[Aetna cover]
Variable Annuity Account I
Build for
Retirement. Manage
for Life. (SM)
1996
Annual
Report
[Aetna Logo]
ANN.VAI-96 Retirement Services (SM)
<PAGE>
As we move forward in our mission to provide the tools to help you achieve your
dreams by becoming your retirement partner, it is an opportune time to reflect
upon our achievements in 1996.
Our Aetna funds had another outstanding year. Aeltus Investment Management,
Inc., our affiliate organization which manages these funds, was named one of the
World's Best Money Managers by Nelson's Publications, an organization that
compares investment performance data on over 1,700 investment managers from
around the world.
To broaden our customer service capabilities, we established a second Customer
Service site in Phoenix, Arizona. This endeavor demonstrates our strong
commitment to providing you with professional and dependable customer service at
all times.
We also introduced Internet capabilities to further expand the breadth and
flexibility of our customer service functions. In 1996, we gave many of our
customers the ability to view their account information through the Internet.
During the first quarter of 1997, some customers using Aetna's variable annuity
contracts to fund their retirement plans under internal revenue code sections
403(b), 457, and 401(k), as well as individuals holding non-qualified Aetna
variable annuities or individual retirement annuities, will be able to use the
Internet to perform allocation changes and fund transfers. We remain steadfast
in our efforts to offer all Aetna Retirement Services customers the ability to
do transactions on the Internet.
The Aetna Retirement Services organization, through its subsidiary Aetna
Financial Services, Inc., is in the process of developing financial planning
capabilities to provide customers with the tools to achieve their retirement
dreams. Once this capability is developed, Aetna Financial Services'
professional financial planners, in partnership with other Aetna Retirement
Services representatives, will be able to help customers define their financial
objectives, evaluate their options, and advise them on the steps they can take
to help turn their retirement dreams into tangible goals.
We are also presently working on an initiative to offer new options for
cost-effective electronic delivery of regulatory materials such as prospectuses
on CD-ROM or via the Internet. Enclosed you will find a consent agreement if you
would like to choose a new delivery option for these materials that better suits
your needs. Kindly take a few minutes to fill out the form and return it to us
in the attached postage paid envelope if you are interested.
Please contact us if you have any questions or comments. You are the reason
we're in business.
Thank you for your business and continued trust.
/s/Daniel P. Kearney
- -----------------------
Daniel P. Kearney
President, Aetna Retirement Services, Inc.
- ------------------------
* Operating earnings exclude net realized capital gains and losses; these
earnings have been further adjusted to exclude $40 million of severance
and facilities charges in 1996.
<PAGE>
[Aetna Logo]
Retirement Services (SM)
Consent Agreement
- ----------------------------------------------------------------------------
February, 1997
Dear Valued Customer,
As we move into the 21st Century, technology is rapidly evolving and more
information is being delivered electronically. Replacing paper documents
with electronic document delivery is not only cost effective, it conserves
and protects our finite supply of natural resources.
During 1997, Aetna Life Insurance and Annuity Company ("ALIAC") plans to
offer new options for electronic delivery, on CD-ROM or via the INTERNET, of
securities-related regulatory materials relating to ALIAC variable
annuities, variable life insurance and the underlying investment options
under such products. These options will help us to provide you with
up-to-date information with speed and efficiency. If you would like to take
advantage of electronic delivery of future regulatory material as this
delivery becomes available, please take a few minutes to check the option
you prefer, fill out the form below and return it to us in the enclosed
postage paid envelope. A toll-free number (800-USAETNA) is always available
to request paper documents and you can change your options by writing to us
(151 Farmington Ave., Hartford, CT. 06156-8972).
Aetna will keep you informed of our progress on this exciting initiative by
announcing its availability in our regular communications. Until then, you
can expect to continue to receive paper copy materials.
We thank you for giving us this opportunity to serve you better.
- --------------------------------------------------------------------------------
Consent Agreement
- --------------------------------------------------------------------------------
When and to the extent that ALIAC makes available such delivery, I will
accept future regulatory materials (Annual Financial Reports and Semi-annual
Financial Reports, as well as prospectuses and supplements for ALIAC's
variable annuity and variable life insurance separate accounts and their
underlying funding options) on:
[ ] Internet via http://www.aetna.com (There may be potential costs to you
associated with such delivery, depending on your access carrier.)
[ ] CD ROM until INTERNET access is available
[ ] CD ROM only
- --------------------------------------------------------------------------------
This consent will be in effect until revoked in writing, which may be done
at any time.
- --------------------------------------------------------------------------------
Last Name First Name Middle Initial
- --------------------------------------------------------------------------------
Number and Street Address
- --------------------------------------------------------------------------------
City State Zip Code
- --------------------------------------------------------------------------------
Signature Date
- --------------------------------------------------------------------------------
Social Security Number/Tax ID Number
- --------------------------------------------------------------------------------
82949 (2-97)
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1996:
<TABLE>
<S> <C>
ASSETS:
Investments, at net asset value: (Note 1)
Aetna Variable Fund; 118,220 shares (cost $3,972,310) ........................ $3,829,309
Aetna Income Shares; 79,477 shares (cost $1,025,028) ......................... 1,003,244
Aetna Variable Encore Fund; 635,111 shares (cost $8,317,770) ................. 8,379,376
Aetna Investment Advisers Fund, Inc.; 46,476 shares (cost $686,701) .......... 702,615
Aetna Ascent Variable Portfolio; 92,327 shares (cost $1,108,682) ............. 1,165,108
Aetna Crossroads Variable Portfolio; 6,406 shares (cost $77,022) ............. 76,740
Aetna Legacy Variable Portfolio; 8,918 shares (cost $103,946) ................ 100,364
Aetna Variable Index Plus Portfolio; 2,964 shares (cost $33,107) ............. 32,321
Alger American Funds:
Balanced Portfolio; 54,958 shares (cost $488,764) .......................... 507,815
Growth Portfolio; 188,312 shares (cost $6,133,738) ......................... 6,464,740
Income and Growth Portfolio; 76,873 shares (cost $604,086) ................. 647,270
Leveraged AllCap Portfolio; 103,955 shares (cost $1,958,838) ............... 2,012,567
MidCap Portfolio; 192,140 shares (cost $3,929,732) ......................... 4,102,199
Small Capitalization Portfolio; 171,234 shares (cost $7,045,821) ........... 7,005,171
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio; 563,735 shares (cost $11,091,451) ................. 11,855,352
Growth Portfolio; 305,971 shares (cost $9,188,009) ......................... 9,527,933
High Income Portfolio; 218,647 shares (cost $2,638,083) .................... 2,737,458
Overseas Portfolio; 70,166 shares (cost $1,255,226) ........................ 1,321,928
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio; 71,870 shares (cost $1,159,980) ................... 1,216,766
Contrafund Portfolio; 395,008 shares (cost $6,102,472) ..................... 6,541,331
Index 500 Portfolio; 54,852 shares (cost $4,513,469) ....................... 4,888,997
Investment Grade Bond Portfolio; 36,653 shares (cost $438,309) ............. 448,634
Insurance Management Series:
American Leaders Fund II; 3,803,235 shares (cost $50,964,321)............... 58,037,362
Growth Strategies Fund II; 765,678 shares (cost $8,910,410)................. 9,800,678
High Income Bond Fund II; 1,131,975 shares (cost $11,148,554)............... 11,591,426
International Equity Fund II; 1,015,711 shares (cost $10,735,477)........... 11,335,329
Prime Money Fund II; 3,507,665 shares (cost $3,507,665)..................... 3,507,665
U.S. Government Securities Fund II; 243,454 shares (cost $2,456,653)....... 2,456,452
Utility Fund II; 1,129,147 shares (cost $12,228,743)........................ 13,335,221
Janus Aspen Series:
Aggressive Growth Portfolio; 150,999 shares (cost $2,736,309)............... 2,754,214
Balanced Portfolio; 134,540 shares (cost $1,940,432)........................ 1,987,150
Flexible Income Portfolio; 34,999 shares (cost $387,419).................... 393,394
Growth Portfolio; 200,763 shares (cost $3,022,933).......................... 3,113,839
Short-Term Bond Portfolio; 31,499 shares (cost $315,844).................... 314,045
Worldwide Growth Portfolio; 710,001 shares (cost $13,144,346)............... 13,802,417
Lexington Emerging Markets Fund; 75,979 shares (cost $770,519)................ 765,870
Lexington Natural Resources Trust Fund; 93,062 shares (cost $1,231,130)....... 1,329,850
MFS Funds:
Emerging Growth Series; 318,453 shares (cost $4,202,694).................... 4,216,322
Research Series; 189,599 shares (cost $2,423,276)........................... 2,489,437
Total Return Series; 86,203 shares (cost $1,159,487)........................ 1,181,849
Value Series; 4,208 shares (cost $44,704)................................... 44,861
World Government Series; 20,267 shares (cost $210,551)...................... 214,428
TCI Portfolios, Inc.:
Balanced Fund; 49,532 shares (cost $363,463)................................ 373,473
Growth Fund; 44,936 shares (cost $471,345).................................. 460,141
International Fund; 138,466 shares (cost $778,083).......................... 825,259
------------
NET ASSETS (cost $205,026,902) ................................................. $218,897,920
============
</TABLE>
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1996 (continued):
Net assets represented by:
Reserves for annuity contracts in accumulation and payment period:
(Notes 1 and 5)
<TABLE>
<S> <C>
Aetna Variable Fund:
Annuity contracts in accumulation............................ $3,829,309
Aetna Income Shares:
Annuity contracts in accumulation............................ 1,003,244
Aetna Variable Encore Fund:
Annuity contracts in accumulation............................ 8,379,376
Aetna Investment Advisers Fund, Inc.:
Annuity contracts in accumulation............................ 702,615
Aetna Ascent Variable Portfolio:
Annuity contracts in accumulation............................ 1,165,108
Aetna Crossroads Variable Portfolio:
Annuity contracts in accumulation............................ 76,740
Aetna Legacy Variable Portfolio:
Annuity contracts in accumulation............................ 100,364
Aetna Variable Index Plus Portfolio:
Annuity contracts in accumulation............................ 32,321
Alger American Funds:
Balanced Portfolio:
Annuity contracts in accumulation............................ 507,815
Growth Portfolio:
Annuity contracts in accumulation............................ 6,464,740
Income and Growth Portfolio:
Annuity contracts in accumulation............................ 647,270
Leveraged AllCap Portfolio:
Annuity contracts in accumulation............................ 2,012,567
MidCap Portfolio:
Annuity contracts in accumulation............................ 4,102,199
Small Capitalization Portfolio:
Annuity contracts in accumulation............................ 7,005,171
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio:
Annuity contracts in accumulation............................ 11,855,352
Growth Portfolio:
Annuity contracts in accumulation............................ 9,527,933
High Income Portfolio:
Annuity contracts in accumulation............................ 2,737,458
Overseas Portfolio:
Annuity contracts in accumulation............................ 1,321,928
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio:
Annuity contracts in accumulation............................ 1,216,766
Contrafund Portfolio:
Annuity contracts in accumulation............................ 6,541,331
Index 500 Portfolio:
Annuity contracts in accumulation............................ 4,888,997
Investment Grade Bond Portfolio:
Annuity contracts in accumulation............................ 448,634
Insurance Management Series:
American Leaders Fund II:
Annuity contracts in accumulation............................ 58,037,362
Growth Strategies Fund II:
Annuity contracts in accumulation............................ 9,800,678
High Income Bond Fund II:
Annuity contracts in accumulation............................ 11,591,426
International Equity Fund II:
Annuity contracts in accumulation............................ 11,335,329
</TABLE>
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1996 (continued):
<TABLE>
<S> <C>
Prime Money Fund II:
Annuity contracts in accumulation..................... $3,507,665
U.S. Government Securities Fund II:
Annuity contracts in accumulation..................... 2,456,452
Utility Fund II:
Annuity contracts in accumulation..................... 13,335,221
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation..................... 2,754,214
Balanced Portfolio:
Annuity contracts in accumulation..................... 1,987,150
Flexible Income Portfolio:
Annuity contracts in accumulation..................... 393,394
Growth Portfolio:
Annuity contracts in accumulation..................... 3,113,839
Short-Term Bond Portfolio:
Annuity contracts in accumulation..................... 314,045
Worldwide Growth Portfolio:
Annuity contracts in accumulation..................... 13,802,417
Lexington Emerging Markets Fund:
Annuity contracts in accumulation..................... 765,870
Lexington Natural Resources Trust Fund:
Annuity contracts in accumulation..................... 1,329,850
MFS Funds:
Emerging Growth Series:
Annuity contracts in accumulation..................... 4,216,322
Research Series:
Annuity contracts in accumulation..................... 2,489,437
Total Return Series:
Annuity contracts in accumulation..................... 1,181,849
Value Series:
Annuity contracts in accumulation..................... 44,861
World Government Series:
Annuity contracts in accumulation..................... 214,428
TCI Portfolios, Inc.:
Balanced Fund:
Annuity contracts in accumulation..................... 373,473
Growth Fund:
Annuity contracts in accumulation..................... 460,141
International Fund:
Annuity contracts in accumulation..................... 825,259
--------------
$218,897,920
==============
</TABLE>
See Notes to Financial Statements
<PAGE>
Variable Annuity Account I
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
1996 *1995
---- -----
<S> <C> <C>
INVESTMENT INCOME:
Income: (Notes 1, 3 and 5)
Dividends ........................................................... $3,142,826 $344,085
Expenses: (Notes 2 and 5)
Valuation Period Deductions ......................................... (1,469,442) (129,615)
---------- --------
Net investment income .................................................. 1,673,384 214,470
---------- --------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on sales of investments: (Notes 1, 4 and 5)
Proceeds from sales .................................................. 30,774,009 1,768,297
Cost of investments sold ............................................. 30,447,382 1,764,665
---------- --------
Net realized gain .................................................. 326,627 3,632
Net unrealized gain on investments: (Note 5)
Beginning of period .................................................. 1,366,008 0
End of period ........................................................ 13,871,018 1,366,008
---------- --------
Net change in unrealized gain ...................................... 12,505,010 1,366,008
---------- --------
Net realized and unrealized gain on investments ........................ 12,831,637 1,369,640
---------- --------
Net increase in net assets resulting from operations ................... 14,505,021 1,584,110
---------- --------
FROM UNIT TRANSACTIONS:
Variable annuity contract purchase payments ............................ 151,305,122 29,988,730
Sales and administrative charges deducted by the Company ............... 0 (98,694)
---------- --------
Net variable annuity contract purchase payments..................... 151,305,122 29,890,036
Transfers from the Company's fixed account options ..................... 21,839,958 2,369,036
Redemptions by contract holders ........................................ (2,630,806) (100,005)
Other .................................................................. 121,009 14,439
---------- --------
Net increase in net assets from unit transactions (Note 5) ......... 170,635,283 32,173,506
---------- --------
Change in net assets ................................................... 185,140,304 33,757,616
NET ASSETS:
Beginning of period .................................................... 33,757,616 0
---------- --------
End of period .......................................................... $218,897,920 $33,757,616
============ ===========
</TABLE>
* Statements of Operations and Changes in Net Assets for the Period June 28,
1995 through December 31, 1995.
<PAGE>
Variable Annuity Account I
Condensed Financial Information - Year Ended December 31, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Per Unit Increase(Decrease) Units
-------- in Value of Outstanding Reserves
Beginning End of Accumulation at End at End
of Year Year Unit of Year of Year
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Variable Fund:
AICA I $10.101 $12.769 26.41% (1) 299,882.4 $3,829,309
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares:
AICA I $10.260 $10.489 2.23% (1) 95,644.3 1,003,244
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund:
AICA I $10.151 $10.481 3.25% (2) 799,456.4 8,379,376
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc.:
AICA I $10.582 $11.781 11.33% (2) 59,639.3 702,615
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio:
AICA I $11.003 $12.674 15.19% (7) 91,926.8 1,165,108
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio:
AICA I $10.932 $12.123 10.89% (7) 6,330.1 76,740
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio:
AICA I $10.601 $11.613 9.55% (5) 8,642.2 100,364
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio:
AICA I $10.000 $10.919 9.19% (8) 2,960.1 32,321
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio:
AICA I $10.393 $10.713 3.08% (4) 47,400.6 507,815
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio:
AICA I $9.790 $10.940 11.75% 590,911.4 6,464,740
- ------------------------------------------------------------------------------------------------------------------------------------
Income and Growth Portfolio:
AICA I $10.048 $11.333 12.79% (3) 57,113.5 647,270
- ------------------------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio:
AICA I $10.349 $11.188 8.11% (4) 179,879.2 2,012,567
- ------------------------------------------------------------------------------------------------------------------------------------
MidCap Portfolio:
AICA I $10.283 $10.667 3.73% (3) 384,586.3 4,102,199
- ------------------------------------------------------------------------------------------------------------------------------------
Small Capitalization Portfolio:
AICA I $9.541 $9.800 2.72% 714,815.6 7,005,171
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
EquityIncome Portfolio:
AICA I $10.301 $11.855 15.09% (1) 1,000,050.3 11,855,352
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio:
AICA I $9.055 $10.940 20.82% (1) 870,922.1 9,527,933
- ------------------------------------------------------------------------------------------------------------------------------------
High Income Portfolio:
AICA I $10.493 $11.410 8.74% (3) 239,917.2 2,737,458
- ------------------------------------------------------------------------------------------------------------------------------------
Overseas Portfolio:
AICA I $10.304 $11.447 11.09% (3) 115,487.1 1,321,928
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio:
AICA I $10.539 $11.674 10.77% (4) 104,228.6 1,216,766
- ------------------------------------------------------------------------------------------------------------------------------------
Contrafund Portfolio:
AICA I $10.273 $12.093 17.72% (3) 540,935.6 6,541,331
- ------------------------------------------------------------------------------------------------------------------------------------
Index 500 Portfolio:
AICA I $10.828 $12.722 17.49% (3) 384,282.0 4,888,997
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio:
AICA I $10.021 $10.455 4.33% (3) 42,911.9 448,634
- ------------------------------------------------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II:
AICA I $11.378 $13.639 19.87% 4,255,332.8 58,037,362
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Strategies Fund II:
AICA I $10.277 $12.596 22.57% 778,060.1 9,800,678
- ------------------------------------------------------------------------------------------------------------------------------------
High Income Bond Fund II:
AICA I $10.576 $11.920 12.71% 972,453.6 11,591,426
- ------------------------------------------------------------------------------------------------------------------------------------
International Equity Fund II:
AICA I $10.229 $10.924 6.80% 1,037,619.3 11,335,329
- ------------------------------------------------------------------------------------------------------------------------------------
Prime Money Fund II:
AICA I $10.180 $10.515 3.29% 333,599.8 3,507,665
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund II:
AICA I $10.521 $10.809 2.74% 227,252.1 2,456,452
- ------------------------------------------------------------------------------------------------------------------------------------
Utility Fund II:
AICA I $11.238 $12.361 9.99% 1,078,803.0 13,335,221
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio:
AICA I $10.988 $11.376 3.53% (3) 242,113.2 2,754,214
- ------------------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio:
AICA I $10.836 $12.038 11.09% (3) 165,078.9 1,987,150
- ------------------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio:
AICA I $10.173 $11.136 9.47% (4) 35,325.6 393,394
- ------------------------------------------------------------------------------------------------------------------------------------
Variable Annuity Account I
</TABLE>
<PAGE>
Condensed Financial Information Year Ended December 31, 1996 (continued):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Per Unit Increase(Decrease) Units
-------- in Value of Outstanding Reserves
Beginning End of Accumulation at End at End
of Year Year Unit of Year of Year
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Growth Portfolio:
AICA I $11.002 $12.171 10.63% (3) 255,831.0 $3,113,839
- ------------------------------------------------------------------------------------------------------------------------------------
ShortTerm Bond Portfolio:
AICA I $10.096 $10.417 3.18% (3) 30,148.1 314,045
- ------------------------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio:
AICA I $10.536 $13.393 27.12% (1) 1,030,570.1 13,802,417
- ------------------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund:
AICA I $9.748 $10.328 5.95% 74,157.0 765,870
- ------------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund:
AICA I $11.444 $13.194 15.29% (4) 100,792.3 1,329,850
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Funds:
Emerging Growth Series:
AICA I $10.000 $10.074 0.74% (6) 418,523.4 4,216,322
- ------------------------------------------------------------------------------------------------------------------------------------
Research Series:
AICA I $10.000 $10.970 9.70% (6) 226,923.2 2,489,437
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return Series:
AICA I $10.000 $10.894 8.94% (6) 108,481.5 1,181,849
- ------------------------------------------------------------------------------------------------------------------------------------
Value Series:
AICA I $10.000 $10.334 3.34% (9) 4,340.9 44,861
- ------------------------------------------------------------------------------------------------------------------------------------
World Government Series:
AICA I $10.000 $10.471 4.71% (6) 20,479.1 214,428
- ------------------------------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.:
Balanced Fund:
AICA I $10.239 $11.284 10.21% (5) 33,096.3 373,473
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Fund:
AICA I $9.592 $9.183 (4.26%) (3) 50,110.4 460,141
- ------------------------------------------------------------------------------------------------------------------------------------
International Fund:
AICA I $10.399 $11.574 11.30% (3) 71,305.4 825,259
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
AICA I- Certain individual and group contracts issued as
nonqualified deferred annuity contracts or Individual
Retirement Annuity contracts issued since June 28, 1995.
Notes to Condensed Financial Information:
(1) Reflects less than a full year of performance activity. Funds were
first received in this option during January 1996.
(2) Reflects less than a full year of performance activity. Funds were
first received in this option during February 1996.
(3) Reflects less than a full year of performance activity. Funds were
first received in this option during March 1996.
(4) Reflects less than a full year of performance activity. Funds were
first received in this option during April 1996.
(5) Reflects less than a full year of performance activity. Funds were
first received in this option during May 1996.
(6) Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during May 1996
when the fund became available under the option.
(7) Reflects less than a full year of performance activity. Funds were
first received in this option during July 1996.
(8) Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during September
1996 when the fund became available under the option.
(9) Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established at $10.000 during October 1996
when the fund became available under the option.
See Notes to Financial Statements
<PAGE>
Variable Annuity Account I
Notes to Financial Statements December 31, 1996
1. Summary of Significant Accounting Policies
Variable Annuity Account I ("Account") is a separate account established
by Aetna Insurance Company of America ("Company") and is registered under
the Investment Company Act of 1940 as a unit investment trust. The Account
is sold exclusively for use with variable annuity contracts that may be
entitled to tax - deferred treatment under specific sections of the
Internal Revenue Code of 1986, as amended. The account commenced
operations on June 28, 1995.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported therein. Although actual results
could differ from these estimates, any such differences are expected to be
immaterial to the net assets of the Account.
a. Valuation of Investments
Investments in the following Funds are stated at the closing net asset
value per share as determined by each Fund on December 31, 1996:
<TABLE>
<S> <C>
Aetna Variable Fund Insurance Management Series:
Aetna Income Shares [bullet]American Leaders Fund II
Aetna Variable Encore Fund [bullet]Growth Strategies Fund II
Aetna Investment Advisers Fund, Inc. [bullet]High Income Bond Fund II
Aetna Ascent Variable Portfolio [bullet]International Equity Fund II
Aetna Crossroads Variable Portfolio [bullet]Prime Money Fund II
Aetna Legacy Variable Portfolio [bullet]U.S. Government Securities Fund II
Aetna Variable Index Plus Portfolio [bullet]Utility Fund II
Alger American Funds: Janus Aspen Series:
[bullet]Balanced Portfolio [bullet]Aggressive Growth Portfolio
[bullet]Growth Portfolio [bullet]Balanced Portfolio
[bullet]Income and Growth Portfolio [bullet]Flexible Income Portfolio
[bullet]Leveraged AllCap Portfolio [bullet]Growth Portfolio
[bullet]MidCap Portfolio [bullet]Short - Term Bond Portfolio
[bullet]Small Capitalization Portfolio [bullet]Worldwide Growth Portfolio
Fidelity Investments Variable Insurance Products Fund: Lexington Emerging Markets Fund
[bullet]Equity - Income Portfolio Lexington Natural Resources Trust Fund
[bullet]Growth Portfolio MFS Funds:
[bullet]High Income Portfolio [bullet]Emerging Growth Series
[bullet]Overseas Portfolio [bullet]Research Series
Fidelity Investments Variable Insurance Products Fund II: [bullet]Total Return Series
[bullet]Asset Manager Portfolio [bullet]Value Series
[bullet]Contrafund Portfolio [bullet]World Government Series
[bullet]Index 500 Portfolio TCI Portfolios, Inc.:
[bullet]Investment Grade Bond Portfolio [bullet]Balanced Fund
[bullet]Growth Fund
[bullet]International Fund
</TABLE>
<PAGE>
Notes to Financial Statements December 31, 1996 (continued):
b. Other
Investment transactions are accounted for on a trade date basis and
dividend income is recorded on the ex-dividend date. The cost of
investments sold is determined by specific identification.
c. Federal Income Taxes
The operations of the Account form a part of, and are taxed with, the total
operations of the Company which is taxed as a life insurance company under
the Internal Revenue Code of 1986, as amended.
d. Annuity Reserves
Annuity reserves held in the Separate Accounts are computed for currently
payable contracts according to the 83a and 83GAM tables using various
assumed interest rates. Mortality experience is monitored by the Company.
Charges to annuity reserves for mortality experience are reimbursed to the
Company if the reserves required are less than originally estimated. If
additional reserves are required, the Company reimburses the Account.
2. Valuation Period Deductions
Deductions by the Account for mortality and expense risk charges are made
in accordance with the terms of the contracts and are paid to the Company.
3. Dividend Income
On an annual basis, the Funds distribute substantially all of their taxable
income and realized capital gains to their shareholders. Distributions to
the Account are automatically reinvested in shares of the Funds. The
Account's proportionate share of each Fund's undistributed net investment
income (distributions in excess of net investment income) and accumulated
net realized gain (loss) on investments is included in net unrealized gain
(loss) in the Statements of Operations and Changes in Net Assets.
4. Purchases and Sales of Investments
The cost of purchases and proceeds from sales of investments other than
shor-tterm investments for the years ended December 31, 1996 and December
31, 1995 aggregated $203,082,676 and $30,774,009; $34,156,273 and
$1,768,297, respectively.
<PAGE>
Variable Annuity Account I
Notes to Financial Statements December 31, 1996 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets Year Ended December 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Variable Fund: $377,243 ($16,848) $678,021 $625,675 $52,346
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Aetna Income Shares: 53,910 (6,342) 361,706 364,811 (3,105)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund: 271,781 (42,460) 8,817,411 8,991,630 (174,219)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc.: 49,621 (6,268) 445,891 441,685 4,206
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio: 41,723 (4,767) 103,743 102,116 1,627
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio: 3,213 (150) 245 229 16
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio: 6,160 (98) 32,715 33,619 (904)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio: 175 (59) 32,626 30,948 1,678
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio: 1,752 (2,640) 164,226 164,428 (202)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Growth Portfolio: 41,079 (39,330) 505,561 482,104 23,457
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Income and Growth Portfolio: 30,956 (3,277) 116,013 131,617 (15,604)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio: 1,193 (10,216) 138,877 145,053 (6,176)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
MidCap Portfolio: 6,167 (19,638) 1,125,112 1,181,040 (55,928)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Small Capitalization Portfolio: 5,402 (43,782) 967,209 963,981 3,228
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Fidelity Investments Variable
Insurance Products Fund:
EquityIncome Portfolio: 5,013 (60,690) 388,307 391,124 (2,817)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Growth Portfolio: 6,182 (51,253) 683,984 650,467 33,517
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
High Income Portfolio: 0 (13,207) 809,332 772,725 36,607
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Overseas Portfolio: 0 (6,706) 553,209 544,802 8,407
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Fidelity Investments Variable
Insurance Products Fund II:
Asset Manager Portfolio: 0 (4,829) 32,049 30,456 1,593
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Contrafund Portfolio: 0 (23,542) 531,787 511,106 20,681
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in in Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund: $0 ($143,001) ($143,001) $3,559,569
Annuity contracts in accumulation $0 $3,829,309
- ------------------------------------------------------------------------------------------------------------------
Aetna Income Shares: 0 (21,783) (21,783) 980,564
Annuity contracts in accumulation 0 1,003,244
- ------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund: 0 61,606 61,606 8,262,668
Annuity contracts in accumulation 0 8,379,376
- ------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc.: 0 15,913 15,913 639,143
Annuity contracts in accumulation 0 702,615
- ------------------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio: 0 56,427 56,427 1,070,098
Annuity contracts in accumulation 0 1,165,108
- ------------------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio: 0 (282) (282) 73,943
Annuity contracts in accumulation 0 76,740
- ------------------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio: 0 (3,582) (3,582) 98,789
Annuity contracts in accumulation (1) 100,364
- ------------------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio: 0 (786) (786) 31,313
Annuity contracts in accumulation 0 32,321
- ------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio: 0 19,051 19,051 489,854
Annuity contracts in accumulation 0 507,815
- ------------------------------------------------------------------------------------------------------------------
Growth Portfolio: (303) 331,002 331,305 6,071,518
Annuity contracts in accumulation 36,711 6,464,740
- ------------------------------------------------------------------------------------------------------------------
Income and Growth Portfolio: 0 43,184 43,184 592,011
Annuity contracts in accumulation 0 647,270
- ------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio: 0 53,728 53,728 1,974,038
Annuity contracts in accumulation 0 2,012,567
- ------------------------------------------------------------------------------------------------------------------
MidCap Portfolio: 0 172,467 172,467 3,999,130
Annuity contracts in accumulation 1 4,102,199
- ------------------------------------------------------------------------------------------------------------------
Small Capitalization Portfolio: (1,042) (40,650) (39,608) 7,044,153
Annuity contracts in accumulation 35,778 7,005,171
- ------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable
Insurance Products Fund:
EquityIncome Portfolio: 0 763,902 763,902 11,149,944
Annuity contracts in accumulation 0 11,855,352
- ------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 0 339,925 339,925 9,199,562
Annuity contracts in accumulation 0 9,527,933
- ------------------------------------------------------------------------------------------------------------------
High Income Portfolio: 0 99,376 99,376 2,614,682
Annuity contracts in accumulation 0 2,737,458
- ------------------------------------------------------------------------------------------------------------------
Overseas Portfolio: 0 66,703 66,703 1,253,524
Annuity contracts in accumulation 0 1,321,928
- ------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable
Insurance Products Fund II:
Asset Manager Portfolio: 0 56,785 56,785 1,163,217
Annuity contracts in accumulation 0 1,216,766
- ------------------------------------------------------------------------------------------------------------------
Contrafund Portfolio: 0 438,859 438,859 6,105,333
Annuity contracts in accumulation
0 6,541,331
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account I
Notes to Financial Statements December 31, 1996 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets Year Ended December 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Index 500 Portfolio: $0 ($22,040) $334,354 $313,306 $21,048
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio: 0 (1,771) 67,878 68,125 (247)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II: 662,642 (497,245) 925,465 746,157 179,308
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Growth Strategies Fund II: 295 (52,685) 106,659 89,128 17,531
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
High Income Bond Fund II: 611,472 (95,132) 310,773 300,649 10,124
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
International Equity Fund II: 20,351 (96,657) 280,807 261,882 18,925
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Prime Money Fund II: 164,619 (50,003) 6,053,920 6,053,922 (2)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund II: 113,351 (26,261) 844,719 846,273 (1,554)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Utility Fund II: 381,276 (128,189) 639,721 566,100 73,621
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio: 7,466 (12,856) 1,050,437 1,088,069 (37,632)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Balanced Portfolio: 23,543 (7,391) 221,223 209,140 12,083
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Flexible Income Portfolio: 18,252 (2,109) 41,760 41,610 150
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Growth Portfolio: 25,286 (14,653) 1,183,201 1,120,812 62,389
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
ShortTerm Bond Portfolio: 9,170 (2,222) 652,610 650,060 2,550
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio: 106,093 (61,217) 446,507 395,584 50,923
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund: 0 (3,899) 109,987 110,241 (254)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund: 4,095 (5,265) 418,184 424,395 (6,211)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
MFS Funds:
Emerging Growth Series: 33,270 (14,548) 145,356 151,959 (6,603)
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Research Series: 32,798 (7,629) 69,685 69,157 528
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
Total Return Series: 22,438 (3,611) 191,249 184,924 6,325
Annuity contracts in accumulation
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
----------- Change in in Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Index 500 Portfolio: $0 $375,527 $375,527 $4,514,462
Annuity contracts in accumulation $0 $4,888,997
- -----------------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio: 0 10,325 10,325 440,327
Annuity contracts in accumulation 0 448,634
- -----------------------------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II: 871,936 7,073,040 6,201,104 35,057,409
Annuity contracts in accumulation 16,434,144 58,037,362
- -----------------------------------------------------------------------------------------------------------------
Growth Strategies Fund II: 4,198 890,268 886,070 8,762,085
Annuity contracts in accumulation 187,382 9,800,678
- -----------------------------------------------------------------------------------------------------------------
High Income Bond Fund II: 47,839 442,872 395,033 7,472,858
Annuity contracts in accumulation 3,197,071 11,591,426
- -----------------------------------------------------------------------------------------------------------------
International Equity Fund II: 77,134 599,852 522,718 7,793,953
Annuity contracts in accumulation 3,076,039 11,335,329
- -----------------------------------------------------------------------------------------------------------------
Prime Money Fund II: 0 0 0 (713,688)
Annuity contracts in accumulation 4,106,739 3,507,665
- -----------------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund II: 32,984 (201) (33,185) 816,834
Annuity contracts in accumulation 1,587,267 2,456,452
- -----------------------------------------------------------------------------------------------------------------
Utility Fund II: 332,527 1,106,478 773,951 7,162,934
Annuity contracts in accumulation 5,071,628 13,335,221
- -----------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio: 0 17,905 17,905 2,779,331
Annuity contracts in accumulation 0 2,754,214
- -----------------------------------------------------------------------------------------------------------------
Balanced Portfolio: 0 46,718 46,718 1,912,197
Annuity contracts in accumulation 0 1,987,150
- -----------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio: 0 5,974 5,974 371,127
Annuity contracts in accumulation 0 393,394
- -----------------------------------------------------------------------------------------------------------------
Growth Portfolio: 0 90,906 90,906 2,949,911
Annuity contracts in accumulation 0 3,113,839
- -----------------------------------------------------------------------------------------------------------------
ShortTerm Bond Portfolio: 0 (1,799) (1,799) 306,346
Annuity contracts in accumulation 0 314,045
- -----------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio: 0 658,071 658,071 13,048,547
Annuity contracts in accumulation 0 13,802,417
- -----------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund: 735 (4,649) (5,384) 750,550
Annuity contracts in accumulation 24,857 765,870
- -----------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund: 0 98,720 98,720 1,238,511
Annuity contracts in accumulation 0 1,329,850
- -----------------------------------------------------------------------------------------------------------------
MFS Funds:
Emerging Growth Series: 0 13,628 13,628 4,190,575
Annuity contracts in accumulation 0 4,216,322
- -----------------------------------------------------------------------------------------------------------------
Research Series: 0 66,161 66,161 2,397,579
Annuity contracts in accumulation 0 2,489,437
- -----------------------------------------------------------------------------------------------------------------
Total Return Series: 0 22,362 22,362 1,134,335
Annuity contracts in accumulation 0 1,181,849
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account I
Notes to Financial Statements December 31, 1996 (continued):
5. Supplemental Information to Statements of Operations and Changes in
Net Assets-Year Ended December 31, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Value Series: $606 ($47) $3,366 $3,307 $59
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
World Government Series: 0 (961) 35,795 34,610 1,185
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.:
Balanced Fund: 1,396 (1,261) 21,355 20,655 700
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Growth Fund: 2,369 (2,424) 89,869 97,034 (7,165)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
International Fund: 468 (3,264) 41,105 40,667 438
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Total Variable Annuity Account I $3,142,826 ($1,469,442) $30,774,009 $30,447,382 $326,620
=======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Net Net Assets
Net Unrealized Net Increase (Decrease) ------------
Gain (Loss) Unrealized in Net Assets
Beginning End Change in from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Value Series: $0 $156 $156 $44,087
Annuity contracts in accumulation $0 $44,861
- --------------------------------------------------------------------------------------------------------------------
World Government Series: 0 3,877 3,877 210,327
Annuity contracts in accumulation 0 214,428
- --------------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc.:
Balanced Fund: 0 10,011 10,011 362,627
Annuity contracts in accumulation 0 373,473
- --------------------------------------------------------------------------------------------------------------------
Growth Fund: 0 (11,204) (11,204) 478,565
Annuity contracts in accumulation 0 460,141
- --------------------------------------------------------------------------------------------------------------------
International Fund: 0 47,176 47,176 780,441
Annuity contracts in accumulation 0 825,259
- --------------------------------------------------------------------------------------------------------------------
Total Variable Annuity Account I $1,366,008 $13,871,018 $12,505,010 $170,635,283 $33,757,616 $218,897,920
=====================================================================================================================
</TABLE>
<PAGE>
Independent Auditors' Report
The Board of Directors of Aetna Insurance Company of America and
Contract Owners of Variable Annuity Account I:
We have audited the accompanying statement of assets and liabilities of Aetna
Insurance Company of America Variable Annuity Account I (the "Account") as of
December 31, 1996, the related statements of operations and changes in net
assets for the year then ended and the period from June 28, 1995 (commencement
of operations) to December 31, 1995 and condensed financial information for the
year ended December 31, 1996. These financial statements and condensed financial
information are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements and
condensed financial information 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 and condensed
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1996, by correspondence with the custodian. An audit
also 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 and condensed financial information
referred to above present fairly, in all material respects, the financial
position of Aetna Insurance Company of America Variable Annuity Account I as of
December 31, 1996, the results of its operations and the changes in its net
assets for the year ended December 31, 1996 and the period from June 28, 1995 to
December 31, 1995 and condensed financial information for the year ended
December 31, 1996 in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Hartford, Connecticut
February 14, 1997
<PAGE>
[Aetna Back Cover]
[Aetna Logo]
Retirement Services (SM)
Insurance products offered by Aetna Life Insurance and Annuity Company and
subsidiaries. Mutual funds and variable annuities are available through local
representatives of Aetna Investment Services, Inc., 151 Farmington Avenue,
Hartford, Connecticut 06156.
Visit our home page an the Internet
http://www.aetna.com
These reports are authorized for distribution to other persons only when
preceded or accompanied by an effective prospectus or disclosure booklet for
that product which gives sales expense and other pertinent information.
Printed on recycled paper
ANN.VAI-96
