reserves under the Contracts.
Each of the Funds in which the Variable Account invests has advised AUL
that it intends to qualify as a "regulated investment company" under the Code.
AUL does not guarantee that any Fund will so qualify. If the requirements of the
Code are met, a Fund will not be taxed on amounts distributed on a timely basis
to the Variable Account. Were such a Fund not to so qualify, the tax status of
the Contracts as annuities might be lost, which could result in immediate
taxation of amounts earned under the Contracts (except those held in Employee
Benefit Plans and 408 Programs).
Under regulations promulgated under Code Section 817(h), each Investment
Account must meet certain diversification standards. Generally, compliance with
these standards is determined by taking into account an Investment Account's
share of assets of the appropriate underlying Fund. To meet this test, on the
last day of each calendar quarter, no more than 55% of the total assets of a
Fund may be represented by any one investment, no more than 70% may be
represented by any two investments, no more than 80% may be represented by any
three investments, and no more than 90% may be represented by any four
investments. For the purposes of Section 817(h), securities of a single issuer
generally are treated as one investment, but obligations of the U.S. Treasury
and each U.S. Governmental agency or instrumentality generally are treated as
securities of separate issuers.
TAX TREATMENT OF RETIREMENT PROGRAMS
The Contracts described in this Prospectus are offered for use with several
types of retirement programs as described in "The Contracts." The tax rules
applicable to Participants in such retirement programs vary according to the
type of retirement plan and its terms and conditions. Therefore, no attempt is
made herein to provide more than general information about the use of the
Contracts with the various types of retirement programs. Participants under such
programs, as well as Owners, Annuitants, Beneficiaries and other payees are
cautioned that the rights of any person to
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any benefits under these programs may be subject to the terms and conditions of
the Plans themselves, regardless of the terms and conditions of the Contracts
issued in connection therewith.
Generally, no taxes are imposed on the increases in the value of a Contract
by reason of investment experience or Employer contributions until a
distribution occurs, either as a lump-sum payment or annuity payments under an
elected Annuity Option or in the form of cash withdrawals, surrenders, or other
distributions prior to the Annuity Commencement Date.
The amounts that may be contributed to the Plans are subject to limitations
that may vary depending on the type of Plan. In addition, early distributions
from most Plans may be subject to penalty taxes, or in the case of distributions
of amounts contributed under salary reduction agreements, could cause the Plan
to be disqualified. Furthermore, distributions from most Plans are subject to
certain minimum distribution rules. Failure to comply with these rules could
result in disqualification of the Plan or subject the Annuitant to penalty
taxes. As a result, the minimum distribution rules could limit the availability
of certain Annuity Options to Participants and their Beneficiaries.
Below are brief descriptions of various types of retirement programs and
the use of the Contracts in connection therewith.
EMPLOYEE BENEFIT PLANS
Code Section 401 permits business employers and certain associations to
establish various types of retirement plans for employees. Such retirement plans
may permit the purchase of Contracts to provide benefits thereunder.
If a Participant under an Employee Benefit Plan receives a lump-sum
distribution, the portion of the distribution equal to any contribution that was
taxable to the Participant in the year when paid is received tax free. The
balance of the distribution will be treated as ordinary income. Special
five-year forward averaging provisions under Code Section 402 may be utilized on
any amount subject to ordinary income tax treatment, provided that the
Participant has reached age 59 1/2, has not previously elected forward averaging
for a distribution from any Employee Benefit Plan after reaching age 59 1/2, and
has not rolled over a partial distribution from a similar plan into an
individual retirement account or annuity. Special ten-year averaging and a
capital-gains election may be available to a Participant who reached age 50
before 1986.
Under an Employee Benefit Plan under Section 401 of the Code, when annuity
payments commence (as opposed to a lump-sum distribution), under Section 72 of
the Code, the portion of each payment attributable to contributions that were
taxable to the Participant in the year made, if any, is excluded from gross
income as a return of the Participant's investment. The portion so excluded is
determined at the time the payments commence by dividing the Participant's
investment in the Contract by the expected return. The periodic payments in
excess of this amount are taxable as ordinary income. Once the Participant's
investment has been recovered, the full annuity payment will be taxable. If the
annuity should stop before the investment has been received, the unrecovered
portion is deductible on the Annuitant's final return. If the Participant made
no contributions that were taxable to the Participant in the year made, there
would be no portion excludable.
403(b) PROGRAMS
Code Section 403(b) permits public school systems and certain types of
charitable, educational, and scientific organizations specified in Code Section
501(c)(3) to purchase annuity contracts on behalf of their employees, and,
subject to certain limitations, allows employees of those organizations to
exclude the amount of contributions from gross income for Federal income tax
purposes.
If a Participant under a 403(b) Program makes a surrender or partial
withdrawal from the Participant's Account, the Participant will realize income
taxable at ordinary tax rates on the full amount received. See "Constraints on
Withdrawal - 403(b) Programs." Since, under a 403(b) Program, contributions
generally are excludable from the taxable income of the employee, the full
amount received will usually be taxable as ordinary income when annuity payments
commence.
408 PROGRAMS
Code Sections 219 and 408 permit eligible individuals to contribute to an
individual retirement program, including Simplified Employee Pension Plans,
SIMPLE IRA plans and Employer/Association Established Individual Retirement
Account Trusts, known as an Individual Retirement Account ("IRA"). These IRA
accounts are subject to limitations on the amount that may be contributed, the
persons who may be eligible, and on the time when distributions may commence. In
addition, certain distributions from some other types of retirement plans may be
placed on a tax-deferred basis in an IRA. Sale of the Contracts for use with
IRA's may be subject to special requirements imposed by the Internal Revenue
Service. Purchasers of the Contracts for such purposes will be provided with
such supplementary information as may be required by the Internal Revenue
Service or other appropriate agency, and will have the right to revoke the
Contract under certain circumstances.
If a Participant under a 408 Program makes a surrender or partial
withdrawal from the Participant's Account, the Participant generally will
realize income taxable at ordinary tax rates on the full amount received. Since,
under a 408 Program, contributions generally are deductible from the taxable
income of the employee, the full amount received will usually be taxable as
ordinary income when annuity payments commence.
457 PROGRAMS
Section 457 of the Code permits employees of state and local governments
and units and agencies of state and local governments as well as tax-exempt
organizations described in Section 501(c)(3) of the Code to defer a portion of
their compensation without paying current taxes. The employees
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must be Participants in an eligible deferred compensation plan.
If the Employer sponsoring a 457 Program requests and receives a withdrawal
for an eligible employee in connection with a 457 Program, then the amount
received by the employee will be taxed as ordinary income. Since, under a 457
Program, contributions are excludable from the taxable income of the employee,
the full amount received will be taxable as ordinary income when annuity
payments commence or other distribution is made.
If a Contract is used in connection with an unqualified, unfunded deferred
compensation benefits to a select group of employees, contributions to the Plan
are includible in the employee's gross income when these amounts are paid or
otherwise made available to the employee.
TAX PENALTY
Any distribution made to a Participant from an Employee Benefit Plan or a
408 Program other than on account of one or more of the following events will be
subject to a 10% penalty tax on the amount distributed:
(a) the Participant has attained age 59 1/2;
(b) the Participant has died; or
(c) the Participant is disabled.
In addition, a distribution from an Employee Benefit Plan will not be
subject to a 10% penalty tax on the amount distributed if the Participant is 55
and has separated from service. Distributions received at least annually as part
of a series of substantially equal periodic payments made for the life of the
Participant will not be subject to a penalty tax. Certain amounts paid for
medical care also may not be subject to a penalty tax.
Any permitted distribution from a Participant Account under a 403(b)
Program will be subject to a 10% excise tax unless the Participant satisfies one
of the exemptions listed above for Employee Benefit Plans. See "Constraints on
Withdrawals - 403(b) Programs."
WITHHOLDING
Distributions from an Employee Benefit Plan under Code Section 401(a) or a
403(b) Program to an employee, surviving spouse, or former spouse who is an
alternate payee under a qualified domestic relations order, in the form of a
lump-sum settlement or periodic annuity payments for a fixed period of fewer
than 10 years are subject to mandatory federal income tax withholding of 20% of
the taxable amount of the distribution, unless the distributee directs the
transfer of such amounts to another Employee Benefit Plan or 403(b) Program or
to an Individual Retirement Account under Code Section 408. The taxable amount
is the amount of the distribution, less the amount allocable to after-tax
contributions.
All other types of distributions from Employee Benefit Plans and 403(b)
Programs, and all distributions from Individual Retirement Accounts, are subject
to federal income tax withholding on the taxable amount unless the distributee
elects not to have the withholding apply. The amount withheld is based on the
type of distribution. Federal tax will be withheld from annuity payments (other
than those subject to mandatory 20% withholding) pursuant to the recipient's
withholding certificate. If no withholding certificate is filed with AUL, tax
will be withheld on the basis that the payee is married with three withholding
exemptions. Tax on all surrenders and lump-sum distributions from Individual
Retirement Accounts will be withheld at a flat 10% rate.
Withholding on annuity payments and other distributions from the Contract
will be made in accordance with regulations of the Internal Revenue Service.
EFFECT OF TAX DEFERRED ACCUMULATION
In general, participants in retirement plans that own annuity contracts are
not taxed on increases in the value of their accounts until some form of
distribution is made to the Participant. Due to this tax deferral during the
accumulation period, participation in a retirement plan funded by an annuity
contract generally results in more rapid growth than a comparable investment
under which contributions and increases in value are taxed on a current basis.
The chart illustrates this benefit by comparing a retirement plan that invests
in a variable annuity contract to accumulation from an investment whose
contributions and gains are taxed on a current basis. The chart illustrates
accumulation of $250 of monthly before-tax contributions going into an annuity
contract for a retirement plan and $172.50 of monthly after-tax contributions
going into a conventional savings plan ($250 minus $77.50 of income taxes based
on an assumed combined rate of 31% for state and federal income tax equals
$172.50 of after-tax contributions). Each contribution is made at the end of
each month. This chart also assumes a 6% before-tax earnings rate. Values for
Tax Deferred Accumulation After Tax and Pre-Tax Accumulation Value do not
reflect the deduction for mortality and expense risk charges under a variable
annuity contract and the values shown for Tax Deferred Accumulation After Tax
would be lower if these charges were included. Values shown for Tax Deferred
Accumulation After Tax reflect appropriate withdrawal charges at the end of the
periods shown.
The hypothetical rate of return used in the chart is an assumption only,
and no implication is intended that the return is guaranteed in any way or that
it represents an average or expected rate of return over the period depicted.
The portion of a Participant's Account Value that exceeds the variable annuity
contract owner's or participant's investment in the Participant's Account is
taxed at ordinary income tax rates upon distribution, and a 10% tax penalty may
apply to withdrawals taken before the taxpayer reaches the age of 59 1/2.
After state and federal income tax at 31% has been paid on the amount
distributed, with a variable annuity, after 5 years there would be an additional
$100 available; after 10 years there would be an additional $2,541 available;
after 20 years, there would be an additional $14,496 available; after 30 years,
there would be an additional $47,016 available; and after 40 years, there would
be an additional $121,922 available. Tax rates may vary for different taxpayers
from the 31% used in this chart, which would result in different values from
those shown in the chart.
<PAGE>
37
(Chart omitted; the following information is an explanation of the
information contained in the chart.)
<TABLE>
<CAPTION>
$250 per month at gross annual rate of 6.00%, taxed at 31%
<S> <C> <C> <C>
Period After Tax Conventional Savings Tax Deferred Accumulation After Tax Pre-Tax Accumulation Value
- ------ ------------------------------ ----------------------------------- --------------------------
5 Years $11,455 $11,555 $17,371
10 Years $25,486 $28,027 $40,618
20 Years $63,722 $78,218 $113,360
30 Years $121,087 $168,103 $243,628
40 Years $207,152 $329,074 $476,919
</TABLE>
OTHER INFORMATION
VOTING OF SHARES OF THE FUNDS
AUL is the legal owner of the shares of the Portfolios of the Funds held by
the Investment Accounts of the Variable Account. In accordance with its view of
present applicable law, AUL will exercise voting rights attributable to the
shares of the Funds held in the Investment Accounts at any regular and special
meetings of the shareholders of the Funds on matters requiring shareholder
voting under the 1940 Act.
AUL will exercise these voting rights based on instructions received from
persons having the voting interest in corresponding Investment Accounts of the
Variable Account and consistent with any requirements imposed on AUL under
contracts with any of the Funds, or under applicable law. However, if the 1940
Act or any regulations thereunder should be amended, or if the present
interpretation thereof should change, and as a result AUL determines that it is
permitted to vote the shares of the Funds in its own right, it may elect to do
so.
The person having the voting interest under a Contract is the Owner or the
Participant, depending on the type of Plan. Generally, a Participant will have a
voting interest under a Contract to the extent of the vested portion of his or
her Account Value. AUL shall send to each Owner or Participant a Fund's proxy
materials and forms of instruction by means of which instructions may be given
to AUL on how to exercise voting rights attributable to the Funds' shares. In
the case of a Contract acquired in connection with an Employee Benefit Plan or
an Employer Sponsored 403(b) Program, AUL may furnish the Owner with sufficient
Fund proxy materials and voting instruction forms for all Participants under a
Contract with any voting interest.
Unless otherwise required by applicable law or under a contract with any of
the Funds, with respect to each of the Funds, the number of Fund shares of a
particular Portfolio as to which voting instructions may be given to AUL is
determined by dividing the value of all of the Accumulation Units of the
corresponding Investment Account attributable to a Contract or a Participant's
Account on a particular date by the net asset value per share of that Portfolio
as of the same date. Fractional votes will be counted. The number of votes as to
which voting instructions may be given will be determined as of the date
coincident with the date established by a Fund for determining shareholders
eligible to vote at the meeting of the Fund. If required by the SEC or under a
contract with any of the Funds, AUL reserves the right to determine in a
different fashion the voting rights attributable to the shares of the Fund.
Voting instructions may be cast in person or by proxy.
Voting rights attributable to the Contracts or Participant Accounts for
which no timely voting instructions are received will be voted by AUL in the
same proportion as the voting instructions which are received in a timely manner
for all Contracts and Participant Accounts participating in that Investment
Account. AUL will vote shares of any Investment Account, if any, that it owns
beneficially in its own discretion, except that if a Fund offers its shares to
any insurance company separate account that funds variable life insurance
contracts or if otherwise required by applicable law, AUL will vote its own
shares in the same proportion as the voting instructions that are received in a
timely manner for Contracts and Participant Accounts participating in the
Investment Account.
<PAGE>
38
Neither the Variable Account nor AUL is under any duty to inquire as to the
instructions received or the authority of Owners or others to instruct the
voting of shares of any of the Funds.
SUBSTITUTION OF INVESTMENTS
AUL reserves the right, subject to compliance with the law as then in
effect, to make additions to, deletions from, substitutions for, or combinations
of the securities that are held by the Variable Account or any Investment
Account or that the Variable Account or any Investment Account may purchase. If
shares of any or all of the Portfolios of a Fund should no longer be available
for investment, or if, in the judgment of AUL's management, further investment
in shares of any or all Portfolios of a Fund should become inappropriate in view
of the purposes of the Contracts, AUL may substitute shares of another Portfolio
of a Fund or of a different fund for shares already purchased, or to be
purchased in the future under the Contracts. AUL may also purchase, through the
Variable Account, other securities for other classes of contracts, or permit a
conversion between classes of contracts on the basis of requests made by Owners
or as permitted by Federal law.
Where required under applicable law, AUL will not substitute any shares
attributable to an Owner's interest in an Investment Account or the Variable
Account without notice, Owner or Participant approval, or prior approval of the
SEC or a state insurance commissioner, and without following the filing or other
procedures established by applicable state insurance regulators.
AUL also reserves the right to establish additional Investment Accounts of
the Variable Account that would invest in a new Portfolio of a Fund or in shares
of another investment company, a series thereof, or other suitable investment
vehicle. New Investment Accounts may be established in the sole discretion of
AUL, and any new Investment Account will be made available to existing Owners on
a basis to be determined by AUL. Not all Investment Accounts may be available
under a particular Contract. AUL may also eliminate or combine one or more
Investment Accounts or cease permitting new allocations to an Investment Account
if, in its sole discretion, marketing, tax, or investment conditions so warrant.
Subject to any required regulatory approvals, AUL reserves the right to
transfer assets of any Investment Account of the Variable Account to another
separate account or Investment Account.
In the event of any such substitution or change, AUL may, by appropriate
endorsement, make such changes in these and other Contracts as may be necessary
or appropriate to reflect such substitution or change. If deemed by AUL to be in
the best interests of persons having voting rights under the Contracts, the
Variable Account may be operated as a management investment company under the
1940 Act or any other form permitted by law, it may be deregistered under that
Act in the event such registration is no longer required, or it may be combined
with other separate accounts of AUL or an affiliate thereof. Subject to
compliance with applicable law, AUL also may combine one or more Investment
Accounts and may establish a committee, board, or other group to manage one or
more aspects of the operation of the Variable Account.
CHANGES TO COMPLY WITH LAW AND AMENDMENTS
AUL reserves the right, without the consent of Owners or Participants, to
make any change to the provisions of the Contracts to comply with, or to give
Owners or Participants the benefit of, any Federal or state statute, rule, or
regulation, including, but not limited to, requirements for annuity contracts
and retirement plans under the Internal Revenue Code and regulations thereunder
or any state statute or regulation.
AUL reserves the right to make certain changes in the Contracts. AUL has
the right at any time to change the Guaranteed Rate of interest credited to
amounts allocated to the Fixed Account for any Participant Accounts established
on or after the effective date of the change, although once a Participant's
Account is established, the Guaranteed Rate may not be changed for the duration
of the Account.
After the fifth anniversary of a Contract, AUL has the right to change any
annuity tables included in the Contract, but any such change shall apply only to
Participant Accounts established on or after the effective date of such a
change. AUL also has the right to change the withdrawal charge and, within the
limits described under "Guarantee of Certain Charges," the administrative
charge.
RESERVATION OF RIGHTS
AUL reserves the right to refuse to accept new contributions under a
Contract and to refuse to accept new Participants under a Contract.
PERIODIC REPORTS
AUL will send quarterly statements showing the number, type, and value of
Accumulation Units credited to the Contract or to the Participant's Account, as
the case may be. AUL will also send statements reflecting transactions in a
Participant's Account as required by applicable law. In addition, every person
having voting rights will receive such reports or Prospectuses concerning the
Variable Account and the Funds as may be required by the 1940 Act and the 1933
Act.
LEGAL PROCEEDINGS
There are no legal proceedings pending to which the Variable Account is a
party, or which would materially affect the Variable Account.
LEGAL MATTERS
Legal matters in connection with the issue and sale of the Contracts
described in this Prospectus and the organization of AUL, its authority to issue
the Contracts under Indiana law, and the validity of the forms of the Contracts
under Indiana law have been passed upon by the Associate General Counsel of AUL.
Legal matters relating to the Federal securities and Federal income tax
laws have been passed upon by Dechert Price & Rhoads, Washington, D.C.
<PAGE>
39
YEAR 2000 READINESS DISCLOSURE
In recent years, the Year 2000 problem has received extensive publicity.
The problem arises because most computer systems and programs were written with
dates expressed as a 2 digit code. Unless steps are taken many systems may
interpret the year "2000" as "1900," and date-related computations either would
not be processed or would be processed incorrectly. This could have a material
and adverse effect on financial institutions such as banks and insurance
companies like AUL. To prevent this, AUL began assessing the potential impact in
early 1996 and adopted a detailed written work plan in June, 1997 to deal with
Year 2000 issues.
Due to the complexity of this issue and the ever-increasing
interrelationships of computer systems in the United States it would be
extremely difficult for any company to state that it has or will achieve
complete Year 2000 compliance or guarantee that its systems will not be affected
in any way on January 1, 2000. However, AUL currently believes that all critical
computer systems and software (those systems or software which would cause
great disruption to the Company if they were inoperable for any length of time
or if they were to generate erroneous data) are, as of April 1, 1999, Year 2000
compliant. Although AUL has no reason to believe that these steps will not be
sufficient to avoid any material adverse impact from Year 2000 issues and is
addressing Year 2000 issues by using both internal staff and external
consultants, by replacing or upgrading hardware, operating systems and
application software, by remediating current application software and by testing
software and hardware in future dated scenarios, there can be no assurance that
the Company's efforts will be sufficient to avoid any adverse impact. The total
effort for all activities to make AUL systems ready for the year 2000 is
currently expected to amount to more than 250 person years of labor at a cost of
approximately $19,000,000 which has been or will be expensed against current
operating funds. As of December 1998, $13,000,000 of this cost was already
incurred.
As a part of its plan, the company has surveyed its primary business
partners to be sure that they have taken steps to address Year 2000 issues. AUL
will continue to monitor the status of all business partners' Year 2000 efforts.
Additionally, a contingency planning effort is underway to identify means by
which the risk associated with potential internal or external failures can be
reduced. Year 2000 contingency planning also includes development of a mechanism
to identify and respond to problems that could develop and to define steps to be
taken should problems arise.
PERFORMANCE INFORMATION
Performance information for the Investment Accounts is shown under
"Performance of the Investment Accounts." Performance information for the
Investment Accounts may also appear in promotional reports and literature to
current or prospective Owners or Participants in the manner described in this
section. Performance information in promotional reports and literature may
include the yield and effective yield of the Investment Account investing in the
AUL American Money Market Portfolio ("Money Market Investment Account"), the
yield of the remaining Investment Accounts, the average annual total return and
the total return of all Investment Accounts.
Current yield for the Money Market Investment Account will be based on
income received by a hypothetical investment over a given 7-day period (less
expenses accrued during the period), and then "annualized" (i.e., assuming that
the 7-day yield would be received for 52 weeks, stated in terms of an annual
percentage return on the investment). "Effective yield" for the Money Market
Investment Account is calculated in a manner similar to that used to calculate
yield, but reflects the compounding effect of earnings.
For the remaining Investment Accounts, quotations of yield will be based on
all investment income per Accumulation Unit earned during a given 30-day period,
less expenses accrued during the period ("net investment income"), and will be
computed by dividing net investment income by the value of an Accumulation Unit
on the last day of the period. Quotations of average annual total return for any
Investment Account will be expressed in terms of the average annual compounded
rate of return on a hypothetical investment in a Contract over a period of one,
five, and ten years (or, if less, up to the life of the Investment Account), and
will reflect the deduction of the applicable withdrawal charge, the mortality
and expense risk charge, and, if applicable, the administrative charge.
Hypothetical quotations of average annual total return may also be shown for an
Investment Account for periods prior to the time that the Investment Account
commenced operations, based upon the performance of the mutual fund portfolio in
which that Investment Account invests, and will reflect the deduction of the
applicable withdrawal charge, the administrative charge, and the mortality and
expense risk charge as if, and to the extent that, such charges had been
applicable. Quotations of total return, actual and hypothetical, may
simultaneously be shown that do not take into account certain contractual
charges such as the withdrawal charge and the administrative charge.
Performance information for an Investment Account may be compared, in
promotional reports and literature, to: (1) the Standard & Poor's 500 Composite
Index ("S & P 500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money
Market Institutional Averages, or other indices measuring performance of a
pertinent group of securities so that investors may compare an Investment
Account's results with those of a group of securities widely regarded by
investors as representative of the securities markets in general; (2) other
variable annuity separate accounts or other investment products tracked by
Lipper Analytical Services, a widely used independent research firm which ranks
mutual funds and other investment companies by overall performance, investment
objectives, and assets, or tracked by other ratings
<PAGE>
40
services, companies, publications, or persons who rank separate accounts or
other investment products on overall performance or other criteria; and (3) the
Consumer Price Index (measure for inflation) to assess the real rate of return
from an investment in the Contract. Unmanaged indices may assume the
reinvestment of dividends but generally do not reflect deductions for
administrative and management costs and expenses.
Performance information for any Investment Account reflects only the
performance of a hypothetical Contract under which Account Value is allocated to
an Investment Account during a particular time period on which the calculations
are based. Performance information should be considered in light of the
investment objectives and policies, characteristics, and quality of the
Portfolio of a Fund in which the Investment Account invests, and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future. For a description of the
methods used to determine yield and total return in promotional reports and
literature for the Investment Accounts, see the Statement of Additional
Information.
Promotional reports and literature may also contain other information
including: (1) the ranking of any Investment Account derived from rankings of
variable annuity separate accounts or other investment products tracked by
Lipper Analytical Services or by other rating services, companies, publications,
or other persons who rank separate accounts or other investment products on
overall performance or other criteria, (2) the effect of tax-deferred
compounding on an Investment Account's investment returns, or returns in
general, which may be illustrated by graphs, charts, or otherwise, and which may
include a comparison, at various points in time, of the return from an
investment in a Contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a taxable basis, and (3)
AUL's rating or a rating of AUL's claim-paying ability by firms that analyze and
rate insurance companies and by nationally recognized statistical rating
organizations.
STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more specific information and
financial statements relating to AUL. The Table of Contents of the Statement of
Additional Information is set forth below:
<TABLE>
<S> <C>
GENERAL INFORMATION AND HISTORY............................................................................................... 3
DISTRIBUTION OF CONTRACTS..................................................................................................... 3
CUSTODY OF ASSETS............................................................................................................. 3
LIMITS ON CONTRIBUTIONS TO RETIREMENT PLANS................................................................................... 3-4
403(b) Programs............................................................................................................. 3
408 Programs................................................................................................................ 4
457 Programs................................................................................................................ 4
Employee Benefit Plans...................................................................................................... 4
INDEPENDENT ACCOUNTANTS....................................................................................................... 4
PERFORMANCE INFORMATION....................................................................................................... 4-5
FINANCIAL STATEMENTS.......................................................................................................... 5-17
</TABLE>
A Statement of Additional Information may be obtained by calling or writing to
AUL at the telephone number and address set forth in the front of this
Prospectus.
<PAGE>
41
================================================================================
No dealer, salesman or any other person is authorized by the AUL
American Unit Trust or by AUL to give any information or to make any
representation other than as contained in this Prospectus in
connection with the offering described herein.
AUL has filed a Registration Statement with the Securities and
Exchange Commission, Washington, D.C. For further information
regarding the AUL American Unit Trust, AUL and its variable annuities,
please reference the Registration statement and the exhibits filed
with it or incorporated into it. All contracts referred to in this
prospectus are also included in that filing.
================================================================================
AUL AMERICAN UNIT TRUST
Group Variable Annuity Contracts
Sold By
AMERICAN UNITED
LIFE INSURANCE COMPANY(R)
One American Square
Indianapolis, Indiana 46282
PROSPECTUS
Dated: May 1, 1999
================================================================================
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1999
AUL American Unit Trust
Group Variable Annuity Contracts
Offered By
American United Life Insurance Company(R)
One American Square
Indianapolis, Indiana 46282
(800) 634-1629
Annuity Service Office Mail Address:
P.O. Box 6148, Indianapolis, Indiana 46206-6148
This Statement of Additional Information is not a prospectus and should
be read in conjunction with the current Prospectus for AUL American
Unit Trust, dated May 1, 1999.
A Prospectus is available without charge by calling or writing to
American United Life Insurance Company(R) at the telephone number or
address shown above or by mailing the Business Reply Mail card included
in this Statement of Additional Information.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Description Page
GENERAL INFORMATION AND HISTORY............................................................................................ 3
DISTRIBUTION OF CONTRACTS.................................................................................................. 3
CUSTODY OF ASSETS.......................................................................................................... 3
LIMITS ON CONTRIBUTIONS TO RETIREMENT PLANS................................................................................ 3-4
403(b) Programs.......................................................................................................... 3
408 Programs............................................................................................................. 4
457 Programs............................................................................................................. 4
Employee Benefit Plans................................................................................................... 4
INDEPENDENT ACCOUNTANTS.................................................................................................... 4
PERFORMANCE INFORMATION.................................................................................................... 4-5
FINANCIAL STATEMENTS....................................................................................................... 6-17
</TABLE>
2
<PAGE>
GENERAL INFORMATION AND HISTORY
For a general description of AUL and AUL American Unit Trust (the "Variable
Account"), see the section entitled "Information about AUL, The Variable
Account, and The Funds" in the Prospectus.
DISTRIBUTION OF CONTRACTS
AUL is the Principal Underwriter for the group variable annuity contracts
(the "Contracts") described in the Prospectus and in this Statement of
Additional Information. AUL is registered with the Securities and Exchange
Commission (the "SEC") as a broker-dealer. The Contracts are currently being
sold in a continuous offering. While AUL does not anticipate discontinuing the
offering of the Contracts, it reserves the right to do so. The Contracts are
sold by registered representatives of AUL who are also licensed insurance
agents.
AUL also has sales agreements with various broker-dealers under which the
Contracts will be sold by registered representatives of the broker-dealers. The
registered representatives are required to be authorized under applicable state
regulations to sell variable annuity contracts. The broker-dealers are required
to be registered with the SEC and members of the National Association of
Securities Dealers, Inc.
AUL serves as the Principal Underwriter without compensation from the
Variable Account.
CUSTODY OF ASSETS
The assets of the Variable Account are held by AUL. The assets are kept
physically segregated and are held separate and apart from the assets of other
separate accounts of AUL and from AUL's General Account assets. AUL maintains
records of all purchases and redemptions of shares of AUL American Series Fund,
Inc., Alger American Fund, American Century Variable Portfolios, Inc., Calvert
Variable Series, Fidelity Variable Insurance Products Fund, Fidelity Variable
Insurance Products Fund II, Janus Aspen Series, PBHG Insurance Series Fund,
Inc., SAFECO Resource Series Trust, and T. Rowe Price Equity Series, Inc., (each
a "Fund" and collectively the "Funds").
LIMITS ON CONTRIBUTIONS TO RETIREMENT PLANS
403(b) PROGRAMS
Contributions to a 403(b) Program are excludable from a Participant's gross
income if they do not exceed the smallest of the limits calculated under
Sections 402(g), 403(b)(2), and 415 of the Internal Revenue Code. Section 402(g)
generally limits a Participant's salary reduction contributions to a 403(b)
Program to $10,000 a year. The $10,000 limit may be reduced by salary reduction
contributions to another type of retirement plan. A Participant with at least 15
years of service for a "qualified employer" (i.e., an educational organization,
hospital, home health service agency, health and welfare service agency, church
or convention or association of churches) generally may exceed the $10,000 limit
by $3,000 per year, subject to an aggregate limit of $15,000 for all years.
Section 403(b)(2) provides an overall limit on Employer and Participant
salary reduction contributions that may be made to a 403(b) Program. Section
403(b)(2) generally provides that the maximum amount of contributions a
Participant may exclude from his gross income in any taxable year is equal to
the excess, if any, of:
(a) the amount determined by multiplying 20% of his includable compensation
by the number of his years of service with his Employer, over
(b) the total amount contributed to retirement plans sponsored by his
Employer, including the Section 403(b) Program, that were excludable from his
gross income in prior years.
Participants employed by "qualified employers" may elect to have certain
alternative limitations apply.
Section 415(c) also provides an overall limit on the amount of Employer and
Participant's salary reduction contributions to a Section 403(b) Program that
will be excludable from an employee's gross income in a given year. The Section
415(c) limit is the lesser of (a) $30,000, or (b) 25% of the Participant's
annual compensation. This limit will be reduced if a Participant also
participates in an Employee Benefit Plan maintained by a business that he or she
controls.
The limits described above do not apply to amounts "rolled over" from
another Section 403(b) Program. A Participant who receives an "eligible rollover
distribution" will be permitted either to roll over such amount to another
Section 403(b) Program or an IRA within 60 days of receipt or to make a direct
rollover to another Section 403(b) Program or an IRA without recognition of
income. An "eligible rollover distribution" means any distribution to a
Participant of all or any taxable portion of the balance to his credit under a
Section 403(b) Program, other than a required minimum distribution to a
Participant who has reached age 70 1/2 and excluding any distribution which is
one of a series of substantially equal payments made (1) over the life
expectancy of the Participant or his beneficiary or (2) over a specified period
of 10 years or more. Provisions of the Internal Revenue Code require that 20% of
every eligible rollover distribution that is not directly rolled over be
withheld by the payor for federal income taxes.
408 PROGRAMS
Contributions to the individual retirement account of a Participant under a
408 Program that is described in Section 408(c) of the Internal Revenue Code are
subject to the limits
3
<PAGE>
on contributions to individual retirement accounts under Section 219(b) of the
Internal Revenue Code. Under Section 219(b) of the Code, contributions to an
individual retirement account are limited to the lesser of $2,000 per year or
the Participant's annual compensation. For tax years beginning after 1996, if a
married couple files a joint return, each spouse may, in a great majority of
cases, make contributions to his or her IRA up to the $2,000 limit. The extent
to which a Participant may deduct contributions to this type of 408 Program
depends on his or her spouse's gross income for the year and whether either
participate in another employer-sponsored retirement plan.
Contributions to a 408 Program that is a simplified employee pension plan
are subject to limits under Section 402(h) of the Internal Revenue Code. Section
402(h) currently limits Employer contributions and Participant salary reduction
contributions (if permitted) to a simplified employee pension plan to the lesser
of (a) 15% of the Participant's compensation, or (b) $30,000. Salary reduction
contributions, if any, are subject to additional annual limits.
457 PROGRAMS
Deferrals by a Participant to a 457 Program generally are limited under
Section 457(b) of the Internal Revenue Code to the lesser of (a) $8,000 or (b)
33 1/3% of the Participant's includable compensation. If the Participant
participates in more than one 457 Program, the $8,000 limit applies to
contributions to all such programs. The $8,000 limit is reduced by the amount of
any salary reduction contribution the Participant makes to a 403(b) Program, a
408 Program, or an Employee Benefit Program. The Section 457(b) limit is
increased during the last three years ending before the Participant reaches his
normal retirement age under the 457 Program. Effective January 1, 1997, the
limit on deferrals became indexed in $500 increments.
EMPLOYEE BENEFIT PLANS
The applicable annual limits on contributions to an Employee Benefit Plan
depend upon the type of plan. Total contributions on behalf of a Participant to
all defined contribution plans maintained by an Employer are limited under
Section 415(c) of the Internal Revenue Code to the lesser of (a) $30,000, or (b)
25% of a Participant's annual compensation. Salary reduction contributions to a
cash-or-deferred arrangement under a profit sharing plan are subject to
additional annual limits. Contributions to a defined benefit pension plan are
actuarially determined based upon the amount of benefits the Participants will
receive under the plan formula. The maximum annual benefit any Participant may
receive under an Employer's defined benefit plan is limited under Section 415(b)
of the Internal Revenue Code. The limits determined under Section 415(b) and (c)
of the Internal Revenue Code are further reduced for a Participant who
participates in a defined contribution plan and a defined benefit plan
maintained by the same employer.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, One American Square, Indianapolis, Indiana
46282, independent accountants, performs certain accounting and auditing
services for AUL and performs similar services for the Variable Account. The AUL
financial statements included in this Statement of Additional Information have
been audited to the extent and for the periods indicated in their report thereon
and its internal accounting controls have been reviewed.
PERFORMANCE INFORMATION
Performance information for the Investment Accounts is shown in the
prospectus under "Performance of the Investment Accounts." Performance
information for the Investment Accounts may also appear in promotional reports
and literature to current or prospective Owners or Participants in the manner
described in this section. Performance information in promotional reports and
literature may include the yield and effective yield of the Investment Account
investing in the AUL American Money Market Portfolio ("Money Market Investment
Account"), the yield of the remaining Investment Accounts, the average annual
total return and the total return of all Investment Accounts.
Current yield for the Money Market Investment Account will be based on the
change in the value of a hypothetical investment (exclusive of capital charges)
over a particular 7-day period, less a pro rata share of the Investment
Account's expenses accrued over that period (the "base period"), and stated as a
percentage of the investment at the start of the base period (the "base period
return"). The base period return is then annualized by multiplying by 365/7,
with the resulting yield figures carried to at least the nearest hundredth of
one percent.
Calculation of "effective yield" begins with the same "base period return"
used in the calculation of yield, which is then annualized to reflect weekly
compounding pursuant to the following formula:
Effective Yield = [(Base Period Return + 1)**365/7] - 1
For the 7-day period ending December 31, 1998, the current yield for the
AUL Money Market Investment Account was 4.2184% and the effective yield was
4.3068%.
Quotations of yield for the remaining Investment Accounts will be based on
all investment income per Accumulation Unit earned during a particular 30-day
period, less expenses accrued during the period ("net investment income"), and
will be computed by dividing net investment income by the value of the
Accumulation Unit on the last day of the period, according to the following
formula:
YIELD = 2[((a - b / cd) + 1)**6 - 1]
4
<PAGE>
where a = net investment income earned during the period by the Portfolio
attributable to shares owned by the Investment Account,
b = expenses accrued for the period (net of reimbursements),
c = the average daily number of Accumulation Units outstanding during the
period that were entitled to receive dividends, and
d = the value (maximum offering period) per Accumulation Unit on the last
day of the period.
For the one year period ending December 31, 1998, the yield for the Investment
Accounts corresponding to the Portfolios of the AUL American Series Fund, Inc.
was 0.24% for the Equity Investment Account, 3.90% for the Bond Investment
Account, 1.65% for the Managed Investment Account, and 0.27% for the Tactical
Asset Allocation Account. The LifeStyle Investment Accounts consisting of the
Conservative, Moderate and Aggressive Investor Investment Accounts commenced
operations May 1, 1998, and therefore has not been in operation for a one year
period.
Quotations of average annual total return for any Investment Account will
be expressed in terms of the average annual compounded rate of return of a
hypothetical investment in a Contract over a period of one, five, and ten years
(or, if less, up to the life of the Investment Account), calculated pursuant to
the following formula: P(1 + T)**n = ERV (where P = a hypothetical initial
payment of $1,000, T = the average annual total return, n = the number of years,
and ERV = the ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the period). Hypothetical quotations of average annual total
return may also be shown for an Investment Account for periods prior to the time
that the Investment Account commenced operations based upon the performance of
the mutual fund portfolio in which that Investment Account invests, as adjusted
for applicable charges. All total return figures reflect the deduction of the
applicable withdrawal charge, the administrative charge, and the mortality and
expense risk charge. Quotations of total return, actual and hypothetical, may
simultaneously be shown that do not take into account certain contractual
charges such as the withdrawal charge and the administrative charge and
quotations of total return may reflect other periods of time.
The average annual total return is calculated from the actual inception
date of the AUL American Investment Accounts and from the inception date of the
corresponding mutual funds for all of the other Investment Accounts. The
reported performance is, therefore, hypothetical to the extent and for the
periods that the Investment Accounts have not been in existence and reflects the
performance that such Investment Accounts would have achieved had they invested
in the corresponding Mutual Funds for those periods. For the periods that an
Investment Account has actually been in existence, however, the performance
represents actual and not hypothetical performance. The average annual return
that the Investment Accounts achieved for the one year, three year, the lessor
of five years or since inception, five year, the lesser of ten years or since
inception and the cumulative return for 10 years or since inception for the
periods ending December 31, 1998 may be found in the Prospectus.
Performance information for an Investment Account may be compared, in
promotional reports and literature, to: (1) the Standard & Poor's 500 Composite
Index ("S&P 500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money Market
Institutional Averages, or other indices that measure performance of a pertinent
group of securities so that investors may compare an Investment Account's
results with those of a group of securities widely regarded by investors as
representative of the securities markets in general; (2) other groups of
variable annuity separate accounts or other investment products tracked by
Lipper Analytical Services, a widely used independent research firm which ranks
mutual funds and other investment companies by overall performance, investment
objectives, and assets, or tracked by other services, companies, publications,
or persons who rank such investment companies on overall performance or other
criteria; and (3) the Consumer Price Index (measure for inflation) to assess the
real rate of return from an investment in the Contract. Unmanaged indices may
assume the reinvestment of dividends but generally do not reflect deductions for
administrative and management costs and expenses.
Performance information for any Investment Account reflects only the
performance of a hypothetical Contract under which a Participant's Account Value
is allocated to an Investment Account during a particular time period on which
the calculations are based. Performance information should be considered in
light of the investment objectives and policies, characteristics and quality of
the Portfolio of the Funds in which the Investment Account invests, and the
market conditions during the given time period, and should not be considered as
a representation of what may be achieved in the future.
Promotional reports and literature may also contain other information
including (1) the ranking of any Investment Account derived from rankings of
variable annuity separate accounts or other investment products tracked by
Lipper Analytical Services or by other rating services, companies, publications,
or other persons who rank separate accounts or other investment products on
overall performance or other criteria; (2) the effect of tax-deferred
compounding on an Investment Account's investment returns, or returns in
general, which may be illustrated by graphs, charts, or otherwise, and which may
include a comparison, at various points in time, of the return from an
investment in a Contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a taxable basis; and (3)
AUL's rating or a rating of AUL's claim-paying ability by firms that analyze and
rate insurance companies and by nationally recognized statistical rating
organizations.
5
<PAGE>
FINANCIAL STATEMENTS
Financial Statements for the Variable Account, including the Notes thereto,
are incorporated by reference to the Annual Report for the Variable Account
dated as of December 31, 1998.
The financial statements of AUL, which are included in this Statement of
Additional Information, should be considered only as bearing on the ability of
AUL to meet its obligations under the Contracts. They should not be considered
as bearing on the investment performance of the assets held in the Variable
Account.
FINANCIAL STATEMENTS - AUL
The following financial statements relate solely to the condition and operations
of AUL.
REPORT OF INDEPENDENT ACCOUNTANTS
Report of Independent Accountants
To the Board of Directors
American United Life Insurance Company(R)
Indianapolis, Indiana
In our opinion, the accompanying combined balance sheet and the related combined
statements of operations, policyholders' surplus, and cash flows present fairly,
in all material respects, the financial position of American United Life
Insurance Company(R) and affiliates (the "Company") at December 31, 1998 and
1997, and the results of their operations and their cash flows for years then
ended, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCooper LLP
Indianapolis, Indiana
February 26, 1999
6
<PAGE>
<TABLE>
<CAPTION>
COMBINED BALANCE SHEET
December 31 1998 (in millions) 1997
- --------------------------------------------------------------------------------------------------------
Assets
<S> <C> <C>
Investments:
Fixed Maturities:
Available for sale at fair value $ 1,695.4 $ 1,653.8
Held to maturity at amortized cost 2,536.2 2,902.2
Equity securities at fair value 75.1 18.6
Mortgage loans 1,128.5 1,120.4
Real estate 46.6 52.1
Policy loans 144.4 143.1
Short term and other invested assets 64.9 102.0
Cash and cash equivalents 95.7 41.2
- --------------------------------------------------------------------------------------------------------
Total investments 5,786.8 6,033.4
- --------------------------------------------------------------------------------------------------------
Accrued investment income 73.0 79.3
Reinsurance receivables 290.6 244.3
Deferred acquisition costs 451.7 421.2
Property and equipment 56.8 55.5
Insurance premiums in course of collection 66.7 72.9
Other assets 16.1 17.2
Assets held in separate accounts 2,594.6 1,674.0
- --------------------------------------------------------------------------------------------------------
Total assets $9,336.3 $8,597.8
- --------------------------------------------------------------------------------------------------------
Liabilities and policyholders' surplus
Liabilities
Policy reserves $5,339.1 $5,642.9
Other policyholder funds 203.9 177.1
Pending policyholder claims 209.2 164.3
Surplus notes 75.0 75.0
Other liabilities and accrued expenses 180.4 199.9
Liabilities related to separate accounts 2,594.6 1,674.0
- --------------------------------------------------------------------------------------------------------
Total liabilities 8,602.2 7,933.2
- --------------------------------------------------------------------------------------------------------
Unrealized appreciation of securities,
net of deferred income tax 39.5 36.5
Policyholders' surplus 694.6 628.1
- --------------------------------------------------------------------------------------------------------
Total policyholders' surplus 734.1 664.6
- --------------------------------------------------------------------------------------------------------
Total liabilities and policyholders' surplus $9,336.3 $8,597.8
- --------------------------------------------------------------------------------------------------------
7
<PAGE>
COMBINED STATEMENT OF POLICYHOLDERS' SURPLUS
Policyholders' surplus at beginning of year $664.6 $572.8
Net income 66.5 74.3
Change in unrealized appreciation (depreciation)
of securities, net 3.0 17.5
- --------------------------------------------------------------------------------------------------------
Policyholders' surplus at end of year $734.1 $664.6
- --------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
COMBINED STATEMENT OF OPERATIONS
Year ended December 31 1998 (in millions) 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues:
Insurance premiums and other considerations $478.5 $413.9
Policy and contract charges 87.7 69.3
Net investment income 452.1 469.5
Realized investment gains 15.8 13.7
Other income 8.9 5.9
- --------------------------------------------------------------------------------------------------------
Total revenues 1,043.0 972.3
- --------------------------------------------------------------------------------------------------------
Benefits and expenses:
Policy benefits $462.4 $386.2
Interest expense on annuities and financial products 231.9 257.3
Underwriting, acquisition and insurance expenses 157.8 131.2
Amortization of deferred acquisition costs 59.7 53.2
Dividends to policyholders 26.4 25.0
Interest expense on surplus notes 5.8 5.8
Other operating expenses 10.2 9.5
- --------------------------------------------------------------------------------------------------------
Total benefits and expenses 954.2 868.2
- --------------------------------------------------------------------------------------------------------
Income before income tax expense 88.8 104.1
Income tax expense 22.3 29.8
- --------------------------------------------------------------------------------------------------------
Net income $ 66.5 $ 74.3
- --------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
COMBINED STATEMENT OF CASH FLOWS
Year ended December 31 1998 (in millions) 1997
- --------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Income $ 66.5 $ 74.3
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred acquisition costs 59.7 53.2
Depreciation 11.2 10.1
Deferred taxes 8.1 7.3
Realized investment gains (15.8) (13.7)
Policy acquisition costs capitalized (94.2) (90.8)
Interest credited to deposit liabilities 225.7 252.1
Fees charged to deposit liabilities (32.7) (32.9)
Amortization and accrual of investment income (10.8) (8.2)
Increase in insurance liabilities 169.6 140.2
Increase in noninvested assets (45.5) (66.3)
Increase in other liabilities (1.8) 35.1
- --------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 340.0 360.4
- --------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases:
Fixed maturities, Held to Maturity (18.7) (120.8)
Fixed maturities, Available for Sale (473.8) (348.3)
Equity securities (63.7) (9.4)
Mortgage loans (183.2) (155.4)
Real estate (4.9) (1.9)
Short term and other invested assets (2.7) (43.3)
Proceeds from sales, calls or maturities:
Fixed maturities, Held to Maturity 388.9 241.2
Fixed maturities, Available for Sale 461.6 335.1
Equity securities 8.1 7.2
Mortgage loans 179.2 149.7
Real estate 4.0 4.3
Short term and other invested assets 39.9 1.6
- --------------------------------------------------------------------------------------------------------
Net cash provided by investing activities 334.7 60.0
- --------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Deposits to insurance liabilities 846.6 713.6
Withdrawals from insurance liabilities (1,467.0) (1,112.5)
Other .2 (.5)
- --------------------------------------------------------------------------------------------------------
Net cash used by financing activities (620.2) (399.4)
- --------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 54.5 21.0
- --------------------------------------------------------------------------------------------------------
Cash and cash equivalents beginning of year 41.2 20.2
- --------------------------------------------------------------------------------------------------------
Cash and cash equivalents end of year $ 95.7 $ 41.2
- --------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Basis of Presentation
- ----------------------------------------------
American United Life Insurance Company(R) (AUL) is an Indiana-domiciled mutual
life insurance company with headquarters in Indianapolis. AUL is licensed to do
business in 48 states and the District of Columbia and is an authorized
reinsurer in all states. AUL offers individual life and annuity products through
its career agent distribution system. AUL's qualified group retirement plans,
tax deferred annuities and other non-medical group products are marketed through
independent agents and brokers, as well as career agents who are supported by 37
regional sales offices located throughout the country. Life and pooled
reinsurance is marketed directly to other insurance companies. In 1998, AUL
International began operations to develop reinsurance partners in Central and
South America. The combined Company financial statements include the accounts of
AUL and its affiliate, The State Life Insurance Company (State Life), and its
subsidiary, Equity Sales Corporation. Significant intercompany transactions have
been excluded.
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles (GAAP). AUL and State Life file
separate financial statements with insurance regulatory authorities which are
prepared on the basis of statutory accounting practices which are significantly
different from financial statements prepared in accordance with GAAP. These
differences are described in detail in Note 9 - Statutory Information.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Investments
- ------------
Fixed maturity securities which may be sold to meet liquidity and other needs of
the Company are categorized as available for sale and are stated at fair value.
Fixed maturity securities which the Company has the positive intent and ability
to hold to maturity are categorized as held-to-maturity and are stated at
amortized cost. Equity securities are stated at fair value. Mortgage loans on
real estate are carried at amortized cost less an impairment allowance for
estimated uncollectible amounts. Real estate is reported at cost less allowances
for depreciation. Depreciation is provided (straight line) over the estimated
useful lives of the related assets. Investment real estate is net of accumulated
depreciation of $31.7 million at December 31, 1998 and 1997. Depreciation
expense for investment real estate amounted to $2.4 million and $2.5 million for
1998 and 1997, respectively. Policy loans are carried at their unpaid balance.
Other invested assets are reported at cost plus the Company's equity in
undistributed net equity since acquisition. Short term investments include
investments with maturities of one-year or less and are carried at cost which
approximates market. Short term certificates of deposit and savings certificates
are considered to be cash equivalents. The carrying amount for cash and cash
equivalents approximates market.
Realized gains and losses on sale or maturity of investments are based upon
specific identification of the investments sold and do not include amounts
allocable to separate accounts. At the time a decline in value of an investment
is determined to be other than temporary, a provision for loss is recorded which
is included in realized investment gains and losses. Unrealized gains and
losses, resulting from carrying available-for-sale securities at fair value, are
reported in policyholders' surplus, net of deferred taxes.
Deferred Policy Acquisition Costs
- ---------------------------------
Those costs of acquiring new business, which vary with and are primarily related
to the production of new business, have been deferred to the extent that such
costs are deemed recoverable. Such costs include commissions, certain costs of
policy underwriting and issue and certain variable agency expenses. These costs
are amortized with interest as follows:
For participating whole life insurance products, over the lesser of 30
years or the lifetime of the policy in relation to the present value of
estimated gross margins from expenses, investments and mortality,
discounted using the expected investment yield.
For universal life-type policies and investment contracts, over the lesser
of the lifetime of the policy or 30 years for life policies or 20 years for
other policies in relation to the present value of estimated gross profits
from surrender charges and investment, mortality and expense margins,
discounted using the interest rate credited to the policy.
For term life insurance products and life reinsurance policies, over the
lesser of the benefit period or 30 years for term life or 20 years for life
reinsurance policies in relation to the ratio of anticipated annual premium
revenue to the anticipated total premium revenue, using the same
assumptions used in calculating policy benefits.
For miscellaneous group life and individual and group health policies,
straight line over the expected life of the policy.
For credit insurance policies, the deferred acquisition cost balance is
primarily equal to the unearned premium reserve multiplied by the ratio of
deferrable commissions to premiums written.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
Recoverability of the unamortized balance of deferred policy acquisition costs
is evaluated regularly. For universal life-type contracts, investment contracts
and participating whole life policies, the accumulated amortization is adjusted
(increased or decreased) whenever there is a material change in the estimated
gross profits or gross margins expected over the life of a block of business in
order to maintain a constant relationship between cumulative amortization and
the present value of gross profits or gross margins. For most other contracts,
the unamortized asset balance is reduced by a charge to income only when the
present value of future cash flows, net of the policy liabilities, is not
sufficient to cover such asset balance.
Assets Held in Separate Accounts
- --------------------------------
Separate accounts are funds on which investment income and gains or losses
accrue directly to certain policies, primarily variable annuity contracts,
equity-based pension and profit sharing plans and variable universal life
policies. The assets of these accounts are legally segregated, and are valued at
fair value. The related liabilities are recorded at amounts equal to the
underlying assets; the fair value of these liabilities is equal to their
carrying amount.
Property and Equipment
- ----------------------
Property and equipment includes real estate owned and occupied by the Company.
Property and equipment is carried at cost, net of accumulated depreciation of
$47.1 million and $41.6 million as of December 31, 1998 and 1997, respectively.
The Company provides for depreciation of property and equipment using the
straight-line method over its estimated useful life. Depreciation expense for
1998 and 1997 was $8.8 million and $7.6 million, respectively.
Premium Revenue and Benefits to Policyholders
- ---------------------------------------------
The premiums and benefits for whole life and term insurance products and certain
annuities with life contingencies (immediate annuities) are fixed and
guaranteed. Such premiums are recognized as premium revenue when due. Group
insurance premiums are recognized as premium revenue over the time period to
which the premiums relate. Benefits and expenses are associated with earned
premiums so as to result in recognition of profits over the life of the
contracts. This association is accomplished by means of the provision for
liabilities for future policy benefits and the amortization of deferred policy
acquisition costs.
Universal life policies and investment contracts are policies with terms that
are not fixed and guaranteed. The terms that may be changed could include one or
more of the amounts assessed the policyholder, premiums paid by the policyholder
or interest accrued to policyholder balances. The amounts collected from
policyholders for these policies are considered deposits, and only the
deductions during the period for cost of insurance, policy administration and
surrenders are included in revenue. Policy benefits and claims that are charged
to expense include interest credited to contracts and benefit claims incurred in
the period in excess of related policy account balances.
Reserves for Future Policy and Contract Benefits
- ------------------------------------------------
Liabilities for future policy benefits for participating whole life policies are
calculated using the net level premium method and assumptions as to interest and
mortality. The interest rate is the dividend fund interest rate and the
mortality rates are those guaranteed in the calculation of cash surrender values
described in the contract. Liabilities for future policy benefits for term life
insurance and life reinsurance policies are calculated using the net level
premium method and assumptions as to investment yields, mortality and
withdrawals. The assumptions are based on projections of past experience and
include provisions for possible unfavorable deviation. These assumptions are
made at the time the contract is issued. Liabilities for future policy benefits
on universal life and investment contracts consist principally of policy account
values plus certain deferred policy fees which are amortized using the same
assumptions and factors used to amortize the deferred policy acquisition costs.
If the future benefits on investment contracts are guaranteed (immediate
annuities with benefits paid for a period certain) the liability for future
benefits is the present value of such guaranteed benefits. Claim liabilities
include provisions for reported claims and estimates based on historical
experience for claims incurred but not reported.
Income Taxes
- ------------
The provision for income taxes includes amounts currently payable and deferred
income taxes resulting from the temporary differences in the assets and
liabilities determined on a tax and financial reporting basis.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
2. INVESTMENTS:
- ---------------
<TABLE>
<CAPTION>
The book value and fair value of investments in fixed maturity securities by type of
investment were as follows:
December 31, 1998
- --------------------------------------------------------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- --------------------------------------------------------------------------------------------------------------------
Available for sale: (in millions)
<S> <C> <C> <C> <C>
Obligations of U.S. government, states,
political subdivisions and foreign governments. $ 42.7 $ 5.4 $0.0 $ 48.1
Corporate securities 1,119.7 65.5 4.3 1,180.9
Mortgage-backed securities 440.7 26.0 0.3 466.4
- --------------------------------------------------------------------------------------------------------------------
$ 1,603.1 $ 96.9 $4.6 $ 1,695.4
- --------------------------------------------------------------------------------------------------------------------
Held to maturity:
Obligations of U.S. government, states,
political subdivisions and foreign governments $ 108.8 $ 7.6 $0.0 $ 116.4
Corporate securities. 1,656.4 141.0 2.9 1,794.5
Mortgage-backed securities. 771.0 50.3 0.3 821.0
- --------------------------------------------------------------------------------------------------------------------
$ 2,536.2 $ 198.9 $3.2 $ 2,731.9
- --------------------------------------------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- --------------------------------------------------------------------------------------------------------------------
Available for sale: (in millions)
Available for sale:
Obligations of U.S. government, states,
...political subdivisions and foreign governments $ 47.8 $ 4.0 $0.0 $ 51.8
Corporate securities. 1,064.1 55.5 1.8 1,117.8
Mortgage-backed securities. 456.8 27.6 0.2 484.2
- --------------------------------------------------------------------------------------------------------------------
$ 1,568.7 $ 87.1 $2.0 $1,653.8
- --------------------------------------------------------------------------------------------------------------------
Held to maturity:
Obligations of U.S. government, states,
...political subdivisions and foreign governments $ 124.2 $ 6.2 $0.3 $ 130.1
Corporate securities. 1,854.4 123.4 3.6 1,974.2
Mortgage-backed securities 923.6 55.5 0.2 978.9
- --------------------------------------------------------------------------------------------------------------------
$ 2,902.2 $ 185.1 $4.1 $ 3,083.2
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The amortized cost and fair value of fixed maturity securities at December 31,
1998, by contractual average maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Available for Sale Held to Maturity Total
Amortized Fair Amortized Fair Amortized Fair
(in millions) Cost Value Cost Value Cost Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Due in one year
or less $ 40.7 $ 40.9 $ 72.9 $ 73.9 $ 113.6 $ 114.8
Due after one year
through five years 392.8 404.1 753.4 790.5 1,146.2 1,194.6
Due after five years
through ten years 363.9 383.1 577.7 639.3 941.6 1,022.4
Due after ten years 365.0 400.9 361.2 407.2 726.2 808.1
- --------------------------------------------------------------------------------------------------------------------
1,162.4 1,229.0 1,765.2 1,910.9 2,927.6 3,139.9
Mortgage-backed securities 440.7 466.4 771.0 821.0 1,211.7 1,287.4
- --------------------------------------------------------------------------------------------------------------------
$1,603.1 $1,695.4 $2,536.2 $2,731.9 $4,139.3 $4,427.3
</TABLE>
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
Net investment income consisted of the following:
for years ended December 31 1998 (in millions) 1997
- -------------------------------------------------------------------------
Fixed maturity securities $341.0 $359.4
Equity securities 2.3 2.5
Mortgage loans 98.5 100.9
Real estate 10.7 11.2
Policy loans 8.8 8.8
Other 10.0 7.3
- -------------------------------------------------------------------------
Gross investment income 471.3 490.1
Investment expenses 19.2 20.6
- -------------------------------------------------------------------------
Net investment income $452.1 $469.5
- -------------------------------------------------------------------------
Net realized investment gains and (losses) include write downs and changes in
the reserve for losses on mortgage loans and foreclosed real estate of $(.1)
million and $(1.3) million for 1998 and 1997, respectively. Proceeds from the
sales, maturities or calls of investments in fixed maturities during 1998 and
1997 were approximately $850.5 million and $576.3 million, respectively. Gross
gains of $14.9 million and $11.6 million, and gross losses of $.6 million and
$1.3 million were realized in 1998 and 1997, respectively. The changes in
unrealized appreciation of fixed maturities amounted to approximately $7.2
million and $39.9 million in 1998 and 1997, respectively.
At December 31, 1998, the unrealized appreciation on equity securities of
approximately $2.3 million is comprised of $3.8 million in unrealized gains and
$1.5 million of unrealized losses and has been reflected directly in
policyholders' surplus. The change in the unrealized appreciation of equity
securities amounted to approximately $.1 million and $.9 million in 1998 and
1997, respectively.
The Company maintains a diversified mortgage loan portfolio and exercises
internal limits on concentrations of loans by geographic area, industry, use and
individual mortgagor. At December 31, 1998, the largest geographic concentration
of commercial mortgage loans was in Indiana, California and Florida where
approximately 31% of the portfolio was invested. A total of 40% of the mortgage
loans have been issued on retail properties, primarily backed by long term
leases or guarantees from strong credits.
The Company has outstanding mortgage loan commitments at December 31, 1998, of
approximately $100.3 million. As of December 31, 1998, the carrying value of
investments that produced no income for the previous twelve month period was $.2
million.
3. Insurance Liabilities:
- -------------------------
Insurance liabilities consisted of the following:
<TABLE>
<CAPTION>
(in millions)
- -------------------------------------------------------------------------------------------------------------------------
Withdrawal Mortality or morbidity Interest rate December 31,
assumption assumption assumption 1998 1997
- -------------------------------------------------------------------------------------------------------------------------
Future policy benefits:
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Participating whole life contracts Company Company 2.5% to 6.0% $ 632.7 $ 594.5
experience experience
Universal life-type contracts n/a n/a n/a 381.2 376.4
Other individual life contracts Company Company 2.5% to 8.0% 271.1 216.4
experience experience
Accident and health n/a n/a n/a 55.2 51.0
Annuity products n/a n/a n/a 3,803.7 4,213.6
Group life and health n/a n/a n/a 195.2 191.0
Other policyholder funds n/a n/a n/a 203.9 177.1
Pending policyholder claims n/a n/a n/a 209.2 164.3
- -------------------------------------------------------------------------------------------------------------------------
Total insurance liabilities $5,752.2 $5,984.3
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Participating life insurance policies under generally accepted accounting
principles represent approximately 7% and 9% of the total individual life
insurance in force at December 31, 1998 and 1997, respectively. Participating
policies represented approximately 34% and 39% of life premium income for 1998
and 1997, respectively. The amount of dividends to be paid is determined
annually by the Board of Directors.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
4. Employees' and Agents' Benefit Plans:
- ----------------------------------------
The Company has a noncontributory defined benefit pension plan covering
substantially all employees. Company contributions to the employee plan are made
periodically in an amount between the minimum ERISA required contribution and
the maximum tax-deductible contribution. Such amounts are expensed as
contributed. Contributions made to the Plan were $2.1 million in 1998 and $2.8
million in 1997.
The following benefit information for the employees' defined benefit plan was
determined by independent actuaries as of January 1, 1998 and 1997,
respectively, the most recent actuarial valuation dates:
1998 (in millions) 1997
- --------------------------------------------------------------------------------
Actuarial present value of
accumulated benefits for the
employees' defined benefit plan $33.6 $28.1
Fair value of plan assets 49.6 39.7
- --------------------------------------------------------------------------------
Funded status $16.0 $11.6
- --------------------------------------------------------------------------------
Net periodic pension cost $ 2.1 $ 2.0
- --------------------------------------------------------------------------------
The assumed discount rate was 7.17% and 7.36% for 1998 and 1997, respectively.
For both 1998 and 1997, the expected return on plan assets was 8.0% and the rate
of compensation increase assumed was 6%. Benefits paid out of the Plan were
approximately $3.1 million in 1998 and $2.6 million in 1997.
The Company has a defined contribution plan and a 401(k) salary
reduction/savings plan for employees. Quarterly contributions covering employees
who have completed one full calendar year of service are made by the Company in
amounts based upon the Company's financial results. Company contributions to the
plan during 1998 and 1997 were $1.7 million and $1.5 million, respectively.
The Company has a defined contribution pension plan and a 401(k) plan covering
substantially all of the agents, except general agents. Contributions of 3% to
4 1/2% of defined commissions (plus 3% to 41/2% for commissions over the Social
Security wage base) are made to the pension plan. An additional contribution of
3% of defined commissions is made to a 401(k) plan. Company contributions
expensed for these plans for 1998 and 1997 were $257,000 and $268,000,
respectively.
The funds for all plans are held by the Company under deposit administration and
group annuity contracts.
The Company also provides certain health care and life insurance benefits
(postretirement benefits) for retired employees and certain agents (retirees).
Employees and agents with at least 10 years of plan participation may become
eligible for such benefits if they reach retirement age while working for the
Company.
Accrued postretirement benefits as of December 31: 1998 (in millions) 1997
================================================================================
Accumulated postretirement benefit obligation $9.5 $9.3
Net postretirement benefit cost 1.2 1.0
Company contributions .7 .7
- --------------------------------------------------------------------------------
There are no specific plan assets for this postretirement liablility as of
December 31, 1998 and 1997. Claims incurred for benefits were funded by company
contributions.
The assumed discount rate used in determining the accumulated postretirement
benefit was 7.00% and the assumed health care cost trend rate was 10% graded to
5% until 2004. Compensation rates were assumed to increase 6% at each year end.
The health coverage for retirees 65 and over is capped in the year 2000. The
health care cost trend rate assumption has an effect on the amounts reported. An
increase in the assumed health care cost trend rates by one percentage point
would increase the accumulated postretirement benefit obligation as of December
31, 1998, by $152,000 and increase the accumulated postretirement benefit cost
for 1998 by $16,000.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
5. Federal Income Taxes:
- ------------------------
A reconciliation of the income tax attributable to continuing operations
computed at U.S. federal statutory tax rates to the income tax expense included
in the statement of operations follows:
for years ended December 31 1998 (in millions) 1997
- ------------------------------------------------------------------------------
Income tax computed at statutory tax rate $31.0 $36.3
Tax exempt income (2.0) (1.5)
Mutual company differential earnings amount 4.3 6.1
Prior year differential earnings amount (10.2) (3.7)
Other (0.8) (7.4)
- ------------------------------------------------------------------------------
Federal income tax $22.3 $29.8
- ------------------------------------------------------------------------------
The components of the provision for income taxes on earnings included current
tax provisions of $14.2 million and $22.5 million for the years ended December
31, 1998 and 1997, respectively, and deferred tax expense of $8.1 million and
$7.3 million for the years ended December 31, 1998 and 1997, respectively.
Deferred income tax assets (liabilities)
- --------------------------------------------------------------------------------
as of December 31: 1998 1997
- --------------------------------------------------------------------------------
Deferred policy acquisition costs $(148.8) $(137.0)
Investments (11.1) (12.0)
Insurance liabilities 158.9 154.7
Unrealized appreciation of securities (23.6) (21.9)
Other (6.1) (4.7)
- --------------------------------------------------------------------------------
Deferred income tax assets (liabilities) $ (30.7) $ (20.9)
- --------------------------------------------------------------------------------
Federal income taxes paid were $10.6 million and $28.6 million for 1998 and
1997, respectively.
6. Reinsurance:
- ---------------
The Company is a party to various reinsurance contracts under which it receives
premiums as a reinsurer and reimburses the ceding companies for portions of the
claims incurred. At December 31, 1998 and 1997, life reinsurance assumed was
approximately 74% and 71%, respectively, of life insurance in force.
For individual life policies, the Company cedes the portion of the total risk in
excess of $1,500,000. For other policies, the Company has established various
limits of coverage it will retain on any one policyholder and cedes the
remainder of such coverage.
Certain statistical data with respect to reinsurance follows:
for years ended December 31 1998 1997
- --------------------------------------------------------------------------------
Direct statutory premiums $374.1 $369.4
Reinsurance assumed 329.7 253.9
Reinsurance ceded 150.2 132.3
- --------------------------------------------------------------------------------
Net premiums 553.6 491.0
- --------------------------------------------------------------------------------
Reinsurance recoveries $146.4 $ 103.4
The Company accounts for all reinsurance agreements as transfers of risk. If
companies to which reinsurance has been ceded are unable to meet obligations
under the reinsurance agreements, the Company would remain liable. Six
reinsurers account for approximately 66% of the Company's December 31, 1998,
ceded reserves for life and accident and health insurance. The remainder of such
ceded reserves is spread among numerous reinsurers.
7. Surplus Notes and Lines of Credit:
- -------------------------------------
On February 16, 1996, the Company issued $75 million of Surplus Notes, due March
30, 2026. Interest is payable semi-annually on March 30, and September 30 at a
7.75% annual rate. Any payment of interest on or principal of the Notes may be
made only with the prior approval of the Commissioner of the Indiana Department
of Insurance. The Surplus Notes may not be redeemed at the option of AUL or any
holder of the Surplus Notes. Interest paid during 1998 was $5.8 million. The
Company has available a $125 million committed credit facility. No amounts have
been drawn as of December 31, 1998.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
8. Commitments and Contingencies:
- ---------------------------------
Various lawsuits have arisen in the ordinary course of the Company's business.
In each of the matters, the Company believes the ultimate resolution of such
litigation will not result in any material adverse impact to operations or
financial condition of the Company.
In 1997, AUL signed an investment agreement with Indianapolis Life Insurance
Company (Indianapolis Life) and Indianapolis Life Group of Companies (ILGroup),
a downstream holding company of Indianapolis Life, with a purpose of creating an
affiliation under a mutual holding company structure. At December 31, 1998, AUL
has invested $49.5 million in ILGroup in exchange for a 33.2% ownership. In
1998, AUL signed an affiliation agreement with Pioneer Mutual Life Insurance
Company, who joined with AUL, Indianapolis Life and State Life contemplating
future integration of the companies in a mutual holding company structure.
9. Statutory Information:
- ---------------------------
AUL and State Life prepare statutory financial statements in accordance with
accounting principles and practices prescribed or permitted by the Indiana
Department of Insurance. Prescribed statutory accounting practices (SAP)
currently include state laws, regulations and general administrative rules
applicable to all insurance enterprises domiciled in a particular state, as well
as practices described in National Association of Insurance Commissioners'
(NAIC) publications.
A reconciliation of SAP surplus to GAAP surplus at December 31 follows:
- --------------------------------------------------------------------------------
for years ended December 31 1998 (in millions) 1997
- --------------------------------------------------------------------------------
SAP surplus $496.5 $464.2
Deferred policy acquisition costs 481.8 447.4
Adjustments to policy reserves (306.0) (303.1)
Asset valuation and interest maintenance reserves 88.9 86.1
Unrealized gain on invested assets, net 39.5 36.5
Surplus notes (75.0) (75.0)
Deferred income taxes (6.7) 1.0
Other, net 15.1 7.5
- --------------------------------------------------------------------------------
GAAP surplus $734.1 $664.6
- --------------------------------------------------------------------------------
A reconciliation of SAP net income to GAAP net income for the years ended
December 31 follows:
- --------------------------------------------------------------------------------
for years ended December 31 1998 (in millions) 1997
- --------------------------------------------------------------------------------
SAP income $33.5 $41.8
Deferred policy acquisition costs 34.5 37.6
Adjustments to policy reserves (3.7) (9.2)
Deferred income taxes (8.1) (7.3)
Other, net 10.3 11.4
- --------------------------------------------------------------------------------
GAAP net income $66.5 $74.3
- --------------------------------------------------------------------------------
Life insurance companies are required to maintain certain amounts of assets on
deposit with state regulatory authorities. Such assets had an aggregate carrying
value of $4.9 million at December 31, 1998.
10. Fair Value of Financial Instruments:
- ----------------------------------------
The disclosure of fair value information about certain financial instruments is
based primarily on quoted market prices. The fair values of short-term
investments and policy loans approximate the carrying amounts reported in the
balance sheets. Fair values for fixed maturity and equity securities, and
surplus notes are based on quoted market prices where available. For fixed
maturity securities not actively traded, fair values are estimated using values
obtained from independent pricing services, or in the case of private
placements, are estimated by discounting expected future cash flows using a
current market rate applicable to the yield, credit quality and maturity of the
investments.
The fair value of the aggregate mortgage loan portfolio was estimated by
discounting the future cash flows using current rates at which similar loans
would be made to borrowers with similar credit ratings for similar maturities.
The estimated fair values of the liabilities for policyholder funds approximate
the statement values because interest rates credited to account balances
approximate current rates paid on similar funds and are not generally guaranteed
beyond one year. Fair values for other insurance reserves are not required to be
disclosed. However, the estimated fair values for all insurance liabilities are
taken into consideration in the Company's overall management of interest rate
risk, which minimizes exposure to changing interest rates through the matching
of investment maturities with amounts due under insurance contracts. The fair
values of certain financial instruments along with their corresponding carrying
values at December 31, 1998 and 1997 follow.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
1998 (in millions) 1997
- --------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amounts Value Amounts Value
- --------------------------------------------------------------------------------
Fixed maturity securities:
Available for sale $1,695.4 $1,695.4 $1,653.8 $1,653.8
Held to Maturity 2,536.2 2,731.9 2,902.2 3,083.2
Equity securities 75.1 75.1 18.6 18.6
Mortgage loans 1,128.5 1,202.1 1,120.4 1,201.0
Policy loans 144.4 144.4 143.1 143.1
Surplus notes 75.0 80.5 75.0 79.5
- --------------------------------------------------------------------------------
17
<PAGE>
================================================================================
No dealer, salesman or any other person is authorized by the AUL American
Unit Trust to give any information or to make any representation other than as
contained in this Statement of Additional Information in connection with the
offering described herein.
AUL has filed a Registration Statement with the Securities and Exchange
Commission, Washington, D.C. For further information regarding the AUL American
Unit Trust, AUL and its variable annuities, please reference the Registration
statement and the exhibits filed with it or incorporated into it. All contracts
referred to in this prospectus are also included in that filing.
================================================================================
AUL AMERICAN UNIT TRUST
Group Variable Annuity Contracts
Sold By
AMERICAN UNITED
LIFE INSURANCE COMPANY(R)
One American Square
Indianapolis, Indiana 46282
STATEMENT OF ADDITIONAL INFORMATION
Dated: May 1, 1999
================================================================================
18
<PAGE>
Part C: Other Information
Item 24. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS
1. Included in Prospectus (Part A):
Condensed Financial Information(3)
2. Included in Statement of Additional Information (Part B):
a) Financial Statements of American United Life Insurance Company(R) (3)
Report of Independent Accountants
Combined Balance Sheet - Assets, Liabilities and Policyowners' Surplus
as of December 31, 1998 and 1997
Combined Statement of Policyowner's Surplus for the years ended Decem-
ber 31, 1998 and 1997
Combined Statement of Operations for the years ended December 31, 1998
and 1997
Combined Statement of Cash Flows for the years ended December 31, 1998
and 1997
Notes to Financial Statements
(b) Financial Statements of AUL American Unit Trust
1. Registrant's Annual Report for the year ended December 31, 1998
is incorporated by reference thereto and contains the following
Financial Statements:
Message from the Chairman of the Board and President of AUL
American Series Fund to Participants in AUL American Unit
Trust
Report of Independent Accountants
Statement of Net Assets as of December 31, 1998
Statement of Operations and Changes in Net Assets for the years
ended December 31, 1998 and 1997
Notes to Financial Statements
(b) Exhibits
1. Resolution of Executive Committee of American United Life Insurance
Company(R) ("AUL") establishing AUL American Unit Trust(1)
2. Not applicable
3. Not applicable
4. Group Annuity Contract Forms:
4.1 TDA Voluntary Contract, Form P-12511 (1)
4.2 TDA Employer Sponsored Contract, Form P-12621 (1)
4.3 TDA Employer Sponsored Benefit Responsive Contract,
Form P-12621BR (1)
4.4 TDA Custodial SPL Contract, Form P-12833 (1)
4.5 TDA Custodial Contract, Form P-12833 (1)
4.6 TDA Employer Sponsored and Qualified Conv. Multiple Fund VA
Contract, Form P-14020 (1)
4.7 TDA Employer Sponsored and Qualified New Multiple Fund VA
Contract, Form P-14020 (1)
4.8 IRA Non-Custodial Contract, Form P-12566 (1)
4.9 IRA Custodial Contract, Form P-12867 (1)
4.10 DCP Contract, Form P-12518 (1)
4.11 IRA No-Load Custodial Contract and Amendment, Form P-12,867 (3)
4.12 IRA Guaranteed Benefit Group Variable Annuity,
Form P-GB-K-IRAMFVA(NBR) (3)
4.13 TDA Guaranteed Benefit Employer-Sponsored Group Variable Annuity,
Form P-GB-K-ERTDAMFVA (3)
4.14 Employer-Sponsored TDA and Qualified Plan Guaranteed Benefit Group
Variable Annuity, Form P-GB-K-AUL1MFVA (3)
(1) Re-filed with the Registrant's Post-Effective Amendment No. 15
(File No. 33-31375) on April 30, 1998.
(2) Filed with the Registrant's Post-Effective Amendment No. 15
(File No. 33-31375) on April 30, 1998.
(3) Filed with the Registrant's Post-Effective Amendment No. 17
(File No. 33-31375 on April 30, 1999.
<PAGE>
2
Item 24. FINANCIAL STATEMENTS AND EXHIBITS (CONTINUED)
5. Application Forms and other forms:
5.1 AUL American Series Enrollment Form P-12464 (1)
5.2. Employer Sponsored TDA Enrollment Form P-12477 (1)
5.3 AUL Select Annuity Enrollment Form P-14009 (1)
5.4 Application for No-Load IRA Contract, P-12503 (3)
6. Certificate of Incorporation and By-Laws of the Depositor
6.1 Articles of Merger between American Central Life Insurance Company
and United Mutual Life Insurance Company (1)
6.2 Certification of the Secretary of State as to the filing
of the Articles of Merger between American Central Life Insurance
Company and United Mutual Life Insurance Company (1)
6.3 Code of By-Laws of American United Life Insurance Company(R) (1)
7. Not applicable
8. Form of Participation Agreements:
8.1 Form of Participation Agreement with Alger American Fund (1)
8.2 Form of Participation Agreement with American Century Variable
Portfolios, Inc.(1)
8.3 Form of Participation Agreement with Calvert Variable Series (1)
8.4 Form of Participation Agreement with Fidelity Variable
Insurance Products Fund (1)
8.5 Form of Participation Agreement with Fidelity Variable Insurance
Products Fund II (1)
8.6 Form of Participation Agreement with Janus Aspen Series (1)
8.7 Form of Participation Agreement with PBHG Funds, Inc. (1)
8.8 Form of Participation Agreement with SAFECO Resource Series Trust(1)
8.9. Form of Participation Agreement with T. Rowe Price Equity
Series, Inc. (1)
9. Opinion and Consent of Senior Counsel of AUL as to the legality of
Contracts being registered (1)
10. Miscellaneous Consents
10.1 Consent of Independent Accountants (3)
10.2 Consent of Dechert Price & Rhoads (1)
10.3 Powers of Attorney (1)(2)
11. Financial Statements of AUL American Unit Trust (4)
12. Not applicable
13. Computation of performance quotations (1)
14. Financial Data Schedules (3)
(1) Re-filed with the Registrant's Post-Effective Amendment No. 15
(File No. 33-31375) on April 30, 1998.
(2) Filed with the Registrant's Post-Effective Amendment No. 15
(File No. 33-31375) on April 30, 1998.
(3) Filed by Registrant's Post-Effective Amendment No. 17
(File No. 33-31375 on April 30, 1999.
(4) Filed electronically by Registrant as part of Form N-30D on
February 23, 1999.
Item 25. DIRECTORS AND OFFICERS OF AUL
Name and Address Positions and Offices with AUL
- ---------------- ------------------------------
John H. Barbre* Senior Vice President
John R. Barton* Senior Vice President
Steven C. Beering M.D. Director
Purdue University
West Lafayette, Indiana
William R. Brown* General Counsel and Secretary, AUL
Secretary, State Life Insurance Co.
Arthur L. Bryant Director
141 E. Washington St.
Indianapolis, Indiana
James M. Cornelius Director
P.O. Box 44906
Indianapolis, Indiana
- ----------------------------------------------
*One American Square, Indianapolis, Indiana
<PAGE>
3
Item 25. DIRECTORS AND OFFICERS OF AUL (CONTINUED)
Name and Address Positions and Offices with AUL
- ---------------- ------------------------------
James E. Dora Director
P.O. Box 42908
Indianapolis, Indiana
Otto N. Frenzel III Director and Chairman of the Audit
101 W. Washington St., Suite 400E Committee
Indianapolis, Indiana
David W. Goodrich Director
One American Square, Suite 2500
Indianapolis, Indiana
Catherine B. Husman* Vice President and Chief Actuary
William P. Johnson Director
P.O. Box 517
Goshen, Indiana
Scott A. Kincaid* Senior Vice President
Charles D. Lineback* Senior Vice President
James T. Morris Director and Chairman of the Salary
1220 Waterway Boulevard and Nominating Committee
Indianapolis, Indiana
James W. Murphy* Senior Vice President
Jerry L. Plummer* Senior Vice President
R. Stephen Radcliffe* Director and Executive Vice President
Thomas E. Reilly Jr. Director and Chairman of the Finance
300 N. Meridian, Suite 1500 Committee
Indianapolis, Indiana
William R. Riggs Director
P.O. Box 82001
Indianapolis, Indiana
G. David Sapp* Senior Vice President
John C. Scully Director
2636 Ocean Dr., # 505
Vero Beach, Florida
Jerry D. Semler* Chairman of the Board, President, Chief
Executive Officer, Chairman of the
Executive Committee, and Chairman of the
AUL Acquisition Committee; Chairman of the
Board, Chief Executive Officer, State Life
Insurance Co.
Yvonne H. Shaheen Director
1310 S. Franklin Road
Indianapolis, Indiana
William L. Tindall* Senior Vice President
Frank D. Walker Director
P.O. Box 40972
Indianapolis, Indiana
- ----------------------------------------------
*One American Square, Indianapolis, Indiana
<PAGE>
4
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
American United Life Insurance Company(R) (AUL) is a mutual insurance company
organized under the laws of the State of Indiana. As a mutual company, AUL has
no shareholders and therefore no one individual controls as much as 10% of AUL.
In accordance with current law, it is anticipated that American United Life
Insurance Company(R) ("AUL") will request voting instructions from owners or
participants of any Contracts that are funded by separate accounts that are
registered investment companies under the Investment Company Act of 1940 and
will vote shares in any such separate account attributable to the Contracts in
proportion to the voting instructions received. AUL may vote shares of any
Portfolio, if any, that it owns beneficially in its own discretion.
Registrant, AUL American Individual Unit Trust and AUL American Individual
Variable Annuity Unit Trust are separate accounts of AUL, organized for the
purpose of the sale of group and individual variable annuity contracts,
respectively.
AUL American Individual Variable Life Unit Trust is a separate account of AUL,
organized for the purpose of the sale of individual variable life insurance
products.
American United Life Pooled Equity Fund B is a separate account of AUL organized
for the purpose of the sale of group variable annuity contracts.
AUL Equity Sales Corp. is a wholly owned subsidiary of AUL, organized under the
laws of the State of Indiana in 1969 as a broker-dealer to market registered
variable insurance products and mutual funds.
AUL may also be deemed to control State Life Insurance Company(R) ("State
Life"), since a majority of AUL's Directors also serve as Directors of State
Life. By virtue of an agreement between AUL and State Life, AUL provides
investment and other support services for State Life on a contractual basis.
AUL owns a 20% share of the stock of Reinsurance Managers of Princeton, LLC,
("Princeton") a limited liability company organized under the laws of Delaware
on July 1, 1996. Princeton is a reinsurance intermediary for certain
catastrophic or pooled risks. AUL's affiliation allows it the opportunity to
participate in this reinsurance business.
AUL American Series Fund, Inc. (the "Fund") was incorporated under the laws of
Maryland on July 26, 1989 and is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940. As a
"series" type of mutual Fund, the Fund issues shares of common stock relating to
separate investment portfolios. Substantially all of the Fund's shares were
originally purchased by AUL in connection with the initial capitalization of the
Fund. On December 31, 1998, AUL owned 6.57% of the outstanding shares of the
Fund's Equity portfolio, 9.99% of the Fund's Tactical Asset Allocation
Portfolio, 81.97% of the Fund's Conservative Investor Portfolio, 75.83% of the
Fund's Moderate Investor Portfolio, and 77.61% of the Fund's Aggressive Investor
Portfolio. Therefore, AUL would be able to control any issue submitted to the
vote of shareholders of the LifeStyle Portfolios.
INDIANAPOLIS LIFE INSURANCE COMPANY is an Indiana domestic mutual insurance
company whose principal business is the sale of life insurance and annuity
contracts. On November 3, 1997 AUL entered into an Agreement to Affiliate and an
Investment Agreement with Indianapolis Life. The Indiana Insurance
Commissioner's Findings of Fact, Conclusions of Law and Order was filed
regarding AUL's agreements with Indianapolis Life on December 19, 1997. Under
the agreements, AUL initially invested $27 million in Indianapolis Life's wholly
owned downstream holding company, Indianapolis Life Group of Companies, Inc., a
portion of this investment occurring on December 30, 1997 and the remainder on
March 30, 1998. On June 30, 1998, AUL invested another $4,166,000, on December
31, 1998 AUL invested $18,375,000, and on March 31, 1999, AUL invested another
$4,500,000. At the present time, AUL holds an equity interest of approximately
33% in Indianapolis Life Group of Companies, Inc. These investments are pursuant
to the agreements which also provide, in part, for the two insurers to
eventually affiliate under the same mutual holding company structure as soon as
state law permits. Currently, that matter is pending before the Indiana General
Assembly.
PIONEER MUTUAL LIFE INSURANCE COMPANY is a North Dakota domestic mutual
insurance company whose principal business is the sale of life insurance and
annuity contracts. On November 10, 1998, AUL became a party to an agreement,
along with Indianapolis Life Insurance Company, whereby Pioneer Mutual will
eventually become a part of the mutual holding company structure noted above. On
March 31, 1999, AUL purchased a Surplus Note issued by Pioneer Mutual Life
Insurance Company in the amount of $10,000,000.
<PAGE>
5
Item 27. NUMBER OF CONTRACTHOLDERS
As of February 28, 1999, AUL has issued 863 qualified contracts to
Contractholders who have or may invest funds in the AUL American Unit Trust.
Item 28. INDEMNIFICATION
Article IX, Section 1 of the by-laws of AUL provides as follows:
The corporation shall indemnify any director or officer or former director or
officer of the corporation against expenses actually and reasonably incurred by
him (and for which he is not covered by insurance) in connection with the
defense of any action, suit or proceeding (unless such action, suit or
proceeding is settled) in which he is made a party by reason of being or having
been such director or officer, except in relation to matters as to which he
shall be adjudged in such action, suit or proceeding, to be liable for
negligence or misconduct in the performance of his duties. The corporation may
also reimburse any director or officer or former director or officer of the
corporation for the reasonable costs of settlement of any such action, suit or
proceeding, if it shall be found by a majority of the directors not involved in
the matter in controversy (whether or not a quorum) that it was to the interest
of the corporation that such settlement be made and that such director or
officer was not guilty of negligence or misconduct. Such rights of
indemnification and reimbursement shall not be exclusive of any other rights to
which such director or officer may be entitled under any By-law, agreement, vote
of members or otherwise.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the Fund's Articles of Incorporation,
its By-laws or otherwise, the Registrant is aware that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act, and therefore, is 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 directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such directors, officers or
controlling persons in connection with the shares 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
issues.
Item 29. PRINCIPAL UNDERWRITERS
(a) AUL acts as Investment Adviser to American United Life Pooled Equity
Fund B (2-27832) and to AUL American Series Fund, Inc. (33-30156).
(b) For information regarding AUL's Officers and Directors, see Item 25
above.
(c) Not applicable
Item 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by Registrant
pursuant to Section 31(a) of the Investment Company Act of 1940 and the rules
under that section will be maintained at One American Square, Indianapolis, IN
46282.
<PAGE>
5
Item 31. MANAGEMENT SERVICES
There are no management-related service contracts not discussed in Part A or
Part B.
Item 32. UNDERTAKINGS
The registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial
statements in this registration statement are never more than 16
months old for so long as payments under the variable annuity
contracts may be accepted, unless otherwise permitted.
(b) to include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an applicant can
check to request a Statement of Additional Information, or (2) a post
card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of
Additional Information.
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form promptly upon
written or oral request.
Additional Representations:
(a) The Registrant and its Depositor are relying upon Rule 6c-7 under the
Investment Company Act of 1940 (17 CFR 270.6c-7), Exemptions from
Certain Provisions of Sections 22(e) and 27 for Registered Separate
Accounts Offering Variable Annuity Contracts to Participants in the
Texas Optional Retirement Program, and the provisions of paragraphs
(a) through (d) of this rule have been complied with.
(b) The Registrant and its Depositor are relying upon American Council of
Life Insurance, SEC No-Action Letter, SEC Ref. No. IP-6-88 (Novem-
ber 28, 1988) with respect to annuity contracts offered as funding
vehicles for retirement plans meeting the requirements of Section
403(b) of the Internal Revenue Code, and the provisions of paragraphs
(1)-(4) of this letter have been complied with.
(c) The Registrant represents that the aggregate fees and charges deducted
under the variable annuity contracts are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks
assumed by the Insurance Company.
<PAGE>
6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) of the Securities Act of 1933 and
has duly caused this Post-Effective Amendment to the Registration Statement
(Form N-4) to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Indianapolis and the State of Indiana on this 30th
day of April, 1999.
AUL AMERICAN UNIT TRUST (Registrant)
By: American United Life Insurance Company(R)
------------------------------------------------
By: Jerry D. Semler*, Chairman of the
Board, President, and Chief Executive Officer
/s/ Richard A. Wacker
- -------------------------------------------
*By: Richard A. Wacker as Attorney-in-fact
Date: April 30, 1999
Pursuant to the requirements of the Securities Act of 1933, this Post Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
_______________________________ Director April 30, 1999
Steven C. Beering M.D.*
_______________________________ Director April 30, 1999
Arthur L. Bryant*
_______________________________ Director April 30, 1999
James M. Cornelius*
_______________________________ Director April 30, 1999
James E. Dora*
_______________________________ Director April 30, 1999
Otto N. Frenzel III*
_______________________________ Director April 30, 1999
David W. Goodrich*
_______________________________ Director April 30, 1999
William P. Johnson*
_______________________________ Director April 30, 1999
James T. Morris*
<PAGE>
7
Signature Title Date
- --------- ----- ----
______________________________ Principal Financial April 30, 1999
James W. Murphy* and Accounting Officer
______________________________ Director April 30, 1999
R. Stephen Radcliffe*
______________________________ Director April 30, 1999
Thomas E. Reilly Jr*
______________________________ Director April 30, 1999
William R. Riggs*
______________________________ Director April 30, 1999
John C. Scully*
______________________________ Director April 30, 1999
Yvonne H. Shaheen*
______________________________ Director April 30, 1999
Frank D. Walker*
/s/ Richard A. Wacker
- -------------------------------------------
*By: Richard A. Wacker as Attorney-in-fact
Date: April 30, 1999
<PAGE>
EXHIBIT LIST
Exhibit No.
in Form N-4 Exhibit
Item 24 Numbered As Name of Exhibit
- ------------ ----------- ---------------
Item 24(b)(4)(4.11) EX-99.B4.11 No-Load IRA Custodial Contract,
& Amendment, Form P-12867
Item 24(b)(4)(4.12) EX-99.B4.12 IRA Guaranteed Benefit Group Variable
Annuity, Form P-GB-K-IRAMFVA(NBR)
Item 24(b)(4)(4.13) EX-99.B4.13 TDA Guaranteed Benefit Employer-
Sponsored Group Variable Annuity,
Form P-GB-K-ERTDAMFVA
Item 24(b)(4)(4.14) EX-99.B4.14 Employer-Sponsored TDA and Qualified Plan
Guaranteed Benefit Group Variable
Annuity, Form P-GB-K-AUL1MFVA (3)
Item 24(b)(5)(5.4) EX-99.B5.4 Application Form for No-Load IRA
Custodial Contract, P-12503
Item 24(b)(10)(10.1) EX-99.B10.1 Consent of Independent Accountants
Item 24(b)(14) EX-27 Financial Data Schedules
AUL.
American United Life Insurance Company (R)
Indianapolis, Indiana 46206-0368
CONTRACT NUMBER __________________
CONTRACTHOLDER __________________
DATE OF ISSUE _________________
CONTRACT DATE _________________
FIRST CONTRACT ANNIVERSARY ________________
American United Life Insurance Company (AUL) shall provide all the rights and
benefits of this contract. This contract is issued in consideration of the
application and of the payment of Contributions to AUL. All provisions and
conditions stated on this and subsequent pages are made a part of this contract.
Signed for AUL at its Home Office in Indianapolis, Indiana.
NOTICE OF TEN DAY RIGHT TO EXAMINE CONTRACT
Please read this contract carefully. The Contractholder may return the contract
for any reason within ten days after receiving it. If returned, the contract
shall be considered void from the beginning, and any Contributions shall be
refunded.
AMERICAN UNITED LIFE INSURANCE COMPANY
By /s/ Jerry D. Semler
Chairman, President, and Chief Executive Officer
Attest /s/ William R. Brown
Secretary
AUL American Series Contract
IRA Multiple-Fund Group Variable Annuity
THE ASSETS HELD IN ANY INVESTMENT ACCOUNT FOR WHICH THIS CONTRACT MAKES
PROVISION MAY INCREASE OR DECREASE IN DOLLAR VALUE ACCORDING TO THE INVESTMENT
PERFORMANCE OF THE CORRESPONDING PORTFOLIO OF THE MUTUAL FUND IN WHICH THE
INVESTMENT ACCOUNT INVESTS. THE VALUE OF SUCH ASSETS IS NOT GUARANTEED. ARTICLE
5 OF THIS CONTRACT EXPLAINS THE VALUATION OF SUCH ASSETS.
P-12867
A Mutual Company G-11019C
<PAGE>
American United Life Insurance Company (R)
Indianapolis, Indiana 46206-0368
CONTRACT NUMBER _________________
CONTRACTHOLDER __________________
DATE OF ISSUE __________________
CONTRACT DATE ___________________
FIRST CONTRACT ANNIVERSARY ________________
American United Life Insurance Company (AUL) shall provide all the rights and
benefits of this contract. This contract is issued in consideration of the
application and of the payment of Contributions to AUL. All provisions and
conditions stated on this and subsequent pages are made a part of this contract.
Signed for AUL at its Home Office in Indianapolis, Indiana.
NOTICE OF TEN DAY RIGHT TO EXAMINE CONTRACT
Please read this contract carefully. The Contractholder may return the contract
for any reason within ten days after receiving it. If returned, the contract
shall be considered void from the beginning, and any Contributions shall be
refunded.
AMERICAN UNITED LIFE INSURANCE COMPANY
By /s/ Jerry D. Semler
Chairman, President, and Chief Executive Officer
Attest /s/ William R. Brown
Secretary
AUL American Series Contract
IRA Multiple-Fund Group Variable Annuity
THE ASSETS HELD IN ANY INVESTMENT ACCOUNT FOR WHICH THIS CONTRACT MAKES
PROVISION MAY INCREASE OR DECREASE IN DOLLAR VALUE ACCORDING TO THE INVESTMENT
PERFORMANCE OF THE CORRESPONDING PORTFOLIO OF THE MUTUAL FUND IN WHICH THE
INVESTMENT ACCOUNT INVESTS. THE VALUE OF SUCH ASSETS IS NOT GUARANTEED. ARTICLE
5 OF THIS CONTRACT EXPLAINS THE VALUATION OF SUCH ASSETS.
If you have questions concerning your AUL contract, or wish to register a
complaint, please call 1-800-634-1629.
P-12867TX
A Mutual Company G-11019C
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
ARTICLE 2 CONTRACT AND AUTHORITY
2.1------Entire Contract
2.2------Authority
ARTICLE 3 CONTRIBUTIONS, INVESTMENTS, AND TRANSFERS
3.1------Amount of Contributions
3.2------How Contributions Are Handled
3.3------Addition, Deletion, or Substitution of Investments
3.4------Transfers
3.5------Limitations on Transfers
ARTICLE 4 BENEFITS
4.1------Election of Annuity Options
4.2------Annuity Options
4.3------Guaranteed Rate of Interest
4.4------Alternate Nonparticipating Retirement Annuity
4.5------Minimum Payments
4.6------Due Proof of Date of Birth and Survival
4.7------Death Benefits
4.8------Withdrawal Benefits
ARTICLE 5 VALUATIONS
5.1------Time of Valuation
5.2------Accumulation Units
5.3------Value of Accumulation Units
5.4------Determining the Net Investment Factor
5.5------Determining the Value of Each Participant Account's Share of any
Investment Account
ARTICLE 6 OTHER CHARGES
6.1------Mortality Risk and Expense Risk Charges
6.2------Investment Management Charge
6.3------Administrative Charge
6.4------Transfer Charge
6.5------Other Charges
6.6------Reduction or Waiver of Certain Charges
ARTICLE 7 RIGHT OF AUL TO CHANGE CERTAIN PROVISIONS
7.1------Right of AUL to Change Interest Rates
7.2------Right of AUL to Change Annuity Table
7.3------Right of AUL to Change Charges
7.4------Amendment of Contract to Conform with Law
P-12867.1
A Mutual Company G-11020B
<PAGE>
ARTICLE 8 MISCELLANEOUS
8.1------Ownership
8.2------AUL's Annual Statement
8.3------Tax Status
8.4------Essential Data
8.5------Reliance
8.6------Misstatement of Essential Data
8.7------Annuity Certificates
8.8------Election, Notice, or Direction Requirements
8.9------Quarterly Statement of Account Value
8.10-----Conformity with State Laws
8.11-----Reference to Federal Laws
8.12-----Sex and Number
8.13-----Facility of Payment
8.14-----Insulation from Liability
8.15-----Voting
8.16-----Acceptance of New Participants or Contributions
8.17-----Nonforfeitability and Nontransferability
8.18-----Termination
8.19-----Notice of Annual Meeting of Members
TABLE OF IMMEDIATE ANNUITIES
P-12867.2
A Mutual Company G-11020B
<PAGE>
ARTICLE I - DEFINITIONS
1.1 "Account Value" for any Participant Account on any given date means:
(a) the balance of the Participant Account's share of the Fixed Interest
Account on that date; plus
(b) the value of the Participant Account's share of each Investment
Account on that date.
1.2 "Accumulation Period" means the period of time commencing on the date on
which a Participant's initial Contribution is credited to the Participant
Account and terminating on the date when such Participant Account is
closed.
1.3 "Accumulation Unit" means a statistical device used to measure amounts of
increases to, decreases from, and accumulations in any Investment Account
during the Accumulation Period.
1.4 "Annuity Commencement Date" means the first day of any month upon which an
annuity begins under this contract. However, for any Participant, amounts
allocated to the Participant Account will be distributed or commence to be
distributed no later than the first day of April following the calendar
year in which such Participant attains age 70 1/2.
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
1.6 "Contract Anniversary" means the first day of each Contract Year. Each
Contract Anniversary after the First Contract Anniversary shall be the same
day of the same month as the day and month which is stated on the face page
of this contract for the First Contract Anniversary.
1.7 "Contract Quarter" means each of the four successive intervals of three
months, the sum of which corresponds to a 12-month Contract Year.
1.8 "Contract Year" means, for the first such year, the period beginning with
the Contract Date and ending on the day immediately preceding the First
Contract Anniversary, and for each succeeding Contract Year, the period
beginning with a Contract Anniversary and ending on the day immediately
preceding the next succeeding Contract Anniversary.
1.9 "Contributions" means amounts paid in cash to AUL from time to time by, or
on behalf of, Participants, which are credited to Participant Accounts
hereunder. The legal title to, and ownership of, such amounts is vested
solely in the Participant. The contract is established for the exclusive
benefit of the Participant or his beneficiaries.
1.10 "Current Rates of Interest" means each of the annual effective rates of
interest as determined and declared by AUL from time to time and as
credited to each interest pocket maintained within the Fixed Interest
Account. The Current Rates of Interest shall always be equal to or greater
than the Guaranteed Rate of Interest.
1.11 "Excess Contributions" means those Contributions made by, or on behalf of,
a Participant which exceed the limitations in effect under applicable
provisions of the Code and Regulations issued thereunder.
P-12867.3
A Mutual Company G-11020B
<PAGE>
1.12 "Fixed Interest Account" means that fund of AUL's general asset account in
which all or a portion of a Participant's Account Value may be held for
accumulation at the Current Rates of Interest.
(a) Contributions allocated, or amounts transferred, to the Fixed Interest
Account shall be credited to the open interest pocket and shall earn
interest at the Current Rate of Interest in effect for that interest
pocket. Such Contributions or transferred amounts, during the time
that the Current Rate of Interest exceeds the Guaranteed Rate of
Interest, shall earn interest at such credited Current Rate of
Interest for at least 1 year. After such 1-year period, AUL reserves
the right to declare, at any time, a new Current Rate of Interest to
be applied to funds held within that interest pocket. Any such new
Current Rate of Interest must remain in effect for that interest
pocket for at least 1 year.
(b) If AUL changes the Current Rate of Interest for new Contributions or
new amounts transferred to the Fixed Interest Account, the previous
open interest pocket shall close, and any Contributions or amounts
transferred on or after the effective date of such change shall be
credited to a new open interest pocket and shall earn interest at the
new Current Rate of Interest in effect for such new open interest
pocket. Therefore, at any given time, various funds credited to a
Participant Account and allocated to the Fixed Interest Account may be
earning interest at different Current Rates of Interest for different
periods of time.
1.13 "Guaranteed Rate of Interest" means interest at an annual effective rate of
4.00%.
1.14 "Home Office" means the principal office of AUL. The mailing address is
P.0. Box 6148, Indianapolis, Indiana 46206-6148.
1.15 "Investment Account" means each subaccount of the Variable Account, which
subaccounts currently include the Equity Investment Account, the Bond
Investment Account, the Money Market Investment Account, and the Managed
Investment Account, as the case may be, where:
(a) Amounts allocated to the Equity Investment Account shall be invested
in shares of the AUL American Equity Portfolio of the Mutual Fund.
(b) Amounts allocated to the Bond Investment Account shall be invested in
shares of the AUL American Bond Portfolio of the Mutual Fund.
(c) Amounts allocated to the Money Market Investment Account shall be
invested in shares of the AUL American Money Market Portfolio of the
Mutual Fund.
(d) Amounts allocated to the Managed Investment Account shall be invested
in shares of the AUL American Managed Portfolio of the Mutual Fund.
1.16 "Investment Option" means the Fixed Interest Account or any of the
Investment Accounts of the Variable Account. AUL reserves the right to
provide other Investment Options under this contract at any time.
1.17 "Mutual Fund" means the AUL American Series Fund, Inc., a diversified,
open-end management investment company registered under The Investment
Company Act of 1940.
1.18 "Participant" means any person enrolled in this contract who elects to make
Contributions or for whom Contributions are made, and for whom a
Participant Account is established.
P-12867.4
A Mutual Company G-11020B
<PAGE>
1.19 "Participant Account" means an account established under this contract for
a Participant. Contributions received by AUL shall be credited to
Participant Accounts as AUL is directed in writing.
1.20 "Portfolio" means a series of the Mutual Fund as described in the
prospectus for the Mutual Fund as such prospectus may be amended or
supplemented from time to time.
1.21 "Valuation Date" means any day when the Home Office of AUL and the New York
Stock Exchange are open and operational.
1.22 "Valuation Period" means the period beginning at the close of business on a
Valuation Date and ending at the close of business on the next succeeding
Valuation Date.
1.23 "Variable Account" means a separate account established by AUL called the
AUL American Unit Trust, which is registered under The Investment Company
Act of 1940 as a unit investment trust.
1.24 "Withdrawal Charge" means a charge taken by AUL equal to a percentage of
the Account Value withdrawn pursuant to Section 4.8, where the percentage
varies by the number of full years measured from the date a Participant
Account is established to the date the Withdrawal Charge is determined.
Such percentage is as follows:
During
Account Years Percentage
1-5 0
6-10 0
Thereafter 0
In no event will the cumulative total of all Withdrawal Charges, including those
previously assessed against any amount withdrawn from a Participant Account,
exceed 9% of total Contributions allocated to that Participant Account.
1.25 "Withdrawal Value" means a Participant's Account Value minus the applicable
Withdrawal Charge.
A Mutual Company G-11020B
<PAGE>
ARTICLE 2 - CONTRACT AND AUTHORITY
2.1 Entire Contract: This contract is for the exclusive benefit of the
Participants and their beneficiaries. This contract and the application of
the Contractholder is the entire agreement between AUL and the
Contractholder. Unless there is a specific written agreement signed by a
corporate officer of AUL, AUL is not a party to, nor bound by, a plan,
trust, custodial agreement, or other agreement, or any amendment or
modification to any of the same. AUL is not a fiduciary under this contract
or under any such plan, trust, custodial agreement, or other agreement.
2.2 Authority: This contract cannot be modified or amended, nor can any
provision or condition be waived, except by a written agreement signed by a
corporate officer of AUL. Such authority may not be delegated to any other
person or entity, except by a written agreement signed by a corporate
officer of AUL.
P-12867.6
A Mutual Company G-11020B
<PAGE>
ARTICLE 2 - CONTRACT AND AUTHORITY
2.1 Entire Contract. This contract is for the exclusive benefit of the
Participants and their beneficiaries. This contract and the application of
the Contractholder is the entire agreement between AUL and the
Contractholder. Unless there is a specific written agreement signed by a
corporate officer of AUL, AUL is not a party to a plan, trust, custodial
agreement, or other agreement, or any amendment or modification to any of
the same. AUL is not a fiduciary under this contract or under any such
plan, trust, custodial agreement, or other agreement.
2.2 Authority: This contract cannot be modified or amended, nor can any
provision or condition be waived, except by a written agreement signed by a
corporate officer of AUL. Such authority may not be delegated to any other
person or entity, except by a written agreement signed by a corporate
officer of AUL.
P-12867.6 (MO)
A Mutual Company G-11020B
<PAGE>
ARTICLE 3 - CONTRIBUTIONS, INVESTMENTS, AND TRANSFERS
3.1 Amount of Contributions:
(a) Contributions may vary in amount and frequency; however, they must be
at least equal to a minimum annual Contribution of $300 per
Participant in any full Contract Year. AUL may change such minimum
annual Contribution acceptable under this contract, but any such
change shall apply only to individuals who become Participants on or
after the date of the change. This contract will not terminate solely
because a Contribution is not made for any Contract Year.
(b) Except for amounts eligible for rollover treatment under Code Sections
402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), or 408(d)(3),
Contributions during a Participant's taxable year (which is presumed
to be a calendar year) must be made in cash and may not exceed the
amounts described below (as adjusted by Code Section 408(a)):
(1) the lesser of $2,000 or 100% of compensation includible in the
Participant's gross income for such taxable year; or
(2) the lesser of $2,250 or 100% of compensation includible in the
Participant's gross income for such taxable year if a
Contribution is made on behalf of the Participant's non-employed
spouse (no more than $2,000 may be allocated to either the
Participant or his spouse); or
(3) the lesser of $30,000 (or, if greater, 25% of the dollar
limitation in effect under Code Section 415(b)(1)(A)) or 15% of
compensation in the case of a simplified employee pension (SEP,
as described in Code Section 408(k)) Contribution.
(c) Excess Contributions (plus gains or minus losses thereon) shall be
withdrawn from a Participant Account and returned to the Participant
upon receipt by AUL at its Home Office of complete written
instructions from the Participant. Such written instructions must
include the amount to be withdrawn and returned, and certification
that such Contributions constitute Excess Contributions and that such
returns are permitted by applicable provisions of the Code and
Regulations issued thereunder. It shall not be the responsibility of
AUL to determine the existence or amount of Excess Contributions or
gains or losses thereon, or that returns of Excess Contributions are
permitted by applicable provisions of the Code and Regulations. In
withdrawing and returning the identified amount, AUL may rely solely
on such written instructions and certification. Such a withdrawal and
return of Excess Contributions shall not be subject to Section 4.8.
(d) Other refunds of Contributions shall be applied before the close of
the calendar year following the year of such refund toward the payment
of future Contributions or the purchase of additional benefits.
3.2 How Contributions Are Handled:
(a) When a Contribution is received at the Home Office, it shall be
credited to Participant Accounts as directed in written allocation
instructions.
(b) The initial Contribution for a Participant shall be credited and
allocated to the Participant Account no later than the close of
business on the second business day of AUL after the later of
(1) the business day that AUL receives the initial Contribution at
its Home Office, or
(2) the business day that AUL receives, at its Home Office, the data
required to establish the Participant Account and allocation
instructions regarding the initial
P-12867.7
A Mutual Company G-11020B
<PAGE>
Contribution. If the data required to establish the Participant
Account and allocation instructions regarding the initial Contribution
are not received by AUL at its Home Office within 5 business days
after AUL first receives the initial Contribution, AUL shall return
the initial Contribution to the contributing party unless consent is
given to AUL to retain the initial Contribution until AUL receives the
data and allocation instructions for the Participant. Alternatively,
if the data required to establish the Participant Account and
allocation instructions regarding the initial Contribution are not
received by AUL at its Home Office when AUL first receives the initial
Contribution, to the extent permitted by applicable law, AUL may
allocate the initial Contribution to the Money Market Investment
Account, and shall transfer such amounts credited to the Money Market
Investment Account according to the applicable allocation instructions
upon receipt of the data required to establish the Participant Account
and allocation instructions.
(c) All Contributions subsequent to the initial Contribution shall be
credited and allocated as of the close of business on the Valuation
Period in which AUL receives the Contribution at its Home Office,
provided that the Contribution is received by 4:00 p.m. E.S.T. If the
Contribution is received after 4:00 p.m. E.S.T., such Contribution
shall be deemed to be received, and shall be credited and allocated as
of the close of business, on the next succeeding Valuation Period.
(d) Within any one Participant Account, the amount so credited shall be
allocated to an Investment Option in increments of 10%, 25%, or 33
1/3%, as elected by the Participant in writing. If no allocation
instruction is made with respect to any Participant Account, AUL shall
process such credits in accordance with the allocation instruction
applicable to the immediately preceding Contribution. If there should
be no allocation instruction applicable to a portion of a Contribution
other than the initial Contribution, that amount shall be credited to
the Fixed Interest Account until such time as an appropriate
allocation instruction is received, at which time such amount shall be
withdrawn from the Fixed Interest Account and allocated pursuant to
such instructions. The Participant may change an allocation
instruction with respect to future allocations to his Participant
Account by giving new written allocation instructions to AUL at its
Home Office.
3.3 Addition, Deletion, or Substitution of Investments:
(a) AUL reserves the right, subject to compliance with applicable law, to
make additions to, deletions from, substitution for, or combinations
of, the securities that are held by the Variable Account or any
Investment Account or that the Variable Account or any Investment
Account may purchase. AUL reserves the right to eliminate the shares
of any of the eligible Portfolios and to substitute shares of, or
interests in, another Portfolio of the Mutual Fund, of another
open-end, registered investment company, or other investment vehicle,
for shares already purchased or to be purchased in the future under
the contract, if the shares of any or all eligible Portfolios are no
longer available for investment, or if, in AUL's judgment, further
investment in any or all eligible Portfolios becomes inappropriate in
view of the purposes of the Variable Account or the contract. Where
required under applicable law, AUL will not substitute any shares in
the Variable Account or any Investment Account without notice,
Participant approval, or prior approval of the Securities and Exchange
Commission or a state insurance commissioner, and without following
the filing or other procedures established by applicable state
insurance regulators. Nothing contained herein shall prevent the
Variable Account from purchasing other securities for other series or
classes of contracts, or from effecting a conversion between series or
classes of contracts on the basis of requests made by a majority of
P-12867.8
A Mutual Company G-11020B
<PAGE>
participants or as permitted by federal law.
(b) AUL reserves the right to establish additional Investment Accounts,
each of which would invest in a new Portfolio of the Mutual Fund, or
in other securities, investment vehicles, or shares of another
diversified open-end management investment company or series thereof.
AUL reserves the right to eliminate or combine existing Investment
Accounts if, in its sole discretion, marketing, tax, or investment
conditions so warrant. AUL also reserves the right to provide other
Investment Options under this contract at any time. Subject to any
required regulatory approvals, AUL reserves the right to transfer
assets from any Investment Account to another separate account of AUL
or Investment Account.
(c) In the event of any such substitution or change, AUL may, by
appropriate amendment, make such changes in this contract as may be
necessary or appropriate to reflect such substitution or change. If
deemed by AUL to be in the best interests of persons or entities
having voting rights under this contract, the Variable Account may be
operated as a management investment company under The Investment
Company Act of 1940 or any other form permitted by law, it may be
deregistered in the event such registration is no longer required
under The Investment Company Act of 1940, or it may be combined with
other separate accounts of AUL or an affiliate thereof. AUL may take
such action as is necessary to comply with, or to obtain, exemptions
from the Securities and Exchange Commission with regard to the
Variable Account. Subject to compliance with applicable law, AUL also
may combine one or more Investment Accounts and may establish a
committee, board, or other group to manage one or more aspects of the
operation of the Variable Account.
3.4 Transfers:
(a) Subject to the limitations of Section 3.5, the Participant may direct
AUL at its Home Office to transfer the amounts credited to an
Investment Option to any other Investment Option during the
Accumulation Period. For any transfer from an Investment Account,
Accumulation Units shall be valued as of the close of business on the
Valuation Date that AUL receives the Participant's direction, provided
that AUL receives such direction by 4:00 p.m. E.S.T. on that Valuation
Date. If such direction is received after 4:00 p.m. E.S.T., such
transfer shall be effective as of the close of business on the next
succeeding Valuation Date.
(b) AUL shall make the transfer as requested by the Participant within 7
days from the date a proper request is received by AUL at its Home
Office, except as AUL may be permitted to defer such payment of
amounts withdrawn from the Variable Account in accordance with
appropriate provisions of the federal securities laws. AUL reserves
the right to defer a transfer of amounts from the Fixed Interest
Account for a period of 6 months after AUL receives the transfer
request at its Home Office.
(c) All transfers from the Fixed Interest Account to any Investment
Account shall be made on a first-in/first-out accounting basis.
P-12867.9
A Mutual Company G-11020B
<PAGE>
3.5 Limitations on Transfers:
(a) The Participant may not direct a transfer with regard to his
Participant Account's share of any Investment Option in an amount less
than $500 or the Participant Account's entire share, if less than
$500. If such a transfer reduces the Participant Account's remaining
share of an Investment Option to less than $500, the entire remaining
share shall also be transferred.
(b) Amounts transferred from the Fixed Interest Account on behalf of a
Participant during any Contract Year shall not exceed 20 % of the
Participant Account's share of the Fixed Interest Account determined
as of the last Contract Anniversary preceding the request for
transfer, or the Participant Account's entire share of the Fixed
Interest Account if such share would be less than $500 after the
transfer.
(c) Amounts under this contract which have been transferred from other
group annuity contracts, whether issued by AUL or otherwise, shall be
allocated pursuant to the provisions of Section 3.2.
(d) AUL reserves the right to change the limitation on the minimum
transfer, to change the limit on remaining balances, to limit the
number and frequency of transfers, to suspend the transfer privilege
provided in Sections 3.4 and 3.5, and to impose a charge on a
transfer.
P-12867.10
A Mutual Company G-11020B
<PAGE>
3.5 Limitations on Transfers:
(a) The Participant may not direct a transfer with regard to his
Participant Account's share of any Investment Option in an amount less
than $500 or the Participant Account's entire share, if less than
$500. If such a transfer reduces the Participant Account's remaining
share of an Investment Option to less than $500, the entire remaining
share shall also be transferred.
(b) Amounts transferred from the Fixed Interest Account on behalf of a
Participant during any Contract Year shall not exceed 20% of the
Participant Account's share of the Fixed Interest Account determined
as of the last Contract Anniversary preceding the request for
transfer, or the Participant Account's entire share of the Fixed
Interest Account if such share would be less than $500 after the
transfer.
(c) Amounts under this contract which have been transferred from other
group annuity contracts, whether issued by AUL or otherwise, shall be
allocated pursuant to the provisions of Section 3.2.
(d) AUL reserves the right to change the limitation on the minimum
transfer, to change the limit on remaining balances, to limit the
number and frequency of transfers, to suspend the transfer privilege
provided in Sections 3.4 and 3.5, and to impose a charge of not more
than $25 on a transfer. AUL reserves the right to change the maximum
limit on such transfer charge upon delivery of written notice to the
Contractholder. Any such change in the maximum limit shall apply only
to transfers by an individual who becomes a Participant on or after
the effective date of such change, and shall apply as long as that
individual remains a Participant.
P- 12867.10 (PA)
A Mutual Company G-11020B
<PAGE>
ARTICLE 4 - BENEFITS
4.1 Election of Annuity Options: At the written request of the Participant, AUL
shall apply all or a portion of the Account Value (subject to Section 6.5)
of the Participant Account for the purpose of providing a fixed payment
annuity. Upon receipt of such request, AUL is hereby authorized by such
Participant to value and transfer the Participant Account's share of the
Variable Account to the Fixed Interest Account as of the date that AUL
receives such written request at its Home Office. Such transferred amounts
shall be held in the Fixed Interest Account until the Participant's Annuity
Commencement Date. The Participant request shall include certification as
to the purpose for the annuity and the election of one of the following
annuity options. The amount of the annuity shall be computed from the Table
of Immediate Annuities then included in this contract, except as provided
under Section 4.4.
4.2 Annuity Options:
(a) Life Annuity. The monthly annuity shall be payable to the annuitant
for as long as the annuitant lives, and shall end with the last
monthly payment before the death of the annuitant.
(b) Certain and Life Annuity. The monthly annuity shall be payable to the
annuitant for as long as the annuitant lives. If the annuitant dies
before receiving payments for the certain period (5, 10, 15, or 20
years, as specified in the election), any remaining payments for the
balance of the certain period shall be paid to the annuitant's
beneficiary.
(c) Survivorship Annuity. The monthly annuity shall be payable to the
annuitant for as long as the annuitant lives. After the death of the
annuitant, a portion (all, 2/3, or 1/2, as specified in the election)
of the annuitant's monthly annuity shall be paid to the contingent
annuitant named in the election for as long as the contingent
annuitant lives. An election of this option is automatically cancelled
if either the Participant or the contingent annuitant dies before the
Annuity Commencement Date.
(d) Unit Refund Life Annuity. The monthly annuity shall be payable to the
annuitant for as long as the annuitant lives, and shall end with the
last monthly payment before the death of the annuitant. If, at the
death of the annuitant, the sum of the monthly payments previously
received is less than the amount applied to provide the annuity,
monthly payments of the same amount shall continue to the annuitant's
beneficiary until the total of the monthly payments received equals
such amount.
(e) Fixed Period. The monthly annuity shall be payable to the annuitant
for a fixed period of time (not less than 5 years nor more than 30
years, as specified in the election). If, at the death of the
annuitant, payments have been made for less than the selected fixed
period, monthly annuity payments to the annuitant's beneficiary shall
be continued during the remainder of such fixed period.
(f) Any other options made available by AUL at the time a Participant
exercises his option to elect an annuity.
If the annuity option selected is not included in the attached Table of
Immediate Annuities, the amount of monthly annuity shall be based on rates
determined in the same manner as those found in the Table.
P-12867. 11
A Mutual Company G-11020B
<PAGE>
If no annuity option election for a Participant has been received by AUL at
its Home Office at least 30 days prior to the Annuity Commencement Date,
the Account Value (subject to Section 6.5) of his Participant Account shall
be applied under (b) above as a 10 Year Certain and Life Annuity. AUL must
receive written notification of such Annuity Commencement Date, written
designation of the contingent annuitant or beneficiary, and any election
forms needed in connection with any annuity option provided in this
Section.
Distributions shall be made in accordance with the requirement of Code
Section 401(a)(9) and the Regulations issued thereunder. Under these
requirements, in no event shall any option elected provide annuity benefits
to the Participant or to the Participant and the contingent annuitant which
would extend for a certain period beyond the life expectancy of such
Participant or the joint life expectancy of such Participant and such
contingent annuitant as determined on the Annuity Commencement Date. Life
expectancy for purposes of Code Section 401(a)(9) and the Regulations
issued thereunder shall be computed using the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations. Any
periodic payments made under Section 401(a)(9) shall be made at intervals
of no longer than one year. In addition, any such periodic payments must be
either nonincreasing or they may increase only as provided in Q&A F-3 of
section 1.401(a)(9)-l of the Proposed Income Tax Regulations.
4.3 Guaranteed Rate of Interest: The retirement annuity options provided in
this Article and illustrated in the attached Table of Immediate Annuities
are based on a guaranteed interest rate of 4.00% compounded annually.
4.4 Alternate Nonparticipating Retirement Annuity: Any annuity elected shall be
provided at whatever current single premium nonparticipating immediate
annuity rates are available under this class of group annuity contract if
such rates produce a higher income than that provided under the Table of
Immediate Annuities provided in this contract.
4.5 Minimum Payments: If the total Account Value is less than $2,000, such
value shall be paid in a lump sum to the annuitant rather than annuitized
under the annuity options provided in Section 4.2. Additionally, if the
monthly annuity is less than AUL's then current established minimum, AUL
reserves the right to make payments on a less frequent basis.
4.6 Due Proof of Date of Birth and Survival: Before commencing payments under
any annuity, AUL may require proof of the date of birth of any annuitant
and may require due proof that any annuitant is living before the payment
of each or any installment under the option. 4.7 Death Benefits:
(a) Upon receipt of written instructions from the Participant's
beneficiary (or, if applicable, the secondary beneficiary of the
Participant) and of due proof of the Participant's (and, if
applicable, the beneficiary's) death during the Accumulation Period at
its Home Office, AUL shall apply the Account Value of the Participant
Account for the purpose of providing a death benefit. The death
benefit shall be paid to the beneficiary last properly designated in
writing to AUL at its Home Office by the Participant, or, if there is
no designated beneficiary living on the date of the Participant's
death, to the Participant's estate. If any beneficiary dies while
receiving payments and no beneficiary is designated to receive any
remaining payments, such remaining payments shall be made to the
deceased beneficiary's estate.
P-12867.12
A Mutual Company G-11020B
<PAGE>
(b) The Account Value to be applied pursuant to (a) above shall be
determined as of the close of business on the later of (1) the
Valuation Date that AUL receives such written instructions at its Home
Office, or (2) the Valuation Date that AUL receives such due proof of
death at its Home Office, provided that such written instructions or
due proof of death received on the later of (1) or (2) above are(is)
received by 4:00 p.m. E.S.T. If the written instructions or due proof
of death received on the later of (1) or (2) above are(is) received
after 4:00 p.m. E.S.T., such valuation shall be made as of the close
of business on the next succeeding Valuation Date.
(c) (1) The benefit shall be payable in accordance with one of the
following provisions as elected by the Participant or the beneficiary
if the Participant did not make an election:
(i) The entire Account Value to be applied shall be paid to the
beneficiary in a single sum or by another elected method on or
before December 31 of the calendar year which contains the fifth
anniversary of the date of the Participant's death; or
(ii) The benefit shall be paid as an annuity in accordance with the
Annuity Options shown in Section 4.2 over a period not to exceed
the life or life expectancy of the beneficiary. If the
beneficiary is not the Participant's surviving spouse, the
annuity must begin on or before December 31 of the calendar year
immediately following the calendar year in which the Participant
died. If the beneficiary is the Participant's surviving spouse,
such spouse may elect to receive equal or substantially equal
payments over the life or life expectancy of such spouse
commencing at any date prior to the later of (1) December 31 of
the calendar year immediately following the calendar year in
which the Participant died, or (2) December 31 of the calendar
year in which the Participant would have attained age 70 1/2.
Such spousal election must be made no later than the earlier of
December 31 of the calendar year containing the fifth anniversary
of the Participant's death or the date distributions are required
to begin pursuant to the preceding sentence. The surviving spouse
may accelerate these payments at any time by increasing the
frequency or amount of such payments. If the beneficiary is the
Participant's surviving spouse, such spouse may treat the
Participant Account as his or her own individual retirement
arrangement (IRA). This election will be deemed to have been made
if such surviving spouse makes a regular IRA Contribution under
this contract, makes a rollover to or from this contract, or
fails to elect any of the above three provisions.
(iii)Distributions under this section are considered to have begun if
distributions are made on account of the individual reaching his
or her required beginning date or if prior to the required
beginning date distributions irrevocably commence to an
individual over a period permitted and in an annuity form
acceptable under section 1.401(a)(9) of the Regulations.
P-12867.13
A Mutual Company G-11020B
<PAGE>
(2) If a Participant dies on or after his Annuity Commencement Date, any
interest remaining under the Annuity Option selected shall be paid at
least as rapidly as prior to the Participant's death.
(3) If payment is to be made in a cash lump sum, payment shall be made
within 7 days of the date of valuation, as determined above in this
Section, except as AUL may be permitted to defer such payment of
amounts derived from the Variable Account in accordance with the
provisions of federal securities laws. Also, AUL reserves the right to
defer the payment of amounts withdrawn from the Fixed Interest Account
for a period of 6 months after AUL receives written instructions at
its Home Office.
4.8 Withdrawal Benefits:
(a) Except as stated below, a Participant, upon submitting a proper
written request to AUL at its Home Office, may direct AUL to withdraw
all or a portion of the Account Value (subject to the Withdrawal
Charge) of his Participant Account.
(b) Withdrawals from a Participant Account's share of an Investment Option
may not be made in an amount less than the smaller of $500 or the
Participant Account's entire share of the Investment Option. If a
withdrawal reduces the Participant Account's share of an Investment
Option to less than $500, such remaining share shall also be
withdrawn.
(c) A withdrawal request shall be effective as of the close of business on
the Valuation Date that AUL receives a proper written withdrawal
request at its Home Office, provided that AUL receives such request by
4:00 p.m. E.S.T. on that Valuation Date. If such request is received
after 4:00 p.m. E.S.T., such request shall be effective as of the
close of business on the next succeeding Valuation Date.
(d) The Account Value to be applied pursuant to this Section shall be
determined as of the applicable Valuation Date determined in (c)
above. If the entire Account Value of a Participant Account is
withdrawn, the Participant shall be paid the Withdrawal Value. If the
Participant requests that a specified percentage or dollar amount be
paid to the Participant, AUL shall withdraw from the Participant
Account an amount equal to the dollar amount to be paid divided by the
difference between 1 and the decimal equivalent of the applicable
Withdrawal Charge. Notwithstanding the previous sentence, in any
Contract Year the Participant may withdraw up to 10% of the Account
Value of his Participant Account determined as of the last Contract
Anniversary preceding the request for the withdrawal without
application of any Withdrawal Charge, provided that 12 months have
elapsed from the date that the Participant's first Contribution is
credited to his Participant Account by AUL to the date of such
withdrawal.
(e) AUL shall pay such amount in a cash lump sum to the Participant. Such
cash lump sum will be paid within 7 days from the date that AUL
receives the withdrawal request at its Home Office, except as AUL may
be permitted to defer such payment of amounts withdrawn from the
Variable Account in accordance with appropriate provisions of the
federal securities laws. AUL reserves the right to defer the payment
of amounts with drawn from the Fixed Interest Account for a period of
up to 6 months after AUL receives the withdrawal request at its Home
Office.
P-12867.14
A Mutual Company G-11020B
<PAGE>
(f) Withdrawals from a Participant Account's share of the Fixed Interest
Account shall be made on a first-in/first-out basis so that all or a
portion of the amounts credited to the Participant Account's share of
the Fixed Interest Account which have been on deposit for the longest
period of time, as well as the interest credited thereon, shall be
withdrawn first.
P-12867.15
A Mutual Company G-11020B
<PAGE>
ARTICLE 5 - VALUATIONS
5.1 Time of Valuation: All assets of each Portfolio shall be valued as provided
in the prospectus for the Mutual Fund as such prospectus may be amended or
supplemented from time to time.
5.2 Accumulation Units: Any amounts that are allocated to any Investment
Account on behalf of a Participant shall be credited to his Participant
Account in the form of Accumulation Units on the basis of the value of such
units in that Investment Account as of the end of the Valuation Period on
which such amounts are received by AUL at its Home Office. Such crediting
shall be made separately for amounts allocated to each Investment Account.
The number of Accumulation Units in each Investment Account credited to
each Participant Account as of any Valuation Period shall be determined by
dividing the amounts allocated to that Investment Account for that
Participant Account as of such Valuation Period by the dollar value of one
Accumulation Unit in that Investment Account as of the close of business on
the applicable Valuation Period. The number of Accumulation Units thus
determined shall not be changed by any subsequent change in the dollar
value of the Accumulation Units.
5.3 Value of Accumulation Units: The value of an Accumulation Unit in each
Investment Account was established at $1.00 as of April 12, 1990. The value
of an Accumulation Unit in each Investment Account as of any Valuation
Period thereafter is equal to the dollar value of one Accumulation Unit in
that Investment Account as of the immediately preceding Valuation Period
multiplied by the Net Investment Factor, as defined in Section 5.4, for
that Investment Account for the current Valuation Period. The value of an
Accumulation Unit for each Investment Account shall be determined for each
Valuation Period before giving effect to any additions, withdrawals, or
transfers. After such determination, the additions, withdrawals, or
transfers which are effective as of that day shall then be made.
5.4 Determining the Net Investment Factor: The Net Investment Factor for each
Investment Account for any Valuation Period is determined by dividing (a)
by (b), and then subtracting (c) from that result, where:
(a) is equal to:
(1) the net asset value of a Portfolio share held in the Investment
Account determined as of the end of the current Valuation Period,
plus
(2) the per share amount of any dividend or other distribution, if
any, paid by the Portfolio during the current Valuation Period,
plus or minus
(3) any credit or charge for any taxes paid or reserved for by AUL
during the current Valuation Period which are determined by AUL
to be attributable to operation of the Investment Account;
(b) is the net asset value of a Portfolio share held in the Investment
Account determined as of the end of the immediately preceding
Valuation Period; and
(c) is a daily charge factor determined by AUL to reflect the charges
assessed against the assets of the Investment Account for mortality
and expense risks.
P-12867.16
A Mutual Company G-11020B
<PAGE>
5.5 Determining the Value of Each Participant Account's Share of any Investment
Account: The value of each Participant Account's share of any Investment
Account as of any Valuation Date shall be determined by multiplying the
Participant Account's aggregate Accumulation Units in that Investment
Account as of such Valuation Date by the dollar value of one Accumulation
Unit in that Investment Account as of such Valuation Date. The value of the
Participant Account's share of any Investment Account as of any date other
than a Valuation Date is equal to the value of its share of that Investment
Account as of the immediately preceding Valuation Date.
P-12867.17
A Mutual Company G-11020B
<PAGE>
5.5 Determining the Value of Each Participant Account's Share of any Investment
Account: The value of each Participant Account's share of any Investment
Account as of any Valuation Date shall be determined by multiplying the
Participant Account's aggregate Accumulation Units in that Investment
Account as of such Valuation Date by the dollar value of one Accumulation
Unit in that Investment Account as of such Valuation Date. The value of the
Participant Account's share of any Investment Account as of any date other
than a Valuation Date is equal to the value of its share of that Investment
Account as of the immediately preceding Valuation Date.
The value of each Participant Account's share of the Fixed Interest Account
as of any Valuation Date shall be equal to the current balance of the
Participant Account's share of the Fixed Interest Account on that date.
P-12867.17(PA)
A Mutual Company G-11020B
<PAGE>
ARTICLE 6 - OTHER CHARGES
6.1 Mortality Risk and Expense Risk Charges: AUL shall deduct a daily mortality
risk charge and a daily expense risk charge equal to the daily equivalent
of an annual combined charge of 1.25 % against the average daily net assets
of each Investment Account.
6.2 Investment Management Charge: The Mutual Fund shall pay an investment
advisory fee and certain other expenses, which may include its operational
and organizational expenses, as described in the current prospectus as it
may be amended or supplemented from time to time. These expenses may vary
from year to year. The net asset value of each Portfolio reflects such
investment advisory fee and other expenses which are deducted from the
assets of such Portfolio.
6.3 Administrative Charge: AUL shall deduct an administrative charge per
Contract Quarter equal to the lesser of $7.50 or 0.5% of the Account Value
on the last day of each Contract Quarter from each Participant Account in
existence on such day for as long as the Participant Account is in effect
during the Accumulation Period. This charge is to be prorated among each
subaccount of the Participant Account which corresponds to each Investment
Option utilized under this contract by that Participant Account. If the
entire balance of a Participant Account is applied or withdrawn before the
last day of the Contract Quarter pursuant to Sections 4.1, 4.7, or 4.8, the
administrative charge attributable to the period of time which has elapsed
since the first day of the Contract Quarter in which such application or
withdrawal of funds is made shall not be deducted from the amount applied
or withdrawn.
6.4 Transfer Charge: AUL reserves the right to deduct a charge for, each
transfer transaction pursuant to Section 3.4. This charge would be prorated
among the Investment Options from which the amounts are transferred in the
same proportion that the amount transferred from the Investment Option
bears to the total amount transferred from all Investment Options.
6.5 Other Charges: AUL reserves the right to deduct the appropriate premium tax
charge at the time annuity payments commence pursuant to Section 4.1 or
such other time that premium taxes are incurred by AUL. AUL also reserves
the right to deduct the appropriate charges for federal, state, or local
income taxes incurred by AUL that are attributable to the Variable Account
and its Investment Accounts.
6.6 Reduction or Waiver of Certain Charges: AUL may reduce or waive the amount
of the Withdrawal Charge or the administrative charge discussed in Section
6.3 where the expenses associated with the sale of this contract or the
administrative costs associated with this contract are reduced, or where
this contract is sold to the directors or employees of AUL or any of its
affiliates, or to directors or any employees of the Mutual Fund.
P-12867.18
A Mutual Company G-11020B
<PAGE>
ARTICLE 6 - OTHER CHARGES
6.1 Mortality Risk and Expense Risk Charges: AUL shall deduct a daily mortality
risk charge and a daily expense risk charge equal to the daily equivalent
of an annual combined charge of 1.25% against the average daily net assets
of each Investment Account.
6.2 Investment Management Charge: The Mutual Fund shall pay an investment
advisory fee and certain other expenses, which may include its operational
and organizational expenses, as described in the current prospectus as it
may be amended or supplemented from time to time. These expenses may vary
from year to year. The net asset value of each Portfolio reflects such
investment advisory fee and other expenses which are deducted from the
assets of such Portfolio.
6.3 Administrative Charge: AUL shall deduct an administrative charge per
Contract Quarter equal to the lesser of $7.50 or 0.5% of the Account Value
on the last day of each Contract Quarter from each Participant Account in
existence on such day for so long as the Participant Account is in effect
during the Accumulation Period. This charge is to be prorated among each
subaccount of the Participant Account which corresponds to each Investment
Option utilized under this contract by that Participant Account. However,
in no event shall any portion of the annual charge for a Contract Year
attributable to the Fixed Interest Account subaccount of the Participant
Account exceed the amount of the Contributions allocated to such Fixed
Interest Account subaccount for the Participant during such Contract Year
plus interest earned during such Contract Year on amounts held in such
Fixed Interest Account subaccount. If the entire balance of a Participant
Account is applied or withdrawn before the last day of the Contract Quarter
pursuant to Sections 4.1, 4.7, or 4.8, the administrative charge
attributable to the period of time which has elapsed since the first day of
the Contract Quarter in which such application or withdrawal of funds is
made shall not be deducted from the amount applied or withdrawn.
6.4 Transfer Charge: AUL reserves the right to deduct a charge for each
transfer transaction pursuant to Section 3.4. This charge would be prorated
among the Investment Options from which the amounts are transferred in the
same proportion that the amount transferred from the Investment Option
bears to the total amount transferred from all Investment Options.
6.5 Other Charges: AUL reserves the right to deduct the appropriate premium tax
charge at the time annuity payments commence pursuant to Section 4.1 or
such other time that premium taxes are incurred by AUL. AUL also reserves
the right to deduct the appropriate charges for federal, state, or local
income taxes incurred by AUL that are attributable to the Variable Account
and its Investment Accounts.
6.6 Reduction or Waiver of Certain Charges: AUL may reduce or waive the amount
of the Withdrawal Charge or the administrative charge discussed in Section
6.3 where the expenses associated with the sale of this contract or the
administrative costs associated with this contract are reduced, or where
this contract is sold to the directors or employees of AUL or any of its
affiliates, or to directors or any employees of the Mutual Fund.
P-12867.18(WA)
A Mutual Company G-11020B
<PAGE>
ARTICLE 6 - OTHER CHARGES
6.1 Mortality Risk and Expense Risk Charges: AUL shall deduct a daily mortality
risk charge and a daily expense risk charge equal to the daily equivalent
of an annual combined charge of 1.25% against the average daily net assets
of each Investment Account.
6.2 Investment Management Charge: The Mutual Fund shall pay an investment
advisory fee and certain other expenses, which may include its operational
and organizational expenses, as described in the current prospectus as it
may be amended or supplemented from time to time. These expenses may vary
from year to year. The net asset value of each Portfolio reflects such
investment advisory fee and other expenses which are deducted from the
assets of such Portfolio.
6.3 Administrative Charge: AUL shall deduct an administrative charge per
Contract Quarter equal to the lesser of $7.50 or 0.5% of the Account Value
on the last day of each Contract Quarter from each Participant Account in
existence on such day for as long as the Participant Account is in effect
during the Accumulation Period. This charge is to be prorated among each
subaccount of the Participant Account which corresponds to each Investment
Option utilized under this contract by that Participant Account. If the
entire balance of a Participant Account is applied or withdrawn before the
last day of the Contract Quarter pursuant to Sections 4.1, 4.7, or 4.8, the
administrative charge attributable to the period of time which has elapsed
since the first day of the Contract Quarter in which such application or
withdrawal of funds is made shall not be deducted from the amount applied
or withdrawn.
6.4 Transfer Charge: AUL reserves the right to deduct a charge (not to exceed
$25) for each transfer transaction pursuant to Section 3.4. This charge
would be prorated among the Investment Options from which the amounts are
transferred in the same proportion that the amount transferred from the
Investment Option bears to the total amount transferred from all Investment
Options.
6.5 Other Charges: AUL reserves the right to deduct the appropriate premium tax
charge at the time annuity payments commence pursuant to Section 4.1 or
such other time that premium taxes are incurred by AUL. AUL also reserves
the right to deduct the appropriate charges for federal, state, or local
income taxes incurred by AUL that are attributable to the Variable Account
and its Investment Accounts.
6.6 Reduction or Waiver of Certain Charges: AUL may reduce or waive the amount
of the Withdrawal Charge or the administrative charge discussed in Section
6.3 where the expenses associated with the sale of this contract or the
administrative costs associated with this contract are reduced, or where
this contract is sold to the directors or employees of AUL or any of its
affiliates, or to directors or any employees of the Mutual Fund.
P-12867.18(NJ)
A Mutual Company G-11020B
<PAGE>
ARTICLE 7 - RIGHT OF AUL TO CHANGE CERTAIN PROVISIONS
7.1 Right of AUL to Change Interest Rates: AUL has the right at any time, upon
delivery of written notice to the Contractholder, to change the Guaranteed
Rate of Interest. Any such change shall apply only to Participant Accounts
established on or after the effective date of such change, and shall apply
for the duration of such affected Participant Accounts. Any change in the
Guaranteed Rate of Interest shall not result in a rate less than that
prescribed by applicable state law.
7.2 Right of AUL to Change Annuity Table: After the first 5 Contract Years, AUL
has the right at any time, upon delivery of written notice to the
Contractholder, to change any annuity table included in this contract, but
any such change shall apply only to Participant Accounts established on or
after the effective date of such change.
7.3 Right of AUL to Change Charges: AUL has the right at any time, upon
delivery of written notice to the Contractholder, to change the charges set
out in Sections 1.24 and 6.3. Any such change to the Withdrawal Charge set
out in Section 1.24 shall apply only to Participant Accounts established on
or after the effective date of such change, and shall apply for the
duration of such affected Participant Accounts. The administrative charge
set out in Section 6.3 shall be limited to a maximum of $15 per Contract
Quarter until the year 2001. Any increase in the administrative charge made
by AUL for any Contract Quarter beginning after December 31, 2000 shall be
limited to an amount which is designed to reimburse AUL for the expenses
associated with the administration of the contract and the operation of the
Variable Account. Any such increase shall not be anticipated to be a source
of profit for AUL.
7.4 Amendment of Contract to Conform with Law: Notwithstanding the provisions
of Section 8.1, AUL reserves the right to amend this contract at any time,
without the consent of the Contractholder, Participants, or any other
person or entity, to make any change to any provisions of the contract to
comply with, or give the Contractholder or Participants the benefit of,
any provisions of federal or state laws, regulations, or rulings. Any such
amendment shall be stated in a written instrument and delivered to the
Contractholder.
P-12867.19
A Mutual Company G-11020B
<PAGE>
ARTICLE 7 - RIGHT OF AUL TO CHANGE CERTAIN PROVISIONS
7.1 Right of AUL to Change Interest Rates: AUL has the right at any time, upon
delivery of written notice to the Contractholder, to change the Guaranteed
Rate of Interest. Any such change shall apply only to Participant Accounts
established on or after the effective date of such change, and shall apply
for the duration of such affected Participant Accounts. Any change in the
Guaranteed Rate of Interest shall not result in a rate less than that
prescribed by applicable state law.
7.2 Right of AUL to Change Annuity Table: AUL does not reserve the right to
change the Table of Immediate Annuities included in this contract.
7.3 Right of AUL to Change Charges: AUL has the right at any time, upon
delivery of written notice to the Contractholder, to change the charges set
out in Sections 1.24 and 6.3. Any such change to the Withdrawal Charge set
out in Section 1.24 shall apply only to Participant Accounts established on
or after the effective date of such change, and shall apply for the
duration of such affected Participant Accounts. The administrative charge
set out in Section 6.3 shall be limited to a maximum of $100 per Contract
Quarter. Any increase in the administrative charge made by AUL for any
Contract Quarter shall be limited to an amount which is designed to
reimburse AUL for the expenses associated with the administration of the
contract and the operation of the Variable Account. Any such increase shall
not be anticipated to be a source of profit for AUL.
7.4 Amendment of Contract to Conform with Law: Notwithstanding the provisions
of Section 8.1, AUL reserves the right to amend this contract at any time,
without the consent of the Contractholder, Participants, or any other
person or entity, to make any change to any provisions of the contract to
comply with, or give the Contractholder or Participants the benefit of, any
provisions of federal or state laws, regulations, or rulings. Any such
amendment shall be stated in a written instrument and delivered to the
Contractholder.
P-12867.19(NJ)
A Mutual Company G-11020B
<PAGE>
ARTICLE 8 - MISCELLANEOUS
8.1 Ownership: The Contractholder is the owner of the contract and may agree
with AUL to any change or amendment of it without the consent of any other
person or entity, except that no such change or amendment shall adversely
affect the benefits to be provided by Contributions made prior to the
effective date of such change or amendment unless the consent of all
Participants is obtained.
AUL shall have no obligation to make any payment or distribution except as
specified in this contract.
8.2 AUL's Annual Statement: No provision or condition of this contract shall be
deemed to control, determine, or modify any annual statement of AUL made to
any insurance department, contractholder, regulatory body, or other person,
nor shall anything in such annual statement be deemed to control,
determine, or modify the valuation provided for in this contract, nor the
values determined, nor the market, book, or other value of any asset in any
Investment Account or Portfolio, nor any of the other provisions and
conditions of this contract.
8.3 Tax Status: AUL does not make any guarantee regarding the federal, state,
or local tax status of this contract, any Participant Account established
hereunder, or any transaction involving this contract.
8.4 Essential Data: The Participant shall furnish to AUL whatever information
is necessary to establish the eligibility and amount of annuity or other
benefit in each instance.
8.5 Reliance: AUL shall be fully protected in relying on any information
furnished by the Contractholder, by any person or persons certified to AUL
by the Contractholder as acting on its behalf, or by a Participant. AUL
need not inquire as to the accuracy or completeness thereof.
8.6 Misstatement of Essential Data: If it has been found that any essential
data pertaining to any person has been omitted or misstated, including, but
not limited to, a misstatement as to the age of an annuitant, an equitable
adjustment shall be made as soon as possible so as to provide the annuity
to which that person is entitled.
8.7 Annuity Certificates: AUL shall issue to each person for whom an annuity is
purchased from AUL a certificate setting forth the amount and terms of
payment of the annuity.
8.8 Election, Notice, or Direction Requirements: Wherever in this contract
reference is made to the Contractholder or Participant making a request or
giving notice or direction, such request, notice, or direction must be in
writing and must be submitted to, and received by, AUL at its Home Office
before becoming effective, unless the Participant is otherwise directed by
AUL.
8.9 Quarterly Statement of Account Value: As soon as reasonably possible after
the end of each Contract Quarter, AUL shall prepare a statement of the
Account Value of each Participant Account existing under this contract.
8.10 Conformity with State Laws: Any benefit payable under this contract shall
not be less than the minimum benefit required by any statute of the state
in which the contract is delivered.
P-12867.20
A Mutual Company G-11020B
<PAGE>
ARTICLE 8 - MISCELLANEOUS
8.1 Ownership: The Contractholder is the owner of the contract and may agree
with AUL to any change or amendment of it without the consent of any other
person or entity, except that no such change or amendment shall adversely
affect the benefits to be provided by Contributions made prior to the
effective date of such change or amendment unless the consent of all
Participants is obtained.
AUL shall have no obligation to make any payment or distribution except as
specified in this contract.
8.2 AUL's Annual Statement: No provision or condition of this contract shall be
deemed to control, determine, or modify any annual statement of AUL made to
any insurance department, contractholder, regulatory body, or other person,
nor shall anything in such annual statement be deemed to control,
determine, or modify the valuation provided for in this contract, nor the
values determined, nor the market, book, or other value of any asset in any
Investment Account or Portfolio, nor any of the other provisions and
conditions of this contract.
8.3 Tax Status: AUL does not make any guarantee regarding the federal, state,
or local tax status of this contract, any Participant Account established
hereunder, or any transaction involving this contract.
8.4 Essential Data: The Participant shall furnish to AUL whatever information
is necessary to establish the eligibility and amount of annuity or other
benefit in each instance.
8.5 Reliance: AUL shall be fully protected in relying on any information
furnished by the Contractholder, by any person or persons certified to AUL
by the Contractholder as acting on its behalf, or by a Participant. AUL
need not inquire as to the accuracy or completeness thereof.
8.6 Misstatement of Essential Data: If it has been found that any essential
data pertaining to any person has been omitted or misstated, including, but
not limited to, a misstatement as to the age of an annuitant, an equitable
adjustment shall be made as soon as possible so as to provide the annuity
to which that person is entitled. Any discovered underpayment by AUL
resulting from such omission or misstatement of essential data shall be
made up immediately.
8.7 Annuity Certificates: AUL shall issue to each person for whom an annuity is
purchased from AUL a certificate setting forth the amount and terms of
payment of the annuity.
8.8 Election, Notice, or Direction Requirements: Wherever in this contract
reference is made to the Contractholder or Participant making a request or
giving notice or direction, such request, notice, or direction must be in
writing and must be submitted to, and received by, AUL at its Home Office
before becoming effective, unless the Participant is otherwise directed by
AUL.
8.9 Quarterly Statement of Account Value: As soon as reasonably possible after
the end of each Contract Quarter, AUL shall prepare a statement of the
Account Value of each Participant Account existing under this contract.
8.10 Conformity with State Laws: Any benefit payable under this contract shall
not be less than the minimum benefit required by any statute of the state
in which the contract is delivered.
P-12867.20(WA)
A Mutual Company G-11020B
<PAGE>
8.11 Reference to Federal Laws: Language in this contract referring to federal
tax, securities, or other statutes or rules shall not be deemed to
incorporate within the contract such statutes or rules. This language is
informational and instructional in nature, and is not subject to approval
or disapproval by the state in which the contract is issued.
8.12 Sex and Number: Whenever the context so requires, the plural includes the
singular, the singular the plural, and the masculine the feminine.
8.13 Facility of Payment: If any Participant, contingent annuitant, or
beneficiary is legally incapable of giving a valid receipt for any payment
due him, and no guardian has been appointed, AUL may make such payment to
the person or persons who have assumed the care and principal support of
such Participant, contingent annuitant, or beneficiary. Also, AUL may make
payment directly to any person or entity when directed to do so in writing
by the Participant. Any payment made by AUL will fully discharge AUL to the
extent of such payment.
8.14 Insulation from Liability: The assets of the Variable Account are not
chargeable with liabilities arising out of any other business AUL may
conduct.
8.15 Voting:
(a) AUL is the legal owner of the shares of the Mutual Fund held by the
Investment Accounts of the Variable Account. AUL shall exercise voting
rights attributable to the shares of each Portfolio held in the
Investment Accounts at any regular and special meetings of the
shareholders of the Mutual Fund on matters requiring shareholder
voting under The Investment Company Act of 1940 or other applicable
laws. AUL shall exercise these voting rights based on instructions
received from persons having the voting interest in corresponding
Investment Accounts of the Variable Account. However, if The
Investment Company Act of 1940 or any regulations thereunder should be
amended, or if the present interpretation thereof should change, and
as a result AUL determines that it is permitted to vote the shares of
the Mutual Fund in its own right, it may elect to do so. AUL will vote
shares of any Investment Account, if any, that it owns beneficially in
its own discretion, except that if the Mutual Fund offers its shares
to any insurance company separate account that funds variable life
insurance contracts or if otherwise required by applicable law, AUL
will vote its own shares in the same proportion as the voting
instructions that are received in a timely manner for contracts and
Participant Accounts participating in the Investment Account.
(b) The persons having the voting interest under this contract are the
Participants. Unless otherwise required by applicable law, the number
of Mutual Fund shares of a particular Portfolio as to which voting
instructions may be given to AUL is determined by dividing the value
of all of the Accumulation Units of the corresponding Investment
Account attributable to this contract on a particular date by the net
asset value per share of that Portfolio as of the same date.
Fractional votes will be counted. The number of votes as to which
voting instructions may be given will be determined as of the date
coincident with the date established by the Mutual Fund for
determining shareholders eligible to vote at the meeting of the Mutual
Fund. If required by the Securities and Exchange Commission, AUL
reserves the right to determine in a different fashion the voting
rights attributable to the shares of the Mutual Fund.
P-12867.21
A Mutual Company G-11020B
<PAGE>
(c) Voting rights attributable to this contract for which no timely
voting instructions are received will be voted by AUL in the same
proportion as the voting instructions which are received in a
timely manner for all contracts and Participant Accounts
participating in that Investment Account.
(d) Neither the Variable Account nor AUL is under any duty to inquire
as to the instructions received or the authority of
Contractholders, Participants, or others to instruct the voting
of Mutual Fund shares.
(e) Every person or entity having such voting rights shall receive
such reports or prospectuses concerning the Variable Account or
the Mutual Fund as may be required by applicable federal law.
8.16 Acceptance of New Participants or Contributions. AUL reserves the right to
refuse to accept new Participants or new Contributions to this contract at
any time. AUL shall have the right to refuse to accept Contributions as of
the last day of the second month following the date that written notice to
this effect is delivered to any contributing Participant or to any
Participant for whom Contributions are being made.
8.17 Nonforfeitability and Nontransferability: The entire Withdrawal Value of a
Participant Account under this contract shall be nonforfeitable at all
times. No sum payable under this contract with respect to a Participant may
be sold, assigned, discounted, or pledged as collateral for a loan or as
security for the performance of an obligation or for any other purpose to
any person or entity other than AUL. In addition, to the extent permitted
by law, no such sum shall in any way be subject to legal process requiring
the payment of any claim against the payee.
8.18 Termination: This contract shall automatically terminate as of the date
that there are no Participant Accounts maintained hereunder.
8.19 Notice of Annual Meeting of Members: The regular annual meeting of the
members of AUL (i.e., contractholders) shall be held at its principal place
of business on the third Thursday in February of each year at the hour of
ten o'clock A.M. Elections for directors shall be held at such annual
meeting.
P-12867.22
A Mutual Company G-11020B
<PAGE>
TABLE OF IMMEDIATE ANNUITIES
MONTHLY INCOME PER $1,000 OF ACCOUNT VALUE
ADJUSTED LIFE 10 YEAR CERTAIN
AGE ANNUITY AND LIFE ANNUITY
--- ------- ----------------
45 2.9690 2.9632
46 3.0190 3.0124
47 3.0715 3.0641
48 3.1269 3.1185
49 3.1852 3.1756
50 3.2466 3.2357
51 3.3115 3.2988
52 3.3800 3.3653
53 3.4525 3.4352
54 3.5291 3.5088
55 3.6104 3.5863
56 3.6966 3.6678
57 3.7881 3.7536
58 3.8850 3.8437
59 3.9877 3.9382
60 4.0964 4.0374
61 4.2115 4.1414
62 4.3334 4.2505
63 4.4626 4.3650
64 4.5994 4.4850
65 4.7442 4.6108
66 4.8977 4.7425
67 5.0608 4.8804
68 5.2347 5.0250
69 5.4213 5.1766
70 5.6229 5.3356
71 5.8412 5.5020
72 6.0778 5.6755
73 6.3336 5.8552
74 6.6097 6.0404
75 6.9084 6.2302
94GARF2-4
Adjusted Age = Actual Age at Settlement (in years and completed months) less the
following number of months: [.6 multiplied by (Birth Year - 1915)] rounded to
the nearest integer.
P-12867.23
a Mutual Company G- 11020B
<PAGE>
The following are the guaranteed annuity rates for the options offered by AUL.
They are based on the following assumptions:
<TABLE>
<CAPTION>
<S> <C> <C>
Retirement value - $1000.00 Interest rate - 4% Load - 4% Participant - Female
Commission - 0% Contingent - Male (same age as participant) Age adjustment - 0
</TABLE>
<TABLE>
<CAPTION>
INSTALLMENT
AGE 5 YR C&L 15 YR C&L 20 YR C&L J&S(FULL) J&2/3S J&1/2S REFUND
--- -------- --------- --------- --------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
45 4.0004 3.9807 3.9616 3.7883 3.8571 3.8924 3.7984
46 4.0413 4.0192 3.9979 3.8194 3.8914 3.9284 3.8336
47 4.0844 4.0597 4.0358 3.8523 3.9275 3.9662 3.8706
48 4.1299 4.1020 4.0753 3.8869 3.9656 4.0062 3.9094
49 4.1777 4.1465 4.1176 3.9235 4.0058 4.0482 3.9501
50 4.2281 4.1931 4.1595 3.9620 4.0481 4.0926 3.9929
51 4.2813 4.2420 4.2044 4.0028 4.0928 4.1394 4.0377
52 4.3375 4.2933 4.2511 4.0458 4.1401 4.1889 4.0849
53 4.3969 4.3471 4.2997 4.0913 4.1900 4.2412 4.1345
54 4.4596 4.4035 4.3503 4.1395 4.2429 4.2965 4.1867
55 4.5259 4.4627 4.4029 4.1905 4.2988 4.3551 4.2416
56 4.5962 4.5248 4.4574 4.2446 4.3581 4.4172 4.2993
57 4.6707 4.5899 4.5139 4.3020 4.4210 4.4830 4.3602
58 4.7498 4.6582 4.5722 4.3630 4.4878 4.5529 4.4244
59 4.8338 4.7299 4.6323 4.4278 4.5588 4.6273 4.4921
60 4.9231 4.8049 4.6940 4.4968 4.6345 4.7065 4.5633
61 5.0181 4.8834 4.7572 4.5704 4.7150 4.7908 4.6387
62 5.1191 4.9654 4.8215 4.6488 4.8009 4.8808 4.7183
63 5.2267 5.0508 4.8868 4.7325 4.8925 4.9767 4.8020
64 5.3413 5.1395 4.9526 4.8218 4.9903 5.0790 4.8906
65 5.4635 5.2315 5.0186 4.9172 5.0947 5.1883 4.9844
66 5.5940 5.3266 5.0843 5.0193 5.2063 5.3052 5.0830
67 5.7334 5.4244 5.1492 5.1284 5.3258 5.4303 5.1875
68 5.8829 5.5249 5.2127 5.2454 5.4539 5.5646 5.2985
69 6.0434 5.6275 5.2744 5.3708 5.5916 5.7089 5.4156
70 6.2158 5.7317 5.3336 5.5055 5.7396 5.8643 5.5396
71 6.4011 5.8369 5.3897 5.6502 5.8991 6.0319 5.6720
72 6.6002 5.9422 5.4421 5.8058 6.0709 6.2127 5.8244
73 6.8139 6.0467 5.9404 5.9731 6.2561 6.4078 5.9594
74 7.0425 6.1493 5.5342 6.1532 6.4557 6.6183 6.1174
75 7.2868 6.2489 5.5735 6.3471 6.6707 6.8453 6.2830
</TABLE>
Table-PA
P-12867.24
<PAGE>
AMENDMENT
TO THE
IRA MULTIPLE-FUND GROUP VARIABLE ANNUITY
CONTRACT NUMBER GA 74,222 (THE CONTRACT)
ISSUED BY
AMERICAN UNITED LIFE INSURANCE COMPANY (AUL)
TO
PEOPLES BANK & TRUST COMPANY AS CUSTODIAN ON BEHALF OF ANY PERSON
ELIGIBLE TO PARTICIPATE IN AN IRC 403(b) TAX-DEFERRED ANNUITY WHO BECOMES A
PARTICIPANT UNDER THIS CONTRACT AND SUCH SUCCESSOR CUSTODIAN AS MAY BE
APPOINTED FROM TIME TO TIME (THE CONTRACTHOLDER)
The Effective Date of this Amendment is JANUARY 1, 1999.
AUL and the Contractholder hereby agree, by signing below, that the Contract is
hereby amended by deleting the corresponding Sections and Subsections of the
Contract, if any, and by inserting the following Sections and Subsections in
lieu thereof:
1.15 "Investment Account" means each subaccount of the Variable Account made
available to the Contractholder by AUL and identified in Schedule A of the
contract. Schedule A of the contract may be amended by AUL from time to
time as described in Section 3.3. Amounts allocated to any Investment
Account identified in Schedule A of the contract shall be invested in the
shares of the corresponding Mutual Fund Portfolio listed in the current
prospectus for the Variable Account.
1.17 "Mutual Fund" means the AUL American Series Fund, Inc., a diversified,
open-end management investment company registered under The Investment
Company Act of 1940, and any other such open-end management investment
company made available by AUL.
1.20 "Portfolio" means a series of a particular Mutual Fund as described in that
prospectus for that Mutual Fund, as such prospectus may be amended or
supplemented from time to time.
3.3 Addition, Deletion, or Substitution of Investments:
(a) AUL reserves the right, subject to compliance with applicable law, to
make additions to, deletions from, substitution for, or combinations
of, the securities that are held by the Variable Account or any
Investment Account or that the Variable Account or any Investment
Account may purchase. AUL reserves the right to eliminate the shares
of any of the eligible Portfolios and to substitute shares of, or
interests in, another Portfolio of the AUL American Series Fund, Inc.,
of another open-end, registered investment company, or other
investment vehicle, for shares already purchased or to be purchased in
the future under the contract, if the shares of any or all eligible
Portfolios are no longer available for investment, or if, in AUL's
judgment, further investment in any or all eligible Portfolios becomes
inappropriate in view of the purposes of the Variable Account or the
contract. Where required under applicable law, AUL will not substitute
any shares in the Variable Account or any Investment Account without
notice, Participant approval, or prior approval of the Securities and
Exchange Commission or a state insurance commissioner, and without
following the filing or other procedures established by applicable
state insurance regulators. Nothing contained herein shall prevent the
Variable Account from purchasing other securities for other series or
classes of contracts, or from effecting a conversion between series or
classes of contracts on the basis of requests made by a majority of
participants or as permitted by federal law.
(b) AUL reserves the right to establish additional Investment Accounts,
each of which would invest in the corresponding Mutual Fund Portfolio
listed in the current prospectus for the
P-12867.AMD. 1
A Mutual Company G-11020B
<PAGE>
Variable Account, or in other securities or investment vehicles. AUL
reserves the right to eliminate or combine existing Investment
Accounts if, in its sole discretion, marketing, tax, or investment
conditions so warrant. AUL also reserves the right to provide other
Investment Options under this contract at any time. Subject to any
required regulatory approvals, AUL reserves the right to transfer
assets from any Investment Account to another separate account of AUL
or Investment Account.
(c) In the event of any such substitution or change, AUL may, by
appropriate amendment, make such changes in this contract as may be
necessary or appropriate to reflect such substitution or change. If
deemed by AUL to be in the best interests of persons or entities
having voting rights under this contract, the Variable Account may be
operated as a management investment company under The Investment
Company Act of 1940 or any other form permitted by law, it may be
deregistered in the event such registration is no longer required
under The Investment Company Act of 1940, or it may be combined with
other separate accounts of AUL or an affiliate thereof. AUL may take
such action as is necessary to comply with, or to obtain, exemptions
from the Securities and Exchange Commission with regard to the
Variable Account. Subject to compliance with applicable law, AUL also
may combine one or more Investment Accounts and may establish a
committee, board, or other group to manage one or more aspects of the
operation of the Variable Account.
4.8 Withdrawal Benefits:
(d) The Account Value to be applied pursuant to this Section shall be
determined as of the applicable Valuation Date determined in (c)
above. If the entire Account Value of a Participant Account is
withdrawn, the Participant shall be paid the Withdrawal Value. If the
Participant requests that a specified percentage or dollar amount be
paid to the Participant, AUL shall withdraw from the Participant
Account an amount equal to the dollar amount to be paid divided by the
difference between I and the decimal equivalent of the applicable
Withdrawal Charge. Notwithstanding the previous sentence, in the first
Contract Year in which a Participant Account is established, and in
the next succeeding Contract Year, the Participant may withdraw from
that Participant Account up to 10% of the sum of the Account Value of
that Participant Account, determined as of the last Contract
Anniversary preceding the request for the withdrawal, plus
Contributions made during the applicable Contract Year, without
application of any Withdrawal Charge. In any subsequent Contract Year,
the Participant may withdraw from that Participant Account up to 10%
of the Account Value of that Participant Account, determined as of the
last Contract Anniversary preceding the request for the withdrawal,
without application of any Withdrawal Charge.
5.1 Time of Valuation: All assets of each Portfolio shall be valued as provided
in the prospectus for the applicable Mutual Fund as such prospectus may be
amended or supplemented from time to time.
5.3 Value of Accumulation Units: The value of an Accumulation Unit in the AUL
American Equity, Bond, Money Market, and Managed Investment Accounts was
established at $1.00 as of April 12, 1990. The value of an Accumulation
Unit in any other Investment Account available under this contract shall be
established at $1.00 as of the date of the first deposit to such Investment
Account. The value of an Accumulation Unit in each Investment Account as of
any Valuation Period thereafter is equal to the dollar value of one
Accumulation Unit in that Investment Account as of the immediately
preceding Valuation Period multiplied by the Net Investment Factor, as
defined
P-12R67-AMD.2
A Mutual Company G-11020B
<PAGE>
in Section 5.4, for that Investment Account for the current Valuation
Period. The value of an Accumulation Unit for each Investment Account shall
be determined for each Valuation Period before giving effect to any
additions, withdrawals, or transfers. After such determination, the
additions, withdrawals, or transfers which are effective as of that day
shall then be made.
5.4 Determining the Net Investment Factor: The Net Investment Factor for each
Investment Account for any Valuation Period is determined by dividing (a)
by (b), and then subtracting (c) from that result, where:
(a) is equal to:
(1) the net asset value of a Portfolio share held in the Investment
Account determined as of the end of the current Valuation Period,
plus
(2) the per share amount of any dividend or other distribution, if
any, paid by the Portfolio during the current Valuation Period,
plus or minus
(3) any credit or charge for any taxes paid or reserved for by AUL
during the current Valuation Period which are determined by AUL
to be attributable to operation of the Investment Account;
(b) is the net asset value of a Portfolio share held in the Investment
Account determined as of the end of the immediately preceding
Valuation Period; and
(c) is a daily charge factor determined by AUL to reflect the charges
assessed against the assets of the Investment Account for mortality
and expense risks, as authorized by Section 6.1.
6.1 Mortality Risk and Expense Risk Charges: AUL shall deduct a daily mortality
risk charge and a daily expense risk charge equal to the daily equivalent
of an annual combined charge of 1.25% against the average daily net assets
of each Investment Account. These charges shall be reflected in the Net
Investment Factor as provided in Section 5.4(c).
6.2 Investment Management Charge: A Mutual Fund shall pay any investment
advisory fee and certain other expenses, which may include its operational
and organizational expenses, as described in the current prospectus for
that Mutual Fund as it may be amended or supplemented from time to time.
These expenses may vary from year to year. The net asset value of each
Portfolio reflects such investment advisory fee and other expenses which
are deducted from the assets of such Portfolio.
6.3 Administrative Charge: AUL shall deduct an administrative charge in the
amount of $3.00 per Contract Quarter on the last day of each Contract
Quarter from each Participant Account in existence on such day for as long
as the Participant Account is in effect during the Accumulation Period.
However, this $3.00 administrative charge per Contract Quarter will be
waived if the Account Value on the last day of the Contract Quarter is
$10,000.00 or greater. When applicable, this $3.00 charge is to be prorated
among each subaccount of the Participant Account which corresponds to each
Investment Option utilized under this contract by that Participant Account.
If the entire balance of a Participant Account is applied or withdrawn
before the last day of the Contract Quarter pursuant to Sections 4.1, 4.7,
or 4.8, the administrative charge attributable to the period of time which
has elapsed since the first day of the Contract Quarter in which such
application or withdrawal of funds is made shall not be deducted from the
amount applied or withdrawn.
6.4 Transfer Charge: AUL reserves the right to deduct a charge (not to exceed
$25) for each transfer transaction pursuant to Section 3.4. This charge
would be prorated among the Investment Options from which the amounts are
transferred in the same proportion that the amount transferred from the
Investment Option bears to the total amount transferred from all Investment
Options.
P-12867.AMD.3 (New Jersey)
A Mutual Company G-11020B
<PAGE>
in Section 5.4, for that Investment Account for the current Valuation
Period. The value of an Accumulation Unit for each Investment Account shall
be determined for each Valuation Period before giving effect to any
additions, withdrawals, or transfers. After such determination, the
additions, withdrawals, or transfers which are effective as of that day
shall then be made.
5.4 Determining the Net Investment Factor: The Net Investment Factor for each
Investment Account for any Valuation Period is determined by dividing (a)
by (b), and then subtracting (c) from that result, where:
(a) is equal to:
(1) the net asset value of a Portfolio share held in the Investment
Account determined as of the end of the current Valuation Period,
plus
(2) the per share amount of any dividend or other distribution, if
any, paid by the Portfolio during the current Valuation Period,
plus or minus
(3) any credit or charge for any taxes paid or reserved for by AUL
during the current Valuation Period which are determined by AUL
to be attributable to operation of the Investment Account;
(b) is the net asset value of a Portfolio share held in the Investment
Account determined as of the end of the immediately preceding
Valuation Period; and
(c) is a daily charge factor determined by AUL to reflect the charges
assessed against the assets of the Investment Account for mortality
and expense risks, as authorized by Section 6.1.
6.1 Mortality Risk and Expense Risk Charges: AUL shall deduct a daily mortality
risk charge and a daily expense risk charge equal to the daily equivalent
of an annual combined charge of 1.25% against the average daily net assets
of each Investment Account. These charges shall be reflected in the Net
Investment Factor as provided in Section 5.4(c).
6.2 Investment Management Charge: A Mutual Fund shall pay any investment
advisory fee and certain other expenses, which may include its operational
and organizational expenses, as described in the current prospectus for
that Mutual Fund as it may be amended or supplemented from time to time.
These expenses may vary from year to year. The net asset value of each
Portfolio reflects such investment advisory fee and other expenses which
are deducted from the assets of such Portfolio.
6.3 Administrative Charge: AUL shall deduct an administrative charge in the
amount of $3.00 per Contract Quarter on the last day of each Contract
Quarter from each Participant Account in existence on such day for as long
as the Participant Account is in effect during the Accumulation Period.
However, this $3.00 administrative charge per Contract Quarter will be
waived if the Account Value on the last day of the Contract Quarter is
$10,000.00 or greater. When applicable, this $3.00 charge is to be prorated
among each subaccount of the Participant Account which corresponds to each
Investment Option utilized under this contract by that Participant Account.
If the entire balance of a Participant Account is applied or withdrawn
before the last day of the Contract Quarter pursuant to Sections 4.1, 4.7,
or 4.8, the administrative charge attributable to the period of time which
has elapsed since the first day of the Contract Quarter in which such
application or withdrawal of funds is made shall not be deducted from the
amount applied or withdrawn.
6.4 Transfer Charge: AUL reserves the right to deduct a charge for each
transfer transaction pursuant to Section 3.4. This charge would be prorated
among the Investment Options from which the amounts are transferred in the
same proportion that the amount transferred from the Investment Option
bears to the total amount transferred from all Investment Options.
P-12867.AMD.3
A Mutual Company G-11020 B
<PAGE>
in Section 5.4, for that Investment Account for the current Valuation
Period. The value of an Accumulation Unit for each Investment Account shall
be determined for each Valuation Period before giving effect to any
additions, withdrawals, or transfers. After such determination, the
additions, withdrawals, or transfers which are effective as of that day
shall then be made.
5.4 Determining the Net Investment Factor: The Net Investment Factor for each
Investment Account for any Valuation Period is determined by dividing (a)
by (b), and then subtracting (c) from that result, where:
(a) is equal to:
(1) the net asset value of a Portfolio share held in the Investment
Account determined as of the end of the current Valuation Period,
plus
(2) the per share amount of any dividend or other distribution, if
any, paid by the Portfolio during the current Valuation Period,
plus or minus
(3) any credit or charge for any taxes paid or reserved for by AUL
during the current Valuation Period which are determined by AUL
to be attributable to operation of the Investment Account;
(b) is the net asset value of a Portfolio share held in the Investment
Account determined as of the end of the immediately preceding
Valuation Period; and
(c) is a daily charge factor determined by AUL to reflect the charges
assessed against the assets of the Investment Account for mortality
and expense risks, as authorized by Section 6.1.
6.1 Mortality Risk and Expense Risk Charges: AUL shall deduct a daily mortality
risk charge and a daily expense risk charge equal to the daily equivalent
of an annual combined charge of 1.25% against the average daily net assets
of each Investment Account. These charges shall be reflected in the Net
Investment Factor as provided in Section 5.4(c).
6.2 Investment Management Charge: A Mutual Fund shall pay any investment
advisory fee and certain other expenses, which may include its operational
and organizational expenses, as described in the current prospectus for
that Mutual Fund as it may be amended or supplemented from time to time.
These expenses may vary from year to year. The net asset value of each
Portfolio reflects such investment advisory fee and other expenses which
are deducted from the assets of such Portfolio.
6.3 Administrative Charge: AUL shall deduct an administrative charge in the
amount of $3.00 per Contract Quarter on the last day of each Contract
Quarter from each Participant Account in existence on such day for as long
as the Participant Account is in effect during the Accumulation Period.
However, this $3.00 administrative charge per Contract Quarter will be
waived if the Account Value on the last day of the Contract Quarter is
$10,000.00 or greater. When applicable, this $3.00 charge is to be prorated
among each subaccount of the Participant Account which corresponds to each
Investment Option utilized under this contract by that Participant Account.
However, in no event shall any portion of the annual charge for a Contract
Year attributable to the Fixed Interest Account subaccount of the
Participant Account exceed the amount of the Contributions allocated to
such Fixed Interest Account subaccount for the Participant during such
Contract Year plus interest earned during such Contract Year on amounts
held in such Fixed Interest Account subaccount. If the entire balance of a
Participant Account is applied or withdrawn before the last day of the
Contract Quarter pursuant to Sections 4.1, 4.7, or 4.8, the administrative
charge attributable to the period of time which has elapsed since the first
day of the Contract Quarter in which such application or withdrawal of
funds is made shall not be deducted from the amount applied or withdrawn.
6.4 Transfer Charge: AUL reserves the right to deduct a charge for each
transfer transaction pursuant to Section 3.4. This charge would be prorated
among the Investment Options from which the amounts are transferred in the
same proportion that the amount transferred from the Investment Option
bears to the total amount transferred from all Investment Options.
P-12867.AMD.3 (Washington State)
A Mutual Company G-11020B
<PAGE>
6.6 Reduction or Waiver of Certain Charges: AUL may reduce or waive the amount
of the withdrawal Charge or the administrative charge discussed in Section
6.3 where the expenses associated with the sale of this contract or the
administrative costs associated with this contract are reduced, or where
this contract is sold to the directors or employees of AUL or any of its
affiliates, or to directors or any employees of the AUL American Series
Fund, Inc. or any other Mutual Fund made available by AUL.
8.15 Voting:
(a) AUL is the legal owner of the shares of a Mutual Fund held by the
Investment Accounts of the Variable Account. AUL shall exercise voting
rights attributable to the shares of each Portfolio held in the
Investment Accounts at any regular and special meetings of the
shareholders of a Mutual Fund on matters requiring shareholder voting
under The Investment Company Act of 1940 or other applicable laws. AUL
shall exercise these voting rights based on instructions received from
persons having the voting interest in corresponding Investment
Accounts of the Variable Account. However, if The Investment Company
Act of 1940 or any regulations thereunder should be amended, or if the
present interpretation thereof should change, and as a result AUL
determines that it is permitted to vote the shares of a Mutual Fund in
its own right, it may elect to do so. AUL will vote shares of any
Investment Account, if any, that it owns beneficially in its own
discretion, except that if a Mutual Fund offers its shares to any
insurance company separate account that funds variable life insurance
contracts or if otherwise required by applicable law, AUL will vote
its own shares in the same proportion as the voting instructions that
are received in a timely manner for contracts and Participant Accounts
participating in the Investment Account.
(b) The persons having the voting interest under this contract are the
Participants. Unless otherwise required by applicable law, the number
of Mutual Fund shares of a particular Portfolio as to which voting
instructions may be given to AUL is determined by dividing the value
of all of the Accumulation Units of the corresponding Investment
Account attributable to this contract on a particular date by the net
asset value per share of that Portfolio as of the same date.
Fractional votes will be counted. The number of votes as to which
voting instructions may be given will be determined as of the date
coincident with the date established by the applicable Mutual Fund for
determining shareholders eligible to vote at the meeting of that
Mutual Fund. If required by the Securities and Exchange Commission,
AUL reserves the right to determine in a different fashion the voting
rights attributable to the shares of a Mutual Fund.
(c) Voting rights attributable to this contract for which no timely voting
instructions are received will be voted by AUL in the same proportion
as the voting instructions which are received in a timely manner for
all contracts and Participant Accounts participating in that
Investment Account.
(d) Neither the Variable Account nor AUL is under any duty to inquire as
to the instructions received or the authority of Contractholders,
Participants, or others to instruct the voting of Mutual Fund shares.
P-12867.AMD.4
A Mutual Company G-11020B
<PAGE>
(e) Every person or entity having such voting rights shall receive such
reports or prospectuses concerning the Variable Account or a Mutual
Fund as may be required by applicable federal law.
CONTRACTHOLDER AMERICAN UNITED LIFE INSURANCE
COMPANY
_______________________________ By: /s/ Jerry D. Semler
By
_______________________________ Chairman of the Board,
Title President, & Chief Executive Officer
Attest
Date___________________________ /s/ William R. Brown
Secretary
P-12867.AMD.5
A Mutual Company G-11020B
<PAGE>
SCHEDULE A
The following Investment Accounts are made available to the Contractholder by
AUL. Amounts allocated to any Investment Account identified below shall be
invested in the shares of the corresponding Mutual Fund or Mutual Fund Portfolio
listed below.
<TABLE>
<CAPTION>
<S> <C>
Investment Account Mutual Fund or Mutual Fund Portfolio
- ------------------ ------------------------------------
AUL American Aggressive Investor Portfolio AUL American Aggressive Investor Portfolio
AUL American Bond AUL American Bond
AUL American Conservative Investor Portfolio AUL American Conservative Investor Portfolio
AUL American Equity AUL American Equity
AUL American Managed AUL American Managed
AUL American Moderate Investor Portfolio AUL American Moderate Investor Portfolio
AUL American Money Market AUL American Money Market
AUL American Tactical Asset Allocation Portfolio AUL American Tactical Asset Allocation Portfolio
Alger American Growth Alger American Growth
American Century VP Capital Appreciation American Century VP Capital Appreciation
Calvert Social Mid-Cap Growth Calvert Social Mid-Cap Growth
Fidelity VIP Equity-Income Fidelity VIP Equity-Income
Fidelity VIP Growth Fidelity VIP Growth
Fidelity VIP High Income Fidelity VIP High Income
Fidelity VIP Overseas Fidelity VIP Overseas
Fidelity VIP II Asset Manager Fidelity VIP II Asset Manager
Fidelity VIP II Contrafund Fidelity VIP II Contrafund
Fidelity VIP II Index 500 Fidelity VIP II Index 500
Janus Aspen Series Flexible Income Portfolio Janus Aspen Series Flexible Income Portfolio
Janus Aspen Series Worldwide Growth Portfolio Janus Aspen Series Worldwide Growth Portfolio
PBHG Insurance Series Growth II PBHG Insurance Series Growth II
PBHG Insurance Series Technology PBHG Insurance Series Technology
and Communication and Communication
SAFECO Resource Series Trust Equity Portfolio SAFECO Resource Series Trust Equity Portfolio
SAFECO Resource Series Trust Growth Portfolio SAFECO Resource Series Trust Growth Portfolio
T. Rowe Price Equity-Income Portfolio T. Rowe Price Equity-Income Portfolio
</TABLE>
P-12867.AMD.6
A Mutual Company G-11020B
<PAGE>
CONTRACT NUMBER: VXX,XXX
CONTRACTHOLDER: ABC SCHOOL
DATE OF ISSUE: JANUARY 1, 1999
CONTRACT DATE: JANUARY 1, 1999
FIRST CONTRACT ANNIVERSARY: JANUARY 1, 2000
American United Life Insurance Company (AUL) issues this contract in
consideration of the Contractholder's application and its payment of
Contributions to AUL. When used in this contract, "we," "us" or "our" refer to
AUL and "you" or "your" refer to the Contractholder.
All provisions and conditions stated on this and subsequent pages are part of
this contract.
This contract is signed for AUL at its Home Office in Indianapolis, Indiana. Our
mailing address is P.O. Box 368, Indianapolis, Indiana 46206-0368.
NOTICE OF TEN DAY RIGHT TO EXAMINE CONTRACT
Please read this contract carefully. You may return the contract for any reason
within ten days after receiving it. If returned, the contract will be considered
void from the beginning and any Contributions will be refunded.
AMERICAN UNITED LIFE INSURANCE COMPANY
By /s/ Jerry D. Semler
Chairman of the Board,
President, & Chief Executive Officer
Attest
/s/ William R. Brown
Secretary
AUL American Series Contract
Guaranteed Benefit IRA Multiple-Fund Group Variable Annuity (NBR)
Current Interest Credited
Nonparticipating
ACCUMULATION UNITS IN AN INVESTMENT ACCOUNT UNDER THIS CONTRACT MAY INCREASE OR
DECREASE IN VALUE ACCORDING TO THE INVESTMENT PERFORMANCE OF THE UNDERLYING
INVESTMENTS HELD BY THE INVESTMENT ACCOUNT. THE VALUE OF SUCH ASSETS AND
ACCUMULATION UNITS IS NOT GUARANTEED. SECTION 4 OF THIS CONTRACT EXPLAINS THE
VALUATION OF SUCH ASSETS AND ACCUMULATION UNITS.
If you have questions concerning your contract, or wish to register a complaint,
you may reach us by calling 1-800-338-9189.
P-GB-K-IRAMFVA(NBR) (THIS CONTRACT IS A SIMPLE IRA)
<PAGE>
ONTRACT NUMBER: VXX,XXX
CONTRACTHOLDER: ABC SCHOOL
DATE OF ISSUE: JANUARY 1, 1999
CONTRACT DATE: JANUARY 1, 1999
FIRST CONTRACT ANNIVERSARY: JANUARY 1, 2000
American United Life Insurance Company (AUL) issues this contract in
consideration of the Contractholder's application and its payment of
Contributions to AUL. When used in this contract, "we," "us" or "our" refer to
AUL and "you" or "your" refer to the Contractholder.
All provisions and conditions stated on this and subsequent pages are part of
this contract.
This contract is signed for AUL at its Home Office in Indianapolis, Indiana. Our
mailing address is P.O. Box 368, Indianapolis, Indiana 46206-0368.
NOTICE OF TEN DAY RIGHT TO EXAMINE CONTRACT
Please read this contract carefully. You may return the contract for any reason
within ten days after receiving it. If returned, the contract will be considered
void from the beginning and any Contributions will be refunded.
AMERICAN UNITED LIFE INSURANCE COMPANY
By /s/ Jerry D. Semler
Chairman of the Board,
President, & Chief Executive Officer
Attest
/s/ William R. Brown
Secretary
AUL American Series Contract
Guaranteed Benefit IRA Multiple-Fund Group Variable Annuity (NBR)
Current Interest Credited
Nonparticipating
ACCUMULATION UNITS IN AN INVESTMENT ACCOUNT UNDER THIS CONTRACT MAY INCREASE OR
DECREASE IN VALUE ACCORDING TO THE INVESTMENT PERFORMANCE OF THE UNDERLYING
INVESTMENTS HELD BY THE INVESTMENT ACCOUNT. THE VALUE OF SUCH ASSETS AND
ACCUMULATION UNITS IS NOT GUARANTEED. SECTION 4 OF THIS CONTRACT EXPLAINS THE
VALUATION OF SUCH ASSETS AND ACCUMULATION UNITS.
If you have questions concerning your contract, or wish to register a complaint,
you may reach us by calling 1-800-338-9189.
P-GB-K-IRAMFVA(NBR) (THIS CONTRACT IS A SEP IRA)
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1 - DEFINITIONS 3
SECTION 2 - ADMINISTRATION OF PARTICIPANT ACCOUNTS 6
2.1----- How Contributions Are Handled
2.2----- Amount of Contributions
2.3----- Excess Contributions
2.4----- Other Refunds
2.5----- Transfers from Other Contracts
SECTION 3 - OPERATION OF FIXED INTEREST ACCOUNT (FIA) 8
3.1----- Allocations to Participant Accounts
3.2----- Provision of Guaranteed Rates for Interest Pockets
3.3----- Renewal of Guaranteed Rates
3.4----- Minimum Rate Guarantee
3.5----- Allocation of Withdrawals
SECTION 4 - VALUATION OF INVESTMENT ACCOUNTS 9
4.1----- Operation of Investment Accounts
4.2----- Valuation of Mutual Funds
4.3----- Accumulation Units
4.4----- Value of Accumulation Units
4.5----- Determining the Net Investment Factor
4.6----- Valuing Participant Accounts
SECTION 5 - WITHDRAWALS, DEATH BENEFITS, AND TRANSFERS 10
5.1----- Withdrawals
5.2----- Death Benefits
5.3----- Transfers Between Investment Options
5.4----- Minimum Amounts
5.5----- Maximum Amounts
5.6----- Transfers to SIMPLE IRAs
SECTION 6 - ANNUITIES 13
6.1----- Annuity Purchases
6.2----- Annuity Options
6.3----- Determining Annuity Amount
6.4----- Proof of Age and Survival; Minimum Payments
6.5----- Annuity Certificates
P-GB-K-IRAMFVA(NBR).1
<PAGE>
Page
SECTION 7 - MORTALITY AND EXPENSE RISK CHARGES
AND ADMINISTRATIVE CHARGES 14
7.1----- Investment Account Mortality and Expense Risk Charges
7.2----- Administrative Charge
7.3----- Mutual Fund or Portfolio Expense
7.4----- Taxes
7.5----- Reduction or Waiver of Charges
SECTION 8 - CONTRACT MODIFICATIONS 15
8.1----- Mutual Amendment
8.2----- Rates and Section 7 Charges
8.3----- Conformance with Law
8.4----- Our Right to Initiate Changes
8.5----- Prohibited Amendments
SECTION 9 - GENERAL PROVISIONS 16
9.1----- Ownership
9.2----- Entire Contract
9.3----- Benefit Determinations
9.4----- Representations and Warranties
9.5------Contractholder Representative; Misstatement of Data
9.6----- Requirement for Writing
9.7----- Quarterly Statement of Account Value
9.8----- Conformity with Law
9.9----- Sex and Number
9.10---- Facility of Payment
9.11---- Voting
9.12---- Acceptance of New Participants or Contributions
9.13-----Termination of Contract
9.14---- Nonforfeitability and Nontransferability
9.15---- AUL's Annual Statement
9.16---- AUL's Annual Meeting
TABLE OF GUARANTEED IMMEDIATE ANNUITIES 19
TABLE OF INVESTMENT ACCOUNTS 20
P-GB-K-IRAMFVA(NBR).2
<PAGE>
SECTION 1 - DEFINITIONS
1.1 "Account Value" for a Participant Account as of a date is:
(a) that account's balance in the Fixed Interest Account (FIA) on that
date; plus
(b) the value of that account's Accumulation Units in each Investment
Account on that date.
1.2 "Accumulation Unit" is a valuation device used to measure increases in and
decreases to the value of any Investment Account.
1.3 "Annuity Commencement Date" is the first day of the month an annuity begins
under this contract. This date may not be later than the date a
Participant's periodic benefits are required to commence under the Code.
1.4 "Business Day" is any day both the New York Stock Exchange and our Home
Office are open for the general conduct of business.
1.5 "Code" means the Internal Revenue Code of 1986, as amended, and any
applicable regulations or rulings thereunder.
1.6 The "First Contract Anniversary" is listed on the contract face page.
Subsequent "Contract Anniversaries" are on the same day of each subsequent
year.
1.7 "Contract Quarter" is each of the four successive three-month periods in a
Contract Year.
1.8 The first "Contract Year" starts on the Contract Date and ends on the day
before the First Contract Anniversary. Each subsequent Contract Year starts
on a Contract Anniversary and ends on the day before the next Contract
Anniversary.
1.9 "Contributions" are amounts paid in cash to us by you or the Participant,
which we credit to a Participant Account. Contributions include amounts
transferred from another AUL group annuity contract. The legal title to,
and ownership of, these amounts is vested solely in the Participant.
Contributions include "Elective Deferrals," which means, with respect to
any taxable year, any Contribution made under a salary reduction agreement.
A Contribution made under a salary reduction agreement is not treated as an
Elective Deferral if, under the salary reduction agreement, the
Contribution is made pursuant to a one-time irrevocable election made by
the Participant at the time of initial eligibility to participate in the
agreement, or is made pursuant to a similar arrangement involving a
one-time irrevocable election specified in Regulations issued under the
Code. The Contractholder must identify any Elective Deferrals, which will
be allocated to an Elective Deferral subaccount within the applicable
Participant Account.
When this contract is a SIMPLE IRA, as defined in Code Section 408(p),
"Contributions" means, subject to the restrictions of the following
paragraph, amounts paid in cash to us by you or by the Participant,
including amounts transferred to this contract from another SIMPLE IRA
P-GB-K-IRAMFVA(NBR).3
<PAGE>
of the Participant, which are credited to a Participant Account maintained
hereunder. The legal title to, and ownership of, such amounts is vested
solely in the Participant.
When this contract is a SIMPLE IRA, it will accept only cash Contributions
made on behalf of the Participant pursuant to the terms of a SIMPLE IRA
Plan described in Code Section 408(p). A rollover Contribution or a
transfer of assets from another SIMPLE IRA of the Participant will also be
accepted. No other Contributions will be accepted.
1.10 "Excess Contributions" are Contributions in excess of the applicable Code
limits.
1.11"Fixed Interest Account" or "FIA" is the portion of our general asset
account as described in Section 3, to which Contributions may be allocated
for accumulation at the Guaranteed Rates.
1.12 "Guaranteed Rates" are the guaranteed annual effective rates of interest we
credit to each Interest Pocket. A Guaranteed Rate may be modified only as
described in Section 3.3.
1.13 "Home Office" is our principal office in Indianapolis, Indiana. For
anything to be "received by AUL," it must be received at our Home Office.
1.14 "Interest Pocket" means a tracking method which associates funds deposited
into the FIA over a specific time period with a specific Guaranteed Rate,
as described in Section 3. After the guaranteed period provided in Section
3.3 has elapsed, we may consolidate two or more Interest Pockets in
conjunction with the announcement of new Guaranteed Rates.
1.15 "Investment Account" means each distinct portfolio established within our
Variable Account and identified in the Table of Investment Accounts in this
contract. Amounts allocated to any Investment Account are invested in the
shares of the corresponding Mutual Fund or Portfolio identified in the
Table of Investment Accounts. Our "Variable Account" is a separate account
we maintain under Indiana law which is called the AUL American Unit Trust
and which is registered under the Investment Company Act of 1940 as a unit
investment trust.
1.16 "Investment Option" is the FIA or any Investment Account. We reserve the
right to provide other Investment Options under this contract at any time.
1.17 "Mutual Fund" means any diversified, open-end, management investment
company made available by us, and listed in the Table of Investment
Accounts.
1.18 "Participant" is any person reported by you to us as eligible for, and as
participating in, this contract, and for whom a Participant Account is
established.
1.19 "Participant Account" is an account under this contract for each
Participant. Each Participant Account may have subaccounts for each type of
Contribution. We credit Contributions to Participant Accounts and
Contribution-type subaccounts as we are directed.
1.20 "Portfolio" is a portfolio established within a particular Mutual Fund, as
described in the Mutual Fund's current prospectus.
P-GB-K-IRAMFVA(NBR).4
<PAGE>
1.21 "Valuation Periods" start at the close of each Business Day and end at the
close of the next Business Day.
1.22 The "Withdrawal Charge" is a percentage of the Account Value withdrawn
under this contract. The Withdrawal Charge will not apply to Account Values
withdrawn to provide an annuity as described in Section 6.1. The percentage
varies by the Participant Account Year in which the withdrawal is made. The
first Participant Account Year begins on the date when we establish a
Participant Account and credit the initial Contribution for the
Participant, and ends on the day immediately preceding the next anniversary
of such date. Each Participant Account Year thereafter begins on such an
anniversary date and ends on the day immediately preceding the next
succeeding anniversary date. The Withdrawal Charge percentage is as
follows:
During Withdrawal Charge
Participant Account Years Percentage
------------------------- -----------------
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
Thereafter 0%
In no event will the cumulative total of all Withdrawal Charges, including
those previously assessed against any amount withdrawn from a Participant
Account, exceed 9% of total Contributions allocated to that Participant
Account.
1.23 "Withdrawal Value" is a Participant's Account Value, less any Withdrawal
Charge.
P-GB-K-IRAMFVA(NBR).5
<PAGE>
SECTION 2 - ADMINISTRATION OF PARTICIPANT ACCOUNTS
2.1 How Contributions Are Handled:
(a) Contributions we receive are credited to the appropriate
Contribution-type subaccounts of each Participant Account, as we are
directed in allocation instructions. A Participant's initial
Contribution is allocated to the Participant Account by the second
Business Day after we (1) receive the initial Contribution or, if
later, (2) receive all data necessary to complete the allocation
(including data required to establish the Participant Account, the
amount of the Participant's Contribution, and Investment Option
elections. Subsequent Contributions are allocated to the Participant
Account on the Business Day we (1) receive that Contribution or, if
later, (2) receive all data necessary to complete the allocation.
(b) If we do not receive the data required to establish a Participant
Account and the amount of a Contribution for the Participant within 5
Business Days after we first receive that Contribution, we will return
that Contribution to the contributing party unless the contributing
party consents to us retaining that Contribution until the earlier of
(i) the date we receive such data and amount and, therefore, can
properly allocate that Contribution to the Participant Account or (ii)
25 days from the date we receive that Contribution.
(c) If we receive the data required to establish a Participant Account and
the amount of a Contribution for the Participant, but we do not
receive Investment Option elections for that Participant, the
Contribution is allocated to a suspense account. The suspense account
earns interest at the Guaranteed Rate for Contributions received on
the same date. When we receive all required data, amounts in the
suspense account, plus interest, are transferred to the appropriate
Investment Option for each designated Contribution-type.
(d) Participant Accounts may be allocated to Investment Options in any
increments acceptable to us. Investment Option elections remain in
effect until changed by the Participant. A change in Investment Option
elections is made by giving us new Investment Option elections.
2.2 Amount of Contributions: Except for amounts eligible for rollover treatment
under Code Sections 402(c), 403(a)(4), 403(b)(8), or 408(d)(3),
Contributions during a Participant's taxable year (which is presumed to be
a calendar year) may not exceed the amounts described below (as adjusted by
Code Section 408(a)):
(a) If this contract is a Simplified Employee Pension (SEP) IRA, as
described in Code Section 408(k):
(1) the lesser of $30,000 (or, if greater, 25% of the dollar
limitation in effect under Code Section 415(b)(1)(A)) or 15% of
compensation.
(2) No Contribution will be accepted under a SIMPLE plan established
by an employer pursuant to Code Section 408(p). No transfer or
rollover of funds attributable to contributions made by a
particular employer under its
P-GB-K-IRAMFVA(NBR).6
<PAGE>
SIMPLE plan will be accepted from a SIMPLE IRA (an IRA used in
conjunction with a SIMPLE plan) prior to the expiration of the
2-year period beginning on the date the individual first
participated in that employer's SIMPLE plan.
(b) If this contract is a SIMPLE IRA:
(1) Except for amounts rolled over or transferred from another SIMPLE
IRA of the Participant, Contributions during a Participant's
taxable year (which is presumed to be a calendar year) may not
exceed the amounts allowed by Code Section 408(p) (as adjusted).
(2) If Contributions made on behalf of the Participant pursuant to a
SIMPLE IRA Plan maintained by the Participant's employer are
received directly by us from the employer, we will provide the
employer with the summary description required by Code Section
408(1)(2).
2.3 Excess Contributions: On receipt of instructions from the Participant, we
will withdraw Excess Contributions, plus gains and minus losses, from a
Participant Account and return them to the Participant. Such instructions
must state the amount to be returned and certify that such Contributions
are Excess Contributions and that such return is permitted by the Code.
2.4 Other Refunds: Other refunds of Contributions are applied before the close
of the calendar year following the year of refund toward the payment of
future Contributions or the purchase of additional benefits.
2.5 Transfers from Other Contracts: We may require amounts transferred to a
Participant Account from other AUL group annuity contracts to be deposited
in a suspense account. We will advise you if this limitation applies before
accepting such a transfer.
P-GB-K-IRAMFVA(NBR).7
<PAGE>
SECTION 3 -- OPERATION OF FIXED INTEREST ACCOUNT (FIA)
3.1 Allocations to Participant Accounts: We allocate each Participant's
Contributions in the FIA based on the information we are provided.
3.2 Provision of Guaranteed Rates for Interest Pockets: At least 10 days in
advance of each calendar quarter, we will declare a Guaranteed Rate for the
Interest Pocket for that quarter. All Contributions or transfers hereunder
which are allocated to the FIA during that quarter will earn interest at
that Guaranteed Rate until that quarterly pocket matures on the second
January 1 following the quarter in which that pocket was established.
3.3 Renewal of Guaranteed Rates: Those quarterly Interest Pockets which mature
at the same time will be combined into an annual renewal Interest Pocket.
Funds associated with that annual renewal Interest Pocket will earn
interest for a full year at the Guaranteed Rate declared for that pocket. A
new Guaranteed Rate for each annual renewal Interest Pocket will be
declared at least 30 days prior to every January 1 for the 5 years
following the establishment of that pocket. An annual renewal Interest
Pocket will mature on January 1 of the sixth year following its
establishment, when it will be combined into one annual portfolio Interest
Pocket. Funds associated with that annual portfolio Interest Pocket will
earn interest for a full year at the Guaranteed Rate for that pocket, which
will be declared at least 30 days prior to every January 1.
3.4 Minimum Rate Guarantee: No Guaranteed Rate may be less than an annual
effective interest rate of 3.00%.
3.5 Allocation of Withdrawals: Withdrawals or transfers from the FIA are on a
first-in/first-out basis.
P-GB-K-IRAMFVA(NBR).8
<PAGE>
SECTION 4 - VALUATION OF INVESTMENT ACCOUNTS
4.1 Operation of Investment Accounts: All income, gains, or losses, realized or
unrealized, from assets held in any Investment Account are credited to or
charged against the applicable Investment Account without regard to our
other income, gains, or losses. Investment Account assets are not
chargeable with liabilities arising out of any other business we may
conduct.
4.2 Valuation of Mutual Funds: The current prospectus for each Mutual Fund
describes how that Mutual Fund's assets are valued.
4.3 Accumulation Units: We credit amounts allocated to an Investment Account in
Accumulation Units. The Accumulation Unit value used is the one for the
Valuation Period when we allocate the amount to the Investment Account.
4.4 Value of Accumulation Units: We generally establish the Accumulation Unit
value for a new Investment Account at $1.00 on the date the first deposit
is made to the Investment Account. The value of an Accumulation Unit for
any later Valuation Period equals the value of an Accumulation Unit for the
immediately preceding Valuation Period times the Net Investment Factor for
the current Valuation Period. We determine the Accumulation Unit value
before giving effect to any additions, withdrawals, or transfers in the
current Valuation Period.
4.5 Determining the Net Investment Factor: We determine the Net Investment
Factor for each Investment Account by dividing (a) by (b), and then
subtracting (c), where:
(a) is:
(1) the net asset value of a Mutual Fund or Portfolio share at the
end of the current Valuation Period, plus
(2) any dividend or other distribution paid on each Mutual Fund or
Portfolio share during such Valuation Period, plus or minus
(3) any credit or charge for taxes paid or reserved by us during the
Valuation Period that we determine are attributable to the
Investment Account;
(b) is the net asset value of each Mutual Fund or Portfolio share held in
the Investment Account at the end of the prior Valuation Period; and
(c) is a daily charge factor we determine, as described in Section 7.1.
4.6 Valuing Participant Accounts: We determine the Account Value in an
Investment Account by multiplying the Accumulation Units in each
Participant Account by the Accumulation Unit value. The Accumulation Unit
value of an Investment Account changes only on a Business Day.
P-GB-K-IRAMFVA(NBR).9
<PAGE>
SECTION 5 - WITHDRAWALS, DEATH BENEFITS, AND TRANSFERS
5.1 Withdrawals: A Participant may direct us to withdraw all or a portion of
his Participant Account, subject to the following provisions:
(a) If the entire Account Value is withdrawn, the amount paid equals the
Withdrawal Value, subject to any charges described in Section 7.4. In
all other instances, the Account Value is reduced by an amount
sufficient to make the payment requested and to cover the Withdrawal
Charge and any charges described in Section 7.4.
However, despite the previous paragraph, in the first Contract Year in
which a Participant Account is established, the Participant may
withdraw from his Participant Account up to 10% of the sum of his
Account Value (determined as of the later of the Contract Date or the
Contract Anniversary immediately preceding the request for the
withdrawal) plus Contributions made for him during that Contract Year,
without application of the Withdrawal Charge. The Participant may also
do this in the next succeeding Contract Year. In any subsequent
Contract Year, the Participant may withdraw up to 10% of his Account
Value (determined as of the Contract Anniversary immediately preceding
the request for the withdrawal) without application of the Withdrawal
Charge.
(b) A withdrawal request is effective, and the Account Value to be applied
pursuant to this Section is determined, on the Business Day that we
receive a proper withdrawal request.
(c) We will pay any cash lump-sum to the Participant within 7 days from
the appropriate Business Day as determined in Subsection (b) above,
except as we may be permitted to defer such payment of amounts
withdrawn from the Variable Account in accordance with appropriate
provisions of the federal securities laws. We reserve the right to
defer the payment of amounts withdrawn from the FIA for a period of up
to 6 months after we receive the withdrawal request.
(d) Withdrawals from a Participant Account's share of the FIA will be made
on a first-in/first- out basis under Section 3.5.
5.2 Death Benefits:
(a) Upon receipt of instructions from the Participant's beneficiary and of
due proof of the Participant's death prior to the date the Participant
Account is closed, we will apply the Account Value (subject to Section
7.4) of the Participant Account for the purpose of providing a death
benefit. The death benefit will be paid to the Participant's
beneficiary according to the method of payment elected by the
beneficiary (unless such method of payment was previously elected by
the Participant). The Participant's beneficiary may also designate a
beneficiary. This death benefit will be payable:
(1) in a single sum or other method not provided in (2) below;
provided, however, that the entire Account Value (subject to
Section 7.4) must be paid to the
P-GB-K-IRAMFVA(NBR).10
<PAGE>
beneficiary on or before December 31 of the calendar year which
contains the fifth anniversary of the Participant's death, or
(2) as an annuity in accordance with the Annuity Options shown in
Section 6.2 over a period not to exceed the life or life
expectancy of the beneficiary.
If the beneficiary is not the Participant's surviving spouse, the
annuity must begin on or before December 31 of the calendar year
immediately following the calendar year in which the Participant
died.
If the beneficiary is the Participant's surviving spouse, the
spouse may elect to receive equal or substantially equal payments
over his or her life expectancy beginning on any date prior to
the later of (a) December 31 of the calendar year immediately
following the calendar year in which the Participant died or (b)
December 31 of the calendar year in which the Participant would
have attained age 70 1/2. This spousal election must be made no
later than the earlier of December 31 of the calendar year
containing the fifth anniversary of the Participant's death or
the date distributions are required to begin under the preceding
sentence. The surviving spouse may accelerate these payments at
any time by increasing the frequency or amount of payments.
If the beneficiary is the Participant's surviving spouse, the
spouse may treat the Participant Account as his or her own IRA.
This election is deemed to be made if the surviving spouse makes
a regular IRA Contribution under this contract, makes a rollover
to or from this contract, or fails to elect any of the above
three provisions.
(b) If a Participant dies on or after his Annuity Commencement Date, any
interest remaining under the Annuity Option selected will be paid at
least as rapidly as prior to the Participant's death.
(c) The Account Value to be applied pursuant to this Section is determined
on the Business Day that we receive a proper withdrawal request (or
due proof of death, if received later).
(d) We will pay any cash lump-sum death benefit to the Participant's
beneficiary within 7 days from the appropriate Business Day as
determined in Subsection (c) above, except as we may be permitted to
defer such payment of amounts withdrawn from the Variable Account in
accordance with appropriate provisions of the federal securities laws.
We reserve the right to defer the payment of amounts withdrawn from
the FIA for a period of up to 6 months after we receive the withdrawal
request.
5.3 Transfers between Investment Options: The Participant may direct us to
transfer amounts between Investment Options. Transfers are effective on the
Business Day we receive the transfer direction. Transfer directions for a
Participant Account may be made daily on any Business Day. We will make the
transfer as requested within 7 days from the date we receive the request,
P-GB-K-IRAMFVA(NBR).11
<PAGE>
except as we may be permitted to defer the transfer of amounts withdrawn
from the Variable Account in accordance with appropriate provisions of the
federal securities laws. We reserve the right to defer a transfer of
amounts from the FIA for a period of up to 6 months after we receive the
transfer request.
However, despite the previous paragraph, once a transfer from the FIA has
been made for a Participant, a transfer to the FIA for that Participant is
permitted only after 90 days have elapsed since the date of the last
transfer from the FIA for that Participant. If you make available to
Participants the FIA and the Competing Investment Account marked with an
asterisk in the Table of Investment Accounts, the 90-day transfer
restriction discussed in the previous sentence does not apply, and Section
5.4 does apply.
5.4 Minimum Amounts: The minimum amount the Participant may withdraw or
transfer from an Investment Option is $500 or, if less, the Participant's
entire balance in that Investment Option. If a withdrawal or transfer
reduces the Participant balance in an Investment Option to less than $500,
the entire balance is withdrawn or transferred.
5.5 Maximum Amounts: If you make available to Participants the FIA and the
Competing Investment Account marked with an asterisk in the Table of
Investment Accounts, no more than 20% of a Participant's FIA Account Value
on the later of the Contract Date or the Contract Anniversary immediately
preceding the request for transfer may be transferred from the FIA during
any Contract Year. However, if the Participant's FIA Account Value is less
than $2,500 on the later of the Contract Date or the Contract Anniversary
immediately preceding the request for transfer, the amount transferrable
from the FIA for that Participant for that Contract Year is the minimum
amount specified in Section 5.4.
5.6 Transfers to SIMPLE IRAs: If this is a SIMPLE IRA, prior to the expiration
of the 2-year period beginning on the date the Participant first
participated in any SIMPLE IRA Plan maintained by the Participant's
employer, any rollover or transfer by the Participant of funds from this
SIMPLE IRA must be made to another SIMPLE IRA of the Participant. Any
distribution of funds to the Participant during this 2-year period may be
subject to a 25- percent additional tax if the Participant does not roll
over the amount distributed into a SIMPLE IRA. After the expiration of this
2-year period, the Participant may roll over or transfer funds to any IRA
of the Participant that is qualified under Code Section 408(a) or (b).
P-GB-K-IRAMFVA(NBR).12
<PAGE>
SECTION 6 - ANNUITIES
6.1 Annuity Purchases: The Participant may withdraw all or a portion of his
Account Value (subject to Section 7.4) to provide an annuity. Such a
withdrawal is not subject to a Withdrawal Charge. On receipt of an annuity
purchase request, we transfer the entire Participant Account to a suspense
account. Such amounts remain in the suspense account until the Annuity
Commencement Date, when the full balance (including interest) is applied to
purchase the annuity.
The Participant's annuity purchase request must specify the purpose for the
annuity, the election of an annuity option, Annuity Commencement Date, any
contingent annuitant or beneficiary, and any additional information we
require. If the Participant or any contingent annuitant dies before the
Annuity Commencement Date, the annuity election is cancelled.
The minimum amount which the Participant may apply to purchase an annuity
is $5,000.
6.2 Annuity Options: The Participant may elect any optional form of annuity we
offer at the time of purchase. Available annuity options always include:
(a) Life Annuity. A monthly annuity is payable as long as the annuitant
lives, and ends with the last payment before the annuitant's death.
(b) Survivorship Annuity. A monthly annuity is payable as long as the
annuitant lives. After the annuitant's death, all or a portion of the
monthly annuity is paid to the contingent annuitant as long as the
contingent annuitant lives.
No annuity may have a certain period extending beyond the life expectancy
of a Participant or the joint life expectancy of a Participant and any
contingent annuitant, as determined on the Annuity Commencement Date.
6.3 Determining Annuity Amount: We compute the annuity amount using the factors
reflected in the Table of Guaranteed Immediate Annuities attached to this
contract. However, if our current single premium, nonparticipating,
immediate annuity rates for this class of group annuity contracts produces
a higher monthly annuity than the Table of Guaranteed Immediate Annuities,
then that more favorable annuity rate is applied.
6.4 Proof of Age and Survival; Minimum Payments: We may require proof of any
annuitant's or contingent annuitant's date of birth before commencing
payments under any annuity. We may also require proof that an annuitant or
contingent annuitant is living before making any annuity payment. If a
monthly annuity is less than our current established minimum payment, we
may make payments on a less-frequent basis or in a single sum.
6.5 Annuity Certificates: We issue to each person for whom an annuity is
purchased a certificate setting forth the annuity's amount and terms.
P-GB-K-IRAMFVA(NBR).13
<PAGE>
SECTION 7 - MORTALITY AND EXPENSE RISK CHARGES
AND ADMINISTRATIVE CHARGES
7.1 Investment Account Mortality and Expense Risk Charges: We deduct from the
average daily net assets of each Investment Account the daily equivalent of
an annual combined mortality risk charge and expense risk charge of 1.25%.
This charge is part of the Net Investment Factor, described in Section 4.5.
7.2 Administrative Charge: We deduct an administrative charge per Contract
Quarter equal to the lesser of $7.50 or 0.5% of the Account Value on the
last day of each Contract Quarter from each Participant Account in
existence on that day for as long as the Participant Account is in effect.
This charge is to be prorated among each subaccount of the Participant
Account which corresponds to each Investment Option utilized under this
contract by that Participant Account. If the entire balance of a
Participant Account is withdrawn pursuant to this contract, the
administrative charge attributable to the period of time which has elapsed
since the first day of the Contract Quarter in which the withdrawal of
funds is made is not deducted from the amount withdrawn.
There is no charge for a Participant for any Contract Quarter in which the
Participant's Account Value on the last day of that quarter is greater than
$25,000.
7.3 Mutual Fund or Portfolio Expense: A Mutual Fund or Portfolio deducts an
investment advisory fee and other expenses from its net asset value, as
described in its current prospectus. Amounts deducted may include
operational, organizational, and extraordinary expenses. Expenses vary from
year-to-year.
7.4 Taxes: We may deduct charges equal to any premium tax we incur from the
balance applied to purchase an annuity or at such other time as premium
taxes are incurred by us. We may also deduct from Investment Accounts
reasonable charges for federal, state, or local income taxes we incur that
are attributable to such Investment Accounts.
7.5 Reduction or Waiver of Charges: We may reduce or waive the Withdrawal
Charge or the charges discussed above if the appropriate expenses
associated with the sale or administration of any contract are reduced, or
if a contract is sold covering our employees or directors, those of the AUL
American Series Fund, Inc., or to either's affiliates.
P-GB-K-IRAMFVA(NBR).14
<PAGE>
SECTION 8 - CONTRACT MODIFICATIONS
8.1 Mutual Amendment: You and we may agree to any change or amendment to this
Contract without the consent of any other person or entity. However, no
such change or amendment shall adversely affect the benefits to be provided
by Contributions made prior to the effective date of the change or
amendment unless the consent of all Participants is obtained. This contract
cannot be modified or amended, nor can any provision or condition be
waived, except by our written agreement, signed by a corporate officer.
Such authority may be delegated only by a written agreement signed by our
corporate officer.
8.2 Rates and Section 7 Charges: We may announce new Guaranteed Rates, as
described in Sections 3.2 and 3.3 (including the consolidation of existing
Interest Pockets). However, as provided in Sections 3.2 and 3.3, we may not
change the declared Guaranteed Rate applicable to an established Interest
Pocket during the guaranteed period. We may also modify the charge levels
in Section 7, using the procedures of Section 8.4.
8.3 Conformance with Law: We may amend this contract at any time, without your
consent, or that of any other person or entity, if the amendment is
reasonably needed to comply with, or give you or Participants the benefit
of, any provisions of federal or state laws. Any such amendment will be
delivered to you prior to its effective date.
8.4 Our Right to Initiate Changes: In addition to those amendments permitted by
Sections 8.2 and 8.3, we may initiate an additional provision or
modification of any other provision of this contract (including the
addition of a charge for transfers between Investment Options) by giving
you 60 days notice of such modification. Any such modification is effective
without your affirmative assent.
8.5 Prohibited Amendments:
(a) Despite our right to initiate changes under Section 8.4, we may not
initiate changes to the minimum Guaranteed Rate specified in Section
3.4, our obligation to set Guaranteed Rates for the period of time
specified in Sections 3.2 and 3.3, or the Table of Guaranteed
Immediate Annuities.
(b) No modification to this contract may change the terms of a previously
purchased annuity or reduce any interest guarantee applicable to
Participant Account FIA balances on the modification's effective date.
P-GB-K-IRAMFVA(NBR).15
<PAGE>
SECTION 9 - GENERAL PROVISIONS
9.1 Ownership: You own this contract. All amounts received or credited under
this contract become our property. We are obligated to make only the
payments or distributions specified in this contract.
9.2 Entire Contract: This contract is for the exclusive benefit of the
Participants and their beneficiaries. This contract and your application is
the entire agreement between you and us. We are not a party to, nor bound
by, a plan, trust, custodial agreement, or other agreement, or any
amendment or modification to any of the same. We are not a fiduciary under
this contract or under any such plan, trust, custodial agreement, or other
agreement.
9.3 Benefit Determinations: The Participant will furnish us whatever
information is necessary to establish the eligibility for and amount of
annuity or other benefit due. We rely solely on his instructions and
certifications with respect to his benefits. The Participant is fully
responsible for determining the existence or amount of Excess Contributions
(plus gains or minus losses thereon), or that returns of Excess
Contributions are permitted by the Code.
We may rely on the Participant's statements or representations in honoring
any benefit payment request.
9.4 Representations and Warranties: You and we mutually represent and warrant,
each to the other, that each is fully authorized to enter into this
contract and that this contract is a valid and binding obligation and that
the execution of this contract does not violate any law, regulation,
judgment, or order by which the representing party is bound. In addition,
you represent and warrant to us that:
(a) your plan is a SEP IRA plan or a SIMPLE IRA plan under the Code;
(b) the execution of this contract has been authorized by the plan
fiduciary responsible for plan investment decisions; and
(c) the execution or performance of this contract does not violate any
plan provision or any law, regulation, judgment, or order by which the
plan is bound.
We do not make any representation or warranty regarding the federal, state,
or local tax status of this contract, any Participant Account, or any
transaction involving this contract.
9.5 Contractholder Representative; Misstatement of Data: You may designate a
representative to act on your behalf under the contract. We may rely on any
information you, your designee, or a Participant furnish. We need not
inquire as to the accuracy or completeness of such information. If any
essential data pertaining to any person has been omitted or misstated,
including, but not limited to, a misstatement of an annuitant's or
contingent annuitant's age, we will make an equitable adjustment to provide
the annuity or other benefit determined using correct data.
P-GB-K-IRAMFVA(NBR).16
<PAGE>
9.6 Requirement for Writing: When reference is made to you, your designee, or a
Participant making a request or giving notice, instruction, or direction,
such request, notice, instruction, or direction must be in writing, or in a
form otherwise acceptable to us, and is effective when we receive it.
9.7 Quarterly Statement of Account Value: Reasonably promptly after the end of
each Contract Quarter, we will prepare a statement of the Account Value for
each Participant Account.
9.8 Conformity with Law: Any benefit payable under this contract shall not be
less than the minimum benefit required by the insurance laws of the state
in which the contract is delivered. Language in this contract referring to
state or federal tax, securities, or other statutes or rules do not
incorporate within this contract any such statutes or rules.
9.9 Sex and Number: Whenever the context so requires, the plural includes the
singular, the singular the plural, and the masculine the feminine.
9.10 Facility of Payment: If any Participant, contingent annuitant, or
beneficiary is legally incapable of giving a valid receipt for any payment,
and no guardian has been appointed, we may pay the person or persons who
have assumed the care and principal support of such Participant, contingent
annuitant, or beneficiary. We may also pay the Participant's designee. Any
such payment fully discharges us to the extent of such payment.
9.11 Voting: We own all Mutual Fund or Portfolio shares held in an Investment
Account. We exercise the voting rights of such shares at all shareholder
meetings on all matters requiring shareholder voting under the Investment
Company Act of 1940 or other applicable laws. Our vote reflects
instructions received from persons having the voting interest in the
shares, as follows:
(a) Participants have the voting interest under this contract. Unless
otherwise required by applicable law, the number of Mutual Fund or
Portfolio shares for which we may receive voting instructions is
determined by dividing the aggregate Account Values in the affected
Investment Account by the net asset value of the Mutual Fund or
Portfolio shares. Fractional votes are counted. Our determination is
made as of the date used by the Mutual Fund or Portfolio to determine
shareholders eligible to vote.
(b) We vote shares proportionally, to reflect the voting instructions we
receive in a timely manner from Participants and from all other
contractholders. If no timely voting instructions are received from
Participants, we vote shares proportionally, to reflect the voting
instructions we received in a timely manner for all other contracts.
To the extent permitted by applicable law, we may vote shares in our own
right or may modify the above procedures to reflect changes in the law or
its interpretation.
We will provide prospectuses and other reports as required by applicable
federal law.
9.12 Acceptance of New Participants or Contributions: We may refuse to accept
new Participants or new Contributions at any time.
P-GB-K-IRAMFVA(NBR).17
<PAGE>
9.13 Termination of Contract: This contract terminates automatically if no
amounts remain in either the FIA or any Investment Account. However, upon
written notice to us, you may stop making Contributions at any time.
9.14 Nonforfeitability and Nontransferability: The entire Withdrawal Value of a
Participant Account under this contract is nonforfeitable at all times. No
sum payable under this contract with respect to a Participant may be sold,
assigned, discounted, or pledged as collateral for a loan or as security
for the performance of an obligation or for any other purpose to any person
or entity other than AUL. In addition, to the extent permitted by law, no
such sum shall in any way be subject to legal process requiring the payment
of any claim against the payee.
9.15 AUL's Annual Statement: No provision of this contract controls, determines,
or modifies any AUL annual statement made to any insurance department,
contractholder, regulatory body, or other person. Nor does anything in such
annual statement control, determine, or modify the provisions of this
contract.
9.16 AUL's Annual Meeting: Unless otherwise notified, our regular annual meeting
is held at our Home Office on the third Thursday in February at 10 a.m.
Elections for directors are held at such annual meeting.
P-GB-K-IRAMFVA(NBR).18
<PAGE>
TABLE OF GUARANTEED IMMEDIATE ANNUITIES
MONTHLY INCOME PER $1,000 OF ACCOUNT VALUE
10-YEAR CERTAIN
ADJUSTED AGE LIFE ANNUITY AND LIFE ANNUITY
45 2.9690 2.9632
46 3.0190 3.0124
47 3.0715 3.0641
48 3.1269 3.1185
49 3.1852 3.1756
50 3.2466 3.2357
51 3.3115 3.2988
52 3.3800 3.3653
53 3.4525 3.4352
54 3.5291 3.5088
55 3.6104 3.5863
56 3.6966 3.6678
57 3.7881 3.7536
58 3.8850 3.8437
59 3.9877 3.9382
60 4.0964 4.0374
61 4.2115 4.1414
62 4.3334 4.2505
63 4.4626 4.3650
64 4.5994 4.4850
65 4.7442 4.6108
66 4.8977 4.7425
67 5.0608 4.8804
68 5.2347 5.0250
69 5.4213 5.1766
70 5.6229 5.3356
71 5.8412 5.5020
72 6.0778 5.6755
73 6.3336 5.8552
74 6.6097 6.0404
75 6.9084 6.2302
Adjusted Age = Actual Age at Settlement (in years and completed months) less the
following number of months: [.6 times (Birth Year - 1915)] rounded to the
nearest integer.
Guaranteed purchase rates are 96% of the net single premium for the benefit
provided based on the unprojected 1994 Group Annuity Reserving Table for females
with interest at 2%.
P-GB-K-IRAMFVA(NBR).19
<PAGE>
TABLE OF INVESTMENT ACCOUNTS
The following Investment Accounts are made available to you under this contract.
By completing a form we require, you may restrict the Investment Accounts you
make available to your Participants. Amounts allocated to any Investment Account
identified below are invested in the shares of the corresponding Mutual Fund or
Portfolio listed below. The Competing Investment Account marked with an asterisk
(*) is not available if you use the FIA and if you do not want the FIA 20%
annual transfer restriction provided in Section 5.5 to apply.
<TABLE>
<CAPTION>
<S> <C>
Investment Account Mutual Fund or Portfolio
- ------------------------------------------ ------------------------------------------
AUL American Aggressive Investor Portfolio AUL American Aggressive Investor Portfolio
AUL American Bond AUL American Bond
AUL American Conservative Investor AUL American Conservative Investor
Portfolio Portfolio
AUL American Equity AUL American Equity
AUL American Managed AUL American Managed
AUL American Moderate Investor Portfolio AUL American Moderate Investor Portfolio
AUL American Money Market * AUL American Money Market
AUL American Tactical Asset Allocation AUL American Tactical Asset Allocation
Portfolio Portfolio
Alger American Growth Alger American Growth
American Century VP Capital Appreciation American Century VP Capital Appreciation
Calvert Social Mid-Cap Growth Calvert Social Mid-Cap Growth
Fidelity VIP Equity-Income Fidelity VIP Equity-Income
Fidelity VIP Growth Fidelity VIP Growth
Fidelity VIP High Income Fidelity VIP High Income
Fidelity VIP Overseas Fidelity VIP Overseas
Fidelity VIP II Asset Manager Fidelity VIP II Asset Manager
Fidelity VIP II Contrafund Fidelity VIP II Contrafund
Fidelity VIP II Index 500 Fidelity VIP II Index 500
Janus Aspen Series Flexible Income Portfolio Janus Aspen Series Flexible Income Portfolio
Janus Aspen Series Worldwide Growth Janus Aspen Series Worldwide Growth
Portfolio Portfolio
PBHG Insurance Series Growth II PBHG Insurance Series Growth II
PBHG Insurance Series Technology PBHG Insurance Series Technology
and Communication and Communication
SAFECO Resource Series Trust Equity SAFECO Resource Series Trust Equity
Portfolio Portfolio
SAFECO Resource Series Trust Growth SAFECO Resource Series Trust Growth
Portfolio Portfolio
T. Rowe Price Equity-Income Portfolio T. Rowe Price Equity-Income Portfolio
</TABLE>
P-GB-K-IRAMFVA(NBR).20
<PAGE>
CONTRACT NUMBER VXX,XXX
CONTRACTHOLDER ABC SCHOOL
PARTICIPANT'S NAME JOHN DOE
SOCIAL SECURITY NUMBER 123-45-6789
American United Life Insurance Company hereby certifies that the Contractholder
and AUL have entered into a Multiple-Fund Group Variable Annuity Contract (the
Contract) in connection with the Contractholder's SIMPLE IRA plan and that AUL
has created an account in your name to receive Contributions from the
Contractholder for your benefit pursuant to the Contract. When used in this
certificate, "we," "us," or "our" refer to AUL.
The only parties to the Contract are the Contractholder and AUL. All rights and
benefits are determined in accordance with the provisions of the Contract.
Benefits under the Contract will be paid at your direction.
Any amendments to, or changes in, the Contract will be binding and conclusive on
you and your beneficiary.
This certificate is not itself the Contract, but is a certificate of
participation in the Contract.
AMERICAN UNITED LIFE INSURANCE COMPANY
/s/ William R. Brown
Secretary
CERTIFICATE FOR
GUARANTEED BENEFIT IRA
MULTIPLE-FUND GROUP VARIABLE ANNUITY (NBR)
ACCUMULATION UNITS IN ANY INVESTMENT ACCOUNT UNDER THE CONTRACT MAY INCREASE OR
DECREASE IN VALUE ACCORDING TO THE INVESTMENT PERFORMANCE OF THE UNDERLYING
INVESTMENTS HELD BY THE INVESTMENT ACCOUNT. THE VALUE OF SUCH ASSETS AND
ACCUMULATION UNITS IS NOT GUARANTEED. SECTION 4 OF THIS CERTIFICATE EXPLAINS THE
VALUATION OF SUCH ASSETS AND ACCUMULATION UNITS.
If you have questions concerning the Contract, or wish to register a complaint,
you may reach us by calling 1-800-338-9189.
P-GB-C-IRAMFVA(NBR) (THE CONTRACT IS A SIMPLE IRA)
<PAGE>
ONTRACT NUMBER VXX,XXX
CONTRACTHOLDER ABC SCHOOL
PARTICIPANT'S NAME JOHN DOE
SOCIAL SECURITY NUMBER 123-45-6789
American United Life Insurance Company hereby certifies that the Contractholder
and AUL have entered into a Multiple-Fund Group Variable Annuity Contract (the
Contract) in connection with the Contractholder's SEP IRA plan and that AUL has
created an account in your name to receive Contributions from the Contractholder
for your benefit pursuant to the Contract. When used in this certificate, "we,"
"us," or "our" refer to AUL.
The only parties to the Contract are the Contractholder and AUL. All rights and
benefits are determined in accordance with the provisions of the Contract.
Benefits under the Contract will be paid at your direction.
Any amendments to, or changes in, the Contract will be binding and conclusive on
you and your beneficiary.
This certificate is not itself the Contract, but is a certificate of
participation in the Contract.
AMERICAN UNITED LIFE INSURANCE COMPANY
/s/ William R. Brown
Secretary
CERTIFICATE FOR
GUARANTEED BENEFIT IRA
MULTIPLE-FUND GROUP VARIABLE ANNUITY (NBR)
ACCUMULATION UNITS IN ANY INVESTMENT ACCOUNT UNDER THE CONTRACT MAY INCREASE OR
DECREASE IN VALUE ACCORDING TO THE INVESTMENT PERFORMANCE OF THE UNDERLYING
INVESTMENTS HELD BY THE INVESTMENT ACCOUNT. THE VALUE OF SUCH ASSETS AND
ACCUMULATION UNITS IS NOT GUARANTEED. SECTION 4 OF THIS CERTIFICATE EXPLAINS THE
VALUATION OF SUCH ASSETS AND ACCUMULATION UNITS.
If you have questions concerning the Contract, or wish to register a complaint,
you may reach us by calling 1-800-338-9189.
P-GB-C-IRAMFVA(NBR) (THE CONTRACT IS A SEP IRA)
<PAGE>
IMPORTANT NOTICE
To obtain information or make a complaint:
You may contact your Texas AUL office at:
1-512-822-7860
You may call AUL's toll-free telephone number for information or to make a
complaint at: 1-800-338-9189
You may also write to AUL at:
P O Box 368
Indianapolis, IN 46206-0368
You may contact the Texas Department of Insurance to obtain information on
companies, coverages, rights, or complaints at: 1-800-252-3439
You may write the Texas Department of Insurance at:
P O Box 149104
Austin, TX 78714-9104
FAX# (512) 475-1771
ATTACH THIS NOTICE TO YOUR POLICY: This notice is for information only and does
not become a part or condition of the attached document.
AVISO IMPORTANTE
Para obtener informacion o para someter una queja:
Puede comunicarse con su Texas AUL al:
1-512-822-7860
Usted puede llamar al numero de telefono gratis de AUL para informacion o para
someter una queja al: 1-800-338-9189
Usted tambien puede escribir a AUL:
P O Box 368
Indianapolis, IN 46206-0368
Puede comunicarse con el Departamento de Se guros de Texas para obtener
informacion acercu de companias, coberturas, derechos o quejas al:
1-800-252-3439
Puede escribir al Departamento de Seguros de
Texas:
P O Box 149104
Austin, TX 78714-9104
FAX# (512) 475-1771
UNA ESTE AVISO A SU POLIZA: Este aviso es solo para proposito de informacion y
no se conveerte en parte o condicion del documento adjunto.
P-GB-C-IRAMFVA(NBR)(TXNOTICE)
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1 - DEFINITIONS 3
SECTION 2 - ADMINISTRATION OF YOUR PARTICIPANT ACCOUNT 6
2.1----- How Contributions Are Handled
2.2----- Amount of Contributions
2.3----- Excess Contributions
2.4----- Other Refunds
2.5----- Transfers from Other Contracts
SECTION 3 - OPERATION OF FIXED INTEREST ACCOUNT (FIA) 8
3.1----- Allocations to Your Participant Account
3.2----- Provision of Guaranteed Rates for Interest Pockets
3.3----- Renewal of Guaranteed Rates
3.4----- Minimum Rate Guarantee
3.5----- Allocation of Withdrawals
SECTION 4 - VALUATION OF INVESTMENT ACCOUNTS 9
4.1----- Operation of Investment Accounts
4.2----- Valuation of Mutual Funds
4.3----- Accumulation Units
4.4----- Value of Accumulation Units
4.5----- Determining the Net Investment Factor
4.6----- Valuing Your Participant Account
SECTION 5 - WITHDRAWALS, DEATH BENEFITS, AND TRANSFERS 10
5.1----- Withdrawals
5.2----- Death Benefits
5.3----- Transfers Between Investment Options
5.4----- Minimum Amounts
5.5----- Maximum Amounts
5.6----- Transfers to SIMPLE IRAs
SECTION 6 - ANNUITIES 13
6.1----- Annuity Purchases
6.2----- Annuity Options
6.3----- Determining Annuity Amount
6.4----- Proof of Age and Survival; Minimum Payments
6.5----- Annuity Certificates
P-GB-C-IRAMFVA(NBR).1
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SECTION 7 - MORTALITY AND EXPENSE RISK CHARGES
AND ADMINISTRATIVE CHARGES 14
7.1----- Investment Account Mortality and Expense Risk Charges
7.2----- Administrative Charge
7.3----- Mutual Fund or Portfolio Expense
7.4----- Taxes
SECTION 8 - CONTRACT MODIFICATIONS 15
8.1----- Mutual Amendment
8.2----- Rates and Section 7 Charges
8.3----- Conformance with Law
8.4----- Our Right to Initiate Changes
8.5----- Prohibited Amendments
SECTION 9 - GENERAL PROVISIONS 16
9.1----- Ownership
9.2----- Entire Contract
9.3----- Benefit Determinations
9.4----- Representations and Warranties
9.5------Contractholder Representative; Misstatement of Data
9.6----- Requirement for Writing
9.7----- Quarterly Statement of Account Value
9.8----- Conformity with Law
9.9----- Sex and Number
9.10---- Facility of Payment
9.11---- Voting
9.12---- Acceptance of New Contributions
9.13-----Termination of Contract
9.14---- Nonforfeitability and Nontransferability
9.15---- AUL's Annual Statement
9.16---- AUL's Annual Meeting
TABLE OF GUARANTEED IMMEDIATE ANNUITIES 19
P-GB-C-IRAMFVA(NBR).2
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SECTION 1 - DEFINITIONS
1.1 "Account Value" for your Participant Account as of a date is:
(a) your account's balance in the Fixed Interest Account (FIA) on that
date; plus
(b) the value of your account's Accumulation Units in each Investment
Account on that date.
1.2 "Accumulation Unit" is a valuation device used to measure increases in and
decreases to the value of any Investment Account.
1.3 "Annuity Commencement Date" is the first day of the month an annuity begins
under the Contract. This date may not be later than the date your periodic
benefits are required to commence under the Code.
1.4 "Business Day" is any day both the New York Stock Exchange and our Home
Office are open for the general conduct of business.
1.5 "Code" means the Internal Revenue Code of 1986, as amended, and any
applicable regulations or rulings thereunder.
1.6 The "First Contract Anniversary" is listed on the Contract face page.
Subsequent "Contract Anniversaries" are on the same day of each subsequent
year.
1.7 "Contract Quarter" is each of the four successive three-month periods in a
Contract Year.
1.8 The first "Contract Year" starts on the Contract Date and ends on the day
before the First Contract Anniversary. Each subsequent Contract Year starts
on a Contract Anniversary and ends on the day before the next Contract
Anniversary.
1.9 "Contributions" are amounts paid in cash to us by the Participant or the
Contractholder, which we credit to a Participant Account. Contributions
include amounts transferred from another AUL group annuity contract. The
legal title to, and ownership of, these amounts is vested solely in the
Participant.
Contributions include "Elective Deferrals," which means, with respect to
any taxable year, any Contribution made under a salary reduction agreement.
A Contribution made under a salary reduction agreement is not treated as an
Elective Deferral if, under the salary reduction agreement, the
Contribution is made pursuant to your one-time irrevocable election at the
time of initial eligibility to participate in the agreement, or is made
pursuant to a similar arrangement involving a one-time irrevocable election
specified in Regulations issued under the Code. The Contractholder must
identify any Elective Deferrals, which will be allocated to an Elective
Deferral subaccount within your Participant Account.
When the Contract is a SIMPLE IRA, as defined in Code Section 408(p),
"Contributions" means, subject to the restrictions of the following
paragraph, amounts paid in cash to us by a Participant or by the
Contractholder, including amounts transferred to the Contract from another
SIMPLE IRA of the Participant, which are credited to a Participant Account
maintained hereunder. The legal title to, and ownership of, such amounts is
vested solely in the Participant.
P-GB-C-IRAMFVA(NBR).3
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When the Contract is a SIMPLE IRA, it will accept only cash Contributions
made on behalf of the Participant pursuant to the terms of a SIMPLE IRA
Plan described in Code Section 408(p). A rollover Contribution or a
transfer of assets from another SIMPLE IRA of the Participant will also be
accepted. No other Contributions will be accepted.
1.10 "Excess Contributions" are Contributions in excess of the applicable Code
limits.
1.11 "Fixed Interest Account" or "FIA" is the portion of our general asset
account as described in Section 3, to which Contributions may be allocated
for accumulation at the Guaranteed Rates.
1.12 "Guaranteed Rates" are the guaranteed annual effective rates of interest we
credit to each Interest Pocket. A Guaranteed Rate may be modified only as
described in Section 3.3.
1.13 "Home Office" is our principal office in Indianapolis, Indiana. For
anything to be "received by AUL," it must be received at our Home Office.
1.14 "Interest Pocket" means a tracking method which associates funds deposited
into the FIA over a specific time period with a specific Guaranteed Rate,
as described in Section 3. After the guaranteed period provided in Section
3.3 has elapsed, we may consolidate two or more Interest Pockets in
conjunction with the announcement of new Guaranteed Rates.
1.15 "Investment Account" means each distinct portfolio established within our
Variable Account and identified in the Table of Investment Accounts in the
Contract. Amounts allocated to any Investment Account are invested in the
shares of the corresponding Mutual Fund or Portfolio identified in the
Table of Investment Accounts. Our "Variable Account" is a separate account
we maintain under Indiana law which is called the AUL American Unit Trust
and which is registered under the Investment Company Act of 1940 as a unit
investment trust.
1.16 "Investment Option" is the FIA or any Investment Account. We reserve the
right to provide other Investment Options under the Contract at any time.
1.17 "Mutual Fund" means any diversified, open-end, management investment
company made available by us, and listed in the Table of Investment
Accounts in the Contract.
1.18 "Participant" is any person reported by the Contractholder to us as
eligible for, and as participating in, the Contract, and for whom a
Participant Account is established.
1.19 "Participant Account" is an account under the Contract for each
Participant. Each Participant Account may have subaccounts for each type of
Contribution. We credit Contributions to Participant Accounts and
Contribution-type subaccounts as we are directed.
1.20 "Portfolio" is a portfolio established within a particular Mutual Fund, as
described in the Mutual Fund's current prospectus.
1.21 "Valuation Periods" start at the close of each Business Day and end at the
close of the next Business Day.
1.22 The "Withdrawal Charge" is a percentage of the Account Value withdrawn
under the Contract. The Withdrawal Charge will not apply to Account Values
withdrawn to provide an annuity as described in Section 6.1. The percentage
varies by the Participant Account Year in which the
P-GB-C-IRAMFVA(NBR).4
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withdrawal is made. The first Participant Account Year begins on the date
when we establish a Participant Account and credit the initial Contribution
for you, and ends on the day immediately preceding the next anniversary of
such date. Each Participant Account Year thereafter begins on such an
anniversary date and ends on the day immediately preceding the next
succeeding anniversary date. The Withdrawal Charge percentage is as
follows:
During Withdrawal Charge
Participant Account Years Percentage
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
Thereafter 0%
In no event will the cumulative total of all Withdrawal Charges, including
those previously assessed against any amount withdrawn from your
Participant Account, exceed 9% of total Contributions allocated to your
Participant Account.
1.23 "Withdrawal Value" is your Account Value, less any Withdrawal Charge.
P-GB-C-IRAMFVA(NBR).5
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SECTION 2 - ADMINISTRATION OF YOUR PARTICIPANT ACCOUNT
2.1 How Contributions Are Handled:
(a) Contributions we receive are credited to the appropriate
Contribution-type subaccounts of your Participant Account, as we are
directed in allocation instructions. The initial Contribution for you
is allocated to your Participant Account by the second Business Day
after we (1) receive the initial Contribution or, if later, (2)
receive all data necessary to complete the allocation (including data
required to establish your Participant Account, the amount of the
Contribution for you, and Investment Option elections. Subsequent
Contributions are allocated to your Participant Account on the
Business Day we (1) receive that Contribution or, if later, (2)
receive all data necessary to complete the allocation.
(b) If we do not receive the data required to establish your Participant
Account and the amount of a Contribution for you within 5 Business
Days after we first receive that Contribution, we will return that
Contribution to the contributing party unless the contributing party
consents to us retaining that Contribution until the earlier of (i)
the date we receive such data and amount and, therefore, can properly
allocate that Contribution to your Participant Account or (ii) 25 days
from the date we receive that Contribution.
(c) If we receive the data required to establish your Participant Account
and the amount of a Contribution for you, but we do not receive
Investment Option elections for you, the Contribution is allocated to
a suspense account. The suspense account earns interest at the
Guaranteed Rate for Contributions received on the same date. When we
receive all required data, amounts in the suspense account, plus
interest, are transferred to the appropriate Investment Option for
each designated Contribution- type.
(d) Your Participant Account may be allocated to Investment Options in any
increments acceptable to us. Investment Option elections remain in
effect until changed by you. A change in Investment Option elections
is made by giving us new Investment Option elections.
2.2 Amount of Contributions: Except for amounts eligible for rollover treatment
under Code Sections 402(c), 403(a)(4), 403(b)(8), or 408(d)(3),
Contributions during your taxable year (which is presumed to be a calendar
year) may not exceed the amounts described below (as adjusted by Code
Section 408(a)):
(a) If the Contract is a Simplified Employee Pension (SEP) IRA, as
described in Code Section 408(k):
(1) the lesser of $30,000 (or, if greater, 25% of the dollar
limitation in effect under Code Section 415(b)(1)(A)) or 15% of
compensation.
(2) No Contribution will be accepted under a SIMPLE plan established
by an employer pursuant to Code Section 408(p). No transfer or
rollover of funds attributable to contributions made by a
particular employer under its SIMPLE plan will be accepted from a
SIMPLE IRA (an IRA used in conjunction with a SIMPLE plan) prior
to the expiration of the 2-year period
P-GB-C-IRAMFVA(NBR).6
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beginning on the date the individual first participated in that
employer's SIMPLE plan.
(b) If the Contract is a SIMPLE IRA:
(1) Except for amounts rolled over or transferred from another SIMPLE
IRA of yours, Contributions during your taxable year (which is
presumed to be a calendar year) may not exceed the amounts
allowed by Code Section 408(p) (as adjusted).
(2) If Contributions made on your behalf pursuant to a SIMPLE IRA
Plan maintained by your employer are received directly by us from
the employer, we will provide the employer with the summary
description required by Code Section 408(1)(2).
2.3 Excess Contributions: On receipt of your instructions, we will withdraw
Excess Contributions, plus gains and minus losses, from your Participant
Account and return them to you. Such instructions must state the amount to
be returned and certify that such Contributions are Excess Contributions
and that their return is permitted by the Code.
2.4 Other Refunds: Other refunds of Contributions are applied before the close
of the calendar year following the year of refund toward the payment of
future Contributions or the purchase of additional benefits.
2.5 Transfers from Other Contracts: We may require amounts transferred to a
Participant Account from other AUL group annuity contracts to be deposited
in a suspense account. We will advise the Contractholder if this limitation
applies before accepting such a transfer.
P-GB-C-IRAMFVA(NBR).7
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SECTION 3 -- OPERATION OF FIXED INTEREST ACCOUNT (FIA)
3.1 Allocations to Your Participant Account: We allocate your Contributions in
the FIA based on the information we are provided.
3.2 Provision of Guaranteed Rates for Interest Pockets: At least 10 days in
advance of each calendar quarter, we will declare a Guaranteed Rate for the
Interest Pocket for that quarter. All Contributions or transfers hereunder
which are allocated to the FIA during that quarter will earn interest at
that Guaranteed Rate until that quarterly pocket matures on the second
January 1 following the quarter in which that pocket was established.
3.3 Renewal of Guaranteed Rates: Those quarterly Interest Pockets which mature
at the same time will be combined into an annual renewal Interest Pocket.
Funds associated with that annual renewal Interest Pocket will earn
interest for a full year at the Guaranteed Rate declared for that pocket. A
new Guaranteed Rate for each annual renewal Interest Pocket will be
declared at least 30 days prior to every January 1 for the 5 years
following the establishment of that pocket. An annual renewal Interest
Pocket will mature on January 1 of the sixth year following its
establishment, when it will be combined into one annual portfolio Interest
Pocket. Funds associated with that annual portfolio Interest Pocket will
earn interest for a full year at the Guaranteed Rate for that pocket, which
will be declared at least 30 days prior to every January 1.
3.4 Minimum Rate Guarantee: No Guaranteed Rate may be less than an annual
effective interest rate of 3.00%.
3.5 Allocation of Withdrawals: Withdrawals or transfers from the FIA are on a
first-in/first-out basis.
P-GB-C-IRAMFVA(NBR).8
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SECTION 4 - VALUATION OF INVESTMENT ACCOUNTS
4.1 Operation of Investment Accounts: All income, gains, or losses, realized or
unrealized, from assets held in any Investment Account are credited to or
charged against the applicable Investment Account without regard to our
other income, gains, or losses. Investment Account assets are not
chargeable with liabilities arising out of any other business we may
conduct.
4.2 Valuation of Mutual Funds: The current prospectus for each Mutual Fund
describes how that Mutual Fund's assets are valued.
4.3 Accumulation Units: We credit amounts allocated to an Investment Account in
Accumulation Units. The Accumulation Unit value used is the one for the
Valuation Period when we allocate the amount to the Investment Account.
4.4 Value of Accumulation Units: We generally establish the Accumulation Unit
value for a new Investment Account at $1.00 on the date the first deposit
is made to the Investment Account. The value of an Accumulation Unit for
any later Valuation Period equals the value of an Accumulation Unit for the
immediately preceding Valuation Period times the Net Investment Factor for
the current Valuation Period. We determine the Accumulation Unit value
before giving effect to any additions, withdrawals, or transfers in the
current Valuation Period.
4.5 Determining the Net Investment Factor: We determine the Net Investment
Factor for each Investment Account by dividing (a) by (b), and then
subtracting (c), where:
(a) is:
(1) the net asset value of a Mutual Fund or Portfolio share at the
end of the current Valuation Period, plus
(2) any dividend or other distribution paid on each Mutual Fund or
Portfolio share during such Valuation Period, plus or minus
(3) any credit or charge for taxes paid or reserved by us during the
Valuation Period that we determine are attributable to the
Investment Account;
(b) is the net asset value of each Mutual Fund or Portfolio share held in
the Investment Account at the end of the prior Valuation Period; and
(c) is a daily charge factor we determine, as described in Section 7.1.
4.6 Valuing Your Participant Account: We determine your Account Value in an
Investment Account by multiplying your Accumulation Units by the
Accumulation Unit value. The Accumulation Unit value of an Investment
Account changes only on a Business Day.
P-GB-C-IRAMFVA(NBR).9
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SECTION 5 - WITHDRAWALS, DEATH BENEFITS, AND TRANSFERS
5.1 Withdrawals: You may direct us to withdraw all or a portion of your
Participant Account, subject to the following provisions:
(a) If your entire Account Value is withdrawn, the amount paid equals your
Withdrawal Value, subject to any charges described in Section 7.4. In
all other instances, your Account Value is reduced by an amount
sufficient to make the payment requested and to cover the Withdrawal
Charge and any charges described in Section 7.4.
However, despite the previous paragraph, in the first Contract Year in
which your Participant Account is established, you may withdraw from
your Account up to 10% of the sum of your Account Value (determined as
of the later of the Contract Date or the Contract Anniversary
immediately preceding the request for the withdrawal) plus
Contributions made for you during that Contract Year, without
application of the Withdrawal Charge. You may also do this in the next
succeeding Contract Year. In any subsequent Contract Year, you may
withdraw up to 10% of your Account Value (determined as of the
Contract Anniversary immediately preceding the request for the
withdrawal) without application of the Withdrawal Charge.
(b) A withdrawal request is effective, and the Account Value to be applied
pursuant to this Section is determined, on the Business Day that we
receive a proper withdrawal request.
(c) We will pay any cash lump-sum to you within 7 days from the
appropriate Business Day as determined in Subsection (b) above, except
as we may be permitted to defer such payment of amounts withdrawn from
the Variable Account in accordance with appropriate provisions of the
federal securities laws. We reserve the right to defer the payment of
amounts withdrawn from the FIA for a period of up to 6 months after we
receive the withdrawal request.
(d) Withdrawals from your share of the FIA will be made on a
first-in/first-out basis under Section 3.5.
5.2 Death Benefits:
(a) Upon receipt of your beneficiary's instructions and of due proof of
your death prior to the date your Participant Account is closed, we
will apply your Account Value (subject to Section 7.4) for the purpose
of providing a death benefit. The death benefit will be paid to your
beneficiary according to the method of payment elected by your
beneficiary (unless you previously elected the method of payment).
Your beneficiary may also designate a beneficiary. This death benefit
will be payable:
(1) in a single sum or other method not provided in (2) below;
provided, however, that your entire Account Value (subject to
Section 7.4) must be paid to your beneficiary on or before
December 31 of the calendar year which contains the fifth
anniversary of your death, or
(2) as an annuity in accordance with the Annuity Options shown in
Section 6.2 over a period not to exceed your beneficiary's life
or life expectancy.
P-GB-C-IRAMFVA(NBR).10
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If your beneficiary is not your surviving spouse, the annuity
must begin on or before December 31 of the calendar year
immediately following the calendar year in which you die.
If your beneficiary is your surviving spouse, your spouse may
elect to receive equal or substantially equal payments over his
or her life expectancy beginning on any date prior to the later
of (a) December 31 of the calendar year immediately following the
calendar year in which you die or (b) December 31 of the calendar
year in which you would have attained age 70 1/2. Your spouse's
election must be made no later than the earlier of December 31 of
the calendar year containing the fifth anniversary of your death
or the date distributions are required to begin under the
preceding sentence. Your surviving spouse may accelerate these
payments at any time by increasing the frequency or amount of
payments.
If your beneficiary is your surviving spouse, your spouse may
treat your Participant Account as his or her own IRA. This
election is deemed to be made if your surviving spouse makes a
regular IRA Contribution under the Contract, makes a rollover to
or from the Contract, or fails to elect any of the above three
provisions.
(b) If you die on or after your Annuity Commencement Date, any interest
remaining under the Annuity Option selected will be paid at least as
rapidly as prior to your death.
(c) The Account Value to be applied pursuant to this Section is determined
on the Business Day that we receive a proper withdrawal request (or
due proof of death, if received later).
(d) We will pay any cash lump-sum death benefit to your beneficiary within
7 days from the appropriate Business Day as determined in Subsection
(c) above, except as we may be permitted to defer such payment of
amounts withdrawn from the Variable Account in accordance with
appropriate provisions of the federal securities laws. We reserve the
right to defer the payment of amounts withdrawn from the FIA for a
period of up to 6 months after we receive the withdrawal request.
5.3 Transfers between Investment Options: You may direct us to transfer amounts
between Investment Options. Transfers are effective on the Business Day we
receive the transfer direction. Your transfer directions may be made daily
on any Business Day. We will make the transfer as requested within 7 days
from the date we receive the request, except as we may be permitted to
defer the transfer of amounts withdrawn from the Variable Account in
accordance with appropriate provisions of the federal securities laws. We
reserve the right to defer a transfer of amounts from the FIA for a period
of up to 6 months after we receive the transfer request.
However, despite the previous paragraph, once a transfer from the FIA has
been made for you, a transfer to the FIA for you is permitted only after 90
days have elapsed since the date of the last transfer from the FIA for you.
If the Contractholder makes available to Participants the FIA and the
Competing Investment Account identified in the Table of Investment Accounts
in the Contract, the 90-day transfer restriction discussed in the previous
sentence does not apply, and Section 5.4 does apply.
P-GB-C-IRAMFVA(NBR).11
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5.4 Minimum Amounts: The minimum amount you may withdraw or transfer from an
Investment Option is $500 or, if less, your entire balance in that
Investment Option. If a withdrawal or transfer reduces your balance in an
Investment Option to less than $500, the entire balance is withdrawn or
transferred.
5.5 Maximum Amounts: If the Contractholder makes available to Participants the
FIA and the Competing Investment Account identified in the Table of
Investment Accounts in the Contract, no more than 20% of your FIA Account
Value on the later of the Contract Date or the Contract Anniversary
immediately preceding the request for transfer may be transferred from the
FIA during any Contract Year. However, if your FIA Account Value is less
than $2,500 on the later of the Contract Date or the Contract Anniversary
immediately preceding the request for transfer, the amount transferrable
from the FIA for you for that Contract Year is the minimum amount specified
in Section 5.4.
5.6 Transfers to SIMPLE IRAs: If this is a SIMPLE IRA, prior to the expiration
of the 2-year period beginning on the date you first participated in any
SIMPLE IRA Plan maintained by your employer, any rollover or transfer by
you of funds from this SIMPLE IRA must be made to another SIMPLE IRA of
yours. Any distribution of funds to you during this 2-year period may be
subject to a 25-percent additional tax if you do not roll over the amount
distributed into a SIMPLE IRA. After the expiration of this 2-year period,
you may roll over or transfer funds to any IRA of yours that is qualified
under Code Section 408(a) or (b).
P-GB-C-IRAMFVA(NBR).12
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SECTION 6 - ANNUITIES
6.1 Annuity Purchases: You may withdraw all or a portion of your Account Value
(subject to Section 7.4) to provide an annuity. Such a withdrawal is not
subject to a Withdrawal Charge. On receipt of an annuity purchase request,
we transfer your entire Participant Account to a suspense account. Such
amounts remain in the suspense account until the Annuity Commencement Date,
when the full balance (including interest) is applied to purchase the
annuity.
Your annuity purchase request must specify the purpose for the annuity, the
election of an annuity option, Annuity Commencement Date, any contingent
annuitant or beneficiary, and any additional information we require. If you
or your contingent annuitant dies before the Annuity Commencement Date, the
annuity election is cancelled.
The minimum amount which you may apply to purchase an annuity is $5,000.
6.2 Annuity Options: You may elect any optional form of annuity we offer at the
time of purchase. Available annuity options always include:
(a) Life Annuity. A monthly annuity is payable as long as the annuitant
lives, and ends with the last payment before the annuitant's death.
(b) Survivorship Annuity. A monthly annuity is payable as long as the
annuitant lives. After the annuitant's death, all or a portion of the
monthly annuity is paid to the contingent annuitant as long as the
contingent annuitant lives.
No annuity may have a certain period extending beyond your life expectancy
or the joint life expectancy of you and your contingent annuitant, as
determined on your Annuity Commencement Date.
6.3 Determining Annuity Amount: We compute the annuity amount using the factors
reflected in the Table of Guaranteed Immediate Annuities attached to the
Contract. However, if our current single premium, nonparticipating,
immediate annuity rates for this class of group annuity contracts produces
a higher monthly annuity than the Table of Guaranteed Immediate Annuities,
then that more favorable annuity rate is applied.
6.4 Proof of Age and Survival; Minimum Payments: We may require proof of any
annuitant's or contingent annuitant's date of birth before commencing
payments under any annuity. We may also require proof that an annuitant or
contingent annuitant is living before making any annuity payment. If a
monthly annuity is less than our current established minimum payment, we
may make payments on a less-frequent basis or in a single sum.
6.5 Annuity Certificates: We issue to each person for whom an annuity is
purchased a certificate setting forth the annuity's amount and terms.
P-GB-C-IRAMFVA(NBR).13
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SECTION 7 - MORTALITY AND EXPENSE RISK CHARGES
AND ADMINISTRATIVE CHARGES
7.1 Investment Account Mortality and Expense Risk Charges: We deduct from the
average daily net assets of each Investment Account the daily equivalent of
an annual combined mortality risk charge and expense risk charge of 1.25%.
This charge is part of the Net Investment Factor, described in Section 4.5.
7.2 Administrative Charge: We deduct an administrative charge per Contract
Quarter equal to the lesser of $7.50 or 0.5% of your Account Value on the
last day of each Contract Quarter from your Participant Account if it
exists on that day for as long as your Participant Account is in effect.
This charge is to be prorated among each subaccount of your Participant
Account which corresponds to each Investment Option utilized by you under
the Contract. If your entire balance is withdrawn pursuant to the Contract,
the administrative charge attributable to the period of time which has
elapsed since the first day of the Contract Quarter in which the withdrawal
of funds is made is not deducted from the amount withdrawn.
There is no charge for you for any Contract Quarter in which your Account
Value on the last day of that quarter is greater than $25,000.
7.3 Mutual Fund or Portfolio Expense: A Mutual Fund or Portfolio deducts an
investment advisory fee and other expenses from its net asset value, as
described in its current prospectus. Amounts deducted may include
operational, organizational, and extraordinary expenses. Expenses vary from
year-to-year.
7.4 Taxes: We may deduct charges equal to any premium tax we incur from the
balance applied to purchase an annuity or at such other time as we incur
premium taxes. We may also deduct from Investment Accounts reasonable
charges for federal, state, or local income taxes we incur that are
attributable to such Investment Accounts.
P-GB-C-IRAMFVA(NBR).14
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SECTION 8 - CONTRACT MODIFICATIONS
8.1 Mutual Amendment: The Contractholder and we may agree to any change or
amendment to the Contract without the consent of any other person or
entity. However, no such change or amendment shall adversely affect the
benefits to be provided by Contributions made prior to the effective date
of the change or amendment unless the consent of all Participants is
obtained. The Contract cannot be modified or amended, nor can any provision
or condition be waived, except by our written agreement, signed by a
corporate officer. Such authority may be delegated only by a written
agreement signed by our corporate officer.
8.2 Rates and Section 7 Charges: We may announce new Guaranteed Rates, as
described in Sections 3.2 and 3.3 (including the consolidation of existing
Interest Pockets). However, as provided in Sections 3.2 and 3.3, we may not
change the declared Guaranteed Rate applicable to an established Interest
Pocket during the guaranteed period. We may also modify the charge levels
in Section 7, using the procedures of Section 8.4.
8.3 Conformance with Law: We may amend the Contract at any time, without the
Contractholder's consent, or that of any other person or entity, if the
amendment is reasonably needed to comply with, or give the Contractholder
or you the benefit of, any provisions of federal or state laws. Any such
amendment will be delivered to the Contractholder prior to its effective
date.
8.4 Our Right to Initiate Changes: In addition to those amendments permitted by
Sections 8.2 and 8.3, we may initiate an additional provision or
modification of any other provision of the Contract (including the addition
of a charge for transfers between Investment Options) by giving the
Contractholder 60 days notice of such modification. Any such modification
is effective without the Contractholder's affirmative assent.
8.5 Prohibited Amendments:
(a) Despite our right to initiate changes under Section 8.4, we may not
initiate changes to the minimum Guaranteed Rate specified in Section
3.4, our obligation to set Guaranteed Rates for the period of time
specified in Sections 3.2 and 3.3, or the Table of Guaranteed
Immediate Annuities.
(b) No modification to the Contract may change the terms of a previously
purchased annuity or reduce any interest guarantee applicable to your
FIA balances on the modification's effective date.
P-GB-C-IRAMFVA(NBR).15
<PAGE>
SECTION 9 - GENERAL PROVISIONS
9.1 Ownership: The Contractholder owns the Contract. All amounts received or
credited under the Contract become our property. We are obligated to make
only the payments or distributions specified in the Contract.
9.2 Entire Contract: The Contract is for the exclusive benefit of the
Participants and their beneficiaries. The Contract and the Contractholder's
application is the entire agreement between the Contractholder and us. We
are not a party to, nor bound by, a plan, trust, custodial agreement, or
other agreement, or any amendment or modification to any of the same. We
are not a fiduciary under the Contract or under any such plan, trust,
custodial agreement, or other agreement.
9.3 Benefit Determinations: You must furnish us whatever information is
necessary to establish the eligibility for and amount of annuity or other
benefit due. We rely solely on your instructions and certifications with
respect to your benefits. You are fully responsible for determining the
existence or amount of Excess Contributions (plus gains or minus losses
thereon), or that returns of Excess Contributions are permitted by the
Code.
We may rely on your statements or representations in honoring any benefit
payment request.
9.4 Representations and Warranties: The Contractholder and we mutually
represent and warrant, each to the other, that each is fully authorized to
enter into the Contract and that the Contract is a valid and binding
obligation and that the execution of the Contract does not violate any law,
regulation, judgment, or order by which the representing party is bound. In
addition, the Contractholder represents and warrants to us that:
(a) its plan is a SEP IRA plan or a SIMPLE IRA plan under the Code;
(b) the execution of the Contract has been authorized by the plan
fiduciary responsible for plan investment decisions; and
(c) the execution or performance of the Contract does not violate any plan
provision or any law, regulation, judgment, or order by which the plan
is bound.
We do not make any representation or warranty regarding the federal, state,
or local tax status of the Contract, any Participant Account, or any
transaction involving the Contract.
9.5 Contractholder Representative; Misstatement of Data: The Contractholder may
designate a representative to act on its behalf under the Contract. We may
rely on any information the Contractholder, its designee, or you furnish.
We need not inquire as to the accuracy or completeness of such information.
If any essential data pertaining to any person has been omitted or
misstated, including, but not limited to, a misstatement of an annuitant's
or contingent annuitant's age, we will make an equitable adjustment to
provide the annuity or other benefit determined using correct data.
9.6 Requirement for Writing: When reference is made to you, the Contractholder,
or its designee making a request or giving notice, instruction, or
direction, such request, notice, instruction, or direction must be in
writing, or in a form otherwise acceptable to us, and is effective when we
receive it.
P-GB-C-IRAMFVA(NBR).16
<PAGE>
9.7 Quarterly Statement of Account Value: Reasonably promptly after the end of
each Contract Quarter, we will prepare a statement of your Account Value.
9.8 Conformity with Law: Any benefit payable under the Contract will not be
less than the minimum benefit required by the insurance laws of the state
in which the Contract is delivered. Language in the Contract referring to
state or federal tax, securities, or other statutes or rules do not
incorporate within the Contract any such statutes or rules.
9.9 Sex and Number: Whenever the context so requires, the plural includes the
singular, the singular the plural, and the masculine the feminine.
9.10 Facility of Payment: If you, your contingent annuitant, or your beneficiary
are legally incapable of giving a valid receipt for any payment, and no
guardian has been appointed, we may pay the person or persons who have
assumed the care and principal support of you, your contingent annuitant,
or your beneficiary. We may also pay your designee. Any such payment fully
discharges us to the extent of such payment.
9.11 Voting: We own all Mutual Fund or Portfolio shares held in an Investment
Account. We exercise the voting rights of such shares at all shareholder
meetings on all matters requiring shareholder voting under the Investment
Company Act of 1940 or other applicable laws. Our vote reflects
instructions received from persons having the voting interest in the
shares, as follows:
(a) Participants have the voting interest under the Contract. Unless
otherwise required by applicable law, the number of Mutual Fund or
Portfolio shares for which we may receive voting instructions is
determined by dividing the aggregate Account Values in the affected
Investment Account by the net asset value of the Mutual Fund or
Portfolio shares. Fractional votes are counted. Our determination is
made as of the date used by the Mutual Fund or Portfolio to determine
shareholders eligible to vote.
(b) We vote shares proportionally, to reflect the voting instructions we
receive in a timely manner from Participants and from all other
contractholders. If no timely voting instructions are received from
Participants, we vote shares proportionally, to reflect the voting
instructions we received in a timely manner for all other contracts.
To the extent permitted by applicable law, we may vote shares in our own
right or may modify the above procedures to reflect changes in the law or
its interpretation.
We will provide prospectuses and other reports as required by applicable
federal law.
9.12 Acceptance of New Contributions: We may refuse to accept new Contributions
at any time.
9.13 Termination of Contract: The Contract terminates automatically if no
amounts remain in either the FIA or any Investment Account. However, upon
written notice to us, the Contractholder may stop making Contributions at
any time.
9.14 Nonforfeitability and Nontransferability: Your entire Withdrawal Value is
nonforfeitable at all times. No sum payable under the Contract with respect
to you may be sold, assigned, discounted, or pledged as collateral for a
loan or as security for the performance of an obligation or for any other
purpose to any person or entity other than AUL. In addition, to
P-GB-C-IRAMFVA(NBR).17
<PAGE>
the extent permitted by law, no such sum will in any way be subject to
legal process requiring the payment of any claim against the payee.
9.15 AUL's Annual Statement: No provision of the Contract controls, determines,
or modifies any AUL annual statement made to any insurance department,
contractholder, regulatory body, or other person. Nor does anything in such
annual statement control, determine, or modify the provisions of the
Contract.
9.16 AUL's Annual Meeting: Unless otherwise notified, our regular annual meeting
is held at our Home Office on the third Thursday in February at 10 a.m.
Elections for directors are held at such annual meeting.
P-GB-C-IRAMFVA(NBR).18
<PAGE>
TABLE OF GUARANTEED IMMEDIATE ANNUITIES
MONTHLY INCOME PER $1,000 OF ACCOUNT VALUE
10-YEAR CERTAIN
ADJUSTED AGE LIFE ANNUITY AND LIFE ANNUITY
45 2.9690 2.9632
46 3.0190 3.0124
47 3.0715 3.0641
48 3.1269 3.1185
49 3.1852 3.1756
50 3.2466 3.2357
51 3.3115 3.2988
52 3.3800 3.3653
53 3.4525 3.4352
54 3.5291 3.5088
55 3.6104 3.5863
56 3.6966 3.6678
57 3.7881 3.7536
58 3.8850 3.8437
59 3.9877 3.9382
60 4.0964 4.0374
61 4.2115 4.1414
62 4.3334 4.2505
63 4.4626 4.3650
64 4.5994 4.4850
65 4.7442 4.6108
66 4.8977 4.7425
67 5.0608 4.8804
68 5.2347 5.0250
69 5.4213 5.1766
70 5.6229 5.3356
71 5.8412 5.5020
72 6.0778 5.6755
73 6.3336 5.8552
74 6.6097 6.0404
75 6.9084 6.2302
Adjusted Age = Actual Age at Settlement (in years and completed months) less the
following number of months: [.6 times (Birth Year - 1915)] rounded to the
nearest integer.
Guaranteed purchase rates are 96% of the net single premium for the benefit
provided based on the unprojected 1994 Group Annuity Reserving Table for females
with interest at 2%.
P-GB-C-IRAMFVA(NBR).19
CONTRACT NUMBER: VXX,XXX
CONTRACTHOLDER: ABC SCHOOL
DATE OF ISSUE: JANUARY 1, 1999
CONTRACT DATE: JANUARY 1, 1999
FIRST CONTRACT ANNIVERSARY: JANUARY 1, 2000
American United Life Insurance Company (AUL) issues this contract in
consideration of the Contractholder's application and its payment of
Contributions to AUL. When used in this contract, "we," "us" or "our" refer to
AUL and "you" or "your" refer to the Contractholder.
All provisions and conditions stated on this and subsequent pages are part of
this contract.
This contract is signed for AUL at its Home Office in Indianapolis, Indiana. Our
mailing address is P.O. Box 368, Indianapolis, Indiana 46206-0368.
NOTICE OF TEN DAY RIGHT TO EXAMINE CONTRACT
Please read this contract carefully. You may return the contract for any reason
within ten days after receiving it. If returned, the contract will be considered
void from the beginning and any Contributions will be refunded.
AMERICAN UNITED LIFE INSURANCE COMPANY
By /s/ Jerry D. Semler
Chairman of the Board,
President, & Chief Executive Officer
Attest
/s/ William R. Brown
Secretary
AUL American Series Contract
Guaranteed Benefit Employer-Sponsored TDA Multiple-Fund Group Variable Annuity
(SBR,MBR,NBR)
Current Interest Credited
Nonparticipating
ACCUMULATION UNITS IN AN INVESTMENT ACCOUNT UNDER THIS CONTRACT MAY INCREASE OR
DECREASE IN VALUE ACCORDING TO THE INVESTMENT PERFORMANCE OF THE UNDERLYING
INVESTMENTS HELD BY THE INVESTMENT ACCOUNT. THE VALUE OF SUCH ASSETS AND
ACCUMULATION UNITS IS NOT GUARANTEED. SECTION 4 OF THIS CONTRACT EXPLAINS THE
VALUATION OF SUCH ASSETS AND ACCUMULATION UNITS.
If you have questions concerning your contract, or wish to register a complaint,
you may reach us by calling 1-800-338-9189.
P-GB-K-ERTDAMFVA
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1 - DEFINITIONS 3
SECTION 2 - ADMINISTRATION OF PARTICIPANT ACCOUNTS 6
2.1----- How Contributions Are Handled
2.2----- Transfers from Other Retirement Programs
2.3----- Reallocation of Participant Accounts
2.4----- Excess Contributions
2.5----- Transfers from Other Contracts
SECTION 3 - OPERATION OF FIXED INTEREST ACCOUNT 7
3.1----- Allocations to Participant Accounts
3.2----- Provision of Guaranteed Rates for Interest Pockets
3.3----- Renewal of Guaranteed Rates
3.4----- Minimum Rate Guarantee
3.5----- Payout Upon Rejection of Declared Guaranteed Rate
3.6----- Allocation of Withdrawals
SECTION 4 - VALUATION OF INVESTMENT ACCOUNTS 8
4.1----- Operation of Investment Accounts
4.2----- Valuation of Mutual Funds
4.3----- Accumulation Units
4.4----- Value of Accumulation Units
4.5----- Determining the Net Investment Factor
4.6----- Valuing Participant Accounts
SECTION 5 - BENEFIT PAYMENTS AND TRANSFERS 9
5.1----- General Withdrawal Provisions
5.2----- Plan Benefit Payments
5.3----- Other Cash Benefits
5.4----- Transfers Between Investment Options
5.5----- Minimum Amounts
5.6----- Maximum Amounts
SECTION 6 - ANNUITIES 13
6.1----- Annuity Purchases
6.2----- Annuity Options
6.3----- Determining Annuity Amount
6.4----- Proof of Age and Survival; Minimum Payments
6.5----- Annuity Certificates
P-GB-K-ERTDAMFVA.1
<PAGE>
SECTION 7 - MORTALITY AND EXPENSE RISK CHARGES
AND ADMINISTRATIVE CHARGES 14
7.1----- Investment Account Mortality and Expense Risk Charges
7.2----- Variable Investment Plus (VIP) Credit Factor
7.3----- Mutual Fund or Portfolio Expense
7.4----- Other Charges
7.5----- Taxes
7.6----- Reduction or Waiver of Charges
SECTION 8 - CONTRACT MODIFICATIONS 15
8.1----- Mutual Amendment
8.2----- Rates and Section 7 Charges
8.3----- Conformance with Law
8.4----- Our Right to Initiate Changes
8.5----- Prohibited Amendments
SECTION 9 - TERMINATION OF CONTRACT 16
9.1----- Termination by You
9.2----- Payment Upon Termination by You
9.3----- Termination by Us
9.4----- Payment Upon Termination by Us
9.5----- Indemnification Required
9.6----- Effect on Contract Obligations
SECTION 10 - GENERAL PROVISIONS 17
10.1----- Ownership
10.2----- Entire Contract
10.3----- Benefit Determinations
10.4----- Recordkeeping Services
10.5----- Representations and Warranties
10.6----- Contractholder Representative; Misstatement of Data
10.7----- Requirement for Writing
10.8----- Quarterly Statement of Account Value
10.9----- Conformity with Law
10.10---- Sex and Number
10.11---- Facility of Payment
10.12---- Voting
10.13---- Acceptance of New Participants or Contributions
10.14---- AUL's Annual Statement
10.15---- AUL's Annual Meeting
10.16---- Nonforfeitability and Nontransferability
TABLE OF GUARANTEED IMMEDIATE ANNUITIES 20
TABLE OF INVESTMENT ACCOUNTS 21
P-GB-K-ERTDAMFVA.2
<PAGE>
SECTION 1 - DEFINITIONS
1.1 "Account Value" for a Participant Account as of a date is:
(a) that account's balance in the Fixed Interest Account (FIA) on that
date; plus
(b) the value of that account's Accumulation Units in each Investment
Account on that date.
1.2 "Accumulation Unit" is a valuation device used to measure increases in and
decreases to the value of any Investment Account.
1.3 "Annuity Commencement Date" is the first day of the month an annuity begins
under this contract. This date may not be later than the date a
Participant's periodic benefits are required to commence under the Code.
1.4 "Business Day" is any day both the New York Stock Exchange and our Home
Office are open for the general conduct of business.
1.5 "Code" means the Internal Revenue Code of 1986, as amended, and any
applicable regulations or rulings thereunder.
1.6 The "First Contract Anniversary" is listed on the contract face page.
Subsequent "Contract Anniversaries" are on the same day of each subsequent
year.
1.7 "Contract Quarter" is each of the four successive three-month periods in a
Contract Year.
1.8 The first "Contract Year" starts on the Contract Date and ends on the day
before the First Contract Anniversary. Each subsequent Contract Year starts
on a Contract Anniversary and ends on the day before the next Contract
Anniversary.
1.9 "Contributions" are amounts paid to us, pursuant to the Plan, which we
credit to a Participant Account. Contributions include amounts transferred
from another AUL group annuity contract. The following types of
Contributions are credited to subaccounts under the Participant Accounts:
(a) "Elective Deferrals," which means, with respect to any taxable year,
any Contribution made under a salary reduction agreement. A
Contribution made under a salary reduction agreement is not treated as
an Elective Deferral if, under the salary reduction agreement, the
Contribution is made pursuant to a one-time irrevocable election made
by the Participant at the time of initial eligibility to participate
in the agreement, or is made pursuant to a similar arrangement
involving a one-time irrevocable election specified in Regulations
issued under the Code.
(b) "Employee Mandatory Contributions," which means Contributions made
under a salary reduction agreement pursuant to a one-time irrevocable
election made by the Participant at the time of initial eligibility to
participate in the agreement, or made
P-GB-K-ERTDAMFVA.3
<PAGE>
pursuant to a similar arrangement involving a one-time irrevocable
election specified in Regulations issued under the Code.
(c) "Employer Contributions," which means Contributions made by the
Participant's employer that are not made pursuant to (a) or (b) above.
1.10 "Excess Contributions" are Contributions in excess of the applicable Code
limits.
1.11 "Fixed Interest Account" or "FIA" is the portion of our general asset
account as described in Section 3, to which Contributions may be allocated
for accumulation at the Guaranteed Rates.
1.12 "Guaranteed Rates" are the guaranteed annual effective rates of interest we
credit to each Interest Pocket. A Guaranteed Rate may be modified only as
described in Section 3.3.
1.13 "Home Office" is our principal office in Indianapolis, Indiana. For
anything to be "received by AUL," it must be received at our Home Office.
1.14 "Interest Pocket" means a tracking method which associates funds deposited
into the FIA over a specific time period with a specific Guaranteed Rate,
as described in Section 3. After the guaranteed period provided in Section
3.3 has elapsed, we may consolidate two or more Interest Pockets in
conjunction with the announcement of new Guaranteed Rates.
1.15 "Investment Account" means each distinct portfolio established within our
Variable Account and identified in the Table of Investment Accounts in this
contract. Amounts allocated to any Investment Account are invested in the
shares of the corresponding Mutual Fund or Portfolio identified in the
Table of Investment Accounts. Our "Variable Account" is a separate account
we maintain under Indiana law which is called the AUL American Unit Trust
and which is registered under the Investment Company Act of 1940 as a unit
investment trust.
1.16 "Investment Option" is the FIA or any Investment Account. We reserve the
right to provide other Investment Options under this contract at any time.
1.17 "Mutual Fund" means any diversified, open-end, management company made
available by us, and listed in the Table of Investment Accounts.
1.18 "Participant" is any person participating in the Plan that has a
Participant Account.
1.19 "Participant Account" is an account under this contract for each
Participant. Each Participant Account may have subaccounts for each type of
Contribution. We credit Contributions to Participant Accounts and
Contribution-type subaccounts as you direct.
1.20 "Plan" means the Plan Sponsor's Code Section 403(b) plan that invests in
this contract.
1.21 "Plan Sponsor" is ABC School.
1.22 "Portfolio" is a portfolio established within a particular Mutual Fund, as
described in the Mutual Fund's current prospectus.
P-GB-K-ERTDAMFVA.4
<PAGE>
1.23 "Valuation Periods" start at the close of each Business Day and end at the
close of the next Business Day.
1.24 The "Withdrawal Charge" is a percentage of the Account Value withdrawn
under this contract. The Withdrawal Charge will not apply to Account Values
withdrawn to provide a benefit payment or an annuity as described in
Sections 5.2 and 6.1, respectively. The percentage varies by the Contract
Year in which a withdrawal is made. The Withdrawal Charge percentage is as
follows:
During Contract Year Percentage
-------------------- ----------
1 3
2 2
3 1
Thereafter 0
In no event will the cumulative total of all Withdrawal Charges, including
those previously assessed against any amount withdrawn from a Participant
Account, exceed 9% of total Contributions allocated to that Participant
Account.
1.25 "Withdrawal Value" is a Participant's Account Value, less any Withdrawal
Charge.
P-GB-K-ERTDAMFVA.5
<PAGE>
SECTION 2 - ADMINISTRATION OF PARTICIPANT ACCOUNTS
2.1 How Contributions Are Handled: Contributions we receive are credited to the
appropriate Contribution-type subaccounts of each Participant Account, as
you direct in your allocation instructions. A Participant's initial
Contribution is allocated to the Participant Account by the second Business
Day after we (1) receive the initial Contribution or, if later, (2) receive
all data necessary to complete the allocation (including data required to
establish the Participant Account, the amount of the Participant's
Contribution, and Investment Option elections. Subsequent Contributions are
allocated to the Participant Account on the Business Day we (1) receive
that Contribution or, if later, (2) receive all data necessary to complete
the allocation.
If we do not receive the data required to establish a Participant Account
and instructions regarding the amount of a Contribution for the Participant
within 5 Business Days after we first receive that Contribution, we will
return that Contribution to you unless you consent to us retaining that
Contribution until the earlier of (i) the date we receive such data and
instructions and, therefore, can properly allocate that Contribution to the
Participant Account or (ii) 25 days from the date we receive that
Contribution.
If we receive the data required to establish a Participant Account and
instructions regarding the amount of a Contribution for the Participant,
but we do not receive Investment Option elections for that Participant, the
Contribution is allocated to a suspense account. The suspense account earns
interest at the Guaranteed Rate for Contributions received on the same
date. When we receive all required data, amounts in the suspense account,
plus interest, are transferred to the appropriate Investment Option for
each designated Contribution-type.
Participant Accounts may be allocated to Investment Options in any
increments acceptable to us. Investment Option elections remain in effect
until changed by you. A change in Investment Option elections is made by
giving us new Investment Option elections.
2.2 Transfers from Other Retirement Programs: If permitted by the Plan, we may
accept amounts transferred from other Code Section 403(b) funding vehicles.
Such transferred amounts, as identified by you, are credited to a rollover
subaccount, under the appropriate Participant Account.
2.3 Reallocation of Participant Accounts: You may direct us to reallocate all
or a portion of the Account Value of any Participant Account among other
Participant Accounts. You must certify that such reallocation is in
accordance with the Plan.
2.4 Excess Contributions: On receipt of instructions from you, we will withdraw
Excess Contributions, plus gains and minus losses, from a Participant
Account and return them to the Participant, or as you direct. Such
instructions must state the amount to be returned and certify that such
Contributions are Excess Contributions and that such return is permitted by
the Plan and the Code. A return of Excess Contributions is treated like a
Plan benefit payment, under Section 5.2.
No Participant is permitted to have elective deferral contributions (within
the meaning of Code Section 402(g)(3)) made during a calendar year under
this contract, or under any other plans, contracts, or arrangements
maintained by his employer, in excess of the dollar limitation in effect
under Code Section 402(g)(1) and any Regulations issued thereunder for
taxable years beginning in such calendar year.
2.5 Transfers from Other Contracts: We may require amounts transferred to a
Participant Account from other AUL group annuity contracts to be deposited
in a suspense account. We will advise you if this limitation applies before
accepting such a transfer.
P-GB-K-ERTDAMFVA.6
<PAGE>
SECTION 3 -- OPERATION OF FIXED INTEREST ACCOUNT
3.1 Allocations to Participant Accounts: We allocate each Participant's
Contributions in the FIA based on the information you provide.
3.2 Provision of Guaranteed Rates for Interest Pockets: At least 10 days in
advance of each calendar quarter, we will declare a Guaranteed Rate for the
Interest Pocket for that quarter. All Contributions or transfers hereunder
which are allocated to the FIA during that quarter will earn interest at
that Guaranteed Rate until that quarterly pocket matures on the second
January 1 following the quarter in which that pocket was established.
3.3 Renewal of Guaranteed Rates: Those quarterly Interest Pockets which mature
at the same time will be combined into an annual renewal Interest Pocket.
Funds associated with that annual renewal Interest Pocket will earn
interest for a full year at the Guaranteed Rate declared for that pocket. A
new Guaranteed Rate for each annual renewal Interest Pocket will be
declared at least 30 days prior to every January 1 for the 5 years
following the establishment of that pocket. An annual renewal Interest
Pocket will mature on January 1 of the sixth year following its
establishment, when it will be combined into one annual portfolio Interest
Pocket. Funds associated with that annual portfolio Interest Pocket will
earn interest for a full year at the Guaranteed Rate for that pocket, which
will be declared at least 30 days prior to every January 1.
You may accept the declared Guaranteed Rate for an annual renewal or
portfolio Interest Pocket either by continuing to allocate Contributions to
the FIA or by otherwise notifying us of your acceptance. You may reject the
declared rate for that pocket by notifying us. This acceptance or rejection
must occur after the declaration of the rate for that pocket and before the
next January 1, when the rate becomes effective. If you neither
specifically accept nor reject the declared Guaranteed Rate for the new
pocket by the deadline, you will be deemed to have accepted the rate. If
you reject the declared Guaranteed Rate for the new annual renewal or
portfolio pocket, the aggregate Withdrawal Value of that pocket will be
paid out as described in Section 3.5.
3.4 Minimum Rate Guarantee: No Guaranteed Rate may be less than an annual
effective interest rate of 3.00%.
3.5 Payout Upon Rejection of Declared Guaranteed Rate: If you reject the
Guaranteed Rate for an Interest Pocket we announce under Section 3.3, the
aggregate Withdrawal Value of that Interest Pocket is paid to you in 6
equal annual installments. The initial installment is calculated on the
date you reject the declared rate and is paid within 7 days from that date.
Subsequent installments are paid on the anniversary of the first
installment payment date. During the installment payment period, interest
is credited to amounts in the terminating pocket at a rate equal to the
current average Guaranteed Rate (as determined on the first installment
payment date) of all your Interest Pockets, less 1%. The minimum rate
guarantee provided in Section 3.4 applies to the interest credited under
this Section. Interest is paid with each installment.
3.6 Allocation of Withdrawals: Withdrawals or transfers from the FIA are on a
first-in/first-out basis, unless the Account or a terminating pocket is
being paid out to you in installments. All amounts paid during an
installment payout period are paid on a pro-rata basis.
P-GB-K-ERTDAMFVA.7
<PAGE>
SECTION 4 - VALUATION OF INVESTMENT ACCOUNTS
4.1 Operation of Investment Accounts: All income, gains, or losses, realized or
unrealized, from assets held in any Investment Account are credited to or
charged against the applicable Investment Account without regard to our
other income, gains, or losses. Investment Account assets are not
chargeable with liabilities arising out of any other business we may
conduct.
4.2 Valuation of Mutual Funds: The current prospectus for each Mutual Fund
describes how that Mutual Fund's assets are valued.
4.3 Accumulation Units: We credit amounts allocated to an Investment Account in
Accumulation Units. The Accumulation Unit value used is the one for the
Valuation Period when we allocate the amount to the Investment Account.
4.4 Value of Accumulation Units: We generally establish the Accumulation Unit
value for a new Investment Account at $1.00 on the date the first deposit
is made to the Investment Account. The value of an Accumulation Unit for
any later Valuation Period equals the value of an Accumulation Unit for the
immediately preceding Valuation Period times the Net Investment Factor for
the current Valuation Period. We determine the Accumulation Unit value
before giving effect to any additions, withdrawals, or transfers in the
current Valuation Period.
4.5 Determining the Net Investment Factor: We determine the Net Investment
Factor for each Investment Account by dividing (a) by (b), and then
subtracting (c), where:
(a) is:
(1) the net asset value of a Mutual Fund or Portfolio share at the
end of the current Valuation Period, plus
(2) any dividend or other distribution paid on each Mutual Fund or
Portfolio share during such Valuation Period, plus or minus
(3) any credit or charge for taxes paid or reserved by us during the
Valuation Period that we determine are attributable to the
Investment Account;
(b) is the net asset value of each Mutual Fund or Portfolio share held in
the Investment Account at the end of the prior Valuation Period; and
(c) is a daily charge factor we determine, as described in Section 7.1.
4.6 Valuing Participant Accounts: We determine the Account Value in an
Investment Account by multiplying the Accumulation Units in each
Participant Account by the Accumulation Unit value. The Accumulation Unit
value of an Investment Account changes only on a Business Day.
P-GB-K-ERTDAMFVA.8
<PAGE>
SECTION 5 - BENEFIT PAYMENTS AND TRANSFERS
5.1 General Withdrawal Provisions: Subject to the following provisions of this
Section, and prior to notification of contract termination, you may direct
us to withdraw all or a portion of a Participant's Account Value pursuant
to Sections 5.2 and 5.3 to provide a cash payment to you to pay Plan
benefits.
(a) Amounts attributable to amounts held as of December 31, 1988 under
another Code Section 403(b) annuity contract may be withdrawn to
provide such benefits.
(b) Amounts attributable to Contributions made other than pursuant to a
salary reduction agreement (within the meaning of Code Section
402(g)(3)(C)) may be withdrawn to provide such benefits.
(c) Amounts attributable to Contributions made pursuant to a salary
reduction agreement (within the meaning of Code Section 402(g)(3)(C))
may be withdrawn to provide such benefits, provided that the
withdrawal is made to provide a loan or that any distribution of such
amount shall not occur until the Participant has either attained age
59 1/2, separated from service, died, become totally disabled (as
defined by the Plan), or experienced a hardship (as defined by the
Plan). However, in the case of a hardship withdrawal, any gain
credited to such Contributions may not be withdrawn.
(d) Withdrawal of any amount from this contract which is transferred
directly by us pursuant to your or Participant instructions to another
tax-deferred annuity funding vehicle under applicable IRS rules and
regulations is not the provision of a Plan benefit for purposes of
Section 5.2, but instead is a Contract termination as to that amount
for that Participant; and any such withdrawal shall be subject to
application of the Withdrawal Charge pursuant to Section 5.3. You
hereby grant to a Participant the right to direct the withdrawal and
direct transfer of his voluntary Elective Deferrals (as determined by
you) to another tax-deferred annuity funding vehicle.
(e) If, as provided in Internal Revenue Code Regulation Section
1.403(b)-2T Q&A-2, the distributee of any eligible rollover
distribution elects to have the distribution paid directly to an
eligible retirement plan (as defined in Q&A-1 of that Section) and
specifies the eligible retirement plan to which the distribution is to
be paid, then the distribution shall be paid to that eligible
retirement plan in a direct rollover.
(f) We are not responsible for determining a Participant's compliance with
the requirements above. Any withdrawal request submitted by you must
include certification as to the purpose of the withdrawal. You assume
full responsibility for determining whether any withdrawal is
permitted under applicable law and under the terms of a particular
Plan. We may rely solely upon your representations made in the
withdrawal request.
(g) Withdrawals from a Participant Account's share of any Investment
Option may not be made in an amount less than the smaller of $500 or
the Participant Account's entire
P-GB-K-ERTDAMFVA.9
<PAGE>
share of the Investment Option. If a withdrawal reduces the
Participant Account's share of an Investment Option to less than $500,
such remaining share shall also be withdrawn.
(h) A withdrawal request is effective, and the Account Value to be applied
pursuant to Sections 5.2, 5.3, or 5.4 is determined, on the Business
Day that we receive a proper withdrawal request (or due proof of
death, if received later).
(i) We will pay any cash lump-sum to you or to whomever you direct within
7 days from the appropriate Business Day as determined in Subsection
(h) above, except as we may be permitted to defer such payment of
amounts withdrawn from the Variable Account in accordance with
appropriate provisions of the federal securities laws. We reserve the
right to defer the payment of amounts withdrawn from the FIA for a
period of up to 6 months after we receive the withdrawal request.
(j) Withdrawals from a Participant Account's share of the FIA will be made
on a first-in/first- out basis under Section 3.6.
5.2 Plan Benefit Payments: You will advise us of any person for whom a payment
is due under the Plan, including the nature and amount of such payment,
before the date such payment is due or as soon thereafter as is
practicable.
(a) Subject to the limitations provided in Section 5.1 and Subsection (b)
below, prior to notification of contract termination, you may direct
us to withdraw all or a portion of a Participant's Account Value
(subject to Section 7.5) to provide a cash payment to you to pay Plan
benefits (other than full or partial Plan termination benefits
described in Section 5.3) for retirement, death, disability,
termination of employment, hardships, loans, required minimum
distribution benefits pursuant to Code Section 401(a)(9), or benefits
upon attainment of age 59 1/2 or as otherwise allowed by the Code
(provided that such benefit upon attainment of age 59 1/2 is paid in a
taxable distribution to the Participant). Such a withdrawal is not
subject to a Withdrawal Charge. Any Plan benefit cash payment
requested for a Participant who terminates employment on or after the
effective date of Plan termination is deemed to be a Plan termination
benefit, and is subject to a Withdrawal Charge pursuant to Section
5.3. Additionally, if 20% or more of the Participants terminate
employment within the same Contract Year, any Plan benefit cash
payment for such a terminating Participant is subject to a Withdrawal
Charge pursuant to Section 5.3.
(b) Regarding death benefits specifically, notwithstanding the provisions
of Section 9, upon receipt from you of instructions and of due proof
of the Participant's (and, if applicable, the beneficiary's) death
prior to the date the Participant Account is closed, we will apply the
Account Value (subject to Section 7.5) of the Participant Account for
the purpose of providing a death benefit under the Plan. The death
benefit will be paid to the Participant's beneficiary according to the
method of payment elected by the beneficiary (unless such method of
payment was previously elected by the Participant). The Participant's
beneficiary may also designate a beneficiary. This death benefit will
be payable:
P-GB-K-ERTDAMFVA.10
<PAGE>
(1) in a single sum or other method not provided in (2) below;
provided, however, that the entire Account Value (subject to
Section 7.5) must be paid to the beneficiary on or before
December 31 of the calendar year which contains the fifth
anniversary of the Participant's death, or
(2) as an annuity in accordance with the Annuity Options shown in
Section 6.2 over a period not to exceed the life or life
expectancy of the beneficiary. If the beneficiary is not the
Participant's surviving spouse, the annuity must begin on or
before December 31 of the calendar year immediately following the
calendar year in which the Participant died. If the beneficiary
is the Participant's surviving spouse, the annuity need not begin
before December 31 of the calendar year in which the Participant
would have attained age 70 1/2.
If a Participant dies on or after his Annuity Commencement Date, any
interest remaining under the Annuity Option selected will be paid at
least as rapidly as prior to the Participant's death.
Any withdrawal request under this Section must certify the purpose of the
request.
5.3 Other Cash Benefits: Prior to notification of contract termination, you may
direct us to make a cash payment from a Participant Account to you for the
purpose of providing Plan benefits not specifically described in Section
5.2. The Withdrawal Charge will be applied under this Section to any
withdrawal to pay a Plan benefit payable because of the termination or
partial termination of the Plan (as determined under applicable IRS
guidelines and judicial precedent), or if the underlying reason for payment
of such benefit results in the termination or partial termination of the
Plan.
If the entire Account Value is withdrawn, the amount paid equals the
Withdrawal Value, subject to any charges described in Section 7. In all
other instances, the Account Value is reduced by an amount sufficient to
make the payment requested and to cover the Withdrawal Charge and any
charges described in Section 7.
Notwithstanding the previous provisions of this paragraph, in the first
Contract Year in which a Participant Account is established, you may
withdraw from that Participant Account up to 10% of the sum of the Account
Value of that Participant Account (determined as of the later of the
Contract Date or the Contract Anniversary immediately preceding the request
for the withdrawal) plus Contributions made for that Participant during
that Contract Year, without application of the Withdrawal Charge. In the
next succeeding Contract Year, you may also withdraw from that Participant
Account up to 10% of the sum of the Account Value of that Participant
Account (determined as of the Contract Anniversary immediately preceding
the request for the withdrawal) plus Contributions made for that
Participant during that Contract Year, without application of the
Withdrawal Charge. In any subsequent Contract Year, you may withdraw from
that Participant Account up to 10% of the Account Value of that Participant
Account (determined as of the Contract Anniversary immediately preceding
the request for the withdrawal) without application of the Withdrawal
Charge.
P-GB-K-ERTDAMFVA.11
<PAGE>
5.4 Transfers between Investment Options: You may direct us to transfer amounts
between Investment Options, or to initiate Participant-directed transfers
between Investment Options. Transfers are effective on the Business Day we
receive the transfer direction. Transfer directions for a Participant
Account may be made daily on any Business Day. We will make the transfer as
requested within 7 days from the date we receive the request, except as we
may be permitted to defer the transfer of amounts withdrawn from the
Variable Account in accordance with appropriate provisions of the federal
securities laws. We reserve the right to defer a transfer of amounts from
the FIA for a period of up to 6 months after we receive the transfer
request.
Notwithstanding the previous paragraph, once a transfer from the FIA has
been made for a Participant, a transfer to the FIA for that Participant is
permitted only after 90 days have elapsed since the date of the last
transfer from the FIA for that Participant. If you make available to
Participants the FIA and any of the Investment Accounts marked with an
asterisk in the Table of Investment Accounts, the 90-day transfer
restriction discussed in the previous sentence does not apply, and Section
5.6 does apply.
5.5 Minimum Amounts: The minimum amount you or a Participant may withdraw or
transfer from an Investment Option is $500 or, if less, the Participant's
entire balance in that Investment Option. If a withdrawal or transfer
reduces the Participant balance in an Investment Option to less than $500,
the entire balance is withdrawn or transferred.
5.6 Maximum Amounts: If you make available to Participants the FIA and any of
the Investment Accounts marked with an asterisk in the Table of Investment
Accounts, no more than 20% of a Participant's FIA Account Value on the
later of the Contract Date or the Contract Anniversary immediately
preceding the request for transfer may be transferred from the FIA during
any Contract Year. However, if the Participant's FIA Account Value is less
than $2,500 on the later of the Contract Date or the Contract Anniversary
immediately preceding the request for transfer, the amount transferrable
from the FIA for that Participant for that Contract Year is the minimum
amount specified in Section 5.5.
P-GB-K-ERTDAMFVA.12
<PAGE>
SECTION 6 - ANNUITIES
6.1 Annuity Purchases: Prior to notification of contract termination, you may
withdraw all or a portion of a Participant's Account Value (subject to
Section 7.5) to provide an annuity, reflecting Plan benefits. Such a
withdrawal is not subject to a Withdrawal Charge. On receipt of an annuity
purchase request, we transfer the entire Participant Account to a suspense
account. Such amounts remain in the suspense account until the Annuity
Commencement Date, when the full balance (including interest) is applied to
purchase the annuity.
Your annuity purchase request must specify the purpose for the annuity, the
election of an annuity option, Annuity Commencement Date, any contingent
annuitant or beneficiary, and any additional information we require. If the
Participant or any contingent annuitant dies before the Annuity
Commencement Date, the annuity election is cancelled.
The minimum amount which you may apply to purchase an annuity is $5,000.
6.2 Annuity Options: You may elect any optional form of annuity we offer at the
time of purchase. Available annuity options always include:
(a) Life Annuity. A monthly annuity is payable as long as the annuitant
lives, and ends with the last payment before the annuitant's death.
(b) Survivorship Annuity. A monthly annuity is payable as long as the
annuitant lives. After the annuitant's death, all or a portion of the
monthly annuity is paid to the contingent annuitant as long as the
contingent annuitant lives.
No annuity may have a certain period extending beyond the life expectancy
of a Participant or the joint life expectancy of a Participant and any
contingent annuitant, as determined on the Annuity Commencement Date.
6.3 Determining Annuity Amount: We compute the annuity amount using the factors
reflected in the Table of Guaranteed Immediate Annuities attached to this
contract. However, if our current single premium, nonparticipating,
immediate annuity rates for this class of group annuity contracts produces
a higher monthly annuity than the Table of Guaranteed Immediate Annuities,
then that more favorable annuity rate is applied.
6.4 Proof of Age and Survival; Minimum Payments: We may require proof of any
annuitant's or contingent annuitant's date of birth before commencing
payments under any annuity. We may also require proof that an annuitant or
contingent annuitant is living before making any annuity payment. If a
monthly annuity is less than our current established minimum payment, we
may make payments on a less-frequent basis or in a single sum.
6.5 Annuity Certificates: We issue to each person for whom an annuity is
purchased a certificate setting forth the annuity's amount and terms.
P-GB-K-ERTDAMFVA.13
<PAGE>
SECTION 7 - MORTALITY AND EXPENSE RISK CHARGES
AND ADMINISTRATIVE CHARGES
7.1 Investment Account Mortality and Expense Risk Charges: We deduct from the
average daily net assets of each Investment Account the daily equivalent of
an annual combined mortality risk charge and expense risk charge of 1.25%.
This charge is part of the Net Investment Factor, described in Section 4.5.
7.2 Variable Investment Plus (VIP) Credit Factor: We determine a VIP credit
factor each month by multiplying the portions of the aggregate month-end
Account Value in all Investment Accounts by the monthly equivalent of the
corresponding annual VIP credit factors in the table below. The sum of
these products is divided by the aggregate month-end Account Value in all
Investment Accounts. We multiply the resulting percentage by each
Participant's month-end Account Value in each Investment Account, and add
the resulting amount to the Participant's Account Value for that Investment
Account.
Aggregate Month-End Account Value
allocated to Investment Accounts Annual VIP Credit Factors
--------------------------------- -------------------------
First $750,000 0.00%
Next $750,000 0.20%
Next $1 million 0.35%
Next $2.5 million 0.65%
Next $5 million 0.75%
Over $10 million 0.85%
7.3 Mutual Fund or Portfolio Expense: A Mutual Fund or Portfolio deducts an
investment advisory fee and other expenses from its net asset value, as
described in its current prospectus. Amounts deducted may include
operational, organizational, and extraordinary expenses. Expenses vary from
year-to- year.
7.4 Other Charges: Due and unpaid charges for which the Plan is responsible,
and which the Plan Sponsor and you have otherwise agreed to in writing,
will be deducted from Participant Accounts on a pro-rata basis. These
charges include participant statement mailing fees, Form 5500 fees, annual
administrative fees, data reconciliation and reconstruction fees,
commissions, and contract application/installation fees for a takeover
Plan. Charges for which the Plan Sponsor (not the Plan) is responsible, and
which the Plan Sponsor has otherwise agreed to in writing, must be paid by
the Plan Sponsor. These charges include contract application/installation
fees for a new Plan.
7.5 Taxes: We may deduct charges equal to any premium tax we incur from the
balance applied to purchase an annuity or at such other time as premium
taxes are incurred by us. We may also deduct from Investment Accounts
reasonable charges for federal, state, or local income taxes we incur, that
are attributable to such Investment Accounts.
7.6 Reduction or Waiver of Charges: We may reduce or waive the Withdrawal
Charge or the charges discussed above, if the appropriate expenses
associated with the sale or administration of any contract are reduced, or
if a contract is sold covering our employees or directors, those of the AUL
American Series Fund, Inc., or to either's affiliates.
P-GB-K-ERTDAMFVA.14
<PAGE>
SECTION 8 - CONTRACT MODIFICATIONS
8.1 Mutual Amendment: You and we may agree to any change or amendment to this
Contract without the consent of any other person or entity. This contract
cannot be modified or amended, nor can any provision or condition be
waived, except by our written agreement, signed by a corporate officer.
Such authority may be delegated only by a written agreement signed by our
corporate officer.
8.2 Rates and Section 7 Charges: We may announce new Guaranteed Rates, as
described in Sections 3.2 and 3.3 (including the consolidation of existing
Interest Pockets). However, as provided in Sections 3.2 and 3.3, we may not
change the declared Guaranteed Rate applicable to an established Interest
Pocket during the guaranteed period. We may also modify the charge levels
in Section 7, using the procedures of Section 8.4.
8.3 Conformance with Law: We may amend this contract at any time, without your
consent, or that of any other person or entity, if the amendment is
reasonably needed to comply with, or give you or Participants the benefit
of, any provisions of federal or state laws. Any such amendment will be
delivered to you prior to its effective date.
8.4 Our Right to Initiate Changes: In addition to those amendments permitted by
Sections 8.2 and 8.3, we may initiate an additional provision or
modification of any other provision of this contract (including the
addition of a charge for transfers between Investment Options) by giving
you 60 days notice of such modification. Any such modification is effective
without your affirmative assent.
8.5 Prohibited Amendments:
(a) Nothwithstanding our right to initiate changes under Section 8.4, we
may not initiate changes to the minimum Guaranteed Rate specified in
Section 3.4, our obligation to set Guaranteed Rates for the period of
time specified in Sections 3.2 and 3.3, the payment upon rejection of
a declared Guaranteed Rate specified in Section 3.5, the payment
provisions upon contract termination specified in Section 9.2, or the
Table of Guaranteed Immediate Annuities.
(b) No modification to this contract may change the terms of a previously
purchased annuity or reduce any interest guarantee applicable to
Participant Account balances held in the FIA on the modification's
effective date.
P-GB-K-ERTDAMFVA.15
<PAGE>
SECTION 9 - TERMINATION OF CONTRACT
9.1 Termination by You: You may terminate this contract by giving us notice.
Such termination is effective on the Business Day that we receive your
notice.
9.2 Payment Upon Termination by You: Upon termination by you, you may elect one
of the following options:
(a) Transfer to Another Contract: You may transfer the aggregate Account
Value of all Participant Accounts, or you may permit a Participant to
transfer his Account Value, to any group annuity contract which we may
make available. Any such amounts are transferred on the termination
effective date.
(b) Payment of Investment Accounts in Lump-Sum and FIA in Installments:
You may have the aggregate Investment Account Withdrawal Value of all
Participant Accounts paid to you in a lump-sum, with the FIA paid in 6
equal annual installments. The aggregate Investment Account Withdrawal
Value will be determined on the termination effective date and paid
within 7 days from the termination effective date, except as we may be
permitted to defer payment in accordance with appropriate provisions
of the federal securities laws. The initial FIA installment is
calculated on the termination effective date and paid within 7 days
from the termination effective date. Subsequent installments are paid
on the anniversary of the termination effective date. During the
installment payment period, interest is credited under the terms
described in Section 3.5.
9.3 Termination by Us: We have the right, subject to applicable state law, to
terminate any Participant Account established under this contract at any
time during the Contract Year if the Account Value of the Participant
Account is less than $200 for the first Contract Year in which a
Contribution is made for the Participant, and $400 for any subsequent
Contract Year, and at least 6 months have elapsed since the last previous
Contribution to the contract. If we elect to terminate a Participant
Account, the termination will be effective on the date 6 months following
the date we give notice to you and the Participant that the Participant
Account is to be terminated, provided that any Contributions made during
the 6-month period are insufficient to raise the Account Value up to the
minimum level.
9.4 Payment Upon Termination by Us: As of the effective date of termination of
a Participant Account by us, we may elect to have a single sum equal to the
Account Value of the Participant Account on the effective date of
termination paid to you within 7 days from that date. Any such payment is
in full settlement of the Participant Account under this contract and in
lieu of any other payment under its terms.
9.5 Indemnification Required: Payments or transfers under Section 9.2 are in
full settlement of our obligations under this contract. Prior to making
such payments or transfers, we may require you and the Plan Sponsor to
indemnify and hold us harmless from any and all losses, claims, or demands
that may later be asserted against us in connection with the making of such
payment or transfer.
9.6 Effect on Contract Obligations: Any annuities purchased prior to
notification of contract termination are unaffected by a termination. We
may refuse further Contributions at any time after a termination notice has
been given. If we have been providing recordkeeping services, such services
stop on the termination effective date. This contract terminates
automatically if no amounts remain in either the FIA or any Investment
Account.
P-GB-K-ERTDAMFVA.16
<PAGE>
SECTION 10 - GENERAL PROVISIONS
10.1 Ownership: You own this contract. No other person or entity has any right,
title, or interest in this contract or to amounts received or credited
under it until such amounts are made available to them by you. All amounts
received or credited under this contract become our property. We are
obligated to make only the payments or distributions specified in this
contract.
10.2 Entire Contract: This contract and your application is the entire agreement
between you and us. We are not a party to, nor bound by, a Plan, trust,
custodial agreement, or other agreement, or any amendment or modification
to any of the same. We are not a fiduciary under this contract or under any
such Plan, trust, custodial agreement, or other agreement.
10.3 Benefit Determinations: You will furnish us whatever information is
necessary to establish the eligibility for and amount of annuity or other
benefit due. We rely solely on your instructions and certifications with
respect to Participant benefits. You are fully responsible for determining:
(a) whether benefit payments are permitted under applicable law and the
Plan and
(b) the existence or amount of Excess Contributions (plus gains or minus
losses thereon), or that returns of Excess Contributions are permitted
by the Plan and the Code.
We may rely on your or your designee's statements or representations in
honoring any benefit payment request.
10.4 Recordkeeping Services: We generally provide Plan recordkeeping services
when all of a Plan's funds are held under this contract. We may decline to
provide Plan recordkeeping services if you elect to allocate Plan funds to
investments other than this contract, or if your Plan's recordkeeping
practices, in our judgment, impose a substantial administrative or
financial burden on us.
10.5 Representations and Warranties: You and we mutually represent and warrant,
each to the other, that each is fully authorized to enter into this
contract and that this contract is a valid and binding obligation and that
the execution of this contract does not violate any law, regulation,
judgment, or order by which the representing party is bound. In addition,
you represent and warrant to us that:
(a) the Plan is qualified under Code Section 403(b);
(b) the execution of this contract has been authorized by the Plan
fiduciary responsible for Plan investment decisions; and
(c) the execution or performance of this contract does not violate any
Plan provision or any law, regulation, judgment, or order by which the
Plan is bound.
We do not make any representation or warranty regarding the federal, state,
or local tax status of this contract, any Participant Account, or any
transaction involving this contract.
P-GB-K-ERTDAMFVA.17
<PAGE>
10.6 Contractholder Representative; Misstatement of Data: You may designate a
representative to act on your behalf under Section 2 or 3 or to receive any
payment under Sections 5 or 9. We may rely on any information you, your
designee, or a Participant furnish. We need not inquire as to the accuracy
or completeness of such information. If any essential data pertaining to
any person has been omitted or misstated, including, but not limited to, a
misstatement of an annuitant's or contingent annuitant's age, we will make
an equitable adjustment to provide the annuity or other benefit determined
using correct data.
10.7 Requirement for Writing: When reference is made to you, your designee, or a
Participant making a request or giving notice, instruction, or direction,
such request, notice, instruction, or direction must be in writing, or in a
form otherwise acceptable to us, and is effective when we receive it.
10.8 Quarterly Statement of Account Value: Reasonably promptly after the end of
each Contract Quarter, we will prepare a statement of the Account Value for
each Participant Account.
10.9 Conformity with Law: Any benefit payable under this contract shall not be
less than the minimum benefit required by the insurance laws of the state
in which the contract is delivered. Language in this contract referring to
state or federal tax, securities, or other statutes or rules do not
incorporate within this contract any such statutes or rules.
10.10 Sex and Number:
Whenever the context so requires, the plural includes the singular, the
singular the plural, and the masculine the feminine.
10.11 Facility of Payment:
If any Participant, contingent annuitant, or beneficiary is legally
incapable of giving a valid receipt for any payment, and no guardian has
been appointed, we may pay the person or persons who have assumed the care
and principal support of such Participant, contingent annuitant, or
beneficiary. We may also pay you directly or as you otherwise instruct. Any
such payment fully discharges us to the extent of such payment.
10.12 Voting:
We own all Mutual Fund or Portfolio shares held in an Investment Account.
We exercise the voting rights of such shares at all shareholder meetings on
all matters requiring shareholder voting under the Investment Company Act
of 1940 or other applicable laws. Our vote reflects instructions received
from persons having the voting interest in the shares, as follows:
(a) You have the voting interest under this contract. Unless otherwise
required by applicable law, the number of Mutual Fund or Portfolio
shares for which you may give voting instructions is determined by
dividing the aggregate Account Values in the affected Investment
Account by the net asset value of the Mutual Fund or Portfolio shares.
Fractional votes are counted. Our determination is made as of the date
used by the Mutual Fund or Portfolio to determine shareholders
eligible to vote.
(b) We vote shares proportionally, to reflect the voting instructions we
receive in a timely manner from you and from all other
contractholders. If no timely voting instructions are received from
you, we vote shares proportionally, to reflect the voting instructions
we received in a timely manner for all other contracts.
P-GB-K-ERTDAMFVA.18
<PAGE>
To the extent permitted by applicable law, we may vote shares in our own
right or may modify the above procedures to reflect changes in the law or
its interpretation.
We will provide prospectuses and other reports as required by applicable
federal law.
10.13 Acceptance of New Participants or Contributions:
We may refuse to accept new Participants or new Contributions at any time.
10.14 AUL's Annual Statement:
No provision of this contract controls, determines, or modifies any AUL
annual statement made to any insurance department, contractholder,
regulatory body, or other person. Nor does anything in such annual
statement control, determine, or modify the provisions of this contract.
10.15 AUL's Annual Meeting:
Unless otherwise notified, our regular annual meeting is held at our Home
Office on the third Thursday in February at 10 a.m. Elections for directors
are held at such annual meeting.
10.16 Nonforfeitability and Nontransferability:
The entire Withdrawal Value of the vested portion (as determined pursuant
to the Plan) of a Participant Account under this contract is nonfor
feitable at all times. No sum payable under this contract with respect to a
Participant may be sold, assigned, discounted, or pledged as collateral for
a loan or as security for the performance of an obligation or for any other
purpose to any person or entity other than AUL. In addition, to the extent
permitted by law, no such sum shall in any way be subject to legal process
requiring the payment of any claim against the payee.
P-GB-K-ERTDAMFVA.19
<PAGE>
TABLE OF GUARANTEED IMMEDIATE ANNUITIES
MONTHLY INCOME PER $1,000 OF ACCOUNT VALUE
10-YEAR CERTAIN
ADJUSTED AGE LIFE ANNUITY AND LIFE ANNUITY
45 2.9690 2.9632
46 3.0190 3.0124
47 3.0715 3.0641
48 3.1269 3.1185
49 3.1852 3.1756
50 3.2466 3.2357
51 3.3115 3.2988
52 3.3800 3.3653
53 3.4525 3.4352
54 3.5291 3.5088
55 3.6104 3.5863
56 3.6966 3.6678
57 3.7881 3.7536
58 3.8850 3.8437
59 3.9877 3.9382
60 4.0964 4.0374
61 4.2115 4.1414
62 4.3334 4.2505
63 4.4626 4.3650
64 4.5994 4.4850
65 4.7442 4.6108
66 4.8977 4.7425
67 5.0608 4.8804
68 5.2347 5.0250
69 5.4213 5.1766
70 5.6229 5.3356
71 5.8412 5.5020
72 6.0778 5.6755
73 6.3336 5.8552
74 6.6097 6.0404
75 6.9084 6.2302
Adjusted Age = Actual Age at Settlement (in years and completed months) less the
following number of months: [.6 times (Birth Year - 1915)] rounded to the
nearest integer.
Guaranteed purchase rates are 96% of the net single premium for the benefit
provided based on the unprojected 1994 Group Annuity Reserving Table for females
with interest at 2%.
P-GB-K-ERTDAMFVA.20
<PAGE>
TABLE OF INVESTMENT ACCOUNTS
The following Investment Accounts are made available to you under this contract.
By completing a form we require, you may restrict the Investment Accounts you
make available to your Participants. Amounts allocated to any Investment Account
identified below are invested in the shares of the corresponding Mutual Fund or
Portfolio listed below. The Investment Account marked with an asterisk (*) is
not available if your Plan uses the FIA and if you do not want the FIA 20%
annual transfer restriction provided in Section 5.6 to apply.
<TABLE>
<CAPTION>
<S> <C>
Investment Account Mutual Fund or Portfolio
- ------------------------------------------ ------------------------------------------
AUL American Aggressive Investor Portfolio AUL American Aggressive Investor Portfolio
AUL American Bond AUL American Bond
AUL American Conservative Investor AUL American Conservative Investor
Portfolio Portfolio
AUL American Equity AUL American Equity
AUL American Managed AUL American Managed
AUL American Moderate Investor Portfolio AUL American Moderate Investor Portfolio
AUL American Money Market * AUL American Money Market
AUL American Tactical Asset Allocation AUL American Tactical Asset Allocation
Portfolio Portfolio
Alger American Growth Alger American Growth
American Century VP Capital Appreciation American Century VP Capital Appreciation
Calvert Social Mid-Cap Growth Calvert Social Mid-Cap Growth
Fidelity VIP Equity-Income Fidelity VIP Equity-Income
Fidelity VIP Growth Fidelity VIP Growth
Fidelity VIP High Income Fidelity VIP High Income
Fidelity VIP Overseas Fidelity VIP Overseas
Fidelity VIP II Asset Manager Fidelity VIP II Asset Manager
Fidelity VIP II Contrafund Fidelity VIP II Contrafund
Fidelity VIP II Index 500 Fidelity VIP II Index 500
Janus Aspen Series Flexible Income Portfolio Janus Aspen Series Flexible Income Portfolio
Janus Aspen Series Worldwide Growth Janus Aspen Series Worldwide Growth
Portfolio Portfolio
PBHG Insurance Series Growth II PBHG Insurance Series Growth II
PBHG Insurance Series Technology PBHG Insurance Series Technology
and Communication and Communication
SAFECO Resource Series Trust Equity SAFECO Resource Series Trust Equity
Portfolio Portfolio
SAFECO Resource Series Trust Growth SAFECO Resource Series Trust Growth
Portfolio Portfolio
T. Rowe Price Equity-Income Portfolio T. Rowe Price Equity-Income Portfolio
</TABLE>
P-GB-K-ERTDAMFVA.21
<PAGE>
CONTRACT NUMBER VXX,XXX
CONTRACTHOLDER ABC SCHOOL
PARTICIPANT'S NAME JOHN DOE
SOCIAL SECURITY NUMBER 123-45-6789
American United Life Insurance Company hereby certifies that the Contractholder
and AUL have entered into a Multiple-Fund Group Variable Annuity Contract (the
Contract) in connection with the Contractholder's tax-deferred annuity Plan, and
that AUL has created an account in your name to receive Contributions from the
Contractholder for your benefit pursuant to the Contract. When used in this
certificate, "we," "us," or "our" refer to AUL.
The only parties to the Contract are the Contractholder and AUL. All rights and
benefits are determined in accordance with the provisions of the Contract.
Benefits under the Contract will be paid at the Contractholder's direction.
Any amendments to, or changes in, the Contract will be binding and conclusive on
you and your beneficiary.
This certificate is not itself the Contract, but is a certificate of
participation in the Contract.
AMERICAN UNITED LIFE INSURANCE COMPANY
/s/ William R. Brown
Secretary
GUARANTEED BENEFIT EMPLOYER-SPONSORED TDA MULTIPLE-FUND
GROUP VARIABLE ANNUITY CERTIFICATE
(SBR,MBR,NBR)
ACCUMULATION UNITS IN ANY INVESTMENT ACCOUNT UNDER THE CONTRACT MAY INCREASE OR
DECREASE IN VALUE ACCORDING TO THE INVESTMENT PERFORMANCE OF THE UNDERLYING
INVESTMENTS HELD BY THE INVESTMENT ACCOUNT. THE VALUE OF SUCH ASSETS AND
ACCUMULATION UNITS IS NOT GUARANTEED. SECTION 4 OF THIS CERTIFICATE EXPLAINS THE
VALUATION OF SUCH ASSETS AND ACCUMULATION UNITS.
If you have questions concerning the Contract, or wish to register a complaint,
you may reach us by calling 1-800-338-9189.
P-GB-C-ERTDAMFVA
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1 - DEFINITIONS 3
SECTION 2 - ADMINISTRATION OF YOUR PARTICIPANT ACCOUNT 6
2.1----- How Contributions Are Handled
2.2----- Transfers from Other Retirement Programs
2.3----- Reallocation of Participant Accounts
2.4----- Excess Contributions
2.5----- Transfers from Other Contracts
SECTION 3 - OPERATION OF FIXED INTEREST ACCOUNT 7
3.1----- Allocations to your Participant Account
3.2----- Provision of Guaranteed Rates for Interest Pockets
3.3----- Renewal of Guaranteed Rates
3.4----- Minimum Rate Guarantee
3.5----- Payout Upon Rejection of Declared Guaranteed Rate
3.6----- Allocation of Withdrawals
SECTION 4 - VALUATION OF INVESTMENT ACCOUNTS 8
4.1----- Operation of Investment Accounts
4.2----- Valuation of Mutual Funds
4.3----- Accumulation Units
4.4----- Value of Accumulation Units
4.5----- Determining the Net Investment Factor
4.6----- Valuing your Participant Account
SECTION 5 - BENEFIT PAYMENTS AND TRANSFERS 9
5.1----- General Withdrawal Provisions
5.2----- Plan Benefit Payments
5.3----- Other Cash Benefits
5.4----- Transfers Between Investment Options
5.5----- Minimum Amounts
5.6----- Maximum Amounts
SECTION 6 - ANNUITIES 12
6.1----- Annuity Purchases
6.2----- Annuity Options
6.3----- Determining Annuity Amount
6.4----- Proof of Age and Survival; Minimum Payments
6.5----- Annuity Certificates
P-GB-C-ERTDAMFVA.1
<PAGE>
Page
SECTION 7 - MORTALITY AND EXPENSE RISK CHARGES
AND ADMINISTRATIVE CHARGES 13
7.1----- Investment Account Mortality and Expense Risk Charges
7.2----- Variable Investment Plus (VIP) Credit Factor
7.3----- Mutual Fund or Portfolio Expense
7.4----- Other Charges
7.5----- Taxes
SECTION 8 - CONTRACT MODIFICATIONS 14
8.1----- Mutual Amendment
8.2----- Rates and Section 7 Charges
8.3----- Conformance with Law
8.4----- Our Right to Initiate Changes
8.5----- Prohibited Amendments
SECTION 9 - TERMINATION OF CONTRACT 15
9.1----- Termination by the Contractholder
9.2----- Payment Upon Termination by the Contractholder
9.3----- Termination by Us
9.4----- Payment Upon Termination by Us
9.5----- Indemnification Required
9.6----- Effect on Contract Obligations
SECTION 10 - GENERAL PROVISIONS 16
10.1----- Ownership
10.2----- Entire Contract
10.3----- Benefit Determinations
10.4----- Recordkeeping Services
10.5----- Representations and Warranties
10.6----- Contractholder Representative; Misstatement of Data
10.7----- Requirement for Writing
10.8----- Quarterly Statement of Account Value
10.9----- Conformity with Law
10.10---- Sex and Number
10.11---- Facility of Payment
10.12---- Voting
10.13---- Acceptance of New Contributions
10.14---- AUL's Annual Statement
10.15---- Nonforfeitability and Nontransferability
TABLE OF GUARANTEED IMMEDIATE ANNUITIES 19
P-GB-C-ERTDAMFVA.2
<PAGE>
SECTION 1 - DEFINITIONS
1.1 "Account Value" for your Participant Account as of a date is:
(a) your account's balance in the Fixed Interest Account (FIA) on that
date; plus
(b) the value of your account's Accumulation Units in each Investment
Account on that date.
1.2 "Accumulation Unit" is a valuation device used to measure increases in and
decreases to the value of any Investment Account.
1.3 "Annuity Commencement Date" is the first day of the month an annuity begins
under the Contract. This date may not be later than the date your periodic
benefits are required to commence under the Code.
1.4 "Business Day" is any day both the New York Stock Exchange and our Home
Office are open for the general conduct of business.
1.5 "Code" means the Internal Revenue Code of 1986, as amended, and any
applicable regulations or rulings thereunder.
1.6 The "First Contract Anniversary" is listed on the Contract face page.
Subsequent "Contract Anniversaries" are on the same day of each subsequent
year.
1.7 "Contract Quarter" is each of the four successive three-month periods in a
Contract Year.
1.8 The first "Contract Year" starts on the Contract Date and ends on the day
before the First Contract Anniversary. Each subsequent Contract Year starts
on a Contract Anniversary and ends on the day before the next Contract
Anniversary.
1.9 "Contributions" are amounts paid to us, pursuant to the Plan, which we
credit to Participant Accounts, including yours. Contributions include
amounts transferred from another AUL group annuity contract. The following
types of Contributions are credited to subaccounts under your Participant
Account:
(a) "Elective Deferrals," which means, with respect to any taxable year,
any Contribution made under a salary reduction agreement. A
Contribution made under a salary reduction agreement is not treated as
an Elective Deferral if, under the salary reduction agreement, the
Contribution is made pursuant to a one-time irrevocable election made
by you at the time of initial eligibility to participate in the
agreement, or is made pursuant to a similar arrangement involving a
one-time irrevocable election specified in Regulations issued under
the Code.
(b) "Employee Mandatory Contributions," which means Contributions made
under a salary reduction agreement pursuant to a one-time irrevocable
election made by you at the time of initial eligibility to participate
in the agreement, or made pursuant to a similar arrangement involving
a one-time irrevocable election specified in Regulations issued under
the Code.
P-GB-C-ERTDAMFVA.3
<PAGE>
(c) "Employer Contributions," which means Contributions made by your
employer that are not made pursuant to (a) or (b) above.
1.10 "Excess Contributions" are Contributions in excess of the applicable Code
limits.
1.11 "Fixed Interest Account" or "FIA" is the portion of our general asset
account as described in Section 3, to which Contributions may be allocated
for accumulation at the Guaranteed Rates.
1.12 "Guaranteed Rates" are the guaranteed annual effective rates of interest we
credit to each Interest Pocket. A Guaranteed Rate may be modified only as
described in Section 3.3.
1.13 "Home Office" is our principal office in Indianapolis, Indiana. For
anything to be "received by AUL," it must be received at our Home Office.
1.14 "Interest Pocket" means a tracking method which associates funds deposited
into the FIA over a specific time period with a specific Guaranteed Rate,
as described in Section 3. After the guaranteed period provided in Section
3.3 has elapsed, we may consolidate two or more Interest Pockets in
conjunction with the announcement of new Guaranteed Rates.
1.15 "Investment Account" means each distinct portfolio established within our
Variable Account and identified in the Table of Investment Accounts in the
Contract. Amounts allocated to any Investment Account are invested in the
shares of the corresponding Mutual Fund or Portfolio identified in the
Table of Investment Accounts. Our "Variable Account" is a separate account
we maintain under Indiana law which is called the AUL American Unit Trust
and which is registered under the Investment Company Act of 1940 as a unit
investment trust.
1.16 "Investment Option" is the FIA or any Investment Account. We reserve the
right to provide other Investment Options under the Contract at any time.
1.17 "Mutual Fund" means any diversified, open-end, management company made
available by us, and listed in the Table of Investment Accounts.
1.18 "Participant" is any person participating in the Plan that has a
Participant Account.
1.19 Your "Participant Account" is an account under the Contract for you. Your
Participant Account may have subaccounts for each type of Contribution. We
credit Contributions to your Participant Account and Contribution-type
subaccounts as the Contractholder directs.
1.20 "Plan" means the Plan Sponsor's Code Section 403(b) plan that invests in
the Contract.
1.21 "Plan Sponsor" is ABC School.
1.22 "Portfolio" is a portfolio established within a particular Mutual Fund, as
described in the Mutual Fund's current prospectus.
1.23 "Valuation Periods" start at the close of each Business Day and end at the
close of the next Business Day.
1.24 The "Withdrawal Charge" is a percentage of the Account Value withdrawn
under the Contract. The Withdrawal Charge will not apply to Account Values
withdrawn to provide a benefit payment
P-GB-C-ERTDAMFVA.4
<PAGE>
or an annuity as described in Section 5.2 and 6.1, respectively. The
percentage varies by the Contract Year in which a withdrawal is made. The
Withdrawal Charge percentage is as follows:
During Contract Year Percentage
1 3
2 2
3 1
Thereafter 0
In no event will the cumulative total of all Withdrawal Charges, including
those previously assessed against any amount withdrawn from your
Participant Account, exceed 9% of total Contributions allocated to your
Participant Account.
1.25 Your "Withdrawal Value" is a your Account Value, less any Withdrawal
Charge.
P-GB-C-ERTDAMFVA.5
<PAGE>
SECTION 2 - ADMINISTRATION OF YOUR PARTICIPANT ACCOUNT
2.1 How Contributions Are Handled: Contributions we receive are credited to the
appropriate Contribution-type subaccounts of your Participant Account, as
the Contractholder directs in its allocation instructions. The initial
Contribution for you is allocated to your Participant Account by the second
Business Day after we (1) receive the initial Contribution or, if later,
(2) receive all data necessary to complete the allocation (including data
required to establish your Participant Account, the amount of the
Contribution for you, and Investment Option elections. Subsequent
Contributions are allocated to your Participant Account on the Business Day
we (1) receive that Contribution or, if later, (2) receive all data
necessary to complete the allocation.
If we do not receive the data required to establish your Participant
Account and instructions regarding the amount of a Contribution for you
within 5 Business Days after we first receive that Contribution, we will
return that Contribution to the Contractholder unless it consents to us
retaining that Contribution until the earlier of (i) the date we receive
such data and instructions and, therefore, can properly allocate that
Contribution to your Participant Account or (ii) 25 days from the date we
receive that Contribution.
If we receive the data required to establish your Participant Account and
instructions regarding the amount of a Contribution for you, but we do not
receive Investment Option elections for you, the Contribution is allocated
to a suspense account. The suspense account earns interest at the
Guaranteed Rate for Contributions received on the same date. When we
receive all required data, amounts in the suspense account, plus interest,
are transferred to the appropriate Investment Option for each designated
Contribution-type.
Your Participant Account may be allocated to Investment Options in any
increments acceptable to us. Investment Option elections remain in effect
until changed by the Contractholder. A change in Investment Option
elections is made by giving us new Investment Option elections.
2.2 Transfers from Other Retirement Programs: If permitted by the Plan, we may
accept amounts transferred from other Code Section 403(b) funding vehicles.
Such transferred amounts, as identified by the Contractholder, are credited
to a rollover subaccount, under the appropriate Participant Account.
2.3 Reallocation of Participant Accounts: The Contractholder may direct us to
reallocate all or a portion of the Account Value of any Participant Account
among other Participant Accounts. The Contractholder must certify that such
reallocation is in accordance with the Plan.
2.4 Excess Contributions: On receipt of instructions from the Contractholder,
we will withdraw Excess Contributions, plus gains and minus losses, from
your Participant Account and return them to the Contractholder, or as the
Contractholder directs. Such instructions must state the amount to be
returned and certify that such Contributions are Excess Contributions and
that such return is permitted by the Plan and the Code. A return of Excess
Contributions is treated like a Plan benefit payment, under Section 5.2.
You are not permitted to have elective deferral contributions (within the
meaning of Code Section 402(g)(3)) made during a calendar year under the
Contract, or under any other plans, contracts, or arrangements maintained
by your employer, in excess of the dollar limitation in effect under Code
Section 402(g)(1) and any Regulations issued thereunder for taxable years
beginning in such calendar year.
2.5 Transfers from Other Contracts: We may require amounts transferred to your
Participant Account from other AUL group annuity contracts to be deposited
in a suspense account. We will advise the Contractholder if this limitation
applies before accepting such a transfer.
P-GB-C-ERTDAMFVA.6
<PAGE>
SECTION 3 -- OPERATION OF FIXED INTEREST ACCOUNT
3.1 Allocations to your Participant Account: We allocate your Contributions in
the FIA based on the information the Contractholder provides.
3.2 Provision of Guaranteed Rates for Interest Pockets: At least 10 days in
advance of each calendar quarter, we will declare a Guaranteed Rate for the
Interest Pocket for that quarter. All Contributions or transfers hereunder
which are allocated to the FIA during that quarter will earn interest at
that Guaranteed Rate until that quarterly pocket matures on the second
January 1 following the quarter in which that pocket was established.
3.3 Renewal of Guaranteed Rates: Those quarterly Interest Pockets which mature
at the same time will be combined into an annual renewal Interest Pocket.
Funds associated with that annual renewal Interest Pocket will earn
interest for a full year at the Guaranteed Rate declared for that pocket. A
new Guaranteed Rate for each annual renewal Interest Pocket will be
declared at least 30 days prior to every January 1 for the 5 years
following the establishment of that pocket. An annual renewal Interest
Pocket will mature on January 1 of the sixth year following its
establishment, when it will be combined into one annual portfolio Interest
Pocket. Funds associated with that annual portfolio Interest Pocket will
earn interest for a full year at the Guaranteed Rate for that pocket, which
will be declared at least 30 days prior to every January 1.
The Contractholder may accept the declared Guaranteed Rate for an annual
renewal or portfolio Interest Pocket either by continuing to allocate
Contributions to the FIA or by otherwise notifying us of its acceptance.
The Contractholder may reject the declared rate for that pocket by
notifying us. This acceptance or rejection must occur after the declaration
of the rate for that pocket and before the next January 1, when the rate
becomes effective. If the Contractholder neither specifically accepts nor
rejects the declared Guaranteed Rate for the new pocket by the deadline, it
will be deemed to have accepted the rate. If the Contractholder rejects the
declared Guaranteed Rate for the new annual renewal or portfolio pocket,
the aggregate Withdrawal Value of that pocket will be paid out as described
in Section 3.5.
3.4 Minimum Rate Guarantee: No Guaranteed Rate may be less than an annual
effective interest rate of 3.00%.
3.5 Payout Upon Rejection of Declared Guaranteed Rate: If the Contractholder
rejects the Guaranteed Rate for an Interest Pocket we announce under
Section 3.3, the aggregate Withdrawal Value of that Interest Pocket is paid
to the Contractholder in 6 equal annual installments. The initial
installment is calculated on the date the Contractholder rejects the
declared rate and is paid within 7 days from that date. Subsequent
installments are paid on the anniversary of the first installment payment
date. During the installment payment period, interest is credited to
amounts in the terminating pocket at a rate equal to the current average
Guaranteed Rate (as determined on the first installment payment date) of
all the Contractholder's Interest Pockets, less 1%. The minimum rate
guarantee provided in Section 3.4 applies to the interest credited under
this Section. Interest is paid with each installment.
P-GB-C-ERTDAMFVA.7
<PAGE>
3.6 Allocation of Withdrawals: Withdrawals or transfers from the FIA are on a
first-in/first-out basis, unless the Account or a terminating pocket is
being paid out to the Contractholder in installments. All amounts paid
during an installment payout period are paid on a pro-rata basis.
P-GB-C-ERTDAMFVA.8
<PAGE>
SECTION 4 - VALUATION OF INVESTMENT ACCOUNTS
4.1 Operation of Investment Accounts: All income, gains, or losses, realized or
unrealized, from assets held in any Investment Account are credited to or
charged against the applicable Investment Account without regard to our
other income, gains, or losses. Investment Account assets are not
chargeable with liabilities arising out of any other business we may
conduct.
4.2 Valuation of Mutual Funds: The current prospectus for each Mutual Fund
describes how that Mutual Fund's assets are valued.
4.3 Accumulation Units: We credit amounts allocated to an Investment Account in
Accumulation Units. The Accumulation Unit value used is the one for the
Valuation Period when we allocate the amount to the Investment Account.
4.4 Value of Accumulation Units: We generally establish the Accumulation Unit
value for a new Investment Account at $1.00 on the date the first deposit
is made to the Investment Account. The value of an Accumulation Unit for
any later Valuation Period equals the value of an Accumulation Unit for the
immediately preceding Valuation Period times the Net Investment Factor for
the current Valuation Period. We determine the Accumulation Unit value
before giving effect to any additions, withdrawals, or transfers in the
current Valuation Period.
4.5 Determining the Net Investment Factor: We determine the Net Investment
Factor for each Investment Account by dividing (a) by (b), and then
subtracting (c), where:
(a) is:
(1) the net asset value of a Mutual Fund or Portfolio share at the
end of the current Valuation Period, plus
(2) any dividend or other distribution paid on each Mutual Fund or
Portfolio share during such Valuation Period, plus or minus
(3) any credit or charge for taxes paid or reserved by us during the
Valuation Period that we determine are attributable to the
Investment Account;
(b) is the net asset value of each Mutual Fund or Portfolio share held in
the Investment Account at the end of the prior Valuation Period; and
(c) is a daily charge factor we determine, as described in Section 7.1.
4.6 Valuing your Participant Account: We determine your Account Value in an
Investment Account by multiplying your Accumulation Units by the
Accumulation Unit value. The Accumulation Unit value of an Investment
Account changes only on a Business Day.
P-GB-C-ERTDAMFVA.9
<PAGE>
SECTION 5 - BENEFIT PAYMENTS AND TRANSFERS
5.1 General Withdrawal Provisions: Subject to the following provisions of this
Section, and prior to notification of Contract termination, the
Contractholder may direct us to withdraw all or a portion of your Account
Value pursuant to Section 5.2 and 5.3 to provide a cash payment to the
Contractholder to pay Plan benefits.
(a) Amounts attributable to amounts held as of December 31, 1988 under
another Code Section 403(b) annuity contract may be withdrawn to
provide such benefits.
(b) Amounts attributable to Contributions made other than pursuant to a
salary reduction agreement (within the meaning of Code Section
402(g)(3)(C)) may be withdrawn to provide such benefits.
(c) Amounts attributable to Contributions made pursuant to a salary
reduction agreement (within the meaning of Code Section 402(g)(3)(C))
may be withdrawn to provide such benefits, provided that the
withdrawal is made to provide a loan or that any distribution of such
amount shall not occur until you have either attained age 59 1/2,
separated from service, died, become totally disabled (as defined by
the Plan), or experienced a hardship (as defined by the Plan).
However, in the case of a hardship withdrawal, any gain credited to
such Contributions may not be withdrawn.
(d) Withdrawal of any amount from the Contract which is transferred
directly by us pursuant to the Contractholder's or your instructions
to another tax-deferred annuity funding vehicle under applicable IRS
rules and regulations is not the provision of a Plan benefit for
purposes of Section 5.2, but instead is a Contract termination as to
that amount for you; and any such withdrawal is subject to application
of the Withdrawal Charge pursuant to Section 5.3. The Contractholder
hereby grants to you the right to direct the withdrawal and direct
transfer of your voluntary Elective Deferrals (as determined by the
Contractholder) to another tax-deferred annuity funding vehicle.
(e) If, as provided in Internal Revenue Code Regulation Section
1.403(b)-2T Q&A-2, the distributee of any eligible rollover
distribution elects to have the distribution paid directly to an
eligible retirement plan (as defined in Q&A-1 of that Section) and
specifies the eligible retirement plan to which the distribution is to
be paid, then the distribution shall be paid to that eligible
retirement plan in a direct rollover.
(f) We are not responsible for determining the Contractholder's or your
compliance with the requirements above. Any withdrawal request
submitted by the Contractholder must include certification as to the
purpose of the withdrawal. The Contractholder assumes full
responsibility for determining whether any withdrawal is permitted
under applicable law and under the terms of a particular Plan. We may
rely solely upon the Contractholder's representations made in the
withdrawal request.
(g) Withdrawals from your share of any Investment Option may not be made
in an amount less than the smaller of $500 or your entire share of the
Investment Option. If a withdrawal reduces your share of an Investment
Option to less than $500, such remaining share shall also be
withdrawn.
(h) A withdrawal request is effective, and the Account Value to be applied
pursuant to Section 5.2, 5.3, or 5.4 is determined, on the Business
Day that we receive a proper withdrawal request (or due proof of
death, if received later).
P-GB-C-ERTDAMFVA.10
<PAGE>
(i) We will pay any cash lump-sum to the Contractholder or to whomever the
Contractholder directs within 7 days from the appropriate Business Day
as determined in Subsection (h) above, except as we may be permitted
to defer such payment of amounts withdrawn from the Variable Account
in accordance with appropriate provisions of the federal securities
laws. We reserve the right to defer the payment of amounts withdrawn
from the FIA for a period of up to 6 months after we receive the
withdrawal request.
(j) Withdrawals from your share of the FIA will be made on a
first-in/first-out basis under Section 3.6.
5.2 Plan Benefit Payments: The Contractholder will advise us of any person for
whom a payment is due under the Plan, including the nature and amount of
such payment, before the date such payment is due or as soon thereafter as
is practicable.
(a) Subject to the limitations provided in Section 5.1 and Subsection (b)
below, prior to notification of Contract termination, the
Contractholder may direct us to withdraw all or a portion of your
Account Value (subject to Section 7.5) to provide a cash payment to
the Contractholder to pay Plan benefits (other than full or partial
Plan termination benefits described in Section 5.3) for retirement,
death, disability, termination of employment, hardships, loans,
required minimum distribution benefits pursuant to Code Section
401(a)(9), or benefits upon attainment of age 59 1/2 or as otherwise
allowed by the Code (provided that such benefit upon attainment of age
59 1/2 is paid in a taxable distribution to you). Such a withdrawal is
not subject to a Withdrawal Charge. Any Plan benefit cash payment
requested for you if you terminate employment on or after the
effective date of Plan termination is deemed to be a Plan termination
benefit, and is subject to a Withdrawal Charge pursuant to Section
5.3. Additionally, if 20% or more of the Participants terminate
employment within the same Contract Year, any Plan benefit cash
payment for such a terminating Participant is subject to a Withdrawal
Charge pursuant to Section 5.3.
(b) Regarding death benefits specifically, notwithstanding the provisions
of Section 9, upon receipt from the Contractholder of instructions and
of due proof of your (and, if applicable, your beneficiary's) death
prior to the date your Participant Account is closed, we will apply
the Account Value (subject to Section 7.5) of your Participant Account
for the purpose of providing a death benefit under the Plan. The death
benefit will be paid to your beneficiary according to the method of
payment elected by your beneficiary (unless you previously elected the
method of payment). Your beneficiary may also designate a beneficiary.
This death benefit will be payable:
(1) in a single sum or other method not provided in (2) below;
provided, however, that your entire Account Value (subject to
Section 7.5) must be paid to your beneficiary on or before
December 31 of the calendar year which contains the fifth
anniversary of your death, or
(2) as an annuity in accordance with the Annuity Options shown in
Section 6.2 over a period not to exceed the life or life
expectancy of the beneficiary. If your beneficiary is not your
surviving spouse, the annuity must begin on or before December 31
of the calendar year immediately following the calendar year in
which you die. If your beneficiary is your surviving spouse, the
annuity need not begin before December 31 of the calendar year in
which you would have attained age 70 1/2.
P-GB-C-ERTDAMFVA.11
<PAGE>
If you die on or after your Annuity Commencement Date, any interest
remaining under the Annuity Option selected will be paid at least as
rapidly as prior to your death.
Any withdrawal request submitted under this Section must certify the
purpose of the request.
5.3 Other Cash Benefits: Prior to notification of Contract termination, the
Contractholder may direct us to make a cash payment from your Participant
Account to the Contractholder for the purpose of providing Plan benefits
not specifically described in Section 5.2. The Withdrawal Charge will be
applied under this Section to any withdrawal to pay a Plan benefit payable
because of the termination or partial termination of the Plan (as
determined under applicable IRS guidelines and judicial precedent), or if
the underlying reason for payment of the benefit results in the termination
or partial termination of the Plan.
If the entire Account Value is withdrawn, the amount paid equals your
Withdrawal Value, subject to any charges described in Section 7. In all
other instances, your Account Value is reduced by an amount sufficient to
make the payment requested and to cover the Withdrawal Charge and any
charges described in Section 7.
Notwithstanding the previous provisions of this paragraph, in the first
Contract Year in which your Participant Account is established, the
Contractholder may withdraw from your Participant Account up to 10% of the
sum of your Account Value (determined as of the later of the Contract Date
or the Contract Anniversary immediately preceding the request for the
withdrawal) plus Contributions made for you during that Contract Year,
without application of the Withdrawal Charge. In the next succeeding
Contract Year, the Contractholder may also withdraw from your Participant
Account up to 10% of the sum of your Account Value (determined as of the
Contract Anniversary immediately preceding the request for the withdrawal)
plus Contributions made for you during that Contract Year, without
application of the Withdrawal Charge. In any subsequent Contract Year, the
Contractholder may withdraw from your Participant Account up to 10% of your
Account Value (determined as of the Contract Anniversary immediately
preceding the request for the withdrawal) without application of the
Withdrawal Charge.
5.4 Transfers between Investment Options: The Contractholder may direct us to
transfer amounts between Investment Options, or to initiate
Participant-directed transfers between Investment Options. Transfers are
effective on the Business Day we receive the transfer direction. Transfer
directions for your Participant Account may be made daily on any Business
Day. We will make the transfer as requested within 7 days from the date we
receive the request, except as we may be permitted to defer the transfer of
amounts withdrawn from the Variable Account in accordance with appropriate
provisions of the federal securities laws. We reserve the right to defer a
transfer of amounts from the FIA for a period of up to 6 months after we
receive the transfer request.
Notwithstanding the previous paragraph, once a transfer from the FIA has
been made for you, a transfer to the FIA for you is permitted only after 90
days have elapsed since the date of the last transfer from the FIA for you.
If the Contractholder makes available to you the FIA and the AUL American
Money Market Investment Account, the 90-day transfer restriction discussed
in the previous sentence does not apply, and Section 5.6 does apply.
5.5 Minimum Amounts: The minimum amount the Contractholder or you may withdraw
or transfer from an Investment Option is $500 or, if less, your entire
balance in that Investment Option. If a withdrawal or transfer reduces your
balance in an Investment Option to less than $500, the entire balance is
withdrawn or transferred.
P-GB-C-ERTDAMFVA.12
<PAGE>
5.6 Maximum Amounts: If the Contractholder makes available to you the FIA and
the AUL American Money Market Investment Account, no more than 20% of your
FIA Account Value on the later of the Contract Date or the Contract
Anniversary immediately preceding the request for transfer may be
transferred from the FIA during any Contract Year. However, if your FIA
Account Value is less than $2,500 on the later of the Contract Date or the
Contract Anniversary immediately preceding the request for transfer, the
amount transferrable from the FIA for you for that Contract Year is the
minimum amount specified in Section 5.5.
P-GB-C-ERTDAMFVA.13
<PAGE>
SECTION 6 - ANNUITIES
6.1 Annuity Purchases: Prior to notification of Contract termination, the
Contractholder may withdraw all or a portion of your Account Value (subject
to Section 7.5) to provide an annuity, reflecting Plan benefits. Such a
withdrawal is not subject to a Withdrawal Charge. On receipt of an annuity
purchase request, we transfer your entire Participant Account to a suspense
account. These amounts remain in the suspense account until your Annuity
Commencement Date, when the full balance (including interest) is applied to
purchase the annuity.
The Contractholder's annuity purchase request must specify the purpose for
the annuity, the election of an annuity option, Annuity Commencement Date,
any contingent annuitant or beneficiary, and any additional information we
require. If you or any contingent annuitant dies before the Annuity
Commencement Date, the annuity election is cancelled.
The minimum amount which the Contractholder may apply to purchase an
annuity is $5,000.
6.2 Annuity Options: The Contractholder may elect any optional form of annuity
we offer at the time of purchase. Available annuity options always include:
(a) Life Annuity. A monthly annuity is payable as long as the annuitant
lives, and ends with the last payment before the annuitant's death.
(b) Survivorship Annuity. A monthly annuity is payable as long as the
annuitant lives. After the annuitant's death, all or a portion of the
monthly annuity is paid to the contingent annuitant as long as the
contingent annuitant lives.
No annuity may have a certain period extending beyond your life expectancy
or the joint life expectancy of you and your contingent annuitant, as
determined on the Annuity Commencement Date.
6.3 Determining Annuity Amount: We compute the annuity amount using the factors
reflected in the Table of Guaranteed Immediate Annuities attached to the
Contract. However, if our current single premium, nonparticipating,
immediate annuity rates for this class of group annuity contracts produces
a higher monthly annuity than the Table of Guaranteed Immediate Annuities,
then that more favorable annuity rate is applied.
6.4 Proof of Age and Survival; Minimum Payments: We may require proof of any
annuitant's or contingent annuitant's date of birth before commencing
payments under any annuity. We may also require proof that an annuitant or
contingent annuitant is living before making any annuity payment. If a
monthly annuity is less than our current established minimum payment, we
may make payments on a less-frequent basis or in a single sum.
6.5 Annuity Certificates: We issue to each person for whom an annuity is
purchased a certificate setting forth the annuity's amount and terms.
P-GB-C-ERTDAMFVA.14
<PAGE>
SECTION 7 - MORTALITY AND EXPENSE RISK CHARGES
AND ADMINISTRATIVE CHARGES
7.1 Investment Account Mortality and Expense Risk Charges: We deduct from the
average daily net assets of each Investment Account the daily equivalent of
an annual combined mortality risk charge and expense risk charge of 1.25%.
This charge is part of the Net Investment Factor, described in Section 4.5.
7.2 Variable Investment Plus (VIP) Credit Factor: We determine a VIP credit
factor each month by multiplying the portions of the aggregate month-end
Account Value in all Investment Accounts by the monthly equivalent of the
corresponding annual VIP credit factors in the table below. The sum of
these products is divided by the aggregate month-end Account Value in all
Investment Accounts. We multiply the resulting percentage by your month-end
Account Value in each Investment Account, and add the resulting amount to
your Account Value for that Investment Account.
Aggregate Month-End Account Value
allocated to Investment Accounts Annual VIP Credit Factors
--------------------------------- -------------------------
First $750,000 0.00%
Next $750,000 0.20%
Next $1 million 0.35%
Next $2.5 million 0.65%
Next $5 million 0.75%
Over $10 million 0.85%
7.3 Mutual Fund or Portfolio Expense: A Mutual Fund or Portfolio deducts an
investment advisory fee and other expenses from its net asset value, as
described in its current prospectus. Amounts deducted may include
operational, organizational, and extraordinary expenses. Expenses vary from
year-to- year.
7.4 Other Charges: Due and unpaid charges for which the Plan is responsible,
and which the Plan Sponsor and the Contractholder have otherwise agreed to
in writing, will be deducted from Participant Accounts on a pro-rata basis.
These charges include participant statement mailing fees, Form 5500 fees,
annual administrative fees, data reconciliation and reconstruction fees,
commissions, and Contract application/installation fees for a takeover
Plan. Charges for which the Plan Sponsor (not the Plan) is responsible, and
which the Plan Sponsor has otherwise agreed to in writing, must be paid by
the Plan Sponsor. These charges include Contract application/installation
fees for a new Plan.
7.5 Taxes: We may deduct charges equal to any premium tax we incur from the
balance applied to purchase an annuity or at such other time as premium
taxes are incurred by us. We may also deduct from Investment Accounts
reasonable charges for federal, state, or local income taxes we incur, that
are attributable to such Investment Accounts.
P-GB-C-ERTDAMFVA.15
<PAGE>
SECTION 8 - CONTRACT MODIFICATIONS
8.1 Mutual Amendment: The Contractholder and we may agree to any change or
amendment to the Contract without the consent of any other person or
entity. The Contract cannot be modified or amended, nor can any provision
or condition be waived, except by our written agreement, signed by a
corporate officer. Such authority may be delegated only by a written
agreement signed by our corporate officer.
8.2 Rates and Section 7 Charges: We may announce new Guaranteed Rates, as
described in Section 3.2 and 3.3 (including the consolidation of existing
Interest Pockets). However, as provided in Section 3.2 and 3.3, we may not
change the declared Guaranteed Rate applicable to an established Interest
Pocket during the guaranteed period. We may also modify the charge levels
in Section 7, using the procedures of Section 8.4.
8.3 Conformance with Law: We may amend the Contract at any time, without the
Contractholder's consent, or that of any other person or entity, if the
amendment is reasonably needed to comply with, or give the Contractholder
or you the benefit of, any provisions of federal or state laws. Any such
amendment will be delivered to the Contractholder prior to its effective
date.
8.4 Our Right to Initiate Changes: In addition to those amendments permitted by
Section 8.2 and 8.3, we may initiate an additional provision or
modification of any other provision of the Contract (including the addition
of a charge for transfers between Investment Options) by giving the
Contractholder 60 days notice of such modification. Any such modification
is effective without the Contractholder's affirmative assent unless.
8.5 Prohibited Amendments:
(a) Nothwithstanding our right to initiate changes under Section 8.4, we
may not initiate changes to the minimum Guaranteed Rate specified in
Section 3.4, our obligation to set Guaranteed Rates for the period of
time specified in Section 3.2 and 3.3, the payment upon rejection of a
declared Guaranteed Rate specified in Section 3.5, the payment
provisions upon Contract termination specified in Section 9.2, or the
Table of Guaranteed Immediate Annuities.
(b) No modification to the Contract may change the terms of a previously
purchased annuity or reduce any interest guarantee applicable to your
Participant Account balances held in the FIA on the modification's
effective date.
P-GB-C-ERTDAMFVA.16
<PAGE>
SECTION 9 - TERMINATION OF CONTRACT
9.1 Termination by the Contractholder: The Contractholder may terminate the
Contract by giving us notice. Such termination is effective on the Business
Day that we receive the Contractholder's notice.
9.2 Payment Upon Termination by the Contractholder: Upon termination by
the Contractholder, it may elect one of the following options:
(a) Transfer to Another Contract: The Contractholder may transfer the
aggregate Account Value of all Participant Accounts, or the
Contractholder may permit you to transfer your Account Value, to
any group annuity contract which we may make available. Any such
amounts are transferred on the termination effective date.
(b) Payment of Investment Accounts in Lump-Sum and FIA in
Installments: The Contractholder may have the aggregate
Investment Account Withdrawal Value of all Participant Accounts
paid to it in a lump-sum, with the FIA paid in 6 equal annual
installments. The aggregate Investment Account Withdrawal Value
will be determined on the termination effective date and paid
within 7 days from the termination effective date, except as we
may be permitted to defer payment in accordance with appropriate
provisions of the federal securities laws. The initial FIA
installment is calculated on the termination effective date and
paid within 7 days from the termination effective date.
Subsequent installments are paid on the anniversary of the
termination effective date. During the installment payment
period, interest is credited under the terms described in Section
3.5.
9.3 Termination by Us: We have the right, subject to applicable state law, to
terminate your Participant Account at any time during the Contract Year if
your Account Value is less than $200 for the first Contract Year in which a
Contribution is made for you, and $400 for any subsequent Contract Year,
and at least 6 months have elapsed since the last previous Contribution to
the Contract. If we elect to terminate your Participant Account, the
termination will be effective on the date 6 months following the date we
give notice to the Contractholder and you that your Participant Account is
to be terminated, provided that any Contributions made during the 6-month
period are insufficient to raise your Account Value up to the minimum
level.
9.4 Payment Upon Termination by Us: As of the effective date of termination of
your Participant Account by us, we may elect to have a single sum equal to
your Account Value on the effective date of termination paid to the
Contractholder within 7 days from that date. Any such payment is in full
settlement of your Participant Account under the Contract and in lieu of
any other payment under its terms.
9.5 Indemnification Required: Payments or transfers under Section 9.2 are in
full settlement of our obligations under the Contract. Prior to making such
payments or transfers, we may require the Contractholder and the Plan
Sponsor to indemnify and hold us harmless from any and all losses, claims,
or demands that may later be asserted against us in connection with the
making of such payment or transfer.
9.6 Effect on Contract Obligations: Any annuities purchased prior to
notification of Contract termination are unaffected by a termination. We
may refuse further Contributions at any time after a termination notice has
been given. If we have been providing recordkeeping services, such services
stop on the termination effective date. The Contract terminates
automatically if no amounts remain in either the FIA or any Investment
Account.
P-GB-C-ERTDAMFVA.17
<PAGE>
SECTION 10 - GENERAL PROVISIONS
10.1 Ownership: The Contractholder owns the Contract. No other person or entity
has any right, title, or interest in the Contract or to amounts received or
credited under it until such amounts are made available to them by the
Contractholder. All amounts received or credited under the Contract become
our property. We are obligated to make only the payments or distributions
specified in the Contract.
10.2 Entire Contract: The Contract and the Contractholder's application is the
entire agreement between the Contractholder and us. We are not a party to,
nor bound by, a Plan, trust, custodial agreement, or other agreement, or
any amendment or modification to any of the same. We are not a fiduciary
under the Contract or under any such Plan, trust, custodial agreement, or
other agreement.
10.3 Benefit Determinations: The Contractholder must furnish us whatever
information is necessary to establish the eligibility for and amount of
annuity or other benefit due. We rely solely on the Contractholder's
instructions and certifications with respect to your benefits. The
Contractholder is fully responsible for determining:
(a) whether benefit payments are permitted under applicable law and the
Plan and
(b) the existence or amount of Excess Contributions (plus gains or minus
losses thereon), or that returns of Excess Contributions are permitted
by the Plan and the Code.
We may rely on the Contractholder's or its designee's statements or
representations in honoring any benefit payment request.
10.4 Recordkeeping Services: We generally provide Plan recordkeeping services
when all of a Plan's funds are held under the Contract. We may decline to
provide Plan recordkeeping services if the Contractholder elects to
allocate Plan funds to investments other than the Contract, or if the
Contractholder's Plan's recordkeeping practices, in our judgment, impose a
substantial administrative or financial burden on us.
10.5 Representations and Warranties: The Contractholder and we mutually
represent and warrant, each to the other, that each is fully authorized to
enter into the Contract and that the Contract is a valid and binding
obligation and that the execution of the Contract does not violate any law,
regulation, judgment, or order by which the representing party is bound. In
addition, the Contractholder represents and warrants to us that:
(a) the Plan is qualified under Code Section 403(b);
(b) the execution of the Contract has been authorized by the Plan
fiduciary responsible for Plan investment decisions; and
(c) the execution or performance of the Contract does not violate any Plan
provision or any law, regulation, judgment, or order by which the Plan
is bound.
P-GB-C-ERTDAMFVA.18
<PAGE>
We do not make any representation or warranty regarding the federal, state,
or local tax status of the Contract, your Participant Account, or any
transaction involving the Contract.
10.6 Contractholder Representative; Misstatement of Data: The Contractholder may
designate a representative to act on its behalf under Section 2 or 3 or to
receive any payment under Section 5 or 9. We may rely on any information
the Contractholder, its designee, or you furnish. We need not inquire as to
the accuracy or completeness of such information. If any essential data
pertaining to any person has been omitted or misstated, including, but not
limited to, a misstatement of an annuitant's or contingent annuitant's age,
we will make an equitable adjustment to provide the annuity or other
benefit determined using correct data.
10.7 Requirement for Writing: When reference is made to the Contractholder, its
designee, or you making a request or giving notice, instruction, or
direction, such request, notice, instruction, or direction must be in
writing, or in a form otherwise acceptable to us, and is effective when we
receive it.
10.8 Quarterly Statement of Account Value: Reasonably promptly after the end of
each Contract Quarter, we will prepare a statement of your Account Value.
10.9 Conformity with Law: Any benefit payable under the Contract will not be
less than the minimum benefit required by the insurance laws of the state
in which the Contract is delivered. Language in the Contract referring to
state or federal tax, securities, or other statutes or rules do not
incorporate within the Contract any such statutes or rules.
10.10 Sex and Number:
Whenever the context so requires, the plural includes the singular, the
singular the plural, and the masculine the feminine.
10.11 Facility of Payment:
If you, your contingent annuitant, or your beneficiary is legally incapable
of giving a valid receipt for any payment, and no guardian has been
appointed, we may pay the person or persons who have assumed the care and
principal support of you, your contingent annuitant, or your beneficiary.
We may also pay the Contractholder directly or as it otherwise instructs.
Any such payment fully discharges us to the extent of such payment.
10.12 Voting:
We own all Mutual Fund or Portfolio shares held in an Investment Account.
We exercise the voting rights of such shares at all shareholder meetings on
all matters requiring shareholder voting under the Investment Company Act
of 1940 or other applicable laws. Our vote reflects instructions received
from persons having the voting interest in the shares, as follows:
(a) The Contractholder has the voting interest under the Contract. Unless
otherwise required by applicable law, the number of Mutual Fund or
Portfolio shares for which the Contractholder may give voting
instructions is determined by dividing the aggregate Account Values in
the affected Investment Account by the net asset value of the Mutual
Fund or Portfolio shares. Fractional votes are counted. Our
determination is made as of the date used by the Mutual Fund or
Portfolio to determine shareholders eligible to vote.
(b) We vote shares proportionally, to reflect the voting instructions we
receive in a timely manner from the Contractholder and from all other
contractholders. If no timely
P-GB-C-ERTDAMFVA.19
<PAGE>
voting instructions are received from the Contractholder, we vote
shares proportionally, to reflect the voting instructions we received
in a timely manner for all other contracts.
To the extent permitted by applicable law, we may vote shares in our
own right or may modify the above procedures to reflect changes in the
law or its interpretation.
We will provide prospectuses and other reports as required by
applicable federal law.
10.13 Acceptance of New Contributions:
We may refuse to accept new Contributions at any time.
10.14 AUL's Annual Statement:
No provision of the Contract controls, determines, or modifies any AUL
annual statement made to any insurance department, contractholder,
regulatory body, or other person. Nor does anything in such annual
statement control, determine, or modify the provisions of the Contract.
10.15 Nonforfeitability and Nontransferability:
The entire Withdrawal Value of the vested portion (as determined pursuant
to the Plan) of your Participant Account under the Contract is
nonforfeitable at all times. No sum payable under the Contract with respect
to you may be sold, assigned, discounted, or pledged as collateral for a
loan or as security for the performance of an obligation or for any other
purpose to any person or entity other than AUL. In addition, to the extent
permitted by law, no such sum shall in any way be subject to legal process
requiring the payment of any claim against the payee.
P-GB-C-ERTDAMFVA.20
<PAGE>
TABLE OF GUARANTEED IMMEDIATE ANNUITIES
MONTHLY INCOME PER $1,000 OF ACCOUNT VALUE
10-YEAR CERTAIN
ADJUSTED AGE LIFE ANNUITY AND LIFE ANNUITY
45 2.9690 2.9632
46 3.0190 3.0124
47 3.0715 3.0641
48 3.1269 3.1185
49 3.1852 3.1756
50 3.2466 3.2357
51 3.3115 3.2988
52 3.3800 3.3653
53 3.4525 3.4352
54 3.5291 3.5088
55 3.6104 3.5863
56 3.6966 3.6678
57 3.7881 3.7536
58 3.8850 3.8437
59 3.9877 3.9382
60 4.0964 4.0374
61 4.2115 4.1414
62 4.3334 4.2505
63 4.4626 4.3650
64 4.5994 4.4850
65 4.7442 4.6108
66 4.8977 4.7425
67 5.0608 4.8804
68 5.2347 5.0250
69 5.4213 5.1766
70 5.6229 5.3356
71 5.8412 5.5020
72 6.0778 5.6755
73 6.3336 5.8552
74 6.6097 6.0404
75 6.9084 6.2302
Adjusted Age = Actual Age at Settlement (in years and completed months) less the
following number of months: [.6 times (Birth Year - 1915)] rounded to the
nearest integer.
Guaranteed purchase rates are 96% of the net single premium for the benefit
provided based on the unprojected 1994 Group Annuity Reserving Table for females
with interest at 2%.
P-GB-C-ERTDAMFVA.21
CONTRACT NUMBER: VXX,XXX
CONTRACTHOLDER: ABC SCHOOL
DATE OF ISSUE: JANUARY 1, 1999
CONTRACT DATE: JANUARY 1, 1999
FIRST CONTRACT ANNIVERSARY: JANUARY 1, 2000
American United Life Insurance Company (AUL) issues this contract in
consideration of the Contractholder's application and its payment of
Contributions to AUL. When used in this contract, "we," "us," or "our" refer to
AUL and "you" or "your" refer to the Contractholder.
All provisions and conditions stated on this and subsequent pages are part of
this contract.
This contract is signed for AUL at its Home Office in Indianapolis, Indiana. Our
mailing address is P.O. Box 368, Indianapolis, Indiana 46206-0368.
NOTICE OF TEN DAY RIGHT TO EXAMINE CONTRACT
Please read this contract carefully. You may return the contract for any reason
within ten days after receiving it. If returned, the contract will be considered
void from the beginning and any Contributions will be refunded.
AMERICAN UNITED LIFE INSURANCE COMPANY
By /s/ Jerry D. Semler
Chairman of the Board,
President, & Chief Executive Officer
Attest
/s/ William R. Brown
Secretary
AUL American Series Contract
Guaranteed Benefit Employer-Sponsored TDA and Qualified Plan
Multiple-Fund Group Variable Annuity (SBR,MBR,NBR)
Current Interest Credited
Nonparticipating
ACCUMULATION UNITS IN AN INVESTMENT ACCOUNT UNDER THIS CONTRACT MAY INCREASE OR
DECREASE IN VALUE ACCORDING TO THE INVESTMENT PERFORMANCE OF THE UNDERLYING
INVESTMENTS HELD BY THE INVESTMENT ACCOUNT. THE VALUE OF SUCH ASSETS AND
ACCUMULATION UNITS IS NOT GUARANTEED. SECTION 4 OF THIS CONTRACT EXPLAINS THE
VALUATION OF SUCH ASSETS AND ACCUMULATION UNITS.
If you have questions concerning your contract, or wish to register a complaint,
you may reach us by calling 1-800-338-9189.
P-GB-K-AUL1MFVA
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1 - DEFINITIONS 3
SECTION 2 - ADMINISTRATION OF PARTICIPANT ACCOUNTS 6
2.1----- How Contributions Are Handled
2.2----- Transfers from Other Retirement Programs
2.3----- Reallocation of Participant Accounts
2.4----- Excess Contributions
2.5----- Transfers from Other Contracts
SECTION 3 - OPERATION OF FIXED INTEREST ACCOUNT (FIA) 8
3.1----- Allocations to Participant Accounts
3.2----- Provision of Guaranteed Rates for Interest Pockets
3.3----- Renewal of Guaranteed Rates
3.4----- Minimum Rate Guarantee
3.5----- Payout Upon Rejection of Declared Guaranteed Rate
3.6----- Allocation of Withdrawals
SECTION 4 - VALUATION OF INVESTMENT ACCOUNTS 9
4.1----- Operation of Investment Accounts
4.2----- Valuation of Mutual Funds
4.3----- Accumulation Units
4.4----- Value of Accumulation Units
4.5----- Determining the Net Investment Factor
4.6----- Valuing Participant Accounts
SECTION 5 - BENEFIT PAYMENTS AND TRANSFERS 10
5.1----- General Withdrawal Provisions
5.2----- Plan Benefit Payments
5.3----- Other Cash Benefits
5.4----- Transfers Between Investment Options
5.5----- Minimum Amounts
5.6----- Maximum Amounts
SECTION 6 - ANNUITIES 14
6.1----- Annuity Purchases
6.2----- Annuity Options
6.3----- Determining Annuity Amount
6.4----- Proof of Age and Survival; Minimum Payments
6.5----- Annuity Certificates
P-GB-K-AUL1MFVA.1
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Page
SECTION 7 - MORTALITY AND EXPENSE RISK CHARGES
AND ADMINISTRATIVE CHARGES 15
7.1----- Investment Account Mortality and Expense Risk Charges
7.2----- Variable Investment Plus (VIP) Credit Factor
7.3----- Mutual Fund or Portfolio Expense
7.4----- Other Charges
7.5----- Taxes
7.6----- Reduction or Waiver of Charges
SECTION 8 - CONTRACT MODIFICATIONS 16
8.1----- Mutual Amendment
8.2----- Rates and Section 7 Charges
8.3----- Conformance with Law
8.4----- Our Right to Initiate Changes
8.5----- Prohibited Amendments
SECTION 9 - TERMINATION OF CONTRACT 17
9.1----- Termination by You
9.2----- Payment Upon Termination by You
9.3----- Termination by Us
9.4----- Payment Upon Termination by Us
9.5----- Indemnification Required
9.6----- Effect on Contract Obligations
SECTION 10 - GENERAL PROVISIONS 19
10.1----- Ownership
10.2----- Entire Contract
10.3----- Benefit Determinations
10.4----- Recordkeeping Services
10.5----- Representations and Warranties
10.6----- Contractholder Representative; Misstatement of Data
10.7----- Requirement for Writing
10.8----- Quarterly Statement of Account Value
10.9----- Conformity with Law
10.10---- Sex and Number
10.11---- Facility of Payment
10.12---- Voting
10.13---- Acceptance of New Participants or Contributions
10.14---- AUL's Annual Statement
10.15---- AUL's Annual Meeting
10.16---- Nonforfeitability and Nontransferability
10.17---- Assignment by You
10.18---- Effect of Disqualification
TABLE OF GUARANTEED IMMEDIATE ANNUITIES 22
TABLE OF INVESTMENT ACCOUNTS 23
P-GB-K-AUL1MFVA.2
<PAGE>
SECTION 1 - DEFINITIONS
1.1 "Account Value" for a Participant Account as of a date is:
(a) that account's Code Section 403(b) subaccounts' balance in the Fixed
Interest Account (FIA) on that date; plus
(b) that account's Code Section 401(a) subaccounts' balance in the Fixed
Interest Account (FIA) on that date; plus
(c) the value of that account's Code Section 403(b) subaccounts'
Accumulation Units in each Investment Account on that date; plus
(d) the value of that account's Code Section 401(a) subaccounts'
Accumulation Units in each Investment Account on that date.
1.2 "Accumulation Unit" is a valuation device used to measure increases in and
decreases to the value of any Investment Account.
1.3 "Annuity Commencement Date" is the first day of the month an annuity begins
under this contract. This date may not be later than the date a
Participant's periodic benefits are required to commence under the Code.
1.4 "Business Day" is any day both the New York Stock Exchange and our Home
Office are open for the general conduct of business.
1.5 "Code" means the Internal Revenue Code of 1986, as amended, and any
applicable regulations or rulings thereunder.
1.6 The "First Contract Anniversary" is listed on the contract face page.
Subsequent "Contract Anniversaries" are on the same day of each subsequent
year.
1.7 "Contract Quarter" is each of the four successive three-month periods in a
Contract Year.
1.8 The first "Contract Year" starts on the Contract Date and ends on the day
before the First Contract Anniversary. Each subsequent Contract Year starts
on a Contract Anniversary and ends on the day before the next Contract
Anniversary.
1.9 "Contributions" are amounts paid to us, pursuant to your Code Section
401(a) Plan and/or Code Section 403(b) Plan, which we credit to a
Participant Account. Contributions include amounts transferred from another
AUL group annuity contract.
The following types of Code Section 403(b) Contributions will be credited
to individual subaccounts under the Participant Account:
(a) "Elective Deferrals," which means, with respect to any taxable year,
any Contribution made under a salary reduction agreement. A
Contribution made under a salary reduction agreement is not treated as
an Elective Deferral if, under the salary reduction agreement, the
Contribution is made pursuant to a one-time irrevocable election made
by the Participant at the time of initial eligibility to participate
in the agreement, or is made pursuant to a similar arrangement
involving a one-time irrevocable election specified in Regulations
issued under the Code.
P-GB-K-AUL1MFVA.3
<PAGE>
(b) "Employee Mandatory Contributions," which means Contributions made
under a salary reduction agreement pursuant to a one-time irrevocable
election made by the Participant at the time of initial eligibility to
participate in the agreement, or made pursuant to a similar
arrangement involving a one-time irrevocable election specified in
Regulations issued under the Code.
(c) "Employer Contributions," which means Contributions made by the
Participant's employer that are not made pursuant to (a) or (b) above.
1.10 "Excess Contributions" are Contributions in excess of the applicable Code
limits.
1.11 "Fixed Interest Account" or "FIA" is the portion of our general asset
account as described in Section 3, to which Contributions may be allocated
for accumulation at the Guaranteed Rates.
1.12 "Guaranteed Rates" are the guaranteed annual effective rates of interest we
credit to each Interest Pocket. A Guaranteed Rate may be modified only as
described in Section 3.3.
1.13 "Home Office" is our principal office in Indianapolis, Indiana. For
anything to be "received by AUL," it must be received at our Home Office.
1.14 "Interest Pocket" means a tracking method which associates funds deposited
into the FIA over a specific time period with a specific Guaranteed Rate,
as described in Section 3. After the guaranteed period provided in Section
3.3 has elapsed, we may consolidate two or more Interest Pockets in
conjunction with the announcement of new Guaranteed Rates.
1.15 "Investment Account" means each distinct portfolio established within our
Variable Account and identified in the Table of Investment Accounts in this
contract. Amounts allocated to any Investment Account are invested in the
shares of the corresponding Mutual Fund or Portfolio identified in the
Table of Investment Accounts. Our "Variable Account" is a separate account
we maintain under Indiana law which is called the AUL American Unit Trust
and which is registered under the Investment Company Act of 1940 as a unit
investment trust.
1.16 "Investment Option" is the FIA or any Investment Account. We reserve the
right to provide other Investment Options under this contract at any time.
1.17 The "Market Value Adjustment" is determined, as of the calculation date, by
multiplying a percentage times the Withdrawal Value being paid from the FIA
under Section 9.2(c).
If X is greater than Y, the percentage equals 5 times (X-Y) and the amount
of the Adjustment is deducted from the Withdrawal Value. If Y is greater
than X, the percentage equals 4 times (X-Y) and the amount of the
Adjustment is added to the Withdrawal Value. For purposes of this Section:
X= the Guaranteed Rate we credit to new Contributions, and
Y= the dollar-weighted average rate of interest we credit to amounts
withdrawn from each affected Participant Account under Section 9.2(c).
Our determination of the Market Value Adjustment is conclusive.
P-GB-K-AUL1MFVA.4
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1.18 "Mutual Fund" means any diversified, open-end, management investment
company made available by us, and listed in the Table of Investment
Accounts.
1.19 "Participant" is any person participating in the Plan that has a
Participant Account.
1.20 "Participant Account" is an account under this contract for each
Participant. Each Participant Account may have subaccounts for each type of
Contribution. We credit Contributions to Participant Accounts and
Contribution-type subaccounts as you direct.
1.21 "Plan" includes the Plan Sponsor's Code Section 401(a) plan and its Code
Section 403(b) plan that invest in this contract.
1.22 "Plan Sponsor" is ABC School.
1.23 "Portfolio" is a portfolio established within a particular Mutual Fund, as
described in the Mutual Fund's current prospectus.
1.24 "Valuation Periods" start at the close of each Business Day and end at the
close of the next Business Day.
1.25 The "Withdrawal Charge" is a percentage of the Account Value withdrawn
under this contract. The Withdrawal Charge will not apply to Account Values
withdrawn to provide a benefit payment or an annuity as described in
Sections 5.2 and 6.1, respectively. The percentage varies by the Contract
Year in which a withdrawal is made. The Withdrawal Charge percentage is as
follows:
During Contract Year Percentage
-------------------- ----------
1 3
2 2
3 1
Thereafter 0
In no event will the cumulative total of all Withdrawal Charges, including
those previously assessed against any amount withdrawn from a Participant
Account, exceed 9% of total Contributions allocated to that Participant
Account.
1.26 "Withdrawal Value" is a Participant's Account Value, less any Withdrawal
Charge.
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SECTION 2 - ADMINISTRATION OF PARTICIPANT ACCOUNTS
2.1 How Contributions Are Handled: Contributions we receive are credited to the
appropriate Contribution-type subaccounts of each Participant Account, as
you direct in your allocation instructions. Code Section 403(b)
Contributions must be identified as Elective Deferrals, Employee Mandatory
Contributions, or Employer Contributions. A Participant's initial
Contribution is allocated to the Participant Account by the second Business
Day after we (1) receive the initial Contribution or, if later, (2) receive
all data necessary to complete the allocation (including data required to
establish the Participant Account, the amount of the Participant's
Contribution, and Investment Option elections. Subsequent Contributions are
allocated to the Participant Account on the Business Day we (1) receive
that Contribution or, if later, (2) receive all data necessary to complete
the allocation.
For Code Section 403(b) Contributions, if we do not receive the data
required to establish a Participant Account and the amount of a
Contribution for the Participant within 5 Business Days after we first
receive that Contribution, we will return that Contribution to you unless
you consent to us retaining that Contribution until the earlier of (i) the
date we receive such data and amount and, therefore, can properly allocate
that Contribution to the Participant Account or (ii) 25 days from the date
we receive that Contribution.
For Code Section 401(a) Contributions, if we do not receive the data
required to establish a Participant Account and the amount of a
Contribution for the Participant as of the date we receive that
Contribution, the Contribution is allocated to a suspense account. The
suspense account earns interest at the Guaranteed Rate for Contributions
received on the same date. When we receive all required data, amounts in
the suspense account, plus interest, are transferred to the appropriate
Investment Option for each designated Contribution-type.
If we receive the data required to establish a Participant Account and the
amount of a Contribution for the Participant, but we do not receive
Investment Option elections for that Participant, the Contribution is
allocated to a suspense account. The suspense account earns interest at the
Guaranteed Rate for Contributions received on the same date. When we
receive all required data, amounts in the suspense account, plus interest,
are transferred to the appropriate Investment Option for each designated
Contribution-type.
Participant Accounts may be allocated to Investment Options in any
increments acceptable to us. Investment Option elections remain in effect
until changed by you. A change in Investment Option elections is made by
giving us new Investment Option elections.
2.2 Transfers from Other Retirement Programs: If permitted by the Plan, we may
accept amounts transferred from other Code Section 403(b) or Code Section
401(a) funding vehicles. Such transferred amounts, as identified by you,
are credited to a rollover subaccount, under the appropriate Participant
Account. Amounts transferred to a Code Section 403(b) Contribution rollover
subaccount of a Participant Account must be attributable to contributions
made pursuant to Code Section 403(b).
2.3 Reallocation of Participant Accounts: You may direct us to reallocate all
or a portion of the Account Value of any Participant Account among other
Participant Accounts. You must certify that such reallocation is in
accordance with the Plan.
2.4 Excess Contributions: On receipt of instructions from you, we will withdraw
Excess Contributions, plus gains and minus losses, from a Participant
Account and return them to the Participant, or as you direct. Such
instructions must state the amount to be returned and certify
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that such Contributions are Excess Contributions and that such return is
permitted by the Plan and the Code. A return of Excess Contributions is
treated like a Plan benefit payment, under Section 5.2.
No Participant is permitted to have elective deferral contributions (within
the meaning of Code Section 402(g)(3)) made during a calendar year under
this contract, or under any other plans, contracts, or arrangements
maintained by his employer, in excess of the dollar limitation in effect
under Code Section 402(g)(1) and any Regulations issued thereunder for
taxable years beginning in such calendar year.
2.5 Transfers from Other Contracts: We may require amounts transferred to a
Participant Account from other AUL group annuity contracts to be deposited
in a suspense account. We will advise you if this limitation applies before
accepting such a transfer.
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SECTION 3 -- OPERATION OF FIXED INTEREST ACCOUNT (FIA)
3.1 Allocations to Participant Accounts: We allocate each Participant's
Contributions in the FIA based on the information you provide.
3.2 Provision of Guaranteed Rates for Interest Pockets: At least 10 days in
advance of each calendar quarter, we will declare a Guaranteed Rate for the
Interest Pocket for that quarter. All Contributions or transfers hereunder
which are allocated to the FIA during that quarter will earn interest at
that Guaranteed Rate until that quarterly pocket matures on the second
January 1 following the quarter in which that pocket was established.
3.3 Renewal of Guaranteed Rates: Those quarterly Interest Pockets which mature
at the same time will be combined into an annual renewal Interest Pocket.
Funds associated with that annual renewal Interest Pocket will earn
interest for a full year at the Guaranteed Rate declared for that pocket. A
new Guaranteed Rate for each annual renewal Interest Pocket will be
declared at least 30 days prior to every January 1 for the 5 years
following the establishment of that pocket. An annual renewal Interest
Pocket will mature on January 1 of the sixth year following its
establishment, when it will be combined into one annual portfolio Interest
Pocket. Funds associated with that annual portfolio Interest Pocket will
earn interest for a full year at the Guaranteed Rate for that pocket, which
will be declared at least 30 days prior to every January 1.
You may accept the declared Guaranteed Rate for an annual renewal or
portfolio Interest Pocket either by continuing to allocate Contributions to
the FIA or by otherwise notifying us of your acceptance. You may reject the
declared rate for that pocket by notifying us. This acceptance or rejection
must occur after the declaration of the rate for that pocket and before the
next January 1, when the rate becomes effective. If you neither
specifically accept nor reject the declared Guaranteed Rate for the new
pocket by the deadline, you will be deemed to have accepted the rate. If
you reject the declared Guaranteed Rate for the new annual renewal or
portfolio pocket, the aggregate Withdrawal Value of that pocket will be
paid out as described in Section 3.5.
3.4 Minimum Rate Guarantee: No Guaranteed Rate may be less than an annual
effective interest rate of 3.00%.
3.5 Payout Upon Rejection of Declared Guaranteed Rate: If you reject the
Guaranteed Rate for an Interest Pocket we announce under Section 3.3, the
aggregate Withdrawal Value of that Interest Pocket is paid to you in 6
equal annual installments. The initial installment is calculated on the
date you reject the declared rate and is paid within 7 days from that date.
Subsequent installments are paid on the anniversary of the first
installment payment date. During the installment payment period, interest
is credited to amounts in the terminating pocket at a rate equal to the
current average Guaranteed Rate (as determined on the first installment
payment date) of all your Interest Pockets, less 1%. The minimum rate
guarantee provided in Section 3.4 applies to the interest credited under
this Section. Interest is paid with each installment.
3.6 Allocation of Withdrawals: Withdrawals or transfers from the FIA are on a
first-in/first-out basis, unless the Account or a terminating pocket is
being paid out to you in installments. All amounts paid during an
installment payout period are paid on a pro-rata basis.
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SECTION 4 - VALUATION OF INVESTMENT ACCOUNTS
4.1 Operation of Investment Accounts: All income, gains, or losses, realized or
unrealized, from assets held in any Investment Account are credited to or
charged against the applicable Investment Account without regard to our
other income, gains, or losses. Investment Account assets are not
chargeable with liabilities arising out of any other business we may
conduct.
4.2 Valuation of Mutual Funds: The current prospectus for each Mutual Fund
describes how that Mutual Fund's assets are valued.
4.3 Accumulation Units: We credit amounts allocated to an Investment Account in
Accumulation Units. The Accumulation Unit value used is the one for the
Valuation Period when we allocate the amount to the Investment Account.
4.4 Value of Accumulation Units: We generally establish the Accumulation Unit
value for a new Investment Account at $1.00 on the date the first deposit
is made to the Investment Account. The value of an Accumulation Unit for
any later Valuation Period equals the value of an Accumulation Unit for the
immediately preceding Valuation Period times the Net Investment Factor for
the current Valuation Period. We determine the Accumulation Unit value
before giving effect to any additions, withdrawals, or transfers in the
current Valuation Period.
4.5 Determining the Net Investment Factor: We determine the Net Investment
Factor for each Investment Account by dividing (a) by (b), and then
subtracting (c), where:
(a) is:
(1) the net asset value of a Mutual Fund or Portfolio share at the
end of the current Valuation Period, plus
(2) any dividend or other distribution paid on each Mutual Fund or
Portfolio share during such Valuation Period, plus or minus
(3) any credit or charge for taxes paid or reserved by us during the
Valuation Period that we determine are attributable to the
Investment Account;
(b) is the net asset value of each Mutual Fund or Portfolio share held in
the Investment Account at the end of the prior Valuation Period; and
(c) is a daily charge factor we determine, as described in Section 7.1.
4.6 Valuing Participant Accounts: We determine the Account Value in an
Investment Account by multiplying the Accumulation Units in each
Participant Account by the Accumulation Unit value. The Accumulation Unit
value of an Investment Account changes only on a Business Day.
P-GB-K-AUL1MFVA.9
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SECTION 5 - BENEFIT PAYMENTS AND TRANSFERS
5.1 General Withdrawal Provisions: Subject to the following provisions of this
Section, and prior to notification of contract termination, you may direct
us to withdraw all or a portion of a Participant's Account Value pursuant
to Sections 5.2 and 5.3 to provide a cash payment to you to pay Plan
benefits.
(a) Amounts attributable to amounts held as of December 31, 1988 under
another Code Section 403(b) annuity contract may be withdrawn to
provide such benefits.
(b) Amounts attributable to Code Section 403(b) Contributions made other
than pursuant to a salary reduction agreement (within the meaning of
Code Section 402(g)(3)(C)) may be withdrawn to provide such benefits.
(c) Amounts attributable to Code Section 403(b) Contributions made
pursuant to a salary reduction agreement (within the meaning of Code
Section 402(g)(3)(C)) may be withdrawn to provide such benefits,
provided that the withdrawal is made to provide a loan or that any
distribution of such amount shall not occur until the Participant has
either attained age 59 1/2, separated from service, died, become
totally disabled (as defined by the Plan), or experienced a hardship
(as defined by the Plan). However, in the case of a hardship
withdrawal, any gain credited to such Contributions may not be
withdrawn.
(d) Withdrawal of any amount from this contract which is transferred
directly by us pursuant to your or Participant instructions to another
Code Section 403(b) tax-deferred annuity funding vehicle under
applicable IRS rules and regulations is not the provision of a Plan
benefit for purposes of Section 5.2, but instead is a Contract
termination as to that amount for that Participant; and any such
withdrawal shall be subject to application of the Withdrawal Charge
pursuant to Section 5.3. You hereby grant to a Participant the right
to direct the withdrawal and direct transfer of his voluntary Elective
Deferrals (as determined by you) to another Code Section 403(b)
tax-deferred annuity funding vehicle.
(e) If, as provided in Internal Revenue Code Regulation Section
1.403(b)-2T Q&A-2, the distributee of any eligible rollover
distribution elects to have the distribution paid directly to an
eligible retirement plan (as defined in Q&A-1 of that Section) and
specifies the eligible retirement plan to which the distribution is to
be paid, then the distribution shall be paid to that eligible
retirement plan in a direct rollover.
(f) We are not responsible for determining a Participant's compliance with
the requirements above. Any withdrawal request submitted by you must
include certification as to the purpose of the withdrawal. You assume
full responsibility for determining whether any withdrawal is
permitted under applicable law and under the terms of a particular
Plan. We may rely solely upon your representations made in the
withdrawal request.
(g) Withdrawals from a Participant Account's share of any Investment
Option may not be made in an amount less than the smaller of $500 or
the Participant Account's entire share of the Investment Option. If a
withdrawal reduces the Participant Account's share of an Investment
Option to less than $500, such remaining share shall also be
withdrawn.
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(h) A withdrawal request is effective, and the Account Value to be applied
pursuant to Sections 5.2, 5.3, or 5.4 is determined, on the Business
Day that we receive a proper withdrawal request (or due proof of
death, if received later).
(i) We will pay any cash lump-sum to you or to whomever you direct within
7 days from the appropriate Business Day as determined in Subsection
(h) above, except as we may be permitted to defer such payment of
amounts withdrawn from the Variable Account in accordance with
appropriate provisions of the federal securities laws. We reserve the
right to defer the payment of amounts withdrawn from the FIA for a
period of up to 6 months after we receive the withdrawal request.
(j) Withdrawals from a Participant Account's share of the FIA will be made
on a first-in/first- out basis under Section 3.6.
5.2 Plan Benefit Payments: You will advise us of any person for whom a payment
is due under the Plan, including the nature and amount of such payment,
before the date such payment is due or as soon thereafter as is
practicable.
(a) Subject to the limitations provided in Section 5.1 and Subsection (b)
below, prior to notification of contract termination, you may direct
us to withdraw all or a portion of a Participant's Account Value
(subject to Section 7.5) to provide a cash payment to you to pay Plan
benefits (other than full or partial Plan termination benefits
described in Section 5.3) for retirement, death, disability,
termination of employment, hardships, loans, required minimum
distribution benefits pursuant to Code Section 401(a)(9), or, for Code
Section 403(b) plans or profit-sharing plans, benefits upon attainment
of age 59 1/2 or as otherwise allowed by the Code (provided that such
Code Section 403(b) plan or profit-sharing plan benefits are paid in a
taxable distribution to the Participant). Such a withdrawal is not
subject to a Withdrawal Charge. Any Plan benefit cash payment
requested for a Participant who terminates employment on or after the
effective date of Plan termination is deemed to be a Plan termination
benefit, and is subject to a Withdrawal Charge pursuant to Section
5.3. Additionally, if 20% or more of the Participants terminate
employment within the same Contract Year, any Plan benefit cash
payment for such a terminating Participant is subject to a Withdrawal
Charge pursuant to Section 5.3.
(b) Regarding death benefits specifically, notwithstanding the provisions
of Section 9, upon receipt from you of instructions and of due proof
of the Participant's (and, if applicable, the beneficiary's) death
prior to the date the Participant Account is closed, we will apply the
Account Value (subject to Section 7.5) of the Participant Account for
the purpose of providing a death benefit under the Plan. The death
benefit will be paid to the Participant's beneficiary according to the
method of payment elected by the beneficiary (unless such method of
payment was previously elected by the Participant). The Participant's
beneficiary may also designate a beneficiary. The death benefit
attributable to Code Section 403(b) funds will be payable:
(1) in a single sum or other method not provided in (2) below;
provided, however, that the entire Account Value (subject to
Section 7.5) must be paid to the beneficiary on or before
December 31 of the calendar year which contains the fifth
anniversary of the Participant's death, or
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(2) as an annuity in accordance with the Annuity Options shown in
Section 6.2 over a period not to exceed the life or life
expectancy of the beneficiary. If the beneficiary is not the
Participant's surviving spouse, the annuity must begin on or
before December 31 of the calendar year immediately following the
calendar year in which the Participant died. If the beneficiary
is the Participant's surviving spouse, the annuity need not begin
before December 31 of the calendar year in which the Participant
would have attained age 70 1/2.
If a Participant dies on or after his Annuity Commencement Date, any
interest remaining under the Annuity Option selected will be paid at
least as rapidly as prior to the Participant's death.
Any withdrawal request under this Section must certify the purpose of the
request.
5.3 Other Cash Benefits: Subject to the limitations provided in Section 5.1,
prior to notification of contract termination, you may direct us to make a
cash payment from a Participant Account to you for the purpose of providing
Plan benefits not specifically described in Section 5.2. This Section
applies to any withdrawal to pay a Plan benefit payable because of the
termination or partial termination of the Plan (as determined under
applicable IRS guidelines and judicial precedent), or if the underlying
reason for payment of such benefit results in the termination or partial
termination of the Plan.
If the entire Account Value is withdrawn, the amount paid equals the
Withdrawal Value, subject to any charges described in Section 7. In all
other instances, the Account Value is reduced by an amount sufficient to
make the payment requested and to cover the Withdrawal Charge and any
charges described in Section 7.
However, despite the previous provisions of this Section, in the first
Contract Year in which a Participant Account is established, you may
withdraw from that Participant Account up to 10% of the sum of the Account
Value of that Participant Account (determined as of the later of the
Contract Date or the Contract Anniversary immediately preceding the request
for the withdrawal) plus Contributions made for that Participant during
that Contract Year, without application of the Withdrawal Charge. You may
do the same in the next succeeding Contract Year. In any subsequent
Contract Year, you may withdraw from that Participant Account up to 10% of
the Account Value of that Participant Account (determined as of the
Contract Anniversary immediately preceding the request for the withdrawal)
without application of the Withdrawal Charge.
5.4 Transfers between Investment Options: You may direct us to transfer amounts
between Investment Options, or to initiate Participant-directed transfers
between Investment Options. Transfers are effective on the Business Day we
receive the transfer direction. Transfer directions for a Participant
Account may be made daily on any Business Day. We will make the transfer as
requested within 7 days from the date we receive the request, except as we
may be permitted to defer the transfer of amounts withdrawn from the
Variable Account in accordance with appropriate provisions of the federal
securities laws. We reserve the right to defer a transfer of amounts from
the FIA for a period of up to 6 months after we receive the transfer
request.
However, despite the previous paragraph, once a transfer from the FIA has
been made for a Participant, a transfer to the FIA for that Participant may
be made only after 90 days have elapsed since the date of the last transfer
from the FIA for that Participant. If you make available to Participants
the FIA and the Competing Investment Account marked with an
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asterisk in the Table of Investment Accounts, the 90-day transfer
restriction discussed in the previous sentence does not apply, and Section
5.6 does apply.
5.5 Minimum Amounts: The minimum amount you or a Participant may withdraw or
transfer from an Investment Option is $500 or, if less, the Participant's
entire balance in that Investment Option. If a withdrawal or transfer
reduces the Participant balance in an Investment Option to less than $500,
the entire balance is withdrawn or transferred.
5.6 Maximum Amounts: If you make available to Participants the FIA and the
Competing Investment Account marked with an asterisk in the Table of
Investment Accounts, no more than 20% of a Participant's FIA Account Value
on the later of the Contract Date or the Contract Anniversary immediately
preceding the request for transfer may be transferred from the FIA during
any Contract Year. However, if the Participant's FIA Account Value is less
than $2,500 on the later of the Contract Date or the Contract Anniversary
immediately preceding the request for transfer, the amount transferrable
from the FIA for that Participant for that Contract Year is the minimum
amount specified in Section 5.5.
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SECTION 6 - ANNUITIES
6.1 Annuity Purchases: Prior to notification of contract termination, you may
withdraw all or a portion of a Participant's Account Value (subject to
Section 7.5) to provide an annuity, reflecting Plan benefits. Such a
withdrawal is not subject to a Withdrawal Charge. On receipt of an annuity
purchase request, we transfer the entire Participant Account to a suspense
account. Such amounts remain in the suspense account until the Annuity
Commencement Date, when the full balance (including interest) is applied to
purchase the annuity.
Your annuity purchase request must specify the purpose for the annuity, the
election of an annuity option, Annuity Commencement Date, any contingent
annuitant or beneficiary, and any additional information we require. If the
Participant or any contingent annuitant dies before the Annuity
Commencement Date, the annuity election is cancelled.
The minimum amount which you may apply to purchase an annuity is $5,000.
6.2 Annuity Options: You may elect any optional form of annuity we offer at the
time of purchase. Available annuity options always include:
(a) Life Annuity. A monthly annuity is payable as long as the annuitant
lives, and ends with the last payment before the annuitant's death.
(b) Survivorship Annuity. A monthly annuity is payable as long as the
annuitant lives. After the annuitant's death, all or a portion of the
monthly annuity is paid to the contingent annuitant as long as the
contingent annuitant lives.
No annuity may have a certain period extending beyond the life expectancy
of a Participant or the joint life expectancy of a Participant and any
contingent annuitant, as determined on the Annuity Commencement Date.
6.3 Determining Annuity Amount: We compute the annuity amount using the factors
reflected in the Table of Guaranteed Immediate Annuities attached to this
contract. However, if our current single premium, nonparticipating,
immediate annuity rates for this class of group annuity contracts produces
a higher monthly annuity than the Table of Guaranteed Immediate Annuities,
then that more favorable annuity rate is applied.
6.4 Proof of Age and Survival; Minimum Payments: We may require proof of any
annuitant's or contingent annuitant's date of birth before commencing
payments under any annuity. We may also require proof that an annuitant or
contingent annuitant is living before making any annuity payment. If a
monthly annuity is less than our current established minimum payment, we
may make payments on a less-frequent basis or in a single sum.
6.5 Annuity Certificates: We issue to each person for whom an annuity is
purchased a certificate setting forth the annuity's amount and terms.
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SECTION 7 - MORTALITY AND EXPENSE RISK CHARGES
AND ADMINISTRATIVE CHARGES
7.1 Investment Account Mortality and Expense Risk Charges: We deduct from the
average daily net assets of each Investment Account the daily equivalent of
an annual combined mortality risk charge and expense risk charge of 1.25%.
This charge is part of the Net Investment Factor, described in Section 4.5.
7.2 Variable Investment Plus (VIP) Credit Factor: We determine a VIP credit
factor each month by multiplying the portions of the aggregate month-end
Account Value in all Investment Accounts by the monthly equivalent of the
corresponding annual VIP credit factors in the table below. The sum of
these products is divided by the aggregate month-end Account Value in all
Investment Accounts. We multiply the resulting percentage by each
Participant's month-end Account Value in each Investment Account, and add
the resulting amount to the Participant's Account Value for that Investment
Account.
Aggregate Month-End Account Value
allocated to Investment Accounts Annual VIP Credit Factors
--------------------------------- -------------------------
First $750,000 0.00%
Next $750,000 0.20%
Next $1 million 0.35%
Next $2.5 million 0.65%
Next $5 million 0.75%
Over $10 million 0.85%
7.3 Mutual Fund or Portfolio Expense: A Mutual Fund or Portfolio deducts an
investment advisory fee and other expenses from its net asset value, as
described in its current prospectus. Amounts deducted may include
operational, organizational, and extraordinary expenses. Expenses vary from
year-to-year.
7.4 Other Charges: Due and unpaid charges for which the Plan is responsible,
and which the Plan Sponsor and you have otherwise agreed to in writing,
will be deducted from Participant Accounts on a pro-rata basis. These
charges include participant statement mailing fees, Form 5500 fees, annual
administrative fees, data reconciliation and reconstruction fees,
commissions, and contract application/installation fees for a takeover
Plan. Charges for which the Plan Sponsor (not the Plan) is responsible, and
which the Plan Sponsor has otherwise agreed to in writing, must be paid by
the Plan Sponsor. These charges include contract application/installation
fees for a new Plan.
7.5 Taxes: We may deduct charges equal to any premium tax we incur from the
balance applied to purchase an annuity or at such other time as premium
taxes are incurred by us. We may also deduct from Investment Accounts
reasonable charges for federal, state, or local income taxes we incur that
are attributable to such Investment Accounts.
7.6 Reduction or Waiver of Charges: We may reduce or waive the Withdrawal
Charge or the charges discussed above, if the appropriate expenses
associated with the sale or administration of any contract are reduced, or
if a contract is sold covering our employees or directors, those of the AUL
American Series Fund, Inc., or to either's affiliates.
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SECTION 8 - CONTRACT MODIFICATIONS
8.1 Mutual Amendment: You and we may agree to any change or amendment to this
Contract without the consent of any other person or entity. This contract
cannot be modified or amended, nor can any provision or condition be
waived, except by our written agreement, signed by a corporate officer.
Such authority may be delegated only by a written agreement signed by our
corporate officer.
8.2 Rates and Section 7 Charges: We may announce new Guaranteed Rates, as
described in Sections 3.2 and 3.3 (including the consolidation of existing
Interest Pockets). However, as provided in Sections 3.2 and 3.3, we may not
change the declared Guaranteed Rate applicable to an established Interest
Pocket during the guaranteed period. We may also modify the charge levels
in Section 7, using the procedures of Section 8.4.
8.3 Conformance with Law: We may amend this contract at any time, without your
consent, or that of any other person or entity, if the amendment is
reasonably needed to comply with, or give you or Participants the benefit
of, any provisions of federal or state laws. Any such amendment will be
delivered to you prior to its effective date.
8.4 Our Right to Initiate Changes: In addition to those amendments permitted by
Sections 8.2 and 8.3, we may initiate an additional provision or
modification of any other provision of this contract (including the
addition of a charge for transfers between Investment Options) by giving
you 60 days notice of such modification. Any such modification is effective
without your affirmative assent.
8.5 Prohibited Amendments:
(a) Despite our right to initiate changes under Section 8.4, we may not
initiate changes to the minimum Guaranteed Rate specified in Section
3.4, our obligation to set Guaranteed Rates for the period of time
specified in Sections 3.2 and 3.3, the payment upon rejection of a
declared Guaranteed Rate specified in Section 3.5, the payment
provisions upon contract termination specified in Section 9.2, or the
Table of Guaranteed Immediate Annuities.
(b) No modification to this contract may change the terms of a previously
purchased annuity or reduce any interest guarantee applicable to
Participant Account balances held in the FIA on the modification's
effective date.
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SECTION 9 - TERMINATION OF CONTRACT
9.1 Termination by You: You may terminate this contract by giving us notice.
Such termination is effective on the Business Day that we receive your
notice. If Code Section 403(b) funds are to be transferred to a substitute
funding medium, your notice must contain your certification that such
substitute funding medium meets the requirements of Code Section 403(b) and
the Regulations issued thereunder.
9.2 Payment Upon Termination by You: Upon termination by you, you may elect
from the following options:
(a) Transfer to Another Contract: You may transfer the aggregate Account
Value of all Participant Accounts, or you may permit a Participant to
transfer his Account Value, to any group annuity contract which we may
make available. Any such amounts are transferred on the termination
effective date.
(b) Payment of Investment Accounts in Lump-Sum and FIA in Installments:
You may have the aggregate Investment Account Withdrawal Value of all
Participant Accounts paid to you in a lump-sum, with the FIA paid in 6
equal annual installments. The aggregate Investment Account Withdrawal
Value will be determined on the termination effective date and paid
within 7 days from the termination effective date, except as we may be
permitted to defer payment in accordance with appropriate provisions
of the federal securities laws. The initial FIA installment is
calculated on the termination effective date and paid within 7 days
from the termination effective date. Subsequent installments are paid
on the anniversary of the termination effective date. During the
installment payment period, interest is credited under the terms
described in Section 3.5.
(c) Payment of Code Section 401(a) Funds in Lump-Sum: The aggregate Code
Section 401(a) Withdrawal Value of all Participant Accounts, plus or
minus any Market Value Adjustment, will be determined on the
termination effective date and paid within 7 days from the termination
effective date, except as we may be permitted to defer payment in
accordance with appropriate provisions of the federal securities laws.
9.3 Termination by Us: We have the right, subject to applicable state law, to
terminate any Participant Account established under this contract at any
time during the Contract Year if the Account Value of the Participant
Account is less than $200 for the first Contract Year in which a
Contribution is made for the Participant, and $400 for any subsequent
Contract Year, and at least 6 months have elapsed since the last previous
Contribution to the contract. If we elect to terminate a Participant
Account, the termination will be effective on the date 6 months following
the date we give notice to you and the Participant that the Participant
Account is to be terminated, provided that any Contributions made during
the 6-month period are insufficient to raise the Account Value up to the
minimum level.
9.4 Payment Upon Termination by Us: As of the effective date of termination of
a Participant Account by us, we may elect to have a single sum equal to the
Account Value of the Participant Account on the effective date of
termination paid to you within 7 days from that date. Any such payment is
in full settlement of the Participant Account under this contract and in
lieu of any other payment under its terms.
P-GB-K-AUL1MFVA.17
<PAGE>
9.5 Indemnification Required: Payments or transfers under Section 9.2 are in
full settlement of our obligations under this contract. Prior to making
such payments or transfers, we may require you and the Plan Sponsor to
indemnify and hold us harmless from any and all losses, claims, or demands
that may later be asserted against us in connection with the making of such
payment or transfer.
9.6 Effect on Contract Obligations: Any annuities purchased prior to
notification of contract termination are unaffected by a termination. We
may refuse further Contributions at any time after a termination notice has
been given. If we have been providing recordkeeping services, such services
stop on the termination effective date. This contract terminates
automatically if no amounts remain in either the FIA or any Investment
Account.
P-GB-K-AUL1MFVA.18
<PAGE>
SECTION 10 - GENERAL PROVISIONS
10.1 Ownership: You own this contract. No other person or entity has any right,
title, or interest in this contract or to amounts received or credited
under it until such amounts are made available to them by you. All amounts
received or credited under this contract become our property. We are
obligated to make only the payments or distributions specified in this
contract.
10.2 Entire Contract: This contract and your application is the entire agreement
between you and us. We are not a party to, nor bound by, a Plan, trust,
custodial agreement, or other agreement, or any amendment or modification
to any of the same. We are not a fiduciary under this contract or under any
such Plan, trust, custodial agreement, or other agreement.
10.3 Benefit Determinations: You will furnish us whatever information is
necessary to establish the eligibility for and amount of annuity or other
benefit due. We rely solely on your instructions and certifications with
respect to Participant benefits. You are fully responsible for determining:
(a) whether benefit payments are permitted under applicable law and the
Plan and
(b) the existence or amount of Excess Contributions (plus gains or minus
losses thereon), or that returns of Excess Contributions are permitted
by the Plan and the Code.
We may rely on your or your designee's statements or representations in
honoring any benefit payment request.
10.4 Recordkeeping Services: We generally provide Plan recordkeeping services
when all of a Plan's funds are held under this contract. We may decline to
provide Plan recordkeeping services if you elect to allocate Plan funds to
investments other than this contract, or if your Plan's recordkeeping
practices, in our judgment, impose a substantial administrative or
financial burden on us.
10.5 Representations and Warranties: You and we mutually represent and warrant,
each to the other, that each is fully authorized to enter into this
contract and that this contract is a valid and binding obligation and that
the execution of this contract does not violate any law, regulation,
judgment, or order by which the representing party is bound. In addition,
you represent and warrant to us that:
(a) the Code Section 401(a) Plan is qualified under Code Section 401(a)
and the Code Section 403(b) Plan is qualified under Code Section
403(b);
(b) the execution of this contract has been authorized by the Plan
fiduciary responsible for Plan investment decisions; and
(c) the execution or performance of this contract does not violate any
Plan provision or any law, regulation, judgment, or order by which the
Plan is bound.
We do not make any representation or warranty regarding the federal, state,
or local tax status of this contract, any Participant Account, or any
transaction involving this contract.
10.6 Contractholder Representative; Misstatement of Data: You may designate a
representative to act on your behalf under Section 2 or 3 or to receive any
payment under Section 5 or 9. We may rely on any information you, your
designee, or a Participant furnish. We need not inquire as to the accuracy
or completeness of such information. If any essential data pertaining to
any person has been omitted or misstated, including, but not limited to, a
misstatement of an annuitant's or contingent
P-GB-K-AUL1MFVA.19
<PAGE>
annuitant's age, we will make an equitable adjustment to provide the
annuity or other benefit determined using correct data.
10.7 Requirement for Writing: When reference is made to you, your designee, or a
Participant making a request or giving notice, instruction, or direction,
such request, notice, instruction, or direction must be in writing, or in a
form otherwise acceptable to us, and is effective when we receive it.
10.8 Quarterly Statement of Account Value: Reasonably promptly after the end of
each Contract Quarter, we will prepare a statement of the Account Value for
each Participant Account.
10.9 Conformity with Law: Any benefit payable under this contract shall not be
less than the minimum benefit required by the insurance laws of the state
in which the contract is delivered. Language in this contract referring to
state or federal tax, securities, or other statutes or rules does not
incorporate within this contract any such statutes or rules.
10.10 Sex and Number:
Whenever the context so requires, the plural includes the singular, the
singular the plural, and the masculine the feminine.
10.11 Facility of Payment:
If any Participant, contingent annuitant, or beneficiary is legally
incapable of giving a valid receipt for any payment, and no guardian has
been appointed, we may pay the person or persons who have assumed the care
and principal support of such Participant, contingent annuitant, or
beneficiary. We may also pay you directly or as you otherwise instruct. Any
such payment fully discharges us to the extent of such payment.
10.12 Voting:
We own all Mutual Fund or Portfolio shares held in an Investment Account.
We exercise the voting rights of such shares at all shareholder meetings on
all matters requiring shareholder voting under the Investment Company Act
of 1940 or other applicable laws. Our vote reflects instructions received
from persons having the voting interest in the shares, as follows:
(a) You have the voting interest under this contract. Unless otherwise
required by applicable law, the number of Mutual Fund or Portfolio
shares for which you may give voting instructions is determined by
dividing the aggregate Account Values in the affected Investment
Account by the net asset value of the Mutual Fund or Portfolio shares.
Fractional votes are counted. Our determination is made as of the date
used by the Mutual Fund or Portfolio to determine shareholders
eligible to vote.
(b) We vote shares proportionally, to reflect the voting instructions we
receive in a timely manner from you and from all other
contractholders. If no timely voting instructions are received from
you, we vote shares proportionally, to reflect the voting instructions
we received in a timely manner for all other contracts.
To the extent permitted by applicable law, we may vote shares in our own
right or may modify the above procedures to reflect changes in the law or
its interpretation.
We will provide prospectuses and other reports as required by applicable
federal law.
10.13 Acceptance of New Participants or Contributions:
We may refuse to accept new Participants or new Contributions at any time.
10.14 AUL's Annual Statement:
No provision of this contract controls, determines, or modifies any AUL
annual statement made to any insurance department, contractholder,
regulatory body, or
P-GB-K-AUL1MFVA.20
<PAGE>
other person. Nor does anything in such annual statement control,
determine, or modify the provisions of this contract.
10.15 AUL's Annual Meeting:
Unless otherwise notified, our regular annual meeting is held at our Home
Office on the third Thursday in February at 10 a.m. Elections for directors
are held at such annual meeting.
10.16 Nonforfeitability and Nontransferability:
The entire Withdrawal Value of the vested portion (as determined pursuant
to the Code Section 403(b) Plan) of Code Section 403(b) funds of a
Participant Account under this contract is nonforfeitable at all times. No
sum payable under this contract which is attributable to Code Section
403(b) funds with respect to a Participant may be sold, assigned,
discounted, or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose to any person or
entity other than AUL. In addition, to the extent permitted by law, no such
sum shall in any way be subject to legal process requiring the payment of
any claim against the payee.
10.17 Assignment by You:
You may assign your interest in Code Section 401(a) funds held in this
contract, but any assignment must be in writing, and we shall not be deemed
to have knowledge of such assignment unless the original or a duplicate is
filed at our Home Office. We will not assume any responsibility for the
validity of an assignment.
10.18 Effect of Disqualification:
You will promptly notify us if you determine that there is a reasonable
basis for believing the Code Section 401(a) Plan is no longer qualified
under Code Section 401(a). In such event, each Participant Account's share
of each Investment Account is withdrawn and transferred to a suspense
account. No amounts attributable to this contract can be placed in any
Investment Account until the Code Section 401(a) Plan is again qualified.
P-GB-K-AUL1MFVA.21
<PAGE>
TABLE OF GUARANTEED IMMEDIATE ANNUITIES
MONTHLY INCOME PER $1,000 OF ACCOUNT VALUE
10-YEAR CERTAIN
ADJUSTED AGE LIFE ANNUITY AND LIFE ANNUITY
45 2.9690 2.9632
46 3.0190 3.0124
47 3.0715 3.0641
48 3.1269 3.1185
49 3.1852 3.1756
50 3.2466 3.2357
51 3.3115 3.2988
52 3.3800 3.3653
53 3.4525 3.4352
54 3.5291 3.5088
55 3.6104 3.5863
56 3.6966 3.6678
57 3.7881 3.7536
58 3.8850 3.8437
59 3.9877 3.9382
60 4.0964 4.0374
61 4.2115 4.1414
62 4.3334 4.2505
63 4.4626 4.3650
64 4.5994 4.4850
65 4.7442 4.6108
66 4.8977 4.7425
67 5.0608 4.8804
68 5.2347 5.0250
69 5.4213 5.1766
70 5.6229 5.3356
71 5.8412 5.5020
72 6.0778 5.6755
73 6.3336 5.8552
74 6.6097 6.0404
75 6.9084 6.2302
Adjusted Age = Actual Age at Settlement (in years and completed months) less the
following number of months: [.6 times (Birth Year - 1915)] rounded to the
nearest integer.
Guaranteed purchase rates are 96% of the net single premium for the benefit
provided based on the unprojected 1994 Group Annuity Reserving Table for females
with interest at 2%.
P-GB-K-AUL1MFVA.22
<PAGE>
TABLE OF INVESTMENT ACCOUNTS
The following Investment Accounts are made available to you under this contract.
By completing a form we require, you may restrict the Investment Accounts you
make available to your Participants. Amounts allocated to any Investment Account
identified below are invested in the shares of the corresponding Mutual Fund or
Portfolio listed below. The Competing Investment Account marked with an asterisk
(*) is not available if your Plan uses the FIA and if you do not want the FIA
20% annual transfer restriction provided in Section 5.6 to apply.
<TABLE>
<CAPTION>
<S> <C>
Investment Account Mutual Fund or Portfolio
- ------------------------------------------ ------------------------------------------
AUL American Aggressive Investor Portfolio AUL American Aggressive Investor Portfolio
AUL American Bond AUL American Bond
AUL American Conservative Investor AUL American Conservative Investor
Portfolio Portfolio
AUL American Equity AUL American Equity
AUL American Managed AUL American Managed
AUL American Moderate Investor Portfolio AUL American Moderate Investor Portfolio
AUL American Money Market * AUL American Money Market
AUL American Tactical Asset Allocation AUL American Tactical Asset Allocation
Portfolio Portfolio
Alger American Growth Alger American Growth
American Century VP Capital Appreciation American Century VP Capital Appreciation
Calvert Social Mid-Cap Growth Calvert Social Mid-Cap Growth
Fidelity VIP Equity-Income Fidelity VIP Equity-Income
Fidelity VIP Growth Fidelity VIP Growth
Fidelity VIP High Income Fidelity VIP High Income
Fidelity VIP Overseas Fidelity VIP Overseas
Fidelity VIP II Asset Manager Fidelity VIP II Asset Manager
Fidelity VIP II Contrafund Fidelity VIP II Contrafund
Fidelity VIP II Index 500 Fidelity VIP II Index 500
Janus Aspen Series Flexible Income Portfolio Janus Aspen Series Flexible Income Portfolio
Janus Aspen Series Worldwide Growth Portfolio Janus Aspen Series Worldwide Growth Portfolio
PBHG Insurance Series Growth II PBHG Insurance Series Growth II
PBHG Insurance Series Technology PBHG Insurance Series Technology
and Communication and Communication
SAFECO Resource Series Trust Equity Portfolio SAFECO Resource Series Trust Equity Portfolio
SAFECO Resource Series Trust Growth SAFECO Resource Series Trust Growth
Portfolio Portfolio
T. Rowe Price Equity-Income Portfolio T. Rowe Price Equity-Income Portfolio
</TABLE>
P-GB-K-AUL1MFVA.23
<PAGE>
CONTRACT NUMBER VXX,XXX
CONTRACTHOLDER ABC SCHOOL
PARTICIPANT'S NAME JOHN DOE
SOCIAL SECURITY NUMBER 123-45-6789
American United Life Insurance Company hereby certifies that the Contractholder
and AUL have entered into a Multiple-Fund Group Variable Annuity Contract (the
Contract) in connection with the Contractholder's tax-deferred annuity Plan
and/or qualified retirement Plan, and that AUL has created an account in your
name to receive Contributions from the Contractholder for your benefit pursuant
to the Contract. When used in this certificate, "we," "us," or "our" refer to
AUL.
The only parties to the Contract are the Contractholder and AUL. All rights and
benefits are determined in accordance with the provisions of the Contract.
Benefits under the Contract will be paid at the Contractholder's direction.
Any amendments to, or changes in, the Contract will be binding and conclusive on
you and your beneficiary.
This certificate is not itself the Contract, but is a certificate of
participation in the Contract.
AMERICAN UNITED LIFE INSURANCE COMPANY
/s/ William R. Brown
Secretary
GUARANTEED BENEFIT EMPLOYER-SPONSORED TDA AND QUALIFIED PLAN
MULTIPLE-FUND GROUP VARIABLE ANNUITY CERTIFICATE
(SBR,MBR,NBR)
ACCUMULATION UNITS IN ANY INVESTMENT ACCOUNT UNDER THE CONTRACT MAY INCREASE OR
DECREASE IN VALUE ACCORDING TO THE INVESTMENT PERFORMANCE OF THE UNDERLYING
INVESTMENTS HELD BY THE INVESTMENT ACCOUNT. THE VALUE OF SUCH ASSETS AND
ACCUMULATION UNITS IS NOT GUARANTEED. SECTION 4 OF THIS CERTIFICATE EXPLAINS THE
VALUATION OF SUCH ASSETS AND ACCUMULATION UNITS.
If you have questions concerning the Contract, or wish to register a complaint,
you may reach us by calling 1-800-338-9189.
P-GB-C-AUL1MFVA
<PAGE>
IMPORTANT NOTICE
To obtain information or make a complaint:
You may contact your Texas AUL office at:
1-512-822-7860
You may call AUL's toll-free telephone number for information or to make a
complaint at: 1-800-338-9189
You may also write to AUL at:
P O Box 368
Indianapolis, IN 46206-0368
You may contact the Texas Department of Insurance to obtain information on
companies, coverages, rights, or complaints at: 1-800-252-3439
You may write the Texas Department of Insurance at:
P O Box 149104
Austin, TX 78714-9104
FAX# (512) 475-1771
ATTACH THIS NOTICE TO YOUR POLICY: This notice is for information only and does
not become a part or condition of the attached document.
AVISO IMPORTANTE
Para obtener informacion o para someter una queja:
Puede comunicarse con su Texas AUL al:
1-512-822-7860
Usted puede llamar al numero de telefono gratis de AUL para informacion o para
someter una queja al: 1-800-338-9189
Usted tambien puede escribir a AUL:
P O Box 368
Indianapolis, IN 46206-0368
Puede comunicarse con el Departamento de Se guros de Texas para obtener
informacion acercu de companias, coberturas, derechos o quejas al:
1-800-252-3439
Puede escribir al Departamento de Seguros de
Texas:
P O Box 149104
Austin, TX 78714-9104
FAX# (512) 475-1771
UNA ESTE AVISO A SU POLIZA: Este aviso es solo para proposito de informacion y
no se conveerte en parte o condicion del documento adjunto.
P-GB-C-AUL1MFVA(TXNOTICE)
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1 - DEFINITIONS 3
SECTION 2 - ADMINISTRATION OF YOUR PARTICIPANT ACCOUNT 6
2.1----- How Contributions Are Handled
2.2----- Transfers from Other Retirement Programs
2.3----- Reallocation of Participant Accounts
2.4----- Excess Contributions
2.5----- Transfers from Other Contracts
SECTION 3 - OPERATION OF FIXED INTEREST ACCOUNT (FIA) 8
3.1----- Allocations to your Participant Account
3.2----- Provision of Guaranteed Rates for Interest Pockets
3.3----- Renewal of Guaranteed Rates
3.4----- Minimum Rate Guarantee
3.5----- Payout Upon Rejection of Declared Guaranteed Rate
3.6----- Allocation of Withdrawals
SECTION 4 - VALUATION OF INVESTMENT ACCOUNTS 9
4.1----- Operation of Investment Accounts
4.2----- Valuation of Mutual Funds
4.3----- Accumulation Units
4.4----- Value of Accumulation Units
4.5----- Determining the Net Investment Factor
4.6----- Valuing your Participant Account
SECTION 5 - BENEFIT PAYMENTS AND TRANSFERS 10
5.1----- General Withdrawal Provisions
5.2----- Plan Benefit Payments
5.3----- Other Cash Benefits
5.4----- Transfers Between Investment Options
5.5----- Minimum Amounts
5.6----- Maximum Amounts
SECTION 6 - ANNUITIES 13
6.1----- Annuity Purchases
6.2----- Annuity Options
6.3----- Determining Annuity Amount
6.4----- Proof of Age and Survival; Minimum Payments
6.5----- Annuity Certificates
P-GB-C-AUL1MFVA.1
<PAGE>
Page
SECTION 7 - MORTALITY AND EXPENSE RISK CHARGES
AND ADMINISTRATIVE CHARGES 14
7.1----- Investment Account Mortality and Expense Risk Charges
7.2----- Variable Investment Plus (VIP) Credit Factor
7.3----- Mutual Fund or Portfolio Expense
7.4----- Other Charges
7.5----- Taxes
SECTION 8 - CONTRACT MODIFICATIONS 15
8.1----- Mutual Amendment
8.2----- Rates and Section 7 Charges
8.3----- Conformance with Law
8.4----- Our Right to Initiate Changes
8.5----- Prohibited Amendments
SECTION 9 - TERMINATION OF CONTRACT 16
9.1----- Termination by the Contractholder
9.2----- Payment Upon Termination by the Contractholder
9.3----- Termination by Us
9.4----- Payment Upon Termination by Us
9.5----- Indemnification Required
9.6----- Effect on Contract Obligations
SECTION 10 - GENERAL PROVISIONS 18
10.1----- Ownership
10.2----- Entire Contract
10.3----- Benefit Determinations
10.4----- Recordkeeping Services
10.5----- Representations and Warranties
10.6----- Contractholder Representative; Misstatement of Data
10.7----- Requirement for Writing
10.8----- Quarterly Statement of Account Value
10.9----- Conformity with Law
10.10---- Sex and Number
10.11---- Facility of Payment
10.12---- Voting
10.13---- Acceptance of New Contributions
10.14---- AUL's Annual Statement
10.15---- Nonforfeitability and Nontransferability
10.16---- Assignment by the Contractholder
10.17---- Effect of Disqualification
TABLE OF GUARANTEED IMMEDIATE ANNUITIES 21
P-GB-C-AUL1MFVA.2
<PAGE>
SECTION 1 - DEFINITIONS
1.1 "Account Value" for your Participant Account as of a date is:
(a) your account's Code Section 403(b) subaccounts' balance in the Fixed
Interest Account (FIA) on that date; plus
(b) your account's Code Section 401(a) subaccounts' balance in the Fixed
Interest Account (FIA) on that date; plus
(c) the value of your account's Code Section 403(b) subaccounts'
Accumulation Units in each Investment Account on that date; plus
(d) the value of your account's Code Section 401(a) subaccounts'
Accumulation Units in each Investment Account on that date.
1.2 "Accumulation Unit" is a valuation device used to measure increases in and
decreases to the value of any Investment Account.
1.3 "Annuity Commencement Date" is the first day of the month an annuity begins
under the Contract. This date may not be later than the date your periodic
benefits are required to commence under the Code.
1.4 "Business Day" is any day both the New York Stock Exchange and our Home
Office are open for the general conduct of business.
1.5 "Code" means the Internal Revenue Code of 1986, as amended, and any
applicable regulations or rulings thereunder.
1.6 The "First Contract Anniversary" is listed on the Contract face page.
Subsequent "Contract Anniversaries" are on the same day of each subsequent
year.
1.7 "Contract Quarter" is each of the four successive three-month periods in a
Contract Year.
1.8 The first "Contract Year" starts on the Contract Date and ends on the day
before the First Contract Anniversary. Each subsequent Contract Year starts
on a Contract Anniversary and ends on the day before the next Contract
Anniversary.
1.9 "Contributions" are amounts paid to us, pursuant to your Plan Sponsor's
Code Section 401(a) Plan and/or Code Section 403(b) Plan, which we credit
to Participant Accounts, including yours. Contributions include amounts
transferred from another AUL group annuity contract. The following types of
Code Section 403(b) Contributions will be credited to subaccounts under
your Participant Account:
(a) "Elective Deferrals," which means, with respect to any taxable year,
any Contribution made under a salary reduction agreement. A
Contribution made under a salary reduction agreement is not treated as
an Elective Deferral if, under the salary reduction agreement, the
Contribution is made pursuant to a one-time irrevocable election made
by you at the time of initial eligibility to participate in the
agreement, or is made pursuant to a similar arrangement involving a
one-time irrevocable election specified in Regulations issued under
the Code.
P-GB-C-AUL1MFVA.3
<PAGE>
(b) "Employee Mandatory Contributions," which means Contributions made
under a salary reduction agreement pursuant to a one-time irrevocable
election made by you at the time of initial eligibility to participate
in the agreement, or made pursuant to a similar arrangement involving
a one-time irrevocable election specified in Regulations issued under
the Code.
(c) "Employer Contributions," which means Contributions made by your
employer that are not made pursuant to (a) or (b) above.
1.10 "Excess Contributions" are Contributions in excess of the applicable Code
limits.
1.11 "Fixed Interest Account" or "FIA" is the portion of our general asset
account as described in Section 3, to which Contributions may be allocated
for accumulation at the Guaranteed Rates.
1.12 "Guaranteed Rates" are the guaranteed annual effective rates of interest we
credit to each Interest Pocket. A Guaranteed Rate may be modified only as
described in Section 3.3.
1.13 "Home Office" is our principal office in Indianapolis, Indiana. For
anything to be "received by AUL," it must be received at our Home Office.
1.14 "Interest Pocket" means a tracking method which associates funds deposited
into the FIA over a specific time period with a specific Guaranteed Rate,
as described in Section 3. After the guaranteed period provided in Section
3.3 has elapsed, we may consolidate two or more Interest Pockets in
conjunction with the announcement of new Guaranteed Rates.
1.15 "Investment Account" means each distinct portfolio established within our
Variable Account and identified in the Table of Investment Accounts in the
Contract. Amounts allocated to any Investment Account are invested in the
shares of the corresponding Mutual Fund or Portfolio identified in the
Table of Investment Accounts. Our "Variable Account" is a separate account
we maintain under Indiana law which is called the AUL American Unit Trust
and which is registered under the Investment Company Act of 1940 as a unit
investment trust.
1.16 "Investment Option" is the FIA or any Investment Account. We reserve the
right to provide other Investment Options under the Contract at any time.
1.17 The "Market Value Adjustment" is determined, as of the calculation date, by
multiplying a percentage times the Withdrawal Value being paid from the FIA
under Section 9.2(c). If X is greater than Y, the percentage equals 5 times
(X-Y) and the amount of the Adjustment is deducted from the Withdrawal
Value. If Y is greater than X, the percentage equals 4 times (X-Y) and the
amount of the Adjustment is added to the Withdrawal Value. For purposes of
this Section:
X= the Guaranteed Rate we credit to new Contributions, and
Y= the dollar-weighted average rate of interest we credit to amounts
withdrawn from each affected Participant Account under Section
9.2(c).
Our determination of the Market Value Adjustment is conclusive.
P-GB-C-AUL1MFVA.4
<PAGE>
1.18 "Mutual Fund" means any diversified, open-end, management investment
company made available by us, and listed in the Table of Investment
Accounts.
1.19 "Participant" is any person participating in the Plan that has a
Participant Account.
1.20 Your "Participant Account" is an account under the Contract for you. Your
Participant Account may have subaccounts for each type of Contribution. We
credit Contributions to your Participant Account and Contribution-type
subaccounts as the Contractholder directs.
1.21 "Plan" includes the Plan Sponsor's Code Section 401(a) plan and its Code
Section 403(b) plan that invest in the Contract.
1.22 "Plan Sponsor" is ABC School.
1.23 "Portfolio" is a portfolio established within a particular Mutual Fund, as
described in the Mutual Fund's current prospectus.
1.24 "Valuation Periods" start at the close of each Business Day and end at the
close of the next Business Day.
1.25 The "Withdrawal Charge" is a percentage of the Account Value withdrawn
under the Contract. The Withdrawal Charge will not apply to Account Values
withdrawn to provide a benefit payment or an annuity as described in
Section 5.2 and 6.1, respectively. The percentage varies by the Contract
Year in which a withdrawal is made. The Withdrawal Charge percentage is as
follows:
During Contract Year Percentage
1 3
2 2
3 1
Thereafter 0
In no event will the cumulative total of all Withdrawal Charges, including
those previously assessed against any amount withdrawn from your
Participant Account, exceed 9% of total Contributions allocated to your
Participant Account.
1.26 Your "Withdrawal Value" is your Account Value, less any Withdrawal Charge.
P-GB-C-AUL1MFVA.5
<PAGE>
SECTION 2 - ADMINISTRATION OF YOUR PARTICIPANT ACCOUNT
2.1 How Contributions Are Handled: Contributions we receive are credited to the
appropriate Contribution-type subaccounts of your Participant Account, as
the Contractholder directs in its allocation instructions. Code Section
403(b) Contributions must be identified as Elective Deferrals, Employee
Mandatory Contributions, or Employer Contributions. The initial
Contribution for you is allocated to your Participant Account by the second
Business Day after we (1) receive the initial Contribution or, if later,
(2) receive all data necessary to complete the allocation (including data
required to establish your Participant Account, the amount of the
Contribution for you, and Investment Option elections. Subsequent
Contributions are allocated to your Participant Account on the Business Day
we (1) receive that Contribution or, if later, (2) receive all data
necessary to complete the allocation.
For Code Section 403(b) Contributions, if we do not receive the data
required to establish your Participant Account and the amount of a
Contribution for you within 5 Business Days after we first receive that
Contribution, we will return that Contribution to the Contractholder unless
it consents to us retaining that Contribution until the earlier of (i) the
date we receive such data and instructions and, therefore, can properly
allocate that Contribution to your Participant Account or (ii) 25 days from
the date we receive that Contribution.
For Code Section 401(a) Contributions, if we do not receive the data
required to establish your Participant Account and the amount of a
Contribution for you as of the date we receive that Contribution, the
Contribution is allocated to a suspense account. The suspense account earns
interest at the Guaranteed Rate for Contributions received on the same
date. When we receive all required data, amounts in the suspense account,
plus interest, are transferred to the appropriate Investment Option for
each designated Contribution-type.
If we receive the data required to establish your Participant Account and
the amount of a Contribution for you, but we do not receive Investment
Option elections for you, the Contribution is allocated to a suspense
account. The suspense account earns interest at the Guaranteed Rate for
Contributions received on the same date. When we receive all required data,
amounts in the suspense account, plus interest, are transferred to the
appropriate Investment Option for each designated Contribution-type.
Your Participant Account may be allocated to Investment Options in any
increments acceptable to us. Investment Option elections remain in effect
until changed by the Contractholder. A change in Investment Option
elections is made by giving us new Investment Option elections.
2.2 Transfers from Other Retirement Programs: If permitted by the Plan, we may
accept amounts transferred from other Code Section 403(b) or Code Section
401(a) funding vehicles. Such transferred amounts, as identified by the
Contractholder, are credited to a rollover subaccount, under the
appropriate Participant Account. Amounts transferred to a Code Section
403(b) Contribution rollover subaccount of a Participant Account must be
attributable to contributions made pursuant to Code Section 403(b).
2.3 Reallocation of Participant Accounts: The Contractholder may direct us to
reallocate all or a portion of the Account Value of any Participant Account
among other Participant Accounts. The Contractholder must certify that such
reallocation is in accordance with the Plan.
2.4 Excess Contributions: On receipt of instructions from the Contractholder,
we will withdraw Excess Contributions, plus gains and minus losses, from
your Participant Account and return them to you, or as the Contractholder
directs. Such instructions must state the amount to be returned
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and certify that such Contributions are Excess Contributions and that such
return is permitted by the Plan and the Code. A return of Excess
Contributions is treated like a Plan benefit payment, under Section 5.2.
You are not permitted to have elective deferral contributions (within the
meaning of Code Section 402(g)(3)) made during a calendar year under the
Contract, or under any other plans, contracts, or arrangements maintained
by your employer, in excess of the dollar limitation in effect under Code
Section 402(g)(1) and any Regulations issued thereunder for taxable years
beginning in such calendar year.
2.5 Transfers from Other Contracts: We may require amounts transferred to a
Participant Account from other AUL group annuity contracts to be deposited
in a suspense account. We will advise the Contractholder if this limitation
applies before accepting such a transfer.
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SECTION 3 -- OPERATION OF FIXED INTEREST ACCOUNT (FIA)
3.1 Allocations to your Participant Account: We allocate your Contributions in
the FIA based on the information the Contractholder provides.
3.2 Provision of Guaranteed Rates for Interest Pockets: At least 10 days in
advance of each calendar quarter, we will declare a Guaranteed Rate for the
Interest Pocket for that quarter. All Contributions or transfers hereunder
which are allocated to the FIA during that quarter will earn interest at
that Guaranteed Rate until that quarterly pocket matures on the second
January 1 following the quarter in which that pocket was established.
3.3 Renewal of Guaranteed Rates: Those quarterly Interest Pockets which mature
at the same time will be combined into an annual renewal Interest Pocket.
Funds associated with that annual renewal Interest Pocket will earn
interest for a full year at the Guaranteed Rate declared for that pocket. A
new Guaranteed Rate for each annual renewal Interest Pocket will be
declared at least 30 days prior to every January 1 for the 5 years
following the establishment of that pocket. An annual renewal Interest
Pocket will mature on January 1 of the sixth year following its
establishment, when it will be combined into one annual portfolio Interest
Pocket. Funds associated with that annual portfolio Interest Pocket will
earn interest for a full year at the Guaranteed Rate for that pocket, which
will be declared at least 30 days prior to every January 1.
The Contractholder may accept the declared Guaranteed Rate for an annual
renewal or portfolio Interest Pocket either by continuing to allocate
Contributions to the FIA or by otherwise notifying us of its acceptance.
The Contractholder may reject the declared rate for that pocket by
notifying us. This acceptance or rejection must occur after the declaration
of the rate for that pocket and before the next January 1, when the rate
becomes effective. If the Contractholder neither specifically accepts nor
rejects the declared Guaranteed Rate for the new pocket by the deadline, it
will be deemed to have accepted the rate. If the Contractholder rejects the
declared Guaranteed Rate for the new annual renewal or portfolio pocket,
the aggregate Withdrawal Value of that pocket will be paid out as described
in Section 3.5.
3.4 Minimum Rate Guarantee: No Guaranteed Rate may be less than an annual
effective interest rate of 3.00%.
3.5 Payout Upon Rejection of Declared Guaranteed Rate: If the Contractholder
rejects the Guaranteed Rate for an Interest Pocket we announce under
Section 3.3, the aggregate Withdrawal Value of that Interest Pocket is paid
to the Contractholder in 6 equal annual installments. The initial
installment is calculated on the date the Contractholder rejects the
declared rate and is paid within 7 days from that date. Subsequent
installments are paid on the anniversary of the first installment payment
date. During the installment payment period, interest is credited to
amounts in the terminating pocket at a rate equal to the current average
Guaranteed Rate (as determined on the first installment payment date) of
all the Contractholder's Interest Pockets, less 1%. The minimum rate
guarantee provided in Section 3.4 applies to the interest credited under
this Section. Interest is paid with each installment.
3.6 Allocation of Withdrawals: Withdrawals or transfers from the FIA are on a
first-in/first-out basis, unless the Account or a terminating pocket is
being paid out to the Contractholder in installments. All amounts paid
during an installment payout period are paid on a pro-rata basis.
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SECTION 4 - VALUATION OF INVESTMENT ACCOUNTS
4.1 Operation of Investment Accounts: All income, gains, or losses, realized or
unrealized, from assets held in any Investment Account are credited to or
charged against the applicable Investment Account without regard to our
other income, gains, or losses. Investment Account assets are not
chargeable with liabilities arising out of any other business we may
conduct.
4.2 Valuation of Mutual Funds: The current prospectus for each Mutual Fund
describes how that Mutual Fund's assets are valued.
4.3 Accumulation Units: We credit amounts allocated to an Investment Account in
Accumulation Units. The Accumulation Unit value used is the one for the
Valuation Period when we allocate the amount to the Investment Account.
4.4 Value of Accumulation Units: We generally establish the Accumulation Unit
value for a new Investment Account at $1.00 on the date the first deposit
is made to the Investment Account. The value of an Accumulation Unit for
any later Valuation Period equals the value of an Accumulation Unit for the
immediately preceding Valuation Period times the Net Investment Factor for
the current Valuation Period. We determine the Accumulation Unit value
before giving effect to any additions, withdrawals, or transfers in the
current Valuation Period.
4.5 Determining the Net Investment Factor: We determine the Net Investment
Factor for each Investment Account by dividing (a) by (b), and then
subtracting (c), where:
(a) is:
(1) the net asset value of a Mutual Fund or Portfolio share at the
end of the current Valuation Period, plus
(2) any dividend or other distribution paid on each Mutual Fund or
Portfolio share during such Valuation Period, plus or minus
(3) any credit or charge for taxes paid or reserved by us during the
Valuation Period that we determine are attributable to the
Investment Account;
(b) is the net asset value of each Mutual Fund or Portfolio share held in
the Investment Account at the end of the prior Valuation Period; and
(c) is a daily charge factor we determine, as described in Section 7.1.
4.6 Valuing your Participant Account: We determine your Account Value in an
Investment Account by multiplying your Accumulation Units by the
Accumulation Unit value. The Accumulation Unit value of an Investment
Account changes only on a Business Day.
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SECTION 5 - BENEFIT PAYMENTS AND TRANSFERS
5.1 General Withdrawal Provisions: Subject to the following provisions of this
Section, and prior to notification of Contract termination, the
Contractholder may direct us to withdraw all or a portion of your Account
Value pursuant to Section 5.2 and 5.3 to provide a cash payment to the
Contractholder to pay Plan benefits.
(a) Amounts attributable to amounts held as of December 31, 1988 under
another Code Section 403(b) annuity contract may be withdrawn to
provide such benefits.
(b) Amounts attributable to Code Section 403(b) Contributions made other
than pursuant to a salary reduction agreement (within the meaning of
Code Section 402(g)(3)(C)) may be withdrawn to provide such benefits.
(c) Amounts attributable to Code Section 403(b) Contributions made
pursuant to a salary reduction agreement (within the meaning of Code
Section 402(g)(3)(C)) may be withdrawn to provide such benefits,
provided that the withdrawal is made to provide a loan or that any
distribution of such amount shall not occur until you have either
attained age 59 1/2, separated from service, died, become totally
disabled (as defined by the Plan), or experienced a hardship (as
defined by the Plan). However, in the case of a hardship withdrawal,
any gain credited to such Contributions may not be withdrawn.
(d) Withdrawal of any amount from the Contract which is transferred
directly by us pursuant to the Contractholder's or your instructions
to another Code Section 403(b) tax- deferred annuity funding vehicle
under applicable IRS rules and regulations is not the provision of a
Plan benefit for purposes of Section 5.2, but instead is a Contract
termination as to that amount for you; and any such withdrawal is
subject to application of the Withdrawal Charge pursuant to Section
5.3. The Contractholder grants to you the right to direct the
withdrawal and direct transfer of your voluntary Elective Deferrals
(as determined by the Contractholder) to another Code Section 403(b)
tax-deferred annuity funding vehicle.
(e) If, as provided in Internal Revenue Code Regulation Section
1.403(b)-2T Q&A-2, the distributee of any eligible rollover
distribution elects to have the distribution paid directly to an
eligible retirement plan (as defined in Q&A-1 of that Section) and
specifies the eligible retirement plan to which the distribution is to
be paid, then the distribution shall be paid to that eligible
retirement plan in a direct rollover.
(f) We are not responsible for determining your compliance with the
requirements above. Any withdrawal request submitted by the
Contractholder must include certification as to the purpose of the
withdrawal. The Contractholder assumes full responsibility for
determining whether any withdrawal is permitted under applicable law
and under the terms of a particular Plan. We may rely solely upon the
Contractholder's representations made in the withdrawal request.
(g) Withdrawals from your share of any Investment Option may not be made
in an amount less than the smaller of $500 or your entire share of the
Investment Option. If a withdrawal reduces your share of an Investment
Option to less than $500, such remaining share shall also be
withdrawn.
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(h) A withdrawal request is effective, and the Account Value to be applied
pursuant to Section 5.2, 5.3, or 5.4 is determined, on the Business
Day that we receive a proper withdrawal request (or due proof of
death, if received later).
(i) We will pay any cash lump-sum to the Contractholder or to whomever the
Contractholder directs within 7 days from the appropriate Business Day
as determined in Subsection (h) above, except as we may be permitted
to defer such payment of amounts withdrawn from the Variable Account
in accordance with appropriate provisions of the federal securities
laws. We reserve the right to defer the payment of amounts withdrawn
from the FIA for a period of up to 6 months after we receive the
withdrawal request.
(j) Withdrawals from your share of the FIA will be made on a
first-in/first-out basis under Section 3.6.
5.2 Plan Benefit Payments: The Contractholder will advise us of any person for
whom a payment is due under the Plan, including the nature and amount of
such payment, before the date such payment is due or as soon thereafter as
is practicable.
(a) Subject to the limitations provided in Section 5.1 and Subsection (b)
below, prior to notification of Contract termination, the
Contractholder may direct us to withdraw all or a portion of your
Account Value (subject to Section 7.5) to provide a cash payment to
the Contractholder to pay Plan benefits (other than full or partial
Plan termination benefits described in Section 5.3) for retirement,
death, disability, termination of employment, hardships, loans,
required minimum distribution benefits pursuant to Code Section
401(a)(9), or, for Code Section 403(b) plans or profit-sharing plans,
benefits upon attainment of age 59 1/2 or as otherwise allowed by the
Code (provided that such Code Section 403(b) plan or profit- sharing
plan benefits are paid in a taxable distribution to you). Such a
withdrawal is not subject to a Withdrawal Charge. Any Plan benefit
cash payment requested for you if you terminate employment on or after
the effective date of Plan termination is deemed to be a Plan
termination benefit, and is subject to a Withdrawal Charge pursuant to
Section 5.3. Additionally, if 20% or more of the Participants
terminate employment within the same Contract Year, any Plan benefit
cash payment for such a terminating Participant is subject to a
Withdrawal Charge pursuant to Section 5.3.
(b) Regarding death benefits specifically, notwithstanding the provisions
of Section 9, upon receipt from the Contractholder of instructions and
of due proof of your (and, if applicable, your beneficiary's) death
prior to the date your Participant Account is closed, we will apply
the Account Value (subject to Section 7.5) of your Participant Account
for the purpose of providing a death benefit under the Plan. The death
benefit will be paid to your beneficiary according to the method of
payment elected by your beneficiary (unless you have previously
elected the method of payment). Your beneficiary may also designate a
beneficiary. The death benefit attributable to Code Section 403(b)
funds will be payable:
(1) in a single sum or other method not provided in (2) below;
provided, however, that your entire Account Value (subject to
Section 7.5) must be paid to your beneficiary on or before
December 31 of the calendar year which contains the fifth
anniversary of your death, or
(2) as an annuity in accordance with the Annuity Options shown in
Section 6.2 over a period not to exceed the life or life
expectancy of the beneficiary. If your beneficiary is not your
surviving spouse, the annuity must begin on or before December 31
of the calendar year immediately following the calendar year in
which you die. If your beneficiary is your surviving spouse, the
annuity need not begin before December 31 of the calendar year in
which you would have attained age 70 1/2.
If you die on or after your Annuity Commencement Date, any interest
remaining under the Annuity Option selected will be paid at least as
rapidly as prior to your death.
Any withdrawal request submitted under this Section must certify the
purpose of the request.
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5.3 Other Cash Benefits: Subject to the limitations provided in Section 5.1,
prior to notification of Contract termination, the Contractholder may
direct us to make a cash payment from your Participant Account to the
Contractholder for the purpose of providing Plan benefits not specifically
described in Section 5.2. This Section applies to any withdrawal to pay a
Plan benefit payable because of the termination or partial termination of
the Plan (as determined under applicable IRS guidelines and judicial
precedent), or if the underlying reason for payment of the benefit results
in the termination or partial termination of the Plan.
If the entire Account Value is withdrawn, the amount paid equals your
Withdrawal Value, subject to any charges described in Section 7. In all
other instances, your Account Value is reduced by an amount sufficient to
make the payment requested and to cover the Withdrawal Charge and any
charges described in Section 7.
However, despite the previous provisions of this Section, in the first
Contract Year in which your Participant Account is established, the
Contractholder may withdraw from your Participant Account up to 10% of the
sum of your Account Value (determined as of the later of the Contract Date
or the Contract Anniversary immediately preceding the request for the
withdrawal) plus Contributions made for you during that Contract Year,
without application of the Withdrawal Charge. The Contractholder may do the
same in the next succeeding Contract Year. In any subsequent Contract Year,
the Contractholder may withdraw from your Participant Account up to 10% of
your Account Value (determined as of the Contract Anniversary immediately
preceding the request for the withdrawal) without application of the
Withdrawal Charge.
5.4 Transfers between Investment Options: The Contractholder may direct us to
transfer amounts between Investment Options, or to initiate
Participant-directed transfers between Investment Options. Transfers are
effective on the Business Day we receive the transfer direction. Transfer
directions for your Participant Account may be made daily on any Business
Day. We will make the transfer as requested within 7 days from the date we
receive the request, except as we may be permitted to defer the transfer of
amounts withdrawn from the Variable Account in accordance with appropriate
provisions of the federal securities laws. We reserve the right to defer a
transfer of amounts from the FIA for a period of up to 6 months after we
receive the transfer request.
However, despite the previous paragraph, once a transfer from the FIA has
been made for you, a transfer to the FIA for you may be made only after 90
days have elapsed since the date of the last transfer from the FIA for you.
If the Contractholder makes available to you the FIA and the AUL American
Money Market Investment Account, the 90-day transfer restriction discussed
in the previous sentence does not apply, and Section 5.6 does apply.
5.5 Minimum Amounts: The minimum amount the Contractholder or you may withdraw
or transfer from an Investment Option is $500 or, if less, your entire
balance in that Investment Option. If a withdrawal or transfer reduces your
balance in an Investment Option to less than $500, the entire balance is
withdrawn or transferred.
5.6 Maximum Amounts: If the Contractholder makes available to you the FIA and
the AUL American Money Market Investment Account, no more than 20% of your
FIA Account Value on the later of the Contract Date or the Contract
Anniversary immediately preceding the request for transfer may be
transferred from the FIA during any Contract Year. However, if your FIA
Account Value is less than $2,500 on the later of the Contract Date or the
Contract Anniversary immediately preceding the request for transfer, the
amount transferrable from the FIA for you for that Contract Year is the
minimum amount specified in Section 5.5.
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SECTION 6 - ANNUITIES
6.1 Annuity Purchases: Prior to notification of Contract termination, the
Contractholder may withdraw all or a portion of your Account Value (subject
to Section 7.5) to provide an annuity, reflecting Plan benefits. Such a
withdrawal is not subject to a Withdrawal Charge. On receipt of an annuity
purchase request, we transfer your entire Participant Account to a suspense
account. These amounts remain in the suspense account until your Annuity
Commencement Date, when the full balance (including interest) is applied to
purchase the annuity.
The Contractholder's annuity purchase request must specify the purpose for
the annuity, the election of an annuity option, Annuity Commencement Date,
any contingent annuitant or beneficiary, and any additional information we
require. If you or any contingent annuitant dies before the Annuity
Commencement Date, the annuity election is cancelled.
The minimum amount which the Contractholder may apply to purchase an
annuity is $5,000.
6.2 Annuity Options: The Contractholder may elect any optional form of annuity
we offer at the time of purchase. Available annuity options always include:
(a) Life Annuity. A monthly annuity is payable as long as the annuitant
lives, and ends with the last payment before the annuitant's death.
(b) Survivorship Annuity. A monthly annuity is payable as long as the
annuitant lives. After the annuitant's death, all or a portion of the
monthly annuity is paid to the contingent annuitant as long as the
contingent annuitant lives.
No annuity may have a certain period extending beyond your life expectancy
or the joint life expectancy of you and your contingent annuitant, as
determined on the Annuity Commencement Date.
6.3 Determining Annuity Amount: We compute the annuity amount using the factors
reflected in the Table of Guaranteed Immediate Annuities attached to the
Contract. However, if our current single premium, nonparticipating,
immediate annuity rates for this class of group annuity contracts produces
a higher monthly annuity than the Table of Guaranteed Immediate Annuities,
then that more favorable annuity rate is applied.
6.4 Proof of Age and Survival; Minimum Payments: We may require proof of any
annuitant's or contingent annuitant's date of birth before commencing
payments under any annuity. We may also require proof that an annuitant or
contingent annuitant is living before making any annuity payment. If a
monthly annuity is less than our current established minimum payment, we
may make payments on a less-frequent basis or in a single sum.
6.5 Annuity Certificates: We issue to each person for whom an annuity is
purchased a certificate setting forth the annuity's amount and terms.
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SECTION 7 - MORTALITY AND EXPENSE RISK CHARGES
AND ADMINISTRATIVE CHARGES
7.1 Investment Account Mortality and Expense Risk Charges: We deduct from the
average daily net assets of each Investment Account the daily equivalent of
an annual combined mortality risk charge and expense risk charge of 1.25%.
This charge is part of the Net Investment Factor, described in Section 4.5.
7.2 Variable Investment Plus (VIP) Credit Factor: We determine a VIP credit
factor each month by multiplying the portions of the aggregate month-end
Account Value in all Investment Accounts by the monthly equivalent of the
corresponding annual VIP credit factors in the table below. The sum of
these products is divided by the aggregate month-end Account Value in all
Investment Accounts. We multiply the resulting percentage by your month-end
Account Value in each Investment Account, and add the resulting amount to
your Account Value for that Investment Account.
Aggregate Month-End Account Value
allocated to Investment Accounts Annual VIP Credit Factors
--------------------------------- -------------------------
First $750,000 0.00%
Next $750,000 0.20%
Next $1 million 0.35%
Next $2.5 million 0.65%
Next $5 million 0.75%
Over $10 million 0.85%
7.3 Mutual Fund or Portfolio Expense: A Mutual Fund or Portfolio deducts an
investment advisory fee and other expenses from its net asset value, as
described in its current prospectus. Amounts deducted may include
operational, organizational, and extraordinary expenses. Expenses vary from
year-to-year.
7.4 Other Charges: Due and unpaid charges for which the Plan is responsible,
and which the Plan Sponsor and the Contractholder have otherwise agreed to
in writing, will be deducted from Participant Accounts on a pro-rata basis.
These charges include participant statement mailing fees, Form 5500 fees,
annual administrative fees, data reconciliation and reconstruction fees,
commissions, and Contract application/installation fees for a takeover
Plan. Charges for which the Plan Sponsor (not the Plan) is responsible, and
which the Plan Sponsor has otherwise agreed to in writing, must be paid by
the Plan Sponsor. These charges include Contract application/installation
fees for a new Plan.
7.5 Taxes: We may deduct charges equal to any premium tax we incur from the
balance applied to purchase an annuity or at such other time as premium
taxes are incurred by us. We may also deduct from Investment Accounts
reasonable charges for federal, state, or local income taxes we incur that
are attributable to such Investment Accounts.
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SECTION 8 - CONTRACT MODIFICATIONS
8.1 Mutual Amendment: The Contractholder and we may agree to any change or
amendment to the Contract without the consent of any other person or
entity. The Contract cannot be modified or amended, nor can any provision
or condition be waived, except by our written agreement, signed by a
corporate officer. Such authority may be delegated only by a written
agreement signed by our corporate officer.
8.2 Rates and Section 7 Charges: We may announce new Guaranteed Rates, as
described in Section 3.2 and 3.3 (including the consolidation of existing
Interest Pockets). However, as provided in Section Section 3.2 and 3.3, we
may not change the declared Guaranteed Rate applicable to an established
Interest Pocket during the guaranteed period. We may also modify the charge
levels in Section 7, using the procedures of Section 8.4.
8.3 Conformance with Law: We may amend the Contract at any time, without the
Contractholder's consent, or that of any other person or entity, if the
amendment is reasonably needed to comply with, or give the Contractholder
or you the benefit of, any provisions of federal or state laws. Any such
amendment will be delivered to the Contractholder prior to its effective
date.
8.4 Our Right to Initiate Changes: In addition to those amendments permitted by
Section 8.2 and 8.3, we may initiate an additional provision or
modification of any other provision of the Contract (including the addition
of a charge for transfers between Investment Options) by giving the
Contractholder 60 days notice of such modification. Any such modification
is effective without the Contractholder's affirmative assent.
8.5 Prohibited Amendments:
(a) Despite our right to initiate changes under Section 8.4, we may not
initiate changes to the minimum Guaranteed Rate specified in Section
3.4, our obligation to set Guaranteed Rates for the period of time
specified in Section Section 3.2 and 3.3, the payment upon rejection
of a declared Guaranteed Rate specified in Section 3.5, the payment
provisions upon Contract termination specified in Section 9.2, or the
Table of Guaranteed Immediate Annuities.
(b) No modification to the Contract may change the terms of a previously
purchased annuity or reduce any interest guarantee applicable to your
Participant Account balances held in the FIA on the modification's
effective date.
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SECTION 9 - TERMINATION OF CONTRACT
9.1 Termination by the Contractholder: The Contractholder may terminate the
Contract by giving us notice. Such termination is effective on the Business
Day that we receive the Contractholder's notice. If Code Section 403(b)
funds are to be transferred to a substitute funding medium, the
Contractholder's notice must contain its certification that such substitute
funding medium meets the requirements of Code Section 403(b) and the
Regulations issued thereunder.
9.2 Payment Upon Termination by the Contractholder: Upon termination by the
Contractholder, it may elect from the following options:
(a) Transfer to Another Contract: The Contractholder may transfer the
aggregate Account Value of all Participant Accounts, or the
Contractholder may permit you to transfer your Account Value, to any
group annuity contract which we may make available. Any such amounts
are transferred on the termination effective date.
(b) Payment of Investment Accounts in Lump-Sum and FIA in Installments:
The Contractholder may have the aggregate Investment Account
Withdrawal Value of all Participant Accounts paid to it in a lump-sum,
with the FIA paid in 6 equal annual installments. The aggregate
Investment Account Withdrawal Value will be determined on the
termination effective date and paid within 7 days from the termination
effective date, except as we may be permitted to defer payment in
accordance with appropriate provisions of the federal securities laws.
The initial FIA installment is calculated on the termination effective
date and paid within 7 days from the termination effective date.
Subsequent installments are paid on the anniversary of the termination
effective date. During the installment payment period, interest is
credited under the terms described in Section 3.5.
(c) Payment of Code Section 401(a) Funds in Lump-Sum: The aggregate Code
Section 401(a) Withdrawal Value of all Participant Accounts, plus or
minus any Market Value Adjustment, will be determined on the
termination effective date and paid within 7 days from the termination
effective date, except as we may be permitted to defer payment in
accordance with appropriate provisions of the federal securities laws.
9.3 Termination by Us: We have the right, subject to applicable state law, to
terminate your Participant Account at any time during the Contract Year if
your Account Value is less than $200 for the first Contract Year in which a
Contribution is made for you, and $400 for any subsequent Contract Year,
and at least 6 months have elapsed since the last previous Contribution to
the Contract. If we elect to terminate your Participant Account, the
termination will be effective on the date 6 months following the date we
give notice to the Contractholder and you that your Participant Account is
to be terminated, provided that any Contributions made during the 6-month
period are insufficient to raise your Account Value up to the minimum
level.
9.4 Payment Upon Termination by Us: As of the effective date of termination of
your Participant Account by us, we may elect to have a single sum equal to
your Account Value on the effective date of termination paid to the
Contractholder within 7 days from that date. Any such payment is in full
settlement of your Participant Account under the Contract and in lieu of
any other payment under its terms.
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9.5 Indemnification Required: Payments or transfers under Section 9.2 are in
full settlement of our obligations under the Contract. Prior to making such
payments or transfers, we may require the Contractholder and the Plan
Sponsor to indemnify and hold us harmless from any and all losses, claims,
or demands that may later be asserted against us in connection with the
making of such payment or transfer.
9.6 Effect on Contract Obligations: Any annuities purchased prior to
notification of Contract termination are unaffected by a termination. We
may refuse further Contributions at any time after a termination notice has
been given. If we have been providing recordkeeping services, such services
stop on the termination effective date. The Contract terminates
automatically if no amounts remain in either the FIA or any Investment
Account.
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SECTION 10 - GENERAL PROVISIONS
10.1 Ownership: The Contractholder owns the Contract. No other person or entity
has any right, title, or interest in the Contract or to amounts received or
credited under it until such amounts are made available to them by the
Contractholder. All amounts received or credited under the Contract become
our property. We are obligated to make only the payments or distributions
specified in the Contract.
10.2 Entire Contract: The Contract and the Contractholder's application is the
entire agreement between the Contractholder and us. We are not a party to,
nor bound by, a Plan, trust, custodial agreement, or other agreement, or
any amendment or modification to any of the same. We are not a fiduciary
under the Contract or under any such Plan, trust, custodial agreement, or
other agreement.
10.3 Benefit Determinations: The Contractholder must furnish us whatever
information is necessary to establish the eligibility for and amount of
annuity or other benefit due. We rely solely on the Contractholder's
instructions and certifications with respect to your benefits. The
Contractholder is fully responsible for determining:
(a) whether benefit payments are permitted under applicable law and the
Plan and
(b) the existence or amount of Excess Contributions (plus gains or minus
losses thereon), or that returns of Excess Contributions are permitted
by the Plan and the Code.
We may rely on the Contractholder's or its designee's statements or
representations in honoring any benefit payment request.
10.4 Recordkeeping Services: We generally provide Plan recordkeeping services
when all of a Plan's funds are held under the Contract. We may decline to
provide Plan recordkeeping services if the Contractholder elects to
allocate Plan funds to investments other than the Contract, or if the
Contractholder's Plan's recordkeeping practices, in our judgment, impose a
substantial administrative or financial burden on us.
10.5 Representations and Warranties: The Contractholder and we mutually
represent and warrant, each to the other, that each is fully authorized to
enter into the Contract and that the Contract is a valid and binding
obligation and that the execution of the Contract does not violate any law,
regulation, judgment, or order by which the representing party is bound. In
addition, the Contractholder represents and warrants to us that:
(a) the Code Section 401(a) Plan is qualified under Code Section 401(a)
and the Code Section 403(b) Plan is qualified under Code Section
403(b);
(b) the execution of the Contract has been authorized by the Plan
fiduciary responsible for Plan investment decisions; and
(c) the execution or performance of the Contract does not violate any Plan
provision or any law, regulation, judgment, or order by which the Plan
is bound.
We do not make any representation or warranty regarding the federal, state,
or local tax status of the Contract, your Participant Account, or any
transaction involving the Contract.
P-GB-C-AUL1MFVA.18
<PAGE>
10.6 Contractholder Representative; Misstatement of Data: The Contractholder may
designate a representative to act on its behalf under Section 2 or 3 or to
receive any payment under Section 5 or 9. We may rely on any information
the Contractholder, its designee, or you furnish. We need not inquire as to
the accuracy or completeness of such information. If any essential data
pertaining to any person has been omitted or misstated, including, but not
limited to, a misstatement of an annuitant's or contingent annuitant's age,
we will make an equitable adjustment to provide the annuity or other
benefit determined using correct data.
10.7 Requirement for Writing: When reference is made to the Contractholder, its
designee, or you making a request or giving notice, instruction, or
direction, such request, notice, instruction, or direction must be in
writing, or in a form otherwise acceptable to us, and is effective when we
receive it.
10.8 Quarterly Statement of Account Value: Reasonably promptly after the end of
each Contract Quarter, we will prepare a statement of your Account Value.
10.9 Conformity with Law: Any benefit payable under the Contract will not be
less than the minimum benefit required by the insurance laws of the state
in which the Contract is delivered. Language in the Contract referring to
state or federal tax, securities, or other statutes or rules does not
incorporate within the Contract any such statutes or rules.
10.10 Sex and Number:
Whenever the context so requires, the plural includes the singular, the
singular the plural, and the masculine the feminine.
10.11 Facility of Payment:
If you, your contingent annuitant, or your beneficiary is legally incapable
of giving a valid receipt for any payment, and no guardian has been
appointed, we may pay the person or persons who have assumed the care and
principal support of you, your contingent annuitant, or your beneficiary.
We may also pay the Contractholder directly or as it otherwise instructs.
Any such payment fully discharges us to the extent of such payment.
10.12 Voting:
We own all Mutual Fund or Portfolio shares held in an Investment Account.
We exercise the voting rights of such shares at all shareholder meetings on
all matters requiring shareholder voting under the Investment Company Act
of 1940 or other applicable laws. Our vote reflects instructions received
from persons having the voting interest in the shares, as follows:
(a) The Contractholder has the voting interest under the Contract. Unless
otherwise required by applicable law, the number of Mutual Fund or
Portfolio shares for which the Contractholder may give voting
instructions is determined by dividing the aggregate Account Values in
the affected Investment Account by the net asset value of the Mutual
Fund or Portfolio shares. Fractional votes are counted. Our
determination is made as of the date used by the Mutual Fund or
Portfolio to determine shareholders eligible to vote.
(b) We vote shares proportionally, to reflect the voting instructions we
receive in a timely manner from the Contractholder and from all other
contractholders. If no timely voting instructions are received from
the Contractholder, we vote shares proportionally, to reflect the
voting instructions we received in a timely manner for all other
contracts.
To the extent permitted by applicable law, we may vote shares in our own
right or may modify the above procedures to reflect changes in the law or
its interpretation.
We will provide prospectuses and other reports as required by applicable
federal law.
P-GB-C-AUL1MFVA.19
<PAGE>
10.13 Acceptance of New Contributions:
We may refuse to accept new Contributions at any time.
10.14 AUL's Annual Statement:
No provision of the Contract controls, determines, or modifies any AUL
annual statement made to any insurance department, contractholder,
regulatory body, or other person. Nor does anything in such annual
statement control, determine, or modify the provisions of the Contract.
10.15 Nonforfeitability and Nontransferability:
The entire Withdrawal Value of the vested portion (as determined pursuant
to the Code Section 403(b) Plan) of Code Section 403(b) funds of your
Participant Account under the Contract is nonforfeitable at all times. No
sum payable under the Contract which is attributable to Code Section 403(b)
funds with respect to you may be sold, assigned, discounted, or pledged as
collateral for a loan or as security for the performance of an obligation
or for any other purpose to any person or entity other than AUL. In
addition, to the extent permitted by law, no such sum shall in any way be
subject to legal process requiring the payment of any claim against the
payee.
10.16 Assignment by the Contractholder:
The Contractholder may assign its interest in Code Section 401(a) funds
held in the Contract, but any assignment must be in writing, and we shall
not be deemed to have knowledge of such assignment unless the original or a
duplicate is filed at our Home Office. We will not assume any
responsibility for the validity of an assignment.
10.17 Effect of Disqualification:
The Contractholder must promptly notify us if it determines that there is a
reasonable basis for believing the Code Section 401(a) Plan is no longer
qualified under Code Section 401(a). In such event, your share of each
Investment Account is withdrawn and transferred to a suspense account. No
amounts attributable to the Contract can be placed in any Investment
Account until the Code Section 401(a) Plan is again qualified.
P-GB-C-AUL1MFVA.20
<PAGE>
TABLE OF GUARANTEED IMMEDIATE ANNUITIES
MONTHLY INCOME PER $1,000 OF ACCOUNT VALUE
10-YEAR CERTAIN
ADJUSTED AGE LIFE ANNUITY AND LIFE ANNUITY
45 2.9690 2.9632
46 3.0190 3.0124
47 3.0715 3.0641
48 3.1269 3.1185
49 3.1852 3.1756
50 3.2466 3.2357
51 3.3115 3.2988
52 3.3800 3.3653
53 3.4525 3.4352
54 3.5291 3.5088
55 3.6104 3.5863
56 3.6966 3.6678
57 3.7881 3.7536
58 3.8850 3.8437
59 3.9877 3.9382
60 4.0964 4.0374
61 4.2115 4.1414
62 4.3334 4.2505
63 4.4626 4.3650
64 4.5994 4.4850
65 4.7442 4.6108
66 4.8977 4.7425
67 5.0608 4.8804
68 5.2347 5.0250
69 5.4213 5.1766
70 5.6229 5.3356
71 5.8412 5.5020
72 6.0778 5.6755
73 6.3336 5.8552
74 6.6097 6.0404
75 6.9084 6.2302
Adjusted Age = Actual Age at Settlement (in years and completed months) less the
following number of months: [.6 times (Birth Year - 1915)] rounded to the
nearest integer.
Guaranteed purchase rates are 96% of the net single premium for the benefit
provided based on the unprojected 1994 Group Annuity Reserving Table for females
with interest at 2%.
P-GB-C-AUL1MFVA.21
<PAGE>
APPLICATION TO THE AMERICAN UNITED LIFE INSURANCE COMPANY
FOR A MULTIPLE-FUND GROUP VARIABLE ANNUITY CONTRACT
PEOPLES BANK & TRUST COMPANY AS CUSTODIAN ON BEHALF OF ANY PERSON
ELIGIBLE TO PARTICIPATE IN AN IRC 403(b) TAX-DEFERRED ANNUITY WHO BECOMES A
PARTICIPANT UNDER THIS CONTRACT AND SUCH SUCCESSOR CUSTODIAN AS MAY BE
APPOINTED FROM TIME TO TIME
(hereinafter called the Applicant)
hereby applies for Group Annuity Contract Number GA 74,222.
This application is made a part of the contract identified above, which is
hereby approved and its provisions and conditions accepted.
One executed copy of this application shall be attached to such contract, and a
second executed copy shall be returned to the American United Life Insurance
Company at its Home Office.
It is agreed that this application supersedes any previous application for such
contract.
Dated at___________ on ____________, 19___
Signature of Applicant_____________________________
By_________________________________________________
Title______________________________________________
Soliciting Agent___________________________________
Any person who knowingly presents false or fraudulent claim for payment of a
loss or knowingly presents false information in an application for insurance is
guilty of a crime and subject to civil fines and criminal penalties.
P-12503
<PAGE>
- --------------------------------------------------------------------------------
CONSENT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
Consent of Independent Accountants
Board of Directors
AUL American Series Fund, Inc.
Indianapolis, Indiana
We consent to the inclusion in Post-Effective Amendment No. 17 to the
Registration Statement of AUL American Unit Trust (the "Trust") on Form N-4
(File No. 33-31375) in the Statement of Additional Information of our report
dated February 26, 1999, on our audits of the financial statements of American
United Life Insurance Company, and to the incorporation by reference of our
report dated February 1, 1999, on our audits of the financial statements of the
Trust. We also consent to the reference to our Firm under the caption
"Independent Accountant" in the Statement of Additional Information.
/s/ PricewaterhouseCoopers LLP
Indianapolis, Indiana
April 30, 1999
<PAGE>
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<EXPENSES-NET> 100,713
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<EXPENSES-NET> 325,915
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<OVERDISTRIBUTION-GAINS> 0
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000856341
<NAME> AUL American Unit Trust
<SERIES>
<NUMBER> 7
<NAME> AUL American Moderate Investor
<MULTIPLIER> 1
<S> <C>
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</TABLE>
<TABLE> <S> <C>
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<CIK> 0000856341
<NAME> AUL American Unit Trust
<SERIES>
<NUMBER> 8
<NAME> AUL American Aggressive Investor
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<S> <C>
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000856341
<NAME> AUL American Unit Trust
<SERIES>
<NUMBER> 9
<NAME> Fidelity High Income
<MULTIPLIER> 1
<S> <C>
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<PERIOD-START> JAN-01-1998
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000856341
<NAME> AUL American Unit Trust
<SERIES>
<NUMBER> 10
<NAME> Fidelity Growth
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
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<INVESTMENTS-AT-VALUE> 92,949,615
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000856341
<NAME> AUL American Unit Trust
<SERIES>
<NUMBER> 11
<NAME> Fidelity Overseas
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000856341
<NAME> AUL American Unit Trust
<SERIES>
<NUMBER> 12
<NAME> Fidelity Asset Manager
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000856341
<NAME> AUL American Unit Trust
<SERIES>
<NUMBER> 13
<NAME> Fidelity Index 500
<MULTIPLIER> 1
<S> <C>
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000856341
<NAME> AUL American Unit Trust
<SERIES>
<NUMBER> 14
<NAME> Fidelity Equity-Income
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000856341
<NAME> AUL American Unit Trust
<SERIES>
<NUMBER> 15
<NAME> Fidelity Contrafund
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
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<NAME> Calvert Social Mid-Cap Growth
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<NAME> T. Rowe Price Equity Income
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<NAME> PBHG Growth II
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<CIK> 0000856341
<NAME> AUL American Unit Trust
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<NAME> PBHG Technology & Communications
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<TABLE> <S> <C>
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<CIK> 0000856341
<NAME> AUL American Unit Trust
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<TABLE> <S> <C>
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<CIK> 0000856341
<NAME> AUL American Unit Trust
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<NAME> Janus Flexible Income
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