The prospectus containing information for the American Express New Solutions
Variable Annuity(SM) filed electronically in Registrant's 497 filing filed on or
about June 20, 2000 is incorporated by reference.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
AMERICAN EXPRESS NEW SOLUTIONS VARIABLE ANNUITY SM
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
Independent Auditors.........................................p. 15
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
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 on
historical earnings, past performance does not guarantee future results.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (Without Purchase Payment Credits) For Qualified
Annuities Without Withdrawal 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 -
UCMG1 Cash Management Fund (10/81)** 3.62% 4.00% 3.79% 5.46%
UFIF1 Federal Income Fund (9/99) -- -- -- 0.16
UMGD1 Managed Fund (4/86) 13.63 16.98 12.34 11.70
UNDM1 New Dimensions Fund(R)(5/96) 30.62 -- -- 25.02
USPF1 S&P 500 Index Fund (--/--)*** -- -- -- --
USCA1 Small Cap Advantage Fund (9/99) -- -- -- 12.32
AIM V.I.
UCAP1 Capital Appreciation Fund (5/93) 43.12 24.27 -- 21.04
UDDT1 Dent Demographic Trends Fund (12/99) -- -- -- -0.11
UVAL1 Value Fund (5/93) 28.56 25.90 -- 21.77
Alliance VP
UGIP1 Growth & Income Portfolio (Class B) 10.04 22.57 -- 14.23
(1/91)
UPRG1 Premier Growth Portfolio (Class B) 30.77 34.57 -- 24.98
(6/92)
UTEC1 Technology Portfolio (Class B) (1/96) 73.89 -- -- 34.48
Evergreen VA
UEGL1 Global Leaders Fund (3/97) 23.41 -- -- 17.23
UEGI1 Growth and Income Fund (3/96) 17.32 -- -- 18.40
UEMS1 Masters Fund (1/99) -- -- -- 26.34
UEOM1 Omega Fund (3/97) 45.70 -- -- 26.46
UESC1 Small Cap Value Fund (5/98) 10.89 -- -- 4.11
UESI1 Strategic Income Fund (3/97) 0.56 -- -- 3.43
Fidelity VIP
UMDC1 III Mid Cap Portfolio (Service 47.39 -- -- 51.43
Class) (12/98)
UCOF1 Contrafund(R)Portfolio (Service 22.84 -- -- 26.35
Class) (1/95)
UHIP1 High Income Portfolio (Service 6.93 9.67 9.96 5.08
Class) (9/85)
Franklin Templeton VIP Trust
USMC1 Franklin Small Cap Fund - Class 2 104.07 -- -- 30.45
(10/95)****
UMSS1 Mutual Shares Securities Fund - 12.38 -- -- 9.67
Class 2 (11/96)****
UDMS1 Templeton Developing Markets 51.68 -- -- -6.47
Securities Fund - Class 2 (3/96)+
UINT1 Templeton International Securities 21.94 15.80 -- 14.03
Fund - Class 2 (5/92)+
MFS(R) VIT
UGRS1 Growth Series - Service Class (5/99) -- -- -- 38.51
UNDS1 New Discovery Series - Service Class 68.55 -- -- 37.79
(4/98)
UTRS1 Total Return Series - Service Class 1.99 -- -- 14.19
(1/95)
Putnam Variable Trust
UGIN1 Putnam VT Growth and Income Fund - 0.32 18.62 13.02 14.17
Class IB Shares (2/88)++
UINO1 Putnam VT International New 100.72 -- -- 50.14
Opportunities Fund - Class IB Shares
(4/98)++
UVIS1 Putnam VT Vista Fund - Class IB 51.10 -- -- 29.69
Shares (1/97)++
</TABLE>
* Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 0.85% mortality and expense risk fee and
a 0.15% variable account administrative charge. Premium taxes are not
reflected in the above total returns.
** (Commencement date of the Fund)
*** Had not commenced operations as of Dec. 31, 1999.
**** 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.
+ Prior to May 1, 2000, the Templeton International Securities Fund was
called the Templeton International Fund and the Templeton Developing
Markets Securities Fund was called the Templeton Developing Markets Fund.
Class 2 shares were issued May 1, 1997. Prior to May 1, 1997, Class 2
performance represents the historical performance results of Class 1
shares. Performance of Class 2 shares for periods after May 1, 1997 reflect
Class 2's additional 12b-1 fee expense, which also affects all future
performance. Figures assume reinvestment of dividends and capital gains.
++ 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%.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (Without Purchase Payment Credits) For Qualified
Annuities With Withdrawal 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 -
UCMG1 Cash Management Fund (10/81)** -3.87% 2.96% 3.79% 5.46%
UFIF1 Federal Income Fund (9/99) -- -- -- -7.05
UMGD1 Managed Fund (4/86) 5.63 16.33 12.34 11.70
UNDM1 New Dimensions Fund(R)(5/96) 22.62 -- -- 23.96
USPF1 S&P 500 Index Fund (--/--)*** -- -- -- --
USCA1 Small Cap Advantage Fund (9/99) -- -- -- 4.32
AIM V.I.
UCAP1 Capital Appreciation Fund (5/93) 35.12 23.76 -- 20.88
UDDT1 Dent Demographic Trends Fund (12/99) -- -- -- -7.31
UVAL1 Value Fund (5/93) 20.56 25.41 -- 21.62
Alliance VP
UGIP1 Growth & Income Portfolio (Class B) 2.04 22.04 -- 14.23
(1/91)
UPRG1 Premier Growth Portfolio (Class B) 22.77 34.21 -- 24.98
(6/92)
UTEC1 Technology Portfolio (Class B) (1/96) 65.89 -- -- 33.75
Evergreen VA
UEGL1 Global Leaders Fund (3/97) 15.41 -- -- 15.35
UEGI1 Growth and Income Fund (3/96) 9.32 -- -- 17.25
UEMS1 Masters Fund (1/99) -- -- -- 18.34
UEOM1 Omega Fund (3/97) 37.70 -- -- 24.82
UESC1 Small Cap Value Fund (5/98) 2.89 -- -- -0.47
UESI1 Strategic Income Fund (3/97) -6.69 -- -- 1.06
Fidelity VIP
UMDC1 III Mid Cap Portfolio (Service 39.39 -- -- 43.52
Class) (12/98)
UCOF1 Contrafund(R)Portfolio (Service 14.84 -- -- 25.88
Class) (1/95)
UHIP1 High Income Portfolio (Service -0.82 8.83 9.96 5.08
Class) (9/85)
Franklin Templeton VIP Trust
USMC1 Franklin Small Cap Fund - Class 2 96.07 -- -- 29.83
(10/95)****
UMSS1 Mutual Shares Securities Fund - 4.38 -- -- 7.82
Class 2 (11/96)****
UDMS1 Templeton Developing Markets 43.68 -- -- -8.11
Securities Fund - Class 2 (3/96)+
UINT1 Templeton International Securities 13.94 15.12 -- 14.03
Fund - Class 2 (5/92)+
MFS(R) VIT
UGRS1 Growth Series - Service Class (5/99) -- -- -- 30.51
UNDS1 New Discovery Series - Service Class 60.55 -- -- 33.91
(4/98)
UTRS1 Total Return Series - Service Class -5.37 -- -- 13.47
(1/95)
Putnam Variable Trust
UGIN1 Putnam VT Growth and Income Fund - -6.91 18.01 13.02 14.17
Class IB Shares (2/88)++
UINO1 Putnam VT International New 92.72 -- -- 46.47
Opportunities Fund - Class IB Shares
(4/98)++
UVIS1 Putnam VT Vista Fund - Class IB 43.10 -- -- 28.28
Shares (1/97)++
</TABLE>
* Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 0.85% mortality and expense risk fee, a
0.15% variable account administrative charge and applicable withdrawal
charges. Premium taxes are not reflected in the above total returns.
** (Commencement date of the Fund)
*** Had not commenced operations as of Dec. 31, 1999.
**** 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.
+ Prior to May 1, 2000, the Templeton International Securities Fund was
called the Templeton International Fund and the Templeton Developing
Markets Securities Fund was called the Templeton Developing Markets Fund.
Class 2 shares were issued May 1, 1997. Prior to May 1, 1997, Class 2
performance represents the historical performance results of Class 1
shares. Performance of Class 2 shares for periods after May 1, 1997 reflect
Class 2's additional 12b-1 fee expense, which also affects all future
performance. Figures assume reinvestment of dividends and capital gains.
++ 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%.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (Without Purchase Payment Credits) For Qualified
Annuities Without Withdrawal and Selection of the Maximum Anniversary Value
Death Benefit and Guaranteed Minimum Income Benefit Riders 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 -
UCMG2 Cash Management Fund (10/81)** 3.22% 3.60% 3.39% 5.06%
UFIF2 Federal Income Fund (9/99) -- -- -- -0.17
UMGD2 Managed Fund (4/86) 13.22 16.56 11.93 11.28
UNDM2 New Dimensions Fund(R)(5/96) 30.19 -- -- 24.60
USPF2 S&P 500 Index Fund (--/--)*** -- -- -- --
USCA2 Small Cap Advantage Fund (9/99) -- -- -- 11.99
AIM V.I.
UCAP2 Capital Appreciation Fund (5/93) 42.67 24.15 23.85 20.92
UDDT2 Dent Demographic Trends Fund (12/99) -- -- -- -0.42
UVAL2 Value Fund (5/93) 28.13 25.47 -- 21.34
Alliance VP
UGIP2 Growth & Income Portfolio (Class B) 9.63 22.15 -- 13.82
(1/91)
UPRG2 Premier Growth Portfolio (Class B) 30.34 34.14 -- 24.55
(6/92)
UTEC2 Technology Portfolio (Class B) (1/96) 73.42 -- -- 34.05
Evergreen VA
UEGL2 Global Leaders Fund (3/97) 22.98 -- -- 16.81
UEGI2 Growth and Income Fund (3/96) 16.90 -- -- 17.98
UEMS2 Masters Fund (1/99) -- -- -- 25.92
UEOM2 Omega Fund (3/97) 45.26 -- -- 26.03
UESC2 Small Cap Value Fund (5/98) 10.48 -- -- 3.71
UESI2 Strategic Income Fund (3/97) 0.16 -- -- 3.02
Fidelity VIP
UMDC2 III Mid Cap Portfolio (Service 46.95 -- -- 50.98
Class) (12/98)
UCOF2 Contrafund(R)Portfolio (Service 22.42 -- -- 25.93
Class) (1/95)
UHIP2 High Income Portfolio (Service 6.53 9.26 9.55 4.67
Class) (9/85)
Franklin Templeton VIP Trust
USMC2 Franklin Small Cap Fund - Class 2 103.57 -- -- 30.02
(10/95)****
UMSS2 Mutual Shares Securities Fund - 11.97 -- -- 9.26
Class 2 (11/96)****
UDMS2 Templeton Developing Markets 51.23 -- -- -6.86
Securities Fund - Class 2 (3/96)+
UINT2 Templeton International Securities 21.52 15.38 -- 13.61
Fund - Class 2 (5/92)+
MFS(R) VIT
UGRS2 Growth Series - Service Class (5/99) -- -- -- 38.12
UNDS2 New Discovery Series - Service Class 68.08 -- -- 37.36
(4/98)
UTRS2 Total Return Series - Service Class 1.59 -- -- 13.77
(1/95)
Putnam Variable Trust
UGIN2 Putnam VT Growth and Income Fund - -0.08 18.20 12.61 13.75
Class IB Shares (2/88)++
UINO2 Putnam VT International New 100.22 -- -- 49.69
Opportunities Fund - Class IB Shares
(4/98)++
UVIS2 Putnam VT Vista Fund - Class IB 50.65 -- -- 29.26
Shares (1/97)++
</TABLE>
* Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 0.85% mortality and expense risk fee, a
0.15% variable account administrative charge, a 0.10% Maximum Anniversary
Value Death Benefit Rider fee and a 0.30% Guaranteed Minimum Income Benefit
Rider fee. Premium taxes are not reflected in the above total returns.
** (Commencement date of the Fund)
*** Had not commenced operations as of Dec. 31, 1999.
**** 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.
+ Prior to May 1, 2000, the Templeton International Securities Fund was
called the Templeton International Fund and the Templeton Developing
Markets Securities Fund was called the Templeton Developing Markets Fund.
Class 2 shares were issued May 1, 1997. Prior to May 1, 1997, Class 2
performance represents the historical performance results of Class 1
shares. Performance of Class 2 shares for periods after May 1, 1997 reflect
Class 2's additional 12b-1 fee expense, which also affects all future
performance. Figures assume reinvestment of dividends and capital gains.
++ 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%.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (Without Purchase Payment Credits) For Qualified
Annuities With Withdrawal and Selection of the Maximum Anniversary Value Death
Benefit and Guaranteed Minimum Income Benefit Riders 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 -
UCMG2 Cash Management Fund (10/81)** -4.24% 2.47% 3.39% 5.04%
UFIF2 Federal Income Fund (9/99) -- -- -- -7.66
UMGD2 Managed Fund (4/86) 5.22 15.83 11.93 11.26
UNDM2 New Dimensions Fund(R)(5/96) 22.19 -- -- 23.42
USPF2 S&P 500 Index Fund (--/--)*** -- -- -- --
USCA2 Small Cap Advantage Fund (9/99) -- -- -- 3.65
AIM V.I.
UCAP2 Capital Appreciation Fund (5/93) 34.67 23.26 -- 20.40
UDDT2 Dent Demographic Trends Fund (12/99) -- -- -- -7.88
UVAL2 Value Fund (5/93) 20.13 24.90 -- 21.14
Alliance VP
UGIP2 Growth & Income Portfolio (Class B) 1.66 21.53 -- 13.78
(1/91)
UPRG2 Premier Growth Portfolio (Class B) 22.34 33.69 -- 24.50
(6/92)
UTEC2 Technology Portfolio (Class B) (1/96) 65.42 -- -- 33.20
Evergreen VA
UEGL2 Global Leaders Fund (3/97) 14.98 -- -- 14.79
UEGI2 Growth and Income Fund (3/96) 8.90 -- -- 16.73
UEMS2 Masters Fund (1/99) -- -- -- 17.55
UEOM2 Omega Fund (3/97) 37.26 -- -- 24.25
UESC2 Small Cap Value Fund (5/98) 2.48 -- -- -1.05
UESI2 Strategic Income Fund (3/97) -7.06 -- -- 0.56
Fidelity VIP
UMDC2 III Mid Cap Portfolio (Service 38.95 -- -- 42.62
Class) (12/98)
UCOF2 Contrafund(R)Portfolio (Service 14.42 -- -- 25.37
Class) (1/95)
UHIP2 High Income Portfolio (Service -1.20 8.34 9.55 4.65
Class) (9/85)
Franklin Templeton VIP Trust
USMC2 Franklin Small Cap Fund - Class 2 95.57 -- -- 29.29
(10/95)****
UMSS2 Mutual Shares Securities Fund - 3.97 -- -- 7.29
Class 2 (11/96)****
UDMS2 Templeton Developing Markets 43.23 -- -- -8.58
Securities Fund - Class 2 (3/96)+
UINT2 Templeton International Securities 13.52 14.63 -- 13.57
Fund - Class 2 (5/92)+
MFS(R) VIT
UGRS2 Growth Series - Service Class (5/99) -- -- -- 29.70
UNDS2 New Discovery Series - Service Class 60.08 -- -- 33.21
(4/98)
UTRS2 Total Return Series - Service Class -5.74 -- -- 12.98
(1/95)
Putnam Variable Trust
UGIN2 Putnam VT Growth and Income Fund - -7.27 17.51 12.61 13.73
Class IB Shares (2/88)++
UINO2 Putnam VT International New 92.22 -- -- 45.74
Opportunities Fund - Class IB Shares
(4/98)++
UVIS2 Putnam VT Vista Fund - Class IB 42.65 -- -- 27.71
Shares (1/97)++
</TABLE>
* Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 0.85% mortality and expense risk fee, a
0.15% variable account administrative charge, a 0.10% Maximum Anniversary
Value Death Benefit Rider fee, a 0.30% Guaranteed Minimum Income Benefit
Rider fee and applicable withdrawal charges. Premium taxes are not
reflected in the above total returns.
** (Commencement date of the Fund)
*** Had not commenced operations as of Dec. 31, 1999.
**** 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.
+ Prior to May 1, 2000, the Templeton International Securities Fund was
called the Templeton International Fund and the Templeton Developing
Markets Securities Fund was called the Templeton Developing Markets Fund.
Class 2 shares were issued May 1, 1997. Prior to May 1, 1997, Class 2
performance represents the historical performance results of Class 1
shares. Performance of Class 2 shares for periods after May 1, 1997 reflect
Class 2's additional 12b-1 fee expense, which also affects all future
performance. Figures assume reinvestment of dividends and capital gains.
++ 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%.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (Without Purchase Payment Credits) For Nonqualified
Annuities Without Withdrawal For Periods Ending Dec. 31, 1999
Performance Since
Commencement of the Performance Since Commencement of the Fund*
Subaccount
1 Since Since
Subaccount Investing In: Year Commencement 1 Year 5 Years 10 Years Commencement
---------- ------------- ----- ------------ ------ ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
AXPSM Variable Portfolio -
PCMG1 Cash Management Fund (11/99; 10/81)** --% 0.52% 3.43% 3.76% 3.54% 5.20%
UFIF3 Federal Income Fund (--/--; 9/99) -- -- -- -- -- 0.08
PMGD1 Managed Fund (11/99; 4/86) -- 7.04 13.35 16.68 12.06 11.42
PNDM1 New Dimensions Fund(R)(11/99; 5/96) -- 13.87 30.29 -- -- 24.71
USPF2 S&P 500 Index Fund (--/--;--/--)*** -- -- -- -- -- --
PSCA1 Small Cap Advantage Fund (11/99; 9/99) -- 8.48 -- -- -- 11.71
AIM V.I.
PCAP1 Capital Appreciation Fund (11/99; 5/93) -- 21.74 42.80 23.97 -- 20.74
UDDT3 Dent Demographic Trends Fund (--/--; -- -- -- -- -- -0.12
12/99)
PVAL1 Value Fund (11/99; 5/93) -- 10.10 28.26 25.59 -- 21.46
Alliance VP
UGIP3 Growth & Income Portfolio (Class B) -- -- 9.77 22.27 -- 13.95
(--/--; 1/91)
UPRG3 Premier Growth Portfolio (Class B) -- -- 30.44 34.24 -- 24.66
(--/--; 6/92)
UTEC3 Technology Portfolio (Class B) (--/--; -- -- 73.46 -- -- 34.15
1/96)
Evergreen VA
UEGL3 Global Leaders Fund (--/--; 3/97) -- -- 23.10 -- -- 16.94
UEGI3 Growth and Income Fund (--/--; 3/96) -- -- 17.02 -- -- 18.10
UEMS3 Masters Fund (--/--; 1/99) -- -- -- -- -- 26.05
UEOM3 Omega Fund (--/--; 3/97) -- -- 45.34 -- -- 26.14
UESC3 Small Cap Value Fund (--/--; 5/98) -- -- 10.61 -- -- 3.85
UESI3 Strategic Income Fund (--/--; 3/97) -- -- 0.30 -- -- 3.17
Fidelity VIP -- --
PMDC1 III Mid Cap Portfolio (Service Class) -- 19.37 46.88 -- -- 50.91
(11/99; 12/98)
UCOF3 Contrafund(R)Portfolio (Service Class) -- -- 22.54 -- -- 26.04
(--/--; 1/95)
UHIP3 High Income Portfolio (Service Class) -- -- 6.67 9.40 9.68 4.81
(--/--; 9/85)
Franklin Templeton VIP Trust
PSMC1 Franklin Small Cap Fund - Class 2 -- 34.13 103.67 -- -- 30.11
(11/99; 10/95)****
PMSS1 Mutual Shares Securities Fund - Class 2 -- 3.28 12.13 -- -- 9.41
(11/99; 11/96)****
UDMS3 Templeton Developing Markets Securities -- -- 51.30 -- -- -6.70
Fund - Class 2 (--/--; 3/96)+
UINT3 Templeton International Securities Fund -- -- 21.63 15.51 -- 13.74
- Class 2
(--/--; 5/92)
MFS(R) VIT
UGRS3 Growth Series - Service Class (--/--; -- -- -- -- -- 38.28
5/99)
PNDS1 New Discovery Series - Service Class -- 30.46 71.25 -- -- 38.97
(11/99; 4/98)
PTRS1 Total Return Series - Service Class -- -0.40 1.75 -- -- 13.91
(11/99; 1/95)
Putnam Variable Trust
PGIN1 Putnam VT Growth and Income Fund - -- -2.32 0.19 18.37 12.76 13.90
Class IB Shares (11/99; 2/88)++
UINO3 Putnam VT International New -- -- 100.22 -- -- 49.77
Opportunities Fund - Class IB Shares
(--/--; 4/98)++
UVIS3 Putnam VT Vista Fund - Class IB Shares -- -- 50.72 -- -- 29.36
(--/--; 1/97 )++
</TABLE>
* Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 1.10% mortality and expense risk fee and
a 0.15% variable account administrative charge. Premium taxes are not
reflected in the above total returns.
** (Commencement date of the Subaccount; Commencement date of the Fund)
*** Had not commenced operations as of Dec. 31, 1999.
**** 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.
+ Prior to May 1, 2000, the Templeton International Securities Fund was
called the Templeton International Fund and the Templeton Developing
Markets Securities Fund was called the Templeton Developing Markets Fund.
Class 2 shares were issued May 1, 1997. Prior to May 1, 1997, Class 2
performance represents the historical performance results of Class 1
shares. Performance of Class 2 shares for periods after May 1, 1997 reflect
Class 2's additional 12b-1 fee expense, which also affects all future
performance. Figures assume reinvestment of dividends and capital gains.
++ 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%..
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (Without Purchase Payment Credits) For Nonqualified
Annuities With Withdrawal For Periods Ending Dec. 31, 1999
Performance since
Commencement of the Performance Since Commencement of the
Subaccount Fund**
1 Since Since
Subaccount Investing In: Year Commencement 1 Year 5 Years 10 Years Commencement
---------- ------------- ------ ------------ ------ ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
AXPSM Variable Portfolio -
PCMG1 Cash Management Fund (11/99; 10/81)** --% -6.65% -4.05% 2.70% 3.54% 5.20%
UFIF3 Federal Income Fund (--/--;9/99) -- -- -- -- -- -7.13
PMGD1 Managed Fund (11/99; 4/86) -- -0.66 5.35 16.03 12.06 11.42
PNDM1 New Dimensions Fund(R)(11/99; 5/96) -- 5.94 22.29 -- -- 23.64
USPF2 S&P 500 Index Fund (--/--; --/--)** -- -- -- -- -- --
PSCA1 Small Cap Advantage Fund (11/99; 9/99) -- 0.66 -- -- -- 3.71
AIM V.I.
PCAP1 Capital Appreciation Fund (11/99; 5/93) -- 13.80 34.80 23.46 -- 20.58
UDDT3 Dent Demographic Trends Fund (--/--; -- -- -- -- -- -7.31
12/99)
PVAL1 Value Fund (11/99; 5/93) -- 2.17 20.26 25.10 -- 21.31
Alliance VP
UGIP3 Growth & Income Portfolio (Class B) -- -- 1.78 21.73 -- 13.95
(--/--; 1/91)
UPRG3 Premier Growth Portfolio (Class B) -- -- 22.44 33.87 -- 24.66
(--/--; 6/92)
UTEC3 Technology Portfolio (Class B) (--/--; -- -- 65.46 -- -- 33.41
1/96)
Evergreen VA
UEGL3 Global Leaders Fund (--/--; 3/97) -- -- 15.10 - -- 15.04
UEGI3 Growth and Income Fund (--/--; 3/96) -- -- 9.02 -- -- 16.95
UEMS3 Masters Fund (--/--; 1/99) -- -- -- -- -- 18.05
UEOM3 Omega Fund (--/--; 3/97) -- -- 37.34 -- -- 24.50
UESC3 Small Cap Value Fund (--/--; 5/98) -- -- 2.61 -- -- -0.72
UESI3 Strategic Income Fund (--/--; 3/97) -- -- -6.92 0.81
Fidelity VIP -- --
PMDC1 III Mid Cap Portfolio (Service Class) -- 11.44 38.88 -- -- 43.00
(11/99; 12/98)
UCOF3 Contrafund(R)Portfolio (Service Class) -- -- 14.54 -- -- 25.56
(--/--; 1/95)
UHIP3 High Income Portfolio (Service Class) -- -- -1.07 8.55 9.68 4.81
(--/--; 9/85)
Franklin Templeton VIP Trust
PSMC1 Franklin Small Cap Fund - Class 2 -- 26.20 95.67 -- -- 29.48
(11/99; 10/95)****
PMSS1 Mutual Shares Securities Fund - Class 2 -- -4.12 4.13 -- -- 7.55
(11/99; 11/96)****
UDMS3 Templeton Developing Markets Securities -- -- 43.30 -- -- -8.34
Fund - Class 2 (--/--; 3/96)+
UINT3 Templeton International Securities Fund -- -- 13.63 14.83 -- 13.74
- Class 2
(--/--; 5/92
MFS(R) VIT
UGRS3 Growth Series - Service Class (--/--; -- -- -- -- -- 30.28
5/99)
PNDS1 New Discovery Series - Service Class -- 22.53 63.25 -- -- 35.10
(11/99; 4/98)
PTRS1 Total Return Series - Service Class -- -7.51 -5.59 -- -- 13.18
(11/99; 1/95)
Putnam Variable Trust
PGIN1 Putnam VT Growth and Income Fund - -- -9.27 -7.03 17.75 12.76 13.90
Class IB Shares (11/99; 2/88)++
UINO3 Putnam VT International New -- -- 92.22 -- -- 46.08
Opportunities Fund - Class IB Shares
(--/--; 4/98)++
UVIS3 Putnam VT Vista Fund - Class IB Shares -- -- 42.72 -- -- 27.95
(--/--; 1/97)++
</TABLE>
* Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 1.10% mortality and expense risk fee, a
0.15% variable account administrative charge and applicable withdrawal
charges. Premium taxes are not reflected in the above total returns.
** (Commencement date of the Subaccount; Commencement date of the Fund)
*** Had not commenced operations as of Dec. 31, 1999.
**** 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.
+ Prior to May 1, 2000, the Templeton International Securities Fund was
called the Templeton International Fund and the Templeton Developing
Markets Securities Fund was called the Templeton Developing Markets Fund.
Class 2 shares were issued May 1, 1997. Prior to May 1, 1997, Class 2
performance represents the historical performance results of Class 1
shares. Performance of Class 2 shares for periods after May 1, 1997 reflect
Class 2's additional 12b-1 fee expense, which also affects all future
performance. Figures assume reinvestment of dividends and capital gains.
++ 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%.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (Without Purchase Payment Credits) For Nonqualified
Annuities Without Withdrawal and Selection of the Maximum Anniversary Value
Death Benefit and Guaranteed Minimum Income Benefit Riders 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 -
UCMG4 Cash Management Fund (10/81)** 2.96% 3.34% 3.13% 4.79%
UFIF4 Federal Income Fund (9/99) -- -- -- -0.25
UMGD4 Managed Fund (4/86) 12.93 16.27 11.65 11.01
UNDM4 New Dimensions Fund(R)(5/96) 29.87 -- -- 24.29
USPF4 S&P 500 Index Fund (--/--)*** -- -- -- --
USCA4 Small Cap Advantage Fund (9/99) -- -- -- 11.90
AIM V.I.
UCAP4 Capital Appreciation Fund (5/93) 42.32 23.54 -- 20.31
UDDT4 Dent Demographic Trends Fund (12/99) -- -- -- -0.42
UVAL4 Value Fund (5/93) 27.81 25.15 -- 21.04
Alliance VP
UGIP4 Growth & Income Portfolio (Class B) 9.36 21.85 -- 13.53
(1/91)
UPRG4 Premier Growth Portfolio (Class B) 30.01 33.80 -- 24.24
(6/92)
UTEC4 Technology Portfolio (Class B) (1/96) 72.99 -- -- 33.71
Evergreen VA
UEGL4 Global Leaders Fund (3/97) 22.68 -- -- 16.52
UEGI4 Growth and Income Fund (3/96) 16.61 -- -- 17.68
UEMS4 Masters Fund (1/99) -- -- -- 25.63
UEOM4 Omega Fund (3/97) 44.89 -- -- 25.71
UESC4 Small Cap Value Fund (5/98) 10.20 -- -- 3.44
UESI4 Strategic Income Fund (3/97) -0.10 -- -- 2.76
Fidelity VIP
UMDC4 III Mid Cap Portfolio (Service 46.58 -- -- 50.60
Class) (12/98)
UCOF4 Contrafund(R)Portfolio (Service 22.11 -- -- 25.61
Class) (1/95)
UHIP4 High Income Portfolio (Service 6.26 8.99 9.27 4.41
Class) (9/85)
Franklin Templeton VIP Trust
USMC4 Franklin Small Cap Fund - Class 2 103.06 -- -- 29.69
(10/95)****
UMSS4 Mutual Shares Securities Fund - 11.69 -- -- 8.98
Class 2 (11/96)****
UDMS4 Templeton Developing Markets 50.85 -- -- -7.10
Securities Fund - Class 2 (3/96)+
UINT4 Templeton International Securities 21.21 15.09 -- 13.33
Fund - Class 2 (5/92)+
MFS(R) VIT
UGRS4 Growth Series - Service Class (5/99) -- -- -- 37.89
UNDS4 New Discovery Series - Service Class 67.66 -- -- 37.01
(4/98)
UTRS4 Total Return Series - Service Class 1.33 -- -- 13.49
(1/95)
Putnam Variable Trust
UGIN4 Putnam VT Growth and Income Fund - -0.33 17.90 12.33 13.47
Class IB Shares (2/88)++
UINO4 Putnam VT International New 99.71 -- -- 49.32
Opportunities Fund - Class IB Shares
(4/98)++
UVIS4 Putnam VT Vista Fund - Class IB 50.27 -- -- 28.93
Shares (1/97)++
</TABLE>
* Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 1.10% mortality and expense risk fee, a
0.15% variable account administrative charge, a 0.10% Maximum Anniversary
Value Death Benefit Rider fee and a 0.30% Guaranteed Minimum Income Benefit
Rider fee. Premium taxes are not reflected in the above total returns.
** (Commencement date of the Fund)
*** Had not commenced operations as of Dec. 31, 1999.
**** 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.
+ Prior to May 1, 2000, the Templeton International Securities Fund was
called the Templeton International Fund and the Templeton Developing
Markets Securities Fund was called the Templeton Developing Markets Fund.
Class 2 shares were issued May 1, 1997. Prior to May 1, 1997, Class 2
performance represents the historical performance results of Class 1
shares. Performance of Class 2 shares for periods after May 1, 1997 reflect
Class 2's additional 12b-1 fee expense, which also affects all future
performance. Figures assume reinvestment of dividends and capital gains.
++ 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%.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (Without Purchase Payment Credits) For Nonqualified
Annuities With Withdrawal and Selection of the Maximum Anniversary Value Death
Benefit and Guaranteed Minimum Income Benefit Riders 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 -
UCMG4 Cash Management Fund (10/81)** -4.48% 2.19% 3.13% 4.77%
UFIF4 Federal Income Fund (9/99) -- -- -- -7.73
UMGD4 Managed Fund (4/86) 4.93 15.53 11.65 10.98
UNDM4 New Dimensions Fund(R)(5/96) 21.87 -- -- 23.10
USPF4 S&P 500 Index Fund (--/--)*** -- -- -- --
USCA4 Small Cap Advantage Fund (9/99) -- -- -- 3.57
AIM V.I.
UCAP4 Capital Appreciation Fund (5/93) 34.32 22.94 -- 20.10
UDDT4 Dent Demographic Trends Fund (12/99) -- -- -- -7.88
UVAL4 Value Fund (5/93) 19.81 24.59 -- 20.83
Alliance VP
UGIP4 Growth & Income Portfolio (Class B) 1.41 21.22 -- 13.50
(1/91)
UPRG4 Premier Growth Portfolio (Class B) 22.01 33.35 -- 24.19
(6/92)
UTEC4 Technology Portfolio (Class B) (1/96) 64.99 -- -- 32.86
Evergreen VA
UEGL4 Global Leaders Fund (3/97) 14.68 -- -- 14.49
UEGI4 Growth and Income Fund (3/96) 8.61 -- -- 16.42
UEMS4 Masters Fund (1/99) -- -- -- 17.26
UEOM4 Omega Fund (3/97) 36.89 -- -- 23.92
UESC4 Small Cap Value Fund (5/98) 2.20 -- -- -1.30
UESI4 Strategic Income Fund (3/97) -7.29 -- -- 0.31
Fidelity VIP
UMDC4 III Mid Cap Portfolio (Service 38.58 -- -- 42.25
Class) (12/98)
UCOF4 Contrafund(R)Portfolio (Service 14.11 -- -- 25.05
Class) (1/95)
UHIP4 High Income Portfolio (Service -1.44 8.06 9.27 4.39
Class) (9/85)
Franklin Templeton VIP Trust
USMC4 Franklin Small Cap Fund - Class 2 95.06 -- -- 28.96
(10/95)****
UMSS4 Mutual Shares Securities Fund - 3.69 -- -- 7.00
Class 2 (11/96)****
UDMS4 Templeton Developing Markets 42.85 -- -- -8.81
Securities Fund - Class 2 (3/96)+
UINT4 Templeton International Securities 13.21 14.33 -- 13.28
Fund - Class 2 (5/92)+
MFS(R) VIT
UGRS4 Growth Series - Service Class (5/99) -- -- -- 29.48
UNDS4 New Discovery Series - Service Class 59.66 -- -- 32.86
(4/98)
UTRS4 Total Return Series - Service Class -5.97 -- -- 12.68
(1/95)
Putnam Variable Trust
UGIN4 Putnam VT Growth and Income Fund - -7.50 17.20 12.33 13.44
Class IB Shares (2/88)++
UINO4 Putnam VT International New 91.71 -- -- 45.35
Opportunities Fund - Class IB Shares
(4/98)++
UVIS4 Putnam VT Vista Fund - Class IB 42.27 -- -- 27.38
Shares (1/97)++
</TABLE>
* Current applicable charges deducted from fund performance include a $40
contract administrative charge, a 1.10% mortality and expense risk fee, a
0.15% variable account administrative charge, a 0.10% Maximum Anniversary
Value Death Benefit Rider fee, a 0.30% Guaranteed Minimum Income Benefit
Rider fee and applicable withdrawal charges. Premium taxes are not
reflected in the above total returns.
** (Commencement date of the Fund)
*** Had not commenced operations as of Dec. 31, 1999.
**** 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.
+ Prior to May 1, 2000, the Templeton International Securities Fund was
called the Templeton International Fund and the Templeton Developing
Markets Securities Fund was called the Templeton Developing Markets Fund.
Class 2 shares were issued May 1, 1997. Prior to May 1, 1997, Class 2
performance represents the historical performance results of Class 1
shares. Performance of Class 2 shares for periods after May 1, 1997 reflect
Class 2's additional 12b-1 fee expense, which also affects all future
performance. Figures assume reinvestment of dividends and capital gains.
++ 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%.
<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 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 return described above, which we then
compound according to the following formula:
Compound Yield = [(Base Period Return + 1)365/7] - 1
Annualized Yield Based on the Seven Day Period Ended Dec. 31, 1999
Subaccount Investing In Simple Yield Compound Yield
PCMG1 AXPSM Variable Portfolio - 4.62% 4.73%
Cash Management Fund
<PAGE>
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.
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.
<PAGE>
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 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, the variable account administration charge and the Enhanced Death
Benefit Rider fee (if selected) 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.
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
<PAGE>
American Enterprise Variable Annuity Account - American Express New Solutions
Variable Annuity (SM)
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 PCMG1, PMGD1, PNDM1, PSCA1, PCAP1, PVAL1, PMDC1,
PSMC1, PMSS1, PNDS1, PTRS1 and PGIN1) as of December 31, 1999, and the related
statements of operations and 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.
/s/ Ernst & Young
Ernst & Young LLP
Minneapolis, Minnesota
March 17, 2000
<PAGE>
<TABLE>
<CAPTION>
American Enterprise Variable Annuity Account -- American Express New Solutions
Variable Annuity (SM)
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets PCMG1 PMGD1 PNDM1 PSCA1 PCAP1 PVAL1
Investments in shares of mutual funds and
portfolios:
<S> <C> <C> <C> <C> <C> <C>
at cost $ 261 $ 273 $ 262 $ 261 $ 266 $ 264
----- ----- ----- ----- ----- -----
at market value $ 261 $ 279 $ 296 $ 282 $ 317 $ 287
Dividends receivable 1 -- -- -- -- --
- -- --- --- --- ---
Total assets 262 279 296 282 317 287
=== === === === === ===
Net assets applicable to contracts in
accumulation period $ 262 $ 279 $ 296 $ 282 $ 317 $ 287
===== ===== ===== ===== ===== =====
Accumulation units outstanding 260 259 257 254 251 258
=== === === === === ===
Net asset value per accumulation unit $1.01 $1.08 $1.15 $1.11 $1.26 $1.11
===== ===== ===== ===== ===== =====
Combined
Variable
Assets PMDC1 PSMC1 PMSS1 PNDS1 PTRS1 PGIN1 Account
Investments in shares of mutual funds and
portfolios:
at cost $ 196 $ 260 $ 260 $ 265 $ 260 $ 260 $ 3,088
----- ----- ----- ----- ----- ----- -------
at market value $ 233 $ 349 $ 269 $ 339 $ 259 $ 254 $ 3,425
Dividends receivable -- -- -- -- -- -- 1
--- ---- ---- ---- ---- ---- -----
Total assets 233 349 269 339 259 254 3,426
=== === === === === === =====
Net assets applicable to contracts in
accumulation period $ 233 $ 349 $ 269 $ 339 $ 259 $ 254 $ 3,426
===== ===== ===== ===== ===== ===== =======
Accumulation units outstanding 188 243 260 238 259 262
=== === === === === ===
Net asset value per accumulation unit $1.24 $1.43 $1.03 $1.43 $1.00 $0.97
===== ===== ===== ===== ===== =====
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Enterprise Variable Annuity Account -- American Express New Solutions
Variable Annuity (SM)
Statements of Operations
Period ended December 31, 1999
Segregated Asset Subaccounts
Investment income PCMG11 PMGD11 PNDM11 PSCA11 PCAP12 PVAL12
Dividend income from mutual funds and
<S> <C> <C> <C> <C> <C> <C>
portfolios $ 2 $ 13 $ 2 $ 2 $ 7 $ 5
Mortality and expense risk fee 1 1 1 1 1 1
- - - - - -
Investment income (loss) - net 1 12 1 1 6 4
= == = = = =
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales -- -- -- -- -- --
Cost of investments sold -- -- -- -- -- --
--- --- --- --- --- ---
Net realized gain (loss) on investments -- -- -- -- -- --
Net change in unrealized appreciation or
depreciation of investments -- 6 34 21 51 23
--- - -- -- -- --
Net gain (loss) on investments -- 6 34 21 51 23
--- - -- -- -- --
Net increase (decrease) in net assets
resulting from operations $ 1 $18 $ 35 $ 22 $ 57 $ 27
=== === ==== ==== ==== ====
1For the period Nov. 10, 1999 (commencement of operations) to Dec. 31, 1999.
2For the period Nov. 9, 1999 (commencement of operations) to Dec. 31, 1999.
Combined
Variable
Investment income PMDC1 PSMC1 PMSS1 PNDS1 PTRS1 PGIN1 Account
Dividend income from mutual funds and
portfolios $ 1 $-- $-- $ 6 $-- $-- $ 38
Mortality and expense risk fee -- -- -- 1 -- -- 7
--- --- --- - --- --- -
Investment income (loss) - net 1 -- -- 5 -- -- 31
= === === == === === ===
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales -- -- -- -- -- -- --
Cost of investments sold -- -- -- -- -- -- --
--- --- --- --- --- --- ---
Net realized gain (loss) on investments -- -- -- -- -- -- --
Net change in unrealized appreciation or
depreciation of investments 37 89 9 74 (1) (6) 337
-- -- - -- -- -- ---
Net gain (loss) on investments 37 89 9 74 (1) (6) 337
-- -- - -- -- -- ---
Net increase (decrease) in net assets
resulting from operations $ 38 $ 89 $ 9 $ 79 $ (1) $ (6) $ 368
==== ==== === ==== ==== ==== =====
1For the period Nov. 9, 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 New Solutions Variable AnnuitySM
Statements of Changes in Net Assets
Period ended December 31, 1999
Segregated Asset Subaccounts
Operations PCMG11 PMGD11 PNDM11 PSCA11 PCAP12 PVAL12
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 1 $ 12 $ 1 $ 1 $ 6 $ 4
Net change in unrealized appreciation or
depreciation of investments -- 6 34 21 51 23
--- - -- -- -- --
Net increase (decrease) in net assets
resulting from operations 1 18 35 22 57 27
= == == == == ==
Contract transactions
Contract purchase payments 261 261 261 260 260 260
--- --- --- --- --- ---
Net assets at beginning of year -- -- -- -- -- --
--- --- --- --- --- ---
Net assets at end of year $ 262 $ 279 $ 296 $ 282 $ 317 $ 287
===== ===== ===== ===== ===== =====
Accumulation unit activity
Units outstanding at beginning of year -- -- -- -- -- --
Contract purchase payments 260 259 257 254 251 258
--- --- --- --- --- ---
Units outstanding at end of year 260 259 257 254 251 258
=== === === === === ===
1For the period Nov. 10, 1999 (commencement of operations) to Dec. 31, 1999.
2For the period Nov. 9, 1999 (commencement of operations) to Dec. 31, 1999.
Combined
Variable
Operations PMDC1 PSMC1 PMSS1 PNDS1 PTRS1 PGIN1 Accounts
Investment income (loss) - net $ 1 $-- $-- $ 5 $-- $-- $ 31
Net change in unrealized appreciation or
deprciation of investments 37 89 9 74 (1) (6) 337
-- -- - -- -- -- ---
Net increase (decrease) in net assets
resulting from operations 38 89 9 79 (1) (6) 368
== == = == == == ===
Contract transactions
Contract purchase payments 195 260 260 260 260 260 3,058
--- --- --- --- --- --- -----
Net assets at beginning of year -- -- -- -- -- -- --
--- --- --- --- --- --- -----
Net assets at end of year $ 233 $ 349 $ 269 $ 339 $ 259 $ 254 $ 3,426
===== ===== ===== ===== ===== ===== =======
Accumulation unit activity
Units outstanding at beginning of year -- -- -- -- -- --
Contract purchase payments 188 243 260 238 259 262
--- --- --- --- --- ---
Units outstanding at end of year 188 243 260 238 259 262
=== === === === === ===
1For the period Nov. 9, 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 New Solutions
Variable Annuity (SM)
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
PCMG1 AXPSM Variable Portfolio-- Cash Management Fund IDS Life Insurance Company 1
PMGD1 AXPSM Variable Portfolio-- Managed Fund IDS Life Insurance Company 1
PNDM1 AXPSM Variable Portfolio-- New Dimensions Fund(R) IDS Life Insurance Company 1
PSCA1 AXPSM Variable Portfolio-- Small Cap Advantage Fund IDS Life Insurance Company 2
PCAP1 AIM V.I. Capital Appreciation Fund A I M Advisors, Inc.
PVAL1 AIM V.I. Value Fund A I M Advisors, Inc.
PMDC1 Fidelity VIP Mid Cap Portfolio - Service Class FMR 3
PSMC1 FTVIPT Franklin Small Cap Fund - Class 2 Franklin Advisers, Inc.
PMSS1 FTVIPT Mutual Shares Securities Fund - Class 2 Franklin Mutual Advisers, LLC
PNDS1 MFS(R)New Discovery Series MFS Investment Management(R)
PTRS1 MFS(R)Total Return Series MFS Investment Management(R)
PGIN1 Putnam VT Growth and Income Fund - Class IB Shares Putnam Investment Management, Inc.
1 American Express Financial Corporation (AEFC) is the investment advisor.
2 AEFC is the investment advisor. Kenwood Capital Management LLC is the
sub-investment advisor.
3 FMR U.K. and FMR Far East 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 either 0.85% or 1.10% of the average
daily net assets of the subaccounts, depending on whether the contract is
qualified or non-qualified.
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 $40 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 $40 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. 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>
PCMG1 AXPSM Variable Portfolio-- Cash Management Fund 261 1.00
PMGD1 AXPSM Variable Portfolio-- Managed Fund 14 19.82
PNDM1 AXPSM Variable Portfolio-- New Dimensions Fund(R) 13 22.86
PSCA1 AXPSM Variable Portfolio-- Small Cap Advantage Fund 25 11.13
PCAP1 AIM V.I. Capital Appreciation Fund 9 35.58
PVAL1 AIM V.I. Value Fund 9 33.50
PMDC1 Fidelity VIP Mid Cap Portfolio - Service Class 15 15.24
PSMC1 FTVIPT Franklin Small Cap Fund - Class 2 13 26.79
PMSS1 FTVIPT Mutual Shares Securities Fund - Class 2 20 13.25
PNDS1 MFS(R)New Discovery Series 20 17.27
PTRS1 MFS(R)Total Return Series 15 17.75
PGIN1 Putnam VT Growth and Income Fund - Class IB Shares 9 26.75
</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
<S> <C> <C>
PCMG11 AXPSM Variable Portfolio-- Cash Management Fund $261
PMGD11 AXPSM Variable Portfolio-- Managed Fund 273
PNDM11 AXPSM Variable Portfolio-- New Dimensions Fund(R) 262
PSCA11 AXPSM Variable Portfolio-- Small Cap Advantage Fund 261
PCAP12 AIM V.I. Capital Appreciation Fund 266
PVAL12 AIM V.I. Value Fund 264
PMDC12 Fidelity VIP Mid Cap Portfolio - Service Class 196
PSMC12 FTVIPT Franklin Small Cap Fund - Class 2 260
PMSS12 FTVIPT Mutual Shares Securities Fund - Class 2 260
PNDS12 MFS(R)New Discovery Series 265
PTRS12 MFS(R)Total Return Series 260
PGIN12 Putnam VT Growth and Income Fund - Class IB Shares 260
Combined Variable Account $3,088
</TABLE>
1 Operations commenced on Nov. 10, 1999.
2 Operations commenced on Nov. 9, 1999.
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 the 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.
