485BPOS 1 marathonshell.txt REGISTRATION STATEMENT As filed with the Securities and Exchange Registration No. 33-34370* Commission on February 15, 2002 Registration No. 811-2512 -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 POST-EFFECTIVE AMENDMENT NO. 50 TO REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 and Amendment to REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Variable Annuity Account B of Aetna Life Insurance and Annuity Company Aetna Life Insurance and Annuity Company 151 Farmington Avenue, TS31 Hartford, Connecticut, 06156 (Address of Depositor's Principal Executive Offices) Depositor's Telephone Number, including Area Code: (860) 273-4686 Linda E. Senker, Counsel Aetna Life Insurance and Annuity Company 1475 Dunwoody Drive, West Chester, PA 19380-1478 (NAME AND ADDRESS OF AGENT FOR SERVICE) It is proposed that this filing will become effective: X immediately upon filing pursuant to paragraph (b) of Rule 485 -------- on _________ pursuant to paragraph (b) of Rule 485 -------- *Pursuant to Rule 429(a) under the Securities Act of 1933, Registrant has included a combined prospectus under this Registration Statement which includes all the information which would currently be required in a prospectus relating to the following earlier Registration Statement: 33-87932. PARTS A AND B The Prospectus dated May 1, 2001, as amended by supplements dated May 1, 2001, May 11, 2001, June 1, 2001, September 18, 2001, September 25, 2001, November 15, 2001 and December 13, 2001, is incorporated into Part A of this Post-Effective Amendment No. 50 by reference to the following filings of the Registrant: Post Effective Amendment No. 46, as filed on April 11, 2001 and declared effective on May 1, 2001, Post-Effective Amendment No. 47, as filed on May 11, 2001 and declared effective on May 11, 2001, Post Effective Amendment No. 48, as filed on September 6, 2001 and declared Effective on September 13, 2001, Rule 497(e) filings as filed on September 17, 2001, September 26, 2001, and October 19, 2001, and Post-Effective Amendment No. 49, as filed on December 6, 2001 and declared effective on December 6, 2001. (File No. 33-34370). A Supplement, dated March 15, 2002, to the Prospectus is included in Part A of this Post-Effective Amendment No. 50. Also included in Part A is Condensed Financial Information. The Statement of Additional Information dated March 15, 2002 is included in Part B of this Post Effective Amendment No. 50 and includes updated performance, unaudited Financial Statements of Variable Annuity Account B for the period ended September 30, 2001 and unaudited Consolidated Financial Statements of Aetna Life Insurance and Annuity Company and Subsidiaries for the period ended September 30, 2001. PART A VARIABLE ANNUITY ACCOUNT B AETNA LIFE INSURANCE AND ANNUITY COMPANY SUPPLEMENT DATED MARCH 15, 2002 TO MAY 1, 2001 PROSPECTUS GENERAL DESCRIPTION OF GET R Series R of the ING GET Fund (formerly known as Aetna GET Fund)(GET R) is an investment option that may be available during the accumulation phase of the contract. Aetna Life Insurance and Annuity Company (the Company, we, our) makes a guarantee, as described below, when you direct money into GET R. Aeltus Investment Management, Inc. serves as investment adviser to GET R. We will offer GET R shares only during its offering period, which is scheduled to run from March 15, 2002 through the close of business on June 13, 2002. GET R may not be available under your contract, your plan or in your state. Please read the GET R prospectus for a more complete description of GET R, including its charges and expenses. INVESTMENT OBJECTIVE OF GET R GET R seeks to achieve maximum total return, without compromising a minimum targeted return, by participating in favorable equity market performance during the guarantee period. GET R's guarantee period runs from June 14, 2002 through June 15, 2007. During the offering period, all GET R assets will be invested in short-term instruments and during the guarantee period will be invested in a combination of fixed income and equity securities. THE GET FUND GUARANTEE The guarantee period for GET R will end on June 15, 2007, which is GET R's maturity date. The Company guarantees that the value of an accumulation unit of the GET R subaccount under the contract on the maturity date (as valued after the close of business on June 15, 2007) will not be less than its value as determined after the close of business on the last day of the offering period. If the value on the maturity date is lower than it was on the last day of the offering period, we will transfer funds from our general account to the GET R subaccount to make up the difference. This means that if you remain invested in GET R until the maturity date, at the maturity date you will receive no less than the value of your separate account investment directed to GET R as of the last day of the offering period, less any maintenance fees or any amounts you transfer or withdraw from the GET R subaccount. The value of dividends and distributions made by GET R throughout the guarantee period is taken into account in determining whether, for purposes of the guarantee, the value of your GET R investment on the maturity date is no less than its value as of the last day of the offering period. The guarantee does not promise that you will earn the fund's minimum targeted return referred to in the investment objective. If you withdraw or transfer funds from GET R before the maturity date, we will process the transactions at the actual unit value next determined after we receive your order. The guarantee will not apply to these amounts or to amounts deducted as a maintenance fee, if applicable. MATURITY DATE Before the maturity date, we will send a notice to each contract holder who has amounts in GET R. This notice will remind you that the maturity date is approaching and that you must choose other investment options for your GET R amounts. If you do not make a choice, on the maturity date we will transfer your GET R amounts to another available series of the GET Fund that is accepting deposits. If no GET Fund series is available, we will transfer your GET R amounts to the fund or funds designated by the Company. 121907--X.GETR34370-01 March 2002 The following information supplements the "Fee Table" contained in the prospectus: MAXIMUM FEES DEDUCTED FROM INVESTMENTS IN THE SEPARATE ACCOUNT In addition to the amounts currently listed under the heading "Fee Table" in the prospectus, we will make a daily deduction of a GET R Guarantee Charge, equal on an annual basis to the percentage shown below, from the amounts allocated to the GET R investment option: SERIES R GUARANTEE CHARGE (deducted daily during the Guarantee Period) 0.50% MAXIMUM TOTAL SEPARATE ACCOUNT EXPENSES 1.40%/1/ The following information supplements the "Fund Expense Table" contained in the prospectus: AETNA GET FUND SERIES R ANNUAL EXPENSES (As a percentage of the average net assets.)
TOTAL FUND ANNUAL EXPENSES (AFTER EXPENSE INVESTMENT REIMBURSEMENT)/4/ ADVISORY FEES/2/ 12B-1 FEE OTHER EXPENSES/3/ ------------------ ------------- --------------------- --------------------------- Aetna GET Fund Series R 0.60% 0.25% 0.15% 1.00%
For more information regarding expenses paid out of assets of the fund, see the GET R prospectus. --------------------------- 1 The total separate account expenses that apply to your contract may be lower. Please refer to the "Fee Table" section of your prospectus. 2 The Investment Advisory Fee will be 0.25% during the offering period and 0.60% during the guarantee period. 3 "Other Expenses" include an annual fund administrative fee of 0.075% of the average daily net assets of GET R and any additional direct fund expenses. 4 The investment adviser is contractually obligated through GET R's maturity date to waive all or a portion of its investment advisory fee and/or its administrative fee and/or to reimburse a portion of the fund's other expenses in order to ensure that GET R's Total Fund Annual Expenses do not exceed 0.75% of the fund's average daily net assets (excluding the 12b-1 fee). It is not expected that GET R's actual expenses without this waiver or reimbursement will exceed this amount. 121907--X.GETR34370-01 2 March 2002 The following information supplements the "Hypothetical Examples" contained in the prospectus: HYPOTHETICAL EXAMPLES--AETNA GET FUND SERIES R ACCOUNT FEES YOU MAY INCUR OVER TIME. The following hypothetical examples show the fees and expenses paid over time if you invest $1,000 in the GET R investment option under the contract (until GET R's maturity date) and assume a 5% annual return on the investment.5 -------------------------------------- > These examples are purely EXAMPLE A EXAMPLE B hypothetical. If at the end of the periods > They should not be considered a If you withdraw your entire shown you (1) leave your representation of past or future account value at the end of the entire account value invested expenses or expected returns. periods shown, you would pay or (2) select an income phase > Actual expenses and/or returns may the following expenses, payment option, you would pay be more or less than those shown including any applicable the following expenses (no in these examples. early withdrawal charge: early withdrawal charge is reflected): -------------------------------------- 1 YEAR 3 YEARS 5 YEARS 1 YEAR 3 YEARS 5 YEARS Aetna GET Fund Series R $93 $144 $190 $30 $90 $154
----------------------------- 5 The examples shown above reflect an annual mortality and expense risk charge of 1.25%, an annual contract administrative expense charge of 0.15%, an annual GET R guarantee charge of 0.50%, a $30 annual maintenance fee that has been converted to a percentage of assets equal to 0.023%, and all charges and expenses of the GET R Fund including the 12b-1 fee. Example A reflects an early withdrawal charge of 7% of the purchase payments at the end of year 1, 6% at the end of year 3, and 4% at the end of year 5. It also reflects the effect of the 10% free withdrawal amount. (The expenses that you would pay under your contract may be lower. Please refer to the "Fee Table" section of your prospectus.) 121907--X.GETR34370-01 3 March 2002 The following information supplements "Appendix III--Description of Underlying Funds" contained in the prospectus: AETNA GET FUND (SERIES R) INVESTMENT OBJECTIVE Seeks to achieve maximum total return without compromising a minimum targeted return (Targeted Return) by participating in favorable equity market performance during the guarantee period, from June 14, 2002 through June 15, 2007, the maturity date. POLICIES Prior to June 14, 2002 assets are invested entirely in short-term instruments. After that date, assets are allocated between equities and fixed income securities. Equities consist primarily of common stocks. Fixed income securities consist primarily of short-to intermediate-duration U.S. Government securities and may also consist of mortgage backed securities and corporate obligations. The investment adviser uses a proprietary computer model to determine the percentage of assets to allocate between the fixed and the equity components. As the value of the equity component declines, more assets are allocated to the fixed component. RISKS The principal risks of investing in Series R are those generally attributable to stock and bond investing. The success of Series R's strategy depends on the investment adviser's skill in allocating assets between the equity and fixed components and in selecting investments within each component. Because Series R invests in both stocks and bonds, it may underperform stock funds when stocks are in favor and underperform bond funds when bonds are in favor. The risks associated with investing in stocks include sudden and unpredictable drops in the value of the market as a whole and periods of lackluster or negative performance. The principal risk associated with investing in bonds is that interest rates may rise, which generally causes bond prices to fall. If at the inception of, or any time during, the guarantee period interest rates are low, Series R assets may be largely invested in the fixed component in order to increase the likelihood of achieving the Targeted Return at the maturity date. The effect of low interest rates on Series R would likely be more pronounced at the beginning of the guarantee period as the initial allocation of assets would include more fixed income securities. In addition, if during the guarantee period the equity markets experienced a major decline, Series R assets may become largely invested in the fixed component in order to increase the likelihood of achieving the Targeted Return at the maturity date. Use of the fixed component reduces Series R's ability to participate as fully in upward equity market movements, and therefore represents some loss of opportunity, or opportunity cost, compared to a portfolio that is fully invested in equities. INVESTMENT ADVISER: Aeltus Investment Management, Inc. 121907--X.GETR34370-01 4 March 2002 CONDENSED FINANCIAL INFORMATION (SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- THE CONDENSED FINANCIAL INFORMATION PRESENTED BELOW FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2001 IS DERIVED FROM THE UNAUDITED INTERIM FINANCIAL STATEMENTS OF THE SEPARATE ACCOUNT. THE FINANCIAL STATEMENTS FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2001 ARE INCLUDED IN THE MARCH 15, 2002 STATEMENT OF ADDITIONAL INFORMATION.
TABLE I TABLE II 1.40% TOTAL CHARGES 1.25% TOTAL CHARGES ------------------- ------------------- AETNA ASCENT VP Value at beginning of period $17.415 $15.521 Value at end of period $14.179 $12.652 Number of accumulation units outstanding at end of period 580,364 123,533 AETNA BALANCED VP, INC. Value at beginning of period $23.622 $16.759 Value at end of period $20.966 $14.892 Number of accumulation units outstanding at end of period 1,816,428 392,964 AETNA BOND VP Value at beginning of period $14.811 $12.640 Value at end of period $15.873 $13.561 Number of accumulation units outstanding at end of period 2,103,629 532,818 AETNA CROSSROADS VP Value at beginning of period $16.155 $14.665 Value at end of period $14.034 $12.755 Number of accumulation units outstanding at end of period 687,303 179,804 AETNA GROWTH VP Value at beginning of period $20.638 $20.755 Value at end of period $14.195 $13.782 Number of accumulation units outstanding at end of period 673,731 1,009,966 AETNA GROWTH AND INCOME VP Value at beginning of period $25.247 $16.928 Value at end of period $19.203 $12.890 Number of accumulation units outstanding at end of period 5,797,873 1,093,450 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $20.478 $20.261 Value at end of period $16.103 $15.951 Number of accumulation units outstanding at end of period 2,310,339 788,454 AETNA INTERNATIONAL VP Value at beginning of period $11.434 $11.481 Value at end of period $7.599 $7.638 Number of accumulation units outstanding at end of period 141,611 38,443 AETNA LEGACY VP Value at beginning of period $15.267 $14.271 Value at end of period $14.195 $13.284 Number of accumulation units outstanding at end of period 928,106 337,712 AETNA MONEY MARKET VP Value at beginning of period $13.392 $12.145 Value at end of period $13.563 $13.693 Number of accumulation units outstanding at end of period 60,616 7,268,248 AETNA SMALL COMPANY VP Value at beginning of period $18.458 $18.563 Value at end of period $16.262 $16.373 Number of accumulation units outstanding at end of period 943,280 297,451 AETNA TECHNOLOGY VP Value at beginning of period $5.824 $5.830 Value at end of period $3.254 $3.261 Number of accumulation units outstanding at end of period 400,072 53,330 AETNA VALUE OPPORTUNITY VP Value at beginning of period $20.480 $20.596 Value at end of period $17.086 $17.203 Number of accumulation units outstanding at end of period 814,799 197,615 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $12.089 $12.146 Value at end of period $10.528 $10.589 Number of accumulation units outstanding at end of period 79,737 61,571
INVESTMENT ADVISER: Aeltus Investment Management, Inc. 121907--X.GETR34370-01 5 March 2002
TABLE I TABLE II 1.40% TOTAL CHARGES 1.25% TOTAL CHARGES ------------------- ------------------- FIDELITY VIP EQUITY-INCOME PORTFOLIO Value at beginning of period $23.395 $16.799 Value at end of period $20.116 $14.461 Number of accumulation units outstanding at end of period 4,793,520 890,806 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $31.342 $20.785 Value at end of period $21.861 $14.514 Number of accumulation units outstanding at end of period 3,319,805 795,606 FIDELITY VIP HIGH INCOME PORTFOLIO Value at beginning of period $10.735 $9.648 Value at end of period $9.112 $8.199 Number of accumulation units outstanding at end of period 1,851,184 440,465 FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $17.062 $14.491 Value at end of period $11.338 $12.111 Number of accumulation units outstanding at end of period 194,437 508,258 FIDELITY VIP II ASSET MANAGER PORTFOLIO Value at beginning of period $18.456 $15.387 Value at end of period $16.163 $13.491 Number of accumulation units outstanding at end of period 725,838 139,942 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $24.674 $19.792 Value at end of period $20.041 $16.095 Number of accumulation units outstanding at end of period 3,801,059 621,629 FIDELITY VIP II INDEX 500 PORTFOLIO Value at beginning of period $24.151 $20.173 Value at end of period $18.985 $15.876 Number of accumulation units outstanding at end of period 4,179,541 941,399 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $30.497 $21.226 Value at end of period $16.076 $11.202 Number of accumulation units outstanding at end of period 2,212,854 515,174 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $26.630 $21.234 Value at end of period $23.947 $19.116 Number of accumulation units outstanding at end of period 2,701,838 765,709 JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $16.170 $13.554 Value at end of period $17.179 $14.415 Number of accumulation units outstanding at end of period 774,708 214,077 JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $29.345 $20.951 Value at end of period $19.310 $13.802 Number of accumulation units outstanding at end of period 2,429,930 498,516 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $32.413 $23.476 Value at end of period $22.060 $15.995 Number of accumulation units outstanding at end of period 5,688,925 1,017,319 MFS GLOBAL GOVERNMENTS SERIES Value at beginning of period $10.799 $10.875 Value at end of period $11.193 $11.286 Number of accumulation units outstanding at end of period 132,673 33,139 MFS TOTAL RETURN SERIES Value at beginning of period $16.782 $16.901 Value at end of period $15.770 $15.900 Number of accumulation units outstanding at end of period 2,088,500 475,578 OPPENHEIMER AGGRESSIVE GROWTH FUND/VA Value at beginning of period $21.423 $21.545 Value at end of period $13.399 $13.491 Number of accumulation units outstanding at end of period 856,280 267,951 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period $21.023 $21.142 Value at end of period $15.654 $15.761 Number of accumulation units outstanding at end of period 503,445 90,235
121907--X.GETR34370-01 6 March 2002
TABLE I TABLE II 1.40% TOTAL CHARGES 1.25% TOTAL CHARGES ------------------- ------------------- OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA Value at beginning of period $14.248 $14.329 Value at end of period $11.746 $11.826 Number of accumulation units outstanding at end of period 1,895,303 614,010 OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period $11.206 $11.269 Value at end of period $11.147 $11.224 Number of accumulation units outstanding at end of period 779,705 236,378 PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO Value at beginning of period $17.303 $17.385 Value at end of period $10.845 $10.909 Number of accumulation units outstanding at end of period 1,116,505 314,907 PPI MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $19.644 $13.372 Value at end of period $11.536 $7.861 Number of accumulation units outstanding at end of period 3,720,936 537,151 PPI MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $17.659 $12.169 Value at end of period $12.306 $8.489 Number of accumulation units outstanding at end of period 2,874,930 524,055 PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $14.415 $14.482 Value at end of period $10.059 $10.117 Number of accumulation units outstanding at end of period 219,954 60,547 PPI T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period $27.438 $19.893 Value at end of period $17.316 $21.321 Number of accumulation units outstanding at end of period 249,196 3,081,320
121907--X.GETR34370-01 7 March 2002 PART B -------------------------------------------------------------------------------- VARIABLE ANNUITY ACCOUNT B OF AETNA LIFE INSURANCE AND ANNUITY COMPANY -------------------------------------------------------------------------------- STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 15, 2002 AETNA MARATHON PLUS This Statement of Additional Information is not a prospectus and should be read in conjunction with the current prospectus for Variable Annuity Account B (the "separate account") dated May 1, 2001, as amended by supplements dated May 1, 2001, May 11, 2001, June 1, 2001, September 18, 2001, November 15, 2001 and December 13, 2001. A free prospectus is available upon request from the local Aetna Life Insurance and Annuity office or by writing to or calling: ING Aetna Financial Services Annuity Services 151 Farmington Avenue Hartford, Connecticut 06156-1258 1-800-238-6219 Read the prospectus before you invest. Unless otherwise indicated, terms used in this Statement of Additional Information shall have the same meaning as in the prospectus. TABLE OF CONTENTS
Page General Information and History 2 Variable Annuity Account B 2 Offering and Purchase of Contracts 3 Performance Data 3 General 3 Average Annual Total Return Quotations 4 Income Phase Payments 7 Sales Material and Advertising 8 Independent Auditors 9 Financial Statements of the Separate Account S-1 Financial Statements of Aetna Life Insurance and Annuity Company and Subsidiaries F-1
GENERAL INFORMATION AND HISTORY Aetna Life Insurance and Annuity Company (the Company, we, us, our) issues the contracts described in the prospectus and is responsible for providing each contract's insurance and annuity benefits. We are a stock life insurance company organized under the insurance laws of the State of Connecticut in 1976 and an indirect wholly-owned subsidiary of ING Groep N.V., a global financial institution active in the fields of insurance, banking and asset management. Through a merger, our operations include the business of Aetna Variable Annuity Life Insurance Company (formerly Participating Annuity Life Insurance Company organized in 1954). We are engaged in the business of issuing life insurance and annuities. Our Home Office is located at 151 Farmington Avenue, Hartford, Connecticut 06156. As of December 31, 2000, the Company and its subsidiary life company had $51 billion invested through their products, including $37 billion in their separate accounts (of which the Company, or, its subsidiary Aeltus Investment Management, Inc., oversees the management of $23 billion). The Company is ranked among the top 1% of all U.S. life insurance companies based on assets as of December 31, 1999. In addition to serving as the depositor for the separate account, the Company is a registered investment adviser under the Investment Advisers Act of 1940. We provide investment advice to several of the registered management investment companies offered as variable investment options under the contracts funded by the separate account (see "Variable Annuity Account B" below). Other than the mortality and expense risk charge and administrative expense charge described in the prospectus, all expenses incurred in the operations of the separate account are borne by the Company. See "Fees" in the prospectus. We receive reimbursement for certain administrative costs from some advisers of the funds used as funding options under the contract. These fees generally range up to 0.425%. The assets of the separate account are held by the Company. The separate account has no custodian. However, the funds in whose shares the assets of the separate account are invested each have custodians, as discussed in their respective prospectuses. From this point forward, the term "contract(s)" refers only to those offered through the prospectus. VARIABLE ANNUITY ACCOUNT B Variable Annuity Account B is a separate account established by the Company for the purpose of funding variable annuity contracts issued by the Company. The separate account is registered with the Securities and Exchange Commission (SEC) as a unit investment trust under the Investment Company Act of 1940, as amended. Purchase payments to accounts under the contract may be allocated to one or more of the subaccounts. Each subaccount invests in the shares of only one of the funds listed below. We may make additions to, deletions from or substitutions of available investment options as permitted by law and subject to the conditions of the contract. The availability of the funds is subject to applicable regulatory authorization. Not all funds are available in all jurisdictions or under all contracts. 2 The funds currently available under the contract are as follows: AETNA ASCENT VP FIDELITY VARIABLE INSURANCE PRODUCTS II (VIP II) AETNA BALANCED VP, INC. CONTRAFUND-Registered Trademark- PORTFOLIO Aetna Income Shares d/b/a AETNA BOND VP FIDELITY VARIABLE INSURANCE PRODUCTS II (VIP II) INDEX 500 AETNA CROSSROADS VP PORTFOLIO AETNA GROWTH VP JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Aetna Variable Fund d/b/a AETNA GROWTH AND INCOME VP JANUS ASPEN BALANCED PORTFOLIO AETNA INDEX PLUS LARGE CAP VP JANUS ASPEN FLEXIBLE INCOME PORTFOLIO AETNA INTERNATIONAL VP JANUS ASPEN GROWTH PORTFOLIO AETNA LEGACY VP JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Aetna Variable Encore Fund d/b/a AETNA MONEY MARKET VP MFS-Registered Trademark- TOTAL RETURN SERIES AETNA SMALL COMPANY VP MFS-Registered Trademark- GLOBAL GOVERNMENTS SERIES AETNA TECHNOLOGY VP OPPENHEIMER AGGRESSIVE GROWTH FUND/VA AETNA VALUE OPPORTUNITY VP OPPENHEIMER GLOBAL SECURITIES FUND/VA CALVERT SOCIAL BALANCED PORTFOLIO OPPENHEIMER MAIN STREET GROWTH AND INCOME FUND/VA FIDELITY VARIABLE INSURANCE PRODUCTS (VIP) EQUITY-INCOME OPPENHEIMER STRATEGIC BOND FUND/VA PORTFOLIO PORTFOLIO PARTNERS, INC. (PPI) MFS EMERGING EQUITIES FIDELITY VARIABLE INSURANCE PRODUCTS (VIP) GROWTH PORTFOLIO FIDELITY VARIABLE INSURANCE PRODUCTS (VIP) HIGH INCOME PORTFOLIO PARTNERS, INC. (PPI) MFS RESEARCH GROWTH PORTFOLIO PORTFOLIO PORTFOLIO PARTNERS, INC. (PPI) MFS CAPITAL OPPORTUNITIES FIDELITY VARIABLE INSURANCE PRODUCTS (VIP) OVERSEAS PORTFOLIO PORTFOLIO FIDELITY VARIABLE INSURANCE PRODUCTS II (VIP II) ASSET PORTFOLIO PARTNERS, INC. (PPI) SCUDDER INTERNATIONAL GROWTH MANAGER PORTFOLIO PORTFOLIO PORTFOLIO PARTNERS, INC. (PPI) T. ROWE PRICE GROWTH EQUITY PORTFOLIO
Complete descriptions of each of the funds, including their investment objectives, policies, risks and fees and expenses, are contained in the prospectuses and statements of additional information for each of the funds. OFFERING AND PURCHASE OF CONTRACTS The Company's subsidiary, Aetna Investment Services, LLC (AIS), serves as the principal underwriter for the contracts. AIS, a Delaware limited liability company, is registered as a broker-dealer with the SEC. AIS is also a member of the National Association of Securities Dealers, Inc. and the Securities Investor Protection Corporation. AIS' principal office is located at 151 Farmington Avenue, Hartford, Connecticut 06156. The contracts are distributed through life insurance agents licensed to sell variable annuities who are registered representatives of AIS or of other registered broker-dealers who have entered into sales arrangements with AIS. The offering of the contracts is continuous. A description of the manner in which the contracts are purchased can be found in the prospectus under the sections entitled "Purchase and Rights" and "Your Account Value." PERFORMANCE DATA GENERAL From time to time we may advertise different types of historical performance for the subaccounts of the separate account available under the contracts. We may advertise the "standardized average annual total returns," calculated in a manner prescribed by the SEC (the "standardized return"), as well as "non-standardized returns," both of which are described below. 3 The standardized and non-standardized total return figures are computed according to a formula in which a hypothetical initial purchase payment of $1,000 is applied to the various subaccounts under the contract, and then related to the ending redeemable values over one, five and ten year periods (or fractional periods thereof). The redeemable value is then divided by the initial investment and this quotient is taken to the Nth root (N represents the number of years in the period) and 1 is subtracted from the result which is then expressed as a percentage, carried to at least the nearest hundredth of a percent. The standardized figures use the actual returns of the fund since the date contributions were first received in the fund under the separate account adjusted to reflect the deduction of the maximum recurring charges under the contracts during each period (e.g., 1.25% mortality and expense risk charge, $30 annual maintenance fee, 0.15% administrative charge, and early withdrawal charge of 7% of purchase payments grading down to 0% after seven years). These charges will be deducted on a pro rata basis in the case of fractional periods. The annual maintenance fee is converted to a percentage of assets based on the average account size under the contracts described in the prospectus. The total return figures shown below may be different from the actual historical total returns under your contract because for periods prior to 1994, the subaccount's investment performance was based on the performance of the underlying fund plus any cash held by the subaccount. The non-standardized figures will be calculated in a similar manner, except that they will not reflect the deduction of any applicable early withdrawal charge, and in some advertisements will also exclude the effect of the annual maintenance fee. The deduction of the early withdrawal charge and the annual maintenance fee would decrease the level of performance shown if reflected in these calculations. The non-standardized figures may also include monthly, quarterly, year-to-date and three-year periods, and may include returns calculated from the fund's inception date and/or the date contributions were first received in the fund under the separate account. The non-standardized returns shown in the tables below reflect the deduction of the maximum recurring charges under the contract except the early withdrawal charge. The annual maintenance fee has been deducted for the purposes of calculating the returns. Investment results of the funds will fluctuate over time, and any presentation of the subaccounts' total return quotations for any prior period should not be considered as a representation of how the subaccounts will perform in any future period. Additionally, the account value upon redemption may be more or less than your original cost. AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - STANDARDIZED AND NON-STANDARDIZED The tables below reflect the average annual standardized and non-standardized total return quotation figures for the periods ended December 31, 2000 for the subaccounts under the contracts. The standardized returns assume the maximum charges under the contract as described under "General" above. The non-standardized returns assume the same charges but do not include the early withdrawal charges. For the subaccounts funded by the Portfolio Partners, Inc. (PPI) portfolios, two sets of performance returns are shown for each subaccount: one showing performance based solely on the performance of the PPI portfolio from November 28, 1997, the date the portfolio commenced operations; and one quotation based on (a) performance through November 26, 1997 of the PPI Partners portfolio. For those subaccounts where results are not available for the full calendar period indicated, performance for such partial periods is shown in the column labeled "Since Inception." For standardized performance, the "Since Inception" column shows the average annual return since the date contributions were first received in the fund under the separate account. For non-standardized performance, the "Since Inception" column shows the average annual total return since the fund's inception date. 4
Date Contributions STANDARDIZED First Received Under the Separate Account ------------------------------------------------------------------------------------------------------------------------------------ Since SUBACCOUNT 1 Year 5 Year 10 Year Inception* ------------------------------------------------------------------------------------------------------------------------------------ Aetna Ascent VP (28.95%) 2.63% 5.37% 08/31/1995 Aetna Balanced VP, Inc.(1) (21.40%) 6.59% 8.59% Aetna Bond VP(1) 5.05% 5.14% 5.85% Aetna Crossroads VP (22.28%) 3.07% 5.20% 08/31/1995 Aetna Growth VP (51.53%) 4.30% 05/30/1997 Aetna Growth and Income VP(1) (37.79%) 3.27% 7.69% Aetna Index Plus Large Cap VP (34.70%) 8.58% 10/31/1996 Aetna International VP (48.63%) (10.22%) 05/05/1998 Aetna Legacy VP (14.08%) 4.19% 5.63% 08/31/1995 Aetna Money Market VP(1)(2) (2.73%) 3.32% 3.47% Aetna Small Company VP (25.75%) 7.95% 05/30/1997 Aetna Technology VP (70.19%) (61.68%) 05/01/2000 Aetna Value Opportunity VP (23.69%) 10.02% 05/30/1997 Calvert Social Balanced Portfolio (25.60%) 4.63% 7.09% 11/30/1992 Fidelity VIP Equity-Income Portfolio (17.29%) 6.78% 10.69% 12/30/1994 Fidelity VIP Growth Portfolio (45.65%) 6.61% 11.39% 12/30/1994 Fidelity VIP High Income Portfolio (33.91%) (6.03%) (1.99%) 06/30/1995 Fidelity VIP Overseas Portfolio (41.59%) (0.42%) 2.77% 01/31/1995 Fidelity VIP II Asset Manager Portfolio (22.52%) 4.73% 7.14% 01/31/1995 Fidelity VIP II Contrafund(R) Portfolio (30.87%) 8.74% 10.64% 06/30/1995 Fidelity VIP II Index 500 Portfolio (34.31%) 7.81% 10.57% 06/30/1995 Janus Aspen Aggressive Growth Portfolio (70.69%) 1.65% 6.02% 10/31/1994 Janus Aspen Balanced Portfolio (18.94%) 11.76% 13.82% 01/31/1995 Janus Aspen Flexible Income Portfolio 2.79% 6.02% 7.89% 10/31/1994 Janus Aspen Growth Portfolio (52.22%) 4.82% 9.53% 07/29/1994 Janus Aspen Worldwide Growth Portfolio (47.45%) 7.53% 12.90% 04/28/1995 MFS(R) Global Governments Series 0.65% 1.04% 1.46% 05/31/1996 MFS(R) Total Return Series (7.38%) 8.31% 8.40% 05/31/1996 Oppenheimer Aggressive Growth Fund/VA (63.73%) 3.48% 05/30/1997 Oppenheimer Global Securities Fund/VA (34.92%) 8.48% 05/30/1997 Oppenheimer Main Street Growth & Income Fund/VA (32.47%) 0.99% 05/30/1997 Oppenheimer Strategic Bond Fund/VA (7.41%) 1.02% 05/30/1997 PPI MFS Capital Opportunities Portfolio (52.42%) 0.75% 11/28/1997 Neuberger Berman AMT Growth/PPI MFS Capital Opportunities(3) (52.42%) 6.19% 7.30% 11/30/1992 PPI MFS Emerging Equities Portfolio (60.83%) (8.25%) 11/28/1997 Alger American Small Cap/PPI MFS Emerging Equities(3) (60.83%) (5.01%) 2.15% 09/30/1993 PPI MFS Research Growth Portfolio (45.76%) (2.72%) 11/28/1997 American Century VP Capital Appreciation/PPI MFS Research Growth(3)(45.76%) (4.18%) 3.10% 08/31/1992 PPI Scudder International Growth Portfolio (38.52%) (0.72%) 11/28/1997 Scudder VLIF International/PPI Scudder International Growth(3) (38.52%) 2.02% 6.01% 08/31/1992 PPI T. Rowe Price Growth Equity Portfolio (35.55%) 3.28% 11/28/1997 Alger American Growth/PPI T. Rowe Price Growth Equity(3) (35.55%) 8.17% 11.88% 02/28/1995 Please refer to the discussion preceding the tables for an explanation of the charges included and methodology used in calculating the standardized and non-standardized figures. These figures represent historical performance and should not be considered a projection of future performance.
* Reflects performance from the date contributions were first received in the fund under the separate account. (1) These funds have been available through the separate account for more than ten years. (2) The current yield for the subaccount for the seven-day period ended September 30, 2001 (on an annualized basis) was 1.81%. Current yield more closely reflects current earnings than does total return. The current yield reflects the deduction of all charges under the contract that are deducted from the total return quotations shown above except the maximum 7% early withdrawal charge. (3) The fund first listed was replaced with the applicable PPI Portfolio after the close of business on November 26, 1997. The performance shown is based on the performance of the replaced fund until November 26, 1997, and the performance of the applicable PPI Portfolio after that date. The replaced fund may not have been available under all contracts. The "Date Contributions First Received Under the Separate Account" refers to the applicable date for the replaced fund. If no date is shown, contributions were first received in the replaced fund under the separate account more than ten years ago. 5 ---------------------------------------------------------------------- Fund NON-STANDARDIZED Inception Date Since SUBACCOUNT 1 Year 3 Years 5 Years 10 Years Inception** ------------------------------------------------------------------------------------------------------------------------------------ Aetna Ascent VP (22.49%) (0.49%) 3.26% 6.25% 07/05/1995 Aetna Balanced VP, Inc.(1) (15.00%) 3.15% 7.12% 8.59% Aetna Bond VP(1) 11.28% 4.56% 5.70% 5.85% Aetna Crossroads VP (15.87%) 0.15% 3.68% 5.99% 07/05/1995 Aetna Growth VP (44.91%) (1.50%) 7.15% 12/13/1996 Aetna Growth and Income VP(1) (31.27%) (2.59%) 3.88% 7.69% Aetna Index Plus Large Cap VP (28.20%) 1.74% 9.84% 9.90% 09/16/1996 Aetna International VP (42.03%) (3.52%) (1.71%) 12/22/1997 Aetna Legacy VP (7.73%) 2.29% 4.77% 6.26% 07/05/1995 Aetna Money Market VP(1)(2) 3.54% 3.88% 3.93% 3.47% Aetna Small Company VP (19.31%) 11.72% 10.36% 12/27/1996 Aetna Technology VP (63.45%) (54.80%) 05/01/2000 Aetna Value Opportunity VP (17.27%) 11.65% 13.13% 12/13/1996 Calvert Social Balanced Portfolio(1) (19.17%) 0.91% 5.20% 7.29% Fidelity VIP Equity-Income Portfolio(1) (10.92%) 3.47% 7.30% 11.54% Fidelity VIP Growth Portfolio(1) (39.08%) 0.89% 7.14% 11.13% Fidelity VIP High Income Portfolio(1) (27.42%) (10.33%) (5.10%) 3.98% Fidelity VIP Overseas Portfolio(1) (35.05%) (2.17%) 0.30% 3.46% Fidelity VIP II Asset Manager Portfolio(1) (16.11%) 0.69% 5.31% 7.18% Fidelity VIP II Contrafund(R)Portfolio (24.40%) 4.08% 9.21% 13.62% 01/03/1995 Fidelity VIP II Index 500 Portfolio (27.82%) 0.32% 8.31% 10.98% 08/27/1992 Janus Aspen Aggressive Growth Portfolio (63.94%) 1.84% 2.31% 9.57% 09/13/1993 Janus Aspen Balanced Portfolio (12.56%) 9.09% 12.18% 12.50% 09/13/1993 Janus Aspen Flexible Income Portfolio 9.02% 3.83% 6.56% 6.82% 09/13/1993 Janus Aspen Growth Portfolio (45.60%) 0.03% 5.39% 8.94% 09/13/1993 Janus Aspen Worldwide Growth Portfolio (40.86%) 3.37% 8.03% 12.94% 09/13/1993 MFS(R)Global Governments Series 6.90% 1.37% 1.71% 2.93% 06/14/1994 MFS(R) Total Return Series (1.08%) 5.52% 8.80% 11.22% 01/03/1995 Oppenheimer Aggressive Growth Fund/VA(1) (57.03%) 7.17% 3.13% 10.62% Oppenheimer Global Securities Fund/VA(1) (28.42%) 13.12% 11.44% 10.61% Oppenheimer Main Street Growth & Income Fund/VA (25.99%) 1.86% 5.04% 11.28% 07/05/1995 Oppenheimer Strategic Bond Fund/VA (1.10%) 1.14% 2.74% 3.76% 05/03/1993 PPI MFS Capital Opportunities Portfolio (45.80%) 2.00% 2.05% 11/28/1997 Neuberger Berman AMT Growth/PPI MFS Capital Opportunities(3) (45.80%) 2.00% 6.73% 7.82% PPI MFS Emerging Equities Portfolio (54.15%) (7.67%) (6.46%) 11/28/1997 Alger American Small Cap/PPI MFS Emerging Equities(3) (54.15%) (7.67%) (4.12%) 4.56% PPI MFS Research Growth Portfolio (39.19%) (0.64%) (1.23%) 11/28/1997 American Century VP Capital Appreciation/PPI MFS Research Growth(3) (39.19%) (0.64%) (3.32%) 2.57% PPI Scudder International Growth Portfolio (32.00%) (0.29%) 0.68% 11/28/1997 Scudder VLIF International/PPI Scudder International Growth(3) (32.00%) (0.30%) 2.66% 5.57% PPI T. Rowe Price Growth Equity Portfolio (29.05%) 4.23% 4.52% 11/28/1997 Alger American Growth/PPI T. Rowe Price Growth Equity(3) (29.05%) 4.23% 8.66% 12.30% ------------------------------------------------------------------------------------------------------------------------------------
Please refer to the discussion preceding the tables for an explanation of the charges included and methodology used in calculating the standardized and non-standardized figures. These figures represent historical performance and should not be considered a projection of future performance. ** Reflects performance from the fund's inception date. (1) These funds have been in operation for more than ten years. (2) The current yield for the subaccount for the seven-day period ended September 30, 2001 (on an annualized basis) was 1.81%. Current yield more closely reflects current earnings than does total return. The current yield reflects the deduction of all charges under the contract that are deducted from the total return quotations shown above. As in the table above, the maximum 7% early withdrawal charge is not reflected. (3) The fund first listed was replaced with the applicable PPI Portfolio after the close of business on November 26, 1997. The performance shown is based on the performance of the replaced fund until November 26, 1997, and the performance of the applicable PPI Portfolio after that date. The replaced fund may not have been available under all contracts. The "Fund Inception Date" refers to the applicable date for the replaced fund. If no date is shown, the replaced fund has been in operation for more than ten years. 6 INCOME PHASE PAYMENTS When you begin receiving payments under the contract during the income phase (see "The Income Phase" in the prospectus), the value of your account is determined using accumulation unit values as of the tenth valuation before the first income phase payment is due. Such value (less any applicable premium tax charge) is applied to provide income phase payments to you in accordance with the income phase payment option and investment options elected. The annuity option tables found in the contract show, for each option, the amount of the first income phase payment for each $1,000 of value applied. Thereafter, variable income phase payments fluctuate as the annuity unit value(s) fluctuates with the investment experience of the selected investment option(s). The first income phase payment and subsequent income phase payments also vary depending upon the assumed net investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes a higher first income phase payment, but payments will increase thereafter only to the extent that the investment performance of the subaccounts you selected is greater than 5% annually after deduction of fees. Income phase payments would decline if the performance was less than 5%. Use of the 3.5% assumed rate causes a lower first income phase payment, but subsequent payments would increase more rapidly or decline more slowly as changes occur in the performance of the subaccounts selected. When the income phase begins, the annuitant is credited with a fixed number of annuity units (which does not change thereafter) in each of the designated investment options. This number is calculated by dividing (a) by (b), where (a) is the amount of the first income phase payment based on a particular investment option, and (b) is the then current annuity unit value for that investment option. As noted, annuity unit values fluctuate from one valuation to the next (see "Your Account Value" in the prospectus); such fluctuations reflect changes in the net investment factor for the appropriate subaccount(s) (with a ten valuation lag which gives the Company time to process income phase payments) and a mathematical adjustment which offsets the assumed net investment rate of 3.5% or 5% per annum. The operation of all these factors can be illustrated by the following hypothetical example. These procedures will be performed separately for the investment options selected during the income phase. EXAMPLE: Assume that, at the date income phase payments are to begin, there are 3,000 accumulation units credited under a particular contract and that the value of an accumulation unit for the tenth valuation prior to retirement was $13.650000. This produces a total value of $40,950. Assume also that no premium tax charge is payable and that the annuity table in the contract provides, for the income phase payment option elected, a first monthly variable income phase payment of $6.68 per $1000 of value applied; the annuitant's first monthly income phase payment would thus be $40.950 multiplied by $6.68, or $273.55. Assume then that the value of an annuity unit upon the valuation on which the first income phase payment was due was $13.400000. When this value is divided into the first monthly payment, the number of annuity units is determined to be 20.414. The value of this number of annuity units will be paid in each subsequent month. 7 If the net investment factor with respect to the appropriate subaccount is 1.0015000 as of the tenth valuation preceding the due date of the second monthly income phase payment, multiplying this factor by .9999058* (to take into account the assumed net investment rate of 3.5% per annum built into the number of annuity units determined above) produces a result of 1.0014057. This is then multiplied by the annuity unit value for the prior valuation (assume such value to be $13.504376) to produce an annuity unit value of $13.523359 for the valuation occurring when the second payment is due. The second monthly income phase payment is then determined by multiplying the number of annuity units by the current annuity unit value, or 20.414 times $13.523359, which produces a payment of $276.07. *If an assumed net investment rate of 5% is elected, the appropriate factor to take into account such assumed rate would be .9998663. SALES MATERIAL AND ADVERTISING We may include hypothetical illustrations in our sales literature that explain the mathematical principles of dollar cost averaging, compounded interest, tax deferred accumulation, and the mechanics of variable annuity contracts. We may also discuss the difference between variable annuity contracts and other types of savings or investment products such as personal savings accounts and certificates of deposit. We may distribute sales literature that compares the percentage change in accumulation unit values for any of the subaccounts to established market indices such as the Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average or to the percentage change in values of other management investment companies that have investment objectives similar to the subaccount being compared. We may publish in advertisements and reports, the ratings and other information assigned to us by one or more independent rating organizations such as A.M. Best Company, Duff & Phelps, Standard & Poor's Corporation and Moody's Investors Service, Inc. The purpose of the ratings is to reflect our financial strength and/or claims-paying ability. We may also quote ranking services such as Morningstar's Variable Annuity/Life Performance Report and Lipper's Variable Insurance Products Performance Analysis Service (VIPPAS), which rank variable annuity or life subaccounts or their underlying funds by performance and/or investment objective. We may categorize the underlying funds in terms of the asset classes they represent and use such categories in marketing materials for the contracts. We may illustrate in advertisements the performance of the underlying funds, if accompanied by performance which also shows the performance of such funds reduced by applicable charges under the separate account. We may also show in advertisements the portfolio holdings of the underlying funds, updated at various intervals. From time to time, we will quote articles from newspapers and magazines or other publications or reports such as The Wall Street Journal, Money magazine, USA Today and The VARDS Report. We may provide in advertising, sales literature, periodic publications or other materials information on various topics of interest to current and prospective contract holders. These topics may include the relationship between sectors of the economy and the economy as a whole and its effect on various securities markets, investment strategies and techniques (such as value investing, market timing, dollar cost averaging, asset allocation, constant ratio transfer and account rebalancing), the advantages and disadvantages of investing in tax-deferred and taxable investments, customer profiles and hypothetical purchase and investment scenarios, financial management and tax and retirement planning, and investment alternatives to certificates of deposit and other financial instruments, including comparison between the contracts and the characteristics of and market for such financial instruments. 8 INDEPENDENT AUDITORS KPMG LLP, One Financial Plaza, 755 Main Street, Hartford, Connecticut 06103, are the independent auditors for the separate account and for the Company for the year ended December 31, 2000. As of May 3, 2001 Ernst & Young LLP, 225 Asylum Street, Hartford, Connecticut 06103 became the independent auditors for the separate acocunt and for the Company for the year ended December 31, 2001. VARIABLE ANNUITY ACCOUNT B Index to Financials for period ended September 30, 2001
PAGE ---- Statement of Assets and Liabilities as of September 30, 2001 (unaudited).................. S-1 Statement of Operations for the Nine Month Period Ended September 30, 2001 (unaudited).................. S-10 Statements of Changes in Net Assets for the Nine Month Periods Ended September 30, 2001 and September 30, 2000 (unaudited)..................................... S-10 Condensed Financial Information for the Nine Month Period Ended September 30, 2001 (unaudited)............ S-11 Notes to Financial Statements (unaudited)......... S-24
S-1 VARIABLE ANNUITY ACCOUNT B STATEMENT OF ASSETS AND LIABILITIES - September 30, 2001 (Unaudited) ASSETS: Investments, at net asset value: (Note 1)
Net Shares Cost Assets ------ ---- ------ Aetna Ascent VP 1,119,360 $ 16,274,280 $ 13,275,609 Aetna Balanced VP, Inc. 15,512,562 228,680,690 178,859,835 Aetna Bond VP 10,093,091 128,743,098 137,669,764 Aetna Crossroads VP 1,424,223 19,231,003 16,549,473 Aetna GET Fund, Series C 657,954 7,272,119 4,493,827 Aetna GET Fund, Series D 12,588,070 127,107,304 120,845,469 Aetna GET Fund, Series E 31,295,483 323,016,403 306,069,825 Aetna GET Fund, Series G 17,690,950 177,325,294 174,255,855 Aetna GET Fund, Series H 13,409,359 137,592,301 133,423,127 Aetna GET Fund, Series I 8,963,730 90,075,082 88,651,289 Aetna GET Fund, Series J 7,727,575 77,820,273 75,730,237 Aetna GET Fund, Series K 9,028,098 91,741,058 89,558,731 Aetna GET Fund, Series L 8,085,723 81,755,035 80,210,368 Aetna GET Fund, Series M 12,487,366 126,142,235 122,376,189 Aetna GET Fund, Series N 10,841,555 109,271,955 109,499,705 Aetna GET Fund, Series P 193,163 1,931,788 1,932,784 Aetna Growth and Income VP 34,505,605 996,069,232 639,733,917 Aetna Growth VP 6,366,440 72,192,983 56,788,641 Aetna Index Plus Large Cap VP 16,553,981 285,488,557 212,884,197 Aetna Index Plus Mid Cap VP 649,832 9,189,286 7,707,007 Aetna Index Plus Small Cap VP 126,262 1,468,499 1,247,468 Aetna International VP 1,078,164 8,778,252 7,514,806 Aetna Legacy VP 1,977,024 24,866,528 22,814,851 Aetna Money Market VP 22,809,033 299,913,985 302,196,874 Aetna Small Company VP 3,482,650 57,043,562 49,732,244 Aetna Technology VP 2,238,771 11,890,977 7,432,719 Aetna Value Opportunity VP 1,915,287 28,621,927 23,672,944 AIM V.I. Funds: Capital Appreciation Fund 1,004,616 33,763,351 20,082,280 Government Securities Fund 691,317 7,987,600 8,240,500 Growth and Income Fund 2,132,745 62,620,838 37,685,602 Growth Fund 1,691,309 47,139,492 25,538,765 Value Fund 3,102,803 89,261,886 67,268,769 Alger American Funds: Balanced Portfolio 299,764 4,256,057 3,714,080 Income & Growth Portfolio 1,114,218 15,099,888 10,540,505 Leveraged AllCap Portfolio 347,498 15,864,817 9,643,071 Alliance Funds: Growth and Income Portfolio 1,097,075 25,728,924 21,996,357 Premier Growth Portfolio 316,324 9,468,479 6,933,822 Quasar Portfolio 61,276 647,445 489,594 American Century VP Funds: Balanced Fund 318,177 2,334,380 1,969,513 International Fund 434,985 4,343,024 2,783,906
S-2 VARIABLE ANNUITY ACCOUNT B STATEMENT OF ASSETS AND LIABILITIES - September 30, 2001 (Unaudited) (continued):
Net Shares Cost Assets ------ ---- ------ Calvert Social Balanced Portfolio 1,088,248 $ 2,343,915 $ 1,917,493 Federated Insurance Series: American Leaders Fund II 4,475,466 85,090,224 79,260,496 Equity Income Fund II 1,481,293 19,670,212 17,034,866 Growth Strategies Fund II 1,250,431 27,076,747 19,469,203 High Income Bond Fund II 2,858,751 27,421,648 20,954,646 International Equity Fund II 1,025,465 17,272,441 10,828,907 Prime Money Fund II 8,702,772 8,702,772 8,702,772 U.S. Government Securities Fund II 1,065,288 11,577,643 12,218,857 Utility Fund II 1,347,640 17,812,047 14,311,933 Fidelity Variable Insurance Products Fund: Equity-Income Portfolio 8,556,190 203,118,423 177,968,746 Growth Portfolio 5,018,619 234,774,631 144,385,673 High Income Portfolio 6,028,742 51,925,568 37,559,060 Overseas Portfolio 737,117 14,462,462 9,309,788 Fidelity Variable Insurance Products Fund II: Asset Manager Portfolio 1,017,153 16,427,653 13,619,679 Contrafund Portfolio 8,777,215 208,262,004 165,274,950 Index 500 Portfolio 802,095 119,602,103 94,294,238 Investment Grade Bond Portfolio 255,006 3,093,564 3,292,124 Janus Aspen Series: Aggressive Growth Portfolio 6,788,162 266,543,704 131,283,060 Balanced Portfolio 10,403,339 255,049,012 227,000,863 Flexible Income Portfolio 1,998,831 22,973,845 23,906,022 Growth Portfolio 9,245,434 269,048,393 162,442,273 Worldwide Growth Portfolio 11,926,642 466,622,895 302,698,172 MFS Funds: Global Government Series 184,243 1,815,051 1,859,016 Total Return Series 4,801,680 89,080,946 84,653,611 Mitchell Hutchins Series Trust: Growth and Income Portfolio 80,828 1,090,371 854,354 Small Cap Portfolio 14,444 228,797 155,710 Tactical Allocation Portfolio 1,179,242 18,115,632 13,549,496 Oppenheimer Funds: Aggressive Growth Fund/VA 1,015,698 48,770,540 38,037,885 Global Securities Fund/VA 691,024 19,015,653 13,502,607 Main Street Growth & Income Fund/VA 3,388,893 75,114,736 59,678,414 Strategic Bond Fund/VA 6,126,213 28,532,061 27,139,121 Pilgrim Funds: Emerging Markets Fund 189,781 1,357,076 757,226 Natural Resources Trust 167,471 2,190,837 1,751,750 Pilgrim Variable Funds: Growth Opportunities Portfolio 17,429 97,503 82,613 Magna Cap Portfolio 32,986 295,442 273,121 Mid Cap Opportunities Portfolio 73,110 448,292 359,702 Small Cap Opportunities Portfolio 44,612 925,055 717,356
S-3 VARIABLE ANNUITY ACCOUNT B STATEMENT OF ASSETS AND LIABILITIES - September 30, 2001 (Unaudited) (continued):
Net Shares Cost Assets ------ ---- ------ Portfolio Partners, Inc. (PPI): PPI MFS Capital Opportunities Portfolio 2,348,605 $ 103,472,597 $ 53,618,656 PPI MFS Emerging Equities Portfolio 2,352,846 126,698,323 76,043,971 PPI MFS Research Growth Portfolio 8,876,763 115,460,280 64,001,465 PPI Scudder International Growth Portfolio 3,117,523 37,640,910 30,177,626 PPI T. Rowe Price Growth Equity Portfolio 2,009,535 118,911,210 79,657,981 Prudential Jennison Portfolio 1,938 32,633 30,569 SP Jennison International Growth Portfolio 23,843 137,374 119,691 -------------- -------------- NET ASSETS $6,996,323,112 $5,426,770,281 ============== ==============
S-4 VARIABLE ANNUITY ACCOUNT B STATEMENT OF ASSETS AND LIABILITIES - September 30, 2001 (Unaudited) (continued): NET ASSETS REPRESENTED BY: Reserves for annuity contracts in accumulation and payment period: (Notes 1 and 6) Aetna Ascent VP Annuity contracts in accumulation............. $ 12,989,334 Annuity contracts in payment period........... 286,275 Aetna Balanced VP, Inc. Annuity contracts in accumulation............. 145,760,509 Annuity contracts in payment period........... 33,099,326 Aetna Bond VP Annuity contracts in accumulation............. 129,638,086 Annuity contracts in payment period........... 8,031,678 Aetna Crossroads VP Annuity contracts in accumulation............. 15,271,479 Annuity contracts in payment period........... 1,277,994 Aetna GET Fund, Series C Annuity contracts in accumulation............. 4,493,827 Aetna GET Fund, Series D Annuity contracts in accumulation............. 120,845,469 Aetna GET Fund, Series E Annuity contracts in accumulation............. 306,069,825 Aetna GET Fund, Series G Annuity contracts in accumulation............. 174,255,855 Aetna GET Fund, Series H Annuity contracts in accumulation............. 133,423,127 Aetna GET Fund, Series I Annuity contracts in accumulation............. 88,651,289 Aetna GET Fund, Series J Annuity contracts in accumulation............. 75,730,237 Aetna GET Fund, Series K Annuity contracts in accumulation............. 89,558,731 Aetna GET Fund, Series L Annuity contracts in accumulation............. 80,210,368 Aetna GET Fund, Series M Annuity contracts in accumulation............. 122,376,189 Aetna GET Fund, Series N Annuity contracts in accumulation............. 109,499,705 Aetna GET Fund, Series P Annuity contracts in accumulation............. 1,932,784 Aetna Growth and Income VP Annuity contracts in accumulation............. 518,698,423 Annuity contracts in payment period........... 121,035,494 Aetna Growth VP Annuity contracts in accumulation............. 52,357,598 Annuity contracts in payment period........... 4,431,043 Aetna Index Plus Large Cap VP Annuity contracts in accumulation............. 173,665,656 Annuity contracts in payment period........... 39,218,541
S-5 VARIABLE ANNUITY ACCOUNT B STATEMENT OF ASSETS AND LIABILITIES - September 30, 2001 (Unaudited) (continued): Aetna Index Plus Mid Cap VP Annuity contracts in accumulation............. $ 7,707,007 Aetna Index Plus Small Cap VP Annuity contracts in accumulation............. 1,247,468 Aetna International VP Annuity contracts in accumulation............. 7,248,508 Annuity contracts in payment period........... 266,298 Aetna Legacy VP Annuity contracts in accumulation............. 19,646,693 Annuity contracts in payment period........... 3,168,158 Aetna Money Market VP Annuity contracts in accumulation............. 290,795,193 Annuity contracts in payment period........... 11,401,681 Aetna Small Company VP Annuity contracts in accumulation............. 46,700,079 Annuity contracts in payment period........... 3,032,165 Aetna Technology VP Annuity contracts in accumulation............. 7,432,719 Aetna Value Opportunity VP Annuity contracts in accumulation............. 23,672,944 AIM V.I. Funds: Capital Appreciation Fund Annuity contracts in accumulation............. 19,456,046 Annuity contracts in payment period........... 626,234 Government Securities Fund Annuity contracts in accumulation............. 8,240,500 Growth and Income Fund Annuity contracts in accumulation............. 34,499,399 Annuity contracts in payment period........... 3,186,203 Growth Fund Annuity contracts in accumulation............. 24,581,250 Annuity contracts in payment period........... 957,515 Value Fund Annuity contracts in accumulation............. 64,501,346 Annuity contracts in payment period........... 2,767,423 Alger American Funds: Balanced Portfolio Annuity contracts in accumulation............. 3,714,080 Income & Growth Portfolio Annuity contracts in accumulation............. 10,540,505 Leveraged AllCap Portfolio Annuity contracts in accumulation............. 9,643,071 Alliance Funds: Growth and Income Portfolio Annuity contracts in accumulation............. 21,996,357 Premier Growth Portfolio Annuity contracts in accumulation............. 6,933,822 Quasar Portfolio Annuity contracts in accumulation............. 489,594
S-6 VARIABLE ANNUITY ACCOUNT B STATEMENT OF ASSETS AND LIABILITIES - September 30, 2001 (Unaudited) (continued): American Century VP Funds: Balanced Fund Annuity contracts in accumulation............. $ 1,969,513 International Fund Annuity contracts in accumulation............. 2,783,906 Calvert Social Balanced Portfolio Annuity contracts in accumulation............. 1,917,493 Federated Insurance Series: American Leaders Fund II Annuity contracts in accumulation............. 79,106,835 Annuity contracts in payment period........... 153,661 Equity Income Fund II Annuity contracts in accumulation............. 16,978,904 Annuity contracts in payment period........... 55,962 Growth Strategies Fund II Annuity contracts in accumulation............. 19,469,203 High Income Bond Fund II Annuity contracts in accumulation............. 20,931,538 Annuity contracts in payment period........... 23,108 International Equity Fund II Annuity contracts in accumulation............. 10,781,452 Annuity contracts in payment period........... 47,455 Prime Money Fund II Annuity contracts in accumulation............. 8,702,772 U.S. Government Securities Fund II Annuity contracts in accumulation............. 12,218,857 Utility Fund II Annuity contracts in accumulation............. 14,267,228 Annuity contracts in payment period........... 44,705 Fidelity Variable Insurance Products Fund: Equity-Income Portfolio Annuity contracts in accumulation............. 177,968,746 Growth Portfolio Annuity contracts in accumulation............. 144,385,673 High Income Portfolio Annuity contracts in accumulation............. 36,753,298 Annuity contracts in payment period........... 805,762 Overseas Portfolio Annuity contracts in accumulation............. 9,309,788 Fidelity Variable Insurance Products Fund II: Asset Manager Portfolio Annuity contracts in accumulation............. 13,619,679 Contrafund Portfolio Annuity contracts in accumulation............. 165,274,950 Index 500 Portfolio Annuity contracts in accumulation............. 94,294,238 Investment Grade Bond Portfolio Annuity contracts in accumulation............. 3,292,124
S-7 VARIABLE ANNUITY ACCOUNT B STATEMENT OF ASSETS AND LIABILITIES - September 30, 2001 (Unaudited) (continued): Janus Aspen Series: Aggressive Growth Portfolio Annuity contracts in accumulation............. $ 131,283,060 Balanced Portfolio Annuity contracts in accumulation............. 227,000,863 Flexible Income Portfolio Annuity contracts in accumulation............. 23,906,022 Growth Portfolio Annuity contracts in accumulation............. 152,928,817 Annuity contracts in payment period........... 9,513,456 Worldwide Growth Portfolio Annuity contracts in accumulation............. 292,205,767 Annuity contracts in payment period........... 10,492,405 MFS Funds: Global Government Series Annuity contracts in accumulation............. 1,859,016 Total Return Series Annuity contracts in accumulation............. 84,653,611 Mitchell Hutchins Series Trust: Growth and Income Portfolio Annuity contracts in accumulation............. 854,354 Small Cap Portfolio Annuity contracts in accumulation............. 155,710 Tactical Allocation Portfolio Annuity contracts in accumulation............. 13,549,496 Oppenheimer Funds: Aggressive Growth Fund/VA Annuity contracts in accumulation............. 37,003,507 Annuity contracts in payment period........... 1,034,378 Global Securities Fund/VA Annuity contracts in accumulation............. 13,502,607 Main Street Growth & Income Fund/VA Annuity contracts in accumulation............. 57,748,821 Annuity contracts in payment period........... 1,929,593 Strategic Bond Fund/VA Annuity contracts in accumulation............. 26,538,146 Annuity contracts in payment period........... 600,975 Pilgrim Funds: Emerging Markets Fund Annuity contracts in accumulation............. 757,226 Natural Resources Trust Annuity contracts in accumulation............. 1,751,750 Pilgrim Variable Funds: Growth Opportunities Portfolio Annuity contracts in accumulation............. 82,613 Magna Cap Portfolio Annuity contracts in accumulation............. 273,121 Mid Cap Opportunities Portfolio Annuity contracts in accumulation............. 359,702
S-8 VARIABLE ANNUITY ACCOUNT B STATEMENT OF ASSETS AND LIABILITIES - September 30, 2001 (Unaudited) (continued): Small Cap Opportunities Portfolio Annuity contracts in accumulation............. $ 717,356 Portfolio Partners, Inc. (PPI): PPI MFS Capital Opportunities Portfolio Annuity contracts in accumulation............. 49,956,075 Annuity contracts in payment period........... 3,662,581 PPI MFS Emerging Equities Portfolio Annuity contracts in accumulation............. 74,286,655 Annuity contracts in payment period........... 1,757,316 PPI MFS Research Growth Portfolio Annuity contracts in accumulation............. 64,001,465 PPI Scudder International Growth Portfolio Annuity contracts in accumulation............. 29,365,563 Annuity contracts in payment period........... 812,063 PPI T. Rowe Price Growth Equity Portfolio Annuity contracts in accumulation............. 78,178,127 Annuity contracts in payment period........... 1,479,854 Prudential Jennison Portfolio Annuity contracts in accumulation............. 30,569 SP Jennison International Growth Portfolio Annuity contracts in accumulation............. 119,691 -------------- $5,426,770,281 ==============
See Notes to Financial Statements S-9 VARIABLE ANNUITY ACCOUNT B STATEMENT OF OPERATIONS (UNAUDITED)
PERIOD ENDED SEPTEMBER 30, 2001 (UNAUDITED) ------------------ INVESTMENT INCOME: Income: (Notes 1, 3 and 5) Dividends....................................... $ 187,286,424 Expenses: (Notes 2 and 5) Valuation period deductions..................... (58,838,344) --------------- Net investment income............................. $ 128,448,080 --------------- NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS: Net realized loss on sales of investments: (Notes 1, 4 and 5) Proceeds from sales............................. $ 1,869,054,028 Cost of investments sold........................ (2,301,674,245) --------------- Net realized loss on investments.............. (432,620,217) --------------- Net unrealized loss on investments: (Note 5) Beginning of period............................. (650,455,465) End of period................................... (1,569,552,831) --------------- Net change in unrealized loss on investments................................. (919,097,366) --------------- Net realized and unrealized loss on investments... (1,351,717,583) --------------- Net decrease in net assets resulting from operations...................................... $(1,223,269,503) ===============
See Notes to Financial Statements -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
PERIOD ENDED SEPTEMBER 30, 2001 2000 (UNAUDITED) (UNAUDITED) ----------- ----------- FROM OPERATIONS: Net investment income................... $ 128,448,080 $ 308,927,426 Net realized (loss) gain on investments........................... (432,620,217) 259,529,786 Net change in unrealized loss on investments........................... (919,097,366) (644,053,696) --------------- -------------- Net decrease in net assets resulting from operations....................... (1,223,269,503) (75,596,484) --------------- -------------- FROM UNIT TRANSACTIONS: Variable annuity contract purchase payments.............................. 216,006,649 469,743,502 Transfers from the Company for mortality guarantee adjustments................. 5,484,431 1,263,034 Transfer from the Company's other variable annuity accounts............. 477,993,016 633,690,348 Redemptions by contract holders......... (350,618,187) (365,191,937) Annuity payments........................ (28,050,766) (30,597,994) Other................................... 4,959,006 1,990,641 --------------- -------------- Net increase in net assets from unit transactions (Note 6)............... 325,774,149 710,897,594 --------------- -------------- Change in net assets.................... (897,495,354) 635,301,110 NET ASSETS: Beginning of period..................... 6,324,265,635 6,173,851,032 --------------- -------------- End of period........................... $ 5,426,770,281 $6,809,152,142 =============== ==============
See Notes to Financial Statements S-10 VARIABLE ANNUITY ACCOUNT B CONDENSED FINANCIAL INFORMATION - Period Ended September 30, 2001 (Unaudited)
---------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End of at End of of Period Period Unit Period Period ---------------------------------------------------------------------------------------------------------------------- AETNA ASCENT VP: Non-Qualified V $ 17.566 $ 14.319 (18.48%) 75,103.0 $ 1,075,400 Non-Qualified V (0.75) 17.996 14.725 (18.18%) 121,860.8 1,794,400 Non-Qualified VII 17.415 14.179 (18.58%) 580,363.8 8,228,978 Non-Qualified VIII 15.521 12.652 (18.48%) 123,532.9 1,562,938 Non-Qualified IX 17.403 14.160 (18.63%) 782.1 11,074 Non-Qualified X 17.786 14.537 (18.27%) 21,775.1 316,544 Annuity contracts in payment period 286,275 ---------------------------------------------------------------------------------------------------------------------- AETNA BALANCED VP, INC.: Non-Qualified V 24.163 21.472 (11.14%) 1,781,906.0 38,261,085 Non-Qualified V (0.75) 24.755 22.081 (10.80%) 1,301,170.7 28,731,150 Non-Qualified VI 20.348 18.090 (11.10%) 24,886.5 450,197 Non-Qualified VII 23.622 20.966 (11.24%) 1,816,428.1 38,083,231 Non-Qualified VIII 16.759 14.892 (11.14%) 392,964.1 5,852,022 Non-Qualified IX 23.939 21.233 (11.30%) 16,099.3 341,836 Non-Qualified X 24.379 21.705 (10.97%) 347,561.3 7,543,817 Non-Qualified XI 20.530 18.286 (10.93%) 3,329.7 60,886 Non-Qualified XII 11.741 10.469 (10.83%) 9,277.0 97,121 Non-Qualified XIII 11.457 10.204 (10.94%) 1,022,548.9 10,434,089 Non-Qualified XIV 11.372 10.106 (11.13%) 794,093.8 8,025,112 Non-Qualified XV 11.330 10.057 (11.24%) 376,991.3 3,791,402 Non-Qualified XVI 9.532 8.457 (11.28%) 257,419.8 2,176,999 Non-Qualified XVIII 9.520 8.418 (11.58%) 73,694.0 620,356 Non-Qualified XIX 9.524 8.431 (11.48%) 153,149.8 1,291,206 Annuity contracts in payment period 33,099,326 ---------------------------------------------------------------------------------------------------------------------- AETNA BOND VP: Non-Qualified V 15.147 16.252 7.30% 853,774.9 13,875,550 Non-Qualified V (0.75) 15.519 16.713 7.69% 1,521,889.8 25,435,344 Non-Qualified VI 13.860 14.877 7.34% 41,031.8 610,430 Non-Qualified VII 14.811 15.873 7.17% 2,103,628.7 33,390,898 Non-Qualified VIII 12.640 13.561 7.29% 532,817.9 7,225,543 Non-Qualified IX 15.007 16.071 7.09% 8,994.2 144,546 Non-Qualified X 15.229 16.358 7.41% 361,470.6 5,912,936 Non-Qualified XI 13.934 14.974 7.46% 5,034.9 75,392 Non-Qualified XII 11.121 11.972 7.65% 178.4 2,136 Non-Qualified XIII 11.018 11.848 7.53% 1,278,201.0 15,144,126 Non-Qualified XIV 10.937 11.734 7.29% 1,305,877.5 15,323,167 Non-Qualified XV 10.896 11.677 7.17% 481,930.6 5,627,504 Non-Qualified XVI 10.472 11.218 7.12% 304,822.2 3,419,496 Non-Qualified XVII 62.352 62.898 0.88% (8) 155.7 9,796 Non-Qualified XVIII 10.459 11.166 6.76% 120,297.2 1,343,238 Non-Qualified XIX 10.463 11.184 6.89% 187,588.0 2,097,984 Annuity contracts in payment period 8,031,678 ---------------------------------------------------------------------------------------------------------------------- AETNA CROSSROADS VP: Non-Qualified V 16.295 14.173 (13.02%) 98,282.5 1,392,958 Non-Qualified V (0.75 16.694 14.575 (12.69%) 120,978.9 1,763,268 Non-Qualified VII 16.155 14.034 (13.13%) 687,303.2 9,645,613 Non-Qualified VIII 14.665 12.755 (13.02%) 179,804.3 2,293,404 Non-Qualified X 16.499 14.388 (12.79%) 9,895.0 142,369 Non-Qualified XVII 16.387 14.302 (12.72%) 2,368.0 33,867 Annuity contracts in payment period 1,277,994 ---------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES C: Non-Qualified V 17.424 13.607 (21.91%) 44,475.3 605,175 Non-Qualified V (0.75) 17.801 13.953 (21.62%) 269,885.5 3,765,713 Non-Qualified IX 17.263 13.455 (22.06%) 9,137.0 122,939 ---------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES D: Non-Qualified V 10.188 10.127 (0.60%) 1,702,339.1 17,239,588 Non-Qualified V (0.75) 10.301 10.279 (0.21%) 1,189,075.1 12,222,503 Non-Qualified VII 10.150 10.078 (0.71%) 3,690,333.7 37,191,183
S-11 VARIABLE ANNUITY ACCOUNT B CONDENSED FINANCIAL INFORMATION - Period Ended September 30, 2001 (Unaudited) (continued):
---------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End of at End of of Period Period Unit Period Period ---------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES D: (continued): Non-Qualified VIII $ 10.199 $ 10.138 (0.60%) 1,743,219.7 $ 17,672,762 Non-Qualified IX 10.131 10.052 (0.78%) 307.4 3,090 Non-Qualified X 10.188 10.127 (0.60%) 150,224.8 1,521,327 Non-Qualified XII 10.290 10.264 (0.25%) 791.8 8,127 Non-Qualified XIII 10.258 10.220 (0.37%) 1,425,457.5 14,568,176 Non-Qualified XIV 10.190 10.129 (0.60%) 1,587,677.8 16,081,588 Non-Qualified XV 10.156 10.084 (0.71%) 430,099.7 4,337,125 ---------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES E: Non-Qualified V 10.139 10.035 (1.03%) 1,569,862.7 15,753,572 Non-Qualified V (0.75) 10.218 10.150 (0.67%) 216,804.5 2,200,566 Non-Qualified VII 10.081 9.946 (1.34%) 3,307,071.1 32,892,129 Non-Qualified VIII 10.105 9.981 (1.23%) 414,141.0 4,133,541 Non-Qualified X 10.145 10.041 (1.03%) 113,944.6 1,144,118 Non-Qualified XIII 10.152 10.050 (1.00%) 9,331,047.1 93,777,023 Non-Qualified XIV 10.105 9.981 (1.23%) 8,601,795.3 85,854,519 Non-Qualified XV 10.081 9.946 (1.34%) 7,069,611.6 70,314,357 ---------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES G: Non-Qualified V 9.914 9.881 (0.33%) 213,108.3 2,105,723 Non-Qualified V (0.75) 9.978 9.983 0.05% 176,706.8 1,764,064 Non-Qualified VII 9.866 9.804 (0.63%) 2,314,863.8 22,694,925 Non-Qualified VIII 9.886 9.834 (0.53%) 294,260.5 2,893,758 Non-Qualified X 9.920 9.888 (0.32%) 12,410.3 122,713 Non-Qualified XIII 9.925 9.896 (0.29%) 4,819,388.7 47,692,671 Non-Qualified XIV 9.886 9.834 (0.53%) 6,584,178.6 64,748,812 Non-Qualified XV 9.866 9.804 (0.63%) 3,287,759.0 32,233,189 ---------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES H: Non-Qualified V 10.069 9.934 (1.34%) 105,016.7 1,043,236 Non-Qualified V (0.75) 10.121 10.023 (0.97%) 49,220.8 493,340 Non-Qualified VII 10.031 9.867 (1.63%) 1,459,329.2 14,399,201 Non-Qualified VIII 10.047 9.893 (1.53%) 102,700.0 1,016,011 Non-Qualified IX 10.043 9.890 (1.52%) 480.6 4,753 Non-Qualified X 10.075 9.940 (1.34%) 989.5 9,836 Non-Qualified XIII 10.079 9.947 (1.31%) 4,562,993.6 45,388,097 Non-Qualified XIV 10.047 9.893 (1.53%) 4,843,365.0 47,915,410 Non-Qualified XV 10.031 9.867 (1.63%) 2,346,533.2 23,153,243 ---------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES I: Non-Qualified VII 9.850 9.764 (0.87%) 359,705.3 3,512,163 Non-Qualified VIII 9.862 9.787 (0.76%) 27,343.3 267,609 Non-Qualified XIII 9.886 9.833 (0.54%) 2,780,031.9 27,336,054 Non-Qualified XIV 9.862 9.787 (0.76%) 3,543,582.1 34,681,038 Non-Qualified XV 9.850 9.764 (0.87%) 2,340,682.6 22,854,425 ---------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES J: Non-Qualified VII 9.722 9.660 (0.64%) 219,139.3 2,116,886 Non-Qualified VIII 9.730 9.679 (0.52%) 36,680.1 355,027 Non-Qualified XIII 9.746 9.717 (0.30%) 2,176,306.8 21,147,173 Non-Qualified XIV 9.730 9.679 (0.52%) 3,437,869.8 33,275,142 Non-Qualified XV 9.722 9.660 (0.64%) 1,949,897.4 18,836,009 ---------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES K: Non-Qualified VII 10.036 9.756 (2.79%) 78,297.5 763,870 Non-Qualified VIII 10.040 9.771 (2.68%) 4,927.4 48,146 Non-Qualified XIII 10.049 9.802 (2.46%) 1,525,551.5 14,953,456 Non-Qualified XIV 10.040 9.771 (2.68%) 2,139,867.6 20,908,646 Non-Qualified XV 10.036 9.756 (2.79%) 944,948.0 9,218,913 Non-Qualified XVI 10.009 9.726 (2.83%) 1,771,553.5 17,230,129 Non-Qualified XVIII 9.997 9.681 (3.16%) 1,234,724.7 11,953,370 Non-Qualified XIX 10.001 9.696 (3.05%) 1,493,626.3 14,482,201 ----------------------------------------------------------------------------------------------------------------------
S-12 VARIABLE ANNUITY ACCOUNT B CONDENSED FINANCIAL INFORMATION - Period Ended September 30, 2001 (Unaudited) (continued):
---------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End of at End of of Period Period Unit Period Period ---------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES L: Non-Qualified VII $ 10.014 $ 9.799 (2.15%) (1) 115,198.8 $ 1,128,833 Non-Qualified VIII 10.051 9.811 (2.39%) (1) 29,165.1 286,139 Non-Qualified XIII 10.017 9.835 (1.82%) 1,481,363.7 14,569,212 Non-Qualified XIV 10.016 9.811 (2.05%) 934,265.8 9,166,082 Non-Qualified XV 10.015 9.799 (2.16%) 832,960.0 8,162,175 Non-Qualified XVI 10.015 9.795 (2.20%) 2,126,193.9 20,826,069 Non-Qualified XVIII 10.023 9.759 (2.63%) (1) 1,095,033.6 10,686,433 Non-Qualified XIX 10.013 9.771 (2.42%) 1,574,600.9 15,385,425 ---------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES M: Non-Qualified VII 10.005 9.711 (2.94%) (2) 209,364.0 2,033,134 Non-Qualified VIII 10.012 9.719 (2.93%) (2) 19,443.6 188,972 Non-Qualified XIII 10.005 9.735 (2.70%) (2) 1,599,826.4 15,574,310 Non-Qualified XIV 10.002 9.719 (2.83%) (2) 1,568,264.1 15,241,959 Non-Qualified XV 10.011 9.711 (3.00%) (2) 832,301.0 8,082,475 Non-Qualified XVI 10.018 9.708 (3.09%) (3) 4,046,366.9 39,282,130 Non-Qualified XVIII 10.019 9.684 (3.34%) (3) 2,016,297.5 19,525,825 Non-Qualified XIX 10.022 9.692 (3.29%) (3) 2,316,073.5 22,447,384 ---------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES N: Non-Qualified VII 10.009 10.056 0.47% (5) 512,153.5 5,150,216 Non-Qualified VIII 10.009 10.061 0.52% (5) 3,140.1 31,593 Non-Qualified XIII 10.003 10.070 0.67% (5) 1,315,152.2 13,243,583 Non-Qualified XIV 10.010 10.061 0.51% (5) 1,023,193.0 10,294,345 Non-Qualified XV 10.006 10.056 0.50% (6) 598,783.9 6,021,371 Non-Qualified XVI 10.003 10.055 0.52% (5) 4,165,777.5 41,886,893 Non-Qualified XVIII 10.032 10.042 0.10% (8) 1,183,133.4 11,881,026 Non-Qualified XIX 10.002 10.046 0.44% (5) 2,089,456.3 20,990,678 ---------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES P: Non-Qualified VII 9.997 9.999 0.02% (8) 76,249.9 762,423 Non-Qualified VIII 9.997 10.000 0.03% (8) 4,738.7 47,387 Non-Qualified XIII 9.998 10.001 0.03% (8) 20,217.6 202,196 Non-Qualified XIV 9.998 10.000 0.02% (8) 45,378.5 453,785 Non-Qualified XV 9.997 9.999 0.02% (8) 2,570.2 25,699 Non-Qualified XVI 9.997 9.999 0.02% (8) 21,216.3 212,142 Non-Qualified XVIII 9.996 9.997 0.01% (8) 4,922.6 49,211 Non-Qualified XIX 9.997 9.997 0.00% (8) 17,999.5 179,941 ---------------------------------------------------------------------------------------------------------------------- AETNA GROWTH AND INCOME VP: Non-Qualified 1964 272.607 207.593 (23.85%) 958.7 199,013 Non-Qualified V 25.397 19.340 (23.85%) 5,593,566.2 108,179,570 Non-Qualified V (0.75) 26.020 19.889 (23.56%) 8,755,465.8 174,137,459 Non-Qualified VI 23.810 18.140 (23.81%) 1,335,597.2 24,227,734 Non-Qualified VII 25.247 19.203 (23.94%) 5,797,873.0 111,336,555 Non-Qualified VIII 16.928 12.890 (23.85%) 1,093,450.1 14,094,572 Non-Qualified IX 25.162 19.125 (23.99%) 77,088.4 1,474,315 Non-Qualified X 25.624 19.550 (23.70%) 2,546,260.0 49,779,383 Non-Qualified XI 24.023 18.336 (23.67%) 37,186.6 681,854 Non-Qualified XII 10.495 8.019 (23.59%) 29,974.9 240,369 Non-Qualified XIII 10.140 7.739 (23.68%) 1,736,681.0 13,440,174 Non-Qualified XIV 10.065 7.664 (23.85%) 1,796,793.6 13,770,626 Non-Qualified XV 10.028 7.627 (23.94%) 600,711.9 4,581,630 Non-Qualified XVI 8.973 6.822 (23.97%) 168,172.2 1,147,271 Non-Qualified XVII 251.601 192.253 (23.59%) 248.4 47,749 Non-Qualified XVIII 8.962 6.790 (24.24%) 69,437.3 471,479 Non-Qualified XIX 8.965 6.801 (24.14%) 130,667.5 888,670 Annuity contracts in payment period 121,035,494 ---------------------------------------------------------------------------------------------------------------------- AETNA GROWTH VP: Non-Qualified V 20.761 13.726 (33.89%) 10,005.5 137,335 Non-Qualified V (0.75) 21.151 13.881 (34.37%) 126,238.7 1,752,320 Non-Qualified VII 20.638 14.195 (31.22%) 673,730.6 9,563,606
S-13 VARIABLE ANNUITY ACCOUNT B CONDENSED FINANCIAL INFORMATION - Period Ended September 30, 2001 (Unaudited) (continued):
---------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End of at End of of Period Period Unit Period Period ---------------------------------------------------------------------------------------------------------------------- AETNA GROWTH VP: (continued): Non-Qualified VIII $ 20.755 $ 13.782 (33.60%) 1,009,965.5 $ 13,919,344 Non-Qualified IX 20.569 13.876 (32.54%) 427,241.9 5,928,409 Non-Qualified XII 13.184 8.845 (32.91%) 6,781.9 59,986 Non-Qualified XIII 12.229 8.195 (32.99%) 1,280,362.3 10,492,569 Non-Qualified XIV 12.139 8.116 (33.14%) 930,764.5 7,554,085 Non-Qualified XV 12.094 5.342 (55.83%) 114,713.0 612,797 Non-Qualified XVI 8.027 8.076 0.61% 185,538.3 1,498,407 Non-Qualified XVIII 8.017 5.358 (33.17%) 140,947.9 755,199 Non-Qualified XIX 8.021 5.333 (33.51%) 15,664.9 83,541 Annuity contracts in payment period 4,431,043 ---------------------------------------------------------------------------------------------------------------------- AETNA INDEX PLUS LARGE CAP VP: Non-Qualified V 20.618 16.233 (21.27%) 322,332.2 5,232,418 Non-Qualified V (0.75) 21.065 16.647 (20.97%) 1,168,403.7 19,450,416 Non-Qualified VII 20.478 16.103 (21.36%) 2,310,339.1 37,203,390 Non-Qualified VIII 20.261 15.951 (21.27%) 788,454.2 12,576,633 Non-Qualified IX 20.427 16.053 (21.41%) 25,078.6 402,587 Non-Qualified X 18.720 16.303 (12.91%) (7) 2,505.7 40,850 Non-Qualified XII 12.292 9.710 (21.01%) 16,328.1 158,546 Non-Qualified XIII 11.839 9.342 (21.09%) 4,393,373.8 41,042,898 Non-Qualified XIV 11.752 9.252 (21.27%) 3,608,122.1 33,382,346 Non-Qualified XV 11.709 9.207 (21.37%) 1,560,213.6 14,364,887 Non-Qualified XVI 9.002 7.076 (21.40%) 570,155.6 4,034,421 Non-Qualified XVII 20.701 16.354 (21.00%) 189.4 3,098 Non-Qualified XVIII 8.991 7.043 (21.67%) 186,079.7 1,310,559 Non-Qualified XIX 8.995 7.054 (21.58%) 632,635.0 4,462,607 Annuity contracts in payment period 39,218,541 ---------------------------------------------------------------------------------------------------------------------- AETNA INDEX PLUS MID CAP VP: Non-Qualified V 14.751 12.631 (14.37%) 103,795.9 1,311,046 Non-Qualified V (0.75) 14.951 12.850 (14.05%) 489,326.7 6,287,848 Non-Qualified XII 15.591 12.523 (19.68%) 5,645.3 70,696 Non-Qualified IX 14.653 13.395 (8.59%) 2,793.4 37,417 ---------------------------------------------------------------------------------------------------------------------- AETNA INDEX PLUS SMALL CAP VP: Non-Qualified V 10.461 9.039 (13.59%) 43,754.0 395,492 Non-Qualified V (0.75) 10.602 9.196 (13.26%) 88,875.5 817,299 Non-Qualified IX 10.391 8.962 (13.75%) 3,858.3 34,578 Non-Qualified XII 11.423 9.904 (13.30%) 10.0 99 ---------------------------------------------------------------------------------------------------------------------- AETNA INTERNATIONAL VP: Non-Qualified V 11.484 7.640 (33.47%) 18,808.8 143,699 Non-Qualified V (0.75) 11.639 7.773 (33.22%) 94,117.7 731,577 Non-Qualified VII 11.434 7.599 (33.54%) 141,611.4 1,076,105 Non-Qualified VIII 11.481 7.638 (33.47%) 38,442.8 293,626 Non-Qualified XIII 10.824 7.217 (33.32%) 307,082.6 2,216,215 Non-Qualified XIV 10.744 7.148 (33.47%) 195,388.8 1,396,639 Non-Qualified XV 10.704 7.113 (33.55%) 77,953.7 554,485 Non-Qualified XVI 8.741 5.807 (33.57%) 79,557.6 461,991 Non-Qualified XVIII 8.730 5.780 (33.79%) 5,964.7 34,476 Non-Qualified XIX 8.734 5.789 (33.72%) 58,679.4 339,695 Annuity contracts in payment period 266,298 ---------------------------------------------------------------------------------------------------------------------- AETNA LEGACY VP: Non-Qualified V 15.397 14.333 (6.91%) 85,156.6 1,220,549 Non-Qualified V (0.75) 15.775 14.740 (6.56%) 51,934.7 765,517 Non-Qualified VII 15.267 14.195 (7.02%) 928,105.6 13,174,459 Non-Qualified VIII 14.271 13.284 (6.92%) 337,712.1 4,486,168 Annuity contracts in payment period 3,168,158 ---------------------------------------------------------------------------------------------------------------------- AETNA MONEY MARKET VP: Non-Qualified V 13.547 13.714 1.23% 4,686.7 64,273 Non-Qualified V (0.75) 13.879 13.868 (0.08%) 1,159,774.4 16,083,752
S-14 VARIABLE ANNUITY ACCOUNT B CONDENSED FINANCIAL INFORMATION - Period Ended September 30, 2001 (Unaudited) (continued):
---------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End of at End of of Period Period Unit Period Period ---------------------------------------------------------------------------------------------------------------------- AETNA MONEY MARKET VP: (continued): Non-Qualified VI $ 13.243 $ 14.262 7.69% 3,333,770.4 $ 47,546,233 Non-Qualified VII 13.392 13.563 1.28% 60,616.0 822,135 Non-Qualified VIII 12.145 13.693 12.75% 7,268,247.6 99,524,115 Non-Qualified IX 13.422 12.432 (7.38%) 1,414,012.7 17,579,006 Non-Qualified X 13.547 13.868 2.37% 445,908.4 6,183,858 Non-Qualified XI 13.243 13.563 2.42% 2,249.9 30,516 Non-Qualified XII 11.260 11.566 2.72% 8,336.3 96,418 Non-Qualified XIII 11.186 11.476 2.59% 3,281,763.2 37,661,515 Non-Qualified XIV 11.103 11.366 2.37% 2,756,776.4 31,333,520 Non-Qualified XV 11.062 10.335 (6.57%) 610,226.5 6,306,691 Non-Qualified XVI 10.143 11.311 11.52% 1,394,748.1 15,775,996 Non-Qualified XVIII 10.130 10.367 2.34% 812,203.6 8,420,115 Non-Qualified XIX 10.135 10.319 1.82% 326,296.2 3,367,050 Annuity contracts in payment period 11,401,681 ---------------------------------------------------------------------------------------------------------------------- AETNA SMALL COMPANY VP: Non-Qualified V 18.568 16.378 (11.79%) 45,944.3 752,475 Non-Qualified V (0.75) 18.917 16.749 (11.46%) 343,327.1 5,750,385 Non-Qualified VII 18.458 16.262 (11.90%) 943,280.0 15,339,619 Non-Qualified VIII 18.563 16.373 (11.80%) 297,451.4 4,870,172 Non-Qualified IX 18.396 16.196 (11.96%) 1,555.4 25,191 Non-Qualified XII 13.077 11.574 (11.49%) 26,143.3 302,583 Non-Qualified XIII 12.820 11.333 (11.60%) 791,134.3 8,965,925 Non-Qualified XIV 12.726 11.224 (11.80%) 503,447.7 5,650,697 Non-Qualified XV 12.679 11.170 (11.90%) 132,311.9 1,477,924 Non-Qualified XVI 9.234 8.132 (11.93%) 260,065.8 2,114,855 Non-Qualified XVII 14.029 12.084 (13.86%) (6) 1,902.0 22,984 Non-Qualified XVIII 9.223 8.094 (12.24%) 30,252.7 244,865 Non-Qualified XIX 9.226 8.107 (12.13%) 145,849.8 1,182,404 Annuity contracts in payment period 3,032,165 ---------------------------------------------------------------------------------------------------------------------- AETNA TECHNOLOGY VP: Non-Qualified V 5.831 3.261 (44.07%) 173,616.7 566,164 Non-Qualified V (0.75) 5.850 3.285 (43.85%) 354,084.3 1,163,167 Non-Qualified VII 5.824 3.254 (44.13%) 400,071.6 1,301,833 Non-Qualified VIII 5.830 3.261 (44.07%) 53,330.0 173,909 Non-Qualified IX 5.821 3.250 (44.17%) 13,244.6 43,045 Non-Qualified X 5.841 3.273 (43.97%) 7,503.8 24,560 Non-Qualified XII 5.848 3.282 (43.88%) 3,067.3 10,067 Non-Qualified XIII 5.842 3.275 (43.94%) 536,171.6 1,755,962 Non-Qualified XIV 5.830 3.261 (44.07%) 367,867.5 1,199,616 Non-Qualified XV 5.824 3.254 (44.13%) 80,570.4 262,176 Non-Qualified XVI 6.088 3.400 (44.15%) 113,634.7 386,358 Non-Qualified XVIII 6.080 3.384 (44.34%) 32,913.7 111,380 Non-Qualified XIX 6.083 3.389 (44.29%) 128,203.6 434,482 ---------------------------------------------------------------------------------------------------------------------- AETNA VALUE OPPORTUNITY VP: Non-Qualified V 20.602 17.209 (16.47%) 53,646.8 923,207 Non-Qualified V (0.75) 20.989 17.598 (16.16%) 293,881.6 5,171,728 Non-Qualified VII 20.480 17.086 (16.57%) 814,799.1 13,921,657 Non-Qualified VIII 20.596 17.203 (16.47%) 197,614.5 3,399,562 Non-Qualified IX 20.412 17.017 (16.63%) 3,806.5 64,775 Non-Qualified XII 14.220 11.917 (16.20%) 16,112.7 192,015 ---------------------------------------------------------------------------------------------------------------------- AIM V.I. FUNDS: CAPITAL APPRECIATION FUND: Non-Qualified V 12.101 7.770 (35.79%) 19,590.5 152,218 Non-Qualified V (0.75) 12.204 7.866 (35.55%) 109,799.8 863,685 Non-Qualified XIII 12.951 8.334 (35.65%) 654,506.0 5,454,653 Non-Qualified XIV 12.855 8.254 (35.79%) 756,260.1 6,242,171 Non-Qualified XV 12.808 8.214 (35.87%) 440,462.6 3,617,960 Non-Qualified XVI 7.678 4.923 (35.88%) 231,431.4 1,139,337
S-15 VARIABLE ANNUITY ACCOUNT B CONDENSED FINANCIAL INFORMATION - Period Ended September 30, 2001 (Unaudited) (continued):
---------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End of at End of of Period Period Unit Period Period ---------------------------------------------------------------------------------------------------------------------- CAPITAL APPRECIATION FUND: (continued): Non-Qualified XVII $ 12.316 $ 7.936 (35.56%) 535.5 $ 4,250 Non-Qualified XVIII 7.669 4.900 (36.11%) 165,385.3 810,388 Non-Qualified XIX 7.672 4.907 (36.04%) 238,716.9 1,171,384 Annuity contracts in payment period 626,234 ---------------------------------------------------------------------------------------------------------------------- GOVERNMENT SECURITIES FUND: Non-Qualified XIII 10.800 11.453 6.05% 204,551.7 2,342,731 Non-Qualified XIV 10.843 11.404 5.17% (1) 170,550.9 1,944,962 Non-Qualified XV 10.767 11.380 5.69% 79,200.9 901,306 Non-Qualified XVI 10.392 10.979 5.65% 148,965.9 1,635,497 Non-Qualified XVIII 10.379 10.928 5.29% 53,012.7 579,323 Non-Qualified XIX 10.384 10.945 5.40% 76,444.1 836,681 ---------------------------------------------------------------------------------------------------------------------- GROWTH AND INCOME FUND: Non-Qualified V 9.887 6.608 (33.16%) 43,281.3 286,003 Non-Qualified V (0.75) 9.970 6.689 (32.91%) 114,931.1 768,774 Non-Qualified IX 8.933 6.568 (26.47%) (4) 2,115.7 13,896 Non-Qualified XII 9.962 6.681 (32.94%) 21.3 142 Non-Qualified XIII 12.001 8.039 (33.01%) 1,171,217.8 9,415,420 Non-Qualified XIV 11.912 7.961 (33.17%) 1,914,372.8 15,240,322 Non-Qualified XV 11.868 7.923 (33.24%) 635,744.3 5,037,002 Non-Qualified XVI 8.214 5.481 (33.27%) 272,304.3 1,492,500 Non-Qualified XVIII 8.204 5.456 (33.50%) 132,217.4 721,378 Non-Qualified XIX 8.207 5.464 (33.42%) 278,909.6 1,523,962 Annuity contracts in payment period 3,186,203 ---------------------------------------------------------------------------------------------------------------------- GROWTH FUND: Non-Qualified V 9.477 5.712 (39.73%) 19,429.3 110,980 Non-Qualified V (0.75) 9.558 5.782 (39.51%) 143,653.9 830,607 Non-Qualified IX 9.437 5.775 (38.80%) 2,241.7 12,946 Non-Qualified XII 9.550 6.869 (28.07%) 969,027.8 6,656,252 Non-Qualified XIII 11.371 5.677 (50.07%) 306.9 1,742 Non-Qualified XIV 11.288 6.803 (39.73%) 1,468,690.6 9,991,502 Non-Qualified XV 11.246 6.770 (39.80%) 509,444.5 3,448,939 Non-Qualified XVI 7.611 4.580 (39.82%) 259,974.9 1,190,685 Non-Qualified XVIII 7.601 4.558 (40.03%) 114,851.9 523,495 Non-Qualified XIX 7.604 4.565 (39.97%) 397,393.6 1,814,102 Annuity contracts in payment period 957,515 ---------------------------------------------------------------------------------------------------------------------- VALUE FUND: Non-Qualified V 9.699 7.628 (21.35%) 19,545.4 149,092 Non-Qualified V (0.75) 9.781 7.721 (21.06%) 188,994.4 1,459,226 Non-Qualified IX 9.203 7.581 (17.62%) (3) 3.4 26 Non-Qualified XII 9.773 7.712 (21.09%) 1,355.3 10,452 Non-Qualified XIII 11.548 9.102 (21.18%) 2,035,729.5 18,529,210 Non-Qualified XIV 11.463 9.014 (21.36%) 3,074,396.6 27,712,611 Non-Qualified XV 11.420 8.971 (21.44%) 1,070,635.4 9,604,670 Non-Qualified XVI 8.804 6.913 (21.48%) 331,290.5 2,290,211 Non-Qualified XVII 9.981 7.877 (21.08%) 410.7 3,235 Non-Qualified XVIII 8.793 6.881 (21.74%) 158,641.9 1,091,615 Non-Qualified XIX 8.796 6.891 (21.66%) 529,821.2 3,650,998 Annuity contracts in payment period 2,767,423 ---------------------------------------------------------------------------------------------------------------------- ALGER AMERICAN FUNDS: BALANCED PORTFOLIO: Non-Qualified VII 25.588 23.520 (8.08%) 157,911.6 3,714,080 ---------------------------------------------------------------------------------------------------------------------- INCOME & GROWTH PORTFOLIO: Non-Qualified VII 30.172 22.893 (24.13%) 460,424.8 10,540,505 ---------------------------------------------------------------------------------------------------------------------- LEVERAGED ALLCAP PORTFOLIO: Non-Qualified VII 32.379 23.691 (26.83%) 406,911.7 9,640,146 Non-Qualified VIII 23.765 17.408 (26.75%) 168.0 2,925 ----------------------------------------------------------------------------------------------------------------------
S-16 VARIABLE ANNUITY ACCOUNT B CONDENSED FINANCIAL INFORMATION - Period Ended September 30, 2001 (Unaudited) (continued):
---------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End of at End of of Period Period Unit Period Period ---------------------------------------------------------------------------------------------------------------------- ALLIANCE FUNDS: GROWTH AND INCOME PORTFOLIO: Non-Qualified XIII $ 10.129 $ 9.132 (9.84%) 609,651.0 $ 5,567,333 Non-Qualified XIV 10.108 9.092 (10.05%) 841,850.1 7,654,101 Non-Qualified XV 10.098 9.073 (10.15%) 300,142.8 2,723,196 Non-Qualified XVI 10.387 9.329 (10.19%) 384,724.2 3,589,092 Non-Qualified XVIII 10.374 9.285 (10.50%) 51,521.5 478,377 Non-Qualified XIX 10.378 9.300 (10.39%) 213,361.1 1,984,258 ---------------------------------------------------------------------------------------------------------------------- PREMIER GROWTH PORTFOLIO: Non-Qualified XIII 7.620 5.458 (28.37%) 333,285.3 1,819,071 Non-Qualified XIV 7.605 5.434 (28.55%) 273,032.4 1,483,658 Non-Qualified XV 7.597 5.422 (28.63%) 73,748.1 399,862 Non-Qualified XVI 8.198 5.849 (28.65%) 194,443.5 1,137,300 Non-Qualified XVIII 8.188 5.822 (28.90%) 77,329.4 450,212 Non-Qualified XIX 8.191 5.831 (28.81%) 281,893.2 1,643,719 ---------------------------------------------------------------------------------------------------------------------- QUASAR PORTFOLIO: Non-Qualified XIII 9.511 6.576 (30.86%) 21,950.4 144,346 Non-Qualified XIV 9.491 6.548 (31.01%) 13,069.5 85,579 Non-Qualified XV 9.482 6.534 (31.09%) 4,806.7 31,407 Non-Qualified XVI 8.589 5.916 (31.12%) 14,300.2 84,600 Non-Qualified XVIII 8.579 5.889 (31.36%) 5,622.7 33,112 Non-Qualified XIX 8.582 5.898 (31.27%) 18,743.6 110,550 ---------------------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VP FUNDS: BALANCED FUND: Non-Qualified VII 18.208 16.324 (10.35%) 120,651.4 1,969,513 ---------------------------------------------------------------------------------------------------------------------- INTERNATIONAL FUND: Non-Qualified VII 21.410 14.572 (31.94%) 190,879.1 2,781,490 Non-Qualified VIII 19.425 13.236 (31.86%) 182.5 2,416 ---------------------------------------------------------------------------------------------------------------------- CALVERT SOCIAL BALANCED PORTFOLIO: Non-Qualified V 21.647 18.874 (12.81%) 7,013.1 132,366 Non-Qualified V (0.75) 22.178 19.410 (12.48%) 15,130.8 293,689 Non-Qualified VII 12.089 10.528 (12.91%) 79,736.6 839,467 Non-Qualified VIII 12.146 10.589 (12.82%) 61,570.6 651,971 ---------------------------------------------------------------------------------------------------------------------- FEDERATED INSURANCE SERIES: AMERICAN LEADERS FUND II: Non-Qualified VII 24.983 21.785 (12.80%) 3,625,143.8 78,973,758 Non-Qualified VIII 17.966 15.684 (12.70%) 8,484.9 133,077 Annuity contracts in payment period 153,661 ---------------------------------------------------------------------------------------------------------------------- EQUITY INCOME FUND II: Non-Qualified VII 14.335 11.626 (18.90%) 1,460,425.3 16,978,904 Annuity contracts in payment period 55,962 ---------------------------------------------------------------------------------------------------------------------- GROWTH STRATEGIES FUND II: Non-Qualified VII 24.528 16.618 (32.25%) 1,171,573.2 19,469,203 ---------------------------------------------------------------------------------------------------------------------- HIGH INCOME BOND FUND II: Non-Qualified VII 13.493 12.852 (4.75%) 1,628,404.6 20,928,256 Non-Qualified VIII 11.464 10.932 (4.64%) 300.2 3,282 Annuity contracts in payment period 23,108 ---------------------------------------------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUND II: Non-Qualified VII 20.476 13.269 (35.20%) 812,411.3 10,779,886 Non-Qualified VIII 18.870 12.242 (35.12%) 127.9 1,566 Annuity contracts in payment period 47,455 ---------------------------------------------------------------------------------------------------------------------- PRIME MONEY FUND II: Non-Qualified VII 12.398 12.660 2.11% 687,422.7 8,702,772 ---------------------------------------------------------------------------------------------------------------------- U.S. GOVERNMENT SECURITIES FUND II: Non-Qualified VII 13.528 14.378 6.28% 849,830.1 12,218,857 ----------------------------------------------------------------------------------------------------------------------
S-17 VARIABLE ANNUITY ACCOUNT B CONDENSED FINANCIAL INFORMATION - Period Ended September 30, 2001 (Unaudited) (continued):
---------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End of at End of of Period Period Unit Period Period ---------------------------------------------------------------------------------------------------------------------- UTILITY FUND II: Non-Qualified VII $ 16.802 $ 14.690 (12.57%) 971,165.8 $ 14,266,426 Non-Qualified VIII 13.971 12.229 (12.47%) 65.6 802 Annuity contracts in payment period 44,705 ---------------------------------------------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO: Non-Qualified V 19.565 16.843 (13.91%) 281,149.0 4,735,393 Non-Qualified V (0.75) 20.045 17.321 (13.59%) 611,951.5 10,599,612 Non-Qualified VII 23.395 20.116 (14.02%) 4,793,520.1 96,426,450 Non-Qualified VIII 16.799 14.461 (13.92%) 890,806.0 12,881,945 Non-Qualified IX 19.384 16.656 (14.07%) 9,409.6 156,726 Non-Qualified X 19.565 16.843 (13.91%) 8,448.7 142,301 Non-Qualified XII 11.457 9.896 (13.62%) 1,803.2 17,844 Non-Qualified XIII 11.210 9.672 (13.72%) 1,801,440.8 17,423,535 Non-Qualified XIV 11.127 9.579 (13.91%) 2,386,419.7 22,859,514 Non-Qualified XV 11.086 9.532 (14.02%) 655,861.3 6,251,670 Non-Qualified XVI 10.654 9.157 (14.05%) 331,226.3 3,033,039 Non-Qualified XVIII 10.640 9.114 (14.34%) 61,181.6 557,609 Non-Qualified XIX 10.645 9.129 (14.24%) 315,818.6 2,883,108 ---------------------------------------------------------------------------------------------------------------------- GROWTH PORTFOLIO: Non-Qualified V 22.858 15.962 (30.17%) 489,437.3 7,812,398 Non-Qualified V (0.75) 23.418 16.415 (29.90%) 979,557.0 16,079,428 Non-Qualified VII 31.342 21.861 (30.25%) 3,319,805.0 72,574,258 Non-Qualified VIII 20.785 14.514 (30.17%) 795,605.6 11,547,419 Non-Qualified IX 22.646 15.785 (30.30%) 10,980.9 173,333 Non-Qualified X 22.858 15.962 (30.17%) 31,192.3 497,892 Non-Qualified XII 14.152 9.916 (29.93%) 7,133.5 70,736 Non-Qualified XIII 11.154 7.807 (30.01%) 1,605,585.5 12,534,806 Non-Qualified XIV 11.102 7.752 (30.17%) 1,548,254.6 12,002,070 Non-Qualified XV 11.076 7.726 (30.25%) 530,594.1 4,099,370 Non-Qualified XVI 8.554 5.964 (30.28%) 584,384.3 3,485,268 Non-Qualified XVII 23.250 16.292 (29.93%) 287.4 4,682 Non-Qualified XVIII 8.543 5.936 (30.52%) 118,381.9 702,715 Non-Qualified XIX 8.546 5.945 (30.44%) 471,202.4 2,801,298 ---------------------------------------------------------------------------------------------------------------------- HIGH INCOME PORTFOLIO: Non-Qualified VII 10.735 9.112 (15.12%) 1,851,183.8 16,867,987 Non-Qualified VIII 9.648 8.199 (15.02%) 440,465.4 3,611,376 Non-Qualified XIII 7.362 6.271 (14.82%) 854,358.0 5,357,679 Non-Qualified XIV 7.307 6.210 (15.01%) 1,008,776.2 6,264,500 Non-Qualified XV 7.280 6.180 (15.11%) 470,476.2 2,907,543 Non-Qualified XVI 8.470 7.187 (15.15%) 125,034.0 898,619 Non-Qualified XVIII 8.459 7.153 (15.44%) 53,756.7 384,522 Non-Qualified XIX 8.463 7.165 (15.34%) 64,350.6 461,072 Annuity contracts in payment period 805,762 ---------------------------------------------------------------------------------------------------------------------- OVERSEAS PORTFOLIO: Non-Qualified V 15.514 10.902 (29.73%) 843.1 9,191 Non-Qualified V (0.75) 15.894 11.025 (30.63%) 40,404.6 445,461 Non-Qualified VII 17.062 11.338 (33.55%) 194,437.0 2,204,527 Non-Qualified VIII 14.491 12.111 (16.42%) 508,257.9 6,155,511 Non-Qualified IX 15.370 10.297 (33.01%) 48,049.2 494,763 Non-Qualified XII 11.081 7.901 (28.70%) 42.4 335 ---------------------------------------------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS FUND II: ASSET MANAGER PORTFOLIO: Non-Qualified VII 18.456 16.163 (12.42%) 725,837.8 11,731,716 Non-Qualified VIII 15.387 13.491 (12.32%) 139,942.4 1,887,963 ---------------------------------------------------------------------------------------------------------------------- CONTRAFUND PORTFOLIO: Non-Qualified V 22.333 18.162 (18.68%) 349,882.3 6,354,563 Non-Qualified V (0.75) 22.881 18.677 (18.37%) 704,332.6 13,154,820
S-18 VARIABLE ANNUITY ACCOUNT B CONDENSED FINANCIAL INFORMATION - Period Ended September 30, 2001 (Unaudited) (continued):
---------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End of at End of of Period Period Unit Period Period ---------------------------------------------------------------------------------------------------------------------- CONTRAFUND PORTFOLIO: (continued): Non-Qualified VII $ 24.674 $ 20.041 (18.78%) 3,801,058.9 $ 76,177,022 Non-Qualified VIII 19.792 16.095 (18.68%) 621,628.7 10,005,114 Non-Qualified IX 22.126 17.960 (18.83%) 20,564.1 369,331 Non-Qualified X 22.333 18.162 (18.68%) 11,129.1 202,127 Non-Qualified XII 12.772 10.422 (18.40%) 7,887.9 82,208 Non-Qualified XIII 11.993 9.775 (18.49%) 2,057,423.2 20,111,312 Non-Qualified XIV 11.904 9.681 (18.67%) 2,556,324.0 24,747,773 Non-Qualified XV 11.860 9.634 (18.77%) 1,049,360.1 10,109,535 Non-Qualified XVI 9.440 7.665 (18.80%) 225,398.3 1,727,678 Non-Qualified XVII 25.197 20.562 (18.40%) 4,890.5 100,558 Non-Qualified XVIII 9.428 7.629 (19.08%) 60,069.9 458,273 Non-Qualified XIX 9.432 7.641 (18.99%) 219,164.5 1,674,636 ---------------------------------------------------------------------------------------------------------------------- INDEX 500 PORTFOLIO: Non-Qualified VII 24.151 18.985 (21.39%) 4,179,540.8 79,348,583 Non-Qualified VIII 20.173 15.876 (21.30%) 941,399.3 14,945,655 ---------------------------------------------------------------------------------------------------------------------- INVESTMENT GRADE BOND PORTFOLIO: Non-Qualified VII 13.317 14.281 7.24% 230,249.6 3,288,194 Non-Qualified VIII 12.998 13.955 7.36% 281.6 3,930 ---------------------------------------------------------------------------------------------------------------------- JANUS ASPEN SERIES: AGGRESSIVE GROWTH PORTFOLIO: Non-Qualified V 30.628 16.165 (47.22%) 850,920.1 13,755,123 Non-Qualified V (0.75) 31.380 16.624 (47.02%) 1,176,762.0 19,562,492 Non-Qualified VII 30.497 16.076 (47.29%) 2,212,854.1 35,573,842 Non-Qualified VIII 21.226 11.202 (47.23%) 515,174.1 5,770,980 Non-Qualified IX 30.344 15.985 (47.32%) 26,906.6 430,102 Non-Qualified X 30.628 16.165 (47.22%) 35,764.7 578,137 Non-Qualified XII 17.646 9.345 (47.04%) 21,616.5 202,006 Non-Qualified XIII 16.650 8.807 (47.11%) 2,645,795.5 23,301,521 Non-Qualified XIV 16.527 8.722 (47.23%) 2,272,370.8 19,819,618 Non-Qualified XV 16.466 8.680 (47.29%) 874,003.7 7,586,352 Non-Qualified XVI 6.975 3.675 (47.31%) 584,472.7 2,147,937 Non-Qualified XVII 36.266 19.207 (47.04%) 2,629.7 50,509 Non-Qualified XVIII 6.966 3.658 (47.49%) 230,884.6 844,576 Non-Qualified XIX 6.969 3.664 (47.42%) 453,019.9 1,659,865 ---------------------------------------------------------------------------------------------------------------------- BALANCED PORTFOLIO: Non-Qualified V 24.030 21.635 (9.97%) 557,206.1 12,055,155 Non-Qualified V (0.75) 24.619 22.249 (9.63%) 755,058.7 16,799,301 Non-Qualified VII 26.630 23.947 (10.08%) 2,701,838.3 64,700,921 Non-Qualified VIII 21.234 19.116 (9.97%) 765,708.5 14,637,283 Non-Qualified IX 23.807 21.394 (10.14%) 8,860.6 189,563 Non-Qualified X 24.030 21.635 (9.97%) 27,720.9 599,741 Non-Qualified XII 14.043 12.687 (9.66%) 5,022.8 63,724 Non-Qualified XIII 13.308 12.008 (9.77%) 3,476,889.1 41,750,484 Non-Qualified XIV 13.210 11.892 (9.98%) 4,047,055.0 48,127,578 Non-Qualified XV 13.161 11.835 (10.08%) 1,481,637.7 17,535,182 Non-Qualified XVI 9.746 8.760 (10.12%) 624,263.9 5,468,552 Non-Qualified XVIII 9.734 8.720 (10.42%) 144,174.5 1,257,202 Non-Qualified XIX 9.738 8.733 (10.32%) 436,983.5 3,816,177 ---------------------------------------------------------------------------------------------------------------------- FLEXIBLE INCOME PORTFOLIO: Non-Qualified V 16.331 17.370 6.36% 106,784.5 1,854,846 Non-Qualified V (0.75) 16.731 17.863 6.77% 311,401.7 5,562,569 Non-Qualified VII 16.170 17.179 6.24% 774,708.0 13,308,709 Non-Qualified VIII 13.554 14.415 6.35% 214,076.6 3,085,914 Non-Qualified IX 16.179 17.177 6.17% 1,336.0 22,949 Non-Qualified X 16.331 17.370 6.36% 3,109.8 54,017 Non-Qualified XII 10.967 11.705 6.73% 1,453.9 17,018 ----------------------------------------------------------------------------------------------------------------------
S-19 VARIABLE ANNUITY ACCOUNT B CONDENSED FINANCIAL INFORMATION - Period Ended September 30, 2001 (Unaudited) (continued):
---------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End of at End of of Period Period Unit Period Period ---------------------------------------------------------------------------------------------------------------------- GROWTH PORTFOLIO: Non-Qualified V $ 24.782 $ 16.327 (34.12%) 461,197.8 $ 7,529,977 Non-Qualified V (0.75) 25.390 16.790 (33.87%) 728,931.8 12,238,765 Non-Qualified VII 29.345 19.310 (34.20%) 2,429,929.5 46,921,939 Non-Qualified VIII 20.951 13.802 (34.12%) 498,516.0 6,880,518 Non-Qualified IX 24.552 16.145 (34.24%) 10,735.7 173,328 Non-Qualified X 24.782 16.327 (34.12%) 48,309.7 788,752 Non-Qualified XII 13.829 9.142 (33.89%) 20,146.4 184,178 Non-Qualified XIII 13.203 8.718 (33.97%) 3,036,104.3 26,468,757 Non-Qualified XIV 13.106 8.634 (34.12%) 4,049,729.7 34,965,366 Non-Qualified XV 13.057 8.592 (34.20%) 1,339,738.6 11,511,034 Non-Qualified XVI 8.308 5.465 (34.22%) 364,573.8 1,992,396 Non-Qualified XVII 27.143 17.944 (33.89%) 570.2 10,231 Non-Qualified XVIII 8.298 5.439 (34.45%) 134,521.4 731,662 Non-Qualified XIX 8.301 5.448 (34.37%) 464,741.9 2,531,914 Annuity contracts in payment period 9,513,456 ---------------------------------------------------------------------------------------------------------------------- WORLDWIDE GROWTH PORTFOLIO: Non-Qualified V 28.839 19.651 (31.86%) 783,135.8 15,389,402 Non-Qualified V (0.75) 29.545 20.208 (31.60%) 1,476,983.0 29,846,872 Non-Qualified VII 32.413 22.060 (31.94%) 5,688,925.2 125,497,689 Non-Qualified VIII 23.476 15.995 (31.87%) 1,017,318.9 16,272,016 Non-Qualified IX 28.571 19.432 (31.99%) 30,788.8 598,287 Non-Qualified X 28.839 19.651 (31.86%) 39,473.1 775,685 Non-Qualified XII 13.899 9.503 (31.63%) 29,628.5 281,560 Non-Qualified XIII 13.030 8.898 (31.71%) 4,532,308.8 40,328,484 Non-Qualified XIV 12.934 8.813 (31.86%) 4,590,937.3 40,459,930 Non-Qualified XV 12.886 8.770 (31.94%) 1,374,084.7 12,050,723 Non-Qualified XVI 8.570 5.830 (31.97%) 817,553.0 4,766,334 Non-Qualified XVII 32.317 22.097 (31.62%) 2,133.4 47,141 Non-Qualified XVIII 8.559 5.803 (32.20%) 199,181.8 1,155,852 Non-Qualified XIX 8.563 5.812 (32.13%) 814,830.0 4,735,792 Annuity contracts in payment period 10,492,405 ---------------------------------------------------------------------------------------------------------------------- MFS FUNDS: GLOBAL GOVERNMENT SERIES: Non-Qualified VII 10.799 11.193 3.65% 132,672.7 1,485,005 Non-Qualified VIII 10.875 11.286 3.78% 33,139.4 374,011 ---------------------------------------------------------------------------------------------------------------------- TOTAL RETURN SERIES: Non-Qualified VII 16.782 15.770 (6.03%) 2,088,500.4 32,935,652 Non-Qualified VIII 16.901 15.900 (5.92%) 475,578.1 7,561,691 Non-Qualified XIII 11.934 11.253 (5.71%) 989,330.1 11,132,932 Non-Qualified XIV 11.846 11.145 (5.92%) 1,628,167.6 18,145,928 Non-Qualified XV 11.803 11.091 (6.03%) 496,165.7 5,502,974 Non-Qualified XVI 10.763 10.110 (6.07%) 500,307.3 5,058,107 Non-Qualified XVIII 10.749 10.063 (6.38%) 136,033.1 1,368,901 Non-Qualified XIX 10.754 10.079 (6.28%) 292,432.4 2,947,426 ---------------------------------------------------------------------------------------------------------------------- MITCHELL HUTCHINS SERIES TRUST: GROWTH AND INCOME PORTFOLIO: Non-Qualified XIII 10.338 9.292 (10.12%) 4,187.5 38,910 Non-Qualified XIV 10.285 9.224 (10.32%) 82,654.2 762,402 Non-Qualified XV 10.258 9.190 (10.41%) 4,214.7 38,733 Non-Qualified XVI 9.658 8.751 (9.39%) (2) 1,635.1 14,309 ---------------------------------------------------------------------------------------------------------------------- SMALL CAP PORTFOLIO: Non-Qualified XIV 13.334 10.340 (22.45%) 14,667.7 151,664 Non-Qualified XV 13.299 10.302 (22.54%) 392.7 4,046 ---------------------------------------------------------------------------------------------------------------------- TACTICAL ALLOCATION PORTFOLIO: Non-Qualified XIII 10.326 8.118 (21.38%) 263,231.0 2,136,909 Non-Qualified XIV 10.273 8.058 (21.56%) 1,062,013.5 8,557,705 Non-Qualified XV 10.247 8.028 (21.66%) 99,887.4 801,896
S-20 VARIABLE ANNUITY ACCOUNT B CONDENSED FINANCIAL INFORMATION - Period Ended September 30, 2001 (Unaudited) (continued):
---------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End of at End of of Period Period Unit Period Period ---------------------------------------------------------------------------------------------------------------------- TACTICAL ALLOCATION PORTFOLIO: (continued): Non-Qualified XVI $ 9.567 $ 7.493 (21.68%) 150,640.1 $ 1,128,746 Non-Qualified XVIII 9.555 7.458 (21.95%) 58,491.3 436,228 Non-Qualified XIX 9.559 7.469 (21.86%) 65,338.3 488,012 ---------------------------------------------------------------------------------------------------------------------- OPPENHEIMER FUNDS: AGGRESSIVE GROWTH FUND/VA: Non-Qualified VII 21.423 13.399 (37.46%) 856,280.4 11,473,301 Non-Qualified VIII 21.545 13.491 (37.38%) 267,950.7 3,614,923 Non-Qualified XIII 14.970 9.396 (37.23%) 736,950.6 6,924,388 Non-Qualified XIV 14.860 9.305 (37.38%) 793,805.3 7,386,358 Non-Qualified XV 14.805 9.260 (37.45%) 256,742.9 2,377,439 Non-Qualified XVI 6.828 4.269 (37.48%) 581,003.0 2,480,302 Non-Qualified XVIII 6.820 4.249 (37.70%) 357,429.0 1,518,716 Non-Qualified XIX 6.823 4.256 (37.62%) 288,552.6 1,228,080 Annuity contracts in payment period 1,034,378 ---------------------------------------------------------------------------------------------------------------------- GLOBAL SECURITIES FUND/VA: Non-Qualified V 16.275 12.133 (25.45%) 93,701.7 1,136,883 Non-Qualified V (0.75) 16.495 12.343 (25.17%) 240,512.8 2,968,649 Non-Qualified VII 21.023 15.654 (25.54%) 503,444.6 7,880,922 Non-Qualified VIII 21.142 15.761 (25.45%) 90,234.9 1,422,193 Non-Qualified IX 16.166 12.030 (25.58%) 4,500.7 54,144 Non-Qualified XII 16.571 12.396 (25.19%) 3,212.0 39,816 ---------------------------------------------------------------------------------------------------------------------- MAIN STREET GROWTH & INCOME FUND/VA: Non-Qualified VII 14.248 11.746 (17.56%) 1,895,302.6 22,262,224 Non-Qualified VIII 14.329 11.826 (17.47%) 614,009.6 7,261,277 Non-Qualified XIII 9.891 8.182 (17.28%) 839,548.5 6,869,186 Non-Qualified XIV 9.818 8.103 (17.47%) 1,601,979.8 12,980,842 Non-Qualified XV 9.782 8.064 (17.56%) 537,631.9 4,335,464 Non-Qualified XVI 8.838 7.283 (17.59%) 244,505.4 1,780,733 Non-Qualified XVIII 8.827 7.249 (17.88%) 87,438.4 633,841 Non-Qualified XIX 8.831 7.260 (17.79%) 223,864.2 1,625,254 Annuity contracts in payment period 1,929,593 ---------------------------------------------------------------------------------------------------------------------- STRATEGIC BOND FUND/VA: Non-Qualified V 10.185 10.144 (0.40%) 9,100.5 92,315 Non-Qualified V (0.75) 10.323 10.320 (0.03%) 16,517.2 170,458 Non-Qualified VII 11.206 11.147 (0.53%) 779,705.1 8,691,373 Non-Qualified VIII 11.269 11.224 (0.40%) 236,378.4 2,653,111 Non-Qualified IX 10.117 10.153 0.36% 543,540.2 5,518,564 Non-Qualified XIII 10.171 10.058 (1.11%) 152.5 1,534 Non-Qualified XIV 10.096 10.055 (0.41%) 552,742.3 5,557,824 Non-Qualified XV 10.059 10.007 (0.52%) 189,679.3 1,898,121 Non-Qualified XVI 9.939 9.884 (0.55%) 106,969.3 1,057,285 Non-Qualified XVIII 9.927 9.838 (0.90%) 27,958.0 275,051 Non-Qualified XIX 9.931 9.853 (0.79%) 63,179.7 622,510 Annuity contracts in payment period 600,975 ---------------------------------------------------------------------------------------------------------------------- PILGRIM FUNDS: EMERGING MARKETS FUND: Non-Qualified VII 8.011 5.747 (28.26%) 131,760.2 757,226 ---------------------------------------------------------------------------------------------------------------------- NATURAL RESOURCES TRUST: Non-Qualified V 14.530 10.208 (29.75%) 41,259.9 421,181 Non-Qualified V (0.75) 14.886 10.497 (29.48%) 41,470.9 435,320 Non-Qualified VII 14.354 10.072 (29.83%) 87,075.8 877,027 Non-Qualified IX 14.395 10.094 (29.88%) 32.4 327 Non-Qualified X 14.530 10.208 (29.75%) 1,753.0 17,895 ---------------------------------------------------------------------------------------------------------------------- PILGRIM VARIABLE FUNDS: GROWTH OPPORTUNITIES PORTFOLIO: Non-Qualified XIII 9.367 6.922 (26.10%) (6) 3,954.3 27,372 Non-Qualified XIV 10.031 6.913 (31.08%) (5) 3,590.6 24,822
S-21 VARIABLE ANNUITY ACCOUNT B CONDENSED FINANCIAL INFORMATION - Period Ended September 30, 2001 (Unaudited) (continued):
---------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End of at End of of Period Period Unit Period Period ---------------------------------------------------------------------------------------------------------------------- GROWTH OPPORTUNITIES PORTFOLIO: (continued): Non-Qualified XV $ 10.086 $ 6.909 (31.50%) (4) 880.9 $ 6,086 Non-Qualified XVI 8.467 6.907 (18.42%) (7) 3,300.4 22,796 Non-Qualified XIX 9.970 6.898 (30.81%) (4) 222.8 1,537 ---------------------------------------------------------------------------------------------------------------------- MAGNA CAP PORTFOLIO: Non-Qualified XIII 9.602 8.577 (10.67%) (5) 20,946.6 179,659 Non-Qualified XIV 9.567 8.566 (10.46%) (5) 2,862.2 24,518 Non-Qualified XV 9.624 8.560 (11.06%) (5) 196.4 1,681 Non-Qualified XVI 9.883 8.558 (13.41%) (4) 7,859.7 67,263 ---------------------------------------------------------------------------------------------------------------------- MID CAP OPPORTUNITIES PORTFOLIO: Non-Qualified XIII 10.181 6.921 (32.02%) (4) 19,921.4 137,876 Non-Qualified XIV 10.125 6.912 (31.73%) (4) 12,080.6 83,501 Non-Qualified XV 9.402 6.908 (26.53%) (5) 2,166.3 14,965 Non-Qualified XVI 10.001 6.906 (30.95%) (4) 9,028.2 62,349 Non-Qualified XIX 9.630 6.897 (28.38%) (6) 8,846.0 61,011 ---------------------------------------------------------------------------------------------------------------------- SMALL CAP OPPORTUNITIES PORTFOLIO: Non-Qualified XIII 10.065 7.262 (27.85%) (4) 53,681.8 389,837 Non-Qualified XIV 10.064 7.253 (27.93%) (4) 20,243.9 146,829 Non-Qualified XV 11.291 7.248 (35.81%) (4) 7,012.1 50,824 Non-Qualified XVI 10.136 7.246 (28.51%) (4) 13,039.7 94,486 Non-Qualified XVIII 10.175 7.232 (28.92%) (4) 1,226.2 8,868 Non-Qualified XIX 9.638 7.237 (24.91%) (6) 3,663.4 26,512 ---------------------------------------------------------------------------------------------------------------------- PORTFOLIO PARTNERS, INC. (PPI): PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO: Non-Qualified V 36.551 22.937 (37.25%) 310,069.5 7,112,065 Non-Qualified V (0.75) 37.448 23.587 (37.01%) 224,268.3 5,289,817 Non-Qualified VII 17.303 10.845 (37.32%) 1,116,505.1 12,108,498 Non-Qualified VIII 17.385 10.909 (37.25%) 314,906.7 3,435,317 Non-Qualified IX 36.213 22.681 (37.37%) 3,198.7 72,549 Non-Qualified X 36.551 22.937 (37.25%) 9,292.5 213,143 Non-Qualified XII 14.714 9.265 (37.03%) 4,334.4 40,158 Non-Qualified XIII 14.030 8.823 (37.11%) 852,260.5 7,519,494 Non-Qualified XIV 13.926 8.738 (37.25%) 935,039.9 8,170,379 Non-Qualified XV 13.875 8.696 (37.33%) 261,747.1 2,276,153 Non-Qualified XVI 8.801 5.514 (37.35%) 313,234.9 1,727,177 Non-Qualified XVII 40.304 25.378 (37.03%) 374.8 9,512 Non-Qualified XVIII 8.790 5.488 (37.57%) 129,457.5 710,463 Non-Qualified XIX 8.794 5.497 (37.49%) 231,280.7 1,271,350 Annuity contracts in payment period 3,662,581 ---------------------------------------------------------------------------------------------------------------------- PPI MFS EMERGING EQUITIES PORTFOLIO: Non-Qualified V 20.426 12.009 (41.21%) 420,463.6 5,049,347 Non-Qualified V (0.75) 20.927 12.350 (40.99%) 456,552.4 5,638,422 Non-Qualified VII 19.644 11.536 (41.27%) 3,720,936.3 42,924,721 Non-Qualified VIII 13.372 7.861 (41.21%) 537,150.6 4,222,541 Non-Qualified IX 20.236 11.876 (41.31%) 7,698.8 91,431 Non-Qualified X 20.426 12.009 (41.21%) 15,456.0 185,611 Non-Qualified XII 11.453 6.757 (41.00%) 2,148.3 14,516 Non-Qualified XIII 10.933 6.442 (41.08%) 889,003.6 5,726,961 Non-Qualified XIV 10.853 6.380 (41.21%) 1,052,857.1 6,717,228 Non-Qualified XV 10.812 6.349 (41.28%) 322,053.6 2,044,718 Non-Qualified XVI 7.614 4.470 (41.29%) 128,331.5 573,642 Non-Qualified XVII 20.274 11.961 (41.00%) 380.3 4,549 Non-Qualified XVIII 7.605 4.449 (41.50%) 75,551.6 336,129 Non-Qualified XIX 7.608 4.456 (41.43%) 169,847.2 756,839 Annuity contracts in payment period 1,757,316 ---------------------------------------------------------------------------------------------------------------------- PPI MFS RESEARCH GROWTH PORTFOLIO: Non-Qualified V 17.889 12.481 (30.23%) 366,114.6 4,569,476 Non-Qualified V (0.75) 18.328 12.835 (29.97%) 281,816.3 3,617,112
S-22 VARIABLE ANNUITY ACCOUNT B CONDENSED FINANCIAL INFORMATION - Period Ended September 30, 2001 (Unaudited) (continued):
---------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End of at End of of Period Period Unit Period Period ---------------------------------------------------------------------------------------------------------------------- PPI MFS RESEARCH GROWTH PORTFOLIO: (continued): Non-Qualified VI $ 15.133 $ 10.562 (30.21%) 21,905.5 $ 231,366 Non-Qualified VII 17.659 12.306 (30.31%) 2,874,930.4 35,378,893 Non-Qualified VIII 12.169 8.489 (30.24%) 524,055.4 4,448,706 Non-Qualified IX 17.723 12.342 (30.36%) 12,641.0 156,015 Non-Qualified X 17.889 12.481 (30.23%) 143,758.6 1,794,251 Non-Qualified XI 15.133 10.562 (30.21%) 1,303.1 13,763 Non-Qualified XIII 11.755 8.219 (30.08%) 407,856.8 3,352,175 Non-Qualified XIV 11.668 8.140 (30.24%) 780,767.9 6,355,451 Non-Qualified XV 11.625 8.101 (30.31%) 251,074.1 2,033,951 Non-Qualified XVI 8.726 6.078 (30.35%) 160,345.2 974,578 Non-Qualified XVIII 8.715 6.050 (30.58%) 49,267.4 298,068 Non-Qualified XIX 8.719 6.060 (30.50%) 128,326.7 777,660 ---------------------------------------------------------------------------------------------------------------------- PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO: Non-Qualified V 26.160 18.276 (30.14%) 258,345.1 4,721,515 Non-Qualified V (0.75) 26.801 18.795 (29.87%) 243,494.2 4,576,473 Non-Qualified VII 14.415 10.059 (30.22%) 219,953.9 2,212,516 Non-Qualified VIII 14.482 10.117 (30.14%) 60,546.9 612,553 Non-Qualified IX 25.917 18.073 (30.27%) 3,711.7 67,081 Non-Qualified X 26.160 18.276 (30.14%) 2,388.8 43,658 Non-Qualified XIII 11.557 8.092 (29.98%) 810,913.0 6,561,908 Non-Qualified XIV 11.472 8.014 (30.14%) 713,324.3 5,716,581 Non-Qualified XV 11.430 7.976 (30.22%) 396,866.0 3,165,403 Non-Qualified XVI 9.775 6.818 (30.25%) 169,046.3 1,152,558 Non-Qualified XVIII 9.763 6.787 (30.48%) 11,520.8 78,192 Non-Qualified XIX 9.767 6.797 (30.41%) 67,253.9 457,125 Annuity contracts in payment period 812,063 ---------------------------------------------------------------------------------------------------------------------- PPI T. ROWE PRICE GROWTH EQUITY PORTFOLIO: Non-Qualified V 21.643 16.651 (23.07%) 9,091.3 151,380 Non-Qualified V (0.75) 22.174 16.838 (24.06%) 213,011.8 3,586,692 Non-Qualified VII 27.438 17.316 (36.89%) 249,196.4 4,315,085 Non-Qualified VIII 19.893 21.321 7.18% 3,081,319.7 65,696,817 Non-Qualified IX 21.443 15.476 (27.83%) 278,301.6 4,306,996 Non-Qualified X 21.643 16.838 (22.20%) 5,019.1 84,511 Non-Qualified XII 13.138 10.256 (21.94%) 1,772.5 18,179 Non-Qualified XVII 25.061 19.564 (21.93%) 943.9 18,467 Annuity contracts in payment period 1,479,854 ---------------------------------------------------------------------------------------------------------------------- PRUDENTIAL JENNISON PORTFOLIO: Non-Qualified XIII 9.126 7.628 (16.41%) (6) 363.0 2,769 Non-Qualified XIV 9.208 7.618 (17.27%) (6) 604.0 4,601 Non-Qualified XV 9.047 7.613 (15.85%) (6) 437.4 3,330 Non-Qualified XVI 8.978 7.612 (15.21%) (6) 125.1 952 Non-Qualified XIX 9.109 7.602 (16.54%) (6) 2,488.4 18,917 ---------------------------------------------------------------------------------------------------------------------- SP JENNISON INTERNATIONAL GROWTH PORTFOLIO: Non-Qualified XIII 8.107 6.984 (13.85%) (7) 15,540.2 108,533 Non-Qualified XIV 9.347 6.975 (25.38%) (5) 122.9 857 Non-Qualified XVI 8.170 6.969 (14.70%) (6) 304.1 2,119 Non-Qualified XIX 8.295 6.960 (16.09%) (6) 1,175.6 8,182 ---------------------------------------------------------------------------------------------------------------------- TOTAL $5,426,770,281 ======================================================================================================================
NON-QUALIFIED 1964 Individual contracts issued from December 1, 1964 to March 14, 1967. NON-QUALIFIED V Certain AetnaPlus contracts issued in connection with Deferred Compensation Plans issued since August 28, 1992, and certain individual non-qualified contracts. NON-QUALIFIED VI Certain existing contracts that were converted to ACES, an administrative system (previously valued under Non-Qualified I).
S-23 VARIABLE ANNUITY ACCOUNT B CONDENSED FINANCIAL INFORMATION - Period Ended September 30, 2001 (Unaudited) (continued): NON-QUALIFIED VII Certain individual and group contracts issued as non-qualified deferred annuity contracts or Individual Retirement Annuity contracts issued since May 4, 1994. NON-QUALIFIED VIII Certain individual Retirement Annuity contracts issued since May 1, 1998. NON-QUALIFIED IX Group Aetna Plus contracts assessing an administrative expense charge effective April 7, 1997 issued in connection with Deferred Compensation Plans. NON-QUALIFIED X Group AetnaPlus contracts containing contractual limits on fees, issued in connection with Deferred Compensation Plans and as individual non-qualified contracts, resulting in reduced daily charges for certain funding options effective May 29, 1997. NON-QUALIFIED XI Certain contracts, previously valued under Non-Qualified VI, containing contractual limits on fees, resulting in reduced daily charges for certain funding options effective May 29, 1997. NON-QUALIFIED XIII Certain individual Retirement Annuity contracts issued since October 1, 1998. NON-QUALIFIED XIV Certain individual Retirement Annuity contracts issued since September 1, 1998. NON-QUALIFIED XV Certain individual Retirement Annuity contracts issued since September 1, 1998. NON-QUALIFIED XVI Certain individual Retirement Annuity contracts issued since August 2000. NON-QUALIFIED XVII Group AetnaPlus contracts issued in connection with Deferred Compensation Plans having contract modifications effective September 1, 1999. NON-QUALIFIED XVIII Certain individual Retirement Annuity contracts issued since September 2000. NON-QUALIFIED XIX Certain individual Retirement Annuity contracts issued since August 2000.
NOTES TO CONDENSED FINANCIAL INFORMATION: (1) - Reflects less than a full year of performance activity. Funds were first received in this option during January 2001. (2) - Reflects less than a full year of performance activity. Funds were first received in this option during March 2001. (3) - Reflects less than a full year of performance activity. Funds were first received in this option during April 2001. (4) - Reflects less than a full year of performance activity. Funds were first received in this option during May 2001. (5) - Reflects less than a full year of performance activity. Funds were first received in this option during June 2001. (6) - Reflects less than a full year of performance activity. Funds were first received in this option during July 2001. (7) - Reflects less than a full year of performance activity. Funds were first received in this option during August 2001. (8) - Reflects less than a full year of performance activity. Funds were first received in this option during September 2001.
See Notes to Financial Statements S-24 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS - September 30, 2001 (Unaudited): 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Variable Annuity Account B (the "Account") is a separate account established by Aetna Life Insurance and Annuity Company (the "Company") registered under the Investment Company Act of 1940 as a unit investment trust. The Account is sold exclusively for use with variable annuity contracts that may be entitled to tax-deferred treatment under specific sections of the Internal Revenue Code of 1986, as amended. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported therein. Actual results could differ from these estimates. Certain reclassifications have been made to prior year financial information to conform to current year presentation. a. VALUATION OF INVESTMENTS Investments in the following Funds are stated at the closing net asset value per share as determined by each Fund on September 30, 2001: Aetna Ascent VP American Century VP Funds: Aetna Balanced VP, Inc. - Balanced Fund Aetna Bond VP - International Fund Aetna Crossroads VP Calvert Social Balanced Portfolio Aetna GET Fund, Series C Federated Insurance Series: Aetna GET Fund, Series D - American Leaders Fund II Aetna GET Fund, Series E - Equity Income Fund II Aetna GET Fund, Series G - Growth Strategies Fund II Aetna GET Fund, Series H - High Income Bond Fund II Aetna GET Fund, Series I - International Equity Fund II Aetna GET Fund, Series J - Prime Money Fund II Aetna GET Fund, Series K - U.S. Government Securities Fund II Aetna GET Fund, Series L - Utility Fund II Aetna GET Fund, Series M Fidelity Variable Insurance Products Fund: Aetna GET Fund, Series N - Equity-Income Portfolio Aetna GET Fund, Series P - Growth Portfolio Aetna Growth and Income VP - High Income Portfolio Aetna Growth VP - Overseas Portfolio Aetna Index Plus Large Cap VP Fidelity Variable Insurance Products Fund II: Aetna Index Plus Mid Cap VP - Asset Manager Portfolio Aetna Index Plus Small Cap VP - Contrafund Portfolio Aetna International VP - Index 500 Portfolio Aetna Legacy VP - Investment Grade Bond Portfolio Aetna Money Market VP Janus Aspen Series: Aetna Small Company VP - Aggressive Growth Portfolio Aetna Technology VP - Balanced Portfolio Aetna Value Opportunity VP - Flexible Income Portfolio AIM V.I. Funds: - Growth Portfolio - Capital Appreciation Fund - Worldwide Growth Portfolio - Government Securities Fund MFS Funds: - Growth and Income Fund - Global Government Series - Growth Fund - Total Return Series - Value Fund Mitchell Hutchins Series Trust: Alger American Funds: - Growth and Income Portfolio - Balanced Portfolio - Small Cap Portfolio - Income & Growth Portfolio - Tactical Allocation Portfolio - Leveraged AllCap Portfolio Oppenheimer Funds: Alliance Funds: - Aggressive Growth Fund/VA - Growth and Income Portfolio - Global Securities Fund/VA - Premier Growth Portfolio - Main Street Growth & Income Fund/VA - Quasar Portfolio - Strategic Bond Fund/VA
S-25 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS - September 30, 2001 (Unaudited) (continued): a. VALUATION OF INVESTMENTS (continued) Pilgrim Funds: Portfolio Partners, Inc. (PPI): - Emerging Markets Fund - PPI MFS Capital Opportunities Portfolio - Natural Resources Trust Fund - PPI MFS Emerging Equities Portfolio Pilgrim Variable Funds: - PPI MFS Research Growth Portfolio - Growth Opportunities Portfolio - PPI Scudder International Growth Portfolio - Magna Cap Portfolio - PPI T. Rowe Price Growth Equity Portfolio - Mid Cap Opportunities Portfolio Prudential Jennison Portfolio - Small Cap Opportunities Portfolio SP Jennison International Growth Portfolio
b. OTHER Investment transactions are accounted for on a trade date basis and dividend income is recorded on the ex-dividend date. The cost of investments sold is determined by specific identification. c. FEDERAL INCOME TAXES The operations of the Account form a part of, and are taxed with, the total operations of the Company which is taxed as a life insurance company under the Internal Revenue Code of 1986, as amended. d. ANNUITY RESERVES Annuity reserves held in the Separate Accounts are computed for currently payable contracts according to the Progressive Annuity, a49, 1971 Individual Annuity Mortality, 1971 Group Annuity Mortality, 83a, and 1983 Group Annuity Mortality tables using various assumed interest rates not to exceed seven percent. Mortality experience is monitored by the Company. Charges to annuity reserves for mortality experience are reimbursed to the Company if the reserves required are less than originally estimated. If additional reserves are required, the Company reimburses the Account. 2. VALUATION PERIOD DEDUCTIONS Deductions by the Account for mortality and expense risk charges are made in accordance with the terms of the contracts and are paid to the Company. 3. DIVIDEND INCOME On an annual basis, the Funds distribute substantially all of their taxable income and realized capital gains to their shareholders. Distributions to the Account are automatically reinvested in shares of the Funds. The Account's proportionate share of each Fund's undistributed net investment income (distributions in excess of net investment income) and accumulated net realized gain (loss) on investments is included in net unrealized gain (loss) in the Statement of Operations. 4. PURCHASES AND SALES OF INVESTMENTS The cost of purchases and proceeds from sales of investments other than short-term investments for the period ended September 30, 2001 aggregated $2,323,276,257 and $1,869,054,028, respectively. S-26 [This page intentionally left blank] VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2001 (Unaudited and continued): 5. SUPPLEMENTAL INFORMATION TO STATEMENT OF OPERATIONS Valuation Proceeds Cost of PERIOD ENDED Period from Investments SEPTEMBER 30, 2001 Dividends Deductions Sales Sold AETNA ASCENT VP Annuity contracts in accumulation $ 249,636 $ (148,487) $ 1,991,142 $ (2,133,434) AETNA BALANCED VP, INC. Annuity contracts in accumulation 7,963,570 (1,709,762) 17,603,327 (23,225,988) AETNA BOND VP Annuity contracts in accumulation 145,777 (1,006,780) 13,516,744 (13,132,178) AETNA CROSSROADS VP Annuity contracts in accumulation 481,864 (184,077) 2,566,576 (2,660,596) AETNA GET FUND, SERIES C Annuity contracts in accumulation 318,853 (43,334) 183,815 (238,663) AETNA GET FUND, SERIES D Annuity contracts in accumulation 1,801,027 (1,373,781) 9,724,991 (10,048,727) AETNA GET FUND, SERIES E Annuity contracts in accumulation 2,482,472 (4,008,280) 28,907,375 (30,545,102) AETNA GET FUND, SERIES G Annuity contracts in accumulation 684,964 (2,277,605) 13,762,066 (14,155,939) AETNA GET FUND, SERIES H Annuity contracts in accumulation 643,089 (1,724,437) 8,776,698 (9,075,168) AETNA GET FUND, SERIES I Annuity contracts in accumulation 225,593 (1,152,094) 4,897,205 (5,084,437) AETNA GET FUND, SERIES J Annuity contracts in accumulation 136,636 (986,730) 5,015,249 (5,260,304) AETNA GET FUND, SERIES K Annuity contracts in accumulation 3,658 (1,315,165) 3,946,318 (4,028,185) AETNA GET FUND, SERIES L Annuity contracts in accumulation 821 (923,642) 6,206,610 (6,073,868) AETNA GET FUND, SERIES M Annuity contracts in accumulation 0 (757,527) 2,806,800 (2,834,495) AETNA GET FUND, SERIES N Annuity contracts in accumulation 0 (94,374) 1,050,823 (1,057,061) AETNA GET FUND, SERIES P Annuity contracts in accumulation 0 (802) 2,486,132 (2,486,292) AETNA GROWTH AND INCOME VP Annuity contracts in accumulation 24,937 (6,368,232) 146,159,470 (235,191,330) AETNA GROWTH VP Annuity contracts in accumulation 8,313,560 (574,765) 72,623,004 (102,742,999) AETNA INDEX PLUS LARGE CAP VP Annuity contracts in accumulation 8,020,627 (2,176,516) 80,785,550 (107,932,797) --------------------------------------------------------------------------------------
S-27 Net Net Net Net Unrealized Change in Increase Realized Gain (Loss) Unrealized (Decrease) in Gain (Loss) ------------------------------ Gain (Loss) Net Assets PERIOD ENDED on Beginning End of on Resulting from SEPTEMBER 30, 2001 Investments of Period Period Investments Operations AETNA ASCENT VP Annuity contracts in accumulation $ (142,292) $ 88,271 $ (2,998,671) $ (3,086,942) $ (3,128,085) AETNA BALANCED VP, INC. Annuity contracts in accumulation (5,622,661) (26,671,998) (49,820,855) (23,148,857) (22,517,710) AETNA BOND VP Annuity contracts in accumulation 384,566 292,798 8,926,666 8,633,868 8,157,431 AETNA CROSSROADS VP Annuity contracts in accumulation (94,020) 96,848 (2,681,530) (2,778,378) (2,574,611) AETNA GET FUND, SERIES C Annuity contracts in accumulation (54,848) (1,291,730) (2,778,292) (1,486,562) (1,265,891) AETNA GET FUND, SERIES D Annuity contracts in accumulation (323,736) (5,506,290) (6,261,835) (755,545) (652,035) AETNA GET FUND, SERIES E Annuity contracts in accumulation (1,637,727) (16,149,627) (16,946,578) (796,951) (3,960,486) AETNA GET FUND, SERIES G Annuity contracts in accumulation (393,873) (4,092,929) (3,069,439) 1,023,490 (963,024) AETNA GET FUND, SERIES H Annuity contracts in accumulation (298,470) (3,459,172) (4,169,174) (710,002) (2,089,820) AETNA GET FUND, SERIES I Annuity contracts in accumulation (187,232) (1,839,216) (1,423,793) 415,423 (698,310) AETNA GET FUND, SERIES J Annuity contracts in accumulation (245,055) (2,762,925) (2,090,036) 672,889 (422,260) AETNA GET FUND, SERIES K Annuity contracts in accumulation (81,867) (937,549) (2,182,327) (1,244,778) (2,638,152) AETNA GET FUND, SERIES L Annuity contracts in accumulation 132,742 194 (1,544,667) (1,544,861) (2,334,940) AETNA GET FUND, SERIES M Annuity contracts in accumulation (27,695) 0 (3,766,046) (3,766,046) (4,551,268) AETNA GET FUND, SERIES N Annuity contracts in accumulation (6,238) 0 227,750 227,750 127,138 AETNA GET FUND, SERIES P Annuity contracts in accumulation (160) 0 996 996 34 AETNA GROWTH AND INCOME VP Annuity contracts in accumulation (89,031,860) (241,325,047) (356,335,315) (115,010,268) (210,385,423) AETNA GROWTH VP Annuity contracts in accumulation (30,119,995) (11,298,783) (15,404,342) (4,105,559) (26,486,759) AETNA INDEX PLUS LARGE CAP VP Annuity contracts in accumulation (27,147,247) (37,334,071) (72,604,360) (35,270,289) (56,573,425) --------------------------------------------------------------------------------------------------------
S-28 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2001 (Unaudited and continued): 5. SUPPLEMENTAL INFORMATION TO STATEMENT OF OPERATIONS (continued): Valuation Proceeds Cost of PERIOD ENDED Period from Investments SEPTEMBER 30, 2001 Dividends Deductions Sales Sold AETNA INDEX PLUS MID CAP VP Annuity contracts in accumulation $ 521,114 $ (48,306) $ 1,286,144 $ (1,477,462) AETNA INDEX PLUS SMALL CAP VP Annuity contracts in accumulation 65,130 (8,259) 1,290,973 (1,255,397) AETNA INTERNATIONAL VP Annuity contracts in accumulation 10,501 (81,181) 34,221,743 (38,159,783) AETNA LEGACY VP Annuity contracts in accumulation 1,080,182 (244,959) 5,140,304 (5,193,631) AETNA MONEY MARKET VP Annuity contracts in accumulation 11,841,123 (2,438,512) 571,679,792 (574,897,162) AETNA SMALL COMPANY VP Annuity contracts in accumulation 2,133,898 (466,160) 58,951,493 (58,771,240) AETNA TECHNOLOGY VP Annuity contracts in accumulation 0 (97,652) 9,538,827 (15,101,914) AETNA VALUE OPPORTUNITY VP Annuity contracts in accumulation 1,200,310 (230,122) 5,990,796 (6,414,892) AIM V.I. FUNDS: CAPITAL APPRECIATION FUND Annuity contracts in accumulation 0 (229,291) 4,460,804 (7,004,590) GOVERNMENT SECURITIES FUND Annuity contracts in accumulation 0 (33,009) 1,067,390 (1,041,535) GROWTH AND INCOME FUND Annuity contracts in accumulation 0 (432,194) 3,019,585 (4,653,012) GROWTH FUND Annuity contracts in accumulation 0 (286,430) 3,743,237 (7,049,107) VALUE FUND Annuity contracts in accumulation 0 (688,446) 8,976,403 (11,977,490) ALGER AMERICAN FUNDS: BALANCED PORTFOLIO Annuity contracts in accumulation 132,843 (44,565) 888,815 (933,637) INCOME & GROWTH PORTFOLIO Annuity contracts in accumulation 972,656 (142,355) 2,516,720 (3,019,870) LEVERAGED ALLCAP PORTFOLIO Annuity contracts in accumulation 426,602 (131,270) 2,195,739 (3,031,291) ALLIANCE FUNDS: GROWTH AND INCOME PORTFOLIO Annuity contracts in accumulation 690,777 (118,402) 315,936 (345,492) --------------------------------------------------------------------------------------
S-29 Net Net Net Net Unrealized Change in Increase Realized Gain (Loss) Unrealized (Decrease) in Gain (Loss) ------------------------------ Gain (Loss) Net Assets PERIOD ENDED on Beginning End of on Resulting from SEPTEMBER 30, 2001 Investments of Period Period Investments Operations AETNA INDEX PLUS MID CAP VP Annuity contracts in accumulation $ (191,318) $ 77,987 $ (1,482,279) $ (1,560,266) $ (1,278,776) AETNA INDEX PLUS SMALL CAP VP Annuity contracts in accumulation 35,576 69,502 (221,031) (290,533) (198,086) AETNA INTERNATIONAL VP Annuity contracts in accumulation (3,938,040) (1,854,980) (1,263,446) 591,534 (3,417,186) AETNA LEGACY VP Annuity contracts in accumulation (53,327) 473,877 (2,051,677) (2,525,554) (1,743,658) AETNA MONEY MARKET VP Annuity contracts in accumulation (3,217,370) 2,001,969 2,282,889 280,920 6,466,161 AETNA SMALL COMPANY VP Annuity contracts in accumulation 180,253 1,228,137 (7,311,318) (8,539,455) (6,691,464) AETNA TECHNOLOGY VP Annuity contracts in accumulation (5,563,087) (3,777,303) (4,458,258) (680,955) (6,341,694) AETNA VALUE OPPORTUNITY VP Annuity contracts in accumulation (424,096) 383,845 (4,948,983) (5,332,828) (4,786,736) AIM V.I. FUNDS: CAPITAL APPRECIATION FUND Annuity contracts in accumulation (2,543,786) (5,765,131) (13,681,071) (7,915,940) (10,689,017) GOVERNMENT SECURITIES FUND Annuity contracts in accumulation 25,855 (259) 252,900 253,159 246,005 GROWTH AND INCOME FUND Annuity contracts in accumulation (1,633,427) (8,539,095) (24,935,236) (16,396,141) (18,461,762) GROWTH FUND Annuity contracts in accumulation (3,305,870) (9,043,771) (21,600,727) (12,556,956) (16,149,256) VALUE FUND Annuity contracts in accumulation (3,001,087) (7,734,104) (21,993,117) (14,259,013) (17,948,546) ALGER AMERICAN FUNDS: BALANCED PORTFOLIO Annuity contracts in accumulation (44,822) (159,674) (541,977) (382,303) (338,847) INCOME & GROWTH PORTFOLIO Annuity contracts in accumulation (503,150) (550,320) (4,559,383) (4,009,063) (3,681,912) LEVERAGED ALLCAP PORTFOLIO Annuity contracts in accumulation (835,552) (2,906,571) (6,221,746) (3,315,175) (3,855,395) ALLIANCE FUNDS: GROWTH AND INCOME PORTFOLIO Annuity contracts in accumulation (29,556) 34,311 (3,732,567) (3,766,878) (3,224,059) --------------------------------------------------------------------------------------------------------
S-30 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2001 (Unaudited and continued): 5. SUPPLEMENTAL INFORMATION TO STATEMENT OF OPERATIONS (continued): Valuation Proceeds Cost of PERIOD ENDED Period from Investments SEPTEMBER 30, 2001 Dividends Deductions Sales Sold PREMIER GROWTH PORTFOLIO Annuity contracts in accumulation $ 354,185 $ (59,931) $ 217,436 $ (282,827) QUASAR PORTFOLIO Annuity contracts in accumulation 17,973 (4,137) 373,708 (420,630) AMERICAN CENTURY VP FUNDS: BALANCED FUND Annuity contracts in accumulation 147,073 (24,452) 502,901 (550,424) INTERNATIONAL FUND Annuity contracts in accumulation 390,807 (39,786) 702,461 (938,562) CALVERT SOCIAL BALANCED PORTFOLIO Annuity contracts in accumulation 0 (20,447) 525,701 (583,217) FEDERATED INSURANCE SERIES: AMERICAN LEADERS FUND II Annuity contracts in accumulation 1,917,273 (1,005,328) 13,981,868 (10,305,254) EQUITY INCOME FUND II Annuity contracts in accumulation 411,071 (221,660) 4,275,162 (4,005,567) GROWTH STRATEGIES FUND II Annuity contracts in accumulation 459,610 (284,569) 5,699,659 (4,333,825) HIGH INCOME BOND FUND II Annuity contracts in accumulation 2,603,114 (262,759) 5,059,097 (6,586,643) INTERNATIONAL EQUITY FUND II Annuity contracts in accumulation 2,007,286 (163,296) 3,140,683 (2,444,697) PRIME MONEY FUND II Annuity contracts in accumulation 252,978 (84,859) 4,742,973 (4,742,973) U.S. GOVERNMENT SECURITIES FUND II Annuity contracts in accumulation 445,726 (118,924) 1,440,546 (1,379,547) UTILITY FUND II Annuity contracts in accumulation 579,989 (179,105) 3,256,321 (3,199,673) FIDELITY VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO Annuity contracts in accumulation 11,925,239 (1,858,607) 36,556,512 (37,715,948) GROWTH PORTFOLIO Annuity contracts in accumulation 13,676,127 (1,758,228) 16,343,474 (23,458,497) HIGH INCOME PORTFOLIO Annuity contracts in accumulation 5,820,989 (443,592) 11,738,213 (14,928,587) OVERSEAS PORTFOLIO Annuity contracts in accumulation 1,702,110 (114,874) 3,822,747 (4,662,809) --------------------------------------------------------------------------------------
S-31 Net Net Net Net Unrealized Change in Increase Realized Gain (Loss) Unrealized (Decrease) in Gain (Loss) ------------------------------ Gain (Loss) Net Assets PERIOD ENDED on Beginning End of on Resulting from SEPTEMBER 30, 2001 Investments of Period Period Investments Operations PREMIER GROWTH PORTFOLIO Annuity contracts in accumulation $ (65,391) $ (105,771) $ (2,534,657) $ (2,428,886) $ (2,200,023) QUASAR PORTFOLIO Annuity contracts in accumulation (46,922) 2,230 (157,851) (160,081) (193,167) AMERICAN CENTURY VP FUNDS: BALANCED FUND Annuity contracts in accumulation (47,523) (44,225) (364,867) (320,642) (245,544) INTERNATIONAL FUND Annuity contracts in accumulation (236,101) 23,975 (1,559,118) (1,583,093) (1,468,173) CALVERT SOCIAL BALANCED PORTFOLIO Annuity contracts in accumulation (57,516) (217,606) (426,422) (208,816) (286,779) FEDERATED INSURANCE SERIES: AMERICAN LEADERS FUND II Annuity contracts in accumulation 3,676,614 10,746,749 (5,829,728) (16,576,477) (11,987,918) EQUITY INCOME FUND II Annuity contracts in accumulation 269,595 2,132,983 (2,635,346) (4,768,329) (4,309,323) GROWTH STRATEGIES FUND II Annuity contracts in accumulation 1,365,834 4,337,092 (7,607,544) (11,944,636) (10,403,761) HIGH INCOME BOND FUND II Annuity contracts in accumulation (1,527,546) (4,746,268) (6,467,002) (1,720,734) (907,925) INTERNATIONAL EQUITY FUND II Annuity contracts in accumulation 695,986 2,439,119 (6,443,534) (8,882,653) (6,342,677) PRIME MONEY FUND II Annuity contracts in accumulation 0 0 0 0 168,119 U.S. GOVERNMENT SECURITIES FUND II Annuity contracts in accumulation 60,999 341,857 641,214 299,357 687,158 UTILITY FUND II Annuity contracts in accumulation 56,648 (860,370) (3,500,114) (2,639,744) (2,182,212) FIDELITY VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO Annuity contracts in accumulation (1,159,436) 12,117,982 (25,149,677) (37,267,659) (28,360,463) GROWTH PORTFOLIO Annuity contracts in accumulation (7,115,023) (21,859,750) (90,388,958) (68,529,208) (63,726,332) HIGH INCOME PORTFOLIO Annuity contracts in accumulation (3,190,374) (5,306,372) (14,366,508) (9,060,136) (6,873,113) OVERSEAS PORTFOLIO Annuity contracts in accumulation (840,062) (447,720) (5,152,674) (4,704,954) (3,957,780) --------------------------------------------------------------------------------------------------------
S-32 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2001 (Unaudited and continued): 5. SUPPLEMENTAL INFORMATION TO STATEMENT OF OPERATIONS (continued): Valuation Proceeds Cost of PERIOD ENDED Period from Investments SEPTEMBER 30, 2001 Dividends Deductions Sales Sold FIDELITY VARIABLE INSURANCE PRODUCTS FUND II: ASSET MANAGER PORTFOLIO Annuity contracts in accumulation $ 970,762 $ (166,729) $ 2,614,888 $ (2,943,689) CONTRAFUND PORTFOLIO Annuity contracts in accumulation 6,961,120 (1,800,253) 28,665,445 (34,686,780) INDEX 500 PORTFOLIO Annuity contracts in accumulation 1,402,323 (1,211,764) 50,683,214 (57,253,388) INVESTMENT GRADE BOND PORTFOLIO Annuity contracts in accumulation 198,718 (35,975) 701,172 (686,554) JANUS ASPEN SERIES: AGGRESSIVE GROWTH PORTFOLIO Annuity contracts in accumulation 0 (1,742,684) 88,708,600 (162,411,564) BALANCED PORTFOLIO Annuity contracts in accumulation 3,119,565 (2,230,382) 16,134,740 (19,021,723) FLEXIBLE INCOME PORTFOLIO Annuity contracts in accumulation 594,783 (191,143) 4,234,048 (4,066,240) GROWTH PORTFOLIO Annuity contracts in accumulation 524,572 (2,132,998) 52,052,566 (73,301,291) WORLDWIDE GROWTH PORTFOLIO Annuity contracts in accumulation 869,615 (3,782,837) 101,458,878 (140,819,392) MFS FUNDS: GLOBAL GOVERNMENT SERIES Annuity contracts in accumulation 63,853 (17,349) 599,580 (572,607) TOTAL RETURN SERIES Annuity contracts in accumulation 4,082,187 (768,073) 3,380,434 (3,387,685) MITCHELL HUTCHINS SERIES TRUST: GROWTH AND INCOME PORTFOLIO Annuity contracts in accumulation 180,934 (9,051) 28,216 (31,857) SMALL CAP PORTFOLIO Annuity contracts in accumulation 0 (1,838) 8,509 (11,594) TACTICAL ALLOCATION PORTFOLIO Annuity contracts in accumulation 1,066,683 (135,353) 749,266 (885,531) OPPENHEIMER FUNDS: AGGRESSIVE GROWTH FUND/VA Annuity contracts in accumulation 7,504,048 (469,000) 44,568,515 (81,139,795) GLOBAL SECURITIES FUND/VA Annuity contracts in accumulation 2,152,426 (144,894) 4,039,553 (4,878,619) MAIN STREET GROWTH & INCOME FUND/VA Annuity contracts in accumulation 354,611 (644,538) 4,519,968 (5,212,067) --------------------------------------------------------------------------------------
S-33 Net Net Net Net Unrealized Change in Increase Realized Gain (Loss) Unrealized (Decrease) in Gain (Loss) ------------------------------ Gain (Loss) Net Assets PERIOD ENDED on Beginning End of on Resulting from SEPTEMBER 30, 2001 Investments of Period Period Investments Operations FIDELITY VARIABLE INSURANCE PRODUCTS FUND II: ASSET MANAGER PORTFOLIO Annuity contracts in accumulation $ (328,801) $ (266,900) $ (2,807,974) $ (2,541,074) $ (2,065,842) CONTRAFUND PORTFOLIO Annuity contracts in accumulation (6,021,335) (4,148,405) (42,987,054) (38,838,649) (39,699,117) INDEX 500 PORTFOLIO Annuity contracts in accumulation (6,570,174) (5,006,883) (25,307,865) (20,300,982) (26,680,597) INVESTMENT GRADE BOND PORTFOLIO Annuity contracts in accumulation 14,618 135,182 198,560 63,378 240,739 JANUS ASPEN SERIES: AGGRESSIVE GROWTH PORTFOLIO Annuity contracts in accumulation (73,702,964) (87,927,298) (135,260,644) (47,333,346) (122,778,994) BALANCED PORTFOLIO Annuity contracts in accumulation (2,886,983) (4,667,881) (28,048,149) (23,380,268) (25,378,068) FLEXIBLE INCOME PORTFOLIO Annuity contracts in accumulation 167,808 221,880 932,177 710,297 1,281,745 GROWTH PORTFOLIO Annuity contracts in accumulation (21,248,725) (39,758,620) (106,606,120) (66,847,500) (89,704,651) WORLDWIDE GROWTH PORTFOLIO Annuity contracts in accumulation (39,360,514) (57,305,031) (163,924,723) (106,619,692) (148,893,428) MFS FUNDS: GLOBAL GOVERNMENT SERIES Annuity contracts in accumulation 26,973 58,605 43,965 (14,640) 58,837 TOTAL RETURN SERIES Annuity contracts in accumulation (7,251) 4,094,999 (4,427,335) (8,522,334) (5,215,471) MITCHELL HUTCHINS SERIES TRUST: GROWTH AND INCOME PORTFOLIO Annuity contracts in accumulation (3,641) 30,611 (236,017) (266,628) (98,386) SMALL CAP PORTFOLIO Annuity contracts in accumulation (3,085) (31,643) (73,087) (41,444) (46,367) TACTICAL ALLOCATION PORTFOLIO Annuity contracts in accumulation (136,265) (247,834) (4,566,136) (4,318,302) (3,523,237) OPPENHEIMER FUNDS: AGGRESSIVE GROWTH FUND/VA Annuity contracts in accumulation (36,571,280) (17,023,622) (10,732,655) 6,290,967 (23,245,265) GLOBAL SECURITIES FUND/VA Annuity contracts in accumulation (839,066) 167,134 (5,513,046) (5,680,180) (4,511,714) MAIN STREET GROWTH & INCOME FUND/VA Annuity contracts in accumulation (692,099) (3,884,729) (15,436,322) (11,551,593) (12,533,619) --------------------------------------------------------------------------------------------------------
S-34 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2001 (Unaudited and continued): 5. SUPPLEMENTAL INFORMATION TO STATEMENT OF OPERATIONS (continued): Valuation Proceeds Cost of PERIOD ENDED Period from Investments SEPTEMBER 30, 2001 Dividends Deductions Sales Sold STRATEGIC BOND FUND/VA Annuity contracts in accumulation $ 1,608,010 $ (248,880) $ 2,702,844 $ (2,734,977) PILGRIM FUNDS: EMERGING MARKETS FUND (1) Annuity contracts in accumulation 214,362 (11,045) 203,817 (230,867) NATURAL RESOURCES TRUST FUND (2) Annuity contracts in accumulation 0 (21,986) 328,942 (387,951) PILGRIM VARIABLE FUNDS: GROWTH OPPORTUNITIES PORTFOLIO Annuity contracts in accumulation 0 (155) 38,988 (40,881) MAGNA CAP PORTFOLIO Annuity contracts in accumulation 15 (455) 527 (573) MID CAP OPPORTUNITIES PORTFOLIO Annuity contracts in accumulation 0 (1,086) 147,931 (172,459) SMALL CAP OPPORTUNITIES PORTFOLIO Annuity contracts in accumulation 2,246 (2,224) 114,403 (142,614) PORTFOLIO PARTNERS, INC. (PPI): PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO Annuity contracts in accumulation 13,575,938 (670,155) 8,247,258 (13,371,158) PPI MFS EMERGING EQUITIES PORTFOLIO Annuity contracts in accumulation 7,195,393 (1,097,604) 83,026,026 (116,474,681) PPI MFS RESEARCH GROWTH PORTFOLIO Annuity contracts in accumulation 17,141,681 (815,842) 9,462,495 (11,849,235) PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO Annuity contracts in accumulation 8,604,172 (297,682) 95,494,041 (107,301,604) PPI T. ROWE PRICE GROWTH EQUITY PORTFOLIO Annuity contracts in accumulation 15,614,636 (993,822) 14,891,946 (18,280,788) PRUDENTIAL JENNISON PORTFOLIO Annuity contracts in accumulation 0 (172) 362,049 (378,039) SP JENNISON INTERNATIONAL GROWTH PORTFOLIO Annuity contracts in accumulation 1 (318) 211,111 (223,294) TOTAL VARIABLE ANNUITY ACCOUNT B $187,286,424 $(58,838,344) $1,869,054,028 $(2,301,674,245)
(1) - Effective May 1, 2001, Lexington Emerging Markets Fund's name changed to Pilgrim Emerging Markets Fund. (2) - Effective May 1, 2001, Lexington Natural Resources Trust's name changed to Pilgrim Natural Resources Trust. S-35 Net Net Net Net Unrealized Change in Increase Realized Gain (Loss) Unrealized (Decrease) in Gain (Loss) ------------------------------ Gain (Loss) Net Assets PERIOD ENDED on Beginning End of on Resulting from SEPTEMBER 30, 2001 Investments of Period Period Investments Operations STRATEGIC BOND FUND/VA Annuity contracts in accumulation $ (32,133) $ 145,482 $ (1,392,940) $ (1,538,422) $ (211,425) PILGRIM FUNDS: EMERGING MARKETS FUND (1) Annuity contracts in accumulation (27,050) (118,440) (599,850) (481,410) (305,143) NATURAL RESOURCES TRUST FUND (2) Annuity contracts in accumulation (59,009) 240,727 (439,087) (679,814) (760,809) PILGRIM VARIABLE FUNDS: GROWTH OPPORTUNITIES PORTFOLIO Annuity contracts in accumulation (1,893) 0 (14,890) (14,890) (16,938) MAGNA CAP PORTFOLIO Annuity contracts in accumulation (46) 0 (22,321) (22,321) (22,807) MID CAP OPPORTUNITIES PORTFOLIO Annuity contracts in accumulation (24,528) 0 (88,590) (88,590) (114,204) SMALL CAP OPPORTUNITIES PORTFOLIO Annuity contracts in accumulation (28,211) 0 (207,699) (207,699) (235,888) PORTFOLIO PARTNERS, INC. (PPI): PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO Annuity contracts in accumulation (5,123,900) (10,163,046) (49,853,941) (39,690,895) (31,909,012) PPI MFS EMERGING EQUITIES PORTFOLIO Annuity contracts in accumulation (33,448,655) (23,512,406) (50,654,352) (27,141,946) (54,492,812) PPI MFS RESEARCH GROWTH PORTFOLIO Annuity contracts in accumulation (2,386,740) (8,619,374) (51,458,815) (42,839,441) (28,900,342) PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO Annuity contracts in accumulation (11,807,563) 680,506 (7,463,284) (8,143,790) (11,644,863) PPI T. ROWE PRICE GROWTH EQUITY PORTFOLIO Annuity contracts in accumulation (3,388,842) (3,849,578) (39,253,229) (35,403,651) (24,171,679) PRUDENTIAL JENNISON PORTFOLIO Annuity contracts in accumulation (15,990) 0 (2,064) (2,064) (18,226) SP JENNISON INTERNATIONAL GROWTH PORTFOLIO Annuity contracts in accumulation (12,183) 0 (17,683) (17,683) (30,183) TOTAL VARIABLE ANNUITY ACCOUNT B $(432,620,217) $(650,455,465) $(1,569,552,831) $(919,097,366) $(1,223,269,503)
(1) - Effective May 1, 2001, Lexington Emerging Markets Fund's name changed to Pilgrim Emerging Markets Fund. (2) - Effective May 1, 2001, Lexington Natural Resources Trust's name changed to Pilgrim Natural Resources Trust. S-36 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS - September 30, 2000 (Unaudited and continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED SEPTEMBER 30, 2001 Net Net Net Change in Increase (Decrease) Net Assets Net Realized Unrealized in Net Assets ---------- Investment Gain (Loss) Gain (Loss) from Unit Beginning End Income (Loss) on Investments on Investments Transactions of Period of Period AETNA ASCENT VP Annuity contracts in accumulation $ 101,149 $ (142,292) $ (3,086,942) $ (1,116,389) $ 17,494,584 $ 12,989,334 Annuity contracts in payment period 25,499 286,275 AETNA BALANCED VP, INC. Annuity contracts in accumulation 6,253,808 (5,622,661) (23,148,857) 1,609,704 170,506,936 145,760,509 Annuity contracts in payment period 29,260,905 33,099,326 AETNA BOND VP Annuity contracts in accumulation (861,003) 384,566 8,633,868 30,022,250 93,669,011 129,638,086 Annuity contracts in payment period 5,821,072 8,031,678 AETNA CROSSROADS VP Annuity contracts in accumulation 297,787 (94,020) (2,778,378) (1,966,104) 19,642,538 15,271,479 Annuity contracts in payment period 1,447,650 1,277,994 AETNA GET FUND, SERIES C Annuity contracts in accumulation 275,519 (54,848) (1,486,562) (138,987) 5,898,705 4,493,827 AETNA GET FUND, SERIES D Annuity contracts in accumulation 427,246 (323,736) (755,545) (8,278,084) 129,775,588 120,845,469 AETNA GET FUND, SERIES E Annuity contracts in accumulation (1,525,808) (1,637,727) (796,951) (23,802,654) 333,832,965 306,069,825 AETNA GET FUND, SERIES G Annuity contracts in accumulation (1,592,641) (393,873) 1,023,490 (11,225,753) 186,444,632 174,255,855 AETNA GET FUND, SERIES H Annuity contracts in accumulation (1,081,348) (298,470) (710,002) (6,250,743) 141,763,690 133,423,127 AETNA GET FUND, SERIES I Annuity contracts in accumulation (926,501) (187,232) 415,423 (3,579,326) 92,928,925 88,651,289 AETNA GET FUND, SERIES J Annuity contracts in accumulation (850,094) (245,055) 672,889 (3,719,119) 79,871,616 75,730,237 AETNA GET FUND, SERIES K Annuity contracts in accumulation (1,311,507) (81,867) (1,244,778) (1,592,938) 93,789,821 89,558,731 AETNA GET FUND, SERIES L Annuity contracts in accumulation (922,821) 132,742 (1,544,861) 81,960,462 584,846 80,210,368 AETNA GET FUND, SERIES M Annuity contracts in accumulation (757,527) (27,695) (3,766,046) 126,927,457 0 122,376,189 AETNA GET FUND, SERIES N Annuity contracts in accumulation (94,374) (6,238) 227,750 109,372,567 0 109,499,705 AETNA GET FUND, SERIES P Annuity contracts in accumulation (802) (160) 996 1,932,750 0 1,932,784 AETNA GROWTH AND INCOME VP Annuity contracts in accumulation (6,343,295) (89,031,860) (115,010,268) (78,090,360) 765,261,567 518,698,423 Annuity contracts in payment period 162,948,133 121,035,494
S-37 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS - September 30, 2000 (Unaudited and continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
PERIOD ENDED SEPTEMBER 30, 2001 Net Net Net Change in Increase (Decrease) Net Assets Net Realized Unrealized in Net Assets ---------- Investment Gain (Loss) Gain (Loss) from Unit Beginning End Income (Loss) on Investments on Investments Transactions of Period of Period AETNA GROWTH VP Annuity contracts in accumulation $ 7,738,795 $ (30,119,995) $ (4,105,559) $ (1,726,777) $ 78,188,522 $ 52,357,598 Annuity contracts in payment period 6,813,655 4,431,043 AETNA INDEX PLUS LARGE CAP VP Annuity contracts in accumulation 5,844,111 (27,147,247) (35,270,289) 7,662,576 217,699,546 173,665,656 Annuity contracts in payment period 44,095,500 39,218,541 AETNA INDEX PLUS MID CAP VP Annuity contracts in accumulation 472,808 (191,318) (1,560,266) 2,252,509 6,733,274 7,707,007 AETNA INDEX PLUS SMALL CAP VP Annuity contracts in accumulation 56,871 35,576 (290,533) 347,682 1,097,872 1,247,468 AETNA INTERNATIONAL VP Annuity contracts in accumulation (70,680) (3,938,040) 591,534 1,224,156 9,382,842 7,248,508 Annuity contracts in payment period 324,994 266,298 AETNA LEGACY VP Annuity contracts in accumulation 835,223 (53,327) (2,525,554) (1,632,707) 22,842,539 19,646,693 Annuity contracts in payment period 3,348,677 3,168,158 AETNA MONEY MARKET VP Annuity contracts in accumulation 9,402,611 (3,217,370) 280,920 83,922,105 206,567,488 290,795,193 Annuity contracts in payment period 5,241,120 11,401,681 AETNA SMALL COMPANY VP Annuity contracts in accumulation 1,667,738 180,253 (8,539,455) 9,153,306 45,163,536 46,700,079 Annuity contracts in payment period 2,106,866 3,032,165 AETNA TECHNOLOGY VP Annuity contracts in accumulation (97,652) (5,563,087) (680,955) 3,941,814 9,832,599 7,432,719 AETNA VALUE OPPORTUNITY VP Annuity contracts in accumulation 970,188 (424,096) (5,332,828) 8,750,096 19,709,584 23,672,944 AIM V.I. FUNDS: CAPITAL APPRECIATION FUND Annuity contracts in accumulation (229,291) (2,543,786) (7,915,940) 4,784,166 25,248,912 19,456,046 Annuity contracts in payment period 738,219 626,234 GOVERNMENT SECURITIES FUND Annuity contracts in accumulation (33,009) 25,855 253,159 7,699,583 294,912 8,240,500 GROWTH AND INCOME FUND Annuity contracts in accumulation (432,194) (1,633,427) (16,396,141) 6,324,226 46,632,179 34,499,399 Annuity contracts in payment period 3,190,959 3,186,203 GROWTH FUND Annuity contracts in accumulation (286,430) (3,305,870) (12,556,956) 4,431,092 36,220,507 24,581,250 Annuity contracts in payment period 1,036,422 957,515 VALUE FUND Annuity contracts in accumulation (688,446) (3,001,087) (14,259,013) 11,867,321 70,471,041 64,501,346 Annuity contracts in payment period 2,878,953 2,767,423
S-38 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS - September 30, 2000 (Unaudited and continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
PERIOD ENDED SEPTEMBER 30, 2001 Net Net Net Change in Increase (Decrease) Net Assets Net Realized Unrealized in Net Assets ---------- Investment Gain (Loss) Gain (Loss) from Unit Beginning End Income (Loss) on Investments on Investments Transactions of Period of Period ALGER AMERICAN FUNDS: BALANCED PORTFOLIO Annuity contracts in accumulation $ 88,278 $ (44,822) $ (382,303) $ (834,932) $ 4,887,859 $ 3,714,080 INCOME & GROWTH PORTFOLIO Annuity contracts in accumulation 830,301 (503,150) (4,009,063) (2,363,592) 16,586,009 10,540,505 LEVERAGED ALLCAP PORTFOLIO Annuity contracts in accumulation 295,332 (835,552) (3,315,175) (2,064,468) 15,562,934 9,643,071 ALLIANCE FUNDS: GROWTH AND INCOME PORTFOLIO Annuity contracts in accumulation 572,375 (29,556) (3,766,878) 24,322,699 897,717 21,996,357 PREMIER GROWTH PORTFOLIO Annuity contracts in accumulation 294,254 (65,391) (2,428,886) 6,446,384 2,687,461 6,933,822 QUASAR PORTFOLIO Annuity contracts in accumulation 13,836 (46,922) (160,081) 600,291 82,470 489,594 AMERICAN CENTURY VP FUNDS: BALANCED FUND Annuity contracts in accumulation 122,621 (47,523) (320,642) (469,426) 2,684,483 1,969,513 INTERNATIONAL FUND Annuity contracts in accumulation 351,021 (236,101) (1,583,093) (652,595) 4,904,674 2,783,906 CALVERT SOCIAL BALANCED PORTFOLIO Annuity contracts in accumulation (20,447) (57,516) (208,816) (309,460) 2,513,732 1,917,493 FEDERATED INSURANCE SERIES: AMERICAN LEADERS FUND II Annuity contracts in accumulation 911,945 3,676,614 (16,576,477) (11,337,635) 102,497,426 79,106,835 Annuity contracts in payment period 88,623 153,661 EQUITY INCOME FUND II Annuity contracts in accumulation 189,411 269,595 (4,768,329) (2,920,058) 24,223,008 16,978,904 Annuity contracts in payment period 41,239 55,962 GROWTH STRATEGIES FUND II Annuity contracts in accumulation 175,041 1,365,834 (11,944,636) (3,936,223) 33,809,187 19,469,203 HIGH INCOME BOND FUND II Annuity contracts in accumulation 2,340,355 (1,527,546) (1,720,734) (4,583,605) 26,434,464 20,931,538 Annuity contracts in payment period 11,712 23,108 INTERNATIONAL EQUITY FUND II Annuity contracts in accumulation 1,843,990 695,986 (8,882,653) (2,885,742) 20,017,475 10,781,452 Annuity contracts in payment period 39,851 47,455 PRIME MONEY FUND II Annuity contracts in accumulation 168,119 0 0 (168,772) 8,703,425 8,702,772 U.S. GOVERNMENT SECURITIES FUND II Annuity contracts in accumulation 326,802 60,999 299,357 398,296 11,133,403 12,218,857
S-39 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS - September 30, 2000 (Unaudited and continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
PERIOD ENDED SEPTEMBER 30, 2001 Net Net Net Change in Increase (Decrease) Net Assets Net Realized Unrealized in Net Assets ---------- Investment Gain (Loss) Gain (Loss) from Unit Beginning End Income (Loss) on Investments on Investments Transactions of Period of Period UTILITY FUND II Annuity contracts in accumulation $ 400,884 $ 56,648 $ (2,639,744) $ (2,856,445) $ 19,310,088 $ 14,267,228 Annuity contracts in payment period 40,502 44,705 FIDELITY VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO Annuity contracts in accumulation 10,066,632 (1,159,436) (37,267,659) 18,304,225 188,024,984 177,968,746 GROWTH PORTFOLIO Annuity contracts in accumulation 11,917,899 (7,115,023) (68,529,208) (1,497,978) 209,609,983 144,385,673 HIGH INCOME PORTFOLIO Annuity contracts in accumulation 5,377,397 (3,190,374) (9,060,136) (1,079,660) 44,851,961 36,753,298 Annuity contracts in payment period 659,872 805,762 OVERSEAS PORTFOLIO Annuity contracts in accumulation 1,587,236 (840,062) (4,704,954) (1,183,647) 14,451,215 9,309,788 FIDELITY VARIABLE INSURANCE PRODUCTS FUND II: ASSET MANAGER PORTFOLIO Annuity contracts in accumulation 804,033 (328,801) (2,541,074) (2,135,437) 17,820,958 13,619,679 CONTRAFUND PORTFOLIO Annuity contracts in accumulation 5,160,867 (6,021,335) (38,838,649) (11,989,287) 216,963,354 165,274,950 INDEX 500 PORTFOLIO Annuity contracts in accumulation 190,559 (6,570,174) (20,300,982) (12,074,194) 133,049,029 94,294,238 INVESTMENT GRADE BOND PORTFOLIO Annuity contracts in accumulation 162,743 14,618 63,378 (648,581) 3,699,966 3,292,124 JANUS ASPEN SERIES: AGGRESSIVE GROWTH PORTFOLIO Annuity contracts in accumulation (1,742,684) (73,702,964) (47,333,346) (20,400,006) 274,462,060 131,283,060 BALANCED PORTFOLIO Annuity contracts in accumulation 889,183 (2,886,983) (23,380,268) 8,234,712 244,144,219 227,000,863 FLEXIBLE INCOME PORTFOLIO Annuity contracts in accumulation 403,640 167,808 710,297 3,894,724 18,729,553 23,906,022 GROWTH PORTFOLIO Annuity contracts in accumulation (1,608,426) (21,248,725) (66,847,500) (15,506,055) 253,461,282 152,928,817 Annuity contracts in payment period 14,191,697 9,513,456 WORLDWIDE GROWTH PORTFOLIO Annuity contracts in accumulation (2,913,222) (39,360,514) (106,619,692) (32,271,028) 467,731,442 292,205,767 Annuity contracts in payment period 16,131,186 10,492,405 MFS FUNDS: GLOBAL GOVERNMENT SERIES Annuity contracts in accumulation 46,504 26,973 (14,640) 262,888 1,537,291 1,859,016 TOTAL RETURN SERIES Annuity contracts in accumulation 3,314,114 (7,251) (8,522,334) 26,470,975 63,398,107 84,653,611
S-40 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS - September 30, 2000 (Unaudited and continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
PERIOD ENDED SEPTEMBER 30, 2001 Net Net Net Change in Increase (Decrease) Net Assets Net Realized Unrealized in Net Assets ---------- Investment Gain (Loss) Gain (Loss) from Unit Beginning End Income (Loss) on Investments on Investments Transactions of Period of Period MITCHELL HUTCHINS SERIES TRUST: GROWTH AND INCOME PORTFOLIO Annuity contracts in accumulation $ 171,883 $ (3,641) $ (266,628) $ 2,502 $ 950,238 $ 854,354 SMALL CAP PORTFOLIO Annuity contracts in accumulation (1,838) (3,085) (41,444) (6,670) 208,747 155,710 TACTICAL ALLOCATION PORTFOLIO Annuity contracts in accumulation 931,330 (136,265) (4,318,302) 4,563,450 12,509,283 13,549,496 OPPENHEIMER FUNDS: AGGRESSIVE GROWTH FUND/VA Annuity contracts in accumulation 7,035,048 (36,571,280) 6,290,967 4,231,128 55,317,044 37,003,507 Annuity contracts in payment period 1,734,978 1,034,378 GLOBAL SECURITIES FUND/VA Annuity contracts in accumulation 2,007,532 (839,066) (5,680,180) 754,747 17,259,574 13,502,607 MAIN STREET GROWTH & INCOME FUND/VA Annuity contracts in accumulation (289,927) (692,099) (11,551,593) 4,559,612 66,668,968 57,748,821 Annuity contracts in payment period 983,453 1,929,593 STRATEGIC BOND FUND/VA Annuity contracts in accumulation 1,359,130 (32,133) (1,538,422) 4,016,011 22,834,845 26,538,146 Annuity contracts in payment period 499,690 600,975 PILGRIM FUNDS: EMERGING MARKETS FUND (1) Annuity contracts in accumulation 203,317 (27,050) (481,410) (192,770) 1,255,139 757,226 NATURAL RESOURCES TRUST FUND (2) Annuity contracts in accumulation (21,986) (59,009) (679,814) (287,963) 2,800,522 1,751,750 PILGRIM VARIABLE FUNDS: GROWTH OPPORTUNITIES PORTFOLIO Annuity contracts in accumulation (155) (1,893) (14,890) 99,551 0 82,613 MAGNA CAP PORTFOLIO Annuity contracts in accumulation (440) (46) (22,321) 295,928 0 273,121 MID CAP OPPORTUNITIES PORTFOLIO Annuity contracts in accumulation (1,086) (24,528) (88,590) 473,906 0 359,702 SMALL CAP OPPORTUNITIES PORTFOLIO Annuity contracts in accumulation 22 (28,211) (207,699) 953,244 0 717,356 PORTFOLIO PARTNERS, INC. (PPI): PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO Annuity contracts in accumulation 12,905,783 (5,123,900) (39,690,895) 7,294,298 74,490,975 49,956,075 Annuity contracts in payment period 3,742,395 3,662,581 PPI MFS EMERGING EQUITIES PORTFOLIO Annuity contracts in accumulation 6,097,789 (33,448,655) (27,141,946) (6,147,864) 134,260,645 74,286,655 Annuity contracts in payment period 2,424,002 1,757,316
S-41 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS - September 30, 2000 (Unaudited and continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
PERIOD ENDED SEPTEMBER 30, 2001 Net Net Net Change in Increase (Decrease) Net Assets Net Realized Unrealized in Net Assets ---------- Investment Gain (Loss) Gain (Loss) from Unit Beginning End Income (Loss) on Investments on Investments Transactions of Period of Period PPI MFS RESEARCH GROWTH PORTFOLIO Annuity contracts in accumulation $ 16,325,839 $ (2,386,740) $ (42,839,441) $ (5,008,469) $ 97,910,276 $ 64,001,465 PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO Annuity contracts in accumulation 8,306,490 (11,807,563) (8,143,790) 3,542,816 37,459,265 29,365,563 Annuity contracts in payment period 820,408 812,063 PPI T. ROWE PRICE GROWTH EQUITY PORTFOLIO Annuity contracts in accumulation 14,620,814 (3,388,842) (35,403,651) (9,400,226) 111,737,190 78,178,127 Annuity contracts in payment period 1,492,696 1,479,854 PRUDENTIAL JENNISON PORTFOLIO Annuity contracts in accumulation (172) (15,990) (2,064) 48,795 0 30,569 SP JENNISON INTERNATIONAL GROWTH PORTFOLIO Annuity contracts in accumulation (317) (12,183) (17,683) 149,874 0 119,691 TOTAL VARIABLE ANNUITY ACCOUNT B $128,448,080 $(432,620,217) $(919,097,366) $325,774,149 $6,324,265,635 $5,426,770,281
(1) - Effective May 1, 2001, Lexington Emerging Markets Fund's name changed to Pilgrim Emerging Markets Fund. (1) - Effective May 1, 2001, Lexington Natural Resources Trust's name changed to Pilgrim Natural Resources Trust. S-42 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS - September 30, 2000 (Unaudited and continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
PERIOD ENDED SEPTEMBER 30, 2000 Net Net Net Change in Increase (Decrease) Net Assets Net Realized Unrealized in Net Assets ---------- Investment Gain (Loss) Gain (Loss) from Unit Beginning End Income (Loss) on Investments on Investments Transactions of Period of Period AETNA ASCENT VP Annuity contracts in accumulation $ 37,190 $ 56,040 $ 463,114 $ (1,839,895) $ 19,981,127 $ 18,669,982 Annuity contracts in payment period 0 27,594 AETNA BALANCED VP, INC. Annuity contracts in accumulation 4,892,548 3,053,919 (2,892,579) (5,222,676) 180,920,898 178,931,246 Annuity contracts in payment period 26,077,945 27,898,809 AETNA BOND VP Annuity contracts in accumulation 380,567 (1,926,827) 5,445,081 (10,000,568) 93,390,139 87,367,041 Annuity contracts in payment period 5,662,703 5,584,054 AETNA CROSSROADS VP Annuity contracts in accumulation 189,633 129,235 193,711 (3,155,646) 23,405,948 20,834,482 Annuity contracts in payment period 1,540,450 1,468,849 AETNA GET FUND, SERIES C Annuity contracts in accumulation 563,898 106,162 (768,047) (582,986) 7,124,468 6,443,495 AETNA GET FUND, SERIES D Annuity contracts in accumulation 504,103 1,029,564 (6,556,494) (33,251,503) 176,632,929 138,358,599 AETNA GET FUND, SERIES E Annuity contracts in accumulation (3,609,372) 1,288,798 (7,957,678) (17,798,603) 381,698,376 353,621,521 AETNA GET FUND, SERIES G Annuity contracts in accumulation (2,162,680) 128,151 (3,887,813) (11,750,675) 211,855,059 194,182,042 AETNA GET FUND, SERIES H Annuity contracts in accumulation (1,428,431) 594,810 4,553,687 141,743,399 1,726,955 147,190,420 AETNA GET FUND, SERIES I Annuity contracts in accumulation (494,422) 109,769 179,912 96,054,236 0 95,849,495 AETNA GET FUND, SERIES J Annuity contracts in accumulation (56,422) (1,605) (1,528,110) 83,179,143 0 81,593,006 AETNA GET FUND, SERIES K Annuity contracts in accumulation (61) 0 381 230,604 0 230,924 AETNA GROWTH AND INCOME VP Annuity contracts in accumulation 38,255,813 349,672 (69,005,913) (96,211,325) 980,638,280 864,230,944 Annuity contracts in payment period 192,658,329 182,453,912 AETNA GROWTH VP Annuity contracts in accumulation 723,146 5,661,629 (2,419,155) 23,408,960 66,260,594 90,687,951 Annuity contracts in payment period 4,742,043 7,689,266 AETNA HIGH YIELD VP Annuity contracts in accumulation (962) (25,591) 16,080 (235,209) 245,682 0 AETNA INDEX PLUS LARGE CAP VP Annuity contracts in accumulation 9,233,360 7,519,384 (21,070,551) 40,398,086 198,210,089 228,910,155 Annuity contracts in payment period 40,863,938 46,244,151
S-43 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS - September 30, 2000 (Unaudited and continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
PERIOD ENDED SEPTEMBER 30, 2000 Net Net Net Change in Increase (Decrease) Net Assets Net Realized Unrealized in Net Assets ---------- Investment Gain (Loss) Gain (Loss) from Unit Beginning End Income (Loss) on Investments on Investments Transactions of Period of Period AETNA INDEX PLUS MID CAP VP Annuity contracts in accumulation $ 6,677 $ 89,267 $ 160,202 $ 1,277,964 $ 866,762 $ 2,400,872 AETNA INDEX PLUS SMALL CAP VP Annuity contracts in accumulation (5,383) 90,420 (45,607) (83,443) 911,313 867,300 AETNA INTERNATIONAL VP Annuity contracts in accumulation 243,495 41,482 (1,286,701) 6,033,811 4,434,269 9,309,812 Annuity contracts in payment period 105,507 262,051 AETNA LEGACY VP Annuity contracts in accumulation 256,361 137,318 774,185 (3,458,599) 26,597,646 23,909,392 Annuity contracts in payment period 2,972,058 3,369,577 AETNA MONEY MARKET VP Annuity contracts in accumulation 7,195,410 460,454 (131,127) (25,568,644) 214,710,443 192,827,541 Annuity contracts in payment period 1,062,436 4,901,431 AETNA REAL ESTATE SECURITIES VP Annuity contracts in accumulation (13,273) 253,382 181,523 (2,361,352) 1,925,817 0 Annuity contracts in payment period 13,903 0 AETNA SMALL COMPANY VP Annuity contracts in accumulation 2,214,447 5,567,759 (4,530,842) 26,108,165 25,125,952 53,033,853 Annuity contracts in payment period 463,770 1,915,398 AETNA TECHNOLOGY VP Annuity contracts in accumulation (22,334) 85,880 (909,693) 10,898,631 0 10,052,484 AETNA VALUE OPPORTUNITY VP Annuity contracts in accumulation 2,316,060 553,758 (1,414,276) (1,193,951) 16,918,826 17,180,417 AIM V.I. FUNDS: CAPITAL APPRECIATION FUND Annuity contracts in accumulation (154,815) 2,329,900 (3,877) 14,960,064 9,923,942 26,525,830 Annuity contracts in payment period 47,197 576,581 GROWTH AND INCOME FUND Annuity contracts in accumulation (328,477) 531,056 (24,242) 26,777,354 22,700,889 47,689,273 Annuity contracts in payment period 789,296 2,756,603 GROWTH FUND Annuity contracts in accumulation (268,707) 517,135 (717,294) 21,270,951 18,608,980 38,769,017 Annuity contracts in payment period 322,083 964,131 VALUE FUND Annuity contracts in accumulation (530,731) 729,043 (5,857,216) 35,262,333 40,884,392 68,693,351 Annuity contracts in payment period 942,276 2,736,746 ALGER AMERICAN FUNDS: BALANCED PORTFOLIO Annuity contracts in accumulation 442,004 421,723 (676,010) (957,975) 6,213,801 5,443,543
S-44 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS - September 30, 2000 (Unaudited and continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
PERIOD ENDED SEPTEMBER 30, 2000 Net Net Net Change in Increase (Decrease) Net Assets Net Realized Unrealized in Net Assets ---------- Investment Gain (Loss) Gain (Loss) from Unit Beginning End Income (Loss) on Investments on Investments Transactions of Period of Period INCOME & GROWTH PORTFOLIO Annuity contracts in accumulation $ 3,829,896 $ 901,352 $ (3,753,307) $ (1,580,445) $ 19,087,670 $ 18,485,166 LEVERAGED ALLCAP PORTFOLIO Annuity contracts in accumulation 1,875,458 2,572,777 (5,410,553) (3,675,741) 25,112,341 20,474,282 ALLIANCE FUNDS: GROWTH & INCOME PORTFOLIO Annuity contracts in accumulation (4) 0 194 22,257 0 22,447 PREMIER GROWTH PORTFOLIO Annuity contracts in accumulation (1) 0 (129) 4,191 0 4,061 AMERICAN CENTURY VP FUNDS: BALANCED FUND Annuity contracts in accumulation 102,555 (11,777) (65,337) (546,781) 3,452,367 2,931,027 INTERNATIONAL FUND Annuity contracts in accumulation 63,048 616,289 (1,533,593) (1,250,443) 7,499,031 5,394,332 CALVERT SOCIAL BALANCED PORTFOLIO Annuity contracts in accumulation (22,935) 160,520 90,128 (79,859) 2,589,130 2,736,984 FEDERATED INSURANCE SERIES: AMERICAN LEADERS FUND II Annuity contracts in accumulation 3,063,327 6,081,545 (10,247,990) (18,840,790) 125,105,874 105,133,777 Annuity contracts in payment period 61,038 89,227 EQUITY INCOME FUND II Annuity contracts in accumulation (10,522) 999,127 (415,379) (895,164) 30,384,515 30,022,678 Annuity contracts in payment period 8,185 48,084 GROWTH STRATEGIES FUND II Annuity contracts in accumulation 2,857,580 5,124,198 (7,819,686) (1,623,941) 46,677,628 45,215,779 HIGH INCOME BOND FUND II Annuity contracts in accumulation 3,117,376 (644,438) (3,710,590) (8,254,988) 41,788,490 32,299,890 Annuity contracts in payment period 17,816 13,776 INTERNATIONAL EQUITY FUND II Annuity contracts in accumulation 4,183,421 2,105,433 (10,616,160) (1,409,190) 28,925,669 23,144,854 Annuity contracts in payment period 0 44,319 PRIME MONEY FUND II Annuity contracts in accumulation 264,007 0 0 (1,559,749) 8,657,471 7,361,729 U.S. GOVERNMENT SECURITIES FUND II Annuity contracts in accumulation 508,209 54,745 71,146 (2,406,383) 12,814,411 11,042,128 UTILITY FUND II Annuity contracts in accumulation 982,952 874,287 (2,291,689) (3,819,589) 26,498,835 22,256,579 Annuity contracts in payment period 59,670 47,887
S-45 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS - September 30, 2000 (Unaudited and continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
PERIOD ENDED SEPTEMBER 30, 2000 Net Net Net Change in Increase (Decrease) Net Assets Net Realized Unrealized in Net Assets ---------- Investment Gain (Loss) Gain (Loss) from Unit Beginning End Income (Loss) on Investments on Investments Transactions of Period of Period FIDELITY VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO Annuity contracts in accumulation $ 13,172,384 $ 6,934,163 $ (15,103,468) $(18,196,416) $ 191,754,908 $ 178,561,571 GROWTH PORTFOLIO Annuity contracts in accumulation 21,079,506 5,273,026 (26,003,173) 29,436,313 208,982,521 238,768,193 HIGH INCOME PORTFOLIO Annuity contracts in accumulation 3,438,850 (3,340,365) (6,462,148) (4,051,740) 61,938,947 51,489,366 Annuity contracts in payment period 755,677 789,855 OVERSEAS PORTFOLIO Annuity contracts in accumulation 1,809,808 2,169,997 (6,360,704) (1,432,220) 20,088,940 16,275,821 FIDELITY VARIABLE INSURANCE PRODUCTS FUND II: ASSET MANAGER PORTFOLIO Annuity contracts in accumulation 2,015,602 8,141 (2,270,304) (1,863,826) 21,519,462 19,409,075 CONTRAFUND PORTFOLIO Annuity contracts in accumulation 27,519,750 8,454,965 (38,493,939) 3,117,012 234,998,024 235,595,812 INDEX 500 PORTFOLIO Annuity contracts in accumulation 716,356 13,524,635 (18,512,810) (19,382,518) 170,467,635 146,813,298 INVESTMENT GRADE BOND PORTFOLIO Annuity contracts in accumulation 240,675 (13,548) (17,742) (628,023) 4,120,050 3,701,412 JANUS ASPEN SERIES: AGGRESSIVE GROWTH PORTFOLIO Annuity contracts in accumulation 38,060,662 35,231,568 (87,925,866) 132,347,261 274,665,000 392,378,625 BALANCED PORTFOLIO Annuity contracts in accumulation 21,731,130 3,075,420 (26,719,705) 59,203,338 185,323,915 242,614,098 FLEXIBLE INCOME PORTFOLIO Annuity contracts in accumulation 537,532 (371,257) 223,491 (1,744,067) 19,582,411 18,228,110 GROWTH PORTFOLIO Annuity contracts in accumulation 20,950,758 14,098,286 (29,776,628) 87,076,758 213,572,309 299,205,161 Annuity contracts in payment period 9,348,397 16,064,719 WORLDWIDE GROWTH PORTFOLIO Annuity contracts in accumulation 39,712,592 71,654,422 (138,086,169) 93,899,383 470,413,281 531,750,201 Annuity contracts in payment period 11,305,698 17,149,006 LEXINGTON FUNDS: EMERGING MARKETS FUND, INC. Annuity contracts in accumulation (24,494) 31,056 (703,008) (333,384) 2,574,027 1,544,197 NATURAL RESOURCES TRUST FUND Annuity contracts in accumulation (15,465) (56,794) 303,492 (669,409) 3,168,963 2,730,787 MFS FUNDS: GLOBAL GOVERNMENT SERIES Annuity contracts in accumulation 60,025 (21,313) (35,084) (213,861) 1,643,414 1,433,181
S-46 VARIABLE ANNUITY ACCOUNT B NOTES TO FINANCIAL STATEMENTS - September 30, 2000 (Unaudited and continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
PERIOD ENDED SEPTEMBER 30, 2000 Net Net Net Change in Increase (Decrease) Net Assets Net Realized Unrealized in Net Assets ---------- Investment Gain (Loss) Gain (Loss) from Unit Beginning End Income (Loss) on Investments on Investments Transactions of Period of Period TOTAL RETURN SERIES Annuity contracts in accumulation $ 1,966,636 $ 875,725 $ 1,614,498 $ 1,077,801 $ 50,789,444 $ 56,324,104 MITCHELL HUTCHINS SERIES TRUST: GROWTH & INCOME PORTFOLIO Annuity contracts in accumulation 54,967 387 (97,765) 180,617 809,956 948,162 SMALL CAP PORTFOLIO Annuity contracts in accumulation 8,864 227 24,862 34,417 172,522 240,892 TACTICAL ALLOCATION PORTFOLIO Annuity contracts in accumulation 85,181 (1,597) (67) 3,234,688 7,364,195 10,682,400 OPPENHEIMER FUNDS: AGGRESSIVE GROWTH FUND/VA Annuity contracts in accumulation 1,121,454 13,003,814 (4,262,867) 26,811,429 29,291,524 65,944,581 Annuity contracts in payment period 1,639,824 1,660,597 GLOBAL SECURITIES FUND/VA Annuity contracts in accumulation 1,763,659 527,826 (1,642,213) 6,153,093 9,513,748 16,316,113 MAIN STREET GROWTH & INCOME FUND/VA Annuity contracts in accumulation 2,645,283 856,923 (3,325,268) 12,763,573 56,214,303 68,270,546 Annuity contracts in payment period 151,990 1,036,258 STRATEGIC BOND FUND/VA Annuity contracts in accumulation 1,480,470 (265,823) (830,869) 2,097,835 19,569,256 21,935,140 Annuity contracts in payment period 228,810 344,539 PORTFOLIO PARTNERS, INC. (PPI): PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO (1) Annuity contracts in accumulation 9,865,557 4,019,385 (56,889,670) 70,525,469 53,173,898 79,004,110 Annuity contracts in payment period 1,763,893 3,454,422 PPI MFS EMERGING EQUITIES PORTFOLIO Annuity contracts in accumulation 104,212 28,578,852 (10,779,103) (25,486,146) 181,712,440 172,687,796 Annuity contracts in payment period 1,531,267 2,973,726 PPI MFS RESEARCH GROWTH PORTFOLIO Annuity contracts in accumulation 6,829,924 3,555,402 7,095,551 (9,125,226) 102,536,898 110,892,549 PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO Annuity contracts in accumulation 3,622,579 (2,896,272) (7,903,438) 9,170,205 35,328,550 36,688,539 Annuity contracts in payment period 123,723 756,808 PPI T. ROWE PRICE GROWTH EQUITY PORTFOLIO Annuity contracts in accumulation 9,179,960 5,906,790 (5,695,288) (11,118,798) 126,069,747 123,801,146 Annuity contracts in payment period 723,814 1,265,079 TOTAL VARIABLE ANNUITY ACCOUNT B $308,927,426 $259,529,786 $ (644,053,696) $710,897,594 $6,173,851,032 $6,809,152,142
(1) - Effective May 1, 2000, PPI MFS Value Equity Portfolio's name changed to PPI MFS Capital Opportunities Portfolio. S-47 AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly owned subsidiary of Aetna Retirement Holdings, Inc.) Consolidated Statements of Income (Unaudited) (millions)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, ------------------------------------------------------------------------ 2001 2000 2001 2000 ---- ---- ---- ---- Revenue: Premiums $22.2 $41.8 $ 83.1 $117.1 Charges assessed against policyholders 92.7 119.9 290.2 351.0 Net investment income 222.4 231.9 662.1 681.5 Net realized capital gains (losses) 10.0 (11.2) 30.3 (23.1) Other income 39.9 44.0 128.9 117.5 ----------- ------------ ------------ ------------ Total revenue 387.2 426.4 1,194.6 1,244.0 Benefits and expenses: Current and future benefits 181.8 199.8 547.2 598.3 Operating expenses: Salaries and related benefits 48.3 52.3 135.2 144.0 Other 43.2 60.1 151.4 166.4 Amortization of deferred policy acquisition costs and value of business acquired 30.6 36.8 89.3 96.4 Amortization of goodwill 14.4 - 43.3 - ----------- ------------ ------------ ------------ Total benefits and expenses 318.3 349.0 966.4 1,005.1 ----------- ------------ ------------ ------------ Income from continuing operations before income taxes 68.9 77.4 228.2 238.9 Income taxes 27.1 22.7 94.4 75.9 ----------- ------------ ------------ ------------ Income from continuing operations 41.8 54.7 133.8 163.0 Discontinued operations, net of tax: Amortization of deferred gain on sale - 1.5 - 4.7 ----------- ------------ ------------ ------------ Net income $41.8 $ 56.2 $133.8 $167.7 =========== ============ ============ ============
See Condensed Notes to Consolidated Financial Statements. F-1 Consolidated Balance Sheets (millions, except share data)
SEPTEMBER 30, DECEMBER 31, ASSETS 2001 2000 ------ ---- ---- (UNAUDITED) Investments: Debt securities available for sale, at fair value (amortized cost: $12,712.8 and $11,120.0) $13,126.3 $11,244.7 Equity securities, at fair value: Nonredeemable preferred stock (cost: $28.5 and $109.0) 23.5 100.7 Investment in affiliated mutual funds (cost: $23.5 and $9.6) 24.8 12.7 Common stock (cost: $6.9 and $2.2) 4.7 3.5 Short-term investments 20.7 109.4 Mortgage loans 192.9 4.6 Policy loans 334.7 339.3 Other investments 15.4 13.4 Securities pledged to creditors (amortized cost: $812.8 and $126.8) 822.3 129.0 ---------------- ---------------- Total investments 14,565.3 11,957.3 Cash and cash equivalents 40.2 796.3 Short-term investments under securities loan agreement 851.4 131.8 Accrued investment income 179.7 147.2 Premiums due and other receivables 175.6 82.9 Reinsurance recoverable 2,989.7 3,005.8 Current income taxes - 40.6 Deferred policy acquisition costs 97.5 12.3 Value of business acquired 1,776.4 1,780.9 Goodwill 2,265.7 2,297.4 Other assets 161.3 154.7 Separate Accounts assets 30,668.7 36,745.8 ---------------- ---------------- Total assets $53,771.5 $57,153.0 ================ ================ LIABILITIES AND SHAREHOLDER'S EQUITY Liabilities: Future policy benefits $3,995.1 $ 3,977.7 Unpaid claims and claim expenses 25.0 29.6 Policyholders' funds left with the Company 12,006.6 11,125.6 ---------------- ---------------- Total insurance reserve liabilities 16,026.7 15,132.9 Payables under securities loan agreement 851.4 131.8 Current income taxes 76.8 - Deferred income taxes 263.6 248.0 Other liabilities 1,363.8 549.9 Separate Accounts liabilities 30,668.7 36,745.8 ---------------- ---------------- Total liabilities 49,251.0 52,808.4 ---------------- ---------------- Shareholder's equity: Common stock, par value $50 (100,000 shares authorized; 55,000 shares issued and outstanding) 2.8 2.8 Paid-in capital 4,303.8 4,303.8 Accumulated other comprehensive gain 67.5 25.4 Retained earnings 146.4 12.6 ---------------- ---------------- Total shareholder's equity 4,520.5 4,344.6 ---------------- ---------------- Total liabilities and shareholder's equity $53,771.5 $57,153.0 ================ ================
F-2 Consolidated Statements of Changes in Shareholder's Equity (Unaudited) (millions)
NINE MONTHS ENDED SEPTEMBER 30, -------------------------------- 2001 2000 ---- ---- Shareholder's equity, beginning of period $4,344.6 $1,385.7 Comprehensive income: Net income 133.8 167.7 Other comprehensive income, net of tax: Unrealized gains on securities ($64.8, $46.6 pretax) (1) 42.1 30.3 ------------- -------------- Total comprehensive income 175.9 198.0 ------------- -------------- Other changes - 0.9 Common stock dividends - (10.1) ------------- -------------- Shareholder's equity, end of period $4,520.5 $1,574.5 ============= ==============
(1) Net of reclassification adjustments. See Condensed Notes to Consolidated Financial Statements. F-3 Consolidated Statements of Cash Flows (Unaudited) (millions)
NINE MONTHS ENDED SEPTEMBER 30, ---------------------------------------- 2001 2000 ---- ---- Cash Flows from Operating Activities: Net income $ 133.8 $ 167.7 Adjustments to reconcile net income to net cash (used for) provided by operating activities: Net accretion of discount on investments (9.9) (25.2) Amortization of deferred gain on sale - (4.7) Net realized capital (gains) losses (30.3) 23.1 Changes in assets and liabilities: (Increase) decrease in accrued investment income (32.5) 2.0 Decrease in premiums due and other receivables 77.9 13.2 Decrease (increase) in policy loans 4.6 (24.6) Increase in deferred policy acquisition costs (85.2) (108.8) Decrease in value of business acquired 4.5 - Goodwill amortization, net of adjustments 31.7 - Net increase in universal life account balances 19.1 21.0 (Decrease) increase in other insurance reserve liabilities (97.0) 84.6 Increase in other liabilities and other assets (171.0) (69.0) Increase in income taxes 111.5 36.6 ------------------ ------------------- Net cash (used for) provided by operating activities (42.8) 115.9 ------------------ ------------------- Cash Flows from Investing Activities: Proceeds from sales of: Debt securities available for sale 8,167.9 9,074.5 Equity securities 4.3 107.4 Mortgage loans 3.8 2.1 Investment maturities and collections of: Debt securities available for sale 824.8 488.0 Short-term investments 3,695.1 57.2 Cost of investment purchases in: Debt securities available for sale (10,046.6) (9,128.6) Equity securities (28.7) (16.5) Mortgages loans (192.2) - Short-term investments (3,602.8) (89.9) Increase (decrease) in property and equipment (33.0) 2.9 Other, net (1.8) (4.6) ------------------ ------------------- Net cash (used for) provided by investing activities (1,209.2) 492.5 ------------------ ------------------- Cash Flows from Financing Activities: Deposits and interest credited for investment contracts 1,464.2 1,275.1 Withdrawals of investment contracts (852.7) (1,606.9) Dividends paid to Shareholder - (10.1) Other, net (115.6) 24.4 ------------------ ------------------- Net cash provided by (used for) financing activities 495.9 (317.5) ------------------ ------------------- Net (decrease) increase in cash and cash equivalents (756.1) 290.9 Effect of exchange rate changes on cash and cash equivalents - 2.0 Cash and cash equivalents, beginning of period 796.3 694.4 ------------------ ------------------- Cash and cash equivalents, end of period $ 40.2 $ 987.3 ================== =================== Supplemental cash flow information: Income taxes (received) paid, net $ (26.8) $ 39.4 ================== ===================
See Condensed Notes to Consolidated Financial Statements. F-4 CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The consolidated financial statements include Aetna Life Insurance and Annuity Company ("ALIAC") and its wholly owned subsidiaries, Aetna Insurance Company of America ("AICA"), Aetna Investment Adviser Holding Company, Inc. ("IA Holdco") and Aetna Investment Services, LLC ("AIS"). ALIAC, together with its wholly owned subsidiaries, is herein called the "Company". ALIAC is a wholly owned subsidiary of Aetna Retirement Holdings, Inc. ("HOLDCO"), which is a wholly owned subsidiary of Aetna Retirement Services, Inc. ("ARSI"). ARSI is indirectly owned by ING Groep N.V. ("ING"). On June 30, 2000, HOLDCO contributed AIS to the Company. (Refer to Note 6). The Company has three business segments: Worksite Products, Individual Products and Investment Management Services. On October 1, 1998, the Company sold its individual life insurance business to Lincoln National Corporation ("Lincoln") and accordingly, it is now classified as Discontinued Operations. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and are unaudited. The contribution of AIS to the Company was accounted for in a manner similar to that of a pooling-of-interests and, accordingly, the Company's historical consolidated financial statements have been restated to include the accounts and results of operations of AIS. These interim financial statements necessarily rely heavily on estimates, including assumptions as to annualized tax rates. In the opinion of management, all adjustments necessary for a fair statement of results for the interim periods have been made. All such adjustments are of a normal, recurring nature. Certain reclassifications have been made to 2000 financial information to conform to the 2001 presentation. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes as presented in ALIAC's 2000 Annual Report on Form 10-K. Certain financial information that is normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America, but that is not required for interim reporting purposes, has been condensed or omitted. Operating results for three and nine months ended September 30, 2001, are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. 2. NEW ACCOUNTING STANDARD As of January 1, 2001, the Company adopted FAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended and interpreted by FAS No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133, FAS No 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities - an Amendment of FASB Statement No 133, and certain FAS No 133 implementation issues. This standard, as amended, requires companies to record all derivatives on the balance sheet as either F-5 assets or liabilities and measure those instruments at fair value. The manner in which companies are to record gains or losses resulting from changes in the fair values of those derivatives depends on the use of the derivative and whether it qualifies for hedge accounting. Adoption of FAS No. 133 did not have a material effect on the Company's financial position or results of operations given the Company's limited derivative and embedded derivative holdings. (Refer to Note 7.) The Company utilizes futures contracts, options, interest rate floors and warrants in order to manage interest rate and price risk (collectively, market risk). These financial exposures are monitored and managed by the Company as an integral part of its overall risk management program. (Refer to Note 7.) Derivatives are recognized on the balance sheet at their fair value. The Company chose not to designate its derivative instruments as part of hedge transactions. Therefore changes in the fair value of the Company's derivative instruments are recorded immediately in the consolidated statements of income as part of realized capital gains and losses. Warrants are carried at fair value and are recorded as either derivative instruments or FAS No. 115 available for sale securities. Warrants that are considered derivatives are carried at fair value if they are readily convertible to cash. The values of these warrants can fluctuate given that the companies which underlie the warrants are non-public companies. At September 30, 2001, the estimated value of these warrants was immaterial. These warrants will be revalued each quarter and the change in the value of the warrants will be included in the consolidated statements of income. The Company, at times, may own warrants on common stock which are not readily convertible to cash as they contain certain conditions which preclude their convertibility and therefore, will not be included in assets or liabilities as derivatives. If conditions are satisfied and the underlying stocks become marketable, the warrants would be reclassified as derivatives and recorded at fair value as an adjustment through current period results of operations. The Company occasionally purchases a financial instrument that contains a derivative that is "embedded" in the instrument. In addition the Company's insurance products are reviewed to determine whether they contain an embedded derivative. The Company assesses whether the economic characteristics of the embedded derivative are clearly and closely related to the economic characteristics of the remaining component of the financial instrument or insurance product (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and that a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is separated from the host contract and carried at fair value. However, in cases where the host contract is measured at fair value, with changes in fair value reported in current period earnings or the Company is unable to reliably identify and measure the embedded derivative for separation from its host contract, the entire contract is carried on the balance sheet at fair value and is not designated as a hedging instrument. The Company had approximately $1 million of embedded derivatives relating to investments at September 30, 2001. F-6 3. FUTURE ACCOUNTING STANDARD ACCOUNTING FOR GOODWILL AND INTANGIBLE ASSETS In July 2001, the Financial Accounting Standards Board ("FASB") issued Financial Accounting Standard ("FAS") No. 142, Accounting for Goodwill and Intangible Assets. Under the new standard, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the new standard. Other intangible assets will continue to be amortized over their useful lives. The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002. Application of the nonamortization provisions of the new standard is expected to result in an increase in net income; however, the Company is still assessing the impact of the new standard. During 2002, the Company will perform the required impairment tests of goodwill as of January 1, 2002 and has not yet determined what the effect of these tests will be on the earnings and financial position of the Company. 4. SALE OF AETNA FINANCIAL SERVICES AND AETNA INTERNATIONAL On December 13, 2000, ING America Insurance Holdings, Inc., an indirect wholly owned subsidiary of ING, acquired Aetna Inc., comprised of the Aetna Financial Services business, of which the Company is a part, and the Aetna International business, for approximately $7.7 billion. The purchase price was comprised of approximately $5.0 billion in cash and the assumption of $2.7 billion of outstanding debt and other net liabilities. In connection with the acquisition, Aetna Inc. was renamed Lion Connecticut Holdings Inc. ("Lion"). At the time of the sale, Lion entered into certain transition services agreements with a former related party, Aetna U.S. Healthcare, which was renamed Aetna Inc. ("former Aetna"). For accounting purposes, the acquisition was accounted for as of November 30, 2000 using the purchase method. The application of the purchase method, including the recognition of goodwill, was pushed down and reflected on the financial statements of certain ARSI subsidiaries, including ALIAC. The purchase price was allocated to assets and liabilities based on their respective fair values. This revaluation resulted in a net increase to assets, excluding the effects of goodwill, of $592.0 million and a net increase to liabilities of $310.6 million. Additionally, the Company established goodwill of $2.3 billion. Goodwill is being amortized over a period of 40 years. The allocation of the purchase price to assets and liabilities is subject to further refinement. Unaudited proforma consolidated income from continuing operations and net income of the Company for the nine months ended September 30, 2000, assuming that the acquisition of the Company occurred at the beginning of 2000, would each have been approximately $119.0 million. F-7 The pro forma adjustments, which do not affect revenues, reflect primarily goodwill amortization, amortization of a favorable lease asset and the elimination of amortization of the deferred gain on the sale of the individual life business to Lincoln. 5. REVISION OF PRELIMINARY ALLOCATION OF PURCHASE PRICE ING America Insurance Holdings, Inc., an indirect wholly owned subsidiary of ING, acquired Aetna Inc., comprised of the Aetna Financial Services business, of which the Company is a part, and the Aetna International business, on December 13, 2000. The preliminary allocation of the purchase price did not reflect any market value adjustments related to the Company's investment portfolios. The Company, after giving consideration to certain exposures in the general market place which, while existing prior to the acquisition, subsequently took on more significance, determined that a reduction in carrying value was warranted. The preliminary allocation of the purchase price reflected the write down of certain fixed assets resulting from conforming accounting policies. Subsequent to the date of acquisition, the Company completed a full review of the fixed assets that existed at or prior to the acquisition and determined that an additional write down was necessary. The amount of the reductions in the carrying values of the investment portfolios and the fixed assets were accounted for as components of the purchase price and the amounts assigned to the Company's assets and liabilities in the allocation of the purchase price were adjusted appropriately. The adjustment was generally reflected as an adjustment to goodwill. The Company generally would be required to recognize a charge to income in its final preacquisition consolidated statement of income for the reduction in the carrying value of the fixed assets. 6. CONTRIBUTION OF AIS FROM HOLDCO On June 30, 2000, HOLDCO contributed AIS to the Company. AIS is registered with the Securities and Exchange Commission as a broker/dealer and is a member of the National Association of Securities Dealers, Inc. It is also registered with the appropriate state securities authorities as a broker/dealer and is a Registered Investment Advisor. The principal operation of AIS is the sale of fixed and variable annuities and mutual funds through its registered representatives. 7. DERIVATIVE INSTRUMENTS The Company enters into derivative instruments to manage interest rate and equity price risks. By using derivative instruments to manage exposures in these risks, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. The Company generally does not F-8 require collateral or other security to support the types of financial instruments presented below. However, the Company minimizes its credit risk exposure by entering into transactions with high credit quality counterparties, limiting the amount of exposure to each counterparty and monitoring the financial condition of its counterparties. At September 30, 2001, such counterparties' credit ratings averaged A- or higher. Market risk is the risk of change in the market price of the underlying instrument and the related derivative instrument. Such price changes result from movements in interest rates and equity markets as well as time value and volatility considerations. The Company's exposure to market risk for changes in interest rates and equity prices relates primarily to the Company's investment portfolio and debt obligations. The portfolio includes only marketable securities with active secondary or resale markets to ensure portfolio liquidity. The Company maintains an interest rate risk management strategy that uses derivatives instruments to minimize significant unanticipated earnings fluctuations caused by interest rate volatility. As a result of interest rate fluctuations, assets and liabilities will appreciate or depreciate in market value. Income or loss on the derivative instruments that are linked to the related assets or liabilities will generally offset the effect of this unrealized appreciation or depreciation. The Company views this strategy as a prudent management of interest rate sensitivity, such that earnings are not exposed to undue risk presented by changes in interest rates. The notional amounts, carrying amounts and estimated fair values of the Company's financial instruments at September 30, were as follows:
2001 2000 -------------------------------------------- --------------------------------------- NOTIONAL CARRYING ESTIMATED FAIR NOTIONAL CARRYING ESTIMATED (MILLIONS) AMOUNTS AMOUNTS VALUE AMOUNTS AMOUNTS FAIR VALUE ------------------------------------------------------------------------------------------------------------------------- Futures contracts to sell securities $ - $ - $ - $ 113.2 $ 0.6 $ 0.6 Interest Rate Floors 300.0 1.9 1.9 - - - Warrants - - - - 0.3 0.3 Embedded Derivatives - investments - 1.0 1.0 - 2.0 2.0 -------------------------------------------------------------------------------------------------------------------------
The fair value of these instruments was estimated based on quoted market prices, dealer quotations or internal price estimates believed to be comparable to dealer quotations. These fair value amounts reflect the estimated amounts that the Company would have to pay or would receive if the contracts were terminated. FUTURES CONTRACTS Futures contracts represent commitments to either purchase or sell securities at a specified future date and at a specified price or yield. Futures contracts trade on organized exchanges and, therefore, have minimal credit risk. Cash settlements are made daily based on changes in the prices of the underlying assets. F-9 INTEREST RATE FLOORS Interest Rate Floors are over-the-counter contracts in which the purchaser pays a premium to reduce the risk associated with a decline in a reference rate or index. The amount of protection is based upon a nominal or notional amount over a set period of time. Interim interest payments are made to the purchaser when the reference rate or index falls below a specified level. OPTION CONTRACTS Options are contracts that grant the purchaser, for a fee, the right but not the obligation, to buy or sell a security at a contracted price on or before a specified date. The option writer is obligated to buy or sell the security if the purchaser chooses to exercise the option. The purchaser pays a nonrefundable fee (premium) to the writer of the option. The buyer of the option has limited risk. The maximum loss to the buyer is the premium paid. As of September 30, 2001, the Company did not have any investment income or loss for writing call options on underlying securities and, as of September 30, 2000, had a $1.1 million investment loss for writing call options on underlying securities. WARRANTS Warrants are instruments that give the holder the right, but not the obligation, to buy or sell a fixed amount of an underlying asset at a fixed price in the future. 8. ADDITIONAL INFORMATION - ACCUMULATED OTHER COMPREHENSIVE INCOME Changes in accumulated other comprehensive income related to changes in unrealized gains on securities (excluding those related to experience-rated contractholders) were as follows:
NINE MONTHS ENDED SEPTEMBER 30, ------------------------------------- (MILLIONS) 2001 2000 --------------------------------------------------------------------------------------------------------------------------- Unrealized holding gains arising during the period (1) $ 68.2 $ 31.7 Less: reclassification adjustments for accretion of net investment discounts and gains included in net income (2) 26.1 1.4 ------------------------------------------------------------------------------------- -------------------- ---------------- Net unrealized losses on securities $ 42.1 $ 30.3 ===================================================================================== ==================== ================
(1) Pretax unrealized holding gains arising during the period were $105.0 million and $48.7 million for the nine months ended September 30, 2001 and September 30, 2000, respectively. (2) Pretax reclassification adjustments for accretion of net investment discounts and gains included in net income for the period were $40.2 million and $2.1 million for the nine months ended September 30, 2001 and September 30, 2000, respectively. F-10 9. VALUE OF BUSINESS ACQUIRED Value of business acquired ("VOBA") is an asset and represents the present value of estimated net cash flows embedded in the Company's contracts indirectly acquired by ING. VOBA is amortized in proportion to estimated gross profits and adjusted to reflect actual gross profits over the contracts (up to 30 years for annuity contracts and pension contracts). Activity for the nine months ended September 30, 2001 within VOBA was as follows:
(MILLIONS) ---------------------------------------------------------- -------------------- Balance at December 31, 2000 $ 1,780.9 Additions 79.4 Interest accrued at 7 % 86.8 Amortization (170.7) ---------------------------------------------------------- -------------------- Balance at September 30, 2001 $ 1,776.4 ========================================================== ====================
10. SEVERANCE In December 2000, the Company, in accounting for its acquisition by ING, established a severance liability related to actions taken or expected to be taken with respect to the integration of the Company's and ING's businesses. Activity for the nine months ended September 30, 2001 within the severance liability and positions eliminated related to such actions was as follows:
(MILLIONS) SEVERANCE LIABILITY POSITIONS ------------------------------------------------------------------------------------------------ Balance at December 31, 2000 $ 10.7 175 Actions taken (5.9) (89) ---------------------------------------------------------------------------- ------------------- Balance at September 30, 2001 $ 4.8 86 ================================================================================================
Severance actions are expected to be substantially complete by March 31, 2002. F-11 11. SEGMENT INFORMATION Summarized financial information for the Company's principal operations for the three months ended September 30, was as follows:
INVESTMENT WORKSITE INDIVIDUAL MANAGEMENT DISCONTINUED (MILLIONS) PRODUCTS (1) PRODUCTS (1) SERVICES (1) OPERATIONS (1) OTHER (1) TOTAL --------------------------------------------------------------------------------------------------------------------------------- 2001 Revenues from external customers $ 100.9 $ 33.5 $ 28.0 $ - $ (7.6) $ 154.8 Net investment income 203.0 25.0 0.4 - (6.0) 222.4 --------------------------------------------------------------------------------------------------------------------------------- Total revenue excluding net realized capital gains $ 303.9 $ 58.5 $ 28.4 $ - $ (13.6) $ 377.2 ================================================================================================================================= Operating earnings (2) $ 41.3 $ 1.8 $ 6.2 $ - $ (13.9) $ 35.4 Net realized capital gains, net of tax 4.3 2.1 - - - 6.4 --------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 45.6 $ 3.9 $ 6.2 $ $ (13.9) $ 41.8 ================================================================================================================================= 2000 Revenues from external customers $ 151.8 $ 30.6 $ 36.4 $ - $ (13.1) $ 205.7 Net investment income 200.5 29.5 0.9 - 1.0 231.9 --------------------------------------------------------------------------------------------------------------------------------- Total revenue excluding net realized capital losses $ 352.3 $ 60.1 $ 37.3 $ - $ (12.1) $ 437.6 ================================================================================================================================= Operating earnings (2) $ 40.7 $ 9.8 $ 9.2 $ - $ 2.3 $ 62.0 Net realized capital losses, net of tax (6.8) (0.5) - - - (7.3) --------------------------------------------------------------------------------------------------------------------------------- Income from continuing operations 33.9 9.3 9.2 - 2.3 54.7 Discontinued operations, net of tax: Amortization of deferred gain on sale - - - 1.5 - 1.5 --------------------------------------------------------------------------------------------------------------------------------- Net income $ 33.9 $ 9.3 $ 9.2 $ 1.5 $ 2.3 $ 56.2 =================================================================================================================================
(1) Worksite Products include deferred annuity contracts that fund defined contribution and deferred compensation plans; immediate annuity contracts; mutual funds; distribution services for annuities and mutual funds; programs offered to defined contribution and deferred compensation plans that package administrative and recordkeeping services along with a menu of investment options; wrapper agreements containing certain benefit responsive guarantees that are entered into with retirement plans, whose assets are not invested with the Company; investment advisory services and pension plan administrative services. Individual Products include deferred and immediate annuity contracts, both qualified and nonqualified, that are sold to individuals and provide variable or fixed investment options or a combination of both. Investment Management Services include: investment advisory services to affiliated and unaffiliated institutional and retail clients; underwriting; distribution for Company mutual funds and a former affiliate's separate accounts; and trustee, administrative and other services to retirement plans. Discontinued Operations include life insurance products. In 2001, Other includes consolidating adjustments, amortization of goodwill, ING corporate expense and taxes not allocated back to segment. In 2000, Other includes consolidating adjustments and taxes not allocated back to segment. (2) Operating earnings is comprised of net income (loss) excluding net realized capital gains and losses. While operating earnings is the measure of profit or loss used by the Company's management when assessing performance or making operating decisions, it does not replace net income as a measure of profitability. F-12 Summarized financial information for the Company's principal operations for the nine months ended September 30, was as follows:
INVESTMENT WORKSITE INDIVIDUAL MANAGEMENT DISCONTINUED (MILLIONS) PRODUCTS (1) PRODUCTS (1) SERVICES (1) OPERATIONS (1) OTHER (1) TOTAL -------------------------------------------------------------------------------------------------------------------------------- 2001 Revenues from external customers $ 332.8 $ 106.7 $ 90.2 $ - $ (27.5) $ 502.2 Net investment income 595.1 76.9 1.3 - (11.2) 662.1 -------------------------------------------------------------------------------------------------------------------------------- Total revenue excluding net realized capital gains $ 927.9 $ 183.6 $ 91.5 $ - $ (38.7) $1,164.3 ================================================================================================================================ Operating earnings (2) $ 127.6 $ 21.2 $ 21.2 $ - $ (55.9) 114.1 Net realized capital gains, net of tax 13.8 5.8 0.1 - - 19.7 -------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 141.4 $ 27.0 $ 21.3 $ - $ (55.9) $ 133.8 ================================================================================================================================ 2000 Revenues from external customers $ 433.8 $ 85.8 $ 104.2 $ - $ (38.2) $ 585.6 Net investment income 592.6 83.8 2.1 - 3.0 681.5 -------------------------------------------------------------------------------------------------------------------------------- Total revenue excluding net realized capital gains (losses) $1,026.4 $ 169.6 $ 106.3 $ - $ (35.2) $1,267.1 ================================================================================================================================ Operating earnings (2) $ 124.2 $ 25.6 $ 25.7 $ - $ 2.5 $ 178.0 Net realized capital (losses) gains , net of tax (12.8) (2.3) 0.1 - - (15.0) -------------------------------------------------------------------------------------------------------------------------------- Income from continuing operations 111.4 23.3 25.8 - 2.5 163.0 Discontinued operations, net of tax: Amortization of deferred gain on sale - - - 4.7 - 4.7 -------------------------------------------------------------------------------------------------------------------------------- Net income $ 111.4 $ 23.3 $ 25.8 $ 4.7 $ 2.5 $ 167.7 ================================================================================================================================
(1) Worksite Products include deferred annuity contracts that fund defined contribution and deferred compensation plans; immediate annuity contracts; mutual funds; distribution services for annuities and mutual funds; programs offered to defined contribution plans and deferred compensation plans that package administrative and recordkeeping services along with a menu of investment options; wrapper agreements containing certain benefit response guarantees that are entered into with retirement plans, whose assets are not invested with the Company; investment advisory services and pension plan administrative services. Individual Products include deferred and immediate annuity contracts, both qualified and nonqualified, that are sold to individuals and provide variable or fixed investment options or a combination of both. Investment Management Services include: investment advisory services to affiliated and unaffiliated institutional and retail clients; underwriting; distribution for Company mutual funds and a former affiliate's separate accounts; and trustee, administrative and other services to retirement plans. Discontinued Operations include life insurance products. In 2001, Other includes consolidating adjustments, amortization of goodwill, ING corporate expense and taxes not allocated back to the segment. In 2000, Other includes consolidating adjustments and taxes not allocated back to segment. (2) Operating earnings is comprised of net income (loss) excluding net realized capital gains and losses. While operating earnings is the measure of profit or loss used by the Company's management when assessing performance or making operating decisions, it does not replace net income as a measure of profitability. F-13 12. COMMITMENTS AND CONTINGENT LIABILITIES COMMITMENTS Through the normal course of investment operations, the Company commits to either purchase or sell securities, money market instruments or commercial mortgages at a specified future date and at a specified price or yield. The inability of counterparties to honor these commitments may result in either higher or lower replacement cost. Also, there is likely to be a change in the value of the securities underlying the commitments between the time that the Company enters into the commitments and the specified future date on which the Company must purchase or sell the securities, as the case may be. As of September 30, 2001, there were off-balance sheet commitments of $41.8 million. LITIGATION In recent years, a number of life insurance companies have been named as defendants in class action lawsuits relating to life insurance sales practices. The Company is currently a defendant in one such lawsuit. A purported class action complaint was filed in the United States District Court for the Middle District of Florida on June 30, 2000, by Helen Reese, Richard Reese, Villere Bergeron and Allan Eckert against ALIAC (the "Reese Complaint"). The Reese Complaint seeks compensatory and punitive damages and injunctive relief from ALIAC. The Reese Complaint claims that ALIAC engaged in unlawful sales practices in marketing life insurance policies. ALIAC has moved to dismiss the Reese Complaint for failure to state a claim upon which relief can be granted. Certain discovery is underway. The Company intends to defend the action vigorously. The Company is also involved in other lawsuits arising, for the most part, in the ordinary course of its business operations. While the outcome of these other lawsuits cannot be determined at this time, after consideration of the defenses available to the Company, applicable insurance coverage and any related reserves established, these other lawsuits are not currently expected to result in liability for amounts material to the financial condition of the Company, although they may adversely affect results of operations in future periods. F-14 INDEPENDENT ACCOUNTANTS' REVIEW REPORT The Board of Directors Aetna Life Insurance and Annuity Company We have reviewed the accompanying condensed consolidated balance sheet of Aetna Life Insurance and Annuity Company and Subsidiaries (the "Company") as of September 30, 2001, and the related condensed consolidated statements of income, changes in stockholder's equity and cash flows for the three-month and nine-month periods then ended. These financial statements are the responsibility of the Company's management. The financial statements of the Company for the three and nine-month periods ended September 30, 2000 were reviewed by other accountants whose report (dated October 31, 2000) stated that they were not aware of any material modifications that should be made to those statements for them to be in conformity with accounting principles generally accepted in the United States. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements at September 30, 2001, and for the three-month and nine-month periods then ended for them to be in conformity with accounting principles generally accepted in the United States. /s/ Ernst & Young LLP Hartford, Connecticut November 8, 2001 F-15 ITEM 2. MANAGEMENT'S ANALYSIS OF THE RESULTS OF OPERATIONS The following analysis presents a review of the Company for the three-month and nine-month periods ended September 30, 2001 and 2000. This review should be read in conjunction with the consolidated financial statements and other data presented herein as well as the "Management's Analysis of the Results of Operations" section contained in ALIAC's 2000 Annual Report on Form 10-K. OVERVIEW Sale of Aetna Financial Services and Aetna International On December 13, 2000, ING America Insurance Holdings, Inc., an indirect wholly owned subsidiary of ING Groep N.V. ("ING"), acquired Aetna Inc., comprised of the Aetna Financial Services business, of which the Company is a part, and the Aetna International business, for approximately $7.7 billion. The purchase price was comprised of approximately $5.0 billion in cash and the assumption of $2.7 billion of outstanding debt and other net liabilities. In connection with the acquisition, Aetna Inc. was renamed Lion Connecticut Holdings Inc. ("Lion"). At the time of the sale, Lion entered into certain transition services agreements with a former related party, Aetna U.S. Healthcare, which was renamed Aetna Inc. ("former Aetna"). Refer to Note 4 of Condensed Notes to Consolidated Financial Statements. As a result of ING's purchase of the Aetna Financial Services business, the Company's Financial Products segment was realigned into two new segments, Worksite Products and Individual Products. Accordingly, the financial results of all prior periods were restated. The Worksite Products segment offers annuity contracts that include a variety of funding and payout options for employer-sponsored retirement plans qualified under Internal Revenue Code Sections 401, 403, 408 and 457, as well as nonqualified deferred compensation plans. Annuity contracts may be deferred or immediate (payout annuities). These products also include programs offered to qualified plans and nonqualified deferred compensation plans that package administrative and recordkeeping services along with a menu of investment options, including Company and nonaffiliated mutual funds and variable and fixed investment options. The Worksite Products segment also includes wrapper agreements entered into with retirement plans which contain certain benefit responsive guarantees (i.e. liquidity guarantees of principal and previously accrued interest for benefits paid under the terms of the plan) with respect to portfolios of plan-owned assets not invested with the Company. The Worksite Products segment also offers pension plan administrative services. The Individual Products segment includes qualified and nonqualified annuity contracts that are offered for sale to individuals and may provide variable or fixed investment options, or a combination of both. These annuity contracts may be deferred or immediate (payout annuities). Investment Management Services provides investment advisory services to affiliated and unaffiliated institutional and retail clients on a fee-for-service basis; underwriting services to the Company funds; distribution services for other Company products; and trustee, administrative and other fiduciary services to retirement plans requiring or otherwise utilizing a trustee or custodian. F-16 CONSOLIDATED RESULTS Consolidated results include results from continuing operations and discontinued operations. Results of continuing operations are comprised of the results of the Worksite Products, Individual Products and Investment Management Services segments and certain items not directly allocable to the business segments. Refer to Note 11 of Condensed Notes to Financial Statements. F-17 Operating Summary
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, -------------------------------------------------------------------- (MILLIONS) 2001 2000 2001 2000 ---------------------------------------------------------------------------------------------------------------------------------- Premiums (1) $ 22.2 $ 41.8 $ 83.1 $ 117.1 Charges assessed against policyholders 92.7 119.9 290.2 351.0 Net investment income 222.4 231.9 662.1 681.5 Net realized capital gains (losses) 10.0 (11.2) 30.3 (23.1) Other income 39.9 44.0 128.9 117.5 ---------------------------------------------------------------------------------------------------------------------------------- Total revenue 387.2 426.4 1,194.6 1,244.0 ---------------------------------------------------------------------------------------------------------------------------------- Current and future benefits 181.8 199.8 547.2 598.3 Operating expenses: Salaries and related benefits 48.3 52.3 135.2 144.0 Other 43.2 60.1 151.4 166.4 Amortization of deferred policy acquisition costs and value of business acquired 30.6 36.8 89.3 96.4 Amortization of goodwill 14.4 - 43.3 - ---------------------------------------------------------------------------------------------------------------------------------- Total benefits and expenses 318.3 349.0 966.4 1,005.1 ---------------------------------------------------------------------------------------------------------------------------------- Income from continuing operations before income taxes 68.9 77.4 228.2 238.9 Income taxes 27.1 22.7 94.4 75.9 ---------------------------------------------------------------------------------------------------------------------------------- Income from continuing operations 41.8 54.7 133.8 163.0 Discontinued operations, net of tax: Amortization of deferred gain on sale - 1.5 - 4.7 ---------------------------------------------------------------------------------------------------------------------------------- Net Income $ 41.8 $ 56.2 $ 133.8 $ 167.7 ================================================================================================================================== Net realized capital gains (losses), net of tax (included above) $ 6.4 $ (7.3) $ 19.7 $ (15.0) ================================================================================================================================== Deposits (not included in premiums above) Annuities -fixed options $ 348.2 $ 337.1 $ 1,145.9 $ 1,151.7 Annuities -variable options 935.2 1,095.4 3,201.1 3,577.6 ---------------------------------------------------------------------------------------------------------------------------------- Total - deposits $ 1,283.4 $ 1,432.5 $ 4,347.0 $ 4,729.3 ================================================================================================================================== Assets under management: Worksite Products $ 40,951.3 $ 47,687.2 Individual Products 7,442.1 8,871.2 Investment Management Services (2) 40,039.1 57,340.5 Consolidating adjustment (3) (22,797.8) (36,985.8) ---------------------------------------------------------------------------------------------------------------------------------- Total assets under management (4) (5) 65,634.7 76,913.1 ---------------------------------------------------------------------------------------------------------------------------------- Assets under administration: (6) Worksite Products 9,299.0 8,654.6 ---------------------------------------------------------------------------------------------------------------------------------- Assets under management and administration $ 74,933.7 $ 85,567.7 ==================================================================================================================================
(1) Includes $15.1 million and $29.3 million for the three months ended September 30, 2001 and 2000, respectively, and $61.1 million and $84.5 million for the nine months ended September 30, 2001 and 2000, respectively, of annuity premiums on contracts converting from the accumulation phase to payout options with life contingencies. (2) Includes $3,851.9 million and $6,871.2 million as of September 30, 2001 and 2000, respectively, of assets managed for Aetna Life Insurance Company, a former affiliate of the Company. (3) Certain assets under management that are reported in the Worksite Products and the Individual Products segments are also reported in the Investment Management Services segment, because Investment Management Services reports a different component of the revenue generated by these particular assets under management. A consolidating adjustment, which eliminates the duplication of such assets, is recorded in order to determine consolidated assets under management of the Company. (4) Includes $10,030.8 million and $15,439.3 million at September 30, 2001 and 2000, respectively, of assets invested through the Company's products in unaffiliated mutual funds. (5) Excludes net unrealized capital gains of $423.0 million at September 30, 2001 and net unrealized capital losses of $117.2 million at September 30, 2000 on assets invested through annuities with fixed options. (6) Represents assets for which the Company provides administrative services only. F-18 Continuing Operations Income from continuing operations decreased $13 million for the three months ended September 30, 2001 compared to the same period in 2000. Excluding goodwill amortization of $14 million in 2001 and net realized capital gains and losses, income from continuing operations for the three months ended September 30, 2001 decreased $12 million, or 20%, compared to the same period in 2000. Income from continuing operations decreased $29 million for the nine months ended September 30, 2001 compared to the same period in 2000. Excluding goodwill amortization of $43 million in 2001 and net realized capital gains and losses, income from continuing operations for the nine months ended September 30, 2001 decreased $21 million, or 12%, compared to the same period in 2000. The decrease in net income, excluding goodwill and net realized capital gains and losses, for the three-month and nine-month periods ended September 30, 2001 primarily reflects a decrease in charges assessed against policyholders resulting from lower levels of assets under management and administration and an increase in the effective tax rate partially offset by lower operating expenses. Substantially all of the charges assessed against policyholders and other income reported for continuing operations are derived from assets under management and administration. Compared to September 30, 2000, assets under management and administration at September 30, 2001 decreased 12% primarily due to a decline in the stock market partially offset by additional net deposits (i.e., deposits less surrenders). Annuity deposits relate to annuity contracts not containing life contingencies. Compared to the three months and nine months ended September 30, 2000, deposits for the three months and nine months ended September 30, 2001 decreased 10% and 8%, respectively. The decreases for the three and nine month periods are primarily due to a decrease in individual annuity sales. Operating expenses decreased $21 million and $24 million for the three and nine months ended September 30, 2001, respectively, compared to the same periods in 2000. These decreases primarily reflect management's continued focus on expense reduction initiatives partially offset by a lower level of policy acquisition expenses being deferred in the Individual Products segment in order to conform with ING's deferral practice. The increases in the effective tax rate for the three-month and nine-month periods ended September 30, 2001 primarily relate to the disallowance of goodwill amortization as a deduction and a decrease in the deduction for dividends received. Discontinued Operations Results of discontinued operations for the three and nine months ended September 30, 2000 represent the amortization of the deferred gain relating to the sale of the domestic individual life insurance business that occurred on October 1, 1998. In conjunction with the accounting for the acquisition of the Aetna Financial Services business, of which the Company is a part, the deferred gain was written off. F-19 WORKSITE PRODUCTS Operating Summary
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------------------------------------------------- (MILLIONS) 2001 2000 2001 2000 ------------------------------------------------------------------------------------------------------------------------------- Premiums (1) $ 15.1 $ 41.8 $ 61.1 $ 117.1 Charges assessed against policyholders 68.0 91.2 214.6 269.6 Net investment income 203.0 200.5 595.1 592.6 Net realized capital gains (losses) 6.6 (10.6) 21.2 (19.8) Other income 17.8 18.8 57.1 47.1 ------------------------------------------------------------------------------------------------------------------------------- Total revenue 310.5 341.7 949.1 1,006.6 ------------------------------------------------------------------------------------------------------------------------------- Current and future benefits 156.2 180.7 468.5 540.8 Operating expenses: Salaries and related benefits 31.9 35.4 96.5 97.8 Other 35.7 53.2 118.2 144.5 Amortization of deferred policy acquisition costs and value of business acquired 16.4 20.3 48.3 52.2 ------------------------------------------------------------------------------------------------------------------------------- Total benefits and expenses 240.2 289.6 731.5 835.3 ------------------------------------------------------------------------------------------------------------------------------- Income from operations before income taxes 70.3 52.1 217.6 171.3 Income taxes 24.7 18.2 76.2 59.9 ------------------------------------------------------------------------------------------------------------------------------- Net income 45.6 33.9 141.4 111.4 =============================================================================================================================== Net realized capital gains (losses), net of tax (included above) 4.3 (6.8) 13.8 (12.8) =============================================================================================================================== Deposits (not included in premiums above) Annuities -fixed options $ 189.0 $ 120.5 $ 565.3 $ 456.6 Annuities -variable options 892.9 977.8 2,995.8 3,112.2 ------------------------------------------------------------------------------------------------------------------------------- Total - deposits $ 1,081.9 $ 1,098.3 $ 3,561.1 $ 3,568.8 =============================================================================================================================== Assets Under Management (2) Annuities - fixed options (3) $ 10,963.2 $ 10,182.6 Annuities - variable options (4) 21,133.3 29,991.8 ------------------------------------------------------------------------------------------------------------------------------- Subtotal - annuities $ 32,096.5 $ 40,174.4 Plan Sponsored and Other 8,854.8 7,512.8 ------------------------------------------------------------------------------------------------------------------------------- Total - assets under management 40,951.3 47,687.2 Assets under administration (5) 9,299.0 8,654.6 ------------------------------------------------------------------------------------------------------------------------------- Total assets under management and administration $ 50,250.3 $ 56,341.8 ===============================================================================================================================
(1) Includes $15.1 million and $29.3 million for the three months ended September 30, 2001 and 2000, respectively, and $61.1 million and $84.5 million for the nine months ended September 30, 2001 and 2000, respectively, for annuity premiums on contracts converting from the accumulation phase to payout options with life contingencies. (2) Includes $20,426.2 million at September 30, 2001 and $32,517.8 million at September 30, 2000 of assets under management that are also reported in the Investment Management Services segment (refer to "Consolidated Results-Continuing Operations"). (3) Excludes net unrealized capital gains of $368.6 million at September 30, 2001 and net unrealized capital losses of $107.2 million at September 30, 2000. (4) Includes $7,490.9 million at September 30, 2001 and $11,623.0 million at September 30, 2000 related to assets invested through the Company's products in unaffiliated mutual funds. (5) Represents assets for which the Company provides administrative services only. F-20 Worksite Products' net income increased $12 million for the three months ended September 30, 2001 compared to the same period in 2000. Excluding net realized capital gains and losses, net income for the three months ended September 30, 2001 increased $1 million, or 1%, compared to the same period in 2000. Worksite Products' net income increased $30 million for the nine months ended September 30, 2001 compared to the same period in 2000. Excluding net realized capital gains and losses, net income increased $3 million, or 3%, compared to the same period in 2000. The increase in net income, excluding realized gains and losses, for the three-month period ended September 30, 2001 is primarily the result of a decrease in operating expenses and amortization costs substantially offset by a decrease in charges assessed against policyholders. The increase in net income, excluding realized gains and losses, for the nine-month period ended September 30, 2001 is primarily the result of a decrease in operating expenses and amortization costs, a decrease in current and future benefits and an increase in other income substantially offset by a decrease in charges assessed against policyholders. Operating expenses decreased $21 million and $28 million for the three and nine months ended September 30, 2001, respectively, compared to the same periods in 2000. These decreases primarily reflect management's continued focus on expense reduction initiatives. Substantially all of the charges assessed against policyholders and a majority of other income reported for the Worksite Products segment are calculated based on assets under management and administration. Assets under management and administration at September 30, 2001 decreased 11% compared to September 30, 2000. The decrease in 2001 is primarily due to a decline in the stock market partially offset by additional net deposits (i.e., deposits less surrenders). Annuity deposits relate to annuity contracts not containing life contingencies. Compared to the three months ended September 30, 2000, deposits for the three months ended September 30, 2001 decreased 1%. Compared to the first nine months of 2000, deposits decreased slightly for the nine months ended September 30, 2001. F-21 INDIVIDUAL PRODUCTS Operating Summary
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------------------------------------------------------- (MILLIONS) 2001 2000 2001 2000 ------------------------------------------------------------------------------------------------------------------------------ Premiums $ 7.0 $ - $ 21.9 $ - Charges assessed against policyholders 24.7 28.8 75.6 81.5 Net investment income 25.0 29.5 76.9 83.8 Net realized capital gains (losses) 3.3 (0.7) 9.0 (3.5) Other income 1.8 1.8 9.2 4.3 ------------------------------------------------------------------------------------------------------------------------------ Total revenue 61.8 59.4 192.6 166.1 ------------------------------------------------------------------------------------------------------------------------------ Current and future benefits 25.6 19.0 78.7 57.5 Operating expenses: Salaries and related benefits 8.7 6.0 15.9 17.1 Other 10.1 6.6 24.3 20.3 Amortization of deferred policy acquisition costs and value of business acquired 11.3 13.4 32.1 35.3 ------------------------------------------------------------------------------------------------------------------------------ Total benefits and expenses 55.7 45.0 151.0 130.2 ------------------------------------------------------------------------------------------------------------------------------ Income from operations before income taxes 6.1 14.4 41.6 35.9 Income taxes 2.2 5.1 14.6 12.6 ------------------------------------------------------------------------------------------------------------------------------ Net income $ 3.9 $ 9.3 $ 27.0 $ 23.3 ============================================================================================================================== Net realized capital gains (losses), net of tax (included above) $ 2.1 $ (0.5) $ 5.8 $ (2.3) ============================================================================================================================== Deposits (not included in premiums above) Annuities -fixed options $ 159.2 $ 216.6 $ 580.6 $ 695.1 Annuities -variable options 42.3 117.6 205.3 465.4 ------------------------------------------------------------------------------------------------------------------------------ Total - deposits $ 201.5 $ 334.2 $ 785.9 $ 1,160.5 ============================================================================================================================== Assets Under Management (1) Annuities - fixed options (2) $ 2,210.1 $ 2,213.7 Annuities - variable options (3) 5,232.0 6,657.5 ------------------------------------------------------------------------------------------------------------------------------ Total - assets under management $ 7,442.1 $ 8,871.2 ==============================================================================================================================
(1) Includes $2,371.6 million at September 30, 2001 and $4,468.0 million at September 30, 2000 of assets under management that are also reported in the Investment Management Services segment (refer to "Overview"). (2) Excludes net unrealized capital gains of $54.4 million at September 30, 2001 and net unrealized capital losses of $10.0 at September 30, 2000. (3) Includes $2,539.9 million at September 30, 2001 and $3,816.3 million at September 30, 2000 related to assets invested through the Company's products in unaffiliated mutual funds. Individual Products' net income decreased $5 million for the three months ended September 30, 2001 compared to the same period in 2000. Excluding net realized capital gains and losses, net income decreased $8 million, or 82%, for the three months ended September 30, 2001 compared to the same period in 2000. Net income increased $4 million for the nine months ended September 30, 2001 compared to the same period in 2000. Excluding net realized capital gains and losses, net income decreased $4 million, or 17%, for the nine months ended September 30, 2001 compared to the same period in 2000. The decreases in earnings for the three-month and nine-month periods ended September 30, 2001 are primarily due to an increase in operating expenses and a decrease in charges assessed against policyholders. F-22 Operating expenses increased $6 million and $3 million for the three and nine months ended September 30, 2001, respectively, compared to the same periods in 2000. Operating expenses for both periods were affected by a lower level of policy acquisition expenses being deferred in order to conform with ING's deferral practice. The resulting increase in operating expenses was partially offset by lower overall operating expenses due to management's continued focus on expense reduction initiatives. Substantially all of the charges assessed against policyholders reported for the Individual Products segment are calculated based on assets under management. Assets under management at September 30, 2001 decreased 16% compared to September 30, 2000. This decrease is primarily due to a decline in the stock market partially offset by additional net deposits (i.e., deposits less surrenders). Annuity deposits relate to annuity contracts not containing life contingencies. Compared to the same periods in 2000, deposits for the three and nine months ended September 30, 2001 decreased 40% and 32%, respectively, due to a decrease in individual annuity sales. F-23 INVESTMENT MANAGEMENT SERVICES Operating Summary
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------------------------------------------------------- (MILLIONS) 2001 2000 2001 2000 ------------------------------------------------------------------------------------------------------------------------------ Net investment income $ 0.4 $ 0.9 $ 1.3 $ 2.1 Net realized capital gains 0.1 - 0.1 0.2 Other income (1) 28.0 36.4 90.2 104.2 ------------------------------------------------------------------------------------------------------------------------------ Total revenue 28.5 37.3 91.6 106.5 ------------------------------------------------------------------------------------------------------------------------------ Operating expenses: Salaries and related benefits 13.2 18.2 42.0 48.4 Other 5.6 5.0 16.2 17.5 ------------------------------------------------------------------------------------------------------------------------------ Total operating expenses 18.8 23.2 58.2 65.9 ------------------------------------------------------------------------------------------------------------------------------ Income from operations before income taxes 9.7 14.1 33.4 40.6 Income taxes 3.5 4.9 12.1 14.8 ------------------------------------------------------------------------------------------------------------------------------ Net income $ 6.2 $ 9.2 $ 21.3 $ 25.8 =============================================================================================================================== Net realized capital gains, net of tax (included above) $ - $ - $ 0.1 $ 0.1 =============================================================================================================================== Assets under management: Plan sponsored (2) $ 13,659.6 $ 16,724.0 Collateralized bond obligations 1,617.6 2,023.2 Retail mutual funds 1,964.1 1,607.5 ------------------------------------------------------------------------------------------------------------------------------ Subtotal 17,241.3 20,354.7 ------------------------------------------------------------------------------------------------------------------------------ Invested through products offered by the Worksite Products and Individual Products segments: (3) Variable annuity mutual funds 14,199.0 17,450.8 Fixed annuities (4) (5) - 12,396.4 Plan sponsored and other 8,598.8 7,138.6 ------------------------------------------------------------------------------------------------------------------------------ Subtotal 22,797.8 36,985.8 ------------------------------------------------------------------------------------------------------------------------------ Total assets under management $ 40,039.1 $ 57,340.5 ===============================================================================================================================
(1) Primarily includes investment advisory fees earned on assets under management. (2) Includes $3,851.9 million and $6,871.2 million of assets managed for Aetna Life Insurance Company, a former affiliate of the Company, as of September 30, 2001 and 2000, respectively. (3) The Investment Management Services segment earns investment advisory fees on these assets, which are also reported in either the Worksite Products or the Individual Products segments. (4) In accordance with a new advisory agreement effective April 1, 2001, ING Investment Management, LLC, an affiliate of the Company, manages the investments supporting the Company 's fixed annuity products. (5) Excludes net unrealized capital losses of $117.2 million at September 30, 2000. For the three months ended September 30, 2001, the Investment Management Services segment's net income decreased $3 million, or 33%, compared to the same period in 2000. For the nine months ended September 30, 2001, the Investment Management Services segment's net income decreased $5 million, or 17%, compared to the same period in 2000. The decrease in net income for the three and nine month periods ended September 30, 2001 primarily reflects a decrease in investment advisory fee income partially offset by a decrease in other operating expenses. Investment advisory fees are calculated based on assets under management. The decrease in advisory fee income is due to lower levels of assets under management. At September 30, 2001, assets under management decreased 30% compared to those reported at September 30, 2000. This decrease was primarily due to a change in the advisory agreements relating to the Company's fixed annuity and collateralized bond obligation assets under management and a decline in the stock market. F-24 Effective April 1, 2001, ING Investment Management, LLC, an affiliate of the Company, replaced Aeltus Investment Management, Inc. ("Aeltus"), an indirect wholly owned subsidiary of the Company, as the advisor for the investments supporting the Company's fixed annuity products. Aeltus, along with its subsidiaries, comprises the Investment Management Services segment. Subsequent to the effective date of the new advisory agreement, the Company no longer received advisory fees relating to these assets under management. Operating expenses decreased $5 million and $7 million for the three and nine months ended September 30, 2001, respectively, compared to the same periods in 2000. The decreases in operating expenses are primarily due to the implementation of new long-term compensation agreements by Aeltus at the beginning of the year. DISCONTINUED OPERATIONS - DOMESTIC INDIVIDUAL LIFE INSURANCE Results of discontinued operations represents the amortization of the deferred gain relating to the sale of the domestic individual life insurance business to Lincoln. The after tax amortization recognized during the three and nine months ended September 30, 2000 was $1.5 million and $4.7 million, respectively. In conjunction with the accounting for the acquisition of the Aetna Financial Services business, of which the Company is a part, the deferred gain relating to the sale of the domestic individual life insurance business was written off. Individual life insurance coverage in force was approximately $37 billion at September 30, 2001. The entire amount of this coverage in force has been ceded to Lincoln under the indemnity reinsurance arrangement entered into as part of the sale. For more details about the transaction and the indemnity reinsurance arrangement, refer to Note 3 of Condensed Notes to Consolidated Financial Statements in the Company's 2000 Annual Report on Form 10-K. F-25 GENERAL ACCOUNT INVESTMENTS The Company's invested assets were comprised of the following:
(MILLIONS) SEPTEMBER 30, 2001 DECEMBER 31, 2000 -------------------------------------------------------------------------------------------------------------- Debt securities, available for sale, at fair value (1) $ 13,948.6 $ 11,371.4 Equity securities, at fair value: Nonredeemable preferred stock 23.5 100.7 Investment in affiliated mutual funds 24.8 12.7 Common stock 4.7 3.5 Short-term investments (2) 20.7 111.7 Mortgage loans 192.9 4.6 Policy loans 334.7 339.3 Other investments 15.4 13.4 -------------------------------------------------------------------------------------------------------------- Total Investments $ 14,565.3 $ 11,957.3 ==============================================================================================================
(1) At September 30, 2001 and December 31, 2000, $822.3 million and $126.7 million, respectively, of debt securities were pledged to creditors. (2) At December 31, 2000, $2.3 million of short-term investments were pledged to creditors; and, at September 30, 2001, there were no short-term investments pledged to creditors. Debt Securities At September 30, 2001 and December 31, 2000, the Company's carrying value of available for sale debt securities including debt securities pledged to creditors (herein after referred to as "total debt securities") represented 96% and 95% of the total general account invested assets, respectively. At September 30, 2001 and December 31, 2000, $11.4 billion, or 82% of total debt securities, and $8.9 billion, or 79% of total debt securities, respectively, supported experience-rated contracts. The carrying value of the Company's total debt securities included net unrealized capital gains of $423.0 million and $126.9 million at September 30, 2001 and December 31, 2000, respectively. It is management's objective that the portfolio of debt securities be of high quality and be well diversified by market sector. The debt securities in the Company's portfolio are generally rated by external rating agencies and, if not externally rated, are rated by the Company on a basis believed to be similar to that used by the rating agencies. The average quality rating of the Company's debt security portfolio was AA- at September 30, 2001 and AA at December 31, 2000. F-26 The percentage of total debt securities by quality rating category is as follows:
SEPTEMBER 30, 2001 DECEMBER 31, 2000 ----------------------------------------------------------------------------------------------------- AAA 54.3% 53.2% AA 6.9 9.1 A 20.7 23.5 BBB 13.0 9.9 BB 2.8 1.5 B and Below 2.3 2.8 ----------------------------------------------------------------------------------------------------- Total 100.0% 100.0% =====================================================================================================
The percentage of total debt securities by market sector is as follows:
SEPTEMBER 30, 2001 DECEMBER 31, 2000 ----------------------------------------------------------------------------------------------------- U.S. Corporate 42.5% 43.0% Residential Mortgage-backed 32.1 27.1 Commercial/Multi-family Mortgage-backed 9.5 9.8 Foreign (1) 8.5 5.0 Asset-backed 6.1 6.7 U.S. Treasuries/Agencies 1.3 8.4 ------------------------------------------------------------------------ ----------------------------- Total 100.0% 100.0% ======================================================================================================
(1) Primarily U.S. dollar denominated FORWARD-LOOKING INFORMATION/RISK FACTORS The "Forward-Looking Information/Risk Factors" section of ALIAC's 2000 Annual Report on Form 10-K contains discussions of important risk factors related to the Company's businesses. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In recent years, a number of life insurance companies have been named as defendants in class action lawsuits relating to life insurance sales practices. The Company is currently a defendant in one such lawsuit. A purported class action complaint was filed in the United States District Court for the Middle District of Florida on June 30, 2000, by Helen Reese, Richard Reese, Villere Bergeron and Allan Eckert against ALIAC (the "Reese Complaint"). The Reese Complaint seeks compensatory and punitive damages and injunctive relief from ALIAC. The Reese Complaint claims that ALIAC engaged in unlawful sales practices in marketing life insurance policies. ALIAC has moved to dismiss the Reese Complaint for failure to state a claim upon which relief can be granted. Certain discovery is underway. The Company intends to defend the action vigorously. F-27 The Company is also involved in other lawsuits arising, for the most part, in the ordinary course of its business operations. While the outcome of these other lawsuits cannot be determined at this time, after consideration of the defenses available to the Company, applicable insurance coverage and any related reserves established, these other lawsuits are not currently expected to result in liability for amounts material to the financial condition of the Company, although they may adversely affect results of operations in future periods. ITEM 5. OTHER INFORMATION RATINGS The Company's financial strength ratings at November 9, 2001 and August 9, 2001 are as follows:
RATING AGENCIES ------------------------------------------------------------------------------------------- MOODY'S INVESTORS STANDARD & POOR'S A.M. BEST FITCH SERVICE -------------------------------------------------------------------------------------------------------------------- November 9, 2001 A+ AA+ Aa2 AA+ August 9, 2001 A+ AA+ Aa2 AA+ --------------------------------------------------------------------------------------------------------------------
F-28 VARIABLE ANNUITY ACCOUNT B PART C - OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS ------------------------------------------ (a) Financial Statements: (1) Incorporated by reference in Part A Included in Part A: Condensed Financial Information (2) Incorporated by reference in Part B: Included in Part B Financial Statements of Variable Annuity Account B: - Statement of Assets and Liabilities as of December 31, 2000 - Statement of Operations for the year ended December 31, 2000 - Statements of Changes in Net Assets for the years ended December 31, 2000 and 1999 - Condensed Financial Information for the year ended December 31, 2000 - Notes to Financial Statements - Independent Auditors' Report * Statement of Assets and Liabilities as of September 30, 2001 (unaudited) * Statement of Operations for the Nine Month Period Ended September 30, 2001 (unaudited) * Statements of Changes in Net Assets for the Nine Month Periods Ended September 30, 2001 and September 30, 2000 (unaudited) * Condensed Financial Information for the Nine Month Period Ended September 30, 2001 (unaudited) * Notes to Financial Statements (unaudited) Financial Statements of Aetna Life Insurance and Annuity Company: - Independent Auditors' Report - Consolidated Statements of Income for the One Month Ended December 31, 2000, the Eleven Months Ended November 30, 2000 and for the Years Ended December 31, 1999 and 1998 - Consolidated Balance Sheets as of December 31, 2000 and 1999 - Consolidated Statements of Changes in Shareholder's Equity for the One Month Ended December 31, 2000, the Eleven Months Ended November 30, 2000 and for the Years Ended December 31, 1999 and 1998 - Consolidated Statements of Cash Flows for the One Month Ended December 31, 2000, the Eleven Month Ended November 30, 2000 and for the Years Ended December 31, 1999 and 1998 - Notes to Consolidated Financial Statements ** Condensed Consolidated Financial Statements: ** Condensed Consolidated Statements of Income for the Three-Month and Nine-Month Periods Ended September 30, 2001 and 2000 (unaudited) ** Condensed Consolidated Balance Sheets as of September 30, 2001 (unaudited) and December 31, 2000 ** Condensed Consolidated Statements of Changes in Shareholder's Equity for the Nine-Month Periods Ended September 30, 2001 and 2000 (unaudited) ** Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2001 and 2000 (unaudited) ** Condensed Notes to Consolidated Financial Statements (unaudited) (b) Exhibits (1) Resolution of the Board of Directors of Aetna Life Insurance and Annuity Company establishing Variable Annuity Account B(1) (2) Not applicable (3.1) Selling Agreement(2) (3.2) Alternative Form of Wholesaling Agreement and Related Selling Agreement(3) (3.3) Federated Broker Dealer Agreement (9/2/94)(4) (3.4) Broker-Dealer Agreement dated June 7, 2000 between Aetna Life Insurance and Annuity Company and Aetna Investment Services, Inc. (AISI) and Letter of Assignment to AISI(5) (3.5) Underwriting Agreement dated November 17, 2000 between Aetna Life Insurance and Annuity Company and Aetna Investment Services, LLC(5) (4.1) Variable Annuity Contract (G-CDA-97(NY))(6) (4.2) Variable Annuity Contract Certificate (GMCC-97(NY)) to Contract G-CDA-97(NY)(6) (4.3) Variable Annuity Contract (G-MP1(5/97))(7) (4.4) Variable Annuity Contract Certificate (MP1CERT(5/97))(7) (4.5) Variable Annuity Contract (I-MP1(5/97))(7) (4.6) Variable Annuity Contract (G-MP1(5/96))(8) (4.7) Variable Annuity Contract Certificate (MP1CERT(5/96))(8) (4.8) Variable Annuity Contract (I-MP1(5/96))(8) (4.9) Variable Annuity Contract (G-CDA-96(NY))(8) (4.10) Variable Annuity Contract Certificate (GMCC-96(NY))(8) (4.11) Variable Annuity Contract (G-CDA-IC(NQ))(9) (4.12) Variable Annuity Certificate (GMCC-IC(NQ))(9) (4.13) Variable Annuity Contract (G-CDA-IC(IR))(9) (4.14) Variable Annuity Contract (I-CDA-IC(NQ/MP))(9) (4.15) Variable Annuity Contract Certificate (GMCC-IC(IR))(10) (4.16) Variable Annuity Contract (I-CDA-IC(IR/MP))(9) (4.17) Variable Annuity Contracts and Certificates (G-CDA-IC(IR/NY)), (GMCC-IC(IR/NY)), (G-CDA-IC(NQ/NY)), and (GMCC-IC(NQ/NY))(11) (4.18) Endorsements (MP1IRA(5/97)) and (I-MP1IRA(5/97)) to Contract G-MP1(5/96) and Certificate MP1CERT(5/96)(8) (4.19) Endorsements (MP1QP(5/97)) and (I-MP1QP(5/97)) to Contract G-MP1(5/96) and Certificate MP1CERT(5/96)(8) (4.20) Endorsements (MP1TDA(5/97)) and (I-MP1TDA(5/97)) to Contract G-MP1(5/96) and Certificate MP1CERT(5/96)(8) (4.21) Endorsements (MP1DC(5/97)) and (I-MP1DC(5/97)) to Contract G-MP1(5/96) and Certificate MP1CERT(5/96)(8) (4.22) Endorsement (G-MP1IRA(11/96)) to Contract G-CDA-96(NY) and Certificate GMCC-96(NY)(8) (4.23) Endorsement (I-MP1END(9/97)) to Contract I-MP1(5/96)(7) (4.24) Endorsement (E1-MPROTH-97) to Contract G-MP1(5/97)(6) (4.25) Endorsement (EI1MPROTH-97) to Contract I-MP1(5/97)(6) (4.26) Endorsement (MP1IRA(11/97)) to Contract G-MP1(5/97)(6) (4.27) Endorsement (I-MP1IRA(11/97)) to Contract I-MP1(5/97)(6) (4.28) Endorsement (MP1END(9/97)) to Contract G-MP1(5/97) and Certificate MP1CERT(5/97)(12) (4.29) Endorsement (I-MP1END(9/97)) to Contract I-MP1(5/97)(12) (4.30) Endorsement (MPNQEND(4/95)) to Contract G-CDA-IC(NQ)(13) (4.31) Endorsement (MPIREND(4/95)) to Contract G-CDA-IC(IR)(13) (4.32) Endorsement (IMPNQEND(4/95)) to Contract I-CDA-IC(NQ/MP)(13) (4.33) Endorsement (IMPIREND(4/95)) to Contract I-CDA-IC(IR/MP)(13) (4.34) Endorsement (EMPGET98) to Contract G-MP1(5/97) and Certificate MP1CERT(5/97)(14) (4.35) Endorsement (MPNQCERTEND(4/95)) to Certificate GMCC-IC(NQ)(13) (4.36) Endorsement (MPIRCERTEND(4/95)) to Certificate GMCC-IC(IR)(13) (4.37) Endorsement EGET(99) to Contracts G-MP1(5/97), G-CDA-97(NY) and I-MP1(5/97) and Certificates MP1(CERT(5/97)) and GMCC-97(NY)(15) (4.38) Contract Schedule I Accumulation Period (G-MP1(11/97)-5) to Group Contract G-MP1(5/97)(6) (4.39) Contract Schedule I Accumulation Period (I-MP1(11/97)-5) to Individual Contract I-MP1(5/97)(6) (5.1) Variable Annuity Contract Application (MPAPPNY(1/96))(6) (5.2) Variable Annuity Contract Application (300-MAR-IB)(16) (5.3) Variable Annuity Contract Application (710.6.13)(16) (6.1) Certificate of Incorporation of Aetna Life Insurance and Annuity Company(17) (6.2) Amendment of Certificate of Incorporation of Aetna Life Insurance and Annuity Company(18) (6.3) By-Laws as amended September 17, 1997 of Aetna Life Insurance and Annuity Company(19) (7) Not applicable (8.1) Fund Participation Agreement dated as of May 1, 1998 by and among Aetna Life Insurance and Annuity Company and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series, Aetna Variable Portfolios, Inc. on behalf of each of its series and Aeltus Investment Management, Inc.(20) (8.2) Amendment dated November 9, 1998 to Fund Participation Agreement dated as of May 1, 1998 by and among Aetna Life Insurance and Annuity Company and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series, Aetna Variable Portfolios, Inc. on behalf of each of its series and Aeltus Investment Management, Inc.(21) (8.3) Second Amendment dated December 31, 1999 to Fund Participation Agreement dated as of May 1, 1998 and amended on November 9, 1998 by and among Aetna Life Insurance and Annuity Company and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series, Aetna Variable Portfolios, Inc. on behalf of each of its series and Aeltus Investment Management, Inc.(22) (8.4) Third Amendment dated February 11, 2000 to Fund Participation Agreement dated as of May 1, 1998 and amended on November 9, 1998 and December 31, 1999 by and among Aetna Life Insurance and Annuity Company and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series, Aetna Variable Portfolios, Inc. on behalf of each of its series and Aeltus Investment Management, Inc.(23) (8.5) Fourth Amendment dated May 1, 2000 to Fund Participation Agreement dated as of May 1, 1998 and amended on November 9, 1998, December 31, 1999 and February 11, 2000 by and among Aetna Life Insurance and Annuity Company and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series, Aetna Variable Portfolios, Inc. on behalf of each of its series and Aeltus Investment Management, Inc.(22) (8.6) Fifth Amendment dated February 27, 2001 to Fund Participation Agreement dated as of May 1, 1998 and amended on November 9, 1998, December 31, 1999, February 11, 2000 and May 1, 2000 by and among Aetna Life Insurance and Annuity Company and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series, Aetna Variable Portfolios, Inc. on behalf of each of its series and Aeltus Investment Management, Inc.(24) (8.7) Service Agreement dated as of May 1, 1998 between Aeltus Investment Management, Inc. and Aetna Life Insurance and Annuity Company in connection with the sale of shares of Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series and Aetna Variable Portfolios, Inc. on behalf of each of its series(20) (8.8) Amendment dated November 4, 1998 to Service Agreement dated as of May 1, 1998 between Aeltus Investment Management, Inc. and Aetna Life Insurance and Annuity Company in connection with the sale of shares of Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series and Aetna Variable Portfolios, Inc. on behalf of each of its series(21) (8.9) Second Amendment dated February 11, 2000 to Service Agreement dated as of May 1, 1998 and amended on November 4, 1998 between Aeltus Investment Management, Inc. and Aetna Life Insurance and Annuity Company in connection with the sale of shares of Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series and Aetna Variable Portfolios, Inc. on behalf of each of its series(22) (8.10) Third Amendment dated May 1, 2000 to Service Agreement dated as of May 1, 1998 and amended on November 4, 1998 and February 11, 2000 between Aeltus Investment Management, Inc. and Aetna Life Insurance and Annuity Company in connection with the sale of shares of Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its series, Aetna Generation Portfolios, Inc. on behalf of each of its series and Aetna Variable Portfolios, Inc. on behalf of each of its series(22) (8.11) Administrative Service Agreement between Aetna Life Insurance and Annuity Company and Agency, Inc.(2) (8.12) Fund Participation Agreement dated as of March 31, 1995 (Amended and Restated) between Aetna Life Insurance and Annuity Company, Alger American Fund and Fred Alger Management, Inc.(3) (8.13) Fund Participation Agreement dated December 1, 1997 among Calvert Responsibly Invested Balanced Portfolio, Calvert Asset Management Company, Inc. and Aetna Life Insurance and Annuity Company(25) (8.14) Service Agreement dated December 1, 1997 between Calvert Asset Management Company, Inc. and Aetna Life Insurance and Annuity Company(25) (8.15) Fund Participation Agreement dated July 1, 1994 by and among Aetna Life Insurance and Annuity Company, Insurance Management Series and Federated Advisors(26) (8.16) Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation(18) (8.17) Fifth Amendment dated as of May 1, 1997 to the Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation(7) (8.18) Sixth Amendment dated November 6, 1997 to the Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996 and May 1, 1997 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation(27) (8.19) Seventh Amendment dated as of May 1, 1998 to the Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996, May 1, 1997 and November 6, 1997 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation(20) (8.20) Eighth Amendment dated December 1, 1999 to Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996, May 1, 1997, November 6, 1997 and May 1, 1998 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation(22) (8.21) Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation(18) (8.22) Fifth Amendment dated as of May 1, 1997 to the Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation(7) (8.23) Sixth Amendment dated as of January 20, 1998 to the Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996 and May 1, 1997 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation(28) (8.24) Seventh Amendment dated as of May 1, 1998 to the Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996, May 1, 1997 and January 20, 1998 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation(20) (8.25) Eighth Amendment dated December 1, 1999 to Fund Participation Agreement dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996, May 1, 1997, January 20, 1998 and May 1, 1998 between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation(22) (8.26) Service Agreement dated as of November 1, 1995 between Aetna Life Insurance and Annuity Company and Fidelity Investments Institutional Operations Company(29) (8.27) Amendment dated January 1, 1997 to Service Agreement dated as of November 1, 1995 between Aetna Life Insurance and Annuity Company and Fidelity Investments Institutional Operations Company(7) (8.28) Service Contract dated May 2, 1997 between Fidelity Distributors Corporation and Aetna Life Insurance and Annuity Company(21) (8.29) Fund Participation Agreement dated December 8, 1997 among Janus Aspen Series and Aetna Life Insurance and Annuity Company and Janus Capital Corporation(30) (8.30) Amendment dated October 12, 1998 to Fund Participation Agreement dated December 8, 1997 among Janus Aspen Series and Aetna Life Insurance and Annuity Company and Janus Capital Corporation(21) (8.31) Second Amendment dated December 1, 1999 to Fund Participation Agreement dated December 8, 1997 and amended on October 12, 1998 among Janus Aspen Series and Aetna Life Insurance and Annuity Company and Janus Capital Corporation(22) (8.32) Amendment dated as of August 1, 2000 to Fund Participation Agreement dated December 8, 1997 and amended on October 12, 1998 and December 1, 1999 among Janus Aspen Series and Aetna Life Insurance and Annuity Company and Janus Capital Corporation(31) (8.33) Service Agreement dated December 8, 1997 between Janus Capital Corporation and Aetna Life Insurance and Annuity Company(30) (8.34) First Amendment dated as of August 1, 2000 to Service Agreement dated December 8, 1997 between Janus Capital Corporation and Aetna Life Insurance and Annuity Company(31) (8.35) Distribution and Shareholder Services Agreement - Service Shares of Janus Aspen Series (for Insurance Companies) dated August 1, 2000 between Janus Distributors, Inc. and Aetna Life Insurance and Annuity Company(31) (8.36) Fund Participation Agreement dated December 1, 1988 and amended February 11, 1991 between Aetna Life Insurance and Annuity Company and Lexington Management Corporation regarding Natural Resources Trust(3) (8.37) Fund Participation Agreement dated April 28, 1994 between Aetna Life Insurance and Annuity Company, Lexington Emerging Markets Fund, Inc. and Lexington Management Corporation (its investment advisor)(2) (8.38) Fund Participation Agreement dated April 30, 1996, and amended on September 3, 1996, March 14, 1997 and November 28, 1997 among MFS Variable Insurance Trust, Aetna Life Insurance and Annuity Company and Massachusetts Financial Services Company(20) (8.39) Fourth Amendment dated May 1, 1998 to the Fund Participation Agreement dated April 30, 1996 and amended on September 3, 1996, March 14, 1997 and November 28, 1997 by and among MFS Variable Insurance Trust, Aetna Life Insurance and Annuity Company and Massachusetts Financial Services Company(32) (8.40) Fifth Amendment dated May 1, 1998 to Fund Participation Agreement dated April 30, 1996 and amended on September 3, 1996, March 14, 1997 and November 28, 1997 by and among MFS Variable Insurance Trust, Aetna Life Insurance and Annuity Company and Massachusetts Financial Services Company(33) (8.41) Fifth Amendment dated July 1, 1999 to Fund Participation Agreement dated April 30, 1996 and amended on September 3, 1996, March 14, 1997, November 28, 1997 and May 1, 1998 by and among MFS Variable Insurance Trust, Aetna Life Insurance and Annuity Company and Massachusetts Financial Services Company(34) (8.42) Sixth Amendment dated November 17, 2000 to the Fund Participation Agreement dated April 30, 1996 and amended on September 3, 1996, March 14, 1997, November 28, 1997, May 1, 1998 and July 1, 1999 between Aetna Life Insurance and Annuity Company, MFS Variable Insurance Trust and Massachusetts Financial Services Company(5) (8.43) Fund Participation Agreement dated March 11, 1997 between Aetna Life Insurance and Annuity Company and Oppenheimer Variable Annuity Account Funds and Oppenheimer Funds, Inc.(26) (8.44) First Amendment dated December 1, 1999 to Fund Participation Agreement dated March 11, 1997 between Aetna Life Insurance and Annuity Company and Oppenheimer Variable Annuity Account Funds and Oppenheimer Funds, Inc.(22) (8.45) Service Agreement effective as of March 11, 1997 between Oppenheimer Funds, Inc. and Aetna Life Insurance and Annuity Company(26) (8.46) Fund Participation Agreement dated July 29, 1992 and amended December 22, 1992 and June 1, 1994 between Aetna Life Insurance and Annuity Company, Investors Research Corporation and TCI Portfolios, Inc.(3) (9) Opinion and Consent of Counsel (10) Consent of KPMG LLP, Independent Auditors (10.1) Consent of Ernst & Young, Independent Auditors (11) Not applicable (12) Not applicable (13) Schedule for Computation of Performance Data(9) (14.1) Powers of Attorney (14.2) Authorization for Signatures(3) 1. Incorporated by reference to Post-Effective Amendment No. 6 to Registration Statement on Form N-4 (File No. 33-75986), as filed on April 22, 1996. 2. Incorporated by reference to Post-Effective Amendment No. 22 to Registration Statement on Form N-4 (File No. 33-34370), as filed on April 22, 1996. 3. Incorporated by reference to Post-Effective Amendment No. 5 to Registration Statement on Form N-4 (File No. 33-75986), as filed on April 12, 1996. 4. Incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement on Form N-4 (File No. 33-79122), as filed on August 16, 1995. 5. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 333-49176), as filed on November 30, 2000. 6. Incorporated by reference to Post-Effective Amendment No. 32 to Registration Statement on Form N-4 (File No. 33-34370), as filed on December 16, 1997. 7. Incorporated by reference to Post-Effective Amendment No. 30 to Registration Statement on Form N-4 (File No. 33-34370), as filed on September 29, 1997. 8. Incorporated by reference to Post-Effective Amendment No. 26 to Registration Statement on Form N-4 (File No. 33-34370), as filed on February 21, 1997. 9. Incorporated by reference to Post-Effective Amendment No. 35 to Registration Statement on Form N-4 (File No. 33-34370), as filed on April 17, 1998. 10. Incorporated by reference to Post-Effective Amendment No. 37 to Registration Statement on Form N-4 (File No. 33-34370), as filed on April 9, 1999. 11. Incorporated by reference to Post-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 33-87932), as filed on September 19, 1995. 12. Incorporated by reference to Post-Effective Amendment No. 33 to Registration Statement on Form N-4 (File No. 33-34370), as filed on February 12, 1998. 13. Incorporated by reference to Post-Effective Amendment No. 34 to Registration Statement on Form N-4 (File No. 33-34370), as filed on February 27, 1998. 14. Incorporated by reference to Post-Effective Amendment No. 37 to Registration Statement on Form N-4 (File No. 33-34370), as filed on September 14, 1998. 15. Incorporated by reference to Post-Effective Amendment No. 13 to Registration Statement on Form N-4 (File No. 333-01107), as filed on April 7, 1999. 16. Incorporated by reference to Post-Effective Amendment No. 29 to Registration Statement on Form N-4 (File No. 33-34370), as filed on August 18, 1997. 17. Incorporated by reference to Post-Effective Amendment No. 1 to Registration Statement on Form S-1 (File No. 33-60477), as filed on April 15, 1996. 18. Incorporated by reference to Post-Effective Amendment No. 12 to Registration Statement on Form N-4 (File No. 33-75964), as filed on February 11, 1997. 19. Incorporated by reference to Post-Effective Amendment No. 12 to Registration Statement on Form N-4 (File No. 33-91846), as filed on October 30, 1997. 20. Incorporated by reference to Registration Statement on Form N-4 (File No. 333-56297) as filed on June 8, 1998. 21. Incorporated by reference to Post-Effective Amendment No. 2 to Registration Statement on Form N-4 (File No. 333-56297), as filed on December 14, 1998. 22. Incorporated by reference to Post-Effective Amendment No. 19 to Registration Statement on Form N-4 (File No. 333-01107), as filed on February 16, 2000. 23. Incorporated by reference to Post-Effective Amendment No. 20 to Registration Statement on Form N-4 (File No. 333-01107), as filed on April 4, 2000. 24. Incorporated by reference to Post-Effective Amendment No. 24 to Registration Statement on Form N-4 (File No. 333-01107), as filed on April 13, 2001. 25. Incorporated by reference to Post-Effective Amendment No. 8 to Registration Statement on Form N-4 (File No. 333-01107), as filed on February 19, 1998. 26. Incorporated by reference to Post-Effective Amendment No. 27 to Registration Statement on Form N-4 (File No. 33-34370), as filed on April 16, 1997. 27. Incorporated by reference to Post-Effective Amendment No. 16 to Registration Statement on Form N-4 (File No. 33-75964), as filed on February 9, 1998. 28. Incorporated by reference to Post-Effective Amendment No. 7 to Registration Statement on Form S-6 (File No. 33-75248), as filed on February 24, 1998. 29. Incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement on Form N-4 (File No. 33-88720), as filed on June 28, 1996. 30. Incorporated by reference to Post-Effective Amendment No. 10 to Registration Statement on Form N-4 (File No. 33-75992), as filed on December 31, 1997. 31. Incorporated by reference to Post-Effective Amendment No. 22 to Registration Statement on Form N-4 (File No. 333-01107), as filed on August 14, 2000. 32. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 333-56297), as filed on August 4, 1998. 33. Incorporated by reference to Post-Effective Amendment No. 4 to Registration Statement on Form N-4 (File No. 333-56297), as filed on February 16, 1999. 34. Incorporated by reference to Post-Effective Amendment No. 11 to Registration Statement on Form N-4 (File No. 333-56297), as filed on November 23, 1999. ITEM 25. DIRECTORS AND PRINCIPAL OFFICERS OF THE DEPOSITOR* --------------------------------------------------------------- Name and Principal BUSINESS ADDRESS POSITIONS AND OFFICES WITH DEPOSITOR Thomas J. McInerney** Director and President Wayne R. Huneke*** Director and Chief Financial Officer Robert C. Salipante**** Director P. Randall Lowery*** Director Mark A. Tullis*** Director Deborah Koltenuk** Vice President and Corporate Controller Paula Cludray-Engelke**** Secretary Brian Murphy** Vice President and Chief Compliance Officer * These individuals may also be directors and/or officers of other affiliates of the Company. ** The principal business address of these directors and officers is 151 Farmington Avenue, Hartford, Connecticut 06156. *** The principal business address of these directors and officers is 5780 Powers Ferry Road, NW, Atlanta, Georgia 30327-4390. **** The principal business address of this Director and this Officer is 20 Washington Avenue South, Minneapolis, Minnesota 55401. ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT -------------------------------------------------------------------------------- Incorporated by reference to Post-Effective Amendment No. 49 to Registration Statement on Form N-4 (File No. 33-34370), as filed on December 6, 2001 ITEM 27. NUMBER OF CONTRACT OWNERS As of December 31, 2001, there were 119,355 individuals holding interests in variable annuity contracts funded through Variable Annuity Account B. ITEM 28. INDEMNIFICATION Section 33-779 of the Connecticut General Statutes ("CGS") provides that a corporation may provide indemnification of or advance expenses to a director, officer, employee or agent only as permitted by Sections 33-770 to 33-778, inclusive, of the Connecticut General Statutes, as amended by Sections 12 to 20, inclusive, of the CGS. Reference is hereby made to Section 33-771(e) of the CGS regarding indemnification of directors and Section 33-776(d) of CGS regarding indemnification of officers, employees and agents of Connecticut corporations. These statutes provide in general that Connecticut corporations incorporated prior to January 1, 1997 shall, except to the extent that their certificate of incorporation expressly provides otherwise, indemnify their directors, officers, employees and agents against "liability" (defined as the obligation to pay a judgment, settlement, penalty, fine, including an excise tax assessed with respect to an employee benefit plan, or reasonable expenses incurred with respect to a proceeding) when (1) a determination is made pursuant to Section 33-775 that the party seeking indemnification has met the standard of conduct set forth in Section 33-771 or (2) a court has determined that indemnification is appropriate pursuant to Section 33-774. Under Section 33-775, the determination of and the authorization for indemnification are made (a) by the disinterested directors, as defined in Section 33-770(3); (b) by special counsel; (c) by the shareholders; or (d) in the case of indemnification of an officer, agent or employee of the corporation, by the general counsel of the corporation or such other officer(s) as the board of directors may specify. Also, Section 33-772 provides that a corporation shall indemnify an individual who was wholly successful on the merits or otherwise against reasonable expenses incurred by him in connection with a proceeding to which he was a party because he was a director of the corporation. Pursuant to Section 33-771(d), in the case of a proceeding by or in the right of the corporation or with respect to conduct for which the director, officer, agent or employee was adjudged liable on the basis that he received a financial benefit to which he was not entitled, indemnification is limited to reasonable expenses incurred in connection with the proceeding against the corporation to which the individual was named a party. The statute does specifically authorize a corporation to procure indemnification insurance on behalf of an individual who was a director, officer, employee or agent of the corporation. Consistent with the statute, ING Groep N.V. has procured insurance from Lloyd's of London and several major United States and international excess insurers for its directors and officers and the directors and officers of its subsidiaries, including the Depositor. Section 20 of the Aetna Investment Services, LLC (AIS) Limited Liability Company Agreement provides that AIS will indemnify certain persons against any loss, damage, claim or expenses (including legal fees) incurred by such person if he is made a party or is threatened to be made a party to a suit or proceeding because he was a member, officer, director, employee or agent of AIS, as long as he acted in good faith on behalf of AIS and in a manner reasonably believed to be within the scope of his authority. An additional condition requires that no person shall be entitled to indemnity if his loss, damage, claim or expense was incurred by reason of his gross negligence or willful misconduct. This indemnity provision is authorized by and is consistent with Title 8, Section 145 of the General Corporation Law of the State of Delaware. ITEM 29. PRINCIPAL UNDERWRITER (a) In addition to serving as the principal underwriter for the Registrant, Aetna Investment Services, LLC (AIS) also acts as the principal underwriter for Portfolio Partners, Inc. (a management investment company registered under the Investment Company Act of 1940 (1940 Act)). Additionally, AIS acts as the principal underwriter for Variable Life Account B of Aetna Life Insurance and Annuity Company (Aetna), Variable Life Account C of Aetna, Variable Annuity Account C of Aetna and Variable Annuity Account G of Aetna (separate accounts of Aetna registered as unit investment trusts under the 1940 Act). AIS is also the principal underwriter for Variable Annuity Account I of Aetna Insurance Company of America (AICA) (a separate account of AICA registered as a unit investment trust under the 1940 Act). (b) The following are the directors and officers of the Principal Underwriter: Name and Principal Positions and Offices with BUSINESS ADDRESS PRINCIPAL UNDERWRITER Marie Augsberger* Director and President Robert L. Francis** Director and Senior Vice President Allan Baker* Chairman of the Board and Senior Vice President Steven A. Haxton* Senior Vice President Willard I. Hill, Jr.* Senior Vice President Deborah Koltenuk* Vice President, Treasurer and Chief Financial Officer Therese Squillacote* Vice President and Chief Compliance Officer Paula Cludray-Engelkey*** Secretary Jeffrey R. Berry* Chief Legal Officer William T. Abramowicz Vice President 2525 Cabot Dr., Ste. 300 Lisle, IL 60532 Douglas J. Ambrose** Vice President Louis E. Bachetti Vice President 581 Main Street, 4th Fl. Woodbridge, NJ 07095 Ronald R. Barhorst Vice President 7676 Hazard Ctr. Dr. San Diego, CA 92108 Robert H. Barley**** Vice President Reginald Bowen* Vice President Steven M. Bresler Vice President 6430 South Fiddler's Green Cir., Ste. 210 Englewood, CO 80111 David Brounley**** Vice President Daniel P. Charles Vice President 5 Penn Plaza, 11th Fl. New York, NY 10001-1879 Brian D. Comer* Vice President Albert J. DiCristofaro, Jr. Vice President 8911 Capitol of TX Hwy., Bldg. 2, Ste. 2210 Austin, TX 78759 John B. Finigan, Jr. Vice President 1601 Trapelo Rd. Waltham, MA 02451 Brian K. Haendiges* Vice President Brian P. Harrington Vice President 12701 Fair Lakes Cir., Ste. 470 Fairfax, VA 22033 Bernard P. Heffernon***** Vice President William S. Jasien***** Vice President Christina Lareau* Vice President Jess D. Kravitz** Vice President George D. Lessner, Jr. Vice President 1755 N. Collins Blvd., Ste. 350 Richardson, TX 75080 Susan J. Lewis Vice President 16530 Ventura Blvd., Ste. 600 Encino, CA 91436 James F. Lille Vice President 159 Wolf Rd., 1st Fl. Albany, NY 12205 David J. Linney Vice President 2900 N. Loop W., Ste. 180 Houston, TX 77092 Richard T. Mason Vice President 440 S. Warren St., Ste. 702 Syracuse, NY 13202 Joseph F. McClain* Vice President W. Michael Montgomery Vice President 5100 W. Lemon St., Ste. 213 Tampa, FL 33609 Pamela Mulvey* Vice President Scott T. Neeb** Vice President Patrick F. O'Christie Vice President The Pavilions, 1700 Lyons Rd., Ste. D Dayton, OH 45458 Ethel Pippin* Vice President Paulette Playce Vice President Two City Place Dr., Ste. 300 St. Louis, MO 63141 Marcellous J. Reed Vice President 2677 N. Main St., Ste. 500 Santa Ana, CA 92705 Charles A. Sklader Vice President 7720 N. 16th St., Ste. 150 Phoenix, AZ 85020 Frank W. Snodgrass Vice President 150 4th Ave., N., Ste. 410 Nashville, TN 37219 S. Bradford Vaughan, Jr. Vice President 601 Union St., Ste. 810 Seattle, WA 98101 Terran Titus* Vice President Mark Woolhiser Vice President 26957 Northwestern Hwy., Ste. 150 Southfield, MI 48034 David A. Kelsey* Assistant Vice President Allissa Archer Obler*** Assistant Secretary Loralee Ann Renelt*** Assistant Secretary * The principal business address of these directors and officers is 151 Farmington Avenue, Hartford, Connecticut 06156 ** The principal business address of these directors and officers is 6140 Stonehedge Mall Rd., Ste. 375, Pleasanton, California 94588 *** The principal business address of these directors and officers is 20 Washington Avenue South, Minneapolis, Minnesota 55401 **** The principal business address of these officers is 100 Corporate Pl., 3rd Fl., Rocky Hill, Connecticut 06067 *****The principal business address of these officers is 10740 Nall Ave., Ste. 120, Overland Park, Kansas 66211 (c) Compensation from January 1, 2000 to December 31, 2000: (1) (2) (3) (4) (5) Name of Net Underwriting Compensation on Principal UNDERWRITER Discounts and COMMISSIONS Redemption OR Brokerage ANNUITIZATION COMMISSIONS COMPENSATION* ------------- ----------- ------------- Aetna Life Insurance $1,638,784 $85,764,442 and Annuity Company
* Compensation shown in column 5 includes deductions for mortality and expense risk guarantees and contract charges assessed to cover costs incurred in the sales and administration of the contracts issued under Variable Annuity Account B. Of this amount, $7,212,372 is attributable to deductions for mortality and expense risk guarantees and contract charges for such contracts during December 2000. Compensation from January 1, 2000 to December 31, 2000: (1) (2) (3) (4) (5) Name of Net Underwriting Compensation on Principal UNDERWRITER Discounts and COMMISSIONS Redemption OR Brokerage ANNUITIZATION COMMISSIONS COMPENSATION** ------------- ----------- -------------- Aetna Investment $1,126,164 Services, LLC
** Reflects compensation paid to AIS attributable to regulatory and operating expenses associated with the distribution of all products issued by Aetna Life Insurance and Annuity Company and Aetna Insurance Company of America during 2000. Of this amount, $15,443 is attributable to fees paid to AIS in connection with its activities as distributor and principal underwriter in December 2000 for all products issued by the Registrant for Variable Annuity Account B. ITEM 30. LOCATION OF ACCOUNTS AND RECORDS All accounts, books and other documents required to be maintained by Section 31(a) of the 1940 Act and the rules under it relating to the securities described in and issued under this Registration Statement are located at the home office of the Depositor as follows: Aetna Life Insurance and Annuity Company 151 Farmington Avenue Hartford, Connecticut 06156 ITEM 31. MANAGEMENT SERVICES Not applicable ITEM 32. UNDERTAKINGS Registrant hereby undertakes: (a) to file a post-effective amendment to this registration statement on Form N-4 as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than sixteen months old for as long as payments under the variable annuity contracts may be accepted; (b) to include as part of any application to purchase a contract offered by a prospectus which is part of this registration statement on Form N-4, a space that an applicant can check to request a Statement of Additional Information; and (c) to deliver any Statement of Additional Information and any financial statements required to be made available under this Form N-4 promptly upon written or oral request. (d) The Company hereby represents that it is relying upon and will comply with the provisions of Paragraphs (1) through (4) of the SEC Staff's No-Action Letter dated November 28, 1988 with respect to language concerning withdrawal restrictions applicable to plans established pursuant to Section 403(b) of the Internal Revenue Code. See American Counsel of Life Insurance; SEC No-Action Letter, [1988 WL 235221, *13 (S.E.C.)]. (e) Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, 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 of 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. (f) Aetna Life Insurance and Annuity Company represents that the fees and charges deducted under the contracts covered by this registration statement, 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. SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, Variable Annuity Account B of Aetna Life Insurance and Annuity Company, certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this Post-Effective Amendment to its Registration Statement on Form N-4 (File No. 33-34370) and has duly caused this Post-Effective Amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of West Chester, Commonwealth of Pennsylvania, on the 15th day of February, 2002. VARIABLE ANNUITY ACCOUNT B OF AETNA LIFE INSURANCE AND ANNUITY COMPANY (REGISTRANT) By: AETNA LIFE INSURANCE AND ANNUITY COMPANY (DEPOSITOR) By: Thomas J. McInerney* -------------------------------------------- Thomas J. McInerney President As required by the Securities Act of 1933, this Post-Effective Amendment No. 50 to the Registration Statement on Form N-4 (File No. 33-34370) has been signed by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE DATE Thomas J. McInerney* Director and President (principal executive officer) ----------------------- Thomas J. McInerney Wayne R. Huneke* Director and Chief Financial Officer ----------------------- Wayne R. Huneke Randy Lowery* Director ----------------------- Randy Lowery Robert C. Salipante* Director ----------------------- Robert C. Salipante Mark A. Tullis* Director ----------------------- Mark A. Tullis Deborah Koltenuk* Corporate Controller ----------------------- Deborah Koltenuk By: /s/ Linda E. Senker ------------------------------------------------------- Linda E. Senker *Attorney-in-Fact VARIABLE ANNUITY ACCOUNT B EXHIBIT INDEX EXHIBIT NO. EXHIBIT 99-B.9 Opinion and Consent of Linda E. Senker, Counsel EX-99.B9 99-B.10 Consent of KPMG LLP, Independent Auditors EX-99.B10 99-B.14.1 Powers of Attorney EX-99.B14.1