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ENDEAVOR VARIABLE ANNUITY
The AUSA Endeavor
Variable Annuity Account
Annual Report
December 31, 1996
[LOGO OF AUSA LIFE APPEARS HERE]
<PAGE>
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Dear Valued Policyholder:
We are pleased to present the Annual Report of the AUSA Endeavor Variable
Annuity Account for the period ended December 31, 1996. This report contains
information on the following subaccounts:
TCW Money Market
TCW Managed Asset Allocation
T. Rowe Price International Stock
Value Equity
Dreyfus Small Cap Value
Dreyfus U.S. Government Securities
T. Rowe Price Equity Income
T. Rowe Price Growth Stock
Opportunity Value
Growth
In addition to the variable annuity report, reports of the underlying mutual
fund portfolios are enclosed. These reports give you insight regarding the
underlying investments in your variable annuity policy.
We are pleased that you have chosen the Endeavor Variable Annuity to be part of
your financial future. We look forward to serving you in the future.
Sincerely,
/s/ William L. Busler
William L. Busler
Vice President
AUSA Life Insurance Company, Inc.
This report may be distributed only to current policyholders or to persons who
have received current prospectuses of the variable annuity and the underlying
funds.
2
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THE AUSA ENDEAVOR VARIABLE ANNUITY ACCOUNT
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND CONTRACT OWNERS OF
THE AUSA ENDEAVOR VARIABLE ANNUITY ACCOUNT,
AUSA LIFE INSURANCE COMPANY, INC.:
We have audited the accompanying balance sheet of The AUSA Endeavor Variable
Annuity Account (comprising, respectively, the TCW Money Market, TCW Managed
Asset Allocation, T. Rowe Price International Stock, Value Equity, Dreyfus
Small Cap Value, Dreyfus U.S. Government Securities, T. Rowe Price Equity
Income, T. Rowe Price Growth Stock, Opportunity Value and Growth subaccounts)
as of December 31, 1996, and the related statements of operations and changes
in contract owners' equity for the periods indicated therein. These financial
statements are the responsibility of the Variable 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 mutual fund shares owned as of December 31,
1996 by correspondence with the mutual funds' transfer agent. 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 each of the respective
subaccounts constituting The AUSA Endeavor Variable Annuity Account at December
31, 1996, and the results of their operations and changes in their contract
owners' equity for the periods indicated therein in conformity with generally
accepted accounting principles.
Ernst & Young LLP
Des Moines, Iowa
January 31, 1997
3
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THE AUSA ENDEAVOR VARIABLE ANNUITY ACCOUNT
BALANCE SHEET
December 31, 1996
<TABLE>
<CAPTION>
TCW
TCW MANAGED
MONEY ASSET
MARKET ALLOCATION
TOTAL SUBACCT. SUBACCT.
----------- -------- ----------
<S> <C> <C> <C>
ASSETS
Cash.......................................... $ 45 -- --
Investments in mutual funds, at current market
value (Note 2):
Endeavor Series Trust--TCW Money Market
Portfolio................................... 767,863 767,863 --
Endeavor Series Trust--TCW Managed Asset
Allocation Portfolio........................ 2,059,658 -- 2,059,658
Endeavor Series Trust--T. Rowe Price
International Stock Portfolio............... 2,774,308 -- --
Endeavor Series Trust--Value Equity
Portfolio................................... 2,653,713 -- --
Endeavor Series Trust--Dreyfus Small Cap
Value Portfolio............................. 1,854,244 -- --
Endeavor Series Trust--Dreyfus U.S.
Government Securities Portfolio............. 665,734 -- --
Endeavor Series Trust--T. Rowe Price Equity
Income Portfolio............................ 2,111,546 -- --
Endeavor Series Trust--T. Rowe Price Growth
Stock Portfolio............................. 1,554,683 -- --
Endeavor Series Trust--Opportunity Value
Portfolio................................... 179,692 -- --
WRL Series Fund, Inc.--Growth Portfolio...... 5,205,872 -- --
----------- ------- ---------
Total investments in mutual funds............ 19,827,313 767,863 2,059,658
----------- ------- ---------
Total Assets................................. $19,827,358 767,863 2,059,658
=========== ======= =========
LIABILITIES AND CONTRACT OWNERS' EQUITY
Liabilities:
Contract terminations payable................ $ 1,141 106 187
----------- ------- ---------
Total Liabilities............................ 1,141 106 187
Contract Owners' Equity:
Deferred annuity contracts terminable by
owners (Notes 3 and 6)...................... 19,826,217 767,757 2,059,471
----------- ------- ---------
$19,827,358 767,863 2,059,658
=========== ======= =========
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
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<TABLE>
<CAPTION>
T. ROWE T. ROWE T. ROWE
PRICE DREYFUS DREYFUS U.S. PRICE PRICE
INT'L. VALUE SMALL CAP GOV'T. EQUITY GROWTH OPPORTUNITY
STOCK EQUITY VALUE SECURITIES INCOME STOCK VALUE GROWTH
SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT.
-------- --------- --------- ------------ --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
-- -- 44 -- -- -- 1 --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
2,774,308 -- -- -- -- -- -- --
-- 2,653,713 -- -- -- -- -- --
-- -- 1,854,244 -- -- -- -- --
-- -- -- 665,734 -- -- -- --
-- -- -- -- 2,111,546 -- -- --
-- -- -- -- -- 1,554,683 -- --
-- -- -- -- -- -- 179,692 --
-- -- -- -- -- -- -- 5,205,872
--------- --------- --------- ------- --------- --------- ------- ---------
2,774,308 2,653,713 1,854,244 665,734 2,111,546 1,554,683 179,692 5,205,872
--------- --------- --------- ------- --------- --------- ------- ---------
2,774,308 2,653,713 1,854,288 665,734 2,111,546 1,554,683 179,693 5,205,872
========= ========= ========= ======= ========= ========= ======= =========
146 251 -- 9 52 28 -- 362
--------- --------- --------- ------- --------- --------- ------- ---------
146 251 -- 9 52 28 -- 362
2,774,162 2,653,462 1,854,288 665,725 2,111,494 1,554,655 179,693 5,205,510
--------- --------- --------- ------- --------- --------- ------- ---------
2,774,308 2,653,713 1,854,288 665,734 2,111,546 1,554,683 179,693 5,205,872
========= ========= ========= ======= ========= ========= ======= =========
</TABLE>
5
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THE AUSA ENDEAVOR VARIABLE ANNUITY ACCOUNT
STATEMENT OF OPERATIONS
Year Ended December 31, 1996, Except as Noted
<TABLE>
<CAPTION>
TCW
MONEY
MARKET
TOTAL SUBACCT.
---------- --------
<S> <C> <C>
NET INVESTMENT INCOME (LOSS)
Income:
Dividends................................................. $ 499,367 27,558
Expenses (Note 5):
Administrative fee........................................ 5,211 181
Mortality and expense risk charge......................... 168,854 8,063
---------- -------
Net investment income (loss)............................ 325,302 19,314
---------- -------
NET REALIZED AND UNREALIZED CAPITAL GAIN (LOSS) FROM
INVESTMENTS
Net realized capital gain (loss) from sales of investments:
Proceeds from sales....................................... 1,050,069 414,686
Cost of investments sold.................................. 960,815 414,686
---------- -------
Net realized capital gain (loss) from sales of
investments............................................... 89,254 --
---------- -------
Net change in unrealized appreciation/depreciation of
investments:
Beginning of the period................................... 354,489 --
End of the period......................................... 1,762,593 --
---------- -------
Net change in unrealized appreciation/depreciation of
investments............................................ 1,408,104 --
---------- -------
Net realized and unrealized capital gain (loss) from
investments............................................ 1,497,358 --
---------- -------
INCREASE (DECREASE) FROM OPERATIONS........................ $1,822,660 19,314
========== =======
</TABLE>
/1/Period from December 13, 1996 (commencement of operations) to December 31,
1996
See accompanying Notes to Financial Statements.
6
<PAGE>
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<TABLE>
<CAPTION>
TCW T. ROWE DREYFUS T. ROWE T. ROWE
MANAGED PRICE DREYFUS U.S. PRICE PRICE
ASSET INT'L. VALUE SMALL CAP GOV'T. EQUITY GROWTH OPPORTUNITY
ALLOCATION STOCK EQUITY VALUE SECURITIES INCOME STOCK VALUE GROWTH
SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT./1/ SUBACCT.
- ---------- -------- -------- --------- ---------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
24,797 9,703 38,881 46,612 15,913 10,384 14,414 -- 311,105
791 563 616 468 167 651 309 -- 1,465
19,583 22,343 23,500 16,062 6,488 16,576 12,146 8 44,085
------- ------- ------- ------- ------ ------- ------- ---- -------
4,423 (13,203) 14,765 30,082 9,258 (6,843) 1,959 (8) 265,555
------- ------- ------- ------- ------ ------- ------- ---- -------
92,138 65,520 64,146 154,397 88,868 62,231 32,296 -- 75,787
75,827 60,515 43,398 135,314 91,441 50,909 27,721 -- 61,004
------- ------- ------- ------- ------ ------- ------- ---- -------
16,311 5,005 20,748 19,083 (2,573) 11,322 4,575 -- 14,783
------- ------- ------- ------- ------ ------- ------- ---- -------
109,510 22,294 60,104 45,750 5,718 21,338 15,903 -- 73,872
299,221 236,578 348,773 278,785 7,435 227,251 174,087 (106) 190,569
------- ------- ------- ------- ------ ------- ------- ---- -------
189,711 214,284 288,669 233,035 1,717 205,913 158,184 (106) 116,697
------- ------- ------- ------- ------ ------- ------- ---- -------
206,022 219,289 309,417 252,118 (856) 217,235 162,759 (106) 131,480
------- ------- ------- ------- ------ ------- ------- ---- -------
210,445 206,086 324,182 282,200 8,402 210,392 164,718 (114) 397,035
======= ======= ======= ======= ====== ======= ======= ==== =======
</TABLE>
7
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THE AUSA ENDEAVOR VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1996 and 1995, Except as Noted
<TABLE>
<CAPTION>
TCW
TCW MANAGED T. ROWE PRICE
MONEY ASSET INTERNATIONAL
MARKET ALLOCATION STOCK
TOTAL SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------------------- ------------------ ------------------ ------------------
1996 1995 1996 1995 1996 1995 1996 1995
----------- --------- -------- -------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income
(loss).................. $ 325,302 127,095 19,314 3,105 4,423 70 (13,203) 2,658
Net realized capital gain
(loss).................. 89,254 31,866 -- -- 16,311 3,066 5,005 (5,399)
Net change in unrealized
appreciation/depreciation
of investments.......... 1,408,104 426,743 -- -- 189,711 126,529 214,284 45,378
----------- --------- -------- -------- --------- ------- --------- -------
Increase (decrease) from
operations.............. 1,822,660 585,704 19,314 3,105 210,445 129,665 206,086 42,637
----------- --------- -------- -------- --------- ------- --------- -------
CONTRACT TRANSACTIONS
Net contract purchase
payments................ 8,945,238 3,101,963 849,831 364,210 451,716 171,807 996,418 414,317
Transfer payments from
(to) other subaccounts
or general account...... 3,698,118 359,061 (403,786) (120,602) 506,790 123,270 843,943 (11,421)
Contract terminations,
withdrawals, and other
deductions.............. (390,272) (116,242) -- -- (68,621) (36,468) (69,872) (27,021)
----------- --------- -------- -------- --------- ------- --------- -------
Increase from contract
transactions............ 12,253,084 3,344,782 446,045 243,608 889,885 258,609 1,770,489 375,875
----------- --------- -------- -------- --------- ------- --------- -------
Net increase in contract
owners' equity.......... 14,075,744 3,930,486 465,359 246,713 1,100,330 388,274 1,976,575 418,512
----------- --------- -------- -------- --------- ------- --------- -------
CONTRACT OWNERS' EQUITY
Beginning of period...... 5,750,473 1,819,987 302,398 55,685 959,141 570,867 797,587 379,075
----------- --------- -------- -------- --------- ------- --------- -------
End of period............ $19,826,217 5,750,473 767,757 302,398 2,059,471 959,141 2,774,162 797,587
=========== ========= ======== ======== ========= ======= ========= =======
</TABLE>
/1/Period from June 16, 1995 (commencement of operations) to December 31, 1995
/2/Period from June 28, 1995 (commencement of operations) to December 31, 1995
/3/Period from April 28, 1995 (commencement of operations) to December 31, 1995
/4/Period from December 13, 1996 (commencement of operations) to December 31,
1996
See accompanying Notes to Financial Statements.
8
<PAGE>
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<TABLE>
<CAPTION>
DREYFUS DREYFUS U.S. T. ROWE PRICE T. ROWE PRICE
VALUE SMALL CAP GOVERNMENT EQUITY GROWTH OPPORTUNITY
EQUITY VALUE SECURITIES INCOME STOCK VALUE
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
- ------------------ ------------------ ---------------- ------------------ ------------------ -----------
1996 1995 1996 1995 1996 1995/1/ 1996 1995/2/ 1996 1995/3/ 1996/4/
- --------- ------- --------- ------- ------- ------- --------- ------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
14,765 (2,984) 30,082 2,286 9,258 (658) (6,843) (702) 1,959 (930) (8)
20,748 12,440 19,083 3,137 (2,573) 802 11,322 2,964 4,575 810 --
288,669 58,248 233,035 45,887 1,717 5,718 205,913 21,338 158,184 15,903 (106)
- --------- ------- --------- ------- ------- ------- --------- ------- --------- ------- -------
324,182 67,704 282,200 51,310 8,402 5,862 210,392 23,600 164,718 15,783 (114)
- --------- ------- --------- ------- ------- ------- --------- ------- --------- ------- -------
1,032,776 452,866 581,260 337,487 336,517 223,574 1,120,024 269,068 890,676 203,721 179,807
598,804 138,439 367,127 (3,930) 111,586 834 458,878 86,340 250,896 38,125 --
(61,807) (2,005) (22,302) (23,639) (21,050) -- (55,759) (1,049) (8,247) (1,017) --
- --------- ------- --------- ------- ------- ------- --------- ------- --------- ------- -------
1,569,773 589,300 926,085 309,918 427,053 224,408 1,523,143 354,359 1,133,325 240,829 179,807
- --------- ------- --------- ------- ------- ------- --------- ------- --------- ------- -------
1,893,955 657,004 1,208,285 361,228 435,455 230,270 1,733,535 377,959 1,298,043 256,612 179,693
- --------- ------- --------- ------- ------- ------- --------- ------- --------- ------- -------
759,507 102,503 646,003 284,775 230,270 -- 377,959 -- 256,612 -- --
- --------- ------- --------- ------- ------- ------- --------- ------- --------- ------- -------
2,653,462 759,507 1,854,288 646,003 665,725 230,270 2,111,494 377,959 1,554,655 256,612 179,693
========= ======= ========= ======= ======= ======= ========= ======= ========= ======= =======
<CAPTION>
VALUE
EQUITY GROWTH
SUBACCOUNT SUBACCOUNT
- ------------------- ---------------------
1996 1996 1995
- ---------- ---------- ----------
<S> <C> <C>
14,765 265,555 124,250
20,748 14,783 14,046
288,669 116,697 107,742
- ---------- ---------- ----------
324,182 397,035 246,038
- ---------- ---------- ----------
1,032,776 2,506,213 664,913
598,804 963,880 108,006
(61,807) (82,614) (25,043)
- ---------- ---------- ----------
1,569,773 3,387,479 747,876
- ---------- ---------- ----------
1,893,955 3,784,514 993,914
- ---------- ---------- ----------
759,507 1,420,996 427,082
- ---------- ---------- ----------
2,653,462 5,205,510 1,420,996
========== ========== ==========
</TABLE>
9
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THE AUSA ENDEAVOR VARIABLE ANNUITY ACCOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization -- Effective January 1, 1995, AUSA Life Insurance Company, Inc.
assumed the Endeavor Variable Annuity contracts issued by International Life
Investors Insurance Company, another indirect, wholly-owned subsidiary of AEGON
USA, Inc. ("AUSA"). In conjunction with this assumption, The AUSA Endeavor
Variable Annuity Account ("Mutual Fund Account") commenced operations on
January 1, 1995. On that same day, all the assets and liabilities of The ILI
Endeavor Variable Annuity Account were merged into the Mutual Fund Account. The
Mutual Fund Account is a segregated investment account of AUSA Life Insurance
Company, Inc. ("AUSA Life"), an indirect, wholly-owned subsidiary of AUSA, a
holding company. AUSA is an indirect, wholly-owned subsidiary of AEGON nv, a
holding company organized under the laws of The Netherlands.
The Opportunity Value Subaccount commenced operations on December 13, 1996. The
T. Rowe Price Equity Income, the U.S. Government Securities and the T. Rowe
Price Growth Stock subaccounts, as part of the Mutual Fund Account, commenced
operations on June 28, 1995, June 16, 1995, and April 28, 1995. Effective May
1, 1996, the names of the Money Market, Managed Asset Allocation, Quest for
Value Equity, Quest for Value Small Cap and U.S. Government Securities
Portfolios and Subaccounts were changed to TCW Money Market, TCW Managed Asset
Allocation, Value Equity, Value Small Cap and Dreyfus U.S. Government
Securities Portfolios and Subaccounts, respectively. Effective October 29,
1996, the names of the Value Small Cap Portfolio and Subaccount were changed to
Dreyfus Small Cap Value Portfolio and Subaccount, respectively. Effective March
24, 1995, the names of the Global Growth Portfolio and Subaccount were changed
to T. Rowe Price International Stock Portfolio and Subaccount, respectively.
The investment objective of the portfolio was changed from an investment on a
global basis to an investment on an international basis (i.e. non-U.S.
companies). The investment advisor of the Endeavor Series Trust is Endeavor
Investment Advisors, a general partnership between Endeavor Management Co. and
AUSA Financial Markets, Inc., an affiliate of AUSA Life. The investment advisor
for the WRL Series Fund, Inc. is Western Reserve Life Assurance Co. of Ohio, an
affiliate of AUSA Life.
The Mutual Fund Account is registered with the Securities and Exchange
Commission as a Unit Investment Trust pursuant to provisions of the Investment
Company Act of 1940.
Investments -- Net purchase payments received by the Mutual Fund Account are
invested in the portfolios of the Endeavor Series Trust, and the Growth
Portfolio of the WRL Series Fund, Inc. (collectively the "Series Funds"), as
selected by the contract owner. Investments are stated at the closing net asset
values per share on December 31, 1996.
Realized capital gains and losses from sale of shares in the Series Funds are
determined on the first-in, first-out basis. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed) and
dividend income is recorded on the ex-dividend date. Unrealized gains or losses
from investments in the Series Funds are credited or charged to contract
owners' equity.
Dividend Income -- Dividends received from the Series Funds investments are
reinvested to purchase additional mutual fund shares.
10
<PAGE>
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2. INVESTMENTS
A summary of the mutual fund investment at December 31, 1996 follows:
<TABLE>
<CAPTION>
NUMBER OF NET ASSET VALUE MARKET
SHARES HELD PER SHARE VALUE COST
----------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
Endeavor Series Trust
TCW Money Market Portfo-
lio...................... 767,863.040 $ 1.00 $ 767,863 $ 767,863
TCW Managed Asset Alloca-
tion Portfolio........... 109,323.685 18.84 2,059,658 1,760,437
T. Rowe Price Interna-
tional Stock Portfolio... 198,875.152 13.95 2,774,308 2,537,730
Value Equity Portfolio.... 154,195.969 17.21 2,653,713 2,304,940
Dreyfus Small Cap Value
Portfolio................ 126,139.028 14.70 1,854,244 1,575,459
Dreyfus U.S. Government
Securities Portfolio..... 59,281.758 11.23 665,734 658,299
T. Rowe Price Equity In-
come Portfolio........... 136,316.691 15.49 2,111,546 1,884,295
T. Rowe Price Growth Stock
Portfolio................ 95,437.886 16.29 1,554,683 1,380,596
Opportunity Value Portfo-
lio...................... 17,862.080 10.06 179,692 179,798
WRL Series Fund, Inc.
Growth Portfolio.......... 148,733.752 35.001280 5,205,872 5,015,303
----------- -----------
$19,827,313 $18,064,720
=========== ===========
</TABLE>
3. CONTRACT OWNERS' EQUITY
A summary of deferred annuity contracts terminable by owners at December 31,
1996 follows:
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION TOTAL
SUBACCOUNT UNITS OWNED UNIT VALUE CONTRACT VALUE
- ---------- ------------- ------------ --------------
<S> <C> <C> <C>
TCW Money Market..................... 665,174.123 $ 1.154219 $ 767,757
TCW Managed Asset Allocation......... 1,123,469.170 1.833135 2,059,471
T. Rowe Price International Stock.... 2,084,832.841 1.330640 2,774,162
Value Equity......................... 1,565,599.143 1.694854 2,653,462
Dreyfus Small Cap Value.............. 1,239,443.264 1.496065 1,854,288
Dreyfus U.S. Government Securities... 589,779.900 1.128769 665,725
T. Rowe Price Equity Income.......... 1,387,607.312 1.521680 2,111,494
T. Rowe Price Growth Stock........... 964,658.085 1.611613 1,554,655
Opportunity Value.................... 178,913.412 1.004355 179,693
Growth............................... 306,855.075 16.964068 5,205,510
-----------
$19,826,217
===========
</TABLE>
A summary of changes in contract owners' account units follows:
<TABLE>
<CAPTION>
TCW T. ROWE DREYFUS T. ROWE T. ROWE
TCW MANAGED PRICE DREYFUS U.S. PRICE PRICE
MONEY ASSET INT'L. VALUE SMALL CAP GOV'T. EQUITY GROWTH OPPORTUNITY
MARKET ALLOCATION STOCK EQUITY VALUE SECURITIES INCOME STOCK VALUE GROWTH
SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT.
-------- ---------- --------- --------- --------- ---------- --------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Units outstanding
at 1/1/95....... 51,924 438,566 352,970 98,032 265,416 -- -- -- -- 42,491
Units purchased.. 329,022 110,905 362,256 344,140 292,146 204,064 223,477 160,519 -- 48,457
Units redeemed
and
transferred..... (109,911) 58,398 (34,132) 105,062 (22,279) 750 70,143 29,095 -- 6,488
-------- --------- --------- --------- --------- ------- --------- ------- ------- -------
Units outstanding
at 12/31/95..... 271,035 607,869 681,094 547,234 535,283 204,814 293,620 189,614 -- 97,436
Units purchased.. 750,980 264,897 798,316 680,695 445,979 305,474 810,397 615,741 178,913 156,541
Units redeemed
and
transferred..... (356,841) 250,703 605,423 337,670 258,181 79,492 283,590 159,303 -- 52,878
-------- --------- --------- --------- --------- ------- --------- ------- ------- -------
Units outstanding
at 12/31/96..... 665,174 1,123,469 2,084,833 1,565,599 1,239,443 589,780 1,387,607 964,658 178,913 306,855
======== ========= ========= ========= ========= ======= ========= ======= ======= =======
</TABLE>
11
<PAGE>
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4. TAXES
Operations of the Mutual Fund Account form a part of AUSA Life, which is taxed
as a life insurance company under Subchapter L of the Internal Revenue Code of
1986, as amended (the Code). The operations of the Mutual Fund Account are
accounted for separately from other operations of AUSA Life for purposes of
federal income taxation. The Mutual Fund Account is not separately taxable as a
regulated investment company under Subchapter M of the Code and is not
otherwise taxable as an entity separate from AUSA Life. Under existing federal
income tax laws, the income of the Mutual Fund Account, to the extent applied
to increase reserves under the variable annuity contracts, is not taxable to
AUSA Life.
5. ADMINISTRATIVE, MORTALITY AND EXPENSE RISK CHARGE
Administrative charges include an annual charge of the lesser of 2% of the
policy value or $35 per contract which will commence on the first policy
anniversary of each contract owner's account. For policies issued on or after
May 1, 1995, the fee is waived if the sum of the premium payments made less the
sum of all partial withdrawals is at least $50,000 on the policy anniversary.
Charges for administrative fees to the variable annuity contracts are an
expense of the Mutual Fund Account.
AUSA Life deducts a daily charge equal to an annual rate of 1.25% of the value
of the contract owners' account as a charge for assuming certain mortality and
expense risks. AUSA Life also deducts a daily charge equal to an annual rate of
.15% of the contract owners' account for administrative expenses.
6. NET ASSETS
At December 31, 1996 contract owners' equity was comprised of:
<TABLE>
<CAPTION>
TCW T. ROWE DREYFUS DREYFUS T. ROWE T. ROWE
TCW MANAGED PRICE SMALL U.S. PRICE PRICE
MONEY ASSET INT'L. VALUE CAP GOV'T. EQUITY GROWTH
MARKET ALLOCATION STOCK EQUITY VALUE SECURITIES INCOME STOCK
TOTAL SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT.
----------- -------- ---------- --------- --------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit transac-
tions, accumu-
lated net in-
vestment income
and realized
capital gains.. $18,063,624 767,757 1,760,250 2,537,584 2,304,689 1,575,503 658,290 1,884,243 1,380,568
Adjustment for
appreciation/depreciation
to market
value.......... 1,762,593 -- 299,221 236,578 348,773 278,785 7,435 227,251 174,087
----------- ------- --------- --------- --------- --------- ------- --------- ---------
Total Contract
Owners'
Equity......... $19,826,217 767,757 2,059,471 2,774,162 2,653,462 1,854,288 665,725 2,111,494 1,554,655
=========== ======= ========= ========= ========= ========= ======= ========= =========
<CAPTION>
OPPORTUNITY
VALUE GROWTH
SUBACCT. SUBACCT.
----------- ---------
<S> <C> <C>
Unit transac-
tions, accumu-
lated net in-
vestment income
and realized
capital gains.. 179,799 5,014,941
Adjustment for
appreciation/depreciation
to market
value.......... (106) 190,569
----------- ---------
Total Contract
Owners'
Equity......... 179,693 5,205,510
=========== =========
</TABLE>
7. PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 OR
COMMENCEMENT OF OPERATIONS TO
DECEMBER 31
---------------------------------------
1996 1995
--------------------- -----------------
PURCHASES SALES PURCHASES SALES
----------- --------- --------- -------
<S> <C> <C> <C> <C>
Endeavor Series Trust
TCW Money Market Portfolio............ $ 880,105 414,686 396,123 149,327
TCW Managed Asset Allocation
Portfolio............................ 986,607 92,138 380,622 123,035
T. Rowe Price International Stock
Portfolio............................ 1,822,939 65,520 482,406 104,421
Value Equity Portfolio................ 1,648,916 64,146 639,975 53,908
Dreyfus Small Cap Value Portfolio..... 1,110,497 154,397 436,139 124,482
Dreyfus U.S. Government Securities
Portfolio............................ 525,184 88,868 274,251 50,497
T. Rowe Price Equity Income
Portfolio............................ 1,578,572 62,231 406,641 52,973
T. Rowe Price Growth Stock Portfolio.. 1,167,599 32,296 245,760 5,852
Opportunity Value Portfolio........... 179,798 -- -- --
WRL Series Fund, Inc.
Growth Portfolio...................... 3,729,079 75,787 970,989 100,431
----------- --------- --------- -------
$13,629,296 1,050,069 4,232,906 764,926
=========== ========= ========= =======
</TABLE>
12
