<PAGE>
ANNUITY INVESTORS(SERVICEMARK) VARIABLE ACCOUNT A
of
ANNUITY INVESTORS(SERVICEMARK)
LIFE INSURANCE COMPANY
for the
Commodore Nauticus(SERVICEMARK)
Group Flexible Premium Deferred
Annuity
June 30, 1996
SEMIANNUAL REPORT TO CONTRACT OWNERS
<PAGE>
ANNUITY INVESTORS(SERVICEMARK)
LIFE INSURANCE COMPANY
SEMIANNUAL REPORT TO CONTRACT OWNERS
JUNE 30, 1996
TABLE OF CONTENTS PAGE
Report from the President A 4
Annuity Investors(SERVICEMARK) Variable Account A
Statements of Assets and Liabilities as of June 30, 1996 A 5
Statements of Operations for the Six Months Ended June 30, 1996
and the Period from December 7, 1995 (Inception)
to December 31, 1995 A 6
Statements of Changes in Net Assets for the Six Months Ended
June 30, 1996 and the Period from December 7, 1995
(Inception) to December 31, 1995 A 6
Notes to Financial Statements A 7
Annuity Investors Variable Account A Sub - Accounts
Janus Aspen Series June 30, 1996 Semiannual Report
Janus Aspen Aggressive Growth Portfolio (James P. Goff) J I
Janus Aspen Worldwide Growth Portfolio (Helen Young Hayes) J 2
Janus Aspen Balanced Portfolio (Blaine P. Rollins) J 3
Janus Aspen Short - Term Bond Portfolio (Sandy R. Rufenacht) J 4
Janus Aspen Aggressive Growth Portfolio Schedule of Investments
(unaudited) J 5
Janus Aspen Worldwide Growth Portfolio Schedule of Investments
(unaudited) J 7
Janus Aspen Balanced Portfolio Schedule of Investments
(unaudited) J12
Janus Aspen Short - Term Bond Portfolio Schedule of Investments
(unaudited) J14
Statements of Assets and Liabilities J15
Statements of Operations J16
Statements of Changes in Net Assets J17
Financial Highlights J18
Notes to Financial Statements J20
Dreyfus Variable Investment Fund,Capital Appreciation Portfolio
Semi-Annual Report June 30,1996
Dreyfus VIF, Capital Appreciation Portfolio Letter to
Shareholders D I
Dreyfus VIF, Capital Appreciation Portfolio Statement of
Investments D 3
Dreyfus VlF, Capital Appreciation Portfolio Statement of
Assets and Liabilities D 6
Dreyfus VIF, Capital Appreciation Portfolio Statement of
Operations D 7
Dreyfus VIF, Capital Appreciation Portfolio Statement of
Changes in Net Assets D 8
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Dreyfus VIF, Capital Appreciation Portfolio Financial
Highlights D 9
Dreyfus VIF, Capital Appreciation Portfolio Notes to
Financial Statements D10
Dreyfus VlF, Capital Appreciation Portfolio Review
Report of Independent Accountants D13
The Dreyfus Socially Responsible Growth Fund, lnc. Semi-Annual Report
June 30, 1996
The Dreyfus Socially Responsible Growth Fund, Inc. Letter to
Shareholders (S. Canter) D15
The Dreyfus Socially Responsible Growth Fund, Inc. Letter to
Shareholders (Managers) D16
The Dreyfus Socially responsible Growth Fund, Inc. Statement of
Investments D17
The Dreyfus Socially Responsible Growth Fund, Inc. Statement
of Assets and Liabilities D20
The Dreyfus Socially Responsible Growth Fund, Inc. Statement
of Operations D21
The Dreyfus Socially Responsible Growth Fund, Inc. Statement
of Changes in Net Assets D22
The Dreyfus Socially Responsible Growth Fund, Inc. Financial
Highlights D23
The Dreyfus Socially Responsible Growth Fund, Inc. Notes
to Financial Statements D24
The Dreyfus Socially Responsible Growth Fund, Inc.
Review Report of Independent Accountants D27
The Dreyfus Socially Responsible Growth Fund, Inc. Proxy
Results D28
Dreyfus Stock Index Fund Semi-Annual Report June 30, 1996
Dreyfus Stock Index Fund Letter to Shareholders D30
Dreyfus Stock Index Fund Statement of Investments D32
Dreyfus Stock Index Fund Statement of Assets and Liabilities D38
Dreyfus Stock Index Fund Statement of Operations D39
Dreyfus Stock Index Fund Statement of Changes in Net Assets D40
Dreyfus Stock Index Fund Financial Highlights D41
Dreyfus Stock Index Fund Notes to Financial Statements D42
Merrill Lynch Variable Series Funds, Inc., Semi-Annual Report June 30,
1996
(Provided under separate cover)
Note: The semi-annual report from Merrill Lynch contains data
regarding Funds that are NOT a part of Annuity
Investors(SERVICEMARK) Variable Account A. For your
purposes, the four Funds listed below are the only Funds
available in Annuity Investors Variable Account A.
Merrill Lynch Variable Series Funds, Inc., Merrill Lynch
Basic Value Focus Fund
Merrill Lynch Variable Series Funds, Inc., Merrill Lynch
Global Strategy Focus Fund
Merrill Lynch Variable Series Funds, Inc., Merrill Lynch
High Current Income Fund
Merrill Lynch Variable Series Funds, Inc., Merrill Lynch
Domestic Money Market Fund
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REPORT FROM THE PRESIDENT
-------------------------
Dear Contract Owner:
I am pleased to report the performance of the sub-accounts of Annuity
Investors Variable Account A for the first six months of 1996. Performance
for all portfolios, measured by the percentage change in unit values for
the period, net of all mortality, expense and contract maintenance
charges, for the six months ended June 30, 1996 was as follows:
Six Months Ended
Equity Portfolios: June 30, 1996
------------------ --------------
Janus Aspen Worldwide Growth Portfolio 19.58%
Janus Aspen Aggressive Growth Portfolio 11.18%
Dreyfus Variable Investment Fund 10.57%
Capital Appreciation Portfolio
Dreyfus Socially Responsible Growth Fund 8.23%
Dreyfus Stock Index Fund 9.29%
Merrill Lynch Basic Value Focus Fund 10.35%
Balanced Portfolios:
Merrill Lynch Global Strategy Focus Fund 3.40%
Janus Aspen Balanced Portfolio 5.88%
Income Portfolios:
Merrill Lynch High Current Income Fund 3.08%
Janus Aspen Short-Term Bond Fund <0.31%>
Cash Portfolio:
Merrill Lynch Domestic Money Market Fund 1.77%
The first half of 1996 has provided substantial positive returns for
equity investments. The stock market, as measured by the Standard and
Poor's 500 Index (including dividends) and the NASDAQ Composite Index
increased 10.09% and 12.63%, respectively, through the first half of the
year. The bond market, as measured by the Lehman Brothers Aggregate Index
decreased <1.22%> over the same period.
Annuity Investors selected Dreyfus, Janus, and Merrill Lynch Portfolios
for inclusion in its Variable Account A based on the level of professional
investment expertise present in each management company and their
dedication to in-depth fundamental research. We offer a broad range of
investment options to allow you the flexibility to implement your own
personal investment strategy and to change your mix of investments as your
objectives change over time.
We look forward to continuing to serve you in the future.
Sincerely,
/s/ Robert A. Adams
Robert A. Adams
President
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<TABLE>
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ANNUITY INVESTORS VARIABLE ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
(UNAUDITED)
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Assets:
<S> <C>
Investments in portfolio shares, at net asset value (Note 2):
Dreyfus Variable Investment Funds:
Capital Appreciation Portfolio, 2,043.118 shares (cost - $38,723) . . . . . . . . . . . . . . . . $ 40,597
Socially Responsible Growth Fund Inc., 922.755 shares (cost - $17,206) . . . . . . . . . . . . . . 17,569
Stock Index Fund, 2,103.314 shares (cost - $38,528) . . . . . . . . . . . . . . . . . . . . . . . 39,690
Janus Aspen Series:
Aggressive Growth Portfolio, 3,279.902 shares (cost - $60,857) . . . . . . . . . . . . . . . . . . 62,121
Worldwide Growth Portfolio, 5,044.391 shares (cost - $83,382) . . . . . . . . . . . . . . . . . . 92,161
Balanced Portfolio, 4,590.542 shares (cost - $62,079) . . . . . . . . . . . . . . . . . . . . . . 63,120
Short-Term Bond Portfolio, 505.268 shares (cost - $5,071) . . . . . . . . . . . . . . . . . . . . 4,957
Merrill Lynch Variable Series Funds, Inc.:
Basic Value Focus Fund, 1,031.654 shares (cost - $13,841) . . . . . . . . . . . . . . . . . . . . 14,216
Global Strategy Focus Fund, 449.715 shares (cost - $5,628) . . . . . . . . . . . . . . . . . . . . 5,756
High Current Income Fund, 602.541 shares (cost - $6,734) . . . . . . . . . . . . . . . . . . . . . 6,664
Domestic Money Market Fund, 15,947.44 shares (cost - $15,947) . . . . . . . . . . . . . . . . . . 15,947
========================================================================================================================
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362,798
Liabilities:
Amounts due to Annuity Investors Life Insurance Company (Note 4) . . . . . . . . . . . . . . . . . . . . 0
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Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $362,798
=========================================================================================================================
Net assets attributable to variable annuity contract holders (Note 2): Units Unit Value
----- ----------
Dreyfus Variable Investment Funds:
Capital Appreciation Portfolio . . . . . . . . . . . . . . . . . . . . . 3,661.184 $11.088432 $ 40,597
Socially Responsible Growth Fund, Inc. . . . . . . . . . . . . . . . . . 1,613.794 10.886897 17,569
Stock Index Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,605.884 11.006876 39,690
Janus Aspen Series:
Aggressive Growth Portfolio . . . . . . . . . . . . . . . . . . . . . . 5,414.779 11.472543 62,121
Worldwide Growth Portfolio . . . . . . . . . . . . . . . . . . . . . . . 7,507.329 12.276122 92,161
Balanced Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,832.351 10.822376 63,120
Short-Term Bond Portfolio . . . . . . . . . . . . . . . . . . . . . . . 494.232 10.029003 4,957
Merrill Lynch Variable Series Funds, Inc.:
Basic Value Focus Fund . . . . . . . . . . . . . . . . . . . . . . . . . 1,256.852 11.310933 14,216
Global Strategy Focus Fund . . . . . . . . . . . . . . . . . . . . . . . 548.856 10.487845 5,756
High Current Income Fund . . . . . . . . . . . . . . . . . . . . . . . . 638.370 10.439437 6,664
Domestic Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . 15,609.583 1.021616 15,947
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Net assets attributable to variable annuity contract holders . . . . . . . . . . . . . . . . . . . 362,798
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Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $362,798
========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ANNUITY INVESTORS VARIABLE ACCOUNT A
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
=========================================================================================================
SIX MONTHS
ENDED JUNE 30,
1996
(UNAUDITED)
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<S> <C>
Investment income:
Dividends from investments in portfolio shares . . . . . . . . . . . . . . . . . $ 3,306
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Expenses:
Mortality and expense risk fees (Note 4) . . . . . . . . . . . . . . . . . 988
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Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . 2,318
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Net realized gain (loss) and unrealized appreciation (depreciation) on investments:
Net realized gain on sale of investments in portfolio shares . . . . . . . . . .
Net change in unrealized appreciation of investments in portfolio share . . . . . 37
14,791
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Net gain on investments in portfolio shares . . . . . . . . . . . . . . . 14,828
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Net increase in net assets from operations . . . . . . . . . . . . $ 17,146
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STATEMENT OF CHANGES IN NET ASSETS
=========================================================================================================
SIX MONTHS
ENDED JUNE 30,
1996
(UNAUDITED)
=========================================================================================================
Changes from operations:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,318
Net realized gain on sale of investments in portfolio shares . . . . . . . . . . 37
Net change in unrealized appreciation of investments in portfolio shares . . . . 14,791
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Net increase in net assets from operations . . . . . . . . . . . . . . . . 17,146
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Changes from principal transactions:
Net contract purchase payments . . . . . . . . . . . . . . . . . . . . . . . . . 339,610
Contract redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,150)
Net transfer from fixed account . . . . . . . . . . . . . . . . . . . . . . . . . 7,192
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Net increase in net assets from principal transactions . . . . . . . . . . 345,652
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Net increase in net assets . . . . . . . . . . . . . . . . . . . . 362,798
Net assets, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . 0
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Net assets, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 362,798
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The accompanying notes are in integral part of these financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(1) GENERAL
-------
Annuity Investors Variable Account A ("Account") is registered under the
Investment Company Act of 1940, as amended, as a unit investment trust.
The Account was established on May 26, 1995 and commenced operations on
December 7, 1995 as a segregated investment account for group variable
annuity contracts which are registered under the Securities Act of 1933.
However, there were no purchase payments allocated or investments held in
the separate account as of December 31, 1995. The operations of the
Account are included in the operations of Annuity Investors Life Insurance
Company (the "Company") pursuant to the provisions of the Ohio Insurance
Code. The Company is an indirect wholly-owned subsidiary of American
Annuity Group, Inc., ("AAG") a publicly traded insurance holding company
listed on the New York Stock Exchange.
On December 7, 1995, the following investment options were available:
The Dreyfus Variable Investment Funds;
. Capital Appreciation Portfolio
. Socially Responsible Growth Fund, Inc.
. Stock Index Fund
Janus Aspen Series;
. Aggressive Growth Portfolio
. Worldwide Growth Portfolio
. Balanced Portfolio
. Short-term Bond Portfolio
Merrill Lynch Variable Series Funds, Inc.;
. Domestic Money Market Fund
. Basic Value Focus Fund
. Global Strategy Focus Fund
. High Current Income Fund
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Security Valuation, Transactions and Related Investment Income
--------------------------------------------------------------
Investments are valued using the net asset value of the
respective portfolios at the end of each business day of the New
York Stock Exchange, with the exception of regional business
holidays. Investment transactions are accounted for on the trade
date (the date the order to buy or sell is executed). The cost
of investments sold is determined on a specific identification
basis. The Account does not hold any investments which are
restricted as to resale.
<PAGE>
Notes to Financial Statements (unaudited)
Continued
Net investment income, net realized gain (loss) and unrealized
appreciation (depreciation) on investments are allocated to the
contracts on each valuation date based on each contracts pro rata
share of the assets of the Account as of the beginning of the
valuation date.
Federal Income Taxes
--------------------
No provision for federal income taxes has been made in the
accompanying financial statements because the operations of the
Account are included in the total operations of the Company,
which is treated as a life insurance company for federal income
tax purposes under the Internal Revenue Code. Net investment
income and realized gains (losses) will be retained in the
Account and will not be taxable until received by the contract
owner or beneficiary in the form of annuity payments or other
distributions.
Variable Annuity Reserves
-------------------------
The variable annuity contract reserves are comprised of net
contract purchase payments less redemptions and benefits. These
reserves are adjusted daily for the net investment income and net
realized gain (loss) and unrealized appreciation (depreciation)
on investments.
(3) PURCHASES AND SALES OF INVESTMENTS IN PORTFOLIO SHARES
------------------------------------------------------
The aggregate cost of purchases and proceeds from sales of
investments in all portfolio shares for the six months ended June
30, 1996 amounted to $350,077 and $2,081, respectively.
(4) DEDUCTIONS AND EXPENSES
-----------------------
Although periodic retirement payments to contract owners vary
according to the investment performance of the sub-accounts, such
payments are not affected by mortality or expense experience
because the Company assumes the mortality risk and expense risk
under the contracts.
The mortality risk assumed by the Company results from the life
annuity payment option in the contracts, in which the Company
agrees to make annuity payments regardless of how long a
2
<PAGE>
Notes to Financial Statements (unaudited)
Continued
particular annuitant or other payee lives. The annuity payments
are determined in accordance with annuity purchase rate
provisions established at the time the contracts are issued.
Based on the actuarial determination of expected mortality, the
Company is required to fund any deficiency in the annuity
payment reserves from its general account assets.
The expense risk assumed by the Company is the risk that the
deductions for sales and administrative expenses may prove
insufficient to cover the actual sales and administrative
expenses.
The Company deducts a fee from the Account each day, which is
equal on an annual basis to 1.25 percent of the daily value of
the total investments of the Account, for assuming the mortality
and expense risks. These fees aggregated $988 for the six
months ended June 30, 1996.
Pursuant to an administrative agreement between AAG and the
Company, AAG subsidiaries provide sales and administrative
services to the Company and the Account. The Company may deduct
a percentage of purchase payments surrendered to cover sales
expenses. The percentage decreases from a maximum of 7.0 percent
based upon the number of years the purchase payment has been
held.
In addition, the Company may deduct units from contracts annually
and upon full surrender to cover an administrative fee of $25.
These expenses totaled $0 for the six months ended June 30, 1996.
(5) OTHER TRANSACTIONS WITH AFFILIATES
----------------------------------
AAG Securities, Inc., an affiliate of the Company, is the
principal underwriter and performs all variable annuity sales
functions on behalf of the Company.
3
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Notes to Financial Statements (unaudited)
Continued
(6) NET ASSETS
----------
Net assets consisted of the following at June 30, 1996:
Proceeds from the sales of units since
organization, less cost of units redeemed $345,652
Undistributed net investment income 2,318
Undistributed net realized gains on sale of investments 37
Net unrealized appreciation of investments 14,791
--------
Net assets $362,798
========
4
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Incorporated by Reference
Fund EDGAR Accession Number
- ---- ----------------------
Janus Aspen Series 919574-96-000755
Semi-Annual Report
June 30, 1996
Dreyfus Variable Investment Fund 813383-96-000013
Capital Appreciation Portfolio
Semi-Annual Report
June 30, 1996
Dreyfus Socially Responsible Growth Fund 890064-96-000010
N-30D
June 30, 1996
Dreyfus Stock Index Fund 846800-96-000006
Semi-Annual Report
June 30, 1996
We attach the following:
Merrill Lynch Variable Series Funds, Inc. 892916-96-000187
Semi-Annual Report
June 30, 1996
5<PAGE>
