SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 6 (File No. 33-57731) [X]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 7 (File No. 811-07247) [X]
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(Check appropriate box or boxes)
APL VARIABLE ANNUITY ACCOUNT 1
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(Exact Name of Registrant)
American Partners Life Insurance Company
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(Name of Depositor)
1751 AXP Financial Center, Minneapolis, MN 55474
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 671-3678
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Mary Ellyn Minenko, 200 AXP Financial Center, Minneapolis, MN 55474
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a) of rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE>
PROSPECTUS
MAY 1, 2000
PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY.
APL VARIABLE ANNUITY ACCOUNT 1
ISSUED BY: AMERICAN PARTNERS LIFE INSURANCE COMPANY (AMERICAN PARTNERS LIFE)
1751 AXP Financial Center
Minneapolis, MN 55474
800-633-4003
This prospectus contains information that you should know before investing. You
also will receive the following prospectuses:
- - American Express-Registered Trademark- Variable Portfolio Funds,
- - American Century Variable Portfolios, Inc.
- - INVESCO Variable Investment Funds, Inc.,
- - Janus Aspen Series: Institutional Shares, and
- - Warburg Pincus Trust -- Global Post-Venture Capital Portfolio
Please read the prospectuses carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS CONTRACT
INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC, and is available without charge by contacting American Partners Life at
the telephone number above or by completing and sending the order form on the
last page of this prospectus. The table of contents of the SAI is on the last
page of this prospectus.
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PROSPECTUS -- MAY 1, 2000 1
<PAGE>
TABLE OF CONTENTS
KEY TERMS.................................... 3
THE CONTRACT IN BRIEF........................ 5
EXPENSE SUMMARY.............................. 7
CONDENSED FINANCIAL INFORMATION
(UNAUDITED)................................ 9
FINANCIAL STATEMENTS......................... 10
PERFORMANCE INFORMATION...................... 11
THE VARIABLE ACCOUNT AND THE FUNDS........... 12
THE FIXED ACCOUNT............................ 14
BUYING YOUR CONTRACT......................... 14
CHARGES...................................... 16
VALUING YOUR INVESTMENT...................... 17
MAKING THE MOST OF YOUR CONTRACT............. 19
SURRENDERS................................... 21
CHANGING OWNERSHIP........................... 22
BENEFITS IN CASE OF DEATH.................... 22
THE ANNUITY PAYOUT PERIOD.................... 23
TAXES........................................ 24
VOTING RIGHTS................................ 26
SUBSTITUTION OF INVESTMENTS.................. 27
ABOUT THE SERVICE PROVIDERS.................. 27
YEAR 2000.................................... 28
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION..................... 29
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2 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
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KEY TERMS
THESE TERMS CAN HELP YOU UNDERSTAND DETAILS ABOUT YOUR CONTRACT.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person on whose life or life expectancy the annuity payouts are
based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ANNUITY START DATE: The date when annuity payouts are scheduled to begin. This
date is established when you start your contract. You can change it in the
future.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force and before annuity payouts
begin.
CLOSE OF BUSINESS: When the New York Stock Exchange (NYSE) closes, normally
4 p.m. Eastern time.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FIXED ACCOUNT: An account to which you may allocate purchase payments. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of any or all of these funds.
OWNER (YOU, YOUR): The person who controls the contract (decides on investment
allocations, transfers, payout options, etc.). Usually, but not always, the
owner is also the annuitant. The owner is responsible for taxes, regardless of
whether he or she receives the contract's benefits.
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
- - Individual Retirement Annuities (IRAs) under Section 408(b) of the Internal
Revenue Code of 1986, as amended (the Code), including rollovers from
qualified plans
- - Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
A qualified annuity will not provide any necessary or additional tax-deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
SURRENDER VALUE: The amount you are entitled to receive if you make a full
surrender from your contract. It is the contract value minus any applicable
charges.
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PROSPECTUS -- MAY 1, 2000 3
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VALUATION DATE: Any normal business day, Monday through Friday, that the NYSE is
open. Each valuation date ends at the close of business. We calculate the value
of each subaccount at the close of business on each valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each subaccount invests in shares of one fund. The value of
your investment in each subaccount changes with the performance of the
particular fund.
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4 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
THE CONTRACT IN BRIEF
PURPOSE: The purpose of the contract is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments; you may
allocate your purchase payments to the fixed account and/or subaccounts under
the contract. These accounts, in turn, may earn returns that increase the value
of the contract. Beginning at a specified time in the future called the
retirement date, the contract provides lifetime or other forms of payouts of
your contract value (less any applicable premium tax). As in the case of other
annuities, it may not be advantageous for you to purchase this contract as a
replacement for, or in addition to, an existing annuity.
A qualified annuity will not provide any necessary or additional tax-deferral if
it is used to fund a retirement plan that is tax-deferred. However, the contract
has features other than tax-deferral that may make it an appropriate investment
for your retirement plan. You should compare these features and their costs with
other investment options before deciding to purchase this contract.
FREE LOOK PERIOD: You may return your contract for a refund within ten days
after you receive it. (If the law requires, we will extend your free look
period; see your contract for details). You must invest the portion of the
purchase payment you allocate to the variable account in the AXP(SM) Variable
Portfolio -- Cash Management Fund subaccount for the period we estimate or
calculate your free look right to be in existence (generally 15 days after the
contract date or 25 days if you are replacing an existing annuity).
If you choose not to keep your contract, return it to us within the free look
period. We will cancel the contract and we promptly will refund the greater of
(1) your purchase payment without investment earnings, or (2) your contract
value plus any amount we deducted from your payment prior to allocation to the
variable account or the fixed account.
ACCOUNTS: Currently, you may allocate your purchase payments among any or all
of:
- - the subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (p. 12)
- - the fixed account, which earns interest at a rate that we adjust periodically.
(p. 14)
BUYING YOUR CONTRACT: You can purchase a contract by submitting a complete
application. Applications are subject to acceptance at our office. You may buy a
nonqualified annuity or a qualified annuity. You must make an initial lump-sum
purchase payment. You have the option of making additional purchase payments in
the future. (p. 14)
- - Minimum purchase payment -- $2,000 ($1,000 for qualified annuities) unless you
pay in installments by means of a bank authorization at a rate of $100/month
or more or other payment plan acceptable to us.
- - Minimum additional purchase payment -- $100.
- - Maximum first-year purchase payments -- $50,000 to $1,000,000 depending on
your age.
- - Maximum purchase payment for each subsequent year -- $50,000.
TRANSFERS: Subject to certain restrictions you currently may redistribute your
money among the accounts without charge at any time until annuity payouts begin.
You may establish automated transfers among the accounts. (p. 19)
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PROSPECTUS -- MAY 1, 2000 5
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SURRENDERS: You may surrender all or part of your contract value at any time
before the annuity start date. You may also establish systematic surrenders.
There is no surrender charge. Surrenders may be taxable (and include a 10% IRS
penalty if made prior to your reaching age 59 1/2) and may have other tax
consequences; also, certain restrictions apply. (p. 21)
CHANGING OWNERSHIP: You may change ownership of a nonqualified annuity by
written instruction, but this may have federal income tax consequences.
Restrictions apply to changing ownership of a qualified annuity. (p. 22)
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary the greater of the contract value or total
purchase payments made less partial surrenders. (p. 22)
ANNUITY PAYOUTS: You can apply your contract value to an annuity payout plan
that begins on the annuity start date. You may choose from a variety of plans to
make sure that payouts continue as long as you like. If you purchased a
qualified annuity, the payout schedule must meet requirements of the qualified
plan. Payouts will be made on a fixed basis. (p. 23)
TAXES: Generally, your contract grows tax-deferred until you surrender it or
begin to receive payouts. (Under certain circumstances, IRS penalty taxes may
apply.) Even if you direct payouts to someone else, you will be taxed on the
income if you are the owner. (p. 24)
CHARGES: We assess certain charges in connection with your contract:
- - $30 annual contract administrative charge;
- - 1.00% mortality and expense risk fee (if you allocate money to one or more
subaccounts);
- - any premium taxes that may be imposed on us by state or local governments
(currently, we deduct any applicable premium tax when annuity payouts begin
but we reserve the right to deduct this tax at other times such as when you
make purchase payments or when you make a total withdrawal from your
contract); and
- - the operating expenses of the funds in which the subaccounts invest.
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6 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
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EXPENSE SUMMARY
The purpose of the following information is to help you understand the various
costs and expenses associated with your contract.
You pay no sales charge when you purchase your contract. We show all costs that
we deduct directly from your contract or indirectly from the subaccounts and
funds below. Some expenses may vary as we explain under "Charges." Please see
the fund prospectuses for more information on the operating expenses for each
fund.
ANNUAL CONTRACT OWNERS EXPENSES
SURRENDER CHARGE 0%
CONTRACT ADMINISTRATIVE CHARGE* $30
ANNUAL SUBACCOUNT EXPENSES
(as a percentage of average subaccount value):
MORTALITY AND EXPENSE RISK FEE 1%
*We will waive this charge when purchase payments less partial surrenders is at
least $10,000.
ANNUAL OPERATING EXPENSES OF THE FUNDS
(AFTER FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS, IF APPLICABLE, AS A
PERCENTAGE OF AVERAGE DAILY NET ASSETS)
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<TABLE>
<CAPTION>
MANAGEMENT 12B-1 OTHER
FEES FEES EXPENSES TOTAL
<S> <C> <C> <C> <C>
AXP(SM) Variable Portfolio -
Bond Fund .60% .13 .08 .81%(1)
Capital Resource Fund .60% .13 .06 .79%(1)
Cash Management Fund .51% .13 .05 .69%(1)
International Fund .83% .13 .11 1.07%(1)
Managed Fund .59% .13 .04 .76%(1)
Strategy Aggressive Fund .60% .13 .07 .80%(1)
American Century VP
Capital Appreciation 1.00% -- -- 1.00%(2)
Value 1.00% -- -- 1.00%(2)
INVESCO VIF
Equity Income Fund .75% -- .44 1.19%(3)
Janus Aspen Series
Growth Portfolio:
Institutional Shares .65% -- .02 .67%(4)
Worldwide Growth
Portfolio: Institutional
Shares .65% -- .05 .70%(4)
Warburg Pincus Trust -
Global Post-Venture
Capital Portfolio 1.25% -- .15 1.40%(5)
</TABLE>
(1) The fund's expense figures are based on actual expenses for the fiscal year
ended Aug. 31, 1999 restated to include a Rule 12b-1 distribution fee of
.125% that went into effect Sept. 21, 1999.
(2) The fund has a stepped fee schedule. As a result, the fund's management fee
rate generally decreases as fund assets increase.
(3) Figures in "Management Fees," "Other Expenses" and "Total" are based on
actual expenses for the fiscal year ended Dec. 31, 1999.
(4) Expenses are based upon expenses for the fiscal year ended Dec. 31, 1999,
restated to reflect a reduction in the management fee for Growth and
Worldwide Growth Portfolios. All expenses are shown without the effect of
expense offset arrangements.
(5) Expense ratios are shown after fee waivers and expenses reimbursements by
the investment advisor. The total expense ratio before the waivers and
reimbursements would have been 1.58% for Warburg Pincus Global Post-Venture
Capital Portfolio.
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PROSPECTUS -- MAY 1, 2000 7
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EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and full surrender, no surrender or selection on annuity payout
plan at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
AXP(SM) Variable Portfolio -
Bond Fund 19.08 59.01 101.46 219.61
Capital Resource Fund 18.87 58.39 100.41 217.46
Cash Management Fund 17.85 55.28 95.15 206.62
International Fund 21.74 67.08 115.02 247.24
Managed Fund 18.56 57.46 98.84 214.22
Strategy Aggressive Fund 18.97 58.70 100.94 218.53
American Century VP
Capital Appreciation 21.02 64.91 111.38 239.87
Value 21.02 64.91 111.38 239.87
INVESCO VIF
Equity Income Fund 22.97 70.79 121.23 259.75
Janus Aspen Series
Growth Portfolio:
Institutional Shares 17.64 54.65 94.10 204.44
Worldwide Growth
Portfolio: Institutional
Shares 17.95 55.59 95.68 207.71
Warburg Pincus Trust -
Global Post-Venture
Capital Portfolio 25.12 77.26 132.02 281.30
</TABLE>
* In this example, the $30 contract administrative charge is approximated as
a 0.051% charge based on our average contract size. Premium taxes imposed
by some state and local governments are not reflected in this table. We
entered into certain arrangements under which we are compensated by the
funds' advisors and/or distributors for the administrative services we
provide to the funds.
YOU SHOULD NOT CONSIDER THIS EXAMPLE AS A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
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8 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
CONDENSED FINANCIAL INFORMATION
(UNAUDITED)
The following tables give per-unit information about the financial history of
each subaccount.
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999 1998 1997 1996 1995
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<S> <C> <C> <C> <C> <C>
SUBACCOUNT CSI(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - BOND FUND)
Accumulation unit value at beginning of
period $1.18 $1.17 $1.09 $1.02 $1.00
Accumulation unit value at end of period $1.18 $1.18 $1.17 $1.09 $1.02
Number of accumulation units outstanding at
end of period (000 omitted) 340 339 206 63 49
Ratio of operating expense to average net
assets 1.00% 1.00% 1.00% 1.00% 1.00%
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SUBACCOUNT CCR(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - CAPITAL RESOURCE FUND)
Accumulation unit value at beginning of
period $1.67 $1.36 $1.11 $1.03 $1.00
Accumulation unit value at end of period $2.05 $1.67 $1.36 $1.11 $1.03
Number of accumulation units outstanding at
end of period (000 omitted) 911 738 421 197 --
Ratio of operating expense to average net
assets 1.00% 1.00% 1.00% 1.00% --
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SUBACCOUNT CMS(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND)
Accumulation unit value at beginning of
period $1.13 $1.09 $1.04 $1.00 $1.00
Accumulation unit value at end of period $1.17 $1.13 $1.09 $1.04 $1.00
Number of accumulation units outstanding at
end of period (000 omitted) 949 977 151 501 2,292
Ratio of operating expense to average net
assets 1.00% 1.00% 1.00% 1.00% 1.00%
Simple yield(2) 5.01% 3.68% 4.13% 3.77% --
Compound yield(2) 5.14% 3.75% 4.22% 3.85% --
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SUBACCOUNT CIE(1) ( INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - INTERNATIONAL FUND)
Accumulation unit value at beginning of
period $1.32 $1.15 $1.13 $1.04 $1.00
Accumulation unit value at end of period $1.90 $1.32 $1.15 $1.13 $1.04
Number of accumulation units outstanding at
end of period (000 omitted) 203 178 153 75 --
Ratio of operating expense to average net
assets 1.00% 1.00% 1.00% 1.00% --
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SUBACCOUNT CMG(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - MANAGED FUND)
Accumulation unit value at beginning of
period $1.61 $1.40 $1.19 $1.02 $1.00
Accumulation unit value at end of period $1.83 $1.61 $1.40 $1.19 $1.02
Number of accumulation units outstanding at
end of period (000 omitted) 753 745 584 98 49
Ratio of operating expense to average net
assets 1.00% 1.00% 1.00% 1.00% 1.00%
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SUBACCOUNT CAG(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - STRATEGY AGGRESSIVE FUND)
Accumulation unit value at beginning of
period $1.30 $1.28 $1.15 $0.99 $1.00
Accumulation unit value at end of period $2.20 $1.30 $1.28 $1.15 $0.99
Number of accumulation units outstanding at
end of period (000 omitted) 1,005 694 452 269 101
Ratio of operating expense to average net
assets 1.00% 1.00% 1.00% 1.00% $1.00
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SUBACCOUNT CGR(3) (INVESTING IN SHARES OF AMERICAN CENTURY VP CAPITAL APPRECIATION)
Accumulation unit value at beginning of
period $0.90 $0.93 $0.97 $1.00 --
Accumulation unit value at end of period $1.46 $0.90 $0.93 $0.97 --
Number of accumulation units outstanding at
end of period (000 omitted) 397 303 256 156 --
Ratio of operating expense to average net
assets 1.00% 1.00% 1.00% 1.00% --
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</TABLE>
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PROSPECTUS -- MAY 1, 2000 9
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999 1998 1997 1996 1995
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<S> <C> <C> <C> <C> <C>
SUBACCOUNT CVL(4) (INVESTING IN SHARES OF AMERICAN CENTURY VP VALUE)
Accumulation unit value at beginning of
period $1.45 $1.40 $1.12 $1.00 --
Accumulation unit value at end of period $1.42 $1.45 $1.40 $1.12 --
Number of accumulation units outstanding at
end of period (000 omitted) 316 410 224 9 --
Ratio of operating expense to average net
assets 1.00% 1.00% 1.00% 1.00% --
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SUBACCOUNT CII(5) (INVESTING IN SHARES OF INVESCO VIF - EQUITY INCOME FUND)
Accumulation unit value at beginning of
period $1.84 $1.61 $1.28 $1.05 $1.00
Accumulation unit value at end of period $2.09 $1.84 $1.61 $1.28 $1.05
Number of accumulation units outstanding at
end of period (000 omitted) 1,188 1,205 791 131 --
Ratio of operating expense to average net
assets 1.00% 1.00% 1.00% 1.00% --
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SUBACCOUNT CSG(4) (INVESTING IN SHARES OF JANUS ASPEN SERIES GROWTH PORTFOLIO: INSTITUTIONAL SHARES)
Accumulation unit value at beginning of
period $1.75 $1.30 $1.07 $1.00 --
Accumulation unit value at end of period $2.49 $1.75 $1.30 $1.07 --
Number of accumulation units outstanding at
end of period (000 omitted) 3,232 1,631 1,020 45 --
Ratio of operating expense to average net
assets 1.00% 1.00% 1.00% 1.00% --
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SUBACCOUNT CWG(3) (INVESTING IN SHARES OF JANUS ASPEN SERIES WORLDWIDE GROWTH PORTFOLIO: INSTITUTIONAL SHARES)
Accumulation unit value at beginning of
period $1.95 $1.53 $1.26 $1.00 --
Accumulation unit value at end of period $3.17 $1.95 $1.53 $1.26 --
Number of accumulation units outstanding at
end of period (000 omitted) 2,725 2,190 1,908 295 --
Ratio of operating expense to average net
assets 1.00% 1.00% 1.00% 1.00% --
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SUBACCOUNT CVC(4) (INVESTING IN SHARES OF WARBURG PINCUS TRUST - GLOBAL POST-VENTURE CAPITAL PORTFOLIO)
Accumulation unit value at beginning of
period $1.15 $1.09 $0.98 $1.00 --
Accumulation unit value at end of period $1.87 $1.15 $1.09 $0.98 --
Number of accumulation units outstanding at
end of period (000 omitted) 270 290 231 42 --
Ratio of operating expense to average net
assets 1.00% 1.00% 1.00% 1.00% --
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</TABLE>
(1) Operations commenced on Nov. 10, 1995. CCR and CIE subaccounts had no
activity in this period.
(2) Net of annual contract administrative charge and mortality and expense risk
fee.
(3) Operations commenced on Jan. 29, 1996.
(4) Operations commenced on Sept. 4, 1996.
(5) Operations commenced on Nov. 13, 1995. CII subaccount had no activity in
this period.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the subaccounts in the SAI.
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10 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
PERFORMANCE INFORMATION
Performance information for the subaccounts may appear from time to time in
advertisements or sales literature. This information reflects the performance of
a hypothetical investment in a particular subaccount during a specified time
period. We show actual performance from the date the subaccounts began investing
in funds. We also show performance from the commencement date of the funds as if
the contract existed at that time which it did not. Although we base performance
figures on historical earnings, past performance does not guarantee future
results.
Total return figures reflect deduction of all applicable charges, including:
- - contract administrative charge, and
- - mortality and expense risk fee.
We may show total return quotations by means of schedules, charts or graphs.
AVERAGE ANNUAL TOTAL RETURN is the average annual compounded rate of return of
the investment over a period of one, five and ten years (or up to the life of
the subaccount if it is less than ten years old).
CUMULATIVE TOTAL RETURN is the cumulative change in the value of an investment
over a specified time period. We assume that income earned by the investment is
reinvested. Cumulative total return generally will be higher than average annual
total return.
ANNUALIZED SIMPLE YIELD (FOR SUBACCOUNTS INVESTING IN MONEY MARKET FUNDS)
"annualizes" the income generated by the investment over a given seven-day
period. That is, we assume the amount of income generated by the investment
during the period will be generated each seven-day period for a year. We show
this as a percentage of the investment.
ANNUALIZED COMPOUND YIELD (FOR SUBACCOUNTS INVESTING IN MONEY MARKET FUNDS) is
calculated like simple yield except that we assume the income is reinvested when
we annualize it. Compound yield will be higher than the simple yield because of
the compounding effect of the assumed reinvestment.
ANNUALIZED YIELD (FOR SUBACCOUNTS INVESTING IN INCOME FUNDS) divides the net
investment income (income less expenses) for each accumulation unit during a
given 30-day period by the value of the unit on the last day of the period. We
then convert the result to an annual percentage.
You should consider performance information in light of the investment
objectives, policies, characteristics and quality of the fund in which the
subaccount invests and the market conditions during the specified time period.
Advertised yields and total return figures include charges that reduce
advertised performance. Therefore, you should not compare subaccount performance
to that of mutual funds that sell their shares directly to the public. (See the
SAI for a further description of methods used to determine total return and
yield.)
If you would like additional information about actual performance, please
contact us at the address or telephone number on the first page of this
prospectus.
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PROSPECTUS -- MAY 1, 2000 11
<PAGE>
THE VARIABLE ACCOUNT AND THE FUNDS
You may allocate payments to any or all of the subaccounts of the variable
account that invest in shares of the following funds:
<TABLE>
<CAPTION>
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES INVESTMENT ADVISOR OR MANAGER
<C> <S> <C> <C>
CSI AXP(SM) Variable Portfolio - Objective: high level of current income IDS Life, investment manager; AEFC
Bond Fund while conserving the value of the investment advisor.
investment and continuing a high level
of income for the longest time period.
Invests primarily in bonds and other
debt obligations.
CCR AXP(SM) Variable Portfolio - Objective: capital appreciation. Invests IDS Life, investment manager; AEFC
Capital Resource Fund primarily in U.S. common stocks and investment advisor.
other securities convertible into common
stocks.
CMS AXPSM Variable Portfolio - Cash Objective: maximum current income IDS Life, investment manager; AEFC
Management Fund consistent with liquidity and investment advisor.
conservation of capital. Invests in
money market securities.
CIE AXP(SM) Variable Portfolio - Objective: capital appreciation. Invests IDS Life, investment manager; AEFC
International Fund primarily in common stocks or investment advisor. American Express
convertible securities of foreign Asset Management International, Inc., a
issuers that offer growth potential. wholly-owned subsidiary of AEFC, is the
sub-investment advisor.
CMG AXP(SM) Variable Portfolio - Objective: maximum total investment IDS Life, investment manager; AEFC
Managed Fund return through a combination of capital investment advisor.
growth and current income. Invests
primarily in a combination of common and
preferred stocks, convertible
securities, bonds and other debt
securities.
CAG AXP(SM) Variable Portfolio - Objective: capital appreciation. Invests IDS Life, investment manager; AEFC
Strategy Aggressive Fund primarily in common stocks of small-and investment advisor.
medium-size companies.
CGR American Century VP Capital Objective: capital growth. Invests American Century Investment
Appreciation primarily in common stocks that are Management, Inc.
considered by management to have
better-than-average prospects for
appreciation.
CVL American Century VP Value Objective: long-term capital growth, American Century Investment
with income as a secondary objective. Management, Inc.
Invests primarily in securities that
management believes to be undervalued at
the time of purchase.
CII Invesco VIF - Equity Income Fund Objective: high current income, with INVESCO Funds Group, Inc.
growth of capital as a secondary
objective. The Fund normally invests at
least 65% of its assets in
dividend-paying common and preferred
stocks, although in recent years that
percentage has been somewhat higher.
Stocks held by the Fund generally are
expected to produce a relatively high
level of income and a consistent, stable
return. Although it focuses on the
stocks of larger companies with a strong
record of paying dividends, the Fund
also may invest in companies that have
not paid regular dividends. The Fund's
equity investments are limited to stocks
that can be traded easily in the United
States; it may, however, invest in
foreign securities in the form of
American Depository Receipts (ADRs). The
rest of the Fund's assets are invested
in debt securities, generally corporate
bonds that are rated investment grade or
better. The Fund also may invest up to
15% of its assets in lower-grade debt
securities commonly known as "junk
bonds", which generally offer higher
interest rates, but are riskier
investment grade securities.
CSG Janus Aspen Series Growth Objective: long-term growth of capital Janus Capital Corporation
Portfolio: Institutional Shares in a manner consistent with the
preservation of capital. Invests
primarily in common stocks, with an
emphasis on companies with larger market
capitalizations.
CWG Janus Aspen Series Worldwide Growth Objective: long-term growth of capital Janus Capital Corporation
Portfolio: Institutional Shares in a manner consistent with the
preservation of capital. Invests
primarily in common stocks of foreign
and domestic issuers.
CVC Warburg Pincus Trust - Global Objective: long-term growth of capital. Credit Suisse Asset Management, LLC
Post-Venture Capital Portfolio Invests primarily in equity securities
of U.S. and foreign issuers in their
post-venture capital stage of
development.
</TABLE>
- --------------------------------------------------------------------------------
12 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
The investment objectives and policies of some of the funds are similar to the
investment objectives and policies of other mutual funds that an investment
advisor or its affiliates manage. Although the objectives and policies may be
similar, each fund will have its own portfolio holdings and its own fees and
expenses. Accordingly, each fund will have its own investment results and those
results may differ significantly from other funds with similar investment
objectives and policies.
The investment managers and advisors cannot guarantee that the funds will meet
their investment objectives. Please read the fund prospectuses for facts you
should know before investing. These prospectuses are also available by
contacting us at the address or telephone number on the first page of this
prospectus.
All funds are available to serve as the underlying investments for variable
annuities. Some funds also are available to serve as investment options for
variable life insurance policies and tax-deferred retirement plans. It is
possible that in the future, it may be disadvantageous for variable annuity
accounts and variable life insurance accounts and/or tax-deferred retirement
plans to invest in the available funds simultaneously.
Although the insurance company and the funds do not currently foresee any such
disadvantages, the boards of directors or trustees of the appropriate funds will
monitor events in order to identify any material conflicts between annuity
owners, policy owners and tax-deferred retirement plans and to determine what
action, if any, should be taken in response to a conflict. If a board were to
conclude that it should establish separate funds for the variable annuity,
variable life insurance and tax-deferred retirement plan accounts, you would not
bear any expenses associated with establishing separate funds. Please refer to
the fund prospectuses for risk disclosure regarding simultaneous investments by
variable annuity, variable life insurance and tax-deferred retirement plan
accounts.
The Internal Revenue Service (IRS) issued final regulations relating to the
diversification requirements under Section 817(h) of the Code. Each fund intends
to comply with these requirements.
The variable account was established under Arizona law on Feb. 9, 1995, and the
subaccounts are registered together as a single unit investment trust under the
Investment Company Act of 1940 (the 1940 Act). This registration does not
involve any supervision of our management or investment practices and policies
by the SEC. All obligations arising under the contracts are general obligations
of American Partners Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business.
The U.S. Treasury and the IRS indicated that they may provide additional
guidance on investment control. This concerns how many variable subaccounts an
insurance company may offer and how many exchanges among subaccounts it may
allow before the contract owner would be currently taxed on income earned within
subaccount assets. At this time, we do not know what the additional guidance
will be or when action will be taken. We reserve the right to modify the
contract, as necessary, so that the owner will not be subject to current
taxation as the owner of the subaccount assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 13
<PAGE>
THE FIXED ACCOUNT
You also may allocate purchase payments to the fixed account. We back the
principal and interest guarantees relating to the fixed account. The value of
the fixed account increases as we credit interest to the account. Purchase
payments and transfers to the fixed account become part of our general account.
We credit and compound interest daily. We will change the interest rates from
time to time at our discretion. These rates will be based on various factors
including, but not limited to, the interest rate environment, returns earned on
investments backing these annuities, the rates currently in effect for new and
existing company annuities, product design, competition, and the company's
revenues and expenses.
Interests in the fixed account are not required to be registered with the SEC.
The SEC staff does not review the disclosures in this prospectus on the fixed
account. Disclosures regarding the fixed account, however, may be subject to
certain generally applicable provisions of the federal securities laws relating
to the accuracy and completeness of statements made in prospectuses. (See
"Making the Most of Your Contract -- Transfer policies" for restrictions on
transfers involving the fixed account.)
BUYING YOUR CONTRACT
Your sales representative can help you prepare and submit your application.
Alternatively, you may ask us for the forms and prepare them yourself. As the
owner, you have all rights and may receive all benefits under the contract. You
can own a nonqualified annuity in joint tenancy with rights of survivorship only
in spousal situations. You cannot own a qualified annuity in joint tenancy.
When you apply, you may select:
- - the fixed account and/or subaccounts in which you want to invest;
- - how you want to make purchase payments;
- - the date you want to start receiving annuity payouts (the annuity start date);
and
- - a beneficiary.
If your application is complete, we will process it and apply your purchase
payment to the fixed account and subaccounts you selected within two business
days after we receive it at our office. If we accept your application, we will
send you a contract. If we cannot accept your application within five business
days, we will decline it and return your payment. We will credit additional
purchase payments you make to your accounts on the valuation date we receive
them. We will value the additional payments at the next accumulation unit value
calculated after we receive your payments at our office.
THE ANNUITY START DATE
Annuity payouts are to begin on the annuity start date. You can align this date
with your actual retirement from a job, or it can be a different future date,
depending on your needs and goals and on certain restrictions. You also can
change the date, provided you send us written instructions at least 30 days
before annuity payouts begin.
FOR NONQUALIFIED ANNUITIES, the annuity start date must be:
- - no earlier than the 60th day after the contract's effective date; and
- - no later than the annuitant's 85th birthday or before the tenth contract
anniversary, if purchased after age 75. (In Pennsylvania, the annuity start
date must be no later than the annuitant's 85th birthday.)
- --------------------------------------------------------------------------------
14 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
FOR QUALIFIED ANNUITIES, to avoid IRS penalty taxes, the annuity start date
generally must be:
- - on or after the date the annuitant reaches age 59 1/2; and
- - for qualified annuities, by April 1 of the year following the calendar year
when the annuitant reaches age 70 1/2 or, if later, retires (except that 5%
business owners may not select a retirement date that is later than April 1 of
the year following the calendar year when they reach age 70 1/2).
If you take the minimum IRA distributions as required by the Code from another
tax-qualified investment, or in the form of partial surrenders from this
contract, annuity payouts can start as late as the annuitant's 85th birthday or
the tenth contract anniversary, if later. (In Pennsylvania, annuity payouts must
start no later than the annuitant's 85th birthday.)
BENEFICIARY
If death benefits become payable before the annuity start date while the
contract is in force and before annuity payouts begin, we will pay your named
beneficiary all or part of the contract value. If there is no named beneficiary,
then you or your estate will be the beneficiary. (See "Benefits in Case of
Death" for more about beneficiaries.)
PURCHASE PAYMENTS
MINIMUM ALLOWABLE PURCHASE PAYMENTS*
<TABLE>
<S> <C>
If paying by installments under a scheduled payment plan: If paying by any other method:
$100 per month $2,000 initial payment for nonqualified
annuities
$50 biweekly $1,000 initial payment for qualified annuities
$100 for any additional payments
Installments must total at least $1,000 in the first year.
</TABLE>
* If you do not make any purchase payments for the most recent 24 months, and
your previous payments total $1,000 or less, we have the right to give you 30
days' written notice and pay you the total value of your contract in a lump
sum. This right does not apply to contracts sold to New Jersey residents.
MAXIMUM ALLOWABLE PURCHASE PAYMENTS**
For the first year, this is based on your age or the age of the annuitant
(whoever is older) on the effective date of the contract.
<TABLE>
<S> <C>
For the first year: For each subsequent year:
$1,000,000 up to age 75 $50,000
$500,000 for ages 76 to 85
$50,000 for ages 86 to 90
</TABLE>
** These limits apply in total to all American Partners Life annuities you own.
We reserve the right to increase maximum limits or reduce age limits. For
qualified annuities the tax-deferred retirement plan's or the Code's limits
on annual contributions also apply.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 15
<PAGE>
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
- --------------------------------------------------------------------------------
Send your check along with your name and contract number to:
American Partners Life Insurance Company
1751 AXP Financial Center
Minneapolis, MN 55474
2 BY SCHEDULED PAYMENT PLAN
- --------------------------------------------------------------------------------
Through:
- - a bank authorization.
3 OTHER
- --------------------------------------------------------------------------------
- - wire transfer; or
- - other method acceptable to us.
CHARGES
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $30
from the contract value on your contract anniversary at the end of each contract
year. We prorate this charge among the subaccounts and the fixed account in the
same proportion your interest in each account bears to your total contract
value.
We will waive this charge for any contract year where:
- - the total purchase payments (less partial surrenders) on the current contract
anniversary is $10,000 or more, or
- - a death benefit is payable, or
- - you surrender the contract in full.
This charge does not apply after annuity payouts begin.
We reserve the right to increase the annual contract administrative charge in
the future, but we guarantee that it will never exceed $50 per year. Also, we
reserve the right to impose the charge on all contracts, including those with
purchase payments equal to or greater than $10,000.
- --------------------------------------------------------------------------------
16 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
MORTALITY AND EXPENSE RISK FEE
We charge this fee daily to the subaccounts. The unit values of your subaccounts
reflect this fee and it totals 1% of their average daily net assets on an annual
basis. This fee covers the mortality risk and expense risk that we assume.
Approximately two-thirds of this amount is for our assumption of mortality risk,
and one-third is for our assumption of expense risk. This fee does not apply to
the fixed account.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific annuitant lives and no matter how long our entire
group of annuitants live. If, as a group, annuitants outlive the life expectancy
we assumed in our actuarial tables, then we must take money from our general
assets to meet our obligations. If, as a group, annuitants do not live as long
as expected, we could profit from the mortality risk fee.
Expense risk arises because the contract administrative charge may not cover our
expenses. We would have to make up any deficit from our general assets. We could
profit from the expense risk fee if future expenses are less than expected.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses.
OTHER INFORMATION ON CHARGES
There is no surrender charge if you take a total or a partial surrender from
your contract.
In some cases, we may incur lower sales and administrative expenses. In those
cases, we may, at our discretion, reduce or eliminate the contract
administrative charge. However, we expect this to occur infrequently.
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was sold. Currently, we deduct any applicable premium tax when annuity
payouts begin, but we reserve the right to deduct this tax at other times such
as when you make purchase payments or when you make a full withdrawal from your
contract.
VALUING YOUR INVESTMENT
We value your accounts as follows:
FIXED ACCOUNT
We value the amounts allocated to the fixed account directly in dollars. The
fixed account value equals:
- - the sum of your purchase payments;
- - plus interest credited;
- - minus the sum of amounts surrendered and amounts transferred out; and
- - minus any prorated contract administrative charge.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts, we credit a certain number of accumulation units to your contract
for that account.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 17
<PAGE>
Conversely, each time you take a partial surrender, transfer amounts out of a
subaccount or we assess a contract administrative charge, we subtract a certain
number of accumulation units from your contract.
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses. Here is
how we calculate accumulation unit values:
NUMBER OF UNITS: to calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: the current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
- - 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
- - dividing that sum by the previous adjusted net asset value per share; and
- - subtracting the percentage factor representing the mortality and expense risk
fee from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
- - additional purchase payments you allocate to the subaccounts;
- - transfers into or out of the subaccounts;
- - partial surrenders; and/or
- - prorated portions of the contract administrative charge.
Accumulation unit values will fluctuate due to:
- - changes in funds' net asset value;
- - dividends distributed to the subaccounts;
- - capital gains or losses of funds;
- - mutual fund operating expenses; and/or
- - mortality and expense risk fees.
- --------------------------------------------------------------------------------
18 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the fixed account to one or
more subaccounts. There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMOUNT ACCUMULATION NUMBER OF UNITS
MONTH INVESTED UNIT VALUE PURCHASED
<S> <C> <C> <C>
By investing an Jan $100 $20 5.00
equal number of Feb 100 18 5.56
dollars each month... Mar 100 17 5.88
you automatically Apr 100 15 6.67
buy more units May 100 16 6.25
when the per unit Jun 100 18 5.56
market price is low... Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit Sept 100 21 4.76
market price is high. Oct 100 20 5.00
</TABLE>
You paid an average price of only $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact our office.
TRANSFERRING MONEY BETWEEN ACCOUNTS
You may transfer money from any one subaccount, or the fixed account, to another
subaccount before annuity payouts begin. We will process your transfer request
on the valuation date we receive your request. We will value your transfer at
the next accumulation unit value calculated after we receive your request. There
is no charge for transfers. Before making a transfer, you should consider the
risks involved in switching investments.
We may suspend or modify transfer privileges at any time. Excessive trading
activity can disrupt fund management strategy and increase expenses, which are
borne by all contract owners who allocated purchase payments to the fund
regardless of their transfer activity. We may apply modifications or
restrictions in any reasonable manner to prevent transfers we believe will
disadvantage other contract owners. For information on transfers after annuity
payouts begin, see "Transfer policies" below.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 19
<PAGE>
TRANSFER POLICIES
- - You may transfer contract values at any time between the subaccounts, from the
subaccounts to the fixed account or from the fixed account to the subaccounts.
- - The amount transferred to any one account must be at least $100.
- - If you make more than twelve transfers in a contract year, we will charge $25
for each transfer in excess of twelve.
- - We reserve the right to limit the number of transfers to twelve per contract
year.
HOW TO REQUEST A TRANSFER OR SURRENDER
1 BY LETTER
- --------------------------------------------------------------------------------
Send your name, contract number, Social Security Number or Taxpayer
Identification Number and signed request for a transfer or surrender to:
American Partners Life Insurance Company
1751 AXP Financial Center
Minneapolis, MN 55474
MINIMUM AMOUNT
Transfers or surrenders: $100 or entire account balance
MAXIMUM AMOUNT
Transfers or surrenders: Contract value
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL SURRENDERS
- --------------------------------------------------------------------------------
You can set up automated transfers among your subaccounts or fixed account or
partial surrenders from the accounts.
You can start or stop this service by written request or other method acceptable
to us. You must allow 30 days for us to change any instructions that are
currently in place.
- - Automated transfers and automated partial surrenders are subject to all of the
contract provisions and terms, including transfer of contract values between
accounts. Automated surrenders may be restricted by applicable law under some
contracts.
- - Automated partial surrenders may result in IRS taxes and penalties on all or
part of the amount surrendered.
MINIMUM AMOUNT
Transfers or surrenders: $100
- --------------------------------------------------------------------------------
20 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
3 BY PHONE
- --------------------------------------------------------------------------------
Call between 8 a.m. and 6 p.m. Central time:
1-800-633-4003
TTY service for the hearing impaired:
1-800-710-5260 (TOLL FREE)
MINIMUM AMOUNT
Transfers or surrenders:
$100 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value
Surrenders: $50,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or surrender requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and tape recording calls. We will not
allow a telephone surrender within 30 days of a phoned-in address change. As
long as we follow the procedures, we (and our affiliates) will not be liable for
any loss resulting from fraudulent requests.
Telephone transfers or surrenders are automatically available. You may request
that telephone transfers or surrenders NOT be authorized from your account by
writing to us.
SURRENDERS
You may surrender all or part of your contract at any time before annuity
payouts begin by sending us a written request or calling us. We will process
your surrender request on the valuation date we receive it. For total
surrenders, we will compute the value of your contract at the next accumulation
unit value calculated after we receive your request. We may ask you to return
the contract. You may have to pay IRS taxes and penalties (see "Taxes"). You can
make surrenders after annuity payouts begin.
SURRENDER POLICIES
If you have a balance in more than one account and you request a partial
surrender, we will withdraw money from all your subaccounts and/or the fixed
account in the same proportion as your value in each account correlates to your
total contract value, unless you request otherwise.
RECEIVING PAYMENT
By regular or express mail:
- - payable to you.
- - mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 21
<PAGE>
Normally, we will send the payment within seven days after receiving your
request. However, we may postpone the payment if:
-- the surrender amount includes a purchase payment check that has not
cleared;
-- the NYSE is closed, except for normal holiday and weekend closings;
-- trading on the NYSE is restricted, according to SEC rules;
-- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
-- the SEC permits us to delay payment for the protection of security holders.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our office. The change
will become binding upon us when we receive and record it. We will honor any
change of ownership request that we believe is authentic and we will use
reasonable procedures to confirm authenticity. If we follow these procedures, we
will not take any responsibility for the validity of the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in similar capacity, ownership of the contract may be
transferred to the annuitant.
BENEFITS IN CASE OF DEATH
If you or the annuitant die before annuity payouts begin while the contract is
in force, we will pay the beneficiary the greater of:
- - the contract value; or
- - purchase payments, minus any partial surrenders.
IF YOUR SPOUSE IS SOLE BENEFICIARY under a nonqualified annuity and you die
before the annuity start date, your spouse may keep the contract as owner. To do
this your spouse must, within 60 days after we receive proof of death, give us
written instructions to keep the contract in force.
Under a qualified annuity, if the annuitant dies before the Code requires
distributions to begin, and the spouse is the only beneficiary, the spouse may
keep the contract as owner until the date on which the annuitant would have
reached age 70 1/2 or any other date permitted by the Code. To do this, the
spouse must give us written instructions within 60 days after we receive proof
of death.
PAYMENTS: Under a nonqualified annuity we will pay the beneficiary in a single
sum unless you give us other written instructions. We must fully distribute the
death benefit within five years of your death. However, the beneficiary may
receive payouts under any annuity payout plan available under this contract if:
- - the beneficiary asks us in writing within 60 days after we receive proof of
death; and
- --------------------------------------------------------------------------------
22 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
- - payouts begin no later than one year after your death, or other date as
permitted by the Code; and
- - the payout period does not extend beyond the beneficiary's life or life
expectancy.
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value at the next accumulation unit value calculated after our death
claim requirements are fulfilled. We pay interest, if any, from the date of
death at a rate no less than required by law. We will mail payment to the
beneficiary within seven days after our death claim requirements are fulfilled.
Other rules may apply to qualified annuities. (See "Taxes.")
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the annuity start date. You may select one of
the annuity payout plans outlined below, or we may mutually agree on other
payout arrangements.
The amount available to purchase payouts under the plan you select is the
contract value (less any applicable premium tax) on your annuity start date. We
will make annuity payouts on a fixed basis.
Amounts of payouts depend on:
- - the annuity payout plan you select;
- - the annuitant's age and, in most cases, sex; and
- - the annuity table in the contract.
For information with respect to transfers between accounts after annuity payouts
begin, see "Making the Most of Your
Contract -- Transfer policies."
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan:
- - PLAN A -- LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we have made only one monthly payout, we will not make any more
payouts.
- - PLAN B -- LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the annuity start date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
- - PLAN C -- LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until
the annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
- - PLAN D -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 23
<PAGE>
- - PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make payouts
only for the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. In addition, a 10% IRS penalty tax could
apply under this payout plan. (See "Taxes.")
RESTRICTIONS FOR SOME TAX-DEFERRED RETIREMENT PLANS: If you purchased a
qualified annuity, you may be required to select a payout plan that provides for
payouts:
- - over the life of the annuitant;
- - over the joint lives of the annuitant and a designated beneficiary;
- - for a period not exceeding the life expectancy of the annuitant; or
- - for a period not exceeding the joint life expectancies of the annuitant and a
designated beneficiary.
You have the responsibility for electing a payout plan that complies with your
contract and with applicable law.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN
If you or the annuitant die after annuity payouts begin, we will pay any amount
payable to the beneficiary as provided in the annuity payout plan in effect.
TAXES
Generally, under current law, your contract has a tax-deferral feature. This
means any increase in the value of the fixed account and/or subaccounts in which
you invest is taxable to you only when you receive a payout or surrender (see
detailed discussion below). Any portion of the annuity payouts and any
surrenders you request that represent ordinary income are normally taxable. We
will send you a tax information reporting form for any year in which we made a
taxable distribution according to our records.
ANNUITY PAYOUTS UNDER NONQUALIFIED ANNUITIES: A portion of each payout will be
ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment and will not be taxed. All
amounts you receive after your investment in the contract is fully recovered
will be subject to tax.
Tax law requires that all nonqualified deferred annuities issued by the same
company (and possibly its affiliates) to the same owner during a calendar year
be taxed as a single, unified contract when you take distributions from any one
of those contracts.
QUALIFIED ANNUITIES: Your contract may be used to fund a tax-deferred retirement
plan that is already tax-deferred under the Code. The contract will not provide
any necessary or additional tax-deferral if it is used to fund a retirement plan
that is tax-deferred. Special rules apply to these retirement plans. Your rights
to benefits may be subject to the terms and conditions of these retirement plans
regardless of the terms of the contract.
- --------------------------------------------------------------------------------
24 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions during your life and after your death. You should refer
to your retirement plan or adoption agreement or consult a tax advisor for more
information about your distribution rules.
ANNUITY PAYOUTS UNDER QUALIFIED ANNUITIES: Under a qualified annuity, the entire
payout generally is includable as ordinary income and is subject to tax except
to the extent that contributions were made with after-tax dollars. If you or
your employer invested in your contract with deductible or pre-tax dollars as
part of a qualified retirement plan, such amounts are not considered to be part
of your investment in the contract and will be taxed when paid to you.
SURRENDERS: If you surrender part or all of your contract before your annuity
payouts begin, your surrender payment will be taxed to the extent that the value
of your contract immediately before the surrender exceeds your investment. You
also may have to pay a 10% IRS penalty for surrenders you make before reaching
age 59 1/2 unless certain exceptions apply. For qualified annuities, other
penalties may apply if you surrender your contract before your plan specifies
that you can receive payouts.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a contract is not
tax-exempt. Any amount your beneficiary receives that represents previously
deferred earnings within the contract is taxable as ordinary income to the
beneficiary in the years he or she receives the payments.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR TRUSTS: For nonqualified
annuities any annual increase in the value of annuities held by such entities
generally will be treated as ordinary income received during that year. This
provision is effective for purchase payments made after Feb. 28, 1986. However,
if the trust was set up for the benefit of a natural person only, the income
will remain tax-deferred.
PENALTIES: If you receive amounts from your contract before reaching age 59 1/2,
you may have to pay a 10% IRS penalty on the amount includable in your ordinary
income. However, this penalty will not apply to any amount received by you or
your beneficiary:
- - because of your death;
- - because you become disabled (as defined in the Code);
- - if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary); or
- - if it is allocable to an investment before Aug. 14, 1982 (except for qualified
annuities).
For a qualified annuity, other penalties or exceptions may apply if you
surrender your contract before your plan specifies that payouts can be made.
WITHHOLDING, GENERALLY: If you receive all or part of the contract value, we may
deduct withholding against the taxable income portion of the payment. Any
withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual tax return.
If the payment is part of an annuity payout plan, we generally compute the
amount of withholding using payroll tables. You may provide us with a statement
of how many exemptions to use in calculating the withholding. As long as you've
provided us with a valid Social Security Number or Taxpayer Identification
Number, you can elect not to have any withholding occur.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 25
<PAGE>
If the distribution is any other type of payment (such as a partial or full
surrender), we compute withholding using 10% of the taxable portion. Similar to
above, as long as you have provided us with a valid Social Security Number or
Taxpayer Identification Number, you can elect not to have this withholding
occur.
Some states also impose withholding requirements similar to the federal
withholding described above. If this should be the case, we may deduct state
withholding from any payment from which we deduct federal withholding. The
withholding requirements may differ if we are making payment to a non-U.S.
citizen or if we deliver the payment outside the United States.
TRANSFER OF OWNERSHIP OF A NONQUALIFIED ANNUITY: If you transfer a nonqualified
annuity without receiving adequate consideration, the transfer is a gift and
also may be a surrender for federal income tax purposes. If the gift is a
currently taxable event for income tax purposes, the original owner will be
taxed on the amount of deferred earnings at the time of the transfer and also
may be subject to the 10% IRS penalty discussed earlier. In this case, the new
owner's investment in the contract will be the value of the contract at the time
of the transfer.
COLLATERAL ASSIGNMENT OF A NONQUALIFIED ANNUITY: If you collaterally assign or
pledge your contract, earnings on purchase payments you made after Aug. 13, 1982
will be taxed to you like a surrender.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As an owner with investments in the subaccounts, you may vote on important fund
policies. We will vote fund shares according to your instructions.
The number of votes you have is determined by applying your percentage interest
in each subaccount to the total number of votes allowed to the subaccount.
We calculate votes separately for each subaccount. We will send notice of these
meetings, proxy materials and a statement of the number of votes to which the
voter is entitled.
We will vote shares for which we have not received instructions in the same
proportion as the votes for which we received instructions. We also will vote
the shares for which we have voting rights in the same proportion as the votes
for which we received instructions.
- --------------------------------------------------------------------------------
26 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
- - laws or regulations change,
- - the existing funds become unavailable, or
- - in our judgment, the funds no longer are suitable for the subaccounts.
If any of these situations occur and if we believe it is in the best interest of
persons having voting rights under the contract, we have the right to substitute
funds other than those currently listed in this prospectus.
We may also:
- - change the funds in which the subaccounts invest, and
- - make additional subaccounts investing in additional funds.
In the event of substitution of any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments. We will notify
you of any substitution or change.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
American Express Financial Advisors Inc. (AEFA) serves as the principal
underwriter and distributes the contracts. Its offices are located at 200 AXP
Financial Center, Minneapolis, MN 55474. AEFA is a wholly-owned subsidiary of
American Express Financial Corporation (AEFC) which is a wholly-owned subsidiary
of American Express Company.
ISSUER
American Partners Life issues the contracts. American Partners Life is a
wholly-owned subsidiary of IDS Life, which is a wholly-owned subsidiary of AEFC.
AEFC is a wholly-owned subsidiary of American Express Company. American Express
Company is a financial services company principally engaged through subsidiaries
(in addition to AEFC) in travel related services, investment services and
international banking services.
American Partners Life is a stock life insurance company organized in 1988 under
the laws of the State of Arizona. Our offices are located at 1751 AXP Financial
Center, Minneapolis, MN 55474. Its statutory address is 3225 North Central
Avenue, Phoenix, AZ 85012. American Partners Life conducts a conventional life
insurance business.
LEGAL PROCEEDINGS
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which American Partners Life and its affiliates do business
involving insurers' sales practices, alleged agent misconduct, failure to
properly supervise agents and other matters. IDS Life is a defendant in three
class action lawsuits of this nature. American Partners Life is a named
defendant in one of these suits, RICHARD W. AND ELIZABETH J. THORESEN VS.
AMERICAN EXPRESS FINANCIAL CORPORATION, AMERICAN CENTURION LIFE ASSURANCE
COMPANY, AMERICAN ENTERPRISE LIFE INSURANCE COMPANY, AMERICAN PARTNERS LIFE
INSURANCE COMPANY, IDS LIFE INSURANCE COMPANY AND IDS LIFE INSURANCE COMPANY OF
NEW YORK which was commenced in Minnesota State Court in October 1998. The
action was brought by individuals who purchased an annuity in a qualified plan.
The plaintiffs allege that the
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 27
<PAGE>
sale of annuities in tax-deferred contributory retirement investment plans
(E.G., IRAs) is never appropriate. The plaintiffs purport to represent a class
consisting of all persons who made similar purchases. The plaintiffs seek
damages in an unspecified amount.
American Partners Life is included as a party to preliminary settlement of all
three class action lawsuits. We believe this approach will put these cases
behind us and provide a fair outcome for our clients. Our decision to settle
does not include any admission of wrongdoing. We do not anticipate that this
proposed settlement, or any other lawsuits in which American Partners Life is a
defendant, will have a material adverse effect on our financial condition.
YEAR 2000
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 Partners Life
and the variable account. All of the major systems used by American Partners
Life and the variable account are maintained by AEFC and are utilized by
multiple subsidiaries and affiliates of AEFC. American Partners Life's and the
variable account's businesses are heavily dependent upon AEFC's computer systems
and have significant interaction with systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to American Partners Life and the variable 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 Partners Life's
and the variable 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 Partners Life's and
the variable account's business, results of operations, or financial condition
as a result of the Year 2000 issue.
- --------------------------------------------------------------------------------
28 PRIVILEGED ASSETS-REGISTERED TRADEMARK- SELECT ANNUITY
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION
Performance Information.......... ........... 3
Calculating Annuity Payouts.................. 6
Rating Agencies.............................. 6
Principal Underwriter........................ 6
Independent Auditors......................... 6
Financial Statements
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 29
<PAGE>
Please check the appropriate box to receive a copy of the Statement of
Additional Information for:
/ / Privileged Assets-Registered Trademark- Select Annuity
/ / American Express Variable Portfolio Funds
/ / American Century Variable Portfolios, Inc.
/ / INVESCO Variable Investment Funds, Inc.
/ / Janus Aspen Series
/ / Warburg Pincus Trust -- Global Post-Venture Capital Portfolio
MAIL YOUR REQUEST TO:
American Partners Life Insurance Company
1751 AXP Financial Center
Minneapolis, MN 55474
WE WILL MAIL YOUR REQUEST TO:
Your name _____________________________________________________________________
Address _______________________________________________________________________
City _________________________ State ___________ Zip ________________________
<PAGE>
THIS PAGE IS NOT PART OF THE PROSPECTUS.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
PRIVILEGED ASSETS(R) SELECT ANNUITY
APL VARIABLE ANNUITY ACCOUNT 1
May 1, 2000
APL Variable Annuity Account 1 is a separate account established and maintained
by American Partners Life Insurance Company (American Partners 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 Partners Life Insurance Company
P.O. Box 59197
Minneapolis, MN 55459-0197
800-633-4003
<PAGE>
TABLE OF CONTENTS
Performance Information..................................................p. 3
Calculating Annuity Payouts..............................................p. 6
Rating Agencies..........................................................p. 6
Principal Underwriter....................................................p. 6
Independent Auditors.....................................................p. 6
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. We show actual performance from the date the
subaccounts began investing in the funds. We also show performance from the
commencement date of the funds as if the contract existed at that time, which it
did not. Although we base performance figures on historical earnings, past
performance does not guarantee future results.
Average Annual Total Return For Periods Ending Dec. 31, 1999
<TABLE>
<CAPTION>
Performance since
commencement of the Performance since
subaccount commencement of the Fund**
<S> <C> <C> <C> <C> <C> <C>
Since Since
Subaccount Investing In: 1 Year commencement 1 Year 5 Years 10 Years commencement
AXPSM VARIABLE PORTFOLIO
CSI Bond Income Fund (11/95; 10/81)* 0.69% 4.42% 0.69% 6.94% 7.10% 9.62%
CCR Capital Resource Fund (11/95; 22.52 19.03 22.52 20.15 14.36 14.83
10/81)
CMS Cash Management Fund (11/95; 3.69 3.98 3.69 4.07 3.86 5.53
10/81)
CIE International Fund (11/95; 1/92) 44.18 17.03 44.18 15.04 -- 12.25
CMG Managed Fund (11/95; 4/86) 13.70 15.89 13.70 17.04 12.41 11.76
CAG Strategy Aggressive Fund (11/95; 69.33 20.97 69.33 23.56 -- 15.86
1/92)
AMERICAN CENTURY VARIABLE
PORTFOLIOS, INC.
CGR VP Capital Appreciation (1/96; 62.89 10.13 62.89 13.17 10.28 10.92
11/87)
CVL VP Value (9/96; 5/96) -1.84 11.09 -1.84 -- -- 10.00
INVESCO
CII VIF Equity Income Fund (11/95; 13.70 19.55 13.70 20.60 -- 19.04
8/94)
JANUS ASPEN SERIES
CSG Growth Portfolio: Institutional 42.55 31.53 42.55 28.60 -- 23.03
Shares (9/96; 9/93)
CWG Worldwide Growth Portfolio: 62.82 34.14 62.82 32.27 -- 28.41
Institutional Shares (1/96; 9/93)
WARBURG PINCUS TRUST
CVC Global Post-Venture Capital 61.87 20.60 61.87 -- -- 20.58
Portfolio (9/96; 9/96)
</TABLE>
<PAGE>
* (Commencement dates of the subaccounts; Commencement dates of the Funds)
** Current applicable charges deducted from fund performance include a $30
contract administrative charge and a 1% mortality and expense risk fee.
Premium taxes are not reflected in these total returns.
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 assume you surrender 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). In addition, total return figures reflect the deduction of all
other applicable charges including the contract administrative charge 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 any realized or unrealized gains or losses.
Annualized Compound Yield:
We calculate compound yield using the base period return described above, which
we then compound according to the following formula:
Compound Yield = [(Base Period Return + 1)365/7] -1
Annualized Yields Based on the Seven-Day Period Ending Dec. 31, 1999
Subaccount Investing In: Simple Yield Compound Yield
- ---------- ------------- ------------ --------------
CMS AXPSM Variable Portfolio - 5.01% 5.14%
<PAGE>
You must consider (when comparing an investment in subaccounts investing in
money market funds with fixed annuities) that fixed annuities often provide an
agreed-to or guaranteed yield for a stated period of time, whereas the
subaccount's yield fluctuates. In comparing the yield of the subaccount to a
money market fund, you should consider the different services that the contract
provides.
Annualized Yield for Subaccounts Investing in Income Funds
For the subaccounts investing in income funds, we base quotations of yield on
all investment income earned during a particular 30-day period, less expenses
accrued during the period (net investment income) and compute it by dividing net
investment income per accumulation unit by the value of an accumulation unit on
the last day of the period, according to the following formula:
YIELD = 2[( a-b + 1)6 - 1]
cd
where: a = dividends and investment income earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of accumulation units outstanding
during the period that were entitled to receive dividends
d = the maximum offering price per accumulation unit on the last
day of the period
The subaccount earns yield from the increase in the net asset value of shares of
the fund in which it invests and from dividends declared and paid by the fund,
which are automatically invested in shares of the fund.
Annualized Yield Based on the 30-Day Period Ended Dec. 31, 1999
Subaccount Investing In: Yield
- ---------- ------------- -----
CSI AXPSM Variable Portfolio - Bond Fund 7.48%
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.
<PAGE>
CALCULATING ANNUITY PAYOUTS
We guarantee the fixed annuity payout amounts. Once calculated, the payout will
remain the same and never change. To calculate annuity payouts we:
o take the total value of the fixed account and the subaccounts at the
annuity start date or the date selected to begin receiving annuity payouts;
then
o using an annuity table we apply the value according to the annuity payout
plan selected.
The annuity payout table we use will be the one in effect at the time chosen to
begin annuity payouts. The table will be equal to or greater than the table in
the contract.
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 the fixed 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
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.
PRINCIPAL UNDERWRITER
The principal underwriter for the contract is American Express Financial
Advisors Inc. (AEFA) which offers the contract on a continuous basis.
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>
APL Variable Annuity Account 1
Annual Financial Information
Report of Independent Auditors
The Board of Directors
American Partners Life Insurance Company
We have audited the accompanying individual and combined statements of net
assets of the segregated asset subaccounts of APL Variable Annuity Account 1
(comprised of subaccounts CSI, CCR, CMS, CIE, CMG, CAG, CGR, CVL, CII, CSG, CWG,
and CVC) as of December 31, 1999, and the related statements of operations for
the year then ended, and statements of changes in net assets for each of the two
years in the period then ended. These financial statements are the
responsibility of the management of American Partners 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 APL Variable Annuity Account 1 (as described
above) at December 31, 1999, and the individual and combined results of their
operations and changes in their net assets for the periods described above, in
conformity with accounting principles generally accepted in the United States.
ERNST & YOUNG LLP
Minneapolis, Minnesota
March 17, 2000
<PAGE>
<TABLE>
<CAPTION>
APL Variable Annuity Account 1
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets CSI CCR CMS CIE
Investments in shares of mutual funds and portfolios:
<S> <C> <C> <C> <C>
at cost $ 421,549 $ 1,563,438 $ 1,928,843 $ 312,155
--------- ----------- ----------- ---------
at market value $ 400,381 $ 1,864,338 $ 1,928,842 $ 385,773
Dividends receivable 2,469 -- 5,696 --
Accounts receivable from American Partners Life
for contract purchase payments -- 1,007 -- --
Receivable from mutual funds and portfolios
for share redemptions -- -- -- --
------ ------- ------- ------
Total assets 402,850 1,865,345 1,934,538 385,773
======= ========= ========= =======
Liabilities
Payable to American Partners Life for:
Mortality and expense risk fee 342 1,575 1,079 331
Contract terminations 5 -- 820,678 --
Payable to mutual funds and portfolios
for investments purchased -- -- -- --
----- ------- -------- ----
Total liabilities 347 1,575 821,757 331
--- ----- ------- ---
Net assets applicable to contracts
in accumulation period $ 402,503 $ 1,863,770 $ 1,112,781 $ 385,442
--------- ----------- ----------- ---------
Accumulation units outstanding 339,740 910,814 949,434 203,155
======= ======= ======= =======
Net asset value per accumulation unit $ 1.18 $ 2.05 $ 1.17 $ 1.90
====== ====== ====== ======
Assets CMG CAG CGR
Investments in shares of mutual funds and portfolios:
at cost $ 1,273,288 $ 1,305,906 $ 400,988
----------- ----------- ---------
at market value $ 1,378,840 $ 1,433,647 $ 580,291
Dividends receivable -- -- --
Accounts receivable from American Partners Life
for contract purchase payments -- 776,278 19,821
Receivable from mutual funds and portfolios
for share redemptions -- -- 473
------- ------- ------
Total assets 1,378,840 2,209,925 600,585
========= ========= =======
Liabilities
Payable to American Partners Life for:
Mortality and expense risk fee 1,165 1,716 473
Contract terminations 490 -- --
Payable to mutual funds and portfolios
for investments purchased -- -- 19,821
------ ----- ------
Total liabilities 1,655 1,716 20,294
----- ----- ------
Net assets applicable to contracts
in accumulation period $ 1,377,185 $ 2,208,209 $ 580,291
=========== =========== =========
Accumulation units outstanding 752,875 1,005,056 396,873
======= ========= =======
Net asset value per accumulation unit $ 1.83 $ 2.20 $ 1.46
====== ====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APL Variable Annuity Account 1
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets CVL CII CSG CWG
Investments in shares of mutual funds
and portfolios:
<S> <C> <C> <C> <C>
at cost $ 488,401 $ 2,070,430 $ 5,448,062 $ 4,761,181
--------- ----------- ----------- -----------
at market value $ 449,298 $ 2,487,501 $ 8,048,049 $ 8,638,885
Dividends receivable -- -- -- --
Accounts receivable from American Partners Life
for contract purchase payments -- 258 2,151 39,607
Receivable from mutual funds and portfolios
for share redemptions 2,434 2,155 6,861 7,160
Total assets 451,732 2,489,914 8,057,061 8,685,652
Liabilities
Payable to American Partners Life for:
Mortality and expense risk fee 384 2,155 6,861 1,419
Contract terminations 2,050 -- -- --
Payable to mutual funds and portfolios
for investments purchased -- 258 2,151 39,607
------ --- ----- ------
Total liabilities 2,434 2,413 9,012 41,026
----- ----- ----- ------
Net assets applicable to contracts in
accumulation period $ 449,298 $ 2,487,501 $ 8,048,049 $ 8,644,626
========= =========== =========== ===========
Accumulation units outstanding 315,862 1,187,516 3,232,439 2,725,105
======= ========= ========= =========
Net asset value per accumulation unit $ 1.42 $ 2.09 $ 2.49 $ 3.17
====== ====== ====== ======
Combined
Variable
Assets CVC Account
Investments in shares of mutual funds
and portfolios:
at cost $ 297,464 $ 20,271,705
at market value $ 504,815 $ 28,100,660
Dividends receivable -- 8,165
Accounts receivable from American Partners Life
for contract purchase payments 334 839,456
Receivable from mutual funds and portfolios
for share redemptions 438 19,521
--- ------
Total assets 505,587 28,967,802
======= ==========
Liabilities
Payable to American Partners Life for:
Mortality and expense risk fee 438 17,938
Contract terminations -- 823,223
Payable to mutual funds and portfolios
for investments purchased 334 62,171
--- ------
Total liabilities 772 903,332
--- -------
Net assets applicable to contracts in
accumulation period $ 504,815 $ 28,064,470
========= ============
Accumulation units outstanding 270,207
=======
Net asset value per accumulation unit $ 1.87
======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APL Variable Annuity Account 1
Statements of Operations
Year ended December 31, 1999
Segregated Asset Subaccounts
Investment income CSI CCR CMS CIE
Dividend income from mutual funds
<S> <C> <C> <C> <C>
and portfolios $ 23,070 $ 167,046 $ 61,582 $ 57,029
Mortality and expense risk fee 3,361 15,474 13,320 2,861
----- ------ ------ -----
Investment income (loss) - net 19,709 151,572 48,262 54,168
====== ======= ====== ======
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 235,385 359,001 24,201,522 105,048
Cost of investments sold 245,357 305,504 24,201,535 93,937
------- ------- ---------- ------
Net realized gain (loss) on investments (9,972) 53,497 (13) 11,111
Net change in unrealized appreciation or
depreciation of investments (6,143) 125,788 (5) 52,738
------ ------- -- ------
Net gain (loss) on investments (16,115) 179,285 (18) 63,849
------- ------- --- ------
Net increase (decrease) in net assets
resulting from operations $ 3,594 $ 330,857 $ 48,244 $ 118,017
======= ========= ======== =========
Investment income CMG CAG CGR
Dividend income from mutual funds
and portfolios $ 88,818 $ 100,022 $--
Mortality and expense risk fee 12,549 11,370 3,264
------ ------ -----
Investment income (loss) - net 76,269 88,652 (3,264)
====== ====== ======
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 270,865 20,597,699 84,219
Cost of investments sold 255,324 19,981,293 87,386
------- ---------- ------
Net realized gain (loss) on investments 15,541 616,406 (3,167)
Net change in unrealized appreciation or
depreciation of investments 75,882 127,804 202,796
------ ------- -------
Net gain (loss) on investments 91,423 744,210 199,629
------ ------- -------
Net increase (decrease) in net assets
resulting from operations $ 167,692 $ 832,862 $ 196,365
========= ========= =========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APL Variable Annuity Account 1
Statements of Operations
Year ended December 31, 1999
Segregated Asset Subaccounts
Investment income CVL CII CSG CWG
Dividend income from mutual funds
<S> <C> <C> <C> <C>
and portfolios $ 51,714 $ 43,424 $ 41,632 $ 10,218
Mortality and expense risk fee 5,113 24,189 53,276 57,072
----- ------ ------ ------
Investment income (loss) - net 46,601 19,235 (11,644) (46,854)
====== ====== ======= =======
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 416,604 549,707 370,335 591,596
Cost of investments sold 431,514 467,423 284,121 445,944
------- ------- ------- -------
Net realized gain (loss) on investments (14,910) 82,284 86,214 145,652
Net change in unrealized appreciation
or depreciation of investments (39,525) 204,187 2,023,076 3,091,000
------- ------- --------- ---------
Net gain (loss) on investments (54,435) 286,471 2,109,290 3,236,652
------- ------- --------- ---------
Net increase (decrease) in net assets
resulting from operations $ (7,834) $ 305,706 $ 2,097,646 $ 3,189,798
======== ========= =========== ===========
Combined
Variable
Investment income CVC Account
Dividend income from mutual funds
and portfolios $-- $ 644,555
Mortality and expense risk fee 3,538 205,387
----- -------
Investment income (loss) - net (3,538) 439,168
====== =======
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments
in mutual funds and portfolios:
Proceeds from sales 186,542 47,968,523
Cost of investments sold 164,126 46,963,464
------- ----------
Net realized gain (loss) on investments 22,416 1,005,059
Net change in unrealized appreciation
or depreciation of investments 171,738 6,029,336
------- ---------
Net gain (loss) on investments 194,154 7,034,395
------- ---------
Net increase (decrease) in net assets
resulting from operations $ 190,616 $ 7,473,563
========= ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APL Variable Annuity Account 1
Statements of Changes in Net Assets
Year ended December 31, 1999
Segregated Asset Subaccounts
Operations CSI CCR CMS CIE
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 19,709 $ 151,572 $ 48,262 $ 54,168
Net realized gain (loss) on investments (9,972) 53,497 (13) 11,111
Net change in unrealized appreciation
or depreciation of investments (6,143) 125,788 (5) 52,738
------ ------- -- ------
Net increase (decrease) in net assets
resulting from operations 3,594 330,857 48,244 118,017
===== ======= ====== =======
Contract transactions
Contract purchase payments 33,388 120,351 5,177,693 14,631
Net transfers* (11,513) 306,148 (5,050,636) 38,421
Contract charges (356) (837) (130) (214)
Contract terminations:
Surrender benefits (21,235) (125,795) (166,723) (19,829)
Death benefits -- -- -- --
------ ------- ------ -----
Increase (decrease) from contract transactions 284 299,867 (39,796) 33,009
--- ------- ------- ------
Net assets at beginning of year 398,625 1,233,046 1,104,333 234,416
------- --------- --------- -------
Net assets at end of year $ 402,503 $ 1,863,770 $ 1,112,781 $ 385,442
========= =========== =========== =========
Accumulation unit activity
Units outstanding at beginning of year 338,792 738,225 977,371 178,119
Contract purchase payments 28,467 67,796 4,508,518 10,188
Net transfers* (9,256) 174,965 (4,391,042) 28,435
Contract charges (303) (469) (113) (148)
Contract terminations:
Surrender benefits (17,960) (69,703) (145,300) (13,439)
Death benefits -- -- -- --
------ ------ ------ -----
Units outstanding at end of year 339,740 910,814 949,434 203,155
======= ======= ======= =======
Operations CMG CAG CGR
Investment income (loss) - net $ 76,269 $ 88,652 $ (3,264)
Net realized gain (loss) on investments 15,541 616,406 (3,167)
Net change in unrealized appreciation
or depreciation of investments 75,882 127,804 202,796
------ ------- -------
Net increase (decrease) in net assets
resulting from operations 167,692 832,862 196,365
======= ======= =======
Contract transactions
Contract purchase payments 97,255 94,204 27,503
Net transfers* 16,414 463,886 105,944
Contract charges (528) (971) (268)
Contract terminations:
Surrender benefits (101,779) (82,658) (21,420)
Death benefits -- -- --
------ ----- ------
Increase (decrease) from contract transactions 11,362 474,461 111,759
------ ------- -------
Net assets at beginning of year 1,198,131 900,886 272,167
--------- ------- -------
Net assets at end of year $ 1,377,185 $ 2,208,209 $ 580,291
=========== =========== =========
Accumulation unit activity
Units outstanding at beginning of year 744,719 694,351 303,145
Contract purchase payments 58,261 67,393 27,377
Net transfers* 10,249 302,264 88,251
Contract charges (318) (700) (271)
Contract terminations:
Surrender benefits (60,036) (58,252) (21,629)
Death benefits -- -- --
------ -------- ------
Units outstanding at end of year 752,875 1,005,056 396,873
======= ========= =======
*Includes transfer activity from (to) other subaccounts and transfers from (to)
American Partners Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APL Variable Annuity Account 1
Statements of Changes in Net Assets
Year ended December 31, 1999
Segregated Asset Subaccounts
Operations CVL CII CSG CWG
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 46,601 $ 19,235 $ (11,644) $ (46,854)
Net realized gain (loss) on investments (14,910) 82,284 86,214 145,652
Net change in unrealized appreciation
or depreciation of investments (39,525) 204,187 2,023,076 3,091,000
------- ------- --------- ---------
Net increase (decrease) in net assets
resulting from operations (7,834) 305,706 2,097,646 3,189,798
====== ======= ========= =========
Contract transactions
Contract purchase payments 47,801 181,218 455,087 537,686
Net transfers* (152,879) 12,681 3,008,505 1,133,322
Contract charges (335) (1,401) (2,827) (3,908)
Contract terminations:
Surrender benefits (33,426) (224,161) (358,388) (470,057)
Death benefits -- (6,389) -- (7,072)
------- ------ --------- ------
Increase (decrease) from contract transactions (138,839) (38,052) 3,102,377 1,189,971
-------- ------- --------- ---------
Net assets at beginning of year 595,971 2,219,847 2,848,026 4,264,857
------- --------- --------- ---------
Net assets at end of year $ 449,298 $ 2,487,501 $ 8,048,049 $ 8,644,626
========= =========== =========== ===========
Accumulation unit activity
Units outstanding at beginning of year 410,444 1,204,843 1,630,632 2,190,421
Contract purchase payments 32,617 91,341 228,608 245,472
Net transfers* (105,123) 6,105 1,552,687 504,465
Contract charges (222) (712) (1,417) (1,771)
Contract terminations:
Surrender benefits (21,854) (110,601) (178,071) (209,928)
Death benefits -- (3,460) -- (3,554)
------- ------ --------- ------
Units outstanding at end of year 315,862 1,187,516 3,232,439 2,725,105
======= ========= ========= =========
Combined
Variable
Operations CVC Account
Investment income (loss) - net $ (3,538) $ 439,168
Net realized gain (loss) on investments 22,416 1,005,059
Net change in unrealized appreciation
or depreciation of investments 171,738 6,029,336
------- ---------
Net increase (decrease) in net assets
resulting from operations 190,616 7,473,563
======= =========
Contract transactions
Contract purchase payments 31,874 6,818,691
Net transfers* 11,008 (118,699)
Contract charges (342) (12,117)
Contract terminations:
Surrender benefits (63,410) (1,688,881)
Death benefits -- (13,461)
------ -------
Increase (decrease) from contract transactions (20,870) 4,985,533
------- ---------
Net assets at beginning of year 335,069 15,605,374
------- ----------
Net assets at end of year $ 504,815 $ 28,064,470
========= ============
Accumulation unit activity
Units outstanding at beginning of year 290,287
Contract purchase payments 25,637
Net transfers* 5,097
Contract charges (254)
Contract terminations:
Surrender benefits (50,560)
Death benefits --
------
Units outstanding at end of year 270,207
=======
*Includes transfer activity from (to) other subaccounts and transfers from (to)
American Partners Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APL Variable Annuity Account 1
Statements of Changes in Net Assets
Year ended December 31, 1998
Segregated Asset Subaccounts
Operations CSI CCR CMS CIE
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 18,760 $ 79,237 $ 29,763 $ 755
Net realized gain (loss) on investments (5,245) (1,424) -- 1,395
Net change in unrealized appreciation or
depreciation of investments (12,582) 109,613 4 22,767
------- ------- - ------
Net increase (decrease) in net assets
resulting from operations 933 187,426 29,767 24,917
=== ======= ====== ======
Contract transactions
Contract purchase payments 39,820 58,625 4,519,714 16,222
Net transfers* 176,255 439,077 (3,349,014) 20,460
Contract charges (325) (605) (75) (199)
Contract terminations:
Surrender benefits (59,301) (23,641) (260,361) (2,689)
Death benefits -- -- -- --
------ ------ ------ -----
Increase (decrease) from contract transactions 156,449 473,456 910,264 33,794
------- ------- ------- ------
Net assets at beginning of year 241,243 572,164 164,302 175,705
------- ------- ------- -------
Net assets at end of year $ 398,625 $ 1,233,046 $ 1,104,333 $ 234,416
========= =========== =========== =========
Accumulation unit activity
Units outstanding at beginning of year 206,048 420,942 151,325 153,093
Contracts purchase payments 33,728 40,481 4,087,136 12,907
Net transfers* 148,915 296,075 (3,028,744) 14,387
Contract charges (274) (410) (67) (158)
Contract terminations:
Surrender benefits (49,625) (18,863) (232,279) (2,110)
Death benefits -- -- -- --
Units outstanding at end of year 338,792 738,225 977,371 178,119
======= ======= ======= =======
Operations CMG CAG CGR
Investment income (loss) - net $ 116,875 $ 49,263 $ 10,087
Net realized gain (loss) on investments (19,332) (33,515) (7,984)
Net change in unrealized appreciation or
depreciation of investments 23,653 (325) (8,000)
------ ---- ------
Net increase (decrease) in net assets
resulting from operations 121,196 15,423 (5,897)
======= ====== ======
Contract transactions
Contract purchase payments 85,483 82,351 26,303
Net transfers* 196,273 242,318 22,431
Contract charges (446) (844) (206)
Contract terminations:
Surrender benefits (24,030) (15,954) (7,268)
Death benefits -- -- --
------- ------ -----
Increase (decrease) from contract transactions 257,280 307,871 41,260
------- ------- ------
Net assets at beginning of year 819,655 577,592 236,804
------- ------- -------
Net assets at end of year $ 1,198,131 $ 900,886 $ 272,167
=========== ========= =========
Accumulation unit activity
Units outstanding at beginning of year 584,073 452,304 255,509
Contracts purchase payments 57,400 65,635 30,984
Net transfers* 122,381 192,895 24,563
Contract charges (298) (659) (239)
Contract terminations:
Surrender benefits (18,837) (15,824) (7,672)
Death benefits -- -- --
------ ------ ------
Units outstanding at end of year 744,719 694,351 303,145
======= ======= =======
*Includes transfer activity from (to) other subaccounts and transfers from (to)
American Partners Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APL Variable Annuity Account 1
Statements of Changes in Net Assets
Year ended December 31, 1998
Segregated Asset Subaccounts
Operations CVL CII CSG CWG
<S> <C> <C> <C> <C>
Investment income (loss) - net $ 24,613 $ 94,763 $ 109,720 $ 101,697
Net realized gain (loss) on investments (345) 23,095 52,112 179,407
Net change in unrealized appreciation or
depreciation of investments (22,277) 113,404 474,587 526,147
------- ------- ------- -------
Net increase (decrease) in net assets
resulting from operations 1,991 231,262 636,419 807,251
===== ======= ======= =======
Contract transactions
Contract purchase payments 59,206 146,362 167,251 312,579
Net transfers* 241,250 653,322 817,246 414,957
Contract charges (241) (932) (1,295) (2,877)
Contract terminations:
Surrender benefits (19,597) (86,875) (96,895) (178,003)
Death benefits -- -- (2,043) --
------ ------- ------ -------
Increase (decrease) from contract transactions 280,618 711,877 884,264 546,656
------- ------- ------- -------
Net assets at beginning of year 313,362 1,276,708 1,327,343 2,910,950
------- --------- --------- ---------
Net assets at end of year $ 595,971 $ 2,219,847 $ 2,848,026 $ 4,264,857
========= =========== =========== ===========
Accumulation unit activity
Units outstanding at beginning of year 224,384 790,904 1,019,902 1,908,118
Contracts purchase payments 40,632 85,140 115,718 177,701
Net transfers* 159,100 379,365 564,725 208,210
Contract charges (171) (548) (902) (1,646)
Contract terminations:
Surrender benefits (13,501) (50,018) (67,506) (101,962)
Death benefits -- -- (1,305) --
------ --------- ------ -------
Units outstanding at end of year 410,444 1,204,843 1,630,632 2,190,421
======= ========= ========= =========
Combined
Variable
Operations CVC Account
Investment income (loss) - net $ (2,586) $ 338,294
Net realized gain (loss) on investments 5,790 252,075
Net change in unrealized appreciation or
depreciation of investments 14,049 1,097,910
------ ---------
Net increase (decrease) in net assets
resulting from operations 17,253 1,688,279
====== =========
Contract transactions
Contract purchase payments 37,152 5,551,068
Net transfers* 31,654 (93,771)
Contract charges (209) (8,254)
Contract terminations:
Surrender benefits (3,838) (778,452)
Death benefits -- (2,043)
------ ------
Increase (decrease) from contract transactions 64,759 4,668,548
------ ---------
Net assets at beginning of year 253,057 8,868,885
------- ---------
Net assets at end of year $ 335,069 $ 15,225,712
========= ============
Accumulation unit activity
Units outstanding at beginning of year 231,194
Contracts purchase payments 34,723
Net transfers* 28,148
Contract charges (196)
Contract terminations:
Surrender benefits (3,582)
Death benefits --
------
Units outstanding at end of year 290,287
=======
*Includes transfer activity from (to) other subaccounts and transfers from (to)
American Partners Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APL Variable Annuity Account 1
Notes to Financial Statements
1. ORGANIZATION
APL Variable Annuity Account 1 (the Account) was established under Arizona law
on Feb. 9, 1995 and the subaccounts are registered together as a single unit
investment trust of American Partners Life Insurance Company (American Partners
Life) under the Investment Company Act of 1940, as amended (the 1940 Act).
Operations of the Account commenced on Dec. 5, 1995.
The Account is comprised of various subaccounts. Each subaccount invests
exclusively in shares of the following funds or portfolios (collectively, the
Funds), which are registered under the 1940 Act as diversified, open-end
management investment companies and have the following investment managers.
Subaccount Invests exclusively in shares of Investment Manager
<S> <C> <C>
CSI AXP SM Variable Portfolio-- Bond Fund IDS Life Insurance Company 1
CCR AXPSM Variable Portfolio-- Capital Resource Fund IDS Life Insurance Company 1
CMS AXP SM Variable Portfolio-- Cash Management Fund IDS Life Insurance Company 1
CIE AXPSM Variable Portfolio-- International Fund IDS Life Insurance Company 2
CMG AXPSM Variable Portfolio-- Managed Fund IDS Life Insurance Company 1
CAG AXPSM Variable Portfolio-- Strategy Aggressive IDS Life Insurance Company 1
Fund
CGR American Century VP Capital Appreciation American Century Investment Management, Inc.
CVL American Century VP Value American Century Investment Management, Inc.
CII INVESCO VIF -- Equity Income Fund INVESCO Funds Group, Inc.
CSG Janus Aspen Series Growth Portfolio: Janus Capital Corporation
Institutional Shares
CWG Janus Aspen Series Worldwide Growth Portfolio: Janus Capital Corporation
Institutional Shares
CVC Warburg Pincus Trust -- Global Post-Venture Warburg Pincus Asset Management, Inc.
Capital Portfolio
1 American Express Financial Corporation (AEFC) is the investment advisor.
2 AEFC is the investment advisor. American Express Asset Management
International Inc. 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 Partners Life.
American Partners Life serves as issuer of the contracts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments in the Funds
Investments in shares of the Funds are stated at market value which is the net
asset value per share as determined by the respective Funds. Investment
transactions are accounted for on the date the shares are purchased and sold.
The cost of investments sold and redeemed is determined on the average cost
method. Dividend distributions received from the Funds are reinvested in
additional shares of the Funds and are recorded as income by the subaccounts on
the ex-dividend date.
Unrealized appreciation or depreciation of investments in the accompanying
financial statements represents the subaccounts' share of the Funds'
undistributed net investment income, undistributed realized gain or loss and the
unrealized appreciation or depreciation on their investment securities.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increase and decrease in net assets from
operations during the period. Actual results could differ from those estimates.
Federal Income Taxes
American Partners Life is taxed as a life insurance company. The Account is
treated as part of American Partners Life for federal income tax purposes. Under
existing tax law, no income taxes are payable with respect to any investment
income of the Account.
3. MORTALITY AND EXPENSE RISK FEE
American Partners 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 Partners Life is computed daily and is
equal, on an annual basis, to 1% of the average daily net assets of the
subaccounts.
4. CONTRACT ADMINISTRATIVE CHARGES
An annual charge of $30 is deducted from the contract value of each Privileged
Assets Select Annuity contract. The annual charges are deducted on each contract
anniversary for administrative services provided to the Account by American
Partners Life. The deduction is allocated to the subaccounts on a pro-rata
basis. American Partners Life does not anticipate that it will make any profit
on this charge. If the total purchase payments (less partial surrenders) on a
contract anniversary are at least $10,000, the charge is waived. American
Partners Life reserves the right to increase the charge in the future, however,
in no event will the charge exceed $50 per year.
5. 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>
CSI AXP SM Variable Portfolio-- Bond Fund 37,972 $ 10.54
CCR AXPSM Variable Portfolio-- Capital Resource Fund 51,224 36.40
CMS AXP SM Variable Portfolio-- Cash Management Fund 1, 929,029 1.00
CIE AXPSM Variable Portfolio-- International Fund 19,903 19.38
CMG AXPSM Variable Portfolio-- Managed Fund 69,582 19.82
CAG AXPSM Variable Portfolio-- Strategy Aggressive Fund 59,945 23.92
CGR American Century VP Capital Appreciation 39,103 14.84
CVL American Century VP Value 75,512 5.95
CII INVESCO VIF-- Equity Income Fund 118,396 21.01
CSG Janus Aspen Series Growth Portfolio: Institutional Shares 239,169 33.65
CWG Janus Aspen Series Worldwide Growth Portfolio: Institutional 180,919 47.75
Shares
CVC Warburg Pincus Trust-- Global Post-Venture Capital Portfolio 26,211 19.26
6. INVESTMENT TRANSACTIONS
The subaccounts' purchases of Funds' shares, including reinvestment of dividend
distributions, were as follows:
Year ended Dec. 31,
Subaccount Investment 1999 1998
<S> <C> <C> <C>
CSI AXP SM Variable Portfolio-- Bond Fund $ 253,256 $ 604,265
CCR AXPSM Variable Portfolio-- Capital Resource Fund 811,008 745,917
CMS AXP SM Variable Portfolio-- Cash Management Fund 25,026,049 5,593,240
CIE AXPSM Variable Portfolio-- International Fund 192,556 61,025
CMG AXPSM Variable Portfolio-- Managed Fund 360,151 785,441
CAG AXPSM Variable Portfolio-- Strategy Aggressive Fund 20,386,252 560,775
CGR American Century VP Capital Appreciation 192,484 123,272
CVL American Century VP Value 323,861 507,061
CII INVESCO VIF-- Equity Income Fund 528,991 1,045,050
CSG Janus Aspen Series Growth Portfolio: Institutional Shares 3,458,684 1,802,798
CWG Janus Aspen Series Worldwide Growth Portfolio: Institutional Shares 1,725,380 2,241,720
CVC Warburg Pincus Trust-- Global Post-Venture Capital Portfolio 161,852 178,909
Combined Variable Account $53,420,524 $14,249,473
7. 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 Partners Life
and the Account. All of the major systems used by American Partners Life and the
Account are maintained by AEFC and are utilized by multiple subsidiaries and
affiliates of AEFC. American Partners Life'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 Partners Life, 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 Partners Life's and the
variable 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 Partners Life's and
the Account's business, results of operations, or financial condition as a
result of the Year 2000 issue.
</TABLE>
<PAGE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS
AMERICAN PARTNERS LIFE INSURANCE COMPANY
We have audited the accompanying balance sheets of American Partners Life
Insurance Company (a wholly-owned subsidiary of IDS Life Insurance Company) as
of December 31, 1999 and 1998, and the related statements of income,
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements are the responsibility of
the Company's management. 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. 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 American Partners Life
Insurance Company at December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
February 3, 2000
Minneapolis, Minnesota
- --------------------------------------------------------------------------------
1
<PAGE>
AMERICAN PARTNERS LIFE INSURANCE COMPANY
BALANCE SHEETS
DECEMBER 31,
($ THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS
- ------------------------------------------------------------
Investments:
Fixed maturities:
Held to maturity, at amortized cost
(fair value:
1999, $57,860; 1998, $64,727) $ 56,778 $ 59,623
Available for sale, at fair value
(amortized cost:
1999, $230,137; 1998, $200,069) 215,550 204,005
------------------
272,328 263,628
Mortgage loans on real estate 12,489 --
- ------------------------------------------------------------
Total investments 284,817 263,628
Cash and cash equivalents 6,763 4,746
Accrued investment income 5,204 4,582
Deferred policy acquisition costs 31,331 27,057
Accounts receivable 76 268
Deferred income taxes 302 --
Other assets 11 104
Separate account assets 28,128 15,622
- ------------------------------------------------------------
Total assets $356,632 $316,007
LIABILITIES AND STOCKHOLDER'S EQUITY
- ------------------------------------------------------------
Liabilities:
Future policy benefits for fixed
annuities $276,924 $236,046
Policy claims and other policyholders'
funds 1,133 1,344
Deferred income taxes -- 5,708
Other liabilities 2,218 3,693
Separate account liabilities 28,128 15,622
- ------------------------------------------------------------
Total liabilities 308,403 262,413
Stockholder's equity:
Capital stock, $100 par value per
share;
30,000 shares authorized,
25,000 shares issued and
outstanding 2,500 2,500
Additional paid-in capital 46,327 46,327
Accumulated other comprehensive (loss)
income:
Net unrealized securities (losses)
gains (7,191) 1,940
Retained earnings 6,593 2,827
- ------------------------------------------------------------
Total stockholder's equity 48,229 53,594
- ------------------------------------------------------------
Total liabilities and stockholder's
equity $356,632 $316,007
- ------------------------------------------------------------
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
2
<PAGE>
AMERICAN PARTNERS LIFE INSURANCE COMPANY
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
($ THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Revenues:
Net investment income $21,543 $17,456 $12,609
Contractholder charges 2,209 1,546 673
Mortality and expense risk fees 205 127 56
Net realized gain (loss) on
investments 62 (66) 130
- ----------------------------------------------------------------------
Total revenues 24,019 19,063 13,468
Benefits and expenses:
Interest credited on investment
contracts 12,189 10,663 9,261
Amortization of deferred policy
acquisition costs 1,999 (41) 131
Amortization of state licenses and
goodwill 104 623 623
Other operating expenses 3,763 2,415 3,853
- ----------------------------------------------------------------------
Total expenses 18,055 13,660 13,868
- ----------------------------------------------------------------------
Income (loss) before income taxes 5,964 5,403 (400)
Income tax expense (benefit) 2,198 1,943 (54)
- ----------------------------------------------------------------------
Net income (loss) $ 3,766 $ 3,460 $ (346)
- ----------------------------------------------------------------------
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
3
<PAGE>
AMERICAN PARTNERS LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
THREE YEARS ENDED DECEMBER 31, 1999
($ THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
TOTAL ADDITIONAL COMPREHENSIVE
STOCKHOLDER'S CAPITAL PAID-IN INCOME, RETAINED
EQUITY STOCK CAPITAL NET OF TAX EARNINGS
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $24,139 $2,500 $21,327 $ 599 $ (287)
Comprehensive income:
Net loss (346) -- -- -- (346)
Unrealized holding gains arising
during the year, net of deferred
policy acquisition costs of ($608)
and taxes of ($717) 1,331 -- -- 1,331 --
- ------------------------------------------------------------------------------------------------------
Other comprehensive income 1,331 -- -- 1,331 --
- ------------------------------------------------------------------------------------------------------
Comprehensive income 985
Capital contribution from parent 15,000 -- 15,000 -- --
- ------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 40,124 2,500 36,327 1,930 (633)
Comprehensive income:
Net income 3,460 -- -- -- 3,460
Unrealized holding losses arising
during the year, net of deferred
policy acquisition costs of $283 and
taxes of $18 (34) -- -- (34) --
Reclassification adjustment for losses
included in net income, net of tax
of ($24) 44 -- -- 44 --
- ------------------------------------------------------------------------------------------------------
Other comprehensive income 10 -- -- 10 --
- ------------------------------------------------------------------------------------------------------
Comprehensive income 3,470
Capital contribution from parent 10,000 -- 10,000 -- --
- ------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 53,594 2,500 46,327 1,940 2,827
Comprehensive loss:
Net income 3,766 -- -- -- 3,766
Unrealized holding losses arising
during the year, net of deferred
policy acquisition costs of $4,474
and taxes of $4,834 (8,977) -- -- (8,977) --
Reclassification adjustment for gains
included in net income, net of tax
of $83 (154) -- -- (154) --
- ------------------------------------------------------------------------------------------------------
Other comprehensive loss (9,131) -- -- (9,131) --
- ------------------------------------------------------------------------------------------------------
Comprehensive loss (5,365)
- ------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 $48,229 $2,500 $46,327 $(7,191) $6,593
- ------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes
- --------------------------------------------------------------------------------
4
<PAGE>
AMERICAN PARTNERS LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
($ THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 3,766 $ 3,460 $ (346)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Change in accrued investment income (622) (991) (830)
Change in deferred policy
acquisition costs, net 200 (5,494) (7,419)
Change in other assets 93 622 624
Change in accounts receivable 192 616 (884)
Change in policy claims and other
policyholders' funds (211) 1,122 110
Deferred income tax (benefit)
provision (1,093) 297 1,296
Change in other liabilities (1,475) (139) 2,308
Amortization of premium (accretion
of discount), net 50 29 (41)
Net realized (gain) loss on
investments (62) 66 (130)
Other, net (126) (9) 10
- ----------------------------------------------------------------------
Net cash provided by (used in)
operating activities 712 (421) (5,302)
- ----------------------------------------------------------------------
Cash flows from investing activities:
Fixed maturities held to maturity:
Maturities 2,807 2,685 869
Sales -- 1,395 3,000
Fixed maturities available for sale:
Purchases (50,344) (70,500) (82,967)
Maturities 11,480 12,163 10,883
Sales 8,974 2,569 --
Other investments:
Purchases (12,590) -- --
Sales 101 -- --
Change in due from brokers -- -- 1,100
Change in due to brokers -- (4,946) 2,945
- ----------------------------------------------------------------------
Net cash used in investing
activities (39,572) (56,634) (64,170)
- ----------------------------------------------------------------------
Cash flows from financing activities:
Activity related to investment
contracts:
Considerations received 78,906 79,943 68,033
Surrenders and other benefits (50,218) (38,805) (23,137)
Interest credited to account
balances 12,189 10,663 9,261
Capital contribution from parent -- 10,000 15,000
- ----------------------------------------------------------------------
Net cash provided by financing
activities 40,877 61,801 69,157
- ----------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 2,017 4,746 (315)
Cash and cash equivalents at beginning
of year 4,746 -- 315
- ----------------------------------------------------------------------
Cash and cash equivalents at end of year $ 6,763 $ 4,746 $ --
- ----------------------------------------------------------------------
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
American Partners Life Insurance Company (the Company) is a stock life insurance
company that is domiciled in Arizona and is licensed to transact insurance
business in 47 states. The Company's principal product is deferred annuities
which are issued primarily to individuals. It offers single premium and
installment premium deferred annuities on both a fixed and variable dollar
basis. Immediate annuities are offered as well.
BASIS OF PRESENTATION
The Company is a wholly owned subsidiary of IDS Life Insurance Company, which is
a wholly owned subsidiary of American Express Financial Corporation (AEFC),
which is a wholly owned subsidiary of American Express Company. The accompanying
financial statements have been prepared in conformity with accounting principles
generally accepted in the United States which vary in certain respects from
reporting practices prescribed or permitted by the Arizona Department of
Insurance (see Note 4).
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
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INVESTMENTS
Fixed maturities that the Company has both the positive intent and the ability
to hold to maturity are classified as held to maturity and carried at amortized
cost. All other fixed maturities are classified as available for sale and
carried at fair value. Unrealized gains and losses on securities classified as
available for sale are reported as a separate component of accumulated other
comprehensive (loss) income, net of deferred policy acquisition costs and
deferred income taxes.
Realized investment gain or loss is determined on an identified cost basis.
Prepayments are anticipated on certain investments in mortgage-backed securities
in determining the constant effective yield used to recognize interest income.
Prepayment estimates are based on information received from brokers who deal in
mortgage-backed securities.
Mortgage loans on real estate are carried at amortized cost less an allowance
for mortgage loan losses. The estimated fair value of the mortgage loans is
determined by a discounted cash flow analysis using mortgage interest rates
currently offered for mortgages of similar maturities.
Impairment of mortgage loans is measured as the excess of the loan's recorded
investment over its present value of expected principal and interest payments
discounted at the loan's effective interest rate, or the fair value of
collateral. The amount of the impairment is recorded in an allowance for
mortgage loan losses. The allowance for mortgage loan losses is maintained at a
level that management believes is adequate to absorb estimated losses in the
portfolio. The level of the allowance account is determined based on several
factors, including historical experience, expected future principal and interest
payments, estimated collateral values, and current and anticipated economic and
political conditions. Management regularly evaluates the adequacy of the
allowance for mortgage loan losses.
- --------------------------------------------------------------------------------
6
<PAGE>
The Company generally stops accruing interest on mortgage loans for which
interest payments are delinquent more than three months. Based on management's
judgment as to the ultimate collectibility of principal, interest payments
received are either recognized as income or applied to the recorded investment
in the loan.
The cost of interest rate caps and floors is amortized to investment income over
the life of the contracts and payments received as a result of these agreements
are recorded as investment income when realized. The amortized cost of interest
rate caps and floors is included in other investments.
When evidence indicates a decline, which is other than temporary, in the
underlying value or earning power of individual investments, such investments
are written down to the fair value by a charge to income.
STATEMENTS OF CASH FLOWS
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These securities are
carried principally at amortized cost which approximates fair value.
Supplementary information to the statements of cash flows for the years ended
December 31 is summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ----------------------------------------------------------
<S> <C> <C> <C>
Cash paid (received) during the
year for:
Income taxes $3,738 $424 $(2,064)
Interest on borrowings 49 270 70
</TABLE>
CONTRACTHOLDER CHARGES
Contractholder charges include fees collected related to the issue and
administration of annuity contracts.
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally sales compensation, policy
issue costs, and certain sales expenses, have been deferred on annuity
contracts. These costs are amortized using primarily the interest method.
For variable annuities and variable universal life insurance, the amortization
of deferred acquisition costs can be impacted by separate account asset
performance. The Company generally assumes assets will appreciate at a constant
rate, and considers whether recent fluctuations from that rate are temporary and
likely to correct.
LIABILITIES FOR FUTURE POLICY BENEFITS
Liabilities for universal-life type insurance and fixed and variable deferred
annuities are accumulation values.
Liabilities for equity indexed deferred annuities are determined as the present
value of guaranteed benefits and the intrinsic value of index-based benefits.
FEDERAL INCOME TAXES
The Company's taxable income is included in the consolidated federal income tax
return of American Express Company. The Company provides for income taxes on a
separate return basis, except that, under an agreement between AEFC and American
Express Company, tax benefit is recognized for losses to the extent they can be
used on the consolidated tax return. It is the policy of AEFC and its
subsidiaries that AEFC will reimburse subsidiaries for all tax benefits.
Included in other liabilities at December 31, 1999 and 1998 are $753 and $1,218,
respectively, payable to IDS Life for federal income taxes.
- --------------------------------------------------------------------------------
7
<PAGE>
SEPARATE ACCOUNT BUSINESS
The separate account assets and liabilities represent funds held for the
exclusive benefit of the variable annuity contract owners. The Company receives
mortality and expense risk fees from the variable annuity separate accounts.
The Company makes contractual mortality assurances to the variable annuity
contract owners that the net assets of the separate accounts will not be
affected by future variations in the actual life expectancy experience of the
annuitants and the beneficiaries from the mortality assumptions implicit in the
annuity contracts. The Company makes periodic fund transfers to, or withdrawals
from, the separate accounts for such actuarial adjustments for variable
annuities that are in the benefit payment period. The Company also guarantees
that the rates at which administrative fees are deducted from contract funds
will not exceed contractual maximums.
INTANGIBLE ASSETS
In connection with the purchase of the Company by IDS Life in 1994, $2,308 of
the purchase price was allocated to state licenses and $808 was allocated to
goodwill. These amounts are being amortized over five years using the
straight-line method. At December 31, 1999 and 1998, the accumulated
amortization was $3,116 and $3,012, respectively.
ACCOUNTING CHANGES
American Institute of Certified Public Accountants (AICPA) Statement of Position
(SOP) 98-1, "Accounting for Costs of Computer Software Developed or Obtained for
Internal Use" became effective January 1, 1999. The SOP requires the
capitalization of certain costs incurred after the date of adoption to develop
or obtain software for internal use. Software utilized by the Company is owned
by AEFC and capitalized by AEFC. As a result, the new rule did not have a
material impact on the Company's results of operations or financial condition.
Effective January 1, 1999, the Company adopted AICPA SOP 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments," providing
guidance for the timing of recognition of liabilities related to guaranty fund
assessments. Adoption of the SOP did not have a material impact on the Company's
results of operations or financial condition.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which is effective January 1, 2001. This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those instruments
at fair value. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and the resulting designation. The
ultimate financial effect of the new rule will be measured based on the
derivatives in place at adoption and cannot be estimated at this time.
2. INVESTMENTS
Fair values of investments in fixed maturities represent quoted market prices
and estimated values when quoted prices are not available. Estimated values are
determined by established procedures involving, among other things, review of
market indices, price levels of current offerings of comparable issues, price
estimates and market data from independent brokers and financial files.
- --------------------------------------------------------------------------------
8
<PAGE>
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at December 31, 1999 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
HELD TO MATURITY COST GAINS LOSSES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Corporate bonds and
obligations $ 56,778 $1,165 $ 83 $ 57,860
- ----------------------------------------------------------------------------
AVAILABLE FOR SALE
- ----------------------------------------------------------------------------
U.S. Government agency
obligations $ 7,376 $ 1 $ 45 $ 7,332
Corporate bonds and
obligations 169,762 467 12,492 157,737
Mortgage-backed securities 52,999 -- 2,518 50,481
- ----------------------------------------------------------------------------
$230,137 $ 468 $15,055 $215,550
- ----------------------------------------------------------------------------
</TABLE>
The amortized cost, gross unrealized gains and losses and fair value of
investments in fixed maturities at December 31, 1998 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
HELD TO MATURITY COST GAINS LOSSES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Corporate bonds and
obligations $ 59,623 $5,104 $ -- $ 64,727
- ----------------------------------------------------------------------------
AVAILABLE FOR SALE
- ----------------------------------------------------------------------------
U.S. Government agency
obligations $ 7,391 $ 773 $ -- $ 8,164
Corporate bonds and
obligations 142,340 4,738 2,593 144,485
Mortgage-backed securities 50,338 1,045 27 51,356
- ----------------------------------------------------------------------------
$200,069 $6,556 $2,620 $204,005
- ----------------------------------------------------------------------------
</TABLE>
The amortized cost and fair value of investments in fixed maturities at December
31, 1999 by contractual maturity are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
AMORTIZED FAIR
HELD TO MATURITY COST VALUE
- ------------------------------------------------------------
<S> <C> <C>
Due from one to five years $42,426 $43,399
Due from five to ten years 12,717 12,874
Due in more than ten years 1,635 1,587
- ------------------------------------------------------------
$56,778 $57,860
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AMORTIZED FAIR
AVAILABLE FOR SALE COST VALUE
- -------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 2,890 $ 2,910
Due from one to five years 12,467 12,279
Due from five to ten years 110,051 102,584
Due in more than ten years 51,730 47,296
Mortgage-backed securities 52,999 50,481
- -------------------------------------------------------------
$230,137 $215,550
- -------------------------------------------------------------
</TABLE>
During the year ended December 31, 1999, 1998 and 1997, fixed maturities
classified as held to maturity were sold with amortized cost of $nil, $1,398 and
$2,879, respectively. Net gains and losses on these sales were not significant.
The sales of these fixed maturities were due to significant deterioration in the
issuers' credit worthiness.
- --------------------------------------------------------------------------------
9
<PAGE>
In addition, fixed maturities available for sale were sold during 1999 with
proceeds of $8,974 and gross realized gains and losses of $328 and $91,
respectively. Fixed maturities available for sale were sold during 1998 with
proceeds of $2,569 and gross realized gains and losses of $151 and $219,
respectively. No fixed maturities available for sale were sold during 1997.
At December 31, 1999, bonds carried at $7,193 were on deposit with various
states as required by law.
At December 31, 1999 fixed maturities comprised 96 percent of the Company's
total invested assets.
Securities are rated by Moody's and Standard & Poor's (S&P), except for
securities carried at approximately $39 million which are rated by AEFC internal
analysts using criteria similar to Moody's and S&P. A summary of investments in
fixed maturities, at amortized cost, by rating on December 31 is as follows:
<TABLE>
<CAPTION>
RATING 1999 1998
- ------------------------------------------------------------
<S> <C> <C>
Aaa/AAA $ 59,407 $ 56,743
Aa/AA 6,754 6,173
Aa/A 8,103 5,609
A/A 34,892 26,214
A/BBB 17,677 21,385
Baa/BBB 120,630 103,790
Baa/BB 2,500 2,743
Below investment grade 36,952 37,035
- ------------------------------------------------------------
$286,915 $259,692
- ------------------------------------------------------------
</TABLE>
At December 31, 1999, 77 percent of the securities rated Aaa/AAA are GNMA, FNMA,
and FHLMC mortgage-backed securities.
At December 31, 1999, approximately 4 percent of the Company's invested assets
were mortgage loans on real estate. Summaries of mortgage loans by region of the
United States and by type of real estate are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999
--------------------------
ON COMMITMENTS
REGION BALANCE SHEET TO PURCHASE
- --------------------------------------------------------------------
<S> <C> <C>
East North Central $ 2,386 $2,145
Mountain 4,516 1,252
West North Central 1,658 --
Pacific 1,287 2,563
West South Central 2,642 --
- --------------------------------------------------------------------
$12,489 $5,960
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1999
--------------------------
ON COMMITMENTS
PROPERTY TYPE BALANCE SHEET TO PURCHASE
- --------------------------------------------------------------------
<S> <C> <C>
Department/retail stores $ 4,633 $ --
Apartments 1,287 1,013
Office buildings 3,866 4,947
Industrial buildings 1,658 --
Medical buildings 1,045 --
- --------------------------------------------------------------------
$12,489 $5,960
- --------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
10
<PAGE>
Mortgage loan fundings are restricted by state insurance regulatory authorities
to 80 percent or less of the market value of the real estate at the time of
origination of the loan. The Company holds the mortgage document, which gives it
the right to take possession of the property if the borrower fails to perform
according to the terms of the agreement. Commitments to purchase mortgages are
made in the ordinary course of business. The fair value of the mortgage
commitments is $nil.
At December 31, 1999, the Company had no impaired loans.
Net investment income for the years ended December 31 is summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------
<S> <C> <C> <C>
Interest on fixed maturities $20,980 $17,741 $12,893
Interest on mortgage loans 370 -- --
Interest on cash equivalents 164 113 192
Other 266 70 1
- --------------------------------------------------------------
21,780 17,924 13,086
Less investment expenses 237 468 477
- --------------------------------------------------------------
$21,543 $17,456 $12,609
- --------------------------------------------------------------
</TABLE>
Net realized gain (loss) on investments was $62, ($66) and $130 for the years
ended December 31, 1999, 1998 and 1997, respectively and was entirely due to
sales of fixed maturities.
Changes in net unrealized appreciation (depreciation) of investments for the
years ended December 31 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities available for sale $(18,522) $299 $2,656
</TABLE>
3. INCOME TAXES
The Company qualifies as a life insurance company for federal income tax
purposes. As such, the Company is subject to the Internal Revenue Code
provisions applicable to life insurance companies.
The income tax expense (benefit) for the years ended December 31, consists of
the following:
<TABLE>
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------
<S> <C> <C> <C>
Federal income taxes:
Current $ 3,110 $1,560 $(1,396)
Deferred (1,093) 297 1,296
- -------------------------------------------------------------
2,017 1,857 (100)
State income taxes -- current 181 86 46
- -------------------------------------------------------------
Income tax expense (benefit) $ 2,198 $1,943 $ (54)
- -------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
11
<PAGE>
Increases (decreases) to the federal income tax provision applicable to pretax
income based on the statutory rate for the years ended December 31, are
attributable to:
<TABLE>
<CAPTION>
1999 1998 1997
------------------ ------------------ -------------------
PROVISION RATE PROVISION RATE PROVISION RATE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes
based on the statutory
rate $2,087 35.0% $1,891 35.0% $(140) 35.0%
Increases are
attributable to:
State tax, net benefit 118 2.0% 56 1.0% 30 (7.4)
Other, net (7) (0.1%) (4) 0.0% 56 (14.0)
- --------------------------------------------------------------------------------------
Income tax expense
(benefit) $2,198 36.9% $1,943 36.0% $ (54) 13.6%
- --------------------------------------------------------------------------------------
</TABLE>
Significant components of the Company's deferred income tax assets and
liabilities as of December 31 are as follows:
<TABLE>
<CAPTION>
1999 1998
- ---------------------------------------------------------
<S> <C> <C>
Deferred income tax assets:
Policy reserves $4,513 $ 3,978
Investments 3,850 --
Other 121 155
- ---------------------------------------------------------
Total deferred income tax assets 8,484 4,133
- ---------------------------------------------------------
Deferred income tax liabilities:
State licenses -- 27
Investments -- 1,218
Deferred policy acquisition costs 8,182 8,596
- ---------------------------------------------------------
Total deferred income tax
liabilities 8,182 9,841
- ---------------------------------------------------------
Net deferred income tax assets
(liabilities) $ 302 $(5,708)
- ---------------------------------------------------------
</TABLE>
The Company is required to establish a valuation allowance for any portion of
the deferred income tax assets that management believes will not be realized. In
the opinion of management, it is more likely than not that the Company will
realize the benefit of the deferred income tax assets and, therefore, no
valuation allowance has been established.
4. STOCKHOLDER'S EQUITY
Retained earnings available for distribution as dividends to IDS Life are
limited to the Company's surplus as determined in accordance with accounting
practices prescribed by the Arizona Department of Insurance. Statutory
unassigned deficit aggregated $6,797 and $10,181 as of December 31, 1999 and
1998, respectively. Any payments in excess of $4,025 would require approval by
the Insurance Department of the State of Arizona.
Statutory net income and stockholder's equity as of December 31, are summarized
as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------
<S> <C> <C> <C>
Statutory net income (loss) $ 4,404 $ 1,470 $(7,990)
Statutory stockholder's equity 40,246 36,862 15,351
</TABLE>
5. RELATED PARTY TRANSACTIONS
The Company entered into a reinsurance agreement to assume single premium
deferred annuity contracts from IDS Life. At September 1, 1995, a $107,564 block
of single premium deferred annuities was transferred from IDS Life to the
Company. The
- --------------------------------------------------------------------------------
12
<PAGE>
accompanying balance sheet includes $83,900 and $90,919 for future policy
benefits related to this agreement as of December 31, 1999 and 1998,
respectively.
The Company has no employees. Charges by IDS Life and AEFC for the use of joint
facilities, marketing services and other services aggregated $3,937, $4,538 and
$6,447 for 1999, 1998 and 1997, respectively. Certain of these costs are
included in deferred policy acquisition costs.
6. LINES OF CREDIT
The Company has an available line of credit with AEFC of $10,000. The interest
rate for any borrowing is established by reference to various indicies plus 20
to 45 basis points depending on the term. There were no borrowings outstanding
under this agreement at December 31, 1999 or 1998.
7. FAIR VALUES OF FINANCIAL INSTRUMENTS
The Company discloses fair value information for most on- and off-balance sheet
financial instruments for which it is practicable to estimate that value. Fair
values of life insurance obligations, receivables and all non-financial
instruments, such as deferred acquisition costs, are excluded. Off-balance sheet
intangible assets are also excluded. Management believes the value of excluded
assets and liabilities is significant. The fair value of the Company, therefore,
cannot be estimated by aggregating the amounts presented.
<TABLE>
<CAPTION>
1999 1998
------------------ ------------------
CARRYING FAIR CARRYING FAIR
FINANCIAL ASSETS AMOUNT VALUE AMOUNT VALUE
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $ 56,778 $ 57,860 $ 59,623 $ 64,727
Available for sale 215,550 12,489 215,550 11,729
Mortgage loans on real estate
(Note 2) 204,005 -- 204,005 --
Cash and cash equivalents
(Note 1) 6,763 6,763 4,746 4,746
Separate account assets (Note
1) 28,128 28,128 15,622 15,622
FINANCIAL LIABILITIES
- ----------------------------------------------------------------------
Future policy benefits for
fixed annuities $276,924 $265,054 $236,046 $225,238
Separate account liabilities 28,128 26,778 15,622 14,811
</TABLE>
The fair value of future policy benefits for fixed annuities is based on the
status of the annuities at December 31, 1999 and 1998. The fair value of
deferred annuities and separate account liabilities is estimated as the carrying
amount less applicable surrender charges. The fair value for annuities in
non-life contingent payout status is estimated as the present value of projected
benefit payments at rates appropriate for contracts issued in 1999 and 1998,
respectively.
8. COMMITMENTS AND CONTINGENCIES
In January 2000, AEFC reached an agreement in principle to settle three
class-action lawsuits. The Company had been named as a co-defendant in one of
these lawsuits. It is expected the settlement will provide $215 million of
benefits to more than 2 million participants. The agreement in principle to
settle also provides for release by class members of all insurance and annuity
market conduct claims dating back to 1985 and is subject to a number of
contingencies including a definitive agreement and court approval. The portion
of the settlement allocated to the Company did not have a material impact on the
Company's consolidated financial position or results from operations.
- --------------------------------------------------------------------------------
13
<PAGE>
9. YEAR 2000 ISSUE (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 the Company. All of the
major systems used by the Company are maintained by AEFC and are utilized by
multiple subsidiaries and affiliates of AEFC. The Company's businesses are
heavily dependent upon AEFC's computer systems and have significant interaction
with systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to the Company, 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 December 31, 1999, AEFC had completed its
program of corrective measures on its internal systems and applications,
including Year 2000 compliance testing. As of December 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 the Company'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. At December 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 January 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on the Company's business, results
of operations, or financial condition as a result of the Year 2000 issue.
- --------------------------------------------------------------------------------
14
<PAGE>
PART C.
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part B of this Registration Statement:
APL Variable Annuity Account 1
Statements of Net Assets for year ended Dec. 31, 1999
Statements of Operations for year ended Dec. 31, 1999
Statements of Changes in Net Assets for years ended Dec.31 1999
and 1998.
Notes to Financial Statements.
Report of Independent Auditors for APL Variable Annuity Account 1 dated
March 17, 2000.
American Partners Life Insurance Company:
Balance Sheets as of Dec. 31, 1999 and 1998;
Statements of Income for years ended Dec. 31, 1999, 1998 and 1997; and
Statements of Stockholder's Equity for years ended Dec. 31, 1999, 1998
and 1997.
Statements of Cash Flows for the years ended Dec. 31, 1999, 1998
and 1997.
Notes to Financial Statements.
Report of Independent Auditors dated February 3, 2000.
(b) Exhibits:
1. Consent in Writing in Lieu of Meeting of Board of Directors establishing
the APL Variable Annuity Account 1 dated February 9, 1995, filed
electronically as Exhibit 1 to Registrant's Initial Registration Statement
No. 33-57731 is incorporated herein by reference.
2. Not applicable.
3. Form of Variable Annuity Distribution Agreement, filed electronically as
Exhibit 3 to Pre-Effective Amendment No. 1 to Registration Statement No.
33-57731 is incorporated herein by reference.
4.1 Form of Deferred Annuity Contract for nonqualified contract (form 32028),
filed electronically as Exhibit 4.1 to Pre-Effective Amendment No. 1 to
Registration Statement No. 33-57731 is incorporated herein by reference.
4.2 Form of Deferred Annuity Contract for qualified contract (form 32034-IRA),
filed electronically as Exhibit 4.2 to Pre-Effective Amendment No. 1 to
Registration Statement No. 33-57731 is incorporated herein by reference.
5. Form of Application for American Partners Life Variable Annuity (form
32025), filed electronically as Exhibit 5.1 to Pre-Effective Amendment No.
1 to Registration Statement No. 33-57731 is incorporated herein by
reference.
6.1 Articles of Amendment and Restatement of National Pension Life Insurance
Company dated February 18, 1994, filed as Exhibit 6.1 to Registrant's
Initial Registration Statement No. 33-57731 is incorporated herein by
reference.
6.2 Amended and Restated By-Laws of American Partners Life, filed as Exhibit
6.2 to Registrant's Initial Registration Statement No. 33-57731 is
incorporated herein by reference.
<PAGE>
7. Not applicable.
8.1 Participation Agreement among INVESCO Variable Investment Funds, Inc.,
INVESCO Funds Group, Inc. and American Partners Life Insurance Company,
dated Oct. 31, 1995, filed electronically as Exhibit 8.1 to Post-Effective
Amendment No. 2 to Registration Statement No. 33-57731 is incorporated
herein by reference.
8.2 Fund Participation Agreement, dated Dec. 19, 1995 by and among American
Partners Life Insurance Company, TCI Portfolios, Inc. and Investors
Research Corporation, filed electronically as Exhibit 8.2 to Post-Effective
Amendment No. 2 to Registration Statement No. 33-57731 is incorporated
herein by reference.
8.3 Amendment No. 1 to Fund Participation Agreement, dated April 18, 1996 by
and among American Partners Life Insurance Company, TCI Portfolios, Inc.
and Investors Research Corporation, filed electronically as Exhibit 8.3 to
Post-Effective Amendment No. 3 to Registration Statement No. 33-57731 is
incorporated herein by reference.
8.4 Fund Participation Agreement, dated Jan. 23, 1996 between JANUS ASPEN
SERIES and American Partners Life Insurance Company, filed electronically
as Exhibit 8.3 to Post-Effective Amendment No. 2 to Registration Statement
No. 33-57731 is incorporated herein by reference.
8.5 Participation Agreement dated March 1, 1996 by and among American Partners
Life Insurance Company and Warburg Pincus Trust and Warburg, Pincus
Counsellors, Inc. and Counsellors Securities Inc., filed electronically as
Exhibit 8.5 to Post-Effective Amendment No. 3 to Registration Statement No.
33-57731 is incorporated herein by reference.
9. Opinion of counsel and consent to its use as to the legality of the
securities being registered, filed electronically herewith.
10. Consent of Independent Auditors, filed electronically herewith.
11. None.
12. Not applicable.
13. Copy of schedule for computation of each performance quotation provided in
the Registration Statement in response to Item 21, filed as Exhibit 13 to
Registrant's Initial Registration Statement No. 33-57731 is incorporated
herein by reference.
14. Power of Attorney to sign Amendments to this Registration Statement dated
April 20, 2000, filed electronically herewith.
<PAGE>
<TABLE>
<CAPTION>
Item 25. Directors and Officers of the Depositor (American Partners Life
Insurance Company)
<S> <C> <C>
Name Principal Business Address Positions and Offices with
Depositor
- ------------------------------------- ---------------------------------- ------------------------------------
Lorraine R. Hart 200 AXP Financial Center Director and Vice President,
Minneapolis, MN 55474 Investments
Jeffrey S. Horton 200 AXP Financial Center Vice President and Treasurer
Minneapolis, MN 55474
Richard W. Kling 200 AXP Financial Center Director and Chairman of the Board
Minneapolis, MN 55474
Eric L. Marhoun 200 AXP Financial Center Vice President, Group Counsel and
Minneapolis, MN 55474 Assistant Secretary
Paula R. Meyer 200 AXP Financial Center Director and President
Minneapolis, MN 55474
Mary Ellyn Minenko 200 AXP Financial Center Vice President, Group Counsel and
Minneapolis, MN 55474 Assistant Secretary
Stuart A. Sedlacek 200 AXP Financial Center Director and Vice President
Minneapolis, MN 55474
William A. Stoltzmann 200 AXP Financial Center Director, Vice President, General
Minneapolis, MN 55474 Counsel and Secretary
Philip C. Wentzel 200 AXP Financial Center Controller
Minneapolis, MN 55474
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
American Partners Life Insurance Company is a wholly-owned
subsidiary of IDS Life Insurance Company which is a
wholly-owned subsidiary of American Express Financial
Corporation. American Express Financial Corporation is a
wholly-owned subsidiary of American Express Company (American
Express).
The following list includes the names of major subsidiaries of
American Express.
<TABLE>
<CAPTION>
<S> <C>
Jurisdiction of
Name of Subsidiary Incorporation
I. Travel Related Services
American Express Travel Related Services Company, Inc. New York
II. International Banking Services
American Express Bank Ltd. Connecticut
III. Companies engaged in Financial Services
Advisory Capital Partners LLC Delaware
Advisory Capital Strategies Group Inc. Minnesota
American Centurion Life Assurance Company New York
<PAGE>
American Enterprise Investment Services Inc. Minnesota
American Enterprise Life Insurance Company Indiana
American Express Asset Management Group Inc. Minnesota
American Express Asset Management International Inc. Delaware
American Express Asset Management International (Japan) Ltd. Japan
American Express Asset Management Ltd. England
American Express Client Service Corporation Minnesota
American Express Corporation Delaware
American Express Financial Advisors Inc. Delaware
American Express Financial Advisors Japan Inc. Delaware
American Express Financial Corporation Delaware
American Express Insurance Agency of Arizona Inc. Arizona
American Express Insurance Agency of Idaho Inc. Idaho
American Express Insurance Agency of Nevada Inc. Nevada
American Express Insurance Agency of Oregon Inc. Oregon
American Express Minnesota Foundation Minnesota
American Express Property Casualty Insurance Agency of Kentucky Inc. Kentucky
American Express Property Casualty Insurance Agency of Maryland Inc. Maryland
American Express Property Casualty Insurance Agency of Mississippi Inc. Mississippi
American Express Property Casualty Insurance Agency of Pennsylvania Inc. Pennsylvania
American Express Trust Company Minnesota
American Partners Life Insurance Company Arizona
IDS Cable Corporation Minnesota
IDS Cable II Corporation Minnesota
IDS Capital Holdings Inc. Minnesota
IDS Certificate Company Delaware
IDS Futures Brokerage Group Minnesota
IDS Futures Corporation Minnesota
IDS Insurance Agency of Alabama Inc. Alabama
IDS Insurance Agency of Arkansas Inc. Arkansas
IDS Insurance Agency of Massachusetts Inc. Massachusetts
IDS Insurance Agency of Mississippi Ltd. Mississippi
IDS Insurance Agency of New Mexico Inc. New Mexico
IDS Insurance Agency of North Carolina Inc. North Carolina
IDS Insurance Agency of Ohio Inc. Ohio
IDS Insurance Agency of Texas Inc. Texas
IDS Insurance Agency of Utah Inc. Utah
IDS Insurance Agency of Wyoming Inc. Wyoming
Jurisdiction of
Name of Subsidiary Incorporation
IDS Life Insurance Company Minnesota
IDS Life Insurance Company of New York New York
IDS Management Corporation Minnesota
IDS Partnership Services Corporation Minnesota
IDS Plan Services of California, Inc. Minnesota
IDS Property Casualty Insurance Company Wisconsin
IDS Real Estate Services, Inc. Delaware
IDS Realty Corporation Minnesota
IDS Sales Support Inc. Minnesota
Investors Syndicate Development Corp. Nevada
Public Employee Payment Company Minnesota
</TABLE>
<PAGE>
Item 27. Number of Contractowners
As of March 31, 2000, there were 50 contract owners of qualified
Privileged Assets(R) Select Annuity contracts. There were 1,217 owners
of non-qualified contracts.
Item 28. Indemnification
The By-Laws of the depositor provide that it shall indemnify a
director, officer, agent or employee of the depositor pursuant to the
provisions of applicable statutes or pursuant to contract.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to director, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
Item 29. Principal Underwriters.
(a) American Express Financial Advisors acts as principal underwriter for
the following investment companies:
AXP Bond Fund, Inc.; AXP California Tax-Exempt Trust; AXP Discovery
Fund, Inc.; AXP Equity Select Fund, Inc.; AXP Extra Income Fund, Inc.;
AXP Federal Income Fund, Inc.; AXP Global Series, Inc.; AXP Growth
Series, Inc.; AXP High Yield Tax-Exempt Fund, Inc.; AXP International
Fund, Inc.; AXP Investment Series, Inc.; AXP Managed Series, Inc.; AXP
Market Advantage Series, Inc.; AXP Money Market Series, Inc.; AXP New
Dimensions Fund, Inc.; AXP Precious Metals Fund, Inc.; AXP Progressive
Fund, Inc.; AXP Selective Fund, Inc.; AXP Special Tax-Exempt Series
Trust; AXP Stock Fund, Inc.; AXP Strategy Series, Inc.; AXP Tax-Exempt
Series, Inc.; AXP Tax-Free Money Fund, Inc.; AXP Utilities Income Fund,
Inc., Growth Trust; Growth and Income Trust; Income Trust; Tax-Free
Income Trust; World Trust; IDS Certificate Company; Strategist Income
Fund, Inc.; Strategist Growth Fund, Inc.; Strategist Growth and Income
Fund, Inc.; Strategist World Fund, Inc. and Strategist Tax-Free Income
Fund, Inc.
<PAGE>
(b) As to each director, officer or partner of the principal underwriter:
Name and Principal Business Address Position and Offices with
Underwriter
- ------------------------------------- -----------------------------------
Ronald. G. Abrahamson Vice President - Business
200 AXP Financial Center Transformation
Minneapolis, MN 55474
Douglas A. Alger Senior Vice President - Human
200 AXP Financial Center Resources
Minneapolis, MN 55474
Peter J. Anderson Senior Vice President -
200 AXP Financial Center Investment Operations
Minneapolis, MN 55474
Ward D. Armstrong Senior Vice President -
200 AXP Financial Center Retirement Services
Minneapolis, MN 55474
John M. Baker Vice President - Plan Sponsor
200 AXP Financial Center Services
Minneapolis, MN 55474
Joseph M. Barsky, III Vice President - Mutual Fund
200 AXP Financial Center Equities
Minneapolis, MN 55474
Timothy V. Bechtold Vice President - Risk Management
200 AXP Financial Center Products
Minneapolis, MN 55474
John D. Begley Group Vice President -
Suite 100 Ohio/Indiana
7760 Olentangy River Rd.
Columbus, OH 43235
Brent L. Bisson Group Vice President - Los
Suite 900 Angeles Metro
E. Westside Twr
11835 West Olympic Blvd.
Los Angeles, CA 90064
John C. Boeder Vice President - Nonproprietary
200 AXP Financial Center Products
Minneapolis, MN 55474
Walter K. Booker Group Vice President - New Jersey
200 AXP Financial Center
Minneapolis, MN 55474
Bruce J. Bordelon Group Vice President - San
1333 N. California Blvd., Suite 200 Francisco Bay Area
Walnut Creek, CA 94596
Charles R. Branch Group Vice President - Northwest
Suite 200
West 111 North River Dr.
Spokane, WA 99201
<PAGE>
Douglas W. Brewers Vice President - Sales Support
200 AXP Financial Center
Minneapolis, MN 55474
Karl J. Breyer Corporate Senior Vice President
200 AXP Financial Center
Minneapolis, MN 55474
Cynthia M. Carlson Vice President - American Express
200 AXP Financial Center Securities Services
Minneapolis, MN 55474
Mark W. Carter Senior Vice President and Chief
200 AXP Financial Center Marketing Officer
Minneapolis, MN 55474
James E. Choat Senior Vice President - Third
200 AXP Financial Center Party Distribution
Minneapolis, MN 55474
Kenneth J. Ciak Vice President and General
IDS Property Casualty Manager - IDS Property Casualty
1400 Lombardi Avenue
Green Bay, WI 54304
Paul A. Connolly Vice President - Advisor
200 AXP Financial Center Staffing, Training and Support
Minneapolis, MN 55474
Henry J. Cormier Group Vice President - Connecticut
Commerce Center One
333 East River Drive
East Hartford, CT 06108
John M. Crawford Group Vice President -
Suite 200 Arkansas/Springfield/Memphis
10800 Financial Ctr Pkwy
Little Rock, AR 72211
Kevin F. Crowe Group Vice President -
Suite 312 Carolinas/Eastern Georgia
7300 Carmel Executive Pk
Charlotte, NC 28226
Colleen Curran Vice President and Assistant
200 AXP Financial Center General Counsel
Minneapolis, MN 55474
Luz Maria Davis Vice President - Communications
200 AXP Financial Center
Minneapolis, MN 55474
Arthur E. DeLorenzo Group Vice President - Upstate
4 Atrium Drive, #100 New York
Albany, NY 12205
<PAGE>
Scott M. DiGiammarino Group Vice President -
Suite 500 Washington/Baltimore
8045 Leesburg Pike
Vienna, VA 22182
Bradford L. Drew Group Vice President - Eastern
Two Datran Center Florida
Penthouse One B
9130 S. Dadeland Blvd.
Miami, FL 33156
Douglas K. Dunning Vice President - Assured Assets
200 AXP Financial Center Product Development and Management
Minneapolis, MN 55474
James P. Egge Group Vice President - Western
4305 South Louise, Suite 202 Iowa, Nebraska, Dakotas
Sioux Falls, SD 57103
Gordon L. Eid Senior Vice President, General
200 AXP Financial Center Counsel and Chief Compliance
Minneapolis, MN 55474 Officer
Robert M. Elconin Vice President - Government
200 AXP Financial Center Relations
Minneapolis, MN 55474
Phillip W. Evans, Group Vice President - Rocky
Suite 600 Mountain
6985 Union Park Center
Midvale, UT 84047-4177
Gordon M. Fines Vice President - Mutual Fund
200 AXP Financial Center Equity Investments
Minneapolis, MN 55474
Douglas L. Forsberg Vice President - International
200 AXP Financial Center
Minneapolis, MN 55474
Jeffrey P. Fox Vice President and Corporate
200 AXP Financial Center Controller
Minneapolis, MN 55474
William P. Fritz Group Vice President - Gateway
Suite 160
12855 Flushing Meadows Dr.
St. Louis, MO 63131
Carl W. Gans Group Vice President - Twin City
8500 Tower Suite 1770 Metro
8500 Normandale Lake Blvd.
Bloomington, MN 55437
Peter A. Gallus Vice President-Investment
200 AXP Financial Center Administration
Minneapolis, MN 55474
<PAGE>
Derek G. Gledhill Vice President - Integrated
200 AXP Financial Center Financial Services Field
Minneapolis, MN 55474 Implementation
David A. Hammer Vice President and Marketing
200 AXP Financial Center Controller
Minneapolis, MN 55474
Teresa A. Hanratty Senior Vice President-Field
Suites 6&7 Management
169 South River Road
Bedford, NH 03110
Robert L. Harden Group Vice President - Boston
Two Constitution Plaza Metro
Boston, MA 02129
Lorraine R. Hart Vice President - Insurance
200 AXP Financial Center Investments
Minneapolis, MN 55474
Scott A. Hawkinson Vice President and Controller -
200 AXP Financial Center Private Client Group
Minneapolis, MN 55474
Brian M. Heath Senior Vice President and General
Suite 150 Sales Manager
801 E. Campbell Road
Richardson, TX 75081
Janis K. Heaney Vice President - Incentive
200 AXP Financial Center Management
Minneapolis, MN 55474
Jon E. Hjelm Group Vice President - Rhode
310 Southbridge Street Island/Central - Western
Auburn, MA 01501 Massachusetts
David J. Hockenberry Group Vice President - Tennessee
30 Burton Hills Blvd. Valley
Suite 175
Nashville, TN 37215
Jeffrey S. Horton Vice President and Treasurer
200 AXP Financial Center
Minneapolis, MN 55474
David R. Hubers Chairman, President and Chief
200 AXP Financial Center Executive Officer
Minneapolis, MN 55474
Debra A. Hutchinson Vice President - Relationship
200 AXP Financial Center Leader
Minneapolis, MN 55474
James M. Jensen Vice President and
200 AXP Financial Center Controller-Advice and Retail
Minneapolis, MN 55474 Distribution Group
<PAGE>
Marietta L. Johns Senior Vice President - Field
200 AXP Financial Center Management
Minneapolis, MN 55474
Nancy E. Jones Vice President - Business
200 AXP Financial Center Development
Minneapolis, MN 55474
Ora J. Kaine Vice President - Financial
200 AXP Financial Center Advisory Services
Minneapolis, MN 55474
Linda B. Keene Vice President - Market
200 AXP Financial Center Development
Minneapolis, MN 55474
G. Michael Kennedy Vice President - Senior Portfolio
200 AXP Financial Center Manager
Minneapolis, MN 55474
Richard W. Kling Senior Vice President - Products
200 AXP Financial Center
Minneapolis, MN 55474
John M. Knight Vice President - Investment
200 AXP Financial Center Accounting
Minneapolis, MN 55474
Paul F. Kolkman Vice President - Actuarial Finance
200 AXP Financial Center
Minneapolis, MN 55474
Claire Kolmodin Vice President - Service Quality
200 AXP Financial Center
Minneapolis, MN 55474
David S. Kreager Group Vice President - Greater
Suite 108 Michigan
Trestle Bridge V
5126 Lovers Lane
Kalamazoo, MI 49002
Steven C. Kumagai Director and Senior Vice
200 AXP Financial Center President-Direct and Interactive
Minneapolis, MN 55474 Group
Mitre Kutanovski Group Vice President - Chicago
Suite 680 Metro
8585 Broadway
Merrillville, IN 48410
Kurt A. Larson Vice President - Senior Portfolio
200 AXP Financial Center Manager
Minneapolis, MN 55474
Lori J. Larson Vice President - Brokerage and
200 AXP Financial Center Direct Services
Minneapolis, MN 55474
<PAGE>
Daniel E. Laufenberg Vice President and Chief U.S.
200 AXP Financial Center Economist
Minneapolis, MN 55474
Jane W. Lee Vice President - New Business
200 AXP Financial Center Development and Marketing
Minneapolis, MN 55474
Peter A. Lefferts Senior Vice President - Corporate
200 AXP Financial Center Strategy and Development
Minneapolis, MN 55474
Douglas A. Lennick Director and Executive Vice
200 AXP Financial Center President - Private Client Group
Minneapolis, MN 55474
Fred A. Mandell Vice President - Field Marketing
200 AXP Financial Center Readiness
Minneapolis, MN 55474
Daniel E. Martin Group Vice President - Pittsburgh
Suite 650 Metro
5700 Corporate Drive
Pittsburgh, PA 15237
Timothy J. Masek Vice President and Director of
200 AXP Financial Center Global Research
Minneapolis, MN 55474
Sarah A. Mealey Vice President - Mutual Funds
200 AXP Financial Center
Minneapolis, MN 55474
Paula R. Meyer Vice President - Assured Assets
200 AXP Financial Center
Minneapolis, MN 55474
William P. Miller Vice President and Senior
200 AXP Financial Center Portfolio Manager
Minneapolis, MN 55474
Shashank B. Modak Vice President - Technology Leader
200 AXP Financial Center
Minneapolis, MN 55474
Pamela J. Moret Vice President - Variable Assets
200 AXP Financial Center
Minneapolis, MN 55474
Barry J. Murphy Senior Vice President - Client
200 AXP Financial Center Service
Minneapolis, MN 55474
Mary Owens Neal Vice President-Consumer Marketing
200 AXP Financial Center
Minneapolis, MN 55474
<PAGE>
Thomas V. Nicolosi Group Vice President - New York
Suite 220 Metro Area
500 Mamaroneck Avenue
Harrison, NY 10528
Michael J. O'Keefe Vice President - Advisory
200 AXP Financial Center Business Systems
Minneapolis, MN 55474
James R. Palmer Vice President - Taxes
200 AXP Financial Center
Minneapolis, MN 55474
Marc A. Parker Group Vice President -
10200 SW Greenburg Road Portland/Eugene
Suite 110
Portland, OR 97223
Carla P. Pavone Vice President-Compensation
200 AXP Financial Center Services and ARD Product
Minneapolis, MN 55474 Distribution
Thomas P. Perrine Senior Vice President - Group
200 AXP Financial Center Relationship Leader/American
Minneapolis, MN 55474 Express Technologies Financial
Services
Susan B. Plimpton Vice President - Marketing
200 AXP Financial Center Services
Minneapolis, MN 55474
Larry M. Post Group Vice President -
One Tower Bridge Philadelphia Metro and Northern
100 Front Street, 8th Fl New England
West Conshohocken, PA 19428
Ronald W. Powell Vice President and Assistant
200 AXP Financial Center General Counsel
Minneapolis, MN 55474
Diana R. Prost Group Vice President -
3030 N.W. Expressway Kansas/Oklahoma
Suite 900
Oklahoma City, OK 73112
James M. Punch Vice President and Project
200 AXP Financial Center Manager - Platform I Value
Minneapolis, MN 55474 Enhanced
Frederick C. Quirsfeld Senior Vice President - Fixed
200 AXP Financial Center Income
Minneapolis, MN 55474
Rollyn C. Renstrom Vice President - Corporate
200 AXP Financial Center Planning and Analysis
Minneapolis, MN 55474
<PAGE>
R. Daniel Richardson Group Vice President - Southern
Suite 800 Texas
Arboretum Plaza One
9442 Capital of Texas Hwy. N
Austin, TX 78759
ReBecca K. Roloff Senior Vice President - Field
200 AXP Financial Center Management and Financial Advisory
Minneapolis, MN 55474 Service
Stephen W. Roszell Senior Vice President -
200 AXP Financial Center Institutional
Minneapolis, MN 55474
Max G. Roth Group Vice President -
Suite 201 S. IDS Ctr Wisconsin/Upper Michigan
1400 Lombardi Avenue
Green Bay, WI 54304
Erven A. Samsel Senior Vice President - Field
45 Braintree Hill Park Management
Suite 402
Braintree, MA 02184
Theresa M. Sapp Vice President - Relationship
200 AXP Financial Center Leader
Minneapolis, MN 55474
Russell L. Scalfano Group Vice President -
Suite 201 Illinois/Indiana/Kentucky
101 Plaza East Blvd.
Evansville, IN 47715
William G. Scholz Group Vice President -
Suite 205 Arizona/Las Vegas
7333 E. Doubletree Ranch Rd
Scottsdale, AZ 85258
Stuart A. Sedlacek Senior Vice President and Chief
200 AXP Financial Center Financial Officer
Minneapolis, MN 55474
Donald K. Shanks Vice President - Property Casualty
200 AXP Financial Center
Minneapolis, MN 55474
Judy P. Skoglund Vice President - Quality and
200 AXP Financial Center Service Support
Minneapolis, MN 55474
James B. Solberg Group Vice President - Eastern
466 Westdale Mall Iowa Area
Cedar Rapids, IA 52404
Bridget Sperl Vice President - Geographic
200 AXP Financial Center Service Teams
Minneapolis, MN 55474
<PAGE>
Paul J. Stanislaw Group Vice President - Southern
Suite 1100 California
Two Park Plaza
Irvine, CA 92714
Lisa A. Steffes Vice President - Marketing Offer
200 AXP Financial Center Development
Minneapolis, MN 55474
Lois A. Stilwell Group Vice President - Outstate
Suite 433 Minnesota Area/North
9900 East Bren Road Dakota/Western Wisconsin
Minnetonka, MN 55343
William A. Stoltzmann Vice President and Assistant
200 AXP Financial Center General Counsel
Minneapolis, MN 55474
James J. Strauss Vice President and General Auditor
200 AXP Financial Center
Minneapolis, MN 55474
Jeffrey J. Stremcha Vice President - Information
200 AXP Financial Center Resource Management/ISD
Minneapolis, MN 55474
Barbara Stroup Stewart Vice President - Channel
200 AXP Financial Center Development
Minneapolis, MN 55474
Craig P. Taucher Group Vice President -
Suite 150 Orlando/Jacksonville
4190 Belfort Road
Jacksonville, FL 32216
Neil G. Taylor Group Vice President -
Suite 425 Seattle/Tacoma/Hawaii
101 Elliott Avenue West
Seattle, WA 98119
John R. Thomas Senior Vice President
200 AXP Financial Center
Minneapolis, MN 55474
Keith N. Tufte Vice President and Director of
200 AXP Financial Center Equity Research
Minneapolis, MN 55474
Peter S. Velardi Group Vice President -
Suite 180 Atlanta/Birmingham
1200 Ashwood Parkway
Atlanta, GA 30338
Charles F. Wachendorfer Group Vice President - Detroit
Suite 100 Metro
Stanford Plaza II
7979 East Tufts Ave. Pkwy
Denver, CO 80237
<PAGE>
Donald F. Weaver Group Vice President - Greater
3500 Market Street, Suite 200 Pennsylvania
Camp Hill, PA 17011
Norman Weaver Jr. Senior Vice President - Alliance
1010 Main St., Suite 2B Group
Huntington Beach, CA 92648
Michael L. Weiner Vice President - Tax Research and
200 AXP Financial Center Audit
Minneapolis, MN 55474
Jeffry M. Welter Vice President - Equity and Fixed
200 AXP Financial Center Income Trading
Minneapolis, MN 55474
Thomas L. White Group Vice President - Cleveland
Suite 200 Metro
28601 Chagrin Blvd.
Woodmere, OH 44122
Eric S. Williams Group Vice President - Virginia
Suite 250
3951 Westerre Parkway
Richmond, VA 23233
William J. Williams Group Vice President - Western
Two North Tamiami Trail Florida
Suite 702
Sarasota, FL 34236
<PAGE>
Edwin M. Wistrand Vice President and Assistant
200 AXP Financial Center General Counsel
Minneapolis, MN 55474
Michael D. Wolf Vice President - Senior Portfolio
200 AXP Financial Center Manager
Minneapolis, MN 55474
Michael R. Woodward Senior Vice President - Field
32 Ellicott St. Management
Suite 100
Batavia, NY 14020
Rande L. Zellers Group Vice President-Gulf States
1 Galleria Blvd., Suite 1900
Metairie, LA 70001
<TABLE>
Item 29(c).
<S> <C> <C> <C> <C>
Net Underwriting
Name of Principal Discounts and Compensation on Brokerage
Underwriter Commissions Redemption Commissions Compensation
- ----------------------- --------------------- -------------------- --------------------- --------------------
American Express None $2,345,144 None None
Financial Advisors
Inc.
</TABLE>
<PAGE>
Item 30. Location of Accounts and Records
American Partners Life Insurance Company
1751 AXP Financial Center
Minneapolis, MN
Item 31. Management Services
Not Applicable
Item 32. Undertakings
(a) (b) & (c) These undertakings were filed with the
Registrant's Pre-Effective Amendment No. 1,
File No. 33-57731.
(d) The sponsoring insurance company represents
that the fees and charges deducted under the
contract, in the aggregate, are reasonable
in relation to the services rendered, the
expenses expected to be incurred, and the
risks assumed by the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, American Partners Life Insurance Company, on behalf of the Registrant
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Minneapolis, and State of Minnesota, on the 27th day
of April, 2000.
APL VARIABLE ANNUITY ACCOUNT 1
(Registrant)
By American Partners Life Insurance Company
(Sponsor)
By /s/ Paula R. Meyer*
Paula R. Meyer
President
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities indicated on the 27th day of
April, 2000.
Signature Title
/s/ Lorraine R. Hart* Director and Vice
Lorraine R. Hart President-Investments
/s/ Richard W. Kling* Director and Chairman of
Richard W. Kling the Board
/s/ Paula R. Meyer* Director and President
Paula R. Meyer
/s/ Stuart A. Sedlacek* Director and Vice President
Stuart A. Sedlacek
/s/ William A. Stoltzmann* Director, Vice President
William A. Stoltzmann General Counsel and Secretary
/s/ Jeffrey S. Horton* Vice President and Treasurer
Jeffrey S. Horton
/s/ Philip C. Wentzel* Controller
Philip C. Wentzel
*Signed pursuant to Power of Attorney dated April 20, 2000, filed electronically
herewith, by:
/s/ Mary Ellyn Minenko
Mary Ellyn Minenko
<PAGE>
CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 6
TO REGISTRATION STATEMENT NO. 33-57731
This Registration Statement is comprised of the following papers and documents:
The Cover Page.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements.
Part C.
Other Information.
The signatures.
Exhibits.
APL VARIABLE ANNUITY ACCOUNT 1 (PASA)
Registration No. 33-57731
EXHIBIT INDEX
Exhibit 9: Opinion of Counsel, dated April 27, 2000.
Exhibit 10: Consent of Independent Auditors, dated April 24, 2000.
Exhibit 14: American Partners Life Power of Attorney, dated April 20,
2000.
April 27, 2000
American Partners Life Insurance Company
80 South 8th Street
P.O. Box 59197
Minneapolis, MN 55459-0197
RE: APL Variable Annuity Account 1
File No.: 33-57731/811-07247
Ladies and Gentlemen:
I am familiar with the establishment of the APL Variable Annuity Account I
("Account"), which is a separate account of American Partners Life Insurance
Company ("Company") established by the Company's Board of Directors according to
applicable insurance law. I also am familiar with the above-referenced
Registration Statement filed by the Company on behalf of the Account with the
Securities and Exchange Commission.
I have made such examination of law and examined such documents and records as
in my judgment are necessary and appropriate to enable me to give the following
opinion:
1. The Company is duly incorporated, validly existing and in good standing
under applicable state law and is duly licensed or qualified to do
business in each jurisdiction where it transacts business. The Company
has all corporate powers required to carry on its business and to issue
the contracts.
2. The Account is a validly created and existing separate account of the
Company and is duly authorized to issue the securities registered.
3. The contracts issued by the Company, when offered and sold in
accordance with the prospectus contained in the Registration Statement
and in compliance with applicable law, will be legally issued and
represent binding obligations of the Company in accordance with their
terms.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Mary Ellyn Minenko
Mary Ellyn Minenko
Counsel
MEM/CLGE/dwl
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent Auditors"
in the Statement of Additional Information and to the use of our report dated
February 3, 2000 with respect to the financial statements of American Partners
Life Insurance Company and to the use of our report dated March 17, 2000 with
respect to the financial statements of APL Variable Annuity Account 1, included
in Post-Effective Amendment No. 6 to the Registration Statement (Form N-4, No.
33-57731) and related Prospectus for the registration of the APL Privileged
Assets Select Annuity Contracts to be offered by American Partners Life
Insurance Company.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
April 24, 2000
AMERICAN PARTNERS LIFE INSURANCE COMPANY
APL Variable Annuity Account 1
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as a director and/or officer of American Partners Life
Insurance Company (APL), on behalf of the below listed registrant previously
have filed registration statements and amendments thereto pursuant to
requirements of the Securities Act of 1933 and the Investment Company Act of
1940 with the Securities and Exchange Commission:
1933 Act 1940 Act
Reg. Number Reg. Number
----------- -----------
APL Variable Annuity Account 1 33-57731 811-07247
Privileged Assets Select Annuity (PASA)
hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn Minenko, Bruce
A. Kohn, Eric L. Marhoun and Timothy S. Meehan or any one of them, as his or her
attorney-in-fact and agent, to sign for her in her name, place and stead any and
all filings, applications (including applications for exemptive relief),
periodic reports, registration statements for existing or future products (with
all exhibits and other documents required or desirable in connection therewith),
other documents, and amendments thereto and to file such filings, applications
periodic reports, registration statements, other documents, and amendments
thereto with the Securities and Exchange Commission, and any necessary
jurisdictions, and grants to any or all of them the full power and authority to
do and perform each and every act required, necessary or appropriate in
connection therewith.
Dated the 20th day of April, 2000.
/s/ Lorraine R. Hart__________________
Lorraine R. Hart
Director and Vice President, Investments
/s/ Jeffrey S. Horton_________________
Jeffrey S. Horton
Vice President and Treasurer
/s/ Richard W. Kling________________
Richard W. Kling
Director and Chairman of the Board
/s/ Paula R. Meyer___________________
Paula R. Meyer
Director and President
<PAGE>
_/s/ Stuart A. Sedlacek________________
Stuart A. Sedlacek
Director and Vice President
/s/ William A. Stoltzmann_____________
William A. Stoltzmann
Director, Vice President, General Counsel
and Secretary
/s/ Philip C. Wentzel_________________
Philip C. Wentzel
Controller
