The prospectus containing information for the Wells Fargo Advantage(SM) Builder
Variable Annuity filed electronically in Registrant's Post-Effective Amendment
No. 1 to Registration Statement No. 333-82149 on Form N-4, filed on or about
April 27, 2000, is incorporated by reference.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
WELLS FARGO ADVANTAGESM BUILDER VARIABLE ANNUITY
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 Annuities
Without Withdrawal and Selection of the Six-Year Withdrawal Charge Schedule 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)** --% --% --% 10.78%
WCAR3 Capital Resource Fund (10/81) 21.84 19.48 13.72 14.20
WDEI3 Diversified Equity Income Fund (9/99) -- -- -- 2.34
WEXI3 Extra Income Fund (5/96) 4.59 -- -- 3.88
WFDI3 Federal Income Fund (9/99) -- -- -- 0.00
WNDM3 New Dimensions Fund(R)(5/96) 29.97 -- -- 24.40
WSCA3 Small Cap Advantage Fund (9/99) -- -- -- 12.15
AIM V.I.
WCAP3 Capital Appreciation Fund (5/93) 42.45 23.66 -- 20.44
WVAL3 Value Fund (5/93) 27.93 25.27 -- 21.16
Dreyfus
WSRG3 The Dreyfus Socially Responsible Growth 28.12 26.72 -- 22.30
Fund, Inc. (10/93)
FRANKLIN TEMPLETON VIP TRUST
WISE3 Franklin Income Securities Fund - Class 2 -3.60 7.98 8.27 8.24
(1/89)***
WRES3 Franklin Real Estate Fund - Class 2 -7.83 6.30 7.32 6.98
(1/89)***
WSMC3 Franklin Small Cap Fund - Class 2 (11/95)*** 103.20 -- -- 31.54
WMSS3 Mutual Shares Securities Fund - Class 2 11.84 -- -- 9.13
(11/96)***
GOLDMAN SACHS Variable Insurance Trust (VIT)
WUSE3 CORESM U.S. Equity Fund (2/98)**** 22.40 -- -- 18.87
WGLI3 Global Income Fund (1/98) -2.56 -- -- 1.98
SITO2 Internet Tollkeeper Fund (4/00)+ -- -- --
--
WMCV3 Mid Cap Value Fund (4/98) 4.60 -- -- -6.45
MFS(R)
WGIS3 Growth with Income Series (10/95) 5.04 -- -- 19.22
WUTS3 Utilities Series (1/95) 28.83 -- -- 24.53
PUTNAM VARIABLE TRUST
WIGR3 Putnam VT International Growth Fund - Class 57.66 -- -- 28.13
IB Shares (1/97)++
WVIS3 Putnam VT Vista Fund - Class IB Shares 50.40 -- -- 29.07
(1/97)++
WELLS FARGO VARIABLE TRUST
WAAL3 Asset Allocation Fund (4/94) 7.64 10.77 -- 9.17
WCBD3 Corporate Bond Fund (9/99) -- -- -- -0.65
WEQI3 Equity Income Fund (5/96) 6.24 -- -- 15.35
WEQV3 Equity Value Fund (5/98) -4.00 -- -- -5.24
WGRO3 Growth Fund (4/94) 18.58 21.67 -- 19.37
WLCG3 Large Company Growth Fund (9/99) -- -- -- 19.76
WMMK3 Money Market Fund (5/94) 2.84 3.25 -- 3.20
WSCG3 Small Cap Growth Fund (5/95) 63.82 -- -- 18.76
</TABLE>
*Current applicable charges deducted from fund performance include a $30
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
the above 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.
****CORESM is a service mark of Goldman, Sachs & Co.
+Fund had not commenced operations as of Dec. 31, 1999.
++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 For Annuities (Without Purchase Payment Credits)
With Withdrawal and Selection of the Six-Year Withdrawal Charge Schedule 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)** --% --% --% 3.11%
WCAR3 Capital Resource Fund (10/81) 13.84 19.09 13.72 14.20
WDEI3 Diversified Equity Income Fund (9/99) -- -- -- -4.65
WEXI3 Extra Income Fund (5/96) -2.57 -- -- 2.40
WFDI3 Federal Income Fund (9/99) -- -- -- -6.80
WNDM3 New Dimensions Fund(R)(5/96) 21.97 -- -- 23.48
WSCA3 Small Cap Advantage Fund (9/99) -- -- -- 4.38
AIM V.I.
WCAP3 Capital Appreciation Fund (5/93) 42.45 23.66 -- 20.44
WVAL3 Value Fund (5/93) 27.93 25.27 -- 21.16
Dreyfus
WSRG3 The Dreyfus Socially Responsible Growth 20.12 26.40 -- 22.30
Fund, Inc. (10/93)
FRANKLIN TEMPLETON VIP TRUST
WISE3 Franklin Income Securities Fund - Class 2 -10.11 7.39 8.27 8.24
(1/89)***
WRES3 Franklin Real Estate Fund - Class 2 -14.00 5.67 7.32 6.98
(1/89)***
WSMC3 Franklin Small Cap Fund - Class 2 (11/95)*** 95.20 -- -- 31.12
WMSS3 Mutual Shares Securities Fund - Class 2 4.09 -- -- 7.54
(11/96)***
GOLDMAN SACHS Variable Insurance Trust (VIT)
WUSE3 CORESM U.S. Equity Fund (2/98)**** 14.40 -- -- 15.16
WGLI3 Global Income Fund (1/98) -9.15 -- -- -1.58
SITO2 Internet Tollkeeper Fund (4/00)+ -- -- --
--
WMCV3 Mid Cap Value Fund (4/98) -2.57 -- -- -10.29
MFS(R)
WGIS3 Growth with Income Series (10/95) -2.16 -- -- 18.68
WUTS3 Utilities Series (1/95) 20.83 -- -- 24.19
PUTNAM VARIABLE TRUST
WIGR3 Putnam VT International Growth Fund - Class 49.66 -- -- 26.48
IB Shares (1/97)++
WVIS3 Putnam VT Vista Fund - Class IB Shares 42.40 -- -- 27.44
(1/97)++
WELLS FARGO VARIABLE TRUST
WAAL3 Asset Allocation Fund (4/94) 0.23 10.24 -- 8.94
WCBD3 Corporate Bond Fund (9/99) -- -- -- -7.40
WEQI3 Equity Income Fund (5/96) -1.06 -- -- 14.21
WEQV3 Equity Value Fund (5/98) -10.48 -- -- -9.09
WGRO3 Growth Fund (4/94) 10.58 21.30 -- 19.21
WLCG3 Large Company Growth Fund (9/99) -- -- -- 11.76
WMMK3 Money Market Fund (5/94) -4.19 2.54 -- 2.89
WSCG3 Small Cap Growth Fund (5/95) 55.82 -- -- 18.30
</TABLE>
*Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 1.35% mortality and expense risk fee, a 0.15%
variable account administrative charge and applicable withdrawal charges
associated with the six-year withdrawal charge schedule. Premium taxes are not
reflected in the above 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.
****CORESM is a service mark of Goldman, Sachs & Co.
+Fund had not commenced operations as of Dec. 31, 1999.
++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 Annuities
Without Withdrawal and Selection of the Six-Year Withdrawal Charge Schedule and
the Optional Enhanced 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 -
WBCA1 Blue Chip Advantage Fund (9/99)** --% --% --% 10.71%
WCAR1 Capital Resource Fund (10/81) 21.60 19.24 13.50 13.97
WDEI1 Diversified Equity Income Fund (9/99) -- -- -- 2.28
WEXI1 Extra Income Fund (5/96) 4.39 -- -- 3.67
WFDI1 Federal Income Fund (9/99) -- -- -- -0.06
WNDM1 New Dimensions Fund(R)(5/96) 29.71 -- -- 24.15
WSCA1 Small Cap Advantage Fund (9/99) -- -- -- 12.08
AIM V.I.
WCAP1 Capital Appreciation Fund (5/93) 42.17 23.41 -- 20.20
WVAL1 Value Fund (5/93) 27.67 25.02 -- 20.92
Dreyfus
WSRG1 The Dreyfus Socially Responsible Growth 27.87 26.47 -- 22.06
Fund, Inc. (10/93)
FRANKLIN TEMPLETON VIP TRUST
WISE1 Franklin Income Securities Fund - Class 2 -3.79 7.76 8.05 8.02
(1/89)***
WRES1 Franklin Real Estate Fund - Class 2 -8.01 6.09 7.10 6.77
(1/89)***
WSMC1 Franklin Small Cap Fund - Class 2 (11/95)*** 102.82 -- -- 31.28
WMSS1 Mutual Shares Securities Fund - Class 2 11.62 -- -- 8.91
(11/96)***
GOLDMAN SACHS Variable Insurance Trust (VIT)
WUSE1 CORESM U.S. Equity Fund (2/98)**** 22.16 -- -- 18.63
WGLI1 Global Income Fund (1/98) -2.75 -- -- 1.78
WITO2 Internet Tollkeeper Fund (4/00)+ -- -- --
--
WMCV1 Mid Cap Value Fund (4/98) 4.38 -- -- -6.64
MFS(R)
WGIS1 Growth with Income Series (10/95) 4.83 -- -- 18.98
WUTS1 Utilities Series (1/95) 28.58 -- -- 24.29
PUTNAM VARIABLE TRUST
WIGR1 Putnam VT International Growth Fund - Class 57.35 -- -- 27.88
IB Shares (1/97)++
WVIS1 Putnam VT Vista Fund - Class IB Shares 50.11 -- -- 28.82
(1/97)++
WELLS FARGO VARIABLE TRUST
WAAL1 Asset Allocation Fund (4/94) 7.43 10.55 -- 8.96
WCBD1 Corporate Bond Fund (9/99) -- -- -- -0.71
WEQI1 Equity Income Fund (5/96) 6.02 -- -- 15.12
WEQV1 Equity Value Fund (5/98) -4.20 -- -- -5.43
WGRO1 Growth Fund (4/94) 18.34 21.43 -- 19.13
WLCG1 Large Company Growth Fund (9/99) -- -- -- 19.70
WMMK1 Money Market Fund (5/94) 2.63 3.05 -- 2.99
WSCG1 Small Cap Growth Fund (5/95) 63.50 -- -- 18.53
</TABLE>
*Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 1.35% mortality and expense risk fee, a 0.15%
variable account administrative charge, a 0.20% Enhanced 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)
***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.
****CORESM is a service mark of Goldman, Sachs & Co.
+Fund had not commenced operations as of Dec. 31, 1999.
++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 Annuities
With Withdrawal and Selection of the Six-Year Withdrawal Charge Schedule and the
Optional Enhanced 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 -
WBCA1 Blue Chip Advantage Fund (9/99)** --% --% --% 2.72%
WCAR1 Capital Resource Fund (10/81) 13.60 18.77 13.50 13.95
WDEI1 Diversified Equity Income Fund (9/99) -- -- -- -4.71
WEXI1 Extra Income Fund (5/96) -2.77 -- -- 2.11
WFDI1 Federal Income Fund (9/99) -- -- -- -6.85
WNDM1 New Dimensions Fund(R)(5/96) 21.71 -- -- 23.12
WSCA1 Small Cap Advantage Fund (9/99) -- -- -- 3.98
AIM V.I.
WCAP1 Capital Appreciation Fund (5/93) 34.17 22.99 -- 20.14
WVAL1 Value Fund (5/93) 19.67 24.61 -- 20.86
Dreyfus
WSRG1 The Dreyfus Socially Responsible Growth 19.87 26.08 -- 22.00
Fund, Inc. (10/93)
FRANKLIN TEMPLETON VIP TRUST
WISE1 Franklin Income Securities Fund - Class 2 -10.29 7.10 8.05 7.99
(1/89)***
WRES1 Franklin Real Estate Fund - Class 2 -14.17 5.38 7.10 6.74
(1/89)***
WSMC1 Franklin Small Cap Fund - Class 2 (11/95)*** 94.82 -- -- 30.76
WMSS1 Mutual Shares Securities Fund - Class 2 3.89 -- -- 7.21
(11/96)***
GOLDMAN SACHS Variable Insurance Trust (VIT)
WUSE1 CORESM U.S. Equity Fund (2/98)**** 14.16 -- -- 14.72
WGLI1 Global Income Fund (1/98) -9.33 -- -- -1.95
WITO2 Internet Tollkeeper Fund (4/00)+ -- -- --
--
WMCV1 Mid Cap Value Fund (4/98) -2.77 -- -- -10.68
MFS(R)
WGIS1 Growth with Income Series (10/95) -2.35 -- -- 18.36
WUTS1 Utilities Series (1/95) 20.58 -- -- 23.87
PUTNAM VARIABLE TRUST
WIGR1 Putnam VT International Growth Fund - Class 49.35 -- -- 26.09
IB Shares (1/97)++
WVIS1 Putnam VT Vista Fund - Class IB Shares 42.11 -- -- 27.05
(1/97)++
WELLS FARGO VARIABLE TRUST
WAAL1 Asset Allocation Fund (4/94) 0.03 9.94 -- 8.67
WCBD1 Corporate Bond Fund (9/99) -- -- -- -7.75
WEQI1 Equity Income Fund (5/96) -1.26 -- -- 13.88
WEQV1 Equity Value Fund (5/98) -10.66 -- -- -9.48
WGRO1 Growth Fund (4/94) 10.34 20.98 -- 18.91
WLCG1 Large Company Growth Fund (9/99) -- -- -- 11.34
WMMK1 Money Market Fund (5/94) -4.38 2.26 -- 2.62
WSCG1 Small Cap Growth Fund (5/95) 55.50 -- -- 17.98
</TABLE>
*Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 1.35% mortality and expense risk fee, a 0.15%
variable account administrative charge, a 0.20% Enhanced Death Benefit Rider
fee, a 0.30% Guaranteed Minimum Income Benefit Rider fee and applicable
withdrawal charges associated with the six-year withdrawal charge schedule.
Premium taxes are not reflected in the above 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.
****CORESM is a service mark of Goldman, Sachs & Co.
+Fund had not commenced operations as of Dec. 31, 1999.
++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 Annuities
Without Withdrawal and Selection of the Eight-Year Withdrawal Charge Schedule
For Periods Ending Dec. 31, 1999
Performance Since Performance Since Commencement
Commencement of the of the Fund*
Subaccount
Since Since
Subaccount Investing In: 1 Year Commencement 1 Year 5 Years 10 Years Commencement
---------- ------------- ------ ------------ ------ ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
AXPSM VARIABLE PORTFOLIO -
PBCA1 Blue Chip Advantage Fund (11/99;9/99)** --% 8.10% --% --% --% 10.49%
WCAR6 Capital Resource Fund (--/--;10/81) -- -- 22.14 19.78 14.01 14.48
PDEI1 Diversified Equity Income Fund (11/99;9/99) -- 2.49 -- -- -- 1.77
PEXI1 Extra Income Fund (11/99;5/96) -- 2.49 4.86 -- -- 4.14
WFDI6 Federal Income Fund (--/--;9/99) -- -- -- -- -- 0.08
PNDM1 New Dimensions Fund(R)(11/99;5/96) -- 13.86 30.30 -- -- 24.71
PSCA1 Small Cap Advantage Fund (11/99;9/99) -- 8.45 -- -- -- 12.24
AIM V.I.
PCAP1 Capital Appreciation Fund (11/99;5/93) -- 21.73 42.81 23.97 -- 20.74
PVAL1 Value Fund (11/99;5/93) -- 10.09 28.25 25.58 -- 21.46
Dreyfus
WSRG6 The Dreyfus Socially Responsible Growth Fund, -- -- 28.43 27.03 -- 22.60
Inc.
(--/--;10/93)
FRANKLIN TEMPLETON VIP TRUST
WISE6 Franklin Income Securities Fund - Class 2 -- -- -3.36 8.25 8.54 8.51
(--/--;1/89)***
WRES6 Franklin Real Estate Fund - Class 2 -- -- -7.60 6.57 7.58 7.25
(--/--;1/89)***
PSMC1 Franklin Small Cap Fund - Class 2 -- 34.15 103.69 -- -- 31.86
(11/99;11/95)***
WMSS6 Mutual Shares Securities Fund - Class 2 -- -- 12.12 -- -- 9.40
(--/--;11/96)***
GOLDMAN SACHS Variable Insurance Trust (VIT)
WUSE6 CORESM U.S. Equity Fund (--/--;2/98)**** -- -- 22.70 -- -- 19.16
WGLI6 Global Income Fund (--/--;1/98) -- -- -2.31 -- -- 2.24
WITO6 Internet Tollkeeper Fund (--/--;4/00)+ -- -- -- -- -- --
WMCV6 Mid Cap Value Fund (--/--;4/98) -- -- 4.86 -- -- -6.21
MFS(R)
PGIS1 Growth with Income Series (11/99;10/95) -- 5.40 5.30 -- -- 19.52
PUTS1 Utilities Series (11/99;1/95) -- 11.65 29.15 -- -- 24.84
PUTNAM VARIABLE TRUST
PIGR1 Putnam VT International Growth Fund - Class IB -- 24.49 58.04 -- -- 28.45
Shares (11/99;1/97)++
PVIS1 Putnam VT Vista Fund - Class IB Shares -- 26.42 50.77 -- -- 29.39
(11/99;1/97)++
WELLS FARGO VARIABLE TRUST
WAAL6 Asset Allocation Fund (--/--;4/94) -- -- 7.91 11.05 -- 9.45
WCBD6 Corporate Bond Fund (--/--;9/99) -- -- -- -- -- -0.58
WEQI6 Equity Income Fund (--/--;5/96) -- -- 6.50 -- -- 15.63
WEQV6 Equity Value Fund (--/--;5/98) -- -- -3.76 -- -- -5.00
WGRO6 Growth Fund (--/--;4/94) -- -- 18.87 21.97 -- 19.66
WLCG6 Large Company Growth Fund (--/--;9/99) -- -- -- -- -- 19.84
WMMK6 Money Market Fund (--/--;5/94) -- -- 3.09 3.51 -- 3.46
WSCG6 Small Cap Growth Fund (--/--;5/95) -- -- 64.21 -- -- 19.06
</TABLE>
*Current applicable charges deducted from fund performance include a $30
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)
***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.
****CORESM is a service mark of Goldman, Sachs & Co.
+Fund had not commenced operations as of Dec. 31, 1999.
++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 Annuities
With Withdrawal and Selection of the Eight-Year Withdrawal Charge Schedule For
Periods Ending Dec. 31, 1999
Performance Since
Commencement of the Performance Since Commencement of the
Subaccount Fund*
Since Since
Subaccount Investing In: 1 Year Commencement 1 Year 5 Years 10 Years Commencement
---------- ------------- ------ ------------ ------ ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
AXPSM VARIABLE PORTFOLIO -
PBCA1 Blue Chip Advantage Fund (11/99;9/99)** --% 0.72% --% --% --% 3.19%
WCAR6 Capital Resource Fund (--/--;10/81) -- -- 14.14 18.99 14.01 14.48
PDEI1 Diversified Equity Income Fund (11/99;9/99) -- -4.45 -- -- -- -5.17
PEXI1 Extra Income Fund (11/99;5/96) -- -4.45 -2.33 -- -- 2.16
WFDI6 Federal Income Fund (--/--;9/99) -- -- -- -- -- -6.72
WFDI6
PNDM1 New Dimensions Fund(R)(11/99;5/96) -- 6.01 22.30 -- -- 23.49
PSCA1 Small Cap Advantage Fund (11/99;9/99) 1.04 -- -- -- 4.46
--
AIM V.I.
PCAP1 Capital Appreciation Fund (11/99;5/93) -- 13.80 34.81 23.28 -- 20.53
PVAL1 Value Fund (11/99;5/93) -- 2.55 20.25 24.93 -- 21.26
Dreyfus
WSRG6 The Dreyfus Socially Responsible Growth Fund, -- -- 20.43 26.41 -- 22.38
Inc.
(--/--;10/93)
FRANKLIN TEMPLETON VIP TRUST
WISE6 Franklin Income Securities Fund - Class 2 -- -- -9.89 7.06 8.54 8.51
(--/--;1/89)***
WRES6 Franklin Real Estate Fund - Class 2 -- -- -13.79 5.30 7.58 7.25
(--/--;1/89)***
PSMC1 Franklin Small Cap Fund - Class 2 -- 26.21 95.69 -- -- 31.02
(11/99;11/95)***
WMSS6 Mutual Shares Securities Fund - Class 2 -- -- 4.35 -- -- 7.28
(--/--;11/96)***
GOLDMAN SACHS Variable Insurance Trust (VIT)
WUSE6 CORESM U.S. Equity Fund (--/--;2/98)**** -- -- 14.70 -- -- 15.46
WGLI6 Global Income Fund (--/--;1/98) -- -- -8.93 -- -- -1.34
WITO6 Internet Tollkeeper Fund (--/--;4/00)+ -- -- -- -- -- --
WMCV6 Mid Cap Value Fund (--/--;4/98) -- -- -2.33 -- -- -10.06
MFS(R)
PGIS1 Growth with Income Series (11/99;10/95) -- -1.77 -1.92 -- -- 18.44
PUTS1 Utilities Series (11/99;1/95) -- 3.98 21.15 -- -- 24.17
PUTNAM VARIABLE TRUST
PIGR1 Putnam VT International Growth Fund - Class -- 16.55 50.04 -- -- 26.80
IB Shares (11/99;1/97)++
PVIS1 Putnam VT Vista Fund - Class IB Shares -- 18.48 42.77 -- -- 27.77
(11/99;1/97)++
WELLS FARGO VARIABLE TRUST
WAAL6 Asset Allocation Fund (--/--;4/94) -- -- 0.48 9.98 -- 8.75
WCBD6 Corporate Bond Fund (--/--;9/99) -- -- -- -- -- -7.33
WEQI6 Equity Income Fund (--/--;5/96) -- -- -0.82 -- -- 14.12
WEQV6 Equity Value Fund (--/--;5/98) -- -- -10.26 -- -- -8.86
WGRO6 Growth Fund (--/--;4/94) -- -- 10.87 21.24 -- 19.21
WLCG6 Large Company Growth Fund (--/--;9/99) -- -- -- -- -- 11.84
WMMK6 Money Market Fund (--/--;5/94) -- -- -3.95 2.08 -- 2.53
WSCG6 Small Cap Growth Fund (--/--;5/95) -- -- 56.21 -- -- 18.12
</TABLE>
*Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 1.10% mortality and expense risk fee, a 0.15%
variable account administrative charge and applicable withdrawal charges
associated with the eight-year withdrawal charge schedule. Premium taxes are not
reflected in the above total returns.
**(Commencement date of the Subaccount; 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.
****CORESM is a service mark of Goldman, Sachs & Co.
+Fund had not commenced operations as of Dec. 31, 1999.
++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 Annuities
Without Withdrawal and Selection of the Eight-Year Withdrawal Charge Schedule
and the Optional Enhanced 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 -
WBCA4 Blue Chip Advantage Fund (9/99)** --% --% --% 10.79%
WCAR4 Capital Resource Fund (10/81) 21.90 19.54 13.78 14.25
WDEI4 Diversified Equity Income Fund (9/99) -- -- -- 2.36
WEXI4 Extra Income Fund (5/96) 4.65 -- -- 3.93
WFDI4 Federal Income Fund (9/99) -- -- -- 0.02
WNDM4 New Dimensions Fund(R)(5/96) 30.04 -- -- 24.46
WSCA4 Small Cap Advantage Fund (9/99) -- -- -- 12.17
AIM V.I.
WCAP4 Capital Appreciation Fund (5/93) 42.52 23.72 - 20.50
WVAL4 Value Fund (5/93) 27.99 25.33 -- 21.22
Dreyfus
WSRG4 The Dreyfus Socially Responsible Growth 28.18 26.78 -- 22.36
Fund, Inc. (10/93)
FRANKLIN TEMPLETON VIP TRUST
WISE4 Franklin Income Securities Fund - Class 2 -3.55 8.03 8.32 8.29
(1/89)***
WRES4 Franklin Real Estate Fund - Class 2 -7.78 6.36 7.37 7.04
(1/89)***
WSMC4 Franklin Small Cap Fund - Class 2 (11/95)*** 103.30 -- -- 31.60
WMSS4 Mutual Shares Securities Fund - Class 2 11.89 -- -- 9.19
(11/96)***
GOLDMAN SACHS Variable Insurance Trust (VIT)
WUSE4 CORESM U.S. Equity Fund (2/98)**** 22.46 -- -- 18.93
WGLI4 Global Income Fund (1/98) -2.51 -- -- 2.03
WITO4 Internet Tollkeeper Fund (--/--;4/00)+ -- -- -- --
WMCV4 Mid Cap Value Fund (4/98) 4.65 -- -- -6.40
MFS(R)
WGIS4 Growth with Income Series (10/95) 5.09 -- -- 19.28
WUTS4 Utilities Series (1/95) 28.89 -- -- 24.59
PUTNAM VARIABLE TRUST
WIGR4 Putnam VT International Growth Fund - Class 57.73 -- -- 28.19
IB Shares (1/97)++
WVIS4 Putnam VT Vista Fund - Class IB Shares 50.48 -- -- 29.13
(1/97)++
WELLS FARGO VARIABLE TRUST
WAAL4 Asset Allocation Fund (4/94) 7.69 10.83 -- 9.23
WCBD4 Corporate Bond Fund (9/99) -- -- -- -0.64
WEQI4 Equity Income Fund (5/96) 6.29 -- -- 15.41
WEQV4 Equity Value Fund (5/98) -3.95 -- -- -5.19
WGRO4 Growth Fund (4/94) 18.64 21.73 -- 19.42
WLCG4 Large Company Growth Fund (9/99) -- -- -- 19.77
WMMK4 Money Market Fund (5/94) 2.89 3.30 -- 3.25
WSCG4 Small Cap Growth Fund (5/95) 63.90 -- -- 18.82
</TABLE>
*Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 1.10% mortality and expense risk fee, a 0.15%
variable account administrative charge, a 0.20% Enhanced 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)
***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.
****CORESM is a service mark of Goldman, Sachs & Co.
+Fund had not commenced operations as of Dec. 31, 1999.
++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 Annuities
With Withdrawal and Selection of the Eight-Year Withdrawal Charge Schedule and
the Optional Enhanced 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 -
WBCA4 Blue Chip Advantage Fund (9/99)** --% --% --% 2.80%
WCAR4 Capital Resource Fund (10/81) 13.90 18.67 13.78 14.23
WDEI4 Diversified Equity Income Fund (9/99) -- -- -- -4.63
WEXI4 Extra Income Fund (5/96) -2.53 -- -- 1.86
WFDI4 Federal Income Fund (9/99) -- -- -- -6.78
WNDM4 New Dimensions Fund(R)(5/96) 22.04 -- -- 23.13
WSCA4 Small Cap Advantage Fund (9/99) -- -- -- 4.06
AIM V.I.
WCAP4 Capital Appreciation Fund (5/93) 34.52 22.95 -- 20.23
WVAL4 Value Fund (5/93) 19.99 24.60 -- 20.96
Dreyfus
WSRG4 The Dreyfus Socially Responsible Growth 20.18 26.08 -- 22.07
Fund, Inc. (10/93)
FRANKLIN TEMPLETON VIP TRUST
WISE4 Franklin Income Securities Fund - Class 2 -10.07 6.76 8.32 8.26
(1/89)***
WRES4 Franklin Real Estate Fund - Class 2 -13.96 5.00 7.37 7.01
(1/89)***
WSMC4 Franklin Small Cap Fund - Class 2 (11/95)*** 95.30 -- -- 30.66
WMSS4 Mutual Shares Securities Fund - Class 2 4.14 -- -- 6.94
(11/96)***
GOLDMAN SACHS Variable Insurance Trust (VIT)
WUSE4 CORESM U.S. Equity Fund (2/98)**** 14.46 -- -- 15.02
WGLI4 Global Income Fund (1/98) -9.11 -- -- -1.70
WITO4 Internet Tollkeeper Fund (--/--;4/00)+ -- -- -- --
WMCV4 Mid Cap Value Fund (4/98) -2.52 -- -- -10.45
MFS(R)
WGIS4 Growth with Income Series (10/95) -2.11 -- -- 18.11
WUTS4 Utilities Series (1/95) 20.89 -- -- 23.84
PUTNAM VARIABLE TRUST
WIGR4 Putnam VT International Growth Fund - Class 49.73 -- -- 26.41
IB Shares (1/97)++
WVIS4 Putnam VT Vista Fund - Class IB Shares 42.48 -- -- 27.38
(1/97)++`
WELLS FARGO VARIABLE TRUST
WAAL4 Asset Allocation Fund (4/94) 0.28 9.68 -- 8.47
WCBD4 Corporate Bond Fund (9/99) -- -- -- -7.69
WEQI4 Equity Income Fund (5/96) -1.01 -- -- 13.78
WEQV4 Equity Value Fund (5/98) -10.44 -- -- -9.26
WGRO4 Growth Fund (4/94) 10.64 20.92 -- 18.90
WLCG4 Large Company Growth Fund (9/99) -- -- -- 11.42
WMMK4 Money Market Fund (5/94) -4.14 1.79 -- 2.25
WSCG4 Small Cap Growth Fund (5/95) 55.90 -- -- 17.80
</TABLE>
*Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 1.10% mortality and expense risk fee, a 0.15%
variable account administrative charge, a 0.20% Enhanced Death Benefit Rider
fee, a 0.30% Guaranteed Minimum Income Benefit Rider fee and applicable
withdrawal charges associated with the eight-year withdrawal charge schedule.
Premium taxes are not reflected in the above 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.
****CORESM is a service mark of Goldman, Sachs & Co.
+Fund had not commenced operations as of Dec. 31, 1999.
++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
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.
<PAGE>
Annualized Yield for Subaccounts Investing in Income Funds
For the subaccounts investing in income funds, we base quotations of yield on
all investment income earned during a particular 30-day period, less expenses
accrued during the period (net investment income) and compute it by dividing net
investment income per accumulation unit by the value of an accumulation unit on
the last day of the period, according to the following formula:
YIELD = 2[( a-b + 1)6 - 1]
----
cd
where: a = dividends and investment income earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of accumulation units outstanding
during the period
that were entitled to receive dividends
d = the maximum offering price per accumulation unit on the last
day of the period
The subaccount earns yield from the increase in the net asset value of shares of
the fund in which it invests and from dividends declared and paid by the fund,
which are automatically invested in shares of the fund.
Annualized Yield Based on the 30-Day Period Ended Dec. 31, 1999
Subaccount Investing In Yield
PEXI1 AXPSM Variable Portfolio -Extra Income Fund 11.28%
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 - Wells Fargo Advantage(SM) Builder
Variable Annuity
Annual Financial Information
Report of Independent Auditors
The Board of Directors
American Enterprise Life Insurance Company
We have audited the individual and combined statements of net assets of the
segregated asset subaccounts of American Enterprise Variable Annuity Account
(comprised of subaccounts PBCA1, PDEI1, PEXI1, PNDM1, PSCA1, PCAP1, PVAL1,
PSMC1, PGIS1, PUTS1, PIGR1 and PVIS1) 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.
ERNST & YOUNG LLP
Minneapolis, Minnesota
March 17, 2000
<PAGE>
<TABLE>
<CAPTION>
American Enterprise Variable Annuity Account -- Wells Fargo Advantage(SM) Builder Variable Annuity
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets PBCA1 PDEI1 PEXI1 PNDM1 PSCA1 PCAP1
Investments in shares of mutual funds
and portfolios:
<S> <C> <C> <C> <C> <C> <C>
at cost $ 260 $ 261 $ 261 $ 262 $ 261 $ 266
----- ----- ----- ----- ----- -----
at market value $ 282 $ 267 $ 265 $ 296 $ 282 $ 317
Dividends receivable -- -- 2 -- -- --
-
Total assets 282 267 267 296 282 317
=== === === === === ===
Net assets applicable to contracts in
accumulation period $ 282 $ 267 $ 267 $ 296 $ 282 $ 317
----- ----- ----- ----- ----- -----
Accumulation units outstanding 259 262 259 257 254 251
=== === === === === ===
Net asset value per accumulation unit $ 1.09 $ 1.02 $ 1.03 $ 1.15 $ 1.11 $ 1.26
====== ====== ====== ====== ====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Enterprise Variable Annuity Account -- Wells Fargo Advantage(SM) Builder Variable Annuity
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets PVAL1 PSMC1 PGIS1 PUTS1
Investments in shares of mutual funds and portfolios:
<S> <C> <C> <C> <C>
at cost $ 264 $ 260 $ 260 $ 260
----- ----- ----- -----
at market value $ 287 $ 349 $ 274 $ 291
Dividends receivable -- -- -- --
---- ----- --- ----
Total assets 287 349 274 291
=== === === ===
Net assets applicable to contracts in
accumulation period $ 287 $ 349 $ 274 $ 291
----- ----- ----- -----
Accumulation units outstanding 258 243 261 255
=== === === ===
Net asset value per accumulation unit $ 1.11 $ 1.43 $ 1.05 $ 1.14
====== ====== ====== ======
Combined
Variable
Assets PIGR1 PVIS1 Account
Investments in shares of mutual funds and portfolios:
at cost $ 260 $ 284 $ 3,159
----- ----- -------
at market value $ 324 $ 329 $ 3,563
Dividends receivable -- -- 2
-
Total assets 324 329 3,565
=== === =====
Net assets applicable to contracts in
accumulation period $ 324 $ 329 $ 3,565
----- ----- -------
Accumulation units outstanding 252 253
=== ===
Net asset value per accumulation unit $ 1.29 $ 1.30
====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Enterprise Variable Annuity Account -- Wells Fargo Advantage(SM) Builder Variable Annuity
Statements of Operations
Period ended December 31, 1999
Segregated Asset Subaccounts
Investment income PBCA11 PDEI11 PEXI11 PNDM11 PSCA11 PCAP12
<S> <C> <C> <C> <C> <C> <C>
Dividend income from mutual funds and portfolios $-- $ 1 $ 4 $ 2 $ 2 $ 7
Mortality and expense risk fee 1 1 1 1 1 1
- - - - - -
Investment income (loss) - net (1) -- 3 1 1 6
== == = = = =
Realized and unrealized gain (loss) on investments - net
Net change in unrealized appreciation or
depreciation of investments 22 6 4 34 21 51
-- - - -- -- --
Net gain (loss) on investments 22 6 4 34 21 51
-- - - -- -- --
Net increase (decrease) in net assets resulting
from operations $ 21 $ 6 $ 7 $ 35 $ 22 $ 57
==== === === ==== ==== ====
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.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Enterprise Variable Annuity Account -- Wells Fargo Advantage(SM) Builder Variable Annuity
Statements of Operations
Period ended December 31, 1999
Segregated Asset Subaccounts
Combined
Variable
Investment income PVAL11 PSMC11 PGIS11 PUTS11 PIGR11 PVIS11 Account
<S> <C> <C> <C> <C> <C> <C> <C>
Dividend income from mutual funds and portfolios $ 5 $-- $-- $-- $-- $ 24 $ 45
Mortality and expense risk fee 1 -- -- -- -- -- 7
- --- --- --- --- --- ---
Investment income (loss) - net 4 -- -- -- -- 24 38
= == === === === == ==
Realized and unrealized gain (loss) on
investments - net
Net change in unrealized appreciation or
depreciation of investments 23 89 14 31 64 45 404
-- -- -- -- -- -- ---
Net gain (loss) on investments 23 89 14 31 64 45 404
-- -- -- -- -- -- ---
Net increase (decrease) in net assets
resulting from operations $27 $ 89 $ 14 $ 31 $ 64 $ 69 $ 442
=== ==== ==== ==== ==== ==== =====
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 -- Wells Fargo Advantage(SM) Builder Variable Annuity
Statements of Changes in Net Assets
Period ended December 31, 1999
Segregated Asset Subaccounts
Operations PBCA11 PDEI11 PEXI11 PNDM11 PSCA11 PCAP12
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss) - net $ (1) $-- $ 3 $ 1 $ 1 $ 6
Net change in unrealized appreciation or
depreciation of investments 22 6 4 34 21 51
-- - - -- -- --
Net increase (decrease) in net assets
resulting from operations 21 6 7 35 22 57
== = = == == ==
Contract transactions
Contract purchase payments 261 261 260 261 260 260
--- --- --- --- --- ---
Net assets at beginning of year -- -- -- -- -- --
Net assets at end of year $ 282 $ 267 $ 267 $ 296 $ 282 $ 317
===== ===== ===== ===== ===== =====
Accumulation unit activity
Units outstanding at beginning of year -- -- -- -- -- --
Contract purchase payments 259 262 259 257 254 251
--- --- --- --- --- ---
Units outstanding at end of year 259 262 259 257 254 251
=== === === === === ===
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.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
American Enterprise Variable Annuity Account -- Wells Fargo Advantage(SM) Builder Variable Annuity
Statements of Changes in Net Assets
Period ended December 31, 1999
Segregated Asset Subaccounts
Combined
Variable
Operations PVAL11 PSMC11 PGIS11 PUTS11 PIGR11 PVIS11 Account
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 4 $-- $-- $-- $-- $ 24 $ 38
Net change in unrealized appreciation
or depreciation of investments 23 89 14 31 64 45 404
-- -- -- -- -- -- ---
Net increase (decrease) in net assets
resulting from operations 27 89 14 31 64 69 442
== == == == == == ===
Contract transactions
Contract purchase payments 260 260 260 260 260 260 3,123
--- --- --- --- --- --- -----
Net assets at beginning of year -- -- -- -- -- -- --
Net assets at end of year $ 287 $ 349 $ 274 $ 291 $ 324 $ 329 $ 3,565
===== ===== ===== ===== ===== ===== =======
Accumulation unit activity
Units outstanding at beginning of year -- -- -- -- -- --
Contract purchase payments 258 243 261 255 252 253
--- --- --- --- --- ---
Units outstanding at end of year 258 243 261 255 252 253
=== === === === === ===
1For the period Nov. 9, 1999 (commencement of operations) to Dec. 31, 1999.
See accompanying notes to financial statements.
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American Enterprise Variable Annuity Account - Wells Fargo Advantage(SM) Builder
Variable Annuity
Notes to Financial Statements
1. ORGANIZATION
American Enterprise Variable Annuity Account (the Account) was established under
Indiana law on July 15, 1987 and the subaccounts are registered together as a
single unit investment trust of American Enterprise Life Insurance Company
(American Enterprise Life) under the Investment Company Act of 1940, as amended
(the 1940 Act). Operations of the Account commenced on Feb. 21, 1995.
The Account is comprised of various subaccounts. Each subaccount invests
exclusively in shares of the following mutual funds (collectively, the Funds),
which are registered under the 1940 Act as diversified, open-end management
investment companies and have the following investment managers.
Subaccount Invests exclusively in shares of Investment Manager
<S> <C> <C>
PBCA1 AXP(SM) Variable Portfolio-- Blue Chip Advantage Fund IDS Life Insurance Company 1
PDEI1 AXP(SM) Variable Portfolio-- Diversified Equity Income Fund IDS Life Insurance Company 1
PEXI1 AXP(SM) Variable Portfolio-- Extra Income Fund IDS Life Insurance Company 1
PNDM1 AXP(SM) Variable Portfolio-- New Dimensions Fund(R) IDS Life Insurance Company 1
PSCA1 AXP(SM) 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.
PSMC1 FTVIPT Franklin Small Cap Fund - Class 2 Franklin Advisers, Inc.
PGIS1 MFS(R)Growth with Income Series Massachusetts Financial Services Company (MFS)
Investment Management(R)
PUTS1 MFS(R) Utilities Series MFS Investment Management(R)
PIGR1 Putnam VT International Growth Fund - Class IB Shares Putnam Investment Management, Inc.
PVIS1 Putnam VT Vista 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.
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.
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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 1.10% or 1.35% of the average
daily net assets of the subaccounts, depending on the death benefit option that
applies to the contract.
4. ADMINISTRATIVE CHARGE
American Enterprise Life deducts a daily charge equal, on an annual basis, to
0.15% of the average daily net assets of each subaccount as an administrative
charge. This charge covers
certain administrative and operating expenses of the subaccounts incurred by
American Enterprise Life such as accounting, legal and data processing fees, and
expenses involved in the preparation and distribution of reports and
prospectuses. This charge cannot be increased.
5. CONTRACT ADMINISTRATIVE CHARGE
American Enterprise Life deducts a contract administrative charge of $30 per
year on each contract anniversary. This charge cannot be increased and does not
apply after annuity payouts begin. American Enterprise Life does not expect to
profit from this charge. This charge reimburses American Enterprise Life for
expenses incurred in establishing and maintaining the annuity records. This
charge is waived when the contract value is $50,000 or more on the current
contract anniversary. The $30 annual charge is deducted at the time of any full
withdrawal.
6. WITHDRAWAL CHARGE
American Enterprise Life will use a withdrawal charge to help it recover certain
expenses relating to the sale of the annuity. The withdrawal charge is deducted
for withdrawals up to the first six or eight payment years following a purchase
payment, depending on the withdrawal charge schedule selected at the time of
application. 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.
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>
PBCA1 AXP(SM) Variable Portfolio-- Blue Chip Advantage Fund 25 $11.08
PDEI1 AXP(SM) Variable Portfolio-- Diversified Equity Income Fund 26 10.19
PEXI1 AXP(SM) Variable Portfolio-- Extra Income Fund 31 8.58
PNDM1 AXP(SM) Variable Portfolio-- New Dimensions Fund(R) 13 22.86
PSCA1 AXP(SM) 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
PSMC1 FTVIPT Franklin Small Cap Fund - Class 2 13 26.79
PGIS1 MFS(R)Growth with Income Series 13 21.31
PUTS1 MFS(R)Utilities Series 12 24.16
PIGR1 Putnam VT International Growth Fund - Class IB Shares 15 21.62
PVIS1 Putnam VT Vista Fund - Class IB Shares 16 20.65
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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>
PBCA11 AXP(SM) Variable Portfolio-- Blue Chip Advantage Fund $260
PDEI11 AXP(SM) Variable Portfolio-- Diversified Equity Income Fund 261
PEXI11 AXP(SM) Variable Portfolio-- Extra Income Fund 261
PNDM11 AXP(SM) Variable Portfolio-- New Dimensions Fund(R) 262
PSCA11 AXP(SM) Variable Portfolio-- Small Cap Advantage Fund 261
PCAP12 AIM V.I. Capital Appreciation Fund 266
PVAL12 AIM V.I. Value Fund 264
PSMC12 FTVIPT Franklin Small Cap Fund - Class 2 260
PGIS12 MFS(R)Growth with Income Series 260
PUTS12 MFS(R)Utilities Series 260
PIGR12 Putnam VT International Growth Fund - Class IB Shares 260
PVIS12 Putnam VT Vista Fund - Class IB Shares 284
Combined Variable Account $3,159
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.
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