AUL AMERICAN INDIVIDUAL UNIT TRUST
Supplement Dated July 13, 1995
To The Prospectus Dated July 13, 1995
Page 7 of the Prospectus of AUL American Individual Unit Trust is
revised by the insertion of the following information in the
Expense Table for the Tactical Asset Allocation Portfolio:
Management/ Advisory Fee 0.80%(1)
Other Expenses 0.20%
Total Portfolio Annual Expenses 1.00%
(1) 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.
The following examples show expenses that a Contract Owner would
pay at the end of one or three years if at the end of those time
periods, the Contract is (1) surrendered, (2) annuitized, or (3)
not surrendered or annuitized.
(1) If Your Contract is Surrendered
Flexible Premium Contracts
1 year 110.78
3 years 154.51
One Year Flexible Premium Contracts
1 year 88.84
3 years 126.18
(2) If Your Contract is Annuitized
Flexible Premium Contracts
1 year 110.78
3 years 154.51
One Year Flexible Premium Contracts
1 year 25.78
3 years 78.98
(3) If Your Contract is not Surrendered or Annuitized
All Contracts
1 year 25.78
3 years 78.98<PAGE>
As filed with the Securities and Exchange Commission on July
13, 1995 File No. 33-79562
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 2 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 3 [X]
(Check appropriate box or boxes)
AUL AMERICAN INDIVIDUAL UNIT TRUST
(Exact Name of Registrant)
AMERICAN UNITED LIFE INSURANCE COMPANY
(Name of Depositor)
One American Square, Indianapolis, Indiana 46204
(Address of Depositor's Principal Executive Offices)(Zip Code)
Depositor's Telephone Number: (317) 263-1877
Richard A. Wacker, One American Square, Indianapolis, Indiana 46204
(Name and Address of Agent for Service)
Title of Securities Being Registered: Interests in individual
variable annuity contracts
Declaration Pursuant to Rule 24f-2: Pursuant to Rule 24f-2
under the Investment Company Act of 1940, the Registrant has registered an
indefinite number or amount of securities under the Securities Act of 1933.
Registrant will file its notice pursuant to Rule 24f-2 for its
fiscal year ending December 31, 1995 on or before February 29, 1996.
It is proposed that this filing will become effective (Check
appropriate Space)
immediately upon filing pursuant to paragraph (b) of
Rule 485
X on July 13, 1995 pursuant to paragraph (b) of Rule 485
60 days after filing pursuant to paragraph (a)(i) of
Rule 485
on (date) pursuant to paragraph (a)(1) of Rule 485
____ 75 days after filing pursuant to paragraph (a)(ii)
____ on (date) pursuant to paragraph (a) (ii) of Rule 485
____ this post-effective amendment designates a new effective
date for a previously filed amendment.
<PAGE>
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
1. Cover Page
..................................................................
Cover Page
2. Definitions
...................................................................
Definitions
3. Synopsis
.................................................................
..... Summary; Expense Table
4. Condensed Financial Information
........................................ Not Applicable
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; Premiums and Contract Values
During the Accumulation
Period; Cash With-
drawals and Death Proceeds;
Summary; Annuity
Period
8. Annuity Period
..............................................................
Annuity Period
9. Death Benefit
................................................................
Cash Withdrawals and The Death Proceeds
10. Purchase and Policy Values
.............................................. Premiums and
Contract Values During the
Accumulation Period
11. Redemptions
................................................................
Cash Withdrawals and The Death Proceeds
12. Taxes
.................................................................
........ Federal Tax Matters
13. Legal Proceedings
......................................................... Other
Information
14. Table of Contents for the Statement of Additional Information
... Statement of Additional Information
PART B - STATEMENT OF ADDITIONAL INFORMATION
Statement of Additional Information Item of Form N-4
Statement of Additional 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
PART C - OTHER INFORMATION
Item of Form N-4 Part C Caption
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 Persons
Controlled By or Under Common Control
Depositor or Registrant
................................................... With the
Depositor or 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
Prospectus
AUL American Individual Unit Trust
INDIVIDUAL VARIABLE ANNUITY CONTRACTS
Offered By
American United Life Insurance Company
One American Square
Indianapolis, Indiana 46204
(317) 263-4045
Annuity Service Office:
P.O. Box 7127, Indianapolis, Indiana 46206-7127
(800) 863-9354
This Prospectus describes individual variable annuity contracts
(the "Contracts") offered by
American United Life Insurance Company<U4> ("AUL" or the
"Company"). The Contracts are
designed for use in connection with non-tax qualified retirement
plans for individuals
("Non-Qualified Plans") and also for use by individuals in
connection with retirement plans that
meet the requirements of Sections 401, 403(b), or 408 of the
Internal Revenue Code ("Qualified
Plans").
This Prospectus describes two variations of Contracts, including
Contracts for which premiums
may vary in amount and frequency, subject to certain limitations
("Flexible Premium Contracts")
and Contracts for which premiums may vary in amount and frequency,
subject to certain
limitations, in the first Contract Year only ("One Year Flexible
Premium Contracts"). Both
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.
Premiums designated to accumulate on a variable basis may be
allocated to one or more of the
Investment Accounts that comprise a separate account of AUL called
AUL American Individual
Unit Trust (the "Variable Account"). Each Investment Account of the
Variable Account invests in
shares of one of the following mutual funds: AUL American Series
Fund, Inc. which offers the
Equity, Bond, Money Market, Managed and Tactical Asset Allocation
Portfolios; Acacia Capital
Corporation, which offers the Calvert Capital Accumulation Fund;
Alger American Portfolio,
which offers the Alger American Growth Portfolio; Fidelity Variable
Insurance Products Fund
("VIP"), which offers the Equity-Income, Growth, High Income and
Overseas Portfolios; Fidelity
Variable Insurance Products Fund II ("VIP II"), which offers the
Asset Manager, Contrafund, and
Index 500 Portfolios; TCI Portfolios, Inc., which offers the Growth
and International Portfolios;
and T. Rowe Price Equity Series, Inc., which offers the T. Rowe
Price Equity Income Portfolio.
AUL acts as the investment adviser to the AUL American Series Fund,
Inc. and Dean Investment
Associates acts as Sub-Adviser to the Tactical Asset Allocation
Portfolio. T. Rowe Price
Associates, Inc. acts as the investment adviser to the T. Rowe
Price Equity Series, Inc. Fidelity
Management & Research Company ("FMR") acts as the investment
adviser to the VIP and VIP II
Funds. Investors Research Corporation acts as the investment
adviser to TCI Portfolios, Inc.
Calvert Management Corporation acts as the investment adviser to
the Acacia Capital
Corporation. Fred Alger & Company acts as the investment adviser to
the Alger American Fund.
Not all Investment Accounts may be available under a particular
Contract and some of the
Investment Accounts are not available for certain types of
Contracts.
Premiums allocated to an Investment Account of the Variable Account
will increase or decrease
in dollar value depending on the investment performance of the
corresponding Fund in which the
Investment Account invests. These amounts are not guaranteed.
Premiums designated to
accumulate on a fixed basis may be allocated to AUL's Fixed Account
and will earn interest at
rates that are paid by AUL as described in "The Fixed Account."
This Prospectus concisely sets forth information about the
Contracts and the Variable Account
that a prospective investor should know before investing. Certain
additional information is
contained in a "Statement of Additional Information," dated July
12, 1995, which has been filed
with the Securities and Exchange Commission (the "SEC"). The
Statement of Additional
Information is incorporated by reference into this Prospectus. A
copy may be obtained without
charge by calling or writing to AUL at the telephone number or
address indicated above. The
table of contents of the Statement of Additional Information is
located at the end of this
Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION. NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SHOULD BE ACCOMPANIED BY THE CURRENT PROSPECTUSES
FOR THE FUND OR FUNDS BEING CONSIDERED. EACH OF THESE PROSPECTUSES
SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.
The date of this Prospectus is July 12, 1995.
TABLE OF CONTENTS
Description Page
DEFINITIONS
SUMMARY
Purpose of the Contracts 5
Types of Contracts 5
The Variable Account and the Funds 5
Fixed Account 5
Premiums 5
Transfers 6
Withdrawals 6
The Death Benefit 6
Charges 6
Free Look Right 6
Dollar Cost Averaging 6
Contacting AUL 6
EXPENSE TABLE 7
CONDENSED FINANCIAL
INFORMATION 9
PERFORMANCE OF THE INVESTMENT ACCOUNT 10
INFORMATION ABOUT AUL, THE VARIABLE ACCOUNT, AND THE FUNDS 12
American United Life Insurance Company 12
Variable Account 12
The Funds 12
AUL American Series Fund, Inc. 12
AUL American Equity Portfolio 12
AUL American Bond Portfolio 13
AUL American Money Market Portfolio 13
AUL American Managed Portfolio 13
AUL American Tactical Asset Allocation Portfolio 13
Acacia Capital Corporation 13
Calvert Capital Accumulation Portfolio 13
Alger American Fund 13
Alger American Growth Portfolio 13
Fidelity Variable Insurance Products Fund 13
Equity-Income Portfolio 13
Growth Portfolio 13
High Income Portfolio 14
Overseas Portfolio 14
Fidelity Variable Insurance Products Fund II 14
Asset Manager Portfolio 14
Contrafund Portfolio 14
Index 500 Portfolio 14
TCI Portfolios, Inc. 14
TCI Growth 14
TCI International 14
T. Rowe Price Equity Series, Inc 14
T. Rowe Price Equity Income 14
THE CONTRACTS 15
General 15
PREMIUMS AND CONTRACT VALUES
DURING THE ACCUMULATION PERIOD 15
Application for a Contract 15
Premiums under the Contracts 15
Free Look Period 15
Allocation of Premiums 16
Transfers of Account Value 16
Dollar Cost Averaging Program 16
PREMIUMS AND CONTRACT VALUES
DURING THE ACCUMULATION PERIOD (continued)
Contract Owner's Variable Account Value 17
Accumulation Units 17
Net Investment Factor 18
CASH WITHDRAWALS AND THE DEATH PROCEEDS 18
Cash Withdrawals 18
The Death Proceeds 19
Payments from the Variable Account 19
CHARGES AND DEDUCTIONS 19
Premium Tax Charge 19
Withdrawal Charge 20
Mortality and Expense Risk Charge 20
Administrative Fee 20
Other Charges 21
Variations in Charges 21
Guarantee of Certain Charges 21
Expenses of the Funds 21
ANNUITY PERIOD 21
General 21
Annuity Options 22
Option 1--Income for a Fixed Period 22
Option 2--Life Annuity 22
Option 3--Survivorship Annuity 22
Selection of an Option 22
THE FIXED ACCOUNT 22
Interest 23
Withdrawals 23
Transfers 23
Contract Charges 23
Payments from the Fixed Account 23
MORE ABOUT THE CONTRACTS 24
Designation and Change of Beneficiary 24
Assignability 24
Proof of Age and Survival 24
Misstatements 24
Acceptance of New Premiums 24
FEDERAL TAX MATTERS 24
Introduction 24
Diversification Standards 25
Taxation of Annuities in General--
Non-Qualified Plans 25
Additional Considerations 26
Qualified Plans 27
403(b) Programs--
Constraints on Withdrawals 28
OTHER INFORMATION 28
Voting of Shares of the Funds 28
Substitution of Investments 29
Changes to Comply with Law and Amendments 29
Reservation of Rights 30
Periodic Reports 30
Legal Proceedings 30
Legal Matters 30
Financial Statements 30
PERFORMANCE INFORMATION 30
STATEMENT OF ADDITIONAL INFORMATION 31
DEFINITIONS
Various terms commonly used in this Prospectus are defined as
follows:
Accumulation Period--The period commencing on the Contract Date and
terminating when the
Contract is terminated, 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 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
Beneficiary--The person having the right to payment of death
proceeds, if any, payable upon the
death of the Contract Owner 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.
Contract Anniversary--The yearly anniversary of the Contract Date.
Contract Date--The date shown as the Contract Date in a Contract.
It will not be later than the
date the initial premium is accepted under a Contract, and it is
the date used to determine
Contract Months, Contract Years, and Contract Anniversaries.
Contract Owner or Owner--The person entitled to the ownership
rights under the Contract and in
whose name 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 Section 401 or 408 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.
Contract Value--The current value of a Contract, which is equal to
the sum of Fixed Account
Value and Variable Account Value. Initially, it is equal to the
initial premium and thereafter will
reflect the net result of premiums, investment experience, charges
deducted, and any partial
withdrawals taken.
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.
Death Proceeds--The amount payable to the Beneficiary by reason of
the death of the Annuitant
or Owner in accordance with the terms of the Contract.
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.
Fixed Account--An account that is part of AUL's General Account
in which all or a portion of a
Owner's Contract Value may be held for accumulation at fixed
rates of interest paid by AUL.
Fixed Account Value--The total value under a Contract allocated
to the Fixed Account.
403(b) Program--An arrangement by a public school organization or
an organization that is
described in Section 501(c)(3) of the Internal Revenue Code,
including certain charitable,
educational and scientific organizations, 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 established by an employer, that meets the
requirements of Section 408 of
the Internal Revenue Code.
Free Withdrawal Amount--The amount that may be withdrawn without
incurring withdrawal
charges, which is 12% of the Contract Value at the time the first
withdrawal in a given Contract
Year is requested.
Funds--Acacia Capital Corporation, which offers the Calvert
Capital Accumulation Fund; Alger
American Portfolio, which offers the Alger American Growth
Portfolio; AUL American Series
Fund, Inc., which offers the Equity, Bond, Money Market, Managed,
and Tactical Asset
Allocation Portfolios; Fidelity Variable Insurance Products Fund
("VIP"), which offers the
Equity-Income, Growth, High Income and Overseas Portfolios;
Fidelity Variable Insurance
Products Fund II ("VIP II"), which offers the Asset Manager,
Contrafund, and Index 500
Portfolios; TCI Portfolios, Inc., which offers the Growth and
International Portfolios; and T.
Rowe Price Equity Series, Inc., which offers the T. Rowe Price
Equity Income Portfolio. Each of
the Funds is a diversified, open-end management investment
company commonly referred to as a
mutual fund, or a portfolio thereof.
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 46204.
HR-10 Plan--An Employee Benefit Plan established by a
self-employed person in accordance with
Section 401 of the Internal Revenue Code.
Investment Account--A sub-account of the Variable Account that
invests in shares of one of the
Funds.
Net Purchase Payments--The premiums paid less any applicable
premium tax.
Premiums--The amounts paid to AUL as consideration for the
Contract. In those states that
require the payment of premium tax upon receipt of a premium by
AUL, the term "premium" shall
refer to the amount received by AUL net of the amount deducted
for premium tax.
Qualified Plans--Employee Benefit Plans, 403(b) Programs and 408
Programs.
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 Value--The total value under a Contract
allocated to the Investment Accounts
of the Variable Account.
Withdrawal Value--An Owner's Contract Value minus the applicable
withdrawal charge.
SUMMARY
This summary is intended to provide a brief overview of the more
significant aspects of the
Contracts. Further detail is provided in this Prospectus, the
Statement of Additional Information,
and the Contracts. 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 Fixed Account is briefly described under "The Fixed
Account" and in the pertinent
Contract.
Purpose of the Contracts
The individual variable annuity contracts ("Contracts") described
in this Prospectus are offered for
use in connection with non-tax qualified retirement plans for
individuals ("Non-Qualified Plans")
and also for use by individuals in connection with retirement plans
that meet the requirements of
Sections 401, 403(b) or 408 of the Internal Revenue Code
(collectively "Qualified Plans"). A
Contract presents a dynamic concept in retirement planning designed
to give Contract Owners
flexibility in attaining 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 Contract Owner can pursue various
investment options by
allocating premiums to the Investment Accounts of the Variable
Account or to the Fixed
Account. See "The Contracts."
Types of Contracts
AUL offers two variations of contracts that are described in this
Prospectus. Under Flexible
Premium Contracts, premiums may vary in amount and frequency,
subject to the limitations
described below. Under One Year Flexible Premium Contracts,
premiums may vary in amount and
frequency but may be made during the first Contract Year only.
The Variable Account and the Funds
Premiums designated to accumulate on a variable basis are allocated
to the Variable Account. See
"Variable Account." The Variable Account is currently divided into
seventeen Investment
Accounts. Each Investment Account invests exclusively in shares of
one of the following mutual
Funds: AUL American Series Fund, Inc. which offers the Equity,
Bond, Money Market,
Managed, and Tactical Asset Allocation Portfolios; Acacia Capital
Corporation, which offers the
Calvert Capital Accumulation Fund; Alger American Portfolio, which
offers the Alger American
Growth Portfolio; Fidelity Variable Insurance Products Fund
("VIP"), which offers the
Equity-Income, Growth, High Income, and Overseas Portfolios;
Fidelity Variable Insurance
Products Fund II ("VIP II"), which offers the Asset Manager,
Contrafund, and Index 500
Portfolios; TCI Portfolios, Inc., which offers the Growth and
International Portfolios; and T.
Rowe Price Equity Series, Inc., which offers the T. Rowe Price
Equity Income Portfolio. AUL
acts as the investment adviser to the AUL American Series Fund,
Inc. Dean Investment
Associates acts as Sub-Adviser to the Tactical Asset Allocation
Portfolio. Calvert Management
Corporation acts as the investment adviser to the Acacia Capital
Corporation. Fred Alger &
Company acts as the investment adviser to the Alger American Fund.
Fidelity Management &
Research Company ("FMR") acts as the investment adviser to the VIP
and VIP II Funds.
Investors Research Corporation acts as the investment adviser to
TCI Portfolios, Inc. T. Rowe
Price Associates, Inc. acts as the investment adviser to the T.
Rowe Price Equity Series, Inc.
Each of the Funds has a different investment objective or
objectives. Premiums may be allocated
to one or more Investment Accounts available under a Contract. Not
all Investment Accounts
may be available under a particular Contract. The value of the
Accumulation Units held in an
Investment Account will increase or decrease in dollar value
depending on the investment
performance of the corresponding Fund in which the Investment
Account invests. The Contract
Owner bears the investment risk for amounts allocated to an
Investment Account of the Variable
Account.
Fixed Account
Premiums designated to accumulate on a fixed basis may be allocated
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 that are guaranteed to be at
least an effective annual rate of
3%. See "The Fixed Account."
Premiums
For Flexible Premium Contracts, premiums may vary in amount and
frequency, but each premium
payment must be at least $50. For the first three Contract Years,
premiums must total, on a
cumulative basis, at least $300 each Contract Year. For One Year
Flexible Premium Contracts,
premiums may be paid only during the first Contract Year, and each
premium must be at least
$500. See "Premiums under the Contracts."
Transfers
A Contract Owner's Variable Account Value may be transferred among
the Investment Accounts
of the Variable Account that are available under the Contract or to
the Fixed Account at any time
during the Accumulation Period. Part of a Contract Owner's Fixed
Account Value may be
transferred to one or more available Investment Accounts of the
Variable Account during the
Accumulation Period, subject to certain restrictions. The minimum
amount that may be
transferred from any one Investment Account or from the Fixed
Account is $500 or, if less than
$500, the Contract Owner's remaining Contract Value in an
Investment Account or the Fixed
Account, provided however, that amounts transferred from the Fixed
Account to an Investment
Account during any given Contract Year cannot exceed 20% of the
Owner's Fixed Account Value
as of the beginning of that Contract Year. If, after any transfer,
the remaining Contract 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 Contract
Value. See "Transfers of Account
Value."
Withdrawals
At any time before the Annuity Date and during the lifetime of the
Contract Owner and subject to
the limitations under any applicable Qualified Plan and applicable
law, a Contract may be
surrendered or a partial withdrawal may be taken from Contract
Value. The minimum amount that
may be withdrawn from an Owner's Contract Value is $200 for
Flexible Premium Contracts and
$500 for One Year Flexible Premium Contracts.
Certain retirement programs, such as 403(b) Programs, are subject
to constraints on withdrawals
and full surrenders. See "403(b) Programs--Constraints on
Withdrawals." See "Cash
Withdrawals" for more information, including the possible charges
and tax consequences of full
and partial withdrawals.
The Death Benefit
The Contracts provide for a death benefit upon the death of the
Annuitant or Contract Owner
during the Accumulation Period. See "Death Benefit" for more
information. The Contracts
provide for several optional fixed Annuity Options, any one of
which may be elected if permitted
by any applicable Qualified Plan and applicable law. Payments under
the Annuity Options will be
fixed and guaranteed by AUL. See "Annuity Period."
Charges
Certain charges will be deducted in connection with the operation
of the Contracts and the
Variable Account including a withdrawal charge that is assessed
upon partial withdrawal or
surrender, a mortality and expense risk charge, a premium tax
charge, and an administrative fee.
In addition, investment advisory fees and other expenses are paid
by the Funds. For further
information on these charges and expenses, see "Charges and
Deductions."
Free Look Right
The Owner has the right to return the Contract for any reason
within ten days of receipt (or a
longer period if required by state law). If this right is
exercised, the Contract will be considered
void from its inception and AUL will refund to the Owner the
greater of (1) premium payments or
(2) any Contract Value as of the end of the Valuation Period in
which AUL receives the Contract
plus any amounts deducted for premium taxes.
Dollar Cost Averaging
Owners who wish to purchase units of an Investment Account over a
period of time may do so
through the Dollar Cost Averaging ("DCA") Program. Under a DCA
Program, the owner
authorizes AUL to transfer a specific dollar amount from the AUL
American Money Market
Investment 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. These
transfers will continue automatically until AUL receives notice to
discontinue the Program, or
until there is not enough money in the Money Market Investment
Account to continue the
Program, whichever occurs first. Currently, the minimum required
amount for each transfer is
$500, although AUL reserves the right to change this minimum
transfer amount in the future. To
participate in the Program, a minimum deposit of $10,000 is
required. For further information, see
the explanation under "Dollar Cost Averaging Program."
Contacting AUL
All written requests, notices, and forms required by the Contracts,
and any questions or inquiries
should be directed to AUL's Annuity Office shown in the front of
this Prospectus.
EXPENSE TABLE
The purpose of the following table is to assist investors in
understanding the various costs and
expenses that Contract Owners in the Contracts bear directly and
indirectly. The table reflects
expenses of the Variable Account as well as the Funds that had
commenced operations as of
December 31, 1994. The Tactical Asset Allocation Portfolio had
not commenced operations as of
December 31, 1994. The table does not reflect AUL's charges for
premium taxes that may be
imposed by various jurisdictions. See "Premium Tax Charge." 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." For
a more complete description of the Funds' costs and expenses, see
the Funds' Prospectuses.
Contract Owner Transaction Expenses
Sales Charge (also referred to as a "Withdrawal Charge")(1)
Charge on Withdrawal Exceeding 12% Free Withdrawal Amount(1)
Contract Year 1 2 3 4 5 6 7 8 9 10 11 or more
Flexible Premium Contracts 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%
One Year Flexible Premium Contracts 7% 6% 5% 4% 3% 2% 1% 0% 0% 0%
0%
Annual Contract Fee Maximum administrative fee (per year) (2)$30
Variable Account Annual Expenses(as a percentage of average
account value)
Mortality and expense risk fee 1.25%
Fund Annual Expenses (as a percentage of net assets of each Fund)
Management/Advisory Fee Other Expenses Total
Fund Annual Expenses
AUL American Series Fund, Inc.: Equity Portfolio 0.50%(3) 0.23%
0.73%(5)
Bond Portfolio 0.50%(3) 0.23% 0.73%(5)
Managed Portfolio 0.50%(3) 0.25% 0.75%(5)
Money Market Portfolio 0.50%(3) 0.23% 0.73%(5)
Acacia Capital Corporation:
Calvert Capital Accumulation Portfolio 0.90%(4) 0.05% 0.95%(5)
Alger American Fund
Alger American Growth Portfolio 0.75%(3) 0.11% 0.86%(5)
Fidelity Variable Insurance Products Fund
Equity-Income Portfolio 0.52%(3) 0.06% 0.58%(5)
Growth Portfolio 0.62%(3) 0.07% 0.69%(5)
High Income Portfolio 0.61%(3) 0.10% 0.71%(5)
Overseas Portfolio 0.77%(3) 0.15% 0.92%(5)
Fidelity Variable Insurance Products Fund II
Asset Manager Portfolio 0.72%(3) 0.08% 0.80%(5)
Contrafund Portfolio 0.62%(3) 0.27% 0.89%(5)
Index 500 Portfolio 0.00%(3) 0.28% 0.28%(6)
TCI Portfolios, Inc.
TCI Growth 1.00%(3) 0.00% 1.00%(5)
TCI International 1.50%(3) 0.00% 1.50%(5)
T. Rowe Price Equity Series, Inc.
T. Rowe Price Equity Income 0.85%(3) 0.00% 0.85%(5)
(1) An amount withdrawn during a Contract Year referred to as the
Free Withdrawal Amount will
not be subject to a withdrawal charge. The Free Withdrawal Amount
is 12% of the Contract
Value at the time of the first withdrawal in any Contract Year in
which the withdrawal is made.
See "Withdrawal Charge."
(2) The administrative charge may be less than $30.00 per year,
based on the Owner's Contract
Value. The maximum charge imposed will be the lesser of 2% of the
Owner's Contract Value or
$30.00 per year. The administrative charge is waived if the
Contract Value equals or exceeds
$50,000 on a Contract Anniversary.
(3) AUL has currently agreed to waive its advisory fee if the
ordinary expenses of a Portfolio
exceed 1% and, to the extend 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 1994, expenses did not
exceed 1% of the average daily
net asset value.
(4) These figures are based on expenses for the fiscal year 1994
and have been restated to reflect
anticipated expenses for 1995. Management and advisory expenses
include an administrative
service fee of 0.10% paid to Adviser's affiliate.
(5) Management fees and expenses estimated for 1995. The
Contrafund commenced operations
on January 3, 1995 and first became available under AUL Contracts
on April 28, 1995.
(6) The fund's expenses were voluntarily reduced by the fund's
investment adviser. Absent such
reimbursement, management fee, other expenses, and total expenses
would have been 0.28%,
0.53%, and 0.81%, respectively.
Examples (for any Investment Account)
For each portfolio that had commenced operations as of December 31,
1994, the following
examples show expenses that a Contract Owner would pay at the end
of one, three, five, or ten
years if at the end of those time periods, the Contract is (1)
surrendered, (2) annuitized, or (3) not
surrendered or annuitized. The information below represents
expenses on a $1,000 premium and
assumes a 5%return per year. For a Contract that is surrendered,
and for a Contract that is
annuitized, the example shows expenses for Flexible Premium
Contracts and One Year Flexible
Premium Contracts. Expenses will be the same for both Contracts if
not surrendered or
annuitized. Column (2) reflects an assumption that a life annuity
or survivorship annuity is elected.
Under certain circumstances, a withdrawal charge may apply upon
annuitization. See "Withdrawal
Charge." These examples should not be considered a representation
of past or futures expenses.
Because Fund expenses may vary, 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. The
Tactical Asset Allocation
Portfolio had not commenced operations as of December 31, 1994.
(1) If Your Contract is Surrendered (2) If your Contract is
Annuitized (3) If your Contractis not
Surrendered or Annuitized
Flexible Premium Contracts One Year Flexible Premium Contracts
Flexible
Premium Contracts One Year Flexible Premium Contracts All
Contracts
Investment Account
AUL American Equity
1 year 108.07 86.30 108.07 23.07 23.07
3 years 146.97 118.42 146.97 70.82 70.82
5 years 181.03 150.92 120.82 120.82 120.82
10 years 268.03 256.57 256.57 256.57 256.57
AUL American Bond
1 year 108.07 86.30 108.07 23.07 23.07
3 years 146.97 118.42 146.97 70.82 70.82
5 years 181.03 150.92 120.82 120.82 120.82
10 years 268.03 256.57 256.57 256.57 256.57
AUL American Money Market
1 year 108.07 86.30 108.07 23.07 23.07
3 years 146.97 118.42 146.97 70.82 70.82
5 years 181.03 150.92 120.82 120.82 120.82
10 years 268.03 256.57 256.57 256.57 256.57
AUL American Managed
1 year 108.29 86.51 108.29 23.29 23.29
3 years 147.59 119.05 147.59 71.49 71.49
5 years 182.07 152.00 121.94 121.94 121.94
10 years 270.25 258.81 258.81 258.81 258.81
Alger American Growth
1 year 109.39 87.54 109.39 24.39 24.39
3 years 150.65 122.20 150.65 74.80 74.80
5 years 187.28 157.38 127.47 127.47 127.47
10 years 281.26 269.95 269.95 269.95 269.95
Calvert Capital Accumulation
1 year 110.31 88.39 110.31 25.31 25.31
3 years 153.19 124.82 153.19 77.55 77.55
5 years 191.59 161.83 132.06 132.06 132.06
10 years 290.34 279.14 279.14 279.14 279.14
Fidelity VIP Equity-Income
1 year 106.57 84.89 106.57 21.57 21,57
3 years 142.77 114.09 142.77 66.28 66.28
5 years 173.85 143.52 113.20 113.20 113.20
10 years 252.72 241.09 241.09 241.09 241.09
Fidelity VIP Growth
1 year 107.71 85.96 107.71 22.71 22.71
3 years 145.95 117.36 145.95 69.72 69.72
5 years 179.28 149.13 118.97 118.97 118.97
10 years 264.32 252.82 252.82 252.82 252.82
Fidelity VIP High Income
1 year 107.89 86.13 107.89 22.89 22.89
3 years 146.46 117.89 146.46 70.27 70.27
5 years 180.15 150.03 119.90 119.90 119.90
10 years 266.18 254.70 254.70 254.70 254.70
Examples (for any Investment Account) (continued)
(1) If Your Contract is Surrendered (2) If your Contract is
Annuitized (3) If your Contract
is not Surrendered or Annuitized
Flexible Premium Contracts One Year Flexible Premium Contracts
Flexible Premium Contracts
One Year Flexible Premium Contracts All Contracts
Investment Account
Fidelity VIP Overseas
1 year 110.01 88.12 110.01 25.01 25.01
3 years 152.37 123.99 152.37 76.67 76.67
5 years 190.22 160.41 130.60 130.60 130.60
10 years 287.45 276.21 276.21 276.21 276.21
Fidelity VIP II Asset
1 year 108.80 86.99 108.80 23.80 23.80
3 years 149.01 120.52 149.01 73.03 73.03
5 years 184.50 154.51 124.52 124.52 124.52
10 years 275.41 264.03 264.03 264.03 264.03
Fidelity VIP II Contrafund
1 year 109.68 87.81 109.68 24.68 24.68
3 years 151.46 123.04 151.46 75.68 75.68
5 years188.66 158.80 128.94 128.94 128.94
10 years 284.18 272.90 272.90 272.90 272.90
Fidelity VIP II Index 500
1 year 103.55 82.07 103.55 18.55 18.55
3 years 134.31 105.36 134.31 57.12 57.12
5 years 159.34 128.55 97.76 97.76 97.76
10 years 221.35 209.36 209.36 209.36 209.36
TCI Growth
1 year 110.78 88.84 110.78 25.78 25.78
3 years 154.51 126.18 154.51 78.98 78.98
5 years 193.83 164.14 134.44 134.44 134.44
10 years 295.03 283.88 283.88 283.88 283.88
TCI International
1 year 115.78 93.52 115.78 30.78 30.78
3 years 168.29 140.39 168.29 93.89 93.89
5 years 217.06 188.11 159.15 159.15 159.15
10 years 324.94 332.34 332.34 332.34 332.34
T. Rowe Price Equity Income
1 year 109.28 87.43 109.28 24.28 24.28
3 years 150.34 121.89 150.34 74.47 74.47
5 years 186.76 156.84 126.92 126.92 126.92
10 years 280.17 268.85 268.85 268.85 268.85
CONDENSED FINANCIAL INFORMATION
The following table presents Condensed Financial Information with
respect to each of the
Investment Accounts of the Variable Account that had commenced
operations as of December
31, 1994 for the period from the date of first deposit on
November 21, 1994 to December 31,
1994. The following tables 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,
1994. The Variable Account's financial statements have been
audited by Coopers & Lybrand
L.L.P., the Variable Account's independent accountant.
Information on the Investment Accounts
that had not commenced operations as of the date of this
prospectus is not presented. These
Investment Accounts include the AUL American Tactical Asset
Allocation Investment Account,
Calvert Capital Accumulation Investment Account, Alger American
Growth Investment Account,
Fidelity VIP Equity-Income Investment Account, Fidelity VIP II
Contrafund Investment Account,
and T. Rowe Price Equity Income Investment Account.
Investment Account 1994
AUL American Equity
Unit Value at begining of period $5.000
Unit Value at end of period 5.010
Number of units outstanding at end of period 15,959.218
CONDENSED FINANCIAL INFORMATION (continued)
Investment Account 1994
AUL American Bond
Unit Value at begining of period $5.000
Unit Value at end of period 5.062
Number of units outstanding at end of period 118.883
AUL American Money Market
Unit Value at begining of period $1.000
Unit Value at end of period 1.004
Number of units outstanding at end of period 626,535.146
AUL American Managed
Unit Value at beginning of period $5.000
Unit Value at end of period 5.034
Number of units outstanding at end of period 664.550
Fidelity VIP High Income
Unit Value at beginning of period $5.000
Unit Value at end of period 4.988
Number of units outstanding at end of period 12,229.340
Fidelity VIP Growth
Unit Value at beginning of period $5.000
Unit Value at end of period 5.028
Number of units outstanding at end of period 17,303.821
Fidelity VIP Overseas
Unit Value at beginning of period $5.000
Unit Value at end of period 4.915
Number of units outstanding at end of period 3,238.060
Fidelity VIP II Asset Manager
Unit Value at beginning of period $5.000
Unit Value at end of period 4.883
Number of units outstanding at end of period 14,681.732
Fidelity VIP II Index 500
Unit Value at beginning of period $5.000
Unit Value at end of period 5.020
Number of units outstanding at end of period 20.000
TCI Growth
Unit Value at beginning of period $5.000
Unit Value at end of period 5.010
Number of units outstanding at end of period 2,809.564
TCI International
Unit Value at beginning of period $5.000
Unit Value at end of period 4.840
Number of units outstanding at end of period 831.382
PERFORMANCE OF THE INVESTMENT ACCOUNTS
The following tables present the return on investment for each of
the Investment Accounts that
had commenced operations as of December 31, 1994. The return on
investment 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
charges. The return on
investment figures in the first table (excluding charges) does not
reflect either the deduction of the
withdrawal charge or a pro-rata portion of the administrative
charge. The return on investment
figures in the second table (including charges) reflects the
deduction of the withdrawal charge and
a pro-rata portion of the administrative charge. Since the
Investment Accounts have been in
operation only since November 21, 1994, the results presented
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. For the periods that a
particular Investment Account has been in existence (see "Inception
Date of Investment Account"
column) then the performance is actual performance and not
hypothetical in nature. The Tactical
Asset Allocation Investment Account had not commenced operations as
of December 31, 1994.
CONDENSED FINANCIAL INFORMATION (continued)
Investment Account 1994
AUL American Bond
Unit Value at begining of period $5.000
Unit Value at end of period 5.062
Number of units outstanding at end of period 118.883
AUL American Money Market
Unit Value at begining of period $1.000
Unit Value at end of period 1.004
Number of units outstanding at end of period 626,535.146
AUL American Managed
Unit Value at beginning of period $5.000
Unit Value at end of period 5.034
Number of units outstanding at end of period 664.550
Fidelity VIP High Income
Unit Value at beginning of period $5.000
Unit Value at end of period 4.988
Number of units outstanding at end of period 12,229.340
Fidelity VIP Growth
Unit Value at beginning of period $5.000
Unit Value at end of period 5.028
Number of units outstanding at end of period 17,303.821
Fidelity VIP Overseas
Unit Value at beginning of period $5.000
Unit Value at end of period 4.915
Number of units outstanding at end of period 3,238.060
Fidelity VIP II Asset Manager
Unit Value at beginning of period $5.000
Unit Value at end of period 4.883
Number of units outstanding at end of period 14,681.732
Fidelity VIP II Index 500
Unit Value at beginning of period $5.000
Unit Value at end of period 5.020
Number of units outstanding at end of period 20.000
TCI Growth
Unit Value at beginning of period $5.000
Unit Value at end of period 5.010
Number of units outstanding at end of period 2,809.564
TCI International
Unit Value at beginning of period $5.000
Unit Value at end of period 4.840
Number of units outstanding at end of period 831.382
PERFORMANCE OF THE INVESTMENT ACCOUNTS
The following tables present the return on investment for each of
the Investment Accounts that
had commenced operations as of December 31, 1994. The return on
investment 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
charges. The return on
investment figures in the first table (excluding charges) does not
reflect either the deduction of the
withdrawal charge or a pro-rata portion of the administrative
charge. The return on investment
figures in the second table (including charges) reflects the
deduction of the withdrawal charge and
a pro-rata portion of the administrative charge. Since the
Investment Accounts have been in
operation only since November 21, 1994, the results presented
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. For the periods that a
particular Investment Account has been in existence (see "Inception
Date of Investment Account"
column) then the performance is actual performance and not
hypothetical in nature. The Tactical
Asset Allocation Investment Account had not commenced operations as
of December 31, 1994.
PERFORMANCE OF THE INVESTMENT ACCOUNTS (continued)
Performance (excluding charges) for All Contracts
Investment Account Inception Date of Mutual Fund Inception
Date of Investment Account
Average Annual Return on Investment for Year ending 12/31/94
Average Annual Return on
Investement for 3 Years ending 12/31/94 Average Annual Return on
Investment for 5 Years
ending 12/31/94 Average Annual Return on Investment for lesser
of 10 Years or Since
Inception Cumulative Return on Investment for Lesser of 10 Years
or Since Inception
AUL American Equity 4/10/90 11/21/94 1.36% 7.69% n.a. 9.27% 51.95%
AUL American Bond 4/10/90 11/21/94 (4.77%) 3.30% n.a. 7.00% 37.62%
AUL American Money Market 4/10/90 11/21/94 2.25% 1.69% n.a 2.89%
14.39%
AUL American Managed 4/10/90 11/21/94 (2.17%) 5.19% n.a. 7.65%
41.61%
Alger American Growth 1/09/89 4/28/95 0.20% 10.40% 13.93% 15.33%
134.60%
Calvert Capital Accumulation 7/16/91 4/28/95 (11.01%) 2.01% n.a.
3.59% 12.98%
Fidelity VIP Equity-Income 10/09/86 4/28/95 5.74% 12.57% 9.15%
9.52% 111.34%
Fidelity VIP Growth 10/09/86 11/21/94 (1.05%) 7.91% 9.50% 11.28%
140.96%
Fidelity VIP High Income 9/19/85 11/21/94 (2.69%) 12.04% 12.63%
9.55% 133.20%
Fidelity VIP Overseas 1/28/87 11/21/94 0.59% 6.31% 4.47% 5.70%
55.19%
Fidelity VIP II Asset Manager 9/06/89 11/21/94 (7.33% ) 7.00%
9.34% 8.82% 56.74%
Fidelity Vip II Contrafund 1/03/95 4/28/95 n.a. n.a. n.a. n.a. n.a.
Fidelity VIP II Index 500 8/27/92 11/21/94 (0.68%) n.a. n.a. 5.90%
14.40%
TCI Growth 11/20/87 11/21/94 (2.40%) 1.19% 7.20% 9.93% 96.11%
TCI International 5/09/91 11/21/94 n.a. n.a. n.a. n.a. (5.79%)
T. Rowe Price Equity Income 3/31/94 4/28/95 n.a. n.a. n.a. n.a.
6.16%
Performance (including charges) for Flexible Premium Contracts
Investment Account Inception Date of Mutual Fund Inception
Date of Investment Account
Average Annual Return on Investment for Year ending 12/31/94
Average Annual Return on
Investement for 3 Years ending 12/31/94 Average Annual Return on
Investment for 5 Years
ending 12/31/94 Average Annual Return on Investment for lesser
of 10 Years or Since
Inception Cumulative Return on Investment for Lesser of 10 Years
or Since Inception
AUL American Equity 4/10/90 11/21/94 (9.05%) 4.42% n.a. 7.51%
40.74%
AUL American Bond 4/10/90 11/21/94 (14.55%) 0.17% n.a. 5.28%
27.49%
AUL American Money Market 4/10/90 11/21/94 (8.25%) (1.39%) n.a.
1.24% 5.99%
AUL American Managed 4/10/90 11/21/94 (12.22%) 2.00% n.a. 5.92%
31.18%
Alger American Growth 1/09/89 4/28/95 (9.82%) 7.38% 12.53%
14.15% 120.61%
Calvert Capital Accumulation 7/16/91 <EN>4/28/95 (19.91%) (0.78%)
n.a. 1.15% 4.04%
Fidelity VIP Equity-Income 10/09/86 4/28/95 (4.83%) 9.48% 7.80%
9.12% 105.07%
Fidelity VIP Growth 10/09/86 11/21/94 (11.21%) 4.63% 7.83% 10.67%
130.30%
Fidelity VIP High Income 9/19/85 11/21/94 (12.69%) 8.64% 10.91%
9.10% 124.46%
Fidelity VIP Overseas 1/28/87 11/21/94 (9.74%) 3.08% 2.88% 4.98%
47.00%
Fidelity VIP II Asset Manager 9/06/89 11/21/94 (16.84%) 3.76%
7.68% 7.44% 46.45%
Fidelity Vip II Contrafund 1/03/95 4/28/95 n.a. n.a. n.a. n.a. n.a.
Fidelity VIP II Index 500 8/27/92 11/21/94 (10.88%) n.a. n.a. 1.85%
4.40%
TCI Growth 11/20/87 11/21/94 (12.42%) (1.88%) 5.56% 9.12% 86.06%
TCI International 5/09/91 11/21/94 n.a. n.a. n.a. n.a. (15.40%)
T. Rowe Price Equity Income 3/31/94 4/28/95 n.a. n.a. n.a. n.a.
(4.46%)
Performance (including charges) for One Year Flexible Premium
Contracts
Investment Account Inception Date of Mutual Fund Inception
Date of Investment Account
Average Annual Return on Investment for Year ending 12/31/94
Average Annual Return on
Investement for 3 Years ending 12/31/94 Average Annual Return on
Investment for 5 Years
ending 12/31/94 Average Annual Return on Investment for lesser
of 10 Years or Since
Inception Cumulative Return on Investment for Lesser of 10 Years
or Since Inception
AUL American Equity 4/10/90 11/21/94 (6.02%) 5.55% n.a. 8.23%
45.24%
AUL American Bond 4/10/90 11/21/94 (11.70%) 1.25% n.a. 5.99%
31.59%
AUL American Money Market 4/10/90 11/21/94 (5.19%) (0.33%) n.a.
1.92% 9.39%
AUL American Managed 4/10/90 11/21/94 (9.29%) 3.10% n.a. 6.63%
35.39%
Alger American Growth 1/09/89 4/28/95 (7.09%) 8.21% 12.90% 14.40%
123.51%
Calvert Capital Accumulation 7/16/91 4/28/95 (17.49%) (0.02%) n.a.
1.78% 6.29%
Fidelity VIP Equity-Income 10/09/86 4/28/95 (1.96%) 10.33% 8.16%
9.19% 106.15%
Fidelity VIP Growth 10/09/86 11/21/94 (8.25%) 5.76% 8.51% 10.94%
134.97%
Fidelity VIP High Income 9/19/85 11/21/94 (9.78%) 9.81% 11.61%
9.22% 126.76%
Fidelity VIP Overseas 1/28/87 11/21/94 (6.74%) 4.19% 3.53% 5.38%
51.50%
Fidelity VIP II Asset Manager 9/06/89 11/21/94 (14.07%) 4.87%
8.36% 8.07% 51.08%
Fidelity Vip II Contrafund 1/03/95 4/28/95 n.a. n.a. n.a. n.a. n.a.
Fidelity VIP II Index 500 8/27/92 11/21/94 (7.91%) n.a. n.a. 3.26%
7.82%
TCI Growth 11/20/87 11/21/94 (9.05%) (0.83%) 6.23% 9.59% 91.83%
TCI International 5/09/91 11/21/94 n.a. n.a. n.a. n.a. (12.58%)
T. Rowe Price Equity Income 3/31/94 4/28/95 n.a. n.a. n.a. n.a.
(1.49%)
INFORMATION ABOUT AUL, THE VARIABLE ACCOUNT, AND THE FUNDS
American United Life Insurance Company
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 46 states and the District of Columbia.
AUL has its principal business
office located at One American Square, Indianapolis, Indiana 46204.
AUL conducts a conventional life insurance, health insurance,
reinsurance, and annuity business.
At December 31, 1994, AUL had admitted assets of $5,955,710,705 and
a policy owners' surplus
of $250,294,754.
The principal underwriter for the Contracts is AUL. AUL is
registered with the SEC as a
broker-dealer.
Variable Account
AUL American Individual Unit Trust was established by AUL on April
14, 1994, 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. Assets in the Variable Account
attributable to the reserves and
other liabilities under the Contracts are not chargeable with
liabilities arising from any other
business that AUL conducts. 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 seventeen Investment
Accounts. Each Investment
Account invests exclusively in shares of one of the Funds. Premiums
may be allocated to one or
more Investment Accounts available under a Contract. Not all
Investment Accounts may be
available under a particular Contract and some of the Investment
Accounts are unavailable for
certain types of Contracts. AUL may in the future establish
additional Investment Accounts of the
Variable Account, which may invest 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, or a portfolio thereof. 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. Each Fund has its own
investment objective or
objectives and policies. The shares of a Fund are purchased by AUL
for the corresponding
Investment Account at the Fund's net asset value per share, i.e.,
without any sales load. All
dividends and capital gain distributions received from a Fund are
automatically reinvested in such
Fund at net asset value, unless otherwise instructed by AUL. AUL
has entered into agreements
with the Distributors/Advisers of Acacia Captial Corporation and
TCI Portfolios, 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/Advisor of these funds.
The investment advisers of the Funds are identified on page 5. All
of the investment advisers are
registered with the SEC as investment advisers.
A summary of the investment objective or objectives of each Fund is
provided below. There can
be no assurance that any Fund 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 Fund.
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 Fund seeks current investment income as a
secondary objective. The Fund
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 Fund seeks to
provide capital appreciation to the extent consistent with the
primary objective. The Fund
attempts to achieve these objectives by investing primarily in
corporate bonds and other debt
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
Fund attempts to achieve this objective by investing in short-term
money market instruments that
are of the highest quality.
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 Fund 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 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.
FOR ADDITIONAL INFORMATION CONCERNING AUL AMERICAN SERIES FUND,
INC. AND ITS FUNDS, PLEASE SEE THE AUL AMERICAN SERIES FUND, INC.
PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING.
Acacia Capital Corporation
Calvert Capital Accumulation Portfolio
The Calvert Capital Accumulation Portfolio is a socially
responsible growth Portfolio that seeks
long-term capital appreciation by investing primarily in the stock
of small to 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 ACACIA CAPITAL CORPORATION
AND THE CALVERT CAPITAL ACCUMULATION PORTFOLIO, PLEASE SEE THE
ACACIA CAPITAL CORPORATION 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
85% of its net assets in equity
securities and at least 65% of its net assets in equity securities
of companies that 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.
Fidelity Variable Insurance Products Fund
Equity-Income Portfolio
The Equity-Income Portfolio seeks reasonable income by investing
primarily in income-producing
equity securities; the fund will also consider the potential for
capital appreciation.
Growth Portfolio
The Growth Portfolio seeks to achieve capital appreciation. The
Portfolio normally purchases
common stocks, although the Portfolio's investments are not
restricted to any one type of
security. Capital appreciation may also be found in other types of
securities, including bonds and
preferred stocks.
High Income Portfolio
The High Income Portfolio seeks to obtain a high level of current
income by investing primarily in
high-yielding, lower-rated, fixed-income securities, while also
considering growth of capital.
These include securities commonly referred to as junk bonds, the
risks of which are described in
the prospectus for the Fund.
Overseas Portfolio
The Overseas Portfolio seeks long-term growth of capital primarily
through investments in foreign
securities. The Overseas Portfolio provides a means for investors
to diversify their own portfolios
by participating in companies and economies outside of the United
States.
Fidelity Variable Insurance Products Fund II
Asset Manager Portfolio
The 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 fixed income
instruments.
Contrafund
The Contrafund Portfolio seeks capital appreciation by investing
primarily in companies that
Fidelity Management & Research, the investment adviser, believes to
be undervalued due to an
overly pessimistic appraisal by the public.
Index 500 Portfolio
The Index 500 Portfolio seeks to provide investment results that
correspond to the total return
(i.e., the combination of capital changes and income) of common
stocks publicly traded in the
United States. In seeking this objective, the Portfolio attempts to
duplicate the composition and
total return of the Standard & Poor's Index of 500 Stocks.
FOR ADDITIONAL INFORMATION CONCERNING VARIABLE INSURANCE
PRODUCTS FUND ("VIP") AND VARIABLE INSURANCE PRODUCTS FUND II ("VIP
II")
AND THEIR PORTFOLIOS, PLEASE SEE THE VIP AND VIP II PROSPECTUS,
WHICH
SHOULD BE READ CAREFULLY BEFORE INVESTING.
TCI Portfolios, Inc.
TCI Growth
The TCI Growth Portfolio seeks capital growth by investing in
common stocks (including
securities convertible into common stocks and other equity
equivalents) and other securities that
meet 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.
TCI International
The TCI International Portfolio seeks to achieve its investment
objective of capital growth by
investing primarily in an internationally diversified portfolio of
securities of foreign companies that
meet certain fundamental and technical standards of selection and
have, in the opinion of the
investment manager, potential for appreciation. The Fund will
invest primarily in common stocks
(defined to include depository receipts for common stocks and other
equity equivalents) of such
companies. Investment in securities of foreign issuers typically
involves a greater degree of risk
than investment in domestic securities.
FOR ADDITIONAL INFORMATION CONCERNING TCI PORTFOLIOS, INC. AND THE
GROWTH AND INTERNATIONAL PORTFOLIOS, PLEASE SEE THE TCI PORTFOLIOS,
INC. 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.
THE CONTRACTS
General
The Contracts are offered for purchase as a non-tax qualified
retirement plan by an individual. The
Contracts are also eligible for use in connection with certain
tax qualified retirement plans that
meet the requirements of Sections 401, 403(b) or 408 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) Section 403(b) annuity purchase plans for employees of public
schools or a charitable,
educational, or scientific organization described under Section
501(c)(3), and (4) individual
retirement accounts or annuities, including those established by
an employer as a simplified
employee pension plan under Section 408.
PREMIUMS AND CONTRACT VALUES DURING THE ACCUMULATION PERIOD
Application for a Contract
Any person wishing to purchase a Contract may submit an
application and an initial premium to
AUL, as well as any other form or information that AUL may
require. AUL reserves the right to
reject an application or premium for any reason, subject to AUL's
underwriting standards and
guidelines.
Premiums under the Contracts
Premiums under Flexible Premium Contracts may be made at any time
during the Contract
Owner's life and before the Contract's Annuity Date. Premiums for
Flexible Premium Contracts
may vary in amount and frequency but each premium payment must be
at least $50. Premiums
must accumulate a total of at least $300 each Contract Year for
the first three Contract Years.
Premiums may not total more than $12,000 in any one Contract Year
unless otherwise agreed by
AUL.
For One Year Flexible Premium Contracts, premiums may vary in
amount and frequency except
that additional premiums will only be accepted during the first
Contract Year. Each such premium
payment must be at least $500, premiums must total at least
$5,000 in the first Contract Year and
all premiums combined may not exceed $1,000,000 unless otherwise
agreed by AUL.
If the minimum premium amounts under Flexible Premium or One Year
Flexible Premium
Contracts are not met, AUL may, after 60 days notice, terminate
the Contract and pay an amount
equal to the Contract Value as of the close of business on the
effective date of termination. AUL
may change the minimum premiums permitted under a Contract, and
may waive any minimum
required premium at its discretion.
Annual premiums under any Contract purchased in connection with a
Qualified Plan will be
subject to maximum limits imposed by the Internal Revenue Code
and possibly by the terms of the
Qualified Plan. See the Statement of Additional Information for a
discussion of these limits or
consult the pertinent Qualified Plan document. Such limits may
change without notice
Initial premiums must be credited to a Contract 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
application that contains all the information necessary for
issuing the Contract and properly
crediting the premium. If AUL does not receive a complete
application, AUL will notify the
applicant that AUL does not have the necessary information to
issue a Contract. If the necessary
information is not provided to AUL within five Business Days
after the Business Day on which
AUL first receives an initial premium or if AUL determines it
cannot otherwise issue a Contract,
AUL will return the initial premium to the applicant, unless
consent is received to retain the initial
premium until the application is made complete.
Subsequent premiums (other than initial premiums) are credited as
of the end of the Valuation
Period in which they are received by AUL at its Home Office.
Free Look Period
The Owner has the right to return the Contract for any reason
within the Free Look Period which
is a ten day period beginning when the Owner receives the
Contract. If a particular state requires
a longer Free Look Period, then eligible Owners in that state
will be allowed the longer statutory
period in which to return the Contract. The returned Contract
will be deemed void and AUL will
refund the greater of (1) premium payments and (2) any Contract
Value as of the end of the
Valuation Period in which AUL receives the Contract plus any
amounts deducted for premium
taxes. AUL allocates initial premiums and any premiums that are
received during the Free Look
Period to the Investment Account investing in the AUL American
Money Market Portfolio
("Money Market Investment Account"). Premiums that are allocated
to the Fixed Account are immediately deposited to the Fixed
Account. The
Contract Value in the Money
Market Investment Account will be transferred automatically to
the Investment Accounts elected
in the Owner's application (or, in subsequent written allocation
instructions) 15 days after the
Contract is issued.
Allocation of Premiums
On the 15th day following receipt of the initial premium or, if
longer, after expiration of the Free
Look Period, initial premiums received during such Free Look
Period will be allocated among the
Investment Accounts of the Variable Account as instructed by the
Contract Owner. Allocation to
the Investment Account and the Fixed Account must be made in
increments of 5%. Not all
Investment Accounts may be available under a particular Contract,
and some of the Investment
Accounts are unavailable for certain types of Contracts.
Prior to such allocation, initial and subsequent premiums
designated by the Contract Owner to the
Investment Accounts and received during the Free Look Period will
be allocated to the Money
Market Investment Account. Premiums designated by the Contract
Owner to the Fixed Account
will be allocated to the Fixed Account.
A Contract Owner may change the allocation instructions at any
time by giving proper written
notice of the change to AUL at its Home Office and such
allocation will continue in effect until
subsequently changed. Any such change in allocation instructions
will be effective upon the latter
of (1) 15 days following receipt of the initial premium or, if
later, expiration of the Free Look
Period or (2) receipt of the change in allocation instructions by
AUL at its Home Office. Any
change in allocation instructions will continue in effect until
subsequently changed. Changes in the
allocation of future premiums have no effect on premiums already
paid. 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."
Transfers of Account Value
All or part of an Owner's Contract Value may be transferred among
the Investment Accounts of
the Variable Account or to the Fixed Account at any time during
the Accumulation Period and
after the Free Look Period upon receipt of a proper written
request by AUL at its Home Office.
Transfers may not be made to Investment Accounts that are not
available under a particular
Contract. Transfers may be made by telephone if a Telephone
Authorization Form has been
properly completed and received by AUL at its Home Office.
However, telephone transfer is not
available as of the date of this Propectus. The minimum amount
that may be transferred from any
one Investment Account is $500 or, if less than $500, the Owner's
remaining Contract Value in
the Investment Account, provided however, that amounts
transferred from the Fixed Account to
an Investment Account during any given Contract Year cannot
exceed 20% of the Owner's Fixed
Account Value as of the beginning of that Contract Year. If,
after any transfer, the Owner's
remaining Contract 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 Contract Value.
Currently, 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
effected as of the end of the Valuation Date in which AUL
receives the request in proper form.
AUL has established procedures to confirm that instructions
communicated by telephone are
genuine, which include the use of personal identification numbers
and recorded telephone calls.
Neither AUL nor its agents, will be liable for acting upon
instructions believed by AUL or its
agents to be genuine, provided AUL has complied with its
procedures.
Part of a Contract Owner's Fixed Account Value may be transferred
to one or more Investment
Accounts of the Variable Account available under a Contract
during the Accumulation Period
subject to certain limitations as described in "The Fixed
Account."
Dollar Cost Averaging Progam
Owners 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 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 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.
Month Transfer Amount Unit Value Units 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 and then authorizes AUL to transfer a specific
dollar amount from the
Money Market Investment 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. These transfers will continue
automatically until AUL receives notice
to discontinue the Program, or until there is not enough money in
the Money Market Investment
Account to continue the Program, whichever occurs first.
Currently, the minimum required amount of each transfer is $500,
although AUL reserves the
right to change this minimum transfer amount in the future.
Transfers to or from the Fixed
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 at no charge and
the Company reserves the right to temporarily discontinue,
terminate, or change the Program at
any time. Contract Owners may change the frequency of scheduled
transfers, or may increase or
decrease the amount of scheduled transfers, or 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 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 end
of the Free Look Period. The
Contract Owner may select the particular date of the month,
quarter, or year that the transfers are
to be made and such transfers will automatically be performed on
such date, provided that such
date selected is a day that AUL is open for business and provided
further that such date is a
Valuation Date. If the date selected is not a Business Day or is
not a Valuation Date, then the
transfer will be made on the next succeeding Valuation Date. To
participate in the Program, a
minimum deposit of $10,000 is required.
Contract Owner's Variable Account Value
Accumulation Units
Premiums allocated to the Investment Accounts available under a
Contract are credited to the
Contract in the form of Accumulation Units. 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 as of
the end of the Valuation
Period in which the premium is credited. The number of Accumulation
Units so credited to the
Contract 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 for the Money Market Investment
Account and $5 for all other
Investment Accounts. Subsequently, on each Valuation Date, the
Accumulation Unit value for
each Investment Account is determined by multiplying the Net
Investment Factor determined as
of the end of the Valuation Date 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 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 Fund during the
Valuation Period, plus or minus
(3) a credit or charge with respect to taxes if any, paid or
reserved for 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 Fund 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.
CASH WITHDRAWALS AND THE DEATH PROCEEDS
Cash Withdrawals
During the lifetime of the Annuitant, at any time before the
Annuity Date and subject to the
limitations under any applicable Qualified Plan and applicable law,
a Contract may be surrendered
or a partial withdrawal may be taken from a Contract. 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 Contract will result in a withdrawal payment
equal to the Owner's Contract
Value allocated to the Variable Accounts 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 an Owner's Contract 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
Owner's Contract Value will be reduced by an amount equal to the
payment and any applicable
withdrawal charge. Requests for a partial withdrawal that would
leave Contract Value of less than
$5000 for a One Year Flexible Premium Contract and less than the
required cumulative minimum
for a Flexible Premium Contract will be treated as a request for a
full surrender. AUL may change
or waive this provision at its discretion.
The minimum amount that may be withdrawn from a Contract Owner's
Contract Value is $200
for Flexible Premium Contracts and $500 for One Year Flexible
Premium Contracts. If remaining
Contract Value is less than these amounts, a request for a
withdrawal will be treated as a
surrender of the Contract. In addition, the Contracts may be issued
in connection with certain
retirement programs that are subject to constraints on withdrawals
and full surrenders.
The amount of a partial withdrawal will be taken from the
Investment Accounts and the Fixed
Account as instructed, and if the Owner does not specify, in
proportion to the Owner's Contract
Value in the various Investment Accounts and the Fixed Account. 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, described
below, and may be subject to a premium tax charge for any tax on
premiums that may be imposed
by various states and municipalities. See "Premium Tax Charge." A
surrender or withdrawal that
results in receipt of proceeds by a Contract Owner may result in
receipt of taxable income to the
Contract Owner and, in some instances, in a tax penalty. In
addition, distributions under certain
Qualified Plans may result in a tax penalty. See "Tax Penalty."
Owners of Contracts used in
connection with a Qualified Plan should refer to the terms of the
applicable Qualified Plan for any
limitations or restrictions on cash withdrawals. The tax
consequences of a surrender or
withdrawal under the Contracts should be carefully considered. See
"Federal Tax Matters."
The Death Proceeds
If a Contract Owner dies at or after 76, the amount of the Death
Proceeds is equal to the Contract
Owner's Contract Value as of the end of the Valuation Period in
which due proof of death and
instructions regarding payment are received by AUL at its Home
Office. If a Contract Owner or,
as described below, an Annuitant, dies before age 76, the Death
Proceeds will be the greater of
the Contract Value as of the end of the Valuation Period in which
due proof of death and
instructions regarding payment are received by AUL at its Home
Office or the value given by (a)-(b)-(c)+(d) where: (a) is the net
premiums; (b) is any amounts withdrawn (including any
withdrawal charges) prior to death; (c) is the annual fees assessed
prior to death; and (d) is the
interest earned on (a)-(b)-(c), credited at an annual effective
rate of 4% until the date of
death.
If the Contract Owner dies before the Annuity Date and the
Beneficiary is not the Contract
Owner's surviving spouse, the Death Proceeds will be paid to the
Beneficiary. Such Death
Proceeds will be paid in a lump sum, unless the Beneficiary elects
to have this value applied under
a settlement option. If a settlement option is elected, the
Beneficiary must be named the Annuitant
and payments must begin within one year of the Contract Owner's
death. The option also must
have payments which are payable over the life of the Beneficiary or
over a period which does not
extend beyond the life expectancy of the Beneficiary.
If the Contract Owner dies before the Annuity Date and the
Beneficiary is the Contract Owner's
surviving spouse, the surviving spouse will become the new Contract
Owner. The Contract will
continue with its terms unchanged and the Contract Owner's spouse
will assume all rights as
Contract Owner. Within 120 days of the original Contract Owner's
death, the Contract Owner's
spouse may elect to receive the Death Proceeds or withdraw any of
the Contract Value without
any early withdrawal charge. However, depending upon the
circumstances, a tax penalty may be
imposed upon such a withdrawal.
Any amount payable under a Contract will not be less than the
minimum required by the law of
the state where the Contract is delivered.
If the Annuitant dies before the Annuity Date and the Annuitant is
not also the Contract Owner,
then: (1) if the Contract Owner is not an individual, the Death
Proceeds will be paid to the
Contract Owner in a lump sum; or (2) if the Contract Owner is an
individual, a new Annuitant
may be named and the Contract will continue. If a new Annuitant is
not named within 120 days of
the Annuitant's death, the Contract Value, less any withdrawal
charges, will be paid to the
Contract Owner in a lump sum.
The death benefit will be paid to the Beneficiary or Contract
Owner, as appropriate, in a single
sum or under one of the Annuity Options, as directed by the
Contract Owner 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.
Payments from the Variable Account
Payment of an amount from the Variable Account resulting from a
surrender, partial withdrawal,
transfer from an Owner's Contract Value allocated to the Variable
Account, or payment of the
Death Proceeds, normally 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
weekend 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 (i) disposal of securities held by the
Variable Account is not reasonably
practicable, or (ii) 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."
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, 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.
Withdrawal Charge
No deduction for sales charges is made from premiums for a
Contract. However, if a cash
withdrawal is made or the Contract is surrendered 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 on the amount withdrawn if the
Contract has not been in
existence for a certain period of time. An amount withdrawn during
a Contract Year referred to as
the Free Withdrawal Amount will not be subject to an otherwise
applicable withdrawal charge.
The Free Withdrawal Amount is 12% of Contract Value at the time of
the first withdrawal in any
Contract Year in which the withdrawal is being made. Any transfer
of Contract Value from the
Fixed Account to the Variable Account will reduce the Free
Withdrawal Amount by the amount
transferred. The chart below illustrates the amount of the
withdrawal charge that applies to both
variations of Contracts based on the number of years that the
Contract has been in existence.
Charge on Withdrawal Exceeding 12% Free Withdrawal Amount
Contract Year 1 2 3 4 5 6 7 8 9 10 11 or more
Flexible Premium Contracts 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%
One Year Flexible Premium Contracts 7% 6% 5% 4% 3% 2% 1% 0% 0% 0%
0%
In no event will the amount of any withdrawal charge, when added to
any withdrawal charges
previously assessed against any amount withdrawn from a Contract,
exceed 8.5% of the total
premiums paid on a Flexible Premium Contract or 8% of the total
premiums paid on a One Year
Flexible Premium Contract. In addition, no withdrawal charge will
be imposed upon payment of
Death Proceeds under the Contract.
A withdrawal charge may be assessed upon annuitization of a
Contract. For a Flexible Premium
Contract, no withdrawal charge will apply if the Contract is in its
fifth Contract Year or later and
a life annuity or survivorship annuity option is selected. For a
One Year Flexible Premium
Contract, no withdrawal charge will apply if a life annuity or
survivorship option is selected or if
the Contract is in its fourth Contract Year or later and the fixed
income option for a period of 10
or more years is chosen. Otherwise, the withdrawal charge will
apply.
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 or decrease the withdrawal charge for any
Contracts established on or after the
effective date of the change, but the withdrawal charge will not
exceed 8.5% of the total
premiums paid on a Flexible Premium Contract or 8% of the total
premiums paid on a One Year
Flexible Premium Contract.
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 is based on
original 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 the Annuitants, as a
group, will live longer than the
AUL'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.
Administrative Fee
AUL deducts an administrative fee from each Owner's Contract Value
equal to the lesser of 2.0%
of the Contract Value or $30 a year. The fee is assessed every year
on a Contract if it is in effect
on the Contract Anniversary, and is assessed only during the
Accumulation Period. The
administrative fee is waived on each Contract Anniversary when the
Contract Value, at the time
the charge would otherwise have been imposed, exceeds $50,000. When
a Contract Owner
annuitizes or surrenders on any day other than a Contract
Anniversary, a pro rata portion of the
charge for that portion of the year will not be assessed. The
charge is deducted proportionately
from the Contract Value allocated among the Investment Accounts and
the Fixed Account. The
purpose of this fee is to reimburse AUL for the expenses associated
with administration of the
Contracts and operation of the Variable Account. AUL does not
expect to profit from this fee.
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.
Variations in Charges
AUL may reduce or waive the amount of the withdrawal charge and
administrative charge for a
Contract where the expenses associated with the sale of the
Contract or the administrative costs
associated with the Contract are reduced. For example, the
withdrawal and/or administrative
charge may be reduced in connection with acquisition of the
Contract in exchange for another
annuity contract issued by AUL. AUL may also reduce or waive the
withdrawal charge and
administrative charge 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 may increase
the administrative fee, but only to the extent necessary to recover
the expenses associated with
administration of the Contracts and operations 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 Fund. The net asset value reflects the investment
advisory fee and other expenses
that are deducted from the assets of the Fund. The advisory fees
and other expenses are not fixed
or specified under the terms of the Contract and are described in
the Funds' Prospectuses.
ANNUITY PERIOD
General
On the Annuity Date, the adjusted value of the Owner's Contract
Value 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 Owner's Contract Value as of the Annuity Date, reduced by
any applicable premium or
similar taxes, and any applicable withdrawal charge. For a Flexible
Premium Contract, no
withdrawal charge will apply if the Contract is in its fifth
Contract Year or later and a life annuity
or survivorship annuity option is selected. For a One Year Flexible
Premium Contract, no
withdrawal charge will apply if a life annuity or survivorship
annuity option is selected or if the
Contract is in its fourth Contract Year or later and the fixed
income option for a period of 10 or
more years is chosen. Otherwise, the withdrawal charge will apply.
The Contracts provide for three Annuity Options, any one of which
may be elected, except as
otherwise noted. A lump sum distribution may also be elected. Other
Annuity Options may be
available upon request at the discretion of AUL. All Annuity
Options are fixed and the annuity
payments are based upon annuity rates that vary with the Annuity
Option selected and the age of
the Annuitant (as adjusted), except that in the case of Option 1,
the Income for a Fixed Period
Option, age is not a consideration. The annuity rates are based
upon an assumed interest rate of
3%, compounded annually. Generally, if no Annuity Option has been
selected for a Contract
Owner, annuity payments will be made to the Annuitant under Option
2, the life annuity with 120
guaranteed payments. For Contracts used in connection with certain
Employee Benefit Plans and
employer sponsored 403(b) programs, annuity payments to Contract
Owners who are married will
be made under Option 3, with the Contract Owner's spouse as
contingent Annuitant, unless the
Contract Owner otherwise elects and obtains his or her spouse's
consent.
Once annuity payments have commenced, a Contract Owner 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 $100 each, AUL has the
right to make either a lump
sum settlement or to make larger payments on a less frequent basis.
AUL also reserves the right
to change the minimum payment amount.
Annuity payments will begin as of the Annuity Date.
A Contract Owner may designate an Annuity Date, Annuity Option,
contingent Annuitant, and
Beneficiary on an Annuity Election Form that must be received by
AUL at its Home Office prior
to the Annuity Date. AUL may also require additional information
before annuity payments
commence. If the Contract Owner is an individual, the Annuitant may
be changed at any time
prior to the Annuity Date. The Annuitant must also be an individual
and must be the Contract
Owner, or
someone chosen from among the Contract Owner's spouse, parents,
brothers, sisters, and
children. Any other choice requires AUL's consent. If the Contract
Owner is not an individual, a
change in the Annuitant will not be permitted without AUL's
consent. The Beneficiary, if any,
may be changed at any time and the Annuity Date and Annuity Option
may be changed at any
time prior to the Annuity Date. For Contracts used in connection
with a Qualified Plan, reference
should be made to the terms of the Qualified Plan for pertinent
limitations regarding annuity dates
and options. To help ensure timely receipt of the first annuity
payment, a transfer of a Contract
Owner's Contract Value in the Variable Account should be made to
the Fixed Account at least
two weeks prior to the Annuity Date.
Annuity Options
Option 1--Income for a Fixed Period
An annuity payable monthly for a fixed period (not more than 20
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.
Option 2--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. A minimum number of
payments can be guaranteed
such as 120 or the number of payments required to refund the
proceeds applied.
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%, 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
Contract Owner or the contingent
Annuitant dies before the Annuity Date.
Selection of an Option
Contract Owners should carefully review the Annuity Options with
their financial or tax advisers.
For Contracts used in connection with a Qualified Plan, reference
should be made to the terms of
the applicable Qualified Plan for pertinent limitations respecting
the form of annuity payments, the
commencement of distributions, and other matters. For instance,
annuity payments under a
Qualified Plan generally must begin no later than April 1 of the
calendar year following the
calendar year in which the Contract Owner reaches age 701/2. For
Option 1, 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 701/2 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 100% election 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.
Interest
A Contract Owner'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 ("Current Rate"), which are guaranteed to be
at least an annual effective rate
of 3% ("Guaranteed Rate"). 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,
premiums allocated or
transfers to the Fixed Account under a Contract during the time the
Current Rate is in effect are
guaranteed to earn interest at that particular Current Rate for at
least one year.
Amounts contributed or transferred to the Fixed Account earn
interest at the Current Rate then in
effect. 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
Contract Owner'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
Contract Owner's Fixed
Account Values and for paying interest at the Current Rate on
amounts allocated to the Fixed
Account.
Withdrawals
A Contract Owner 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 Contract Owner's
Fixed Account Value will result in a withdrawal payment equal to
the value of the Contract
Owner's Fixed Account Value as of the day the surrender is
effected, minus any applicable
withdrawal charge. A partial withdrawal may be requested for a
specified percentage or dollar
amount of the Contract Owner's Fixed Account Value. For a further
discussion of surrenders and
partial withdrawals as generally applicable to a Contract Owner's
Variable Account Value and
Fixed Account Value, see "Cash Withdrawals."
Transfers
A Contract Owner's Fixed Account Value may be transferred from the
Fixed Account to the
Variable Account subject to certain limitations. The minimum amount
that may be transferred
from the Fixed Account is $500 or, if the Fixed Account Value is
less than $500 after the transfer,
the Contract Owner's remaining Fixed Account Value. If the amount
remaining in the Fixed
Account after a transfer would be less than $500, the remaining
amount will be transferred with
the amount that has been requested. The maximum amount that may be
transferred in any one
Contract Year is the lesser of 20% of a Contract Owner's Fixed
Account Value as of the last
Contract Anniversary preceding the request, or the Contract Owner's
entire Fixed Account Value
if it would be less than $500 after the transfer. Transfers and
withdrawals of a Contract Owner's
Fixed Account Value will be effected on a last-in first-out basis.
For a discussion of transfers as
generally applicable to a Contract Owner's Variable Account Value
and Fixed Account Value, see
"Transfers of Account Value."
Contract Charges
The withdrawal charge will be the same for amounts surrendered or
withdrawn from a Contract
Owner's Fixed Account Value as for amounts surrendered or withdrawn
from a Contract Owner's
Variable Account Value. In addition, the annual fee will be the
same whether or not a Owner's
Contract 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 Contract Owners to
the extent the Contract Value
is allocated to the Fixed Account; however, such Contract Owners
will not participate in the
investment experience of the Variable Account. See "Charges and
Deductions."
Payments from the Fixed Account
Surrenders, withdrawals, and transfers from the Fixed Account and
payment of Death Proceeds
based upon a Contract Owner'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 Contract
Owner's Fixed Account Value.
MORE ABOUT THE CONTRACTS
Designation and Change of Beneficiary
The Beneficiary designation contained in an application for the
Contracts will remain in effect
until changed. A Beneficiary may only be named if the Contract
Owner is an individual. The
interests of a Beneficiary who dies before the Contract Owner will
pass to any surviving
Beneficiary, unless the Contract Owner specifies otherwise. Unless
otherwise provided, if no
designated Beneficiary is living upon the death of the Contract
Owner prior to the Annuity Date,
the Contract Owner's estate is the Beneficiary. Unless otherwise
provided, if no designated
Beneficiary under an Annuity Option is living after the Annuity
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 Contract Owner 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.
For Contracts issued in connection with Qualified Plans, reference
should be made to the terms of
the particular Qualified Plan, if any, and any applicable law for
any restrictions on the beneficiary
designation. For instance, under an Employee Benefit Plan, the
Beneficiary (or contingent
Annuitant) must be the Contract Owner's spouse if the Contract
Owner is married, unless the
spouse properly consents to the designation of a Beneficiary (or
contingent Annuitant) other than
the spouse.
Assignability
A Contract Owner may assign a Contract, but the rights of the
Contract Owner and any
Beneficiary will be secondary to the interests of the assignee. AUL
assumes no responsibility for
the validity of an assignment. Any assignment will not be binding
upon AUL until received in
writing at its home office. Because an assignment may be a taxable
event, Contract Owners
should consult a tax advisor as to the tax consequences resulting
from such an assignment.
Proof of Age and Survival
AUL may require proof of age, sex, or survival of any person on
whose life annuity payments
depend.
Misstatements
If the age or sex of an Annuitant or contingent Annuitant has been
misstated, the correct amount
paid or payable by AUL shall be such as the Contract would have
provided for the correct age
and sex.
Acceptance of New Premiums
AUL reserves the right to refuse to accept new premiums for a
Contract at any time.
FEDERAL TAX MATTERS
Introduction
The Contracts described in this Prospectus are designed for use in
connection with non-tax
qualified retirement plans for individuals and for use by
individuals in connection with retirement
plans under the provisions of Sections 401, 403(b), or 408 of the
Internal Revenue Code
("Code"). The ultimate effect of Federal income taxes on values
under a Contract, on annuity
payments, and on the economic benefits to the Owner, the Annuitant,
and the Beneficiary or other
payee, may depend upon the type of Qualified 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. Future legislation
may affect annuity contracts adversely. 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 terms of the Qualified Plan and the
particular circumstances of the
individual
involved, any person contemplating the purchase of 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 OF ANY
CONTRACT OR ANY TRANSACTION INVOLVING THE CONTRACTS. CONSULT
YOUR TAX ADVISOR.
Diversification Standards
Treasury Department regulations under Section 817(h) of the Code
prescribe asset diversification
requirements which are expected to be met by the investment
companies whose shares are sold to
the Investment Accounts. Failure to meet these requirements would
jeopardize the tax status of
the Contracts. See the Statement of Additional Information for
additional details.
In connection with the issuance of the regulations governing
diversification under Section 817(h)
of the Code, the Treasury Department announced that it would
issue future regulations or rulings
addressing the circumstances in which a variable contract owner's
control of the investments of a
separate account may cause the contract owner, rather than the
insurance company, to be treated
as the owner of the assets held by the separate account. If the
variable contract owner is
considered the owner of the securities underlying the separate
account, income and gains
produced by those securities would be included currently in a
contract owner's gross income.
It is not clear, at present, what these regulations or rulings
may provide. It is possible that when
the regulations or rulings are issued, the Contracts may need to
be modified in order to remain in
compliance. AUL intends to make reasonable efforts to comply with
any such regulations or
rulings so that the Contracts will be treated as annuity
contracts for Federal income tax purposes
and reserves the right to make such changes as it deems
appropriate for that purpose.
Taxation of Annuities in General--Non-Qualified Plans
Section 72 of the Code governs taxation of annuities. In general,
a Contract Owner is not taxed
on increases in value under an annuity contract until some form
of distribution is made under the
contract. However, the increase in value may be subject to tax
currently under certain
circumstances. See "Contracts Owned by Non-Natural Persons" on
page 26 and "Diversification
Standards" above.
1. Surrenders or Withdrawals Prior to the Annuity Date
Code Section 72 provides that amounts received upon a total or
partial surrender or withdrawal
from a contract prior to the annuity date generally will be
treated as gross income to the extent
that the cash value of the contract (determined without regard to
any surrender charge in the case
of a partial withdrawal) exceeds the "investment in the
contract." In general, the "investment in
the contract" is that portion, if any, of premiums paid under a
contract less any distributions
received previously under the contract that are excluded from the
recipient's gross income. The
taxable portion is taxed at ordinary income tax rates. For
purposes of this rule, a pledge or
assignment of a contract is treated as a payment received on
account of a partial withdrawal of a
contract. Similarly, loans under a contract generally are treated
as distributions under the contract.
2. Surrenders or Withdrawals on or after the Annuity Date
Upon receipt of a lump sum payment or an annuity payment under an
annuity contract, the
recipient is taxed if the cash value of the contract exceeds the
investment in the contract.
For fixed annuity payments, the taxable portion of each payment
is determined by using a formula
known as the "exclusion ratio," which establishes the ratio that
the investment in the contract
bears to the total expected amount of annuity payments for the
term of the contract. That ratio is
then applied to each payment to determine the non-taxable portion
of the payment. That
remaining portion of each payment is taxed at ordinary income
rates. Once the excludable portion
of annuity payments to date equals the investment in the
contract, the balance of the annuity
payments will be fully taxable.
Withholding of Federal income taxes on all distributions may be
required unless a recipient who is
eligible elects not to have any amounts withheld and properly
notifies AUL of that election.
Special rules apply to withholding on distributions from Employee
Benefit Plans that are qualified
under Section 401(a) of the Internal Revenue Code.
3. Penalty Tax on Certain Surrenders and Withdrawals
With respect to amounts withdrawn or distributed before the
recipient reaches age 591/2, a
penalty tax is imposed equal to 10% of the portion of such amount
which is includable in gross
income. However, the penalty tax is not applicable to
withdrawals: (i) made on or after the death
of the owner (or where the owner is not an individual, the death
of the "primary annuitant," who is defined as the individual the
events in whose life are of primary
importance in affecting the timing and amount of the payout under
the contract); (ii) attributable
to the recipient's becoming totally disabled within the meaning of
Code Section 72(m)(7); or (iii)
which are part of a series of substantially equal periodic payments
(not less frequently than
annually) made for the life (or life expectancy) of the recipient,
or the joint lives (or joint life
expectancies) of the recipient and his beneficiary. The 10% penalty
also does not apply in certain
other circumstances described in Code Section 72.
If the penalty tax does not apply to a surrender or withdrawal as
a result of the application of item
(iii) above, and the series of payments are subsequently modified
(other than by reason of death or
disability), the tax for the first year in which the modification
occurs will be increased by an
amount (determined in accordance with IRS regulations) equal to the
tax that would have been
imposed but for item (iii) above, plus interest for the deferral
period, if the modification takes
place (a) before the close of the period which is five years from
the date of the first payment and
after the recipient attains age 591/2, or (b) before the recipient
reaches age 591/2.
Additional Considerations
1. Distribution-at-Death Rules
In order to be treated as an annuity contract, a contract must
provide the following two
distribution rules: (a) if the owner dies on or after the Annuity
Commencement Date, and before
the entire interest in the contract has been distributed, the
remaining interest must be distributed at
least as quickly as the method in effect on the owner's death; and
(b) if the owner dies before the
Annuity Date, the entire interest in the contract must generally be
distributed within five years
after the date of death, or, if payable to a designated
beneficiary, must be annuitized over the life
of that designated beneficiary or over a period not extending
beyond the life expectancy of that
beneficiary, commencing within one year after the date of death of
the owner. If the designated
beneficiary is the spouse of the owner, the contract may be
continued in the name of the spouse as
owner.
For purposes of determining the timing of distributions under the
foregoing rules, where the
owner is not an individual, the primary annuitant is considered the
owner. In that case, a change in
the primary annuitant will be treated as the death of the owner.
Finally, in the case of joint
owners, the distribution-at-death rules will be applied by treating
the death of the first owner as
the one to be taken into account in determining how generally
distributions must commence,
unless the sole surviving owner is the deceased owner's spouse.
2. Gift of Annuity Contracts
Generally, gifts of contracts (not purchased in connection with a
Qualified Plan) before the
Annuity Commencement Date will trigger income tax on the gain on
the contract, with the donee
getting a stepped-up basis for the amount included in the donor's
income. This provision does not
apply to certain transfers incident to a divorce. The 10% penalty
tax on pre-age 591/2
withdrawals and distributions and gift tax also may be applicable.
3. Contracts Owned by Non-Natural Persons
If the contract is held by a non-natural person (for example, a
corporation) the income on that
contract (generally the net surrender value less the premium
payments) is includable in taxable
income each year. Other taxes (such as the alternative minimum tax
and the environmental tax
imposed under Code Section 59A) may also apply. The rule does not
apply where the contract is
acquired by the estate of a decedent, where the contract is held by
certain types of retirement
plans, where the contract is a qualified funding asset for
structured settlements, where the
contract is purchased on behalf of an employee upon termination of
an Employee Benefit Plan,
and in the case of a so-called immediate annuity. Code Section 457
(deferred compensation) plans
for employees of state and local governments and tax-exempt
organizations are not within the
purview of the exceptions. However, the income of state and local
governments and tax-exempt
organizations generally is exempt from federal income tax.
4. Multiple Contract Rule
For purposes of determining the amount of any distribution under
Code Section 72(e) (amounts
not received as annuities) that is includable in gross income, all
annuity contracts issued by the
same insurer to the same contract owner during any calendar year
must be aggregated and treated
as one contract. Thus, any amount received under any such contract
prior to the contract's
Annuity Commencement Date, such as a partial surrender, dividend,
or loan, will be taxable (and
possibly subject to the 10% penalty tax) to the extent of the
combined income in all such
contracts. In addition, the Treasury Department has broad
regulatory authority in applying this
provision to prevent avoidance of the purposes of this new rule.
Qualified Plans
The Contract may be used with certain types of Qualified Plans as
described under "The
Contracts." The tax rules applicable to participants in such
Qualified Plans vary according to the
type of plan and the terms and conditions of the plan itself. No
attempt is made herein to provide
more than general information about the use of the Contract with
the various types of Qualified
Plans. Contract Owners, Annuitants, and Beneficiaries, are
cautioned that the rights of any person
to any benefits under such Qualified Plans will be subject to the
terms and conditions of the plans
themselves and may be limited by applicable law, regardless of the
terms and conditions of the
Contract issued in connection therewith. For example, AUL may
accept beneficiary designations
and payment instructions under the terms of the Contract without
regard to any spousal consents
that may be required under the Code or the Employee Retirement
Income Securities Act of 1974
("ERISA"). Consequently, a Contract Owner's Beneficiary designation
or elected payment option
may not be enforceable.
The following are brief descriptions of the various types of
Qualified Plans and the use of the
Contract therewith:
1. Individual Retirement Annuities
Code Section 408 permits an eligible individual to contribute to an
individual retirement program
through the purchase of Individual Retirement Annuities ("IRAs").
The Contract may be
purchased as an IRA. IRAs are subject to limitations on the amount
that may be contributed, the
persons who may be eligible, and on the time when distributions
must commence. Depending
upon the circumstances of the individual, contributions to an IRA
may be made on a deductible or
non-deductible basis. IRAs may not be transferred, sold, assigned,
discounted, or pledged as
collateral for a loan or other obligation. The annual premium for
an IRA may not exceed $2,000.
Any refund of premium must be applied to payment of future premiums
or the purchase of
additional benefits. In addition, distributions from certain other
types of Qualified Plans may be
placed on a tax-deferred basis into an IRA.
2. Corporate Pension and Profit Sharing Plans
Code Section 401(a) permits corporate employers to establish
various types of retirement plans
for their employees. For this purpose, self-employed individuals
(proprietors or partners operating
a trade or business) are treated as employees eligible to
participate in such plans. Such retirement
plans may permit the purchase of Contracts to provide benefits
thereunder.
In order for a retirement plan to be "qualified" under Code Section
401, it must: (i) meet certain
minimum standards with respect to participation, coverage and
vesting; (ii) not discriminate in
favor of "highly compensated" employees; (iii) provide
contributions or benefits that do not
exceed certain limitations; (iv) prohibit the use of plan assets
for purposes other than the exclusive
benefit of the employees and their beneficiaries covered by the
plan; (v) provide for distributions
that comply with certain minimum distribution requirements; (vi)
provide for certain spousal
survivor benefits; and (vii) comply with numerous other
qualification requirements.
A retirement plan qualified under Code Section 401 may be funded by
employer contributions,
employee contributions or a combination of both. Plan participants
are not subject to tax on
employer contributions until such amounts are actually distributed
from the plan. Depending upon
the terms of the particular plan, employee contributions may be
made on a pre-tax or after-tax
basis. In addition, plan participants are not taxed on plan
earnings derived from either employer or
employee contributions until such earnings are distributed.
3. Tax-Deferred Annuities
Section 403(b) of the Code permits the purchase of "tax-deferred
annuities" by public schools and
organizations described in Section 501(c)(3) of the Code, including
certain charitable, educational
and scientific organizations. These qualifying employers may pay
premiums under the Contracts
for the benefit of their employees. Such premiums are not
includible in the gross income of the
employee until the employee receives distributions from the
Contract. The amount of premiums to
the tax-deferred annuity is limited to certain maximums imposed by
the Code. Furthermore, the
Code sets forth additional restrictions governing such items as
transferability, distributions,
nondiscrimination and withdrawals. Any employee should obtain
competent tax advice as to the
tax treatment and suitability of such an investment.
The above description of the Federal income tax consequences of the
different types of Qualified
Plans which may be funded by the Contract offered by this
Prospectus is only a brief summary and
is not intended as tax advice. The rules governing the provisions
of Qualified Plans are extremely
complex and often difficult to comprehend. Anything less than full
compliance with the applicable
rules, all of which are subject to change, may have adverse tax
consequences. A pro-
spective Contract Owner considering adoption of a Qualified Plan
and purchase of a Contract in
connection therewith should first consult a qualified and competent
tax adviser, with regard to the
suitability of the Contract as an investment vehicle for the
Qualified Plan.
Periodic distributions (e.g., annuities and installment payments)
from a Qualified Plan that will last
for a period of ten or more years are generally subject to
voluntary income tax withholding. The
amount withheld on such periodic distributions is determined at the
rate applicable to wages. The
recipient of a period distribution may generally elect not to have
withholding apply.
Nonperiodic distributions (e.g., lump sums and annuities or
installment payments of less than 10
years) from a Qualified Plan (other than IRAs) are generally
subject to mandatory 20 percent
income tax withholding. However, no withholding is imposed if the
distribution is transferred
directly to another eligible Qualified Plan or IRA. Nonperiodic
distributions from an IRA are
subject to income tax withholding at a flat 10 percent rate. The
recipient of such a distribution
may elect not to have withholding apply.
403(b) Programs--Constraints on Withdrawals
Section 403(b) of the Internal Revenue Code permits public school
employees and employees of
organizations specified in Section 501(c)(3) of the Internal
Revenue Code, such as certain types
of charitable, educational, and scientific organizations, 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 591/2,
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.
An Owner of a Contract purchased as a tax-sheltered 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 Contract Value
attributable to premiums paid under a
salary reduction agreement or any income or gains credited to such
Contract Owner 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 Contract Owner's December 31,
1988 account balance under the
old contract, provided that the amounts transferred between
contracts meets certain conditions.
An Owner's Contract may be able to be transferred to certain other
investment or funding
alternatives meeting the requirements of Section 403(b) that are
available under an employer's
Section 403(b) arrangement.
OTHER INFORMATION
Voting of Shares of the Funds
AUL is the legal owner of the shares 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 each Fund 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
Contract Owner. AUL or the
pertinent Fund shall send to each Contract Owner 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 Fund's shares.
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 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 on a
particular date by the net asset
value per share of that Fund 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 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 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 it shares to any insurance company separate account
that funds variable life insurance
contracts or if otherwise required by applicable law or contract,
AUL will vote its own shares in
the same proportion as the voting instructions that are received in
a timely manner for Contracts
participating in the Investment Account.
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 Funds should no longer be
available for investment, or if, in
the judgment of AUL's management, further investment in shares of
any or all of the Funds should
become inappropriate in view of the purposes of the Contracts, AUL
may substitute shares of
another 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
Contract Owners or as permitted by Federal law.
Where required under applicable law, AUL will not substitute any
shares attributable to a
Contract Owner's interest in an Investment Account or the Variable
Account without notice,
Contract Owner 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 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 Contract
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. AUL reserves the right to operate the
Variable Account as a management
investment company under the 1940 Act or any other form permitted
by law, an Investment
Account 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 Contract Owners, to
make any change to the
provisions of the Contracts to comply with, or to give Contract
Owners 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.
Reservation of Rights
AUL reserves the right to refuse to accept new premiums under a
Contract and to refuse to
accept any application for a Contract.
Periodic Reports
AUL will send quarterly statements showing the number, type, and
value of Accumulation Units
credited to the Contract. AUL will also send statements reflecting
transactions in a Contract
Owner'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.
Financial Statements
Financial statements of AUL as of December 31, 1994, are included
in the Statement of
Additional Information.
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 sales literature to current or prospective
Contract Owners 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 Money Market
Investment Account, the yield of the remaining Investment Accounts,
the average annual total
return and the total return of all Investment Accounts. For
information on the calculation of
current yield and effective yield, see the Statement of Additional
Information.
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 and may be
shown for different periods.
Performance information for any Investment Account reflects only
the performance of a
hypothetical Contract under which Contract 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
Fund in which the Investment Account invests, and the market
conditions during the given time
period, and should not be considered as 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, information on possible
uses for performance, and other
information, see the Statement of Additional Information.
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:
GENERAL INFORMATION AND HISTORY 3
DISTRIBUTION OF CONTRACTS 3
CUSTODY OF ASSETS 3
TAX STATUS OF AUL AND THE VARIABLE ACCOUNT 3
TAX TREATMENT OF AND LIMITS ON PREMIUMS UNDER RETIREMENT PLANS 3-6
403(b) Programs 4
408 Programs 5
Employee Benefit Plans 5
Tax Penalty for All Annuity Contracts 6
Withholding for Employee Benefit Plans and Tax-Deferred Annuities
6
INDEPENDENT ACCOUNTANTS 6
PERFORMANCE INFORMATION 6-10
FINANCIAL STATEMENTS 10-22
A Statement of Additional Information may be obtained without
charge by calling or writing to
AUL at the telephone number and address set forth in the front of
this Prospectus.
No dealer, salesman or any other person is authorized by the AUL
American Individual 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.
There has been filed with the Securities and Exchange Commission,
Washington, D.C., a
Registration Statement under the Securities Act of 1933, as
amended, and the Investment
Company Act of 1940, as amended, with respect to the offering
herein described. For further
information with respect to the AUL American Individual Unit Trust,
AUL and its variable
annuities, reference is made thereto and the exhibits filed
therewith or incorporated therein, which
include all contracts or documents referred to herein.
AUL AMERICAN INDIVIDUAL UNIT TRUST
Individual Variable Annuity Contracts
Sold By
AMERICAN UNITED
LIFE INSURANCE COMPANY
One American Square
Indianapolis, Indiana 46204
PROSPECTUS
Dated: July 12, 1995
STATEMENT OF ADDITIONAL INFORMATION
July 12, 1995
AUL American Individual Unit Trust
Individual Variable Annuity Contracts
Offered By
American United Life Insurance Company
One American Square
Indianapolis, Indiana 46204
(317) 263-4045
Annuity Service Office Mail Address:
P.O. Box 7127, Indianapolis, Indiana 46206-7127
(800) 863-9354
This Statement of Additional Information is not a prospectus and
should be read in conjunction
with the current Prospectus for AUL American Individual Unit Trust,
dated July 12, 1995.
A Prospectus is available without charge by mailing the Business
Reply Mail card included in this
Statement of Additional Information to American United Life
Insurance Company ("AUL").
TABLE OF CONTENTS
Description Page
GENERAL INFORMATION AND HISTORY 3
DISTRIBUTION OF CONTRACTS 3
CUSTODY OF ASSETS 3
TAX STATUS OF AUL AND THE VARIABLE ACCOUNT 3
TAX TREATMENT OF AND LIMITS ON PREMIUMS UNDER RETIREMENT
PROGRAMS 3-6
403(b) Programs 4
408 Programs 5
Employee Benefit Plans 5
Tax Penalty for All Annuity Contracts 6
Withholding for Employee Benefit Plans and Tax-Deferred Annuities
6
INDEPENDENT ACCOUNTANTS 6
PERFORMANCE INFORMATION 6-10
FINANCIAL STATEMENTS 10-22
GENERAL INFORMATION AND HISTORY
For a general description of AUL and AUL American Individual Unit
Trust (the "Variable
Account"), see the section entitled "Information about AUL, The
Variable Account, and The
Funds" in the Prospectus. Defined terms used in this Statement of
Additional Information have the
same meaning as terms defined in the Prospectus.
DISTRIBUTION OF CONTRACTS
AUL is the Principal Underwriter for the 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
maintained 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 the
Funds.
TAX STATUS OF AUL AND THE VARIABLE ACCOUNT
The operations of the Variable Account form a part of AUL, so AUL
will be responsible for any
Federal income and other taxes that become payable with respect to
the income of the Variable
Account. Each Investment Account will bear its allocable share of
such liabilities, but under
current law, no dividend, 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 AND LIMITS ON PREMIUMS UNDER RETIREMENT
PROGRAMS
The Contracts may be offered for use with several types of qualifed
or non-qualified retirement
programs as described in the Prospectus. The tax rules applicable
to Owners of Contracts used in
connection with qualified 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 qualified retirement
programs.
Owners, Annuitants, Beneficiaries and other payees are cautioned
that the rights of any person to
any benefits under these programs may be subject to the terms and
conditions of the Qualified
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 Date.
The amount of premiums that may be paid under a Contract issued in
connection with a Qualified
Plan are subject to limitations that may vary depending on the type
of Qualified Plan. In addition,
early distributions from most Qualified Plans may be subject to
penalty taxes, or in the case of
distributions of amounts contributed under salary reduction
agreements, could cause the Qualified
Plan to be disqualified. Furthermore, distributions from most
Qualified Plans are subject to certain
minimum distribution rules. Failure to comply with these rules
could result in disqualification of
the Qualified Plan or subject the Annuitant to penalty taxes. As a
result, the minimum distribution
rules could limit the availability of certain Annuity Options to
Contract Owners and their
Beneficiaries.
Below are brief descriptions of various types of qualified
retirement programs and the use of the
Contracts in connection therewith. Unless otherwise indicated in
the context of the description,
these descriptions reflect the assumption that the Contract Owner
is a participant in the retirement
program. For Employee Benefit Plans that are defined benefit plans,
a Contract generally would
be purchased by a participant, but only by the plan itself.
403(b) Programs
Premiums paid pursuant to a 403(b) Program are excludable from a
Contract Owner'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 Contract
Owner's salary reduction premiums to a 403(b) Program to $9,500 a
year. The $9,500 limit may
be reduced by salary reduction pemiums to another type of
retirement plan. A Contract Owner
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 $9,500 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
Contract Owner salary reduction
premiums that may be made to a 403(b) Program. Section 403(b)(2)
generally provides that the
maximum amount of premiums a Contract Owner 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.
Contract Owners 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 Contract Owner's
salary reduction premiums 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 Contract Owner's annual compensation (reduced by his
salary reduction premiums
to the 403(b) Program and certain other employee plans). This limit
will be reduced if a Contract
Owner 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. With respect to the distributions made prior to 1993,
Section 403(b)(8) of the Internal
Revenue Code permits a Contract Owner who receives a "total
distribution" and certain partial
distributions from a Section 403(b) Program to transfer the
proceeds (excluding amounts
previously included in his gross income) to another Section 403(b)
Program within 60 days of
receipt without recognizing income on the distribution. A "total
distribution" is a distribution of
the balance of the credit of a Contract Owner under a Section
403(b) Program (and all other
Section 403(b) Programs in which he has participated in connection
with his employment with his
employer) (a) on account of his death, disability, or termination
of employment, or (b) after he
reached age 591/2. Beginning in 1993, a Contract Owner 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 Contract Owner of all or any taxable portion of
the balance of his credit under a
Section 403(b) Program, other than a required minimum distribution
to a Contract Owner who
has reached age 701/2 and excluding any
distribution which is one of a series of substantially equal
payments made (1) over the life
expectancy of the Contract Owner or the joint life expectancy of
the Contract Owner and 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
Code Sections 219 and 408 permit eligible individuals to contribute
to an individual retirement
program, including a Simplified Employee Pension Plan and an
Employer Association Established
Individual Retirement Account Trust, 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 IRAs 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 an Owner of a Contract issued in connection with a 408 Program
surrenders the Contract or
makes a partial withdrawal, the Contract Owner will realize income
taxable at ordinary tax rates
on the amount received to the extent that amount exceeds the 408
premiums that were not
excludable from the taxable income of the employee when paid.
Premiums paid to the individual retirement account of a Contract
Owner under a 408 Program
that is described in Section 408(c) of the Internal Revenue Code
are subject to the limits on
premiums paid to individual retirement accounts under Section
219(b) of the Internal Revenue
Code. Under Section 219(b) of the Code, premiums paid to an
individual retirement account are
limited to the lesser of $2,000 per year or the Contract Owner's
annual compensation. An
additional $250 may be paid if the Contract Owner has a spouse with
little or no compensation for
the year, provided separate accounts are maintained for the
Contract Owner and his spouse, and
no more than $2,000 is contributed to either account in any one
year. The extent to which a
Contract Owner may deduct premiums paid in connection with this
type of 408 Program depends
on his and his spouse's gross income for the year and whether
either participate in another
employer-sponsored retirement plan.
Premiums paid in connection with 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 premiums paid in connection with a simplified employee
pension plan to the lesser of (a)
15% of the Contract Owner's compensation, or (b) $22,500. Premiums
paid through salary
reduction are subject to additional annual limits.
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 an Owner of a Contract issued in connection with an Employee
Benefit Plan who is a
participant in the Plan receives a lump-sum distribution, the
portion of the distribution equal to
any premiums that were taxable to the Contract Owner in the year
when paid is generally received
tax free. The balance of the distribution will generally be treated
as ordinary income. Special
five-year forward averaging provisions under Code Section 402 may
be utilized on the amount
subject to ordinary income tax treatment, provided that the
Contract Owner has reached age
591/2, has not previously elected forward averaging for a
distribution from any Employee Benefit
Plan after reaching age 591/2, and has not rolled over a
distribution from the Employee Benefit
Plan or a similar plan into another Employee Benefit Plan or an
individual retirement account or
annuity. Special ten-year average and a capital-gains election may
be available to a Contract
Owner 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 premiums 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 Contract
Owner paid no premiums that were taxable to the Contract Owner in
the year made, there would
be no portion excludable.
The applicable annual limits on premiums paid in connection with an
Employee Benefit Plan
depend upon the type of plan. Total premiums paid on behalf of a
Contract Owner who is 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. Premiums paid through salary reduction to a
cash-or-deferred arrangement
under a profit sharing plan are subject to additional annual
limits. Premiums paid to a defined
benefit pension plan are actuarially determined based upon the
amount of benefits the participant
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.
Tax Penalty for All Annuity Contracts
Any distribution made to a Contract Owner who is 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 Contract Owner has attained age 591/2;
(b) the Contract Owner has died; or
(c) the Contract Owner is disabled.
In addition, a distribution from an Employee Benefit Plan will not
be subject to a 10% excise tax
on the amount distributed if the Contract Owner is 55 and has
separated from service.
Distributions that are received as a life annuity where payment is
made at least annually will not be
subject to an excise tax. Certain amounts paid for medical care
also may not be subject to an
excise tax.
Withholding for Employee Benefit Plans and Tax-Deferred Annuities
Distributions from an Employee Benefit Plan to an employee,
surviving spouse, or former spouse
who is an alternate payee under a qualified domestic relations
order, in the form 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 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 premiums.
All other types of distributions from Employee Benefit Plans 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.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., independent accountants, performs certain
accounting and auditing
services for AUL and performs the same 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. As
independent accountants, Coopers &
Lybrand L.L.P. audits the financial statements of AUL and reviews
its internal accounting
controls, and performs the same services for the Variable Account.
PERFORMANCE INFORMATION
Performance information for the Investment Accounts that had
commenced operations as of
December 31, 1994 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 Contract Owners 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 changes) 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
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]
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.
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
<FT2>=<FT1> 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 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. None of the Investment
Accounts have been in existence for the reported periods ending
December 31, 1994. The
following Investment Accounts commenced operations on November 21,
1994: AUL American
Equity, Bond, Money Market, and Managed Investment Accounts;
Fidelity VIP Growth, High
Income, and Overseas Investment Accounts; Fidelity VIP II Asset
Manager and Index 500
Investment Accounts; and the TCI Growth and International
Investment Accounts. Effective
April 28, 1995, the following Investment Accounts commenced
operation: Alger American
Growth, Calvert Capital Accumulation, Fidelity VIP Equity-Income,
Fidelity VIP II Contrafund,
and T. Rowe Price Equity Income. 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 T. Rowe Price Equity Income Portfolio and the VIP
II Contrafund Portfolio
commenced operations on March 31, 1994 and January 3, 1995,
respectively, and therefore, one
year performance information is not available. The AUL American
Tactical Asset Allocation
Portfolio commenced operation on July 12, 1995, and therefore, one
year performance
information is not available.
The hypothetical average annual return that the Investment Accounts
would have achieved had
they invested in the corresponding Funds for the one year period
ending December 31, 1994
under a Flexible Premium Contract (assuming the withdrawal charge
is taken into account in
computing the ending redeemable value) would have been (9.05%) for
the AUL American Equity
Investment Account, (14.55%) for the AUl American Bond Investment
Account, (8.25%) for the
AUL American Money Market Investment Account, (12.22%) for the AUL
American Managed
Investment Account, (9.82%) for the Alger Growth Investment
Account, (19.91%) for the
Calvert Capital Accumulation Investment Account, (4.83%) for the
Fidelity VIP Equity-Income
Investment Account, (11.21%) for the Fidelity VIP Growth Investment
Account, (12.69%) for
the Fidelity VIP High Income Investment Account, (9.74%) for the
Fidelity VIP Overseas
Investment Account, (16.84%) for the Fidelity VIP II Asset Manager
Investment Account,
(10.88%) for the Fidelity VIP II Index 500 Investment Account, and
(12.42%) for the TCI
Growth Investment Account. The T. Rowe Price Equity Income,
Fidelity VIP II Contrafund, TCI
International, and the AUL American Tactical Asset Allocation
Investment Accounts have not
been in operation for the relevant time period.
The hypothetical average annual return that the Investment Accounts
would have achieved had
they invested in the corresponding Funds for the three year period
ending December 31, 1994
under a Flexible Premium Contract (assuming the withdrawal charge
is taken into account in
computing the ending redeemable value) would have been 4.42% for
the AUl American Equity
Investment Account, 0.17% for the AUL American Bond Investment
Account, (1.39%) for the
AUL American Money Market Investment Account, 2.00% for the AUL
American Managed
Investment Account, 7.38% for the Alger Growth Investment Account,
(0.78%) for the Calvert
Capital Accumulation Investment Account, 9.48% for the Fidelity VIP
Equity-Income Investment
Account, 4.63% for the Fidelity VIP Growth Investment Account,
8.64% for the Fidelity VIP
High Income Investment Account, 3.08% for the Fidelity VIP Overseas
Investment Account,
3.76% for the Fidelity VIP II Asset Manager Investment Account, and
(1.88%) for the TCI
Growth Investment Account. The Fidelity VIP II Contrafund, Fidelity
VIP II Index 500, TCI
International, T. Rowe Price Equity Income, and the AUL American
Tactical Asset Allocation
Investment Accounts have not been in operation for the relevant
time period.
The hypothetical average annual return that the Investment Accounts
would have achieved had
they invested in the corresponding Funds for the five year period
ending December 31, 1994
under a Flexible Premium Contract (assuming the withdrawal charge
is taken into account in
computing the ending redeemable value) would have been 12.53% for
the Alger Growth
Investment Account, 7.80% for the Fidelity VIP Equity-Income
Investment Account, 7.83% for
the Fidelity VIP Growth Investment Account, 10.91% for the Fidelity
VIP High Income
Investment Account, 2.88% for the Fidelity VIP Overseas Investment
Account, 7.68% for the
Fidelity VIP II Asset Manager Investment Account, and 5.56% for the
TCI Growth Investment
Account. The AUL American Equity, AUL American Bond, AUL American
Money Market,
AUL American Managed, Calvert Capital Accumulation, Fidelity VIP II
Contrafund, Fidelity VIP
II Index 500, TCI International, T. Rowe Price Equity Income, and
the AUL American Tactical
Asset Allocation Investment Accounts have not been in operation for
the relevant time period.
The hypothetical average annual return that the Investment Accounts
would have achieved had
they invested in the corresponding Funds for the period from
inception through December 31,
1994 under a Flexible Premium Contract (assuming the withdrawal
charge is taken into account in
computing the ending redeemable value) would have been 7.51% for
the AUl American Equity
Investment Account, 5.28% for the AUL American Bond Investment
Account, 1.24% for the
AUL American Money Market Investment Account, 5.92% for the AUL
American Managed
Investment Account, 14.15% for the Alger Growth Investment Account,
1.15% for the Calvert
Capital Assumulation Investment Account, 9.12% for the Fidelity VIP
Equity-Income Investment
Account, 10.67% for the Fidelity VIP Growth Investment Account,
9.10% for the Fidelity VIP
High Income Investment Account, 4.98% for the Fidelity VIP Overseas
Investment Account,
7.44% for the Fidelity VIP II Asset Manager Investment Account,
1.85% for the Fidelity VIP II
Index 500 Investment Account, and 9.12% for the TCI Growth
Investment Account. The Fidelity
VIP II Contrafund, TCI International, T. Rowe Price Equity Income,
and the AUL American
Tactical Asset Allocation Investment Accounts have not been in
operation for the relevant time
period.
The hypothetical average annual return that the Investment Accounts
would have achieved had
they invested in the corresponding Funds for the one year period
ending December 31, 1994
under a One Year Flexible Premium Contract (assuming the withdrawal
charge is taken into
account in computing the ending redeemable value) would have been
(6.02%) for the AUL
American Equity Investment Account, (11.70%) for the AUL American
Bond Investment
Account, (5.19%) for the AUL American Money Market Investment
Account, (9.29%) for the
AUL American Managed Investment Account, (7.09%) for the Alger
Growth Investment
Account, (17.49%) for the Calvert Capital Accumulation Investment
Account, (1.96%) for the
Fidelity VIP Equity-Income Investment Account, (8.25%) for the
Fidelity VIP Growth
Investment Account, (9.78%) for the Fidelity VIP High Income
Investment Account, (6.74%) for
the Fidelity VIP Overseas Investment Account, (14.07%) for the
Fidelity VIP II Asset Manager
Investment Account, (7.91%) for the Fidelity VIP II Index 500
Investment Account, and (9.05%)
for the TCI Growth Investment Account. The Fidelity VIP II
Contrafund, TCI International,
T. Rowe Price Equity Income, and the AUL American Tactical Asset
Allocation Investment
Accounts have not been in operation for the relevant time period.
The hypothetical average annual return that the Investment Accounts
would have achieved had
they invested in the corresponding Funds for the three year period
ending December 31, 1994
under a One Year Flexible Premium Contract (assuming the withdrawal
charge is taken into
account in computing the ending redeemable value) would have been
5.55% for the AUL
American Equity Investment Account, 1.25% for the AUL American Bond
Investment Account,
(0.33%) for the AUL American Money Market Investment Account, 3.10%
for the AUL
American Managed Investment Account, 8.21% for the Alger Growth
Investment Account,
(0.02%) for the Calvert Capital Accumulation Investment Account,
10.33% for the Fidelity VIP
Equity-Income Investment Account, 5.76% for the Fidelity VIP Growth
Investment Account,
9.81% for the Fidelity VIP High Income Investment Account, 4.19%
for the Fidelity VIP
Overseas Investment Account, 4.87% for the Fidelity VIP II Asset
Manager Investment Account,
and (0.83%) for the TCI Growth Investment Account. The Fidelity VIP
II Contrafund, Fidelity
VIP II Index 500, TCI International, T. Rowe Price Equity Income,
and the AUL American
Tactical Asset Allocation Investment Accounts have not been in
operation for the relevant time
period.
The hypothetical average annual return that the Investment Accounts
would have achieved had
they invested in the corresponding Funds for the five year period
ending December 31, 1994
under a One Year Flexible Premium Contract (assuming the withdrawal
charge is taken into
account in computing the ending redeemable value) would have been
12.90% for the Alger Growth Investment Account, 8.16% for the
Fidelity VIP Equity-Income
Investment Account, 8.51% for the Fidelity VIP Growth Investment
Account, 11.61% for the
Fidelity VIP High Income Investment Account, 3.53% for the Fidelity
VIP Overseas Investment
Account, 8.36% for the Fidelity VIP II Asset Manager Investment
Account, and 6.23% for the
TCI Growth Investment Account. The AUL American Equity, AUL
American Bond, AUL
American Money Market, AUL American Managed, Calvert Capital
Accumulation, Fidelity VIP
II Contrafund, Fidelity VIP II Index 500, TCI International, T.
Rowe Price Equity Income, and
the AUL American Tactical Asset Allocation Investment Accounts have
not been in operation for
the relevant time period.
The hypothetical average annual return that the Investment Accounts
would have achieved had
they invested in the corresponding Funds for the period from
inception through December 31,
1994 under a One Year Flexible Premium Contract (assuming the
withdrawal charge is taken into
account in computing the ending redeemable value) would have been
8.23% for the AUL
American Equity Investment Account, 5.99% for the AUL American Bond
Investment Account,
1.92% for the AUL American Money Market Investment Account, 6.63%
for the AUL American
Managed Investment Account, 14.40% for the Alger Growth Investment
Account, 1.78% for the
Calvert Capital Accumulation Investment Account, 9.19% for the
Fidelity VIP Equity-Income
Investment Account, 10.94% for the Fidelity VIP Growth Investment
Account, 9.22% for the
Fidelity VIP High Income Investment Account, 5.38% for the Fidelity
VIP Overseas Investment
Account, 8.07% for the Fidelity VIP II Asset Manager Investment
Account, 3.26% for the
Fidelity VIP II Index 500 Investment Account, 9.59% for the TCI
Growth Investment Account.
The Fidelity VIP II Contrafund, TCI International, T. Rowe Price
Equity Income, and the AUL
American Tactical Asset Allocation Investment Accounts have not
been in operation for the
relevant time period.
If the withdrawal charge is not taken into account in computing the
ending redeemable value, the
hypothetical average annual total return that each of the
Investment Accounts would have
achieved for the one year period ending December 31, 1994 (under
either the Flexible Premium
Contract or the One Year Flexible Premium Contract) would have been
1.36% for the AUL
American Equity Investment Account, (4.77%) for the AUL American
Bond Investment Account,
2.25% for the AUL American Money Market Investment Account, (2.17%)
for the AUL
American Managed Investment Account, 0.20% for the Alger Growth
Investment Account,
(11.01%) for the Calvert Capital Accumulation Investment Account,
5.74% for the Fidelity VIP
Equity-Income Investment Account, (1.05%) for the Fidelity VIP
Growth Investment Account,
(2.69%) for the Fidelity VIP High Income Investment Account, 0.59%
for the Fidelity VIP
Overseas Investment Account, (7.33%) for the Fidelity VIP II Asset
Manager Investment
Account, (0.68%) for the Fidelity VIP II Index 500 Investment
Account, and (2.40%) for the TCI
Growth Investment Account. The Fidelity VIP II Contrafund, TCI
International,
T. Rowe Price Equity Income, and the AUL American Tactical Asset
Allocation Investment
Accounts have not been in operation for the relevant time period.
The hypothetical average annual return (if the withdrawal charge is
not included) that each of the
Investment Accounts would have achieved had they invested in the
corresponding Funds for the
three year period ending December 31, 1994 (under either the
Flexible Premium Contract or the
One Year Flexible Premium Contract) would have been 7.69% for the
AUL American Equity
Investment Account, 3.30% for the AUL American Bond Investment
Account, 1.69% for the
AUL American Money Market Investment Account, 5.19% for the AUL
American Managed
Investment Account, 10.40% for the Alger Growth Investment Account,
2.01% for the Calvert
Capital Accumulation Investment Account, 12.57% for the Fidelity
VIP Equity-Income
Investment Account, 7.91% for the Fidelity VIP Growth Investment
Account, 12.04% for the
Fidelity VIP High Income Investment Account, 6.31% for the Fidelity
VIP Overseas Investment
Account, 7.00% for the Fidelity VIP II Asset Manager Investment
Account, and 1.10% for the
TCI Growth Investment Account. The Fidelity VIP II Contrafund,
Fidelity VIP II Index 500, TCI
International, T. Rowe Price Equity Income, and the AUL American
Tactical Asset Allocation
Investment Accounts have not been in operation for the relevant
time period.
The hypothetical average annual return (if the withdrawal charge is
not included) that each of the
Investment Accounts would have achieved had they invested in the
corresponding Funds for the
five year period ending December 31, 1994 (under either the
Flexible Premium Contract or the
One Year Flexible Premium Contract) would have been 13.93% for the
Alger Growth Investment
Account, 9.15% for the Fidelity VIP Equity-Income Investment
Account, 9.50% for the Fidelity
VIP Growth Investment Account, 12.63% for the Fidelity VIP High
Income Investment Account,
4.47% for the Fidelity VIP Overseas Investment Account, 9.34% for
the Fidelity VIP II Asset
Manager Investment Account, and 7.20% for the TCI Growth Investment
Account. The AUL
American Equity, AUL American Bond, AUl American Money Market, AUl
American Managed,
Calvert Capital Accumulation, Fidelity VIP II Contrafund, Fidelity
VIP II Index 500, TCI
International, T. Rowe Price Equity Income, and the AUL American
Tactical Asset Allocation
Investment Accounts have not been in operation for the relevant
time period.
The hypothetical average annual return (if the withdrawal charge is
not included) that each of the
Investment Accounts would have achieved had they invested in the
corresponding Funds for the
period from inception through December 31, 1994 (under either the
Flexible Premium Contract or
the One Year Flexible Premium Contract) would have been 9.27% for
the AUL American Equity
Investment Account, 7.00% for the AUL American Bond Investment
Account, 2.89% for the
AUL American Money Market Investment Account, 7.65% for the AUl
American Managed
Investment Account, 15.33% for the Alger Growth Investment Account,
3.59% for the Calvert
Capital Accumulation Investment Account, 9.52% for the Fidelity VIP
Equity-Income Investment
Account, 11.28% for the Fidelity VIP Growth Investment Account,
9.55%
for the Fidelity VIP High Income Investment Account, 5.70% for the
Fidelity VIP Overseas
Investment Account, 8.82% for the Fidelity VIP II Asset Manager
Investment Account, 5.90%
for the Fidelity VIP II Index 500 Investment Account, and 9.93% for
the TCI Growth Investment
Account. The Fidelity VIP II Contrafund, TCI International, T. Rowe
Price Equity Income, and
the AUL American Tactical Asset Allocation Investment Accounts have
not been in operation for
the relevant time period.
Performance information for an Investment Account may be compared,
in promotional reports
and literature, to:
(i) the Standard & Poor's 500 Composite Index ("S&P 500"), Dow
Jones Industrial Average
("DIJA"), 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; (ii) 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 (iii) 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 an Owner's Contract 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 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 (i) 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, (ii) the effect of
tax-deferred compounding on an
Investment Account's investment returns, or returns in general,
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 (iii)
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.
FINANCIAL STATEMENTS
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.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
American United Life Insurance Company
Indianapolis, Indiana
We have audited the accompanying balance sheet of American United
Life Insurance Company as
of December 31, 1994 and 1993, and the related statements of
operations, policyowners' surplus,
and cash flows for the years then ended. These financial
statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An
audit includes assessing the accounting principles used and
significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects,
the financial position of American United Life Insurance Company
as of December 31, 1994 and
1993, and the results of its operations and its cash flows for
the years then ended in conformity
with generally accepted accounting principles.
As discussed in Note 1, in accordance with prescribed accounting
requirements, the Company
changed its method of accounting for postretirement benefits
other than pensions in 1993.
/s/ Coopers & Lybrand L.L.P.
Indianapolis, Indiana
February 15, 1995
<PAGE>
AMERICAN UNITED LIFE
BALANCE
December 31, 1994 1993
ASSETS, at amortized cost $4,082,347,294 $3,797,357,439
STOCKS:
Preferred, at cost 3,390,328 3,432,568
Common, at market 26,762,298 30,820,966
30,152,626 34,253,534
MORTGAGE LOANS 1,051,896,715 1,072,059,280
SHORT-TERM INVESTMENTS, at cost 69,482,580 26,166,519
REAL ESTATE:
Investment properties, net 52,938,109 52,624,565
Home office, net 27,347,204 27,665,700
80,285,313 80,290,265
OTHER:
Policy loans 117,708,964 111,975,797
Cash and cash equivalents 8,816,165 5,340,572
Premiums deferred and uncollected 38,751,657 45,490,683
Accrued investment income 80,065,880 74,760,397
Other assets 44,866,999 30,827,000
Separate Account assets 351,336,512 199,489,634
641,546,177 467,884,083
$5,955,710,705 $5,478,011,120
INSURANCE COMPANY
SHEET
December 31, 1994 1993
LIABILITIES AND POLICYOWNERS' SURPLUS
POLICY RESERVES
Deposit administration and supplementary contracts $3,672,096,982
$3,506,066,730
Life and annuities 1,237,321,589 1,132,906,136
Accident and health 85,463,733 76,324,114
4,994,882,304 4,715,296,980
POLICY AND CONTRACT LIABILITIES
Policy claims in process of settlement 74,603,465 61,467,932
Policy dividends on deposit at interest 59,504,981 57,072,770
Policy dividends payable in following year 20,543,858 18,220,532
Other policy and contract liabilities 37,262,603 27,033,632
191,914,907
163,794,866
GENERAL LIABILITIES AND OTHER RESERVES
Accrued commissions and general expenses 4,492,396 4,826,393
Taxes, including federal income taxes 17,900,917 14,238,938
Unearned interest and rents 2,860,495 2,787,318
Other liabilities 40,967,710 51,565,645
Mortality and morbidity fluctuation reserve 5,902,184 4,420,848
Asset valuation reserve 70,496,028 69,364,359
Interest maintenance reserve 23,820,990 20,687,682
Contingent liability for reinsurance 841,508 2,807,642
Separate Account liabilities 351,336,512 199,489,634
518,618,740 370,188,459
TOTAL LIABILITIES 5,705,415,951 5,249,280,305
POLICYOWNERS' SURPLUS 250,294,754 228,730,815
$5,955,710,705
$5,478,011,120
The accompanying notes are an integral part of the financial
statements.
AMERICAN UNITED LIFE INSURANCE COMPANY STATEMENT OF OPERATIONS
Year Ended December 31, 1994 1993
PREMIUM AND OTHER INCOME
Life and annuities $306,862,818 $292,188,444
Accident and health 101,189,449 105,299,051
Deposit administration and supplementary contracts 351,114,943
251,254,086
Net investment income 436,007,437 453,906,805
1,195,174,647 1,102,648,386
BENEFITS AND EXPENSES
Death benefits 109,503,889 99,967,671
Accident and health and disability benefits 75,377,072 65,596,128
Annuity benefits 88,718,053 84,211,945
Surrender benefits and other fund withdrawals 288,847,121
223,316,976
Supplementary contracts and endowments 1,699,279 1,920,632
Other benefits 7,863,187 7,447,287
Increase in policy reserves:
Deposit administration and supplementary contracts 166,030,251
246,391,493
Life and annuities 104,415,453 72,295,092
Accident and health 9,139,619 18,692,514
Separate accounts 152,033,307 64,994,675
Other (8,704,756) (93,366)
Reserve adjustment on reinsurance assumed (38,713,806) (1,947,556)
Dividends to policyowners 21,039,163 24,665,535
Commissions and service fees 75,300,197 68,166,734
General expenses 76,019,074 66,531,914
Taxes, licenses and fees 11,074,820 9,948,921
1,139,641,923 1,052,106,595
Net gain from operations before federal income taxes 55,532,724
50,541,791
Federal income taxes 27,058,888 18,586,986
Net gain from operations before net realized
capital losses 28,473,836 31,954,805
Net realized capital losses net of taxes (477,559) (2,221,432)
NET INCOME $ 27,996,277 $ 29,733,373
AMERICAN UNITED LIFE INSURANCE COMPANY
STATEMENT OF POLICYOWNERS' SURPLUS
Year Ended December 31, 1994 1993
Policyowners' surplus, beginning of year $228,730,815 $207,361,479
Add (deduct):
Net income 27,996,277 29,733,373
Change in statement value of investments (3,504,915) 948,528
Change in contingent liability for reinsurance 1,966,134 2,528,287
Change in asset valuation reserve (1,131,669) (3,720,535)
Cumulative effect on prior years of change in accounting principle
(see Notes 1 and 5) (7,521,000)
Other (3,761,888) (599,317)
Policyowners' surplus, end of year $250,294,754 $228,730,815
The accompanying notes are an integral part of the financial
statements.
AMERICAN UNITED LIFE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
Year Ended December 31, 1994 1993
CASH FROM OPERATIONS:
Premiums and other policy considerations $755,594,547 $636,428,412
Investment income 427,781,227 439,012,508
1,183,375,774 1,075,440,920
Benefits 704,331,452 544,322,389
Commissions and general expenses 122,334,264 141,248,115
Federal income taxes 23,674,736 17,193,020
Increase (decrease) in policy loans 5,733,167 (5,055,611)
Dividends to policyowners 18,715,837 26,215,303
874,789,456 723,923,216
NET CASH FROM OPERATIONS 308,586,318 351,517,704
Proceeds from investments sold, redeemed or matured:
Bonds 525,799,172 664,901,326
Stocks 4,073,265 2,890,773
Mortgage loans 131,105,341 118,994,847
Real estate 605,533 4,652,637
Other invested assets 79,704 (1,108)
Tax on capital gains, including amounts in asset and interest
maintenance reserves (4,551,265) (15,431,717)
Other sources 26,156,329 20,188,738
TOTAL CASH PROVIDED 991,854,397 1,147,713,200
Cost of investments acquired:
Bonds 801,182,111 1,100,318,851
Stocks 759,415 2,943,762
Mortgage loans 111,872,905 88,834,295
Real estate 2,391,763 3,285,426
Other uses 28,856,549 18,871,339
TOTAL CASH APPLIED 945,062,743 1,214,253,673
Net change in cash and short-term investments 46,791,654
(66,540,473)
Cash and short-term investments, beginning of year 31,507,091
98,047,564
Cash and short-term investments, end of year $78,298,745
$31,507,091
The accompanying notes are an integral part of the financial
statements.
NOTES TO FINANCIAL STATEMENTS AMERICAN UNITED LIFE INSURANCE
COMPANY
ACCOUNTING POLICIES:
a. Basis of Presentation: The financial statements have been
prepared on the basis of accounting
practices prescribed or permitted by the Insurance Department of
the State of Indiana, which
practices are regarded as generally accepted accounting principles
(GAAP) for mutual life
insurance companies.
In January 1995, the Financial Accounting Standards Board (FASB)
issued Statement of Financial
Accounting Standards (SFAS) No. 120, Accounting and Reporting by
Mutual Life Insurance
Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts. This
Statement, effective for fiscal years beginning after December 15,
1995, extends the requirements
of SFAS Nos. 60, 97, and 113 to mutual life insurance companies. It
also defers the effective date
of Interpretation 40, previously issued by the FASB in 1993, for
fiscal years beginning after
December 15, 1995. Interpretation 40 indicated that financial
statements of mutual life insurance
companies prepared on a statutory basis will no longer be
considered in conformity with GAAP.
InNOTES TO FINANCIAL STATEMENTS (Continued)
ACCOUNTING POLICIES (Continued):
a. addition, the American Institute of Certified Public Accountants
has issued Statement of
Position (SOP) 95-1, Accounting for Certain Insurance Activities of
Mutual Life Insurance
Enterprises, which is also effective for fiscal years beginning
after December 15, 1995. This SOP
establishes accounting for certain participating life insurance
contracts.
The effect of initially applying, SFAS No. 120, Interpretation 40,
and SOP 95-1, is to be reported
retroactively through restatement of all previously issued annual
financial statements presented for
comparative purposes for fiscal years beginning after December 15,
1992. Management has
determined it will initiate the accounting changes; the effect of
which has not yet been determined.
b. Accounting Change: In 1993, the Company began accruing for
certain postretirement benefits
other than pensions as prescribed by statutory accounting
practices. The projected future cost of
postretirement benefits, such as health care and life insurance, is
to be recognized as an expense
during the active service period of the employee. Prior to 1993,
the Company recognized expense
in the period postretirement benefits were paid. This change
resulted in a net charge to surplus of
$7,521,000 in 1993. (See Note 5.) The expense charged to the
statement of operations for 1993
was not significantly affected by the change in accounting.
c. Investments: Bonds and mortgage loans are reported principally
at amortized cost; preferred
stocks are reported at cost (market value was $3,251,000 and
$3,318,000 at December 31, 1994
and 1993, respectively); common stocks are reported at market (cost
was $25,269,000 and
$27,816,000 at December 31, 1994 and 1993, respectively);
short-term investments include
investments with maturities of one year or less and are reported at
cost, which approximates
market; policy loans are reported at unpaid balances and real
estate is reported at cost less
allowances for depreciation. Depreciation is provided over the
estimated useful lives of the related
assets using the straight-line method.
Market values of bonds, common stocks, and preferred stocks, that
are publicly traded, are
determined based on published market values. For bonds not publicly
traded, the market value is
based on discounted cash flows using current yields of comparable
publicly traded securities.
Realized gains and losses on sale or maturity of investments are
determined on the basis of
specific identification. Unrealized gains and losses are reported
as a component of surplus without
recognizing the effect of related income taxes. Realized gains,
including those deferred in the
interest maintenance reserve, were reduced by federal taxes of
$4,551,265 and $15,431,717 in
1994 and 1993, respectively.
d. Asset Valuation and Interest Maintenance Reserve: The asset
valuation reserve is provided
from policyowners' surplus in accordance with statutory accounting
requirements. The interest
maintenance reserve, reduced by federal income taxes of $4,488,055
and $12,658,650 in 1994
and 1993, respectively, defers the recognition of net gains
realized on the sale of fixed maturity
investments, resulting from changes in interest rates. Such gains
will be amortized to income over
the remaining lives of the assets sold.
e. Separate Accounts: The assets of the Separate Accounts shown in
the balance sheet are based
on market value and represent funds which are segregated for
variable annuity contracts and
equity-based pension and profit sharing plans.
The statement of operations includes the operations of the Separate
Accounts. Realized and
unrealized gains or losses on investments held by the Separate
Accounts are accounted for as
prescribed by the National Association of Insurance Commissioners
(NAIC) as an addition to or
reduction in net investment income. Separate Account income is
offset by payments and
provisions for benefits and services, thus having no effect on net
income or policyowners' surplus.
f. Policy Reserves: Policy reserves are based on mortality,
morbidity and interest assumptions
prescribed by regulatory authorities.
An additional reserve for mortality and morbidity fluctuations is
maintained for certain policies to
provide for the risk that actual mortality and morbidity experience
may be less favorable than that
assumed in the calculation of the statutory policy reserves. This
reserve is adjusted annually and
the adjustment primarily reflects a portion of the difference
between the current year's mortality
and morbidity experience and similar average experience for
preceding years. Changes in this
reserve are reflected in operations.
Claim liabilities include provisions for reported claims and
estimates based on historical
experience, for claims incurred but not reported. Such claim
liabilities have been reduced at
December 31, 1994 and 1993 by $32,054,748 and $25,902,451,
respectively, for reinsurance
ceded.
The Company received written approval from the Insurance Department
of the State of Indiana to
record a "Separate Account Transfer Credit" for the difference
between reserves maintained in the
General Account and reserves maintained in the Separate Account
after the transfer of funds. As
of December 31, 1994 and 1993, that permitted transaction increased
statutory surplus by
approximately $14,000,000 and $2,200,000, respectively.
NOTES TO FINANCIAL STATEMENTS (Continued)
ACCOUNTING POLICIES (Continued): Federal Income Taxes: Generally,
no provision is made
for deferred income taxes due to timing differences that may exist
between financial reporting and
taxable income.
h. Revenues and Expenses: Premium income is recognized over the
premium paying period. Costs
of acquiring new business are expensed when incurred and credit is
not taken, other than by
statutory reserve modification methods applicable to some policies,
for the expectation that such
costs will be recovered from future premium income.
Policyowner dividends are determined by crediting each
participating policy with its share of the
divisible surplus as apportioned by the Company.
i. Retirement Plans: Annual provisions for employees' and agents'
retirement plans are computed
actuarially and include amortization of past service cost over
approximately 20 years.
j. Litigation: Various lawsuits have arisen in the ordinary course
of the Company's business. In
each of the matters, the Company believes its defenses are
meritorious and that the eventual
outcome will not have a material effect on the Company's financial
position.
2. INVESTMENTS:
The admitted values (principally amortized cost) and estimated
market values of investments in
bonds and short-term investments at December 31, 1994 and 1993 are
as follows:
December 31, 1994
Admitted Value Gross Unrealized Gains Gross Unrealized Losses
Estimated Market Value
U.S. Treasury securities and obligations of U.S. government
agencies and corporations
$52,764,874 $19,491 $1,833,537 $50,950,828
Obligations of states and political subdivisions 101,141,851
500,600 2,496,531 99,145,919
Debt securities issued by foreign governments 87,740,434 931,396
5,796,978 82,874,852
Corporate securities 2,537,870,822 44,908,139 112,059,750
2,470,719,212
Mortgage-backed securities 1,372,311,893 20,531,761 64,300,906
1,328,542,748
$4,151,829,874 $66,891,387 $186,487,702 $4,032,233,559
December 31, 1993
Admitted Value Gross Unrealized Gains Gross Unrealized Losses
Estimated Market Value
U.S. Treasury securities and obligations of U.S. government
agencies and corporations
$98,843,506 $3,174,049 $219,699 $101,797,856
Obligations of states and political subdivisions 59,698,176
2,727,935 150,023 62,276,088
Debt securities issued by foreign governments 85,316,601 5,245,089
191,488 90,370,202
Corporate securities 2,305,106,456 196,125,740 9,196,390
2,492,035,806
Mortgage-backed securities 1,274,559,219 133,167,009 3,554,506
1,404,171,722
$ 3,823,523,958 $340,439,822 $13,312,106 $4,150,651,674
Issues of various public utilities account for approximately 21% of
the admitted value of the
Company's corporate securities.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. INVESTMENTS (Continued):
The admitted value and estimated market value of bonds and
short-term investments at December
31, 1994, by contractual 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.
Admitted Value Estimated Market Value
Due in one year or less $169,445,048 $169,908,280
Due after one year through five years 562,843,455 544,361,589
Due after five years through ten years 1,104,665,185 1,060,880,227
Due after ten years 942,564,293 928,540,715
2,779,517,981 2,703,690,811
Mortgage-backed securities 1,372,311,893 1,328,542,748
$4,151,829,874 $4,032,233,559
Proceeds from sales, maturities, or calls of investments in bonds
during 1994 were approximately
$525,799,000. Gross gains of $10,353,000 and gross losses of
$3,025,000 were realized. Net
capital gains of approximately $7,538,000 were transferred to IMR.
Proceeds from sales, maturities, or calls of investments in bonds
during 1993 were approximately
$664,901,000. Gross gains of $26,947,000 and gross losses of
$79,000 were realized. Net capital
gains of approximately $26,771,000 were transferred to the Interest
Maintenance Reserve (IMR).
Net investment income consists of the following:
1994 1993
Interest $437,070,589 $442,857,948
Dividends 6,089,743 3,473,269
Rents 13,431,856 13,279,286
Gains on separate account investments:
Realized 11,064,625 4,944,639
Unrealized (16,414,460) 6,963,898
Other 4,275,265 2,251,636
455,517,618 473,770,676
Less investment expenses 19,510,181 19,863,871
Net investment income $436,007,437 $453,906,805
At December 31, 1994, the preferred stock unrealized depreciation
of approximately $139,000
has not been reflected in the financial statements. The change in
the unrealized depreciation of
preferred stocks amounted to approximately $24,000 of depreciation
and $28,000 of appreciation
in 1994 and 1993, respectively.
At December 31, 1994, the common stock unrealized appreciation of
approximately $1,493,000
is comprised of $1,525,000 of unrealized gains and $32,000 of
unrealized losses and has been
reflected directly in policyowners' surplus. The change in the
unrealized appreciation of common
stocks amounted to approximately $1,512,000 and $34,000 of
depreciation in 1994 and 1993,
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. Mortgage
loans on various properties in eight states (California, Florida,
North Carolina, Indiana, Texas,
Illinois, Georgia and Ohio) account for approximately 59<U7> of the
total amortized cost of the
Company's mortgage loans. The remaining mortgage loans relate to
properties located throughout
the United States. A total of approximately $83,000,000 of mortgage
loans have been issued on
40 geographically diversified properties of four large retailers,
K-Mart, Wal-Mart, Publix, and
Fleming Companies. The fair value of the aggregate mortgage loan
portfolio approximates
$1,075,000,000 and 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.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. INVESTMENTS (Continued):
The Company has outstanding mortgage loan commitments at December
31, 1994 of
approximately $54,000,000. The Company has made no financial
guarantees other than those
described in Note 8.
3. REAL ESTATE:
The Company owns its home office and occupies approximately 35<U7>
of the complex; the
remaining space is available for lease to third parties. Real
estate is recorded net of accumulated
depreciation of $24,474,746 and $23,078,697 for investment
properties and $10,633,240 and
$9,340,266 for home office at December 31, 1994 and 1993,
respectively. Depreciation expense
on real estate amounted to $4,488,377 and $3,544,565 in 1994 and
1993, respectively.
4. POLICY RESERVES
Reserves for life policies are computed principally by the net
level and modified preliminary term
methods on the basis of interest rates (2 1/2% to 6%) and mortality
assumptions (1941, 1958 and
1980 CSO Tables) prescribed by state regulatory authorities.
Reserves for annuities and deposit
administration contacts are computed on the basis of interest rates
ranging from 2 1/2% to 10%.
At December 31, 1994 and 1993 these reserves consisted of the
following:
1994 1993
Individual, group and credit life policies $719,787,943
$641,849,881
Annuities and deposit administration funds 4,199,320,853
4,013,656,702
Accident and health and other reserves 166,873,578 151,660,576
Less reinsurance ceded (91,100,070) (91,870,179)
$4,994,882,304 $4,715,296,980
The statement values of the reserves for annuities and deposit
administration funds approximate
the estimated fair values at December 31, 1994. The estimated fair
values of the reserves
approximate the statement values because interest rates credited to
account balances approximate
current rates paid on similar investments 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 of liabilities for all insurance liabilities are taken into
consideration in the Company's overall
management of interest rate risk.
Included in the reserves for individual, group, and credit life
policies are approximately $38
million of reserves assumed from Educators Mutual Life Insurance
Company during 1994.
5. 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
annually 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 $2,215,000 in 1994
and $2,105,000 in 1993. The following benefit information for the
employees' defined benefit plan
was determined by outside actuaries as of January 1, 1994 and 1993,
respectively, the most recent
actuarial valuation dates:
1994 1993
Actuarial present value of accumulated benefits for the employees'
defined benefit plan:
Vested $17,138,000 $14,897,000
Nonvested 291,000 906,000
$17,429,000 $15,803,000
Related net assets available for plan benefits $23,595,000
$22,272,000
The Company has a defined contribution plan covering employees who
have completed one full
calendar year of service. Annual contributions are made by the
Company in amounts based upon
the Company's financial results. Company contributions to the plan
during 1994 and 1993 were
$1,265,000 and $1,009,000, respectively.
The Company has entered into deferred compensation agreements with
several directors, key
management employees, agents and general agents. These deferred
amounts are payable
according to the terms and subject to the conditions of said
agreements.
NOTES TO FINANCIAL STATEMENTS (Continued)
EMPLOYEES` AND AGENTS` BENEFIT PLANS (Continued):
The Company also has a defined contribution pension plan and a
401(k) plan covering
substantially all of the agents, except general agents.
Contributions of 3% of defined commissions
(plus 3% for commissions over the Social Security wage base) are
made to the pension plan. An
additional contribution of 3% of defined commissions are made to a
401(k) plan. Company
contributions expensed for these plans for 1994 and 1993 are as
follows:
1994 1993
Agents' pension plan $349,000 $174,000
Agents' 401(k) plan 262,000 200,000
$ 611,000 $ 374,000
The funds for all plans are held by the Company under deposit
administration and group annuity
contracts.
In addition to providing pension benefits, the Company provides
certain health care and life
insurance benefits (postretirement benefits) for retired employees
and certain agents (retirees).
Substantially all employees and agents may become eligible for such
benefits if they reach
retirement age while working for the Company.
Net periodic postretirement benefit costs for the year ended
December 31, 1994 and 1993 were as
follows:
1994 1993
Service cost $252,000 $181,000
Interest cost 594,000 570,000
Amortization of unrecognized loss 42,000 --
Net postretirement benefit cost $888,000 $751,000
Company-paid premiums in 1994 were $797,000. Claims incurred in
1993 for benefits was not
significantly different than the above provision. Accrued
postretirement benefits as of December
31, 1994 were as follows:
1994 1993
Accumulated postretirement benefit obligation (APBO): Retirees and
their dependents
$5,620,000 $4,713,000
Active employees fully eligible to retire and
receive benefits 2,523,000 2,196,000
Active employees not fully eligible 843,000 612,000
Unrecognized loss (1,374,000) --
Total APBO $7,612,000 $7,521,000
The assumed discount rate used in determining the accumulated
postretirement benefit was 8.0%
and the assumed health care cost trend rate was 10% graded to 6%
over 50 years. Compensation
rates were assumed to increase 6% at each year end. The health
coverage for retirees age 65 and
over is capped in the year 2000.
The health care cost trend rate assumption has a significant 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,
1994 by $582,000 and increase
the net periodic postretirement benefit cost for 1994 by $49,000.
NOTES TO FINANCIAL STATEMENTS (Continued)
6. FEDERAL INCOME TAXES:
Following is a reconciliation between the amount of tax computed at
the federal statutory rate of
35% in 1994 and 1993, respectively, and the federal income tax
provision reflected in the
statement of operations:
1994 1993
Income tax computed at statutory rate $19,436,453 $17,689,627
Increases (decreases) in taxes resulting from:
Bond discount accrual (917,099) (1,096,322)
Reserve adjustments 476,495 3,410,101
Tax-exempt income (1,990,012) (2,048,109)
Accelerated depreciation (822,622) (1,014,963)
Policyowner dividends 1,006,132 (83,240<FO>)
Deferred acquisition costs 4,160,043 2,782,043
Change in mortality and morbidity fluctuation reserve 518,468
239,090
Change in discounting of accident and health reserves (131,267)
570,701
Change in interest maintenance reserve (897,837) (726,911)
Mutual company differential earnings amount,
Current year 10,295,733 1,990,460
Changes in prior period estimates (4,263,100) (2,720,882)
Other 187,501 (404,609)
Federal income taxes $27,058,888 $18,586,986
7. 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, 1994 and 1993, life reinsurance assumed was approximately 62%
and 59%, respectively, of
life insurance in force. Premiums on life reinsurance assumed were
approximately 43% and 42%
of life insurance premium income in 1994 and 1993, respectively.
Premiums on accident and
health reinsurance assumed were approximately 53% and 45% of
accident and health premium
income in 1994 and 1993, respectively.
The Company cedes that portion of the total risk on an individual
life in excess of $1,000,000. For
accident and health and disability policies, the Company has
established various limits of coverage
it will retain on any one policyowner and cedes the remainder of
such coverage. Certain statistical
data with respect to reinsurance ceded follows:
1994 1993
Reinsurance ceded on ordinary life in force $6,248,499,000
$5,048,902,000
Reinsurance ceded on group and credit life in force 1,631,068,000
1,699,287,000
Life reinsurance premiums ceded 26,562,000 20,621,000
Accident and health reinsurance premiums ceded 71,318,000
57,336,000
The Company accounts for all reinsurance agreements as transfers of
risk. Premiums for policies
reinsured with other companies have been reported as a reduction of
premium income and
amounts applicable to reinsurance ceded for policy reserves and
claim liabilities have been
reported as reductions of these items.
Six reinsurers account for approximately 60<U7> of the Company's
December 31, 1994 ceded
reserves for life and accident and health insurance. The remainder
of such ceded reserves is spread
among numerous reinsurers. If companies to which reinsurance has
been ceded are unable to meet
obligations under the reinsurance agreements, the Company would
remain liable. Changes in such
contingent liabilities are reflected directly to policyowners'
surplus.
NOTES TO FINANCIAL STATEMENTS (Continued)
8. STRATEGIC ALLIANCE:
In September 1994, the Company and State Life Insurance Company
(State Life) entered into a
strategic alliance (the alliance). The Company and State Life will
remain separate entities, in that
each will retain its own assets, liabilities, surplus, policies,
and policyowners. There will also be
separate but common boards of directors.
In accordance with the alliance, the Company has guaranteed the
insurance liabilities of State Life
to its policyholders, including present policyholders and those
acquired during the period of the
alliance (initially ten years), in the event State Life becomes
unable to honor such insurance
liabilities. As of December 31, 1994, the Company has not recorded
any liabilities relating to this
guarantee.
No dealer, salesman or any other person is authorized by the AUL
American Individual Unit Trust
or by AUL 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.
There has been filed with the Securities and Exchange Commission,
Washington, D.C., a
Registration Statement under the Securities Act of 1933, as
amended, and the Investment
Company Act of 1940, as amended, with respect to the offering
herein described. For further
information with respect to the AUL American Individual Unit Trust,
AUL and its variable
annuities, reference is made thereto and the exhibits filed
therewith or incorporated therein, which
include all contracts or documents referred to herein.
AUL AMERICAN INDIVIDUAL UNIT TRUST
Individual Variable Annuity Contracts
Sold By
AMERICAN UNITED
LIFE INSURANCE COMPANY
One American Square
Indianapolis, Indiana 46204
STATEMENT OF ADDITIONAL INFORMATION
Dated: July 12, 1995<PAGE>
PART C
OTHER INFORMATION
<PAGE>
Part C: Other Information
(a) Financial Statements
1. Included in Prospectus (Part A):
Condensed Financial Information
2. Included in Statement of Additional Information (Part B):
(a) Financial Statements of American United Life Insurance
Company
Report of Independent Accountants
Balance Sheet - Assets, Liabilities and Policyowners'
Surplus as of December 31, 1994 and 1993
Statement of Operations for the years ended December 31,
1994 and 1993
Statement of Policyowners' Surplus for the years ended
December 31, 1994 and 1993
Statement of Cash Flows for the years ended December 31,
1994 and 1993
Notes to Financial Statements
(b) Financial Statements of AUL American Individual Unit Trust
(1) Registrant's Annual Report for the year ended December
31, 1994 is incorporated by reference thereto and contains
the following Financial Statements:
Report of Independent Accountants
Statement of Net Assets as of December 31, 1994
Statement of Operations and Changes in Net Assets for the
period from November 21, 1994 through December 31,
1994
Notes to Financial Statements
(b) Exhibits
1. Resolution of Executive Committee of American United Life
Insurance Company ("AUL") establishing AUL American
Individual Unit Trust(1)
2. Not applicable
3. Broker-Dealer Supervisory and Selling Agreement(1)
4. (a) Flexible Premium Variable Annuity Contract(1)
(b) One Year Flexible Premium Variable Annuity Contract(1)
5. Application for Individual Variable Annuity(1)
6. Copies of AUL's certificate of incorporation and by-laws(2)
7. Not applicable
8. (a) Form of Participation Agreement with Variable Annuity
Products Fund and Variable Annuity Products Fund II(3)
(b) Form of Participation Agreement with TCI Portfolios,
Inc.(1)
(c) Form of Participation Agreement with T. Rowe Price Equity
Series, Inc., Alger American Series Fund and Acacia
Capital Corporation(6)
9. Opinion and Consent of Associate General Counsel of AUL as
to the legality of the Contracts being registered(5)
10. (a) Consent of Independent Accountants(7)
(b) Consent of Dechert Price & Rhoads(5)
(c) Powers of Attorney(4)
11. Financial Statements of AUL American Individual Unit
Trust(6)
12. Not applicable
13. Schedule for Computation of Performance Quotations(6)
(1) Originally filed with the Registrant's Registration Statement
(File No. 33-79562) on May 31, 1994, and incorporated by reference
herein.
(2) Filed with AUL American Unit Trust's Registration Statement
(File No. 33-31375) and incorporated by reference herein.
(3) Filed with Post-Effective Amendment No. 6 to AUL American Unit
Trust's Registration Statement (File No. 33-31375) and incorporated
by reference herein.
(4) Filed with AUL American Unit Trust's Registration Statement
(File No. 33-31375) and Post-Effective Amendment Nos. 1, 2, 3, 7,
and
10, and incorporated by reference herein.
(5) Filed with Registrant's Pre-Effective Amendment No. 1 and
incorporated by reference herein.
(6) Filed with Registrant's Post-Effective Amendment No. 1 and
incorporated by reference herein.
(7) Filed with Registrant's Post-Effective Amendment No. 2 and
incorporated by reference herein.
Item 25. Directors and Officers of AUL
Name and Address
Positions and
Offices with AUL
John H. Barbre*
Senior
Vice President
Steven C. Beering M.D.
Director
Purdue University
West Lafayette, Indiana
William R. Brown*
General
Counsel and Secretary
Secretary, State Life Insurance Co.
Arthur L. Bryant
Director
P.O. Box 406
Indianapolis, Indiana
_____________________________________________
*One American Square, Indianapolis, Indiana
Item 25. Directors and Officers of AUL (Continued)
Name and Address
Positions and
Offices with AUL
James E. Dora
Director
2501 S. High School Road
Indianapolis, Indiana
Otto N. Frenzel III
Director
and Chairman of the Audit Committee
One Merchants Plaza
Indianapolis, Indiana
David W. Goodrich
Director
Box 82055
Indianapolis, Indiana
William P. Johnson
Director
1525 S. 10th Street
Goshen, Indiana
Charles D. Lineback*
Senior Vice President
James T. Morris
Director
1220 Waterway Boulevard
Indianapolis, Indiana
James W. Murphy*
Senior Vice
President
Jerry L. Plummer*
Senior
Vice President
R. S tephen Radcliffe*
Director and Executive Vice President
Jack E. Reich*
Emeritus
Chairman of the Board
Thom as E. Reilly Jr.
Director
151 N. Delaware Street
Indianapolis, Indiana
Will iam R. Riggs*
Director
G. David Sapp*
Senior Vice
President
Leonard D Schutt
Director
and Chairman of the Finance Committee
5853 Wycombe Lane
Indianapolis, Indiana
Jerry D. Semler*
Chairman
of the Board, President, Chief Executive Officer and Chairman of
the
Executive Committee, AUL
Chairman of the Board, Chief
Executive Officer, State Life Insurance Co.
Yvonne H. Shaheen
Director
1310 S. Franklin Road
Indianapolis, Indiana
James P. Shanahan*
Senior
Vice President
Frank D. Walker
Director
P.O. Box 80432
Indianapolis, Indiana
Gerald T. Walker*
Senior
Vice President
James R. Zapapas
Director
5025 Plantation Drive
Indianapolis, Indiana
______________________________________________
*One American Square, Indianapolis, Indiana
<PAGE>
Item 26. Persons Controlled by or Under Common Control with
Registrant
American United Life Insurance Company ("AUL") is a mutual life
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 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.
AUL may also be deemed to control State Life Insurance Company
("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 Equity Sales Corporation ("ESC") is a wholly-owned subsidiary
of AUL organized under the laws of the State of Indiana in 1969
for the purpose of the sale of mutual funds on an application-way
basis only.
Registrant and AUL American Unit Trust are separate accounts of
AUL, organized for the purpose of the sale of individual and group
variable annuity contracts, respectively.
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." As a result of providing the initial
capital
for the Portfolios, on December 31, 1994, AUL owned 18.5% of the
outstanding shares of the Fund's Equity Portfolio, 51.6% of the
Fund's Bond Portfolio, 23.5% of the Fund's Managed Portfolio, and
34.4% of the Fund's Money Market Portfolio. Therefore, AUL
may be able to control the outcome of any issue submitted generally
to the vote of Fund shareholders and would be able to control the
outcome of any issue submitted to the vote of shareholders of the
Bond and the Money Market Portfolios.
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.
Item 27. Number of Contractholders
As of December 31, 1994, AUL has issued 41 Individual variable
annuity contracts.
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.
Item 29. Principal Underwriters
(a) AUL acts as Investment Adviser to American United Life Pooled
Equity Fund B (File No. 2-27832) and to AUL American Series Fund,
Inc. (File No. 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 46204.
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 American
Council of Life Insurance, SEC
No-Action Letter, SEC Ref. No. IP-6-88 (November 28, 1988)
with respect to annuity contract
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.
<PAGE>
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 thirtieth day of June, 1995.
AUL AMERICAN INDIVIDUAL UNIT TRUST
(Registrant)
By: American United Life Insurance Company
__________________________________________
By: Jerry D. Semler*, Chairman of the Board,
President, and Chief
Executive Officer
_______________________________________________
*By: Richard A. Wacker as Attorney-in-fact
Date: June 30, 1995
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
Steven C. Beering M.D.* Director June 30, 1995
Arthur L. Bryant* Director June 30, 1995
Title
Date
_______________________________________________ Principal
Financial
June 30, 1995
James W. Murphy*
and
Accounting
Officer
_______________________________________________ Director
June 30, 1995
R. Stephen Radcliffe*
_______________________________________________ Emeritus
Chairman
June 30, 1995
Jack E. Reich* of the Board
_______________________________________________ Director
June 30, 1995
Thomas E. Reilly Jr*
_______________________________________________ Director
June 30, 1995
William R. Riggs*
_______________________________________________ Director
June 30, 1995
Leonard D Schutt*
_______________________________________________ Director
June 30, 1995
Yvonne H. Shaheen*
_______________________________________________ Director
June 30, 1995
Frank D. Walker*
_______________________________________________ Director
June 30, 1995
James R. Zapapas*
_______________________________________________
*By: Richard A. Wacker as Attorney-in-fact
Date: June 30, 1995
* Powers of Attorney filed with AUL American Unit Trust's
Registration Statement (File No.
33-31375) and Post-Effective Amendment Nos. 1, 2, 3, 7, and 10
and incorporated by
reference thereto.<PAGE>
EXHIBIT LIST
Exhibit Number Name of Exhibit
10(a) Consent of Independent
Accountants
<PAGE>
EXHIBIT 10(a)
Consent of Independent Accountants
<PAGE>
Consent of Independent Accountants
Board of Directors
American United Life Insurance Company
Indianapolis, Indiana
We consent to the incorporation by reference in Post Effective
Amendment No. 2 to the
Registration Statement of the AUL American Individual Unit Trust
(the "Trust") on Form N-4 (File No. 33-79562) of our report dated
January 25, 1995, on our audit of the financial
statements of the "Trust", for the period from November 21, 1994
to December 31, 1994.
We also consent to the inclusion in Part B of the Registration
Statement of our report dated
February 15, 1995, on our audits of the financial statements of
American United Life
Insurance Company ("AUL").
We also consent to the reference to our Firm as the independent
accountants for the "Trust"
and as the independent accountants for "AUL".
Indianapolis, Indiana
July 10, 1995
<PAGE>
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 thirtieth day of June, 1995.
AUL AMERICAN INDIVIDUAL UNIT TRUST
(Registrant)
By: American United Life Insurance Company
By: Jerry D. Semler, Chairmain of the Board,
President, and Chief Executive Officer
*By: Richard A. Wacker as Attorney-in-fact
Date: June 30, 1995
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
Steven C. Deering M.D.* Director June 30, 1995
Arthur L. Bryant* Director June 30, 1995
James E. Dora* Director June 30, 1995
Otto N. Frenzel III* Director June 30, 1995
David W. Goodrich* Director June 30, 1995
William P. Johnson* Director June 30, 1995
James T. Morris* Director June 30, 1995
James W. Murphy* Principal Financial June 30, 1995
and Accounting
Officer
R. Stephen Radcliffe* Director June 30, 1995
Jack E. Reich* Emeritus Chairman June 30, 1995
of the Board
Thomas E. Reilly Jr.* Director June 30, 1995
William R. Riggs* Director June 30, 1995
Leonard D. Schutt* Director June 30, 1995
Yvonne H. Shaheen* Director June 30, 1995
Frank D. Walker* Director June 30, 1995
James R. Zapapas* Director June 30, 1995
*By: Richard A. Wacker as Attorney-in-fact
Date: June 30, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
Board of Directors
American United Life Insurance Company
Indianapolis, Indiana
We consent to the incorporation by reference in Post Effective
Amendment No. 2 to the Registration Statement of the AUL American
Individual Unit Trust (the "Trust") on Form N-4 (File No. 33-79562)
of our report dated January 25, 1995, on our audit of the financial
statements of the "Trust", for the period from November 21, 1994 to
December 31, 1994.
We also consent to the inclusion in Part B of the Registration
Statement of our report dated February 15, 1995, on our audits of
the financial statements of American United Life Insurance Company
("AUL").
We also consent to the reference to our Firm as the independent
accountants for the "Trust" and as the independent accountants for
"AUL".
/s/ Coopers and Lybrand L.L.P.
Indianapolis, Indiana
July 10, 1995
