CITICORP LIFE INSURANCE COMPANY
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<PAGE>
Citicorp Citicorp Plaza
Life Insurance P.O. Box 7031
Company Dover, Delaware
19903 [CITICORP LOGO]
Dear Contract Owner:
We are pleased to provide you with the results of the subaccounts in your
Citicorp Life Insurance Company Variable Annuity Separate Account, covering the
one year period ending December 31, 1996. This annual report includes summaries
of the performance of the variable annuity subaccounts, as well as annual
reports of the underlying funds in which the subaccounts invest.
The performance of the subaccounts reflect the performance of the funds in which
they invest, but take into account the charges and expenses imposed under the
contract. Therefore, the subaccount performance figures are most representative
of the returns contract holders experienced for the full calendar year under the
annuity contract.
The annual report of the funds provide additional information, including the
specific investments of each fund and the percentage that each investment class
bears to the total fund investments.
The variable annuity you purchased was developed specifically to meet your
investment needs and help you reach your financial goals. Your satisfaction with
this product is important to us and we welcome any comments or suggestions you
may have regarding our product or service. Please feel free to call us at
1-800-497-4855 from 8:00 a.m. to 5:00 p.m. Eastern time, Monday through Friday.
We would like to thank you for the opportunity to be of service to you. We look
forward to continuing in that role as we work together to make your future the
best it can be.
Sincerely,
/s/ Larry D. Williams
Larry D. Williams
Senior Vice President
<PAGE>
Table of Contents
Citicorp Life Insurance Company
Variable Annuity Separate Account Annual Report
Landmark VIP Funds Annual Report
Landmark VIP U.S. Government Fund
Landmark VIP Equity Fund
Landmark VIP Balanced Fund
Landmark VIP International Equity Fund
AIM Variable Insurance Funds, Inc. Annual Report
AIM V.I. Capital Appreciation Fund
Fidelity Variable Insurance Products Fund Annual Report
VIP: Growth Portfolio
MFS Variable Insurance Trust Annual Report
MFS World Governments Series
MFS Money Market Series
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Financial Statements and Schedule
December 31, 1996
(With Independent Auditors' Report Thereon)
<PAGE>
[KPMG Peat Marwick LLP]
1010 Market Street
St. Louis, MO 63101-2085
Independent Auditors' Report
The Board of Directors
Citicorp Life Insurance Company and Policyholders
of Citicorp Life Insurance Company
Variable Annuity Separate Account:
We have audited the accompanying statements of net assets, including the
schedule of investments, of the Landmark Equity Fund, Landmark U.S. Government
Fund, Landmark International Equity Fund, Landmark Balanced Fund, A.I.M. V.I.
Capital Appreciation Fund, Fidelity Growth Portfolio, MFS Money Market Series,
and MFS World Government Series Portfolios of Citicorp Life Insurance Company
Variable Annuity Separate Account as of December 31, 1996, and the related
statements of operations and changes in net assets for the periods presented.
These financial statements are the responsibility of Citicorp Life Insurance
Company Variable Annuity Separate Account's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements 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 investments owned at December 31, 1996 by correspondence with
the Landmark Variable Insurance Products Fund, A.I.M. Variable Insurance Funds,
Inc., Fidelity Variable Insurance Products Fund, and MFS Variable Insurance
Trust. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Landmark Equity Fund,
Landmark U.S. Government Fund, Landmark International Equity Fund, Landmark
Balanced Fund, A.I.M. V.I. Capital Appreciation Fund, Fidelity Growth Portfolio,
MFS Money Market Series, and MFS World Government Series Portfolios of Citicorp
Life Insurance Company Variable Annuity Separate Account as of December 31,
1996, and the results of their operations and changes in their net assets for
the periods presented, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
February 7, 1997
1
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Net Assets
December 31, 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Landmark A.I.M. V.I.
U.S. Landmark Landmark Capital
Landmark Government International Balanced Appreciation
Equity Fund Fund Equity Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets
Investments at market value
(see schedule of investments) $1,311,984 1,154,871 4,483,228 1,262,073 115,785
Payable to Citicorp Life
Insurance Company 1 38 59 30 62
- ----------------------------------------------------------------------------------------------------------
Total net assets $1,311,983 1,154,833 4,483,169 1,262,043 115,723
- ----------------------------------------------------------------------------------------------------------
Total net assets represented by:
Variable annuity cash value
invested in separate account
by contractholders 1,508 70,075 109,826 55,410 115,723
Citicorp Life Insurance Company equity 1,310,475 1,084,758 4,373,343 1,206,633 --
- ----------------------------------------------------------------------------------------------------------
Total net assets represented $1,311,983 1,154,833 4,483,169 1,262,043 115,723
- ----------------------------------------------------------------------------------------------------------
Total units held by contractholders 1,165 65,380 101,764 46,475 77,611
Accumulated unit value $ 1.29 1.07 1.08 1.19 1.49
Cost of investments $1,059,207 1,170,964 4,288,747 1,136,001 111,685
- ----------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
[restubbed table]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Fidelity MFS MFS World
Growth Money Government
Portfolio Market Series Series
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets
Investments at market value
(see schedule of investments) 145,817 50,127 74,053
Payable to Citicorp Life
Insurance Company 79 27 40
- ------------------------------------------------------------------------------
Total net assets 145,738 50,100 74,013
- ------------------------------------------------------------------------------
Total net assets represented by:
Variable annuity cash value
invested in separate account
by contractholders 145,738 50,100 74,013
Citicorp Life Insurance Company equity -- -- --
- ------------------------------------------------------------------------------
Total net assets represented 145,738 50,100 74,013
- ------------------------------------------------------------------------------
Total units held by contractholders 98,550 47,376 65,848
Accumulated unit value 1.48 1.06 1.12
Cost of investments 140,566 50,127 70,829
- ------------------------------------------------------------------------------
</TABLE>
[end of restubbed table]
2
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Operations
For the year ended December 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Landmark A.I.M. V.I.
U.S. Landmark Landmark Capital
Landmark Government International Balanced Appreciation
Equity Fund Fund Equity Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income - dividends $ 45,449 69,642 130,400 61,588 173
Expenses:
Mortality and expense risk fees 3 467 404 312 548
Daily administrative charges -- 55 47 38 65
- ---------------------------------------------------------------------------------------------------------
Total expenses 3 522 451 350 613
- ---------------------------------------------------------------------------------------------------------
Net investment income (loss) 45,446 69,120 129,949 61,238 (440)
- ---------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss)
on investments:
Realized gain on sale of investments -- 12 22 44 5
Change in unrealized gain (loss)
on investments 117,485 (50,069) 122,500 38,580 4,100
- ---------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 117,485 (50,057) 122,522 38,624 4,105
- ---------------------------------------------------------------------------------------------------------
Increase in net assets resulting
from operations $162,931 19,063 252,471 99,862 3,665
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
[restubbed table]
<TABLE>
<CAPTION>
Fidelity MFS MFS World
Growth Money Government
Portfolio Market Series Series
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment income - dividends 429 379 --
Expenses:
Mortality and expense risk fees 703 111 470
Daily administrative charges 84 13 56
- --------------------------------------------------------------------------------
Total expenses 787 124 526
- --------------------------------------------------------------------------------
Net investment income (loss) (358) 255 (526)
- --------------------------------------------------------------------------------
Realized and unrealized gain (loss)
on investments:
Realized gain on sale of investments 124 -- 15
Change in unrealized gain (loss)
on investments 4,380 -- 3,224
- --------------------------------------------------------------------------------
Net gain (loss) on investments 4,504 -- 3,239
- --------------------------------------------------------------------------------
Increase in net assets resulting
from operations 4,146 255 2,713
- --------------------------------------------------------------------------------
</TABLE>
[end of restubbed table]
3
<PAGE>
<TABLE>
<CAPTION>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
For the year ended December 31, 1996
- ----------------------------------------------------------------------------------------------------------------
Landmark A.I.M. V.I.
U.S. Landmark Landmark Capital
Landmark Government International Balanced Appreciation
Equity Fund Fund Equity Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets resulting
from operations:
Net investment income (loss) $ 45,446 69,120 129,949 61,238 (440)
Realized gain on sale of investments -- 12 22 44 5
Change in unrealized gain (loss)
on investments 117,485 (50,069) 122,500 38,580 4,100
- ----------------------------------------------------------------------------------------------------------------
Increase in net assets resulting
from operations 162,931 19,063 252,471 99,862 3,665
- ----------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits 1,531 66,291 107,779 47,895 110,664
Transfers from Citicorp Life
Insurance Company -- -- -- -- 1,394
Annual administrative charges -- -- -- (14)
Contract withdrawals -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
Increase in net assets resulting
from capital transactions 1,531 66,291 107,779 47,881 112,058
- ----------------------------------------------------------------------------------------------------------------
Total increase in net assets 164,462 85,354 360,250 147,743 115,723
Net assets at beginning of period 1,147,521 1,069,479 4,122,919 1,114,300 --
- ----------------------------------------------------------------------------------------------------------------
Net assets at end of period $1,311,983 1,154,833 4,483,169 1,262,043 115,723
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
[restubbed table]
<TABLE>
<CAPTION>
Fidelity MFS MFS World
Growth Money Government
Portfolio Market Series Series
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (decrease) in net assets resulting
from operations:
Net investment income (loss) (358) 255 (526)
Realized gain on sale of investments 124 -- 15
Change in unrealized gain (loss)
on investments 4,380 -- 3,224
- --------------------------------------------------------------------------------
Increase in net assets resulting
from operations 4,146 255 2,713
- --------------------------------------------------------------------------------
Capital transactions:
Contract deposits 134,244 49,845 71,300
Transfers from Citicorp Life
Insurance Company 1,394 -- --
Annual administrative charges (16) -- --
Contract withdrawals -- -- --
- --------------------------------------------------------------------------------
Increase in net assets resulting
from capital transactions 135,622 49,845 71,300
- --------------------------------------------------------------------------------
Total increase in net assets 139,768 50,100 74,013
Net assets at beginning of period 5,970 -- --
- --------------------------------------------------------------------------------
Net assets at end of period 145,738 50,100 74,013
- --------------------------------------------------------------------------------
</TABLE>
[end of restubbed table]
4
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Changes in Net Assets
For the period June 5, 1995 (Inception) to December 31, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Landmark
U.S. Landmark Landmark Fidelity
Landmark Government International Balanced Growth
Equity Fund Fund Equity Fund Fund Portfolio
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets resulting
from operations:
Net investment income (loss) $ 12,229 35,503 50,938 21,665 (50)
Realized gain on sale of investments -- -- -- 2 8
Change in unrealized appreciation
on investments 135,292 33,976 71,981 87,492 871
- ------------------------------------------------------------------------------------------------------------
Increase in net assets resulting
from operations 147,521 69,479 122,919 109,159 829
- ------------------------------------------------------------------------------------------------------------
Capital transactions:
Contract deposits -- -- -- 5,141 5,141
Transfers from Citicorp Life
Insurance Company 1,000,000 1,000,000 4,000,000 1,000,000 --
Annual administrative charges -- -- -- -- --
Contract withdrawals -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------
Increase in net assets resulting
from capital transactions 1,000,000 1,000,000 4,000,000 1,005,141 5,141
- ------------------------------------------------------------------------------------------------------------
Total increase in net assets 1,147,521 1,069,479 4,122,919 1,114,300 5,970
Net assets at beginning of period -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------
Net assets at end of period $1,147,521 1,069,479 4,122,919 1,114,300 5,970
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
- --------------------------------------------------------------------------------
(1) History
The Citicorp Life Insurance Company Variable Annuity Separate Account (the
"Account") is a separate investment account maintained under the provisions
of Arizona Insurance Law by Citicorp Life Insurance Company (the "Company"),
a subsidiary of Citibank Delaware. The Account operates as a unit investment
trust registered under the Investment Company act of 1940, as amended, and
supports the operations of the Company's individual flexible premium
deferred variable annuity contracts (the "contracts"). The Account invests
in portfolios of the Landmark Variable Insurance Products (VIP) Funds, the
A.I.M. Variable Insurance Funds, Inc., the Fidelity Investments Variable
Insurance Products Fund, and the MFS Variable Insurance Trust (the "Funds").
The available portfolios of the Landmark VIP Funds include the Landmark VIP
Equity Fund, the Landmark VIP U.S. Government Fund, the Landmark VIP
International Equity Fund and the Landmark VIP Balanced Fund. The A.I.M.
V.I. Capital Appreciation Fund of the A.I.M. Variable Insurance Funds, Inc.,
the Growth Portfolio of the Fidelity Investments Variable Insurance Products
Fund, the MFS Money Market Series and the MFS World Government Series of the
MFS Variable Insurance Trust are also available for investment.
The account had no assets or operations until June 5, 1995, when the initial
investment was made. On June 12, 1995, the Company transferred $7,000,000
from its general funds to provide initial capital in the Landmark Variable
Insurance Products Funds. There were no assets or operations reflected
within the A.I.M. V.I. Capital Appreciation Fund, MFS Money Market Series or
the MFS World Government Series Portfolio's at December 31, 1995 as the
initial investments to these Portfolio's were made in April, April, and June
1996, respectively.
The assets of the Account are the property of the Company. The portion of
the Account's assets applicable to the contracts are not chargeable with
liabilities arising out of any other business conducted by the Company.
In addition to the Account, a contract owner may also allocate funds to the
General Account, which is part of the Company's general account. Amounts
allocated to the General Account are credited with a guaranteed rate for one
year. Because of exemptive and exclusionary provisions, interests in the
General Account have not been registered under the Securities Act of 1933,
and the General Account has not been registered as an investment company
under the Investment Company Act of 1940.
(2) Summary of Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Account in preparation of the financial statements in conformity with
generally accepted accounting principles.
Investment Valuation - The investment in the Fund is stated at market value,
which is the net asset value of each of the respective series as determined
by the Fund at the close of business on the last working day of the period.
(continued)
6
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
- --------------------------------------------------------------------------------
Accounting for Investments - Investment transactions are accounted for on
the trade date. Dividend income is recorded on the ex-dividend date. The
cost of investments sold is generally determined on the specific
identification method.
Federal Income Taxes - The Company is taxed under federal law as a life
insurance company. The Account is part of the Company's total operations,
and is not taxed separately. Under existing law, no taxes are payable on
investment income and realized capital gains of the Account.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of increase and
decrease in net assets from operations during the period. Actual results
could differ from those estimates.
(3) Contract Charges
Daily charges for mortality and expense risks assumed by the Company are
assessed through the daily unit value calculation, and are equivalent on an
annual basis to 1.25% of the net assets of the contracts.
An annual contract fee of $30 is assessed against each contract on its
anniversary date by surrendering units. Daily charges for administrative
expenses are assessed through the daily unit value calculation, and are
equivalent on an annual basis to 0.15% of the net assets of the contracts.
The contracts provide that in the event that a contract owner withdraws all
or a portion of the contract value within five contract years, a deferred
sales charge will be assessed. The deferred sales charge is based on a table
of charges, of which the maximum charge is currently 7% of the contract
value. During each contract year, up to 10% of purchase payments less any
prior withdrawal of purchase payments may be withdrawn without a deferred
sales charge.
Premium taxes may be applicable, depending on the laws of various
jurisdictions. Various states and other governmental entities levy a premium
tax on annuity contracts issued by insurance companies.
(continued)
7
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
- --------------------------------------------------------------------------------
(4) Purchases of Investments
For the year ended December 31, 1996, investment activity in each of the
respective Funds was as follows:
- ------------------------------------------------------------------------
Cost of Proceeds
Shares of purchases from sales
- ------------------------------------------------------------------------
Landmark Variable Insurance Products Funds:
Landmark Equity Fund $ 46,980 2
Landmark U.S. Government Fund 135,933 484
Landmark International Equity Fund 238,180 393
Landmark Balanced Fund 109,483 338
A.I.M. Variable Insurance Funds, Inc.:
A.I.M. V.I. Capital Appreciation Fund 112,231 551
Fidelity Variable Insurance Products Fund:
Growth Portfolio 136,067 728
MFS Variable Insurance Trust:
MFS Money Market Series 55,224 5,097
MFS World Governments Series 71,300 486
- ------------------------------------------------------------------------
(continued)
8
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
- --------------------------------------------------------------------------------
(5) Net Increase in Accumulation Units
For the year ended December 31, 1996, transactions in accumulation units of
contractholders of the Account were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Landmark A.I.M. V.I.
U.S. Landmark Landmark Capital
Landmark Government International Balanced Appreciation
Equity Fund Fund Equity Fund Fund Fund
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Units purchased 1,165 65,380 101,764 41,393 76,664
Units withdrawn and contract charges -- -- -- (12) --
Units transferred between funds -- -- -- -- 947
- -------------------------------------------------------------------------------------------------------
Net increase 1,165 65,380 101,764 41,381 77,611
Units at beginning of period -- -- -- 5,094 --
- -------------------------------------------------------------------------------------------------------
Units at end of period 1,165 65,380 101,764 46,475 77,611
- -------------------------------------------------------------------------------------------------------
</TABLE>
[restubbed table]
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Fidelity MFS MFS World
Growth Money Government
Portfolio Market Series Series
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Units purchased 93,044 47,376 65,848
Units withdrawn and contract charges (11) -- --
Units transferred between funds 952 -- --
- ---------------------------------------------------------------------------
Net increase 93,985 47,376 65,848
Units at beginning of period 4,565 -- --
- ---------------------------------------------------------------------------
Units at end of period 98,550 47,376 65,848
- ---------------------------------------------------------------------------
</TABLE>
[end of restubbed table]
9
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Notes to Financial Statements
================================================================================
(5) Net Increase in Accumulation Units (continued)
For the period June 5, 1995 (Inception) to December 31, 1995, transactions
in accumulation units of contractholders of the Account were as follows:
- -------------------------------------------------------------------------
Landmark Fidelity
Balanced Growth
Fund Portfolio
- -------------------------------------------------------------------------
Units purchased 5,094 4,565
Units withdrawn and contract charges -- --
Units transferred between funds -- --
- -------------------------------------------------------------------------
Net increase 5,094 4,565
Units at beginning of period -- --
- -------------------------------------------------------------------------
Units at end of period 5,094 4,565
- -------------------------------------------------------------------------
10
<PAGE>
CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------
Number Market
of shares value Cost
- --------------------------------------------------------------------------------
Landmark Variable Insurance
Products Funds:
Landmark Equity Fund 103,387 $1,311,984 1,059,207
Landmark U.S. Government Fund 115,603 1,154,871 1,170,964
Landmark International Equity Fund 422,547 4,483,228 4,288,747
Landmark Balanced Fund 110,611 1,262,073 1,136,001
A.I.M. Variable Insurance Funds, Inc.:
A.I.M. V.I. Capital Appreciation Fund 5,959 115,785 111,685
Fidelity Variable Insurance Products Fund:
Growth Portfolio 4,683 145,817 140,566
MFS Variable Insurance Trust:
MFS Money Market Series 50,127 50,127 50,127
MFS World Government Series 6,999 74,053 70,829
- --------------------------------------------------------------------------------
11
<PAGE>
The following documents have been previously filed via EDGAR and are herein
incorporated by reference. Financial information may be obtained from the
following:
Landmark Institutional Funds
CIK#: 0000878732
Form Type: N-30B-2
File Number: 811-06401
Filing Date: 3/03/97
Accession No.: 0000950156-97-000229
<PAGE>
AIM Variable Insurance Funds, Inc.
CIK #: 0000896435
Form Type: N-30D
File Number: 811-07452
Filing Date: 3/05/97
Accession No.: 0000899243-97-000334
<PAGE>
Fidelity Variable Insurance Products Fund
CIK #: 0000814066
Form Type: N-30D
File Number: 811-03329
Filing Date: 2/26/97
Accession No.: 0000215829-97-000003
<PAGE>
MFS Variable Insurance Trust
CIK #: 0000918571
Form Type: N-30D
File Number: 811-08326
Filing Date: 3/05/97
Accession No.: 0000950156-97-000271, 0000950156-97-000283
