SEMI-ANNUAL REPORT
AUL AMERICAN INDIVIDUAL UNIT TRUST
JUNE 30,2000
This report and the financial statements contained herein are for the general
information of the Participants. The Report is not to be distributed to
prospective investors as sales literature unless accompanied or preceded by an
effective prospectus of AUL American Series Fund,Inc and AUL American Individual
Unit Trust, which contains further information concerning the sales charge,
expenses and other pertinent information.
1
<PAGE>
A Message
From
The Chairman of the Board
and President of
AUL American Series Fund, Inc.
To Participants in AUL American Individual Unit Trust
Recent evidence suggests the growth rate of the U.S. economy is finally
moderating as consumer spending and residential real estate activity slowed
during the second quarter. Although second quarter GDP rose at a 5.2% annualized
rate, many economists believe economic growth during the second half of this
year will slow to a more moderate 3.5% to 4.0% rate, well within the Federal
Reserve's estimate of the non-inflationary growth potential for our economy.
Federal Reserve intervention is a primary factor contributing to this slowdown.
Fearing that inflationary pressures were mounting, Fed officials raised the
Federal Funds rate by 175 basis points during the past twelve months. The goal
was to orchestrate a "soft landing" by slowing growth just enough to cut off
inflationary pressures while keeping unemployment stable.
During the first half of 2000, the equity market resembled a roller coaster ride
as investors rotated repeatedly between "New Economy" stocks (primarily
technology and growth companies) and "Old Economy" stocks (economically
sensitive, value companies). The NASDAQ Composite, an index that is heavily
weighted in technology companies, experienced extremely volatile returns during
the first half of the year. Investors poured a great deal of money into
technology stocks, pushing this index up 24% from the beginning of the year to
its peak on March 10. The NASDAQ subsequently experienced a dramatic sell-off
during April and May and although a recovery occurred in late May, this index
still reported negative investment returns for the first six months of the year.
The S&P 500 and the Dow Jones Industrial Average, two other commonly quoted
equity benchmarks, also experienced negative returns during the first half of
the year.
Treasuries were the best performing sector of the bond market, outpacing
corporate bonds and mortgage-backed securities by a wide margin. The huge
federal government surplus has drastically reduced the supply of Treasuries.
Government buy backs of existing long Treasury issues helped boost thirty-year
Treasuries returns to 9.8% in the first half of the year, well ahead of the 4.0%
return for the Lehman Aggregate Bond Index as well as the returns of major stock
indices.
The late 1990s handsomely rewarded equity investors. Based on this experience,
many investors now consider 20% annual returns to be "normal." Since major
equity indices were still in negative territory for the first half of the year,
the equity market may have trouble repeating this remarkable performance in the
current year.
Signs of a slowing economy have raised the hopes of many bond investors that the
Federal Reserve Bank has won the battle against inflation, eliminating the need
for further short-term interest rate increases. The question remains, however,
whether inflation has truly been suppressed given the low 4% unemployment rate
in the U.S., higher energy prices, and mounting global economic strength.
In closing, American United Life remains committed to serving your investment
needs. We appreciate your continued confidence and support.
/s/ R. Stephen Radcliffe
R. Stephen Radcliffe
Chairman of the Board of Directors and President
Indianapolis, Indiana
July 31, 2000
<PAGE>
(This page is intentionally blank.)
2
<PAGE>
AUL American Individual Unit Trust
STATEMENTS OF NET ASSETS
June 30,2000
(unaudited)
<TABLE>
<CAPTION>
AUL American Series Fund Fidelity
Tactical Asset
Equity Money Market Bond Managed Allocation High Income
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at value $ 6,797,689 $ 6,709,117 $ 5,128,827 $ 6,206,740 $ 2,582,644 $ 4,997,522
Net assets $ 6,797,689 $ 6,709,117 $ 5,128,827 $ 6,206,740 $ 2,582,644 $ 4,997,522
Units outstanding 768,434 5,477,763 749,794 764,123 372,973 673,515
Accumulation unit value $ 8.85 $ 1.22 $ 6.84 $ 8.12 $ 6.92 $ 7.42
</TABLE>
<TABLE>
<CAPTION>
Fidelity
Growth Overseas Asset Manager Index 500 Equity-Income Contrafund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at value $ 40,857,060 $ 3,870,916 $22,755,035 $48,424,091 $12,518,276 $27,191,819
Net assets $ 40,857,060 $ 3,870,916 $22,755,035 $48,424,091 $12,518,276 $27,191,819
Units outstanding 2,252,512 398,967 2,431,766 3,005,992 1,310,779 1,987,626
Accumulation unit value $ 18.14 $ 9.70 $ 9.36 $ 16.11 $ 9.55 $ 13.68
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
AUL American Individual Unit Trust
STATEMENTS OF NET ASSETS (continued)
June 30,2000 (unaudited)
<TABLE>
<CAPTION>
American Century Alger Calvert T. Rowe Price
VP Capital VP American Social Mid Cap
Appreciation International Growth Growth Equity Income
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at value $ 2,358,701 $ 9,601,115 $56,058,938 $ 4,284,741 $20,370,532
Net assets $ 2,358,701 $ 9,601,115 $56,058,938 $ 4,284,741 $20,370,532
Units outstanding 220,011 761,945 3,381,214 355,136 2,113,247
Accumulation unit value $ 10.72 $ 12.60 $ 16.58 $ 12.06 $ 9.64
</TABLE>
<TABLE>
<CAPTION>
PBHG
Technology &
Growth II Communications
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at value $ 4,112,881 $ 20,590,179
Net assets $ 4,112,881 $ 20,590,179
Units outstanding 309,166 796,058
Accumulation unit value $ 13.30 $ 25.86
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
AUL American Individual Unit Trust
STATEMENTS OF OPERATIONS
for six months ended June 30, 2000
(unaudited)
<TABLE>
<CAPTION>
AUL American Series Fund Fidelity
Tactical Asset
Equity Money Market Bond Managed Allocation High Income
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ - $ 214,896 $ 15,766 $ - $ 81,808 $ 386,085
Mortality & expense
charges 47,946 49,911 33,632 43,326 19,646 33,283
Net investment
income (loss) (47,946) 164,985 (17,866) (43,326) 62,162 352,802
Gain (loss) on investments:
Net realized gain (loss) (975,195) - (152,667) (651,835) (97,492) (209,638)
Net change in unrealized
appreciation (depreciation) 518,346 3,261 320,160 538,797 10,269 (439,048)
Net gain (loss) (456,849) 3,261 167,493 (113,038) (87,223) (648,686)
Increase (decrease) in
net assets from operations$ (504,795) $ 168,246 $ 149,627 $ (156,364) $ (25,061) $ (295,884)
</TABLE>
<TABLE>
<CAPTION>
Fidelity
Growth Overseas Asset Manager Index 500 Equity-Income Contrafund
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ 4,046,700 $ 415,996 $ 2,584,433 $ 705,267 $ 1,203,170 $ 3,562,038
Mortality & expense
charges 240,573 24,836 145,154 297,753 82,386 169,638
Net investment
income (loss) 3,806,127 391,160 2,439,279 407,514 1,120,784 3,392,400
Gain (loss) on investments:
Net realized gain (loss) 598,110 81,371 155,853 1,316,728 33,689 691,366
Net change in unrealized
appreciation (depreciation) (2,706,647) (681,923) (2,918,042) (2,302,321) (1,791,043) (4,612,059)
Net gain (loss) (2,108,537) (600,552) (2,762,189) (985,593) (1,757,354) (3,920,693)
Increase (decrease) in
net assets from operations $ 1,697,590 $ (209,392) $ (322,910) $ (578,079) $ (636,570) $ (528,293)
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
AUL American Individual Unit Trust
STATEMENTS OF OPERATIONS continued)
for six months ended June 30, 2000
(unaudited)
<TABLE>
<CAPTION>
American Century Alger Calvert T. Rowe Price
VP Capital VP American Social Mid Cap
Appreciation International Growth Growth Equity Income
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ 66,685 $ 154,454 $ 7,121,630 $ - $ 559,262
Mortality & expense
charges 13,908 54,081 337,286 24,742 138,690
Net investment
income (loss) 52,777 100,373 6,784,344 (24,742) 420,572
Gain (loss) on investments:
Net realized gain (loss) 37,916 65,593 971,889 72,277 (238,492)
Net change in unrealized
appreciation (depreciation) 250,440 (1,001,897) (6,278,914) 364,955 (1,428,920)
Net gain (loss) 288,356 (936,304) (5,307,025) 437,232 (1,667,412)
Increase (decrease) in
net assets from operations$ 341,133 $ (835,931) $ 1,477,319 $ 412,490 $(1,246,840)
</TABLE>
<TABLE>
<CAPTION>
PBHG
Technology &
Growth II Communications
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ - $ -
Mortality & expense
charges 20,183 117,178
Net investment
income (loss) (20,183) (117,178)
Gain (loss) on investments:
Net realized gain (loss) 864,507 2,447,539
Net change in unrealized
appreciation (depreciation) (428,672) (997,114)
Net gain (loss) 435,835 1,450,425
Increase (decrease) in
net assets from operations $ 415,652 $ 1,333,247
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
AUL American Individual Unit Trust
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AUL American Series Fund
Equity Money Market Bond
Six months Year Six months Year Six months Year
ended 6/30/00 ended ended 6/30/00 ended ended 6/30/00 ended
(unaudited) 12/31/99 (unaudited) 12/31/99 (unaudited) 12/31/99
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets from operations:
Net investment income
(loss) $ (47,946) $ 1,810,973 $ 164,985 $ 310,340 $ (17,866) $278,704
Net realized gain (loss) (975,195) 522,698 - - (152,667) (63,609)
Net change in unrealized
appreciation
(depreciation) 518,346 (2,503,880) 3,261 - 320,160 (389,764)
Increase (decrease)
in net assets from
operations (504,795) (170,209) 168,246 310,340 149,627 (174,669)
Contract owner transactions:
Proceeds from units sold 237,352 1,135,734 10,299,212 25,892,227 443,232 3,358,754
Cost of units redeemed (2,652,256) (3,294,461) (17,295,332) (21,947,085) (1,731,241) (3,285,629)
Increase (decrease) (2,414,904) (2,158,727) (6,996,120) 3,945,142 (1,288,009) 73,125
Net increase (decrease) (2,919,699) (2,328,936) (6,827,874) 4,255,482 (1,138,382) (101,544)
Net assets, beginning 9,717,388 12,046,324 13,536,991 9,281,509 6,267,209 6,368,753
Net assets, ending $ 6,797,689 $ 9,717,388 $ 6,709,117 $13,536,991 $ 5,128,827 $ 6,267,209
Units sold 26,774 118,150 8,522,681 21,924,159 66,271 499,329
Units redeemed (309,197) (343,998) (14,335,177) (18,636,281) (260,009) (492,203)
Net increase (decrease) (282,423) (225,848) (5,812,496) 3,287,878 (193,738) 7,126
Units outstanding, beginning 1,050,857 1,276,705 11,290,259 8,002,381 943,532 936,406
Units outstanding, ending 768,434 1,050,857 5,477,763 11,290,259 749,794 943,532
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
AUL American Individual Unit Trust
STATEMENTS OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
AUL American Series Fund Fidelity
Managed Tactical Asset Allocation High Income
Six months Year Six months Year Six months Year
ended 6/30/00 ended ended 6/30/00 ended ended 6/30/00 ended
(unaudited) 12/31/99 (unaudited) 12/31/99 (unaudited) 12/31/99
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets from operations:
Net investment income
(loss) $ (43,326) $ 1,154,316 $ 62,162 $ 63,739 $ 352,802 $ 473,022
Net realized gain (loss) (651,835) 313,554 (97,492) 111,566 (209,638) (313,235)
Net change in unrealized
appreciation
(depreciation) 538,797 (1,654,334) 10,269 (343,220) (439,048) 222,922
Increase (decrease)
in net assets from
operations (156,364) (186,464) (25,061) (167,915) (295,884) 382,709
Contract owner transactions:
Proceeds from units sold 275,474 1,713,443 105,237 482,336 582,012 1,775,315
Cost of units redeemed (2,625,161) (2,863,360) (1,175,723) (1,573,004) (1,293,449) (1,810,647)
Increase (decrease) (2,349,687) (1,149,917) (1,070,486) (1,090,668) (711,437) (35,332)
Net increase (decrease) (2,506,051) (1,336,381) (1,095,547) (1,258,583) (1,007,321) 347,377
Net assets, beginning 8,712,791 10,049,172 3,678,191 4,936,774 6,004,843 5,657,466
Net assets, ending $ 6,206,740 $ 8,712,791 $ 2,582,644 $ 3,678,191 $ 4,997,522 $ 6,004,843
Units sold 34,452 203,508 15,237 65,902 76,489 230,397
Units redeemed (333,327) (342,921) (167,883) (215,647) (168,266) (235,235)
Net increase (decrease) (298,875) (139,413) (152,646) (149,745) (91,777) (4,838)
Units outstanding, beginning 1,062,998 1,202,411 525,619 675,364 765,292 770,130
Units outstanding, ending 764,123 1,062,998 372,973 525,619 673,515 765,292
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
AUL American Individual Unit Trust
STATEMENTS OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
Fidelity
Growth Overseas Asset Manager
Six months Year Six months Year Six months Year
ended 6/30/00 ended ended 6/30/00 ended ended 6/30/00 ended
(unaudited) 12/31/99 (unaudited) 12/31/99 (unaudited) 12/31/99
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets from operations:
Net investment income
(loss) $ 3,806,127 $ 2,228,794 $ 391,160 $ 55,122 $ 2,439,279 $ 1,243,065
Net realized gain (loss) 598,110 1,493,369 81,371 52,349 155,853 347,542
Net change in unrealized
appreciation
(depreciation) (2,706,647) 5,478,228 (681,923) 839,894 (2,918,042) 584,101
Increase (decrease)
in net assets from
operations 1,697,590 9,200,391 (209,392) 947,365 (322,910) 2,174,708
Contract owner transactions:
Proceeds from units sold 7,085,624 9,896,185 1,238,292 875,961 1,812,545 7,085,395
Cost of units redeemed (3,498,668) (5,529,443) (619,564) (435,824) (3,360,331) (4,778,014)
Increase (decrease) 3,586,956 4,366,742 618,728 440,137 (1,547,786) 2,307,381
Net increase (decrease) 5,284,546 13,567,133 409,336 1,387,502 (1,870,696) 4,482,089
Net assets, beginning 35,572,514 22,005,381 3,461,580 2,074,078 24,625,731 20,143,642
Net assets, ending $ 40,857,060 $ 35,572,514 $ 3,870,916 $ 3,461,580 $22,755,035 $24,625,731
Units sold 401,409 696,978 124,800 105,207 193,125 799,887
Units redeemed (197,527) (368,375) (62,441) (52,662) (358,740) (533,393)
Net increase (decrease) 203,882 328,603 62,359 52,545 (165,615) 266,494
Units outstanding, beginning 2,048,630 1,720,027 336,608 284,063 2,597,381 2,330,887
Units outstanding, ending 2,252,512 2,048,630 398,967 336,608 2,431,766 2,597,381
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
AUL American Individual Unit Trust
STATEMENTS OF CHANGES IN NET ASSETS (continued)
Fidelity
Index 500 Equity-Income Contrafund
Six months Year Six months Year Six months Year
ended 6/30/00 ended ended 6/30/00 ended ended 6/30/00 ended
(unaudited) 12/31/99 (unaudited) 12/31/99 (unaudited) 12/31/99
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets from operations:
Net investment income
(loss) $ 407,514 $ 61,787 $ 1,120,784 $ 495,157 $ 3,392,400 $ 554,940
Net realized gain (loss) 1,316,728 2,652,341 33,689 615,178 691,366 1,852,683
Net change in unrealized
appreciation
(depreciation) (2,302,321) 4,907,922 (1,791,043) (404,345) (4,612,059) 2,660,686
Increase (decrease)
in net assets from
operations (578,079) 7,622,050 (636,570) 705,990 (528,293) 5,068,309
Contract owner transactions:
Proceeds from units sold 5,834,256 15,268,187 934,183 3,588,829 4,012,683 9,233,005
Cost of units redeemed (6,062,414) (9,437,856) (3,048,781) (3,386,311) (3,802,029) (6,144,229)
Increase (decrease) (228,158) 5,830,331 (2,114,598) 202,518 210,654 3,088,776
Net increase (decrease) (806,237) 13,452,381 (2,751,168) 908,508 (317,639) 8,157,085
Net assets, beginning 49,230,328 35,777,947 15,269,444 14,360,936 27,509,458 19,352,373
Net assets, ending $ 48,424,091 $ 49,230,328 $12,518,276 $15,269,444 $27,191,819 $27,509,458
Units sold 368,221 1,048,649 98,008 362,499 285,913 763,384
Units redeemed (381,668) (640,606) (333,645) (343,238) (270,446) (493,583)
Net increase (decrease) (13,447) 408,043 (235,637) 19,261 15,467 269,801
Units outstanding, beginning 3,019,439 2,611,396 1,546,416 1,527,155 1,972,159 1,702,358
Units outstanding, ending 3,005,992 3,019,439 1,310,779 1,546,416 1,987,626 1,972,159
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
AUL American Individual Unit Trust
STATEMENTS OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
American Century Alger
VP Capital Appreciation VP International American Growth
Six months Year Six months Year Six months Year
ended 6/30/00 ended ended 6/30/00 ended ended 6/30/00 ended
(unaudited) 12/31/99 (unaudited) 12/31/99 (unaudited) 12/31/99
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets from operations:
Net investment income
(loss) $ 52,777 $ (22,543) $ 100,373 $ (54,602) $ 6,784,344 $ 3,160,915
Net realized gain (loss) 37,916 (15,521) 65,593 131,619 971,889 2,664,688
Net change in unrealized
appreciation
(depreciation) 250,440 912,179 (1,001,897) 2,349,083 (6,278,914) 6,044,231
Increase (decrease)
in net assets from
operations 341,133 874,115 (835,931) 2,426,100 1,477,319 11,869,834
Contract owner transactions:
Proceeds from units sold 29,831 193,519 4,835,656 802,451 8,959,478 17,308,495
Cost of units redeemed (82,523) (739,318) (665,524) (764,616) (4,825,682) (8,948,808)
Increase (decrease) (52,692) (545,799) 4,170,132 37,835 4,133,796 8,359,687
Net increase (decrease) 288,441 328,316 3,334,201 2,463,935 5,611,115 20,229,521
Net assets, beginning 2,070,260 1,741,944 6,266,914 3,802,979 50,447,823 30,218,302
Net assets, ending $ 2,358,701 $ 2,070,260 $ 9,601,115 $ 6,266,914 $56,058,938 $50,447,823
Units sold 2,773 31,792 348,522 89,166 545,784 1,286,848
Units redeemed (8,053) (114,486) (51,128) (81,568) (293,979) (633,352)
Net increase (decrease) (5,280) (82,694) 297,394 7,598 251,805 653,496
Units outstanding, beginning 225,291 307,985 464,551 456,953 3,129,409 2,475,913
Units outstanding, ending 220,011 225,291 761,945 464,551 3,381,214 3,129,409
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
AUL American Individual Unit Trust
STATEMENTS OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
Calvert T. Rowe Price PBHG
Social Mid Cap Growth Equity Income Growth II
Six months Year Six months Year Six months Year
ended 6/30/00 ended ended 6/30/00 ended ended 6/30/00 ended
(unaudited) 12/31/99 (unaudited) 12/31/99 (unaudited) 12/31/99
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets from operations:
Net investment income
(loss) $ (24,742) $ 268,178 $ 420,572 $ 1,366,491 $ (20,183) $ (12,451)
Net realized gain (loss) 72,277 167,140 (238,492) 1,331,882 864,507 60,238
Net change in unrealized
appreciation
(depreciation) 364,955 (207,895) (1,428,920) (2,103,050) (428,672) 809,043
Increase (decrease)
in net assets from
operations 412,490 227,423 (1,246,840) 595,323 415,652 856,830
Contract owner transactions:
Proceeds from units sold 365,381 1,053,892 3,189,915 5,732,295 3,548,922 772,820
Cost of units redeemed (584,499) (740,238) (8,693,183) (7,240,898) (1,923,127) (200,596)
Increase (decrease) (219,118) 313,654 (5,503,268) (1,508,603) 1,625,795 572,224
Net increase (decrease) 193,372 541,077 (6,750,108) (913,280) 2,041,447 1,429,054
Net assets, beginning 4,091,369 3,550,292 27,120,640 28,033,920 2,071,434 642,380
Net assets, ending $ 4,284,741 $ 4,091,369 $20,370,532 $27,120,640 $ 4,112,881 $ 2,071,434
Units sold 33,686 104,422 329,046 560,658 272,808 97,149
Units redeemed (54,279) (73,082) (935,024) (720,387) (149,469) (24,127)
Net increase (decrease) (20,593) 31,340 (605,978) (159,729) 123,339 73,022
Units outstanding, beginning 375,729 344,389 2,719,225 2,878,954 185,827 112,805
Units outstanding, ending 355,136 375,729 2,113,247 2,719,225 309,166 185,827
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
AUL American Individual Unit Trust
STATEMENTS OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
PBHG
Technology & Communications
Six months Year
ended 6/30/00 ended
(unaudited) 12/31/99
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets from operations:
Net investment income
(loss) $ (117,178) $ (54,228)
Net realized gain (loss) 2,447,539 1,130,910
Net change in unrealized
appreciation
(depreciation) (997,114) 6,644,999
Increase (decrease)
in net assets from
operations 1,333,247 7,721,681
Contract owner transactions:
Proceeds from units sold 11,904,810 6,991,981
Cost of units redeemed (5,663,735) (2,821,442)
Increase (decrease) 6,241,075 4,170,539
Net increase (decrease) 7,574,322 11,892,220
Net assets, beginning 13,015,857 1,123,637
Net assets, ending $ 20,590,179 $ 13,015,857
Units sold 445,268 643,527
Units redeemed (233,960) (225,484)
Net increase (decrease) 211,308 418,043
Units outstanding, beginning 584,750 166,707
Units outstanding, ending 796,058 584,750
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
The AUL American Individual Unit Trust (Variable Account) was established by
American United Life Insurance Company(R) (AUL) on April 14, 1994, under
procedures established by Indiana law and is registered as a unit investment
trust under the Investment Company Act of 1940, as amended. The Variable
Account is a segregated investment account for individual annuity contracts
issued by AUL and invests exclusively in shares of mutual fund portfolios
offered by the AUL American Series Fund, Inc. (AUL American Series Fund),
Fidelity Variable Insurance Products Fund (Equity-Income, Growth, High
Income, Overseas) and Fidelity Variable Insurance Products Fund II(Asset
Manager, Contrafund, Index 500) (Fidelity), American Century Variable
Portfolios, Inc. (American Century), Alger American Fund (Alger), Calvert
Variable Series (Calvert), T. Rowe Price Equity Series, Inc. (T. Rowe Price),
and PBHG Insurance Series Fund, Inc. (PBHG).
Security Valuation Transactions and Related Income
The market value of investments are based on the closing bid prices at June
30, 2000. Investment transactions are accounted for on the trade date and
dividend income is recorded on the ex-dividend date. Mortality and Expense
Risks Charges AUL deducts a daily charge as compensation for the mortality
and expense risks assumed by AUL. The charge is equal on an annual basis to
1.25% of the average daily net assets of each investment account. AUL
guarantees that the mortality and expense charge shall not increase. The
charges incurred during the six months ended June 30, 2000 and the year ended
December 31, 1999 were $1,894,151 and $3,317,824, respectively.
Taxes
Operations of the Variable Account are part of, and are taxed with, the
operations of AUL, which is taxed as a "life insurance company" under the
Internal Revenue Code. Under current law, investment income, including
realized and unrealized capital gains of the investment accounts, is not
taxed to AUL to the extent it is applied to increase reserves under the
contracts. The Variable Account has not been charged for federal and state
income taxes since none have been imposed. Estimates The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those
estimates.
2. Account Charges
AUL may assess a premium tax charge based on premium taxes incurred. Premium
taxes currently range between 0% and 3.5%, but are subject to change by
governmental entities. AUL deducts an annual administrative charge from each
contract equal to the lesser of 2% of the contract value or $30. The fee is
assessed every year on the contract anniversary date during the accumulation
period but is waived if the contract value exceeds $50,000 on the contract
anniversary date. The charges incurred during the six months ended June 30,
2000 were $144,760. AUL may assess a withdrawal charge on withdrawals that
exceed 12% of the contract value at the time of the first withdrawal in a
contract year. However, the contract owner has a right to a full refund of
the contributions made under the contract for any reason within ten days of
original contract purchase. If a particular state allows a longer "free look"
period, then such state law will be followed. The amount of the withdrawal
charge depends upon the type of contract and the length of time the contract
has existed, as follows:
Flexible Premium Contract One Year Flexible Premium Contract
Contract Year Withdrawal Charge Contract Year Withdrawal Charge
1 10% 1 7%
2 9% 2 6%
3 8% 3 5%
4 7% 4 4%
5 6% 5 3%
6 5% 6 2%
7 4% 7 1%
8 3% 8 0%
9 2%
10 1%
11 0%
The aggregate withdrawal charges 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.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
3. Accumulation Unit Value
The change in the Accumulation Unit Value per unit for the six months ended
June 30, 2000, is:
<TABLE>
<CAPTION>
6/30/00 12/31/99 Change
<S> <C> <C> <C> <C> <C> <C>
AUL American Series Fund:
Equity $ 8.847313 $ 9.247989 -4.3%
Money Market 1.224799 1.198719 2.2%
Bond 6.838998 6.641018 3.0%
Managed 8.123307 8.196934 -0.9%
Tactical Asset
Allocation 6.924588 6.997700 -1.0%
Fidelity:
High Income 7.419868 7.846311 -5.4%
Growth 18.138345 17.363923 4.5%
Overseas 9.702545 10.284116 -5.7%
Asset Manager 9.357950 9.481331 -1.3%
Index 500 16.110491 16.305704 -1.2%
Equity Income 9.551604 9.874671 -3.3%
Contrafund 13.680919 13.949322 -1.9%
American Century:
VP Capital
Appreciation 10.724343 9.192207 16.7%
VP International 12.600860 13.490516 -6.6%
Alger:
American Growth 16.577911 16.118835 2.8%
Calvert:
Social Mid Cap
Growth 12.064302 10.888464 10.8%
T. Rowe Price:
Equity Income 9.640162 9.973846 -3.3%
PBHG:
Growth II 13.302942 11.146816 19.3%
Technology &
Communications 25.863570 22.256574 16.2%
</TABLE>
4. Cost of Investments
The cost of investments at June 30, 2000, is:
AUL American Series Fund:
Equity $ 8,628,448
Money Market 6,705,856
Bond 5,299,861
Managed 7,315,012
Tactical Asset
Allocation 2,853,652
Fidelity:
High Income 5,745,001
Growth 32,519,499
Overseas 3,660,582
Asset Manager 23,396,283
Fidelity (continued):
Index 500 $ 37,873,655
Equity Income 13,252,631
Contrafund 25,050,949
American Century:
VP Capital
Appreciation 1,354,462
VP International 8,100,927
Alger:
American Growth 49,204,053
Calvert:
Social Mid Cap
Growth $ 3,831,715
T. Rowe Price:
Equity Income 22,064,333
PBHG:
Growth II 3,700,944
Technology &
Communications 14,734,541
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
5. Net Assets
Net Assets at June 30, 2000 are:
<TABLE>
<CAPTION>
AUL American Series Fund
Tactical Asset
Equity Money Market Bond Managed Allocation
<S> <C> <C> <C> <C> <C> <C>
Proceeds from units sold $ 14,155,810 $104,100,541 $18,569,821 $12,707,378 $ 5,813,483
Cost of units redeemed (9,145,505) (98,347,196) (13,960,295) (7,722,243) (3,563,679)
Net investment income (loss) 2,988,694 952,511 777,887 2,204,841 440,861
Net realized gain (loss) 629,449 (0) (87,552) 125,036 162,987
Unrealized appreciation
(depreciation) (1,830,759) 3,261 (171,034) (1,108,272) (271,008)
$ 6,797,689 $ 6,709,117 $ 5,128,827 $ 6,206,740 $ 2,582,644
Fidelity
High Income Growth Overseas Asset Manager Index 500
Proceeds from units sold $ 11,363,015 $ 34,370,067 $ 5,169,074 $28,169,804 $51,568,244
Cost of units redeemed (6,633,160) (12,945,664) (2,443,565) (11,437,248) (20,857,070)
Net investment income (loss) 1,462,444 7,979,951 635,896 5,760,283 1,027,788
Net realized gain (loss) (447,298) 3,115,145 299,177 903,444 6,134,693
Unrealized appreciation
(depreciation) (747,479) 8,337,561 210,334 (641,248) 10,550,436
$ 4,997,522 $ 40,857,060 $ 3,870,916 $22,755,035 $48,424,091
Fidelity American Century Alger
VP Capital VP American
Equity-Income Contrafund Appreciation International Growth
Proceeds from units sold $ 20,276,584 $ 31,473,087 $ 5,078,747 $12,199,923 $49,696,869
Cost of units redeemed (11,186,122) (15,257,031) (3,740,371) (4,911,756) (18,104,206)
Net investment income (loss) 2,663,081 4,529,208 231,445 203,109 12,780,627
Net realized gain (loss) 1,499,088 4,305,685 (215,359) 609,651 4,830,763
Unrealized appreciation
(depreciation) (734,355) 2,140,870 1,004,239 1,500,188 6,854,885
$ 12,518,276 $ 27,191,819 $ 2,358,701 $ 9,601,115 $56,058,938
Calvert T. Rowe Price PBHG
Social Mid Cap Technology &
Growth Equity Income Growth II Communications
Proceeds from units sold $ 4,668,662 $ 37,672,650 $ 6,770,934 $20,451,946
Cost of units redeemed (2,010,271) (22,318,065) (4,005,541) (9,098,989)
Net investment income (loss) 802,593 3,740,099 (44,119) (180,853)
Net realized gain (loss) 370,731 2,969,649 979,670 3,562,437
Unrealized appreciation
(depreciation) 453,026 (1,693,801) 411,937 5,855,638
$ 4,284,741 $ 20,370,532 $ 4,112,881 $20,590,179
</TABLE>
16
<PAGE>
American United Life Insurance Company
One American Square
P.O. Box 368
Indianapolis, Indiana 46206-0368
www.aul.com
7-13971B (6/00)
