The prospectus containing information for the American Express Signature One
Annuity(SM) filed electronically in Registrant's Post-Effective Amendment No. 5
to Registration Statement No. 333-85567 on Form N-4, filed on or about April 27,
2000, is incorporated by reference.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
AMERICAN EXPRESS SIGNATURE ONE VARIABLE ANNUITYSM
American Enterprise Variable Annuity Account
May 1, 2000
Revised as of July 21, 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 may be
obtained by writing or calling us at the address and telephone number below. The
prospectus is incorporated in 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.13
Rating Agencies........................................................p.15
Principal Underwriter..................................................p.15
<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
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)
We calculated the following performance figures on the basis of historical
performance of each fund. Currently, we do not show any performance information
for the subaccounts because they are new and have not had any activity to date.
However, we 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 (Without Purchase Payment Credits) For Annuities
Without Withdrawal and Selection of the Value Option Return of Purchase Payment
Death Benefit For Periods Ending Dec. 31, 1999
Performance Since
Commencement of the Fund*
Since
Subaccount Investing In: 1 Year 5 Years 10 Years Commencement
---------- ------------- ------ ------- -------- ------------
<S> <C> <C> <C> <C> <C>
AXPSM VARIABLE PORTFOLIO -
WBCA3 Blue Chip Advantage Fund (9/99)** --% --% --% 10.74%
SBND2 Bond Fund (10/81) 0.09 6.30 6.47 8.97
WCAR3 Capital Resource Fund (10/81) 21.81 19.45 13.69 14.16
SCMG2 Cash Management Fund (10/81) 3.07 3.45 3.24 4.90
WDEI3 Diversified Equity Income Fund (9/99) -- -- -- 2.31
WEXI3 Extra Income Fund (5/96) 4.56 -- -- 3.84
WFDI3 Federal Income Fund (9/99) -- -- -- -0.03
SGRO2 Growth Fund (9/99) -- -- -- 17.65
SGMD2 Managed Fund (4/86) 13.03 16.36 11.75 11.11
WNDM3 New Dimensions Fund(R)(5/96) 29.94 -- -- 24.37
WSCA3 Small Cap Advantage Fund (9/99) -- -- -- 12.12
AIM V.I.
WCAP3 Capital Appreciation Fund (5/93) 42.42 23.63 -- 20.41
SCDV2 Capital Development Fund (5/98) 27.11 -- -- 9.45
WVAL3 Value Fund (5/93) 27.90 25.24 -- 21.13
ALLIANCE VP
SPGR2 Premier Growth Portfolio (Class B) (6/92) 30.08 33.88 -- 24.33
STEC2 Technology Portfolio (Class B) (1/99) 73.00 -- -- 33.78
SUGH2 U.S. Government/High Grade Securities -4.18 -- -- 3.58
Portfolio (Class B) (9/92)
BARON FUNDS
SCAS2 Baron Capital Asset Fund (10/98) 33.75 -- -- 59.14
FIDELITY VIP
SGRI2 III Growth & Income Portfolio (Service 6.13 -- -- 19.63
Class) (12/96)
SMDC2 III Mid Cap Portfolio 46.66 -- -- 50.69
(Service Class) (12/98)
SOVS2 Overseas Portfolio (Service Class) (1/87) 40.12 15.48 9.65 9.04
FRANKLIN TEMPLETON VIP TRUST
WRES3 Franklin Real Estate Fund - -7.86 6.27 7.28 6.94
Class 2 (1/89)***
WMSS3 Mutual Shares Securities Fund - 11.81 -- -- 9.10
Class 2 (11/96)***
SISC2 Templeton International Smaller Companies 21.99 -- -- 3.56
Fund - Class 2 (5/96)***
</TABLE>
*Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 1.35% mortality and expense risk fee and a
0.15% variable account administrative charge. Premium taxes are not reflected in
these total returns.
**(Commencement date of the Fund.)
***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.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (Without Purchase Payment Credits) For Annuities
Without Withdrawal and Selection of the Value Option Return of Purchase Payment
Death Benefit For Periods Ending Dec. 31, 1999 (continued)
Performance Since
Commencement of the Fund*
Since
Subaccount Investing In: 1 Year 5 Years 10 Years Commencement
---------- ------------- ------ ------- -------- ------------
<S> <C> <C> <C> <C> <C>
GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT)
SCGR2 Capital Growth Fund (4/98)** 25.16% --% --% 22.53%
WUSE3 CORESM U.S. Equity Fund (2/98)*** 22.37 -- -- 18.83
WGLI3 Global Income Fund (1/98) -2.59 -- -- 1.97
SIEQ2 International Equity Fund (1/98) 29.18 -- -- 24.03
SITO2 Internet Tollkeeper Fund (4/00)+ -- -- -- --
JANUS ASPEN SERIES
SAGP2 aggressive Growth Portfolio: Service Shares (9/93)+ 119.95 33.75 -- 31.92
SGLT2 Global Technology Portfolio: Service Shares (1/00)+ -- -- -- --
SGIP2 Growth Portfolio: Service Shares (9/93)+ 40.84 26.59 -- 21.22
SINT2 International Growth Portfolio: Service Shares 76.87 31.23 -- 26.55
(5/94)+
J.P. MORGAN Series Trust II
SUDE2 J.P. Morgan U.S. Disciplined Equity Portfolio (12/94) 16.71 22.58 -- 22.56
LAZARD RETIREMENT Series
SREQ2 Equity Portfolio (3/98) 6.29 -- -- 8.86
SRIE2 International Equity Portfolio (9/98) 19.53 -- -- 24.27
MFS(R)
SNDS2 New Discovery Series (4/98) 67.78 -- -- 37.12
SRSS2 Research Series (7/95) 22.14 -- -- 21.02
WUTS3 Utilities Series (1/95) 28.80 -- -- 24.50
ROYCE Capital Fund
SMCC2 Micro-Cap Portfolio (12/96) 26.16 -- -- 15.50
SPRM2 Premier Portfolio (12/96) 6.52 -- -- 9.56
THIRD AVENUE VARIABLE SERIES TRUST
SVLU2 Value Portfolio (9/99) -- -- -- 7.86
WANGER
SISM2 International Small Cap (5/95) 123.15 -- -- 36.63
SUSC2 U.S. Small Cap (5/95) 22.96 -- -- 24.48
WARBURG PINCUS TRUST -
SEGR2 Emerging Growth Portfolio (9/99) -- -- -- 31.34
WELLS FARGO VARIABLE TRUST
WEQI3 Equity Income Fund (5/96) 6.21 -- -- 15.32
</TABLE>
*Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 1.35% mortality and expense risk fee and a
0.15% variable account administrative charge. Premium taxes are not reflected in
these total returns.
**(Commencement date of the Fund.
*** CORESM is a service mark of Goldman, Sachs & Co.
+Had not commenced operations as of Dec. 31, 1999.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (Without Purchase Payment Credits) For Annuities
With Withdrawal and Selection of the Value Option Return of Purchase Payment
Death Benefit For Periods Ending Dec. 31, 1999
Performance Since
Commencement of the Fund*
Since
Subaccount Investing In: 1 Year 5 Years 10 Years Commencement
---------- ------------- ------ ------- -------- -----------
<S> <C> <C> <C> <C> <C>
AXPSM VARIABLE PORTFOLIO -
WBCA3 Blue Chip Advantage Fund (9/99)** --% --% --% 2.74%
SBND2 Bond Fund (10/81) -7.12 5.18 6.47 8.97
WCAR3 Capital Resource Fund (10/81) 13.81 18.75 13.69 14.16
SCMG2 Cash Management Fund (10/81) -4.38 2.20 3.24 4.90
WDEI3 Diversified Equity Income Fund (9/99) -- -- -- -5.08
WEXI3 Extra Income Fund (5/96) 4.56 -- -- 3.84
WFDI3 Federal Income Fund (9/99) -- -- -- -7.23
SGRO2 Growth Fund (9/99) -- -- -- 9.65
SGMD2 Managed Fund (4/86) 5.03 15.59 11.75 11.11
WNDM3 New Dimensions Fund(R)(5/96) 21.94 -- -- 23.13
WSCA3 Small Cap Advantage Fund (9/99) -- -- -- 4.12
AIM V.I.
WCAP3 Capital Appreciation Fund (5/93) 34.42 23.02 -- 20.09
SCDV2 Capital Development Fund (5/98) 19.11 -- -- 4.87
WVAL3 Value Fund (5/93) 19.90 24.67 -- 20.82
ALLIANCE VP
SPGR2 Premier Growth Portfolio (Class B) (6/92) 22.08 33.44 -- 24.20
STEC2 Technology Portfolio (Class B) (1/96) 65.00 -- -- 32.93
SUGH2 U.S. Government/High Grade Securities -11.04 -- -- 3.13
Portfolio (Class B) (9/92)
BARON FUNDS
SCAS2 Baron Capital Asset Fund (10/98) 25.75 -- -- 53.37
FIDELITY VIP
SGRI2 III Growth & Income Portfolio (Service -1.56 -- -- 17.74
Class) (12/96)
SMDC2 III Mid Cap Portfolio 38.66 -- -- 42.78
(Service Class) (12/98)
SOVS2 Overseas Portfolio (Service Class) (1/87) 32.21 14.68 9.65 9.04
FRANKLIN TEMPLETON VIP TRUST
WRES3 Franklin Real Estate Fund - -14.43 5.15 7.28 6.94
Class 2 (1/89)***
WMSS3 Mutual Shares Securities Fund - 3.81 -- -- 6.96
Class 2 (11/96)***
SISC2 Templeton International Smaller Companies 13.99 -- -- 1.52
Fund - Class 2 (5/96)***
</TABLE>
*Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 1.35% 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.
**(Commencement date of the Fund.)
***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.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (Without Purchase Payment Credits) For Annuities
With Withdrawal and Selection of the Value Option Return of Purchase Payment
Death Benefit For Periods Ending Dec. 31, 1999 (continued)
Performance Since
Commencement of the Fund*
Since
Subaccount Investing In: 1 Year 5 Years 10 Years Commencement
---------- ------------- ------ ------- -------- ------------
<S> <C> <C> <C> <C> <C>
GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT)
SCGR2 Capital Growth Fund (4/98)** 17.16% --% --% 18.31%
WUSE3 CORESM U.S. Equity Fund (2/98)*** 14.37 -- -- 15.13
WGLI3 Global Income Fund (1/98) -9.58 -- -- -1.82
SIEQ2 International Equity Fund (1/98) 21.18 -- -- 20.68
SITO2 Internet Tollkeeper Fund (4/00)+ -- -- -- --
JANUS ASPEN SERIES
SAGP2 aggressive Growth Portfolio: Service Shares (9/93)+ 111.95 33.31 -- 31.70
SGLT2 Global Technology Portfolio: Service Shares (1/00)+ -- -- -- --
SGIP2 Growth Portfolio: Service Shares (9/93)+ 32.84 26.04 -- 20.87
SINT2 International Growth Portfolio: Service Shares 68.87 30.76 -- 26.19
(5/94)+
J.P. MORGAN Series Trust II
SUDE2 J.P. Morgan U.S. Disciplined Equity Portfolio (12/94) 8.71 21.96 -- 22.02
LAZARD RETIREMENT Series
SREQ2 Equity Portfolio (3/98) -1.41 -- -- 4.61
SRIE2 International Equity Portfolio (9/98) 11.53 -- -- 18.64
MFS(R)
SNDS2 New Discovery Series (4/98) 59.78 -- -- 33.22
SRSS2 Research Series (7/95) 14.14 -- -- 20.19
WUTS3 Utilities Series (1/95) 20.80 -- -- 23.91
ROYCE Capital FUND
SMCC2 Micro-Cap Portfolio (12/96) 18.16 -- -- 13.46
SPRM2 Premier Portfolio (12/96) -1.20 -- -- 7.29
THIRD AVENUE VARIABLE SERIES TRUST
SVLU2 Value Portfolio (9/99) -- -- -- 0.03
WANGER
SISM2 International Small Cap (5/95) 115.15 -- -- 36.14
SUSC2 U.S. Small Cap (5/95) 14.96 -- -- 23.80
WARBURG PINCUS TRUST -
SEGR2 Emerging Growth Portfolio (9/99) -- -- -- 23.34
WELLS FARGO VARIABLE TRUST
WEQI3 Equity Income Fund (5/96) -1.49 -- -- 13.79
</TABLE>
*Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 1.35% 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.
**(Commencement date of the Fund.)
*** CORESM is a service mark of Goldman, Sachs & Co.
+Had not commenced operations as of Dec. 31, 1999.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (Without Purchase Payment Credits) For Annuities
Without Withdrawal and Selection of the Guaranteed Minimum Income Benefit Rider
(6% Accumulation Benefit Base) and Either the Maximum Anniversary Value Death
Benefit or the 5% Accumulation Death Benefit For Periods Ending Dec. 31, 1999
Performance Since
Commencement of the Fund*
Since
Subaccount Investing In: 1 Year 5 Years 10 Years Commencement
---------- ------------- ------ ------- -------- ------------
<S> <C> <C> <C> <C> <C>
AXPSM VARIABLE PORTFOLIO -
SBCA1 Blue Chip Advantage Fund (9/99)** --% --% --% 10.36%
SBND1 Bond Fund (10/81) -0.36 5.85 6.01 8.52
SCAR1 Capital Resource Fund (10/81) 21.34 18.98 13.23 13.70
SCMG1 Cash Management Fund (10/81) 2.62 3.00 2.79 4.45
SDEI1 Diversified Equity Income Fund (9/99) -- -- -- 1.32
SEXI1 Extra Income Fund (5/96) 4.11 -- -- 3.39
SFDI1 Federal Income Fund (9/99) -- -- -- -0.30
SGRO1 Growth Fund (9/99) -- -- -- 18.50
SMGD1 Managed Fund (4/86) 12.57 15.89 11.29 10.65
SNDM1 New Dimensions Fund(R)(5/96) 29.46 -- -- 23.89
SSCA1 Small Cap Advantage Fund (9/99) -- -- -- 11.20
AIM V.I.
SCAP1 Capital Appreciation Fund (5/93) 41.93 23.15 -- 19.94
SCDV1 Capital Development Fund (5/98) 26.64 -- -- 8.99
SVAL1 Value Fund (5/93) 27.43 24.76 -- 20.66
ALLIANCE VP
SPGR1 Premier Growth Portfolio (Class B) (6/92) 29.60 33.40 -- 23.86
STEC1 Technology Portfolio (Class B) (1/96) 72.48 -- -- 33.30
SUGH1 U.S. Government/High Grade Securities -4.62 4.82 -- 3.13
Portfolio (Class B) (9/92)
BARON FUNDS
SCAS1 Baron Capital Asset Fund (10/98) 33.27 -- -- 58.64
FIDELITY VIP
SGRI1 III Growth & Income Portfolio (Service 5.68 -- -- 19.16
Class) (12/96)
SMDC1 III Mid Cap Portfolio 46.17 -- -- 50.19
(Service Class) (12/98)
SOVS1 Overseas Portfolio (Service Class) (1/87) 39.73 15.02 9.19 8.58
FRANKLIN TEMPLETON VIP TRUST
SRES1 Franklin Real Estate Fund - -8.30 5.82 6.82 6.49
Class 2 (1/89)***
SMSS1 Mutual Shares Securities Fund - 11.34 -- -- 8.64
Class 2 (11/96)***
SISC1 Templeton International Smaller Companies 21.52 -- -- 3.11
Fund - Class 2 (5/96)***
</TABLE>
*Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 1.45% 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.
**(Commencement date of the Fund.)
***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.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (Without Purchase Payment Credits) For Annuities
Without Withdrawal and Selection of the Guaranteed Minimum Income Benefit Rider
(6% Accumulation Benefit Base) and Either the Maximum Anniversary Value Death
Benefit or the 5% Accumulation Death Benefit For Periods Ending Dec. 31, 1999
(continued)
Performance Since
Commencement of the Fund*
Since
Subaccount Investing In: 1 Year 5 Years 10 Years Commencement
---------- ------------- ------ ------- -------- ------------
<S> <C> <C> <C> <C> <C>
GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT)
SCGR1 Capital Growth Fund (4/98)** 24.69% --% --% 22.06%
SUSE1 CORESM U.S. Equity Fund (2/98)*** 21.90 -- -- 18.37
SGLI1 Global Income Fund (1/98) -3.04 -- -- 1.52
SIEQ1 International Equity Fund (1/98) 28.70 -- -- 23.56
SITO1 Internet Tollkeeper Fund (4/00)+
JANUS ASPEN SERIES
SAGP1 aggressive Growth Portfolio: Service Shares (9/93)+ 119.39 33.27 -- 31.44
SGLT1 Global Technology Portfolio: Service Shares (1/00)+ -- -- -- --
SGIP1 Growth Portfolio: Service Shares (9/93)+ 40.36 26.11 -- 20.75
SINT1 International Growth Portfolio: Service Shares 76.35 30.76 -- 26.07
(5/94)+
J.P. MORGAN Series Trust II
SUDE1 J.P. Morgan U.S. Disciplined Equity Portfolio 16.24 22.11 -- 22.08
(12/94)
LAZARD RETIREMENT Series
SREQ1 Equity Portfolio (3/98) 5.83 -- -- 8.40
SRIE1 International Equity Portfolio (9/98) 19.06 -- -- 23.80
MFS(R)
SNDS1 New Discovery Series (4/98) 67.27 -- -- 36.64
SRSS1 Research Series (7/95) 21.67 -- -- 20.55
SUTS1 Utilities Series (1/95) 28.33 -- -- 24.03
ROYCE CAPITAL FUND
SMCC1 Micro-Cap Portfolio (12/96) 25.68 -- -- 15.03
SPRM1 Premier Portfolio (12/96) 6.06 -- -- 9.10
THIRD AVENUE VARIABLE SERIES TRUST
SVLU1 Value Portfolio (9/99) -- -- -- 7.48
WANGER
SISM1 International Small Cap (5/95) 123.61 -- -- 36.28
SUSC1 U.S. Small Cap (5/95) 20.02 -- -- 23.47
WARBURG PINCUS TRUST -
SEGR1 Emerging Growth Portfolio (9/99) -- -- -- 30.95
WELLS FARGO VARIABLE TRUST
SEQI1 Equity Income Fund (5/96) 5.75 -- -- 14.85
</TABLE>
*Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 1.45% 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.
**(Commencement date of the Fund.)
*** CORESMis a service mark of Goldman, Sachs & Co.
+Had not commenced operations as of Dec. 31, 1999.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (Without Purchase Payment Credits) For Annuities
With Withdrawal and Selection of the Guaranteed Minimum Income Benefit Rider (6%
Accumulation Benefit Base) and Either the Maximum Anniversary Value Death
Benefit or the 5% Accumulation Death Benefit For Periods Ending Dec. 31, 1999
Performance Since
Commencement of the Fund*
Since
Subaccount Investing In: 1 Year 5 Years 10 Years Commencement
---------- ------------- ------ ------- -------- ------------
<S> <C> <C> <C> <C> <C>
AXPSM VARIABLE PORTFOLIO -
SBCA1 Blue Chip Advantage Fund (9/99)** --% --% --% 2.04%
SBND1 Bond Fund (10/81) -7.53 4.71 6.01 8.52
SCAR1 Capital Resource Fund (10/81) 13.34 18.27 13.23 13.70
SCMG1 Cash Management Fund (10/81) -4.79 1.72 2.79 4.45
SDEI1 Diversified Equity Income Fund (9/99) -- -- -- -5.99
SEXI1 Extra Income Fund (5/96) 4.11 -- -- 1.34
SFDI1 Federal Income Fund (9/99) -- -- -- -7.47
SGRO1 Growth Fund (9/99) -- -- -- 10.50
SMGD1 Managed Fund (4/86) 4.57 15.11 11.29 10.65
SNDM1 New Dimensions Fund(R)(5/96) 21.46 -- -- 22.65
SSCA1 Small Cap Advantage Fund (9/99) -- -- -- 3.20
AIM V.I.
SCAP1 Capital Appreciation Fund (5/93) 33.93 22.54 -- 19.61
SCDV1 Capital Development Fund (5/98) 18.64 -- -- 4.40
SVAL1 Value Fund (5/93) 19.43 24.18 -- 20.34
ALLIANCE VP
SPGR1 Premier Growth Portfolio (Class B) (6/92) 21.60 32.95 -- 23.73
STEC1 Technology Portfolio (Class B) (1/96) 64.48 -- -- 32.43
SUGH1 U.S. Government/High Grade Securities -11.45 3.64 -- 2.67
Portfolio (Class B) (9/92)
BARON FUNDS
SCAS1 Baron Capital Asset Fund (10/98) 25.27 -- -- 52.87
FIDELITY VIP
SGRI1 III Growth & Income Portfolio (Service -1.98 -- -- 17.25
Class) (12/96)
SMDC1 III Mid Cap Portfolio 38.17 -- -- 42.28
(Service Class) (12/98)
SOVS1 Overseas Portfolio (Service Class) (12/87) 31.73 14.20 9.19 8.58
FRANKLIN TEMPLETON VIP TRUST
SRES1 Franklin Real Estate Fund - -14.84 4.68 6.82 6.49
Class 2 (1/89)***
SMSS1 Mutual Shares Securities Fund - 3.35 -- -- 6.48
Class 2 (11/96)***
SISC1 Templeton International Smaller Companies 13.52 -- -- 1.05
Fund - Class 2 (5/96)***
</TABLE>
*Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 1.45% 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.
**(Commencement date of the Fund.)
***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.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (Without Purchase Payment Credits) For Annuities
With Withdrawal and Selection of the Guaranteed Minimum Income Benefit Rider (6%
Accumulation Benefit Base) and Either the Maximum Anniversary Value Death
Benefit or the 5% Accumulation Death Benefit For Periods Ending Dec. 31, 1999
(continued)
Performance Since
Commencement of the Fund*
Since
Subaccount Investing In: 1 Year 5 Years 10 Years Commencement
---------- ------------- ------ ------- -------- ------------
<S> <C> <C> <C> <C> <C>
GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT)
SCGR1 Capital Growth Fund (4/98)** 16.69% --% --% 17.82%
SUSE1 CORESM U.S. Equity Fund (2/98)*** 13.90 -- -- 14.64
SGLI1 Global Income Fund (1/98) -9.99 -- -- -2.25
SIEQ1 International Equity Fund (1/98) 20.70 -- -- 20.20
SITO1 Internet Tollkeeper Fund (4/00)+
JANUS ASPEN SERIES
SAGP1 aggressive Growth Portfolio: Service Shares (9/93)+ 111.39 32.83 -- 31.22
SGLT1 Global Technology Portfolio: Service Shares (1/00)+ -- -- -- --
SGIP1 Growth Portfolio: Service Shares (9/93)+ 32.36 25.56 -- 20.40
SINT1 International Growth Portfolio: Service Shares 68.35 30.27 -- 25.71
(5/94)+
J.P. MORGAN Series trust II
SUDE1 J. P. Morgan U.S. Disciplined Equity Portfolio 8.24 21.48 -- 21.54
(12/94)
LAZARD RETIREMENT Series
SREQ1 Equity Portfolio (3/98) -1.83 -- -- 4.14
SRIE1 International Equity Portfolio (9/98) 11.06 -- -- 18.16
MFS(R)
SNDS1 New Discovery Series (4/98) 59.27 -- -- 32.73
SRSS1 Research Series (7/95) 13.67 -- -- 19.71
SUTS1 Utilities Series (1/95) 20.33 -- -- 23.43
ROYCE Capital fund
SMCC1 Micro-Cap Portfolio (12/96) 17.68 -- -- 12.98
SPRM1 Premier Portfolio (12/96) -1.62 -- -- 6.81
THIRD AVENUE VARIABLE SERIES TRUST
SVLU1 Value Portfolio (9/99) -- -- -- -0.32
WANGER
SISM1 International Small Cap (5/95) 115.61 -- -- 35.79
SUSC1 U.S. Small Cap (5/95) 12.02 -- -- 22.77
WARBURG PINCUS TRUST -
SEGR1 Emerging Growth Portfolio (9/99) -- -- -- 22.95
WELLS FARGO VARIABLE TRUST
SEQI1 Equity Income Fund (5/96) -1.91 -- -- 13.31
</TABLE>
*Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 1.45% 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.
**(Commencement date of the Fund.)
*** CORESM is a service mark of Goldman, Sachs & Co.
+Had not commenced operations as of Dec. 31, 1999.
<PAGE>
Cumulative Total Return
Cumulative total return represents the cumulative change in the value of an
investment for a given period (reflecting change in a subaccount's accumulation
unit value). We compute cumulative total return by 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 also may
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 contract administrative charge, the variable account
administrative charge, the Maximum Anniversary Value Death Benefit Rider fee,
the Enhanced Death Benefit Rider fee, the Guaranteed Minimum Income Benefit
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
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.
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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.
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.
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.
<PAGE>
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 values 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
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.
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 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.
<PAGE>
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 our general account and
reflects our ability to make annuity payouts and to pay death benefits and other
distributions from the contract.
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.
PRINCIPAL UNDERWRITER
The principal underwriter for the contract is American Express Financial
Advisors Inc. (AEFA) which offers the contract on a continuous basis.
The contract is new and, therefore, we have not received any withdrawal charges
or paid any commissions.
