SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. ______ [ ]
Post-Effective Amendment No. 2 (File No. 333-74865) [X]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 3 (File No. 811-7195) [X]
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(Check appropriate box or boxes)
AMERICAN ENTERPRISE VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)
American Enterprise Life Insurance Company
(Name of Depositor)
829 AXP Financial Center, Minneapolis, MN 55474
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 671-3678
Mary Ellyn Minenko, 200 AXP Financial Center, Minneapolis, MN 55474
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 2000 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE>
PROSPECTUS
MAY 1, 2000
AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
AMERICAN ENTERPRISE VARIABLE ANNUITY ACCOUNT
ISSUED BY: AMERICAN ENTERPRISE LIFE INSURANCE COMPANY (AMERICAN ENTERPRISE LIFE)
829 AXP Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
This prospectus contains information that you should know before investing. You
also will receive the prospectuses for:
<TABLE>
<S> <C>
- - American Express-Registered Trademark- Variable Portfolio Funds - J. P. Morgan Series Trust II
- - AIM Variable Insurance Funds - Lazard Retirement Series, Inc.
- - Alliance Variable Products Series Fund - MFS-Registered Trademark- Variable Insurance Trust-SM-
- - Baron Capital Funds - Putnam Variable Trust - Class IB Shares
- - Fidelity Variable Insurance Products Service Class - Royce Capital Fund
- - Franklin Templeton Variable Insurance Products Trust (FTVIPT) - Third Avenue Variable Series Trust
- - Goldman Sachs Variable Insurance Trust (VIT) - Wanger Advisors Trust
- - Janus Aspen Series: Service Shares - Warburg Pincus Trust
</TABLE>
Please read the prospectuses carefully and keep them for future reference.
This contract provides for contract value credits. The death benefits for
contracts with such credits may be lower than for contracts without such
credits. The amount of the credit may be more than offset by the reduction in
the death benefits provided.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS CONTRACT
INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed
with the SEC and is available without charge by contacting American
Enterprise Life at the telephone number above or by completing and sending
the order form on the last page of this prospectus. The table of contents of
the SAI is on the last page of this prospectus.
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PROSPECTUS -- MAY 1, 2000 1
<PAGE>
TABLE OF CONTENTS
KEY TERMS............................................................3
THE CONTRACT IN BRIEF................................................4
EXPENSE SUMMARY......................................................7
CONDENSED FINANCIAL INFORMATION (UNAUDITED).........................15
FINANCIAL STATEMENTS................................................23
PERFORMANCE INFORMATION.............................................23
THE VARIABLE ACCOUNT AND THE FUNDS..................................25
THE FIXED ACCOUNTS..................................................32
BUYING YOUR CONTRACT................................................34
CHARGES.............................................................36
VALUING YOUR INVESTMENT.............................................40
MAKING THE MOST OF YOUR CONTRACT....................................42
WITHDRAWALS.........................................................50
TSA -- SPECIAL WITHDRAWAL PROVISIONS................................51
CHANGING OWNERSHIP..................................................51
BENEFITS IN CASE OF DEATH...........................................51
THE ANNUITY PAYOUT PERIOD...........................................55
TAXES...............................................................57
VOTING RIGHTS.......................................................59
SUBSTITUTION OF INVESTMENTS.........................................60
ABOUT THE SERVICE PROVIDERS.........................................60
ADDITIONAL INFORMATION ABOUT AMERICAN ENTERPRISE LIFE...............61
DIRECTORS AND EXECUTIVE OFFICERS....................................66
EXPERTS.............................................................68
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
FINANCIAL INFORMATION...........................................69
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION........87
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2 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
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KEY TERMS
THESE TERMS CAN HELP YOU UNDERSTAND DETAILS ABOUT YOUR CONTRACT.
ACCUMULATION UNIT -- A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT -- The person on whose life or life expectancy the annuity payouts are
based.
ANNUITY PAYOUTS -- An amount paid at regular intervals under one of several
plans.
BENEFICIARY -- The person you designate to receive benefits in case of the
owner's or annuitant's death while the contract is in force and before annuity
payouts begin.
CLOSE OF BUSINESS -- When the New York Stock Exchange (NYSE) closes, normally 4
p.m. Eastern time.
CONTRACT -- a deferred annuity contract, or a certificate showing your interest
under a group annuity contract, that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payout beginning at a specified time in the future.
CONTRACT VALUE -- The total value of your contract before we deduct any
applicable charges.
CONTRACT YEAR -- A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FIXED ACCOUNTS -- The one-year fixed account is an account to which you may
allocate purchase payments. Amounts you allocate to this account earn interest
at rates that we declare periodically. Guarantee Period Accounts are fixed
accounts to which you may also allocate purchase payments. These accounts have
guaranteed interest rates declared for periods ranging from two to ten years.
Withdrawals from these accounts prior to the end of the term specified will
receive a Market Value Adjustment, which may result in a gain or loss of
principal.
FUNDS -- Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of any or all of these funds.
GUARANTEE PERIOD -- The number of years that a guaranteed interest rate is
credited.
MARKET VALUE ADJUSTMENT (MVA) -- A positive or negative adjustment assessed if
any portion of a Guarantee Period Account is withdrawn or transferred prior to
the end of its Guarantee Period.
OWNER (YOU, YOUR) -- The person who controls the contract (decides on investment
allocations, transfers, payout options, etc.). Usually, but not always, the
owner is also the annuitant. The owner is responsible for taxes, regardless of
whether he or she receives the contract's benefits.
QUALIFIED ANNUITY -- A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
- - Individual Retirement Annuities (IRAs) under Section 408(b) of the
Internal Revenue Code of 1986, as amended (the Code)
- - Roth IRAs under Section 408A of the Code
- - Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
- - Tax Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
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PROSPECTUS -- MAY 1, 2000 3
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A qualified annuity will not provide any necessary or additional tax deferral
if it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE -- The date when annuity payouts are scheduled to begin.
VALUATION DATE -- Any normal business day, Monday through Friday, that the NYSE
is open. Each valuation date ends at the close of business. We calculate the
value of each subaccount at the close of business on each valuation date.
VARIABLE ACCOUNT -- Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE -- The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
THE CONTRACT IN BRIEF
PURPOSE: The purpose of the contract is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments; you may
allocate your purchase payments to the fixed accounts and/or subaccounts under
the contract. These accounts in turn, may earn returns that increase the value
of the contract. Beginning at a specified time in the future called the
retirement date, the contract provides lifetime or other forms of payouts of
your contract value (less any applicable premium tax). As in the case of other
annuities, it may not be advantageous for you to purchase this contract as a
replacement for, or in addition to, an existing annuity.
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is tax-deferred. However, the contract
has features other than tax deferral that may make it an appropriate investment
for your retirement plan. You should compare these features and their costs with
other investment options before deciding to purchase this contract.
FREE LOOK PERIOD: You may return your contract to your sales representative or
to our office within the time stated on the first page of your contract and
receive a full refund of the contract value. We will not deduct any charges.
However, you bear the investment risk from the time of purchase until you return
the contract; the refund amount may be more or less than the payment you made.
(Exception: If the law requires, we will refund all of your purchase payments.)
ACCOUNTS: Currently, you may allocate your purchase payments among any or all
of:
- - the subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at
the retirement date will equal or exceed the total purchase payments you
allocate to the subaccounts. (p. 25)
- - the fixed accounts, which earn interest at rates that we adjust periodically.
Some states restrict the amount you can allocate to these accounts. (p. 32)
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4 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
BUYING YOUR CONTRACT: Your sales representative will help you complete and
submit an application. Applications are subject to acceptance at our office. You
may buy a nonqualified annuity or a qualified annuity. After your initial
purchase payment, you have the option of making additional purchase payments in
the future. Some states have time limitations for making additional payments.
(p. 34)
- - Minimum initial purchase payment (including Systematic Investment
Plans (SIPs)) --
$5,000 in Texas, Washington, Pennsylvania and South Carolina;
$2,000 in all other states
- - Minimum additional purchase payment -- $100 ($50 for SIPs)
- - Maximum total purchase payments (without prior approval) --
$1,000,000 for issue ages up to 85
$100,000 for issue ages 86 to 90
TRANSFERS: Subject to certain restrictions you currently may redistribute
your money among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the Guarantee Period Accounts before the end
of the Guarantee Period will be subject to a MVA. You may establish automated
transfers among the accounts. Fixed account transfers are subject to special
restrictions. (p. 43)
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties
(including a 10% IRS penalty if you make withdrawals prior to your reaching
age 59 1/2) and may have other tax consequences; also, certain restrictions
apply. (p. 50)
CHANGING OWNERSHIP: You may change ownership of a nonqualified annuity by
written instruction, but this may have federal income tax consequences.
Restrictions apply to changing ownership of a qualified annuity. (p. 51)
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (p. 51)
ANNUITY PAYOUTS: You can apply your contract value to an annuity payout plan
that begins on the retirement date. You may choose from a variety of plans to
make sure that payouts continue as long as you like. If you purchased a
qualified annuity, the payout schedule must meet the requirements of the
qualified plan. We can make payouts on a fixed or variable basis, or both.
Total monthly payouts may include amounts from each subaccount and the
one-year fixed account. During the annuity payout period, your choices for
subaccounts may be limited. The Guarantee Period Accounts are not available
during the payout period. (p. 55)
TAXES: Generally, your contract grows tax-deferred until you make withdrawals
from it or begin to receive payouts. (Under certain circumstances, IRS
penalty taxes may apply.) Even if you direct payouts to someone else, you
will be taxed on the income if you are the owner. However, Roth IRAs may grow
and be distributed tax free if you meet certain distribution requirements.
(p. 57)
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PROSPECTUS -- MAY 1, 2000 5
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CHARGES: We assess certain charges in connection with your contract (p. 36):
- - $30 annual contract administrative charge;
- - 0.15% variable account administrative charge;
- - 1.25% mortality and expense risk fee (if you allocate money to one
or more subaccounts);
- - if you select the Guaranteed Minimum Income Benefit Rider (6% Accumulation
Benefit Base)*, an annual fee based on an adjusted contract value (currently
0.35%);
- - if you select the 8% Performance Credit Rider*, an annual fee of 0.25% of the
contract anniversary contract value;
- - withdrawal charge;
- - any premium taxes that may be imposed on us by state or local governments
(currently, we deduct any applicable premium tax when annuity payouts begin,
but we reserve the right to deduct this tax at other times such as when you
make purchase payments or when you make a total withdrawal); and
- - the operating expenses of the funds in which the subaccounts invest.
*You may select either the Guaranteed Minimum Income Benefit Rider (6%
Accumulation Benefit Base) or the 8% Performance Credit Rider, but not both.
Riders may not be available in all states. The Guaranteed Minimum Income Benefit
Rider (6% Accumulation Benefit Base) is only available if the annuitant is age
75 or younger.
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6 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
EXPENSE SUMMARY
The purpose of the following information is to help you understand the various
costs and expenses associated with your contract.
You pay no sales charge when you purchase your contract. We show all costs that
we deduct directly from your contract or indirectly from the subaccounts and
funds below. Some expenses may vary as we explain under "Charges." Please see
the funds' prospectuses for more information on the operating expenses for each
fund.
CONTRACT OWNER EXPENSES
WITHDRAWAL CHARGE (contingent deferred sales charge as a percentage of
purchase payment withdrawn)
<TABLE>
<CAPTION>
YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE
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<S> <C> <S>
1 7%
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2 7
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3 6
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4 6
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5 5
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6 4
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7 2
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Thereafter 0
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</TABLE>
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
The amount equal to the difference in the present value of remaining payments
using the assumed investment rate and such present value using the investment
rate plus 1.77%. In no event would your withdrawal charge exceed 9% of the
amount available for payouts under the plan.
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $30*
*We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
GUARANTEED MINIMUM INCOME BENEFIT RIDER
(6% ACCUMULATION BENEFIT BASE) FEE:**
as a percentage of an adjusted contract value
charged annually. This is an optional expense. 0.35%
8% PERFORMANCE CREDIT RIDER FEE:**
as a percentage of the contract value at contract
anniversary charged annually. This is an optional expense. 0.25%
**You may select either the Guaranteed Minimum Income Benefit Rider (6%
Accumulation Benefit Base) or the 8% Performance Credit Rider, but not both.
Riders may not be available in all states. The Guaranteed Minimum Income Benefit
Rider (6% Accumulation Benefit Base) is only available if the annuitant is age
75 or younger.
ANNUAL VARIABLE ACCOUNT EXPENSES (AS A PERCENTAGE OF AVERAGE SUBACCOUNT VALUE)
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE 0.15%
MORTALITY AND EXPENSE RISK FEE*** 1.25%
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TOTAL ANNUAL VARIABLE ACCOUNT EXPENSES 1.40%
***Includes a death benefit choice of either the Option A -- Return of purchase
payment death benefit, Option B -Maximum anniversary value death benefit, or
Option C -- 5% Accumulation death benefit rider if both you and the annuitant
are age 79 or younger. If either you or the annuitant are age 80 or older Option
A will apply.
.
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PROSPECTUS -- MAY 1, 2000 7
<PAGE>
<TABLE>
<CAPTION>
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ANNUAL OPERATING EXPENSES OF THE FUNDS (AFTER FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS, IF APPLICABLE, AS A
PERCENTAGE OF AVERAGE DAILY NET ASSETS)
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MANAGEMENT 12b-1 OTHER
FEES FEES EXPENSES TOTAL
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<S> <C> <C> <C> <C>
AXP-SM- Variable Portfolio -
Blue Chip Advantage Fund .56% .13 .26 .95%(1)
Bond Fund .60% .13 .08 .81%(2)
Capital Resource Fund .60% .13 .06 .79%(2)
Cash Management Fund .51% .13 .05 .69%(2)
Diversified Equity Income Fund .56% .13 .26 .95%(1)
Extra Income Fund .62% .13 .08 .83%(2)
Federal Income Fund .61% .13 .14 .88%(1)
Growth Fund .63% .13 .19 .95%(1)
Managed Fund .59% .13 .04 .76%(2)
New Dimensions Fund-Registered Trademark- .61% .13 .07 .81%(2)
Small Cap Advantage Fund .79% .13 .31 1.23%(1)
AIM V.I.
Capital Appreciation Fund .62% -- .11 .73%(3)
Capital Development Fund --% -- 1.23 1.23%(3,4)
Value Fund .61% -- .15 .76%(3)
Alliance VP
Premier Growth Portfolio (Class B) 1.00% .25 .04 1.29%(5)
Technology Portfolio (Class B) .71% .25 .24 1.20%(5)
U.S. Government/High Grade Securities
Portfolio (Class B) .60% .25 .30 1.15%(5)
Baron Funds
Baron Capital Asset Fund 1.00% .25 .25 1.50%(6)
Fidelity VIP
III Growth & Income Portfolio (Service Class) .48% .10 .12 .70%(7)
III Mid Cap Portfolio (Service Class) .57% .10 .40 1.07%(8)
Overseas Portfolio (Service Class) .73% .10 .18 1.01%(7)
FTVIPT
Franklin Real Estate Fund - Class 2 .56% .25 .02 .83%(9)
Mutual Shares Securities Fund - Class 2 .60% .25 .19 1.04%(10)
Templeton International Smaller Companies Fund - Class 2 .85% .25 .26 1.36%(11)
Goldman Sachs VIT
Capital Growth Fund .75% -- .25 1.00%(12)
CORE-SM- U.S. Equity Fund .70% -- .20 .90%(12)
Global Income Fund .90% -- .25 1.15%(12)
International Equity Fund 1.00% -- .35 1.35%(12)
Internet Tollkeeper Fund 1.00% -- .25 1.25%(13)
Janus Aspen Series
Aggressive Growth Portfolio: Service Shares .65% .25 .02 .92%(14)
Global Technology Portfolio: Service Shares .65% .25 .13 1.03%(14)
Growth Portfolio: Service Shares .65% .25 .02 .92%(14)
International Growth Portfolio: Service Shares .65% .25 .11 1.01%(14)
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8 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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ANNUAL OPERATING EXPENSES OF THE FUNDS (AFTER FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS, IF APPLICABLE, AS A
PERCENTAGE OF AVERAGE DAILY NET ASSETS)
MANAGEMENT 12b-1 OTHER
FEES FEES EXPENSES TOTAL
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<S> <C> <C> <C> <C>
J.P. Morgan
U.S. Disciplined Equity Portfolio .35% -- .50 .85%(15)
Lazard Retirement Series
Equity Portfolio .75% .25 .25 1.25%(16)
International Equity Portfolio .75% .25 .25 1.25%(16)
MFS-Registered Trademark-
New Discovery Series .90% -- .17 1.07%(17,18)
Research Series .75% -- .11 .86%(17)
Utilities Series .75% -- .16 .91%(17)
Putnam Variable Trust
Putnam VT Growth and Income Fund - Class IB Shares .46% .15 .04 .65%(3)
Putnam VT International Growth Fund - Class IB Shares .80% .15 .22 1.17%(3)
Putnam VT International New Opportunities Fund - Class IB Shares 1.08% .15 .33 1.56%(3)
Royce
Micro-Cap Portfolio 1.25% -- .10 1.35%(19)
Premier Portfolio 1.00% -- .35 1.35%(19)
Third Avenue
Value Portfolio .90% -- .40 1.30%(20)
Wanger
International Small Cap 1.25% -- .24 1.49%(21)
U.S. Small Cap .95% -- .07 1.02%(21)
Warburg Pincus Trust -
Emerging Growth Portfolio --% -- 1.40 1.40%(22)
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PROSPECTUS -- MAY 1, 2000 9
</TABLE>
<PAGE>
(1) Based on estimated expense after fee waivers and expense reimbursements.
Without fee waivers and expense reimbursements "Other Expenses" and
"Total" would be 0.39% and 1.08% for AXP-SM- Variable Portfolio - Blue
Chip Advantage and AXP-SM- Variable Portfolio - Diversified Equity
Income Funds, 0.26% and 1.00% for AXP-SM- Variable Portfolio - Federal
Income Fund, 0.32% and 1.08% for AXP-SM- Variable Portfolio - Growth
Fund and 0.43% and 1.35% for AXP-SM- Variable Portfolio - Small Cap
Advantage Fund.
(2) The fund's expense figures are based on actual expenses for the fiscal
year ended Aug. 31, 1999 restated to include a Rule 12b-1 distribution
fee of 0.125% that went into effect Sept. 21, 1999.
(3) Figures in "Management Fees", "12b-1 Fees", "Other Expenses" and "Total"
are based on actual expenses for the fiscal year ended Dec. 31, 1999.
(4) Had there been no fee waiver or expenses reimbursements, expenses would
have been: 0.75%, 0.00%, 2.67% and 3.42%.
(5) Figures in "Management Fees", "12b-1 Fees". "Other Expenses" and "Total"
are based on actual expenses for the fiscal period ended Dec. 31, 1999.
Absent fee waivers and expense reimbursements "Management Fees," "12b-1
Fees," "Other Expenses" and "Total" would be, respectively, 1.00%,
0.25%, 0.27% and 1.52% for Alliance Technology Portfolio.
(6) The Advisor is contractually obligated to reduce its fee to the extent
required to limit Baron Capital Asset Fund's total operating expenses to
1.50% for the first $250 million of assets in the Fund, 1.35% for Fund
assets over $250 million and 1.25% for Fund assets over $500 million.
Without the expense limitations, total operating expenses for the Fund
for the period Jan. 1, 1999 through Dec. 31, 1999 would have been 1.88%.
(7) A portion of the brokerage commissions that certain funds pay was used
to reduce fund expenses. In addition, through arrangements with certain
funds' custodian, credits realized as a result of uninvested cash
balances were used to reduce a portion of each applicable funds'
expenses. With these reductions, "Other Expenses," and "Total" presented
in the table would have been 0.11% and 0.69% for Growth & Income
Portfolio and 0.15% and 0.98% for Overseas Portfolio.
(8) FMR agreed to reimburse a portion Mid Cap Portfolio's expenses during
the period. Without this reimbursement, the Portfolio's management fee,
distribution & service fee (12b-1), other expenses and total expenses
would have been 0.57%, 0.10%, 2.74% and 3.41%, respectively.
(9) Previously Franklin Real Estate Securities Fund. The fund administration
fee is paid indirectly through the management fee. The fund's Class 2
distribution plan or "Rule 12b-1 plan" is described in the fund's
prospectus.
(10) On Feb. 8, 2000, a merger and reorganization was approved that combined
the fund with a similar fund of Templeton Variable Products Series Fund,
effective May 1, 2000. The table shows total expenses based on the
fund's assets as of Dec. 31, 1999, and not the assets of the combined
fund. However, if the table reflected combined assets, the fund's
expenses after May 1, 2000 would be estimated as: "Management Fees"
0.60%, "12b-1 Fees" 0.25%, "Other Expenses" 0.19%, and "Total" 1.04%.
The fund's Class 2 distribution plan or "Rule 12b-1 plan" is described
in the fund's prospectus.
(11) The fund's class 2 distribution plan or "Rule 12b-1 plan" is described
in the fund's prospectus.
(12) The fund's expenses are based on estimated expenses for the fiscal year
ended Dec. 31, 2000. Goldman Sachs Asset Management and Goldman Sachs
Asset Management International, the investment advisers, have
voluntarily agreed to reduce or limit certain other expenses (excluding
management fees, taxes, interest, brokerage fees, litigation,
indemnification and other extraordinary expenses) to the extent such
expenses exceed the percentage stated in the above table (as calculated
per annum) of each fund's respective average daily net assets. Without
the limitations described above, "Other Expenses" and "Total" of the
funds would be as follows: 0.94% and 1.69% for Capital Growth Fund,
1.78% and 2.68% for Global Income Fund, 0.77% and 1.77% for
International Equity Fund, and 0.20% and 0.90% for CORE-SM- U.S. Equity
Fund. CORE-SM- is a service mark of Goldman Sachs & Co.
(13) Based on projected assets of $150 million, there will be no expense
reimbursements.
(14) Expenses are based on the estimated expenses that the new Service Shares
Class of each portfolio expects to incur in its initial fiscal year. All
expenses are shown without the effect of expense offset arrangements.
(15) Fees are stated to reflect an agreement to reimburse the trust to the
extent certain expenses exceed in any fiscal year 0.85% of the average
daily net assets of the J.P. Morgan U.S. Disciplined Equity Portfolio.
Without such reimbursements, total fund annual expenses would have been
0.87% for the portfolio.
(16) Effective May 1, 1999, the investment advisor agreed to waive its fees
and/or reimburse the Funds through Dec. 31, 2000 to the extent that
total Fund expenses exceed 1.25% for Equity and 1.25% for International
Equity of the Funds' average daily net assets. Absent fee waivers and/or
reimbursements, "Other Expenses" and "Total" expenses for the year ended
Dec. 31, 1999 would have been 4.63% and 5.63% for Equity, and 11.94% and
12.94% for International Equity.
(17) Each series has an expense offset arrangement which reduces the series'
custodian fee based upon the amount of cash maintained by the series
with its custodian and dividend disbursing agent. Each series may enter
into other such arrangements and directed brokerage arrangements, which
would also have the effect of reducing the series' expenses. "Other
Expenses" do not take into account these expense reductions, and are
therefore higher than the actual expenses of the series. Had these fee
reductions been taken into account, "Net Expenses" would be lower for
certain series and would equal: 1.05% for New Discovery Series, 0.85%
for Research Series, and 0.90% for Utilities Series.
(18) MFS has contractually agreed, subject to reimbursement, to bear expenses
for these series such that each such series' "Other Expenses" (after
taking into account the expense offset arrangement described above), do
not exceed the following percentages of the average daily net assets of
the series during the current fiscal year 0.15% for the New Discovery
Series. Without this agreement, "Other" and Total Expenses" would have
been 1.59% and 2.49%. These contractual fee arrangements will continue
until at least May 1, 2001, unless changed with the consent of the board
of trustees which oversees the series.
(19) Royce has contractually agreed to waive its fees and reimburse expenses
to the extent necessary to maintain the Funds Net Annual Operating
Expense ratio at or below 1.35% through Dec. 31, 1999 and 1.99% through
Dec. 31, 2008. Absent fee waivers "Other Expenses" and "Total Expenses"
would be 0.99% and 2.24% for Royce Micro-Cap Portfolio and 4.63% and
5.63% for Royce Premier Portfolio.
(20) These expenses reflect reimbursements by the Advisor. The Advisor
reimbursed the Fund for all expenses incurred by the Fund in excess of
1.30% of Fund assets. The fund will repay the Advisor the amount of its
reimbursement for up to three years following the reimbursement to the
extent Fund expenses drop below 1.30%. The Advisor expects to continue
to reimburse the Fund for these expenses for the foreseeable future.
Either the Fund or the Advisor can terminate this arrangement at any
time. Without this reimbursement, the Fund's "Other Expenses" and
"Total" would have been 2.05% and 2.95%. Other expenses are based on
estimated amounts for the current fiscal year.
(21) Actual operating expenses of funds at Dec. 31, 1999.
(22) Expense ratios are shown after fee waivers and expense reimbursements by
the investment advisor. The total expense ratio before the waivers and
reimbursements would have been 11.16% for Emerging Growth Portfolio of
the Warburg Pincus Trust.
- --------------------------------------------------------------------------------
10 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
EXAMPLES:*
You would pay the following expenses on a $1,000 investment without any optional
rider and assuming a 5% annual return and....
<TABLE>
<CAPTION>
NO WITHDRAWAL OR SELECTION
TOTAL WITHDRAWAL AT THE OF AN ANNUITY PAYOUT PLAN AT THE
END OF EACH TIME PERIOD END OF EACH TIME PERIOD
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AXP (SM) Variable Portfolio -
Blue Chip Advantage Fund $94.78 $136.24 $180.33 $277.94 $24.78 $76.24 $130.33 $277.94
Bond Fund 93.35 131.93 173.14 263.58 23.35 71.93 123.14 263.58
Capital Resource Fund 93.14 131.31 172.11 261.52 23.14 71.31 122.11 261.52
Cash Management Fund 92.12 128.23 166.94 251.11 22.12 68.23 116.94 251.11
Diversified Equity Income Fund 94.78 136.24 180.33 277.94 24.78 76.24 130.33 277.94
Extra Income Fund 93.55 132.55 174.17 265.65 23.55 72.55 124.17 265.65
Federal Income Fund 94.07 134.09 176.74 270.79 24.07 74.09 126.74 270.79
Growth Fund 94.78 136.24 180.33 277.94 24.78 76.24 130.33 277.94
Managed Fund 92.84 130.39 170.56 258.41 22.84 70.39 120.56 258.41
New Dimensions Fund-Registered Trademark- 93.35 131.93 173.14 263.58 23.35 71.93 123.14 263.58
Small Cap Advantage Fund 97.65 144.83 194.59 306.08 27.65 84.83 144.59 306.08
AIM V.I.
Capital Appreciation Fund 92.53 129.46 169.01 255.29 22.53 69.46 119.01 255.29
Capital Development Fund 97.65 144.83 194.59 306.08 27.65 84.83 144.59 306.08
Value Fund 92.84 130.39 170.56 258.41 22.84 70.39 120.56 258.41
Alliance VP
Premier Growth Portfolio (Class B) 98.27 146.66 197.63 312.00 28.27 86.66 147.63 312.00
Technology Portfolio (Class B) 97.35 143.91 193.07 303.10 27.35 83.91 143.07 303.10
U.S. Government/High Grade
Securities Portfolio (Class B) 96.83 142.38 190.53 298.12 26.83 82.38 140.53 298.12
Baron Funds
Baron Capital Asset Fund 100.42 153.06 208.18 332.47 30.42 93.06 158.18 332.47
Fidelity VIP
III Growth & Income Portfolio
(Service Class) 92.22 128.53 167.46 252.16 22.22 68.53 117.46 252.16
III Mid Cap Portfolio (Service Class) 96.01 139.93 186.46 290.10 26.01 79.93 136.46 290.10
Overseas Portfolio (Service Class) 95.40 138.09 183.40 284.04 25.40 78.09 133.40 284.04
FTVIPT
Franklin Real Estate Fund - Class 2 93.55 132.55 174.17 265.65 23.55 72.55 124.17 265.65
Mutual Shares Securities Fund - Class 2 95.71 139.01 184.93 287.07 25.71 79.01 134.93 287.07
Templeton International Smaller
Companies Fund - Class 2 98.99 148.80 201.16 318.87 28.99 88.80 151.16 318.87
Goldman Sachs VIT
Capital Growth Fund 95.30 137.78 182.89 283.03 25.30 77.78 132.89 283.03
CORE (SM) U.S. Equity Fund 94.27 134.71 177.77 272.84 24.27 74.71 127.77 272.84
Global Income Fund 96.83 142.38 190.53 298.12 26.83 82.38 140.53 298.12
International Equity Fund 98.88 148.50 200.65 317.89 28.88 88.50 150.65 317.89
Internet Tollkeeper Fund 97.86 145.44 195.60 308.06 27.86 85.44 145.60 308.06
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 11
<PAGE>
You would pay the following expenses on a $1,000 investment without any optional
rider and assuming a 5% annual return and....
<TABLE>
<CAPTION>
NO WITHDRAWAL OR SELECTION
TOTAL WITHDRAWAL AT THE OF AN ANNUITY PAYOUT PLAN AT THE
END OF EACH TIME PERIOD END OF EACH TIME PERIOD
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Janus Aspen Series
Aggressive Growth Portfolio: Service Shares 94.48 135.32 178.79 274.88 24.48 75.32 128.79 274.88
Global Technology Portfolio: Service Shares 95.60 138.70 184.42 286.06 25.60 78.70 134.42 286.06
Growth Portfolio: Service Shares 94.48 135.32 178.79 274.88 24.48 75.32 128.79 274.88
International Growth Portfolio: Service Shares 95.40 138.09 183.40 284.04 25.40 78.09 133.40 284.04
J.P. Morgan
U.S. Disciplined Equity Portfolio 93.76 133.17 175.20 267.71 23.76 73.17 125.20 267.71
Lazard Retirement Series
Equity Portfolio 97.86 145.44 195.60 308.06 27.86 85.44 145.60 308.06
International Equity Portfolio 97.86 145.44 195.60 308.06 27.86 85.44 145.60 308.06
MFS-Registered Trademark-
New Discovery Series 96.01 139.93 186.46 290.10 26.01 79.93 136.46 290.10
Research Series 93.86 133.47 175.71 268.74 23.86 73.47 125.71 268.74
Utilities Series 94.37 135.01 178.28 273.86 24.37 75.01 128.28 273.86
Putnam Variable Trust
Putnam VT Growth and Income
Fund - Class IB Shares 91.71 126.99 164.87 246.92 21.71 66.99 114.87 246.92
Putnam VT International Growth
Fund - Class IB Shares 97.04 143.00 191.55 300.11 27.04 83.00 141.55 300.11
Putnam VT International New Opportunities
Fund - Class IB Shares 101.04 154.89 211.18 338.24 31.04 94.89 161.18 338.24
Royce
Micro-Cap Portfolio 98.88 148.50 200.65 317.89 28.88 88.50 150.65 317.89
Premier Portfolio 98.88 148.50 200.65 317.89 28.88 88.50 150.65 317.89
Third Avenue
Value Portfolio 98.37 146.97 198.13 312.99 28.37 86.97 148.13 312.99
Wanger
International Small Cap 100.32 152.76 207.68 331.51 30.32 92.76 157.68 331.51
U.S. Small Cap 95.50 138.40 183.91 285.05 25.50 78.40 133.91 285.05
Warburg Pincus Trust -
Emerging Growth Portfolio 99.40 150.02 203.17 322.78 29.40 90.02 153.17 322.78
</TABLE>
- --------------------------------------------------------------------------------
12 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
You would pay the following expenses on a $1,000 investment if you selected the
0.35% Guaranteed Minimum Income Benefit Rider (6% Accumulation Benefit Base) and
assuming a 5% annual return and....
<TABLE>
<CAPTION>
NO WITHDRAWAL OR SELECTION
TOTAL WITHDRAWAL AT THE OF AN ANNUITY PAYOUT PLAN AT THE
END OF EACH TIME PERIOD END OF EACH TIME PERIOD
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AXP (SM) Variable Portfolio -
Blue Chip Advantage Fund $98.37 $146.97 $198.13 $312.99 $28.37 $86.97 $148.13 $312.99
Bond Fund 96.94 142.69 191.04 299.12 26.94 82.69 141.04 299.12
Capital Resource Fund 96.73 142.08 190.03 297.12 26.73 82.08 140.03 297.12
Cash Management Fund 95.71 139.01 184.93 287.07 25.71 79.01 134.93 287.07
Diversified Equity Income Fund 98.37 146.97 198.13 312.99 28.37 86.97 148.13 312.99
Extra Income Fund 97.14 143.30 192.06 301.11 27.14 83.30 142.06 301.11
Federal Income Fund 97.65 144.83 194.59 306.08 27.65 84.83 144.59 306.08
Growth Fund 98.37 146.97 198.13 312.99 28.37 86.97 148.13 312.99
Managed Fund 96.42 141.16 188.50 294.12 26.42 81.16 138.50 294.12
New Dimensions Fund-Registered Trademark- 96.94 142.69 191.04 299.12 26.94 82.69 141.04 299.12
Small Cap Advantage Fund 101.24 155.50 212.18 340.16 31.24 95.50 162.18 340.16
AIM V.I.
Capital Appreciation Fund 96.12 140.24 186.97 291.10 26.12 80.24 136.97 291.10
Capital Development Fund 101.24 155.50 212.18 340.16 31.24 95.50 162.18 340.16
Value Fund 96.42 141.16 188.50 294.12 26.42 81.16 138.50 294.12
Alliance VP
Premier Growth Portfolio (Class B) 101.86 157.32 215.17 345.88 31.86 97.32 165.17 345.88
Technology Portfolio (Class B) 100.93 154.58 210.68 337.28 30.93 94.58 160.68 337.28
U.S. Government/High Grade Securities
Portfolio (Class B) 100.42 153.06 208.18 332.47 30.42 93.06 158.18 332.47
Baron Funds
Baron Capital Asset Fund 104.01 163.67 225.57 365.64 34.01 103.67 175.57 365.64
Fidelity VIP
III Growth & Income Portfolio
(Service Class) 95.81 139.32 185.44 288.08 25.81 79.32 135.44 288.08
III Mid Cap Portfolio (Service Class) 99.60 150.63 204.17 324.72 29.60 90.63 154.17 324.72
Overseas Portfolio (Service Class) 98.99 148.80 201.16 318.87 28.99 88.80 151.16 318.87
FTVIPT
Franklin Real Estate Fund - Class 2 97.14 143.30 192.06 301.11 27.14 83.30 142.06 301.11
Mutual Shares Securities Fund - Class 2 99.29 149.72 202.66 321.80 29.29 89.72 152.66 321.80
Templeton International Smaller
Companies Fund - Class 2 102.57 159.44 218.65 352.51 32.57 99.44 168.65 352.51
Goldman Sachs VIT
Capital Growth Fund 98.88 148.50 200.65 317.89 28.88 88.50 150.65 317.89
CORE (SM) U.S. Equity Fund 97.86 145.44 195.60 308.06 27.86 85.44 145.60 308.06
Global Income Fund 100.42 153.06 208.18 332.47 30.42 93.06 158.18 332.47
International Equity Fund 102.47 159.13 218.15 351.57 32.47 99.13 168.15 351.57
Internet Tollkeeper Fund 101.45 156.10 213.18 342.07 31.45 96.10 163.18 342.07
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 13
<PAGE>
You would pay the following expenses on a $1,000 investment if you selected the
0.35% Guaranteed Minimum Income Benefit Rider (6% Accumulation Benefit Base) and
assuming a 5% annual return and....
<TABLE>
<CAPTION>
NO WITHDRAWAL OR SELECTION
TOTAL WITHDRAWAL AT THE OF AN ANNUITY PAYOUT PLAN AT THE
END OF EACH TIME PERIOD END OF EACH TIME PERIOD
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Janus Aspen Series
Aggressive Growth Portfolio: Service Shares 98.06 146.05 196.62 310.03 28.06 86.05 146.62 310.03
Global Technology Portfolio: Service Shares 99.19 149.41 202.16 320.83 29.19 89.41 152.16 320.83
Growth Portfolio: Service Shares 98.06 146.05 196.62 310.03 28.06 86.05 146.62 310.03
International Growth Portfolio: Service Shares 98.99 148.80 201.16 318.87 28.99 88.80 151.16 318.87
J.P. Morgan
U.S. Disciplined Equity Portfolio 97.35 143.91 193.07 303.10 27.35 83.91 143.07 303.10
Lazard Retirement Series
Equity Portfolio 101.45 156.10 213.18 342.07 31.45 96.10 163.18 342.07
International Equity Portfolio 101.45 156.10 213.18 342.07 31.45 96.10 163.18 342.07
MFS-Registered Trademark-
New Discovery Series 99.60 150.63 204.17 324.72 29.60 90.63 154.17 324.72
Research Series 97.45 144.22 193.58 304.09 27.45 84.22 143.58 304.09
Utilities Series 97.96 145.75 196.11 309.04 27.96 85.75 146.11 309.04
Putnam Variable Trust
Putnam VT Growth and Income
Fund - Class IB Shares 95.30 137.78 182.89 283.03 25.30 77.78 132.89 283.03
Putnam VT International Growth
Fund - Class IB Shares 100.63 153.67 209.18 334.40 30.63 93.67 159.18 334.40
Putnam VT International New Opportunities
Fund - Class IB Shares 104.62 165.48 228.53 371.21 34.62 105.48 178.53 371.21
Royce
Micro-Cap Portfolio 102.47 159.13 218.15 351.57 32.47 99.13 168.15 351.57
Premier Portfolio 102.47 159.13 218.15 351.57 32.47 99.13 168.15 351.57
Third Avenue
Value Portfolio 101.96 157.62 215.67 346.83 31.96 97.62 165.67 346.83
Wanger
International Small Cap 103.91 163.37 225.08 364.71 33.91 103.37 175.08 364.71
U.S. Small Cap 99.09 149.11 201.66 319.85 29.09 89.11 151.66 319.85
Warburg Pincus Trust -
Emerging Growth Portfolio 102.98 160.65 220.63 356.28 32.98 100.65 170.63 356.28
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In these examples, the $30 contract administrative charge is approximated
as a 0.068% charge based on our average contract size. Premium taxes
imposed by some state and local governments are not reflected in this
table. We entered into certain arrangements under which we are
compensated by the funds' advisors and/or distributors for the
administrative services we provide to the funds.
YOU SHOULD NOT CONSIDER THESE EXAMPLES AS REPRESENTATIONS OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
- --------------------------------------------------------------------------------
14 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
each subaccount. We have not provided this information for some subaccounts
because they are new and do not have any history.
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
SUBACCOUNT ESI(1) (INVESTING IN SHARES OF AXP (SM) VARIABLE PORTFOLIO - BOND FUND)
Accumulation unit value at beginning of period $1.33 $1.33 $1.24 $1.17 $1.00
Accumulation unit value at end of period $1.33 $1.33 $1.33 $1.24 $1.17
Number of accumulation units outstanding at end of period (000 omitted) 8,127 5,689 2,544 1,377 414
Ratio of operating expense to average net assets 1.40% 1.40% 1.40% 1.50% 1.50%
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT ECR(1) (INVESTING IN SHARES OF AXP (SM) VARIABLE PORTFOLIO - CAPITAL RESOURCE FUND)
Accumulation unit value at beginning of period $1.91 $1.56 $1.27 $1.20 $1.00
Accumulation unit value at end of period $2.33 $1.91 $1.56 $1.27 $1.20
Number of accumulation units outstanding at end of period (000 omitted) 5,864 5,163 3,813 2,350 818
Ratio of operating expense to average net assets 1.40% 1.40% 1.40% 1.50% 1.50%
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EMS(1) (INVESTING IN SHARES OF AXP (SM) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND)
Accumulation unit value at beginning of period $1.15 $1.11 $1.07 $1.03 $1.00
Accumulation unit value at end of period $1.18 $1.15 $1.11 $1.07 $1.03
Number of accumulation units outstanding at end of period (000 omitted) 941 749 231 241 132
Ratio of operating expense to average net assets 1.40% 1.40% 1.40% 1.50% 1.50%
Simple yield(2) 4.52% 3.24% 3.71% 3.26% 3.53%
Compound yield(2) 4.62% 3.29% 3.78% 3.32% 3.59%
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EIA(3) (INVESTING IN SHARES OF AXP (SM) VARIABLE PORTFOLIO - EXTRA INCOME FUND)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.00 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 8 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EMG(1) (INVESTING IN SHARES OF AXP (SM) VARIABLE PORTFOLIO - MANAGED FUND)
Accumulation unit value at beginning of period $1.83 $1.60 $1.36 $1.18 $1.00
Accumulation unit value at end of period $2.07 $1.83 $1.60 $1.36 $1.18
Number of accumulation units outstanding at end of period (000 omitted) 5,985 4,684 2,944 1,546 589
Ratio of operating expense to average net assets 1.40% 1.40% 1.40% 1.50% 1.50%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 15
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
SUBACCOUNT EGD(4) (INVESTING IN SHARES OF AXP (SM) VARIABLE PORTFOLIO - NEW DIMENSIONS FUND-Registered Trademark-)
Accumulation unit value at beginning of period $1.32 $1.05 $1.00 -- --
Accumulation unit value at end of period $1.72 $1.32 $1.05 -- --
Number of accumulation units outstanding at end of period (000 omitted) 2,141 1,108 69 -- --
Ratio of operating expense to average net assets 1.40% 1.40% 1.40% -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT ECA(3) (INVESTING IN SHARES OF AIM V.I. CAPITAL APPRECIATION FUND)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.43 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 57 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT ECD(5) (INVESTING IN SHARES OF AIM V.I. CAPITAL DEVELOPMENT FUND)
Accumulation unit value at beginning of periodt $1.00 -- -- -- --
Accumulation unit value at end of period $1.26 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 1 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EVA(6) (INVESTING IN SHARES OF AIM V.I. VALUE FUND)
Accumulation unit value at beginning of period $1.34 $1.03 $1.00 -- --
Accumulation unit value at end of period $1.72 $1.34 $1.03 -- --
Number of accumulation units outstanding at end of period (000 omitted) 5,638 1,779 66 -- --
Ratio of operating expense to average net assets 1.40% 1.40% 1.40% -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EPP(5) (INVESTING IN SHARES OF ALLIANCE VP PREMIER GROWTH PORTFOLIO -
CLASS B)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.17 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 56 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
16 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
SUBACCOUNT ETC(5) (INVESTING IN SHARES OF ALLIANCE VP TECHNOLOGY PORTFOLIO - CLASS B)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.40 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 105 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EHG(5) (INVESTING IN SHARES OF ALLIANCE VP U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO - CLASS B)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.00 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 7 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EAS(5) (INVESTING IN SHARES OF BARON CAPITAL ASSET FUND)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.19 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 31 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EFG(5) (INVESTING IN SHARES OF FIDELITY VIP III GROWTH & INCOME
PORTFOLIO - SERVICE CLASS)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 71 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EFM(5) (INVESTING IN SHARES OF FIDELITY VIP III MID CAP PORTFOLIO - SERVICE CLASS)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.24 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 44 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 17
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
SUBACCOUNT EFO(5) (INVESTING IN SHARES OF FIDELITY VIP OVERSEAS PORTFOLIO - SERVICE CLASS)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.23 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 33 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT ERE(5) (INVESTING IN SHARES OF FTVIPT FRANKLIN REAL ESTATE SECURITIES FUND - CLASS 2)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $0.97 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 1 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EMU(5) (INVESTING IN SHARES OF FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 31 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EIS(5) (INVESTING IN SHARES OF FTVIPT TEMPLETON INTERNATIONAL SMALLER COMPANIES FUND - CLASS 2)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.02 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 1 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT JCG(5) (INVESTING IN SHARES OF GOLDMAN SACHS VIT CAPITAL GROWTH FUND)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.16 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 226 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
18 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
SUBACCOUNT JUS(5) (INVESTING IN SHARES OF GOLDMAN SACHS VIT CORE (SM) U.S. EQUITY FUND)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.12 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 480 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT JGL(5) (INVESTING IN SHARES OF GOLDMAN SACHS VIT GLOBAL INCOME FUND)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $0.97 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 34 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT JIF(5) (INVESTING IN SHARES OF GOLDMAN SACHS VIT INTERNATIONAL EQUITY FUND)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.27 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 30 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EDE(5) (INVESTING IN SHARES OF J.P. MORGAN U.S. DISCIPLINED EQUITY PORTFOLIO)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.07 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 51 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT ERQ(5) (INVESTING IN SHARES OF LAZARD RETIREMENT SERIES EQUITY PORTFOLIO)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.01 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 1 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 19
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
SUBACCOUNT ERI(5) (INVESTING IN SHARES OF LAZARD RETIREMENT SERIES INTERNATIONAL EQUITY PORTFOLIO)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.07 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 1 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT END(5) (INVESTING IN SHARES OF MFS-Registered Trademark- NEW DISCOVERY SERIES)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.47 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 64 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT ERS(5) (INVESTING IN SHARES OF MFS-Registered Trademark- RESEARCH SERIES)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.16 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 242 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EUT(5) (INVESTING IN SHARES OF MFS-Registered Trademark- UTILITIES SERIES)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.20 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 30 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EPG(7) (INVESTING IN SHARES OF PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES)
Accumulation unit value at beginning of period $1.18 $1.00 -- -- --
Accumulation unit value at end of period $1.18 $1.18 -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 4,302 239 -- -- --
Ratio of operating expense to average net assets 1.40% 1.40% -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
20 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
SUBACCOUNT EPL(5) (INVESTING IN SHARES OF PUTNAM VT INTERNATIONAL GROWTH FUND -
CLASS IB SHARES)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.33 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 347 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EPN(5) (INVESTING IN SHARES OF PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND -
CLASS IB SHARES)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.53 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 35 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EMC(5) (INVESTING IN SHARES OF ROYCE MICRO-CAP PORTFOLIO)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.15 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 37 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EPR(5) (INVESTING IN SHARES OF ROYCE PREMIER PORTFOLIO)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 1 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EIC(5) (Investing in shares of Wanger International Small Cap)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.51 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 28 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS -- MAY 1, 2000 21
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
SUBACCOUNT EUC(5) (INVESTING IN SHARES OF WANGER U.S. SMALL CAP)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.15 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 19 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EEG(5) (INVESTING IN SHARES OF WARBURG PINCUS TRUST - EMERGING GROWTH PORTFOLIO)
Accumulation unit value at beginning of period $1.00 -- -- -- --
Accumulation unit value at end of period $1.31 -- -- -- --
Number of accumulation units outstanding at end of period (000 omitted) 6 -- -- -- --
Ratio of operating expense to average net assets 1.40% -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Operations commenced on Feb. 21, 1995.
2 Net of annual contract administrative charge and mortality and expense risk
fee.
3 Operations commenced on Aug. 26, 1999.
4 Operations commenced on Oct. 29, 1997.
5 Operations commenced on Sept. 22, 1999.
6 Operations commenced on Oct. 30, 1997.
7 Operations commenced on Oct. 5, 1998.
22 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
FINANCIAL STATEMENTS
You can find the audited financial statements of the subaccounts with financial
history in the SAI. The SAI does not include the audited financial statements
for some of the subaccounts because they are new and do not have any assets. You
can find our audited financial statements later in this prospectus.
PERFORMANCE INFORMATION
Performance information for the subaccounts may appear from time to time in
advertisements or sales literature. This information reflects the performance of
a hypothetical investment in a particular subaccount during a specified time
period. We show actual performance from the date the subaccounts began investing
in funds. For some subaccounts, we do not provide any performance information
because they are new and have not had any activity to date. We also show
performance from the commencement date of the funds as if the contract existed
at that time, which it did not. Although we base performance figures on
historical earnings, past performance does not guarantee future results.
We include non-recurring charges (such as withdrawal charges) in total return
figures, but not in yield quotations. Excluding non-recurring charges in yield
calculations increases the reported value.
Total return figures reflect deduction of all applicable charges, including the:
- - contract administrative charge,
- - variable account administrative charge,
- - the Guaranteed Minimum Income Benefit Rider (6% Accumulation Benefit Base)*
fee,
- - the 8% Performance Credit Rider* fee,
- - mortality and expense risk fee, and
- - withdrawal charge (assuming a full withdrawal at the end of the illustrated
period).
*You may select either the Guaranteed Minimum Income Benefit Rider (6%
Accumulation Benefit Base) or the 8% Performance Credit Rider, but not both.
Riders may not be available in all states. The Guaranteed Minimum Income Benefit
Rider (6% Accumulation Benefit Base) is only available if the annuitant is age
75 or younger.
We also show optional total return quotations that do not reflect a withdrawal
charge deduction (assuming no withdrawal), the Guaranteed Minimum Income Benefit
Rider (6% Accumulation Benefit Base) fee and the 8% Performance Credit Rider
fee. We may show total return quotations by means of schedules, charts or
graphs.
PROSPECTUS -- MAY 1, 2000 23
<PAGE>
AVERAGE ANNUAL TOTAL RETURN is the average annual compounded rate of return of
the investment over a period of one, five and ten years (or up to the life of
the subaccount if it is less than ten years old).
CUMULATIVE TOTAL RETURN is the cumulative change in the value of an investment
over a specified time period. We assume that income earned by the investment is
reinvested. Cumulative total return generally will be higher than average annual
total return.
ANNUALIZED SIMPLE YIELD (FOR SUBACCOUNTS INVESTING IN MONEY MARKET FUNDS)
"annualizes" the income generated by the investment over a given seven-day
period. That is, we assume the amount of income generated by the investment
during the period will be generated each seven-day period for a year. We show
this as a percentage of the investment.
ANNUALIZED COMPOUND YIELD (FOR SUBACCOUNTS INVESTING IN MONEY MARKET FUNDS) is
calculated like simple yield except that we assume the income is reinvested when
we annualize it. Compound yield will be higher than the simple yield because of
the compounding effect of the assumed reinvestment.
ANNUALIZED YIELD (FOR SUBACCOUNTS INVESTING IN INCOME FUNDS) divides the net
investment income (income less expenses) for each accumulation unit during a
given 30-day period by the value of the unit on the last day of the period. We
then convert the result to an annual percentage.
You should consider performance information in light of the investment
objectives, policies, characteristics and quality of the fund in which the
subaccount invests and the market conditions during the specified time period.
Advertised yields and total return figures include charges that reduce
advertised performance. Therefore, you should not compare subaccount performance
to that of mutual funds that sell their shares directly to the public. (See the
SAI for a further description of methods used to determine total return and
yield.)
If you would like additional information about actual performance, please
contact us at the address or telephone number on the first page of this
prospectus.
24 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
THE VARIABLE ACCOUNT AND THE FUNDS
You may allocate payments to any or all of the subaccounts of the variable
account that invest in shares of the following funds:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES: INVESTMENT ADVISOR OR MANAGER
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
EVB AXP(SM) Variable Objective: long-term total return IDS Life, investment
Portfolio - Blue Chip exceeding that of the U.S. stock manager; American
Advantage Fund market. Invests primarily in Express Financial
common stocks of companies Corporation (AEFC)
included in the unmanaged S&P 500 investment advisor.
Index.
- --------------------------------------------------------------------------------------------------------------
ESI AXP(SM) Variable Objective: high level of current IDS Life, investment
Portfolio -Bond Fund income while conserving the value manager; AEFC,
of the investment and continuing investment advisor.
a high level of income for the
longest time period. Invests
primarily in bonds and other debt
obligations.
- --------------------------------------------------------------------------------------------------------------
ECR AXP(SM) Variable Objective: capital appreciation. IDS Life, investment
Portfolio -Capital Invests primarily in U.S. common manager; AEFC
Resource Fund stocks and other securities investment advisor.
convertible into common stocks.
- --------------------------------------------------------------------------------------------------------------
EMS AXP(SM) Variable Objective: maximum current income IDS Life, investment
Portfolio -Cash consistent with liquidity and manager; AEFC
Management Fund conservation of capital. Invests investment advisor.
in money market securities.
- --------------------------------------------------------------------------------------------------------------
EVD AXP(SM) Variable Objective: a high level of IDS Life, investment
Portfolio - current income and, as a manager; AEFC
Diversified Equity secondary goal, steady growth of investment advisor.
Income Fund capital. Invests primarily in
dividend-paying common and
preferred stocks.
- --------------------------------------------------------------------------------------------------------------
EIA AXP(SM) Variable Objective: high current income, IDS Life, investment
Portfolio -Extra with capital growth as a manager; AEFC
Income Fund secondary objective. Invests investment advisor.
primarily in high-yielding,
high-risk corporate bonds issued
by U.S. and foreign companies and
governments.
- --------------------------------------------------------------------------------------------------------------
EVF AXP(SM) Variable Objective: a high level of IDS Life, investment
Portfolio - Federal current income and safety of manager; AEFC
Income Fund principal consistent with an investment advisor.
investment in U.S. government and
government agency securities.
Invests primarily in debt
obligations issued or guaranteed
as to principal and interest by
the U.S. government, its agencies
or instrumentalities.
- --------------------------------------------------------------------------------------------------------------
EVG AXP(SM) Variable Objective: long-term capital IDS Life, investment
Portfolio -Growth Fund growth. Invests primarily in manager; AEFC
common stocks and securities investment advisor.
convertible into common stocks
that appear to offer growth
opportunities.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS -- MAY 1, 2000 25
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES: INVESTMENT ADVISOR OR MANAGER
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
EMG AXP(SM) Variable Objective: maximum total IDS Life, investment
Portfolio - Managed investment return through a manager; AEFC
Fund combination of capital growth and investment advisor.
current income. Invests primarily
in a combination of common and
preferred stocks, convertible
securities, bonds and other debt
securities.
- --------------------------------------------------------------------------------------------------------------
EGD AXP(SM) Variable Objective: long-term growth of IDS Life, investment
Portfolio -New capital. Invests primarily in manager; AEFC
Dimensions Fund common stocks of U.S. and foreign investment advisor.
-Registered Trademark- companies showing potential for
significant growth.
- --------------------------------------------------------------------------------------------------------------
EVS AXP(SM) Variable Objective: long-term capital IDS Life, investment
Portfolio -Small Cap growth. Invests primarily in manager; AEFC
Advantage Fund equity stocks of small companies investment advisor.
that are often included in the
S&P Small Cap 600 Index or the
Russell 2000 Index.
- --------------------------------------------------------------------------------------------------------------
ECA AIM V.I. Capital Objective: growth of capital. A I M Advisors, Inc.
Appreciation Fund Invests primarily in common
stocks, with emphasis on medium-
or small-sized growth companies.
- --------------------------------------------------------------------------------------------------------------
ECD AIM V.I. Capital Objective: long term growth of A I M Advisors, Inc.
Development Fund capital. Invests primarily in
securities (including common
stocks, convertible securities
and bonds) of small- and
medium-sized companies.
- --------------------------------------------------------------------------------------------------------------
EVA AIM V.I. Value Fund Objective: long-term growth of A I M Advisors, Inc.
capital with income as a
secondary objective. Invests
primarily in equity securities
judged to be undervalued relative
to the investment advisor's
appraisal of the current or
projected earnings of the
companies issuing the securities,
or relative to current market
values of assets owned by the
companies issuing the securities,
or relative to the equity market
generally.
- --------------------------------------------------------------------------------------------------------------
EPP Alliance VP Premier Objective: long-term growth of Alliance Capital
Growth Portfolio capital by pursuing aggressive Management, L.P.
(Class B) investment policies. Invests
primarily in equity securities of
a limited number of large,
carefully selected, high-quality
U.S. companies that are judged
likely to achieve superior
earnings growth.
- --------------------------------------------------------------------------------------------------------------
ETC Alliance VP Technology Objective: growth of capital. Alliance Capital
Portfolio (Class B) Current income is only an Management, L.P.
incidental consideration. Invests
primarily in securities of
companies expected to benefit
from technological advances and
improvements.
- --------------------------------------------------------------------------------------------------------------
EHG Alliance VP U.S. Objective: high level of current Alliance Capital
Government/ High Grade income consistent with Management, L.P.
Securities Portfolio preservation of capital. Invest
(Class B) primarily in (1) U.S. Government
securities and (2) other
high-grade debt securities or, if
unrated, of equivalent quality.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
26 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES: INVESTMENT ADVISOR OR MANAGER
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
EAS Baron Capital Asset Objective: capital appreciation. BAMCO, Inc.
Fund Invests primarily in securities
of small and medium sized
companies with undervalued assets
or favorable growth prospects.
- --------------------------------------------------------------------------------------------------------------
EFG Fidelity VIP III Objective: high total return Fidelity Management &
Growth & Income through a combination of current Research Company
Portfolio (Service income and capital appreciation. (FMR), investment
Class) Invests primarily in common manager; FMR U.K. and
stocks with a focus on those that FMR Far East,
pay current dividends and show sub-investment
potential for capital advisors.
appreciation.
- --------------------------------------------------------------------------------------------------------------
EFM Fidelity VIP III Mid Objective: long-term growth of FMR, investment
Cap Portfolio (Service capital. Invests primarily in manager; FMR U.K. and
Class) medium market capitalization FMR Far East,
common stocks. sub-investment
advisors.
- --------------------------------------------------------------------------------------------------------------
EFO Fidelity VIP Overseas Objective: long-term growth of FMR, investment
Portfolio (Service capital. Invests primarily in manager; FMR U.K., FMR
Class) common stocks of foreign Far East, Fidelity
securities. International
Investment Advisors
(FIIA) and FIIA U.K.,
sub-investment advisors.
- --------------------------------------------------------------------------------------------------------------
ERE FTVIPT Franklin Real Objective: capital appreciation Franklin Advisers, Inc.
Estate Fund - Class 2 with a secondary goal to earn
(previously Franklin current income. Invests primarily
Real Estate Securities in securities of companies
Fund) operating in the real estate
industry, primarily equity real
estate investment trusts (REITS).
- --------------------------------------------------------------------------------------------------------------
EMU FTVIPT Mutual Shares Objective: capital appreciation Franklin Mutual
Securities Fund - with income as a secondary goal. Advisers, LLC
Class 2 Invests primarily in equity
securities of companies that the
manager believes are available at
market prices less than their
value based on certain recognized
or objective criteria (intrinsic
value).
- --------------------------------------------------------------------------------------------------------------
EIS FTVIPT Templeton Objective: long-term capital Templeton Investment
International Smaller appreciation. Invests primarily Counsel, Inc.
Companies Fund - Class 2 in equity securities of smaller
companies located outside the
U.S., including in emerging
markets.
- --------------------------------------------------------------------------------------------------------------
JCG Goldman Sachs VIT Objective: long-term growth of Goldman Sachs Asset
Capital Growth Fund capital. Invests primarily in Management
equity securities considered by
the Investment Advisor to have
long-term capital appreciation
potential.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS -- MAY 1, 2000 27
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES: INVESTMENT ADVISOR OR MANAGER
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
JUS Goldman Sachs VIT Objective: long-term growth of Goldman Sachs Asset
CORE(SM) U.S. Equity capital and dividend income. Management
Fund Invests primarily in a broadly
diversified portfolio of
large-cap and blue chip equity
securities representing all major
sectors of the U.S. economy.
- --------------------------------------------------------------------------------------------------------------
JGL Goldman Sachs VIT Global Objective: high total return, Goldman Sachs Asset
Income Fund emphasizing current income, and, Management
to a lesser extent, providing International
opportunities for capital
appreciation. Invests primarily
in a portfolio of high quality
fixed-income securities of U.S.
and foreign issuers and enters
into transactions in foreign
currencies.
- --------------------------------------------------------------------------------------------------------------
JIF Goldman Sachs VIT Objective: long-term capital Goldman Sachs Asset
International Equity appreciation. Invests primarily Management
Fund in equity securities of companies International
that are organized outside the
U.S., or whose securities are
principally traded outside the
U.S.
- --------------------------------------------------------------------------------------------------------------
EIT Goldman Sachs VIT Objective: long-term growth of Goldman Sachs Asset
Internet Tollkeeper capital. Invests primarily in Management
Fund equity securities of companies
that the Investment Advisor
believes will benefit from the
growth of the Internet by
providing access, infrastructure,
content and services to Internet
companies and customers.
- --------------------------------------------------------------------------------------------------------------
EJA Janus Aspen Series Objective: long-term growth of Janus Capital
Aggressive Growth capital. Invests primarily in
Portfolio: Service common stocks selected for their
Shares growth potential and normally
invests at least 50% of its
equity assets in medium-sized
companies.
- --------------------------------------------------------------------------------------------------------------
EJT Janus Aspen Series Objective: long-term growth of Janus Capital
Global Technology capital. Invests primarily in
Portfolio: Service equity securities of U.S. and
Shares foreign companies selected for
their growth potential. Normally
invests at least 65% of assets in
securities of companies that the
manager believes will benefit
significantly from advancements
or improvements in technology.
- --------------------------------------------------------------------------------------------------------------
EJG Janus Aspen Series Objective: long-term growth of Janus Capital
Growth Portfolio: capital in a manner consistent
Service Shares with the preservation of capital.
Invests primarily in common
stocks selected for their growth
potential.
- --------------------------------------------------------------------------------------------------------------
EJI Janus Aspen Series Objective: long-term growth of Janus Capital
International Growth capital. Invests at least 65% of
Portfolio: Service its total assets in securities of
Shares issuers from at least five
different countries, excluding
the U.S. It may at times invest
all of its assets in fewer than
five countries or even a single
country.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
28 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES: INVESTMENT ADVISOR OR MANAGER
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
EDE J.P. Morgan U.S. Objective: seeks to provide a J.P. Morgan
Disciplined Equity high total return from a
Portfolio portfolio comprised of selected
equity securities. The portfolio
invests primarily in the common
stocks of U.S. corporations with
market capitalizations above $1.5
billion. The portfolio is
designed for investors who want
an actively managed portfolio of
selected equity securities that
seeks to outperform the S&P 500
Index.
- --------------------------------------------------------------------------------------------------------------
ERQ Lazard Retirement Objective: long-term capital Lazard Asset Management
Series Equity Portfolio appreciation. Invests primarily
in equity securities, principally
common stocks of relatively large
U.S. companies (those whose total
market value is more than $1
billion) that the Investment
Manager believes are undervalued
based on their earnings, cash
flow or asset values.
- --------------------------------------------------------------------------------------------------------------
ERI Lazard Retirement Objective: long-term capital Lazard Asset Management
Series International appreciation. Invests primarily
Equity Portfolio in equity securities, principally
common stocks of relatively large
non-U.S. companies (those whose
total market value is more than
$1 billion) that the Investment
Manager believes are undervalued
based on their earnings, cash
flow or asset values.
- --------------------------------------------------------------------------------------------------------------
END MFS-Registered Trademark- Objective: capital appreciation. MFS Investment
New Discovery Series Invests primarily in equity Management-Registered
securities of emerging growth Trademark-
companies.
- --------------------------------------------------------------------------------------------------------------
ERS MFS-Registered Trademark- Objective: long-term growth of MFS Investment
Research Series capital and future income. Management-Registered
Invests primarily in common Trademark-
stocks and related securities
that have favorable prospects for
long-term growth, attractive
valuations based on current and
expected earnings or cash flow,
dominant or growing market share,
and superior management.
- --------------------------------------------------------------------------------------------------------------
EUT MFS-Registered Trademark- Objective: capital growth and MFS Investment Management
Utilities Series current income. Invests primarily -Registered Trademark-
in equity and debt securities of
domestic and foreign companies in
the utilities industry.
- --------------------------------------------------------------------------------------------------------------
EPG Putnam VT Growth and Objective: capital growth and Putnam Investment
Income Fund - Class IB current income. Invests primarily Management, Inc.
Shares in common stocks that offer
potential of capital growth,
current income or both.
- --------------------------------------------------------------------------------------------------------------
EPL Putnam VT Objective: capital appreciation. Putnam Investment
International Growth Invests primarily in growth Management, Inc.
Fund - Class IB Shares stocks outside the U.S.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS -- MAY 1, 2000 29
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES: INVESTMENT ADVISOR OR MANAGER
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
EPN Putnam VT Objective: long-term capital Putnam Investment
International New appreciation by investing in Management, Inc.
Opportunities Fund companies that have above-average
-Class IB Shares growth prospects due to the
fundamental growth of their
market sector. Invests primarily
in growth stocks outside the U.S.
- --------------------------------------------------------------------------------------------------------------
EMC Royce Micro-Cap Objective: long-term growth of Royce & Associates,
Portfolio capital. Invests primarily in a Inc.
broadly diversified portfolio of
equity securities issued by
micro-cap companies (companies
with stock market capitalizations
below $300 million).
- --------------------------------------------------------------------------------------------------------------
EPR Royce Premier Portfolio Objective: long-term growth of Royce & Associates,
capital with current income as a Inc.
secondary objective. Invests
primarily in a limited number of
equity securities issued by small
companies with stock market
capitalization between $300
million and $1.5 billion.
- --------------------------------------------------------------------------------------------------------------
ETV Third Avenue Value Objective: long-term capital EQSF Advisers, Inc.
Portfolio appreciation. Invests primarily
in common stocks of well-financed
companies at a substantial
discount to what the Advisor
believes is their true value.
- --------------------------------------------------------------------------------------------------------------
EIC Wanger International Objective: long-term growth of Wanger Asset
Small Cap capital. Invests primarily in Management, L.P.
stocks of small- and medium-size
non-U.S. companies.
- --------------------------------------------------------------------------------------------------------------
EUC Wanger U.S. Small Cap Objective: long-term growth of Wanger Asset
capital. Invests primarily in Management, L.P.
stocks of small- and medium-size
U.S. companies.
- --------------------------------------------------------------------------------------------------------------
EEG Warburg Pincus Trust - Objective: maximum capital Credit Suisse Asset
Emerging Growth appreciation. Invests primarily Management, LLC
Portfolio in equity securities of small- or
medium-sized U.S. emerging growth
companies.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
30 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
The investment objectives and policies of some of the funds are similar to the
investment objectives and policies of other mutual funds that an investment
advisor or its affiliates manage. Although the objectives and policies may be
similar, each fund will have its own portfolio holdings and its own fees and
expenses. Accordingly, each fund will have its own investment results, and those
results may differ significantly from other funds with similar investment
objectives and policies.
The investment managers and advisors cannot guarantee that the funds will meet
their investment objectives. Please read the funds' prospectuses for facts you
should know before investing. These prospectuses are also available by
contacting us at the address or telephone number on the first page of this
prospectus.
All funds are available to serve as the underlying investments for variable
annuities. Some funds also are available to serve as investment options for
variable life insurance policies and tax-deferred retirement plans. It is
possible that in the future, it may be disadvantageous for variable annuity
accounts and variable life insurance accounts and/or tax-deferred retirement
plans to invest in the available funds simultaneously.
Although the insurance company and the funds do not currently foresee any such
disadvantages, the boards of directors or trustees of the appropriate funds will
monitor events in order to identify any material conflicts between annuity
owners, policy owners and tax-deferred retirement plans and to determine what
action, if any, should be taken in response to a conflict. If a board were to
conclude that it should establish separate funds for the variable annuity,
variable life insurance and tax-deferred retirement plan accounts, you would not
bear any expenses associated with establishing separate funds. Please refer to
the funds' prospectuses for risk disclosure regarding simultaneous investments
by variable annuity, variable life insurance and tax-deferred retirement plan
accounts.
The Internal Revenue Service (IRS) issued final regulations relating to the
diversification requirements under Section 817(h) of the Code. Each fund intends
to comply with these requirements.
The variable account was established under Indiana law on July 15, 1987, and the
subaccounts are registered together as a single unit investment trust under the
Investment Company Act of 1940 (the 1940 Act). This registration does not
involve any supervision of our management or investment practices and policies
by the SEC. All obligations arising under the contracts are general obligations
of American Enterprise Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
The U.S. Treasury and the IRS indicated that they may provide additional
guidance on investment control. This concerns how many variable subaccounts an
insurance company may offer and how many exchanges among subaccounts it may
allow before the contract owner would be currently taxed on income earned within
subaccount assets. At this time, we do not know what the additional guidance
will be or when action will be taken. We reserve the right to modify the
contract, as necessary, so that the owner will not be subject to current
taxation as the owner of the subaccount assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
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PROSPECTUS -- MAY 1, 2000 31
<PAGE>
THE FIXED ACCOUNTS
GUARANTEE PERIOD ACCOUNTS
You may allocate purchase payments to one or more of the Guarantee Period
Accounts with Guarantee Periods ranging from two to ten years. These accounts
are not available in all states and are not offered after annuity payouts begin.
Some states also restrict the amount you can allocate to these accounts. Each
Guarantee Period Account pays an interest rate that is declared when you
allocate money to that account. That interest rate is then fixed for the
Guarantee Period that you chose. We will periodically change the declared
interest rate for any future allocations to these accounts, but we will not
change the rate paid on money currently in a Guarantee Period Account.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion. We will determine these rates based on
various factors including, but not limited to, the interest rate environment,
returns available on investments backing these annuities, product design,
competition and American Enterprise Life's revenues and other expenses.
You may transfer money out of the Guarantee Period Accounts within 30 days
before the end of the Guarantee Period without receiving a MVA (see "Market
Value Adjustment (MVA)" below.) At that time you may choose to start a new
Guarantee Period of the same length, transfer the money to another Guarantee
Period Account, transfer the money to any of the subaccounts, or withdraw the
money from the contract (subject to applicable withdrawal provisions). If we do
not receive any instructions at the end of your Guarantee Period, we will
automatically transfer the money into the one-year fixed account.
We hold amounts you allocate to the Guarantee Period Accounts in a "nonunitized"
separate account we have established under the Indiana Insurance Code. This
separate account provides an additional measure of assurance that we will make
full payment of amounts due under the Guarantee Period Accounts. State insurance
law prohibits us from charging this separate account with liabilities of any
other separate account or of our general business. We own the assets of this
separate account as well as any favorable investment performance of those
assets. You do not participate in the performance of the assets held in this
separate account. We guarantee all benefits relating to your value in the
Guarantee Period Accounts.
We intend to construct and manage the investment portfolio relating to the
separate account using a strategy known as "immunization." Immunization seeks to
lock in a defined return on the pool of assets versus the pool of liabilities
over a specified time horizon. Since the return on the assets versus the
liabilities is locked in, it is "immune" to any potential fluctuations in
interest rates during the given time. We achieve immunization by constructing a
portfolio of assets with a price sensitivity to interest rate changes (i.e.,
price duration) that is essentially equal to the price duration of the
corresponding portfolio of liabilities. Portfolio immunization provides us with
flexibility and efficiency in creating and managing the asset portfolio, while
still assuring safety and soundness for funding liability obligations.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable Guarantee Periods. These instruments
include, but are not necessarily limited to, the following:
- - Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
- - Debt securities that have an investment grade, at the time of purchase,
within the four highest grades assigned by any of three nationally recognized
rating agencies -- Standard & Poor's, Moody's Investors Service or Duff and
Phelp's -- or are rated in the two highest grades by the National Association
of Insurance Commissioners;
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32 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
- - Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
- - Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
You may choose to transfer or withdraw money out of the Guarantee Period
Accounts prior to the end of the Guarantee Period. The amount transferred or
withdrawn will receive a MVA which will increase or decrease the actual amount
transferred or withdrawn. We calculate the MVA using the formula shown below and
we base it on the current level of interest rates compared to the rate of your
Guarantee Period Account.
Amount transferred x ( l + i ) n/12
----------------
( l + j + .001 )
Where: i = rate earned in the account from which
funds are being transferred
j = current rate for a new Guarantee Period equal
to the remaining term in the current
Guarantee Period
n = number of months remaining in the current
Guarantee Period (rounded up)
We will not make MVAs for amounts withdrawn for withdrawal charges, the annual
contract administrative charge or paid out as a death claim. We also will not
make MVAs on automatic transfers from the two-year Guarantee Period Account. We
determine any applicable withdrawal charges based on the market value adjusted
withdrawals. In some states the MVA is limited.
THE ONE-YEAR FIXED ACCOUNT
You may also allocate purchase payments to the one-year fixed account. Some
states may restrict the amount you can allocate to this account. We back the
principal and interest guarantees relating to the one-year fixed account. The
value of the one-year fixed account increases as we credit interest to the
account. Purchase payments and transfers to the one-year fixed account become
part of our general account. We credit interest daily and compound it annually.
We will change the interest rates from time to time at our discretion. These
rates will be based on various factors including, but not limited to, the
interest rate environment, returns earned on investments backing these
annuities, the rates currently in effect for new and existing company annuities,
product design, competition, and the company's revenues and expenses.
Interest in the one-year fixed account is not required to be registered with the
SEC. However, the Market Value Adjustment interests under the contracts are
registered with the SEC. The SEC staff does not review the disclosures in this
prospectus on the one-year fixed account (but the SEC does review the
disclosures in this prospectus on the Market Value Adjustment interests).
Disclosures regarding the one-year fixed account, however, may be subject to
certain generally applicable provisions of the federal securities laws relating
to the accuracy and completeness of statements made in prospectuses. (See
"Making the Most of Your Contract -- Transfer policies" for restrictions on
transfers involving the one-year fixed account.)
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PROSPECTUS -- MAY 1, 2000 33
<PAGE>
BUYING YOUR CONTRACT
You can fill out an application and send it along with your initial purchase
payment to our office. As the owner, you have all rights and may receive all
benefits under the contract. You can own a nonqualified annuity in joint tenancy
with rights of survivorship only in spousal situations. You cannot own a
qualified annuity in joint tenancy. You can buy a contract or become an
annuitant if you are 90 or younger.
When you apply, you may select:
- - one of three death benefit options if both you and the annuitant are age 79
or younger*: Option A -- Return of purchase payment death benefit, Option B
-- Maximum anniversary value death benefit, or Option C -- 5% Accumulation
death benefit rider**;
- - the optional Guaranteed Minimum Income Benefit Rider (6% Accumulation Benefit
Base)***;
- - the optional 8% Performance Credit Rider;
- - the one-year fixed account, Guarantee Period Accounts and/or subaccounts in
which you want to invest****;
- - how you want to make purchase payments;
- - the date you want to start receiving annuity payouts (the
retirement date); and
- - a beneficiary.
* If either you or the annuitant are age 80 or older, Option A -- Return
of purchase payment death benefit will apply.
** May not be available in all states.
*** You may select either the Guaranteed Minimum Income Benefit Rider (6%
Accumulation Benefit Base) or the 8% Performance Credit Rider, but not
both. Riders may not be available in all states. The Guaranteed Minimum
Income Benefit Rider (6% Accumulation Benefit Base) is only avaialble
if the annuitant is age 75 or younger.
**** Some states may restrict the amount you can allocate to the
fixed accounts.
The contract provides for allocation of purchase payments to the subaccounts of
the variable account and/or to the fixed accounts in even 1% increments.
If your application is complete, we will process it and apply your purchase
payment to the fixed accounts and subaccounts you selected within two business
days after we receive it at our office. If we accept your application, we will
send you a contract. If we cannot accept your application within five business
days, we will decline it and return your payment. We will credit additional
purchase payments you make to your accounts on the valuation date we receive
them. We will value the additional payments at the next accumulation unit value
calculated after we receive your payments at our office.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). You must make an initial purchase payment of at least $5,000 in
Texas, Washington, Pennsylvania or South Carolina or $2,000 in all other states.
Then, to begin the SIP, you will complete and send a form and your first SIP
payment along with your application. There is no charge for SIP. You can stop
your SIP payments at any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
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34 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
THE RETIREMENT DATE
Annuity payouts are to begin on the retirement date. You can align this date
with your actual retirement from a job, or it can be a different future date,
depending on your needs and goals and on certain restrictions. You also can
change the date, provided you send us written instructions at least 30 days
before annuity payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be:
- - no earlier than the 60th day after the contract's effective date; and
- - no later than the annuitant's 85th birthday (or the tenth contract
anniversary, if later).
FOR QUALIFIED ANNUITIES (EXCEPT ROTH IRAS), to avoid IRS penalty taxes, the
retirement date generally must be:
- - on or after the date the annuitant reaches age 59 1/2; and
- - for IRAs and SEPs, by April 1 of the year following the calendar year when
the annuitant reaches age 70 1/2; or
- - for TSAs, by April 1 of the year following the calendar year when the
annuitant reaches age 70 1/2 or, if later, retires (except that 5% business
owners may not select a retirement date that is later than April 1 of the
year following the calendar year when they reach age 70 1/2).
If you are taking the minimum IRA or TSA distributions as required by the Code
from another tax-qualified investment, or in the form of partial withdrawals
from this contract, annuity payouts can start as late as the annuitant's 85th
birthday or the tenth contract anniversary, if later.
BENEFICIARY
If death benefits become payable before the retirement date (while the contract
is in force and before annuity payouts begin), we will pay your named
beneficiary all or part of the contract value. If there is no named beneficiary,
then you or your estate will be the beneficiary. (See "Benefits in Case of
Death" for more about beneficiaries.)
PURCHASE PAYMENTS
MINIMUM INITIAL PURCHASE PAYMENT (INCLUDING SIPS):
$5,000 in Texas, Washington, Pennsylvania and South Carolina
$2,000 in all other states
MINIMUM ADDITIONAL PURCHASE PAYMENTS:
$ 50 for SIPs
$100 for regular payments
MAXIMUM TOTAL PURCHASE PAYMENTS* (WITHOUT PRIOR APPROVAL):
$1,000,000 for ages up to 85
$ 100,000 for ages 86 to 90
* These limits apply in total to all American Enterprise Life annuities you own.
We reserve the right to increase maximum limits. For qualified annuities the
tax-deferred retirement plan's limits on annual contributions also apply.
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PROSPECTUS -- MAY 1, 2000 35
<PAGE>
HOW TO MAKE PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
1 BY LETTER:
- --------------------------------------------------------------------------------
Send your check along with your name and contract number to:
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
829 AXP FINANCIAL CENTER
MINNEAPOLIS, MN 55474
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2 BY SIP:
- --------------------------------------------------------------------------------
Contact your sales representative to complete the necessary SIP paperwork.
CHARGES
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $30
from the contract value on your contract anniversary at the end of each contract
year. We prorate this charge among the subaccounts and the fixed accounts in the
same proportion your interest in each account bears to your total contract
value.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct this charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge this fee daily to the subaccounts. The unit values of your subaccounts
reflect this fee and it totals 1.25% of their average daily net assets on an
annual basis. This fee includes coverage under any of the three death benefit
options. This fee covers the mortality and expense risk that we assume.
Approximately two-thirds of this amount is for our assumption of mortality risk,
and one-third is for our assumption of expense risk. This fee does not apply to
the fixed accounts.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific annuitant lives and no matter how long our entire
group of annuitants live. If, as a group, annuitants outlive the life expectancy
we assumed in our actuarial tables, then we must take money from our general
assets to meet our obligations. If, as a group, annuitants do not live as long
as expected, we could profit from the mortality risk fee.
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36 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
Expense risk arises because we cannot increase the contract administrative
charge or variable account administrative charge and these charges may not cover
our expenses. We would have to make up any deficit from our general assets. We
could profit from the expense risk fee if future expenses are less than
expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
- - first, to the extent possible, the subaccounts pay this fee from any
dividends distributed from the funds in which they invest;
- - then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge, discussed in the following paragraphs, will cover sales
and distribution expenses.
GUARANTEED MINIMUM INCOME BENEFIT RIDER (6% ACCUMULATION BENEFIT BASE) FEE
We charge a fee based on an adjusted contract value for this optional feature
only if you choose this option.* If selected, we deduct the fee (currently
0.35%) from the contract value on your contract anniversary at the end of each
contract year. We prorate this fee among the subaccounts and fixed accounts in
the same proportion your interest in each account bears to your total contract
value.
We apply the fee on an adjusted contract value calculated as the contract value
plus the lesser of zero or (a)-(b), where:
(a) is the transfers from the subaccounts to the fixed accounts in the last
six months, and
(b) is the total contract value in the fixed accounts.
This adjustment to the contract value allows us to base the charge largely on
the subaccounts, and not on the fixed accounts. We will deduct the fee, adjusted
for the number of calendar days coverage was in place, if the contract is
terminated for any reason or when annuity payouts begin. We cannot increase this
fee after the rider effective date and it does not apply after annuity payouts
begin. We can increase this fee on new contracts up to a maximum of 0.75%.
8% PERFORMANCE CREDIT RIDER FEE
We charge a fee for this optional feature only if you choose this option.* If
selected, we deduct the fee of 0.25% of your contract value on your contract
anniversary date at the end of each contract year. We prorate this fee among the
subaccounts and fixed accounts in the same proportion as your interest in each
account bears to your total contract value.
We will deduct this fee, adjusted for the number of calendar days coverage was
in place, if the contract is terminated for any reason or when annuity payouts
begin. We cannot increase the 8% Performance Credit Rider fee.
*You may select either the Guaranteed Minimum Income Benefit Rider (6%
Accumulation Benefit Base) or the 8% Performance Credit Rider, but not both.
WITHDRAWAL CHARGE
If you withdraw all or part of your contract, you may be subject to a withdrawal
charge. A withdrawal charge applies if all or part of the withdrawal amount is
from purchase payments we received within seven years before withdrawal. The
withdrawal charge percentages that apply to you are shown in your contract. In
addition, amounts withdrawn from a Guarantee Period Account prior to the end of
the applicable Guarantee Period will be subject to a MVA. (See "The Fixed
Accounts -- Market Value Adjustments (MVA).")
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PROSPECTUS -- MAY 1, 2000 37
<PAGE>
For purposes of calculating any withdrawal charge, we treat amounts withdrawn
from your contract in the following order:
- - First, in each contract year, we withdraw amounts totaling up to 10% of your
prior anniversary contract value. (We consider your initial purchase payment
to be the prior anniversary contract value during the first contract year.)
We do not assess a withdrawal charge on this amount.
- - Next, we withdraw contract earnings, if any, that are greater than the annual
10% free withdrawal amount described above. Contract earnings equal contract
value less purchase payments received and not previously withdrawn. We do not
assess a withdrawal charge on contract earnings.
NOTE: We determine contract earnings by looking at the entire contract value,
not the earnings of any particular subaccount or the fixed account.
- - Next, we withdraw purchase payments we received prior to the withdrawal
charge period shown in your contract. We do not assess a withdrawal charge on
these purchase payments.
- - Finally, if necessary, we withdraw purchase payments that are all within the
withdrawal charge period shown in your contract. We withdraw these payments
on a "first-in, first-out" (FIFO) basis. We do assess a withdrawal charge on
these payments.
We determine your withdrawal charge by multiplying each of these payments by the
applicable withdrawal charge percentage, and then totaling the withdrawal
charges.
The withdrawal charge percentage depends on the number of years since you made
the payments that are withdrawn.
YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE
- --------------------------------------------------------------------------------
1 7%
- --------------------------------------------------------------------------------
2 7
- --------------------------------------------------------------------------------
3 6
- --------------------------------------------------------------------------------
4 6
- --------------------------------------------------------------------------------
5 5
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6 4
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7 2
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Thereafter 0
- --------------------------------------------------------------------------------
For a partial withdrawal that is subject to a withdrawal charge, the amount
deducted for the withdrawal charge will be a percentage of the total amount
withdrawn. We will deduct the charge from the value remaining after we pay you
the amount you requested. Example:Assume you request a withdrawal of $1,000 and
there is a 7% withdrawal charge. The withdrawal charge is $75.26 for a total
withdrawal amount of $1,075.26. This charge represents 7% of the total amount
withdrawn and we deduct it from the contract value remaining after we pay you
the $1,000 you requested. If you make a full withdrawal of your contract, we
also will deduct the applicable contract administrative charge.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E: Payouts for a specified period.
Under this payout plan, you can choose to take a withdrawal. The amount that you
can withdraw is the present value of any remaining variable payouts. The
discount rate we use in the calculation will be 5.27% if the assumed investment
rate is 3.5% and 6.77% if the assumed investment rate is 5%. The withdrawal
charge is equal to the difference in discount values using the above discount
rates and the assumed investment rate. In no event would your withdrawal charge
exceed 9% of the amount available for payouts under the plan.
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38 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
WITHDRAWAL CHARGE CALCULATION EXAMPLE
The following is an example of the calculation we would make to determine the
withdrawal charge on a contract with this history:
- - The contract date is July 1, 2000 with a contract year of July 1 through
June 30 and with an anniversary date of July 1 each year; and
- - We received these payments:
-- $10,000 July 1, 2000;
-- $8,000 Dec. 31, 2005;
-- $6,000 Feb. 20, 2008; and
- - The owner withdraws the contract for its total withdrawal value of $38,101
on Aug. 5, 2010 and had not made any other withdrawals during that contract
year; and
- - The prior anniversary July 1, 2010 contract value was $38,488.
WITHDRAWAL CHARGE EXPLANATION
$0 $3,848.80 is 10% of the prior anniversary
contract value withdrawn without withdrawal
charge; and
0 $10,252.20 is contract earnings in excess of
the 10% free withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 July 1, 2000 payment was received
eight or more years before withdrawal and
is withdrawn without withdrawal charge; and
400 $8,000 Dec. 31, 2005 payment is in its fifth
year from receipt, withdrawn with a 5%
withdrawal charge; and
360 $6,000 Feb. 20, 2008 payment is in its
third year from receipt, withdrawn with a
6% withdrawal charge.
--------------
$760
WAIVER OF WITHDRAWAL CHARGE
We do not assess a withdrawal charge for:
- - withdrawals of any contract earnings;
- - withdrawals of amounts totaling up to 10% of your prior contract anniversary
contract value to the extent they exceed contract earnings;
- - required minimum distributions from a qualified annuity (for those amounts
required to be distributed from the contract described in this prospectus);
- - contracts settled using an annuity payout plan;
- - death benefits;
- - withdrawals you make under your contract's "Waiver of Withdrawal Charges"
provision. To the extent permitted by state law, your contract will include
this provision when the owner and annuitant are under age 76 on the date we
issue the contract. We will waive withdrawal charges that we normally assess
upon full or partial withdrawal if you provide proof satisfactory to us that,
as of the date you request the withdrawal, you or the annuitant are confined
to a hospital or nursing home and have been for the prior 60 days. (See your
contract for additional conditions and restrictions on this waiver); and
- - to the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled
with a medical condition that with reasonable medical certainty will result
in death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
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PROSPECTUS -- MAY 1, 2000 39
<PAGE>
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average
contribution and the use of group enrollment procedures. In such cases, we
may be able to reduce or eliminate the contract administrative and withdrawal
charges. However, we expect this to occur infrequently.
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was sold. Currently, we deduct any applicable premium tax when annuity
payouts begin, but we reserve the right to deduct this tax at other times such
as when you make purchase payments or when you make a full withdrawal from your
contract.
VALUING YOUR INVESTMENT
We value your accounts as follows:
FIXED ACCOUNTS
We value the amounts you allocated to the fixed accounts directly in dollars.
The value of a fixed account equals:
- - the sum of your purchase payments and transfer amounts allocated to the
one-year fixed account and the Guarantee Period Accounts;
- - plus any contract value credits allocated to the fixed accounts;
- - plus interest credited;
- - minus the sum of amounts withdrawn after any applicable MVA (including any
applicable withdrawal charges) and amounts transferred out;
- - minus any prorated contract administrative charge;
- - minus any prorated portion of the Guaranteed Minimum Income Benefit Rider (6%
Accumulation Benefit Base) fee (if applicable); and
- - minus any prorated portion of the 8% Performance Credit Rider fee (if
applicable).
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any contract value credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, each
time you take a partial withdrawal, transfer amounts out of a subaccount, or we
assess a contract administrative charge, or the 8% Performance Credit Rider fee,
or the Guaranteed Minimum Income Benefit Rider (6% Accumulation Benefit Base)
fee, we subtract a certain number of accumulation units from your contract.
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: to calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: the current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
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40 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
WE DETERMINE THE NET INVESTMENT FACTOR BY:
- -- adding the fund's current net asset value per share, plus the per share
amount of any accrued income or capital gain dividends to obtain a current
adjusted net asset value per share; then
- -- dividing that sum by the previous adjusted net asset value per share; and
- -- subtracting the percentage factor representing the mortality and expense
risk fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may
change in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
- -- additional purchase payments you allocate to the subaccounts;
- -- any contract value credits allocated to the subaccounts;
- -- transfers into or out of the subaccounts;
- -- partial withdrawals;
- -- withdrawal charges;
- -- prorated portions of the contract administrative
charge;
- -- prorated portions of the Guaranteed Minimum Income Benefit Rider
(6% Accumulation Benefit Base) fee (if selected); and/or
- -- prorated portions of the 8% Performance Credit Rider fee (if selected).
Accumulation unit values will fluctuate due to:
- -- changes in funds' net asset value;
- -- dividends distributed to the subaccounts;
- -- capital gains or losses of funds;
- -- fund operating expenses; and/or
- -- mortality and expense risk fee and the variable account administrative
charge.
CONTRACT VALUE CREDITS
Before annuity payouts begin, and starting in the eighth contract year while
this contract is in force, we periodically will apply a "contract value credit"
to your contract value if:
- -- you chose death benefit Option A -- Return of
purchase payment death benefit, at the time of application (see
"Benefits in Case of Death"); and
- -- there are "eligible purchase payments" at the time we calculate the credit.
"Eligible purchase payments" means payments you made to the contract that you
have not withdrawn and that are no longer subject to a withdrawal charge.
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PROSPECTUS -- MAY 1, 2000 41
<PAGE>
On an annual basis, the contract value credit is 0.50% of an amount we
calculate by multiplying (a) times (b) where:
(a) is the contract value at the time we make the calculation; and
(b) is the ratio of "eligible purchase payments" to total purchase payments.
We reserve the right to calculate and apply the contract value credit on a
quarterly or monthly basis. If we calculate the credit on a quarterly basis,
the percentage will be 0.125% instead of 0.50%. If we calculate the credit on a
monthly basis, the percentage will be 0.04167% instead of 0.50%.
We will apply the contract value credit to your contract value according to
your fixed accounts and subaccount allocation instructions that are in effect
at the time. We will continue to apply the contract value credit, if
applicable, for the life of your contract until full withdrawal or until
annuity payouts begin. The contract value credit will be taxable when we
distribute it to you.
The contract value credit is available because of lower costs associated with a
reduced death benefit guarantee. Because the guaranteed death benefit is lower
in situations where the contract value credit is paid, there may be
circumstances where you may be worse off for having received the credit than in
other contracts. In particular, if the market were to decline, and a death
benefit became payable, the amount paid might be less.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount
to a more aggressive one, or to several others, or from the one-year fixed
account or the two-year Guarantee Period Accounts to one or more subaccounts.
The three to ten year Guarantee Period Accounts are not available for automated
transfers. You can also obtain the benefits of dollar-cost averaging by setting
up regular automatic SIP payments. There is no charge for dollar-cost
averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is
to lower your average cost per unit.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
HOW DOLLAR-COST AVERAGING WORKS
- ----------------------------------------------------------------------------------------------------------------------
MONTH AMOUNT ACCUMULATION NUMBER OF UNITS
INVESTED UNIT VALUE PURCHASED
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
By investing an
equal number of
dollars each month ... Jan $100 $20 5.00
Feb 100 18 5.56
Mar 100 17 5.88
you automatically --> Apr 100 15 6.67
buy more units May 100 16 6.25
when the per unit Jun 100 18 5.56
market price is low ... Jul 100 17 5.88
Aug 100 19 5.26
and fewer units --> Sep 100 21 4.76
when the per unit Oct 100 20 5.00
market price is high.
</TABLE>
You paid an average price of only $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
- -------------------------------------------------------------------------------
42 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your sales representative.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semi-annually or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in
whole numbers. Asset rebalancing does not apply to the fixed accounts. There
is no charge for asset rebalancing. The contract value must be at least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing
to stop rebalancing your contract value. You must allow 30 days for us to
change any instructions that currently are in place. For more information on
asset rebalancing, contact your sales representative.
TRANSFERRING MONEY BETWEEN ACCOUNTS
You may transfer money from any one subaccount, or the fixed accounts, to
another subaccount before annuity payouts begin. (Certain restrictions apply to
transfers involving the fixed accounts.) We will process your transfer on the
valuation date we receive your request. We will value your transfer at the next
accumulation unit value calculated after we receive your request. There is no
charge for transfers. Before making a transfer, you should consider the risks
involved in switching investments. Transfers out of the Guarantee Period
Accounts will be subject to a MVA if done more than 30 days before the end of
the Guarantee Period.
We may suspend or modify transfer privileges at any time. Excessive trading
activity can disrupt fund management strategy and increase expenses, which are
borne by all contract owners who allocated purchase payments to the fund
regardless of their transfer activity. We may apply modifications or
restrictions in any reasonable manner to prevent transfers we believe will
disadvantage other contract owners.
These modifications could include, but not be limited to:
- -- requiring a minimum time period between each transfer;
- -- not accepting transfer requests of an agent acting under power of attorney
on behalf of more than one contract owner; or
- -- limiting the dollar amount that a contract owner may transfer at any one
time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
- -------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 43
<PAGE>
TRANSFER POLICIES
- -- Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the fixed accounts at any time.
However, if you made a transfer from the one-year fixed account to the
subaccounts, you may not make a transfer from any subaccount back to the
one-year fixed account for six months following that transfer.
- -- You may transfer contract values from the one-year fixed account to the
subaccounts or the Guarantee Period Accounts once a year on or within 30
days before or after the contract anniversary (except for automated
transfers, which can be set up at any time for certain transfer periods
subject to certain minimums). Transfers from the one-year fixed account are
not subject to a MVA.
- -- You may transfer contract values from a Guarantee Period Account any time
after 60 days of transfer or payment allocation to the account. Transfers
made before the end of the Guarantee Period will receive a MVA, which may
result in a gain or loss of contract value.
- -- If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the
subaccounts or the Guarantee Period Accounts will be effective on the
valuation date we receive it.
- -- We will not accept requests for transfers from the one-year fixed account at
any other time.
- -- Once annuity payouts begin, you may not make transfers to or from the
one-year fixed account, but you may make transfers once per contract year
among the subaccounts. During the annuity payout period, we reserve the right
to limit the number of subaccounts in which you may invest.
- -- Once annuity payouts begin, you may not make any transfers to the Guarantee
Period Accounts.
- -------------------------------------------------------------------------------
44 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
HOW TO REQUEST A TRANSFER OR A WITHDRAWAL
- -------------------------------------------------------------------------------
1 BY LETTER:
- -------------------------------------------------------------------------------
Send your name, contract number, Social Security Number or Taxpayer
Identification Number and signed request for a transfer or withdrawal to:
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
829 AXP FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or the entire account balance
- -------------------------------------------------------------------------------
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS:
- -------------------------------------------------------------------------------
Your sales representative can help you set up automated transfers or partial
withdrawals among your subaccounts or fixed accounts.
You can start or stop this service by written request or other method
acceptable to us. You must allow 30 days for us to change any instructions
that are currently in place.
- -- Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months.
- -- Automated withdrawals may be restricted by applicable law under some
contracts.
- -- You may not make additional purchase payments if automated partial
withdrawals are in effect.
- -- Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semi-annually or annually
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value (except for automated transfers from
the one-year fixed account)
- -------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 45
<PAGE>
- -------------------------------------------------------------------------------
3 BY PHONE:
- -------------------------------------------------------------------------------
Call between 8 a.m. and 6 p.m. Central time:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or the entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and tape recording calls. We will not
allow a telephone withdrawal within 30 days of a phoned-in address change. As
long as we follow the procedures, we (and our affiliates) will not be liable
for any loss resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may
request that telephone transfers and withdrawals not be authorized from
your account by writing to us.
GUARANTEED MINIMUM INCOME BENEFIT RIDER (6% ACCUMULATION BENEFIT BASE)
This optional Guaranteed Minimum Income Benefit Rider may be available in many
jurisdictions for a separate annual charge (see "Charges -- Guaranteed Minimum
Income Rider (6% Accumulation Benefit Base) fee"). You cannot select this rider
if you select the 8% Performance Credit Rider. The rider guarantees a minimum
amount of fixed annuity lifetime income during the annuity payout period if
your contract has been in force for at least seven years, subject to the
conditions described below. The rider also provides you the option of variable
annuity payouts, with a guaranteed minimum initial payment. This rider is only
available at the time you purchase your contract.
In some instances, we may allow you to add this rider if it was not available
when you initially purchased your contract. In these instances we would add
this rider at the next contract anniversary with the contract value at that
anniversary reflected as the premium. All conditions of the rider would use
this date as the effective date.
This rider does not create contract value or guarantee the performance of any
investment option. Fixed annuity payouts under the terms of this rider will
occur at the guaranteed annuity purchase rates based on the guaranteed
annuitant mortality table in your contract and a 2.5% interest rate. We base
first year payments from the variable annuity payout option offered under this
rider on the same factors as the fixed annuity payout option. We base
subsequent payments on the initial payment and an assumed annual return of 5%.
Because this rider is based on guaranteed actuarial factors for the fixed
option, the level of fixed lifetime income it guarantees may be less than the
level that would be provided by applying the then current annuity factors.
Likewise, for the variable annuity payout option, we base the rider on more
conservative factors resulting in a lower initial payment and lower lifetime
payments than those provided otherwise if the same benefit base were used.
However, the Guaranteed Income Benefit Base described below establishes a
floor, which when higher than the contract value, can result in a higher
annuity payout level. Thus, the rider is a guarantee of a minimum amount
of annuity income.
- -------------------------------------------------------------------------------
46 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
The Guaranteed Income Benefit Base uses the same calculation as the Variable
account 5% floor but uses a 6% accumulation rate.
The Guaranteed Income Benefit Base, less any applicable premium tax, is the
value that will be used to determine minimum annuity payouts if the rider is
exercised.
We reserve the right to exclude subsequent payments paid in the last five years
before exercise of the benefit in the calculation of the Guaranteed Income
Benefit Base. We would do so only if such payments total $50,000 or more or if
they are 25% or more of total payments paid into the contract.
If we exclude such payments, the Guaranteed Income Benefit Base would be
calculated as the greatest of:
(a) contract value less "market value adjusted prior five years of payments"
(b) total payments less prior five years of payments and adjusted partial
withdrawals
(c) the Variable account 6% floor, less the "6% adjusted prior five years
of payments"
"Market value adjusted prior five years of payments" are calculated as the sum
of each such payment, multiplied by the ratio of the current contract value
over the estimated contract value on the anniversary prior to such payment. We
calculate the estimated contract value at such anniversary by assuming that
payments and partial withdrawals occurring in a contract year take place at the
beginning of the year for that anniversary and every year after that to the
current contract year.
"6% Adjusted prior 5 years of payments" are calculated as the sum of each
payment accumulated at 6% for the number of full contract years they have been
in the contract.
CONDITIONS ON ELECTION OF THE RIDER:
- -- you must elect the rider at the time you purchase your contract,
- -- you must elect either the Maximum anniversary value death benefit or the 5%
Accumulation death benefit and
- -- the annuitant must be age 75 or younger on the contract date.
FUND SELECTION TO CONTINUE THE RIDER: You may allocate your purchase payments
to any of the subaccounts or the fixed accounts. However, we reserve the right
to limit the amount in the AXP-SM- Variable Portfolio - Cash Management Fund to
10% of the total amount in the subaccounts. If we are required to activate this
restriction, and you have more than 10% of your subaccount value in this fund,
we will send you notice and ask that you reallocate your contract value so that
the limitation is satisfied within 60 days. If after 60 days the limitation is
not satisfied, we will terminate the rider.
EXERCISING THE RIDER:
- -- you may only exercise the rider within 30 days after any contract
anniversary following the expiration of a seven-year waiting period from
the effective date of the rider, and
- -- the annuitant on the retirement date must be between 50 and 86 years old, and
- -- you can only take an annuity payout in one of the following annuity payout
plans:
-- Plan A -- Life Annuity -- no refund
-- Plan B -- Life Annuity with ten years certain
-- Plan D -- Joint and last survivor life annuity -- no refund
- -------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 47
<PAGE>
TERMINATING THE RIDER:
- -- You may terminate the rider within 30 days after the first anniversary of the
effective date of the rider.
- -- You may terminate the rider any time after the seventh anniversary of the
effective date of the rider.
- -- The rider will terminate on the date you make a full withdrawal from
the contract, or annuity payouts begin, or on
the date that a death benefit is payable.
- -- The rider will terminate on the contract anniversary after the annuitant's
86th birthday.
EXAMPLE:
- -- You purchase the contract with a payment of $104,000 on Jan. 1, 2000.
- -- There are no additional purchase payments and no partial withdrawals.
- -- The money is fully allocated to the subaccounts.
- -- The annuitant is male and age 55 on the contract date. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is
female and age 55 on the contract date.
- -- The contract is within 30 days after contract anniversary.
If the Guaranteed Minimum Income Benefit Rider (6% Accumulation Benefit Base)
is exercised, the minimum fixed annuity monthly payout or the first year
variable annuity monthly payout would be:
<TABLE>
<CAPTION>
Fixed Annuity Payout Options
Minimum Guaranteed Annual Income
Plan A-- Plan B-- Plan D--
Life Annuity-- Life Annuity with Joint and lost survivor
Contract Anniversary At Exercise Guaranteed Income Benefit Base no refund ten years certain life annuity - no refund
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10 $186,248 $970.35 $944.28 $772.93
15 $249,242 $1,485.48 $1,415.69 $1,149.00
</TABLE>
After the first year payments, lifetime income payments on a variable annuity
payout option will depend on the investment performance of the subaccounts you
select. The payments will be higher if investment performance is greater than a
5% annual return and lower if investment performance is less than a 5% annual
return.
8% PERFORMANCE CREDIT RIDER
If this rider is available in your state, you may choose to add this benefit to
your contract at issue. You cannot select this rider if you select the
Guaranteed Minimum Income Benefit Rider (6% Accumulation Benefit Base). This
feature provides certain benefits if your contract value has not reached or
exceeded a target value (as defined below) on the seventh and tenth rider
anniversaries.
Your benefits under this rider are as follows:
(a) if on the seventh rider anniversary, your contract value has not met or
exceeded the target value, we will make a credit to your contract equal
to 3% of your purchase payments less adjusted partial withdrawals and
purchase payments made in the prior five years; and
(b) if on the tenth rider anniversary, your contract value has not met or
exceeded the target value, we will make an additional credit to your
contract equal to 5% of your purchase payments less adjusted partial
withdrawals and purchase payments made in the prior five years.
- -------------------------------------------------------------------------------
48 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
On the tenth rider anniversary and every ten years thereafter while you have
the contract, the ten year calculation period restarts. We use the contract
value (after any credits) on that contract anniversary as the initial
purchase payment for the calculation of the target value and any credit.
Additional credits may then be made at the end of each ten year period as
described above.
In some instances, we may allow you to add this rider if it was not available
when you initially purchased your contract. In these instances we would add
this rider at the next contract anniversary with the contract value at that
anniversary reflected as the initial purchase payment for the calculation
of the target value and any credit.
TARGET VALUE: The target value accumulates purchase payments at an annual
interest rate of 8% until the tenth rider anniversary less adjusted partial
withdrawals also accumulated at 8% until the tenth rider anniversary.
ADJUSTED PARTIAL WITHDRAWALS: We calculate the adjusted partial withdrawals
for the 8% Performance Credit Rider for each partial withdrawal as the
product of (a) times (b) where:
(a) is the ratio of the amount of partial withdrawal (including any
applicable withdrawal charge) to the contract value on the date of
(but prior to) the partial withdrawal, and
(b) is the Target Value on the date of (but prior to) the partial
withdrawal.
RESET OPTION: You can elect to lock in the growth in your contract by
restarting the ten-year period on any contract anniversary. If you elect
to restart the calculation period, the contract value on the restart date is
used as the initial purchase payment for the calculation of the target value
and any credit. The next ten year calculation period will then restart at the
end of the new ten year period from the most recent restart date. We must
receive your request to restart the calculation period within 30 days after
a contract anniversary.
FUND SELECTION TO CONTINUE THE RIDER: You may allocate your purchase payments
to any of the subaccounts or the fixed accounts. However, we reserve the right
to limit the amount in the fixed accounts and the AXP-SM- Variable Portfolio
Cash Management Fund to 10% of the contract value. If we are required to
activate this restriction and you have more than 10% of your contract value in
these accounts, we will send you notice and ask you that you reallocate your
contract value so that the limitation is satisfied in 60 days. If after 60 days
the limitation is not satisfied, we will terminate the rider.
TERMINATING THE RIDER:
- -- You may terminate the rider within 30 days following the first anniversary
after the effective date of the rider.
- -- You may terminate the rider within 30 days following the tenth anniversary
of the latest of the effective date of the rider or the last reset date.
- -- The rider will terminate on the date you make a full withdrawal from the
contract, or annuity payouts begin, or on the date that a death benefit is
payable.
EXAMPLE:
- -- You purchase the contract with a payment of $104,000 on January 1, 2000.
- -- There are no additional purchase payments and no partial withdrawals.
- -- On January 1, 2007, the contract value is $150,000.
- -- The credit on January 1, 2007 is determined as:
Target Value on January 1, 2007 =
104,000 x (1.08)^7 = 104,000 x 1.71382 = $178,237.72
As the target value of $178,237.72 is greater than the contract value of
$150,000, a credit is made to the contract equal to $3,120 (or 3% of the
purchase payment of $104,000). Your total contract value on that date is
$153,120.
- -------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 49
<PAGE>
- -- On January 1, 2010, the contract value is $220,000.
- -- The credit on January 1, 2010 is determined as:
Target Value on January 1, 2010 =
$104,000 x (1.08)^10 = $104,000 x 2.158924 = $224,528.20
As the target value of $224,528.20 is greater than the contract value of
$220,000, a credit is made to the contract equal to $5,200 (or 5% of the
purchase payment of $104,000). Your total contract value on that date is
$225,200.
- -- The benefit automatically restarts on January 1, 2010 with the "initial
payment" equal to $225,200 and the credit determination made on January 1,
2017 and January 1, 2020.
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity
payouts begin by sending us a written request or calling us. We will process
your withdrawal request on the valuation date we receive it. For total
withdrawals, we will compute the value of your contract at the next
accumulation unit value calculated after we receive your request. We may ask
you to return the contract. You may have to pay charges (see "Charges --
Withdrawal charge") and IRS taxes and penalties (see "Taxes"). You cannot
make withdrawals after annuity payouts begin except under Plan E (see "The
Annuity Payout Period -- Annuity payout plans").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will withdraw money from all your subaccounts and/or the fixed
accounts in the same proportion as your value in each account correlates to
your total contract value, unless you request otherwise.
RECEIVING PAYMENT
By regular or express mail:
- -- payable to owner;
- -- mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request. However, we may postpone the payment if:
- -- the withdrawal amount includes a purchase payment check that has not cleared;
- -- the NYSE is closed, except for normal holiday and weekend closings;
- -- trading on the NYSE is restricted, according to SEC rules;
- -- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- -- the SEC permits us to delay payment for the protection of security holders.
- -------------------------------------------------------------------------------
50 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
TSA -- SPECIAL WITHDRAWAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
- - Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
-- you are at least age 59 1/2;
-- you are disabled as defined in the Code;
-- you separated from the service of the employer
who purchased the contract; or
-- the distribution is because of your death.
- - If you encounter a financial hardship (as defined by the Code), you may
receive a distribution of all contract values attributable to salary
reduction contributions made after Dec. 31, 1988, but not the earnings on
them.
- - Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes").
- - The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our office. The change
will become binding upon us when we receive and record it. We will honor any
change of ownership request that we believe is authentic and we will use
reasonable procedures to confirm authenticity. If we follow these procedures, we
will not take any responsibility for the validity of the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in similar capacity, ownership of the contract may be
transferred to the annuitant.
BENEFITS IN CASE OF DEATH
There are two standard death benefit options under this contract (Option A --
Return of purchase payment death benefit and Option B -- Maximum Anniversary
Value death benefit) or you may choose to select Option C -- 5% Accumulation
death benefit rider. If either you or the annuitant are age 80 or older (in most
states) on the contract date, Option A will apply. If both you and the annuitant
are age 79 or younger (in most states) on the contract date, you can elect
Option A, Option B or Option C on your application. Once you elect an option,
you cannot change it. We show the option that applies in your contract.
Under all options, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death. If a contract has more than one
person as the owner, we will pay benefits upon the first to die of any owner or
the annuitant. Other rules apply to qualified annuities. (See "Taxes").
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 51
<PAGE>
OPTION A -- RETURN OF PURCHASE PAYMENT DEATH BENEFIT
We will pay the beneficiary the greater of:
- - the contract value; or
- - the total purchase payments paid minus "adjusted partial withdrawals."
Contract value credits may apply if you choose Option A at the time of
application (see "Valuing your Investment -Contract value credits").
OPTION B -- MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT
We will pay the beneficiary the greatest of:
- - the contract value; or
- - the total purchase payments paid minus any "adjusted partial withdrawals"; or
- - the "maximum anniversary value" immediately preceding the date of death plus
the dollar amount of any payments since that anniversary and minus any
"adjusted partial withdrawals" since that anniversary.
MAXIMUM ANNIVERSARY VALUE: Each contract anniversary prior to the earlier of
your or the annuitant's 81st birthday, we calculate the anniversary value which
is the greater of:
(a) the contract value on that anniversary; or
(b) total payments made to the contract minus "adjusted partial withdrawals."
The "maximum anniversary value" is equal to the greatest of these anniversary
values.
After your or the annuitant's 81st birthday, the death benefit continues to be
the death benefit value as of that date, plus any subsequent payments and minus
any "adjusted partial withdrawals."
ADJUSTED PARTIAL WITHDRAWALS: Under either Option A or Option B, we calculate
"adjusted partial withdrawals" for each partial withdrawal as the product of (a)
times (b) where:
(a) is the ratio of the amount of the partial withdrawal (including any
applicable withdrawal charge) to the contract value on the date of (but prior
to) the partial withdrawal; and
(b) is the death benefit on the date of (but prior to) the partial
withdrawal.
EXAMPLE: OPTION A - RETURN OF PURCHASE PAYMENT DEATH BENEFIT
- - You purchase the contract with a payment of $20,000 on Jan. 1, 2000.
- - On Jan. 1, 2001 you make an additional purchase payment of $5,000.
- - On March 1, 2001 the contract value falls to $22,000 and you take a $1,500
partial withdrawal.
- - On March 1, 2002 the contract value falls to $23,000.
We calculate the death benefit on March 1, 2002 as follows:
Total purchase payments paid: $25,000.00
minus any "adjusted partial withdrawals"
calculated as: 1,500 x 25,000 = - 1,704.54
-------------------- -----------
22,000
for a death benefit of: $23,295.45
----------
- --------------------------------------------------------------------------------
52 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
EXAMPLE: OPTION B -- MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT
- - You purchase the contract with a payment of $20,000 on Jan. 1, 2000.
- - On Jan. 1, 2001 (the first contract anniversary) the contract value
grows to $29,000.
- - On March 1, 2001 the contract value falls to $22,000, at which point
you take a $1,500 partial withdrawal, leaving a contract value
of $20,500.
We calculate the death benefit on March 1, 2001 as follows:
The highest contract value on any prior contract anniversary: $29,000.00
plus any purchase payments paid since that anniversary: + 0.00
minus any "adjusted partial withdrawal"
taken since that anniversary,
calculated as: 1,500 x 29,000 = - 1,977.27
-------------------- ------------
22,000
for a death benefit of: $27,022.72
OPTION C -- 5% ACCUMULATION DEATH BENEFIT RIDER
If this optional rider is available in your state and both you and the annuitant
are age 79 or younger on the contract date, you may choose to add this benefit
to your contract. This optional rider provides that if you or the annuitant die
before annuity payouts begin while this contract is in force, we will pay the
beneficiary the greatest of the following amounts:
- - the contract value; or
- - the total purchase payments paid less any "adjusted partial withdrawals"; or
- - the Variable account 5% floor
We calculate the "adjusted partial withdrawals" as described above except that
only the first two benefits are taken into account.
THE VARIABLE ACCOUNT 5% FLOOR
The Variable account 5% floor is the sum of the value in the fixed accounts plus
the variable account floor. On each contract anniversary prior to the earlier of
your or the annuitant's 81st birthday, we increase the variable account floor by
accumulating the prior anniversary's floor at 5%. On the first contract
anniversary, the floor is increased by 5% of the accumulated initial purchase
payments allocated to the subaccounts. On any day that you allocate additional
amounts to, or withdraw or transfer from the subaccounts, we adjust the floor by
adding the additional amounts and subtracting the "adjusted partial withdrawals"
or "adjusted transfers."
After the contract anniversary immediately following either your or the
annuitant's 81st birthday, the Variable account floor is the floor on that
anniversary increased by additional amounts allocated to the subaccounts since
that anniversary plus purchase payment credits and reduced by any "adjusted
partial withdrawals" since that anniversary.
For the Variable account 5% floor, we calculate the "adjusted partial
withdrawals" or "adjusted transfers" as the result of (a) times (b) where:
(a) is the ratio of the amount of withdrawal (including any withdrawal
charges) or transfer from the subaccounts to the total value in the
subaccounts on the date of (but prior to) the withdrawal or transfer.
(b) is the variable account floor on the date of (but prior to) the
withdrawal or transfer.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 53
<PAGE>
EXAMPLE:
- - You purchase the contract with a payment of $25,000 on Jan. 1, 2000 with
$5,000 allocated to the one-year fixed account and $20,000 allocated
to the subaccounts.
- - On Jan. 1, 2001 (the first contract anniversary), the one-year fixed account
value is $5,200 and the subaccount value is $17,000. Total contract value
is $23, 200.
- - On March 1, 2001, the one-year fixed account value is $5,300 and the
subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 partial withdrawal all from the subaccounts, leaving the contract
value at $22,800.
We calculate the death benefit on March 1, 2001 as follows:
The variable account floor on Jan. 1, 2001,
calculated as: 1.05 x 20,000 = $21,000
plus any purchase payments paid since that anniversary: + 0.00
minus any "adjusted partial withdrawals" from the subaccounts,
calculated as: 1,500 x 21,000 = -$1,657.89
----------------------- ----------
19,000
Variable account floor benefit $19,342.10
plus the one-year fixed account value + 5,300.00
----------
for a death benefit of: $24,642.10
==========
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner. To do this your spouse must, within 60
days after we receive proof of death, give us written instructions to keep the
contract in force. The Guaranteed Minimum Income Benefit Rider (6% Accumulation
Benefit Base), if selected, is then terminated.
PAYMENTS: Under a nonqualified annuity, we will pay the beneficiary in a single
sum unless you give us other written instructions. We must fully distribute the
death benefit within five years of your death. However, the beneficiary may
receive payouts under any annuity payout plan available under this contract if:
- - the beneficiary asks us in writing within 60 days after we receive proof of
death; and
- - payouts begin no later than one year after your death, or other
date as permitted by the Code; and
- - the payout period does not extend beyond the beneficiary's life
or life expectancy.
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value at the next accumulation unit value calculated after our death
claim requirements are fulfilled. We pay interest, if any, from the date of
death at a rate no less than required by law. We will mail payment to the
beneficiary within seven days after our death claim requirements are fulfilled.
Other rules may apply to qualified annuities. (See "Taxes.")
- --------------------------------------------------------------------------------
54 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amounts available to purchase
payouts under the plan you select is the contract value on your retirement date
(less any applicable premium tax). You may reallocate this contract value to the
one-year fixed account to provide fixed dollar payouts and/or among the
subaccounts to provide variable annuity payouts. During the annuity payout
period, we reserve the right to limit the number of subaccounts in which you may
invest. The Guarantee Period Accounts are not available during this payout
period.
Amounts of fixed and variable payouts depend on:
- - the annuity payout plan you select;
- - the annuitant's age and, in most cases, sex;
- - the annuity table in the contract; and
- - the amounts you allocated to the accounts at settlement.
In addition, for variable payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. (In the case of fixed
annuities, payouts remain the same from month to month.)
For information with respect to transfers between accounts after annuity payouts
begin, see "Making the Most of Your Contract -- Transfer policies."
ANNUITY TABLE
The annuity table in your contract shows the amount of the first monthly payment
for each $1,000 of contract value according to the age and, when applicable, the
sex of the annuitant. (Where required by law, we will use a unisex table of
settlement rates.) The table assumes that the contract value is invested at the
beginning of the annuity payout period and earns a 5% rate of return, which is
reinvested and helps to support future payouts.
SUBSTITUTION OF 3.5% TABLE
If you ask us at least 30 days before the retirement date, we will substitute an
annuity table based on an assumed 3.5% investment rate for the 5% table in the
contract. The assumed investment rate affects both the amount of the first
payout and the extent to which subsequent payouts increase or decrease. Using
the 5% table results in a higher initial payment, but later payouts will
increase more slowly when annuity unit values rise and decrease more rapidly
when they decline.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 55
<PAGE>
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan:
- - PLAN A -- LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the
annuitant dies after we made only one monthly payout, we will not make any
more payouts.
- - PLAN B -- LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires.
We calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue
to make payouts until the annuitant's death.
- - PLAN C -- LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts
until the annuitant's death, with our guarantee that payouts will continue
for some period of time. We will make payouts for at least the number of
months determined by dividing the amount applied under this option by the
first monthly payout, whether or not the annuitant is living.
- - PLAN D -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make
monthly payouts while both the annuitant and a joint annuitant are living.
If either annuitant dies, we will continue to make monthly payouts at the
full amount until the death of the surviving annuitant. Payouts end with
the death of the second annuitant.
- - PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make
payouts only for the number of years specified whether the annuitant is
living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the
payout period, you can elect to have us determine the present value of any
remaining variable payouts and pay it to you in a lump sum. We determine
the present value of the remaining annuity payouts which are assumed to
remain level at the initial payment. The discount rate we use in the
calculation will vary between 5.27% and 6.77% depending on the applicable
assumed investment rate. (See "Charges-- Withdrawal charge under Annuity
Payout Plan E.") You can also take a portion of the discounted value once
a year. If you do so, your monthly payouts will be reduced by the
proportion of your withdrawal to the full discounted value. A 10% IRS
penalty tax could apply if you take a withdrawal. (See "Taxes.")
RESTRICTIONS FOR SOME TAX-DEFERRED RETIREMENT PLANS: If you purchased a
qualified annuity, you may be required to select a payout plan that provides for
payouts:
- - over the life of the annuitant;
- - over the joint lives of the annuitant and a designated beneficiary;
- - for a period not exceeding the life expectancy of the annuitant; or
- - for a period not exceeding the joint life expectancies of the annuitant
and a designated beneficiary.
You have the responsibility for electing a payout plan that complies with your
contract and with applicable law.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
Contract values that you allocated to the fixed accounts will provide fixed
dollar payouts and contract values that you allocated among the subaccounts will
provide variable annuity payouts.
- --------------------------------------------------------------------------------
56 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN
If you or the annuitant die after annuity payouts begin, we will pay any amount
payable to the beneficiary as provided in the annuity payout plan in effect.
TAXES
Generally, under current law, your contract has a tax deferral feature. That is
any increase in the value of the fixed accounts and/or subaccounts in which you
invest is taxable to you only when you receive a payout or withdrawal (see
detailed discussion below). Any portion of the annuity payouts and any
withdrawals you request that represent ordinary income normally are taxable. We
will send you a tax information reporting form for any year in which we made a
taxable distribution according to our records. Roth IRAs may grow and be
distributed tax free if you meet certain distribution requirements.
ANNUITY PAYOUTS UNDER NONQUALIFIED ANNUITIES: A portion of each payout will be
ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment and will not be taxed. All
amounts you receive after your investment in the contract is fully recovered
will be subject to tax.
Tax law requires that all nonqualified deferred annuity contracts issued by the
same company (and possibly its affiliates) to the same owner during a calendar
year be taxed as a single, unified contract when you take distributions from any
one of those contracts.
QUALIFIED ANNUITIES: Your contract may be used to fund a tax-deferred retirement
plan that is already tax-deferred under the Code. The contract will not provide
any necessary or additional tax deferral if it is used to fund a retirement plan
that is tax-deferred. Special rules apply to these retirement plans. Your rights
to benefits may be subject to the terms and conditions of these retirement plans
regardless of the terms of the contract.
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions during your life (except for Roth IRAs) and after your
death. You should refer to your retirement plan or adoption agreement, or
consult a tax advisor for more information about these distribution rules.
ANNUITY PAYOUTS UNDER QUALIFIED ANNUITIES (EXCEPT ROTH IRAS): Under a qualified
annuity, the entire payout generally is includable as ordinary income and is
subject to tax except to the extent that contributions were made with after-tax
dollars. If you or your employer invested in your contract with deductible or
pre-tax dollars as part of a tax-deferred retirement plan, such amounts are not
considered to be part of your investment in the contract and will be taxed when
paid to you.
WITHDRAWALS: If you withdraw part or all of your contract before your annuity
payouts begin, your withdrawal payment will be taxed to the extent that the
value of your contract immediately before the withdrawal exceeds your
investment. You also may have to pay a 10% IRS penalty for withdrawals you make
before reaching age 59 1/2 unless certain exceptions apply. For qualified
annuities, other penalties may apply if you make withdrawals from your contract
before your plan specifies that you can receive payouts.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 57
<PAGE>
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a contract (except a
Roth IRA) is not tax exempt. Any amount your beneficiary receives that
represents previously deferred earnings within the contract is taxable as
ordinary income to the beneficiary in the years he or she receives the payments.
The death benefit under a Roth IRA generally is not taxable as ordinary income
to the beneficiary if certain distribution requirements are met.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR TRUSTS: For nonqualified
annuities any annual increase in the value of annuities held by such entities
generally will be treated as ordinary income received during that year. This
provision is effective for purchase payments made after Feb. 28, 1986. However,
if the trust was set up for the benefit of a natural person only, the income
will remain tax deferred.
PENALTIES: If you receive amounts from your contract before reaching age 59 1/2,
you may have to pay a 10% IRS penalty on the amount includable in your ordinary
income. However, this penalty will not apply to any amount received by you or
your beneficiary:
- - because of your death;
- - because you become disabled (as defined in the Code);
- - if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary); or
- - if it is allocable to an investment before Aug. 14, 1982 (except for
qualified annuities).
For a qualified annuity, other penalties or exceptions may apply if you make
withdrawals from your contract before your plan specifies that payouts can be
made.
WITHHOLDING, GENERALLY: If you receive all or part of the contract value, we may
deduct withholding against the taxable income portion of the payment. Any
withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual tax return.
If the payment is part of an annuity payout plan, we generally compute the
amount of withholding using payroll tables. You may provide us with a statement
of how many exemptions to use in calculating the withholding. As long as you've
provided us with a valid Social Security Number or Taxpayer Identification
Number, you can elect not to have any withholding occur.
If the distribution is any other type of payment (such as a partial or full
withdrawal) we compute withholding using 10% of the taxable portion. Similar to
above, as long as you have provided us with a valid Social Security Number or
Taxpayer Identification Number, you can elect not to have this withholding
occur.
Some states also may impose withholding requirements similar to the federal
withholding described above. If this should be the case, we may deduct state
withholding from any payment from which we deduct federal withholding. The
withholding requirements may differ if we are making payment to a non-U.S.
citizen or if we deliver the payment outside the United States.
WITHHOLDING FROM TSAS: If you receive directly all or part of the contract value
from your TSA, mandatory 20% Federal income tax withholding (and possibly state
income tax withholding) generally will be imposed at the time we make the
payout. This mandatory withholding is in place of the elective withholding
discussed above. This mandatory withholding will not be imposed if:
- - instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan;
- - the payout is one in a series of substantially equal periodic payouts, made
at least annually, over your life or the life expectancy (or the joint lives
or life expectancies of you and your designated beneficiary) or over a
specified period of ten years or more; or
- - the payout is a minimum distribution required under the Code.
- --------------------------------------------------------------------------------
58 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
Payments we make to a surviving spouse instead of being directly rolled over to
an IRA also may be subject to a mandatory 20% income tax withholding.
State withholding also may be imposed on taxable distributions.
TRANSFER OF OWNERSHIP OF A NONQUALIFIED ANNUITY: If you transfer a nonqualified
annuity without receiving adequate consideration, the transfer is a gift and
also may be a withdrawal for federal income tax purposes. If the gift is a
currently taxable event for income tax purposes, the original owner will be
taxed on the amount of deferred earnings at the time of the transfer and also
may be subject to the 10% IRS penalty discussed earlier. In this case, the new
owner's investment in the contract will be the value of the contract at the time
of the transfer.
COLLATERAL ASSIGNMENT OF A NONQUALIFIED ANNUITY: If you collaterally assign or
pledge your contract, earnings on purchase payments you made after Aug. 13, 1982
will be taxed to you like a withdrawal.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
- - the reserve held in each subaccount for your contract;
- - divided by the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 59
<PAGE>
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
- - laws or regulations change;
- - the existing funds become unavailable; or
- - in our judgment, the funds no longer are suitable for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute the funds currently listed in this prospectus for other funds.
We may also:
- - add new subaccounts;
- - combine any two or more subaccounts;
- - make additional subaccounts investing in additional funds;
- - transfer assets to and from the subaccounts or the variable account; and
- - eliminate or close any subaccounts.
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments. We will notify
you of any substitution or change.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
American Express Financial Advisors Inc. (AEFA) serves as the principal
underwriter for the contract. Its offices are located at 200 AXP Financial
Center, Minneapolis, MN 55474. AEFA is a wholly-owned subsidiary of American
Express Financial Corporation (AEFC) which is a wholly-owned subsidiary of
American Express Company.
The contracts will be distributed by broker-dealers which have entered into
distribution agreements with AEFA and American
Enterprise Life.
We pay commissions for sales of the contracts of up to 7% of purchase payments
to insurance agencies or broker-dealers that are also insurance agencies.
Sometimes we pay the commissions as a combination of a certain amount of the
commission at the time of sale and a trail commission (which, when totaled,
could exceed 7% of purchase payments). In addition, we may pay certain sellers
additional compensation for selling and distribution activities under certain
circumstances. From time to time, we will pay or permit other promotional
incentives, in cash or credit or other compensation.
Other contracts issued by American Enterprise Life that are not described in
this prospectus may be available through your sales representative. The
features, investment options, sales charges and expenses of the other contracts
are different than those of this contract. Therefore, the contract values under
the other contracts may be different than your contract value under this
contract. In addition, sales commissions for the other contracts may be higher
or lower than sales commissions for this contract.
- --------------------------------------------------------------------------------
60 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
ISSUER
American Enterprise Life issues the annuities. American Enterprise Life is a
wholly-owned subsidiary of IDS Life, which is a wholly-owned subsidiary of
AEFC. AEFC is a wholly-owned subsidiary of American Express Company. American
Express Company is a financial services company principally engaged through
subsidiaries (in addition to AEFC) in travel related services, investment
services and international banking services.
American Enterprise Life is a stock life insurance company organized in 1981
under the laws of the state of Indiana. Our administrative offices are located
at 829 AXP Financial Center, Minneapolis, MN 55474. Our statutory address is
100 Capitol Center South, 201 North Illinois Street, Indianapolis, IN 46204.
American Enterprise Life conducts a conventional life insurance business.
LEGAL PROCEEDINGS
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which American Enterprise Life and its affiliates do business
involving insurers' sales practices, alleged agent misconduct, failure to
properly supervise agents and other matters. IDS Life is a defendant in three
class action lawsuits of this nature. American Enterprise Life is a named
defendant in one of these suits, RICHARD W. AND ELIZABETH J. THORESEN VS.
AMERICAN EXPRESS FINANCIAL CORPORATION, AMERICAN CENTURION LIFE ASSURANCE
COMPANY, AMERICAN ENTERPRISE LIFE INSURANCE COMPANY, AMERICAN PARTNERS LIFE
INSURANCE COMPANY, IDS LIFE INSURANCE COMPANY AND IDS LIFE INSURANCE COMPANY OF
NEW YORK which was commenced in Minnesota State Court in October 1998. The
action was brought by individuals who purchased an annuity in a qualified plan.
The plaintiffs allege that the sale of annuities in tax-deferred contributory
retirement investment plans (e.g., IRAs) is never appropriate. The plaintiffs
purport to represent a class consisting of all persons who made similar
purchases. The plaintiffs seek damages in an unspecified amount.
American Enterprise Life is included as a party to preliminary settlement of
all three class action lawsuits. We believe this approach will put these cases
behind us and provide a fair outcome for our clients. Our decision to settle
does not include any admission of wrongdoing. We do not anticipate that this
proposed settlement, or any other lawsuits in which American Enterprise Life is
a defendant, will have a material adverse effect on our financial condition.
ADDITIONAL INFORMATION ABOUT AMERICAN ENTERPRISE LIFE
SELECTED FINANCIAL DATA
The following selected financial data for American Enterprise Life should be
read in conjunction with the financial statements and notes.
<TABLE>
<CAPTION>
YEARS ENDED DEC. 31, (THOUSANDS) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net investment income $ 322,746 $ 340,219 $ 332,268 $ 271,719 $ 223,706
Net gain/loss on investments 6,565 (4,788) (509) (5,258) (1,154)
Other 8,338 7,662 6,329 5,753 4,214
- ----------------------------------------------------------------------------------------------------------------------
Total revenues $ 337,649 $ 343,093 $ 338,088 $ 272,214 $ 226,766
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Income before income taxes $ 50,662 $ 36,421 $ 44,958 $ 35,735 $ 33,440
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Net income $ 33,987 $ 22,026 $ 28,313 $ 22,823 $ 21,748
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Total assets $4,603,343 $4,885,621 $4,973,413 $4,425,837 $3,570,960
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS - MAY 1, 2000 61
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
1999 COMPARED TO 1998:
Net income increased 54 percent to $34 million in 1999, compared to $22 million
in 1998. Earnings growth resulted primarily net realized gains of $6.6 million
in 1999, compared to net realized losses of $4.8 in 1998.
Income before income taxes totaled $51 million in 1999, compared with $36
million in 1998.
Total investment contract deposits received decreased to $336 million in 1999,
compared with $348 million in 1998. This decrease is primarily due to a
decrease in sales of variable annuities in 1999.
Total revenues decreased to $338 million in 1999, compared with $343 million in
1998. The decrease is primarily due to decreased net investment income which
was partially offset by an increase in realized gain on investments. Net
investment income, the largest component of revenues, decreased 5 percent from
the prior year, reflecting decreases in investments owned and investment
yields.
Contractholder charges decreased 5 percent to $6.1 million in 1999, compared
with $6.4 million in 1998, reflecting a decrease in fixed annuities inforce.
The Company receives mortality and expense risk fees from the separate
accounts. Mortality and expense risk fees increased 77 percent to $2.3
million in 1999, compared with $1.3 million in 1998, this reflects the
increase in separate account assets.
Net realized gain on investments was $6.6 million in 1999, compared to a net
realized loss on investments of $4.8 million in 1998. The net realized gains
were primarily due to the sale of available for sale fixed maturity investments
at a gain as well as a decrease in the allowance for mortgage loan losses based
on management's regular evaluation of allowance adequacy.
Total benefits and expenses decreased slightly to $287 million in 1999. The
largest component of expenses, interest credited on investment contracts,
decreased to $209 million, reflecting a decrease in fixed annuities in force
and lower interest rates. Amortization of deferred policy acquisition costs
decreased to $43 million, compared to $54 million in 1998. This decrease was
due primarily to decreased aggregate amounts in force, as well as the impact of
changing prospective assumptions in 1998 based on actual lapse experience on
certain fixed annuities.
Other operating expenses increased 46 percent to $35 million in 1999, compared
to $24 million in 1998. This increase is primarily reflects technology costs
related to growth initiatives.
1998 COMPARED TO 1997:
Net income decreased 22 percent to $22 million in 1998, compared to $28 million
in 1997. The decrease in earnings resulted primarily from increases in
amortization of deferred policy acquisition costs.
Income before income taxes totaled $36 million in 1998, compared with $45
million in 1997.
Total premiums and investment contract deposits received decreased to $348
million in 1998, compared with $802 million in 1997. This decrease is primarily
due to a decrease in sales of fixed annuities in 1998, reflecting the low
interest rate environment.
Total revenues increased to $343 million in 1998, compared with $338 million in
1997. The increase is primarily due to increases in net investment income and
contractholder charges. Net investment income, the largest component of
revenues, increased 2 percent from the prior year, reflecting increases in
investments owned and investment yields.
Contractholder charges, increased 12 percent to $6.4 million in 1998, compared
with $5.7 million in 1997. The Company receives mortality and expense risk fees
from the separate accounts.
Total benefits and expenses increased 4.6 percent to $307 million in 1998,
compared with 293 million in 1997. The largest component of expenses, interest
credited on contractholders investment contracts, decreased to $229 million,
reflecting a decrease in fixed annuities in force and lower interest rates.
Amortization of deferred policy acquisition costs increased to $54 million,
compared to $37 million in 1997. This increase was due primarily to the impact
of changing prospective assumptions based on actual lapse experience on certain
fixed annuities.
- --------------------------------------------------------------------------------
62 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
RISK MANAGEMENT
The sensitivity analysis of the test of market risk discussed below estimates
the effects of hypothetical sudden and sustained changes in the applicable
market conditions on the ensuing year's earnings based on year-end positions.
The market changes, assumed to occur as of year-end, is a 100 basis point
increase in market interest rates. Computations of the prospective effects of
hypothetical interest rate change based on numerous assumptions, including
relative levels of market interest rates as well as the levels of assets and
liabilities. The hypothetical changes and assumptions will be different from
what actually occurs in the future. Furthermore, the computations do not
anticipate actions that may be taken by management if the hypothetical market
changes actually occurred over time. As a result, actual earnings effects in
the future will differ from those quantified below.
The Company primarily invests in fixed income securities over a broad range of
maturities for the purpose of providing fixed annuity clients with a
competitive rate of return on their investments while minimizing risk, and to
provide a dependable and targeted spread between the interest rate earned on
investments and the interest rate credited to contractholders' accounts. The
Company does not invest in securities to generate trading profits.
The Company has an investment committee that holds regularly scheduled meetings
and, when necessary, special meetings. At these meetings, the committee reviews
models projecting different interest rate scenarios and their impact on
profitability. The objective of the committee is to structure the investment
security portfolio based upon the type and behavior of products in the
liability portfolio so as to achieve targeted levels of profitability.
Rates credited to contractholders' accounts are generally reset at shorter
intervals than the maturity of underlying investments. Therefore, margins may
be negatively impacted by increases in the general level of interest rates.
Part of the committee's strategy includes the purchase of some types of
derivatives, such as interest rate caps, swaps and floors, for hedging
purposes. These derivatives protect margins by increasing investment
returns if there is a sudden and severe rise in interest rates, thereby
mitigating the impact of an increase in rates credited to contractholders'
accounts.
The negative effect on the Company's pretax earnings of a 100 basis point
increase in interest rates, which assumes repricings and customer behavior
based on the application of proprietary models to the book of business at
December 31, 1999, would be appoximately $4.2 million.
LIQUIDITY AND CAPITAL RESOURCES
The liquidity requirements of the Company are met by funds provided by annuity
considerations, investment income, proceeds from sales of investments as well
as maturities and periodic repayments of investment principal.
The primary uses of funds are policy benefits, commissions and operating
expenses, policy loans, and investment purchases.
The Company has an available line of credit with American Express Financial
Corporation aggregating $50 million. The line of credit is used strictly as a
short-term source of funds. No borrowings were outstanding under the agreement
at December 31, 1999. At December 31, 1999, outstanding reverse repurchase
agreements totaled $26 million.
At December 31, 1999, investments in fixed maturities comprised 81 percent of
the Company's total invested assets. Of the fixed maturity portfolio,
approximately 32 percent is invested in GNMA, FNMA and FHLMC mortgage-backed
securities which are considered AAA/Aaa quality.
At December 31, 1999, approximately 14 percent of the Company's investments in
fixed maturities were below investment grade bonds. These investments may be
subject to a higher degree of risk than the investment grade issues because of
the borrower's generally greater sensitivity to adverse economic conditions,
such as recession or increasing interest rates, and in certain instances, the
lack of an active
- --------------------------------------------------------------------------------
PROSPECTUS - MAY 1, 2000 63
<PAGE>
secondary market. Expected returns on below investment grade
bonds reflect consideration of such factors. The Company has identified those
fixed maturities for which a decline in fair value is determined to be other
than temporary, and has written them down to fair value with a charge to
earnings.
At December 31, 1999, net unrealized appreciation on fixed maturities held to
maturity included $6.3 million of gross unrealized appreciation and $29 million
of gross unrealized depreciation. Net unrealized appreciation on fixed
maturities available for sale included $9.3 million of gross unrealized
appreciation and $117 million of gross unrealized depreciation.
At December 31, 1999, the Company had an allowance for losses for mortgage
loans totaling $6.7 million.
The economy and other factors have caused a number of insurance companies to go
under regulatory supervision. This circumstance has resulted in assessments by
state guaranty associations to cover losses to policyholders of insolvent or
rehabilitated companies. Some assessments can be partially recovered through a
reduction in future premium taxes in certain states. The Company established an
asset for guaranty association assessments paid to those states allowing a
reduction in future premium taxes over a reasonable period of time. The asset is
being amortized as premium taxes are reduced. The Company has also estimated
the potential effect of future assessments on the Company's financial position
and results of operations and has established a reserve for such potential
assessments. The Company has adopted Statement of Position 97-3 providing
guidance when an insurer should recognize a liability for guaranty fund
assessments. The SOP is effective for fiscal years beginning after December 15,
1998. Adoption did not have a material impact on the Company's results of
operations or financial condition.
The National Association of Insurance Commissioners has established risk-based
capital standards to determine the capital requirements of a life insurance
company based upon the risks inherent in its operations. These standards
require the computation of a risk-based capital amount which is then compared
to a company's actual total adjusted capital. The computation involves applying
factors to various statutory financial data to address four primary risks:
asset default, adverse insurance experience, interest rate risk and external
events. These standards provide for regulatory attention when the percentage
of total adjusted capital to authorized control level risk-based capital is
below certain levels. As of December 31, 1999, the Company's total adjusted
capital was well in excess of the levels requiring regulatory attention.
YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs having been written
using two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or
miscalculations, which could have a material impact on the operations of
American Enterprise Life and the variable account. All of the major systems
used by American Enterprise Life and the variable account are maintained by
AEFC and are utilized by multiple subsidiaries and affiliates of AEFC. American
Enterprise Life's and the variable account's businesses are heavily dependent
upon AEFC's computer systems and have significant interaction with systems of
third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to American Enterprise Life and the variable account,
was conducted to identify the major systems that could be affected by the Year
2000 issue. Steps were taken to resolve potential problems including
modification to existing software and the purchase of new software. As of Dec.
31, 1999, AEFC had completed its program of corrective measures on its internal
systems and applications, including Year 2000 compliance testing. As of
Dec. 31, 1999, AEFC had also completed an evaluation of the Year 2000 readiness
of other third parties whose system failures could have an impact on American
Enterprise Life's and the variable account's operations.
- --------------------------------------------------------------------------------
64 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
AEFC's Year 2000 project also included establishing Year 2000 contingency plans
for all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. As of Dec. 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since Jan. 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on American Enterprise Life's and
the variable account's business, results of operations, or financial condition
as a result of the Year 2000 issue.
RESERVES
In accordance with the insurance laws and regulations under which we operate,
we are obligated to carry on our books, as liabilities, actuarially determined
reserves to meet our obligations on our outstanding annuity contracts. We base
our reserves for deferred annuity contracts on accumulation value and for fixed
annuity contracts in a benefit status on established industry mortality tables.
These reserves are computed amounts that will be sufficient to meet our policy
obligations at their maturities.
INVESTMENTS
Our total investments of $4,107,559 at Dec. 31, 1999, 28% was invested in
mortgage-backed securities, 53% in corporate and other bonds, 19% in primary
mortgage loans on real estate and the remaining less than 1% in other
investments.
COMPETITION
We are engaged in a business that is highly competitive due to the large number
of stock and mutual life insurance companies and other entities marketing
insurance products. There are over 1,600 stock, mutual and other types of
insurers in the life insurance business. Best's Insurance Reports, Life-Health
edition 1999, assigned us one of its highest classifications, A+ (Superior).
EMPLOYEES
As of Dec. 31, 1999, we had no employees.
PROPERTIES
We occupy office space in Minneapolis, MN, which is rented by AEFC. We
reimburse AEFC for rent based on direct and indirect allocation methods.
Facilities occupied by us are believed to be adequate for the purposes for
which they are used and well maintained.
STATE REGULATION
American Enterprise Life is subject to the laws of the State of Indiana
governing insurance companies and to the regulations of the Indiana
Department of Insurance. An annual statement in the prescribed form is
filed with the Indiana Department of Insurance each year covering our
operation for the preceding year and its financial condition at the end
of such year. Regulation by the Indiana Department of Insurance includes
periodic examination to determine American Enterprise's contract liabilities
and reserves so that the Indiana Department of Insurance may certify that
these items are correct. The Company's books and accounts are subject to
review by the Indiana Department of Insurance at all times. Such regulation
does not, however, involve any supervision of the account's management or the
company's investment practices or policies. In addition, American Enterprise
Life is subject to regulation under the insurance laws of other jurisdictions
in which it operates. A full examination of American Enterprise Life's
operations is conducted periodically by the National Association of Insurance
Commissioners.
Under insurance guaranty fund laws, in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses
incurred by insolvent companies. Most of these laws do provide however, that an
assessment may be excused or deferred if it would threaten an insurer's own
financial strength.
- --------------------------------------------------------------------------------
PROSPECTUS - MAY 1, 2000 65
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS*
The directors and principal executive officers of American Enterprise Life and
the principal occupation of each during the last five years is as follows:
DIRECTORS
JAMES E. CHOAT
Born in 1947
Director, president and chief executive officer since 1996; Senior vice
president - Institutional Products Group, AEFA, 1994 to 1997.
RICHARD W. KLING
Born 1940
Director and chairman of the board since March 1989.
PAUL S. MANNWEILER**
Born in 1949
Director since 1986; Partner at Locke Reynolds Boyd & Weisell since 1980.
PAULA R. MEYER
Born in 1954
Director and executive vice president, assured assets since 1998; vice
president, AEFC since 1998; Piper Capital Management (PCM) President from Oct.
1997 to May 1998; PCM Director of Marketing from June 1995 to Oct. 1997; PCM
Director of Retail Marketing from Dec. 1993 to June 1995.
WILLIAM A. STOLTZMANN
Born in 1948
Director since Sept. 1989; vice president, general counsel and secretary since
1985.
OFFICERS OTHER THAN DIRECTORS
JEFFREY S. HORTON
Born 1961
Vice president and treasurer since Dec. 1997; vice president and corporate
treasurer, AEFC, since Dec. 1997; controller, American Express Technologies -
Financial Services, AEFC, from July 1997 to Dec. 1997; controller, Risk
Management Products, AEFC, from May 1994 to July 1997; director of finance and
analysis, Corporate Treasury, AEFC, from June 1990 to May 1994.
PHILIP C. WENTZEL
Born in 1961
Vice president and controller since 1998; vice president - Finance, Risk
Management Products, AEFC since 1997; and director of financial reporting and
analysis from 1992 to 1997.
* The address for all of the directors and principal officers is: 200 AXP
Financial Center, Minneapolis, MN 55474 except for Mr. Mannweiler who is an
independent director.
** Mr. Mannweiler's address is: 201 No. Illinois Street, Indianapolis, IN 46204
- --------------------------------------------------------------------------------
66 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
<PAGE>
EXECUTIVE COMPENSATION
Our executive officers also may serve one or more affiliated companies. The
following table reflects cash compensation paid to the five most highly
compensated executive officers as a group for services rendered in the most
recent year to us and our affiliates. The table also shows the total cash
compensation paid to all our executive officers, as a group, who were executive
officers at any time during the most recent year.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL OR NUMBER IN GROUP POSITION HELD CASH COMPENSATION
<S> <C> <C>
Five most highly compensated executive officers as a group: $ 7,960,888
Richard W. Kling Chairman of the Board
James E. Choat President and CEO
Stuart A. Sedlacek Executive Vice President
Lorraine R. Hart Vice President, Investments
Deborah L. Pederson Assistant Vice President, Investments
All executive officers as a group (11) $11,535,043
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS - MAY 1, 2000 67
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
Our directors and officers do not beneficially own any outstanding shares of
stock of the company. All of our outstanding shares of stock are beneficially
owned by IDS Life. The percentage of shares of IDS Life owned by any director,
and by all our directors and officers as a group, does not exceed 1% of the
class outstanding.
Experts
Ernst & Young LLP, independent auditors, have audited the financial statements
of American Enterprise Life Insurance Company at Dec. 31, 1999 and 1998, and
for each of the three years in the period ended Dec. 31, 1999, and the
individual and combined statements of the segregated asset subaccounts of
American Enterprise Variable Annuity Account (comprised of subaccounts ESI,
ECR, EMS, EIA, EMG, EGD, ECA, ECD, EVA, EPP, ETC, EHG, EAS, EFG, EFM, EFO,
ERE, EMU, EIS, JCG, JUS, JGL, JIF, EDE, ERQ, ERI, END, ERS, EUT, EPG, EPL,
EPN, EMC, EPR, EIC, EUC and EEG) as of Dec. 31, 1999 and for the periods
indicated therein, as set forth in their reports. We've included our
financial statements in the prospectus and elsewhere in the registration
statement in reliance on Ernst & Young LLP's report, given on their authority
as experts in accounting and auditing.
- --------------------------------------------------------------------------------
68 AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY FINANCIAL INFORMATION
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
American Enterprise Life Insurance Company
We have audited the accompanying balance sheets of American Enterprise Life
Insurance Company (a wholly owned subsidiary of IDS Life Insurance Company) as
of December 31, 1999 and 1998, and the related statements of income,
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
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 referred to above present fairly, in
all material respects, the financial position of American Enterprise Life
Insurance Company at December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
/s/ Ernst & Young LLP
Ernst & Young LLP
February 3, 2000
Minneapolis, Minnesota
<PAGE>
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
BALANCE SHEETS
December 31,
($ thousands, except share amounts)
<TABLE>
<S> <C> <C>
ASSETS 1999 1998
- ------ ----------- -----------
Investments:
Fixed maturities:
Held to maturity, at amortized cost (fair value:
1999, $984,103; 1998, $1,126,732) $1,006,349 $1,081,193
Available for sale, at fair value (amortized cost:
1999, $2,411,799; 1998, $2,526,712) 2,304,487 2,594,858
----------- -----------
3,310,836 3,676,051
Mortgage loans on real estate 785,253 815,806
Other investments 11,470 12,103
----------- -----------
Total investments 4,107,559 4,503,960
Accounts receivable 316 214
Accrued investment income 56,676 61,740
Deferred policy acquisition costs 180,288 196,479
Deferred income taxes 37,501 --
Other assets 9 43
Separate account assets 220,994 123,185
----------- -----------
Total assets $4,603,343 $4,885,621
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Future policy benefits for fixed annuities $3,921,513 $4,166,852
Policy claims and other policyholders' funds 12,097 7,389
Deferred income taxes -- 23,199
Amounts due to brokers 25,215 54,347
Other liabilities 17,436 24,500
Separate account liabilities 220,994 123,185
----------- -----------
Total liabilities 4,197,255 4,399,472
Stockholder's equity:
Capital stock, $100 par value per share;
100,000 shares authorized,
20,000 shares issued and outstanding 2,000 2,000
Additional paid-in capital 282,872 282,872
Accumulated other comprehensive (loss) income:
Net unrealized securities (losses) gains (69,753) 44,295
Retained earnings 190,969 156,982
----------- -----------
Total stockholder's equity 406,088 486,149
----------- -----------
Total liabilities and stockholder's equity $4,603,343 $4,885,621
========== ==========
</TABLE>
<PAGE>
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
STATEMENTS OF INCOME
Years ended December 31,
($ thousands)
<TABLE>
<S> <C> <C> <C>
1999 1998 1997
--------- --------- ---------
Revenues:
Net investment income $322,746 $340,219 $332,268
Contractholder charges 6,069 6,387 5,688
Mortality and expense risk fees 2,269 1,275 641
Net realized gain (loss) on investments 6,565 (4,788) (509)
--------- --------- ---------
Total revenues 337,649 343,093 338,088
--------- --------- ---------
Benefits and expenses:
Interest credited on investment contracts 208,583 228,533 231,437
Amortization of deferred policy acquisition costs 43,257 53,663 36,803
Other operating expenses 35,147 24,476 24,890
--------- --------- ---------
Total benefits and expenses 286,987 306,672 293,130
--------- --------- ---------
Income before income taxes 50,662 36,421 44,958
Income taxes 16,675 14,395 16,645
--------- --------- ---------
Net income $ 33,987 $ 22,026 $ 28,313
========= ========= =========
</TABLE>
<PAGE>
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
Three years ended December 31, 1999
($ thousands)
<TABLE>
<CAPTION>
Accumulated
Other
Total Additional Comprehensive
Stockholder's Capital Paid-In (Loss) Income, Retained
Equity Stock Capital Net of Tax Earnings
------------- -------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $363,858 $2,000 $242,872 $ 12,343 $106,643
Comprehensive income:
Net income 28,313 -- -- -- 28,313
Unrealized holding gains arising
during the year, net of taxes of
($19,891) 36,940 -- -- 36,940 --
Reclassification adjustment for losses
included in net income, net of tax
of ($126) 233 -- -- 233 --
------------- ------------
Other comprehensive income 37,173 -- -- 37,173 --
-------------
Comprehensive income 65,486
Capital contribution from IDS Life 40,000 -- 40,000 -- --
------------- -------- ------------ ------------ -------------
Balance, December 31, 1997 469,344 2,000 282,872 49,516 134,956
Comprehensive income:
Net income 22,026 -- -- -- 22,026
Unrealized holding losses arising
during the year, net of taxes of $3,400 (6,314) -- -- (6,314) --
Reclassification adjustment for losses
included in net income, net of tax
of ($588) 1,093 -- -- 1,093 --
------------- ------------
Other comprehensive loss (5,221) -- -- (5,221) --
-------------
Comprehensive income 16,805
------------- -------- ------------ ------------ -------------
Balance, December 31, 1998 486,149 2,000 282,872 44,295 156,982
Comprehensive loss:
Net income 33,987 -- -- -- 33,987
Unrealized holding losses arising
during the year, net of taxes of $(59,231) (110,001) -- -- (110,001) --
Reclassification adjustment for gains
included in net income, net of tax (4,047) (4,047) --
of $(2,179) ------------- ------------
Other comprehensive loss (114,048) -- -- (114,048) --
-------------
Comprehensive loss (80,061)
------------- -------- ------------ ------------ -------------
Balance, December 31, 1999 $406,088 $2,000 $282,872 $(69,753) $190,969
============= ======== ============ ============ =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
See accompanying notes.
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
Years ended December 31,
($ thousands)
<S> <C> <C> <C>
1999 1998 1997
----------- ----------- -----------
Cash flows from operating activities:
Net income $ 33,987 $ 22,026 $ 28,313
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Change in accrued investment income 5,064 (2,152) (8,017)
Change in accounts receivable (102) 349 9,304
Change in deferred policy acquisition costs, net 16,191 28,022 (21,276)
Change in other assets 34 74 4,840
Change in policy claims and other policyholders' funds 4,708 (3,939) (16,099)
Deferred income tax (benefit) provision 711 (9,591) (2,485)
Change in other liabilities (7,064) 7,595 1,255
Amortization of premium (accretion of discount), net 2,315 122 (2,316)
Net realized (gain) loss on investments (6,565) 4,788 509
Other, net (1,562) 2,544 959
----------- ----------- -----------
Net cash provided by (used in) operating activities 47,717 49,838 (5,013)
Cash flows from investing activities:
Fixed maturities held to maturity:
Purchases -- -- (1,996)
Maturities 65,705 73,601 41,221
Sales 8,466 31,117 30,601
Fixed maturities available for sale:
Purchases (593,888) (298,885) (688,050)
Maturities 248,317 335,357 231,419
Sales 469,126 48,492 73,366
Other investments:
Purchases (28,520) (161,252) (199,593)
Sales 57,548 78,681 29,139
Change in amounts due to brokers (29,132) 19,412 (53,796)
----------- ----------- ------------
Net cash provided by (used in) investing activities 197,622 126,523 (537,689)
Cash flows from financing activities:
Activity related to investment contracts:
Considerations received 299,899 302,158 783,339
Surrenders and other benefits (753,821) (707,052) (552,903)
Interest credited to account balances 208,583 228,533 231,437
Capital contribution from parent -- -- 40,000
----------- ----------- -----------
Net cash (used in) provided by financing activities (245,339) (176,361) 501,873
----------- ----------- -----------
Net decrease in cash and cash equivalents -- -- (40,829)
Cash and cash equivalents at beginning of year -- -- 40,829
----------- ----------- -----------
Cash and cash equivalents at end of year $ -- $ -- $ --
=========== =========== ==========
See accompanying notes.
</TABLE>
<PAGE>
1. Summary of significant accounting policies
Nature of business
American Enterprise Life Insurance Company (the Company) is a stock life
insurance company that is domiciled in Indiana and is licensed to transact
insurance business in 48 states. The Company's principal product is
deferred annuities, which are issued primarily to individuals. It offers
single premium and annual premium deferred annuities on both a fixed and
variable dollar basis.
Immediate annuities are offered as well.
Basis of presentation
The Company is a wholly-owned subsidiary of IDS Life Insurance Company (IDS
Life), which is a wholly owned subsidiary of American Express Financial
Corporation (AEFC). AEFC is a wholly owned subsidiary of American Express
Company. The accompanying financial statements have been prepared in
conformity with accounting principles generally accepted in the United
States which vary in certain respects from reporting practices prescribed
or permitted by the Indiana Department of Insurance (see Note 4).
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Investments
Fixed maturities that the Company has both the positive intent and the
ability to hold to maturity are classified as held to maturity and carried
at amortized cost. All other fixed maturities are classified as available
for sale and carried at fair value. Unrealized gains and losses on
securities classified as available for sale are reported as a separate
component of accumulated other comprehensive (loss) income, net of deferred
income taxes.
Realized investment gain or loss is determined on an identified cost basis.
Prepayments are anticipated on certain investments in mortgage-backed
securities in determining the constant effective yield used to recognize
interest income. Prepayment estimates are based on information received
from brokers who deal in mortgage-backed securities.
Mortgage loans on real estate are carried at amortized cost less an
allowance for mortgage loan losses. The estimated fair value of the
mortgage loans is determined by a discounted cash flow analysis using
mortgage interest rates currently offered for mortgages of similar
maturities.
<PAGE>
1. Summary of significant accounting policies (continued)
Impairment of mortgage loans is measured as the excess of the loan's
recorded investment over its present value of expected principal and
interest payments discounted at the loan's effective interest rate, or the
fair value of collateral. The amount of the impairment is recorded in an
allowance for mortgage loan losses. The allowance for mortgage loan losses
is maintained at a level that management believes is adequate to absorb
estimated losses in the portfolio. The level of the allowance account is
determined based on several factors, including historical experience,
expected future principal and interest payments, estimated collateral
values, and current and anticipated economic and political conditions.
Management regularly evaluates the adequacy of the allowance for mortgage
loan losses.
The Company generally stops accruing interest on mortgage loans for which
interest payments are delinquent more than three months. Based on
management's judgment as to the ultimate collectibility of principal,
interest payments received are either recognized as income or applied to
the recorded investment in the loan.
The cost of interest rate caps and floors is amortized to investment income
over the life of the contracts and payments received as a result of these
agreements are recorded as investment income when realized. The amortized
cost of interest rate caps and floors is included in other investments.
When evidence indicates a decline, which is other than temporary, in the
underlying value or earning power of individual investments, such
investments are written down to the fair value by a charge to income.
Statements of cash flows
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These
securities are carried principally at amortized cost which approximates
fair value.
Supplementary information to the statements of cash flows for the years
ended December 31, is summarized as follows:
1999 1998 1997
---- ----- ----
Cash paid during the year for:
Income taxes $22,007 $19,035 $19,456
Interest on borrowings 2,187 5,437 1,832
Contractholder charges
Contractholder charges include surrender charges and fees collected
regarding the issue and administration of annuity contracts.
<PAGE>
1. Summary of significant accounting policies (continued)
Deferred policy acquisition costs
The costs of acquiring new business, principally sales compensation, policy
issue costs, and certain sales expenses, have been deferred on annuity
contracts. These costs are amortized using primarily the interest method.
Amortization of deferred policy acquisition costs requires the use of
assumptions including interest margins, mortality margins, persistency
rates, maintenance expense levels and, for variable products, separate
account performance. For universal life-type insurance and deferred
annuities, actual experience is reflected in the Company's amortization
models monthly. As actual experience differs from the current assumptions,
management considers the need to change key assumptions underlying the
amortization models prospectively. The impact of changing prospective
assumptions is reflected in the period that such changes are made and is
generally referred to as an unlocking adjustment. During 1998, unlocking
adjustments resulted in a net increase in amortization of $11 million. Net
unlocking adjustments in 1999 and 1997 were not significant.
Liabilities for future policy benefits
Liabilities for universal-life type insurance and fixed and variable
deferred annuities are accumulation values.
Federal income taxes
The Company's taxable income is included in the consolidated federal income
tax return of American Express Company. The Company provides for income
taxes on a separate return basis, except that, under an agreement between
AEFC and American Express Company, tax benefit is recognized for losses to
the extent they can be used on the consolidated tax return. It is the
policy of AEFC and its subsidiaries that AEFC will reimburse subsidiaries
for all tax benefits.
Included in other liabilities at December 31, 1999 and 1998 are $2,147 and
$3,504, respectively, payable to IDS Life for federal income taxes.
Separate account business
The separate account assets and liabilities represent funds held for the
exclusive benefit of the variable annuity contract owners. The Company
receives mortality and expense risk fees from the variable annuity separate
accounts.
<PAGE>
1. Summary of significant accounting policies (continued)
The Company makes contractual mortality assurances to the variable annuity
contract owners that the net assets of the separate accounts will not be
affected by future variations in the actual life expectancy experience of
the annuitants and beneficiaries from the mortality assumptions implicit in
the annuity contracts. The Company makes periodic fund transfers to, or
withdrawals from, the separate account assets for such actuarial
adjustments for variable annuities that are in the benefit payment period.
The Company also guarantees that the rates at which administrative fees are
deducted from contract funds will not exceed contractual maximums.
Accounting changes
American Institute of Certified Public Accountants (AICPA) Statement of
Position (SOP) 98-1, "Accounting for Costs of Computer Software Developed
or Obtained for Internal Use" became effective January 1, 1999. The SOP
requires the capitalization of certain costs incurred after the date of
adoption to develop or obtain software for internal use. Software utilized
by the Company is owned by AEFC and capitalized by AEFC. As a result, the
new rule did not have a material impact on the Company's results of
operations or financial condition.
Effective January 1, 1999, the Company adopted AICPA SOP 97-3, "Accounting
by Insurance and Other Enterprises for Insurance-Related Assessments,"
providing guidance for the timing of recognition of liabilities related to
guaranty fund assessments. The Company had historically carried balance in
other liabilities on the balance sheet for potential guaranty fund
assessment exposure. Adoption of the SOP did not have a material impact on
the Company's results of operations or financial condition.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is effective January 1, 2001.
This Statement establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded
in other contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the balance
sheet and measure those instruments at fair value. The accounting for
changes in the fair value of a derivative depends on the intended use of
the derivative and the resulting designation. The ultimate financial effect
of the new rule will be measured based on the derivatives in place at
adoption and cannot be estimated at this time.
<PAGE>
2. Investments
Fair values of investments in fixed maturities represent quoted market
prices and estimated values when quoted prices are not available. Estimated
values are determined by established procedures involving, among other
things, review of market indices, price levels of current offerings of
comparable issues, price estimates and market data from independent brokers
and financial files.
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at December 31, 1999 are as follows:
<TABLE>
<S> <C> <C> <C> <C>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- ---------- -------- -------- ----------
U.S. Government agency obligations $ 7,514 $ 23 $ 431 $ 7,106
State and municipal obligations 3,002 44 -- 3,046
Corporate bonds and obligations 816,826 5,966 23,311 799,482
Mortgage-backed securities 179,007 296 4,834 174,469
---------- -------- -------- ----------
$1,006,349 $ 6,329 $ 28,576 $ 984,103
========== ======== ======== ==========
Available for sale
U.S. Government agency obligations $ 2,047 $ -- $ 47 $ 1,999
State and municipal obligations 2,250 -- 190 2,060
Corporate bonds and obligations 1,419,150 7,445 90,703 1,335,892
Mortgage-backed securities 988,352 1,929 25,746 964,536
------------ -------- -------- ----------
$2,411,799 $ 9,374 $116,686 $2,304,487
========== ======== ======== ==========
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at December 31, 1998 are as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- ---------- -------- -------- ----------
U.S. Government agency obligations $ 8,652 $ 423 $ -- $ 9,075
State and municipal obligations 3,003 149 -- 3,152
Corporate bonds and obligations 877,140 48,822 6,670 919,292
Mortgage-backed securities 192,398 2,844 29 195,213
---------- -------- -------- ----------
$1,081,193 $ 52,238 $ 6,699 $1,126,732
========== ======== ======== ==========
Available for sale
U.S. Government agency obligations $ 2,062 $ 116 $ -- $ 2,178
Corporate bonds and obligations 1,472,814 69,990 34,103 1,508,701
Mortgage-backed securities 1,051,836 32,232 89 1,083,979
---------- -------- -------- ----------
$2,526,712 $102,338 $34,192 $2,594,858
========== ======== ======= ==========
</TABLE>
<PAGE>
2. Investments (continued)
The amortized cost and fair value of investments in fixed maturities at
December 31, 1999 by contractual maturity are shown below. Expected
maturities will differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.
Amortized Fair
Held to maturity Cost Value
Due in one year or less $ 26,214 $ 26,334
Due from one to five years 412,533 408,638
Due from five to ten years 331,187 320,146
Due in more than ten years 57,408 54,516
Mortgage-backed securities 179,007 174,469
------------- -------------
$ 1,006,349 $ 984,103
=========== ============
Amortized Fair
Available for sale Cost Value
Due in one year or less $ 46,937 $ 47,236
Due from one to five years 75,233 73,525
Due from five to ten years 1,037,001 980,633
Due in more than ten years 264,276 238,557
Mortgage-backed securities 988,352 964,536
------------ ------------
$2,411,799 $2,304,487
During the years ended December 31, 1999, 1998 and 1997, fixed maturities
classified as held to maturity were sold with amortized cost of $8,466,
$31,117 and $29,561, respectively. Net gains and losses on these sales were
not significant. The sales of these fixed maturities were due to
significant deterioration in the issuers' creditworthiness.
In addition, fixed maturities available for sale were sold during 1999 with
proceeds of $469,126 and gross realized gains and losses of $10,374 and
$4,147 respectively. Fixed maturities available for sale were sold during
1998 with proceeds of $48,492 and gross realized gains and losses of $2,835
and $4,516, respectively. Fixed maturities available for sale were sold
during 1997 with proceeds of $73,366 and gross realized gains and losses of
$1,081 and $1,440, respectively.
At December 31, 1999, bonds carried at $3,277 were on deposit with various
states as required by law.
<PAGE>
2. Investments (continued)
At December 31, 1999, investments in fixed maturities comprised 81 percent
of the Company's total invested assets. These securities are rated by
Moody's and Standard & Poor's (S&P), except for securities carried at
approximately $486 million which are rated by AEFC internal analysts using
criteria similar to Moody's and S&P. A summary of investments in fixed
maturities, at amortized cost, by rating on December 31 is as follows:
Rating 1999 1998
---------------------- ----------- -----------
Aaa/AAA $1,168,144 $1,242,301
Aa/AA 42,859 45,526
Aa/A 52,416 60,019
A/A 422,668 422,725
A/BBB 189,072 228,656
Baa/BBB 995,152 1,030,874
Baa/BB 64,137 79,687
Below investment grade 483,700 498,117
------------ ------------
$3,418,148 $3,607,905
At December 31, 1999, approximately 94 percent of the securities rated
Aaa/AAA were GNMA, FNMA and FHLMC mortgage-backed securities. No holdings
of any other issuer were greater than one percent of the Company's total
investments in fixed maturities.
At December 31, 1999, approximately 19 percent of the Company's invested
assets were mortgage loans on real estate. Summaries of mortgage loans by
region of the United States and by type of real estate are as follows:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
------------------------------- --------------------------------
<S> <C> <C> <C> <C>
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
---------------------------------- ----------- ----------- ---------- -----------
South Atlantic $194,325 $ -- $198,552 $ 651
Middle Atlantic 118,699 -- 129,284 520
East North Central 126,243 -- 134,165 2,211
Mountain 103,751 -- 113,581 --
West North Central 125,891 513 119,380 9,626
New England 43,345 802 46,103 --
Pacific 41,396 -- 43,706 --
West South Central 31,153 -- 32,086 --
East South Central 7,100 -- 7,449 --
----------- ------------ ----------- ------------
791,903 1,315 824,306 13,008
Less allowance for losses 6,650 -- 8,500 --
----------- ------------ ----------- ------------
$785,253 $ 1,315 $815,806 $13,008
======== ======== ======== =======
<PAGE>
2. Investments (continued)
December 31, 1999 December 31, 1998
------------------------------ ------------------------------
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
---------- -------------- ---------- ------------
Department/retail stores $232,449 $ 1,315 $253,380 $ 781
Apartments 181,346 -- 186,030 2,211
Office buildings 202,132 -- 206,285 9,496
Industrial buildings 83,186 -- 82,857 520
Hotels/Motels 43,839 -- 45,552 --
Medical buildings 32,284 -- 33,103 --
Nursing/retirement homes 6,608 -- 6,731 --
Mixed Use 10,059 -- 10,368 --
---------- -------------- ---------- ------------
791,903 1,315 824,306 13,008
Less allowance for losses 6,650 -- 8,500 --
----------- -------------- ----------- ------------
$785,253 $ 1,315 $815,806 $13,008
======== ========== ======== =======
</TABLE>
Mortgage loan fundings are restricted by state insurance regulatory
authorities to 80 percent or less of the market value of the real estate at
the time of origination of the loan. The Company holds the mortgage
document, which gives it the right to take possession of the property if
the borrower fails to perform according to the terms of the agreement.
Commitments to purchase mortgages are made in the ordinary course of
business. The fair value of the mortgage commitments is $nil.
At December 31, 1999, the Company's recorded investment in impaired loans
was $5,200 with an allowance of $1,250. At December 31, 1998, the Company's
recorded investment in impaired loans was $1,932 with an allowance of $500.
During 1999 and 1998, the average recorded investment in impaired loans was
$5,399 and $2,736, respectively.
The Company recognized $136, $251 and $nil of interest income related to
impaired loans for the years ended December 31, 1999, 1998 and 1997,
respectively.
The following table presents changes in the allowance for investment losses
related to all loans:
<TABLE>
<S> <C> <C> <C>
1999 1998 1997
---- ---- ----
Balance, January 1 $8,500 $3,718 $2,370
Provision (reduction) for investment losses (1,850) 4,782 1,805
Loan payoffs -- -- (457)
------ --------- -------
Balance, December 31 $6,650 $8,500 $3,718
====== ====== ======
Net investment income for the years ended December 31 is summarized as
follows:
1999 1998 1997
----- ----- ----
Interest on fixed maturities $265,199 $285,260 $278,736
Interest on mortgage loans 63,721 65,351 55,085
Interest on cash equivalents 534 137 704
Other (1,755) (2,493) 1,544
---------- ---------- ----------
327,699 348,255 336,069
Less investment expenses 4,953 8,036 3,801
--------- ---------- ----------
$322,746 $340,219 $332,268
======== ======== ========
</TABLE>
<PAGE>
2. Investments (continued)
Net realized gain (loss) on investments for the years ended December 31 is
summarized as follows:
<TABLE>
<S> <C> <C> <C>
1999 1998 1997
---- ---- ----
Fixed maturities $ 6,534 $ 863 $ 1,638
Mortgage loans (1,650) (4,816) (1,348)
Other investments (1,819) (835) (799)
--------- -------- -------
$ 3,065 $(4,788) $ (509)
========= ======= =======
Changes in net unrealized appreciation (depreciation) of investments for
the years ended December 31 are summarized as follows:
1999 1998 1997
----- ----- ----
Fixed maturities available for sale $(175,458) $(8,032) $57,188
3. Income taxes
The Company qualifies as a life insurance company for federal income tax
purposes. As such, the Company is subject to the Internal Revenue Code
provisions applicable to life insurance companies.
The income tax expense (benefit) for the years ended December 31, consists
of the following:
1999 1998 1997
---- ---- ----
Federal income taxes:
Current $ 15,531 $ 23,227 $17,668
Deferred 711 (9,591) (2,485)
-------- -------- -------
16,242 13,636 15,183
State income taxes-current 433 759 1,462
-------- -------- -------
Income tax expense $ 16,675 $ 14,395 $16,645
======== ======== =======
</TABLE>
Increases (decreases) to the federal income tax provision applicable to
pretax income based on the statutory rate, for the years ended December 31,
are attributable to:
<TABLE>
<CAPTION>
1999 1998 1997
------------------ ------------------ ---------------------
Provision Rate Provision Rate Provision Rate
--------- ----- --------- ----- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes based
on the statutory rate $17,731 35.0% $13,972 35.0% $15,735 35.0%
Increases (decreases) are
attributable to:
Tax-excluded interest (14) -- (35) (0.1) (41) (0.1)
State tax, net of federal benefit 281 0.5 493 1.2 956 2.1
Reduction of mortgage loss
reserve (1,225) (2.4) -- -- -- --
Other, net (98) (0.2) (35) -- (5) --
------ ----- -------- ------ ---- ------
Total income taxes $16,675 32.9 % $14,395 36.1% $16,645 37.0%
======= ===== ======= ==== ======= ====
</TABLE>
<PAGE>
3. Income taxes (continued)
Significant components of the Company's deferred income tax assets and
liabilities as of December 31 are as follows:
Deferred income tax assets: 1999 1998
------- -------
Policy reserves $46,243 $51,298
Unrealized losses on investments 39,678 --
Other 1,070 2,214
-------- --------
Total deferred income tax assets 86,991 53,512
-------- --------
Deferred income tax liabilities:
Deferred policy acquisition costs 49,490 52,908
Unrealized gains on investments -- 23,803
-------- --------
Total deferred income tax liabilities 49,490 76,711
-------- --------
Net deferred income tax assets (liabilities) $37,501 ($23,199)
======= ========
The Company is required to establish a valuation allowance for any portion
of the deferred income tax assets that management believes will not be
realized. In the opinion of management, it is more likely than not that the
Company will realize the benefit of the deferred income tax assets and,
therefore, no such valuation allowance has been established.
4. Stockholder's equity
Retained earnings available for distribution as dividends to IDS Life are
limited to the Company's surplus as determined in accordance with
accounting practices prescribed by state insurance regulatory authorities.
Statutory unassigned surplus aggregated $58,223 and $45,716 as of December
31, 1999 and 1998, respectively. In addition, dividends in excess of
$15,241 would require approval by the Insurance Department of the state of
Indiana.
Statutory net income and stockholder's equity as of December 31, are
summarized as follows:
1999 1998 1997
--------- --------- -------
Statutory net income $ 15,241 $ 37,902 $ 23,589
Statutory stockholder's equity 343,094 330,588 302,264
5. Related party transactions
The Company has purchased interest rate floors from IDS Life and entered
into an interest rate swap with IDS Life to manage its exposure to interest
rate risk. The interest rate floors had a carrying amount of $8,258 and
$6,651 at December 31, 1999 and 1998, respectively. The interest rate swap
is an off balance sheet transaction.
The Company has no employees. Charges by IDS Life for services and use of
other joint facilities aggregated $38,931, $28,482 and $24,535 for the
years ended December 31, 1999, 1998 and 1997, respectively. Certain of
these costs are included in deferred policy acquisition costs.
<PAGE>
6. Lines of credit
The Company has an available line of credit with AEFC aggregating $50,000.
The rate for the line of credit is established by reference to various
indices plus 20 to 45 basis points, depending on the term. There were no
borrowings outstanding under this agreement at December 31, 1999 or 1998.
7. Derivative financial instruments
The Company enters into transactions involving derivative financial
instruments to manage its exposure to interest rate risk, including hedging
specific transactions. The Company does not hold derivative instruments for
trading purposes. The Company manages risks associated with these
instruments as described below.
Market risk is the possibility that the value of the derivative financial
instruments will change due to fluctuations in a factor from which the
instrument derives its value, primarily an interest rate. The Company is
not impacted by market risk related to derivatives held for non-trading
purposes beyond that inherent in cash market transactions. Derivatives are
largely used to manage risk and, therefore, the cash flow and income
effects of the derivatives are inverse to the effects of the underlying
transactions.
Credit risk is the possibility that the counterparty will not fulfill the
terms of the contract. The Company monitors credit risk related to
derivative financial instruments through established approval procedures,
including setting concentration limits by counterparty, and requiring
collateral, where appropriate. A vast majority of the Company's
counterparties are rated A or better by Moody's and Standard & Poor's.
Credit risk related to interest rate caps and floors is measured by
replacement cost of the contracts. The replacement cost represents the fair
value of the instruments.
The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid over
the life of the agreement. Notional amounts are not recorded on the balance
sheet. Notional amounts far exceed the related credit exposure.
The Company's holdings of derivative financial instruments are as follows:
<TABLE>
<CAPTION>
Notional Carrying Fair Total Credit
December 31, 1999 Amount Amount Value Exposure
----------------- -------- -------- ------ ------------
<S> <C> <C> <C> <C>
Assets:
Interest rate caps $ 900,000 $ 3,212 $ 4,437 $ 4,437
Interest rate floors 2,000,000 8,258 2,251 2,251
Off balance sheet assets:
Interest rate swaps 2,000,000 -- 18,274 18,274
--------- -------- --------
$11,470 $24,962 $24,962
======= ======= =======
<PAGE>
7. Derivative financial instruments (continued)
Notional Carrying Fair Total Credit
December 31, 1998 Amount Amount Value Exposure
----------------- -------- -------- ------ ------------
Assets:
Interest rate caps $ 900,000 $ 5,452 $ 1,518 $ 1,518
Interest rate floors 1,000,000 6,651 17,798 17,798
Off balance sheet liabilities:
Interest rate swaps 1,000,000 -- (33,500) --
--------- ---------- --------
$12,103 ($ 14,184) $19,316
======= =========== =======
</TABLE>
The fair values of derivative financial instruments are based on market
values, dealer quotes or pricing models. All interest rate caps, floors and
swaps will expire on various dates from 2000 to 2006.
Interest rate caps, floors and swaps are used to manage the Company's
exposure to interest rate risk. These instruments are used primarily to
protect the margin between interest rates earned on investments and the
interest rates credited to related annuity contract holders.
8. Fair values of financial instruments
The Company discloses fair value information for most on- and off-balance
sheet financial instruments for which it is practicable to estimate that
value. Fair value of life insurance obligations, receivables and all
non-financial instruments, such as deferred acquisition costs are excluded.
Off-balance sheet intangible assets are also excluded. Management believes
the value of excluded assets and liabilities is significant. The fair value
of the Company, therefore, cannot be estimated by aggregating the amounts
presented.
<TABLE>
<CAPTION>
December 31,
1999 1998
-------------------------- --------------------------
Carrying Fair Carrying Fair
Financial Assets Amount Value Amount Value
---------------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $1,006,349 $984,103 $1,081,193 $1,126,732
Available for sale 2,304,487 2,304,487 2,594,858 2,594,858
Mortgage loans on real estate (Note 2) 785,253 770,095 815,806 874,064
Derivative financial instruments (Note 7) 11,470 24,962 12,103 19,316
Separate account assets (Note 1) 220,994 220,994 123,185 123,185
Financial Liabilities
Future policy benefits for fixed annuities $3,905,849 $3,778,945 $4,152,059 $4,000,789
Separate account liabilities 220,994 209,942 123,185 115,879
Derivative financial instruments (Note 7) -- -- -- 33,500
</TABLE>
At December 31, 1999 and 1998, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related
contracts carried at $15,633 and $14,793, respectively. The fair value of
these benefits is based on the status of the annuities at December 31, 1999
and 1998.
<PAGE>
8. Fair values of financial instruments (continued)
The fair values of deferred annuities and separate account liabilities are
estimated as the carrying amount less applicable surrender charges. The
fair value for annuities in non-life contingent payout status is estimated
as the present value of projected benefit payments at rates appropriate for
contracts issued in 1999 and 1998.
9. Commitments and contingencies
In January 2000, AEFC reached an agreement in principle to settle three
class-action lawsuits. The Company had been named as a co-defendant in one
of these lawsuits. It is expected the settlement will provide $215 million
of benefits to more than 2 million participants. The agreement in principle
to settle also provides for release by class members of all insurance and
annuity market conduct claims dating back to 1985 and is subject to a
number of contingencies including a definitive agreement and court
approval. The portion of the settlement allocated to the Company did not
have a material impact on the Company's financial position or results from
operations.
10. YEAR 2000 ISSUE (unaudited)
The Year 2000 issue is the result of computer programs having been written
using two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900
rather than 2000. This could result in the failure of major systems or
miscalculations, which could have a material impact on the operations of
the Company. All of the major systems used by the Company are maintained by
AEFC and are utilized by multiple subsidiaries and affiliates of AEFC. The
Company's businesses are heavily dependent upon AEFC's computer systems and
have significant interaction with systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to the Company, was conducted to identify the
major systems that could be affected by the Year 2000 issue. Steps were
taken to resolve potential problems including modification to existing
software and the purchase of new software. As of December 31, 1999, AEFC
had completed its program of corrective measures on its internal systems
and applications, including Year 2000 compliance testing. As of December
31, 1999, AEFC had also completed an evaluation of the Year 2000 readiness
of other third parties whose system failures could have an impact on the
Company's operations.
AEFC's Year 2000 project also included establishing Year 2000 contingency
plans for all key business units. Business continuation plans, which
address business continuation in the event of a system disruption, are in
place for all key business units. At December 31, 1999, these plans had
been amended to include specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since January 1, 2000, management believes no material adverse consequences
were experienced, and there was no material effect on the Company's
business, results of operations, or financial condition as a result of the
Year 2000 issue.
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Performance Information.............................p.3
Calculating Annuity Payouts........................p.14
Rating Agencies....................................p.15
Principal Underwriter..............................p.16
Independent Auditors...............................p.16
Financial Statements
<PAGE>
Please check the appropriate box to receive a copy of the Statement of
Additional Information for:
[ ] American Express Signature Variable Annuity(SM)
[ ] American Express Variable Portfolio Funds
[ ] AIM Variable Insurance Funds
[ ] Alliance variable Products Series Fund
[ ] Baron Capital Funds
[ ] Fidelity Variable Insurance Products Funds - Service Class
[ ] Franklin Templeton Variable Insurance Products Trust
[ ] Goldman Sachs Variable Insurance Trust (VIT)
[ ] Janus Aspen Series: Series Trust II
[ ] J.P. Morgan Series Trust II
[ ] Lazard Retirement Series, Inc.
[ ] MFS(R) Variable Insurance Trust(SM)
[ ] Putnam Variable Trust - Class IB shares
[ ] Royce Capital Fund
[ ] Third Avenue Variable Series Trust
[ ] Third Avenue Variable Series Trust
[ ] Wanger Advisors Trust
[ ] Warburg Pincus Trust - Emerging Growth Portfolio
MAIL YOUR REQUEST TO:
American Enterprise Life Insurance Company
829 AXP Financial Center
Minneapolis, MN 55474
We will mail your request to:
Your name ___________________________________________________________________
Address _____________________________________________________________________
City ___________________________________State _________________Zip __________
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
AMERICAN EXPRESS SIGNATURE VARIABLE ANNUITY(SM)
AMERICAN ENTERPRISE VARIABLE ANNUITY ACCOUNT
May 1, 2000
American Enterprise Variable Annuity Account is a separate account established
and maintained by American Enterprise Life Insurance Company (American
Enterprise Life).
This Statement of Additional Information (SAI) is not a prospectus. It should be
read together with the prospectus dated the same date as this SAI which you can
obtain from your sales representative or by writing or calling us at the address
or telephone number below. The prospectus is incorporated into this SAI by
reference.
American Enterprise Life Insurance Company
829 AXP Financial Center
Minneapolis, MN 55474
1-800-333-3437
<PAGE>
TABLE OF CONTENTS
Performance Information.............................................p. 3
Calculating Annuity Payouts.........................................p.14
Rating Agencies....................................................p. 15
Principal Underwriter..............................................p. 16
Independent Auditors...............................................p. 16
Financial Statements
<PAGE>
PERFORMANCE INFORMATION
The subaccounts may quote various performance figures to illustrate past
performance. We base total return and current yield quotations (if applicable)
on standardized methods of computing performance as required by the Securities
and Exchange Commission (SEC). An explanation of the methods used to compute
performance follows below.
Average Annual Total Return
We will express quotations of average annual total return for the subaccounts in
terms of the average annual compounded rate of return of a hypothetical
investment in the contract over a period of one, five and ten years (or, if
less, up to the life of the subaccounts), calculated according to the following
formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
EVR = Ending Redeemable Value of a hypothetical $1,000
payment made at the beginning of the period, at the
end of the period (or fractional portion thereof)
We calculated the following performance figures on the basis of historical
performance of each fund. We show actual performance from the date the
subaccounts began investing in the funds. For some subaccounts, we do not
provide any performance information because they are new and have not had any
activity to date. We also show performance from the commencement date of the
funds as if the contract existed at that time, which it did not. Although we
base performance figures on historical earnings, past performance does not
guarantee future results.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Annuities Without Withdrawal For Periods Ending Dec. 31. 1999
<S> <C> <C> <C> <C> <C> <C> <C>
Performance Since
Commencement of the Performance Since
Subaccount** Commencement of the Fund**
Since Since
Subaccount Investing In: 1 Year Commencement 1 Year 5 Years 10 Years Commencement
- ---------- ------------- ------ ------------ ------ ------- -------- ------------
AXP(SM) VARIABLE PORTFOLIO -
EVB Blue Chip Advantage Fund (5/00;9/99)* --% --% --% --% --% 10.81%
ESI Bond Fund (2/95;10/81) 0.22 6.09 0.22 6.41 6.54 9.03
ECR Capital Resource Fund (2/95;10/81) 21.96 18.97 21.96 19.55 13.76 14.22
EMS Cash Management Fund (2/95;10/81) 3.21 3.49 3.21 3.51 3.29 4.94
EVD Diversified Equity Income Fund (5/00;9/99) -- -- -- -- -- 2.37
EIA Extra Income Fund (7/99;5/96) -- 0.36 4.28 -- -- 3.87
EVF Federal Income Fund (5/00;9/99) -- -- -- -- -- 0.04
EVG Growth Fund (5/00;9/99) -- -- -- -- -- 17.72
EMG Managed Fund (2/95;4/86) 13.18 16.23 13.18 16.46 11.82 11.16
EGD New Dimensions Fund(R)(10/97, 5/96) 30.10 28.33 30.10 -- -- 24.50
EVS Small Cap Advantage Fund (5/00;9/99) -- -- -- -- -- 12.18
AIM V.I.
ECA Capital Appreciation Fund (8/99;5/93) -- 32.97 42.56 23.78 -- 20.56
ECD Capital Development Fund (9/99;5/98) -- 28.68 27.23 -- -- 9.57
EVA Value Fund (10/97;5/93) 28.03 28.33 28.03 25.36 -- 21.22
ALLIANCE VP
EPP Premier Growth Portfolio (Class B) -- 19.00 -- -- -- 11.27
(9/99;7/99)
ETC Technology Portfolio (Class B) (9/99,9/99) -- 47.96 -- -- -- 47.96
EHG U.S. Government/High Grade Securities -- -0.54 -- -- -- -0.60
Portfolio (Class B) (9/99;6/99)
BARON FUNDS
EAS Baron Capital Asset Fund (9/99;10/98) -- 19.38 33.89 -- -- 59.30
FIDELITY VIP
EFG III Growth & Income Portfolio (Service -- 6.87 6.26 -- -- 19.78
Class) (9/99;12/96)
EFM III Mid Cap Portfolio (Service Class) -- 27.26 46.63 -- -- 50.65
(9/99;12/98)
EFO Overseas Portfolio (Service Class) -- 24.71 40.35 15.62 9.79 10.78
(9/99;12/87)
FRANKLIN TEMPLETON VIP TRUST
ERE Franklin Real Estate Fund - Class 2 -- -0.50 -7.72 6.41 7.42 7.08
(9/99;1/89)***
EMU Mutual Shares Securities Fund - Class 2 -- 8.50 11.95 -- -- 9.24
(9/99;11/96)***
EIS Templeton International Smaller Companies -- 5.28 22.15 -- -- 3.70
Fund - Class 2 (9/99;5/96) ***
GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT)
JCG Capital Growth Fund (9/99;4/98) -- 16.96 25.30 -- -- 22.68
JUS CORE(SM) U.S. Equity Fund (9/99;2/98)**** -- 12.43 22.51 -- -- 18.98
JGL Global Income Fund (9/99;1/98) -- 0.09 -2.46 -- -- 2.08
JIF International Equity Fund (9/99;1/98) -- 20.71 29.34 -- -- 24.19
EIT Internet Tollkeeper Fund (5/00;5/00)+ -- -- -- -- -- --
Janus Aspen Series
EJA Aggressive Growth Portfolio: Service -- -- -- -- -- --
Shares (5/00;12/99)+
EJT Global Technology Portfolio: Service -- -- -- -- -- --
Shares (5/00; 1/00)+
EJG Growth Portfolio: Service Shares -- -- -- -- -- --
(5/00;12/99)+
EJI International Growth Portfolio: Service -- -- -- -- -- --
Shares (5/00;12/99)+
*(Commencement date of the subaccount; Commencement date of the fund)
**Current applicable charges deducted from fund performance include a $30
annual contract administrative charge, a 1.25% mortality and expense risk
fee and a 0.15% variable account administrative charge. Premium taxes are
not reflected in these total returns.
***Class 2 shares were issued Jan. 6, 1999. Prior to Jan. 6, 1999, Class 2 performance represents the historical
performance results of Class 1 shares. Performance of Class 2 shares for periods after its Jan. 6, 1999 inception
reflect Class 2's additional 12b-1 fee expense, which also affects all future performance. Figures assume
reinvestment of dividends and capital gains.
+Had not commenced operations as of Dec. 31, 1999.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Annuities Without Withdrawal For Periods Ending Dec. 31. 1999 (continued)
<S> <C> <C> <C> <C> <C> <C> <C>
Performance Since
Commencement of the Performance Since
Subaccount** Commencement of the Fund**
Since Since
Subaccount Investing In: 1 Year Commencement 1 Year 5 Years 10 Years Commencement
- ---------- ------------- ------ ------------ ------ ------- -------- ------------
J.P. MORGAN SERIES TRUST II
EDE J.P. Morgan U.S. Disciplined Equity --% 8.60% 16.85% 22.73% --% 22.71%
Portfolio (9/99;12/94)*
LAZARD RETIREMENT SERIES
ERQ Equity Portfolio (9/99;3/98) -- 3.57 6.42 -- -- 9.00
ERI International Equity Portfolio (9/99;9/98) -- 9.38 19.67 -- -- 24.42
MFS (R)
END New Discovery Series (9/99;4/98) -- 51.86 70.96 -- -- 38.74
ERS Research Series (9/99;7/95) -- 17.90 22.26 -- -- 21.17
EUT Utilities Series (9/99;1/95) -- 21.18 28.93 -- -- 24.65
PUTNAM VARIABLE TRUST
EPG Putnam VT Growth and Income Fund - Class -0.01 14.33 -0.01 17.46 12.10 13.27
IB Shares (10/98;2/88)+
EPL Putnam VT International Growth Fund - -- 36.35 57.89 -- -- 28.28
Class IB Shares (9/99;1/97)+
EPN Putnam VT International New Opportunities -- 59.44 100.08 -- -- 30.85
Fund - Class IB Shares (9/99;1/97)+
ROYCE CAPITAL FUND
EMC Micro-Cap Portfolio (9/99;12/96) -- 15.85 26.30 -- -- 15.64
EPR Premier Portfolio (9/99;12/96) -- 9.14 6.65 -- -- 9.70
THIRD AVENUE VARIABLE SERIES TRUST
ETV Value Portfolio (5/00;9/99) -- -- -- -- -- 7.89
WANGER
EIC International Small Cap (9/99;5/95) -- 56.59 123.29 -- -- 36.78
EUC U.S. Small Cap (9/99;5/95) -- 28.00 23.09 -- -- 24.63
WARBURG PINCUS TRUST -
EEG Emerging Growth Portfolio (9/99;7/99) -- 33.52 -- -- -- 34.33
*(Commencement date of the subaccount; Commencement date of the fund)
**Current applicable charges deducted from fund performance include a $30
annual contract administrative charge, a 1.25% mortality and expense risk
fee and a 0.15% variable account administrative charge. Premium taxes are
not reflected in these total returns.
+Each of the above Funds' Class IB Shares commenced operations on April 30,
1998. For periods prior to the inception dates of the Funds' Class IB
Shares, the performance shown is based on the historical performance of the
Funds' Class IA Shares adjusted to reflect the current expenses of the
Funds' Class IB Shares, including a 12b-1 fee of 0.15%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Annuities With Withdrawal For Periods Ending Dec. 31. 1999
<S> <C> <C> <C> <C> <C> <C> <C>
Performance Since
Commencement of the Performance Since
Subaccount** Commencement of the Fund**
Since Since
Subaccount Investing In: 1 Year Commencement 1 Year 5 Years 10 Years Commencement
- ---------- ------------- ------ ------------ ------ ------- -------- ------------
AXP(SM) VARIABLE PORTFOLIO -
EVB Blue Chip Advantage Fund (5/00;9/99)* --% --% --% --% --% 3.81%
ESI Bond Fund (2/95;10/81) -6.09 5.26 -6.09 5.62 6.54 9.03
ECR Capital Resource Fund (2/95;10/81) 14.96 18.44 14.96 19.06 13.76 14.22
EMS Cash Management Fund (2/95;10/81) -3.32 2.57 -3.32 2.62 3.29 4.94
EVD Diversified Equity Income Fund (5/00;9/99) -- -- -- -- -- -4.09
EIA Extra Income Fund (7/99;5/96) -- -6.18 -2.32 -- -- 2.36
EVF Federal Income Fund (5/00;9/99) -- -- -- -- -- -6.27
EVG Growth Fund (5/00;9/99) -- -- -- -- -- 10.72
EMG Managed Fund (2/95;4/86) 6.18 15.65 6.18 15.91 11.82 11.16
EGD New Dimensions Fund(R)(10/97, 5/96) 23.10 26.24 23.10 -- -- 23.58
EVS Small Cap Advantage Fund (5/00;9/99) -- -- -- -- -- 5.18
AIM V.I.
ECA Capital Appreciation Fund (8/99;5/93) -- 25.97 35.56 23.35 -- 20.45
ECD Capital Development Fund (9/99;5/98) -- 21.65 20.23 -- -- 5.57
EVA Value Fund (10/97;5/93) 21.03 26.25 21.03 24.95 -- 21.12
ALLIANCE VP
EPP Premier Growth Portfolio (Class B) -- 12.00 -- -- -- 3.77
(9/99;7/99)
ETC Technology Portfolio (Class B) (9/99,9/99) -- 40.96 -- -- -- 40.96
EHG U.S. Government/High Grade Securities -- -6.80 -- -- -- -7.31
Portfolio (Class B) (9/99;6/99)
BARON FUNDS
EAS Baron Capital Asset Fund (9/99;10/98) -- 12.38 26.89 -- -- 54.26
FIDELITY VIP
EFG III Growth & Income Portfolio (Service -- 0.09 -0.48 -- -- 18.37
Class) (9/99;12/96)
EFM III Mid Cap Portfolio (Service Class) -- 20.26 39.63 -- -- 43.73
(9/99;12/98)
EFO Overseas Portfolio (Service Class) -- 17.71 33.35 15.06 9.79 10.78
(9/99;12/87)
FRANKLIN TEMPLETON VIP TRUST
ERE Franklin Real Estate Fund - Class 2 -- -6.76 -13.48 5.62 7.42 7.08
(9/99;1/89)***
EMU Mutual Shares Securities Fund - Class 2 -- 1.60 4.95 -- -- 7.65
(9/99;11/96)***
EIS Templeton International Smaller Companies -- -1.39 15.15 -- -- 2.19
Fund - Class 2 (9/99;5/96) ***
GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT)
JCG Capital Growth Fund (9/99;4/98) -- 9.96 18.30 -- -- 18.99
JUS CORE(SM) U.S. Equity Fund (9/99;2/98)**** -- 5.43 15.51 -- -- 15.74
JGL Global Income Fund (9/99;1/98) -- -6.21 -8.59 -- -- -1.23
JIF International Equity Fund (9/99;1/98) -- 13.71 22.34 -- -- 21.27
EIT Internet Tollkeeper Fund (5/00;5/00)+ -- -- -- -- -- --
Janus Aspen Series
EJA Aggressive Growth Portfolio: Service -- -- -- -- -- --
Shares (5/00;12/99)+
EJT Global Technology Portfolio: Service -- -- -- -- -- --
Shares (5/00; 1/00)+
EJG Growth Portfolio: Service Shares -- -- -- -- -- --
(5/00;12/99)+
EJI International Growth Portfolio: Service -- -- -- -- -- --
Shares (5/00;12/99)+
*(Commencement date of the subaccount; Commencement date of the fund)
**Current applicable charges deducted from fund performance include a $30
annual contract administrative charge, a 1.25% mortality and expense risk
fee and a 0.15% variable account administrative charge. Premium taxes are
not reflected in these total returns.
***Class 2 shares were issued Jan. 6, 1999. Prior to Jan. 6, 1999, Class 2 performance represents the historical
performance results of Class 1 shares. Performance of Class 2 shares for periods after its Jan. 6, 1999 inception
reflect Class 2's additional 12b-1 fee expense, which also affects all future performance. Figures assume
reinvestment of dividends and capital gains.
+Had not commenced operations as of Dec. 31, 1999.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Annuities With Withdrawal For Periods Ending Dec. 31. 1999 (continued)
<S> <C> <C> <C> <C> <C> <C> <C>
Performance Since
Commencement of the Performance Since
Subaccount** Commencement of the Fund**
Since Since
Subaccount Investing In: 1 Year Commencement 1 Year 5 Years 10 Years Commencement
- ---------- ------------- ------ ------------ ------ ------- -------- ------------
J.P. MORGAN SERIES TRUST II
EDE J.P. Morgan U.S. Disciplined Equity --% 1.70% 9.85% 22.29% --% 22.35%
Portfolio (9/99;12/94)*
LAZARD RETIREMENT SERIES
ERQ Equity Portfolio (9/99;3/98) -- -2.98 -0.33 -- -- 5.29
ERI International Equity Portfolio (9/99;9/98) -- 2.42 12.67 -- -- 19.50
MFS (R)
END New Discovery Series (9/99;4/98) -- 44.86 63.96 -- -- 35.36
ERS Research Series (9/99;7/95) -- 10.90 15.26 -- -- 20.58
EUT Utilities Series (9/99;1/95) -- 14.18 21.93 -- -- 24.23
PUTNAM VARIABLE TRUST
EPG Putnam VT Growth and Income Fund - Class -6.31 8.83 -6.31 16.93 12.10 13.27
IB Shares (10/98;2/88)+
EPL Putnam VT International Growth Fund - -- 29.35 50.89 -- -- 27.05
Class IB Shares (9/99;1/97)+
EPN Putnam VT International New Opportunities -- 52.44 93.08 -- -- 29.67
Fund - Class IB Shares (9/99;1/97)+
ROYCE CAPITAL FUND
EMC Micro-Cap Portfolio (9/99;12/96) -- 8.85 19.30 -- -- 14.12
EPR Premier Portfolio (9/99;12/96) -- 2.20 -0.12 -- -- 8.01
THIRD AVENUE VARIABLE SERIES TRUST
ETV Value Portfolio (5/00;9/99) -- -- -- -- -- 1.04
WANGER
EIC International Small Cap (9/99;5/95) -- 49.59 116.29 -- -- 36.44
EUC U.S. Small Cap (9/99;5/95) -- 21.00 16.09 -- -- 24.15
WARBURG PINCUS TRUST -
EEG Emerging Growth Portfolio (9/99;7/99) -- 26.52 -- -- -- 27.33
*(Commencement date of the subaccount; Commencement date of the fund)
**Current applicable charges deducted from fund performance include a $30
annual contract administrative charge, a 1.25% mortality and expense risk
fee, a 0.15% variable account administrative charge and applicable
withdrawal charges. Premium taxes are not reflected in these total returns.
+Each of the above Funds' Class IB Shares commenced operations on April 30,
1998. For periods prior to the inception dates of the Funds' Class IB
Shares, the performance shown is based on the historical performance of the
Funds' Class IA Shares adjusted to reflect the current expenses of the
Funds' Class IB Shares, including a 12b-1 fee of 0.15%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Annuities Without Withdrawal and Selection of the Guaranteed Minimum Income Benefit
Rider (6% Accumulation Benefit Base) For Periods Ending Dec. 31. 1999
<S> <C> <C> <C> <C> <C> <C> <C>
Performance Since
Commencement of the Performance Since
Subaccount** Commencement of the Fund**
Since Since
Subaccount Investing In: 1 Year Commencement 1 Year 5 Years 10 Years Commencement
- ---------- ------------- ------ ------------ ------ ------- -------- ------------
AXP(SM) VARIABLE PORTFOLIO -
EVB Blue Chip Advantage Fund (5/00;9/99)* --% --% --% --% --% 10.46%
ESI Bond Fund (2/95;10/81) -0.13 5.74 -0.13 6.06 6.19 8.68
ECR Capital Resource Fund (2/95;10/81) 21.61 18.62 21.61 19.20 13.41 13.87
EMS Cash Management Fund (2/95;10/81) 2.86 3.14 2.86 3.16 2.94 4.59
EVD Diversified Equity Income Fund (5/00;9/99) -- -- -- -- -- 2.02
EIA Extra Income Fund (7/99;5/96) -- 0.01 3.93 -- -- 3.52
EVF Federal Income Fund (5/00;9/99) -- -- -- -- -- -0.31
EVG Growth Fund (5/00;9/99) -- -- -- -- -- 17.37
EMG Managed Fund (2/95;4/86) 12.83 15.88 12.83 16.11 11.47 10.81
EGD New Dimensions Fund(R)(10/97, 5/96) 29.75 27.98 29.75 -- -- 24.15
EVS Small Cap Advantage Fund (5/00;9/99) -- -- -- -- -- 11.83
AIM V.I.
ECA Capital Appreciation Fund (8/99;5/93) -- 32.62 42.21 23.43 -- 20.21
ECD Capital Development Fund (9/99;5/98) -- 28.33 26.88 -- -- 9.22
EVA Value Fund (10/97;5/93) 27.68 27.98 27.68 25.01 -- 20.87
ALLIANCE VP
EPP Premier Growth Portfolio (Class B) -- 18.65 -- -- -- 10.92
(9/99;7/99)
ETC Technology Portfolio (Class B) (9/99,9/99) -- 47.61 -- -- -- 47.61
EHG U.S. Government/High Grade Securities -- -0.89 -- -- -- -0.95
Portfolio (Class B) (9/99;6/99)
BARON FUNDS
EAS Baron Capital Asset Fund (9/99;10/98) -- 19.03 33.54 -- -- 58.95
FIDELITY VIP
EFG III Growth & Income Portfolio (Service -- 6.52 5.91 -- -- 19.43
Class) (9/99;12/96)
EFM III Mid Cap Portfolio (Service Class) -- 26.91 46.28 -- -- 50.30
(9/99;12/98)
EFO Overseas Portfolio (Service Class) -- 24.36 40.00 15.27 9.44 10.43
(9/99;12/87)
FRANKLIN TEMPLETON VIP TRUST
ERE Franklin Real Estate Fund - Class 2 -- -0.85 -8.07 6.06 7.07 6.73
(9/99;1/89)***
EMU Mutual Shares Securities Fund - Class 2 -- 8.15 11.60 -- -- 8.89
(9/99;11/96)***
EIS Templeton International Smaller Companies -- 4.93 21.80 -- -- 3.35
Fund - Class 2 (9/99;5/96) ***
GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT)
JCG Capital Growth Fund (9/99;4/98) -- 16.61 24.95 -- -- 22.33
JUS CORE(SM) U.S. Equity Fund (9/99;2/98)**** -- 12.08 22.16 -- -- 18.63
JGL Global Income Fund (9/99;1/98) -- -0.26 -2.81 -- -- 1.73
JIF International Equity Fund (9/99;1/98) -- 20.36 28.99 -- -- 23.84
EIT Internet Tollkeeper Fund (5/00;5/00)+ -- -- -- -- -- --
Janus Aspen Series
EJA Aggressive Growth Portfolio: Service -- -- -- -- -- --
Shares (5/00;12/99)+
EJT Global Technology Portfolio: Service -- -- -- -- -- --
Shares (5/00; 1/00)+
EJG Growth Portfolio: Service Shares -- -- -- -- -- --
(5/00;12/99)+
EJI International Growth Portfolio: Service -- -- -- -- -- --
Shares (5/00;12/99)+
*(Commencement date of the subaccount; Commencement date of the fund)
**Current applicable charges deducted from fund performance include a $30
annual contract administrative charge, a 1.25% mortality and expense risk
fee and a 0.15% variable account administrative charge. Premium taxes are
not reflected in these total returns.
***Class 2 shares were issued Jan. 6, 1999. Prior to Jan. 6, 1999, Class 2 performance represents the historical
performance results of Class 1 shares. Performance of Class 2 shares for periods after its Jan. 6, 1999 inception
reflect Class 2's additional 12b-1 fee expense, which also affects all future performance. Figures assume
reinvestment of dividends and capital gains.
+Had not commenced operations as of Dec. 31, 1999.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Annuities Without Withdrawal and Selection of the Guaranteed Minimum Income Benefit
Rider (6% Accumulation Benefit Base) For Periods Ending Dec. 31. 1999
<S> <C> <C> <C> <C> <C> <C> <C>
Performance Since
Commencement of the Performance Since
Subaccount** Commencement of the Fund**
Since Since
Subaccount Investing In: 1 Year Commencement 1 Year 5 Years 10 Years Commencement
- ---------- ------------- ------ ------------ ------ ------- -------- ------------
J.P. MORGAN SERIES TRUST II
EDE J.P. Morgan U.S. Disciplined Equity --% 8.25% 16.50% 22.38% --% 22.36%
Portfolio (9/99;12/94)*
LAZARD RETIREMENT SERIES
ERQ Equity Portfolio (9/99;3/98) -- 3.22 6.07 -- -- 8.65
ERI International Equity Portfolio (9/99;9/98) -- 9.03 19.32 -- -- 24.07
MFS (R)
END New Discovery Series (9/99;4/98) -- 51.51 70.61 -- -- 38.39
ERS Research Series (9/99;7/95) -- 17.55 21.91 -- -- 20.82
EUT Utilities Series (9/99;1/95) -- 20.83 28.58 -- -- 24.30
PUTNAM VARIABLE TRUST
EPG Putnam VT Growth and Income Fund - Class -0.36 13.98 -0.36 17.11 11.75 12.92
IB Shares (10/98;2/88)+
EPL Putnam VT International Growth Fund - -- 36.00 57.54 -- -- 27.93
Class IB Shares (9/99;1/97)+
EPN Putnam VT International New Opportunities -- 59.09 99.73 -- -- 30.50
Fund - Class IB Shares (9/99;1/97)+
ROYCE CAPITAL FUND
EMC Micro-Cap Portfolio (9/99;12/96) -- 15.50 25.95 -- -- 15.29
EPR Premier Portfolio (9/99;12/96) -- 8.79 6.30 -- -- 9.35
THIRD AVENUE VARIABLE SERIES TRUST
ETV Value Portfolio (5/00;9/99) -- -- -- -- -- 7.54
WANGER
EIC International Small Cap (9/99;5/95) -- 56.24 122.94 -- -- 36.43
EUC U.S. Small Cap (9/99;5/95) -- 27.65 22.74 -- -- 24.28
WARBURG PINCUS TRUST -
EEG Emerging Growth Portfolio (9/99;7/99) -- 33.17 -- -- -- 33.98
*(Commencement date of the subaccount; Commencement date of the fund)
**Current applicable charges deducted from fund performance include a $30
annual contract administrative charge, a 1.25% mortality and expense risk
fee, a 0.15% variable account administrative charge and a 0.35% Guaranteed
Minimum Income Benefit Rider (6% Accumulation Benefit Base) fee. Premium
taxes are not reflected in these total returns.
+Each of the above Funds' Class IB Shares commenced operations on April 30,
1998. For periods prior to the inception dates of the Funds' Class IB
Shares, the performance shown is based on the historical performance of the
Funds' Class IA Shares adjusted to reflect the current expenses of the
Funds' Class IB Shares, including a 12b-1 fee of 0.15%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Annuities With Withdrawal and Selection of the Guaranteed Minumum Income Benefit Rider
(6% Accumulation Benefit Base) For Periods Ending Dec. 31. 1999
<S> <C> <C> <C> <C> <C> <C> <C>
Performance Since
Commencement of the Performance Since
Subaccount** Commencement of the Fund**
Since Since
Subaccount Investing In: 1 Year Commencement 1 Year 5 Years 10 Years Commencement
- ---------- ------------- ------ ------------ ------ ------- -------- ------------
AXP(SM) VARIABLE PORTFOLIO -
EVB Blue Chip Advantage Fund (5/00;9/99)* --% --% --% --% --% 3.46%
ESI Bond Fund (2/95;10/81) -6.42 4.90 -6.42 5.26 6.19 8.68
ECR Capital Resource Fund (2/95;10/81) 14.61 18.08 14.61 18.71 13.41 13.87
EMS Cash Management Fund (2/95;10/81) -3.65 2.21 -3.65 2.26 2.94 4.59
EVD Diversified Equity Income Fund (5/00;9/99) -- -- -- -- -- -4.42
EIA Extra Income Fund (7/99;5/96) -- -6.29 -2.65 -- -- 2.00
EVF Federal Income Fund (5/00;9/99) -- -- -- -- -- -6.60
EVG Growth Fund (5/00;9/99) -- -- -- -- -- 10.37
EMG Managed Fund (2/95;4/86) 12.83 15.88 12.83 16.11 11.47 10.81
EGD New Dimensions Fund(R)(10/97, 5/96) 22.75 25.89 22.75 -- -- 23.23
EVS Small Cap Advantage Fund (5/00;9/99) -- -- -- -- -- 4.83
AIM V.I.
ECA Capital Appreciation Fund (8/99;5/93) -- 25.62 35.21 22.99 -- 20.10
ECD Capital Development Fund (9/99;5/98) -- 21.33 19.88 -- -- 5.22
EVA Value Fund (10/97;5/93) 20.68 25.89 20.68 24.60 -- 20.77
ALLIANCE VP
EPP Premier Growth Portfolio (Class B) -- 11.65 -- -- -- 3.92
(9/99;7/99)
ETC Technology Portfolio (Class B) (9/99,9/99) -- 40.61 -- -- -- 40.61
EHG U.S. Government/High Grade Securities -- -7.13 -- -- -- -7.19
Portfolio (Class B) (9/99;6/99)
BARON FUNDS
EAS Baron Capital Asset Fund (9/99;10/98) -- 12.03 26.54 -- -- 53.91
FIDELITY VIP
EFG III Growth & Income Portfolio (Service -- -0.24 -0.81 -- -- 18.01
Class) (9/99;12/96)
EFM III Mid Cap Portfolio (Service Class) -- 19.91 39.28 -- -- 43.38
(9/99;12/98)
EFO Overseas Portfolio (Service Class) -- 17.36 33.00 14.70 9.44 10.43
(9/99;12/87)
FRANKLIN TEMPLETON VIP TRUST
ERE Franklin Real Estate Fund - Class 2 -- -7.09 -13.81 5.26 7.07 6.73
(9/99;1/89)***
EMU Mutual Shares Securities Fund - Class 2 -- 1.28 4.60 -- -- 7.29
(9/99;11/96)***
EIS Templeton International Smaller Companies -- -1.72 14.80 -- -- 1.83
Fund - Class 2 (9/99;5/96) ***
GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT)
JCG Capital Growth Fund (9/99;4/98) -- 9.61 17.95 -- -- 18.63
JUS CORE(SM) U.S. Equity Fund (9/99;2/98)**** -- 5.08 15.16 -- -- 15.39
JGL Global Income Fund (9/99;1/98) -- -6.54 -8.93 -- -- -1.56
JIF International Equity Fund (9/99;1/98) -- 13.36 21.99 -- -- 20.91
EIT Internet Tollkeeper Fund (5/00;5/00)+ -- -- -- -- -- --
Janus Aspen Series
EJA Aggressive Growth Portfolio: Service -- -- -- -- -- --
Shares (5/00;12/99)+
EJT Global Technology Portfolio: Service -- -- -- -- -- --
Shares (5/00; 1/00)+
EJG Growth Portfolio: Service Shares -- -- -- -- -- --
(5/00;12/99)+
EJI International Growth Portfolio: Service -- -- -- -- -- --
Shares (5/00;12/99)+
*(Commencement date of the subaccount; Commencement date of the fund)
**Current applicable charges deducted from fund performance include a $30
annual contract administrative charge, a 1.25% mortality and expense risk
fee and a 0.15% variable account administrative charge. Premium taxes are
not reflected in these total returns.
***Class 2 shares were issued Jan. 6, 1999. Prior to Jan. 6, 1999, Class 2 performance represents the historical
performance results of Class 1 shares. Performance of Class 2 shares for periods after its Jan. 6, 1999 inception
reflect Class 2's additional 12b-1 fee expense, which also affects all future performance. Figures assume
reinvestment of dividends and capital gains.
+Had not commenced operations as of Dec. 31, 1999.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Annuities With Withdrawal and Selection of the Guaranteed Minimum Income Benefit Rider
(6% Accumulation Benefit Base) For Periods Ending Dec. 31. 1999 (continued)
<S> <C> <C> <C> <C> <C> <C> <C>
Performance Since
Commencement of the Performance Since
Subaccount** Commencement of the Fund**
Since Since
Subaccount Investing In: 1 Year Commencement 1 Year 5 Years 10 Years Commencement
- ---------- ------------- ------ ------------ ------ ------- -------- ------------
J.P. MORGAN SERIES TRUST II
EDE J.P. Morgan U.S. Disciplined Equity --% 1.37% 9.50% 21.94% --% 22.00%
Portfolio (9/99;12/94)*
LAZARD RETIREMENT SERIES
ERQ Equity Portfolio (9/99;3/98) -- -3.31 -0.66 -- -- 4.93
ERI International Equity Portfolio (9/99;9/98) -- 2.09 12.32 -- -- 19.14
MFS (R)
END New Discovery Series (9/99;4/98) -- 44.51 63.61 -- -- 35.01
ERS Research Series (9/99;7/95) -- 10.55 14.91 -- -- 20.22
EUT Utilities Series (9/99;1/95) -- 13.83 21.58 -- -- 23.87
PUTNAM VARIABLE TRUST
EPG Putnam VT Growth and Income Fund - Class -6.64 8.47 -6.64 16.57 11.75 12.92
IB Shares (10/98;2/88)+
EPL Putnam VT International Growth Fund - -- 29.00 50.54 -- -- 26.69
Class IB Shares (9/99;1/97)+
EPN Putnam VT International New Opportunities -- 52.09 92.73 -- -- 29.31
Fund - Class IB Shares (9/99;1/97)+
ROYCE CAPITAL FUND
EMC Micro-Cap Portfolio (9/99;12/96) -- 8.50 18.95 -- -- 13.76
EPR Premier Portfolio (9/99;12/96) -- 1.87 -0.44 -- -- 7.65
THIRD AVENUE VARIABLE SERIES TRUST
ETV Value Portfolio (5/00;9/99) -- -- -- -- -- 0.71
WANGER
EIC International Small Cap (9/99;5/95) -- 49.24 115.94 -- -- 36.08
EUC U.S. Small Cap (9/99;5/95) -- 20.65 15.74 -- -- 23.79
WARBURG PINCUS TRUST -
EEG Emerging Growth Portfolio (9/99;7/99) -- 26.17 -- -- -- 26.98
*(Commencement date of the subaccount; Commencement date of the fund)
**Current applicable charges deducted from fund performance include a $30
annual contract administrative charge, a 1.25% mortality and expense risk
fee, a 0.15% variable account administrative charge, a 0.35% Guaranteed
Minimum Income Benefit Rider (6% Accumulation Benefit Base) fee and
applicable withdrawal charges. Premium taxes are not reflected in these
total returns.
+Each of the above Funds' Class IB Shares commenced operations on April 30,
1998. For periods prior to the inception dates of the Funds' Class IB
Shares, the performance shown is based on the historical performance of the
Funds' Class IA Shares adjusted to reflect the current expenses of the
Funds' Class IB Shares, including a 12b-1 fee of 0.15%.
</TABLE>
<PAGE>
Cumulative Total Return
Cumulative total return represents the cumulative change in value of an
investment for a given period (reflecting change in a subaccount's accumulation
unit value). We compute cumulative total return using the following formula:
ERV - P
P
where: P = a hypothetical initial payment of $1,000
ERV = Ending Redeemable Value of a hypothetical $1,000 payment
made at the beginning of the period, at the end of the period
(or fractional portion thereof)
Total return figures reflect the deduction of the withdrawal charge which
assumes you withdraw the entire contract value at the end of the one-, five- and
ten- year periods (or, if less, up to the life of the subaccount).
We may also show performance figures without the deduction of a withdrawal
charge. In addition, total return figures reflect the deduction of all other
applicable charges including the annual contract administrative charge, the
variable account administrative charge, the Guaranteed Minimum Income Benefit
Rider (6% Accumulation Benefit Base) fee, the 8% Performance Credit Rider fee
and the mortality and expense risk fee.
Calculation of Yield for Subaccounts Investing in Money Market Funds
Annualized Simple Yield
For the subaccounts investing in money market funds, we base quotations of
simple yield on:
(a) the change in the value of a hypothetical subaccount
(exclusive of capital changes and income other than investment
income) at the beginning of a particular seven-day period:
(b) less, a pro rata share of the subaccount expenses accrued over
the period;
(c) dividing this difference by the value of the subaccount at the
beginning of the period to obtain the base period return; and
(d) multiplying the base period return by 365/7.
The subaccount's value includes:
o any declared dividends;
o the value of any shares purchased with dividends paid during the period;
and
o any dividends declared for such shares.
It does not include:
o the effect of any applicable withdrawal charge; or
o any realized or unrealized gains or losses.
Annualized Compound Yield
We calculate compound yield using the base period return described above, which
we then compound according to the following formula:
Compound Yield = [(Base Period Return + 1)365/7] - 1
<PAGE>
Annualized Yields Based on the Seven-Day Period Ending Dec. 31, 1999
Subaccount Investing In Simple Yield Compound Yield
EMS AXP(SM) Variable Portfolio - 4.52% 4.62%
Cash Management Fund
You must consider (when comparing an investment in subaccounts investing in
money market funds with fixed annuities) that fixed annuities often provide an
agreed-to or guaranteed yield for a stated period of time, whereas the
subaccount's yield fluctuates. In comparing the yield of the subaccount to a
money market fund, you should consider the different services that the contract
provides.
Annualized Yield for Subaccounts Investing in Income Funds
For the subaccounts investing in income funds, we base quotations of yield on
all investment income earned during a particular 30-day period, less expenses
accrued during the period (net investment income) and compute it by dividing net
investment income per accumulation unit by the value of an accumulation unit on
the last day of the period according to the following formula:
YIELD = 2[a-b + 1)6 - 1]
cd
where: a = dividends and investment income earned during
the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of accumulation units
outstanding during the period that were entitled
to receive dividends
d = the maximum offering price per accumulation unit
on the last day of the period
The subaccount earns yield from the increase in the net asset value of shares of
the fund in which it invests and from dividends declared and paid by the fund,
which are automatically invested in shares of the fund.
Annualized Yield Based on 30-Day Period Ended Dec. 31, 1999
Subaccount Investing In Yield
ESI AXPSM Variable Portfolio - Bond Fund 7.52%
EIA AXPSM Variable Portfolio - Extra Income Fund 15.35
The yield on the subaccount's accumulation unit may fluctuate daily and does not
provide a basis for determining future yields.
Independent rating or statistical services or publishers or publications such as
those listed below may quote subaccount performance, compare it to rankings,
yields or returns, or use it in variable annuity accumulation or settlement
illustrations they publish or prepare:
The Bank Rate Monitor National Index, Barron's, Business Week, CDA
Technologies, Donoghue's Money Market Fund Report, Financial Services
Week, Financial Times, Financial World, Forbes, Fortune, Global
Investor, Institutional Investor, Investor's Business Daily,
Kiplinger's Personal Finance, Lipper Analytical Services, Money,
Morningstar, Mutual Fund Forecaster, Newsweek, The New York Times,
Personal Investor, Stanger Report, Sylvia Porter's Personal Finance,
USA Today, U.S. News & World Report, The Wall Street Journal and
Wiesenberger Investment Companies Service.
<PAGE>
CALCULATING ANNUITY PAYOUTS
The Variable Account
We do the following calculations separately for each of the subaccounts of the
variable account. The separate monthly payouts, added together, make up your
total variable annuity payout.
Initial Payout: To compute your first monthly payment, we:
o determine the dollar value of your contract on the valuation date; then
o apply the result to the annuity table contained in the contract or another
table at least as favorable.
The annuity table shows the amount of the first monthly payment for each $1,000
of value which depends on factors built into the table, as described below.
Annuity Units: We then convert the value of your subaccount to annuity units. To
compute the number of units credited to you, we divide the first monthly payment
by the annuity unit value (see below) on the valuation date. The number of units
in your subaccount is fixed. The value of the units fluctuates with the
performance of the underlying fund.
Subsequent Payouts: To compute later payouts, we multiply:
o the annuity unit value on the valuation date; by
o the fixed number of annuity units credited to you.
Annuity Unit Values: We originally set this value at $1 for each subaccount. To
calculate later value we multiply the last annuity value by the product of:
o the net investment factor; and
o the neutralizing factor.
The purpose of the neutralizing factor is to offset the effect of the assumed
investment rate built into the annuity table. With an assumed investment rate of
5%, the neutralizing factor is 0.999866 for a one day valuation period.
Net Investment Factor
We determine the net investment factor by:
o adding the fund's current net asset value per share plus the per-share
amount of any accrued income or capital gain dividends to obtain a current
adjusted net asset value per share; then
o dividing that sum by the previous adjusted net asset value per share; and
o subtracting the percentage factor representing the mortality and expense
risk fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the net investment factor
may be greater or less than one, and the annuity unit value may increase or
decrease. You bear this investment risk in a variable subaccount.
<PAGE>
The One-Year Fixed Account
We guarantee your fixed annuity payout amounts. Once calculated, your payout
will remain the same and never change. To calculate your annuity payouts we:
o take the value of your one-year fixed account at the retirement date or the
date you have selected to begin receiving your annuity payouts; then
o using an annuity table, we apply the value according to the annuity payout
plan you select.
The annuity payout table we use will be the one in effect at the time you choose
to begin your annuity payouts. The values in the table will be equal to or
greater than the table in your contract.
RATING AGENCIES
The following chart reflects the ratings given to us by independent rating
agencies. These agencies evaluate the financial soundness and claims-paying
ability of insurance companies based on a number of different factors. This
information does not relate to the management or performance of the subaccounts
of the contract. This information relates only to the fixed account and reflects
our ability to make annuity payouts and to pay death benefits and other
distributions from the annuities.
Rating agency Rating
A.M. Best A+ (Superior)
Duff & Phelps AAA
Moody's Aa2 (Excellent)
A.M. Best's superior rating reflects our strong distribution network, favorable
overall balance sheet, consistently improving profitability, adequate level of
capitalization and asset/liability management expertise.
Duff & Phelps rating reflects our consistently excellent profitability record,
leadership position in chosen markets, stable operating leverage and effective
use of asset/liability management techniques.
Moody's excellent rating reflects our leadership position in financial planning,
strong asset, liability management and good capitalization. American Enterprise
Life has a strong market focus and greatly emphasizes quality service. This
information applies only to fixed products invested in American Enterprise
Life's General Account and reflects American Enterprise Life's ability to
fulfill its obligations under its contracts. This information does not relate to
the management and performance of the separate account assets associated with
American Enterprise Life's variable products.
<PAGE>
PRINCIPAL UNDERWRITER
The principal underwriter for the contract is American Express Financial
Advisors Inc. (AEFA) which offers the contract on a continuous basis.
Withdrawal charges received by AEFA for 1999 total $479,554. Commissions we paid
for 1999 total $5,924,368.
The contract is new as of 1999 and therefore, we do not have three years of
history for withdrawal charges received or commissions paid.
INDEPENDENT AUDITORS
The financial statements appearing in this SAI have been audited by Ernst &
Young LLP (1400 Pillsbury Center, 200 South Sixth Street, Minneapolis, MN 55402)
independent auditors, as stated in their report appearing herein.
FINANCIAL STATEMENTS
American Enterprise Variable Annuity Account -- American Express Signature
Variable Annuity
Annual Financial Information
Report of Independent Auditors
The Board of Directors
American Enterprise Life Insurance Company
We have audited the individual and combined statements of net assets of the
segregated asset subaccounts of American Enterprise Variable Annuity Account
(comprised of subaccounts ESI, ECR, EMS, EIA, EMG, EGD, ECA, ECD, EVA, EPP, ETC,
EHG, EAS, EFG, EFM, EFO, ERE, EMU, EIS, JCG, JUS, JGL, JIF, EDE, ERQ, ERI, END,
ERS, EUT, EPG, EPL, EPN, EMC, EPR, EIC, EUC and EEG) as of December 31, 1999,
and the related statements of operations and the statements of changes in net
assets for the periods indicated therein. These financial statements are the
responsibility of the management of American Enterprise Life Insurance Company.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at December 31, 1999 with
the affiliated and unaffiliated mutual fund managers. 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 referred to above present fairly, in
all material respects, the individual and combined financial position of the
segregated asset subaccounts of American Enterprise Variable Annuity Account (as
described above) at December 31, 1999, and the individual and combined results
of their operations and the changes in their net assets for the periods
indicated therein, in conformity with accounting principles generally accepted
in the United States.
Ernst & Young LLP
Minneapolis, Minnesota
March 17, 2000
<PAGE>
<TABLE>
<CAPTION>
American Enterprise Variable Annuity Account -- American Express Signature
Variable Annuity(SM)
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets ESI ECR EMS EIA EMG
Investments in shares of mutual funds and
portfolios:
<S> <C> <C> <C> <C> <C>
at cost $ 11,651,363 $ 10,984,992 $ 1,110,118 $ 6,759 $ 11,427,222
------------ ------------ ----------- ------- ------------
at market value $ 10,828,713 $ 13,632,953 $ 1,110,117 $ 6,752 $ 12,406,820
Dividends receivable 66,241 -- 5,329 1,078 --
Accounts receivable from American Enterprise
Life for contracct purchase payments -- 27,305 -- -- --
Receivable from mutual funds and portfolios
for share redemptions -- -- -- -- --
---- ----- ----- --- -----
Total assets 10,894,954 13,660,258 1,115,446 7,830 12,406,820
========== ========== ========= ===== ==========
Liabilities
Payable to American Enterprise Life for:
Mortality and expense risk fee 11,459 14,364 1,274 93 13,107
Issue and adminstrative fee 1,375 1,724 153 11 1,573
Contract terminations 61,819 -- -- -- 1,945
Payable to mutual funds and portfolios for
investments purchased -- -- -- -- --
----- ---- --- -- -----
Total liabilities 74,653 16,088 1,427 104 16,625
------ ------ ----- --- ------
Net assets applicable to contracts in
accumulation period 10,817,495 13,637,782 1,114,004 7,726 12,385,565
Net assets applicable to contracts in payment
period 2,806 6,388 15 -- 4,630
----- ----- -- ----- -----
Total net assets $ 10,820,301 $ 13,644,170 $ 1,114,019 $ 7,726 $ 12,390,195
------------ ------------ ----------- ------- ------------
Accumulation units outstanding 8,126,599 5,864,252 941,161 7,716 5,985,403
========= ========= ======= ===== =========
Net asset value per accumulation unit $ 1.33 $ 2.33 $ 1.18 $ 1.00 $ 2.07
====== ====== ====== ====== ======
Assets EGD ECA ECD EVA EPP
Investments in shares of mutual funds and portfolios:
at cost $ 2,802,524 $ 71,183 $ 1,591 $ 8,003,320 $ 61,509
----------- -------- ------- ----------- --------
at market value $ 3,689,151 $ 80,940 $ 1,855 $ 9,698,008 $ 65,331
Dividends receivable -- -- -- -- --
Accounts receivable from American Enterprise
Life for contract purchase payments -- -- -- -- --
Receivable from mutual funds and portfolios
for share redemptions -- 70 1 27,675 43
----- -- - ------ --
Total assets 3,689,151 81,010 1,856 9,725,683 65,374
========= ====== ===== ========= ======
Liabilities
Payable to American Enterprise Life for:
Mortality and expense risk fee 3,694 63 1 10,001 38
Issue and adminstrative fee 443 7 -- 1,200 5
Contract terminations 401 -- -- 16,474 --
Payable to mutual funds and portfolios for
investments purchased -- -- -- -- --
--- -- -- ---- --
Total liabilities 4,538 70 1 27,675 43
----- -- - ------ --
Net assets applicable to contracts in
accumulation period 3,684,613 80,940 1,855 9,698,008 65,331
Net assets applicable to contracts in payment
period -- -- -- -- --
------ ---- --- ------ ----
Total net assets $ 3,684,613 $ 80,940 $ 1,855 $ 9,698,008 $ 65,331
----------- -------- ------- ----------- --------
Accumulation units outstanding 2,140,748 56,612 1,469 5,637,595 55,616
========= ====== ===== ========= ======
Net asset value per accumulation unit $ 1.72 $ 1.43 $ 1.26 $ 1.72 $ 1.17
====== ====== ====== ====== ======
Assets ETC EHG EAS EFG EFM
Investments in shares of mutual funds and portfolios:
at cost $ 129,401 $ 7,310 $ 33,298 $ 72,435 $ 48,285
--------- ------- -------- -------- --------
at market value $ 147,050 $ 7,271 $ 36,704 $ 75,207 $ 54,974
Dividends receivable -- -- -- -- --
Accounts receivable from American Enterprise
Life for contract purchase payments 1 -- -- -- 60
Receivable from mutual funds and portfolios
for share redemptions 125 9 29 72 47
--- - -- -- --
Total assets 147,176 7,280 36,733 75,279 55,081
======= ===== ====== ====== ======
Liabilities
Payable to American Enterprise Life for:
Mortality and expense risk fee 112 8 26 64 42
Issue and adminstrative fee 13 1 3 8 5
Contract terminations -- -- -- -- --
Payable to mutual funds and portfolios for
investments purchased 1 -- -- -- 60
- -- -- -- --
Total liabilities 126 9 29 72 107
--- - -- -- ---
Net assets applicable to contracts in
accumulation period 147,050 7,271 36,704 75,207 54,974
Net assets applicable to contracts in payment
period -- -- -- -- --
----- ---- ---- ---- ----
Total net assets $ 147,050 $ 7,271 $ 36,704 $ 75,207 $ 54,974
========= ======= ======== ======== ========
Accumulation units outstanding 105,175 7,282 30,841 71,445 44,234
======= ===== ====== ====== ======
Net asset value per accumulation unit $ 1.40 $ 1.00 $ 1.19 $ 1.05 $ 1.24
====== ====== ====== ====== ======
Assets EFO ERE EMU EIS JCG
Investments in shares of mutual funds and portfolios:
at cost $ 34,348 $ 867 $ 31,535 $ 867 $ 246,690
-------- ----- -------- ----- ---------
at market value $ 40,260 $ 859 $ 32,322 $ 910 $ 261,211
Dividends receivable -- -- -- -- --
Accounts receivable from American Enterprise
Life for contract purchase payments -- -- 52 -- --
Receivable from mutual funds and portfolios
for share redemptions 133 1 18 1 248
--- - -- - ---
Total assets 40,393 860 32,392 911 261,459
====== === ====== === =======
Liabilities
Payable to American Enterprise Life for:
Mortality and expense risk fee 119 1 16 1 221
Issue and adminstrative fee 14 -- 2 -- 27
Contract terminations -- -- -- -- --
Payable to mutual funds and portfolios for
investments purchased -- -- 52 -- --
---- --- --- --- ---
Total liabilities 133 1 70 1 248
--- - -- - ---
Net assets applicable to contracts in
accumulation period 40,260 859 32,322 910 261,211
Net assets applicable to contracts in payment
period -- -- -- -- --
------ ---- ---- ---- ------
Total net assets $ 40,260 $ 859 $ 32,322 $ 910 $ 261,211
======== ===== ======== ===== =========
Accumulation units outstanding 32,631 889 30,888 890 226,060
====== === ====== === =======
Net asset value per accumulation unit $ 1.23 $ 0.97 $ 1.05 $ 1.02 $ 1.16
====== ====== ====== ====== ======
Assets JUS JGL JIF EDE ERQ
Investments in shares of mutual funds and portfolios:
at cost $ 515,769 $ 34,464 $ 36,698 $ 54,747 $ 1,196
--------- -------- -------- -------- -------
at market value $ 539,763 $ 33,287 $ 38,640 $ 54,066 $ 1,203
Dividends receivable -- -- -- -- --
Accounts receivable from American Enterprise
Life for contract purchase payments -- -- -- -- --
Receivable from mutual funds and portfolios
for share redemptions 429 38 39 45 1
--- -- -- -- -
Total assets 540,192 33,325 38,679 54,111 1,204
======= ====== ====== ====== =====
Liabilities
Payable to American Enterprise Life for:
Mortality and expense risk fee 383 34 35 40 1
Issue and adminstrative fee 46 4 4 5 --
Contract terminations -- -- -- -- --
Payable to mutual funds and portfolios for
investments purchased -- -- -- -- --
--- --- --- --- --
Total liabilities 429 38 39 45 1
--- -- -- -- -
Net assets applicable to contracts in
accumulation period 539,763 33,287 38,640 54,066 1,203
Net assets applicable to contracts in payment
period -- -- -- -- --
----- ---- ----- ---- ----
Total net assets $ 539,763 $ 33,287 $ 38,640 $ 54,066 $ 1,203
========= ======== ======== ======== =======
Accumulation units outstanding 480,470 34,328 30,495 50,706 1,190
======= ====== ====== ====== =====
Net asset value per accumulation unit $ 1.12 $ 0.97 $ 1.27 $ 1.07 $ 1.01
====== ====== ====== ====== ======
Assets ERI END ERS EUT EPG
Investments in shares of mutual funds and portfolios:
at cost $ 1,169 $ 77,260 $ 263,600 $ 34,419 $ 5,335,763
------- -------- --------- -------- -----------
at market value $ 1,270 $ 93,788 $ 281,042 $ 36,290 $ 5,082,976
Dividends receivable -- -- -- -- --
Accounts receivable from American Enterprise
Life for contract purchase payments -- -- -- -- 21,459
Receivable from mutual funds and portfolios
for share redemptions 2 79 143 25 5,781
- -- --- -- -----
Total assets 1,272 93,867 281,185 36,315 5,110,216
===== ====== ======= ====== =========
Liabilities
Payable to American Enterprise Life for:
Mortality and expense risk fee 2 70 128 22 5,162
Issue and adminstrative fee -- 9 15 3 619
Contract terminations -- -- -- -- --
Payable to mutual funds and portfolios for
investments purchased -- -- -- -- 21,459
--- --- ---- --- ------
Total liabilities 2 79 143 25 27,240
- -- --- -- ------
Net assets applicable to contracts in
accumulation period 1,270 93,788 281,042 36,290 5,082,976
Net assets applicable to contracts in payment
period -- -- -- -- --
---- ---- ---- ---- ----
Total net assets $ 1,270 $ 93,788 $ 281,042 $ 36,290 $ 5,082,976
======= ======== ========= ======== ===========
Accumulation units outstanding 1,184 63,944 241,943 30,180 4,302,357
===== ====== ======= ====== =========
Net asset value per accumulation unit $ 1.07 $ 1.47 $ 1.16 $ 1.20 $ 1.18
====== ====== ====== ====== ======
Assets EPL EPN EMC EPR EIC
Investments in shares of mutual funds and portfolios:
at cost $ 421,932 $ 43,126 $ 42,113 $ 1,300 $ 35,030
--------- -------- -------- ------- --------
at market value $ 461,834 $ 53,689 $ 42,610 $ 1,267 $ 41,956
Dividends receivable -- -- -- -- --
Accounts receivable from American Enterprise
Life for contract purchase payments 3 -- -- -- --
Receivable from mutual funds and portfolios
for share redemptions 322 78 37 1 35
--- -- -- - --
Total assets 462,159 53,767 42,647 1,268 41,991
======= ====== ====== ===== ======
Liabilities
Payable to American Enterprise Life for:
Mortality and expense risk fee 288 50 33 1 31
Issue and adminstrative fee 34 6 4 -- 4
Contract terminations -- 22 -- -- --
Payable to mutual funds and portfolios for
investments purchased 3 -- -- -- --
- --- ---- --- ---
Total liabilities 325 78 37 1 35
--- -- -- - --
Net assets applicable to contracts in
accumulation period 461,834 53,689 42,610 1,267 41,956
Net assets applicable to contracts in payment
period -- -- -- -- --
----- ---- ---- --- ----
Total net assets $ 461,834 $ 53,689 $ 42,610 $ 1,267 $ 41,956
========= ======== ======== ======= ========
Accumulation units outstanding 346,626 35,084 37,088 1,208 27,774
======= ====== ====== ===== ======
Net asset value per accumulation unit $ 1.33 $ 1.53 $ 1.15 $ 1.05 $ 1.51
====== ====== ====== ====== ======
Combined
Variable
Assets EUC EEG Account
Investments in shares of mutual funds and portfolios:
at cost $ 20,937 $ 6,882 $ 53,652,022
-------- ------- ------------
at market value $ 22,183 $ 7,393 $ 58,970,665
Dividends receivable -- -- 72,648
Accounts receivable from American Enterprise
Life for contract purchase payments -- -- 48,880
Receivable from mutual funds and portfolios
for share redemptions 16 4 35,547
-- - ------
Total assets 22,199 7,397 59,127,740
====== ===== ==========
Liabilities
Payable to American Enterprise Life for:
Mortality and expense risk fee 14 4 61,002
Issue and adminstrative fee 2 -- 7,319
Contract terminations -- -- 80,661
Payable to mutual funds and portfolios for
investments purchased -- -- 21,575
--- --- ------
Total liabilities 16 4 170,557
-- - -------
Net assets applicable to contracts in accumulation
period 22,183 7,393 58,943,344
Net assets applicable to contracts in payment
period -- -- 13,839
--- --- ------
Total net assets $ 22,183 $ 7,393 $ 58,957,183
======== ======= ============
Accumulation units outstanding 19,249 5,626
====== =====
Net asset value per accumulation unit $ 1.15 $ 1.31
====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Enterprise Variable Annuity Account -- American Express Signature
Variable Annuity(SM)
Statements of Operations
Period ended December 31, 1999
Segregated Asset Subaccounts
Investment income ESI ECR EMS EIA1 EMG
<S> <C> <C> <C> <C> <C>
Dividend income from mutual funds and portfolios $ 639,680 $ 1,220,605 $ 49,468 $ 1,149 $ 773,979
--------- ----------- -------- ------- ---------
Expenses:
Mortality and expense risk fee 116,344 140,485 13,300 103 128,811
Administrative charge 13,961 16,857 1,596 12 15,458
------ ------ ----- -- ------
Total expenses 130,305 157,342 14,896 115 144,269
------- ------- ------ --- -------
Investment income (loss) - net 509,375 1,063,263 34,572 1,034 629,710
======= ========= ====== ===== =======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on
sales of investments in mutual funds and portfolios:
Proceeds from sales 519,183 775,040 3,469,740 351,891 674,233
Cost of investments sold 557,599 641,397 3,469,746 352,546 642,429
------- ------- --------- ------- -------
Net realized gain (loss) on investments (38,416) 133,643 (6) (655) 31,804
Net change in unrealized appreciation or
depreciation of investments (431,444) 1,170,550 (4) (7) 705,266
-------- --------- -- -- -------
Net gain (loss) on investments (469,860) 1,304,193 (10) (662) 737,070
-------- --------- --- ---- -------
Net increase (decrease) in net assets resulting
from operations $39,515 $ 2,367,456 $ 34,562 $ 372 $ 1,366,780
======= =========== ======== ===== ===========
1For the period Aug. 26, 1999 (commencement of operations) to Dec. 31, 1999.
Investment income EGD ECA1 ECD2 EVA EPP2
Dividend income from mutual funds and portfolios $ 32,955 $ 1,195 $-- $ 154,339 $--
-------- ------- - --------- -
Expenses:
Mortality and expense risk fee 29,409 105 3 67,218 54
Administrative charge 3,529 12 -- 8,066 7
----- -- ----- -
Total expenses 32,938 117 3 75,284 61
------ --- - ------ --
Investment income (loss) - net 17 1,078 (3) 79,055 (61)
== ===== == ====== ===
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on
sales of investments in mutual funds and portfolios:
Proceeds from sales 141,571 175 3 136,790 3,526
Cost of investments sold 116,987 157 3 119,888 3,388
------- --- - ------- -----
Net realized gain (loss) on investments 24,584 18 -- 16,902 138
Net change in unrealized appreciation or
depreciation of investments 694,325 9,757 264 1,432,915 3,822
------- ----- --- --------- -----
Net gain (loss) on investments 718,909 9,775 264 1,449,817 3,960
------- ----- --- --------- -----
Net increase (decrease) in net assets resulting
from operations $ 718,926 $ 10,853 $ 261 $ 1,528,872 $ 3,899
========= ======== ===== =========== =======
1For the period Aug. 26, 1999 (commencement of operations) to Dec. 31, 1999.
2For the period Sept. 22, 1999 (commencement of operations) to Dec. 31, 1999.
Investment income ETC1 EHG1 EAS1 EFG1 EFM1
Dividend income from mutual funds and portfolios $-- $-- $-- $-- $ 341
---- ----- --- --- ----
Expenses:
Mortality and expense risk fee 136 15 32 118 62
Administrative charge 16 2 4 14 8
-- - - -- -
Total expenses 152 17 36 132 70
--- -- -- --- --
Investment income (loss) - net (152) (17) (36) (132) 271
==== === === ==== ===
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on
sales of investments in mutual funds and portfolios:
Proceeds from sales 7,260 17 36 3,535 7,011
Cost of investments sold 7,201 17 33 3,409 6,911
----- -- -- ----- -----
Net realized gain (loss) on investments 59 -- 3 126 100
Net change in unrealized appreciation or
depreciation of investments 17,649 (39) 3,406 2,772 6,689
------ --- ----- ----- -----
Net gain (loss) on investments 17,708 (39) 3,409 2,898 6,789
------ --- ----- ----- -----
Net increase (decrease) in net assets resulting
from operations $ 17,556 $ (56) $ 3,373 $ 2,766 $ 7,060
======== ===== ======= ======= =======
1For the period Sept. 22,1999 (commencement of operations) to Dec. 31, 1999.
Investment income EFO1 ERE1 EMU1 EIS1 JCG1
Dividend income from mutual funds and portfolios $-- $-- $-- $-- $ 5,181
---- ---- ----- --- -----
Expenses:
Mortality and expense risk fee 352 3 18 3 341
Administrative charge 42 -- 2 -- 41
-- --- - --- --
Total expenses 394 3 20 3 382
--- - -- - ---
Investment income (loss) - net (394) (3) (20) (3) 4,799
==== == === == =====
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on
sales of investments in mutual funds and portfolios:
Proceeds from sales 170,378 3 28 3 249
Cost of investments sold 152,684 3 28 3 235
------- - -- - ---
Net realized gain (loss) on investments 17,694 -- -- -- 14
Net change in unrealized appreciation or
depreciation of investments 5,912 (8) 787 43 14,521
----- -- --- -- ------
Net gain (loss) on investments 23,606 (8) 787 43 14,535
------ -- --- -- ------
Net increase (decrease) in net assets resulting
from operations $ 23,212 $ (11) $ 767 $ 40 $ 19,334
======== ===== ===== ==== ========
1For the period Sept. 22,1999 (commencement of operations) to Dec. 31, 1999.
Investment income JUS1 JGL1 JIF1 EDE1 ERQ1
Dividend income from mutual funds and portfolios $ 4,261 $ 1,258 $ 2,396 $ 2,464 $ 40
------- ------- ------- ------- ----
Expenses:
Mortality and expense risk fee 514 60 58 56 4
Administrative charge 62 7 7 7 --
-- - - - --
Total expenses 576 67 65 63 4
--- -- -- -- -
Investment income (loss) - net 3,685 1,191 2,331 2,401 36
===== ===== ===== ===== ==
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on
sales of investments in mutual funds and portfolios:
Proceeds from sales 36,031 65,197 101 3,431 4
Cost of investments sold 34,985 65,023 95 3,336 4
------ ------ -- ----- -
Net realized gain (loss) on investments 1,046 174 6 95 --
Net change in unrealized appreciation or
depreciation of investments 23,994 (1,177) 1,942 (681) 7
------ ------ ----- ---- -
Net gain (loss) on investments 25,040 (1,003) 1,948 (586) 7
------ ------ ----- ---- -
Net increase (decrease) in net assets resulting
from operations $ 28,725 $ 188 $ 4,279 $ 1,815 $ 43
======== ===== ======= ======= ====
1For the period Sept. 22,1999 (commencement of operations) to Dec. 31, 1999.
Investment income ERI1 END1 ERS1 EUT1 EPG
Dividend income from mutual funds and portfolios $ 13 $ 1,640 $-- $-- $ 116,237
Expenses:
Mortality and expense risk fee 4 114 140 28 33,684
Administrative charge -- 14 17 3 4,042
-- -- -- - -----
Total expenses 4 128 157 31 37,726
- --- --- -- ------
Investment income (loss) - net 9 1,512 (157) (31) 78,511
= ===== ==== === ======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on
sales of investments in mutual funds and portfolios:
Proceeds from sales 4 128 3,520 31 194,641
Cost of investments sold 4 107 3,409 30 200,699
- --- ----- -- -------
Net realized gain (loss) on investments -- 21 111 1 (6,058)
Net change in unrealized appreciation or
depreciation of investments 101 16,528 17,442 1,871 (265,626)
--- ------ ------ ----- --------
Net gain (loss) on investments 101 16,549 17,553 1,872 (271,684)
--- ------ ------ ----- --------
Net increase (decrease) in net assets resulting
from operations $ 110 $ 18,061 $ 17,396 $ 1,841 $ (193,173)
===== ======== ======== ======= ==========
1For the period Sept. 22,1999 (commencement of operations) to Dec. 31, 1999.
Investment income EPL1 EPN1 EMC1 EPR1 EIC1
Dividend income from mutual funds and portfolios $-- $-- $ 2,694 $ 144 $--
--- -- ------- ----- ---
Expenses:
Mortality and expense risk fee 563 63 41 4 37
Administrative charge 68 8 5 -- 4
-- - - -
Total expenses 631 71 46 4 41
--- -- -- - --
Investment income (loss) - net (631) (71) 2,648 140 (41)
==== === ===== === ===
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on
sales of investments in mutual funds and portfolios:
Proceeds from sales 183,965 1,934 46 4 41
Cost of investments sold 155,333 1,853 46 4 35
------- ----- -- - --
Net realized gain (loss) on investments 28,632 81 -- -- 6
Net change in unrealized appreciation or
depreciation of investments 39,902 10,563 497 (33) 6,926
------ ------ --- --- -----
Net gain (loss) on investments 68,534 10,644 497 (33) 6,932
------ ------ --- --- -----
Net increase (decrease) in net assets resulting
from operations $ 67,903 $ 10,573 $ 3,145 $ 107 $ 6,891
======== ======== ======= ===== =======
1For the period Sept. 22,1999 (commencement of operations) to Dec. 31, 1999.
Combined
Variable
Investment income EUC1 EEG1 Account
Dividend income from mutual funds and portfolios $-- $ 13 $ 3,010,052
--- ---- -----------
Expenses:
Mortality and expense risk fee 17 6 532,305
Administrative charge 2 1 63,874
- - ------
Total expenses 19 7 596,179
-- - -------
Investment income (loss) - net (19) 6 2,413,873
=== = =========
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on
sales of investments in mutual funds and portfolios:
Proceeds from sales 19 7 6,749,776
Cost of investments sold 18 7 6,539,652
-- - ---------
Net realized gain (loss) on investments 1 -- 210,124
Net change in unrealized appreciation or
depreciation of investments 1,246 511 3,491,189
----- --- ---------
Net gain (loss) on investments 1,247 511 3,701,313
----- --- ---------
Net increase (decrease) in net assets resulting
from operations $ 1,228 $ 517 $ 6,115,186
======= ===== ===========
1For the period Sept. 22,1999 (commencement of operations) to Dec. 31, 1999.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Enterprise Variable Annuity Account -- American Express Signature
Variable Annuity(SM)
Statements of Changes in Net Assets
Period ended December 31, 1999
Segregated Asset Subaccounts
Operations ESI ECR EMS EIA1 EMG
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 509,375 $ 1,063,263 $ 34,572 $ 1,034 $ 629,710
Net realized gain (loss) on investments (38,416) 133,643 (6) (655) 31,804
Net change in unrealized appreciation or
depreciation of investments (431,444) 1,170,550 (4) (7) 705,266
-------- --------- -- -- -------
Net increase (decrease) in net assets resulting
from operations 39,515 2,367,456 34,562 372 1,366,780
====== ========= ====== === =========
Contract transactions
Contract purchase payments 2,364,485 1,613,826 327,820 5,191 1,698,764
Net transfers2 1,661,343 889,541 920,070 2,163 1,651,501
Annuity payments (143) (473) -- -- (257)
Contract terminations:
Surrender benefits and contract charges (643,436) (978,721) (1,027,233) -- (777,693)
Death benefits (155,072) (92,582) -- -- (113,085)
-------- ------- ------ ---- --------
Increase (decrease) from contract transactions 3,227,177 1,431,591 220,657 7,354 2,459,230
--------- --------- ------- ----- ---------
Net assets at beginning of year 7,553,609 9,845,123 858,800 -- 8,564,185
--------- --------- ------- ---------
Net assets at end of year $ 10,820,301 $ 13,644,170 $ 1,114,019 $ 7,726 $ 12,390,195
============ ============ =========== ======= ============
Accumulation unit activity
Units outstanding at beginning of year 5,688,915 5,163,185 749,301 -- 4,684,466
Contract purchase payments 1,802,413 806,674 279,813 5,303 906,505
Net transfers2 1,255,338 436,406 788,973 2,413 874,349
Contract terminations:
Surrender benefits and contract charges (503,166) (490,112) (876,926) -- (420,370)
Death benefits (116,901) (51,901) -- -- (59,547)
-------- ------- -------
Units outstanding at end of year 8,126,599 5,864,252 941,161 7,716 5,985,403
========= ========= ======= ===== =========
1For the period Aug. 26, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
American Enterprise Life's fixed account.
Operations EGD ECA1 ECD2 EVA EPP2
Investment income (loss) - net $ 17 $ 1,078 $ (3) $ 79,055 $ (61)
Net realized gain (loss) on investments 24,584 18 -- 16,902 138
Net change in unrealized appreciation or
depreciation of investments 694,325 9,757 264 1,432,915 3,822
------- ----- --- --------- -----
Net increase (decrease) in net assets resulting
from operations 718,926 10,853 261 1,528,872 3,899
======= ====== === ========= =====
Contract transactions
Contract purchase payments 1,253,933 63,183 870 3,650,384 32,039
Net transfers3 409,913 6,962 724 2,416,621 29,393
Annuity payments -- -- -- -- --
Contract terminations:
Surrender benefits and contract charges (132,862) (58) -- (259,654) --
Death benefits (30,780) -- -- (27,190) --
------- -------
Increase (decrease) from contract transactions 1,500,204 70,087 1,594 5,780,161 61,432
--------- ------ ----- --------- ------
Net assets at beginning of year 1,465,483 -- -- 2,388,975 --
--------- ---------
Net assets at end of year $ 3,684,613 $ 80,940 $ 1,855 $ 9,698,008 $ 65,331
=========== ======== ======= =========== ========
Accumulation unit activity
Units outstanding at beginning of year 1,108,323 -- -- 1,778,901 --
Contract purchase payments 882,440 51,342 887 2,548,626 29,157
Net transfers3 288,019 5,312 582 1,606,765 26,459
Contract terminations:
Surrender benefits and contract charges (117,217) (42) -- (278,884) --
Death benefits (20,817) -- -- (17,813) --
------- ----- ---- ------- ----
Units outstanding at end of year 2,140,748 56,612 1,469 5,637,595 55,616
========= ====== ===== ========= ======
1For the period Aug. 26, 1999 (commencement of operations) to Dec. 31, 1999.
2For the period Sept. 22, 1999 (commencement of operations) to Dec. 31, 1999.
3Includes transfer activity from (to) other subaccounts and transfers from (to)
American Enterprise Life's fixed account.
Operations ETC1 EHG1 EAS1 EFG1 EFM1
Investment income (loss) - net $ (152) $ (17) $ (36) $ (132) $ 271
Net realized gain (loss) on investments 59 -- 3 126 100
Net change in unrealized appreciation or
depreciation of investments 17,649 (39) 3,406 2,772 6,689
------ --- ----- ----- -----
Net increase (decrease) in net assets resulting
from operations 17,556 (56) 3,373 2,766 7,060
====== === ===== ===== =====
Contract transactions
Contract purchase payments 80,862 5,440 33,331 52,322 18,976
Net transfers2 48,691 1,887 -- 20,119 28,938
Annuity payments -- -- -- -- --
Contract terminations:
Surrender benefits and contract charges (59) -- -- -- --
Death benefits -- -- -- -- --
------ --- ------ ----- ----
Increase (decrease) from contract transactions 129,494 7,327 33,331 72,441 47,914
------- ----- ------ ------ ------
Net assets at beginning of year -- -- -- -- --
----- ----- ------ ----- -----
Net assets at end of year $ 147,050 $ 7,271 $ 36,704 $ 75,207 $ 54,974
========= ======= ======== ======== ========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- -- --
Contract purchase payments 67,333 5,404 30,841 51,905 18,546
Net transfers2 37,885 1,878 -- 19,540 25,688
Contract terminations:
Surrender benefits and contract charges (43) -- -- -- --
Death benefits -- -- -- -- --
------ ---- ---- ---- -----
Units outstanding at end of year 105,175 7,282 30,841 71,445 44,234
======= ===== ====== ====== ======
1For the period Sept. 22, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
American Enterprise Life's fixed account.
Operations EFO1 ERE1 EMU1 EIS1 JCG1
Investment income (loss) - net $ (394) $ (3) $ (20) $ (3) $ 4,799
Net realized gain (loss) on investments 17,694 -- -- -- 14
Net change in unrealized appreciation or
depreciation of investments 5,912 (8) 787 43 14,521
----- -- --- -- ------
Net increase (decrease) in net assets resulting
from operations 23,212 (11) 767 40 19,334
====== === === == ======
Contract transactions
Contract purchase payments 33,832 870 1,178 870 122,121
Net transfers2 (16,784) -- 30,377 -- 119,756
Annuity payments -- -- -- -- --
Contract terminations:
Surrender benefits and contract charges -- -- -- -- --
Death benefits -- -- -- -- --
----- --- ----- ---- -----
Increase (decrease) from contract transactions 17,048 870 31,555 870 241,877
------ --- ------ --- -------
Net assets at beginning of year -- -- -- -- --
----- --- ---- ---- ----
Net assets at end of year $ 40,260 $ 859 $ 32,322 $ 910 $ 261,211
======== ===== ======== ===== =========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- -- --
Contract purchase payments 29,861 889 1,194 890 115,561
Net transfers2 2,770 -- 29,694 -- 110,499
Contract terminations:
Surrender benefits and contract charges -- -- -- -- --
Death benefits -- -- -- -- --
---- --- ----- --- ------
Units outstanding at end of year 32,631 889 30,888 890 226,060
====== === ====== === =======
1For the period Sept. 22, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
American Enterprise Life's fixed account.
Operations JUS1 JGL1 JIF1 EDE1 ERQ1
Investment income (loss) - net $ 3,685 $ 1,191 $ 2,331 $ 2,401 $ 36
Net realized gain (loss) on investments 1,046 174 6 95 --
Net change in unrealized appreciation or
depreciation of investments 23,994 (1,177) 1,942 (681) 7
------ ------ ----- ---- -
Net increase (decrease) in net assets resulting
from operations 28,725 188 4,279 1,815 43
====== === ===== ===== ==
Contract transactions
Contract purchase payments 401,524 21,346 11,840 40,435 1,160
Net transfers2 109,571 11,753 22,521 11,816 --
Annuity payments -- -- -- -- --
Contract terminations:
Surrender benefits and contract charges (57) -- -- -- --
Death benefits -- -- -- -- --
----- --- ---- ----- ----
Increase (decrease) from contract transactions 511,038 33,099 34,361 52,251 1,160
------- ------ ------ ------ -----
Net assets at beginning of year -- -- -- -- --
------ ---- ----- ----- -----
Net assets at end of year $ 539,763 $ 33,287 $ 38,640 $ 54,066 $ 1,203
========= ======== ======== ======== =======
Accumulation unit activity
Units outstanding at beginning of year -- -- -- -- --
Contract purchase payments 376,243 22,245 11,022 39,144 1,190
Net transfers2 104,278 12,083 19,473 11,562 --
Contract terminations:
Surrender benefits and contract charges (51) -- -- -- --
Death benefits -- -- -- -- --
--- ---- --- ----- ----
Units outstanding at end of year 480,470 34,328 30,495 50,706 1,190
======= ====== ====== ====== =====
1For period Sept. 22, 1999 (commencemenet of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
American Enterprise Life's fixed account.
Operations ERI1 END1 ERS1 EUT1 EPG
Investment income (loss) - net $ 9 $ 1,512 $ (157) $ (31) $ 78,511
Net realized gain (loss) on investments -- 21 111 1 (6,058)
Net change in unrealized appreciation or
depreciation of investments 101 16,528 17,442 1,871 (265,626)
--- ------ ------ ----- --------
Net increase (decrease) in net assets resulting
from operations 110 18,061 17,396 1,841 (193,173)
=== ====== ====== ===== ========
Contract transactions
Contract purchase payments 1,160 75,476 227,648 22,501 2,903,937
Net transfers2 -- 251 35,998 12,005 2,189,715
Annuity payments -- -- -- -- --
Contract terminations:
Surrender benefits and contract charges -- -- -- (57) (79,588)
Death benefits -- -- -- -- (20,046)
----- ----- ----- ---- -------
Increase (decrease) from contract transactions 1,160 75,727 263,646 34,449 4,994,018
----- ------ ------- ------ ---------
Net assets at beginning of year -- -- -- -- 282,131
---- ----- ------ ----- -------
Net assets at end of year $ 1,270 $ 93,788 $ 281,042 $ 36,290 $ 5,082,976
======= ======== ========= ======== ===========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- -- 238,893
Contract purchase payments 1,184 63,747 209,115 19,749 2,446,691
Net transfers2 -- 197 32,828 10,479 1,788,367
Contract terminations:
Surrender benefits and contract charges -- -- -- (48) (155,678)
Death benefits -- -- -- -- (15,916)
---- ---- --- ---- -------
Units outstanding at end of year 1,184 63,944 241,943 30,180 4,302,357
===== ====== ======= ====== =========
1For the period Sept. 22, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
American Enterprise Life's fixed account.
Operations EPL1 EPN1 EMC1 EPR1 EIC1
Investment income (loss) - net $ (631) $ (71) $ 2,648 $ 140 $ (41)
Net realized gain (loss) on investments 28,632 81 -- -- 6
Net change in unrealized appreciation or
depreciation of investments 39,902 10,563 497 (33) 6,926
------ ------ --- --- -----
Net increase (decrease) in net assets resulting
from operations 67,903 10,573 3,145 107 6,891
====== ====== ===== === =====
Contract transactions
Contract purchase payments 70,121 30,681 19,922 1,160 35,065
Net transfers2 323,810 12,495 19,543 -- --
Annuity payments -- -- -- -- --
Contract terminations:
Surrender benefits and contract charges -- (60) -- -- --
Death benefits -- -- -- -- --
----- ----- ---- ---- -----
Increase (decrease) from contract transactions 393,931 43,116 39,465 1,160 35,065
------- ------ ------ ----- ------
Net assets at beginning of year -- -- -- -- --
----- ---- ---- ----- -----
Net assets at end of year $ 461,834 $ 53,689 $ 42,610 $ 1,267 $ 41,956
========= ======== ======== ======= ========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- -- --
Contract purchase payments 61,197 25,283 18,922 1,208 27,774
Net transfers2 285,429 9,842 18,166 -- --
Contract terminations:
Surrender benefits and contract charges -- (41) -- -- --
Death benefits -- -- -- -- --
------ ---- ----- ----- -----
Units outstanding at end of year 346,626 35,084 37,088 1,208 27,774
======= ====== ====== ===== ======
1For the period Sept. 22, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
American Enterprise Life's fixed account.
Combined
Variable
Operations EUC1 EEG1 Account
Investment income (loss) - net $ (19) $ 6 $ 2,413,873
Net realized gain (loss) on investments 1 -- 210,124
Net change in unrealized appreciation or
depreciation of investments 1,246 511 3,491,189
----- --- ---------
Net increase (decrease) in net assets resulting
from operations 1,228 517 6,115,186
===== === =========
Contract transactions
Contract purchase payments 1,412 1,161 15,226,846
Net transfers2 19,543 5,715 10,995,951
Annuity payments -- -- (873)
Contract terminations:
Surrender benefits and contract charges -- -- (3,899,478)
Death benefits -- -- (438,755)
---- ----- --------
Increase (decrease) from contract transactions 20,955 6,876 21,883,691
------ ----- ----------
Net assets at beginning of year -- -- 30,958,306
----- --- ----------
Net assets at end of year $ 22,183 $ 7,393 $ 58,957,183
Accumulation unit activity
Units outstanding at beginning of year -- --
Contract purchase payments 1,394 1,180
Net transfers2 17,855 4,446
Contract terminations:
Surrender benefits and contract charges -- --
Death benefits -- --
----- ---
Units outstanding at end of year 19,249 5,626
====== =====
1For the period Sept. 22, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
American Enterprise Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Enterprise Variable Annuity Account
Statements of Changes in Net Assets
Period ended December 31, 1998
Segregated Asset Subaccounts
Operations ESI ECR EMS EMG EGD EVA
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss) - net $338,547 $598,178 $ 21,695 $ 794,837 $ (4,574) $ 90,940
Net realized gain (loss) on investments (2,867) 31,856 1 6,346 758 478
Net change in unrealized appreciation or
depreciation of investments (378,318) 957,259 3 55,365 190,924 262,764
-------- ------- - ------ ------- -------
Net increase (decrease) in net assets
resulting from operations (42,638) 1,587,293 21,699 856,548 187,108 354,182
======= ========= ====== ======= ======= =======
Contract transactions
Contract purchase payments 4,304,628 3,114,006 691,275 3,376,704 1,111,110 1,616,894
Net transfers2 243,040 (245,243) (85,043) (21,220) 126,930 381,890
Annuity payments (74) (385) -- (118) -- --
Contract terminations:
Surrender benefits and contract charges (297,229) (529,563) (28,396) (335,067) (25,802) (25,796)
Death benefits (28,304) (21,950) -- (25,390) (5,911) (5,952)
------- ------- ----- ------- ------ ------
Increase (decrease) from contract transactions 4,222,061 2,316,865 577,836 2,994,909 1,206,327 1,967,036
--------- --------- ------- --------- --------- ---------
Net assets at beginning of year 3,374,186 5,940,965 259,265 4,712,728 72,048 67,757
--------- --------- ------- --------- ------ ------
Net assets at end of year $7,553,609 $9,845,123 $858,800 $ 8,564,185 $1,465,483 $2,388,975
========== ========== ======== =========== ========== ==========
Accumulation unit activity
Units outstanding at beginning of year 2,543,718 3,812,754 231,256 2,944,208 68,572 65,875
Contracts purchase payments 3,245,320 1,848,700 635,551 2,000,537 965,321 1,418,576
Net transfers2 183,324 (146,994) (79,775) (16,062) 108,613 327,920
Contract terminations:
Surrender benefits and contract charges (262,248) (338,414) (37,731) (229,369) (29,255) (28,544)
Death benefits (21,199) (12,861) -- (14,848) (4,928) (4,926)
------- ------- ------- ------ ------
Units outstanding at end of year 5,688,915 5,163,185 749,301 4,684,466 1,108,323 1,778,901
========= ========= ======= ========= ========= =========
Combined
Variable
Operations EPG1 Account
Investment income (loss) - net $ (411) $ 1,500,665
Net realized gain (loss) on investments -- 39,439
Net change in unrealized appreciation or
depreciation of investments 12,839 1,479,154
------ ---------
Net increase (decrease) in net assets
resulting from operations 12,428 3,019,258
====== =========
Contract transactions
Contract purchase payments 217,969 10,127,958
Net transfers2 53,032 210,346
Annuity payments -- (503)
Contract terminations:
Surrender benefits and contract charges (1,298) (945,922)
Death benefits -- (59,203)
----- -------
Increase (decrease) from contract transactions 269,703 9,332,676
------- ---------
Net assets at beginning of year -- 11,052,763
------- ----------
Net assets at end of year $ 282,131 $ 23,404,697
========= ============
Accumulation unit activity
Units outstanding at beginning of year --
Contracts purchase payments 194,565
Net transfers2 45,511
Contract terminations:
Surrender benefits and contract charges (1,183)
Death benefits --
-----
Units outstanding at end of year 238,893
=======
1For the period Oct. 5, 1998 (commencement of operations) to Dec. 31, 1998.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
American Enterprise Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Enterprise Variable Annuity Account -- American Express Signature
Variable Annuity
Notes to Financial Statements
1. ORGANIZATION
American Enterprise Variable Annuity Account (the Account) was established under
Indiana law on July 15, 1987 and the subaccounts are registered together as a
single unit investment trust of American Enterprise Life Insurance Company
(American Enterprise Life) under the Investment Company Act of 1940, as amended
(the 1940 Act). Operations of the Account commenced on Feb. 21, 1995.
The Account is comprised of various subaccounts. Each subaccount invests
exclusively in shares of the following mutual funds or portfolios (collectively,
the Funds), which are registered under the 1940 Act as diversified, open-end
management investment companies and have the following investment managers.
<S> <C> <C>
Subaccount Invests exclusively in shares of Investment Manager
ESI AXPSM Variable Portfolio-- Bond Fund IDS Life Insurance Company 1
ECR AXPSM Variable Portfolio-- Capital Resource Fund IDS Life Insurance Company 1
EMS AXPSM Variable Portfolio-- Cash Management Fund IDS Life Insurance Company 1
EIA AXPSM Variable Portfolio-- Extra Income Fund IDS Life Insurance Company 1
EMG AXPSM Variable Portfolio-- Managed Fund IDS Life Insurance Company 1
EGD AXPSM Variable Portfolio-- New Dimensions Fund(R) IDS Life Insurance Company 1
ECA AIM V.I. Capital Appreciation Fund A I M Advisors, Inc.
ECD AIM V.I. Capital Development Fund A I M Advisors, Inc.
EVA AIM V.I. Value Fund A I M Advisors, Inc.
EPP Alliance VP Premier Growth Portfolio - Class B Alliance Capital Management, L.P.
ETC Alliance VP Technology Portfolio - Class B Alliance Capital Management, L.P.
EHG Alliance VP U.S. Government/High Grade Securities Alliance Capital Management, L.P.
Portfolio - Class B
EAS Baron Capital Asset Fund BAMCO, Inc.
EFG Fidelity VIP III Growth & Income Portfolio - Service Class Fidelity Management & Research Company
(FMR) 2
EFM Fidelity VIP III Mid Cap Portfolio - Service Class FMR 2
EFO Fidelity VIP Overseas Portfolio - Service Class FMR 3
ERE FTVIPT Franklin Real Estate Securities Fund - Class 2 Franklin Advisers, Inc.
EMU FTVIPT Mutual Shares Securities Fund - Class 2 Franklin Mutual Advisers, LLC
EIS FTVIPT Templeton International Smaller Companies Fund - Templeton Investment Counsel, Inc.
Class 2
JCG Goldman Sachs VIT Capital Growth Fund Goldman Sachs Asset Management
JUS Goldman Sachs VIT CORESM U.S. Equity Fund Goldman Sachs Asset Management
JGL Goldman Sachs VIT Global Income Fund Goldman Sachs Asset Management
International
JIF Goldman Sachs VIT International Equity Fund Goldman Sachs Asset Management
International
EDE J.P. Morgan U.S. Disciplined Equity Portfolio J.P. Morgan
ERQ Lazard Retirement Equity Portfolio Lazard Asset Management
ERI Lazard Retirement International Equity Portfolio Lazard Asset Management
END MFS(R) New Discovery Series Massachusetts Financial Service
Company (MFS) Investment Management(R)
ERS MFS(R)Research Series MFS Investment Management(R)
EUT MFS(R)Utilities Series MFS Investment Management(R)
EPG Putnam VT Growth and Income Fund-- Class IB Shares Putnam Investment Management, Inc.
EPL Putnam VT International Growth Fund-- Class IB Shares Putnam Investment Management, Inc.
EPN Putnam VT International New Opportunities Fund-- Class IB Putnam Investment Management, Inc.
Shares
EMC Royce Micro-Cap Portfolio Royce & Associates, Inc.
EPR Royce Premier Portfolio Royce & Associates, Inc.
EIC Wanger International Small Cap Wanger Asset Management, L.P.
EUC Wanger U.S. Small Cap Wanger Asset Management, L.P.
EEG Warburg Pincus Trust - Emerging Growth Portfolio Credit Suisse Asset Management, LLC
1 American Express Financial Corporation (AEFC) is the investment advisor.
2 FMR U.K. and FMR Far East are the sub-investment advisors.
3 FMR U.K., FMR Far East, Fidelity International Investment Advisors and FIIA
U.K. are the sub-investment advisors.
The assets of each subaccount of the Account are not chargeable with liabilities
arising out of the business conducted by any other segregated asset account or
by American Enterprise Life.
American Enterprise Life issues the contracts that are distributed by banks and
financial institutions either directly or through a network of third-party
marketers.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments in the Funds
Investments in shares of the Funds are stated at market value which is the net
asset value per share as determined by the respective Funds. Investment
transactions are accounted for on the date the shares are purchased and sold.
The cost of investments sold and redeemed is determined on the average cost
method. Dividend distributions received from the Funds are reinvested in
additional shares of the Funds and are recorded as income by the subaccounts on
the ex-dividend date.
Unrealized appreciation or depreciation of investments in the accompanying
financial statements represents the subaccounts' share of the Funds'
undistributed net investment income, undistributed realized gain or loss and the
unrealized appreciation or depreciation on their investment securities.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increase and decrease in net assets from
operations during the period. Actual results could differ from those estimates.
Federal Income Taxes
American Enterprise Life is taxed as a life insurance company. The Account is
treated as part of American Enterprise Life for federal income tax purposes.
Under existing federal income tax law, no income taxes are payable with respect
to any investment income of the Account.
3. MORTALITY AND EXPENSE RISK FEE
American Enterprise Life makes contractual assurances to the Account that
possible future adverse changes in administrative expenses and mortality
experience of the contract owners and annuitants will not affect the Account.
The mortality and expense risk fee paid to American Enterprise Life is computed
daily and is equal, on an annual basis, to 1.25% of the average daily net assets
of the subaccounts.
4. ADMINISTRATIVE CHARGE
American Enterprise Life deducts a daily charge equal, on an annual basis, to
0.15% of the average daily net assets of each subaccount as an administrative
charge. This charge covers certain administrative and operating expenses of the
subaccounts incurred by American Enterprise Life such as accounting, legal and
data processing fees, and expenses involved in the preparation and distribution
of reports and prospectuses. This charge cannot be increased.
5. CONTRACT ADMINISTRATIVE CHARGE
American Enterprise Life deducts a contract administrative charge of $30 per
year on each contract anniversary. This charge cannot be increased and does not
apply after annuity payouts begin. American Enterprise Life does not expect to
profit from this charge. This charge reimburses American Enterprise Life for
expenses incurred in establishing and maintaining the annuity records. This
charge is waived when the contract value is $50,000 or more on the current
contract anniversary. The $30 annual charge is deducted at the time of any full
withdrawal.
6. WITHDRAWAL CHARGE
American Enterprise Life will use a withdrawal charge to help it recover certain
expenses relating to the sale of the annuity. The withdrawal charge is deducted
for withdrawals up to the first seven payment years following a purchase
payment. Charges by American Enterprise Life for withdrawals are not identified
on an individual segregated asset account basis. Charges for all segregated
asset accounts amounted to $479,554 in 1999 and $199,062 in 1998. Such charges
are not treated as a separate expense of the subaccounts. They are ultimately
deducted from contract withdrawal benefits paid by American Enterprise Life.
This charge is waived if the withdrawal meets certain provisions as stated in
the contract.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
7. INVESTMENT IN SHARES
The subaccounts' investment in shares of the Funds as of Dec. 31, 1999 were as follows:
Subaccount Investment Shares NAV
<S> <C> <C> <C>
ESI AXPSM Variable Portfolio-- Bond Fund 1,026,989 $10.54
ECR AXPSM Variable Portfolio-- Capital Resource Fund 374,575 36.40
EMS AXPSM Variable Portfolio-- Cash Management Fund 1,110,224 1.00
EIA AXPSM Variable Portfolio-- Extra Income Fund 787 8.58
EMG AXPSM Variable Portfolio-- Managed Fund 626,098 19.82
EGD AXPSM Variable Portfolio-- New Dimensions Fund(R) 161,401 22.86
ECA AIM V.I. Capital Appreciation Fund 2,275 35.58
ECD AIM V.I. Capital Development Fund 156 11.89
EVA AIM V.I. Value Fund 289,489 33.50
EPP Alliance VP Premier Growth Portfolio - Class B 1,617 40.40
ETC Alliance VP Technology Portfolio - Class B 4,375 33.61
EHG Alliance VP U.S. Government/High Grade Securities Portfolio -
Class B 652 11.16
EAS Baron Capital Asset Fund 2,065 17.77
EFG Fidelity VIP III Growth & Income Portfolio - Service Class 4,362 17.24
EFM Fidelity VIP III Mid Cap Portfolio - Service Class 3,607 15.24
EFO Fidelity VIP Overseas Portfolio - Service Class 1,470 27.38
ERE FTVIPT Franklin Real Estate Securities Fund - Class 2 58 14.88
EMU FTVIPT Mutual Shares Securities Fund - Class 2 2,439 13.25
EIS FTVIPT Templeton International Smaller
Companies - Class 2 82 11.07
JCG Goldman Sachs VIT Capital Growth Fund 18,645 14.01
JUS Goldman Sachs VIT CORESM U.S. Equity Fund 38,610 13.98
JGL Goldman Sachs VIT Global Income Fund 3,386 9.83
JIF Goldman Sachs VIT International Equity Fund 2,670 14.47
EDE J.P. Morgan U.S. Disciplined Equity Portfolio 3,116 17.35
ERQ Lazard Retirement Equity Portfolio 104 11.53
ERI Lazard Retirement International Equity Portfolio 94 13.49
END MFS(R)New Discovery Series 5,431 17.27
ERS MFS(R)Research Series 12,041 23.34
EUT MFS(R)Utilities Series 1,502 24.16
EPG Putnam VT Growth and Income Fund-- Class IB Shares 190,018 26.75
EPL Putnam VT International Growth Fund-- Class IB Shares 21,361 21.62
EPN Putnam VT International New Opportunities Fund-- Class IB Shares 2,306 23.28
EMC Royce Micro-Cap Portfolio 6,951 6.13
EPR Royce Premier Portfolio 242 5.23
EIC Wanger International Small Cap 961 43.67
EUC Wanger U.S. Small Cap 892 24.88
EEG Warburg Pincus Trust - Emerging Growth Portfolio 566 13.07
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
8. INVESTMENT TRANSACTIONS
The subaccounts' purchases of Funds' shares, including reinvestment of dividend
distributions, were as follows:
Year ended Dec. 31,
Subaccount Investment 1999 1998
<S> <C> <C> <C>
ESI AXPSM Variable Portfolio-- Bond Fund $4,264,147 $4,647,272
ECR AXPSM Variable Portfolio-- Capital Resource Fund 3,258,677 3,205,569
EMS AXPSM Variable Portfolio-- Cash Management Fund 3,721,067 1,567,312
EIA2 AXPSM Variable Portfolio-- Extra Income Fund 359,305 --
EMG AXPSM Variable Portfolio-- Managed Fund 3,779,798 3,919,323
EGD AXPSM Variable Portfolio-- New Dimensions Fund(R) 1,646,330 1,222,554
ECA2 AIM V.I. Capital Appreciation Fund 71,340 --
ECD3 AIM V.I. Capital Development Fund 1,594 --
EVA AIM V.I. Value Fund 5,993,303 2,077,208
EPP3 Alliance VP Premier Growth Portfolio - Class B 64,897 --
ETC3 Alliance VP Technology Portfolio - Class B 136,602 --
EHG3 Alliance VP U.S. Government/High Grade Securities Portfolio - Class B 7,327 --
EAS3 Baron Capital Asset Fund 33,331 --
EFG3 Fidelity VIP III Growth & Income Portfolio - Service Class 75,844 --
EFM3 Fidelity VIP III Mid Cap Portfolio - Service Class 55,196 --
EFO3 Fidelity VIP Overseas Portfolio - Service Class 187,032 --
ERE3 FTVIPT Franklin Real Estate Securities Fund - Class 2 870 --
EMU3 FTVIPT Mutual Shares Securities Fund - Class 2 31,563 --
EIS3 FTVIPT Templeton International Smaller Companies Fund - Class 2 870 --
JCG3 Goldman Sachs VIT Capital Growth Fund 246,925 --
JUS3 Goldman Sachs VIT CORESM U.S. Equity Fund 550,754 --
JGL3 Goldman Sachs VIT Global Income Fund 99,487 --
JIF3 Goldman Sachs VIT International Equity Fund 36,793 --
EDE3 J.P. Morgan U.S. Disciplined Equity Portfolio 58,083 --
ERQ3 Lazard Retirement Equity Portfolio 1,200 --
ERI3 Lazard Retirement International Equity Portfolio 1,173 --
END3 MFS(R) New Discovery Series 77,367 --
ERS3 MFS(R) Research Series 267,009 --
EUT3 MFS(R) Utilities Series 34,449 --
EPG1 Putnam VT Growth and Income Fund-- Class IB Shares 5,266,904 269,558
EPL3 Putnam VT International Growth Fund-- Class IB Shares 577,265 --
EPN3 Putnam VT International New Opportunities Fund-- Class IB Shares 44,979 --
EMC3 Royce Micro-Cap Portfolio 42,159 --
EPR3 Royce Premier Portfolio 1,304 --
EIC3 Wanger International Small Cap 35,065 --
EUC3 Wanger U.S. Small Cap 20,955 --
EEG3 Warburg Pincus Trust - Emerging Growth Portfolio 6,889 --
- ----- ------
Combined Variable Account $31,057,853 $16,908,796
1 Operations commenced on Oct. 5, 1998.
2 Operations commenced on Aug. 26, 1999.
3 Operations commenced on Sept.22, 1999.
</TABLE>
<PAGE>
9. YEAR 2000 (UNAUDITED)
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of American Enterprise Life
and the Account. All of the major systems used by American Enterprise Life and
the Account are maintained by AEFC and are utilized by multiple subsidiaries and
affiliates of AEFC. American Enterprise Life's and the Account's businesses are
heavily dependent upon AEFC's computer systems and have significant interactions
with systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to American Enterprise Life and the Account, was
conducted to identify the major systems that could be affected by the Year 2000
issue. Steps were taken to resolve potential problems including modification to
existing software and the purchase of new software. As of Dec. 31, 1999, AEFC
had completed its program of corrective measures on its internal systems and
applications, including Year 2000 compliance testing. As of Dec. 31, 1999, AEFC
had also completed an evaluation of the Year 2000 readiness of other third
parties whose system failures could have an impact on American Enterprise Life's
and the Account's operations.
AEFC's Year 2000 project also included establishing Year 2000 contingency plans
for all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. As of Dec. 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since Jan. 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on American Enterprise Life's and
the Account's business, results of operations, or financial condition as a
result of the Year 2000 issue.
<PAGE>
PART C.
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part A of this Registration Statement:
American Enterprise Life Insurance Company
Report of Independent Auditors dated Feb. 3, 2000.
Balance sheets as of Dec. 31, 1999 and 1998.
Statements of Income for the years ended Dec. 31, 1999, 1998, and 1997.
Statement of Stockholders Equity for the three years ended Dec. 31, 1999
Statements of Cash Flows for the years ended Dec. 31, 1999, 1998 and
1997.
Notes to Financial Statements.
Financial Statements included in Part B of this Registration Statement:
American Enterprise Variable Annuity Account
Report of Independent Auditors dated March 17, 2000.
Statements of Net Assets for the year ended Dec. 31, 1999.
Statements of Operations for the year ended Dec. 31, 1999.
Statements of Changes in Net Assets for the period ended Dec. 31, 1999.
Notes to Financial Statements.
(b) Exhibits:
1.1 Resolution of the Executive Committee of the Board of Directors of
American Enterprise Life establishing the American Enterprise Variable
Annuity Account dated July 15, 1987, filed electronically as Exhibit 1
to American Enterprise Life Personal Portfolio Plus 2's Initial
Registration Statement No. 33-54471, filed on or about July 5, 1994,
is incorporated by reference.
1.2 Resolution of the Board of Directors of American Enterprise Life
establishing 37 additional subaccounts within the separate account
dated June 29, 1999, filed electronically as Exhibit 1.2 to American
Enterprise Variable Annuity Account's American Enterprise Variable
Annuity Account's Pre-Effective Amendment No. 1 to Registration
Statement No. 333-67595, filed on or about July 8, 1999, is
incorporated by reference.
1.3 Resolution of the Board of Directors of American Enterprise Life
establishing 141 additional subaccounts within the separate account
dated April 25, 2000, filed electronically herewith.
2. Not applicable.
3. Form of Master General Agent Agreement for American Enterprise Life
Insurance Company Variable Annuities (form 9802B) filed electronically
as Exhibit 3 to American Enterprise Variable Annuity Account's
Pre-Effective Amendment No. 1 to Registration Statement No. 333-74865
filed on or about Aug. 4, 1999, is incorporated by reference.
4.1 Form of Deferred Annuity Contract (form 43431) filed electronically as
Exhibit 4.1 to American Enterprise Variable Annuity Account's
Pre-Effective Amendment No. 1 to Registration Statement No. 333-74865
filed on or about Aug. 4, 1999, is incorporated by reference.
4.2 Form of Roth IRA Endorsement (form 43094) filed electronically as
Exhibit 4.2 to American Enterprise Variable Annuity Account's
Pre-Effective Amendment No. 1 to Registration Statement No. 333-74865
filed on or about Aug. 4, 1999, is incorporated by reference.
<PAGE>
4.3 Form of SEP-IRA Endorsement (form 43433) filed electronically herewith
as Exhibit 4.3 to American Enterprise Variable Annuity Account's
Pre-Effective Amendment No. 1 to Registration Statement No. 333-74865
filed on or about Aug. 4, 1999, is incorporated by reference.
4.4 Form of TSA Endorsement (form 43413) filed electronically as Exhibit
4.4 to American Enterprise Variable Annuity Account's Pre-Effective
Amendment No. 1 to Registration Statement No. 333-67595, filed on or
about July 8, 1999, is incorporated by reference.
4.5 Form of Guaranteed Minimum Income Benefit Rider (6% Accumulation
Benefit Base) (form 240186), filed electronically as Exhibit 4.2 to
American Enterprise Variable Annuity Account's Post-Effective
Amendment No. 3 to Registration Statement No. 333-85567 on form N-4,
filed on or about Feb. 11, 2000, is incorporated by reference.
4.6 Form of 5% Accumulation Death Benefit Rider (form 240183), filed
electronically as Exhibit 4.3 to American Enterprise Variable Annuity
Account's Post-Effective Amendment No. 1 to Registration Statement No.
333-85567 on form N-4, filed on or about Dec. 8, 1999, is incorporated
by reference.
4.7 Form of 8% Performance Credit Rider (form 240187), filed
electronically as Exhibit 4.4 to American Enterprise Variable Annuity
Account's Post-Effective Amendment No. 2 to Registration Statement No.
333-85567 on form N-4, filed on or about Dec. 30, 1999, is
incorporated by reference.
5. Form of Variable Annuity Application (form 43432) filed electronically
as Exhibit 5 to American Enterprise Variable Annuity Account's
Pre-Effective Amendment No. 1 to Registration Statement No. 333-74865
filed on or about Aug. 4, 1999, is incorporated herein by reference.
6.1 Amendment and Restatement of Articles of Incorporation of American
Enterprise Life dated July 29, 1986, filed electronically as Exhibit
6.1 to the Initial Registration Statement No. 33-54471, filed on or
about July 5, 1994, is incorporated by reference.
6.2 Amended By-Laws of American Enterprise Life, filed electronically as
Exhibit 6.2 to American Enterprise Variable Annuity Account's Initial
Registration Statement No. 33-54471, filed on or about July 5, 1994,
is incorporated by reference.
7. Not applicable.
8.1 Form of Participation Agreement among Royce Capital Fund, Royce &
Associates, Inc. and American Enterprise Life Insurance Company filed
electronically as Exhibit 8.1 to American Enterprise Variable Annuity
Account'sPre-Effective Amendment No. 1 to Registration Statement No.
333-74865 filed on or about Aug. 4, 1999, is incorporated by
reference.
8.2 (a) Copy of Participation Agreement among Putnam Capital Manager Trust,
Putnam Mutual Funds Corp. and American Enterprise Life Insurance
Company, dated January 16, 1995, filed electronically as Exhibit 8.2
to American Enterprise Life Personal Portfolio Plus 2's Post-Effective
Amendment No. 2 to Registration Statement No. 33-54471, is
incorporated by reference.
8.2 (b) Form of Amendment No. 4 to Participation Agreement among Putnam
Capital Manager Trust, Putnam Mutual Funds Corp. and American
Enterprise Life Insurance Company dated June 15, 1999 filed
electronically as Exhibit 8.2(b) to American Enterprise Variable
Annuity Account's Pre-Effective Amendment No. 1 to Registration
Statement No. 333-74865 filed on or about Aug. 4, 1999, is
incorporated by reference.
8.3 Form of Participation Agreement among Templeton Variable Products
Series Fund, Franklin Templeton Variable Insurance Products Trust,
Franklin Templeton Distributors, Inc. and American Enterprise Life
Insurance Company filed electronically as Exhibit 8.3 to American
Enterprise Variable Annuity Account's Pre-Effective Amendment No. 1 to
Registration Statement No. 333-74865 filed on or about Aug. 4, 1999,
is incorporated by reference.
8.4 (a) Copy of Participation Agreement among Goldman Sachs Variable Insurance
Trust, Goldman Sachs & Co. and American Enterprise Life Insurance
Company, dated April 1, 1999, filed electronically as Exhibit 8.4(a)
to American Enterprise Variable Annuity Account'sPre-Effective
Amendment No. 1 to Registration Statement No. 333-74865 filed on or
about Aug. 4, 1999, is incorporated by reference.
<PAGE>
8.4 (b) Form of Amendment 1 to Schedule 2 to Participation Agreement among
Goldman Sachs Variable Insurance Trust, Goldman Sachs & Co. and
American Enterprise Life Insurance Company, filed electronically as
Exhibit 8.4(b) to American Enterprise Variable Annuity Account's
Pre-Effective Amendment No. 1 to Registration Statement No. 333-74865
filed on or about Aug. 4, 1999, is incorporated by reference.
8.4 (c) Form of Amendment 1 to Schedule 3 to Participation Agreement among
Goldman Sachs Variable Insurance Trust, Goldman Sachs & Co. and
American Enterprise Life Insurance Company filed electronically as
Exhibit 8.4(c) to American Enterprise Variable Annuity Account's
Pre-Effective Amendment No. 1 to Registration Statement No. 333-74865
filed on or about Aug. 4, 1999, is incorporated by reference.
9. Opinion of counsel and consent to its use as to the legality of the
securities dated April 28, 2000, being registered filed electronically
herewith.
10. Consent of Independent Auditors, dated April 24, 2000, is filed
electronically herewith.
11. None.
12. Not applicable.
13. Copy of schedule for computation of each performance quotation provided
in the Registration Statement in response to Item 21, filed
electronically herewith.
14. Power of Attorney to sign this Post-Effective Amendment, dated July 29,
1999, filed electronically as Exhibit 15 to Initial Registration
Statement No. 333-85567, filed on or about Aug. 19, 1999 is
incorporated by reference.
<PAGE>
Item 25. Directors and Officers of the Depositor
(American Enterprise Life Insurance Company)
<TABLE>
<S> <C> <C>
Name Principal Business Address Positions and Offices with Depositor
- ------------------------------------- -------------------------------------- --------------------------------------
James E. Choat 200 AXP Financial Center Director, President and Chief
Minneapolis, MN 55474 Executive Officer
Lorraine R. Hart 200 AXP Financial Center Vice President, Investments
Minneapolis, MN 55474
Jeffrey S. Horton 200 AXP Financial Center Vice President and Treasurer
Minneapolis, MN 55474
Richard W. Kling 200 AXP Financial Center Director and Chairman of the Board
Minneapolis, MN 55474
Bruce A. Kohn 200 AXP Financial Center Vice President, Group Counsel and
Minneapolis, MN 55474 Assistant Secretary
Paul S. Mannweiler Indianapolis Power and Light Director
One Monument Circle
P.O. Box 1595
Indianapolis, IN 46206-1595
Eric L. Marhoun 200 AXP Financial Center Vice President, Group Counsel and
Minneapolis, MN 55474 Assistant Secretary
Paula R. Meyer 200 AXP Financial Center Director and Executive Vice
Minneapolis, MN 55474 President, Assured Assets
Mary Ellyn Minenko 200 AXP Financial Center Vice President, Group Counsel and
Minneapolis, MN 55474 Assistant Secretary
Stuart A. Sedlacek 200 AXP Financial Center Executive Vice President
Minneapolis, MN 55474
William A. Stoltzmann 200 AXP Financial Center Director, Vice President, General
Minneapolis, MN 55474 Counsel and Secretary
Philip C. Wentzel 200 AXP Financial Center Vice President and Controller
Minneapolis, MN 55474
</TABLE>
<PAGE>
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
American Enterprise Life Insurance Company is a wholly-owned
subsidiary of IDS Life Insurance Company which is a
wholly-owned subsidiary of American Express Financial
Corporation. American Express Financial Corporation is a
wholly-owned subsidiary of American Express Company (American
Express).
The following list includes the names of major subsidiaries of
American Express.
Jurisdiction of
Name of Subsidiary Incorporation
I. Travel Related Services
American Express Travel Related Services Company, Inc. New York
II. International Banking Services
American Express Bank Ltd. Connecticut
III. Companies engaged in Financial Services
Advisory Capital Strategies Group Inc. Minnesota
American Centurion Life Assurance Company New York
American Enterprise Investment Services Inc. Minnesota
American Enterprise Life Insurance Company Indiana
American Express Asset Management Group Inc. Minnesota
American Express Asset Management International Inc. Delaware
American Express Asset Management International
(Japan) Ltd. Japan
American Express Asset Management Ltd. England
American Express Client Service Corporation Minnesota
American Express Corporation Delaware
American Express Financial Advisors Inc. Delaware
American Express Financial Corporation Delaware
American Express Insurance Agency of Arizona Inc. Arizona
American Express Insurance Agency of Idaho Inc. Idaho
American Express Insurance Agency of Nevada Inc. Nevada
American Express Insurance Agency of Oregon Inc. Oregon
American Express Minnesota Foundation Minnesota
American Express Property Casualty Insurance Agency
of Kentucky Inc. Kentucky
American Express Property Casualty Insurance Agency
of Maryland Inc. Maryland
American Express Property Casualty Insurance Agency
of Pennsylvania Inc. Pennsylvania
American Express Trust Company Minnesota
American Partners Life Insurance Company Arizona
IDS Cable Corporation Minnesota
IDS Cable II Corporation Minnesota
IDS Capital Holdings Inc. Minnesota
IDS Certificate Company Delaware
IDS Futures Corporation Minnesota
IDS Insurance Agency of Alabama Inc. Alabama
IDS Insurance Agency of Arkansas Inc. Arkansas
IDS Insurance Agency of Massachusetts Inc. Massachusetts
IDS Insurance Agency of New Mexico Inc. New Mexico
<PAGE>
IDS Insurance Agency of North Carolina Inc. North Carolina
IDS Insurance Agency of Utah Inc. Utah
IDS Insurance Agency of Wyoming Inc. Wyoming
IDS Life Insurance Company Minnesota
IDS Life Insurance Company of New York New York
IDS Management Corporation Minnesota
IDS Partnership Services Corporation Minnesota
IDS Plan Services of California, Inc. Minnesota
IDS Property Casualty Insurance Company Wisconsin
IDS Real Estate Services, Inc. Delaware
IDS Realty Corporation Minnesota
IDS Sales Support Inc. Minnesota
IDS Securities Corporation Delaware
Investors Syndicate Development Corp. Nevada
Public Employee Payment Company Minnesota
Item 27. Number of Contract owners
On March 31, 2000, there were 62 qualified contract holders
and 86 non-qualified contract holders.
Item 28. Indemnification
The By-Laws of the depositor provide that the Corporation
shall have the power to indemnify a director, officer, agent
or employee of the Corporation pursuant to the provisions of
applicable statues or pursuant to contract.
The Corporation may purchase and maintain insurance on behalf
of any director, officer, agent or employee of the Corporation
against any liability asserted against or incurred by the
director, officer, agent or employee in such capacity or
arising out of the director's, officer's, agent's or
employee's status as such, whether or not the Corporation
would have the power to indemnify the director, officer, agent
or employee against such liability under the provisions of
applicable law.
The By-Laws of the depositor provide that it shall indemnify a
director, officer, agent or employee of the depositor pursuant
to the provisions of applicable statutes or pursuant to
contract.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
<PAGE>
Item 29 Principal Underwriters
(a) American Express Financial Advisors acts as principal
underwriter for the following investment companies:
AXP Bond Fund, Inc.; AXP California Tax-Exempt Trust; AXP Discovery
Fund, Inc.; AXP Equity Select Fund, Inc.; AXP Extra Income Fund, Inc.;
AXP Federal Income Fund, Inc.; AXP Global Series, Inc.; AXP Growth
Fund, Inc.; AXP High Yield Tax-Exempt Fund, Inc.; AXP International
Fund, Inc.; AXP Investment Series, Inc.; AXP Managed Retirement Fund,
Inc.; AXP Market Advantage Series, Inc.; AXP Money Market Series, Inc.;
AXP New Dimensions Fund, Inc.; AXP Precious Metals Fund, Inc.; AXP
Progressive Fund, Inc.; AXP Selective Fund, Inc.; AXP Special
Tax-Exempt Series Trust; AXP Stock Fund, Inc.; AXP Strategy Fund, Inc.;
AXP Tax-Exempt Bond Fund, Inc.; AXP Tax-Free Money Fund, Inc.; AXP
Utilities Income Fund, Inc., Growth Trust; Growth and Income Trust;
Income Trust, Tax-Free Income Trust, World Trust and IDS Certificate
Company.
(b) As to each director, officer or partner of the principal underwriter:
Name and Principal Business Address Position and Offices with
Underwriter
- ------------------------------------- -----------------------------------
Ronald. G. Abrahamson Vice President - Business
200 AXP Financial Center Transformation
Minneapolis, MN 55474
Douglas A. Alger Senior Vice President - Human
200 AXP Financial Center Resources
Minneapolis, MN 55474
Peter J. Anderson Senior Vice President -
200 AXP Financial Center Investment Operations
Minneapolis, MN 55474
Ward D. Armstrong Senior Vice President -
200 AXP Financial Center Retirement Services
Minneapolis, MN 55474
John M. Baker Vice President - Plan Sponsor
200 AXP Financial Center Services
Minneapolis, MN 55474
Joseph M. Barsky, III Vice President - Mutual Fund
200 AXP Financial Center Equities
Minneapolis, MN 55474
Timothy V. Bechtold Vice President - Risk Management
200 AXP Financial Center Products
Minneapolis, MN 55474
John D. Begley Group Vice President -
Suite 100 Ohio/Indiana
7760 Olentangy River Rd.
Columbus, OH 43235
Brent L. Bisson Group Vice President - Los
Suite 900 Angeles Metro
E. Westside Twr
11835 West Olympic Blvd.
Los Angeles, CA 90064
John C. Boeder Vice President - Nonproprietary
200 AXP Financial Center Products
Minneapolis, MN 55474
<PAGE>
Walter K. Booker Group Vice President - New Jersey
200 AXP Financial Center
Minneapolis, MN 55474
Bruce J. Bordelon Group Vice President - San
1333 N. California Blvd., Suite 200 Francisco Bay Area
Walnut Creek, CA 94596
Charles R. Branch Group Vice President - Northwest
Suite 200
West 111 North River Dr.
Spokane, WA 99201
<PAGE>
Douglas W. Brewers Vice President - Sales Support
200 AXP Financial Center
Minneapolis, MN 55474
Karl J. Breyer Corporate Senior Vice President
200 AXP Financial Center
Minneapolis, MN 55474
Cynthia M. Carlson Vice President - American Express
200 AXP Financial Center Securities Services
Minneapolis, MN 55474
Mark W. Carter Senior Vice President and Chief
200 AXP Financial Center Marketing Officer
Minneapolis, MN 55474
James E. Choat Senior Vice President - Third
200 AXP Financial Center Party Distribution
Minneapolis, MN 55474
Kenneth J. Ciak Vice President and General
IDS Property Casualty Manager - IDS Property Casualty
1400 Lombardi Avenue
Green Bay, WI 54304
Paul A. Connolly Vice President - Advisor
200 AXP Financial Center Staffing, Training and Support
Minneapolis, MN 55474
Henry J. Cormier Group Vice President - Connecticut
Commerce Center One
333 East River Drive
East Hartford, CT 06108
John M. Crawford Group Vice President -
Suite 200 Arkansas/Springfield/Memphis
10800 Financial Ctr Pkwy
Little Rock, AR 72211
Kevin F. Crowe Group Vice President -
Suite 312 Carolinas/Eastern Georgia
7300 Carmel Executive Pk
Charlotte, NC 28226
Colleen Curran Vice President and Assistant
200 AXP Financial Center General Counsel
Minneapolis, MN 55474
<PAGE>
Luz Maria Davis Vice President - Communications
200 AXP Financial Center
Minneapolis, MN 55474
Arthur E. DeLorenzo Group Vice President - Upstate
4 Atrium Drive, #100 New York
Albany, NY 12205
Scott M. DiGiammarino Group Vice President -
Suite 500 Washington/Baltimore
8045 Leesburg Pike
Vienna, VA 22182
Bradford L. Drew Group Vice President - Eastern
Two Datran Center Florida
Penthouse One B
9130 S. Dadeland Blvd.
Miami, FL 33156
Douglas K. Dunning Vice President - Assured Assets
200 AXP Financial Center Product Development and Management
Minneapolis, MN 55474
James P. Egge Group Vice President - Western
4305 South Louise, Suite 202 Iowa, Nebraska, Dakotas
Sioux Falls, SD 57103
Gordon L. Eid Senior Vice President, General
200 AXP Financial Center Counsel and Chief Compliance
Minneapolis, MN 55474 Officer
Robert M. Elconin Vice President - Government
200 AXP Financial Center Relations
Minneapolis, MN 55474
Phillip W. Evans, Group Vice President - Rocky
Suite 600 Mountain
6985 Union Park Center
Midvale, UT 84047-4177
Gordon M. Fines Vice President - Mutual Fund
200 AXP Financial Center Equity Investments
Minneapolis, MN 55474
Douglas L. Forsberg Vice President - International
200 AXP Financial Center
Minneapolis, MN 55474
Jeffrey P. Fox Vice President and Corporate
200 AXP Financial Center Controller
Minneapolis, MN 55474
William P. Fritz Group Vice President - Gateway
Suite 160
12855 Flushing Meadows Dr.
St. Louis, MO 63131
Carl W. Gans Group Vice President - Twin City
8500 Tower Suite 1770 Metro
8500 Normandale Lake Blvd.
Bloomington, MN 55437
<PAGE>
Peter A. Gallus Vice President-Investment
200 AXP Financial Center Administration
Minneapolis, MN 55474
Derek G. Gledhill Vice President - Integrated
200 AXP Financial Center Financial Services Field
Minneapolis, MN 55474 Implementation
David A. Hammer Vice President and Marketing
200 AXP Financial Center Controller
Minneapolis, MN 55474
Teresa A. Hanratty Senior Vice President-Field
Suites 6&7 Management
169 South River Road
Bedford, NH 03110
Robert L. Harden Group Vice President - Boston
Two Constitution Plaza Metro
Boston, MA 02129
Lorraine R. Hart Vice President - Insurance
200 AXP Financial Center Investments
Minneapolis, MN 55474
Scott A. Hawkinson Vice President and Controller -
200 AXP Financial Center Private Client Group
Minneapolis, MN 55474
Brian M. Heath Senior Vice President and General
Suite 150 Sales Manager
801 E. Campbell Road
Richardson, TX 75081
Janis K. Heaney Vice President - Incentive
200 AXP Financial Center Management
Minneapolis, MN 55474
Jon E. Hjelm Group Vice President - Rhode
310 Southbridge Street Island/Central - Western
Auburn, MA 01501 Massachusetts
David J. Hockenberry Group Vice President - Tennessee
30 Burton Hills Blvd. Valley
Suite 175
Nashville, TN 37215
Jeffrey S. Horton Vice President and Treasurer
200 AXP Financial Center
Minneapolis, MN 55474
David R. Hubers Chairman, President and Chief
200 AXP Financial Center Executive Officer
Minneapolis, MN 55474
Debra A. Hutchinson Vice President - Relationship
200 AXP Financial Center Leader
Minneapolis, MN 55474
James M. Jensen Vice President and
200 AXP Financial Center Controller-Advice and Retail
Minneapolis, MN 55474 Distribution Group
<PAGE>
Marietta L. Johns Senior Vice President - Field
200 AXP Financial Center Management
Minneapolis, MN 55474
Nancy E. Jones Vice President - Business
200 AXP Financial Center Development
Minneapolis, MN 55474
Ora J. Kaine Vice President - Financial
200 AXP Financial Center Advisory Services
Minneapolis, MN 55474
Linda B. Keene Vice President - Market
200 AXP Financial Center Development
Minneapolis, MN 55474
G. Michael Kennedy Vice President - Senior Portfolio
200 AXP Financial Center Manager
Minneapolis, MN 55474
Richard W. Kling Senior Vice President - Products
200 AXP Financial Center
Minneapolis, MN 55474
John M. Knight Vice President - Investment
200 AXP Financial Center Accounting
Minneapolis, MN 55474
Paul F. Kolkman Vice President - Actuarial Finance
200 AXP Financial Center
Minneapolis, MN 55474
Claire Kolmodin Vice President - Service Quality
200 AXP Financial Center
Minneapolis, MN 55474
David S. Kreager Group Vice President - Greater
Suite 108 Michigan
Trestle Bridge V
5126 Lovers Lane
Kalamazoo, MI 49002
Steven C. Kumagai Director and Senior Vice
200 AXP Financial Center President-Direct and Interactive
Minneapolis, MN 55474 Group
Mitre Kutanovski Group Vice President - Chicago
Suite 680 Metro
8585 Broadway
Merrillville, IN 48410
Kurt A. Larson Vice President - Senior Portfolio
200 AXP Financial Center Manager
Minneapolis, MN 55474
Lori J. Larson Vice President - Brokerage and
200 AXP Financial Center Direct Services
Minneapolis, MN 55474
Daniel E. Laufenberg Vice President and Chief U.S.
200 AXP Financial Center Economist
Minneapolis, MN 55474
<PAGE>
Jane W. Lee Vice President - New Business
200 AXP Financial Center Development and Marketing
Minneapolis, MN 55474
Peter A. Lefferts Senior Vice President - Corporate
200 AXP Financial Center Strategy and Development
Minneapolis, MN 55474
Douglas A. Lennick Director and Executive Vice
200 AXP Financial Center President - Private Client Group
Minneapolis, MN 55474
Fred A. Mandell Vice President - Field Marketing
200 AXP Financial Center Readiness
Minneapolis, MN 55474
Daniel E. Martin Group Vice President - Pittsburgh
Suite 650 Metro
5700 Corporate Drive
Pittsburgh, PA 15237
Timothy J. Masek Vice President and Director of
200 AXP Financial Center Global Research
Minneapolis, MN 55474
Sarah A. Mealey Vice President - Mutual Funds
200 AXP Financial Center
Minneapolis, MN 55474
Paula R. Meyer Vice President - Assured Assets
200 AXP Financial Center
Minneapolis, MN 55474
William P. Miller Vice President and Senior
200 AXP Financial Center Portfolio Manager
Minneapolis, MN 55474
Shashank B. Modak Vice President - Technology Leader
200 AXP Financial Center
Minneapolis, MN 55474
Pamela J. Moret Vice President - Variable Assets
200 AXP Financial Center
Minneapolis, MN 55474
Barry J. Murphy Senior Vice President - Client
200 AXP Financial Center Service
Minneapolis, MN 55474
Mary Owens Neal Vice President-Consumer Marketing
200 AXP Financial Center
Minneapolis, MN 55474
Thomas V. Nicolosi Group Vice President - New York
Suite 220 Metro Area
500 Mamaroneck Avenue
Harrison, NY 10528
Michael J. O'Keefe Vice President - Advisory
200 AXP Financial Center Business Systems
Minneapolis, MN 55474
<PAGE>
James R. Palmer Vice President - Taxes
200 AXP Financial Center
Minneapolis, MN 55474
Marc A. Parker Group Vice President -
10200 SW Greenburg Road Portland/Eugene
Suite 110
Portland, OR 97223
Carla P. Pavone Vice President-Compensation
200 AXP Financial Center Services and ARD Product
Minneapolis, MN 55474 Distribution
Thomas P. Perrine Senior Vice President - Group
200 AXP Financial Center Relationship Leader/American
Minneapolis, MN 55474 Express Technologies Financial
Services
Susan B. Plimpton Vice President - Marketing
200 AXP Financial Center Services
Minneapolis, MN 55474
Larry M. Post Group Vice President -
One Tower Bridge Philadelphia Metro and Northern
100 Front Street, 8th Fl New England
West Conshohocken, PA 19428
Ronald W. Powell Vice President and Assistant
200 AXP Financial Center General Counsel
Minneapolis, MN 55474
Diana R. Prost Group Vice President -
3030 N.W. Expressway Kansas/Oklahoma
Suite 900
Oklahoma City, OK 73112
James M. Punch Vice President and Project
200 AXP Financial Center Manager - Platform I Value
Minneapolis, MN 55474 Enhanced
Frederick C. Quirsfeld Senior Vice President - Fixed
200 AXP Financial Center Income
Minneapolis, MN 55474
Rollyn C. Renstrom Vice President - Corporate
200 AXP Financial Center Planning and Analysis
Minneapolis, MN 55474
R. Daniel Richardson Group Vice President - Southern
Suite 800 Texas
Arboretum Plaza One
9442 Capital of Texas Hwy. N
Austin, TX 78759
ReBecca K. Roloff Senior Vice President - Field
200 AXP Financial Center Management and Financial Advisory
Minneapolis, MN 55474 Service
Stephen W. Roszell Senior Vice President -
200 AXP Financial Center Institutional
Minneapolis, MN 55474
<PAGE>
Max G. Roth Group Vice President -
Suite 201 S. IDS Ctr Wisconsin/Upper Michigan
1400 Lombardi Avenue
Green Bay, WI 54304
Erven A. Samsel Senior Vice President - Field
45 Braintree Hill Park Management
Suite 402
Braintree, MA 02184
Theresa M. Sapp Vice President - Relationship
200 AXP Financial Center Leader
Minneapolis, MN 55474
Russell L. Scalfano Group Vice President -
Suite 201 Illinois/Indiana/Kentucky
101 Plaza East Blvd.
Evansville, IN 47715
William G. Scholz Group Vice President -
Suite 205 Arizona/Las Vegas
7333 E. Doubletree Ranch Rd
Scottsdale, AZ 85258
Stuart A. Sedlacek Senior Vice President and Chief
200 AXP Financial Center Financial Officer
Minneapolis, MN 55474
Donald K. Shanks Vice President - Property Casualty
200 AXP Financial Center
Minneapolis, MN 55474
Judy P. Skoglund Vice President - Quality and
200 AXP Financial Center Service Support
Minneapolis, MN 55474
James B. Solberg Group Vice President - Eastern
466 Westdale Mall Iowa Area
Cedar Rapids, IA 52404
Bridget Sperl Vice President - Geographic
200 AXP Financial Center Service Teams
Minneapolis, MN 55474
Paul J. Stanislaw Group Vice President - Southern
Suite 1100 California
Two Park Plaza
Irvine, CA 92714
Lisa A. Steffes Vice President - Marketing Offer
200 AXP Financial Center Development
Minneapolis, MN 55474
Lois A. Stilwell Group Vice President - Outstate
Suite 433 Minnesota Area/North
9900 East Bren Road Dakota/Western Wisconsin
Minnetonka, MN 55343
William A. Stoltzmann Vice President and Assistant
200 AXP Financial Center General Counsel
Minneapolis, MN 55474
<PAGE>
James J. Strauss Vice President and General Auditor
200 AXP Financial Center
Minneapolis, MN 55474
Jeffrey J. Stremcha Vice President - Information
200 AXP Financial Center Resource Management/ISD
Minneapolis, MN 55474
Barbara Stroup Stewart Vice President - Channel
200 AXP Financial Center Development
Minneapolis, MN 55474
Craig P. Taucher Group Vice President -
Suite 150 Orlando/Jacksonville
4190 Belfort Road
Jacksonville, FL 32216
Neil G. Taylor Group Vice President -
Suite 425 Seattle/Tacoma/Hawaii
101 Elliott Avenue West
Seattle, WA 98119
John R. Thomas Senior Vice President
200 AXP Financial Center
Minneapolis, MN 55474
Keith N. Tufte Vice President and Director of
200 AXP Financial Center Equity Research
Minneapolis, MN 55474
Peter S. Velardi Group Vice President -
Suite 180 Atlanta/Birmingham
1200 Ashwood Parkway
Atlanta, GA 30338
Charles F. Wachendorfer Group Vice President - Detroit
Suite 100 Metro
Stanford Plaza II
7979 East Tufts Ave. Pkwy
Denver, CO 80237
Donald F. Weaver Group Vice President - Greater
3500 Market Street, Suite 200 Pennsylvania
Camp Hill, PA 17011
Norman Weaver Jr. Senior Vice President - Alliance
1010 Main St., Suite 2B Group
Huntington Beach, CA 92648
Michael L. Weiner Vice President - Tax Research and
200 AXP Financial Center Audit
Minneapolis, MN 55474
Jeffry M. Welter Vice President - Equity and Fixed
200 AXP Financial Center Income Trading
Minneapolis, MN 55474
Thomas L. White Group Vice President - Cleveland
Suite 200 Metro
28601 Chagrin Blvd.
Woodmere, OH 44122
<PAGE>
Eric S. Williams Group Vice President - Virginia
Suite 250
3951 Westerre Parkway
Richmond, VA 23233
William J. Williams Group Vice President - Western
Two North Tamiami Trail Florida
Suite 702
Sarasota, FL 34236
<PAGE>
Edwin M. Wistrand Vice President and Assistant
200 AXP Financial Center General Counsel
Minneapolis, MN 55474
Michael D. Wolf Vice President - Senior Portfolio
200 AXP Financial Center Manager
Minneapolis, MN 55474
Michael R. Woodward Senior Vice President - Field
32 Ellicott St. Management
Suite 100
Batavia, NY 14020
Rande L. Zellers Group Vice President-Gulf States
1 Galleria Blvd., Suite 1900
Metairie, LA 70001
Item 29(c)
<TABLE>
<S> <C> <C> <C> <C>
Net Underwriting
Name of Principal Discounts and Compensation on Brokerage
Underwriter Commissions Redemption Commissions Compensation
American Express $5,924,368 $479,554 None None
Financial Advisors
Inc.
</TABLE>
Item 30. Location of Accounts and Records
American Enterprise Life Insurance Company
829 AXP Financial Center
Minneapolis, MN 55402
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Registrant undertakes that it will file a post-effective
amendment to this registration statement as frequently as is
necessary to ensure that the audited financial statements in
the registration statement are never more than 16 months old
for so long as payments under the variable annuity contracts
may be accepted.
(b) Registrant undertakes that it will include either (1) as part
of any application to purchase a contract offered by the
prospectus, a space that an applicant can check to request a
Statement of Additional Information, or (2) a post card or
similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a
Statement of Additional Information.
<PAGE>
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made
available under this Form promptly upon written or oral
request to American Enterprise Life Contract Owner Service at
the address or phone number listed in the prospectus.
(d) Registrant represents that it is relying upon the no-action
assurance given to the American Council of Life Insurance
(pub. avail. Nov. 28, 1998). Further, Registrant represents
that it has complied with the provisions of paragraphs
(1)-(4) of that no-action letter.
(e) The sponsoring insurance company represents that the fees and
charges deducted under the contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the
insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, American Enterprise Life Insurance Company, on behalf of the Registrant,
certifies that it meets the requirements of the Securities Act Rule 485(b) for
effectiveness of this Registration Statement and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Minneapolis, and State of Minnesota, on the 28th
day of April, 2000.
AMERICAN ENTERPRISE VARIABLE ANNUITY ACCOUNT
(Registrant)
By American Enterprise Life Insurance Company
(Sponsor)
By /s/ James E. Choat*
James E. Choat
President and Chief Executive Officer
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities indicated on the 28th day of
April, 2000.
Signature Title
/s/ James E. Choat* Director, President and
James E. Choat Chief Executive Officer
/s/ Jeffrey S. Horton** Vice President and Treasurer
Jeffrey S. Horton
/s/ Richard W. Kling* Director and Chairman of the Board
Richard W. Kling
/s/ Paul S. Mannweiler* Director
Paul S. Mannweiler
/s/ Paula R. Meyer* Executive Vice President, Assured Assets
Paula R. Meyer
/s/ William A. Stoltzmann* Director, Vice President, General
William A. Stoltzmann Counsel and Secretary
/s/ Philip C. Wentzel* Vice President and Controller
Philip C. Wentzel
***Signed pursuant to Power of Attorney, dated July 29, 1999, filed
electronically as Exhibit 15 to Initial Registration Statement No. 333-85567,
filed on or about Aug. 19, 1999 is incorporated by reference.
By: __________________________________
Mary Ellyn Minenko
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 2
TO REGISTRATION STATEMENT No. 333-74865
This Post-Effective Amendment is comprised of the following papers and
documents:
The Cover Page.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements
Part C.
Other Information.
The signatures.
Exhibits.
American Express Signature(SM) Variable Annuity
EXHIBIT INDEX
Exhibit 1.3: Resolution of the Board of Directors of American Enterprise
Life, dated April 25, 2000
Exhibit 9: Opinion of Counsel
Exhibit 10: Independent Auditors Consent
Exhibit 13: Copy of schedule for computation of each performance
quotation provided in the Registration Statement in response
to Item 21
TO THE SECRETARY OF
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
By Resolution received by the Secretary on July 15, 1987, the Board of Directors
of American Enterprise Life Insurance Company:
RESOLVED, That American Enterprise Life Insurance Company, pursuant to
the provisions of Section 27-1-51 Section 1 Class 1(c) of the Indiana
Insurance Code, established a separate account designated American
Enterprise Variable Annuity Account, to be used for the Corporation's
Variable Annuity contracts; and
RESOLVED FURTHER, That the proper officers of the Corporation were
authorized and directed to establish such subaccounts and/or investment
divisions of the Account in the future as they determine to be
appropriate; and
RESOLVED FURTHER, That the proper officers of the Corporation were
authorized and directed to accomplish all filings, including
registration statements and applications for exemptive relief from
provisions of the securities laws as they deem necessary to carry the
foregoing into effect.
As President of American Enterprise Life Insurance Company, I hereby establish,
in accordance with the above resolutions and pursuant to authority granted by
the Board of Directors, 141 additional subaccounts within the separate account
to invest in the following funds or portfolios:
AXPsm Variable Portfolio - Blue Chip Advantage Fund (1 subaccount)
AXPsm Variable Portfolio - Diversified Equity Income Fund (1 subaccount)
AXPsm Variable Portfolio - Federal Income Fund (2 subaccounts)
AXPsm Variable Portfolio - Growth Fund (1 subaccount)
AXPsm Variable Portfolio - S&P 500 Index Fund (4 subaccounts)
AXPsm Variable Portfolio - Small Cap Advantage Fund (1 subaccount)
AIM V.I. Capital Appreciation Fund (3 subaccounts)
AIM V.I. Dent Demographic Trends Fund (4 subaccounts)
AIM V.I. Value Fund (3 subaccounts)
Alliance VP Technology Portfolio - Class B (4 subaccounts)
Alliance VP Premier Growth Portfolio - Class B (4 subaccounts)
Alliance VP Growth & Income Portfolio - Class B (4 subaccounts)
Evergreen Masters Fund (4 subaccounts)
Evergreen Small Cap Value Fund (4 subaccounts)
Evergreen Growth and Income Fund (4 subaccounts)
Evergreen Omega Fund (4 subaccounts)
Evergreen Global Leaders Fund (4 subaccounts)
Evergreen Strategic Income Fund (4 subaccounts)
Fidelity VIP III Mid Cap Portfolio - Service Class (3 subaccounts)
Fidelity VIP Contrafund(R) Portfolio - Service Class (4 subaccounts)
Fidelity VIP High Income Portfolio - Service Class (4 subaccounts)
FTVIPT Templeton International Securities Fund - Class 2 (4 subaccounts)
FTVIPT Mutual Shares Securities Fund - Class 2 (3 subaccounts)
FTVIPT Franklin Small Cap Fund - Class 2 (3 subaccounts)
FTVIPT Templeton Developing Markets Securities Fund - Class 2 (4 subaccounts)
Galaxy VIP Asset Allocation Fund (2 subaccounts)
Galaxy VIP Equity Fund (2 subaccounts)
Galaxy VIP Growth & Income Fund (2 subaccounts)
Galaxy VIP High Quality Bond Fund (2 subaccounts)
Galaxy VIP Small Company Growth Fund (2 subaccounts)
Goldman Sachs VIT Internet Tollkeeper Fund (8 subaccounts)
Janus Aspen Series Aggressive Growth Portfolio: Service Shares (3 subaccounts)
Janus Aspen Series Global Technology Portfolio: Service Shares (3 subaccounts)
Janus Aspen Series Growth Portfolio: Service Shares (3 subaccounts)
Janus Aspen Series International Growth Portfolio: Service Shares
(3 subaccounts)
MFS(R) VIT Growth Series - Service Class (4 subaccounts)
MFS(R) VIT Growth with Income Series - Service Class (2 subaccounts)
MFS(R) VIT New Discovery Series - Service Class (5 subaccounts)
MFS(R) VIT Total Return Series - Service Class (5 subaccounts)
MFS(R) VIT Utilities Series - Service Class (2 subaccounts)
Putnam VT Growth & Income Fund - Class IB (3 subaccounts)
Putnam VT International New Opportunities Fund - Class IB (4 subaccounts)
Putnam VT Vista Fund - Class IB (4 subaccounts)
Third Avenue Value Portfolio (1 subaccount)
<PAGE>
In accordance with the above resolutions and pursuant to authority granted by
the Board of Directors of American Enterprise Life Insurance Company, the Unit
Investment Trust comprised of American Enterprise Variable Annuity Account and
consisting of 403 subaccounts is hereby reconstituted as American Enterprise
Variable Annuity Account consisting of 544 subaccounts.
Received by the Secretary:
/s/ James E. Choat /s/ William A. Stoltzmann
James E. Choat William A. Stoltzmann
Date: April 25, 2000
April 28, 2000
American Enterprise Life Insurance Company
829 AXP Financial Center
Minneapolis, MN 55474
RE: American Enterprise Variable Annuity Account
Post-Effective Amendment No. 2
File Nos: 333-74865 / 811-7195
Ladies and Gentlemen:
I am familiar with the establishment of the American Enterprise Variable Annuity
Account ("Account"), which is a separate account of American Enterprise Life
Insurance Company ("Company") established by the Company's Board of Directors
according to applicable insurance law. I also am familiar with the
above-referenced Registration Statement filed by the Company on behalf of the
Account with the Securities and Exchange Commission.
I have made such examination of law and examined such documents and records as
in my judgment are necessary and appropriate to enable me to give the following
opinion:
1. The Company is duly incorporated, validly existing and in good standing
under applicable state law and is duly licensed or qualified to do business
in each jurisdiction where it transacts business. The Company has all
corporate powers required to carry on its business and to issue the
contracts.
2. The Account is a validly created and existing separate account of the
Company and is duly authorized to issue the securities registered.
3. The contracts issued by the Company, when offered and sold in accordance
with the prospectus contained in the Registration Statement and in
compliance with applicable law, will be legally issued and represent
binding obligations of the Company in accordance with their terms.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
- -------------------------
Mary Ellyn Minenko
Vice President and Group Counsel
Consent of Independent Auditors
We consent to the references to our firm under the captions "Experts" in the
Prospectus and "Independent Auditors" in the Statement of Additional Information
and to the use of our report dated February 3,2000 with respect to the financial
statements of American Enterprise Life Insurance Company and to the use of our
report dated March 17, 2000 with respect to the financial statements of American
Enterprise Variable Annuity Account - American Express Signature Variable
Annuity, included in Post-Effective Amendment No. 2 to the Registration
Statement (Form N-4, No. 333-74865) and related Prospectus for the registration
of the American Express Signature Variable AnnuitySM Contracts, to be offered by
American Enterprise Life Insurance Company.
/s/ Ernst & Young LLP
Minneapolis, MN
April 24, 2000
American Enterprise Life - New Solutions Variable Annuity
Performance Calculations
As disclosed in the Fund's prospectus, cumulative total return is the cumulative
change in the value of an investment over a specified time period. We assume
that income earned by the investment is reinvested.
Cumulative Total Return = Ending Total Value - Initial Amount Invested
--------------------------------------------
Initial Amount Invested
Where: Ending Total Value =
Initial Investment * [(1 + Gross Total Return) - Contract Charge Factor]
and; Contract Charge Factor = Policy Fee
-----------------------------
Estimated Average Policy Size
Gross Total Return = Ending AUV - Initial AUV
------------------------
Initial AUV
Average Policy Size = $40,000
Policy Fee = $40
Average annual total return (T) equates the initial amount invested(P) to the
ending redeemable value (ERV) over each period (n) in accordance with the
formula prescribed by the Securities and Exchange P(1+T)(n) = ERV.
Average annual total return with surrender charge
Ending Total Value - Surrender Charge Amount
--------------------------------------------
Initial Amount Invested
where: Surrender Charge Amount =
(Ending Total Value - Free Withdrawal Amount) * Surrender Charge %
and; Free Withdrawal Amount is the greater of 10% of the value of
the contract on the prior contract anniversary or 100% of
earnings on the contract (Ending Total value - Initial
Amount Invested).
The surrender charge shcedule is stated below.
Seven year schedule
Years from purchase
payment receipt Surrender charge
percentage
----------------------- -------------------------
1 8%
2 8
3 7
4 7
5 6
6 5
7 3
8 0
