President's Letter
Dear Valued Client,
What a year this has been in the market! Many of us feel as if we've been riding
a roller coaster. Record highs one day. Record drops another. But you'll see on
the following pages that, overall, your Aetna Retirement Services variable
annuity or variable life insurance contract has once again delivered solid
returns(1).
The dramatic changes such as those witnessed in the 1998 financial markets
reinforce the importance of choosing a competent, long-term financial partner --
one who can help you to weather the dips in the market.
At Aetna Retirement Services, we take our role as your financial partner very
seriously, and realize that the dollars we hold are actually your dreams.
Perhaps it's your hope of an early retirement. Or a dream home. It may be the
promise of your child's or grandchild's college education. Or the pride you take
in knowing that your family is financially secure because of the financial plans
you've made with us in retirement. Whatever your goals, our team of
professionals is here to help you achieve them.
As we move through 1999, I want you to know that we are prepared to help meet
your needs well into the next millennium. We have a team of extremely competent
business experts and systems leading our charge in addressing the Year 2000 bug.
In fact, we are making steady progress in systems remediation, and expect to be
Year 2000 ready by mid-1999.
My colleagues at Aetna Retirement Services and I look forward to continuing our
partnership into the next millennium. Thank you for your confidence and support.
Sincerely,
Thomas J. McInerney
/s/---------------------------
Thomas J. McInerney
- --------------------------
(1)Remember that past performance is no indication of future results.
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1998
ASSETS:
Investments at net asset value: (Note 1)
<TABLE>
<CAPTION>
Net
Shares Cost Assets
------ ---- ------
<S> <C> <C> <C>
Aetna Ascent VP: 104,739 $ 1,543,462 $ 1,468,439
Aetna Balanced VP: 466,540 7,374,965 7,338,678
Aetna Bond VP: 628,747 8,330,232 8,211,438
Aetna Crossroads VP: 58,972 785,680 785,501
Aetna Growth and Income VP: 982,351 33,447,658 31,297,697
Aetna Growth VP: 451,105 5,319,141 6,103,448
Aetna Index Plus Large Cap VP: 849,667 13,688,423 14,945,637
Aetna International VP: 3,797 41,261 44,011
Aetna Legacy VP: 133,748 1,660,761 1,654,467
Aetna Money Market VP: 1,975,904 26,236,238 26,452,214
Aetna Real Estate Securities VP: 4,651 43,996 39,671
Aetna Small Company VP: 294,544 3,279,774 3,767,223
Aetna Value Opportunity VP: 434,406 5,636,469 6,259,793
Alger American Funds:
Balanced Portfolio: 108,171 1,100,460 1,404,059
Income and Growth Portfolio: 310,627 3,299,115 4,075,424
Leveraged AllCap Portfolio: 104,148 2,270,569 3,634,760
American Century Investments:
Balanced Fund: 66,794 515,655 557,006
International Fund: 243,103 1,624,446 1,852,446
Calvert Social Balanced Portfolio: 124,088 259,747 265,177
Fidelity Investments Variable Insurance Product Fund:
Equity-Income Portfolio: 2,013,434 47,204,298 51,181,501
Growth Portfolio: 854,304 31,178,486 38,326,577
High Income Portfolio: 1,512,768 19,151,904 17,442,220
Overseas Portfolio: 206,337 4,004,605 4,136,808
Fidelity Investments Variable Insurance Product Fund II:
Asset Manager Portfolio: 447,745 7,570,709 8,131,050
Contrafund Portfolio: 1,620,361 31,130,912 39,601,618
Index 500 Portfolio: 326,815 38,214,324 46,168,328
Investment Grade Bond Portfolio: 94,123 1,128,605 1,219,839
Insurance Management Series:
American Leaders Fund II: 6,824,761 109,150,633 147,960,825
Equity Income Fund II: 2,004,210 24,767,711 28,359,570
Growth Strategies Fund II: 1,962,559 28,120,682 35,149,425
High Income Bond Fund II: 2,717,067 28,282,860 29,670,377
International Equity Fund II: 1,796,331 21,260,207 27,645,530
Prime Money Fund II: 4,666,589 4,665,273 4,666,589
U.S. Government Securities Fund II: 585,366 6,085,740 6,526,831
Utility Fund II: 1,734,312 20,695,200 26,482,939
Janus Aspen Series:
Aggressive Growth Portfolio: 386,923 9,583,635 10,675,204
Balanced Portfolio: 921,338 16,804,227 20,730,112
Flexible Income Portfolio: 386,017 4,666,753 4,655,365
</TABLE>
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1998 (continued):
<TABLE>
<CAPTION>
Net
Shares Cost Assets
------ ---- ------
<S> <C> <C> <C>
Growth Portfolio: 774,377 $ 14,923,215 $ 18,228,835
Worldwide Growth Portfolio: 2,418,350 60,413,840 70,349,793
Lexington Emerging Markets Fund: 110,605 1,133,387 627,133
Lexington Natural Resources Trust Fund: 78,858 1,151,725 869,806
MFS Funds:
Total Return Series: 904,731 15,015,459 16,393,724
Worldwide Government Series: 70,397 727,002 765,918
Oppenheimer Funds:
Aggressive Growth Fund: 75,688 3,107,624 3,393,073
Global Securities Fund: 93,561 1,992,083 2,064,889
Growth & Income Fund: 561,831 11,689,993 11,506,303
Strategic Bond Fund: 868,342 4,445,390 4,445,909
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio: 666,143 30,422,970 36,930,956
PPI MFS Research Growth Portfolio: 1,700,156 17,369,033 20,299,859
PPI MFS Value Equity Portfolio: 155,399 5,324,611 5,881,864
PPI Scudder International Growth Portfolio: 75,410 1,213,809 1,263,880
PPI T. Rowe Price Growth Equity Portfolio: 535,071 23,443,670 29,594,758
------------ ------------
NET ASSETS $762,498,627 $891,504,497
============ ============
</TABLE>
Net assets represented by:
Reserves for annuity contracts in accumulation and payment period:
(Notes 1 and 5)
<TABLE>
<S> <C>
Aetna Ascent VP:
Annuity contracts in accumulation .................. $ 1,468,439
Aetna Balanced VP:
Annuity contracts in accumulation .................. 7,338,678
Aetna Bond VP:
Annuity contracts in accumulation .................. 8,211,438
Aetna Crossroads VP:
Annuity contracts in accumulation .................. 785,501
Aetna Growth and Income VP:
Annuity contracts in accumulation .................. 31,263,322
Annuity contracts in payment period ................ 34,375
Aetna Growth VP:
Annuity contracts in accumulation .................. 6,066,474
Annuity contracts in payment period ................ 36,974
Aetna Index Plus Large Cap VP:
Annuity contracts in accumulation .................. 14,945,637
Aetna International VP:
Annuity contracts in accumulation .................. 44,011
Aetna Legacy VP:
Annuity contracts in accumulation .................. 1,628,799
Annuity contracts in payment period ................ 25,668
Aetna Money Market VP:
Annuity contracts in accumulation .................. 26,452,214
Aetna Real Estate Securities VP:
Annuity contracts in accumulation .................. 39,671
Aetna Small Company VP:
Annuity contracts in accumulation .................. 3,767,223
</TABLE>
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1998 (continued):
<TABLE>
<S> <C>
Aetna Value Opportunity VP:
Annuity contracts in accumulation .................. $ 6,259,793
Alger American Funds:
Balanced Portfolio:
Annuity contracts in accumulation .................. 1,404,059
Income and Growth Portfolio:
Annuity contracts in accumulation .................. 4,075,424
Leveraged AllCap Portfolio:
Annuity contracts in accumulation .................. 3,634,760
American Century Investments:
Balanced Fund:
Annuity contracts in accumulation .................. 557,006
International Fund:
Annuity contracts in accumulation .................. 1,852,446
Calvert Social Balanced Portfolio:
Annuity contracts in accumulation .................. 265,177
Fidelity Investments Variable Insurance Product Fund:
Equity-Income Portfolio:
Annuity contracts in accumulation .................. 51,181,501
Growth Portfolio:
Annuity contracts in accumulation .................. 38,326,577
High Income Portfolio:
Annuity contracts in accumulation .................. 17,442,220
Overseas Portfolio:
Annuity contracts in accumulation .................. 4,136,808
Fidelity Investments Variable Insurance Product Fund II:
Asset Manager Portfolio:
Annuity contracts in accumulation .................. 8,131,050
Contrafund Portfolio:
Annuity contracts in accumulation .................. 39,601,618
Index 500 Portfolio:
Annuity contracts in accumulation .................. 46,168,328
Investment Grade Bond Portfolio:
Annuity contracts in accumulation .................. 1,219,839
Insurance Management Series:
American Leaders Fund II:
Annuity contracts in accumulation .................. 147,843,450
Annuity contracts in payment period ................ 117,375
Equity Income Fund II:
Annuity contracts in accumulation .................. 28,317,427
Annuity contracts in payment period ................ 42,143
Growth Strategies Fund II:
Annuity contracts in accumulation .................. 35,149,425
High Income Bond Fund II:
Annuity contracts in accumulation .................. 29,644,378
Annuity contracts in payment period ................ 25,999
International Equity Fund II:
Annuity contracts in accumulation .................. 27,616,968
Annuity contracts in payment period ................ 28,562
</TABLE>
<PAGE>
Variable Annuity Account I
Statement of Assets and Liabilities - December 31, 1998 (continued):
<TABLE>
<S> <C>
Prime Money Fund II:
Annuity contracts in accumulation ................... $ 4,666,589
U.S. Government Securities Fund II:
Annuity contracts in accumulation .................. 6,526,831
Utility Fund II:
Annuity contracts in accumulation .................. 26,418,108
Annuity contracts in payment period ................ 64,831
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation .................. 10,675,204
Balanced Portfolio:
Annuity contracts in accumulation .................. 20,730,112
Flexible Income Portfolio:
Annuity contracts in accumulation .................. 4,655,365
Growth Portfolio:
Annuity contracts in accumulation .................. 18,191,718
Annuity contracts in payment period ................ 37,117
Worldwide Growth Portfolio:
Annuity contracts in accumulation .................. 70,349,793
Lexington Emerging Markets Fund:
Annuity contracts in accumulation .................. 627,133
Lexington Natural Resources Trust Fund:
Annuity contracts in accumulation .................. 869,806
MFS Funds:
Total Return Series:
Annuity contracts in accumulation .................. 16,393,724
Worldwide Government Series:
Annuity contracts in accumulation .................. 765,918
Oppenheimer Funds:
Aggressive Growth Fund:
Annuity contracts in accumulation .................. 3,393,073
Global Securities Fund:
Annuity contracts in accumulation .................. 2,064,889
Growth & Income Fund:
Annuity contracts in accumulation .................. 11,506,303
Strategic Bond Fund:
Annuity contracts in accumulation .................. 4,445,909
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
Annuity contracts in accumulation .................. 36,930,956
PPI MFS Research Growth Portfolio:
Annuity contracts in accumulation .................. 20,299,859
PPI MFS Value Equity Portfolio:
Annuity contracts in accumulation .................. 5,846,092
Annuity contracts in payment period ................ 35,772
PPI Scudder International Growth Portfolio:
Annuity contracts in accumulation .................. 1,263,880
PPI T. Rowe Price Growth Equity Portfolio:
Annuity contracts in accumulation .................. 29,594,758
------------
$891,504,497
============
</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,
1998 1997
---------------- ----------------
<S> <C> <C>
INVESTMENT INCOME:
Income: (Notes 1, 3 and 5)
Dividends .......................................................... $ 36,268,129 $ 13,569,495
Expenses: (Notes 2 and 5)
Valuation period deductions ........................................ (10,257,915) (5,565,448)
------------- -------------
Net investment income ............................................... 26,010,214 8,004,047
------------- -------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on sales of investments: (Notes 1, 4 and 5)
Proceeds from sales ................................................ 438,314,806 170,076,421
Cost of investments sold ........................................... 412,797,023 157,030,583
------------- -------------
Net realized gain .................................................. 25,517,783 13,045,838
Net unrealized gain on investments: (Note 5)
Beginning of year .................................................. 62,528,168 13,871,018
End of year ........................................................ 129,005,870 62,528,168
------------- -------------
Net change in unrealized gain ..................................... 66,477,702 48,657,150
------------- -------------
Net realized and unrealized gain on investments ..................... 91,995,485 61,702,988
------------- -------------
Net increase in net assets resulting from operations ................ 118,005,699 69,707,035
------------- -------------
FROM UNIT TRANSACTIONS:
Variable annuity contract purchase payments ......................... 168,355,044 230,999,062
Transfers from the Company's fixed account options .................. 75,081,637 55,038,062
Redemptions by contract holders ..................................... (31,854,396) (14,064,451)
Annuity payments .................................................... (83,247) (14,846)
Other ............................................................... 1,337,372 99,606
------------- -------------
Net increase in net assets from unit transactions (Note 5) ......... 212,836,410 272,057,433
------------- -------------
Change in net assets ................................................ 330,842,109 341,764,468
NET ASSETS:
Beginning of year ................................................... 560,662,388 218,897,920
------------- -------------
End of year ......................................................... $ 891,504,497 $ 560,662,388
============= =============
</TABLE>
See Notes to Financial Statements
<PAGE>
Variable Annuity Account I
Condensed Financial Information - Year Ended December 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Value
Per Unit Increase (Decrease) Units
------------------------ in Value of Outstanding Reserves
Beginning End of Accumulation at End at End
of Year Year Unit of Year of Year
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aetna Ascent VP:
AICA I $14.983 $15.409 2.84% 83,798.0 $1,291,246
AICA II 10.694 10.059 (5.94%) (1) 17,615.1 177,193
- -------------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP:
AICA I 14.228 16.405 15.30% 369,651.5 6,063,987
AICA II 10.708 11.312 5.64% (1) 112,689.3 1,274,691
- -------------------------------------------------------------------------------------------------------------------------
Aetna Bond VP:
AICA I 11.201 11.943 6.62% 500,098.0 5,972,864
AICA II 10.118 10.606 4.82% (1) 211,071.3 2,238,574
- -------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads VP:
AICA I 14.054 14.676 4.43% 40,711.8 597,491
AICA II 10.504 10.270 (2.23%) (1) 18,307.3 188,010
- -------------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP:
AICA I 16.354 18.461 12.88% 1,217,448.2 22,475,910
AICA II 11.063 11.063 0.00% (1) 794,334.9 8,787,412
Annuity contracts in payment period 34,375
- -------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP:
AICA I 13.158 17.862 35.75% 284,771.1 5,086,654
AICA II 11.455 12.977 13.29% (1) 75,505.9 979,820
Annuity contracts in payment period 36,974
- -------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP:
AICA I 14.414 18.704 29.76% 654,766.9 12,246,441
AICA II 11.157 12.535 12.35% (1) 215,324.4 2,699,196
- -------------------------------------------------------------------------------------------------------------------------
Aetna International VP:
AICA I 10.149 9.754 (3.89%) (1) 1,816.4 17,717
AICA II 9.851 9.764 (0.88%) (2) 2,693.0 26,294
- -------------------------------------------------------------------------------------------------------------------------
Aetna Legacy VP:
AICA I 13.112 13.825 5.44% 95,815.1 1,324,652
AICA II 10.404 10.380 (0.23%) (1) 29,301.4 304,147
Annuity contracts in payment period 25,668
- -------------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP:
AICA I 10.900 11.335 3.99% 2,041,170.4 23,136,033
AICA II 10.097 10.371 2.71% (1) 319,752.5 3,316,181
- -------------------------------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP:
AICA I 10.115 8.863 (12.38%) (1) 2,216.9 19,648
AICA II 9.918 8.872 (10.55%) (1) 2,256.8 20,023
- -------------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP:
AICA I 13.638 13.595 (0.32%) 225,981.5 3,072,277
AICA II 11.126 9.724 (12.60%) (1) 71,464.8 694,946
- -------------------------------------------------------------------------------------------------------------------------
Aetna Value Opportunity VP:
AICA I 13.246 15.985 20.68% 311,396.8 4,977,799
AICA II 11.097 11.644 4.93% (1) 110,096.6 1,281,994
- -------------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio:
AICA I 12.657 16.412 29.67% 85,549.6 1,404,059
- -------------------------------------------------------------------------------------------------------------------------
Income and Growth Portfolio:
AICA I 15.229 19.880 30.54% 205,001.6 4,075,424
- -------------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio:
AICA I 13.203 20.547 55.62% 176,900.2 3,634,760
- -------------------------------------------------------------------------------------------------------------------------
American Century Investments:
Balanced Fund:
AICA I 12.885 14.709 14.16% 37,869.0 557,006
- -------------------------------------------------------------------------------------------------------------------------
International Fund:
AICA I 13.538 15.853 17.10% 116,852.2 1,852,446
- -------------------------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio:
AICA I 9.976 11.437 14.65% 12,287.9 140,540
AICA II 10.596 11.208 5.78% (1) 11,120.5 124,637
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account I
Condensed Financial Information - Year Ended December 31, 1998 (continued):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Value
Per Unit Increase (Decrease) Units
------------------------ in Value of Outstanding Reserves
Beginning End of Accumulation at End at End
of Year Year Unit of Year of Year
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fidelity Investments Variable Insurance
Product Fund:
Equity-Income Portfolio:
AICA I $14.974 $16.482 10.07% 2,792,888.9 $ 46,031,203
AICA II 10.957 10.806 (1.38%) (1) 476,634.1 5,150,298
- -------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio:
AICA I 13.320 18.320 37.54% 1,869,305.9 34,245,624
AICA II 11.094 13.253 19.46% (1) 307,937.0 4,080,953
- -------------------------------------------------------------------------------------------------------------------------------
High Income Portfolio:
AICA I 13.238 12.488 (5.67%) 1,196,921.6 14,946,591
AICA II 10.292 9.222 (10.40%) (1) 270,626.6 2,495,629
- -------------------------------------------------------------------------------------------------------------------------------
Overseas Portfolio:
AICA I 12.590 13.997 11.18% 261,377.1 3,658,529
AICA II 11.082 10.487 (5.37%) (1) 45,606.3 478,279
- -------------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance
Product Fund II:
Asset Manager Portfolio:
AICA I 13.888 15.754 13.44% 408,018.8 6,428,060
AICA II 10.607 11.165 5.26% (1) 152,533.0 1,702,990
- -------------------------------------------------------------------------------------------------------------------------------
Contrafund Portfolio:
AICA I 14.802 18.970 28.16% 1,853,911.1 35,169,124
AICA II 11.136 12.537 12.58% (1) 353,547.6 4,432,494
- -------------------------------------------------------------------------------------------------------------------------------
Index 500 Portfolio:
AICA I 16.646 21.063 26.53% 1,953,506.1 41,145,842
AICA II 11.159 12.259 9.86% (1) 409,684.6 5,022,486
- -------------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio:
AICA I 11.242 12.066 7.33% 101,099.9 1,219,839
- -------------------------------------------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II:
AICA I 17.796 20.639 15.98% 7,163,133.1 147,843,450
Annuity contracts in payment period 117,375
- -------------------------------------------------------------------------------------------------------------------------------
Equity Income Fund II:
AICA I 12.305 14.022 13.95% 2,019,440.7 28,317,427
Annuity contracts in payment period 42,143
- -------------------------------------------------------------------------------------------------------------------------------
Growth Strategies Fund II:
AICA I 15.777 18.269 15.80% 1,923,943.6 35,149,425
- -------------------------------------------------------------------------------------------------------------------------------
High Income Bond Fund II:
AICA I 13.379 13.547 1.26% 2,188,220.6 29,644,378
Annuity contracts in payment period 25,999
- -------------------------------------------------------------------------------------------------------------------------------
International Equity Fund II:
AICA I 11.858 14.682 23.82% 1,881,029.6 27,616,968
Annuity contracts in payment period 28,562
- -------------------------------------------------------------------------------------------------------------------------------
Prime Money Fund II:
AICA I 10.877 11.253 3.46% 414,692.7 4,666,589
- -------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund II:
AICA I 11.572 12.284 6.15% 531,319.3 6,526,831
- -------------------------------------------------------------------------------------------------------------------------------
Utility Fund II:
AICA I 15.434 17.341 12.36% 1,523,423.7 26,418,108
Annuity contracts in payment period 64,831
- -------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio:
AICA I 12.637 16.729 32.38% 601,046.9 10,054,808
AICA II 11.125 13.003 16.88% (1) 47,713.2 620,396
- -------------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio:
AICA I 14.492 19.189 32.41% 927,778.7 17,802,853
AICA II 10.904 12.689 16.37% (1) 230,692.8 2,927,259
- -------------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio:
AICA I 12.272 13.202 7.58% 267,030.6 3,525,265
AICA II 10.191 10.599 4.00% (1) 106,625.5 1,130,100
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account I
Condensed Financial Information - Year Ended December 31, 1998 (continued):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
Value
Per Unit
----------------------
Beginning End of
of Year Year
- -------------------------------------------------------------------
<S> <C> <C>
Growth Portfolio:
AICA I $14.731 $19.704
AICA II 11.091 12.784
Annuity contracts in payment period
- -------------------------------------------------------------------
Worldwide Growth Portfolio:
AICA I 16.131 20.506
AICA II 11.375 11.960
- -------------------------------------------------------------------
Lexington Emerging Markets Fund:
AICA I 9.007 6.399
- -------------------------------------------------------------------
Lexington Natural Resources Trust Fund:
AICA I 13.939 11.047
- -------------------------------------------------------------------
MFS Funds:
Total Return Series:
AICA I 13.030 14.432
AICA II 10.639 10.942
- -------------------------------------------------------------------
Worldwide Government Series:
AICA I 10.207 10.860
AICA II 10.032 10.514
- -------------------------------------------------------------------
Oppenheimer Funds:
Aggressive Growth Fund:
AICA I 12.204 13.520
AICA II 11.304 10.886
- -------------------------------------------------------------------
Global Securities Fund:
AICA I 11.539 12.982
AICA II 10.941 10.949
- -------------------------------------------------------------------
Growth & Income Fund:
AICA I 12.785 13.199
AICA II 11.377 10.111
- -------------------------------------------------------------------
Strategic Bond Fund:
AICA I 10.764 10.921
AICA II 10.118 10.037
- -------------------------------------------------------------------
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
AICA I 10.554 13.494
AICA II 11.104 11.797
- -------------------------------------------------------------------
PPI MFS Research Growth Portfolio:
AICA I 8.786 10.656
AICA II 11.178 11.634
- -------------------------------------------------------------------
PPI MFS Value Equity Portfolio:
AICA I 10.152 12.686
AICA II 11.503 12.005
Annuity contracts in payment period
- -------------------------------------------------------------------
PPI Scudder International Growth Portfolio:
AICA I 9.912 11.640
AICA II 11.145 10.995
- -------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio:
AICA I 13.834 17.406
AICA II 11.120 12.103
- -------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Increase (Decrease) Units
in Value of Outstanding Reserves
Accumulation at End at End
Unit of Year of Year
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Portfolio:
AICA I 33.76% 807,575.7 $15,912,701
AICA II 15.26% (1) 178,276.3 2,279,017
Annuity contracts in payment period 37,117
- --------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio:
AICA I 27.12% 3,185,556.5 65,321,610
AICA II 5.14% (1) 420,428.4 5,028,183
- --------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund:
AICA I (28.96%) 98,010.6 627,133
- --------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund:
AICA I (20.75%) 78,736.7 869,806
- --------------------------------------------------------------------------------------------------------
MFS Funds:
Total Return Series:
AICA I 10.76% 943,853.4 13,621,896
AICA II 2.85% (1) 253,311.0 2,771,828
- --------------------------------------------------------------------------------------------------------
Worldwide Government Series:
AICA I 6.40% 69,956.8 759,700
AICA II 4.80% (2) 591.4 6,218
- --------------------------------------------------------------------------------------------------------
Oppenheimer Funds:
Aggressive Growth Fund:
AICA I 10.78% 179,860.9 2,431,715
AICA II (3.70%) (1) 88,309.9 961,358
- --------------------------------------------------------------------------------------------------------
Global Securities Fund:
AICA I 12.51% 134,448.6 1,745,444
AICA II 0.07% (1) 29,175.9 319,445
- --------------------------------------------------------------------------------------------------------
Growth & Income Fund:
AICA I 3.24% 693,694.9 9,156,069
AICA II (11.13%) (1) 232,433.2 2,350,234
- --------------------------------------------------------------------------------------------------------
Strategic Bond Fund:
AICA I 1.46% 328,545.6 3,588,020
AICA II (0.80%) (1) 85,476.9 857,889
- --------------------------------------------------------------------------------------------------------
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
AICA I 27.86% 2,557,154.8 34,505,993
AICA II 6.24% (1) 205,549.0 2,424,963
- --------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio:
AICA I 21.28% 1,761,234.3 18,766,935
AICA II 4.08% (1) 131,760.5 1,532,924
- --------------------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio:
AICA I 24.96% 358,518.3 4,548,303
AICA II 4.36% (1) 108,102.4 1,297,789
Annuity contracts in payment period 35,772
- --------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio:
AICA I 17.43% 79,756.2 928,340
AICA II (1.35%) (1) 30,516.2 335,540
- --------------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio:
AICA I 25.82% 1,616,747.9 28,140,515
AICA II 8.84% (1) 120,156.6 1,454,243
- --------------------------------------------------------------------------------------------------------
</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. AICA II - Certain individual and group contracts issued as
non-qualified deferred annuity contracts or Individual Retirement Annuity
contracts issued since May 1, 1998.
Notes to Condensed Financial Information:
(1) - Reflects less than a full year of performance activity. Funds were first
received in this option during May 1998.
(2) - Reflects less than a full year of performance activity. Funds were first
received in this option during June 1998.
See Notes to Financial Statements
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1998
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, 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, 1998:
<TABLE>
<S> <C>
Aetna Ascent VP Insurance Management Series:
Aetna Balanced VP o American Leaders Fund II
Aetna Bond VP o Equity Income Fund II
Aetna Crossroads VP o Growth Strategies Fund II
Aetna Growth and Income VP o High Income Bond Fund II
Aetna Growth VP o International Equity Fund II
Aetna Index Plus Large Cap VP o Prime Money Fund II
Aetna International VP o U.S. Government Securities Fund II
Aetna Legacy VP o Utility Fund II
Aetna Money Market VP Janus Aspen Series:
Aetna Real Estate Securities VP o Aggressive Growth Portfolio
Aetna Small Company VP o Balanced Portfolio
Aetna Value Opportunity VP o Flexible Income Portfolio
Alger American Funds: o Growth Portfolio
o Balanced Portfolio o Worldwide Growth Portfolio
o Income and Growth Portfolio Lexington Emerging Markets Fund
o Leveraged AllCap Portfolio Lexington Natural Resources Trust Fund
American Century Investments: MFS Funds:
o Balanced Fund o Total Return Series
o International Fund o Worldwide Government Series
Calvert Social Balanced Portfolio Oppenheimer Funds:
Fidelity Investments Variable Insurance Products Fund: o Aggressive Growth Fund
o Equity-Income Portfolio o Global Securities Fund
o Growth Portfolio o Growth & Income Fund
o High Income Portfolio o Strategic Bond Fund
o Overseas Portfolio Portfolio Partners, Inc. (PPI):
Fidelity Investments Variable Insurance Products o PPI MFS Emerging Equities Portfolio
Fund II: o PPI MFS Research Growth Portfolio
o Asset Manager Portfolio o PPI MFS Value Equity Portfolio
o Contrafund Portfolio o PPI Scudder International Growth Portfolio
o Index 500 Portfolio o PPI T. Rowe Price Growth Equity Portfolio
o Investment Grade Bond Portfolio
</TABLE>
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, 1998 (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, 1998 and 1997
aggregated $677,161,429 and $438,314,806; $450,137,902 and $170,076,421,
respectively.
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental information to Statements of Operations and Changes in Net
Assets
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Ascent VP: (1) $71,800 ($19,502) $673,031 $668,648 $4,383
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP: (2) 990,418 (80,461) 1,792,080 1,696,266 95,814
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Bond VP: (3) 431,716 (72,965) 4,486,268 4,387,120 99,148
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Crossroads VP: (4) 29,801 (8,675) 155,691 141,072 14,619
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP: (5) 4,637,602 (297,037) 33,298,888 34,084,318 (785,430)
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------
Aetna Growth VP: (6) 11,767 (50,232) 2,569,530 2,639,070 (69,540)
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP: (7) 660,099 (124,498) 9,779,183 9,124,915 654,268
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna International VP: (8) 2,114 (215) 38,105 39,540 (1,435)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Legacy VP: (9) 71,808 (17,570) 157,163 143,237 13,926
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP: (10) 821,419 (301,700) 85,211,294 84,897,725 313,569
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP: (11) 1,888 (319) 19,063 21,385 (2,322)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP: (12) 34,904 (47,717) 5,571,439 6,248,167 (676,728)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Aetna Value Opportunity VP: (13) 61,137 (49,913) 1,542,126 1,589,981 (47,855)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio: 121,184 (20,212) 372,244 302,913 69,331
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Income and Growth Portfolio:
Annuity contracts in accumulation 379,349 (53,943) 785,199 640,145 145,054
- -----------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio:
Annuity contracts in accumulation 141,107 (43,691) 747,610 539,018 208,592
- -----------------------------------------------------------------------------------------------------------------------
American Century Investments:
Balanced Fund: 81,193 (8,558) 189,467 179,893 9,574
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
International Fund: 127,270 (27,807) 562,465 470,481 91,984
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio: 19,179 (1,776) 24,753 27,598 (2,845)
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>
($42,941) ($75,022) ($32,081) $359,326
$1,084,513 $1,468,439
- ---------------------------------------------------------------------------------------------------------
93,604 (36,287) (129,891) 1,988,879
4,473,919 7,338,678
- ---------------------------------------------------------------------------------------------------------
(10,865) (118,794) (107,929) 4,840,848
3,020,620 8,211,438
- ---------------------------------------------------------------------------------------------------------
3,424 (178) (3,602) 338,325
415,033 785,501
- ---------------------------------------------------------------------------------------------------------
(1,131,268) (2,149,960) (1,018,692) 13,277,579
15,483,675 31,263,322
0 34,375
- ---------------------------------------------------------------------------------------------------------
(264,795) 784,306 1,049,101 4,256,569
905,783 6,066,474
0 36,974
- ---------------------------------------------------------------------------------------------------------
106,638 1,257,214 1,150,576 8,689,925
3,915,267 14,945,637
- ---------------------------------------------------------------------------------------------------------
0 2,750 2,750 40,797
0 44,011
- ---------------------------------------------------------------------------------------------------------
4,308 (6,294) (10,602) 769,986
793,678 1,628,799
33,241 25,668
- ---------------------------------------------------------------------------------------------------------
203,382 215,976 12,594 10,238,451
15,367,881 26,452,214
0 (4,325) (4,325) 44,749
0 39,671
- ---------------------------------------------------------------------------------------------------------
(169,978) 487,449 657,427 1,224,164
2,575,173 3,767,223
- ---------------------------------------------------------------------------------------------------------
(130,696) 623,324 754,020 4,650,918
891,486 6,259,793
- ---------------------------------------------------------------------------------------------------------
125,129 303,599 178,470 (345,746)
1,401,032 1,404,059
- ---------------------------------------------------------------------------------------------------------
245,881 776,309 530,428 (693,378)
3,767,914 4,075,424
- ---------------------------------------------------------------------------------------------------------
265,618 1,364,191 1,098,573 (689,303)
2,919,482 3,634,760
- ---------------------------------------------------------------------------------------------------------
44,098 41,409 (2,689) (179,238)
656,724 557,006
- ---------------------------------------------------------------------------------------------------------
108,904 228,000 119,096 (505,703)
2,047,606 1,852,446
- ---------------------------------------------------------------------------------------------------------
(5,832) 5,430 11,262 206,857
32,500 265,177
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Valuation
Period
Dividends Deductions
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: $2,271,527 ($618,549)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Growth Portfolio: 2,644,108 (381,295)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
High Income Portfolio: 1,474,357 (221,958)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Overseas Portfolio: 233,121 (53,772)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Product Fund II:
Asset Manager Portfolio: 523,249 (84,936)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Contrafund Portfolio: 1,534,561 (426,807)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Index 500 Portfolio: 981,068 (488,490)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio: 73,857 (18,586)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II: 8,099,929 (1,877,678)
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------
Equity Income Fund II: 91,670 (295,623)
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------
Growth Strategies Fund II: 1,646,118 (414,206)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
High Income Bond Fund II: 795,943 (408,858)
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------
International Equity Fund II: 28,894 (359,609)
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------
Prime Money Fund II: 211,667 (62,627)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
U.S. Government Securities Fund II: 99,559 (83,453)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------
Utility Fund II: 1,407,516 (327,505)
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Proceeds Cost of Net
from Investments Realized
Sales Sold Gain (Loss)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: $15,606,753 $12,759,366 $2,847,387
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Growth Portfolio: 12,032,669 9,870,234 2,162,435
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
High Income Portfolio: 5,402,639 5,517,939 (115,300)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Overseas Portfolio: 15,311,424 15,163,882 147,542
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Product Fund II:
Asset Manager Portfolio: 1,323,072 1,302,771 20,301
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Contrafund Portfolio: 7,291,380 5,323,524 1,967,856
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Index 500 Portfolio: 8,828,912 6,299,987 2,528,925
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio: 375,674 366,141 9,533
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Insurance Management Series:
American Leaders Fund II: 4,239,643 2,620,457 1,619,186
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------
Equity Income Fund II: 1,065,676 844,287 221,389
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------
Growth Strategies Fund II: 1,857,899 1,425,043 432,856
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
High Income Bond Fund II: 3,342,335 3,079,403 262,932
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------
International Equity Fund II: 1,808,323 1,321,140 487,183
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------
Prime Money Fund II: 4,154,382 4,154,382 0
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund II: 1,719,925 1,600,469 119,456
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------
Utility Fund II: 1,448,374 1,070,900 377,474
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------
</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>
$4,573,383 $3,977,202 ($596,181) $12,941,401
$34,335,916 $51,181,501
- -----------------------------------------------------------------------------------------------------------
2,613,104 7,153,104 4,540,000 10,721,202
18,640,127 38,326,577
- -----------------------------------------------------------------------------------------------------------
678,175 (1,709,684) (2,387,859) 7,278,178
11,414,802 17,442,220
- -----------------------------------------------------------------------------------------------------------
83,223 131,756 48,533 772,708
2,988,676 4,136,808
- -----------------------------------------------------------------------------------------------------------
247,841 560,341 312,500 3,571,525
3,788,411 8,131,050
- -----------------------------------------------------------------------------------------------------------
3,303,522 8,470,707 5,167,185 6,461,571
24,897,252 39,601,618
- -----------------------------------------------------------------------------------------------------------
2,903,863 7,949,380 5,045,517 15,200,754
22,900,554 46,168,328
- -----------------------------------------------------------------------------------------------------------
63,100 91,234 28,134 (314,286)
1,441,187 1,219,839
- -----------------------------------------------------------------------------------------------------------
27,572,894 38,810,192 11,237,298 14,814,848
114,050,410 147,843,450
16,832 117,375
- -----------------------------------------------------------------------------------------------------------
716,240 3,591,859 2,875,619 12,524,130
12,942,385 28,317,427
0 42,143
- -----------------------------------------------------------------------------------------------------------
4,379,010 7,028,743 2,649,733 6,249,006
24,585,918 35,149,425
- -----------------------------------------------------------------------------------------------------------
1,855,372 1,387,517 (467,855) 3,527,318
25,944,158 29,644,378
16,739 25,999
- -----------------------------------------------------------------------------------------------------------
1,842,212 6,385,323 4,543,111 2,840,676
20,105,275 27,616,968
0 28,562
- -----------------------------------------------------------------------------------------------------------
0 1,316 1,316 757,047
3,759,186 4,666,589
- -----------------------------------------------------------------------------------------------------------
224,916 441,091 216,175 530,017
5,645,077 6,526,831
- -----------------------------------------------------------------------------------------------------------
4,421,460 5,787,739 1,366,279 2,535,912
21,104,322 26,418,108
18,941 64,831
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio: $0 ($115,274) $50,864,976 $48,298,175 $2,566,801
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio: 595,970 (174,733) 2,029,779 1,535,395 494,384
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio: 235,389 (45,468) 1,385,219 1,308,029 77,190
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 870,829 (185,099) 5,214,196 4,131,907 1,082,289
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio: 2,336,194 (835,432) 24,476,251 18,059,755 6,416,496
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund: 66,337 (11,442) 369,448 511,215 (141,767)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund: 73,010 (15,445) 348,129 355,188 (7,059)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
MFS Funds:
Total Return Series: 295,218 (157,641) 1,431,298 1,180,363 250,935
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Worldwide Government Series: 8,377 (9,148) 309,659 301,566 8,093
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Funds:
Aggressive Growth Fund: 37,225 (35,416) 47,122,397 46,966,784 155,613
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Global Securities Fund: 149,505 (24,845) 719,379 757,991 (38,612)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Growth & Income Fund: 475,900 (140,773) 5,499,885 5,888,453 (388,568)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Strategic Bond Fund: 65,788 (43,976) 704,382 714,269 (9,887)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio: 88,752 (435,112) 11,342,689 10,460,671 882,018
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio: 4,104 (238,253) 4,855,332 4,530,115 325,217
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio: 7,644 (70,872) 4,030,146 3,786,613 243,533
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio: 4,297 (11,632) 40,667,463 40,626,409 41,054
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio: 140,691 (356,611) 3,159,498 2,822,708 336,790
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------
Total Variable Annuity Account 1 $36,268,129 ($ 10,257,915) $438,314,806 $412,797,023 $25,517,783
==============================================================================================================================
</TABLE>
(1) Effective May 1, 1998, Aetna Ascent Variable Portfolio's name changed to
Aetna Ascent VP.
(2) Effective May 1, 1998, Aetna Investment Advisors Fund's name changed to
Aetna Balanced VP.
(3) Effective May 1, 1998, Aetna Income Shares' name changed to Aetna Bond
Fund VP.
(4) Effective May 1, 1998, Aetna Crossroads Variable Portfolio's name
changed to Aetna Crossroads VP.
(5) Effective May 1, 1998, Aetna Variable Fund's name changed to Aetna
Growth and Income VP.
(6) Effective May 1, 1998, Aetna Variable Growth Portfolio's name changed to
Aetna Growth VP.
(7) Effective May 1, 1998, Aetna Variable Index Plus Portfolio's name
changed to Aetna Index Plus Large Cap VP.
(8) Effective May 1, 1998, Aetna International Portfolio's name changed to
Aetna International VP.
(9) Effective May 1, 1998, Aetna Legacy Variable Portfolio's name changed to
Aetna Legacy VP. (10) Effective May 1, 1998, Aetna Variable Encore
Fund's name changed to Aetna Money Market VP.
(11) Effective May 1, 1998, Aetna Real Estate Securities Portfolio's name
changed to Aetna Real Estate Securities VP.
(12) Effective May 1, 1998, Aetna Variable Small Company Portfolio's name
changed to Aetna Small Company VP.
(13) Effective May 1, 1998, Aetna Variable Capital Appreciation Portfolio's
name changed to Aetna Value Opportunity VP.
<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>
$685,946 $1,091,568 $405,622 $1,263,440
$6,554,615 $10,675,204
- -------------------------------------------------------------------------------------------------------------
746,135 3,925,885 3,179,750 8,908,355
7,726,386 20,730,112
- -------------------------------------------------------------------------------------------------------------
32,134 (11,388) (43,522) 2,430,909
2,000,867 4,655,365
- -------------------------------------------------------------------------------------------------------------
1,026,518 3,305,620 2,279,102 4,104,069
10,077,645 18,191,718
0 37,117
- -------------------------------------------------------------------------------------------------------------
4,733,621 9,935,954 5,202,333 12,501,656
44,728,546 70,349,793
- -------------------------------------------------------------------------------------------------------------
(302,429) (506,254) (203,825) (312,229)
1,230,059 627,133
- -------------------------------------------------------------------------------------------------------------
11,212 (281,919) (293,131) (322,903)
1,435,334 869,806
- -------------------------------------------------------------------------------------------------------------
595,567 1,378,265 782,698 8,404,056
6,818,458 16,393,724
- -------------------------------------------------------------------------------------------------------------
4,445 38,917 34,472 190,257
533,867 765,918
- -------------------------------------------------------------------------------------------------------------
(12,997) 285,448 298,445 2,135,488
801,718 3,393,073
- -------------------------------------------------------------------------------------------------------------
6,826 72,806 65,980 902,520
1,010,341 2,064,889
- -------------------------------------------------------------------------------------------------------------
136,910 (183,690) (320,600) 7,350,914
4,529,430 11,506,303
- -------------------------------------------------------------------------------------------------------------
(6,794) 519 7,313 3,041,102
1,385,569 4,445,909
- -------------------------------------------------------------------------------------------------------------
(271,841) 6,507,986 6,779,827 4,339,155
25,276,316 36,930,956
- -------------------------------------------------------------------------------------------------------------
(235,756) 2,930,826 3,166,582 2,849,219
14,192,990 20,299,859
- -------------------------------------------------------------------------------------------------------------
24,196 557,253 533,057 2,972,891
2,195,611 5,846,092
0 35,772
- -------------------------------------------------------------------------------------------------------------
(460) 50,071 50,531 1,154,164
25,466 1,263,880
- -------------------------------------------------------------------------------------------------------------
432,009 6,151,086 5,719,077 1,997,336
21,757,475 29,594,758
- -------------------------------------------------------------------------------------------------------------
$62,528,168 $129,005,870 $66,477,702 $212,836,410 $560,662,388 $891,504,497
=============================================================================================================
</TABLE>
<PAGE>
Variable Annuity Account I
Notes to Financial Statements - December 31, 1998 (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>
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, 1998 (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, 1998 (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, 1998 (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>
Independent Auditors' Report
The Board of Directors of Aetna Life Insurance and Annuity Company and Contract
Owners of Variable Annuity Account I:
We have audited the accompanying statement of assets and liabilities of Aetna
Life Insurance and Annuity Company Variable Annuity Account I (the "Account") as
of December 31, 1998, 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, 1998. 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, 1998, 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 Life Insurance and Annuity Company Variable Annuity Account I
as of December 31, 1998, 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, 1998, in conformity with
generally accepted accounting principles.
KPMG LLP
Hartford, Connecticut
February 26, 1999
