President's Letter
Dear Valued Client,
In August of 1997, I assumed leadership of Aetna's retirement, investment, and
life insurance areas, known collectively as Aetna Retirement Services (ARS).
Through its operating companies, ARS provides individuals with a full range of
financial services, investment management, and other important products and
services. I'm delighted to be heading this company because our mission is to
help people clarify, plan for, and achieve their personal retirement dreams.
That's a mission that's important to us and to you.
Overall, 1997 proved to be another strong year for the stock market. The year
began with some skepticism as to whether or not stocks could produce a third
consecutive year of 20%-plus total returns. At year end, the turbulence in the
Asian markets contributed to wild swings in domestic markets. And, in spite of
it all, the S & P 500 Index rose more than 33%, while the Dow Jones Industrial
Average climbed nearly 25%. The resilience of the market helped equity investors
enjoy yet another year of record returns.*
In the fall of 1997, the ARS organization formed a management investment company
named Portfolio Partners, Inc. (PPI) in order to give many of our clients access
to a wider array of fund management styles, with reduced fees. With the addition
of PPI, our variable insurance product investment options include funds
subadvised by T. Rowe Price Associates, Inc., Massachusetts Financial Services,
Inc. (MFS), and Scudder Kemper Investments, Inc. (Scudder). Aetna funds,
subadvised by Aeltus Investment Management, Inc., remain in our expanding list
of fund families, and together, give you valuable diversification across
markets.
Market swings, economic twists, changes in state and federal tax laws. All offer
opportunities - and confusion - for investors. That's why it's so important for
you to pursue an investment strategy that fits your needs and to wisely choose
your retirement planning partner. Thank you for choosing Aetna Retirement
Services, and for your continued trust and business.
Sincerely,
/s/ Thomas J. McInerney
Thomas J. McInerney
*Past performance is no indication of future results.
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at net asset value: (Note 1)
Aetna Variable Fund; 460,341 shares (cost $16,614,943) .............................. $15,483,675
Aetna Income Shares; 235,061 shares (cost $3,031,485) ............................... 3,020,620
Aetna Variable Encore Fund; 1,149,925 shares (cost $15,164,499) ..................... 15,367,881
Aetna Investment Advisers Fund, Inc.; 279,051 shares (cost $4,380,315) .............. 4,473,919
Aetna Ascent Variable Portfolio; 76,815 shares (cost $1,127,454) .................... 1,084,513
Aetna Crossroads Variable Portfolio; 31,718 shares (cost $411,609) .................. 415,033
Aetna Legacy Variable Portfolio; 68,340 shares (cost $822,611) ...................... 826,919
Aetna Variable Portfolios, Inc.:
Aetna Variable Capital Appreciation Portfolio; 74,816 shares (cost $1,022,182) ..... 891,486
Aetna Variable Growth Portfolio; 91,990 shares (cost $1,170,578) ................... 905,783
Aetna Variable Index Plus Portfolio; 279,320 shares (cost $3,808,630) .............. 3,915,267
Aetna Variable Small Company Portfolio; 201,662 shares (cost $2,745,151) ........... 2,575,173
Alger American Funds:
Balanced Portfolio; 130,207 shares (cost $1,275,903) ............................... 1,401,032
Income and Growth Portfolio; 342,849 shares (cost $3,522,033) ...................... 3,767,914
Leveraged AllCap Portfolio; 126,003 shares (cost $2,653,864) ....................... 2,919,482
American Century Investments:
Balanced Fund; 79,700 shares (cost $612,625) ....................................... 656,724
International Fund; 299,358 shares (cost $1,938,702) ............................... 2,047,606
Calvert Social Balanced Portfolio; 16,398 shares (cost $38,333) ..................... 32,500
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio; 1,414,165 shares (cost $29,762,531) ....................... 34,335,916
Growth Portfolio; 502,429 shares (cost $16,027,024) ................................ 18,640,127
High Income Portfolio; 840,560 shares (cost $10,736,627) ........................... 11,414,802
Overseas Portfolio; 155,660 shares (cost $2,905,453) ............................... 2,988,676
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio; 210,350 shares (cost $3,540,570) .......................... 3,788,411
Contrafund Portfolio; 1,248,608 shares (cost $21,593,730) .......................... 24,897,252
Index 500 Portfolio; 200,197 shares (cost $19,996,691) ............................. 22,900,554
Investment Grade Bond Portfolio; 114,744 shares (cost $1,378,087) .................. 1,441,187
Insurance Management Series:
American Leaders Fund II; 5,810,863 shares (cost $86,494,347) ...................... 114,067,242
Equity Income Fund II; 1,051,372 shares (cost $12,226,145) ......................... 12,942,385
Growth Strategies Fund II; 1,522,348 shares (cost $20,206,907) ..................... 24,585,918
High Income Bond Fund II; 2,370,858 shares (cost $24,105,525) ...................... 25,960,897
International Equity Fund II; 1,638,572 shares (cost $18,263,063) .................. 20,105,275
Prime Money Fund II; 3,759,186 shares (cost $3,759,186) ............................ 3,759,186
U.S. Government Securities Fund II; 535,586 shares (cost $5,420,161) ............... 5,645,077
Utility Fund II; 1,478,185 shares (cost $16,701,803) ............................... 21,123,263
Janus Aspen Series:
Aggressive Growth Portfolio; 318,959 shares (cost $5,868,670) ...................... 6,554,615
Balanced Portfolio; 442,266 shares (cost $6,980,252) ............................... 7,726,386
Flexible Income Portfolio; 169,853 shares (cost $1,968,733) ........................ 2,000,867
Growth Portfolio; 545,327 shares (cost $9,051,127) ................................. 10,077,645
Worldwide Growth Portfolio; 1,912,294 shares (cost $39,994,925) .................... 44,728,546
Lexington Emerging Markets Fund; 138,054 shares (cost $1,532,488) ................... 1,230,059
Lexington Natural Resources Trust Fund; 96,267 shares (cost $1,424,122) ............. 1,435,334
MFS Funds:
Total Return Series; 410,009 shares (cost $6,222,891) .............................. 6,818,458
World Government Series; 52,289 shares (cost $529,421) ............................. 533,867
</TABLE>
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1997 (continued):
<TABLE>
<S> <C>
Oppenheimer Funds:
Capital Appreciation Fund; 19,573 shares (cost $814,715) ........................... $ 801,718
Global Securities Fund; 47,278 shares (cost $1,003,515) ............................ 1,010,341
Growth and Income Fund; 220,089 shares (cost $4,392,520) ........................... 4,529,430
Strategic Bond Fund; 270,619 shares (cost $1,392,363) .............................. 1,385,569
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio; 589,192 shares (cost $25,548,157) ............. 25,276,316
PPI MFS Research Growth Portfolio; 1,461,688 shares (cost $14,428,746) ............. 14,192,990
PPI MFS Value Equity Portfolio; 73,407 shares (cost $2,171,416) .................... 2,195,611
PPI Scudder International Growth Portfolio; 1,806 shares (cost $25,926) ............ 25,466
PPI T. Rowe Price Growth Equity Portfolio; 498,910 shares (cost $21,325,466) ....... 21,757,475
------------
NET ASSETS (cost $498,134,220) ...................................................... $560,662,388
============
Net assets represented by:
Reserves for annuity contracts in accumulation and payment period: (Notes 1 and 5)
Aetna Variable Fund:
Annuity contracts in accumulation .................................................. $ 15,483,675
Aetna Income Shares:
Annuity contracts in accumulation .................................................. 3,020,620
Aetna Variable Encore Fund:
Annuity contracts in accumulation .................................................. 15,367,881
Aetna Investment Advisers Fund, Inc.:
Annuity contracts in accumulation .................................................. 4,473,919
Aetna Ascent Variable Portfolio:
Annuity contracts in accumulation .................................................. 1,084,513
Aetna Crossroads Variable Portfolio:
Annuity contracts in accumulation .................................................. 415,033
Aetna Legacy Variable Portfolio:
Annuity contracts in accumulation .................................................. 793,678
Annuity contracts in payment period ................................................ 33,241
Aetna Variable Portfolios, Inc.:
Aetna Variable Capital Appreciation Portfolio:
Annuity contracts in accumulation .................................................. 891,486
Aetna Variable Growth Portfolio:
Annuity contracts in accumulation .................................................. 905,783
Aetna Variable Index Plus Portfolio:
Annuity contracts in accumulation .................................................. 3,915,267
Aetna Variable Small Company Portfolio:
Annuity contracts in accumulation .................................................. 2,575,173
Alger American Funds:
Balanced Portfolio:
Annuity contracts in accumulation .................................................. 1,401,032
Income and Growth Portfolio:
Annuity contracts in accumulation .................................................. 3,767,914
Leveraged AllCap Portfolio:
Annuity contracts in accumulation .................................................. 2,919,482
American Century Investments:
Balanced Fund:
Annuity contracts in accumulation .................................................. 656,724
</TABLE>
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1997 (continued):
<TABLE>
<S> <C>
International Fund:
Annuity contracts in accumulation ...................... $ 2,047,606
Calvert Social Balanced Portfolio:
Annuity contracts in accumulation ...................... 32,500
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio:
Annuity contracts in accumulation ...................... 34,335,916
Growth Portfolio:
Annuity contracts in accumulation ...................... 18,640,127
High Income:
Annuity contracts in accumulation ...................... 11,414,802
Overseas Portfolio:
Annuity contracts in accumulation ...................... 2,988,676
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio:
Annuity contracts in accumulation ...................... 3,788,411
Contrafund Portfolio:
Annuity contracts in accumulation ...................... 24,897,252
Index 500 Portfolio:
Annuity contracts in accumulation ...................... 22,900,554
Investment Grade Bond Portfolio:
Annuity contracts in accumulation ...................... 1,441,187
Insurance Management Series:
American Leaders Fund II:
Annuity contracts in accumulation ...................... 114,050,410
Annuity contracts in payment period .................... 16,832
Equity Income Fund II:
Annuity contracts in accumulation ...................... 12,942,385
Growth Strategies Fund II:
Annuity contracts in accumulation ...................... 24,585,918
High Income Bond Fund II:
Annuity contracts in accumulation ...................... 25,944,158
Annuity contracts in payment period .................... 16,739
International Equity Fund II:
Annuity contracts in accumulation ...................... 20,105,275
Prime Money Fund II:
Annuity contracts in accumulation ...................... 3,759,186
U.S. Government Securities Fund II:
Annuity contracts in accumulation ...................... 5,645,077
Utility Fund II:
Annuity contracts in accumulation ...................... 21,104,322
Annuity contracts in payment period .................... 18,941
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation ...................... 6,554,615
Balanced Portfolio:
Annuity contracts in accumulation ...................... 7,726,386
Flexible Income Portfolio:
Annuity contracts in accumulation ...................... 2,000,867
Growth Portfolio:
Annuity contracts in accumulation ...................... 10,077,645
</TABLE>
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1997 (continued):
<TABLE>
<S> <C>
Worldwide Growth Portfolio:
Annuity contracts in accumulation ......... $ 44,728,546
Lexington Emerging Markets Fund:
Annuity contracts in accumulation ......... 1,230,059
Lexington Natural Resources Trust Fund:
Annuity contracts in accumulation ......... 1,435,334
MFS Funds:
Total Return Series:
Annuity contracts in accumulation ......... 6,818,458
World Government Series:
Annuity contracts in accumulation ......... 533,867
Oppenheimer Funds:
Capital Appreciation Fund:
Annuity contracts in accumulation ......... 801,718
Global Securities Fund:
Annuity contracts in accumulation ......... 1,010,341
Growth and Income Fund:
Annuity contracts in accumulation ......... 4,529,430
Strategic Bond Fund:
Annuity contracts in accumulation ......... 1,385,569
Portfolio Partners, Inc.:
PPI MFS Emerging Equities Portfolio:
Annuity contracts in accumulation ......... 25,276,316
PPI MFS Research Growth Portfolio:
Annuity contracts in accumulation ......... 14,192,990
PPI MFS Value Equity Portfolio:
Annuity contracts in accumulation ......... 2,195,611
PPI Scudder International Growth Portfolio:
Annuity contracts in accumulation ......... 25,466
PPI T. Rowe Price Growth Equity Portfolio:
Annuity contracts in accumulation ......... 21,757,475
------------
$560,662,388
============
</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,
1997 1996
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Income: (Notes 1, 3 and 5)
Dividends .......................................................... $ 13,569,495 $ 3,142,826
Expenses: (Notes 2 and 5)
Valuation period deductions ........................................ (5,565,448) (1,469,442)
------------- ------------
Net investment income ............................................... 8,004,047 1,673,384
------------- ------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on sales of investments: (Notes 1, 4 and 5)
Proceeds from sales ................................................ 170,076,421 30,774,009
Cost of investments sold ........................................... 157,030,583 30,447,382
------------- ------------
Net realized gain ................................................. 13,045,838 326,627
Net unrealized gain on investments: (Note 5)
Beginning of year .................................................. 13,871,018 1,366,008
End of year ........................................................ 62,528,168 13,871,018
------------- ------------
Net change in unrealized gain ..................................... 48,657,150 12,505,010
------------- ------------
Net realized and unrealized gain on investments ..................... 61,702,988 12,831,637
------------- ------------
Net increase in net assets resulting from operations ................ 69,707,035 14,505,021
------------- ------------
FROM UNIT TRANSACTIONS:
Variable annuity contract purchase payments ......................... 230,999,062 151,305,122
Transfers from the Company's fixed account options .................. 55,038,062 21,839,958
Redemptions by contract holders ..................................... (14,064,451) (2,630,806)
Annuity Payments .................................................... (14,846) 0
Other ............................................................... 99,606 121,009
------------- ------------
Net increase in net assets from unit transactions (Note 5) ......... 272,057,433 170,635,283
------------- ------------
Change in net assets ................................................ 341,764,468 185,140,304
NET ASSETS:
Beginning of year ................................................... 218,897,920 33,757,616
------------- ------------
End of year ......................................................... $ 560,662,388 $218,897,920
============= ============
</TABLE>
See Notes to Financial Statements
<PAGE>
Variable Annuity Account I
Condensed Financial Information - Year Ended December 31, 1997
<TABLE>
<CAPTION>
Value
Per Unit
-----------------------
Beginning End of
of Year Year
<S> <C> <C>
- --------------------------------------------------------------------------------
Aetna Variable Fund: $12.769 $16.354
AICA I
- --------------------------------------------------------------------------------
Aetna Income Shares: 10.489 11.201
AICA I
- --------------------------------------------------------------------------------
Aetna Variable Encore Fund: 10.481 10.900
AICA I
- --------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc.: 11.781 14.228
AICA I
- --------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio: 12.674 14.983
AICA I
- --------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio: 12.123 14.054
AICA I
- --------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio: 11.613 13.112
AICA I
Annuity contracts in payment period
- --------------------------------------------------------------------------------
Aetna Variable Portfolios, Inc.:
Aetna Variable Capital Appreciation Portfolio: 10.856 13.246
AICA I
- --------------------------------------------------------------------------------
Aetna Variable Growth Portfolio: 10.667 13.158
AICA I
- --------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio: 10.919 14.414
AICA I
- --------------------------------------------------------------------------------
Aetna Variable Small Company Portfolio: 11.313 13.639
AICA I
- --------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio: 10.713 12.657
AICA I
- --------------------------------------------------------------------------------
Income and Growth Portfolio: 11.333 15.229
AICA I
- --------------------------------------------------------------------------------
Leveraged AllCap Portfolio: 11.188 13.203
AICA I
- --------------------------------------------------------------------------------
American Century Investments:
Balanced Fund: 11.284 12.885
AICA I
- --------------------------------------------------------------------------------
International Fund: 11.574 13.538
AICA I
- --------------------------------------------------------------------------------
Calvert Social Balanced Portfolio: 9.824 9.976
AICA I
- --------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: 11.855 14.974
AICA I
- --------------------------------------------------------------------------------
Growth Portfolio: 10.940 13.320
AICA I
- --------------------------------------------------------------------------------
High Income Portfolio: 11.410 13.238
AICA I
- --------------------------------------------------------------------------------
Overseas Portfolio: 11.447 12.590
AICA I
- --------------------------------------------------------------------------------
Fidelity Investments Variable Insurance
Products Fund II:
Asset Manager Portfolio: 11.674 13.888
AICA I
- --------------------------------------------------------------------------------
Contrafund Portfolio: 12.093 14.802
AICA I
- --------------------------------------------------------------------------------
Index 500 Portfolio: 12.722 16.646
AICA I
- --------------------------------------------------------------------------------
Investment Grade Bond Portfolio: 10.455 11.242
AICA I
- --------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II: 13.639 17.796
AICA I
Annuity contracts in payment period
- --------------------------------------------------------------------------------
<CAPTION>
Increase (Decrease) Units
in Value of Outstanding Reserves
Accumulation at End at End
Unit of Year of Year
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Aetna Variable Fund: 28.07% 946,795.7 $ 15,483,675
AICA I
- -----------------------------------------------------------------------------------------------------------------
Aetna Income Shares: 6.78% 269,674.6 3,020,620
AICA I
- -----------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund: 4.00% 1,409,840.2 15,367,881
AICA I
- -----------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc.: 20.77% 314,446.5 4,473,919
AICA I
- -----------------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio: 18.22% 72,382.7 1,084,513
AICA I
- -----------------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio: 15.93% 29,531.9 415,033
AICA I
- -----------------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio: 12.90% 60,532.8 793,678
AICA I
Annuity contracts in payment period 33,241
- -----------------------------------------------------------------------------------------------------------------
Aetna Variable Portfolios, Inc.:
Aetna Variable Capital Appreciation Portfolio: 22.01% (2) 67,303.1 891,486
AICA I
- -----------------------------------------------------------------------------------------------------------------
Aetna Variable Growth Portfolio: 23.35% (2) 68,839.7 905,783
AICA I
- -----------------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio: 32.01% 271,627.9 3,915,267
AICA I
- -----------------------------------------------------------------------------------------------------------------
Aetna Variable Small Company Portfolio: 20.55% (2) 188,817.8 2,575,173
AICA I
- -----------------------------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio: 18.14% 110,696.4 1,401,032
AICA I
- -----------------------------------------------------------------------------------------------------------------
Income and Growth Portfolio: 34.38% 247,411.8 3,767,914
AICA I
- -----------------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio: 18.00% 221,125.0 2,919,482
AICA I
- -----------------------------------------------------------------------------------------------------------------
American Century Investments:
Balanced Fund: 14.19% 50,966.9 656,724
AICA I
- -----------------------------------------------------------------------------------------------------------------
International Fund: 16.97% 151,247.2 2,047,606
AICA I
- -----------------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio: 1.55% (4) 3,257.7 32,500
AICA I
- -----------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: 26.32% 2,292,970.9 34,335,916
AICA I
- -----------------------------------------------------------------------------------------------------------------
Growth Portfolio: 21.75% 1,399,424.4 18,640,127
AICA I
- -----------------------------------------------------------------------------------------------------------------
High Income Portfolio: 16.02% 862,284.1 11,414,802
AICA I
- -----------------------------------------------------------------------------------------------------------------
Overseas Portfolio: 9.99% 237,376.3 2,988,676
AICA I
- -----------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance
Products Fund II:
Asset Manager Portfolio: 18.96% 272,788.6 3,788,411
AICA I
- -----------------------------------------------------------------------------------------------------------------
Contrafund Portfolio: 22.40% 1,682,028.9 24,897,252
AICA I
- -----------------------------------------------------------------------------------------------------------------
Index 500 Portfolio: 30.84% 1,375,720.8 22,900,554
AICA I
- -----------------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio: 7.53% 128,191.3 1,441,187
AICA I
- -----------------------------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II: 30.48% 6,408,594.4 114,050,410
AICA I
Annuity contracts in payment period 16,832
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account I
Condensed Financial Information - Year Ended December 31, 1997 (continued):
<TABLE>
<CAPTION>
Value
Per Unit
------------------------
Beginning End of
of Year Year
<S> <C> <C>
- --------------------------------------------------------------------------------
Equity Income Fund II: $10.539 $12.305
AICA I
- --------------------------------------------------------------------------------
Growth Strategies Fund II: 12.596 15.777
AICA I
- --------------------------------------------------------------------------------
High Income Bond Fund II: 11.920 13.379
AICA I
Annuity contracts in payment period
- --------------------------------------------------------------------------------
International Equity Fund II: 10.924 11.858
AICA I
- --------------------------------------------------------------------------------
Prime Money Fund II: 10.515 10.877
AICA I
- --------------------------------------------------------------------------------
U.S. Government Securities Fund II: 10.809 11.572
AICA I
- --------------------------------------------------------------------------------
Utility Fund II: 12.361 15.434
AICA I
Annuity contracts in payment period
- --------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio: 11.376 12.637
AICA I
- --------------------------------------------------------------------------------
Balanced Portfolio: 12.038 14.492
AICA I
- --------------------------------------------------------------------------------
Flexible Income Portfolio: 11.136 12.272
AICA I
- --------------------------------------------------------------------------------
Growth Portfolio: 12.171 14.731
AICA I
- --------------------------------------------------------------------------------
Worldwide Growth Portfolio: 13.393 16.131
AICA I
- --------------------------------------------------------------------------------
Lexington Emerging Markets Fund: 10.328 9.007
AICA I
- --------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund: 13.194 13.939
AICA I
- --------------------------------------------------------------------------------
MFS Funds:
Total Return Series: 10.894 13.030
AICA I
- --------------------------------------------------------------------------------
World Government Series: 10.471 10.207
AICA I
- --------------------------------------------------------------------------------
Oppenheimer Funds:
Capital Appreciation Fund: 10.516 12.204
AICA I
- --------------------------------------------------------------------------------
Global Securities Fund: 10.488 11.539
AICA I
- --------------------------------------------------------------------------------
Growth and Income Fund: 10.497 12.785
AICA I
- --------------------------------------------------------------------------------
Strategic Bond Fund: 10.187 10.764
AICA I
- --------------------------------------------------------------------------------
Portfolio Partners, Inc.:
PPI MFS Emerging Equities Portfolio: 10.689 10.554
AICA I
- --------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio: 8.960 8.786
AICA I
- --------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio: 10.009 10.152
AICA I
- --------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio: 9.791 9.912
AICA I
- --------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio: 13.560 13.834
AICA I
- --------------------------------------------------------------------------------
<CAPTION>
Increase (Decrease) Units
in Value of Outstanding Reserves
Accumulation at End at End
Unit of Year of Year
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Equity Income Fund II: 16.76% (1) 1,051,763.9 $12,942,385
AICA I
- ----------------------------------------------------------------------------------------------------
Growth Strategies Fund II: 25.25% 1,558,313.6 24,585,918
AICA I
- ----------------------------------------------------------------------------------------------------
High Income Bond Fund II: 12.24% 1,939,238.0 25,944,158
AICA I
Annuity contracts in payment period 16,739
- ----------------------------------------------------------------------------------------------------
International Equity Fund II: 8.54% 1,695,554.7 20,105,275
AICA I
- ----------------------------------------------------------------------------------------------------
Prime Money Fund II: 3.46% 345,598.2 3,759,186
AICA I
- ----------------------------------------------------------------------------------------------------
U.S. Government Securities Fund II: 7.06% 487,807.1 5,645,077
AICA I
- ----------------------------------------------------------------------------------------------------
Utility Fund II: 24.86% 1,367,351.0 21,104,322
AICA I
Annuity contracts in payment period 18,941
- ----------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio: 11.09% 518,685.6 6,554,615
AICA I
- ----------------------------------------------------------------------------------------------------
Balanced Portfolio: 20.39% 533,138.3 7,726,386
AICA I
- ----------------------------------------------------------------------------------------------------
Flexible Income Portfolio: 10.20% 163,047.7 2,000,867
AICA I
- ----------------------------------------------------------------------------------------------------
Growth Portfolio: 21.03% 684,113.2 10,077,645
AICA I
- ----------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio: 20.44% 2,772,831.0 44,728,546
AICA I
- ----------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund: (12.79%) 136,572.9 1,230,059
AICA I
- ----------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund: 5.65% 102,970.7 1,435,334
AICA I
- ----------------------------------------------------------------------------------------------------
MFS Funds:
Total Return Series: 19.60% 523,290.9 6,818,458
AICA I
- ----------------------------------------------------------------------------------------------------
World Government Series: ( 2.51%) 52,301.9 533,867
AICA I
- ----------------------------------------------------------------------------------------------------
Oppenheimer Funds:
Capital Appreciation Fund: 16.05% (2) 65,695.4 801,718
AICA I
- ----------------------------------------------------------------------------------------------------
Global Securities Fund: 10.02% (2) 87,559.2 1,010,341
AICA I
- ----------------------------------------------------------------------------------------------------
Growth and Income Fund: 21.79% (2) 354,268.6 4,529,430
AICA I
- ----------------------------------------------------------------------------------------------------
Strategic Bond Fund: 5.67% (2) 128,719.9 1,385,569
AICA I
- ----------------------------------------------------------------------------------------------------
Portfolio Partners, Inc.:
PPI MFS Emerging Equities Portfolio: (1.26%) (3) 2,394,861.4 25,276,316
AICA I
- ----------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio: (1.94%) (3) 1,615,395.2 14,192,990
AICA I
- ----------------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio: 1.43% (3) 216,272.5 2,195,611
AICA I
- ----------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio: 1.24% (3) 2,569.1 25,466
AICA I
- ----------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio: 2.03% (3) 1,572,718.4 21,757,475
AICA I
- ----------------------------------------------------------------------------------------------------
</TABLE>
AICA I - Certain individual and group contracts issued as non-qualified
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 1997.
(2) - Reflects less than a full year of performance activity. Funds were first
received in this option during May 1997.
(3) - Reflects less than a full year of performance activity. Funds were first
received in this option during November 1997.
(4) - Reflects less than a full year of performance activity. Funds were first
received in this option during December 1997.
See Notes to Financial Statements
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997
1. Summary of Significant Accounting Policies
Variable Annuity Account I (the "Account") is a separate account
established by Aetna Insurance Company of America (the "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, 1997:
Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna Ascent Variable Portfolio
Aetna Crossroads Variable Portfolio
Aetna Legacy Variable Portfolio
Aetna Variable Portfolios, Inc.:
[bullet] Aetna Variable Capital Appreciation Portfolio
[bullet] Aetna Variable Growth Portfolio
[bullet] Aetna Variable Index Plus Portfolio
[bullet] Aetna Variable Small Company Portfolio
Alger American Funds:
[bullet] Balanced Portfolio
[bullet] Income and Growth Portfolio
[bullet] Leveraged AllCap Portfolio
American Century Investments:
[bullet] Balanced Fund
[bullet] International Fund
Calvert Social Balanced Portfolio
Fidelity Investments Variable Insurance Products Fund:
[bullet] Equity-Income Portfolio
[bullet] Growth Portfolio
[bullet] High Income Portfolio
[bullet] Overseas Portfolio
Fidelity Investments Variable Insurance Products Fund II:
[bullet] Asset Manager Portfolio
[bullet] Contrafund Portfolio
[bullet] Index 500 Portfolio
[bullet] Investment Grade Bond Portfolio
Insurance Management Series:
[bullet] American Leaders Fund II
[bullet] Equity Income Fund II
[bullet] Growth Strategies Fund II
[bullet] High Income Bond Fund II
[bullet] International Equity Fund II
[bullet] Prime Money Fund II
[bullet] U.S. Government Securities Fund II
[bullet] Utility Fund II
Janus Aspen Series:
[bullet] Aggressive Growth Portfolio
[bullet] Balanced Portfolio
[bullet] Flexible Income Portfolio
[bullet] Growth Portfolio
[bullet] Worldwide Growth Portfolio
Lexington Emerging Markets Fund
Lexington Natural Resources Trust Fund
MFS Funds:
[bullet] Total Return Series
[bullet] World Government Series
Oppenheimer Funds:
[bullet] Capital Appreciation Fund
[bullet] Global Securities Fund
[bullet] Growth and Income Fund
[bullet] Strategic Bond Fund
Portfolio Partners, Inc.:
[bullet] PPI MFS Emerging Equities Portfolio
[bullet] PPI MFS Research Growth Portfolio
[bullet] PPI MFS Value Equity Portfolio
[bullet] PPI Scudder International Growth Portfolio
[bullet] PPI T. Rowe Price Growth Equity Portfolio
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.
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
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
short-term investments for the years ended December 31, 1997 and 1996
aggregated $450,137,902 and $170,076,421; $203,082,676 and $30,774,009,
respectively.
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Variable Fund: $2,917,442 ($ 125,993) $ 772,972 $ 648,307 $ 124,665
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares: 151,053 (26,889) 754,709 750,000 4,709
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund: 322,525 (170,170) 19,808,667 19,627,696 180,971
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc.: 443,088 (36,303) 411,120 371,132 39,988
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio: 66,289 (9,238) 1,580,817 1,443,402 137,415
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio: 26,978 (2,883) 5,444 4,842 602
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio: 45,122 (6,136) 199,255 188,641 10,614
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Variable Portfolios, Inc.:
Aetna Variable Capital Appreciation Portfolio: 141,848 (2,366) 140,737 134,978 5,759
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Variable Growth Portfolio: 242,318 (2,483) 311,238 305,917 5,321
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio: 156,860 (28,110) 1,772,894 1,552,332 220,562
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Variable Small Company Portfolio: 155,307 (7,993) 104,643 86,811 17,832
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio: 24,076 (13,590) 120,684 99,159 21,525
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: (1) 89,153 (132,536) 15,600,119 13,181,627 2,418,492
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Income and Growth Portfolio: 65,111 (31,295) 1,374,610 1,109,169 265,441
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio: 0 (36,689) 1,293,544 1,102,668 190,876
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
MidCap Portfolio: (1) 80,363 (75,046) 9,541,316 8,551,109 990,207
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Small Capitalization Portfolio: (2) 338,930 (118,559) 12,725,130 12,057,293 667,837
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
American Century Investments:
Balanced Fund: 29,309 (8,128) 203,349 186,540 16,809
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>
($143,001) ($ 1,131,268) ($ 988,267) $ 9,726,519
$3,829,309 $15,483,675
- -----------------------------------------------------------------------------------------------------------------------------
(21,783) (10,865) 10,918 1,877,585
1,003,244 3,020,620
- -----------------------------------------------------------------------------------------------------------------------------
61,606 203,382 141,776 6,513,403
8,379,376 15,367,881
- -----------------------------------------------------------------------------------------------------------------------------
15,913 93,604 77,691 3,246,840
702,615 4,473,919
- -----------------------------------------------------------------------------------------------------------------------------
56,427 (42,941) (99,368) (175,693)
1,165,108 1,084,513
- -----------------------------------------------------------------------------------------------------------------------------
(282) 3,424 3,706 309,890
76,740 415,033
- -----------------------------------------------------------------------------------------------------------------------------
(3,582) 4,308 7,890 669,065
100,364 793,678
0 33,241
- -----------------------------------------------------------------------------------------------------------------------------
0 (130,696) (130,696) 876,941
0 891,486
- -----------------------------------------------------------------------------------------------------------------------------
0 (264,795) (264,795) 925,422
0 905,783
- -----------------------------------------------------------------------------------------------------------------------------
(786) 106,638 107,424 3,426,210
32,321 3,915,267
- -----------------------------------------------------------------------------------------------------------------------------
0 (169,978) (169,978) 2,580,005
0 2,575,173
- -----------------------------------------------------------------------------------------------------------------------------
19,051 125,129 106,078 755,128
507,815 1,401,032
- -----------------------------------------------------------------------------------------------------------------------------
331,002 0 (331,002) (8,508,847)
6,464,740 0
- -----------------------------------------------------------------------------------------------------------------------------
43,184 245,881 202,697 2,618,690
647,270 3,767,914
- -----------------------------------------------------------------------------------------------------------------------------
53,728 265,618 211,890 540,838
2,012,567 2,919,482
- -----------------------------------------------------------------------------------------------------------------------------
172,467 0 (172,467) (4,925,256)
4,102,199 0
- -----------------------------------------------------------------------------------------------------------------------------
(40,650) 0 40,650 (7,934,029)
7,005,171 0
- -----------------------------------------------------------------------------------------------------------------------------
10,011 44,098 34,087 211,174
373,473 656,724
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Valuation
Period
Dividends Deductions
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation Fund: (3) $ 13,359 ($10,581)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
International Fund: 43,440 (24,794)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio: 0 (2)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: 1,381,407 (329,134)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Growth Portfolio: 387,748 (199,645)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
High Income Portfolio: 258,910 (88,291)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Overseas Portfolio: 123,104 (32,314)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio: 167,003 (32,759)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Contrafund Portfolio: 273,634 (226,793)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Index 500 Portfolio: 198,117 (197,448)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio: 34,282 (13,109)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II: 2,021,951 (1,254,649)
Annuity contracts in accumulation
Annuity contracts in payment period
- ----------------------------------------------------------------------------------------------------
Equity Income Fund II: 42,089 (75,051)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Growth Strategies Fund II: 83,791 (249,588)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
High Income Bond Fund II: 1,053,521 (275,549)
Annuity contracts in accumulation
Annuity contracts in payment period
- ----------------------------------------------------------------------------------------------------
International Equity Fund II: 15,632 (226,665)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
Prime Money Fund II: 210,825 (62,256)
Annuity contracts in accumulation
- ----------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Proceeds Cost of Net
from Investments Realized
Sales Sold Gain (Loss)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation Fund: (3) $1,483,901 $1,555,024 ($71,123)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
International Fund: 793,249 675,144 118,105
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio: 6,738 7,426 (688)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: 1,006,879 870,117 136,762
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Growth Portfolio: 1,523,787 1,391,777 132,010
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
High Income Portfolio: 1,389,256 1,263,386 125,870
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Overseas Portfolio: 372,931 345,379 27,552
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio: 95,686 90,640 5,046
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Contrafund Portfolio: 624,535 485,003 139,532
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Index 500 Portfolio: 2,562,053 1,860,408 701,645
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio: 292,775 284,565 8,210
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II: 3,672,802 2,283,020 1,389,782
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------
Equity Income Fund II: 125,938 117,498 8,440
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Growth Strategies Fund II: 644,437 464,629 179,808
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
High Income Bond Fund II: 1,329,211 1,199,797 129,414
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------
International Equity Fund II: 792,013 683,940 108,073
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------
Prime Money Fund II: 5,616,613 5,616,577 36
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>
($11,204) $0 $11,204 ($403,000)
$460,141 $0
- ------------------------------------------------------------------------------------------------------------------------
47,176 108,904 61,728 1,023,868
825,259 2,047,606
- ------------------------------------------------------------------------------------------------------------------------
0 (5,832) (5,832) 39,022
0 32,500
- ------------------------------------------------------------------------------------------------------------------------
763,902 4,573,383 3,809,481 17,482,048
11,855,352 34,335,916
- ------------------------------------------------------------------------------------------------------------------------
339,925 2,613,104 2,273,179 6,518,902
9,527,933 18,640,127
- ------------------------------------------------------------------------------------------------------------------------
99,376 678,175 578,799 7,802,056
2,737,458 11,414,802
- ------------------------------------------------------------------------------------------------------------------------
66,703 83,223 16,520 1,531,886
1,321,928 2,988,676
- ------------------------------------------------------------------------------------------------------------------------
56,785 247,841 191,056 2,241,299
1,216,766 3,788,411
- ------------------------------------------------------------------------------------------------------------------------
438,859 3,303,522 2,864,663 15,304,885
6,541,331 24,897,252
- ------------------------------------------------------------------------------------------------------------------------
375,527 2,903,863 2,528,336 14,780,907
4,888,997 22,900,554
- ------------------------------------------------------------------------------------------------------------------------
10,325 63,100 52,775 910,396
448,634 1,441,187
- ------------------------------------------------------------------------------------------------------------------------
7,073,040 27,572,894 20,499,854 33,372,942
58,037,362 114,050,410
0 16,832
- ------------------------------------------------------------------------------------------------------------------------
0 716,240 716,240 12,250,666
0 12,942,385
- ------------------------------------------------------------------------------------------------------------------------
890,268 4,379,010 3,488,742 11,282,487
9,800,678 24,585,918
- ------------------------------------------------------------------------------------------------------------------------
442,872 1,855,372 1,412,500 12,049,585
11,591,426 25,944,158
0 16,739
- ------------------------------------------------------------------------------------------------------------------------
599,852 1,842,212 1,242,360 7,630,546
11,335,329 20,105,275
- ------------------------------------------------------------------------------------------------------------------------
0 0 0 102,916
3,507,665 3,759,186
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Government Securities Fund II: $136,009 ($57,878) $815,197 $816,209 ($1,012)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Utility Fund II: 698,490 (236,725) 1,251,178 1,013,333 237,845
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio: 0 (64,625) 1,801,019 1,701,173 99,846
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio: 181,361 (69,510) 417,457 346,860 70,597
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio: 87,894 (14,471) 333,439 322,660 10,779
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 219,777 (99,435) 947,759 774,701 173,058
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Portfolio: (4) 10,649 (6,397) 1,087,777 1,072,304 15,473
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio: 522,386 (448,359) 2,135,232 1,701,774 433,458
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund: 1,295 (21,167) 1,232,664 1,305,131 (72,467)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund: 41,210 (18,555) 1,350,194 1,215,906 134,288
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
MFS Funds:
Emerging Growth Series: (2) 0 (116,977) 15,517,072 13,662,725 1,854,347
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Research Series: (3) 0 (100,752) 13,471,461 12,125,968 1,345,493
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Total Return Series: 0 (54,566) 831,314 702,549 128,765
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Value Series: (5) 0 (5,724) 1,671,063 1,502,195 168,868
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
World Government Series: 15,615 (8,914) 711,009 723,530 (12,521)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Oppenheimer Funds:
Capital Appreciation Fund: 0 (2,638) 62,476 58,435 4,041
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Global Securities Fund: 0 (3,510) 38,265 35,536 2,729
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund: 12,626 (13,385) 107,192 95,273 11,919
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>
($201) $224,916 $225,117 $2,886,389
$2,456,452 $5,645,077
- -----------------------------------------------------------------------------------------------------------------
1,106,478 4,421,460 3,314,982 3,773,450
13,335,221 21,104,322
0 18,941
- -----------------------------------------------------------------------------------------------------------------
17,905 685,946 668,041 3,097,139
2,754,214 6,554,615
- -----------------------------------------------------------------------------------------------------------------
46,718 746,135 699,417 4,857,371
1,987,150 7,726,386
- -----------------------------------------------------------------------------------------------------------------
5,974 32,134 26,160 1,497,111
393,394 2,000,867
- -----------------------------------------------------------------------------------------------------------------
90,906 1,026,518 935,612 5,734,794
3,113,839 10,077,645
- -----------------------------------------------------------------------------------------------------------------
(1,799) 0 1,799 (335,569)
314,045 0
- -----------------------------------------------------------------------------------------------------------------
658,071 4,733,621 4,075,550 26,343,094
13,802,417 44,728,546
- -----------------------------------------------------------------------------------------------------------------
(4,649) (302,429) (297,780) 854,308
765,870 1,230,059
- -----------------------------------------------------------------------------------------------------------------
98,720 11,212 (87,508) 36,049
1,329,850 1,435,334
- -----------------------------------------------------------------------------------------------------------------
13,628 0 (13,628) (5,940,064)
4,216,322 0
- -----------------------------------------------------------------------------------------------------------------
66,161 0 (66,161) (3,668,017)
2,489,437 0
- -----------------------------------------------------------------------------------------------------------------
22,362 595,567 573,205 4,989,205
1,181,849 6,818,458
- -----------------------------------------------------------------------------------------------------------------
156 0 (156) (207,849)
44,861 0
- -----------------------------------------------------------------------------------------------------------------
3,877 4,445 568 324,691
214,428 533,867
- -----------------------------------------------------------------------------------------------------------------
0 (12,997) (12,997) 813,312
0 801,718
- -----------------------------------------------------------------------------------------------------------------
0 6,826 6,826 1,004,296
0 1,010,341
- -----------------------------------------------------------------------------------------------------------------
0 136,910 136,910 4,381,360
0 4,529,430
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Year Ended December 31, 1997
Valuation
Period
Dividends Deductions
- -------------------------------------------------------------------------------
<S> <C> <C>
Strategic Bond Fund: $37,598 ($5,530)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------
Portfolio Partners, Inc.:
PPI MFS Emerging Equities Portfolio: 0 (33,567)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio: 0 (18,615)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio: 0 (2,523)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio: 0 (5)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio: 0 (28,585)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------
Total Variable Annuity Account I $13,569,495 ($5,565,448)
===============================================================================
<CAPTION>
- --------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Proceeds Cost of Net
from Investments Realized
Sales Sold Gain (Loss)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Strategic Bond Fund: $50,466 $49,763 $703
Annuity contracts in accumulation
- --------------------------------------------------------------------------------------------------
Portfolio Partners, Inc.:
PPI MFS Emerging Equities Portfolio: 14,301,627 14,309,825 (8,198)
Annuity contracts in accumulation
- --------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio: 13,341,021 13,351,443 (10,422)
Annuity contracts in accumulation
- --------------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio: 1,560,760 1,560,280 480
Annuity contracts in accumulation
- --------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio: 4 4 0
Annuity contracts in accumulation
- --------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio: 7,986,723 7,987,053 (330)
Annuity contracts in accumulation
- --------------------------------------------------------------------------------------------------
Total Variable Annuity Account I $170,076,421 $157,030,583 $13,045,838
==================================================================================================
</TABLE>
(1) Effective November 28, 1997, assets from these funds were transferred to the
PPI T. Rowe Price Growth Equity Portfolio.
(2) Effective November 28, 1997, assets from these funds were transferred to the
PPI MFS Emerging Equities Portfolio.
(3) Effective November 28, 1997, assets from these funds were transferred to the
PPI MFS Research Growth Portfolio.
(4) Effective November 28, 1997, assets from these funds were transferred to the
Aetna Variable Encore Fund.
(5) Effective November 28, 1997, assets from these funds were transferred to the
PPI MFS Value Equity Portfolio.
<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>
$0 ($6,794) ($6,794) $1,359,592
$0 $1,385,569
- --------------------------------------------------------------------------------------------------------------------
0 (271,841) (271,841) 25,589,922
0 25,276,316
- --------------------------------------------------------------------------------------------------------------------
0 (235,756) (235,756) 14,457,783
0 14,192,990
- --------------------------------------------------------------------------------------------------------------------
0 24,196 24,196 2,173,458
0 2,195,611
- --------------------------------------------------------------------------------------------------------------------
0 (460) (460) 25,931
0 25,466
- --------------------------------------------------------------------------------------------------------------------
0 432,009 432,009 21,354,381
0 21,757,475
- --------------------------------------------------------------------------------------------------------------------
$13,871,018 $62,528,168 $48,657,150 $272,057,433 $218,897,920 $560,662,388
====================================================================================================================
</TABLE>
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1996
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:
Equity-Income 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
- ------------------------------------------------------------------------------------------------------------------------------
</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>
$0 ($143,001) ($143,001) $3,559,569
$0 $3,829,309
- ----------------------------------------------------------------------------------------------------------
0 (21,783) (21,783) 980,564
0 1,003,244
- ----------------------------------------------------------------------------------------------------------
0 61,606 61,606 8,262,668
0 8,379,376
- ----------------------------------------------------------------------------------------------------------
0 15,913 15,913 639,143
0 702,615
- ----------------------------------------------------------------------------------------------------------
0 56,427 56,427 1,070,098
0 1,165,108
- ----------------------------------------------------------------------------------------------------------
0 (282) (282) 73,943
0 76,740
- ----------------------------------------------------------------------------------------------------------
0 (3,582) (3,582) 98,789
(1) 100,364
- ----------------------------------------------------------------------------------------------------------
0 (786) (786) 31,313
0 32,321
- ----------------------------------------------------------------------------------------------------------
0 19,051 19,051 489,854
0 507,815
- ----------------------------------------------------------------------------------------------------------
(303) 331,002 331,305 6,071,518
36,711 6,464,740
- ----------------------------------------------------------------------------------------------------------
0 43,184 43,184 592,011
0 647,270
- ----------------------------------------------------------------------------------------------------------
0 53,728 53,728 1,974,038
0 2,012,567
- ----------------------------------------------------------------------------------------------------------
0 172,467 172,467 3,999,130
1 4,102,199
- ----------------------------------------------------------------------------------------------------------
(1,042) (40,650) (39,608) 7,044,153
35,778 7,005,171
- ----------------------------------------------------------------------------------------------------------
0 763,902 763,902 11,149,944
0 11,855,352
- ----------------------------------------------------------------------------------------------------------
0 339,925 339,925 9,199,562
0 9,527,933
- ----------------------------------------------------------------------------------------------------------
0 99,376 99,376 2,614,682
0 2,737,458
- ----------------------------------------------------------------------------------------------------------
0 66,703 66,703 1,253,524
0 1,321,928
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1996
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
- ---------------------------------------------------------------------------------------------------------------------------------
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
- ---------------------------------------------------------------------------------------------------------------------------------
Short-Term 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
- ---------------------------------------------------------------------------------------------------------------------------------
</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>
$0 $56,785 $56,785 $1,163,217
$0 $1,216,766
- -----------------------------------------------------------------------------------------------------------
0 438,859 438,859 6,105,333
0 6,541,331
- -----------------------------------------------------------------------------------------------------------
0 375,527 375,527 4,514,462
0 4,888,997
- -----------------------------------------------------------------------------------------------------------
0 10,325 10,325 440,327
0 448,634
- -----------------------------------------------------------------------------------------------------------
871,936 7,073,040 6,201,104 35,057,409
16,434,144 58,037,362
- -----------------------------------------------------------------------------------------------------------
4,198 890,268 886,070 8,762,085
187,382 9,800,678
- -----------------------------------------------------------------------------------------------------------
47,839 442,872 395,033 7,472,858
3,197,071 11,591,426
- -----------------------------------------------------------------------------------------------------------
77,134 599,852 522,718 7,793,953
3,076,039 11,335,329
- -----------------------------------------------------------------------------------------------------------
0 0 0 (713,688)
4,106,739 3,507,665
- -----------------------------------------------------------------------------------------------------------
32,984 (201) (33,185) 816,834
1,587,267 2,456,452
- -----------------------------------------------------------------------------------------------------------
332,527 1,106,478 773,951 7,162,934
5,071,628 13,335,221
- -----------------------------------------------------------------------------------------------------------
0 17,905 17,905 2,779,331
0 2,754,214
- -----------------------------------------------------------------------------------------------------------
0 46,718 46,718 1,912,197
0 1,987,150
- -----------------------------------------------------------------------------------------------------------
0 5,974 5,974 371,127
0 393,394
- -----------------------------------------------------------------------------------------------------------
0 90,906 90,906 2,949,911
0 3,113,839
- -----------------------------------------------------------------------------------------------------------
0 (1,799) (1,799) 306,346
0 314,045
- -----------------------------------------------------------------------------------------------------------
0 658,071 658,071 13,048,547
0 13,802,417
- -----------------------------------------------------------------------------------------------------------
735 (4,649) (5,384) 750,550
24,857 765,870
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1997 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1996
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
- ---------------------------------------------------------------------------------------------------------------------------------
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 $326,627
=================================================================================================================================
</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>
$0 $98,720 $98,720 $1,238,511
$0 $1,329,850
- ----------------------------------------------------------------------------------------------------------------
0 13,628 13,628 4,190,575
0 4,216,322
- ----------------------------------------------------------------------------------------------------------------
0 66,161 66,161 2,397,579
0 2,489,437
- ----------------------------------------------------------------------------------------------------------------
0 22,362 22,362 1,134,335
0 1,181,849
- ----------------------------------------------------------------------------------------------------------------
0 156 156 44,087
0 44,861
- ----------------------------------------------------------------------------------------------------------------
0 3,877 3,877 210,327
0 214,428
- ----------------------------------------------------------------------------------------------------------------
0 10,011 10,011 362,627
0 373,473
- ----------------------------------------------------------------------------------------------------------------
0 (11,204) (11,204) 478,565
0 460,141
- ----------------------------------------------------------------------------------------------------------------
0 47,176 47,176 780,441
0 825,259
- ----------------------------------------------------------------------------------------------------------------
$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, 1997, and the related statements of operations and changes in net
assets for each of the years in the two-year period then ended and condensed
financial information for the year ended December 31, 1997. 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 and condensed financial information. Our procedures
included confirmation of securities owned as of December 31, 1997, 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, 1997, the results of its operations and changes in its net assets
for each of the years in the two-year period then ended and condensed financial
information for the year ended December 31, 1997 in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Hartford, Connecticut
February 27, 1998
