-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P/oocqQwyRp7u5mobrzjWPCMDhxYbiLNgr3wSAbp0TANNXit6PMAXZxE6oRX3PxY CJAFNmruHYI0TDQLfvhS4g== 0000912057-01-508628.txt : 20010416 0000912057-01-508628.hdr.sgml : 20010416 ACCESSION NUMBER: 0000912057-01-508628 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20010413 EFFECTIVENESS DATE: 20010413 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VARIABLE ANNUITY ACCT C OF AETNA LIFE INSURANCE & ANNUITY CO CENTRAL INDEX KEY: 0000103007 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 033-75980 FILM NUMBER: 1602228 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-02513 FILM NUMBER: 1602229 BUSINESS ADDRESS: STREET 1: 151 FARMINGTON AVE CITY: HARTFORD STATE: CT ZIP: 06156 BUSINESS PHONE: 2032734808 MAIL ADDRESS: STREET 1: C/O AETNA LIFE & CASUALTY STREET 2: 151 FARMINGTON AVE CITY: HARTFORD STATE: CT ZIP: 06156 FORMER COMPANY: FORMER CONFORMED NAME: VARIABLE ANNUITY ACCOUNT C OF AETNA VARIABLE ANNUITY LIFE IN DATE OF NAME CHANGE: 19791108 485BPOS 1 a2035445z485bpos.txt 485BPOS As filed with the Securities and Exchange Registration No. 33-75980* Commission on April 13, 2001 Registration No. 811-2513 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 POST-EFFECTIVE AMENDMENT NO. 15 TO REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 and Amendment to REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Variable Annuity Account C of Aetna Life Insurance and Annuity Company Aetna Life Insurance and Annuity Company 151 Farmington Avenue, TS31, Hartford, Connecticut 06156 Depositor's Telephone Number, including Area Code: (860) 273-4686 Julie E. Rockmore, Counsel Aetna Life Insurance and Annuity Company 151 Farmington Avenue, TS31, Hartford, Connecticut 06156 (NAME AND ADDRESS OF AGENT FOR SERVICE) It is proposed that this filing will become effective: -------- immediately upon filing pursuant to paragraph (b) of Rule 485 X on May 1, 2001 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 securities covered by Registration Statement No. 33-75984. VARIABLE ANNUITY ACCOUNT C CROSS REFERENCE SHEET
FORM N-4 ITEM NO. LOCATION - PROSPECTUS DATED MAY 1, 2001 PART A (PROSPECTUS) 1 Cover Page....................................... Cover Page 2 Definitions...................................... Not Applicable 3 Synopsis......................................... Contract Overview; Fee Table 4 Condensed Financial Information.................. Condensed Financial Information; Appendix III - Condensed Financial Information 5 General Description of Registrant, Depositor, and Portfolio Companies.......................... Other Topics - The Company; Variable Annuity C; Investment Options 6 Deductions and Expenses.......................... Fee Table; Fees 7 General Description of Variable Annuity Contracts Contract Overview; Other Topics 8 Annuity Period................................... The Income Phase 9 Death Benefit.................................... Death Benefit 10 Purchases and Contract Value..................... Contract Purchase and Participation; Your Account Value 11 Redemptions...................................... Right to Cancel 12 Taxes............................................ Taxation 13 Legal Proceedings................................ Other Topics - Legal Matters and Proceedings 14 Table of Contents of the Statement of Additional Information...................................... Contents of the Statement of Additional Information
LOCATION - STATEMENT OF ADDITIONAL FORM N-4 ITEM NO. PART B (STATEMENT OF ADDITIONAL INFORMATION) INFORMATION DATED MAY 1, 2001 15 Cover Page........................................... Cover page 16 Table of Contents.................................... Table of Contents 17 General Information and History...................... General Information and History 18 Services............................................. General Information and History; Independent Auditors 19 Purchase of Securities Being Offered................. Offering and Purchase of Contracts 20 Underwriters......................................... Offering and Purchase of Contracts 21 Calculation of Performance Data...................... Performance Data, as amended; Average Annual Total Return Quotation 22 Annuity Payments..................................... Income Phase Payments 23 Financial Statements................................. Financial Statements of the Separate Account; Financial Statements
PART C (OTHER INFORMATION) Information required to be included in Part C is set forth under the appropriate item, so numbered, in Part C to this Registration Statement. PROSPECTUS - MAY 1, 2001 - -------------------------------------------------------------------------------- [SIDE NOTE] THE FUNDS Aetna Balanced VP, Inc. Aetna Income Shares d/b/a Aetna Bond VP Aetna Variable Fund d/b/a Aetna Growth and Income VP Aetna Variable Encore Fund d/b/a Aetna Money Market VP Portfolio Partners (PPI) MFS Research Growth Portfolio [END SIDE NOTE] THE CONTRACTS. The contracts described in this prospectus are group installment variable annuity contracts issued by Aetna Life Insurance and Annuity Company (the Company, we, us). They are intended to be used as funding vehicles for certain types of retirement plans that may qualify for beneficial tax treatment under certain sections of the Internal Revenue Code of 1986, as amended (Tax Code). WHY READING THIS PROSPECTUS IS IMPORTANT. Before you participate in the contract through a retirement plan, you should read this prospectus. It provides facts about the contract and its investment options. Plan sponsors (generally your employer) should read this prospectus to help determine if the contract is appropriate for their plan. Keep this document for future reference. TABLE OF CONTENTS . . . PAGE 3 INVESTMENT OPTIONS. The contracts offer variable investment options and fixed investment options. When we establish your account the contract holder, or you if permitted by the plan, instructs us to direct account dollars into any of the available options. Some investment options may be unavailable through certain contracts and plans, or in some states. VARIABLE INVESTMENT OPTIONS. These options are called subaccounts. The subaccounts are within Variable Annuity Account C (the separate account), a separate account of the Company. Each subaccount invests in one of the mutual funds (funds) listed on this page. Earnings on amounts invested in a subaccount will vary depending upon the performance of its underlying fund. You do not invest directly in or hold shares of the funds. FIXED INTEREST OPTIONS - -- Guaranteed Accumulation Account - -- Fixed Account Except as specifically mentioned, this prospectus describes only the variable investment options. However, we describe the fixed interest options in the appendices to this prospectus. There is also a separate prospectus for the Guaranteed Accumulation Account. RISKS ASSOCIATED WITH INVESTING IN THE FUNDS. Information about the risks of investing in the funds is located in the "Investment Option" section in this prospectus at page 10 and in each fund prospectus. Read this prospectus in conjunction with the fund prospectuses, and retain the prospectuses for future reference. GETTING ADDITIONAL INFORMATION. You may obtain the May 1, 2001, Statement of Additional Information (SAI) by indicating your request on your enrollment materials or calling the Company at 1-800-262-3862. You may also obtain an SAI for any of the funds by calling that number. This prospectus, the SAI and other information about the separate account may be obtained by accessing the Securities and Exchange Commission's (SEC) web site, www.sec.gov. Copies of this information may also be obtained, after paying a duplicating fee, by contacting the SEC Public Reference Room. Information on the operation of the SEC Public Reference Room may be obtained by calling 1-202-942-8090 or 1-800-SEC-0330, e-mailing publicinfo@sec.gov or by writing to SEC Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549. The SAI table of contents is listed on page 37 of this prospectus. The SAI is incorporated into this prospectus by reference. ADDITIONAL DISCLOSURE INFORMATION. Neither the SEC nor any state securities commission has approved or disapproved the contracts offered through this prospectus or passed on the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. This prospectus is valid only when accompanied by current prospectuses of the funds and the Guaranteed Accumulation Account. We do not intend for this prospectus to be an offer to sell or a solicitation of an offer to buy these contracts in any state that does not permit their sale. We have not authorized anyone to provide you with information that is different from that contained in this prospectus. THIS PAGE INTENTIONALLY LEFT BLANK TABLE OF CONTENTS CONTRACT OVERVIEW.............................. 4 Who's Who The Contract and Your Retirement Plan Contract Rights Contract Facts Contract Phases: Accumulation Phase, Income Phase Questions: Contacting the Company (sidebar) Sending Forms and Written Requests in Good Order (sidebar) FEE TABLE........................................ 7 CONDENSED FINANCIAL INFORMATION.................. 10 INVESTMENT OPTIONS............................... 10 TRANSFERS........................................ 12 CONTRACT PURCHASE AND PARTICIPATION.............. 13 CONTRACT OWNERSHIP AND RIGHTS.................... 14 RIGHT TO CANCEL.................................. 15 FEES............................................. 16 YOUR ACCOUNT VALUE............................... 19 WITHDRAWALS...................................... 21 SYSTEMATIC DISTRIBUTION OPTIONS.................. 22 DEATH BENEFIT.................................... 23 THE INCOME PHASE................................. 25 TAXATION......................................... 28 OTHER TOPICS..................................... 32 The Company -- Variable Annuity Account C -- Performance Reporting -- Voting Rights -- Contract Distribution -- Commission Payments -- Third Party Compensation Arrangements -- Contract Modification -- Legal Matters and Proceedings -- Payment Delay or Suspension -- Transfer of Ownership; Assignment -- Intent to Confirm Quarterly CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION...................................... 37 APPENDIX I -- GUARANTEED ACCUMULATION ACCOUNT.... 38 APPENDIX II -- FIXED ACCOUNT..................... 40 APPENDIX III -- CONDENSED FINANCIAL INFORMATION...................................... 41
3 [SIDE NOTE] QUESTIONS: CONTACTING THE COMPANY. To answer your questions, contact your local representative or write or call our Home Office: ING Aetna Financial Services Annuity Services 151 Farmington Avenue Hartford, CT 06156 1-800-262-3862 SENDING FORMS AND WRITTEN REQUESTS IN GOOD ORDER. If you are writing to change your beneficiary, request a withdrawal, or for any other purpose, contact your local representative or the Company to learn what information is required in order for the request to be in "good order." We can only act upon written requests that are received in good order. [END SIDE NOTE] CONTRACT OVERVIEW - ---------------------------------------------- The following is a summary. Please read each section of this prospectus for additional information. WHO'S WHO - ------------------------------------------------------------------- You (the participant): The individual participating in a retirement plan, where the plan uses the contract as a funding option. Plan Sponsor: The sponsor of your retirement plan. Generally, your employer. Contract Holder: The person or entity to whom we issue the contract. Generally, the plan sponsor or plan trustee. We (the Company): Aetna Life Insurance and Annuity Company. We issue the contract. THE CONTRACT AND YOUR RETIREMENT PLAN - ------------------------------------------------------------------- RETIREMENT PLAN (PLAN): A plan sponsor has established a retirement plan for you. This contract is offered as a funding option for that plan. We are not a party to the plan, so the terms and the conditions of the contract and the plan may differ. PLAN TYPE. We refer to the retirement plan by type. For example, a "401 plan" qualifies for tax treatment under Internal Revenue Code Section 401, and an HR10 plan is a plan under Section 401 for self-employed individuals. To learn which type of plan you have, contact your plan sponsor, your local representative or the Company. CONTRACT RIGHTS - ------------------------------------------------------------------- The contract holder holds all rights under the contract, but may permit you to exercise those rights through the plan. For example: The contract may permit the contract holder to select investment options for your account dollars. The plan may permit you to exercise that right. For greater detail see "Contract Ownership and Rights." CONTRACT FACTS - ------------------------------------------------------------------- FREE LOOK/RIGHT TO CANCEL: Contract holders may cancel the contract within ten days after they receive the contract or as otherwise allowed by state law. (See "Right To Cancel.") DEATH BENEFIT: A beneficiary may receive a benefit in the event of your death prior to the income phase. Death benefits during the income phase depend on the payment option selected. (See "Death Benefit" and "The Income Phase.") WITHDRAWALS: During the accumulation phase the contract holder may withdraw all or a part of the plan or individual account value. Amounts withdrawn may be subject to an early withdrawal charge, other deductions, tax withholding and taxation. (See "Withdrawals" and "Taxation.") SYSTEMATIC DISTRIBUTION OPTIONS: The contract holder on your behalf may elect for you to receive regular payments from your account, while retaining the account in the accumulation phase. (See "Systematic Distribution Options.") FEES: Certain fees are deducted from your account value. (See "Fee Table" and "Fees.") TAXATION. You will generally not pay taxes on any earnings from the annuity contract described in this prospectus until they are withdrawn. Tax-qualified retirement arrangements (e.g., 401(a) plans including HR10 plans), also defer 4 payment of taxes on earnings until they are withdrawn. When an annuity contract is used to fund a tax-qualified retirement arrangement, you should know that the annuity contract does not provide any additional tax deferral of earnings beyond the tax deferral provided by the tax-qualified retirement arrangement. However, annuities do provide other features and benefits which may be valuable to you. You should discuss your alternatives with your financial representative. Taxes will generally be due when you receive a distribution. Tax penalties may apply in some circumstances. (See "Taxation.") 5 CONTRACT PHASES - ------------------------------------------------------------------- I. THE ACCUMULATION PHASE (accumulating retirement benefits) STEP 1: The contract holder provides Aetna Life Insurance and Annuity Company with a completed application. Under some contracts, the contract holder directs us to set up individual accounts for participants. Under other contracts, we maintain only one plan account under the contract. [GRAPHIC] STEP 2: The contract holder, or you if permitted by your plan, directs us to invest account dollars in any of the following investment options: a) Fixed Interest Options b) Variable Investment Options (The variable investment options are the subaccounts of Variable Annuity Account C. Each one invests in a specific mutual Fund.) STEP 3: The subaccount(s) selected purchases shares of its assigned fund. II. THE INCOME PHASE (receiving income phase payments from your contract). The contracts offer several income phase payment options (see "The Income Phase.") In general, you may: - -- Receive income phase payments over a lifetime or for a specified period; - -- Receive income phase payments monthly, quarterly, semi-annually or annually; - -- Select an income phase option that provides a death benefit to beneficiaries; or - -- Select fixed income phase payment or variable income phase payments that vary based upon the performance of the variable investment options you select. 6 [SIDE NOTE] IN THIS SECTION: - -- Transaction Fees - -- Fees Deducted from the Subaccounts - -- Fund Fees - -- Hypothetical Examples SEE THE "FEES" SECTION FOR - -- How, When and Why Fees are Deducted - -- Premium and Other Taxes SEE "THE INCOME PHASE" FOR: - -- Fees During the Income Phase [END SIDE NOTE] FEE TABLE - ---------------------------------------------- The tables and examples in this section show the fees your account may incur while accumulating dollars under the contract (the accumulation phase). See "The Income Phase" for fees that may apply after you begin receiving payments under the contract. The fees shown below do not include premium taxes that may be applicable. TRANSACTION FEES EARLY WITHDRAWAL CHARGE. As a percentage of the amount withdrawn. EARLY WITHDRAWAL CHARGE SCHEDULE COMPLETED CONTRACT YEARS EARLY WITHDRAWAL CHARGE Fewer than 5 5% 5 or more but fewer than 7 4% 7 or more but fewer than 9 3% 9 or more but fewer than 10 2% More than 10 0%
ANNUAL MAINTENANCE FEE ............................................... $30.00(1) ALLOCATION AND TRANSFER FEES ................................... $0.00-$10.00(2) FEES DEDUCTED FROM THE SUBACCOUNTS
HR10 CORPORATE 401 (Daily deductions equal to the given percentage CONTRACTS CONTRACTS on an annual basis) --------- --------- MORTALITY AND EXPENSE RISK CHARGE(3)....... 1.25% 1.19% ADMINISTRATIVE EXPENSE CHARGE.............. 0.25%(4) 0.00%-0.25%(4) ----- ----------- TOTAL SEPARATE ACCOUNT EXPENSES............ 1.50% 1.19%-1.44% ===== ===========
- ------------------------ (1) This fee is deducted from each individual or plan account. It may be reduced or waived for certain plans. (See "Fees--Maintenance Fee.") (2) The Company currently allows an unlimited number of transfers or allocation changes without charge. However, the Company reserves the right to impose a transfer fee of $10.00 for each transfer or allocation change in excess of 12 during each calendar year. (See "Fees--Allocation and Transfer Fee.") (3) For all types of contracts, the mortality and expense risk fee during the income phase is 1.25% on an annual basis of your account value invested in the subaccount. (4) Effective December 1, 2000 under HR 10 Contracts issued after May 1, 1984, we make a daily deduction of 0.25% on an annual basis of the account value invested in the subaccounts. We currently do not impose this fee under Corporate 401 Contracts; however, under some Corporate 401 Contracts we reserve the right to impose this fee in the future. 7 FEES DEDUCTED BY THE FUNDS USING THIS INFORMATION. The following table shows the investment advisory fees and other expenses charged Annually by each fund. Fund fees are one factor that impacts the value of a fund share. To learn about additional factors, refer to the fund prospectus. HOW FEES ARE DEDUCTED. Fund fees are not deducted from account values. Instead, fees are deducted from the value of the fund shares on a daily basis, which in turn will affect the value of each subaccount on a daily basis. Except as noted below, the following figures are a percentage of the average net assets of each fund, and are based on figures for the year ended December 31, 2000.
FUND EXPENSE TABLE(1) TOTAL FUND NET FUND ANNUAL ANNUAL EXPENSES EXPENSES INVESTMENT WITHOUT TOTAL AFTER ADVISORY OTHER WAIVERS OR WAIVERS AND WAIVERS FUND NAME FEES EXPENSES REDUCTIONS REDUCTIONS OR REDUCTIONS --------- ---- -------- ---------- ---------- ------------- Aetna Balanced VP, Inc. 0.50% 0.09% 0.59% -- 0.59% Aetna Bond VP 0.40% 0.10% 0.50% -- 0.50% Aetna Growth and Income VP 0.50% 0.08% 0.58% -- 0.58% Aetna Money Market VP 0.25% 0.09% 0.34% -- 0.34% PPI MFS Research Growth Portfolio(2) 0.69% 0.15% 0.84% 0.00% 0.84%
FOOTNOTES TO THE "FUND EXPENSE TABLE" (1) Certain of the fund advisers reimburse the Company for administrative costs incurred in connection with administering the funds as variable funding options under the contract. These reimbursements are separate from the expenses shown above and do not affect, directly or indirectly, the expenses paid by investors. (2) The investment adviser has agreed to reimburse the portfolios for expenses and/or waive its fees, so that, through at least April 30, 2002, the aggregate of each portfolio's expenses will not exceed the combined investment advisory fees and other expenses shown under the Net Fund Annual Expenses After Waivers or Reductions column above. 8 HYPOTHETICAL EXAMPLES ACCOUNT FEES INCURRED OVER TIME. The following hypothetical examples show the fees paid over time if $1,000 is invested in a subaccount, assuming a 5% annual return on the investment. For the purposes of these examples, we deducted the following fees: mortality and expense risk charge of 1.25% and 1.19% on an annual basis for HR 10 Contracts and Corporate 401 Contracts respectively, the maximum administrative expense charge of 0.25% on an annual basis for HR 10 and Corporate 401 Contracts (which is charged under some HR 10 Contracts effective December 1, 2000 but is not currently charged under Corporate 401 Contracts), and a maintenance fee of $30.00 (converted to a percentage of assets equal to 0.028% for HR 10 Contracts and 0.035% for 401 Contracts). The total annual fund expenses used are those shown in the column "Total Annual Expenses Without Waivers or Reductions" in the Fund Expense Table. HR 10 CONTRACTS EXAMPLE A EXAMPLE B If you withdraw your entire If you leave your entire account account value at the end of the value invested or if you select an periods shown, you would pay income phase payment option at the the following fees, including end of the periods shown, you any applicable early withdrawal would pay the following fees (no charge assessed: early withdrawal charge is reflected):*
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS FUND NAME ------ ------- ------- -------- ------ ------- ------- -------- Aetna Balanced VP, Inc. $73 $121 $160 $245 $21 $66 $114 $245 Aetna Bond VP $72 $118 $156 $236 $21 $64 $109 $236 Aetna Growth and Income VP $73 $120 $159 $244 $21 $66 $113 $244 Aetna Money Market VP $71 $114 $148 $219 $19 $59 $101 $219 PPI MFS Research Growth Portfolio $75 $128 $172 $270 $24 $74 $126 $270
CORPORATE 401 CONTRACTS EXAMPLE A EXAMPLE B If you withdraw your entire If you leave your entire account account value at the end of the value invested or if you select an periods shown, you would pay income phase payment option at the the following fees, including end of the periods shown, you any applicable early withdrawal would pay the following fees (no charge assessed: early withdrawal charge is reflected):*
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS FUND NAME ------ ------- ------- -------- ------ ------- ------- -------- Aetna Balanced VP, Inc. $72 $119 $157 $239 $21 $65 $111 $239 Aetna Bond VP $72 $117 $153 $230 $20 $62 $107 $230 Aetna Growth and Income VP $72 $119 $157 $238 $21 $64 $111 $238 Aetna Money Market VP $70 $112 $145 $213 $18 $57 $ 98 $213 PPI MFS Research Growth Portfolio $75 $126 $169 $265 $23 $72 $124 $265
- -------------------------- * Example B will not apply if during the income phase a nonlifetime payment option is elected with variable payments and a lump- sum payment is requested within three years after payments start. In that case, the lump-sum payment is treated as a withdrawal during the accumulation phase and may be subject to an early withdrawal charge. (Refer to Example A.) 9 CONDENSED FINANCIAL INFORMATION - ---------------------------------------------- UNDERSTANDING CONDENSED FINANCIAL INFORMATION. In Appendix III, we provide condensed financial information about the Variable Annuity Account C (the separate account) subaccounts available under the contracts. The tables show the value of the subaccounts over the past 10 years. For the subaccounts that were not available 10 years ago, we give a history from the date of first availability. INVESTMENT OPTIONS - ---------------------------------------------- The contract offers variable investment options and fixed interest options. When we establish your account, the contract holder, or you if permitted by the plan, instructs us to direct account dollars to any of the available options. VARIABLE INVESTMENT OPTIONS. These options are called subaccounts. The subaccounts are within Variable Annuity Account C (the separate account), a separate account of the Company. Earnings on amounts invested in a subaccount will vary depending upon the performance and fees of its underlying fund. You do not invest directly in or hold shares of the fund. FIXED INTEREST OPTIONS. For descriptions of the fixed interest options, see Appendix I and II and the Guaranteed Accumulation Account prospectus. SELECTING INVESTMENT OPTIONS - CHOOSE OPTIONS APPROPRIATE FOR YOU. Your local representative can help evaluate which funds or fixed interest options may be appropriate for your financial goals. - UNDERSTAND THE RISKS ASSOCIATED WITH THE OPTIONS YOU CHOOSE. Some funds are considered riskier than others. Funds with additional risks are expected to have a value that rises and falls more rapidly and to a greater degree than other funds. For example, funds investing in foreign or international securities are subject to additional risks not associated with domestic investments, and their performance may vary accordingly. Also, funds using derivatives in their investment strategy may be subject to additional risks. - BE INFORMED. Read the prospectus, the fund prospectus, fixed interest option appendices, and the Guaranteed Accumulation Account prospectus. Fund prospectuses may be obtained, free of charge, by calling the Company at the telephone number listed in "Contract Overview--Questions: Contacting the Company," by accessing the SEC's website, or by contacting the SEC Public Reference Room. FUND DESCRIPTIONS. The investment results of the mutual funds (funds) are likely to differ significantly and there is no assurance that any of the funds will achieve their respective investment objectives. Shares of the funds will rise and fall in value and you could lose money by investing in the funds. Shares of the funds are not bank deposits and are not guaranteed, endorsed or insured by any financial institution, the Federal Deposit Insurance Corporation or any 10 other government agency. Except as noted, all funds are diversified, as defined under the Investment Company Act of 1940. - -- AETNA BALANCED VP, INC. seeks to maximize investment return, consistent with reasonable safety of principal by investing in a diversified portfolio of one or more of the following asset classes: stocks, bonds, and cash equivalents, based on the investment adviser's judgment of which of those sectors or mix thereof offers the best investment prospects.(1) - -- AETNA INCOME SHARES D/B/A AETNA BOND VP seeks to maximize total return, consistent with reasonable risk, through investments in a diversified portfolio consisting primarily of debt securities. It is anticipated that capital appreciation and investment income will both be major factors in achieving total return.(1) - -- AETNA VARIABLE FUND D/B/A AETNA GROWTH AND INCOME VP seeks to maximize total return through investments in a diversified portfolio of common stocks and securities convertible into common stock. It is anticipated that capital appreciation and investment income will both be major factors in achieving total return.(1) - -- AETNA VARIABLE ENCORE FUND D/B/A AETNA MONEY MARKET VP seeks to provide high current return, consistent with preservation of capital and liquidity, through investment in high-quality money market instruments. AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.(1) - -- PORTFOLIO PARTNERS, INC. (PPI) MFS RESEARCH GROWTH PORTFOLIO seeks long-term growth of capital and future income.(2)(a) INVESTMENT ADVISER: (1) Investment Adviser: Aeltus Investment Management, Inc. (Aeltus) (2) Investment Adviser: Aetna Life Insurance and Annuity Company (a) Subadviser: Massachusetts Financial Services Company LIMITS ON OPTION AVAILABILITY. Some funds and fixed interest options may not be available through certain contracts and plans, or in some states. We may add, withdraw or substitute funds, subject to the conditions in the contract and regulatory requirements. LIMITS IMPOSED BY THE UNDERLYING FUND. Orders for the purchase of fund shares may be subject to acceptance by the fund. We reserve the right to reject, without prior notice, any allocation of purchase payments to a subaccount if the subaccount's investment in the corresponding fund is not accepted by the fund for any reason. ADDITIONAL RISKS OF INVESTING IN THE FUNDS. (MIXED AND SHARED FUNDING) "Shared funding" occurs when shares of a fund, which the subaccounts buy for variable annuity contracts, are also bought by other insurance companies for their variable annuity contracts. "Mixed funding" occurs when shares of a fund, which the subaccounts buy for variable annuity contracts, is bought for variable life insurance contracts issued by us or other insurance companies. - -- Shared--bought by more than one company. - -- Mixed--bought for annuities and life insurance. 11 It is possible that a conflict of interest may arise due to mixed and/or shared funding, that could adversely impact the value of a fund. For example: If a conflict of interest occurred and one of the subaccounts withdrew its investment in a fund, the fund may be forced to sell its securities at disadvantageous prices, causing its share value to decrease. Each fund's board of directors or trustees will monitor events to identify any conflict which might arise and to determine what action, if any, should be taken to address such conflicts. ERISA STATUS. The Employee Retirement Income Security Act of 1974 (ERISA) imposes a "prudent man" rule regarding the selection and monitoring of investments for these types of retirement plans. Those responsible for selecting and monitoring the investments (fiduciaries or plan trustees) can be held liable for plan investment losses if they fail to provide for prudent investment of plan assets. However, Section 404(c) of ERISA limits fiduciary liability in plans that allow participants to select their own investments, provided the available investments meet certain criteria. The five funds available under the contract provide plan fiduciaries some protection under Section 404(c). The five subaccounts available under the contract qualify as "core funds" under ERISA Section 404(c). The underlying funds are broadly diversified, have different risk/return characteristics, are supported by pre- and post-enrollment disclosure material, are valued and accessible daily, and are look-through investment vehicles. The Fixed and Guaranteed Accumulation Accounts are not Section 404(c) core funds, but are intended as additional investment options. Thus, the contract provides a well-rounded portfolio, the potential for 404(c) protection and eliminates the need for an external investment manager. The Company is not a designated fiduciary or investment manager for any pension plan. Our responsibility is to execute investment instructions received from the trustee and/or employees as required under state and federal law. The employer and plan trustee have overall fiduciary responsibility for your plan. Plan trustees are responsible for taking affirmative actions in order to retain Section 404(c) protection, and should review applicable Department of Labor regulations (20 C.F.R. Section 2550.404c-1) TRANSFERS - ---------------------------------------------- TRANSFERS AMONG INVESTMENT OPTIONS. During the accumulation phase the contract holder, or you if permitted by the plan, may transfer among the investment options. Subject to the contract holder's approval, requests may be made in writing, by telephone or, where applicable, electronically. Transfers 12 from fixed interest options may be restricted as outlined in Appendices I and II. You may not make transfers once you enter the income phase. CHARGES FOR TRANSFERS. We currently do not charge for transfers or allocation changes. We do however, reserve the right to charge a fee of $10.00 for each transfer and/or allocation change in excess of 12 made in any calendar year. VALUE OF TRANSFERRED DOLLARS. The value of amounts transferred into or out of the funds will be based on the subaccount values next determined after we receive your request in good order at our Home Office. TELEPHONE AND ELECTRONIC TRANSFERS: SECURITY MEASURES. To prevent fraudulent use of telephone and electronic transactions (including, but not limited to, internet transactions), we have established security procedures. These include recording calls on our toll-free telephone lines and requiring use of a personal identification number (PIN) to execute transactions. You are responsible for keeping your PIN and account information confidential. If we fail to follow reasonable security procedures, we may be liable for losses due to unauthorized or fraudulent telephone or other electronic transactions. We are not liable for losses resulting from telephone instructions we believe to be genuine. If a loss occurs when we rely on such instructions, you will bear the loss. LIMITS ON FREQUENT TRANSFERS. The contracts are not designed to serve as vehicles for frequent trading in response to short-term fluctuations in the market. Such frequent trading can disrupt management of a fund and raise its expenses. This in turn can have an adverse effect on fund performance. Accordingly, organizations or individuals that use market-timing investment strategies and make frequent transfers should not purchase the contracts. We reserve the right to restrict, in our sole discretion and without prior notice, transfers initiated by a market-timing organization or individual or other party authorized to give transfer instructions on behalf of multiple contract holders or participants. Such restrictions could include: (1) not accepting transfer instructions from an agent acting on behalf of more than one contract holder or participant; and (2) not accepting preauthorized transfer forms from market timers or other entities acting on behalf of more than one contract holder or participant at a time. We further reserve the right to impose, without prior notice, restrictions on any transfers that we determine, in our sole discretion, will disadvantage or potentially hurt the rights or interests of other contract holders or participants. CONTRACT PURCHASE AND PARTICIPATION - ---------------------------------------------- CONTRACTS AVAILABLE FOR PURCHASE. The contracts are designed for plans sponsored by self-employed individuals eligible to establish an HR 10 plan for their employees, and for other corporate plans designed to qualify for treatment under Section 401 of the Internal Revenue Code of 1986, as amended (the Tax Code). PURCHASING THE CONTRACT. (1) The contract holder submits the required forms and application to the Company. 13 (2) We approve the forms and issue a contract to the contract holder. PARTICIPATING IN THE CONTRACT. If the contract provides for the establishment of individual accounts for employees under the plan: (1) We provide you with enrollment materials for completion and return to us. You then complete an enrollment form and submit it to us. (2) If your enrollment materials are complete and in good order, we establish an account for you. ACCEPTANCE OR REJECTION OF APPLICATIONS OR ENROLLMENT FORMS. We must accept or reject an application or your enrollment materials within two business days of receipt. If the forms are incomplete, we may hold any forms and accompanying payments for five business days, unless you consent to our holding them longer. Under limited circumstances, we may also agree, for a particular plan, to hold payments for longer periods with the permission of the contract holder. If we agree to this, we will deposit the payments in the Aetna Money Market VP subaccount until the forms are completed (or for a maximum of 105 days). If we reject the application or enrollment form, we will return forms and any payments. TYPES OF CONTRACTS. Generally, a single master group contract is issued to cover present and future participants. The following types of contracts are available: - -- Allocated, where individual accounts are established and individual purchase payments are directed to each corresponding account. - -- Unallocated, where no individual accounts are established. All purchase payments go to a single plan account. The corporate 401 contracts covered by this prospectus were available only for conversions through the Company's rewrite program. Those eligible for these contracts were contract holders of Individual Pension Trust contracts issued prior to May 1, 1975 who elected to stop payments to their existing contract and direct future payments to the new contracts. These contracts are no longer available for new sales. If state law does not permit a group contract, individual contracts will be issued for each participant. ALLOCATION OF PURCHASE PAYMENTS. The contract holder or you, if the contract holder permits, directs us to allocate initial contributions to the investment options available under the plan. Generally you will specify this information on your enrollment materials. After your enrollment, changes to allocations for future purchase payments or transfer of existing balances among investment options may be requested in writing and, where available, by telephone or electronically. Allocations must be in whole percentages. Payments must be large enough to fulfill the terms of the plan. For HR 10 plans, payments must be at least $25 per participant and total payments for the plan must be at least $6,000 annually (or average $2,000 per participant if there are fewer than three participants in the plan). TAX CODE RESTRICTIONS. The Tax Code places some limitations on contributions to your account. (See "Taxation.") 14 CONTRACT OWNERSHIP AND RIGHTS - ---------------------------------------------- WHO OWNS THE CONTRACT? The contract holder. This is the person or entity to whom we issue the contract. The contract holder is usually your employer, unless the plan has a trustee, in which case the trustee is usually the contract holder. WHAT RIGHTS DO I HAVE UNDER THE CONTRACT? The contract holder, usually your employer, holds all rights under the contract. The contract holder's plan, which you participate in, may permit you to exercise some of those rights. RIGHT TO CANCEL - ---------------------------------------------- WHEN AND HOW TO CANCEL. The contract holder may cancel the contract within ten days of receiving it (or as otherwise allowed by state law) by returning it to the Company along with a written notice of cancellation. REFUNDS TO CONTRACT HOLDERS. We will produce a refund to the contract holder not later than seven days after we receive the contract and the written notice of cancellation at our Home Office. The refund will equal the dollars contributed to the contract plus any earnings or less any losses attributable to those contributions allocated to the variable investment options, unless otherwise required by law. 15 [SIDE NOTE] TYPES OF FEES There are three types of fees your account may incur: - -- Transaction Fees - Early Withdrawal Charge - Maintenance Fee - Allocation and Transfer Fees - -- Fees Deducted From The Subaccounts - Mortality and Expense Risk Charge - Administrative Expense Charge - -- Fees Deducted By The Funds - Investment Advisory Fees - Other Expenses TERMS TO UNDERSTAND IN THE SCHEDULES Contract Year -- For HR 10 contracts issued before June 1, 1992 and for all corporate 401 contracts, the period of 12 months measured from the contract's effective date or from any anniversary of such effective date. For HR 10 contracts issued on and after June 1, 1992, the period of 12 months measured from the date the first purchase payment is applied to the contract or from any anniversary of such date. [END SIDE NOTE] FEES - ---------------------------------------------- The following repeats and adds to information provided in the "Fee Table" section. Please review both this section and the Fee Table for information on fees. TRANSACTION FEES EARLY WITHDRAWAL CHARGE Withdrawal of all or a portion of the individual or plan account value may be subject to a charge. AMOUNT. The charge is a percentage of the amount withdrawn from the contract as shown in the Early Withdrawal Charge Schedule below. PURPOSE. This is a deferred sales charge. The charge reimburses us for some of the sales and administrative expenses associated with the contract. If our expenses are greater than the amount we collect for the early withdrawal charge, we may use any of our corporate assets, including potential profit that may arise from the mortality and expense risk change, to make up any difference. EARLY WITHDRAWAL CHARGE SCHEDULE COMPLETED CONTRACT YEARS EARLY WITHDRAWAL CHARGE Fewer than 5 5% 5 or more but fewer than 7 4% 7 or more but fewer than 9 3% 9 or more but fewer than 10 2% More than 10 0%
WAIVER. The early withdrawal charge is waived for portions of a withdrawal when the withdrawal is: - -- Used to provide income phase payments; - -- Paid due to your death before income phase payments begin; - -- Taken after the completion of ten contract years; - -- Taken because of the election of a systematic distribution option (See "Systematic Distribution Options"); - -- Used as a rollover to purchase another of the Company's pension or IRA contracts; or - -- Paid when the individual account value is below $2,500 and no other withdrawals have been made from that individual account within the past 12 months. We will add together all individual account values held on your behalf to determine eligibility for this exemption. This provision is not available where we do not maintain individual accounts or where all individual accounts are withdrawn under the contract. 16 MAINTENANCE FEE MAXIMUM AMOUNT. $30.00 for each individual account. For a plan account, the maintenance fee is $30 for each participant for whom payments are made, up to a maximum of $240 for the plan account. WHEN/HOW. During the accumulation phase we deduct this fee from each individual or plan account. We deduct it on your account anniversary and, if permitted by state law, at the time of full withdrawal. PURPOSE. This fee reimburses us for our administrative expenses relating to the establishment and maintenance of the account. OPTIONAL PAYMENT METHOD. The contract holder may elect to pay the annual maintenance fee directly to the Company for all participants in the plan. In this case the maintenance fee will not be deducted from the account value. REDUCTION/WAIVER. For both HR 10 contracts and corporate 401 contracts, the contract holder may become eligible for a maintenance fee reduction. For HR 10 contracts issued on or after June 1, 1992, if at installation the contract has 25 or more active participants and the contract holder meets and adheres to the terms of an agreement to remit automated payments and enrollments, the maintenance fee will be reduced by $10. For HR 10 contracts issued prior to June 1, 1992 that met these conditions at installation, or for any contracts that meet these conditions subsequent to the installation, the maintenance fee will be reduced by $5. For corporate 401 contracts, the maintenance fee will be reduced by $5 if the contract has 25 or more active participants and the contract holder meets and adheres to the terms of an agreement to remit automated payments. For all contracts, the maintenance fee is waived when: - -- A participant has account values totaling less than $100; - -- A participant enrolls within 90 days of the maintenance fee deduction; or - -- An individual account or plan account is terminated less than 90 days after the last deduction. ALLOCATION AND TRANSFER FEE AMOUNT. We currently do not impose a fee for allocation changes or transfers among investment options. We reserve the right, however, to charge $10 for each allocation change or transfer in excess of 12 that occurs in a calendar year. PURPOSE. This fee reimburses us for administrative expenses associated with transferring or reallocating your dollars among investment options. FEES DEDUCTED FROM INVESTMENTS IN THE SUBACCOUNTS MORTALITY AND EXPENSE RISK CHARGE AMOUNT. During the accumulation phase, for HR 10 plans, 1.25% annually; and for corporate 401 plans, 1.19% annually of the account value invested in 17 the subaccounts. See "The Income Phase -- Charges Deducted" for charges deducted during the income phase. WHEN/HOW. This fee is deducted daily from the subaccounts. We do not deduct this from any fixed interest option. PURPOSE. This fee compensates us for the mortality and expense risks we assume under the contracts. - -- The mortality risks are those associated with our promise to make lifetime payments based on annuity rates specified in the contracts and our funding of the death benefit and other payments we make to owners or beneficiaries of the accounts. - -- The expense risk is that actual expenses we incur under the contract will exceed the maximum costs that we can charge. If the amount we deduct for this fee is not enough to cover our mortality costs and expenses under the contracts, we will bear the loss. We may use any excess to recover distribution costs relating to the contract and as a source of profit. We expect to make a profit from this fee. ADMINISTRATIVE EXPENSE CHARGE MAXIMUM AMOUNT. 0.25% annually of your account value invested in the subaccounts. This fee may be assessed during the accumulation phase and during the income phase. WHEN/HOW. Effective December 1, 2000 under HR 10 contracts issued after May 1, 1984, during the accumulation phase only we make a daily deduction of 0.25% on an annual basis of the account value invested in the subaccounts. We currently do not impose this fee under Corporate 401 contracts; however, under some Corporate 401 contracts we reserve the right to impose this fee. PURPOSE. This fee is intended to recoup some of the day to day administrative and technology expenses incurred in maintaining and servicing the contracts. FUND EXPENSES MAXIMUM AMOUNT. Each fund determines its own advisory fees and expenses. For a list of fund fees, see "Fee Table." The fees are described in more detail in each fund prospectus. WHEN/HOW. Fund fees are not deducted from your account. Fund advisory fees and expenses are reflected in the daily value of the fund shares, which will in turn affect the daily value of each subaccount. PURPOSE. These amounts help to pay the funds' investment advisor and operating expenses. PREMIUM AND OTHER TAXES MAXIMUM AMOUNT. Some states and municipalities charge a premium tax on annuities. These taxes currently range from 0% to 4%, depending upon jurisdiction. WHEN/HOW. We reserve the right to deduct a charge for premium taxes from your account value or from purchase payments to your account at any time, but not before there is a tax liability under state law. For example, we may deduct a charge for premium taxes at the time of a complete withdrawal or we may reflect the cost of premium taxes in our income phase payment rates when you 18 commence income phase payments. We will not deduct a charge for municipal premium tax of 1% or less, but we reserve the right to reflect such an expense in our annuity rates. In addition, the Company reserves the right to assess a charge for any federal taxes due against the separate account. (See "Taxation.") YOUR ACCOUNT VALUE - ---------------------------------------------- During the accumulation phase, your account value at any given time equals: - -- Account dollars directed to the fixed interest options, including interest earnings to date; minus - -- Any deductions from the fixed interest options (e.g. withdrawals, fees); plus - -- The current dollar value of amounts invested in the subaccounts. SUBACCOUNT ACCUMULATION UNITS. When a fund is selected as an investment option, your account dollars invest in "accumulation units" of the Variable Annuity Account C subaccount corresponding to that fund. The subaccount invests directly in the fund shares. The value of your interests in a subaccount is expressed as the number of accumulation units you hold multiplied by an "Accumulation Unit Value," as described below, for each unit. ACCUMULATION UNIT VALUE (AUV). The value of each accumulation unit in a subaccount is called the accumulation unit value or AUV. The value of accumulation units vary daily in relation to the underlying fund's investment performance. The value also reflects deductions for fund fees and expenses, the mortality and expense risk charge, and the administrative expense charge (if any). We discuss these deductions in more detail in "Fee Table" and "Fees." VALUATION. We determine the AUV every business day after the close of the New York Stock Exchange. At that time, we calculate the current AUV by multiplying the AUV last calculated by the "net investment factor" of the subaccount. The net investment factor measures the investment performance of the subaccount from one valuation to the next. Current AUV = Prior AUV x Net Investment Factor NET INVESTMENT FACTOR. The net investment factor for a subaccount between two consecutive valuations, equals the sum of 1.0000 plus the net investment rate. NET INVESTMENT RATE. The net investment rate is computed according to a formula that is equivalent to the following: - -- The net assets of the fund held by the subaccount as of the current valuation; minus - -- The net assets of the fund held by the subaccount at the preceding valuation; plus or minus - -- Taxes or provisions for taxes, if any, due to subaccount operations (with any federal income tax liability offset by foreign tax credits to the extent allowed); divided by - -- The total value of the subaccount units at the preceding valuation; minus 19 - -- A daily deduction for the mortality and expense risk charge and the administrative expense charge, if any. See "Fees." The net investment rate may be either positive or negative. HYPOTHETICAL ILLUSTRATION. As a hypothetical illustration, assume that an investor contributes $5,000 to his account and directs us to invest $3,000 of payments in Fund A and $2,000 of payments in Fund B. After receiving the contribution and following the next close of business of the New York Stock Exchange, the applicable AUV's are $10 for Subaccount A, and $25 for Subaccount B. The investor's account is credited with 300 accumulation units of subaccount A and 80 accumulation units of Subaccount B. STEP 1: An Investor contributes $5,000 STEP 2: A. He directs us to invest $3,000 in Fund A. His dollars purchase 300 accumulation units of Subaccount A ($3,000 divided by the current [GRAPHIC] $10 AUV). B. He directs us to invest $2,000 in Fund B. His dollars purchase 80 accumulation units of Subaccount B ($2,000 divided by the current $25 AUV). STEP 3: The separate account then purchases shares of the applicable funds at the current market value (net asset value or NAV). The fund's subsequent investment performance, expenses and charges, and the daily charges deducted from the subaccount, will cause the AUV to move up or down on a daily basis. PURCHASE PAYMENTS TO YOUR ACCOUNT. If all or a portion of initial purchase payments are directed to the subaccounts, they will purchase subaccount accumulation units at the AUV next computed after our acceptance of the applicable application or enrollment forms. Subsequent payments or transfers directed to the subaccounts that we receive by the close of business of the New York Stock Exchange (Exchange) will purchase subaccount accumulation units at the AUV computed after the close of the Exchange on that day. The value of subaccounts may vary day to day. 20 [SIDE NOTE] TAXES, FEES AND DEDUCTIONS Amounts withdrawn may be subject to one or more of the following: - -- Early Withdrawal Charge - -- Market Value Adjustment (see Appendix I) - -- Tax Penalty (see "Taxation") - -- Tax Withholding (see "Taxation") To determine which may apply, refer to the appropriate sections of this prospectus, contact your local representative, or call the Company at the number listed in "Contract Overview-- Questions: Contacting the Company." [END SIDE NOTE] WITHDRAWALS - ---------------------------------------------- MAKING A WITHDRAWAL. The contract holder may withdraw all or a portion of the individual or plan account value at any time during the accumulation phase. STEPS FOR MAKING A WITHDRAWAL. The contract holder must: - -- Select the Withdrawal Amount. (1) Full Withdrawal: The contract holder will receive, reduced by any required withholding tax, the account value allocated to the subaccounts, the Guaranteed Accumulation Account (plus or minus any market value adjustment) and to the Fixed Account, minus any applicable early withdrawal charge. (2) Partial Withdrawal (Percentage or Specified Dollar Amount): The contract holder will receive, reduced by any required withholding tax, the amount specified, subject to the value available in the account. However, the amount actually withdrawn from the account will be adjusted by any applicable early withdrawal charge, and any positive or negative market value adjustment for amounts withdrawn from the Guaranteed Accumulation Account. - -- Select Investment Options. If this is not specified, we will withdraw dollars in the same proportion as the values you hold in the various investment options from each investment option in which you have an account value. - -- Properly complete a disbursement form and submit it to our Home Office. CALCULATION OF YOUR WITHDRAWAL. We determine the account value every normal business day after the close of the New York Stock Exchange. All withdrawal amounts paid will be based on account value as of either: (1) The next valuation after receiving a request for withdrawal at our Home Office; or (2) On such later date as specified on the disbursement form. DELIVERY OF PAYMENT. Payments for withdrawal requests will be made in accordance with SEC requirements. Normally, payment will be sent not later than seven calendar days following our receipt of the disbursement form in good order. REINVESTMENT PRIVILEGE. The contracts allow one-time use of a reinvestment privilege. Within 30 days after a full withdrawal, if allowed by law and the contract, the contract holder may elect to reinvest all or a portion of the proceeds. We must receive reinvested amounts within 60 days of the withdrawal. We will credit the account for the amount reinvested based on the subaccount values next computed following our receipt of the request and the amount to be reinvested. We will credit the amount reinvested for maintenance fees and proportionally for early withdrawal charges imposed at the time of withdrawal. We will deduct from the amounts reinvested any maintenance fee which fell due after the withdrawal and before the reinvestment. We will reinvest in the same investment options and proportions in place at the time of withdrawal. Special rules apply to reinvestments of amounts withdrawn from the Guaranteed Accumulation Account (see Appendix I). Seek competent advice regarding the tax consequences associated with reinvestment. 21 [SIDE NOTE] FEATURES OF A SYSTEMATIC DISTRIBUTION OPTION A Systematic Distribution Option allows the contract holder to elect for you to receive regular payments from your account, without moving into the income phase. By maintaining your account in the accumulation phase, certain rights and flexibility are retained and accumulation phase fees continued to apply. [END SIDE NOTE] SYSTEMATIC DISTRIBUTION OPTIONS - ---------------------------------------------- AVAILABILITY OF SYSTEMATIC DISTRIBUTION OPTIONS. These options may be exercised at any time during the accumulation phase of the contract. To exercise one of these options the account must meet any minimum dollar amount and you must meet any age criteria applicable to that option. Check with the contract holder to determine which Systematic Distribution Options are available under your plan. The Systematic Distribution Options currently available under the contract include the following: - -- SWO--SYSTEMATIC WITHDRAWAL OPTION. SWO is a series of automatic partial withdrawals from your account based on the payment method selected. It is designed for those who would like a periodic income while retaining investment flexibility for amounts accumulated under the contract. - -- ECO--ESTATE CONSERVATION OPTION. ECO offers the same investment flexibility as SWO, but is designed for those who want to receive only the minimum distribution that the Tax Code requires each year. Under ECO, we calculate the minimum distribution amount required by law at age 70 1/2, and pay that amount once a year. - -- OTHER SYSTEMATIC DISTRIBUTION OPTIONS. We may add additional Systematic Distribution Options from time to time. You may obtain additional information relating to any of the Systematic Distribution Options from your local representative or from our Home Office. AVAILABILITY OF SYSTEMATIC DISTRIBUTION OPTIONS. The Company may discontinue the availability of one or all of the Systematic Distribution Options at any time, and/or change the terms of future elections. TERMINATING A SYSTEMATIC DISTRIBUTION OPTION. Once a Systematic Distribution Option is elected, the contract holder may revoke it at any time by submitting a written request to our Home Office. Any revocation will apply only to the amount yet to be paid. Once an option is revoked for an account, it may not be elected again, nor may any other Systematic Distribution Option be elected. CHARGES AND TAXATION. When the contract holder elects a Systematic Distribution Option for your account, your account value remains in the accumulation phase and subject to the charges and deductions described in the "Fees" section. Taking a withdrawal under a Systematic Distribution Option may have tax consequences. If you are concerned about tax implications, consult a tax adviser before a Systematic Distribution Option is elected. 22 [SIDE NOTE] DURING THE INCOME PHASE This section provides information about the accumulation phase. For death benefit information applicable to the income phase see "The Income Phase." [END SIDE NOTE] DEATH BENEFIT - ---------------------------------------------- The contract provides a death benefit in the event of your death, which is payable to the contract holder (usually the plan trustee). The contract holder may direct that we make any payments to the beneficiary you name under the plan (plan beneficiary). DURING THE ACCUMULATION PHASE PAYMENT PROCESS - -- Following your death, the contract holder (on behalf of your plan beneficiary) must provide the Company with proof of death acceptable to us and a payment request in good order. - -- The payment request should include selection of a benefit payment option. - -- Within seven days after we receive proof of death acceptable to us and payment request in good order at our Home Office, we will mail payment, unless otherwise requested. Until a payment option is selected, account dollars will remain invested as at the time of your death, and no distribution will be made. If you die during the accumulation phase of your account, the following payment options are available to your plan beneficiary, if allowed by your contract holder and the Tax Code: - -- Lump-sum payment; - -- Payment in accordance with any of the available income phase payment options (see "The Income Phase--Payment Options"); or - -- If the plan beneficiary is your spouse, payment in accordance with an available Systematic Distribution Option (See "Systematic Distribution Options"). The following options are also available; however, the Tax Code limits how long the death benefit proceeds may be left in these options: - -- Leaving your account value invested in the contract; or - -- Under some contracts, leaving your account value on deposit in the Company's general account, and receiving monthly, quarterly, semi-annual or annual interest payments at the interest rate then being credited on such deposits. The beneficiary may withdraw the balance on deposit at any time or request to receive payment in accordance with any of the available income phase payment options (See "The Income Phase--Payment Options.") THE VALUE OF THE DEATH BENEFIT. The death benefit will be based on your account value as calculated on the next valuation following the date on which we receive proof of death in good order. Interest, if any, will be paid from the date of death at a rate no less than required by law. For amounts held in the Guaranteed Accumulation Account (GAA), any positive aggregate market value adjustment (the sum of all market value adjustments calculated due to a withdrawal) will be included in your account value. If a negative aggregate market value adjustment applies, it would be deducted only if the death benefit 23 is withdrawn more than six months after your death. We describe the market value adjustment in Appendix I and the GAA prospectus. TAX CODE REQUIREMENTS. The Tax Code requires distribution of death benefit proceeds within a certain period of time. Failure to begin receiving death benefit payments within those time periods can result in tax penalties. Regardless of the method of payment, death benefit proceeds will generally be taxed to the beneficiary in the same manner as if you had received those payments. See "Taxation" for additional information. 24 [SIDE NOTE] We may have used the following terms in prior prospectuses: ANNUITY PHASE--Income Phase ANNUITY OPTION--Payment Option ANNUITY PAYMENT--Income Phase Payment ANNUITIZATION--Initiating Income Phase Payments [END SIDE NOTE] THE INCOME PHASE - ---------------------------------------------- During the income phase you stop contributing dollars to the account and start receiving payments from the accumulated account value. INITIATING PAYMENTS. At least 30 days prior to the desired date to start receiving income phase payments, the contract holder must notify us in writing of the following: - -- Payment Start date; - -- Income Phase Payment option (see the payment options table in this section); - -- Income Phase Payment frequency (i.e., monthly, quarterly, semi-annually or annually); - -- Choice of fixed or variable income phase payments; and - -- Selection of an assumed net investment rate (only if variable payments are elected). The account will continue in the accumulation phase until the contract holder properly initiates income phase payments. Once a payment option is selected, it may not be changed; however, certain options allow the withdrawal of a lump sum. WHAT AFFECTS PAYMENT AMOUNTS? Some of the factors that may affect the amount of your income phase payments include: your age, your account value, the payment option selected, number of guaranteed income phase payments (if any) selected, and whether variable or fixed payments are selected. FIXED PAYMENTS. Amounts funding fixed income phase payments will be held in the Company's general account. Fixed income phase payment amounts do not vary over time. VARIABLE PAYMENTS. Amounts funding variable income phase payments will be held in the subaccount(s) selected or a combination of subaccounts and the general account. The only subaccounts currently permitted during the income phase are the Aetna Balanced Fund, Inc., Aetna Bond Fund, and Aetna Growth and Income Fund. Transfers are not permitted once the income phase begins. For variable income phase payments, an assumed net investment rate must be selected. ASSUMED NET INVESTMENT RATE. If you select variable income phase payments, you must also select an assumed net investment rate of either 5% or 3 1/2%. If a 5% rate is selected, the first payment will be higher, but subsequent income phase payments will increase only if the investment performance of the subaccounts selected is greater than 5% annually, after deduction of fees. Income phase payment amounts will decline if the investment performance is less than 5%, after deduction of fees. If a 3 1/2% rate is selected, the first income phase payment will be lower and subsequent payments will increase more rapidly or decline more slowly depending upon the investment performance of the subaccounts selected. For more information about selecting an assumed net investment rate, request a 25 copy of the Statement of Additional Information by calling the Company. (See "Contract Overview--Questions: Contacting the Company.") MINIMUM INCOME PHASE PAYMENT AMOUNTS. The income phase payment option selected must result in one or both of the following: - -- A first payment of at least $20; or - -- Total yearly payments of at least $100. If your account value is too low to meet these minimum payment amounts, the contract holder must elect a lump-sum payment. CHARGES DEDUCTED. We make a daily deduction of 1.25% on an annual basis for mortality and expense risks from amounts held in the subaccounts. Therefore if variable payments and a nonlifetime payment option are chosen, we still make this deduction from the subaccounts selected, even though we no longer assume any mortality risk. We may also deduct a daily administrative charge from amounts held in the subaccounts; however, we are not currently deducting such fees during the income phase under the contracts. (See "Fees.") DEATH BENEFIT DURING THE INCOME PHASE. The death benefits that may be available to a beneficiary are outlined in the payment option table below. If a lump-sum payment is due as a death benefit, we will make payment within seven calendar days after we receive proof of death acceptable to us and the payment request in good order at our Home Office. TAXATION. To avoid certain tax penalties, you and any beneficiary must meet the distribution rules imposed by the Tax Code. (See "Taxation.") 26 INCOME PHASE PAYMENT OPTIONS The following tables list the income phase payment options and accompanying death benefits which may be available under the contracts. Some contracts restrict the options and the terms available. Check with your contract holder for details. We may offer additional payment options under the contract from time to time. TERMS USED IN THE TABLES: ANNUITANT: The person(s) on whose life expectancy the income phase payments are calculated. BENEFICIARY: The person designated to receive the death benefit payable under the contract. LIFETIME INCOME PHASE PAYMENT OPTIONS LENGTH OF PAYMENTS: For as long as the annuitant lives. It is possible that only one payment will be made should the annuitant die prior to the Life Income second payment's due date. DEATH BENEFIT--NONE: All payments end upon the annuitant's death. LENGTH OF PAYMENTS: For as long as the annuitant lives, with payments guaranteed for a Choice of 5 to 20 years or otherwise as specified in the contract. DEATH BENEFIT--PAYMENT TO THE BENEFICIARY: If the Life Income-- annuitant dies before we have made all the Guaranteed guaranteed payments, we will continue to pay the Payments beneficiary the remaining payments. Unless prohibited by a prior election of the contract holder, the beneficiary may elect to receive a lump-sum payment equal to the present value of the remaining guaranteed payments. LENGTH OF PAYMENTS: For as long as either annuitant lives. It is possible that only one payment will be made should both annuitants die before the second payment's due date. CONTINUING PAYMENTS: (a) This option allows a choice of 100%, 66 2/3% or 50% of the payment to continue to the surviving Life Income--Two Lives annuitant after the first death; or (b) 100% of the payment to continue to the annuitant on the second annuitant's death, and 50% of the payment to continue to the second annuitant on the annuitant's death. DEATH BENEFIT--NONE: All payments end after the deaths of both annuitants. LENGTH OF PAYMENTS: For as long as either annuitant lives, with payments guaranteed for a minimum of 120 months, or as otherwise specified in the contract. CONTINUING PAYMENTS: 100% of the payment will continue to the surviving annuitant after the first death. Life Income--Two Lives--Guaranteed DEATH BENEFIT--PAYMENT TO THE BENEFICIARY: If both Payments annuitants die before the guaranteed payments have all been paid, we will continue to pay the beneficiary the remaining payments. Unless prohibited by a prior election of the contract holder, the beneficiary may elect to receive a lump-sum payment equal to the present value of the remaining guaranteed payments. NONLIFETIME PAYMENT OPTIONS LENGTH OF PAYMENTS: Payments generally may be fixed or variable and may be made for 3-30 years. In certain cases a lump sum payment may be requested at any time (see below). DEATH BENEFIT--PAYMENT TO THE BENEFICIARY: If the annuitant dies before we make all the guaranteed Nonlifetime--Guaranteed payments, we will continue to pay the beneficiary Payments the remaining payments. Unless prohibited by a prior election of the contract holder, the beneficiary may elect to receive a lump-sum payment equal to the present value of the remaining guaranteed payments, and we will not impose any early withdrawal charge. LUMP-SUM PAYMENT: If the Nonlifetime--Guaranteed Payments option is elected with variable payments, the contract holder may request at any time that all or a portion of the present value of the remaining payments be paid in one sum. A lump sum elected before three years of payments have been completed will be treated as a withdrawal during the accumulation phase and we will charge any applicable early withdrawal charge. (See "Fees--Early Withdrawal Charge.") Lump-sum payments will be sent within seven calendar days after we receive the request for payment in good order at our Home Office.
27 [SIDE NOTE] IN THIS SECTION - -- Introduction - -- Contract Type - -- Taxation Of Gains Prior To Distribution - -- Plan Types - -- Withdrawals And Other Distributions - Taxation of Distributions - 10% Penalty Tax - Withholding - -- Minimum Distribution Requirements - 50% Excise Tax - -- Rules Specific To Certain Plans - Code Section 401(a), 401(k) and 403(a) Plans - -- Taxation Of The Company When consulting a tax adviser, be certain that he or she has expertise in the Tax Code sections applicable to your tax concerns. [END SIDE NOTE] TAXATION - ---------------------------------------------- INTRODUCTION This section discusses our understanding of current federal income tax laws affecting the contract. You should keep the following in mind when reading it: - -- Your tax position (or the tax position of the beneficiary, as applicable) determines federal taxation of amounts held or paid out under the contract. - -- Tax laws change. It is possible that a change in the future could affect contracts issued in the past. - -- This section addresses federal income tax rules and does not discuss federal estate and gift tax implications, state and local taxes or any other tax provisions. - -- We do not make any guarantee about the tax treatment of the contract or transactions involving the contract. We do not intend this information to be tax advice. For advice about the effect of federal income taxes or any other taxes on amounts held or paid out under the contract, consult a tax adviser. For more comprehensive information contact the Internal Revenue Service (IRS). TAXATION OF GAINS PRIOR TO DISTRIBUTION. You will generally not pay taxes on any earnings from the annuity contract described in this prospectus until they are withdrawn. Tax-qualified retirement arrangements under Tax Code Sections 401(a), 401(k) or 403(a) also generally defer payment of taxes on earnings until they are withdrawn. (See "Taxation of Distributions" later in this "Taxation" section for a discussion of how distributions under the various types of plans are taxed.) When an annuity contract is used to fund one of these tax-qualified retirement arrangements, you should know that the annuity contract does not provide any additional tax deferral of earnings beyond the tax deferral provided by the tax-qualified retirement arrangement. However, annuities do provide other features and benefits which may be valuable to you. You should discuss your alternatives with your financial representative. PLAN TYPES. There are two contracts described in this prospectus. Both contracts are used for retirement plans that qualify under Code Section 401(a), 401(k) or 403(a). One contract is designed for use with qualified retirement plans established by self-employed individuals (H.R. 10 Plans). The other contract is designed for use with qualified retirement plans established by corporations. THE CONTRACT AND RETIREMENT PLANS. Contract holders and contract participants are responsible for determining that contributions, distributions and other transactions satisfy applicable laws. Legal counsel and a tax adviser should be consulted regarding the suitability of the contract. BECAUSE THE PLAN IS NOT PART OF THE CONTRACT, WE ARE NOT BOUND BY ANY PLAN'S TERMS OR CONDITIONS. WITHDRAWALS AND OTHER DISTRIBUTIONS Certain tax rules apply to distributions from the contract. A distribution is any amount taken from the contract including withdrawals, income payments, rollovers and death benefit proceeds. 28 We report the taxable portion of all distributions to the IRS. TAXATION OF DISTRIBUTIONS 401(a), 401(k) OR 403(a) PLANS. All distributions from these plans are taxed as received unless: The distribution is rolled over to another plan of the same type or to a traditional individual retirement annuity/account (IRA) in accordance with the Tax Code, or You made after-tax contributions to the plan. In this case, depending upon the type of distribution, a portion may be excluded from gross income according to rules detailed in the Tax Code. TAXATION OF DEATH BENEFIT PROCEEDS. In general, payments received by your beneficiaries after your death are taxed in the same manner as if you had received those payments. 10% PENALTY TAX. The Tax Code imposes a 10% penalty tax on the taxable portion of any distribution from a 401(a), 401(k) or 403(a), unless one or more of the following have occurred: - -- You have attained age 59 1/2, - -- You have become permanently disabled, - -- You have died, - -- You have separated from service with the plan sponsor at or after age 55, - -- The distribution amount is rolled over into another plan of the same type or to an IRA in accordance with the terms of the Tax Code, - -- The withdrawal amount is made to an alternate payee under a Qualified Domestic Relations Order (QDRO), - -- The distribution is due to an IRS levy upon the individual's account, or - -- The distribution amount is made in substantially equal periodic payments (at least annually) over your life or life expectancy or the joint lives or joint life expectancies of you and your beneficiary. Also, you must have separated from service with the plan sponsor. In addition, the penalty tax does not apply for the amount of a distribution equal to unreimbursed medical expenses incurred by you that qualify for deduction as specified in the Tax Code. The Tax Code may impose other penalty taxes in other circumstances. WITHHOLDING FOR FEDERAL INCOME TAX LIABILITY. Any distributions under the contracts are generally subject to withholding. Federal income tax liability rates vary according to the type of distribution and the recipient's tax status. 401(a), 401(k) OR 403(a) PLANS. Generally, under these plans you or a beneficiary may elect not to have tax withheld from distributions. However, certain distributions from these plans are subject to a mandatory 20% federal income tax withholding. NON-RESIDENT ALIENS. If you or a beneficiary is a non-resident alien, then any withholding is governed by Code Section 1441 based on the individual's citizenship, the country of domicile and treaty status. 29 MINIMUM DISTRIBUTION REQUIREMENTS To avoid certain tax penalties, you and any beneficiary must meet the minimum distribution requirements imposed by the Tax Code. These rules may dictate one or more of the following: - -- Start date for distributions; - -- The time period in which all amounts in your account(s) must be distributed; or - -- Distribution amounts. THE RULES ARE COMPLEX AND YOU AND ANY BENEFICIARY SHOULD CONSULT WITH A TAX ADVISER BEFORE ELECTING THE METHOD OF CALCULATION TO SATISFY THE MINIMUM DISTRIBUTION REQUIREMENTS. THE RULES ARE SUBJECT TO CHANGE AS A RESULT OF NEW REGULATIONS PROPOSED BY THE IRS ON JANUARY 17, 2001. START DATE. Generally, you must begin receiving distributions by April 1 of the calendar year following the calendar year in which you attain age 70 1/2 or retire, whichever occurs later, unless you are a 5% owner, in which case such distributions must begin by April 1st of the calendar year following the calendar year in which you attain age 70 1/2. TIME PERIOD. We must pay out distributions from the contract over one of the following time periods: - -- Over your life or the joint lives of you and your beneficiary, or - -- Over a period not greater than your life expectancy or the joint life expectancies of you and your beneficiary. 50% EXCISE TAX. If you fail to receive the minimum required distribution for any tax year, a 50% excise tax is imposed on the required amount that was not distributed. MINIMUM DISTRIBUTION OF DEATH BENEFIT PROCEEDS. Different distribution requirements apply if your death occurs: - -- After you begin receiving minimum distributions under the contract, or - -- Before you begin receiving such distributions. If your death occurs after you begin receiving minimum distributions under the contract, distributions must be made at least as rapidly as under the method in effect at the time of your death. Code Section 401(a)(9) provides specific rules for calculating the minimum required distributions at your death. The rules differ, dependent upon: - -- Whether your minimum required distribution was calculated each year based on your single life expectancy or the joint life expectancies of you and your beneficiary, and - -- Whether life expectancy was recalculated. THE RULES ARE COMPLEX AND ANY BENEFICIARY SHOULD CONSULT WITH A TAX ADVISER BEFORE ELECTING THE METHOD OF CALCULATION TO SATISFY THE MINIMUM DISTRIBUTION REQUIREMENTS. THE RULES ARE SUBJECT TO CHANGE AS A RESULT OF NEW REGULATIONS PROPOSED BY THE IRS ON JANUARY 17, 2001. Should you die before you begin receiving minimum distributions under the contract, your entire balance must be distributed by December 31 of the calendar year containing the fifth anniversary of the date of your death. For example, if you die on September 1, 2001, your entire balance must be distributed to the beneficiary by December 31, 2006. However, if the 30 distribution begins by December 31 of the calendar year following the calendar year of your death, then payments may be made in one of the following time- frames: - -- Over the life of the beneficiary, or - -- Over a period not extending beyond the life expectancy of the beneficiary. START DATES FOR SPOUSAL BENEFICIARIES. If the beneficiary is your spouse, the distribution must begin on or before the later of the following: - -- December 31 of the calendar year following the calendar year of your death, or - -- December 31 of the calendar year in which you would have attained age 70 1/2. RULES SPECIFIC TO CERTAIN PLANS CODE SECTION 401(a), 401(k) AND 403(a) PLANS Code Sections 401(a), 401(k) and 403(a) permit certain employers to establish various types of retirement plans for employees, and permit self-employed individuals to establish various types of retirement plans for themselves and for their employees. These retirement plans may permit the purchase of the contracts to accumulate retirement savings under the plans. ASSIGNMENT OR TRANSFER OF CONTRACTS. Adverse tax consequences to the plan and/or to you may result if your beneficial interest in the contract is assigned or transferred to persons other than: a plan participant as a means to provide benefit payments; an alternate payee under a qualified domestic relations order in accordance with Code Section 414(p); or to the Company as collateral for a loan. EXCLUSION FROM GROSS INCOME. The Tax Code imposes a maximum limit on annual payments to your account(s) that may be excluded from gross income. The employer must calculate this limit under the plan in accordance with Code Section 415. This limit is generally the lesser of 25% of your compensation or $35,000. Compensation means your compensation from the employer sponsoring the plan and, for years beginning after December 31, 1997, includes any elective deferrals under Code Section 402(g) and any amounts not includible in gross income under Code Sections 125 or 457. The limit applies to your contributions as well as any contributions made by your employer on your behalf. There is an additional limit that specifically limits your salary reduction contributions under a 401(k) plan to generally no more than $10,500 annually (subject to indexing). Your own limits may be higher or lower, depending upon certain conditions. In addition, payments to your account(s) will be excluded from your gross income only if the plan meets certain nondiscrimination requirements. RESTRICTIONS ON DISTRIBUTIONS. Code Section 401(k) restricts distribution from your 401(k) employee account, and possibly all or a portion of your 401(k) employer account if such amounts are included in determining compliance with certain nondiscrimination requirements under the Tax Code. Subject to the terms of the 401(k) plan, distribution of these restricted amounts may only occur upon: retirement, death, attainment of age 59 1/2, disability, separation from service, financial hardship, termination of the plan in certain circumstances, or, generally, if your employer is a corporation and disposes of substantially all of its assets or disposes of 31 a subsidiary. In addition, income attributable to salary reduction contributions and credited on or after January 1, 1989, may not be distributed in the case of hardship. TAXATION OF THE COMPANY We are taxed as a life insurance company under the Tax Code. Variable Annuity Separate Account C is not a separate entity from us. Therefore, it is not taxed separately as a "regulated investment company," but is taxed as part of the Company. We automatically apply investment income and capital gains attributable to the separate account to increase reserves under the contracts. Because of this, under existing federal tax law we believe that any such income and gains will not be taxed to the extent that such income and gains are applied to increase reserves under the contracts. In addition, any foreign tax credits attributable to the separate account will be first used to reduce any income taxes imposed on the separate account before being used by the Company. In summary, we do not expect that we will incur any federal income tax liability attributable to the separate account and we do not intend to make any provision for such taxes. However, changes in federal tax laws and/or their interpretation may result in our being taxed on income or gains attributable to the separate account. In this case, we may impose a charge against the separate account (with respect to some or all of the contracts) to set aside provisions to pay such taxes. We may deduct this amount from the separate account, including from your account value invested in the subaccounts. OTHER TOPICS - ---------------------------------------------- THE COMPANY Aetna Life Insurance and Annuity Company (the Company, we) issues the contracts described in this 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 known as Participating Annuity Life Insurance Company, an Arkansas life insurance company organized in 1954). We are engaged in the business of issuing life insurance and annuities. Our principal executive offices are located at: 151 Farmington Avenue Hartford, Connecticut 06156 VARIABLE ANNUITY ACCOUNT C We established Variable Annuity Account C (the "separate account") under Connecticut Law in 1976 as a continuation of the separate account established in 1974 under Arkansas law of Aetna Variable Annuity Life Insurance Company. 32 The separate account was established as a segregated asset account to fund variable annuity contracts. The separate account is registered as a unit investment trust under the Investment Company Act of 1940 (the "40 Act"). It also meets the definition of "separate account" under the federal securities laws. The separate account is divided into "subaccounts." These subaccounts invest directly in shares of a pre-assigned fund. Although we hold title to the assets of the separate account, such assets are not chargeable with the liabilities of any other business that we conduct. Income, gains or losses of the separate account are credited to or charged against the assets of the separate account without regard to other income, gains or losses of the Company. All obligations arising under the contracts are obligations of the Company. PERFORMANCE REPORTING We may advertise different types of historical performance for the subaccounts including: - -- Standardized average annual total returns, and - -- Non-standardized average annual total returns. We may also advertise certain ratings, rankings or other information related to the Company, the subaccounts or the funds. For further details regarding performance reporting and advertising request a Statement of Additional Information at the number listed in "Contract Overview--Questions: Contacting the Company." STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS. We calculate standardized average annual total returns according to a formula prescribed by the SEC. This shows the percentage return applicable to $1,000 invested in the subaccount over the most recent one, five and 10-year periods. If the investment option was not available for the full period, we give a history from the date money was first received in that option under the separate account. We include all recurring charges during each period (e.g., mortality and expense risk charges, annual maintenance fees, administrative expense charges (if any) and any applicable early withdrawal charges). NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS. We calculate non-standardized average annual total returns in a similar manner as that stated above, except we do not include the deduction of any applicable early withdrawal charge. Some non-standardized returns may also exclude the effect of a maintenance fee. If we reflected these charges in the calculation, they would decrease the level of performance reflected by the calculation. Non-standardized returns may also include performance from the fund's inception date, if that date is earlier than the one we use for standardized returns. VOTING RIGHTS Each of the subaccounts holds shares in a fund and each is entitled to vote at regular and special meetings of that fund. Under our current view of applicable law, we will vote the shares for each subaccount as instructed by persons having a voting interest in the subaccount. Under the contracts described in this prospectus, the contract holder, not the plan participants, has all voting rights. We will vote shares for which instructions have not been received in the same proportion as those for which we received instructions. Each person who has a 33 voting interest in the separate account will receive periodic reports relating to the funds in which he or she has an interest, as well as any proxy materials and a form on which to give voting instructions. Voting instructions will be solicited by a written communication at least 14 days before the meeting. The number of votes (including fractional votes) the contract holder is entitled to direct will be determined as of the record date set by any fund the contract holder invests in through the subaccounts. - -- During the accumulation phase, the number of votes is equal to the portion of the account value invested in the fund, divided by the net asset value of one share of that fund. - -- During the income phase, the number of votes is equal to the portion of reserves set aside for the contract's share of the fund, divided by the net asset value of one share of that fund. CONTRACT DISTRIBUTION 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 offered to the public by individuals who are registered representatives of AIS or other broker-dealers which have entered into a selling arrangement with AIS. We refer to AIS and the other broker-dealers selling the contracts as "distributors." All registered representatives selling the contracts must also be licensed as insurance agents for the Company. COMMISSION PAYMENTS Persons who offer and sell the contracts may be paid a commission. The maximum percentage amount that may be paid with respect to a given purchase payment is the first-year percentage which equals approximately 2% of the first year of payments to an account. Renewal commissions may also be paid on payments made after the first year and, under group contracts, asset-based service fees. The average of all commissions and asset-based service fees paid is estimated to equal approximately 2% of the total payments made over the life of an average contract. Some sales personnel may receive various types of non-cash compensation as special sales incentives, including trips and educational and/or business seminars. However, any such compensation will be paid in accordance with NASD rules. In addition, the Company may provide additional compensation to its supervisory and other management personnel if the overall amount of investments in funds advised by the Company or its affiliates increases over time. The total compensation package for sales, supervisory and management personnel of affiliated or related broker-dealers may be positively impacted if the overall amount of investments in the contracts and other products issued or advised by the Company or its affiliates increases over time. The distributor may be reimbursed for certain expenses. The names of the distributor and the registered representative responsible for your account are stated in your enrollment materials. Commissions and sales related expenses are paid by us or our affiliates and are not deducted from payments to your account. 34 THIRD PARTY COMPENSATION ARRANGEMENTS Occasionally: - -- Commissions and fees may be paid to distributors affiliated or associated with the contract holder, you and/or other contract participants; and/or - -- The Company may enter into agreements with entities associated with the contract holder, you and/or other participants. Through such agreements, we may pay the entities for certain services in connection with administering the contract. In both these circumstances there may be an understanding that the distributor or entities would endorse us as a provider of the contract. You will be notified if you are purchasing a contract that is subject to these arrangements. CONTRACT MODIFICATION We may change the contract as required by federal or state law. In addition, we may, upon 30 days' written notice to the contract holder, make other changes to group contracts that would apply only to individuals who become participants under that contract after the effective date of such changes. If the group contract holder does not agree to a change, we reserve the right to refuse to establish new accounts under the contract. Certain changes will require the approval of appropriate state or federal regulatory authorities. LEGAL MATTERS AND PROCEEDINGS We are aware of no material legal proceedings pending which involve the separate account as a party or which would materially affect the separate account. The validity of the securities offered by this prospectus has been passed upon by Counsel to the Company. In recent years, a number of companies have been named as defendants in class action lawsuits relating to life insurance. The Company is a defendant in one such lawsuit, a purported class action which was filed against the Company in the United States District Court for the Middle District of Florida on June 30, 2000, by Helen Reese, Richard Reese, Villere Bergeron, and Alan Eckert (the "Reese Complaint"). The Reese Complaint claims that the Company engaged in unlawful sales practices in marketing life insurance policies. The Company intends to defend this action vigorously. The Company also is a party to other litigation and arbitration proceedings in the ordinary course of its business, none of which is expected to have a material adverse effect on the Company. PAYMENT DELAY OR SUSPENSION We reserve the right to suspend or postpone the date of any payment of benefits or values under the following circumstances: - -- On any valuation date when the New York Stock Exchange (Exchange) is closed (except customary weekend and holidays) or when trading on the Exchange is restricted; - -- When an emergency exists as determined by the SEC so that disposal of the securities held in the subaccounts is not reasonably practicable or it is not reasonably practicable fairly to determine the value of the subaccount's assets; or - -- During any other periods the SEC may by order permit for the protection of investors. 35 The conditions under which restricted trading or an emergency exists shall be determined by the rules and regulations of the SEC. TRANSFER OF OWNERSHIP; ASSIGNMENT An assignment of a contract will only be binding on us if it is made in writing and sent to us at our Home Office. We will use reasonable procedures to confirm that the assignment is authentic, including verification of signature. If we fail to follow our own procedures, we will be liable for any losses to you directly resulting from the failure. Otherwise, we are not responsible for the validity of any assignment. The rights of the contract holder and the interest of the annuitant and any beneficiary will be subject to the rights of any assignee we have on our records. INTENT TO CONFIRM QUARTERLY We will provide confirmation of schedule transactions quarterly rather than immediately to the participant. 36 CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION - ---------------------------------------------- The Statement of Additional Information contains more specific information on the separate account and the contract, as well as the financial statements of the separate account and the Company. A list of the contents of the SAI is set forth below: General Information and History Variable Annuity Account C Offering and Purchase of Contracts Performance Data General Average Annual Total Return Quotations Income Phase Payments Sales Material and Advertising Independent Auditors Financial Statements of the Separate Account Financial Statements of Aetna Life Insurance and Annuity Company
You may request an SAI by calling the Company at the number listed in "Contract Overview--Questions: Contacting the Company." 37 APPENDIX I GUARANTEED ACCUMULATION ACCOUNT - ------------------------------------------------------------------ The Guaranteed Accumulation Account (GAA) is a fixed interest option that may be available during the accumulation phase under the contracts. This appendix is only a summary of certain facts about GAA. Please read the GAA prospectus before investing in this option. IN GENERAL. Amounts that you invest in GAA will earn a guaranteed interest rate if amounts are left in GAA for the specified period of time. If you withdraw or transfer those amounts before the specified period of time has elapsed, we may apply a "market value adjustment," which may be positive or negative. When you decide to invest money in GAA, you will want to contact your representative or the Company to learn: - -- The interest rate we will apply to the amounts that you invest in GAA. We change this rate periodically, so be certain you know what rate we guarantee on the day your account dollars are invested into GAA. - -- The period of time your account dollars need to remain in GAA in order to earn that rate. You are required to leave your account dollars in GAA for a specified period of time (guaranteed term), in order to earn the guaranteed interest rate. DEPOSIT PERIODS. A deposit period is the time during which we offer a specific interest rate if you deposit dollars for a certain guaranteed term. For a particular interest rate and guaranteed term apply to your account dollars, you must invest them during the deposit period during which that rate and term are offered. INTEREST RATES. We guarantee different interest rates, depending upon when account dollars are invested in GAA. The interest rate we guarantee is an annual effective yield; that means that the rate reflects a full year's interest. We credit interest daily at a rate that will provide the guaranteed annual effective yield over one year. The guaranteed interest rate will never be less than the rate stated in the contract. FEES AND OTHER DEDUCTIONS. If all or a portion of your account value in GAA is withdrawn, you may incur the following: - -- Market Value Adjustment (MVA)--as described in this appendix and in the GAA prospectus; - -- Tax Penalties and/or Tax withholding--see "Taxation;" - -- Early Withdrawal Charge--see "Fees;" or - -- Maintenance Fee--see "Fees." We do not make deductions from amounts in the GAA to cover mortality and expense risks. Rather, we consider these risks when determining the credited rate. MARKET VALUE ADJUSTMENT (MVA). If you withdraw or transfer your account value from GAA before the guaranteed term is completed, an MVA may apply. The MVA reflects the change in the value of the investment due to changes in interest rates since the date of deposit. The MVA may be positive or negative. - -- If interest rates at the time of withdrawal have increased since the date of deposit, the value of the investment decreases and the MVA will be negative. This could result in your receiving less than the amount you paid into GAA. - -- If interest rates at the time of withdrawal have decreased since the date of deposit, the value of the investment increases and the MVA will be positive. GUARANTEED TERMS. The guaranteed term is the period of time account dollars must be left in the GAA in order to earn the guaranteed interest rate specified for that guaranteed term. We offer different guaranteed terms at different times. Check with your representative or the Company to learn the details about the guaranteed term(s) currently being offered. In general we offer the following guaranteed terms: - -- Short-term--three years or less, or - -- Long-term--ten years or less, but more than three years. 38 At the end of a guaranteed term, your contract holder or you if permitted may: - -- Transfer dollars to a new guaranteed term; - -- Transfer dollars to other available investment options; or - -- Withdraw dollars. Deductions may apply to withdrawals. See "Fees and Other Deductions" in this section. TRANSFER OF ACCOUNT DOLLARS. Generally, account dollars invested in GAA may be transferred among guaranteed terms offered through the GAA, and/or to other investment options offered through the contract. However, transfers may not be made during the deposit period in which your account dollars are invested in GAA or for 90 days after the close of that deposit period. We will apply an MVA to transfers made before the end of a guaranteed term. INCOME PHASE. GAA can not be used as an investment option during the income phase. However, the contract holder (or you, if permitted) may notify us at least 30 days in advance to elect a variable payment option and to transfer your GAA account dollars to any of the subaccounts available during the income phase. REINVESTING AMOUNTS WITHDRAWN FROM GAA. If amounts are withdrawn from GAA and then reinvested in GAA, we will apply the reinvested amount to the current deposit period. This means that the guaranteed annual interest rate, and guaranteed terms available on the date of reinvestment, will apply. Amounts will be reinvested proportionately in the same way as they were allocated before withdrawal. Your account value will not be credited for any negative MVA that was deducted at the time of withdrawal. 39 APPENDIX II FIXED ACCOUNT - ------------------------------------------------------------------ The Fixed Account is an investment option available during the accumulation phase under the contracts. Amounts allocated to the Fixed Account are held in the Company's general account which supports insurance and annuity obligations. Additional information about this option may be found in the contract. GENERAL DISCLOSURE. Interests in the Fixed Account have not been registered with the SEC in reliance on exemptions under the Securities Act of 1933, as amended. Disclosure in this prospectus about the Fixed Account may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of the statements. Disclosure in this Appendix regarding the Fixed Account has not been reviewed by the SEC. INTEREST RATES. The Fixed Account guarantees that amounts allocated to this option will earn the minimum interest rate specified in the contract. We may credit a higher interest rate from time to time, but the rate we credit will never fall below the guaranteed minimum specified in the contract. Among other factors, the safety of the interest rate guarantee depends upon the claims-paying ability of the Company. Amounts applied to the Fixed Account will earn the interest rate in effect at the time money is applied. Amounts in the Fixed Account will reflect a compound interest rate as credited by us. The rate we quote is an annual effective yield. Our determination of interest rates reflects the investment income earned on invested assets and the amortization of any capital gains and/or losses realized on the sale of invested assets. Under this option, we assume the risk of investment gain or loss by guaranteeing the amounts you allocate to this option and promising a minimum interest rate and income phase payment. WITHDRAWALS. Under certain emergency conditions, we may defer payment of any withdrawal for period of up to 6 months or as provided by federal law. Additionally, if allowed by state law, we may pay withdrawals in equal payments with interest, over a period not to exceed 60 months when the Fixed Account withdrawal, when added to the total of all Fixed Account withdrawals from the contract within the past 12 calendar months, exceeds $250,000 for HR 10 contracts, or $500,000 for corporate 401 contracts. CHARGES. We do not make deductions from amounts in the Fixed Account to cover mortality and expense risks. We consider these risks when determining the credited rate. If the contract holder makes a withdrawal from amounts in the Fixed Account, an early withdrawal charge may apply. (See "Fees-Early Withdrawal Charge.") TRANSFERS. During the accumulation phase, the contract holder or you, if permitted, may transfer account dollars from the Fixed Account to any other available investment option. We may vary the dollar amount that you are allowed to transfer, but it will never be less than 10% of your account value held in the Fixed Account. By notifying our Home Office at least 30 days before income phase payments begin, the contract holder or you, if permitted, may elect to have amounts transferred to one or more of the subaccounts available during the income phase to provide variable payments. 40 APPENDIX III CONDENSED FINANCIAL INFORMATION - ------------------------------------------------------------------ TABLE I CORPORATE 401 CONTRACTS (SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE CONDENSED FINANCIAL INFORMATION PRESENTED BELOW FOR EACH OF THE PERIODS IN THE TEN-YEAR PERIOD ENDED DECEMBER 31, 2000 (AS APPLICABLE), IS DERIVED FROM THE FINANCIAL STATEMENTS OF THE SEPARATE ACCOUNT, WHICH HAVE BEEN AUDITED BY KPMG LLP, INDEPENDENT AUDITORS. THE FINANCIAL STATEMENTS AND THE INDEPENDENT AUDITORS' REPORT THEREON FOR THE YEAR ENDED DECEMBER 31, 2000 ARE INCLUDED IN THE STATEMENT OF ADDITIONAL INFORMATION.
2000 1999 1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- ---- ---- AETNA BALANCED VP, INC Value at beginning of period $32.205 $28.687 $24.826 $20.511 $18.024 $14.336 $14.558 Value at end of period $31.647 $32.205 $28.687 $24.826 $20.511 $18.024 $14.336 Number of accumulation units outstanding at end of period 41,042 46,578 73,629 84,065 280,547 393,613 756,261 AETNA BOND VP Value at beginning of period $54.432 $55.494 $51.930 $48.524 $47.405 $40.570 $42.675 Value at end of period $58.977 $54.432 $55.494 $51.930 $48.524 $47.405 $40.570 Number of accumulation units outstanding at end of period 11,571 13,088 26,694 20,288 43,327 72,902 181,535 AETNA GROWTH AND INCOME VP Value at beginning of period $374.804 $323.019 $285.511 $222.444 $180.879 $138.406 $141.424 Value at end of period $329.769 $374.804 $323.019 $285.511 $222.444 $180.879 $138.406 Number of accumulation units outstanding at end of period 100,475 124,050 140,708 158,078 340,229 549,056 1,258,166 AETNA MONEY MARKET VP Value at beginning of period $45.192 $43.523 $41.763 $40.069 $38.485 $36.723 $35.701 Value at end of period $47.509 $45.192 $43.523 $41.763 $40.069 $38.485 $36.723 Number of accumulation units outstanding at end of period 28,488 35,830 31,408 34,420 93,727 150,480 241,159 PPI MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $13.469 $10.989 $9.041 $9.218(1) Value at end of period $12.713 $13.469 $10.989 $9.041 Number of accumulation units outstanding at end of period 2,584 603 603 603 1993 1992 1991 ---- ---- ---- AETNA BALANCED VP, INC Value at beginning of period $13.407 $12.755 $10.906 Value at end of period $14.558 $13.407 $12.755 Number of accumulation units outstanding at end of period 1,142,268 1,129,453 725,598 AETNA BOND VP Value at beginning of period $39.376 $37.086 $31.424 Value at end of period $42.675 $39.376 $37.086 Number of accumulation units outstanding at end of period 241,551 263,105 283,119 AETNA GROWTH AND INCOME VP Value at beginning of period $134.081 $127.171 $101.824 Value at end of period $141.424 $134.080 $127.171 Number of accumulation units outstanding at end of period 1,616,018 1,829,160 1,956,479 AETNA MONEY MARKET VP Value at beginning of period $35.009 $34.172 $32.460 Value at end of period $35.701 $35.009 $34.172 Number of accumulation units outstanding at end of period 312,350 471,585 470,248 PPI MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period
- ---------------------------------- FOOTNOTE FOR PERIOD ENDED DECEMBER 31, 1997: (1) Funds were first received in this option during November 1997. 41 CONDENSED FINANCIAL INFORMATION - ------------------------------------------------------------------ TABLE II CORPORATE 401 CONTRACTS FOR CONTRACTS CONTAINING LIMITS ON FEES (SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE CONDENSED FINANCIAL INFORMATION PRESENTED BELOW FOR EACH OF THE PERIODS IN THE FOUR-YEAR PERIOD ENDED DECEMBER 31, 2000 (AS APPLICABLE), IS DERIVED FROM THE FINANCIAL STATEMENTS OF THE SEPARATE ACCOUNT, WHICH HAVE BEEN AUDITED BY KPMG LLP, INDEPENDENT AUDITORS. THE FINANCIAL STATEMENTS AND THE INDEPENDENT AUDITORS' REPORT THEREON FOR THE YEAR ENDED DECEMBER 31, 2000 ARE INCLUDED IN THE STATEMENT OF ADDITIONAL INFORMATION.
2000 1999 1998 1997 ---- ---- ---- ---- AETNA BALANCED VP, INC Value at beginning of period $32.412 $28.800 $24.861 $22.085(1) Value at end of period $31.930 $32.412 $28.800 $24.861 Number of accumulation units outstanding at end of period 38,739 59,325 122,358 157,309 AETNA BOND VP Value at beginning of period $54.642 $55.625 $51.975 $49.527(1) Value at end of period $59.293 $54.642 $55.625 $51.975 Number of accumulation units outstanding at end of period 7,879 14,745 18.271 23,539 AETNA GROWTH AND INCOME VP Value at beginning of period $377.218 $324.288 $285.918 $253.000(1) Value at end of period $332.719 $377.218 $324.288 $285.918 Number of accumulation units outstanding at end of period 54,076 81,135 98.422 118,511 AETNA MONEY MARKET VP Value at beginning of period $45.192 $43.523 $41.763 $40.781(1) Value at end of period $47.509 $45.192 $43.523 $41.763 Number of accumulation units outstanding at end of period 18,453 15,405 29,827 19,720 PPI MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $13.469 $10.989 $9.041 $9.218(2) Value at end of period $12.713 $13.469 $10.989 $9.041 Number of accumulation unitsoutstanding at end of period 7,855 14,802 30.747 40,144
- ---------------------------------- FOOTNOTES FOR PERIOD ENDED DECEMBER 31, 1997: (1) Funds were first received in this option during June 1997. (2) Funds were first received in this option during November 1997. 42 CONDENSED FINANCIAL INFORMATION - ------------------------------------------------------------------ TABLE III HR 10 CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.25% (SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE CONDENSED FINANCIAL INFORMATION PRESENTED BELOW FOR EACH OF THE PERIODS IN THE TEN-YEAR PERIOD ENDED DECEMBER 31, 2000 (AS APPLICABLE), IS DERIVED FROM THE FINANCIAL STATEMENTS OF THE SEPARATE ACCOUNT, WHICH HAVE BEEN AUDITED BY KPMG LLP, INDEPENDENT AUDITORS. THE FINANCIAL STATEMENTS AND THE INDEPENDENT AUDITORS' REPORT THEREON FOR THE YEAR ENDED DECEMBER 31, 2000 ARE INCLUDED IN THE STATEMENT OF ADDITIONAL INFORMATION.
2000 1999 1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- ---- ---- AETNA BALANCED VP, INC Value at beginning of period $32.002 $28.524 $24.700 $20.419 $17.954 $14.270 $14.519 Value at end of period $31.429 $32.002 $28.524 $24.700 $20.419 $17.954 $14.270 Number of accumulation units outstanding at end of period 30,114 2,155,445 2,294,877 2,160,305 2,716,641 9,193,181 21,990,186 AETNA BOND VP Value at beginning of period $53.738 $54.819 $51.330 $47.992 $46.913 $40.173 $42.283 Value at end of period $58.190 $53.738 $54.819 $51.330 $47.992 $46.913 $40.173 Number of accumulation units outstanding at end of period 2,085 867,416 994,987 959,336 835,724 2,377,622 5,108,720 AETNA GROWTH AND INCOME VP Value at beginning of period $284.994 $245.765 $217.359 $169.448 $137.869 $105.558 $107.925 Value at end of period $250.600 $284.994 $245.765 $217.359 $169.448 $137.869 $105.558 Number of accumulation units outstanding at end of period 6,172 1,555,542 1,747,097 1,826,355 2,071,139 6,364,000 13,966,072 AETNA MONEY MARKET VP Value at beginning of period $44.501 $42.883 $41.174 $39.528 $37.988 $36.271 $35.282 Value at end of period $46.754 $44.501 $42.883 $41.174 $39.528 $37.988 $36.271 Number of accumulation units outstanding at end of period 2,553 845,679 564,537 455,502 597,656 1,836,260 3,679,802 PPI MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $17.796 $14.528 $11.960 $12.195(1) Value at end of period $16.788 $17.796 $14.528 $11.960 Number of accumulation unitsoutstanding at end of period 3,736 194,296 1,379,653 232,418 1993 1992 1991 ---- ---- ---- AETNA BALANCED VP, INC Value at beginning of period $13.379 $12.736 $10.896 Value at end of period $14.519 $13.379 $12.736 Number of accumulation units outstanding at end of period 30,784,750 34,802,433 22,898,099 AETNA BOND VP Value at beginning of period $39.038 $36.789 $31.192 Value at end of period $42.283 $39.038 $36.789 Number of accumulation units outstanding at end of period 8,210,666 8,507,292 7,844,412 AETNA GROWTH AND INCOME VP Value at beginning of period $102.383 $97.165 $77.845 Value at end of period $107.925 $102.383 $97.165 Number of accumulation units outstanding at end of period 21,148,863 24,201,565 20,948,226 AETNA MONEY MARKET VP Value at beginning of period $34.619 $33.812 $32.138 Value at end of period $35.282 $34.619 $33.812 Number of accumulation units outstanding at end of period 5,086,515 7,534,662 8,430,082 PPI MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation unitsoutstanding at end of period
- ---------------------------------- FOOTNOTE FOR PERIOD ENDED DECEMBER 31, 1997: (1) Funds were first received in this option during November 1997. 43 CONDENSED FINANCIAL INFORMATION - ------------------------------------------------------------------ TABLE IV HR 10 CONTRACTS FOR CONTRACTS CONTAINING LIMITS ON FEES (SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE CONDENSED FINANCIAL INFORMATION PRESENTED BELOW FOR EACH OF THE PERIODS IN THE FOUR-YEAR PERIOD ENDED DECEMBER 31, 2000 (AS APPLICABLE), IS DERIVED FROM THE FINANCIAL STATEMENTS OF THE SEPARATE ACCOUNT, WHICH HAVE BEEN AUDITED BY KPMG LLP, INDEPENDENT AUDITORS. THE FINANCIAL STATEMENTS AND THE INDEPENDENT AUDITORS' REPORT THEREON FOR THE YEAR ENDED DECEMBER 31, 2000 ARE INCLUDED IN THE STATEMENT OF ADDITIONAL INFORMATION.
2000 1999 1998 1997 ---- ---- ---- ---- AETNA BALANCED VP, INC Value at beginning of period $32.208 $28.636 $24.735 $21.980(1) Value at end of period $31.710 $32.208 $28.636 $24.735 Number of accumulation units outstanding at end of period 93,990 129,106 149,576 178,943 AETNA BOND VP Value at beginning of period $53.945 $54.949 $51.374 $48.971(1) Value at end of period $58.502 $53.945 $54.949 $51.374 Number of accumulation units outstanding at end of period 18,880 22,964 24,551 39,709 AETNA GROWTH AND INCOME VP Value at beginning of period $286.829 $246.731 $217.668 $192.674(1) Value at end of period $252.842 $286.829 $246.731 $217.668 Number of accumulation units outstanding at end of period 119,702 158,086 195,339 225,862 AETNA MONEY MARKET VP Value at beginning of period $44.501 $42.883 $41.174 $40.220(1) Value at end of period $46.754 $44.501 $42.883 $41.174 Number of accumulation units outstanding at end of period 75,481 82,224 120,539 98,560 PPI MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $17.796 $14.528 $11.960 $12.195(2) Value at end of period $16.788 $17.796 $14.528 $11.960 Number of accumulation unitsoutstanding at end of period 13,713 24,518 23,437 31,573
- ---------------------------------- FOOTNOTES FOR PERIOD ENDED DECEMBER 31, 1997: (1) Funds were first received in this option during June 1997. (2) Funds were first received in this option during November 1997. 44 CONDENSED FINANCIAL INFORMATION - ------------------------------------------------------------------ TABLE V HR 10 CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.50% (SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE CONDENSED FINANCIAL INFORMATION PRESENTED BELOW FOR EACH OF THE PERIODS IN THE TEN-YEAR PERIOD ENDED DECEMBER 31, 2000 (AS APPLICABLE), IS DERIVED FROM THE FINANCIAL STATEMENTS OF THE SEPARATE ACCOUNT, WHICH HAVE BEEN AUDITED BY KPMG LLP, INDEPENDENT AUDITORS. THE FINANCIAL STATEMENTS AND THE INDEPENDENT AUDITORS' REPORT THEREON FOR THE YEAR ENDED DECEMBER 31, 2000 ARE INCLUDED IN THE STATEMENT OF ADDITIONAL INFORMATION.
2000 1999 1998 1997 1996 1995 1994 ---- ---- ---- ---- ---- ---- ---- AETNA BALANCED VP, INC Value at beginning of period $32.002 $28.524 $24.700 $20.419 $17.954 $14.270 $14.519 Value at end of period $31.429 $32.002 $28.524 $24.700 $20.419 $17.954 $14.270 Number of accumulation units outstanding at end of period 37,522 2,155,445 2,294,877 2,160,305 2,716,641 9,193,181 21,990,186 AETNA BOND VP Value at beginning of period $53.738 $54.819 $51.330 $47.992 $46.913 $40.173 $42.283 Value at end of period $58.180 $53.738 $54.819 $51.330 $47.992 $46.913 $40.173 Number of accumulation units outstanding at end of period 29,617 867,416 994,987 959,336 835,724 2,377,622 5,108,720 AETNA GROWTH AND INCOME VP Value at beginning of period $284.994 $245.765 $217.359 $169.448 $137.869 $105.558 $107.925 Value at end of period $250.558 $284.994 $245.765 $217.359 $169.448 $137.869 $105.558 Number of accumulation units outstanding at end of period 81,402 1,555,542 1,747,097 1,826,355 2,071,139 6,364,000 13,966,072 AETNA MONEY MARKET VP Value at beginning of period $44.501 $42.883 $41.174 $39.528 $37.988 $36.271 $35.282 Value at end of period $46.746 $44.501 $42.883 $41.174 $39.528 $37.988 $36.271 Number of accumulation units outstanding at end of period 32,033 845,679 564,537 455,502 597,656 1,836,260 3,679,802 PPI MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $17.796 $14.528 $11.960 $12.195(1) Value at end of period $16.785 $17.796 $14.528 $11.960 Number of accumulation unitsoutstanding at end of period 88,380 194,296 1,379,653 232,418 1993 1992 1991 ---- ---- ---- AETNA BALANCED VP, INC Value at beginning of period $13.379 $12.736 $10.896 Value at end of period $14.519 $13.379 $12.736 Number of accumulation units outstanding at end of period 30,784,750 34,802,433 22,898,099 AETNA BOND VP Value at beginning of period $39.038 $36.789 $31.192 Value at end of period $42.283 $39.038 $36.789 Number of accumulation units outstanding at end of period 8,210,666 8,507,292 7,844,412 AETNA GROWTH AND INCOME VP Value at beginning of period $102.383 $97.165 $77.845 Value at end of period $107.925 $102.383 $97.165 Number of accumulation units outstanding at end of period 21,148,863 24,201,565 20,948,226 AETNA MONEY MARKET VP Value at beginning of period $34.619 $33.812 $32.138 Value at end of period $35.282 $34.619 $33.812 Number of accumulation units outstanding at end of period 5,086,515 7,534,662 8,430,082 PPI MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation unitsoutstanding at end of period
- ---------------------------------- FOOTNOTE FOR PERIOD ENDED DECEMBER 31, 1997: (1) Funds were first received in this option during November 1997. 45 VARIABLE ANNUITY ACCOUNT C OF AETNA LIFE INSURANCE AND ANNUITY COMPANY STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 2001 This Statement of Additional Information is not a prospectus and should be read in conjunction with the current prospectus dated May 1, 2001. The contracts offered in connection with the prospectus are group deferred variable annuity contracts funded through Variable Annuity Account C (the "separate account"). A free prospectus is available upon request from the local Aetna Life Insurance and Annuity Company office or by writing to or calling: Aetna Life Insurance and Annuity Company Customer Service 151 Farmington Avenue Hartford, Connecticut 06156 1-800-262-3862 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 C............................................... 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..................................................... 8 Financial Statements of the Separate Account............................. S-1 Financial Statements of Aetna Life Insurance and Annuity Company......... F-1
GENERAL INFORMATION AND HISTORY Aetna Life Insurance and Annuity Company (the "Company," we, us, our) is a stock life insurance company which was organized under the insurance laws of the State of Connecticut in 1976. Through a merger, it succeeded to the business of Aetna Variable Annuity Life Insurance Company (formerly Participating Annuity Life Insurance Company organized in 1954). As of December 31, 2000, the Company and its subsidiary life company had $51 billion invested through its products, including $37 billion in its separate accounts (of which the Company or its subsidiary, Aeltus Investment Management, Inc., oversees the management of $23 billion). The Company is ranked based on assets among the top 1% of all life insurance companies rated by A.M. Best Company as of December 31, 1999. The Company is an indirect wholly-owned subsidiary of ING Groep N.V., a global financial institution active in the fields of insurance, banking and asset management. The Company is engaged in the business of issuing life insurance policies and annuity contracts. Our Home Office is located at 151 Farmington Avenue, Hartford, Connecticut 06156. In addition to serving as the 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 C" 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 C Variable Annuity Account C 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. 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, under all contracts, or under all plans. 2 The funds currently available under the contract are as follows: >> AETNA BALANCED VP, INC. >> Aetna Income Shares d/b/a AETNA BOND VP >> Aetna Variable Fund d/b/a AETNA GROWTH AND INCOME VP >> Aetna Variable Encore Fund d/b/a AETNA MONEY MARKET VP >> PORTFOLIO PARTNERS, INC. (PPI) MFS EMERGING EQUITIES PORTFOLIO A complete description of each of the funds, including their investment objectives, policies, risks and fees and expenses, is contained in the prospectus and statement 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. 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 contracts are purchased may be found in the prospectus under the sections titled "Contract Ownership 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 total return"), as well as the "non-standardized total return," both of which are described below. The standardized and non-standardized total return figures are computed according to a formula in which a hypothetical initial 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 and then adjust them to reflect the deduction of all recurring charges under the contracts during each period (e.g., mortality and expense risk charges, administrative expense charges (if any), maintenance fees and early withdrawal charges). These charges will be deducted on a pro rata basis in the case of fractional periods. The 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 return under your contract because for periods prior to 1994, the subaccount's investment performance reflected the investment performance of the underlying fund plus any cash held by the subaccount. The non-standardized total return 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 any applicable maintenance fee. The deduction of the early withdrawal charge and the maintenance fee 3 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 all charges under the contract except the early withdrawal charge. The maximum 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 contract value and/or 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. Table A below reflects the figures for the subaccounts available under HR 10 contracts. The standardized returns for HR 10 contracts assume a mortality and expense risk charge of 1.25%, an administrative expense charge of 0.25%, a $30 annual maintenance fee and an early withdrawal charge for ten years. Table B reflects the figures for the subaccounts available under Corporate 401 contracts. The standardized returns for Corporate 401 contracts assume a mortality and expense risk charge of 1.19%, a $30 annual maintenance fee and an early withdrawal charge for ten years. The non-standardized returns assume the same charges but do not include the early withdrawal charge. For the subaccount funded by the Portfolio Partners, Inc. (PPI) portfolio, 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 fund it replaced under many contracts and; (b) after November 26, 1997, based on the performance of the PPI 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 average annual total return since the fund's inception date. 4 TABLE A HR10 CONTRACTS
DATE CONTRIBUTIONS FIRST RECEIVED UNDER THE STANDARDIZED SEPARATE ACCOUNT SINCE SUBACCOUNT 1 YEAR 5 YEAR 10 YEAR INCEPTION* Aetna Balanced VP, Inc.(1) (6.96%) 10.64% 10.88% Aetna Bond VP(1) 2.59% 3.27% 6.14% Aetna Growth and Income VP(1) (16.70%) 11.47% 12.10% Aetna Money Market VP(1)(2) (0.47%) 3.11% 3.54% PPI MFS Research Growth Portfolio (10.63%) 8.77% 11/28/1997 American Century VP Capital Appreciation/PPI MFS Research Growth(3) (10.63%) 3.78% 7.47% 08/31/1992
FUND INCEPTION NON-STANDARDIZED DATE SINCE SUBACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION** Aetna Balanced VP, Inc.(1) (2.06%) 8.07% 11.55% 10.88% Aetna Bond VP(1) 7.99% 3.99% 4.12% 6.14% Aetna Growth and Income VP(1) (12.31%) 4.57% 12.39% 12.10% Aetna Money Market VP(1)(2) 4.78% 4.04% 3.95% 3.54% PPI MFS Research Growth Portfolio (5.93%) 11.66% 10.59% 11/28/1997 American Century VP Capital Appreciation/PPI MFS Research Growth(3) (5.93%) 11.66% 4.63% 8.81%
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. ** Reflects performance from the fund's inception date. (1) These funds have been in operation and available through the separate account for more than ten years. (2) The current yield for the subaccount for the seven-day period ended December 31, 2000 (on an annualized basis) was 4.83%. Current yield more closely reflects current earnings than does total return. The current yield reflects the deduction of the mortality and expense risk charge and the maintenance fee but does not reflect the deduction of the maximum 5% 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" and the "Fund Inception Date" refer to the applicable date for the replaced fund. If no date is shown in the standardized table, contributions were first received in the replaced fund under the separate account more than ten years ago. If no date is shown in the non-standardized table the replaced fund has been in operation for more than ten years. 5 TABLE B CORPORATE 401 CONTRACTS
DATE CONTRIBUTIONS FIRST RECEIVED UNDER THE STANDARDIZED SEPARATE ACCOUNT SINCE SUBACCOUNT 1 YEAR 5 YEAR 10 YEAR INCEPTION* Aetna Balanced VP, Inc.(1) (6.68%) 10.97% 11.21% Aetna Bond VP(1) 2.90% 3.58% 6.46% Aetna Growth and Income VP(1) (16.45%) 11.81% 12.44% Aetna Money Market VP(1)(2) (0.16%) 3.42% 3.85% PPI MFS Research Growth Portfolio (10.36%) 9.10% 11/28/1997 American Century VP Capital Appreciation/PPI MFS Research Growth(3) (10.36%) 4.09% 7.79% 08/31/1992
FUND INCEPTION NON-STANDARDIZED DATE SINCE SUBACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION** Aetna Balanced VP, Inc.(1) (1.77%) 8.39% 11.88% 11.21% Aetna Bond VP(1) 8.32% 4.30% 4.43% 6.46% Aetna Growth and Income VP(1) (12.05%) 4.89% 12.73% 12.44% Aetna Money Market VP(1)(2) 5.09% 4.36% 4.27% 3.85% PPI MFS Research Growth Portfolio (5.64%) 12.00% 10.93% 11/28/1997 American Century VP Capital Appreciation/PPI MFS Research Growth(3) (5.64%) 12.00% 4.94% 9.13%
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. ** Reflects performance from the fund's inception date. (1) These funds have been in operation and available through the separate account for more than ten years. (2) The current yield for the subaccount for the seven-day period ended December 31, 2000 (on an annualized basis) was 5.13%. Current yield more closely reflects current earnings than does total return. The current yield reflects the deduction of the mortality and expense risk charge and the maintenance fee but does not reflect the deduction of the maximum 5% 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" and the "Fund Inception Date" refer to the applicable date for the replaced fund. If no date is shown in the standardized table, contributions were first received in the replaced fund under the separate account more than ten years ago. If no date is shown in the non-standardized table 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 payment is due. Such value (less any applicable premium tax charge) is applied to provide payments to you in accordance with the payment option and investment options elected. The Annuity option tables found in the contract show, for each option, the amount of the first payment for each $1,000 of value applied. Thereafter, variable payments fluctuate as the Annuity Unit value(s) fluctuates with the investment experience of the selected investment option(s). The first payment and subsequent payments also vary depending on the assumed net investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes a higher first payment, but payments will increase thereafter only to the extent that the net investment rate increases by more than 5% on an annual basis. Payments would decline if the rate failed to increase by 5%. Use of the 3.5% assumed rate causes a lower first payment, but subsequent payments would increase more rapidly or decline more slowly as changes occur in the net investment rate. 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 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 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 payments are to begin, there are 3,000 accumulation units credited under a particular contract or account 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 payment option elected, a first monthly variable payment of $6.68 per $1000 of value applied; the annuitant's first monthly 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 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. 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 payment, multiplying this factor by .9999058* (to neutralize 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 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. 7 *If an assumed net investment rate of 5% is elected, the appropriate factor to neutralize 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 or participants. 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. 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. The independent auditors provide services to the separate account that include primarily the audit of the separate account's financial statements and the review of filings made with the SEC. 8 FORM NO. SAI.75980-01 ALIAC ED. MAY 2001 FINANCIAL STATEMENTS VARIABLE ANNUITY ACCOUNT C INDEX
Page ---- Statement of Assets and Liabilities............... S-2 Statement of Operations........................... S-7 Statements of Changes in Net Assets............... S-7 Condensed Financial Information................... S-8 Notes to Financial Statements..................... S-38 Independent Auditors' Report...................... S-56
S-1 VARIABLE ANNUITY ACCOUNT C STATEMENT OF ASSETS AND LIABILITIES - December 31, 2000 ASSETS: Investments, at net asset value: (Note 1)
Net Shares Cost Assets ------ ---- ------ Aetna Ascent VP 5,259,883 $ 76,468,111 $ 77,057,293 Aetna Balanced VP, Inc. 65,331,011 977,472,296 875,435,544 Aetna Bond VP 23,942,796 308,330,391 301,918,661 Aetna Crossroads VP 4,604,538 62,412,640 62,529,623 Aetna GET Fund, Series C 14,803,838 166,451,122 136,195,306 Aetna GET Fund, Series D 34,167,037 343,861,975 331,078,585 Aetna GET Fund, Series E 13,367,984 134,557,909 131,674,642 Aetna GET Fund, Series G 3,873,967 39,038,211 38,003,615 Aetna GET Fund, Series H 2,911,742 29,442,901 29,175,653 Aetna GET Fund, Series I 138,369 1,397,214 1,364,320 Aetna GET Fund, Series J 46,892 473,303 456,726 Aetna GET Fund, Series K 284,568 2,871,053 2,862,754 Aetna GET Fund, Series L 1,598 15,971 15,987 Aetna Growth and Income VP 196,498,686 6,194,672,657 4,739,548,311 Aetna Growth VP 11,418,245 172,682,851 171,159,499 Aetna Index Plus Large Cap VP 29,225,231 524,351,579 488,938,113 Aetna Index Plus Mid Cap VP 3,776,101 54,070,560 55,395,398 Aetna Index Plus Small Cap VP 1,072,901 12,073,043 12,842,621 Aetna International VP 1,246,310 17,614,427 12,949,161 Aetna Legacy VP 3,047,043 38,405,250 39,124,035 Aetna Money Market VP 23,714,655 319,072,697 322,713,770 Aetna Small Company VP 6,289,033 114,035,196 104,712,398 Aetna Technology VP 4,227,059 37,331,806 24,855,104 Aetna Value Opportunity VP 4,111,216 62,193,891 63,066,047 AIM V.I. Funds: Capital Appreciation Fund 712,526 27,052,669 21,974,303 Growth and Income Fund 1,870,223 57,804,423 48,981,132 Growth Fund 783,289 25,376,269 19,441,222 Value Fund 676,938 21,862,116 18,487,184 Calvert Social Balanced Portfolio 31,599,633 62,691,995 63,262,465 Fidelity Investments Variable Insurance Products Fund: Equity-Income Portfolio 7,676,441 176,990,382 195,902,776 Growth Portfolio 10,283,432 426,652,953 448,871,801 High Income Portfolio 299,483 2,990,465 2,449,768 Overseas Portfolio 910,031 20,692,809 18,191,519 Fidelity Investments Variable Insurance Products Fund II: Asset Manager Portfolio 1,483,141 24,349,233 23,730,253 Contrafund Portfolio 17,729,634 363,740,485 420,901,510 Index 500 Portfolio 699,859 105,141,101 104,649,875 Janus Aspen Series: Aggressive Growth Portfolio 26,176,122 1,077,875,877 950,193,244 Balanced Portfolio 12,173,271 285,355,150 296,053,943 Flexible Income Portfolio 3,219,721 37,703,827 36,898,000 Growth Portfolio 15,584,802 418,878,110 412,685,554 Worldwide Growth Portfolio 29,305,563 921,683,304 1,083,719,714 Janus Twenty Fund 10 581 545
S-2 VARIABLE ANNUITY ACCOUNT C STATEMENT OF ASSETS AND LIABILITIES - December 31, 2000 (continued):
Net Shares Cost Assets ------ ---- ------ Lexington Funds: Emerging Markets Fund, Inc. 834,476 $ 6,803,091 $ 6,367,049 Natural Resources Trust Fund 1,131,942 14,293,827 16,696,149 MFS Total Return Series Fund 248,071 4,630,156 4,859,718 Oppenheimer Funds: Global Securities Fund/VA 1,657,057 52,786,290 50,258,541 Strategic Bond Fund/VA 1,281,383 6,096,649 6,009,685 Portfolio Partners, Inc. (PPI): PPI MFS Capital Opportunities Portfolio 6,563,822 267,962,580 291,499,326 PPI MFS Emerging Equities Portfolio 7,285,604 362,545,289 425,187,851 PPI MFS Research Growth Portfolio 17,930,384 191,941,138 234,529,426 PPI Scudder International Growth Portfolio 11,905,816 219,730,011 219,543,248 PPI T. Rowe Price Growth Equity Portfolio 4,051,381 197,888,308 244,865,459 ----------------- ----------------- NET ASSETS $ 15,070,816,142 $ 13,689,284,426 ================= =================
S-3 VARIABLE ANNUITY ACCOUNT C STATEMENT OF ASSETS AND LIABILITIES - December 31, 2000 (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............ $ 77,057,293 Aetna Balanced VP, Inc. Annuity contracts in accumulation............ 842,266,266 Annuity contracts in payment period.......... 33,169,278 Aetna Bond VP Annuity contracts in accumulation............ 296,126,266 Annuity contracts in payment period.......... 5,792,395 Aetna Crossroads VP Annuity contracts in accumulation............ 62,461,577 Annuity contracts in payment period.......... 68,046 Aetna GET Fund, Series C Annuity contracts in accumulation............ 136,195,306 Aetna GET Fund, Series D Annuity contracts in accumulation............ 331,078,585 Aetna GET Fund, Series E Annuity contracts in accumulation............ 131,674,642 Aetna GET Fund, Series G Annuity contracts in accumulation............ 38,003,615 Aetna GET Fund, Series H Annuity contracts in accumulation............ 29,175,653 Aetna GET Fund, Series I Annuity contracts in accumulation............ 1,364,320 Aetna GET Fund, Series J Annuity contracts in accumulation............ 456,726 Aetna GET Fund, Series K Annuity contracts in accumulation............ 2,862,754 Aetna GET Fund, Series L Annuity contracts in accumulation............ 15,987 Aetna Growth and Income VP Annuity contracts in accumulation............ 4,428,082,443 Annuity contracts in payment period.......... 311,465,868 Aetna Growth VP Annuity contracts in accumulation............ 171,026,842 Annuity contracts in payment period.......... 132,657 Aetna Index Plus Large Cap VP Annuity contracts in accumulation............ 487,054,341 Annuity contracts in payment period.......... 1,883,772 Aetna Index Plus Mid Cap VP Annuity contracts in accumulation............ 55,395,398 Aetna Index Plus Small Cap VP Annuity contracts in accumulation............ 12,842,621 Aetna International VP Annuity contracts in accumulation............ 12,949,161 Aetna Legacy VP Annuity contracts in accumulation............ 38,925,638 Annuity contracts in payment period.......... 198,397
S-4 VARIABLE ANNUITY ACCOUNT C STATEMENT OF ASSETS AND LIABILITIES - December 31, 2000 (continued): Aetna Money Market VP Annuity contracts in accumulation............ $ 322,624,048 Annuity contracts in payment period.......... 89,722 Aetna Small Company VP Annuity contracts in accumulation............ 104,675,715 Annuity contracts in payment period.......... 36,683 Aetna Technology VP Annuity contracts in accumulation............ 24,855,104 Aetna Value Opportunity VP Annuity contracts in accumulation............ 63,066,047 AIM V.I. Funds: Capital Appreciation Fund Annuity contracts in accumulation............ 21,974,303 Growth and Income Fund Annuity contracts in accumulation............ 48,981,132 Growth Fund Annuity contracts in accumulation............ 19,441,222 Value Fund Annuity contracts in accumulation............ 18,487,184 Calvert Social Balanced Portfolio Annuity contracts in accumulation............ 63,262,465 Fidelity Investments Variable Insurance Products Fund: Equity-Income Portfolio Annuity contracts in accumulation............ 195,902,776 Growth Portfolio Annuity contracts in accumulation............ 448,871,801 High Income Portfolio Annuity contracts in accumulation............ 2,449,768 Overseas Portfolio Annuity contracts in accumulation............ 18,191,519 Fidelity Investments Variable Insurance Products Fund II: Asset Manager Portfolio Annuity contracts in accumulation............ 23,730,253 Contrafund Portfolio Annuity contracts in accumulation............ 420,901,510 Index 500 Portfolio Annuity contracts in accumulation............ 104,649,875 Janus Aspen Series: Aggressive Growth Portfolio Annuity contracts in accumulation............ 950,193,244 Balanced Portfolio Annuity contracts in accumulation............ 296,053,943 Flexible Income Portfolio Annuity contracts in accumulation............ 36,898,000 Growth Portfolio Annuity contracts in accumulation............ 917,937 Annuity contracts in payment period.......... 411,767,617 Worldwide Growth Portfolio Annuity contracts in accumulation............ 1,095,143 Annuity contracts in payment period.......... 1,082,624,571
S-5 VARIABLE ANNUITY ACCOUNT C STATEMENT OF ASSETS AND LIABILITIES - December 31, 2000 (continued): Janus Twenty Fund Annuity contracts in accumulation............ $ 545 Lexington Funds: Emerging Markets Fund, Inc. Annuity contracts in accumulation............ 6,367,049 Natural Resources Trust Fund Annuity contracts in accumulation............ 16,696,149 MFS Total Return Series Annuity contracts in accumulation............ 4,859,718 Oppenheimer Funds: Global Securities Fund/VA Annuity contracts in accumulation............ 50,258,541 Strategic Bond Fund/VA Annuity contracts in accumulation............ 21,845 Annuity contracts in payment period.......... 5,987,840 Portfolio Partners, Inc. (PPI): PPI MFS Capital Opportunities Portfolio Annuity contracts in accumulation............ 291,099,078 Annuity contracts in payment period.......... 400,248 PPI MFS Emerging Equities Portfolio Annuity contracts in accumulation............ 425,020,833 Annuity contracts in payment period.......... 167,018 PPI MFS Research Growth Portfolio Annuity contracts in accumulation............ 234,529,426 PPI Scudder International Growth Portfolio Annuity contracts in accumulation............ 219,533,810 Annuity contracts in payment period.......... 9,438 PPI T. Rowe Price Growth Equity Portfolio Annuity contracts in accumulation............ 158,262 Annuity contracts in payment period.......... 244,707,197 ------------------------- $ 13,689,284,426 =========================
See Notes to Financial Statements S-6 VARIABLE ANNUITY ACCOUNT C STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2000 ----------------- INVESTMENT INCOME: Income: (Notes 1, 3 and 5) Dividends....................................... $ 1,472,215,106 Expenses: (Notes 2 and 5) Valuation Year deductions....................... (175,240,683) --------------- Net investment income............................. $ 1,296,974,423 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investments: (Notes 1, 4 and 5) Proceeds from sales............................. $ 3,840,647,337 Cost of investments sold........................ (3,516,088,718) --------------- Net realized gain on investments.............. 324,558,619 --------------- Net unrealized gain (loss) on investments: (Note 5) Beginning of year............................... 2,223,496,072 End of year..................................... (1,381,531,716) --------------- Net change in unrealized gain (loss) on investments................................. (3,605,027,788) --------------- Net realized and unrealized loss on investments... (3,280,469,169) --------------- Net decrease in net assets resulting from operations...................................... $(1,983,494,746) ===============
See Notes to Financial Statements - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 2000 1999 ---- ---- FROM OPERATIONS: Net investment income................... $ 1,296,974,423 $ 1,336,283,808 Net realized gain on investments........ 324,558,619 421,797,682 Net change in unrealized (loss) gain on investments........................... (3,605,027,788) 1,273,553,376 --------------- --------------- Net decrease in net assets resulting from operations....................... (1,983,494,746) 3,031,634,866 --------------- --------------- FROM UNIT TRANSACTIONS: Variable annuity contract purchase payments.............................. 1,255,425,118 1,172,840,518 Transfer from the Company for mortality guarantee adjustments................. 3,371,394 2,184,815 Transfer from the Company's other variable annuity accounts............. 254,674,124 220,257,324 Redemptions by contract holders......... (1,257,770,002) (1,347,163,695) Annuity Payments........................ (47,041,158) (43,203,172) Other................................... 1,019,544 184,219 --------------- --------------- Net increase in net assets from unit transactions (Note 6)............... 209,679,020 5,100,009 --------------- --------------- Change in net assets.................... (1,773,815,726) 3,036,734,875 NET ASSETS: Beginning of year....................... 15,463,100,152 12,426,365,277 --------------- --------------- End of year............................. $13,689,284,426 $15,463,100,152 =============== ===============
See Notes to Financial Statements S-7 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- AETNA ASCENT VP: Qualified III $ 17.940 $ 17.601 (1.89%) 149.4 $ 2,629 Qualified V 17.814 17.449 (2.05%) 1,517.2 26,473 Qualified VI 17.940 17.601 (1.89%) 2,468,024.0 43,439,691 Qualified VIII 17.934 17.593 (1.90%) 8.6 151 Qualified X (1.15) 18.533 18.200 (1.80%) 12,361.8 224,985 Qualified X (1.25) 18.450 18.100 (1.90%) 423,053.1 7,657,262 Qualified XI 18.172 17.927 (1.35%) 72,525.8 1,300,170 Qualified XII (0.35) 10.649 10.744 0.89% (5) 144,050.4 1,547,678 Qualified XII (0.40) 16.043 15.873 (1.06%) 2,004.8 31,822 Qualified XII (0.45) 10.836 10.716 (1.11%) 60,938.4 653,016 Qualified XII (0.55) 10.819 10.688 (1.21%) 3,343.1 35,731 Qualified XII (0.65) 10.802 10.660 (1.31%) 216,679.8 2,309,807 Qualified XII (0.70) 10.793 10.646 (1.36%) 25,012.0 266,278 Qualified XII (0.75) 10.784 10.633 (1.40%) 236,647.8 2,516,276 Qualified XII (0.80) 11.458 11.292 (1.45%) 204,193.7 2,305,755 Qualified XII (0.85) 16.002 15.761 (1.51%) 120,341.0 1,896,694 Qualified XII (0.90) 11.279 11.104 (1.55%) 22,446.2 249,243 Qualified XII (0.95) 15.944 15.688 (1.61%) 61,883.6 970,830 Qualified XII (1.00) 15.915 15.652 (1.65%) 409,440.5 6,408,563 Qualified XII (1.05) 15.886 15.616 (1.70%) 52,033.6 812,557 Qualified XII (1.10) 15.857 15.580 (1.75%) 28,870.7 449,805 Qualified XII (1.15) 15.828 15.544 (1.79%) 25,071.9 389,718 Qualified XII (1.20) 15.799 15.508 (1.84%) 39,097.5 606,324 Qualified XII (1.25) 15.770 15.472 (1.89%) 4,619.1 71,466 Qualified XII (1.30) 15.742 15.436 (1.94%) 12,799.2 197,568 Qualified XII (1.35) 16.103 15.400 (4.37%) (2) 12.6 194 Qualified XII (1.40) 15.685 15.365 (2.04%) 3,008.1 46,220 Qualified XII (1.50) 15.628 15.294 (2.14%) 670.5 10,255 Qualified XIII 18.135 17.845 (1.60%) 10,708.7 191,097 Qualified XV 18.105 17.815 (1.60%) 8,473.9 150,962 Qualified XVI 17.818 17.437 (2.14%) 37,681.1 657,046 Qualified XVII 18.102 17.821 (1.55%) 1,660.0 29,583 Qualified XVIII 18.616 18.328 (1.55%) 5,198.0 95,269 Qualified XXI 18.122 17.858 (1.46%) 15,636.3 279,233 Qualified XXII 18.152 17.888 (1.45%) 10,631.7 190,180 Qualified XXIV 16.192 15.662 (3.27%) (6) 15,299.8 239,626 Qualified XXV 18.231 17.628 (3.31%) (9) 7,890.3 139,091 Qualified XXVI 17.673 17.620 (0.30%) (9) 663.2 11,686 Qualified XXVII 18.479 17.624 (4.63%) (2) 28,874.1 508,877 Qualified XXVIII 18.479 17.601 (4.75%) (2) 7,811.0 137,482 - -------------------------------------------------------------------------------------------------------------------------- AETNA BALANCED VP, INC.: Qualified I 32.205 31.647 (1.73%) 41,042.2 1,298,861 Qualified III 32.002 31.424 (1.81%) 148,870.3 4,678,075 Qualified V 24.251 23.779 (1.95%) 3,412.5 81,145 Qualified VI 24.372 23.936 (1.79%) 18,322,640.8 438,570,729 Qualified VII 23.469 23.063 (1.73%) 217,937.6 5,026,296 Qualified VIII 22.622 22.215 (1.80%) 4,477.2 99,460 Qualified IX 22.855 22.557 (1.30%) 2,588.7 58,394 Qualified X (1.15) 24.523 24.108 (1.69%) 98,020.4 2,363,075 Qualified X (1.25) 24.372 23.936 (1.79%) 4,540,990.9 108,693,157 Qualified XI 24.687 24.380 (1.24%) 681,757.6 16,621,250 Qualified XII (0.35) 12.051 11.974 (0.64%) (5) 1,229,466.4 14,721,631 Qualified XII (0.40) 17.347 17.181 (0.96%) 10,066.5 172,952 Qualified XII (0.45) 12.064 11.943 (1.00%) 106,919.5 1,276,940 Qualified XII (0.55) 12.045 11.912 (1.10%) 197,183.2 2,348,846 Qualified XII (0.65) 12.026 11.881 (1.21%) 118,491.7 1,407,800 Qualified XII (0.70) 12.016 11.865 (1.26%) 141,383.9 1,677,520 Qualified XII (0.75) 12.006 11.850 (1.30%) 574,781.9 6,811,166 Qualified XII (0.80) 12.801 12.628 (1.35%) 3,302,106.0 41,698,995 Qualified XII (0.85) 17.303 17.060 (1.40%) 1,637,556.3 27,936,710 Qualified XII (0.90) 12.561 12.379 (1.45%) 21,070.2 260,828
S-8 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- AETNA BALANCED VP, INC.: (continued): Qualified XII (0.95) $ 17.240 $ 16.981 (1.50%) 592,454.2 $ 10,060,465 Qualified XII (1.00) 17.208 16.942 (1.55%) 2,074,748.0 35,150,381 Qualified XII (1.05) 17.177 16.903 (1.60%) 143,923.2 2,432,734 Qualified XII (1.10) 17.146 16.864 (1.64%) 45,822.9 772,758 Qualified XII (1.15) 17.115 16.825 (1.69%) 165,555.8 2,785,476 Qualified XII (1.20) 17.083 16.786 (1.74%) 48,482.4 813,826 Qualified XII (1.25) 17.052 16.747 (1.79%) 6,532.1 109,393 Qualified XII (1.30) 17.021 16.708 (1.84%) 4,387.9 73,313 Qualified XII (1.35) 16.663 16.670 0.04% (2) 74.1 1,236 Qualified XII (1.40) 16.960 16.631 (1.94%) 3,654.5 60,778 Qualified XII (1.50) 16.898 16.554 (2.04%) 409.4 6,778 Qualified XIII 24.637 24.268 (1.50%) 110,144.2 2,672,979 Qualified XV 24.596 24.228 (1.50%) 83,251.6 2,017,019 Qualified XVI 24.206 23.714 (2.03%) 317,955.2 7,539,990 Qualified XVII 24.529 24.150 (1.55%) 291,348.3 7,036,061 Qualified XVIII 24.529 24.150 (1.55%) 470,992.8 11,374,476 Qualified XIX 32.412 31.930 (1.49%) 38,738.7 1,236,927 Qualified XX 32.208 31.710 (1.55%) 93,990.3 2,980,431 Qualified XXI 24.619 24.286 (1.35%) 227,797.0 5,532,279 Qualified XXII 24.660 24.327 (1.35%) 90,315.6 2,197,107 Qualified XXIV 17.735 16.953 (4.41%) (6) 348,078.0 5,900,966 Qualified XXV 24.797 23.973 (3.32%) (9) 280,297.7 6,719,576 Qualified XXVI 24.183 23.962 (0.91%) (9) 16,891.0 404,743 Qualified XXVII 31.463 31.470 0.02% (2) 1,630,256.0 51,304,155 Qualified XXVIII 31.464 31.429 (0.11%) (2) 163,951.5 5,152,833 Qualified XXIX 30.917 31.429 1.66% 30,114.4 946,467 Qualified XXX 32.076 31.429 (2.02%) 37,522.3 1,179,289 Annuity contracts in payment period 33,169,278 - -------------------------------------------------------------------------------------------------------------------------- AETNA BOND VP: Qualified I 54.432 58.977 8.35% 11,570.5 682,393 Qualified III 53.860 58.190 8.04% 6,929.5 403,229 Qualified V 13.981 15.115 8.11% 11,054.1 167,082 Qualified VI 13.859 15.007 8.28% 9,870,708.1 148,129,715 Qualified VII 12.833 13.904 8.35% 128,272.1 1,783,495 Qualified VIII 12.760 13.816 8.28% 7,897.9 109,118 Qualified IX 13.012 14.146 8.72% 1,440.1 20,371 Qualified X (1.15) 13.945 15.115 8.39% 62,380.4 942,880 Qualified X (1.25) 13.859 15.007 8.28% 1,685,437.9 25,293,367 Qualified XI 14.037 15.286 8.90% 268,652.0 4,106,614 Qualified XII (0.35) 10.424 11.377 9.14% (5) 310,266.2 3,529,898 Qualified XII (0.40) 11.942 13.041 9.20% 1,342.5 17,508 Qualified XII (0.45) 10.396 11.348 9.16% 20,187.3 229,085 Qualified XII (0.55) 10.380 11.318 9.04% 34,829.2 394,197 Qualified XII (0.65) 10.363 11.289 8.94% 115,114.4 1,299,527 Qualified XII (0.70) 10.355 11.274 8.87% 107,054.7 1,206,935 Qualified XII (0.75) 10.346 11.259 8.82% 213,636.9 2,405,338 Qualified XII (0.80) 10.487 11.406 8.76% 670,969.5 7,653,078 Qualified XII (0.85) 11.911 12.949 8.71% 661,111.8 8,560,737 Qualified XII (0.90) 10.481 11.388 8.65% 3,652.9 41,599 Qualified XII (0.95) 11.867 12.889 8.61% 339,119.2 4,370,908 Qualified XII (1.00) 11.846 12.859 8.55% 1,038,667.9 13,356,230 Qualified XII (1.05) 11.824 12.829 8.50% 59,398.3 762,021 Qualified XII (1.10) 11.803 12.800 8.45% 17,651.2 225,935 Qualified XII (1.15) 11.781 12.770 8.39% 58,437.4 746,246 Qualified XII (1.20) 11.760 12.740 8.33% 28,921.1 368,455 Qualified XII (1.25) 11.738 12.711 8.29% 9,827.4 124,916 Qualified XII (1.30) 11.717 12.681 8.23% 7,648.2 96,987 Qualified XII (1.35) 11.769 12.652 7.50% (2) 58.4 739 Qualified XII (1.40) 11.674 12.623 8.13% 3,129.5 39,504 Qualified XII (1.50) 11.632 12.564 8.01% 695.0 8,732 Qualified XIII 14.009 15.215 8.61% 114,543.2 1,742,775
S-9 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- AETNA BOND VP: (continued): Qualified XV $ 13.986 $ 15.190 8.61% 101,758.7 $ 1,545,714 Qualified XVI 13.764 14.868 8.02% 155,213.8 2,307,719 Qualified XVII 13.912 15.087 8.45% 264,384.8 3,988,774 Qualified XVIII 13.912 15.087 8.45% 523,161.1 7,892,931 Qualified XIX 54.642 59.293 8.51% 7,879.3 467,190 Qualified XX 53.945 58.502 8.45% 18,880.2 1,104,528 Qualified XXI 13.999 15.227 8.77% 17,781.0 270,751 Qualified XXII 14.022 15.252 8.77% 38,843.4 592,439 Qualified XXIV 12.155 12.867 5.86% (6) 165,139.0 2,124,844 Qualified XXV 14.385 15.030 4.48% (9) 59,880.0 899,997 Qualified XXVI 14.416 15.023 4.21% (9) 4,465.3 67,082 Qualified XXVII 53.528 58.266 8.85% (2) 603,258.7 35,149,471 Qualified XXVIII 53.528 58.190 8.71% (2) 155,538.3 9,050,774 Qualified XXIX 57.031 58.190 2.03% 2,085.2 121,338 Qualified XXX 53.738 58.180 8.27% 29,616.6 1,723,100 Annuity contracts in payment period 5,792,395 - -------------------------------------------------------------------------------------------------------------------------- AETNA CROSSROADS VP: Qualified III 16.458 16.322 (0.83%) 29.5 481 Qualified V 16.342 16.181 (0.99%) 575.0 9,304 Qualified VI 16.458 16.322 (0.83%) 2,083,592.6 34,008,401 Qualified X (1.15) 16.923 16.799 (0.73%) 18,918.2 317,807 Qualified X (1.25) 16.847 16.707 (0.83%) 314,495.1 5,254,269 Qualified XI 16.670 16.625 (0.27%) 72,153.4 1,199,551 Qualified XII (0.35) 10.497 10.777 2.67% (5) 75,426.6 812,873 Qualified XII (0.40) 14.960 14.962 0.01% 581.4 8,699 Qualified XII (0.45) 10.752 10.749 (0.03%) 140,545.3 1,510,721 Qualified XII (0.55) 10.735 10.721 (0.13%) 3,859.2 41,374 Qualified XII (0.65) 10.718 10.693 (0.23%) 98,178.7 1,049,825 Qualified XII (0.70) 10.709 10.679 (0.28%) 13,626.2 145,514 Qualified XII (0.75) 10.701 10.665 (0.34%) 214,545.2 2,288,125 Qualified XII (0.80) 11.275 11.232 (0.38%) 134,663.6 1,512,541 Qualified XII (0.85) 14.921 14.857 (0.43%) 65,822.6 977,926 Qualified XII (0.90) 11.115 11.061 (0.49%) 6,134.6 67,855 Qualified XII (0.95) 14.867 14.788 (0.53%) 59,724.4 883,204 Qualified XII (1.00) 14.840 14.754 (0.58%) 135,910.5 2,005,223 Qualified XII (1.05) 14.813 14.719 (0.63%) 51,578.0 759,176 Qualified XII (1.10) 14.786 14.685 (0.68%) 47,415.2 696,292 Qualified XII (1.15) 14.759 14.651 (0.73%) 14,299.9 209,508 Qualified XII (1.20) 14.732 14.617 (0.78%) 371,913.0 5,436,252 Qualified XII (1.25) 14.705 14.584 (0.82%) 11,049.6 161,148 Qualified XII (1.30) 14.679 14.550 (0.88%) 14,623.9 212,778 Qualified XII (1.35) 14.793 14.516 (1.87%) (2) 3.9 56 Qualified XII (1.40) 14.625 14.483 (0.97%) 4,151.4 60,125 Qualified XII (1.50) 14.572 14.416 (1.07%) 472.4 6,810 Qualified XIII 16.637 16.548 (0.53%) 9,637.6 159,483 Qualified XV 16.609 16.521 (0.53%) 10,168.0 167,986 Qualified XVI 16.346 16.170 (1.08%) 32,973.2 533,177 Qualified XVII 16.607 16.526 (0.49%) 37,614.4 621,616 Qualified XVIII 16.999 16.917 (0.48%) 11,019.9 186,424 Qualified XXI 16.624 16.561 (0.38%) 10,579.4 175,205 Qualified XXII 16.652 16.588 (0.38%) 11,879.3 197,054 Qualified XXIV 14.969 14.763 (1.38%) (6) 6,470.7 95,527 Qualified XXV 16.707 16.347 (2.15%) (9) 4,110.8 67,200 Qualified XXVI 16.294 16.340 0.28% (9) 304.0 4,967 Qualified XXVII 16.637 16.343 (1.77%) (2) 36,195.9 591,550 Qualified XXVIII 16.637 16.322 (1.89%) (2) 1,565.4 25,550 Annuity contracts in payment period 68,046 - -------------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES C: Qualified III 19.358 17.424 (9.99%) 29,117.9 507,351 Qualified VI 19.358 17.424 (9.99%) 4,499,483.4 78,398,999 Qualified XI 19.568 17.712 (9.48%) 546,470.2 9,679,080
S-10 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES C: (continued): Qualified XII (0.60) $ 13.075 $ 12.298 (5.94%) (5) 66,328.5 $ 815,708 Qualified XII (0.65) 19.672 17.857 (9.23%) 109.6 1,957 Qualified XII (0.70) 13.520 12.266 (9.28%) 23,935.4 293,592 Qualified XII (0.80) 13.498 12.234 (9.36%) 6,968.0 85,247 Qualified XII (0.90) 13.477 12.203 (9.45%) 10,693.6 130,494 Qualified XII (0.95) 12.849 12.187 (5.15%) (5) 8,063.3 98,267 Qualified XII (1.00) 13.455 12.171 (9.54%) 107,474.7 1,308,075 Qualified XII (1.05) 14.919 13.489 (9.59%) 578,463.2 7,802,890 Qualified XII (1.10) 19.615 17.725 (9.64%) 76,637.1 1,358,393 Qualified XII (1.15) 14.489 13.087 (9.68%) 4,014.5 52,538 Qualified XII (1.20) 19.550 17.649 (9.72%) 115,574.6 2,039,776 Qualified XII (1.25) 19.518 17.612 (9.77%) 990,293.7 17,441,053 Qualified XII (1.30) 19.486 17.574 (9.81%) 1,697.7 29,836 Qualified XII (1.35) 19.454 17.536 (9.86%) 4,951.0 86,820 Qualified XII (1.40) 19.422 17.499 (9.90%) 3,706.0 64,851 Qualified XII (1.45) 19.390 17.461 (9.95%) 3,011.7 52,587 Qualified XIII 19.550 17.649 (9.72%) 83,470.8 1,473,177 Qualified XV 19.536 17.637 (9.72%) 16,020.9 282,560 Qualified XVI 19.227 17.263 (10.21%) 25,328.3 437,243 Qualified XVII 19.358 17.424 (9.99%) 93,254.5 1,624,867 Qualified XXI 19.557 17.682 (9.59%) 47,002.9 831,106 Qualified XXII 19.571 17.694 (9.59%) 75,781.6 1,340,880 Qualified XXV 18.958 17.451 (7.95%) (9) 62,911.9 1,097,875 Qualified XXVI 18.294 17.443 (4.65%) (9) 496.7 8,664 Qualified XXVII 18.371 17.447 (5.03%) (2) 385,443.5 6,724,833 Qualified XXVIII 18.372 17.424 (5.16%) (2) 122,049.3 2,126,587 - -------------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES D: Qualified III 10.726 10.188 (5.02%) 6,178.2 62,943 Qualified VI 10.726 10.188 (5.02%) 13,303,066.2 135,531,636 Qualified X (1.15) 10.726 10.188 (5.02%) 139,040.1 1,416,541 Qualified X (1.25) 10.726 10.188 (5.02%) 2,618,087.2 26,673,072 Qualified XI 10.775 10.292 (4.48%) 2,233,755.0 22,989,806 Qualified XII (0.60) 10.239 10.394 1.51% (5) 123,380.6 1,282,418 Qualified XII (0.65) 10.833 10.376 (4.22%) 1,176.9 12,212 Qualified XII (0.70) 10.832 10.370 (4.27%) 39,906.2 413,827 Qualified XII (0.80) 10.818 10.347 (4.35%) 28,921.7 299,253 Qualified XII (0.90) 10.805 10.324 (4.45%) 22,607.9 233,404 Qualified XII (0.95) 10.103 10.313 2.08% (5) 17,710.5 182,648 Qualified XII (1.00) 10.792 10.301 (4.55%) 204,858.3 2,110,245 Qualified XII (1.05) 10.785 10.290 (4.59%) 2,847,975.4 29,305,667 Qualified XII (1.10) 10.779 10.279 (4.64%) 127,491.1 1,310,481 Qualified XII (1.15) 10.772 10.267 (4.69%) 7,600.0 78,029 Qualified XII (1.20) 10.765 10.256 (4.73%) 310,326.7 3,182,711 Qualified XII (1.25) 10.759 10.244 (4.79%) 5,102,718.6 52,272,249 Qualified XII (1.30) 10.752 10.233 (4.83%) 39,657.4 405,814 Qualified XII (1.35) 10.745 10.222 (4.87%) 20,860.6 213,237 Qualified XII (1.40) 10.739 10.210 (4.93%) 16,039.0 163,758 Qualified XII (1.50) 10.726 10.188 (5.02%) 4,235.8 43,154 Qualified XII (1.75) 10.693 10.131 (5.26%) 695.8 7,049 Qualified XIII 10.765 10.256 (4.73%) 388,392.1 3,983,349 Qualified XV 10.765 10.256 (4.73%) 77,534.9 795,198 Qualified XVI 10.693 10.131 (5.26%) 103,950.1 1,053,118 Qualified XVII 10.726 10.188 (5.02%) 94,258.4 960,305 Qualified XVIII 10.726 10.188 (5.02%) 536,117.4 5,461,964 Qualified XXI 10.777 10.282 (4.59%) 195,828.0 2,013,503 Qualified XXII 10.777 10.282 (4.59%) 452,842.1 4,656,122 Qualified XXIV 10.406 10.251 (1.49%) (6) 71,274.8 730,638 Qualified XXV 10.381 10.203 (1.71%) (9) 78,974.2 805,774 Qualified XXVI 10.207 10.199 (0.08%) (9) 1,369.3 13,965 Qualified XXVII 10.224 10.201 (0.22%) (2) 3,177,580.1 32,414,495 - --------------------------------------------------------------------------------------------------------------------------
S-11 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES E: Qualified V $ 10.751 $ 10.114 (5.93%) 489.8 $ 4,954 Qualified VI 10.760 10.139 (5.77%) 5,712,633.7 57,920,395 Qualified X (1.15) 10.755 10.109 (6.01%) 155,990.2 1,576,905 Qualified X (1.25) 10.752 10.107 (6.00%) 1,392,603.1 14,075,040 Qualified XI 10.787 10.221 (5.25%) 763,611.9 7,804,877 Qualified XII (0.70) 10.807 10.265 (5.02%) 2,531.9 25,990 Qualified XII (0.80) 10.801 10.249 (5.11%) 24,171.9 247,738 Qualified XII (0.95) 10.224 10.226 0.02% (5) 57,462.1 587,607 Qualified XII (1.00) 10.789 10.218 (5.29%) 63,957.0 653,513 Qualified XII (1.05) 10.787 10.210 (5.35%) 1,061,700.4 10,839,961 Qualified XII (1.10) 10.784 10.202 (5.40%) 39,174.9 399,662 Qualified XII (1.15) 10.781 10.194 (5.44%) 1,600.0 16,310 Qualified XII (1.20) 10.778 10.186 (5.49%) 127,699.5 1,300,747 Qualified XII (1.25) 10.775 10.178 (5.54%) 1,500,333.2 15,270,391 Qualified XII (1.30) 10.772 10.171 (5.58%) 14,079.7 143,205 Qualified XII (1.35) 10.769 10.163 (5.63%) 4,033.4 40,991 Qualified XII (1.40) 10.766 10.155 (5.68%) 5,246.1 53,274 Qualified XII (1.50) 10.760 10.139 (5.77%) 9,586.3 97,195 Qualified XII (1.75) 10.745 10.100 (6.00%) 287.7 2,906 Qualified XIII 10.778 10.186 (5.49%) 104,359.7 1,063,008 Qualified XV 10.778 10.186 (5.49%) 87,491.3 891,186 Qualified XVI 10.745 10.100 (6.00%) 29,135.5 294,269 Qualified XVII 10.760 10.139 (5.77%) 125,087.7 1,268,264 Qualified XVIII 10.752 10.107 (6.00%) 64,489.2 651,792 Qualified XXI 10.787 10.210 (5.35%) 165,247.6 1,687,178 Qualified XXII 10.787 10.210 (5.35%) 173,190.0 1,768,270 Qualified XXIV 10.531 10.185 (3.29%) (6) 23,134.6 235,626 Qualified XXV 10.452 10.155 (2.84%) (9) 172,664.6 1,753,409 Qualified XXVII 10.283 10.153 (1.26%) (2) 1,083,421.6 10,999,979 - -------------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES G: Qualified VI 10.370 9.914 (4.40%) 1,574,542.7 15,610,012 Qualified X (1.25) 10.369 9.888 (4.64%) 466,941.8 4,617,121 Qualified XI 10.384 9.983 (3.86%) 86,922.8 867,750 Qualified XII (0.60) 9.873 10.031 1.60% (5) 5,346.4 53,630 Qualified XII (0.80) 10.392 10.004 (3.73%) 1,379.7 13,803 Qualified XII (0.90) 10.389 9.991 (3.83%) 359.5 3,592 Qualified XII (1.00) 10.386 9.978 (3.93%) 26,136.6 260,791 Qualified XII (1.05) 10.384 9.972 (3.97%) 163,563.9 1,631,059 Qualified XII (1.10) 10.383 9.965 (4.03%) 52,679.8 524,954 Qualified XII (1.20) 10.379 9.952 (4.11%) 26,500.6 263,734 Qualified XII (1.25) 10.378 9.946 (4.16%) 579,378.5 5,762,499 Qualified XII (1.30) 10.376 9.939 (4.21%) 4,382.3 43,556 Qualified XII (1.35) 10.375 9.933 (4.26%) 3,944.2 39,178 Qualified XII (1.40) 10.373 9.926 (4.31%) 3,654.4 36,274 Qualified XII (1.45) 10.371 9.920 (4.35%) 35,869.8 355,828 Qualified XII (1.55) 10.193 9.907 (2.81%) (7) 132.0 1,308 Qualified XIII 10.379 9.952 (4.11%) 30,434.6 302,885 Qualified XV 10.379 9.952 (4.11%) 30,357.2 302,115 Qualified XVI 10.362 9.881 (4.64%) 5,837.3 57,678 Qualified XVII 10.370 9.914 (4.40%) 29,547.1 292,930 Qualified XVIII 10.369 9.888 (4.64%) 69,330.3 685,538 Qualified XXI 10.384 9.972 (3.97%) 9,240.4 92,145 Qualified XXII 10.384 9.972 (3.97%) 18,135.0 180,842 Qualified XXIV 10.067 9.952 (1.14%) (6) 6,204.8 61,750 Qualified XXV 10.067 9.929 (1.37%) (9) 18,054.5 179,263 Qualified XXVII 9.923 9.927 0.04% (2) 580,576.2 5,763,380 - -------------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES H: Qualified VI 10.020 10.069 0.49% 1,268,817.2 12,775,721 Qualified X (1.15) 10.086 10.051 (0.35%) (2) 47,965.0 482,096 Qualified X (1.25) 10.020 10.049 0.29% 241,335.0 2,425,175 Qualified XI 10.022 10.127 1.05% 111,279.1 1,126,923
S-12 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES H: (continued): Qualified XII (0.60) $ 10.178 $ 10.163 (0.15%) (5) 331.6 $ 3,370 Qualified XII (0.80) 10.050 10.142 0.92% (1) 13,648.5 138,423 Qualified XII (0.90) 10.652 10.131 (4.89%) (3) 1,483.3 15,027 Qualified XII (0.95) 10.085 10.126 0.41% (5) 10,895.1 110,324 Qualified XII (1.00) 10.043 10.121 0.78% (1) 14,380.6 145,546 Qualified XII (1.05) 10.021 10.116 0.95% (1) 339,304.6 3,432,405 Qualified XII (1.10) 10.042 10.111 0.69% (1) 23,489.4 237,501 Qualified XII (1.20) 10.021 10.100 0.79% 13,950.5 140,900 Qualified XII (1.25) 10.021 10.095 0.74% 285,355.3 2,880,662 Qualified XII (1.30) 10.021 10.090 0.69% 1,294.8 13,065 Qualified XII (1.35) 10.020 10.084 0.64% 8,826.3 89,004 Qualified XII (1.40) 10.044 10.079 0.35% (1) 5,910.1 59,568 Qualified XII (1.45) 10.020 10.074 0.54% 5,077.4 51,150 Qualified XIII 10.021 10.100 0.79% 23,614.4 238,505 Qualified XV 10.021 10.100 0.79% 16,123.9 162,851 Qualified XVI 10.019 10.043 0.24% 9,657.3 96,988 Qualified XVII 10.043 10.069 0.26% (1) 58,378.1 587,809 Qualified XVIII 10.020 10.049 0.29% 60,782.9 610,807 Qualified XXI 10.022 10.116 0.94% 5,072.3 51,311 Qualified XXII 10.033 10.116 0.83% (1) 34,213.2 346,101 Qualified XXV 10.332 10.084 (2.40%) (9) 3,437.1 34,660 Qualified XXVI 10.131 10.080 (0.50%) (9) 395.1 3,983 Qualified XXVII 10.066 10.082 0.16% (2) 289,206.3 2,915,778 - -------------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES I: Qualified X (1.25) 10.005 9.863 (1.42%) (3) 115,538.7 1,139,558 Qualified XVIII 10.020 9.863 (1.57%) (4) 22,788.4 224,762 - -------------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES J: Qualified X (1.25) 9.997 9.731 (2.66%) (6) 40,311.1 392,267 Qualified XVIII 10.098 9.731 (3.63%) (8) 6,624.1 64,459 - -------------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES K: Qualified X (1.25) 10.031 10.041 0.10% (8) 91,123.2 914,968 Qualified XVIII 10.058 10.041 (0.17%) (9) 1,699.0 17,060 Qualified XXVII 10.023 10.046 0.23% (8) 192,188.5 1,930,726 - -------------------------------------------------------------------------------------------------------------------------- AETNA GET FUND, SERIES L: Qualified XXVII 10.006 10.015 0.09% (11) 1,596.3 15,987 - -------------------------------------------------------------------------------------------------------------------------- AETNA GROWTH AND INCOME VP: Qualified I 374.804 329.769 (12.02%) 100,475.1 33,133,575 Qualified III 285.655 250.600 (12.27%) 11,884.6 2,978,293 Qualified V 28.987 25.448 (12.21%) 16,861.9 429,101 Qualified VI 29.100 25.588 (12.07%) 90,718,317.0 2,321,300,294 Qualified VII 27.450 24.151 (12.02%) 7,082,962.5 171,060,628 Qualified VIII 27.018 23.756 (12.07%) 51,784.0 1,230,180 Qualified IX 27.182 24.020 (11.63%) 15,521.2 372,819 Qualified X (1.15) 29.280 25.772 (11.98%) 481,221.6 12,402,044 Qualified X (1.25) 29.100 25.588 (12.07%) 15,052,265.7 385,157,374 Qualified XI 29.475 26.063 (11.58%) 4,152,127.0 108,216,887 Qualified XII (0.35) 11.432 10.545 (7.76%) (5) 5,130,359.5 54,099,641 Qualified XII (0.40) 19.586 17.368 (11.32%) 55,508.4 964,070 Qualified XII (0.45) 11.867 10.518 (11.37%) 396,365.5 4,168,972 Qualified XII (0.55) 11.847 10.490 (11.45%) 1,009,352.0 10,588,103 Qualified XII (0.65) 11.828 10.463 (11.54%) 448,612.4 4,693,832 Qualified XII (0.70) 11.819 10.450 (11.58%) 525,994.8 5,496,646 Qualified XII (0.75) 11.809 10.436 (11.63%) 3,953,353.9 41,257,201 Qualified XII (0.80) 12.939 11.429 (11.67%) 11,724,441.0 133,998,636 Qualified XII (0.85) 19.535 17.246 (11.72%) 4,996,223.1 86,164,863 Qualified XII (0.90) 12.572 11.094 (11.76%) 131,644.7 1,460,466 Qualified XII (0.95) 19.464 17.166 (11.81%) 3,034,487.9 52,090,020 Qualified XII (1.00) 19.429 17.127 (11.85%) 10,368,984.1 177,589,590 Qualified XII (1.05) 19.393 17.087 (11.89%) 499,790.4 8,539,919 Qualified XII (1.10) 19.358 17.047 (11.94%) 221,197.6 3,770,755
S-13 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- AETNA GROWTH AND INCOME VP: (continued): Qualified XII (1.15) $ 19.323 $ 17.008 (11.98%) 329,934.2 $ 5,611,521 Qualified XII (1.20) 19.288 16.969 (12.02%) 197,616.7 3,353,358 Qualified XII (1.25) 19.253 16.929 (12.07%) 53,512.6 905,914 Qualified XII (1.30) 19.218 16.890 (12.11%) 12,706.0 214,605 Qualified XII (1.35) 18.079 16.851 (6.79%) (2) 65.7 1,107 Qualified XII (1.40) 19.148 16.812 (12.20%) 23,600.2 396,766 Qualified XII (1.50) 19.078 16.734 (12.29%) 13,521.8 226,274 Qualified XIII 29.416 25.943 (11.81%) 867,248.8 22,499,036 Qualified XV 29.367 25.900 (11.81%) 878,039.9 22,741,234 Qualified XVI 28.902 25.351 (12.29%) 1,314,584.9 33,326,043 Qualified XVII 29.287 25.817 (11.85%) 4,335,995.8 111,942,404 Qualified XVIII 29.287 25.817 (11.85%) 4,664,125.2 120,413,721 Qualified XIX 377.218 332.719 (11.80%) 54,075.8 17,992,039 Qualified XX 286.829 252.842 (11.85%) 119,701.5 30,265,567 Qualified XXI 29.394 25.963 (11.67%) 868,957.6 22,560,745 Qualified XXII 29.443 26.006 (11.67%) 1,132,148.1 29,442,644 Qualified XXIV 19.041 17.138 (9.99%) (6) 1,179,341.3 20,211,552 Qualified XXV 28.038 25.628 (8.60%) (9) 727,720.6 18,650,024 Qualified XXVI 26.982 25.617 (5.06%) (9) 34,055.5 872,399 Qualified XXVII 275.773 250.928 (9.01%) (2) 1,257,857.1 315,631,560 Qualified XXVIII 275.776 250.600 (9.13%) (2) 30,795.6 7,717,365 Qualified XXIX 248.703 250.600 0.76% 6,171.8 1,546,652 Qualified XXX 284.994 250.558 (12.08%) 81,402.4 20,396,004 Annuity contracts in payment period 311,465,868 - -------------------------------------------------------------------------------------------------------------------------- AETNA GROWTH VP: Qualified III 18.124 15.760 (13.04%) 840.0 13,238 Qualified V 23.771 20.638 (13.18%) 3,433.4 70,858 Qualified VI 23.875 20.761 (13.04%) 4,162,081.8 86,408,981 Qualified VIII 23.870 20.755 (13.05%) 1,210.0 25,113 Qualified X (1.15) 23.940 20.839 (12.95%) 23,304.8 485,649 Qualified X (1.25) 23.875 20.761 (13.04%) 644,933.3 13,389,461 Qualified XI 24.094 21.069 (12.55%) 259,594.1 5,469,388 Qualified XII (0.35) 15.254 13.544 (11.21%) (5) 168,968.9 2,288,515 Qualified XII (0.40) 24.222 21.242 (12.30%) 981.2 20,843 Qualified XII (0.45) 15.412 13.509 (12.35%) 236,124.1 3,189,800 Qualified XII (0.55) 15.387 13.474 (12.43%) 22,757.5 306,634 Qualified XII (0.60) 14.825 13.456 (9.23%) (11) 1.4 19 Qualified XII (0.65) 15.362 13.439 (12.52%) 20,846.9 280,162 Qualified XII (0.70) 15.350 13.421 (12.57%) 160,372.0 2,152,352 Qualified XII (0.75) 15.338 13.404 (12.61%) 278,123.2 3,727,963 Qualified XII (0.80) 17.447 15.239 (12.66%) 1,159,343.0 17,667,228 Qualified XII (0.85) 24.137 21.073 (12.69%) 88,456.0 1,864,034 Qualified XII (0.90) 16.962 14.801 (12.74%) 18,738.5 277,349 Qualified XII (0.95) 24.071 20.994 (12.78%) 99,760.5 2,094,372 Qualified XII (1.00) 24.039 20.955 (12.83%) 755,685.6 15,835,392 Qualified XII (1.05) 24.006 20.916 (12.87%) 64,832.0 1,356,026 Qualified XII (1.10) 23.973 20.878 (12.91%) 9,211.2 192,312 Qualified XII (1.15) 23.940 20.839 (12.95%) 16,704.9 348,114 Qualified XII (1.20) 23.908 20.800 (13.00%) 11,753.0 244,463 Qualified XII (1.25) 23.875 20.761 (13.04%) 10,083.5 209,343 Qualified XII (1.30) 23.843 20.723 (13.09%) 6,817.2 141,272 Qualified XII (1.35) 23.242 20.684 (11.01%) (2) 193.8 4,008 Qualified XII (1.40) 23.778 20.646 (13.17%) 2,989.4 61,720 Qualified XII (1.50) 23.713 20.569 (13.26%) 5,215.1 107,269 Qualified XIII 24.071 20.994 (12.78%) 32,769.8 687,970 Qualified XV 24.071 20.994 (12.78%) 38,168.0 801,299 Qualified XVI 23.713 20.569 (13.26%) 74,056.3 1,523,264 Qualified XVII 23.875 20.761 (13.04%) 55,705.1 1,156,493 Qualified XVIII 24.091 21.022 (12.74%) 63,055.8 1,325,559 Qualified XXI 24.094 21.045 (12.65%) 69,861.9 1,470,244 Qualified XXII 24.094 21.045 (12.65%) 103,002.5 2,167,687
S-14 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- AETNA GROWTH VP: (continued): Qualified XXIV $ 26.062 $ 20.969 (19.54%) (6) 59,768.7 $ 1,253,290 Qualified XXV 24.462 20.793 (15.00%) (9) 80,896.8 1,682,087 Qualified XXVI 23.388 20.784 (11.13%) (9) 2,394.2 49,761 Qualified XXVII 9.343 7.718 (17.39%) (8) 87,757.2 677,310 Annuity contracts in payment period 132,657 - -------------------------------------------------------------------------------------------------------------------------- AETNA INDEX PLUS LARGE CAP VP: Qualified V 22.923 20.478 (10.67%) 1,069.5 21,901 Qualified VI 23.044 20.618 (10.53%) 10,804,600.3 222,769,249 Qualified VIII 23.038 20.612 (10.53%) 1,696.4 34,966 Qualified X (1.15) 23.120 20.707 (10.44%) 66,254.2 1,371,925 Qualified X (1.25) 23.044 20.618 (10.53%) 1,239,413.6 25,554,230 Qualified XI 23.294 20.959 (10.02%) 728,521.5 15,269,082 Qualified XII (0.35) 13.504 12.651 (6.32%) (5) 332,138.6 4,201,885 Qualified XII (0.40) 23.418 21.131 (9.77%) 1,499.6 31,689 Qualified XII (0.45) 13.991 12.618 (9.81%) 398,207.5 5,024,582 Qualified XII (0.55) 13.968 12.585 (9.90%) 134,831.0 1,696,848 Qualified XII (0.60) 12.787 12.569 (1.70%) (11) 2.3 29 Qualified XII (0.65) 13.946 12.553 (9.99%) 214,857.7 2,697,109 Qualified XII (0.70) 13.935 12.536 (10.04%) 94,619.6 1,186,151 Qualified XII (0.75) 13.923 12.520 (10.08%) 555,823.6 6,958,911 Qualified XII (0.80) 15.521 13.950 (10.12%) 2,757,219.9 38,463,217 Qualified XII (0.85) 23.350 20.975 (10.17%) 625,951.4 13,129,331 Qualified XII (0.90) 15.036 13.500 (10.22%) 35,744.4 482,550 Qualified XII (0.95) 23.273 20.885 (10.26%) 364,048.2 7,603,147 Qualified XII (1.00) 23.235 20.841 (10.30%) 1,994,038.0 41,557,745 Qualified XII (1.05) 23.196 20.796 (10.35%) 104,345.5 2,169,969 Qualified XII (1.10) 23.158 20.751 (10.39%) 76,996.8 1,597,761 Qualified XII (1.15) 23.120 20.707 (10.44%) 39,702.7 822,123 Qualified XII (1.20) 23.082 20.663 (10.48%) 35,906.4 741,934 Qualified XII (1.25) 23.044 20.618 (10.53%) 23,353.3 481,498 Qualified XII (1.30) 23.006 20.574 (10.57%) 18,316.2 376,838 Qualified XII (1.35) 21.210 20.530 (3.21%) (2) 166.5 3,418 Qualified XII (1.40) 22.930 20.486 (10.66%) 9,813.8 201,045 Qualified XII (1.50) 22.855 20.399 (10.75%) 6,602.6 134,687 Qualified XIII 23.273 20.885 (10.26%) 96,356.4 2,012,403 Qualified XIV 23.044 20.618 (10.53%) 529.1 10,908 Qualified XV 23.256 20.870 (10.26%) 43,031.0 898,056 Qualified XVI 22.887 20.427 (10.75%) 146,862.7 2,999,965 Qualified XVII 23.103 20.692 (10.44%) 90,740.7 1,877,606 Qualified XVIII 23.252 20.877 (10.21%) 59,854.8 1,249,589 Qualified XXI 23.277 20.920 (10.13%) 378,291.3 7,913,853 Qualified XXII 23.294 20.936 (10.12%) 142,200.3 2,977,105 Qualified XXIV 23.001 20.854 (9.33%) (6) 83,049.5 1,731,914 Qualified XXV 22.482 20.650 (8.15%) (9) 110,803.6 2,288,095 Qualified XXVI 21.677 20.641 (4.78%) (9) 7,167.8 147,951 Qualified XXVII 21.787 20.645 (5.24%) (2) 2,198,549.7 45,389,058 Qualified XXVIII 21.787 20.618 (5.37%) (2) 1,114,270.0 22,974,018 Annuity contracts in payment period 1,883,772 - -------------------------------------------------------------------------------------------------------------------------- AETNA INDEX PLUS MID CAP VP: Qualified V 12.497 14.688 17.53% (1) 221.2 3,249 Qualified VI 12.455 14.751 18.43% 1,651,221.6 24,357,170 Qualified VIII 12.454 14.748 18.42% 2.9 43 Qualified X (1.15) 13.477 14.791 9.75% (3) 4,513.6 66,760 Qualified X (1.25) 12.455 14.751 18.43% 185,614.9 2,738,005 Qualified XI 12.530 14.923 19.10% 140,819.5 2,101,449 Qualified XII (0.35) 14.273 15.460 8.32% (5) 47,993.2 741,975 Qualified XII (0.40) 12.597 15.046 19.44% 556.8 8,378 Qualified XII (0.45) 12.916 15.419 19.38% 18,305.5 282,252 Qualified XII (0.55) 12.896 15.379 19.25% 7,716.2 118,667 Qualified XII (0.65) 12.875 15.339 19.14% 7,546.3 115,752 Qualified XII (0.70) 12.864 15.319 19.08% 15,600.5 238,984
S-15 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- AETNA INDEX PLUS MID CAP VP: (continued): Qualified XII (0.75) $ 12.854 $ 15.299 19.02% 32,312.1 $ 494,343 Qualified XII (0.80) 12.551 14.930 18.95% 148,980.8 2,224,283 Qualified XII (0.85) 12.540 14.910 18.90% 52,574.4 783,885 Qualified XII (0.90) 12.529 14.890 18.84% 3,892.7 57,963 Qualified XII (0.95) 12.519 14.870 18.78% 67,543.2 1,004,367 Qualified XII (1.00) 12.508 14.851 18.73% 174,355.3 2,589,351 Qualified XII (1.05) 12.498 14.831 18.67% 9,532.1 141,370 Qualified XII (1.10) 12.487 14.811 18.61% 5,612.0 83,119 Qualified XII (1.15) 12.477 14.791 18.55% 5,064.4 74,908 Qualified XII (1.20) 12.466 14.771 18.49% 2,937.0 43,383 Qualified XII (1.25) 12.455 14.751 18.43% 2,018.8 29,779 Qualified XII (1.30) 12.445 14.731 18.37% 1,743.5 25,684 Qualified XII (1.35) 12.420 14.712 18.45% (2) 101.1 1,488 Qualified XII (1.40) 12.564 14.692 16.94% (2) 1,016.5 14,934 Qualified XII (1.50) 12.403 14.653 18.14% 340.5 4,989 Qualified XIII 12.519 14.870 18.78% 19,360.7 287,893 Qualified XV 12.519 14.870 18.78% 19,369.3 288,022 Qualified XVI 12.403 14.653 18.14% 22,439.6 328,807 Qualified XVII 12.475 14.751 18.24% (2) 6,140.4 90,577 Qualified XVIII 12.455 14.751 18.43% 29,585.0 436,408 Qualified XXI 12.530 14.906 18.96% 46,568.5 694,150 Qualified XXII 12.530 14.906 18.96% 21,104.3 314,581 Qualified XXIV 14.131 14.860 5.16% (6) 8,616.4 128,039 Qualified XXV 15.067 14.774 (1.94%) (9) 23,199.5 342,750 Qualified XXVI 14.459 14.768 2.14% (9) 3,480.0 51,393 Qualified XXVII 13.115 15.377 17.25% (2) 344,474.8 5,296,989 Qualified XXVIII 13.116 15.357 17.09% (2) 572,329.2 8,789,259 - -------------------------------------------------------------------------------------------------------------------------- AETNA INDEX PLUS SMALL CAP VP: Qualified V 10.271 10.416 1.41% (10) 12.2 127 Qualified VI 9.645 10.461 8.46% 528,977.5 5,533,637 Qualified X (1.15) 9.661 10.489 8.57% 1,442.0 15,125 Qualified X (1.25) 9.645 10.461 8.46% 91,047.3 952,446 Qualified XI 9.703 10.583 9.07% 36,589.3 387,225 Qualified XII (0.35) 9.804 11.144 13.67% (5) 16,975.5 189,175 Qualified XII (0.45) 10.166 11.115 9.34% 2,602.7 28,929 Qualified XII (0.65) 10.134 11.057 9.11% 44,025.8 486,793 Qualified XII (0.70) 10.126 11.042 9.05% 2,159.2 23,842 Qualified XII (0.75) 10.117 11.028 9.00% 15,933.7 175,717 Qualified XII (0.80) 9.718 10.588 8.95% 61,434.5 650,469 Qualified XII (0.85) 9.710 10.574 8.90% 20,025.3 211,748 Qualified XII (0.90) 9.702 10.559 8.83% 1,099.5 11,610 Qualified XII (0.95) 9.694 10.545 8.78% 16,219.3 171,032 Qualified XII (1.00) 9.686 10.531 8.72% 70,028.4 737,469 Qualified XII (1.05) 9.677 10.517 8.68% 3,795.6 39,918 Qualified XII (1.10) 9.669 10.503 8.63% 1,063.3 11,168 Qualified XII (1.15) 9.661 10.489 8.57% 1,569.1 16,458 Qualified XII (1.20) 9.653 10.475 8.52% 2,252.9 23,599 Qualified XII (1.25) 8.614 10.461 21.44% (4) 692.7 7,246 Qualified XII (1.30) 9.637 10.447 8.41% 22.1 231 Qualified XII (1.35) 9.777 10.433 6.71% (2) 14.8 154 Qualified XII (1.40) 9.746 10.419 6.91% (2) 2,254.9 23,494 Qualified XII (1.50) 9.604 10.391 8.19% 116.9 1,215 Qualified XIII 9.694 10.545 8.78% 6,873.5 72,481 Qualified XV 9.694 10.545 8.78% 6,765.9 71,346 Qualified XVI 9.604 10.391 8.19% 7,534.1 78,287 Qualified XVII 9.645 10.461 8.46% 66.3 694 Qualified XVIII 9.645 10.461 8.46% 3,001.1 31,395 Qualified XXI 9.703 10.571 8.95% 12,341.2 130,459 Qualified XXII 9.703 10.571 8.95% 9,383.7 99,195 Qualified XXIV 9.929 10.538 6.13% (6) 1,304.5 13,747 Qualified XXV 10.027 10.477 4.49% (9) 3,066.6 32,129
S-16 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- AETNA INDEX PLUS SMALL CAP VP: (continued): Qualified XXVII $ 10.151 $ 10.881 7.19% (2) 185,349.9 $ 2,016,792 Qualified XXVIII 10.151 10.866 7.04% (2) 54,966.8 597,269 - -------------------------------------------------------------------------------------------------------------------------- AETNA INTERNATIONAL VP: Qualified V 14.554 11.434 (21.44%) 49.1 561 Qualified VI 14.594 11.484 (21.31%) 697,215.3 8,006,821 Qualified VIII 14.592 11.481 (21.32%) 10.9 125 Qualified X (1.15) 14.618 11.514 (21.23%) 1,073.0 12,354 Qualified X (1.25) 14.594 11.484 (21.31%) 102,558.2 1,177,778 Qualified XI 14.682 11.617 (20.88%) 15,926.1 185,014 Qualified XII (0.35) 14.054 11.462 (18.44%) (5) 13,069.8 149,806 Qualified XII (0.45) 14.414 11.433 (20.68%) 36,204.5 413,926 Qualified XII (0.55) 14.391 11.403 (20.76%) 823.8 9,394 Qualified XII (0.65) 14.367 11.373 (20.84%) 1,360.1 15,468 Qualified XII (0.70) 14.356 11.358 (20.88%) 36,880.2 418,885 Qualified XII (0.75) 14.344 11.344 (20.91%) 6,183.4 70,144 Qualified XII (0.80) 14.705 11.623 (20.96%) 51,128.9 594,271 Qualified XII (0.85) 14.693 11.608 (21.00%) 21,474.5 249,276 Qualified XII (0.90) 14.680 11.592 (21.04%) 1,340.6 15,540 Qualified XII (0.95) 14.668 11.576 (21.08%) 10,159.9 117,611 Qualified XII (1.00) 14.656 11.561 (21.12%) 49,308.6 570,057 Qualified XII (1.05) 14.643 11.545 (21.16%) 4,129.7 47,677 Qualified XII (1.10) 14.631 11.530 (21.19%) 1,911.1 22,035 Qualified XII (1.15) 14.618 11.514 (21.23%) 733.6 8,447 Qualified XII (1.20) 14.606 11.499 (21.27%) 1,244.2 14,307 Qualified XII (1.25) 14.594 11.484 (21.31%) 1,173.7 13,479 Qualified XII (1.30) 14.582 11.468 (21.36%) 174.4 2,000 Qualified XII (1.35) 15.783 11.453 (27.43%) (2) 7.2 82 Qualified XII (1.40) 14.557 11.437 (21.43%) 422.9 4,837 Qualified XII (1.50) 14.532 11.407 (21.50%) 232.3 2,650 Qualified XIII 14.668 11.576 (21.08%) 6,891.9 79,781 Qualified XV 14.668 11.576 (21.08%) 1,093.7 12,661 Qualified XVI 14.532 11.407 (21.50%) 9,524.0 108,640 Qualified XVIII 14.594 11.484 (21.31%) 11,045.9 126,851 Qualified XXI 14.681 11.604 (20.96%) 2,241.8 26,014 Qualified XXII 14.681 11.604 (20.96%) 22,820.7 264,811 Qualified XXIV 14.803 11.568 (21.85%) (6) 11,240.9 130,035 Qualified XXV 13.152 11.501 (12.55%) (9) 4,906.2 56,426 Qualified XXVI 12.586 11.496 (8.66%) (9) 1.7 19 Qualified XXVII 9.610 8.094 (15.78%) (8) 2,641.2 21,378 - -------------------------------------------------------------------------------------------------------------------------- AETNA LEGACY VP: Qualified III 15.070 15.599 3.51% 490.0 7,643 Qualified V 14.964 15.465 3.35% 587.2 9,081 Qualified VI 15.070 15.599 3.51% 1,251,617.8 19,523,983 Qualified X (1.15) 15.203 15.753 3.62% 17,675.4 278,441 Qualified X (1.25) 15.135 15.667 3.52% 359,253.4 5,628,423 Qualified XI 15.264 15.889 4.09% 50,443.3 801,494 Qualified XII (0.35) 10.706 11.234 4.93% (5) 31,285.8 351,465 Qualified XII (0.40) 13.986 14.600 4.39% 138.3 2,019 Qualified XII (0.45) 10.738 11.204 4.34% 45,064.1 504,898 Qualified XII (0.55) 10.721 11.175 4.23% 19,311.8 215,809 Qualified XII (0.65) 10.704 11.146 4.13% 59,748.3 665,954 Qualified XII (0.70) 10.695 11.132 4.09% 6,671.5 74,267 Qualified XII (0.75) 10.686 11.117 4.03% 69,002.9 767,105 Qualified XII (0.80) 11.073 11.514 3.98% 137,810.6 1,586,751 Qualified XII (0.85) 13.950 14.497 3.92% 44,708.2 648,135 Qualified XII (0.90) 10.986 11.412 3.88% 1,923.9 21,955 Qualified XII (0.95) 13.899 14.430 3.82% 29,660.8 428,005 Qualified XII (1.00) 13.874 14.397 3.77% 188,329.0 2,711,372 Qualified XII (1.05) 13.848 14.363 3.72% 33,688.0 483,861 Qualified XII (1.10) 13.823 14.330 3.67% 23,915.7 342,712 Qualified XII (1.15) 13.798 14.297 3.62% 13,274.0 189,778
S-17 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- AETNA LEGACY VP: (continued): Qualified XII (1.20) $ 13.773 $ 14.264 3.56% 17,252.5 $ 246,089 Qualified XII (1.25) 13.748 14.231 3.51% 7,350.2 104,600 Qualified XII (1.30) 13.723 14.198 3.46% 6,773.6 96,172 Qualified XII (1.40) 13.673 14.132 3.36% 1,037.6 14,664 Qualified XII (1.50) 13.623 14.067 3.26% 369.6 5,199 Qualified XIII 15.234 15.817 3.83% 3,220.4 50,937 Qualified XV 15.208 15.789 3.82% 6,547.0 103,371 Qualified XVI 14.967 15.454 3.25% 17,583.3 271,733 Qualified XVII 15.206 15.795 3.87% 20,947.1 330,859 Qualified XVIII 15.272 15.864 3.88% 43,923.8 696,807 Qualified XXI 15.222 15.828 3.98% 55,825.1 883,599 Qualified XXII 15.248 15.855 3.98% 5,216.7 82,711 Qualified XXIV 14.232 14.406 1.22% (6) 1,444.1 20,803 Qualified XXV 15.609 15.623 0.09% (9) 3,716.1 58,057 Qualified XXVI 15.374 15.616 1.57% (9) 966.1 15,086 Qualified XXVII 15.132 15.620 3.22% (2) 44,929.6 701,800 Annuity contracts in payment period 198,397 - -------------------------------------------------------------------------------------------------------------------------- AETNA MONEY MARKET VP: Qualified I 45.192 47.509 5.13% 28,487.5 1,353,413 Qualified III 44.501 46.754 5.06% 3,601.3 168,374 Qualified V 12.808 13.435 4.90% 19,981.8 268,455 Qualified VI 12.917 13.571 5.06% 9,554,318.5 129,661,654 Qualified VII 12.842 13.500 5.12% 276,030.4 3,726,411 Qualified VIII 12.437 13.066 5.06% 10,882.4 142,190 Qualified IX 12.847 13.531 5.32% 1,653.2 22,370 Qualified X (1.15) 12.997 13.669 5.17% 258,756.5 3,536,942 Qualified X (1.25) 12.917 13.571 5.06% 2,471,828.3 33,545,182 Qualified XI 13.083 13.823 5.66% 380,540.3 5,260,209 Qualified XII (0.35) 11.033 11.443 3.72% (5) 437,758.4 5,009,269 Qualified XII (0.40) 11.748 12.448 5.96% 3,393.6 42,244 Qualified XII (0.45) 10.777 11.413 5.90% 28,640.7 326,876 Qualified XII (0.55) 10.760 11.383 5.79% 48,059.7 547,064 Qualified XII (0.65) 10.742 11.354 5.70% 220,271.4 2,500,962 Qualified XII (0.70) 10.734 11.339 5.64% 135,516.7 1,536,624 Qualified XII (0.75) 10.725 11.324 5.59% 300,528.7 3,403,187 Qualified XII (0.80) 10.855 11.456 5.54% 1,463,946.6 16,770,972 Qualified XII (0.85) 11.717 12.360 5.49% 371,038.8 4,586,039 Qualified XII (0.90) 10.811 11.398 5.43% 21,482.2 244,854 Qualified XII (0.95) 11.675 12.303 5.38% 453,479.4 5,579,157 Qualified XII (1.00) 11.654 12.274 5.32% 1,864,849.9 22,889,168 Qualified XII (1.05) 11.632 12.246 5.28% 57,152.9 699,894 Qualified XII (1.10) 11.611 12.218 5.23% 39,771.3 485,926 Qualified XII (1.15) 11.590 12.189 5.17% 59,675.4 727,383 Qualified XII (1.20) 11.569 12.161 5.12% 45,351.7 551,522 Qualified XII (1.25) 11.548 12.133 5.07% 24,433.0 296,445 Qualified XII (1.30) 11.527 12.105 5.01% 11,514.2 139,379 Qualified XII (1.35) 11.577 12.077 4.32% (2) 46.9 567 Qualified XII (1.40) 11.485 12.049 4.91% 6,042.0 72,800 Qualified XII (1.50) 11.443 11.993 4.81% 1,424.3 17,082 Qualified XIII 13.057 13.759 5.38% 101,086.2 1,390,845 Qualified XV 13.035 13.736 5.38% 82,420.1 1,132,122 Qualified XVI 12.829 13.445 4.80% 131,197.9 1,763,956 Qualified XVII 12.917 13.571 5.06% 442,559.9 6,005,980 Qualified XVIII 12.917 13.571 5.06% 807,654.3 10,960,676 Qualified XIX 45.192 47.509 5.13% 18,452.8 876,674 Qualified XX 44.501 46.754 5.06% 75,480.5 3,529,015 Qualified XXI 13.047 13.769 5.53% 117,584.1 1,619,016 Qualified XXII 13.069 13.792 5.53% 141,829.2 1,956,108 Qualified XXIV 11.938 12.282 2.88% (6) 119,289.1 1,465,109 Qualified XXV 13.398 13.592 1.45% (9) 86,230.9 1,172,050 Qualified XXVI 13.409 13.586 1.32% (9) 27,084.4 367,969
S-18 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- AETNA MONEY MARKET VP: (continued): Qualified XXVII $ 44.732 $ 47.123 5.35% (2) 685,272.4 $ 32,292,092 Qualified XXVIII 44.735 46.754 4.51% (2) 264,427.4 12,363,040 Qualified XXIX 46.555 46.754 0.43% 2,552.8 119,354 Qualified XXX 44.501 46.746 5.04% 32,033.0 1,497,428 Annuity contracts in payment period 89,722 - -------------------------------------------------------------------------------------------------------------------------- AETNA SMALL COMPANY VP: Qualified V 17.540 18.458 5.23% 767.0 14,158 Qualified VI 17.617 18.568 5.40% 2,460,640.1 45,689,165 Qualified VIII 17.613 18.563 5.39% 639.3 11,867 Qualified X (1.15) 17.665 18.638 5.51% 22,612.6 421,454 Qualified X (1.25) 17.617 18.568 5.40% 295,892.6 5,494,133 Qualified XI 17.778 18.843 5.99% 130,001.5 2,449,618 Qualified XII (0.35) 12.599 12.732 1.06% (5) 51,631.4 657,371 Qualified XII (0.40) 17.873 18.998 6.29% 327.2 6,217 Qualified XII (0.45) 11.953 12.699 6.24% 122,373.7 1,554,024 Qualified XII (0.55) 11.933 12.666 6.14% 21,330.6 270,174 Qualified XII (0.65) 11.914 12.633 6.03% 14,680.9 185,464 Qualified XII (0.70) 11.904 12.616 5.98% 24,605.7 310,426 Qualified XII (0.75) 11.895 12.600 5.93% 144,228.7 1,817,282 Qualified XII (0.80) 12.675 13.419 5.87% 1,784,687.4 23,948,720 Qualified XII (0.85) 17.810 18.847 5.82% 86,789.5 1,635,721 Qualified XII (0.90) 12.336 13.048 5.77% 13,290.5 173,415 Qualified XII (0.95) 17.762 18.777 5.71% 75,786.5 1,423,043 Qualified XII (1.00) 17.737 18.742 5.67% 569,784.2 10,678,896 Qualified XII (1.05) 17.713 18.707 5.61% 10,886.6 203,656 Qualified XII (1.10) 17.689 18.673 5.56% 7,637.4 142,613 Qualified XII (1.15) 17.665 18.638 5.51% 13,932.6 259,676 Qualified XII (1.20) 17.641 18.603 5.45% 13,067.5 243,094 Qualified XII (1.25) 17.617 18.568 5.40% 9,885.0 183,544 Qualified XII (1.30) 21.056 18.534 (11.98%) (4) 14,211.6 263,398 Qualified XII (1.35) 22.460 18.499 (17.64%) (2) 132.4 2,449 Qualified XII (1.40) 17.545 18.465 5.24% 2,611.7 48,225 Qualified XII (1.50) 17.497 18.396 5.14% 1,485.5 27,327 Qualified XIII 17.762 18.777 5.71% 29,276.2 549,720 Qualified XV 17.762 18.777 5.71% 15,865.0 297,898 Qualified XVI 17.497 18.396 5.14% 40,696.0 748,643 Qualified XVII 17.617 18.568 5.40% 9,443.0 175,338 Qualified XVIII 17.776 18.801 5.77% 4,738.4 89,086 Qualified XXI 17.778 18.822 5.87% 39,273.4 739,203 Qualified XXII 17.778 18.822 5.87% 50,096.7 942,921 Qualified XXIV 20.872 18.754 (10.15%) (6) 68,241.9 1,279,808 Qualified XXV 19.585 18.597 (5.04%) (9) 23,757.6 441,821 Qualified XXVI 18.318 18.589 1.48% (9) 2,705.3 50,288 Qualified XXVII 10.292 9.145 (11.14%) (8) 136,233.9 1,245,859 Annuity contracts in payment period 36,683 - -------------------------------------------------------------------------------------------------------------------------- AETNA TECHNOLOGY VP: Qualified V 9.916 5.824 (41.27%) (7) 5,044.0 29,376 Qualified VI 9.999 5.831 (41.68%) (5) 2,082,585.8 12,143,559 Qualified VIII 10.480 5.830 (44.37%) (6) 185.1 1,079 Qualified X (1.25) 9.999 5.831 (41.68%) (5) 276,442.5 1,611,936 Qualified XI 9.849 5.854 (40.56%) (6) 158,659.9 928,795 Qualified XII (0.35) 8.956 5.865 (34.51%) (5) 47,465.3 278,384 Qualified XII (0.55) 10.445 5.857 (43.93%) (7) 5,915.1 34,645 Qualified XII (0.70) 8.273 5.851 (29.28%) (5) 15,827.0 92,604 Qualified XII (0.75) 8.851 5.849 (33.92%) (5) 89,724.2 524,797 Qualified XII (0.80) 9.996 5.847 (41.51%) (5) 433,323.4 2,533,642 Qualified XII (0.85) 9.996 5.845 (41.53%) (5) 67,524.4 394,680 Qualified XII (0.90) 9.925 5.842 (41.14%) (7) 8,843.2 51,662 Qualified XII (0.95) 9.735 5.840 (40.01%) (5) 55,834.6 326,074 Qualified XII (1.00) 9.995 5.838 (41.59%) (5) 490,482.0 2,863,434 Qualified XII (1.05) 9.202 5.836 (36.58%) (5) 12,022.6 70,164
S-19 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- AETNA TECHNOLOGY VP: (continued): Qualified XII (1.10) $ 9.939 $ 5.834 (41.30%) (6) 20,196.6 $ 117,827 Qualified XII (1.15) 9.851 5.832 (40.80%) (6) 3,756.0 21,905 Qualified XII (1.20) 10.021 5.830 (41.82%) (6) 7,851.8 45,776 Qualified XII (1.25) 9.934 5.828 (41.33%) (6) 2,632.3 15,341 Qualified XII (1.30) 10.134 5.826 (42.51%) (7) 856.5 4,990 Qualified XII (1.40) 10.067 5.822 (42.17%) (7) 2,174.3 12,659 Qualified XII (1.50) 10.630 5.818 (45.27%) (7) 7.0 41 Qualified XIII 9.950 5.842 (41.29%) (6) 54,142.9 316,303 Qualified XV 9.950 5.842 (41.29%) (6) 21,058.0 123,021 Qualified XVI 9.738 5.821 (40.22%) (5) 41,667.9 242,549 Qualified XVII 9.365 5.841 (37.63%) (5) 22,437.9 131,060 Qualified XVIII 8.952 5.841 (34.75%) (5) 6,670.1 38,960 Qualified XXI 8.618 5.848 (32.14%) (5) 52,013.7 304,176 Qualified XXII 9.496 5.848 (38.42%) (5) 93,245.4 545,299 Qualified XXIV 9.939 5.842 (41.22%) (6) 18,107.2 105,782 Qualified XXV 8.891 5.840 (34.32%) (9) 25,943.5 151,510 Qualified XXVI 7.855 5.837 (25.69%) (9) 380.8 2,223 Qualified XXVII 9.391 5.710 (39.20%) (8) 138,502.8 790,851 - -------------------------------------------------------------------------------------------------------------------------- AETNA VALUE OPPORTUNITY VP: Qualified V 18.847 20.480 8.66% 627.1 12,843 Qualified VI 18.930 20.602 8.83% 1,174,458.4 24,196,192 Qualified VIII 18.926 20.596 8.82% 306.5 6,313 Qualified X (1.15) 18.982 20.679 8.94% 2,242.3 46,368 Qualified X (1.25) 18.930 20.602 8.83% 157,726.9 3,249,489 Qualified XI 19.103 20.907 9.44% 71,761.2 1,500,312 Qualified XII (0.35) 12.984 13.931 7.29% (5) 37,963.8 528,874 Qualified XII (0.40) 19.205 21.079 9.76% 82.4 1,737 Qualified XII (0.45) 12.665 13.895 9.71% 9,566.3 132,924 Qualified XII (0.55) 12.645 13.858 9.59% 21,967.7 304,428 Qualified XII (0.65) 12.625 13.822 9.48% 68,866.0 951,866 Qualified XII (0.70) 12.615 13.804 9.43% 163,513.0 2,257,134 Qualified XII (0.75) 12.604 13.786 9.38% 85,132.5 1,173,637 Qualified XII (0.80) 13.870 15.163 9.32% 468,298.6 7,100,811 Qualified XII (0.85) 19.138 20.911 9.26% 35,815.0 748,928 Qualified XII (0.90) 13.583 14.834 9.21% 7,999.1 118,659 Qualified XII (0.95) 19.085 20.834 9.16% 49,812.7 1,037,797 Qualified XII (1.00) 19.059 20.795 9.11% 129,862.2 2,700,485 Qualified XII (1.05) 19.033 20.756 9.05% 10,459.2 217,092 Qualified XII (1.10) 19.007 20.718 9.00% 1,299.2 26,917 Qualified XII (1.15) 18.982 20.679 8.94% 7,947.9 164,354 Qualified XII (1.20) 18.956 20.641 8.89% 7,678.4 158,490 Qualified XII (1.25) 18.930 20.602 8.83% 1,987.6 40,949 Qualified XII (1.30) 18.904 20.564 8.78% 8,400.7 172,753 Qualified XII (1.35) 17.510 20.526 17.22% (2) 27.5 564 Qualified XII (1.40) 18.852 20.488 8.68% 1,417.2 29,035 Qualified XII (1.50) 18.801 20.412 8.57% 460.5 9,399 Qualified XIII 19.085 20.834 9.16% 5,125.7 106,789 Qualified XV 19.085 20.834 9.16% 6,152.6 128,184 Qualified XVI 18.801 20.412 8.57% 12,929.4 263,914 Qualified XVII 18.930 20.602 8.83% 8,383.3 172,712 Qualified XVIII 19.101 20.861 9.21% 9,022.9 188,226 Qualified XXI 19.103 20.884 9.32% 14,447.7 301,725 Qualified XXII 19.103 20.884 9.32% 26,506.6 553,563 Qualified XXIV 19.863 20.809 4.76% (6) 8,033.8 167,175 Qualified XXV 20.650 20.634 (0.08%) (9) 17,415.9 359,359 Qualified XXVI 20.538 20.625 0.42% (9) 591.2 12,193 Qualified XXVII 13.603 15.556 14.36% (2) 227,330.5 3,536,353 Qualified XXVIII 13.603 15.536 14.21% (2) 668,608.7 10,387,504 - --------------------------------------------------------------------------------------------------------------------------
S-20 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- AIM V.I. FUNDS: CAPITAL APPRECIATION FUND: Qualified V $ 13.738 $ 12.068 (12.16%) 19.7 $ 238 Qualified VI 13.753 12.101 (12.01%) 1,020,762.4 12,352,243 Qualified VIII 13.752 12.099 (12.02%) 669.6 8,102 Qualified X (1.15) 13.762 12.121 (11.92%) 78.5 951 Qualified X (1.25) 13.753 12.101 (12.01%) 105,549.7 1,277,257 Qualified XI 15.993 12.205 (23.69%) (7) 21,995.0 268,449 Qualified XII (0.35) 13.648 12.286 (9.98%) (5) 15,852.4 194,762 Qualified XII (0.55) 13.820 12.245 (11.40%) 12,515.1 153,248 Qualified XII (0.60) 13.036 12.235 (6.14%) (10) 31.9 390 Qualified XII (0.65) 14.959 12.224 (18.28%) (2) 1,699.4 20,774 Qualified XII (0.70) 13.805 12.214 (11.52%) 20,534.2 250,805 Qualified XII (0.75) 13.801 12.204 (11.57%) 27,142.6 331,248 Qualified XII (0.80) 13.796 12.193 (11.62%) 122,505.5 1,493,710 Qualified XII (0.85) 13.791 12.183 (11.66%) 36,970.9 450,416 Qualified XII (0.90) 14.065 12.173 (13.45%) (5) 2,279.4 27,747 Qualified XII (0.95) 13.781 12.162 (11.75%) 47,484.7 577,509 Qualified XII (1.00) 13.777 12.152 (11.80%) 150,952.7 1,834,377 Qualified XII (1.05) 13.772 12.142 (11.84%) 4,565.5 55,434 Qualified XII (1.10) 13.767 12.132 (11.88%) 1,964.6 23,834 Qualified XII (1.15) 13.762 12.121 (11.92%) 1,957.3 23,725 Qualified XII (1.20) 13.758 12.111 (11.97%) 1,368.3 16,572 Qualified XII (1.25) 13.753 12.101 (12.01%) 4,931.4 59,675 Qualified XII (1.30) 13.748 12.091 (12.05%) 639.8 7,736 Qualified XII (1.35) 14.449 12.081 (16.39%) (2) 91.1 1,100 Qualified XII (1.40) 14.449 12.070 (16.46%) (2) 4,731.3 57,107 Qualified XII (1.50) 14.116 12.050 (14.64%) (1) 1,233.1 14,859 Qualified XIII 13.359 12.130 (9.20%) (1) 8,951.9 108,587 Qualified XV 13.745 12.130 (11.75%) 7,589.4 92,060 Qualified XVI 13.729 12.050 (12.23%) 28,018.1 337,618 Qualified XVII 13.759 12.106 (12.01%) 3,770.5 45,646 Qualified XVIII 13.759 12.106 (12.01%) 6,634.8 80,321 Qualified XXI 13.372 12.160 (9.06%) (1) 38,762.5 471,352 Qualified XXII 14.269 12.160 (14.78%) (2) 36,954.2 449,363 Qualified XXIV 14.837 12.160 (18.04%) (6) 11,675.8 141,978 Qualified XXV 15.281 12.115 (20.72%) (9) 17,938.1 217,320 Qualified XXVI 14.236 12.110 (14.93%) (9) 659.5 7,987 Qualified XXVII 9.838 7.500 (23.76%) (8) 69,307.1 519,803 - -------------------------------------------------------------------------------------------------------------------------- GROWTH AND INCOME FUND: Qualified V 11.717 9.860 (15.85%) (5) 4.3 42 Qualified VI 11.716 9.887 (15.61%) 2,698,139.7 26,676,510 Qualified VIII 11.715 9.885 (15.62%) 419.8 4,150 Qualified X (1.15) 10.853 9.903 (8.75%) (1) 19,411.5 192,232 Qualified X (1.25) 11.716 9.887 (15.61%) 219,944.1 2,174,587 Qualified XI 12.244 9.972 (18.56%) (8) 28,163.0 280,841 Qualified XII (0.35) 11.228 10.038 (10.60%) (5) 45,120.9 452,924 Qualified XII (0.45) 11.781 10.021 (14.94%) 3,975.5 39,838 Qualified XII (0.55) 11.773 10.004 (15.03%) 48,445.2 484,646 Qualified XII (0.60) 10.403 9.996 (3.91%) (10) 84.1 841 Qualified XII (0.65) 11.764 9.987 (15.11%) 1,781.4 17,791 Qualified XII (0.70) 11.760 9.979 (15.14%) 13,862.1 138,330 Qualified XII (0.75) 11.756 9.970 (15.19%) 119,758.2 1,193,989 Qualified XII (0.80) 11.752 9.962 (15.23%) 436,298.8 4,346,409 Qualified XII (0.85) 11.748 9.954 (15.27%) 79,363.6 789,985 Qualified XII (0.90) 12.256 9.945 (18.86%) (4) 6,406.1 63,709 Qualified XII (0.95) 11.740 9.937 (15.36%) 95,583.4 949,812 Qualified XII (1.00) 11.736 9.928 (15.41%) 549,569.2 5,456,123 Qualified XII (1.05) 11.732 9.920 (15.44%) 31,266.6 310,165 Qualified XII (1.10) 11.728 9.912 (15.48%) 24,518.3 243,025 Qualified XII (1.15) 11.724 9.903 (15.53%) 7,463.6 73,912 Qualified XII (1.20) 11.720 9.895 (15.57%) 15,555.6 153,923
S-21 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- GROWTH AND INCOME FUND: (continued): Qualified XII (1.25) $ 11.716 $ 9.887 (15.61%) 7,623.0 $ 75,369 Qualified XII (1.30) 11.712 9.878 (15.66%) 4,846.4 47,873 Qualified XII (1.35) 11.204 9.870 (11.91%) (2) 32.3 319 Qualified XII (1.40) 11.707 9.862 (15.76%) (2) 5,050.8 49,811 Qualified XII (1.50) 11.695 9.845 (15.82%) 3,046.2 29,990 Qualified XIII 11.710 9.911 (15.36%) 31,226.2 309,483 Qualified XV 11.710 9.911 (15.36%) 3,109.4 30,817 Qualified XVI 11.695 9.845 (15.82%) 38,373.7 377,789 Qualified XVII 11.721 9.891 (15.61%) 13,778.0 136,278 Qualified XVIII 11.721 9.891 (15.61%) 18,441.6 182,406 Qualified XXI 11.721 9.935 (15.24%) 11,950.2 118,725 Qualified XXII 11.815 9.935 (15.91%) (2) 8,936.0 88,779 Qualified XXIV 11.807 9.935 (15.86%) (6) 15,235.4 151,364 Qualified XXV 11.715 9.898 (15.51%) (9) 27,070.1 267,940 Qualified XXVI 11.140 9.894 (11.18%) (9) 8,539.6 84,491 Qualified XXVII 9.776 7.842 (19.78%) (8) 380,759.2 2,985,914 - -------------------------------------------------------------------------------------------------------------------------- GROWTH FUND: Qualified V 12.055 9.452 (21.59%) 22.5 213 Qualified VI 12.069 9.477 (21.48%) 1,068,220.5 10,123,525 Qualified X (1.15) 12.077 9.493 (21.40%) 1,148.8 10,906 Qualified X (1.25) 12.069 9.477 (21.48%) 141,426.9 1,340,303 Qualified XII (0.35) 11.987 9.622 (19.73%) (5) 22,505.3 216,546 Qualified XII (0.55) 12.127 9.590 (20.92%) 12,591.8 120,755 Qualified XII (0.65) 12.119 9.574 (21.00%) 3,182.4 30,468 Qualified XII (0.70) 12.115 9.566 (21.04%) 4,288.6 41,025 Qualified XII (0.75) 12.111 9.558 (21.08%) 40,078.2 383,067 Qualified XII (0.80) 12.106 9.550 (21.11%) 254,281.8 2,428,391 Qualified XII (0.85) 12.102 9.542 (21.15%) 49,755.8 474,770 Qualified XII (0.90) 12.098 9.533 (21.20%) 26,082.3 248,643 Qualified XII (0.95) 12.094 9.525 (21.24%) 85,385.1 813,293 Qualified XII (1.00) 12.090 9.517 (21.28%) 147,926.0 1,407,812 Qualified XII (1.05) 12.085 9.509 (21.32%) 15,027.2 142,894 Qualified XII (1.10) 12.081 9.501 (21.36%) 2,851.0 27,087 Qualified XII (1.15) 12.077 9.493 (21.40%) 4,197.0 39,842 Qualified XII (1.20) 12.073 9.485 (21.44%) 6,981.9 66,223 Qualified XII (1.25) 12.069 9.477 (21.48%) 7,191.6 68,155 Qualified XII (1.30) 12.064 9.469 (21.51%) 960.9 9,099 Qualified XII (1.35) 12.477 9.461 (24.17%) (2) 66.8 632 Qualified XII (1.40) 12.056 9.453 (21.59%) 2,381.9 22,516 Qualified XII (1.50) 12.048 9.437 (21.67%) 343.0 3,237 Qualified XIII 12.098 9.529 (21.23%) 9,403.0 89,601 Qualified XV 12.098 9.529 (21.23%) 2,846.7 27,126 Qualified XVI 12.048 9.437 (21.67%) 25,090.6 236,780 Qualified XVII 14.498 9.481 (34.60%) (3) 7,620.8 72,253 Qualified XVIII 12.306 9.481 (22.96%) (1) 5,707.8 54,116 Qualified XXI 12.110 9.552 (21.12%) 7,102.5 67,843 Qualified XXII 12.655 9.552 (24.52%) (2) 18,076.0 172,662 Qualified XXIV 12.619 9.524 (24.53%) (6) 9,125.6 86,912 Qualified XXV 12.051 9.489 (21.26%) (9) 16,052.6 152,323 Qualified XXVI 11.267 9.485 (15.82%) (9) 2,054.6 19,488 Qualified XXVII 9.482 7.162 (24.47%) (8) 61,814.6 442,716 - -------------------------------------------------------------------------------------------------------------------------- VALUE FUND: Qualified III 11.650 9.942 (14.66%) (6) 18.1 180 Qualified V 11.493 9.673 (15.84%) 20.2 195 Qualified VI 11.506 9.699 (15.70%) 862,415.6 8,364,569 Qualified X (1.15) 11.514 9.715 (15.62%) 1,771.0 17,205 Qualified X (1.25) 11.506 9.699 (15.70%) 124,166.7 1,204,293 Qualified XII (0.35) 11.026 9.848 (10.68%) (5) 4,590.9 45,211 Qualified XII (0.45) 11.570 9.831 (15.03%) 45,266.5 445,015 Qualified XII (0.55) 11.562 9.814 (15.12%) 3,280.3 32,193 Qualified XII (0.60) 9.839 9.806 (0.34%) (10) 5.0 49
S-22 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- VALUE FUND: (continued): Qualified XII (0.65) $ 11.554 $ 9.798 (15.20%) 2,324.8 $ 22,778 Qualified XII (0.70) 11.550 9.790 (15.24%) 90,763.7 888,577 Qualified XII (0.75) 11.546 9.781 (15.29%) 44,777.7 437,971 Qualified XII (0.80) 11.542 9.773 (15.33%) 379,305.3 3,706,951 Qualified XII (0.85) 11.538 9.765 (15.37%) 33,891.2 330,948 Qualified XII (0.90) 11.534 9.757 (15.41%) 8,901.6 86,853 Qualified XII (0.95) 11.530 9.748 (15.46%) 31,332.1 305,425 Qualified XII (1.00) 11.526 9.740 (15.50%) 79,423.0 773,580 Qualified XII (1.05) 11.522 9.732 (15.54%) 6,439.5 62,669 Qualified XII (1.10) 11.518 9.724 (15.58%) 14,059.6 136,716 Qualified XII (1.15) 11.514 9.715 (15.62%) 3,149.2 30,594 Qualified XII (1.20) 11.510 9.707 (15.66%) 2,497.1 24,239 Qualified XII (1.25) 10.796 9.699 (10.16%) (1) 16,464.1 159,685 Qualified XII (1.30) 11.502 9.691 (15.75%) 1,328.9 12,878 Qualified XII (1.35) 11.307 9.683 (14.36%) (2) 164.9 1,597 Qualified XII (1.40) 11.494 9.675 (15.83%) 1,954.0 18,905 Qualified XII (1.50) 11.486 9.658 (15.92%) 587.5 5,674 Qualified XIII 11.495 9.719 (15.45%) 14,972.0 145,513 Qualified XV 11.495 9.719 (15.45%) 4,686.7 45,550 Qualified XVI 11.486 9.658 (15.92%) 9,996.6 96,547 Qualified XVII 11.511 9.703 (15.71%) 24,287.5 235,662 Qualified XVIII 11.511 9.703 (15.71%) 5,265.5 51,091 Qualified XXI 11.036 9.742 (11.73%) (1) 18,115.3 176,479 Qualified XXII 11.754 9.742 (17.12%) (2) 13,458.7 131,115 Qualified XXIV 11.438 9.746 (14.79%) (6) 27,162.2 264,723 Qualified XXV 10.611 9.711 (8.48%) (9) 2,803.5 27,225 Qualified XXVI 10.085 9.707 (3.75%) (9) 113.9 1,106 Qualified XXVII 9.503 8.315 (12.50%) (8) 23,718.9 197,223 - -------------------------------------------------------------------------------------------------------------------------- CALVERT SOCIAL BALANCED PORTFOLIO: Qualified III 30.131 28.827 (4.33%) 17,778.8 512,509 Qualified V 23.131 22.095 (4.48%) 1,652.6 36,514 Qualified VI 22.705 21.722 (4.33%) 1,065,387.5 23,142,345 Qualified VIII 20.623 19.729 (4.33%) 6,611.6 130,440 Qualified X (1.25) 11.637 11.133 (4.33%) 23,976.9 266,935 Qualified XI 22.998 22.125 (3.80%) 68,632.7 1,518,499 Qualified XII (0.35) 11.718 11.574 (1.23%) (5) 118,983.5 1,377,115 Qualified XII (0.40) 16.740 16.152 (3.51%) 332.0 5,362 Qualified XII (0.45) 11.970 11.543 (3.57%) 43,992.3 507,803 Qualified XII (0.55) 11.951 11.513 (3.66%) 11,184.1 128,762 Qualified XII (0.65) 11.932 11.483 (3.76%) 4,099.1 47,070 Qualified XII (0.70) 11.922 11.468 (3.81%) 21,801.4 250,019 Qualified XII (0.75) 11.912 11.453 (3.85%) 64,676.4 740,739 Qualified XII (0.80) 12.530 12.041 (3.90%) 147,700.9 1,778,467 Qualified XII (0.85) 16.697 16.038 (3.95%) 203,730.4 3,267,428 Qualified XII (0.90) 12.414 11.918 (4.00%) 4,895.1 58,340 Qualified XII (0.95) 16.636 15.964 (4.04%) 68,101.9 1,087,178 Qualified XII (1.00) 16.606 15.927 (4.09%) 171,211.0 2,726,878 Qualified XII (1.05) 16.576 15.890 (4.14%) 36,607.0 581,685 Qualified XII (1.10) 16.546 15.853 (4.19%) 15,619.4 247,615 Qualified XII (1.15) 16.515 15.816 (4.23%) 23,264.9 367,957 Qualified XII (1.20) 16.485 15.780 (4.28%) 8,798.8 138,845 Qualified XII (1.25) 16.455 15.743 (4.33%) 998.9 15,726 Qualified XII (1.30) 16.426 15.707 (4.38%) 1,433.4 22,514 Qualified XII (1.35) 15.730 15.670 (0.38%) (2) 169.8 2,661 Qualified XII (1.40) 16.366 15.634 (4.47%) 1,624.0 25,389 Qualified XII (1.50) 16.306 15.562 (4.56%) 148.4 2,310 Qualified XIII 22.951 22.024 (4.04%) 16,335.7 359,778 Qualified XV 22.913 21.987 (4.04%) 5,812.2 127,793 Qualified XVI 22.550 21.521 (4.56%) 28,518.0 613,735 Qualified XVII 22.705 21.722 (4.33%) 968.5 21,037 Qualified XVIII 11.637 11.133 (4.33%) 9,411.1 104,774
S-23 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- CALVERT SOCIAL BALANCED PORTFOLIO: (continued): Qualified XXI $ 22.935 $ 22.040 (3.90%) 3,041.1 $ 67,026 Qualified XXII 22.973 22.077 (3.90%) 3,627.1 80,075 Qualified XXIV 16.973 15.937 (6.10%) (6) 20,993.8 334,578 Qualified XXV 23.113 21.748 (5.91%) (9) 5,527.9 120,221 Qualified XXVI 22.610 21.739 (3.85%) (9) 227.2 4,940 Qualified XXVII 29.380 28.864 (1.76%) (2) 708,860.6 20,460,551 Qualified XXVIII 29.380 28.827 (1.88%) (2) 68,715.2 1,980,852 - -------------------------------------------------------------------------------------------------------------------------- FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO: Qualified III 19.201 20.561 7.08% 876.3 18,017 Qualified V 18.143 19.397 6.91% 426.5 8,272 Qualified VI 18.334 19.632 7.08% 4,252,751.6 83,490,017 Qualified VIII 18.265 19.557 7.07% 4,267.5 83,460 Qualified X (1.15) 23.071 24.729 7.19% 84,690.9 2,094,321 Qualified X (1.25) 22.942 24.567 7.08% 946,481.1 23,252,200 Qualified XI 18.570 19.996 7.68% 177,576.9 3,550,827 Qualified XII (0.35) 10.595 11.419 7.78% (5) 187,521.8 2,141,312 Qualified XII (0.40) 16.089 17.374 7.99% 730.5 12,691 Qualified XII (0.45) 10.552 11.389 7.93% 162,442.3 1,850,055 Qualified XII (0.55) 10.535 11.360 7.83% 55,910.6 635,144 Qualified XII (0.65) 10.518 11.330 7.72% 107,996.9 1,223,605 Qualified XII (0.70) 10.509 11.315 7.67% 51,473.4 582,422 Qualified XII (0.75) 10.501 11.300 7.61% 227,966.9 2,576,026 Qualified XII (0.80) 11.445 12.310 7.56% 710,549.0 8,746,858 Qualified XII (0.85) 16.047 17.252 7.51% 286,746.7 4,946,954 Qualified XII (0.90) 11.245 12.083 7.45% 11,253.7 135,979 Qualified XII (0.95) 15.989 17.172 7.40% 306,173.8 5,257,617 Qualified XII (1.00) 15.960 17.132 7.34% 295,865.9 5,068,775 Qualified XII (1.05) 15.931 17.092 7.29% 60,783.4 1,038,910 Qualified XII (1.10) 15.902 17.053 7.24% 31,932.0 544,536 Qualified XII (1.15) 15.873 17.013 7.18% 36,839.7 626,754 Qualified XII (1.20) 15.844 16.974 7.13% 30,503.4 517,764 Qualified XII (1.25) 15.815 16.935 7.08% 15,146.4 256,505 Qualified XII (1.30) 15.786 16.896 7.03% 6,031.0 101,899 Qualified XII (1.35) 13.910 16.856 21.18% (2) 78.8 1,329 Qualified XII (1.40) 15.729 16.817 6.92% 1,912.8 32,168 Qualified XII (1.50) 15.672 16.740 6.81% 4,921.7 82,389 Qualified XIII 18.533 19.904 7.40% 20,687.8 411,770 Qualified XV 18.502 19.871 7.40% 13,788.9 274,000 Qualified XVI 18.209 19.450 6.82% 118,945.4 2,313,488 Qualified XVII 18.334 19.632 7.08% 33,028.7 648,419 Qualified XVIII 22.942 24.567 7.08% 15,396.9 378,255 Qualified XXI 18.519 19.919 7.56% 25,298.2 503,914 Qualified XXII 18.550 19.952 7.56% 39,260.8 783,331 Qualified XXIV 15.457 17.143 10.91% (6) 74,096.1 1,270,230 Qualified XXV 19.049 19.655 3.18% (9) 33,296.9 654,451 Qualified XXVI 18.652 19.647 5.33% (9) 15,602.7 306,547 Qualified XXVII 17.293 20.588 19.05% (2) 1,521,270.8 31,319,923 Qualified XXVIII 17.293 20.561 18.90% (2) 396,947.7 8,161,642 - -------------------------------------------------------------------------------------------------------------------------- GROWTH PORTFOLIO: Qualified I 24.603 21.644 (12.03%) 2,653.4 57,431 Qualified III 26.340 23.158 (12.08%) 163.2 3,780 Qualified V 26.134 22.940 (12.22%) 2,104.7 48,282 Qualified VI 25.999 22.858 (12.08%) 10,298,746.9 235,408,759 Qualified VIII 26.310 23.130 (12.09%) 8,221.8 190,170 Qualified X (1.15) 36.363 32.002 (11.99%) 66,459.4 2,126,833 Qualified X (1.25) 36.160 31.791 (12.08%) 1,500,686.0 47,708,308 Qualified XI 26.334 23.282 (11.59%) 615,609.2 14,332,613 Qualified XII (0.35) 16.211 14.798 (8.72%) (5) 564,611.6 8,355,123 Qualified XII (0.40) 23.989 21.270 (11.33%) 1,788.2 38,035 Qualified XII (0.45) 16.655 14.760 (11.38%) 130,483.0 1,925,929
S-24 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- GROWTH PORTFOLIO: (continued): Qualified XII (0.55) $ 16.628 $ 14.721 (11.47%) 151,952.1 $ 2,236,887 Qualified XII (0.60) 15.283 14.702 (3.80%) (10) 10.7 157 Qualified XII (0.65) 16.601 14.683 (11.55%) 331,653.4 4,869,667 Qualified XII (0.70) 16.588 14.664 (11.60%) 117,753.2 1,726,733 Qualified XII (0.75) 16.574 14.645 (11.64%) 581,764.1 8,519,935 Qualified XII (0.80) 18.143 16.023 (11.68%) 2,257,499.3 36,171,912 Qualified XII (0.85) 23.927 21.120 (11.73%) 596,022.3 12,587,992 Qualified XII (0.90) 17.677 15.596 (11.77%) 42,684.0 665,700 Qualified XII (0.95) 23.840 21.023 (11.82%) 573,111.4 12,048,520 Qualified XII (1.00) 23.797 20.974 (11.86%) 1,259,926.0 26,425,687 Qualified XII (1.05) 23.754 20.926 (11.91%) 122,516.5 2,563,781 Qualified XII (1.10) 23.710 20.877 (11.95%) 67,647.3 1,412,273 Qualified XII (1.15) 23.667 20.829 (11.99%) 80,859.3 1,684,218 Qualified XII (1.20) 23.624 20.781 (12.03%) 71,710.4 1,490,213 Qualified XII (1.25) 23.581 20.733 (12.08%) 33,790.3 700,575 Qualified XII (1.30) 23.538 20.684 (12.13%) 23,713.2 490,484 Qualified XII (1.35) 23.491 20.637 (12.15%) (2) 569.1 11,745 Qualified XII (1.40) 23.453 20.589 (12.21%) 10,223.7 210,496 Qualified XII (1.50) 23.368 20.494 (12.30%) 5,157.2 105,691 Qualified XIII 26.281 23.175 (11.82%) 87,549.3 2,028,955 Qualified XV 26.237 23.137 (11.82%) 63,541.7 1,470,165 Qualified XVI 25.822 22.646 (12.30%) 211,306.4 4,785,244 Qualified XVII 25.999 22.858 (12.08%) 62,728.5 1,433,847 Qualified XVIII 36.160 31.791 (12.08%) 75,763.8 2,408,607 Qualified XXI 26.262 23.193 (11.69%) 103,624.8 2,403,369 Qualified XXII 26.305 23.231 (11.69%) 92,854.6 2,157,105 Qualified XXIV 24.889 20.988 (15.67%) (6) 158,991.3 3,336,909 Qualified XXV 25.914 22.885 (11.69%) (9) 183,299.3 4,194,804 Qualified XXVI 25.026 22.876 (8.59%) (9) 23,381.1 534,867 - -------------------------------------------------------------------------------------------------------------------------- HIGH INCOME PORTFOLIO: Qualified XXVII 9.522 7.389 (22.40%) (2) 159,262.8 1,176,793 Qualified XXVIII 9.523 7.379 (22.51%) (2) 172,513.1 1,272,975 - -------------------------------------------------------------------------------------------------------------------------- OVERSEAS PORTFOLIO: Qualified V 19.108 15.241 (20.24%) 74.3 1,133 Qualified VI 19.243 15.374 (20.11%) 655,335.3 10,075,126 Qualified VIII 19.237 15.367 (20.12%) 357.1 5,488 Qualified X (1.15) 19.936 15.943 (20.03%) 9,198.5 146,652 Qualified X (1.25) 19.825 15.838 (20.11%) 146,480.0 2,319,951 Qualified XI 19.492 15.659 (19.66%) 24,251.5 379,754 Qualified XII (0.35) 12.131 10.828 (10.74%) (5) 51,138.4 553,727 Qualified XII (0.40) 18.709 15.074 (19.43%) 284.1 4,283 Qualified XII (0.45) 13.410 10.799 (19.47%) 11,727.5 126,645 Qualified XII (0.55) 13.389 10.771 (19.55%) 8,239.0 88,742 Qualified XII (0.65) 13.367 10.743 (19.63%) 17,888.5 192,176 Qualified XII (0.70) 13.356 10.729 (19.67%) 12,203.7 130,934 Qualified XII (0.75) 13.346 10.715 (19.71%) 20,800.7 222,880 Qualified XII (0.80) 14.900 11.957 (19.75%) 42,155.7 504,056 Qualified XII (0.85) 18.661 14.968 (19.79%) 25,576.2 382,825 Qualified XII (0.90) 14.905 11.949 (19.83%) 4,435.9 53,005 Qualified XII (0.95) 18.593 14.898 (19.87%) 25,963.6 386,805 Qualified XII (1.00) 18.559 14.864 (19.91%) 44,395.7 659,897 Qualified XII (1.05) 18.525 14.830 (19.95%) 7,533.4 111,720 Qualified XII (1.10) 18.492 14.795 (19.99%) 8,320.1 123,096 Qualified XII (1.15) 18.458 14.761 (20.03%) 7,202.0 106,308 Qualified XII (1.20) 18.424 14.727 (20.07%) 3,776.5 55,616 Qualified XII (1.25) 18.391 14.693 (20.11%) 8,004.6 117,612 Qualified XII (1.30) 18.357 14.659 (20.14%) 2,480.9 36,367 Qualified XII (1.35) 17.843 14.625 (18.04%) (2) 14.4 210 Qualified XII (1.40) 18.291 14.591 (20.23%) 626.4 9,140 Qualified XII (1.50) 18.224 14.523 (20.31%) 27.6 401 Qualified XIII 19.452 15.587 (19.87%) 11,388.7 177,515
S-25 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- OVERSEAS PORTFOLIO: (continued): Qualified XV $ 19.420 $ 15.561 (19.87%) 4,698.6 $ 73,115 Qualified XVI 19.112 15.231 (20.31%) 13,970.3 212,782 Qualified XVII 19.243 15.374 (20.11%) 2,770.8 42,599 Qualified XVIII 19.825 15.838 (20.11%) 1,464.1 23,189 Qualified XXI 19.438 15.599 (19.75%) 9,133.8 142,478 Qualified XXII 19.470 15.625 (19.75%) 12,807.8 200,122 Qualified XXIV 17.531 14.874 (15.16%) (6) 21,266.9 316,324 Qualified XXV 16.962 15.392 (9.26%) (9) 8,636.8 132,938 Qualified XXVI 16.449 15.386 (6.46%) (9) 1,668.9 25,678 Qualified XXVII 9.535 8.471 (11.16%) (8) 5,929.6 50,230 - -------------------------------------------------------------------------------------------------------------------------- FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND II: ASSET MANAGER PORTFOLIO: Qualified XXVII 17.740 17.427 (1.76%) (2) 1,239,976.3 21,609,067 Qualified XXVIII 17.740 17.405 (1.89%) (2) 121,872.2 2,121,186 - -------------------------------------------------------------------------------------------------------------------------- CONTRAFUND PORTFOLIO: Qualified III 27.214 25.097 (7.78%) 1,720.8 43,187 Qualified V 24.046 22.141 (7.92%) 2,667.1 59,053 Qualified VI 24.053 22.182 (7.78%) 8,555,653.0 189,781,495 Qualified VIII 24.208 22.324 (7.78%) 4,012.1 89,567 Qualified X (1.15) 27.150 25.063 (7.69%) 16,463.7 412,630 Qualified X (1.25) 27.024 24.923 (7.77%) 805,532.0 20,076,274 Qualified XI 24.363 22.594 (7.26%) 213,248.6 4,818,138 Qualified XII (0.35) 13.485 13.229 (1.90%) (5) 375,277.7 4,964,549 Qualified XII (0.40) 22.045 20.503 (6.99%) 2,260.6 46,349 Qualified XII (0.45) 14.194 13.195 (7.04%) 367,939.4 4,854,960 Qualified XII (0.55) 14.171 13.160 (7.13%) 123,644.0 1,627,155 Qualified XII (0.65) 14.148 13.126 (7.22%) 277,303.1 3,639,880 Qualified XII (0.70) 14.137 13.109 (7.27%) 89,345.3 1,171,227 Qualified XII (0.75) 14.126 13.092 (7.32%) 568,291.2 7,440,068 Qualified XII (0.80) 15.518 14.375 (7.37%) 1,662,214.4 23,894,332 Qualified XII (0.85) 21.988 20.359 (7.41%) 243,716.1 4,961,817 Qualified XII (0.90) 15.138 14.009 (7.46%) 32,744.0 458,710 Qualified XII (0.95) 21.908 20.265 (7.50%) 427,085.4 8,654,885 Qualified XII (1.00) 21.868 20.218 (7.55%) 1,562,971.2 31,600,152 Qualified XII (1.05) 21.828 20.171 (7.59%) 141,388.4 2,851,946 Qualified XII (1.10) 21.789 20.124 (7.64%) 56,051.0 1,127,971 Qualified XII (1.15) 21.749 20.078 (7.68%) 57,856.8 1,161,648 Qualified XII (1.20) 21.710 20.031 (7.73%) 35,453.7 710,174 Qualified XII (1.25) 21.670 19.985 (7.78%) 18,639.8 372,517 Qualified XII (1.30) 21.631 19.938 (7.83%) 10,383.4 207,025 Qualified XII (1.35) 20.986 19.892 (5.21%) (2) 110.1 2,191 Qualified XII (1.40) 21.552 19.846 (7.92%) 9,052.2 179,649 Qualified XII (1.50) 21.474 19.755 (8.01%) 11,467.8 226,547 Qualified XIII 24.314 22.490 (7.50%) 74,362.5 1,672,412 Qualified XV 24.274 22.453 (7.50%) 39,966.4 897,365 Qualified XVI 23.889 21.977 (8.00%) 157,050.7 3,451,504 Qualified XVII 24.053 22.182 (7.78%) 34,733.7 770,463 Qualified XVIII 27.024 24.923 (7.77%) 19,367.4 482,693 Qualified XXI 24.296 22.507 (7.36%) 76,554.5 1,723,013 Qualified XXII 24.336 22.544 (7.36%) 117,566.6 2,650,422 Qualified XXIV 21.474 20.231 (5.79%) (6) 139,446.2 2,821,137 Qualified XXV 23.513 22.209 (5.55%) (9) 77,273.8 1,716,173 Qualified XXVI 22.768 22.199 (2.50%) (9) 7,665.8 170,172 Qualified XXVII 27.021 25.130 (7.00%) (2) 3,098,834.5 77,873,712 Qualified XXVIII 27.021 25.097 (7.12%) (2) 447,796.5 11,238,348 - -------------------------------------------------------------------------------------------------------------------------- INDEX 500 PORTFOLIO: Qualified XXVII 26.558 25.246 (4.94%) (2) 3,615,258.7 91,270,821 Qualified XXVIII 26.559 25.213 (5.07%) (2) 530,641.1 13,379,054 - --------------------------------------------------------------------------------------------------------------------------
S-26 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- JANUS ASPEN SERIES: AGGRESSIVE GROWTH PORTFOLIO: Qualified I $ 32.516 $ 21.908 (32.62%) 2,964.1 $ 64,937 Qualified III 53.644 36.122 (32.66%) 82,204.1 2,969,378 Qualified V 46.252 31.095 (32.77%) 4,673.7 145,330 Qualified VI 46.640 31.406 (32.66%) 14,665,250.9 460,576,868 Qualified VIII 46.621 31.390 (32.67%) 8,849.9 277,797 Qualified X (1.15) 45.235 30.490 (32.60%) 58,337.9 1,778,723 Qualified X (1.25) 45.025 30.318 (32.66%) 1,454,286.2 44,091,048 Qualified XI 47.242 31.989 (32.29%) 846,146.2 27,067,370 Qualified XII (0.35) 23.888 18.526 (22.45%) (5) 913,545.7 16,924,348 Qualified XII (0.40) 31.711 21.535 (32.09%) 5,601.1 120,620 Qualified XII (0.45) 27.222 18.477 (32.12%) 219,159.2 4,049,405 Qualified XII (0.55) 27.178 18.429 (32.19%) 169,466.1 3,123,090 Qualified XII (0.60) 19.660 18.405 (6.38%) (10) 5.5 102 Qualified XII (0.65) 27.135 18.381 (32.26%) 259,474.9 4,769,408 Qualified XII (0.70) 27.113 18.357 (32.29%) 212,479.7 3,900,489 Qualified XII (0.75) 27.091 18.333 (32.33%) 769,624.8 14,109,531 Qualified XII (0.80) 29.195 19.747 (32.36%) 3,760,656.3 74,261,680 Qualified XII (0.85) 31.629 21.383 (32.39%) 758,936.6 16,228,342 Qualified XII (0.90) 28.662 19.367 (32.43%) 48,045.7 930,501 Qualified XII (0.95) 31.514 21.284 (32.46%) 910,896.1 19,387,513 Qualified XII (1.00) 31.457 21.235 (32.50%) 2,444,196.0 51,902,502 Qualified XII (1.05) 31.400 21.186 (32.53%) 210,615.7 4,462,105 Qualified XII (1.10) 31.343 21.137 (32.56%) 93,122.1 1,968,322 Qualified XII (1.15) 31.286 21.088 (32.60%) 111,951.1 2,360,825 Qualified XII (1.20) 31.229 21.039 (32.63%) 85,842.0 1,806,030 Qualified XII (1.25) 31.172 20.990 (32.66%) 41,374.5 868,451 Qualified XII (1.30) 31.116 20.942 (32.70%) 25,984.8 544,174 Qualified XII (1.35) 30.334 20.893 (31.12%) (1) 1,476.2 30,843 Qualified XII (1.40) 31.003 20.845 (32.76%) 18,684.9 389,486 Qualified XII (1.50) 30.890 20.748 (32.83%) 12,540.7 260,194 Qualified XIII 47.147 31.842 (32.46%) 137,401.3 4,375,133 Qualified XV 47.068 31.789 (32.46%) 118,868.5 3,778,710 Qualified XVI 46.323 31.115 (32.83%) 230,520.9 7,172,658 Qualified XVII 46.640 31.406 (32.66%) 74,585.6 2,342,436 Qualified XVIII 45.025 30.318 (32.66%) 76,249.2 2,311,722 Qualified XXI 47.112 31.866 (32.36%) 299,256.9 9,536,119 Qualified XXII 47.190 31.919 (32.36%) 171,175.5 5,463,751 Qualified XXIV 31.793 21.249 (33.16%) (6) 331,173.0 7,037,095 Qualified XXV 43.951 31.443 (28.46%) (9) 312,954.2 9,840,220 Qualified XXVI 40.992 31.430 (23.33%) (9) 30,076.3 945,297 Qualified XXVII 61.680 36.169 (41.36%) (2) 3,203,706.1 115,874,846 Qualified XXVIII 61.681 36.122 (41.44%) (2) 613,084.7 22,145,845 - -------------------------------------------------------------------------------------------------------------------------- BALANCED PORTFOLIO: Qualified III 24.929 24.071 (3.44%) 591.5 14,239 Qualified V 24.747 23.857 (3.60%) 344.0 8,206 Qualified VI 24.922 24.064 (3.44%) 6,649,999.5 160,025,589 Qualified VIII 24.913 24.054 (3.45%) 3,786.2 91,074 Qualified X (1.15) 25.978 25.109 (3.35%) 85,788.8 2,154,070 Qualified X (1.25) 25.859 24.969 (3.44%) 960,790.1 23,989,968 Qualified XI 25.243 24.511 (2.90%) 354,240.4 8,682,786 Qualified XII (0.35) 14.368 14.550 1.27% (5) 285,116.5 4,148,445 Qualified XII (0.40) 22.571 21.980 (2.62%) 730.5 16,057 Qualified XII (0.45) 14.910 14.512 (2.67%) 415,782.5 6,033,835 Qualified XII (0.55) 14.886 14.474 (2.77%) 153,748.7 2,225,359 Qualified XII (0.60) 14.284 14.455 1.20% (10) 55.1 797 Qualified XII (0.65) 14.862 14.436 (2.87%) 265,161.2 3,827,867 Qualified XII (0.70) 14.850 14.418 (2.91%) 66,358.4 956,755 Qualified XII (0.75) 14.838 14.399 (2.96%) 414,075.2 5,962,269 Qualified XII (0.80) 16.022 15.540 (3.01%) 1,015,206.9 15,776,315 Qualified XII (0.85) 22.513 21.825 (3.06%) 157,518.8 3,437,848
S-27 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- BALANCED PORTFOLIO: (continued): Qualified XII (0.90) $ 15.690 $ 15.203 (3.10%) 30,780.7 $ 467,959 Qualified XII (0.95) 22.431 21.724 (3.15%) 336,660.9 7,313,622 Qualified XII (1.00) 22.390 21.674 (3.20%) 1,132,980.9 24,556,227 Qualified XII (1.05) 22.350 21.623 (3.25%) 105,284.7 2,276,571 Qualified XII (1.10) 22.309 21.573 (3.30%) 43,940.9 947,937 Qualified XII (1.15) 22.269 21.523 (3.35%) 75,247.5 1,619,552 Qualified XII (1.20) 22.228 21.474 (3.39%) 32,902.7 706,553 Qualified XII (1.25) 22.188 21.424 (3.44%) 18,356.1 393,261 Qualified XII (1.30) 22.147 21.374 (3.49%) 11,435.2 244,416 Qualified XII (1.35) 21.906 21.325 (2.65%) (2) 373.6 7,967 Qualified XII (1.40) 22.067 21.276 (3.58%) 23,489.3 499,758 Qualified XII (1.50) 21.987 21.177 (3.68%) 11,524.9 244,063 Qualified XIII 25.192 24.398 (3.15%) 65,152.8 1,589,597 Qualified XV 25.151 24.358 (3.15%) 35,278.2 859,306 Qualified XVI 24.752 23.841 (3.68%) 149,658.8 3,568,016 Qualified XVII 24.922 24.064 (3.44%) 41,857.8 1,007,266 Qualified XVIII 25.859 24.969 (3.44%) 64,590.8 1,612,768 Qualified XXI 25.174 24.417 (3.01%) 101,912.8 2,488,404 Qualified XXII 25.216 24.457 (3.01%) 57,540.5 1,407,267 Qualified XXIV 22.439 21.688 (3.35%) (6) 90,306.5 1,958,568 Qualified XXV 24.658 24.093 (2.29%) (9) 143,009.0 3,445,517 Qualified XXVI 24.180 24.083 (0.40%) (9) 6,885.3 165,819 Qualified XXVII 9.909 9.491 (4.22%) (8) 139,295.1 1,322,050 - -------------------------------------------------------------------------------------------------------------------------- FLEXIBLE INCOME PORTFOLIO: Qualified III 15.601 16.372 4.94% 2,253.7 36,897 Qualified V 15.411 16.147 4.78% 164.4 2,655 Qualified VI 15.540 16.308 4.94% 1,096,264.5 17,877,880 Qualified VIII 15.534 16.300 4.93% 201.0 3,276 Qualified X (1.25) 10.455 10.971 4.94% 88,906.4 975,392 Qualified XI 15.741 16.611 5.53% 55,992.8 930,097 Qualified XII (0.35) 10.485 11.206 6.88% (5) 60,507.3 678,045 Qualified XII (0.40) 13.210 13.980 5.83% 643.0 8,989 Qualified XII (0.45) 10.566 11.177 5.78% 69,754.7 779,648 Qualified XII (0.55) 10.549 11.148 5.68% 28,827.5 321,369 Qualified XII (0.65) 10.532 11.119 5.57% 85,713.8 953,052 Qualified XII (0.70) 10.523 11.104 5.52% 99,634.9 1,106,346 Qualified XII (0.75) 10.515 11.090 5.47% 21,441.7 237,788 Qualified XII (0.80) 10.727 11.308 5.42% 289,585.0 3,274,627 Qualified XII (0.85) 13.175 13.881 5.36% 53,424.8 741,590 Qualified XII (0.90) 10.712 11.280 5.30% 4,152.0 46,834 Qualified XII (0.95) 13.127 13.817 5.26% 58,109.6 802,901 Qualified XII (1.00) 13.104 13.785 5.20% 435,194.6 5,999,158 Qualified XII (1.05) 13.080 13.753 5.15% 31,503.3 433,265 Qualified XII (1.10) 13.056 13.722 5.10% 5,814.5 79,787 Qualified XII (1.15) 13.032 13.690 5.05% 7,769.6 106,366 Qualified XII (1.20) 13.008 13.658 5.00% 9,741.5 133,049 Qualified XII (1.25) 12.985 13.626 4.94% 6,996.6 95,336 Qualified XII (1.30) 12.961 13.595 4.89% 1,971.8 26,806 Qualified XII (1.35) 13.025 13.563 4.13% (2) 90.2 1,223 Qualified XII (1.40) 12.914 13.532 4.79% 5,876.3 79,518 Qualified XII (1.50) 12.867 13.469 4.68% 636.7 8,576 Qualified XIII 15.709 16.535 5.26% 5,661.0 93,605 Qualified XV 15.683 16.507 5.25% 5,348.6 88,290 Qualified XVI 15.434 16.157 4.68% 14,366.9 232,126 Qualified XVII 15.540 16.308 4.94% 492.8 8,036 Qualified XXI 15.698 16.547 5.41% 9,312.3 154,090 Qualified XXII 15.724 16.575 5.41% 8,756.9 145,145 Qualified XXIV 13.199 13.794 4.51% (6) 21,143.7 291,656 Qualified XXV 15.851 16.328 3.01% (9) 7,489.3 122,285 Qualified XXVI 15.890 16.321 2.71% (9) 1,366.2 22,297 - --------------------------------------------------------------------------------------------------------------------------
S-28 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- GROWTH PORTFOLIO: Qualified I $ 24.151 $ 21.330 (11.68%) (9) 48.4 $ 1,032 Qualified III 32.036 27.035 (15.61%) 1,533.9 41,470 Qualified V 29.183 24.589 (15.74%) 1,558.8 38,330 Qualified VI 29.366 24.782 (15.61%) 6,820,739.0 169,031,553 Qualified VIII 29.380 24.792 (15.62%) 2,570.3 63,722 Qualified X (1.15) 31.550 26.652 (15.52%) 54,278.5 1,446,631 Qualified X (1.25) 31.406 26.504 (15.61%) 955,551.5 25,325,937 Qualified XI 29.744 25.242 (15.14%) 423,179.3 10,681,892 Qualified XII (0.35) 16.099 14.289 (11.24%) (5) 369,847.4 5,284,750 Qualified XII (0.40) 25.537 21.734 (14.89%) 1,684.4 36,608 Qualified XII (0.45) 16.753 14.251 (14.93%) 357,565.4 5,095,664 Qualified XII (0.55) 16.726 14.214 (15.02%) 95,334.5 1,355,084 Qualified XII (0.65) 16.699 14.177 (15.10%) 44,539.5 631,437 Qualified XII (0.70) 16.686 14.159 (15.14%) 276,665.0 3,917,300 Qualified XII (0.75) 16.673 14.140 (15.19%) 466,385.6 6,594,693 Qualified XII (0.80) 18.335 15.543 (15.23%) 1,984,175.6 30,840,042 Qualified XII (0.85) 25.471 21.581 (15.27%) 569,518.7 12,290,782 Qualified XII (0.90) 17.786 15.062 (15.32%) 20,667.2 311,290 Qualified XII (0.95) 25.378 21.481 (15.36%) 341,721.3 7,340,516 Qualified XII (1.00) 25.332 21.431 (15.40%) 714,656.0 15,315,792 Qualified XII (1.05) 25.286 21.382 (15.44%) 85,881.9 1,836,327 Qualified XII (1.10) 25.240 21.332 (15.48%) 37,391.9 797,645 Qualified XII (1.15) 25.194 21.283 (15.52%) 42,066.2 895,295 Qualified XII (1.20) 25.148 21.234 (15.56%) 46,994.9 997,890 Qualified XII (1.25) 25.103 21.184 (15.61%) 25,075.5 531,200 Qualified XII (1.30) 25.057 21.135 (15.65%) 11,630.9 245,820 Qualified XII (1.35) 24.785 21.086 (14.92%) (2) 384.9 8,117 Qualified XII (1.40) 24.966 21.038 (15.73%) 6,688.7 140,717 Qualified XII (1.50) 24.875 20.940 (15.82%) 5,215.5 109,212 Qualified XIII 29.684 25.126 (15.36%) 68,376.1 1,718,018 Qualified XV 29.635 25.084 (15.36%) 42,270.4 1,060,311 Qualified XVI 29.166 24.552 (15.82%) 127,707.6 3,135,476 Qualified XVII 29.366 24.782 (15.61%) 48,284.0 1,196,575 Qualified XVIII 31.406 26.504 (15.61%) 53,708.7 1,423,496 Qualified XXI 29.662 25.145 (15.23%) 103,000.3 2,589,942 Qualified XXII 29.712 25.187 (15.23%) 84,428.5 2,126,500 Qualified XXIV 25.641 21.445 (16.36%) (6) 84,667.4 1,815,692 Qualified XXV 29.874 24.812 (16.94%) (9) 127,737.9 3,169,432 Qualified XXVI 28.180 24.801 (11.99%) (9) 12,973.2 321,748 Qualified XXVII 33.378 27.071 (18.90%) (2) 2,566,224.1 69,470,253 Qualified XXVIII 33.378 27.035 (19.00%) (2) 833,490.9 22,533,426 Annuity contracts in payment period 917,937 - -------------------------------------------------------------------------------------------------------------------------- WORLDWIDE GROWTH PORTFOLIO: Qualified I 29.020 24.185 (16.66%) 2,110.6 51,044 Qualified III 38.648 32.189 (16.71%) 1,677.6 54,001 Qualified V 34.593 28.765 (16.85%) 3,556.1 102,290 Qualified VI 34.574 28.796 (16.71%) 16,487,771.5 474,781,871 Qualified VIII 34.465 28.703 (16.72%) 10,077.1 289,244 Qualified X (1.15) 39.011 32.523 (16.63%) 66,341.7 2,157,630 Qualified X (1.25) 38.832 32.342 (16.71%) 1,661,139.9 53,724,586 Qualified XI 35.020 29.330 (16.25%) 954,756.1 28,002,996 Qualified XII (0.35) 16.103 14.104 (12.41%) (5) 1,146,536.9 16,170,757 Qualified XII (0.40) 28.797 24.188 (16.01%) 6,041.1 146,122 Qualified XII (0.45) 16.757 14.068 (16.05%) 662,704.2 9,322,923 Qualified XII (0.55) 16.730 14.031 (16.13%) 213,103.2 2,990,051 Qualified XII (0.60) 14.508 14.013 (3.41%) (10) 19.9 279 Qualified XII (0.65) 16.703 13.994 (16.22%) 266,227.7 3,725,590 Qualified XII (0.70) 16.689 13.976 (16.26%) 281,891.7 3,939,719 Qualified XII (0.75) 16.676 13.958 (16.30%) 1,451,474.2 20,259,677 Qualified XII (0.80) 19.592 16.390 (16.34%) 5,857,225.6 95,999,928 Qualified XII (0.85) 28.723 24.018 (16.38%) 836,804.6 20,098,374
S-29 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- WORLDWIDE GROWTH PORTFOLIO: (continued): Qualified XII (0.90) $ 19.141 $ 15.998 (16.42%) 51,009.3 $ 816,047 Qualified XII (0.95) 28.619 23.907 (16.46%) 858,504.0 20,524,255 Qualified XII (1.00) 28.567 23.852 (16.51%) 3,118,616.0 74,385,228 Qualified XII (1.05) 28.515 23.796 (16.55%) 256,820.8 6,111,308 Qualified XII (1.10) 28.463 23.741 (16.59%) 90,052.4 2,137,933 Qualified XII (1.15) 28.411 23.686 (16.63%) 103,449.3 2,450,300 Qualified XII (1.20) 28.360 23.632 (16.67%) 64,985.9 1,535,747 Qualified XII (1.25) 28.308 23.577 (16.71%) 32,757.8 772,330 Qualified XII (1.30) 28.257 23.522 (16.76%) 22,895.2 538,542 Qualified XII (1.35) 27.255 23.468 (13.89%) (1) 503.3 11,812 Qualified XII (1.40) 28.154 23.414 (16.84%) 18,964.9 444,045 Qualified XII (1.50) 28.052 23.305 (16.92%) 16,549.7 385,691 Qualified XIII 34.949 29.195 (16.46%) 136,896.9 3,996,706 Qualified XV 34.891 29.147 (16.46%) 109,138.9 3,181,071 Qualified XVI 34.339 28.529 (16.92%) 259,043.5 7,390,251 Qualified XVII 34.574 28.796 (16.71%) 101,798.9 2,931,400 Qualified XVIII 38.832 32.342 (16.71%) 91,519.9 2,959,937 Qualified XXI 34.923 29.217 (16.34%) 276,227.5 8,070,538 Qualified XXII 34.982 29.266 (16.34%) 193,451.9 5,661,562 Qualified XXIV 29.012 23.867 (17.73%) (6) 251,658.2 6,006,327 Qualified XXV 33.364 28.830 (13.59%) (9) 210,872.4 6,079,452 Qualified XXVI 32.009 28.818 (9.97%) (9) 24,036.5 692,683 Qualified XXVII 42.335 32.231 (23.87%) (2) 4,666,561.6 150,407,947 Qualified XXVIII 42.335 32.189 (23.97%) (2) 1,345,688.8 43,316,377 Annuity contracts in payment period 1,095,143 - -------------------------------------------------------------------------------------------------------------------------- JANUS TWENTY FUND: Qualified XII (0.95) 8.308 7.345 (11.59%) (10) 74.2 545 - -------------------------------------------------------------------------------------------------------------------------- LEXINGTON FUNDS: EMERGING MARKETS FUND, INC.: Qualified XXVII 15.945 7.254 (54.51%) (2) 657,383.0 4,768,656 Qualified XXVIII 15.945 7.244 (54.57%) (2) 220,650.6 1,598,393 - -------------------------------------------------------------------------------------------------------------------------- NATURAL RESOURCES TRUST FUND: Qualified III 12.882 15.061 16.92% 4,697.0 70,742 Qualified V 14.253 16.636 16.72% 2,776.4 46,189 Qualified VI 13.900 16.250 16.91% 373,904.7 6,075,952 Qualified VIII 12.047 14.083 16.90% 979.1 13,789 Qualified XI 14.079 16.552 17.57% 20,792.0 344,150 Qualified XII (0.35) 9.158 10.347 12.98% (5) 11,114.4 115,001 Qualified XII (0.40) 10.939 12.897 17.90% 179.8 2,319 Qualified XII (0.45) 8.758 10.320 17.84% 4,369.6 45,094 Qualified XII (0.55) 8.744 10.293 17.72% 3,526.1 36,294 Qualified XII (0.65) 8.729 10.266 17.61% 1,115.8 11,455 Qualified XII (0.70) 8.722 10.253 17.55% 6,480.3 66,443 Qualified XII (0.75) 8.715 10.240 17.50% 22,901.1 234,507 Qualified XII (0.80) 9.524 11.184 17.43% 107,963.7 1,207,466 Qualified XII (0.85) 10.911 12.806 17.37% 23,332.2 298,792 Qualified XII (0.95) 10.871 12.747 17.26% 19,715.8 251,317 Qualified XII (1.00) 10.851 12.717 17.20% 79,616.9 1,012,488 Qualified XII (1.05) 10.831 12.688 17.15% 3,762.7 47,741 Qualified XII (1.10) 10.812 12.659 17.08% 1,086.7 13,756 Qualified XII (1.15) 10.792 12.629 17.02% 5,137.4 64,880 Qualified XII (1.20) 10.772 12.600 16.97% 2,780.0 35,028 Qualified XIII 14.051 16.475 17.25% 4,068.2 67,024 Qualified XV 14.028 16.448 17.25% 7,371.7 121,249 Qualified XVI 13.805 16.099 16.62% 5,288.2 85,135 Qualified XVII 13.900 16.250 16.91% 876.9 14,250 Qualified XXI 14.041 16.488 17.43% 3,120.4 51,449 Qualified XXII 14.064 16.515 17.43% 2,571.9 42,475 Qualified XXIV 11.307 12.726 12.55% (6) 6,520.0 82,974 Qualified XXV 14.773 16.269 10.13% (9) 4,180.7 68,016 Qualified XXVI 15.024 16.262 8.24% (9) 822.9 13,382
S-30 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- NATURAL RESOURCES TRUST FUND: (continued): Qualified XXVII $ 11.702 $ 15.080 28.87% (2) 269,501.1 $ 4,064,076 Qualified XXVIII 11.702 15.061 28.70% (2) 138,949.3 2,092,716 - -------------------------------------------------------------------------------------------------------------------------- MFS TOTAL RETURN SERIES: Qualified XXVII 10.126 12.300 21.47% (2) 167,946.1 2,065,737 Qualified XXVIII 10.126 12.284 21.31% (2) 227,448.8 2,793,981 - -------------------------------------------------------------------------------------------------------------------------- OPPENHEIMER FUNDS: GLOBAL SECURITIES FUND/VA: Qualified III 16.126 16.737 3.79% 44.1 738 Qualified V 15.638 16.205 3.63% 438.6 7,107 Qualified VI 15.681 16.275 3.79% 1,084,590.0 17,651,702 Qualified VIII 15.988 16.272 1.78% (1) 38.7 630 Qualified X (1.15) 15.707 16.319 3.90% 15,425.0 251,720 Qualified X (1.25) 15.681 16.275 3.79% 166,004.4 2,701,721 Qualified XI 15.775 16.464 4.37% 90,380.6 1,488,027 Qualified XII (0.35) 16.636 16.624 (0.07%) (5) 29,809.0 495,545 Qualified XII (0.40) 15.859 16.600 4.67% 578.4 9,601 Qualified XII (0.45) 15.849 16.581 4.62% 5,197.9 86,187 Qualified XII (0.55) 15.823 16.538 4.52% 13,256.9 219,243 Qualified XII (0.65) 15.798 16.495 4.41% 5,368.2 88,549 Qualified XII (0.70) 15.785 16.473 4.36% 13,835.1 227,906 Qualified XII (0.75) 15.772 16.452 4.31% 46,116.1 758,702 Qualified XII (0.80) 15.800 16.473 4.26% 182,218.7 3,001,689 Qualified XII (0.85) 15.787 16.451 4.21% 43,640.8 717,935 Qualified XII (0.90) 17.689 16.429 (7.12%) (7) 3,722.2 61,152 Qualified XII (0.95) 15.760 16.407 4.11% 48,073.8 788,747 Qualified XII (1.00) 15.747 16.385 4.05% 125,076.5 2,049,379 Qualified XII (1.05) 15.734 16.363 4.00% 8,494.9 139,002 Qualified XII (1.10) 15.721 16.341 3.94% 2,579.3 42,149 Qualified XII (1.15) 15.707 16.319 3.90% 6,902.6 112,643 Qualified XII (1.20) 15.694 16.297 3.84% 3,942.6 64,252 Qualified XII (1.25) 15.681 16.275 3.79% 3,911.8 63,665 Qualified XII (1.30) 15.668 16.253 3.73% 526.4 8,556 Qualified XII (1.35) 15.714 16.231 3.29% (1) 105.7 1,715 Qualified XII (1.40) 15.641 16.210 3.64% 1,536.2 24,902 Qualified XII (1.50) 15.883 16.166 1.78% (1) 508.2 8,215 Qualified XIII 15.760 16.407 4.11% 9,278.1 152,226 Qualified XV 15.760 16.407 4.11% 6,178.8 101,376 Qualified XVI 15.615 16.166 3.53% 23,681.5 382,835 Qualified XVII 15.681 16.275 3.79% 14,615.1 237,861 Qualified XVIII 15.681 16.275 3.79% 11,938.9 194,305 Qualified XXI 15.775 16.446 4.25% 38,008.9 625,094 Qualified XXII 15.775 16.446 4.25% 16,185.8 266,192 Qualified XXIV 17.346 16.395 (5.48%) (6) 18,701.5 306,611 Qualified XXV 16.764 16.294 (2.80%) (9) 16,613.8 270,706 Qualified XXVI 16.277 16.288 0.07% (9) 1,978.9 32,233 Qualified XXVII 17.929 16.759 (6.53%) (2) 424,091.7 7,107,352 Qualified XXVIII 17.930 16.737 (6.65%) (2) 568,224.4 9,510,371 - -------------------------------------------------------------------------------------------------------------------------- STRATEGIC BOND FUND/VA: Qualified V 10.021 10.142 1.21% 43.0 436 Qualified VI 10.048 10.185 1.36% 169,954.1 1,730,983 Qualified VIII 10.125 10.183 0.57% (4) 121.5 1,237 Qualified X (1.25) 10.048 10.185 1.36% 29,298.3 298,403 Qualified XI 10.108 10.304 1.94% 2,328.3 23,991 Qualified XII (0.35) 10.102 10.437 3.32% (5) 2,759.3 28,799 Qualified XII (0.45) 10.188 10.410 2.18% 9,983.2 103,925 Qualified XII (0.65) 10.155 10.356 1.98% 4,045.6 41,896 Qualified XII (0.70) 9.988 10.342 3.54% (5) 331.2 3,425 Qualified XII (0.75) 10.139 10.329 1.87% 6,680.2 69,000 Qualified XII (0.80) 10.125 10.309 1.82% 7,601.6 78,365 Qualified XII (0.85) 10.116 10.295 1.77% 7,153.3 73,643
S-31 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- STRATEGIC BOND FUND/VA: (continued): Qualified XII (0.90) $ 10.244 $ 10.281 0.36% (3) 183.3 $ 1,884 Qualified XII (0.95) 10.099 10.268 1.67% 5,540.9 56,894 Qualified XII (1.00) 10.091 10.254 1.62% 18,473.1 189,423 Qualified XII (1.05) 10.082 10.240 1.57% 1,936.3 19,828 Qualified XII (1.10) 10.074 10.226 1.51% 766.9 7,842 Qualified XII (1.15) 10.065 10.213 1.47% 312.1 3,187 Qualified XII (1.20) 10.057 10.199 1.41% 333.8 3,404 Qualified XII (1.25) 10.048 10.185 1.36% 2,119.0 21,582 Qualified XII (1.30) 10.252 10.172 (0.78%) (7) 171.3 1,742 Qualified XII (1.40) 10.064 10.144 0.79% (2) 709.6 7,198 Qualified XII (1.50) 10.006 10.117 1.11% 133.7 1,353 Qualified XIII 10.099 10.268 1.67% 293.6 3,015 Qualified XV 10.099 10.268 1.67% 3,970.7 40,771 Qualified XVI 10.006 10.117 1.11% 1,311.4 13,267 Qualified XVIII 10.048 10.185 1.36% 11,071.3 112,761 Qualified XXI 10.108 10.292 1.82% 978.0 10,066 Qualified XXII 10.108 10.292 1.82% 7,670.2 78,942 Qualified XXIV 10.217 10.260 0.42% (6) 8,348.7 85,658 Qualified XXV 10.237 10.197 (0.39%) (9) 2,009.8 20,494 Qualified XXVI 10.235 10.193 (0.41%) (9) 1.0 10 Qualified XXVII 10.094 10.240 1.45% (2) 125,233.4 1,282,390 Qualified XXVIII 10.095 10.226 1.30% (2) 153,728.3 1,572,026 Annuity contracts in payment period 21,845 - -------------------------------------------------------------------------------------------------------------------------- PORTFOLIO PARTNERS, INC. (PPI): PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO: Qualified III 43.112 40.144 (6.88%) 54,582.7 2,191,167 Qualified V 35.288 32.806 (7.03%) 7,849.8 257,522 Qualified VI 35.480 33.037 (6.89%) 2,778,965.9 91,808,695 Qualified VIII 30.498 28.396 (6.89%) 10,193.1 289,443 Qualified X (1.15) 15.447 14.398 (6.79%) 11,757.9 169,290 Qualified X (1.25) 15.421 14.359 (6.89%) 318,659.8 4,575,636 Qualified XI 35.938 33.651 (6.36%) 251,486.2 8,462,762 Qualified XII (0.35) 16.155 14.877 (7.91%) (5) 160,437.0 2,386,821 Qualified XII (0.40) 23.231 21.815 (6.10%) 888.4 19,381 Qualified XII (0.45) 15.809 14.838 (6.14%) 69,689.5 1,034,053 Qualified XII (0.55) 15.783 14.799 (6.23%) 81,825.1 1,210,929 Qualified XII (0.60) 15.104 14.780 (2.15%) (10) 17.7 262 Qualified XII (0.65) 15.758 14.761 (6.33%) 19,493.3 287,740 Qualified XII (0.70) 15.745 14.741 (6.38%) 88,158.3 1,299,541 Qualified XII (0.75) 15.732 14.722 (6.42%) 188,557.5 2,775,944 Qualified XII (0.80) 17.793 16.643 (6.46%) 642,990.5 10,701,291 Qualified XII (0.85) 23.171 21.662 (6.51%) 432,871.4 9,376,861 Qualified XII (0.90) 17.184 16.057 (6.56%) 14,267.4 229,092 Qualified XII (0.95) 23.087 21.561 (6.61%) 214,278.7 4,620,063 Qualified XII (1.00) 23.045 21.512 (6.65%) 862,759.7 18,559,687 Qualified XII (1.05) 23.003 21.462 (6.70%) 39,672.0 851,440 Qualified XII (1.10) 22.961 21.412 (6.75%) 12,813.4 274,361 Qualified XII (1.15) 22.919 21.363 (6.79%) 51,927.3 1,109,323 Qualified XII (1.20) 22.878 21.313 (6.84%) 21,153.5 450,844 Qualified XII (1.25) 22.836 21.264 (6.88%) 6,816.2 144,940 Qualified XII (1.30) 22.794 21.214 (6.93%) 2,742.3 58,175 Qualified XII (1.35) 24.002 21.165 (11.82%) (2) 32.2 681 Qualified XII (1.40) 22.712 21.116 (7.03%) 1,602.5 33,839 Qualified XII (1.50) 22.629 21.019 (7.11%) 1,516.9 31,883 Qualified XIII 35.866 33.496 (6.61%) 35,905.3 1,202,685 Qualified XV 35.806 33.440 (6.61%) 24,244.7 810,742 Qualified XVI 35.239 32.731 (7.12%) 41,528.5 1,359,270 Qualified XVII 35.480 33.037 (6.89%) 9,109.1 300,936 Qualified XVIII 15.421 14.359 (6.89%) 12,111.1 173,904 Qualified XXI 35.839 33.521 (6.47%) 35,540.4 1,191,350 Qualified XXII 35.899 33.577 (6.47%) 34,742.9 1,166,563
S-32 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO: (continued): Qualified XXIV $ 24.748 $ 21.526 (13.02%) (6) 45,922.1 $ 988,519 Qualified XXV 37.485 33.077 (11.76%) (9) 29,269.8 968,156 Qualified XXVI 36.090 33.063 (8.39%) (9) 2,496.0 82,524 Qualified XXVII 45.887 40.196 (12.40%) (2) 2,301,512.8 92,511,607 Qualified XXVIII 45.888 40.144 (12.52%) (2) 675,845.9 27,131,156 Annuity contracts in payment period 400,248 - -------------------------------------------------------------------------------------------------------------------------- PPI MFS EMERGING EQUITIES PORTFOLIO: Qualified III 28.710 20.194 (29.66%) 96,466.2 1,948,039 Qualified V 28.327 19.892 (29.78%) 6,276.2 124,847 Qualified VI 28.481 20.033 (29.66%) 9,202,749.2 184,358,676 Qualified VIII 29.833 20.982 (29.67%) 12,522.0 262,737 Qualified X (1.15) 28.661 20.179 (29.59%) 36,462.8 735,782 Qualified X (1.25) 28.481 20.033 (29.66%) 1,261,315.2 25,267,927 Qualified XI 28.849 20.405 (29.27%) 638,180.5 13,022,074 Qualified XII (0.35) 15.512 11.747 (24.27%) (5) 693,415.6 8,145,553 Qualified XII (0.40) 19.199 13.619 (29.06%) 5,732.3 78,068 Qualified XII (0.45) 16.525 11.716 (29.10%) 194,900.8 2,283,458 Qualified XII (0.55) 16.499 11.686 (29.17%) 101,007.0 1,180,368 Qualified XII (0.65) 16.472 11.655 (29.24%) 116,509.0 1,357,912 Qualified XII (0.70) 16.459 11.640 (29.28%) 125,768.1 1,463,941 Qualified XII (0.75) 16.446 11.625 (29.31%) 709,695.1 8,250,205 Qualified XII (0.80) 17.731 12.527 (29.35%) 3,144,386.0 39,389,724 Qualified XII (0.85) 19.150 13.523 (29.38%) 838,567.6 11,339,950 Qualified XII (0.90) 17.139 12.097 (29.42%) 29,261.3 353,974 Qualified XII (0.95) 19.080 13.460 (29.45%) 526,039.7 7,080,495 Qualified XII (1.00) 19.045 13.429 (29.49%) 2,470,780.2 33,180,107 Qualified XII (1.05) 19.011 13.398 (29.53%) 208,958.9 2,799,631 Qualified XII (1.10) 18.976 13.367 (29.56%) 44,716.4 597,724 Qualified XII (1.15) 18.942 13.336 (29.60%) 98,119.0 1,308,515 Qualified XII (1.20) 18.907 13.305 (29.63%) 76,968.4 1,024,064 Qualified XII (1.25) 18.873 13.274 (29.67%) 32,838.9 435,904 Qualified XII (1.30) 18.838 13.244 (29.70%) 11,428.6 151,360 Qualified XII (1.35) 17.600 13.213 (24.93%) (1) 198.5 2,623 Qualified XII (1.40) 18.770 13.182 (29.77%) 3,932.3 51,835 Qualified XII (1.50) 18.702 13.121 (29.84%) 6,877.3 90,237 Qualified XIII 28.791 20.311 (29.45%) 70,520.9 1,432,351 Qualified XV 28.743 20.277 (29.45%) 75,357.6 1,528,026 Qualified XVI 28.288 19.847 (29.84%) 140,183.2 2,782,215 Qualified XVII 28.481 20.033 (29.66%) 14,665.7 293,797 Qualified XVIII 28.481 20.033 (29.66%) 38,347.8 768,222 Qualified XXI 28.769 20.326 (29.35%) 200,926.5 4,084,033 Qualified XXII 28.817 20.360 (29.35%) 205,500.8 4,183,996 Qualified XXIV 19.145 13.438 (29.81%) (6) 202,745.4 2,724,493 Qualified XXV 24.830 20.057 (19.22%) (9) 93,439.5 1,874,117 Qualified XXVI 22.873 20.048 (12.35%) (9) 6,331.7 126,937 Qualified XXVII 28.118 20.220 (28.09%) (2) 2,380,369.9 48,131,080 Qualified XXVIII 28.119 20.194 (28.18%) (2) 535,101.3 10,805,836 Annuity contracts in payment period 167,018 - -------------------------------------------------------------------------------------------------------------------------- PPI MFS RESEARCH GROWTH PORTFOLIO: Qualified I 13.469 12.713 (5.61%) 2,584.3 32,854 Qualified III 17.837 16.788 (5.88%) 78,522.0 1,318,228 Qualified V 20.293 19.113 (5.81%) 10,465.6 200,029 Qualified VI 20.527 19.365 (5.66%) 6,451,502.4 124,933,346 Qualified VII 17.322 16.350 (5.61%) 139,937.9 2,287,985 Qualified VIII 17.312 16.330 (5.67%) 13,503.4 220,511 Qualified IX 17.102 16.173 (5.43%) 2,854.8 46,171 Qualified X (1.15) 20.653 19.503 (5.57%) 10,200.2 198,935 Qualified X (1.25) 20.527 19.365 (5.66%) 850,004.0 16,460,328 Qualified XI 20.792 19.724 (5.14%) 327,757.0 6,464,680 Qualified XII (0.35) 13.213 12.452 (5.76%) (5) 406,356.4 5,059,950 Qualified XII (0.40) 13.146 12.506 (4.87%) 7,788.3 97,401
S-33 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- PPI MFS RESEARCH GROWTH PORTFOLIO: (continued): Qualified XII (0.45) $ 13.061 $ 12.420 (4.91%) 63,658.6 $ 790,640 Qualified XII (0.55) 13.040 12.387 (5.01%) 48,216.1 597,253 Qualified XII (0.65) 13.019 12.355 (5.10%) 96,006.1 1,186,155 Qualified XII (0.70) 13.008 12.339 (5.14%) 60,144.1 742,118 Qualified XII (0.75) 12.998 12.323 (5.19%) 205,081.6 2,527,220 Qualified XII (0.80) 14.375 13.621 (5.25%) 575,027.7 7,832,452 Qualified XII (0.85) 13.112 12.418 (5.29%) 630,101.3 7,824,598 Qualified XII (0.90) 13.982 13.236 (5.34%) 11,608.9 153,655 Qualified XII (0.95) 13.064 12.361 (5.38%) 344,610.3 4,259,728 Qualified XII (1.00) 13.040 12.332 (5.43%) 886,127.1 10,927,720 Qualified XII (1.05) 13.016 12.304 (5.47%) 70,122.6 862,788 Qualified XII (1.10) 12.993 12.275 (5.53%) 27,355.5 335,789 Qualified XII (1.15) 12.969 12.247 (5.57%) 81,794.2 1,001,734 Qualified XII (1.20) 12.945 12.218 (5.62%) 34,058.2 416,123 Qualified XII (1.25) 12.922 12.190 (5.66%) 4,912.6 59,885 Qualified XII (1.30) 12.898 12.162 (5.71%) 2,271.7 27,629 Qualified XII (1.35) 12.502 12.133 (2.95%) (2) 48.5 589 Qualified XII (1.40) 12.851 12.105 (5.80%) 3,599.2 43,568 Qualified XII (1.50) 12.805 12.049 (5.90%) 5,882.4 70,877 Qualified XIII 20.750 19.634 (5.38%) 45,243.4 888,308 Qualified XV 20.716 19.601 (5.38%) 64,258.7 1,259,534 Qualified XVI 20.388 19.185 (5.90%) 131,412.1 2,521,141 Qualified XVII 20.527 19.365 (5.66%) 101,084.5 1,957,501 Qualified XVIII 20.527 19.365 (5.66%) 44,961.5 870,680 Qualified XIX 13.469 12.713 (5.61%) 7,855.0 99,860 Qualified XX 17.796 16.788 (5.66%) 13,712.7 230,208 Qualified XXI 20.735 19.648 (5.24%) 76,323.2 1,499,598 Qualified XXII 20.770 19.681 (5.24%) 99,463.7 1,957,546 Qualified XXIV 13.783 12.340 (10.47%) (6) 134,120.9 1,655,052 Qualified XXV 21.916 19.388 (11.53%) (9) 35,218.4 682,814 Qualified XXVI 21.170 19.380 (8.46%) (9) 18,054.4 349,894 Qualified XXVII 19.214 18.387 (4.30%) (2) 999,126.6 18,370,941 Qualified XXVIII 19.214 18.363 (4.43%) (2) 199,270.6 3,659,206 Qualified XXIX 16.661 16.788 0.76% 3,735.6 62,713 Qualified XXX 17.796 16.785 (5.68%) 88,380.3 1,483,491 - -------------------------------------------------------------------------------------------------------------------------- PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO: Qualified III 32.585 25.876 (20.59%) 35,300.7 913,441 Qualified V 30.781 24.404 (20.72%) 3,391.3 82,762 Qualified VI 31.255 24.820 (20.59%) 3,143,511.5 78,021,954 Qualified VIII 26.330 20.907 (20.60%) 22,370.4 467,698 Qualified X (1.15) 31.447 24.997 (20.51%) 35,392.2 884,699 Qualified X (1.25) 31.255 24.820 (20.59%) 408,735.2 10,144,807 Qualified XI 31.658 25.281 (20.14%) 244,725.0 6,186,893 Qualified XII (0.35) 13.496 12.401 (8.11%) (5) 412,382.9 5,113,960 Qualified XII (0.40) 21.461 17.187 (19.92%) 2,415.9 41,522 Qualified XII (0.45) 15.452 12.369 (19.95%) 42,328.5 523,561 Qualified XII (0.55) 15.427 12.337 (20.03%) 56,339.2 695,057 Qualified XII (0.65) 15.403 12.305 (20.11%) 27,469.3 338,010 Qualified XII (0.70) 15.390 12.289 (20.15%) 51,248.8 629,796 Qualified XII (0.75) 15.378 12.273 (20.19%) 246,962.0 3,030,965 Qualified XII (0.80) 17.351 13.840 (20.24%) 817,107.2 11,308,763 Qualified XII (0.85) 21.405 17.066 (20.27%) 455,540.1 7,774,248 Qualified XII (0.90) 17.314 13.797 (20.31%) 19,568.6 269,988 Qualified XII (0.95) 21.327 16.987 (20.35%) 237,252.8 4,030,214 Qualified XII (1.00) 21.289 16.948 (20.39%) 843,397.6 14,293,902 Qualified XII (1.05) 21.250 16.908 (20.43%) 48,765.9 824,534 Qualified XII (1.10) 21.211 16.869 (20.47%) 14,556.4 245,552 Qualified XII (1.15) 21.173 16.830 (20.51%) 44,356.8 746,525 Qualified XII (1.20) 21.134 16.791 (20.55%) 19,314.2 324,305 Qualified XII (1.25) 21.096 16.752 (20.59%) 6,895.8 115,518 Qualified XII (1.30) 21.057 16.714 (20.62%) 1,108.1 18,521
S-34 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued):
- -------------------------------------------------------------------------------------------------------------------------- Value Per Unit Increase (Decrease) Units -------- in Value of Outstanding Reserves Beginning End of Accumulation at End at End of Year Year Unit of Year of Year - -------------------------------------------------------------------------------------------------------------------------- PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO: (continued): Qualified XII (1.40) $ 20.981 $ 16.636 (20.71%) 1,838.2 $ 30,580 Qualified XII (1.50) 20.905 16.559 (20.79%) 2,838.3 46,999 Qualified XIII 31.595 25.165 (20.35%) 27,857.8 701,041 Qualified XV 31.542 25.123 (20.35%) 37,706.1 947,291 Qualified XVI 31.043 24.590 (20.79%) 51,362.9 1,263,013 Qualified XVII 31.255 24.820 (20.59%) 4,114.9 102,133 Qualified XVIII 31.255 24.820 (20.59%) 11,399.2 282,929 Qualified XXI 31.571 25.184 (20.23%) 73,935.1 1,861,982 Qualified XXII 31.624 25.225 (20.23%) 43,700.2 1,102,337 Qualified XXIV 19.321 16.959 (12.23%) (6) 39,737.8 673,913 Qualified XXV 25.595 24.850 (2.91%) (9) 16,938.0 420,910 Qualified XXVI 25.253 24.839 (1.64%) (9) 676.6 16,805 Qualified XXVII 33.036 25.910 (21.57%) (2) 2,322,472.6 60,175,266 Qualified XXVIII 33.036 25.876 (21.67%) (2) 188,646.5 4,881,416 Annuity contracts in payment period 9,438 - -------------------------------------------------------------------------------------------------------------------------- PPI T. ROWE PRICE GROWTH EQUITY PORTFOLIO: Qualified III 25.283 24.962 (1.27%) 199.3 4,974 Qualified V 22.227 21.910 (1.43%) 1,935.1 42,398 Qualified VI 21.922 21.643 (1.27%) 5,373,948.6 116,308,370 Qualified VIII 22.377 22.091 (1.28%) 4,564.0 100,824 Qualified X (1.15) 24.669 24.380 (1.17%) 30,565.8 745,195 Qualified X (1.25) 24.557 24.245 (1.27%) 636,137.2 15,423,147 Qualified XI 22.205 22.045 (0.72%) 327,657.9 7,223,219 Qualified XII (0.35) 13.599 13.434 (1.21%) (5) 261,445.9 3,512,264 Qualified XII (0.40) 20.546 20.457 (0.43%) 1,418.6 29,020 Qualified XII (0.45) 13.464 13.399 (0.48%) 103,238.4 1,383,291 Qualified XII (0.55) 13.443 13.364 (0.59%) 31,732.9 424,079 Qualified XII (0.65) 13.421 13.329 (0.69%) 14,591.8 194,494 Qualified XII (0.70) 13.410 13.312 (0.73%) 74,711.3 994,557 Qualified XII (0.75) 13.399 13.295 (0.78%) 357,441.4 4,752,183 Qualified XII (0.80) 14.748 14.625 (0.83%) 909,338.2 13,299,071 Qualified XII (0.85) 20.493 20.313 (0.88%) 158,446.8 3,218,529 Qualified XII (0.90) 14.296 14.163 (0.93%) 8,707.1 123,318 Qualified XII (0.95) 20.418 20.219 (0.97%) 310,664.9 6,281,333 Qualified XII (1.00) 20.381 20.172 (1.03%) 537,291.5 10,838,244 Qualified XII (1.05) 20.344 20.125 (1.08%) 84,135.8 1,693,233 Qualified XII (1.10) 20.307 20.079 (1.12%) 25,973.1 521,513 Qualified XII (1.15) 20.270 20.032 (1.17%) 34,240.7 685,910 Qualified XII (1.20) 20.233 19.986 (1.22%) 21,354.8 426,797 Qualified XII (1.25) 20.196 19.939 (1.27%) 2,905.7 57,937 Qualified XII (1.30) 20.160 19.893 (1.32%) 5,082.9 101,114 Qualified XII (1.35) 19.539 19.847 1.58% (2) 88.0 1,746 Qualified XII (1.40) 20.086 19.801 (1.42%) 2,103.2 41,645 Qualified XII (1.50) 20.013 19.710 (1.51%) 980.5 19,325 Qualified XIII 22.160 21.944 (0.97%) 31,368.8 688,356 Qualified XV 22.123 21.907 (0.98%) 21,531.4 471,689 Qualified XVI 21.773 21.443 (1.52%) 91,561.0 1,963,342 Qualified XVII 21.922 21.643 (1.27%) 20,218.0 437,578 Qualified XVIII 24.557 24.245 (1.27%) 19,543.1 473,822 Qualified XXI 22.144 21.960 (0.83%) 55,666.5 1,222,437 Qualified XXII 22.181 21.997 (0.83%) 54,354.7 1,195,641 Qualified XXIV 21.893 20.185 (7.80%) (6) 86,754.5 1,751,140 Qualified XXV 23.370 21.669 (7.28%) (9) 68,019.6 1,473,916 Qualified XXVI 22.363 21.660 (3.14%) (9) 14,653.3 317,390 Qualified XXVII 25.002 24.994 (0.03%) (2) 1,359,111.0 33,969,620 Qualified XXVIII 25.002 24.962 (0.16%) (2) 492,530.1 12,294,536 Annuity contracts in payment period 158,262 - -------------------------------------------------------------------------------------------------------------------------- TOTAL $13,689,284,426 ==========================================================================================================================
S-35 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued): QUALIFIED I Individual contracts issued prior to May 1, 1975 in connection with "Qualified Corporate Retirement Plans" established pursuant to Section 401 of the Internal Revenue Code ("Code"); Tax-Deferred Annuity Plans established by the public school systems and tax-exempt organizations pursuant to Section 403(b) of the Code, and certain Individual Retirement Annuity Plans established by or on behalf of individuals pursuant to section 408(b) of the Code; Individual contracts issued prior to November 1, 1975 in connection with "H.R. 10 Plans" established by persons entitled to the benefits of the Self-Employed Individuals Tax Retirement Act of 1962, as amended; allocated group contracts issued prior to May 1, 1975 in connection with Qualified Corporate Retirement Plans; and group contracts issued prior to October 1, 1978 in connection with Tax-Deferred Annuity Plans. QUALIFIED III Individual contracts issued in connection with Tax-Deferred Annuity Plans and Individual Retirement Annuity Plans since May 1, 1975, H.R. 10 Plans since November 1, 1975; group contracts issued since October 1, 1978 in connection with Tax-Deferred Annuity Plans and group contracts issued since May 1, 1979 in connection with Deferred Compensation Plans adopted by state and local governments and H.R. 10 Plans. QUALIFIED V Certain group AetnaPlus contracts issued since August 28, 1992 in connection with "Optional Retirement Plans" established pursuant to Section 403(b) or 401(a) of the Internal Revenue Code. QUALIFIED VI Certain group AetnaPlus contracts issued in connection with Tax-Deferred Annuity Plans, Retirement Plus Plans and Deferred Compensation Plans since August 28, 1992. QUALIFIED VII Certain existing contracts that were converted to ACES, an administrative system (previously valued under Qualified I). QUALIFIED VIII Group AetnaPlus contracts issued in connection with Tax-Deferred Annuity Plans and Deferred Compensation Plans adopted by state and local governments since June 30, 1993. QUALIFIED IX Certain large group contracts (Jumbo) that were converted to ACES, an administrative system (previously valued under Qualified VI). QUALIFIED X Individual Retirement Annuity and Simplified Employee Pension Plans issued or converted to ACES, an adminis- trative system. QUALIFIED XI Certain large group contracts issued in connection with Deferred Compensation Plans adopted by state and local governments since January 1996. QUALIFIED XII Group Retirement Plus and Voluntary TDA contracts issued since 1996 in connection with plans established pursuant to Section 403(b) or 401(a) of the Internal Revenue Code, shown separately by applicable daily charge; and contracts issued since October 1, 1996 in connection with Optional Retirement Plans established pursuant to Section 403(b) or 403(a) of the Internal Revenue Code. QUALIFIED XIII Certain existing contracts issued in connection with Deferred Compensation Plans issued through product exchange on May 25, 1996 (previously valued under Qualified VI). QUALIFIED XIV Certain existing contracts issued in connection with Deferred Compensation Plans issued through product exchange on November 1, 1996 (previously valued under Qualified III). QUALIFIED XV Certain existing contracts issued in connection with Deferred Compensation Plans issued through product exchange on December 16, 1996 (previously valued under Qualified VI), and new contracts issued after that date in connection with certain Deferred Compensation Plans. QUALIFIED XVI Group AetnaPlus contracts assessing an administrative expense charge effective April 7, 1997 issued in connection with Tax-Deferred Annuity Plans, Retirement Plus Plans and Deferred Compensation Plans. QUALIFIED XVII Group AetnaPlus contracts containing contractual limits on fees issued in connection with Tax-Deferred Annuity Plans and Deferred Compensation Plans, which resulted in reduced daily charges for certain funding options effective May 29, 1997. QUALIFIED XVIII Individual Retirement Annuity and Simplified Employee Pension Plan contracts containing contractual limits on fees, which resulted in reduced daily charges for certain funding options effective May 29, 1997. QUALIFIED XIX Group Corporate 401 contracts containing contractual limits on fees, which resulted in reduced daily charges for certain funding options effective May 29, 1997. QUALIFIED XX Group HR 10 contracts containing contractual limits on fees, which resulted in reduced daily charges for certain funding options effective May 29, 1997. QUALIFIED XXI Certain existing contracts issued in connection with Deferred Compensation Plans having contract modifications effective May 20, 1999. QUALIFIED XXII Certain existing contracts issued in connection with Deferred Compensation Plans having contract modifications effective May 20, 1999. QUALIFIED XXIV Group contract issued in connection with Optional Retirement Plans having contract modifications effective July 2000 to lower mortality and expense fee. QUALIFIED XXV Group contract issued in connection with Aetna Government Custom Choice plans having contract modifications effective October 2000 to lower mortality and expense fee.
S-36 VARIABLE ANNUITY ACCOUNT C CONDENSED FINANCIAL INFORMATION - Year Ended December 31, 2000 (continued): QUALIFIED XXVI Group contract issued in connection with Aetna Government Custom Choice plans having contract modifications effective October 2000 to lower mortality and expense fee. QUALIFIED XXVII Group contract issued in connection with Tax Deferred Annuity Plans having contract modifications effective February 2000 to lower mortality and expense fee. QUALIFIED XXVIII Group contract issued in connection with Optional Retirement Plans having contract modifications effective February 2000 to lower mortality and expense fee. QUALIFIED XXIX Individual contracts issued in connection with Tax-Deferred Annuity Plans and Individual Retirement Annuity Plans since May 1, 1975, H.R. 10 Plans since November 1, 1975; group contracts issued since October 1, 1978 in connection with Tax-Deferred Annuity Plans and group contracts issued since May 1, 1979 in connection with Deferred Compensation Plans adopted by state and local governments and H.R. 10 Plans. QUALIFIED XXX Individual contracts issued in connection with Tax-Deferred Annuity Plans and Individual Retirement Annuity Plans since May 1, 1975, H.R. 10 Plans since November 1, 1975; group contracts issued since October 1, 1978 in connection with Tax-Deferred Annuity Plans and group contracts issued since May 1, 1979 in connection with Deferred Compensation Plans adopted by state and local governments and H.R. 10 Plans.
NOTES TO CONDENSED FINANCIAL INFORMATION: (1) - Reflects less than a full year of performance activity. Funds were first received in this option during January 2000. (2) - Reflects less than a full year of performance activity. Funds were first received in this option during February 2000. (3) - Reflects less than a full year of performance activity. Funds were first received in this option during March 2000. (4) - Reflects less than a full year of performance activity. Funds were first received in this option during April 2000. (5) - Reflects less than a full year of performance activity. Funds were first received in this option during May 2000. (6) - Reflects less than a full year of performance activity. Funds were first received in this option during June 2000. (7) - Reflects less than a full year of performance activity. Funds were first received in this option during July 2000. (8) - Reflects less than a full year of performance activity. Funds were first received in this option during September 2000. (9) - Reflects less than a full year of performance activity. Funds were first received in this option during October 2000. (10) - Reflects less than a full year of performance activity. Funds were first received in this option during November 2000. (11) - Reflects less than a full year of performance activity. Funds were first received in this option during December 2000.
See Notes to Financial Statements S-37 VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS - December 31, 2000 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Variable Annuity Account C (the "Account") is a separate account established by Aetna Life Insurance and Annuity Company (the "Company") and is 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 are qualified under 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 their closing net asset value per share as determined by each Fund on December 31, 2000: Aetna Ascent VP Aetna Balanced VP, Inc. Aetna Bond VP Aetna Crossroads VP Aetna GET Fund, Series C Aetna GET Fund, Series D Aetna GET Fund, Series E Aetna GET Fund, Series G Aetna GET Fund, Series H Aetna GET Fund, Series I Aetna GET Fund, Series J Aetna GET Fund, Series K Aetna GET Fund, Series L Aetna Growth and Income VP Aetna Growth VP Aetna Index Plus Bond VP Aetna Index Plus Large Cap VP Aetna Index Plus Mid Cap VP Aetna Index Plus Small Cap VP Aetna International VP Aetna Legacy VP Aetna Money Market VP Aetna Technology VP Aetna Value Opportunity VP AIM V.I. Funds: - Capital Appreciation Fund - Growth and Income Fund - Growth Fund - Value Fund Calvert Social Balanced Portfolio Fidelity Investments Variable Insurance Products Fund: - Equity-Income Portfolio - Growth Portfolio - High Income Portfolio - Overseas Portfolio Fidelity Investments Variable Insurance Products Fund II: - Asset Manager Portfolio - Contrafund Portfolio - Index 500 Portfolio Janus Aspen Series: - Aggressive Growth Portfolio - Balanced Portfolio - Flexible Income Portfolio - Growth Portfolio - Worldwide Growth Portfolio Janus Twenty Fund Lexington Funds: - Emerging Markets Fund - Natural Resources Trust Fund MFS Funds Total Return Series Oppenheimer Funds: - Global Securities Fund - Strategic Bond Fund Portfolio Partners, Inc. (PPI): - PPI MFS Capital Opportunities Portfolio - PPI MFS Emerging Equities Portfolio - PPI MFS Research Growth Portfolio - PPI Scudder International Growth Portfolio - PPI T. Rowe Price Growth Equity Portfolio S-38 VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS - December 31, 2000 (continued): 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 Account 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 year ended December 31, 2000 aggregated $5,347,300,780 and $3,840,647,337, respectively. S-39 VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS - December 31, 2000 5. SUPPLEMENTAL INFORMATION TO STATEMENT OF OPERATIONS Valuation Proceeds Cost of PERIOD ENDED DECEMBER 31, Period from Investments 2000 Dividends Deductions Sales Sold AETNA ASCENT VP Annuity contracts in accumulation $932,980 ($896,430) $13,450,834 ($11,426,883) AETNA BALANCED VP, INC. Annuity contracts in accumulation 123,722,239 (10,820,738) 137,653,078 (117,925,973) AETNA BOND VP Annuity contracts in accumulation 16,656,617 (3,439,951) 61,181,748 (64,141,020) AETNA CROSSROADS VP Annuity contracts in accumulation 1,173,799 (732,514) 10,689,405 (10,592,100) AETNA GET FUND, SERIES C Annuity contracts in accumulation 32,577,189 (2,128,129) 23,065,389 (19,345,251) AETNA GET FUND, SERIES D Annuity contracts in accumulation 19,533,149 (5,092,781) 127,994,339 (124,905,042) AETNA GET FUND, SERIES E Annuity contracts in accumulation 5,842,968 (2,015,692) 21,285,953 (20,259,107) AETNA GET FUND, SERIES G Annuity contracts in accumulation 964,998 (585,341) 6,744,661 (6,673,262) AETNA GET FUND, SERIES H Annuity contracts in accumulation 573,716 (376,921) 3,497,097 (3,334,459) AETNA GET FUND, SERIES I Annuity contracts in accumulation 17,271 (15,817) 198,429 (196,296) AETNA GET FUND, SERIES J Annuity contracts in accumulation 3,333 (2,718) 3,226 (3,271) AETNA GET FUND, SERIES K Annuity contracts in accumulation 5,228 (6,207) 18,899 (18,702) AETNA GET FUND, SERIES L Annuity contracts in accumulation 0 (1) 1 (1) AETNA GROWTH AND INCOME VP Annuity contracts in accumulation 600,493,802 (63,728,442) 871,616,223 (899,922,177) AETNA GROWTH VP Annuity contracts in accumulation 3,038,381 (1,944,710) 11,906,095 (8,174,444) AETNA HIGH YIELD VP Annuity contracts in accumulation 4,178 (17,017) 4,683,768 (4,877,410) AETNA INDEX PLUS BOND VP Annuity contracts in accumulation 505 (6,940) 1,302,832 (1,317,450) AETNA INDEX PLUS LARGE CAP VP Annuity contracts in accumulation 59,262,689 (5,521,587) 52,615,469 (31,567,660) AETNA INDEX PLUS MID CAP VP Annuity contracts in accumulation 231,204 (259,191) 9,225,597 (8,070,602) ----------------------------------------------------------------------------------
S-40 Net Increase Net Net Unrealized Net (Decrease) Realized Gain (Loss) Change in in Net Assets Gain (Loss) ------------------------------ Unrealized Resulting PERIOD ENDED DECEMBER 31, on Beginning End Gain (Loss) from 2000 Investments of Year of Year on Investments Operations AETNA ASCENT VP Annuity contracts in accumulation $2,023,951 $4,030,133 $589,182 ($3,440,951) ($1,380,450) AETNA BALANCED VP, INC. Annuity contracts in accumulation 19,727,105 45,044,344 (102,036,752) (147,081,096) (14,452,490) AETNA BOND VP Annuity contracts in accumulation (2,959,272) (19,754,875) (6,411,730) 13,343,145 23,600,539 AETNA CROSSROADS VP Annuity contracts in accumulation 97,305 1,130,783 116,983 (1,013,800) (475,210) AETNA GET FUND, SERIES C Annuity contracts in accumulation 3,720,138 19,237,706 (30,255,816) (49,493,522) (15,324,324) AETNA GET FUND, SERIES D Annuity contracts in accumulation 3,089,297 25,690,783 (12,783,390) (38,474,173) (20,944,508) AETNA GET FUND, SERIES E Annuity contracts in accumulation 1,026,846 10,381,800 (2,883,267) (13,265,067) (8,410,945) AETNA GET FUND, SERIES G Annuity contracts in accumulation 71,399 1,305,419 (1,034,596) (2,340,015) (1,888,959) AETNA GET FUND, SERIES H Annuity contracts in accumulation 162,638 2,236 (267,248) (269,484) 89,949 AETNA GET FUND, SERIES I Annuity contracts in accumulation 2,133 0 (32,894) (32,894) (29,307) AETNA GET FUND, SERIES J Annuity contracts in accumulation (45) 0 (16,577) (16,577) (16,007) AETNA GET FUND, SERIES K Annuity contracts in accumulation 197 0 (8,299) (8,299) (9,081) AETNA GET FUND, SERIES L Annuity contracts in accumulation 0 0 16 16 15 AETNA GROWTH AND INCOME VP Annuity contracts in accumulation (28,305,954) (281,156,139) (1,455,124,346) (1,173,968,207) (665,508,801) AETNA GROWTH VP Annuity contracts in accumulation 3,731,651 31,404,391 (1,523,352) (32,927,743) (28,102,421) AETNA HIGH YIELD VP Annuity contracts in accumulation (193,642) (112,582) 0 112,582 (93,899) AETNA INDEX PLUS BOND VP Annuity contracts in accumulation (14,618) (64,241) 0 64,241 43,188 AETNA INDEX PLUS LARGE CAP VP Annuity contracts in accumulation 21,047,809 94,088,323 (35,413,466) (129,501,789) (54,712,878) AETNA INDEX PLUS MID CAP VP Annuity contracts in accumulation 1,154,995 147,754 1,324,838 1,177,084 2,304,092 - -------------------------------------------------------------------------------------------------------
S-41 VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS - December 31, 2000 (continued): 5. SUPPLEMENTAL INFORMATION TO STATEMENT OF OPERATIONS (continued): Valuation Proceeds Cost of PERIOD ENDED DECEMBER 31, Period from Investments 2000 Dividends Deductions Sales Sold AETNA INDEX PLUS SMALL CAP VP Annuity contracts in accumulation $0 ($110,447) $9,314,421 ($8,484,450) AETNA INTERNATIONAL VP Annuity contracts in accumulation 2,317,439 (143,974) 16,677,924 (16,485,807) AETNA LEGACY VP Annuity contracts in accumulation 788,237 (453,560) 10,329,056 (10,036,348) AETNA MONEY MARKET VP Annuity contracts in accumulation 14,088,879 (3,315,026) 1,002,469,774 (997,218,100) AETNA REAL ESTATE SECURITIES VP Annuity contracts in accumulation 1,796 (15,710) 5,781,362 (5,397,911) AETNA SMALL COMPANY VP Annuity contracts in accumulation 5,715,158 (1,027,111) 58,446,003 (41,951,259) AETNA TECHNOLOGY VP Annuity contracts in accumulation 0 (123,166) 3,382,223 (4,041,241) AETNA VALUE OPPORTUNITY VP Annuity contracts in accumulation 5,685,856 (446,263) 14,543,123 (11,879,196) AIM V.I. FUNDS: CAPITAL APPRECIATION FUND Annuity contracts in accumulation 609,333 (143,163) 3,352,076 (3,094,277) GROWTH AND INCOME FUND Annuity contracts in accumulation 1,505,326 (360,447) 2,157,150 (1,767,171) GROWTH FUND Annuity contracts in accumulation 646,543 (169,818) 1,113,297 (974,205) VALUE FUND Annuity contracts in accumulation 832,774 (172,424) 2,587,349 (2,447,180) CALVERT SOCIAL BALANCED PORTFOLIO Annuity contracts in accumulation 3,005,075 (737,829) 9,490,532 (6,636,170) FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUNDS: EQUITY-INCOME PORTFOLIO Annuity contracts in accumulation 15,968,399 (2,117,305) 50,075,466 (41,317,562) GROWTH PORTFOLIO Annuity contracts in accumulation 49,684,906 (5,427,174) 17,853,934 (10,289,675) HIGH INCOME PORTFOLIO Annuity contracts in accumulation 143,538 (28,949) 1,452,668 (1,660,297) OVERSEAS PORTFOLIO Annuity contracts in accumulation 2,247,070 (237,237) 21,321,597 (20,112,513) ----------------------------------------------------------------------------------
S-42 Net Increase Net (Decrease) Net Net Unrealized Change in in Net Realized Gain (Loss) Unrealized Assets Gain (Loss) -------------------------- Gain (Loss) Resulting PERIOD ENDED DECEMBER 31, on Beginning of End on from 2000 Investments Year of Year Investments Operations AETNA INDEX PLUS SMALL CAP VP Annuity contracts in accumulation $829,971 $672,037 $769,578 $97,541 $817,065 AETNA INTERNATIONAL VP Annuity contracts in accumulation 192,117 1,272,468 (4,665,266) (5,937,734) (3,572,152) AETNA LEGACY VP Annuity contracts in accumulation 292,708 (83,476) 718,785 802,261 1,429,646 AETNA MONEY MARKET VP Annuity contracts in accumulation 5,251,674 4,054,787 3,641,073 (413,714) 15,611,813 AETNA REAL ESTATE SECURITIES VP Annuity contracts in accumulation 383,451 (72,859) 0 72,859 442,396 AETNA SMALL COMPANY VP Annuity contracts in accumulation 16,494,744 13,100,682 (9,322,798) (22,423,480) (1,240,689) AETNA TECHNOLOGY VP Annuity contracts in accumulation (659,018) 0 (12,476,702) (12,476,702) (13,258,886) AETNA VALUE OPPORTUNITY VP Annuity contracts in accumulation 2,663,927 5,773,811 872,156 (4,901,655) 3,001,865 AIM V.I. FUNDS: CAPITAL APPRECIATION FUND Annuity contracts in accumulation 257,799 166,754 (5,078,366) (5,245,120) (4,521,151) GROWTH AND INCOME FUND Annuity contracts in accumulation 389,979 1,220,016 (8,823,291) (10,043,307) (8,508,449) GROWTH FUND Annuity contracts in accumulation 139,092 497,930 (5,935,047) (6,432,977) (5,817,160) VALUE FUND Annuity contracts in accumulation 140,169 835,034 (3,374,932) (4,209,966) (3,409,447) CALVERT SOCIAL BALANCED PORTFOLIO Annuity contracts in accumulation 2,854,362 7,801,335 570,470 (7,230,865) (2,109,257) FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUNDS: EQUITY-INCOME PORTFOLIO Annuity contracts in accumulation 8,757,904 29,981,910 18,912,394 (11,069,516) 11,539,482 GROWTH PORTFOLIO Annuity contracts in accumulation 7,564,259 135,925,667 22,218,848 (113,706,819) (61,884,828) HIGH INCOME PORTFOLIO Annuity contracts in accumulation (207,629) 42,986 (540,697) (583,683) (676,723) OVERSEAS PORTFOLIO Annuity contracts in accumulation 1,209,084 5,076,505 (2,501,290) (7,577,795) (4,358,878) - -----------------------------------------------------------------------------------------------
S-43 VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS - December 31, 2000 (continued): 5. SUPPLEMENTAL INFORMATION TO STATEMENT OF OPERATIONS (continued): Valuation Proceeds Cost of PERIOD ENDED DECEMBER 31, Period from Investments 2000 Dividends Deductions Sales Sold FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUNDS II: ASSET MANAGER PORTFOLIO Annuity contracts in accumulation $2,891,552 ($290,058) $4,448,390 ($3,746,605) CONTRAFUND PORTFOLIO Annuity contracts in accumulation 59,662,762 (5,067,350) 48,543,621 (27,704,159) INDEX 500 PORTFOLIO Annuity contracts in accumulation 1,721,648 (1,321,614) 59,026,752 (35,665,034) JANUS ASPEN SERIES: AGGRESSIVE GROWTH PORTFOLIO Annuity contracts in accumulation 148,372,545 (14,564,091) 144,369,632 (44,558,621) BALANCED PORTFOLIO Annuity contracts in accumulation 31,342,522 (3,110,307) 10,544,363 (5,618,590) FLEXIBLE INCOME PORTFOLIO Annuity contracts in accumulation 1,926,419 (357,984) 11,057,104 (11,766,103) GROWTH PORTFOLIO Annuity contracts in accumulation 37,319,136 (5,077,467) 29,014,597 (13,885,988) WORLDWIDE GROWTH PORTFOLIO Annuity contracts in accumulation 105,574,692 (14,110,028) 101,145,319 (40,120,649) JANUS TWENTY FUND Annuity contracts in accumulation 0 (1) 12,337 (12,826) LEXINGTON FUNDS: EMERGING MARKETS FUND Annuity contracts in accumulation 0 (138,792) 37,930,672 (39,305,108) NATURAL RESOURCES TRUST FUND Annuity contracts in accumulation 59,448 (174,562) 8,934,916 (10,937,162) MFS TOTAL RETURN SERIES Annuity contracts in accumulation 42,782 (15,849) 956,479 (936,309) OPPENHEIMER FUNDS: GLOBAL SECURITIES FUND Annuity contracts in accumulation 2,277,721 (303,133) 6,616,401 (5,645,106) STRATEGIC BOND FUND Annuity contracts in accumulation 320,219 (53,722) 1,980,953 (2,106,469) PORTFOLIO PARTNERS, INC. (PPI): PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO (1) Annuity contracts in accumulation 41,352,585 (3,205,147) 12,180,987 (6,431,146) ----------------------------------------------------------------------------------
S-44 Net Net Increase Net Net Unrealized Change in (Decrease) Realized Gain (Loss) Unrealized in Net Assets Gain (Loss) --------------------------- Gain (Loss) Resulting PERIOD ENDED DECEMBER 31, on Beginning of End on from 2000 Investments Year of Year Investments Operations FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUNDS II: ASSET MANAGER PORTFOLIO Annuity contracts in accumulation $701,785 $3,975,450 ($618,980) ($4,594,430) ($1,291,151) CONTRAFUND PORTFOLIO Annuity contracts in accumulation 20,839,462 167,567,655 57,161,025 (110,406,630) (34,971,756) INDEX 500 PORTFOLIO Annuity contracts in accumulation 23,361,718 35,135,496 (491,226) (35,626,722) (11,864,970) JANUS ASPEN SERIES: AGGRESSIVE GROWTH PORTFOLIO Annuity contracts in accumulation 99,811,011 589,941,753 (127,682,633) (717,624,386) (484,004,921) BALANCED PORTFOLIO Annuity contracts in accumulation 4,925,773 53,832,562 10,698,793 (43,133,769) (9,975,781) FLEXIBLE INCOME PORTFOLIO Annuity contracts in accumulation (708,999) (1,682,793) (805,827) 876,966 1,736,402 GROWTH PORTFOLIO Annuity contracts in accumulation 15,128,609 119,830,478 (6,192,556) (126,023,034) (78,652,756) WORLDWIDE GROWTH PORTFOLIO Annuity contracts in accumulation 61,024,670 537,057,291 162,036,410 (375,020,881) (222,531,547) JANUS TWENTY FUND Annuity contracts in accumulation (489) 0 (36) (36) (526) LEXINGTON FUNDS: EMERGING MARKETS FUND Annuity contracts in accumulation (1,374,436) 3,274,926 (436,042) (3,710,968) (5,224,196) NATURAL RESOURCES TRUST FUND Annuity contracts in accumulation (2,002,246) (2,122,540) 2,402,322 4,524,862 2,407,502 MFS TOTAL RETURN SERIES Annuity contracts in accumulation 20,170 (1,178) 229,562 230,740 277,843 OPPENHEIMER FUNDS: GLOBAL SECURITIES FUND Annuity contracts in accumulation 971,295 1,418,022 (2,527,749) (3,945,771) (999,888) STRATEGIC BOND FUND Annuity contracts in accumulation (125,516) (2,586) (86,964) (84,378) 56,603 PORTFOLIO PARTNERS, INC. (PPI): PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO (1) Annuity contracts in accumulation 5,749,841 93,135,075 23,536,746 (69,598,329) (25,701,050) - --------------------------------------------------------------------------------------------------
S-45 VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS - December 31, 2000 (continued): 5. SUPPLEMENTAL INFORMATION TO STATEMENT OF OPERATIONS (continued): Valuation Proceeds Cost of Period from Investments PERIOD ENDED DECEMBER 31, 2000 Dividends Deductions Sales Sold PPI MFS EMERGING EQUITIES PORTFOLIO Annuity contracts in accumulation $6,199,858 ($6,237,790) $55,129,171 ($31,391,585) PPI MFS RESEARCH GROWTH PORTFOLIO Annuity contracts in accumulation 18,992,631 (2,911,500) 27,627,852 (18,166,161) PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO Annuity contracts in accumulation 24,723,742 (2,881,443) 671,761,812 (687,430,118) PPI T. ROWE PRICE GROWTH EQUITY PORTFOLIO Annuity contracts in accumulation 21,160,269 (2,799,115) 21,884,981 (14,116,507) TOTAL VARIABLE ANNUITY ACCOUNT C $1,472,215,106 ($175,240,683) $3,840,647,337 ($3,516,088,718)
(1) - Effective May 1, 2000, PPI MFS Value Equity Portfolio's name changed to PPI MFS Capital Opportunities Portfolio. S-46 Net Net Net Unrealized Net Increase Realized Gain (Loss) Change in (Decrease) Gain (Loss) ------------------------------- Unrealized in Net Assets on Beginning End Gain (Loss) Resulting from PERIOD ENDED DECEMBER 31, 2000 Investments of Year of Year on Investments Operations PPI MFS EMERGING EQUITIES PORTFOLIO Annuity contracts in accumulation $23,737,586 $265,730,062 $62,642,562 ($203,087,500) ($179,387,846) PPI MFS RESEARCH GROWTH PORTFOLIO Annuity contracts in accumulation 9,461,691 81,650,752 42,588,288 (39,062,464) (13,519,642) PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO Annuity contracts in accumulation (15,668,306) 60,499,972 (186,763) (60,686,735) (54,512,742) PPI T. ROWE PRICE GROWTH EQUITY PORTFOLIO Annuity contracts in accumulation 7,768,474 76,614,253 46,977,151 (29,637,102) (3,507,474) TOTAL VARIABLE ANNUITY ACCOUNT C $324,558,619 $2,223,496,072 ($1,381,531,716) ($3,605,027,788) ($1,983,494,746)
(1) - Effective May 1, 2000, PPI MFS Value Equity Portfolio's name changed to PPI MFS Capital Opportunities Portfolio. S-47 VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS - December 31, 2000 (continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED DECEMBER 31, 2000 Net Net Net Change in Increase (Decrease) Net Assets Net Realized Unrealized in Net Assets ----- Investment Gain (Loss) Gain (Loss) from Unit Beginning Income (Loss) on Investments on Investments Transactions of Year AETNA ASCENT VP Annuity contracts in accumulation $36,550 $2,023,951 ($3,440,951) ($3,443,191) $81,880,934 AETNA BALANCED VP, INC. Annuity contracts in accumulation 112,901,501 19,727,105 (147,081,096) (103,452,150) 958,810,376 Annuity contracts in payment period 34,529,808 AETNA BOND VP Annuity contracts in accumulation 13,216,666 (2,959,272) 13,343,145 (39,454,311) 312,007,882 Annuity contracts in payment period 5,764,551 AETNA CROSSROADS VP Annuity contracts in accumulation 441,285 97,305 (1,013,800) (4,468,657) 67,400,270 Annuity contracts in payment period 73,220 AETNA GET FUND, SERIES C Annuity contracts in accumulation 30,449,060 3,720,138 (49,493,522) (18,887,555) 170,407,185 AETNA GET FUND, SERIES D Annuity contracts in accumulation 14,440,368 3,089,297 (38,474,173) (119,418,211) 471,441,304 AETNA GET FUND, SERIES E Annuity contracts in accumulation 3,827,276 1,026,846 (13,265,067) (17,735,793) 157,821,380 AETNA GET FUND, SERIES G Annuity contracts in accumulation 379,657 71,399 (2,340,015) (5,775,781) 45,668,355 AETNA GET FUND, SERIES H Annuity contracts in accumulation 196,795 162,638 (269,484) 27,303,119 1,782,585 AETNA GET FUND, SERIES I Annuity contracts in accumulation 1,454 2,133 (32,894) 1,393,627 0 AETNA GET FUND, SERIES J Annuity contracts in accumulation 615 (45) (16,577) 472,733 0 AETNA GET FUND, SERIES K Annuity contracts in accumulation (979) 197 (8,299) 2,871,835 0 AETNA GET FUND, SERIES L Annuity contracts in accumulation (1) 0 16 15,972 0 AETNA GROWTH AND INCOME VP Annuity contracts in accumulation 536,765,360 (28,305,954) (1,173,968,207) (721,658,072) 5,753,192,035 Annuity contracts in payment period 373,523,149 AETNA GROWTH VP Annuity contracts in accumulation 1,093,671 3,731,651 (32,927,743) 53,759,126 145,431,206 Annuity contracts in payment period 71,588 AETNA HIGH YIELD VP Annuity contracts in accumulation (12,839) (193,642) 112,582 (2,083,594) 2,177,493 AETNA INDEX PLUS BOND VP Annuity contracts in accumulation (6,435) (14,618) 64,241 (1,042,892) 999,704 PERIOD ENDED DECEMBER 31, 2000 Net Assets --- End of Year AETNA ASCENT VP Annuity contracts in accumulation $77,057,293 AETNA BALANCED VP, INC. Annuity contracts in accumulation 842,266,266 Annuity contracts in payment period 33,169,278 AETNA BOND VP Annuity contracts in accumulation 296,126,266 Annuity contracts in payment period 5,792,395 AETNA CROSSROADS VP Annuity contracts in accumulation 62,461,577 Annuity contracts in payment period 68,046 AETNA GET FUND, SERIES C Annuity contracts in accumulation 136,195,306 AETNA GET FUND, SERIES D Annuity contracts in accumulation 331,078,585 AETNA GET FUND, SERIES E Annuity contracts in accumulation 131,674,642 AETNA GET FUND, SERIES G Annuity contracts in accumulation 38,003,615 AETNA GET FUND, SERIES H Annuity contracts in accumulation 29,175,653 AETNA GET FUND, SERIES I Annuity contracts in accumulation 1,364,320 AETNA GET FUND, SERIES J Annuity contracts in accumulation 456,726 AETNA GET FUND, SERIES K Annuity contracts in accumulation 2,862,754 AETNA GET FUND, SERIES L Annuity contracts in accumulation 15,987 AETNA GROWTH AND INCOME VP Annuity contracts in accumulation 4,428,082,443 Annuity contracts in payment period 311,465,868 AETNA GROWTH VP Annuity contracts in accumulation 171,026,842 Annuity contracts in payment period 132,657 AETNA HIGH YIELD VP Annuity contracts in accumulation 0 AETNA INDEX PLUS BOND VP Annuity contracts in accumulation 0
S-48 VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS - December 31, 2000 (continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
PERIOD ENDED DECEMBER 31, 2000 Net Net Net Change in Increase (Decrease) Net Assets Net Realized Unrealized in Net Assets ----- Investment Gain (Loss) Gain (Loss) from Unit Beginning Income (Loss) on Investments on Investments Transactions of Year AETNA INDEX PLUS LARGE CAP VP Annuity contracts in accumulation $53,741,102 $21,047,809 ($129,501,789) $68,658,775 $473,757,587 Annuity contracts in payment period 1,234,629 AETNA INDEX PLUS MID CAP VP Annuity contracts in accumulation (27,987) 1,154,995 1,177,084 43,880,546 9,210,760 AETNA INDEX PLUS SMALL CAP VP Annuity contracts in accumulation (110,447) 829,971 97,541 3,748,048 8,277,508 AETNA INTERNATIONAL VP Annuity contracts in accumulation 2,173,465 192,117 (5,937,734) 8,806,604 7,714,709 AETNA LEGACY VP Annuity contracts in accumulation 334,677 292,708 802,261 (5,203,105) 42,650,270 Annuity contracts in payment period 247,224 AETNA MONEY MARKET VP Annuity contracts in accumulation 10,773,853 5,251,674 (413,714) (18,346,548) 325,367,721 Annuity contracts in payment period 80,784 AETNA REAL ESTATE SECURITIES VP Annuity contracts in accumulation (13,914) 383,451 72,859 (2,426,021) 1,983,625 AETNA SMALL COMPANY VP Annuity contracts in accumulation 4,688,047 16,494,744 (22,423,480) 43,023,013 62,919,038 Annuity contracts in payment period 11,036 AETNA TECHNOLOGY VP Annuity contracts in accumulation (123,166) (659,018) (12,476,702) 38,113,990 0 AETNA VALUE OPPORTUNITY VP Annuity contracts in accumulation 5,239,593 2,663,927 (4,901,655) 25,424,473 34,639,709 AIM V.I. FUNDS: CAPITAL APPRECIATION FUND Annuity contracts in accumulation 466,170 257,799 (5,245,120) 24,665,165 1,830,289 GROWTH AND INCOME FUND Annuity contracts in accumulation 1,144,879 389,979 (10,043,307) 47,737,578 9,752,003 GROWTH FUND Annuity contracts in accumulation 476,725 139,092 (6,432,977) 20,557,669 4,700,713 VALUE FUND Annuity contracts in accumulation 660,349 140,169 (4,209,966) 13,358,563 8,538,069 CALVERT SOCIAL BALANCED PORTFOLIO Annuity contracts in accumulation 2,267,247 2,854,362 (7,230,865) (2,720,584) 68,092,305 FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUNDS: EQUITY-INCOME PORTFOLIO Annuity contracts in accumulation 13,851,094 8,757,904 (11,069,516) (29,578,468) 213,941,762 GROWTH PORTFOLIO Annuity contracts in accumulation 44,257,732 7,564,259 (113,706,819) 70,421,374 440,335,255 PERIOD ENDED DECEMBER 31, 2000 Net Assets --- End of Year AETNA INDEX PLUS LARGE CAP VP Annuity contracts in accumulation $487,054,341 Annuity contracts in payment period 1,883,772 AETNA INDEX PLUS MID CAP VP Annuity contracts in accumulation 55,395,398 AETNA INDEX PLUS SMALL CAP VP Annuity contracts in accumulation 12,842,621 AETNA INTERNATIONAL VP Annuity contracts in accumulation 12,949,161 AETNA LEGACY VP Annuity contracts in accumulation 38,925,638 Annuity contracts in payment period 198,397 AETNA MONEY MARKET VP Annuity contracts in accumulation 322,624,048 Annuity contracts in payment period 89,722 AETNA REAL ESTATE SECURITIES VP Annuity contracts in accumulation 0 AETNA SMALL COMPANY VP Annuity contracts in accumulation 104,675,715 Annuity contracts in payment period 36,683 AETNA TECHNOLOGY VP Annuity contracts in accumulation 24,855,104 AETNA VALUE OPPORTUNITY VP Annuity contracts in accumulation 63,066,047 AIM V.I. FUNDS: CAPITAL APPRECIATION FUND Annuity contracts in accumulation 21,974,303 GROWTH AND INCOME FUND Annuity contracts in accumulation 48,981,132 GROWTH FUND Annuity contracts in accumulation 19,441,222 VALUE FUND Annuity contracts in accumulation 18,487,184 CALVERT SOCIAL BALANCED PORTFOL Annuity contracts in accumulation 63,262,465 FIDELITY INVESTMENTS VARIABLE I EQUITY-INCOME PORTFOLIO Annuity contracts in accumulation 195,902,776 GROWTH PORTFOLIO Annuity contracts in accumulation 448,871,801
S-49 VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS - December 31, 2000 (continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
PERIOD ENDED DECEMBER 31, 2000 Net Net Net Change in Increase (Decrease) Net Assets Net Realized Unrealized in Net Assets ----- Investment Gain (Loss) Gain (Loss) from Unit Beginning Income (Loss) on Investments on Investments Transactions of Year HIGH INCOME PORTFOLIO Annuity contracts in accumulation $114,589 ($207,629) ($583,683) $1,252,502 $1,873,989 OVERSEAS PORTFOLIO Annuity contracts in accumulation 2,009,833 1,209,084 (7,577,795) 516,832 22,033,565 FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUNDS II: ASSET MANAGER PORTFOLIO Annuity contracts in accumulation 2,601,494 701,785 (4,594,430) (2,709,341) 27,730,745 CONTRAFUND PORTFOLIO Annuity contracts in accumulation 54,595,412 20,839,462 (110,406,630) (19,480,139) 475,353,405 INDEX 500 PORTFOLIO Annuity contracts in accumulation 400,034 23,361,718 (35,626,722) (6,058,333) 122,573,178 JANUS ASPEN SERIES: AGGRESSIVE GROWTH PORTFOLIO Annuity contracts in accumulation 133,808,454 99,811,011 (717,624,386) 340,768,328 1,093,429,837 BALANCED PORTFOLIO Annuity contracts in accumulation 28,232,215 4,925,773 (43,133,769) 70,619,050 235,410,674 FLEXIBLE INCOME PORTFOLIO Annuity contracts in accumulation 1,568,435 (708,999) 876,966 2,253,321 32,908,277 GROWTH PORTFOLIO Annuity contracts in accumulation 32,241,669 15,128,609 (126,023,034) 127,925,797 362,723,120 Annuity contracts in payment period 689,393 WORLDWIDE GROWTH PORTFOLIO Annuity contracts in accumulation 91,464,664 61,024,670 (375,020,881) 169,190,829 1,136,307,574 Annuity contracts in payment period 752,858 JANUS TWENTY FUND Annuity contracts in payment period (1) (489) (36) 1,071 0 LEXINGTON FUNDS: EMERGING MARKETS FUND Annuity contracts in accumulation (138,792) (1,374,436) (3,710,968) 5,130 11,586,115 NATURAL RESOURCES TRUST FUND Annuity contracts in accumulation (115,114) (2,002,246) 4,524,862 (2,219,822) 16,508,469 MFS TOTAL RETURN SERIES Annuity contracts in accumulation 26,933 20,170 230,740 3,897,679 684,196 OPPENHEIMER FUNDS: GLOBAL SECURITIES FUND Annuity contracts in accumulation 1,974,588 971,295 (3,945,771) 45,386,552 5,871,877 STRATEGIC BOND FUND Annuity contracts in accumulation 266,497 (125,516) (84,378) 2,461,306 3,464,259 Annuity contracts in payment period 27,517 PERIOD ENDED DECEMBER 31, 2000 Net Assets --- End of Year HIGH INCOME PORTFOLIO Annuity contracts in accumulation $2,449,768 OVERSEAS PORTFOLIO Annuity contracts in accumulation 18,191,519 FIDELITY INVESTMENTS VARIABLE I ASSET MANAGER PORTFOLIO Annuity contracts in accumulation 23,730,253 CONTRAFUND PORTFOLIO Annuity contracts in accumulation 420,901,510 INDEX 500 PORTFOLIO Annuity contracts in accumulation 104,649,875 JANUS ASPEN SERIES: AGGRESSIVE GROWTH PORTFOLIO Annuity contracts in accumulation 950,193,244 BALANCED PORTFOLIO Annuity contracts in accumulation 296,053,943 FLEXIBLE INCOME PORTFOLIO Annuity contracts in accumulation 36,898,000 GROWTH PORTFOLIO Annuity contracts in accumulation 411,767,617 Annuity contracts in payment period 917,937 WORLDWIDE GROWTH PORTFOLIO Annuity contracts in accumulation 1,082,624,571 Annuity contracts in payment period 1,095,143 JANUS TWENTY FUND Annuity contracts in payment period 545 LEXINGTON FUNDS: EMERGING MARKETS FUND Annuity contracts in accumulation 6,367,049 NATURAL RESOURCES TRUST FUND Annuity contracts in accumulation 16,696,149 MFS TOTAL RETURN SERIES Annuity contracts in accumulation 4,859,718 OPPENHEIMER FUNDS: GLOBAL SECURITIES FUND Annuity contracts in accumulation 50,258,541 STRATEGIC BOND FUND Annuity contracts in accumulation 5,987,840 Annuity contracts in payment period 21,845
S-50 VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS - December 31, 2000 (continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
PERIOD ENDED DECEMBER 31, 2000 Net Net Net Change in Increase (Decrease) Net Assets Net Realized Unrealized in Net Assets ----- Investment Gain (Loss) Gain (Loss) from Unit Beginning Income (Loss) on Investments on Investments Transactions of Year PORTFOLIO PARTNERS, INC. (PPI): PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO (1) Annuity contracts in accumulation $38,147,438 $5,749,841 ($69,598,329) $90,392,695 $226,770,707 Annuity contracts in payment period 36,974 PPI MFS EMERGING EQUITIES PORTFOLIO Annuity contracts in accumulation (37,932) 23,737,586 (203,087,500) 6,822,966 597,714,231 Annuity contracts in payment period 38,500 PPI MFS RESEARCH GROWTH PORTFOLIO Annuity contracts in accumulation 16,081,131 9,461,691 (39,062,464) (7,714,809) 255,763,877 PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO Annuity contracts in accumulation 21,842,299 (15,668,306) (60,686,735) (17,427,634) 291,483,624 Annuity contracts in payment period 0 PPI T. ROWE PRICE GROWTH EQUITY PORTFOLIO Annuity contracts in accumulation 18,361,154 7,768,474 (29,637,102) 5,277,763 243,032,240 Annuity contracts in payment period 62,930 TOTAL VARIABLE ANNUITY ACCOUNT C $1,296,974,423 $324,558,619 ($3,605,027,788) $209,679,020 $15,463,100,152 PERIOD ENDED DECEMBER 31, 2000 Net Assets --- End of Year PORTFOLIO PARTNERS, INC. (PPI): PPI MFS CAPITAL OPPORTUNITIES Annuity contracts in accumulation $291,099,078 Annuity contracts in payment period 400,248 PPI MFS EMERGING EQUITIES POR Annuity contracts in accumulation 425,020,833 Annuity contracts in payment period 167,018 PPI MFS RESEARCH GROWTH PORTF Annuity contracts in accumulation 234,529,426 PPI SCUDDER INTERNATIONAL GRO Annuity contracts in accumulation 219,533,810 Annuity contracts in payment period 9,438 PPI T. ROWE PRICE GROWTH EQUI Annuity contracts in accumulation 244,707,197 Annuity contracts in payment period 158,262 TOTAL VARIABLE ANNUITY ACCOUNT C $13,689,284,426
(1) - Effective May 1, 2000, PPI MFS Value Equity Portfolio's name changed to PPI MFS Capital Opportunities Portfolio. S-51 VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS - December 31, 2000 (continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
YEAR ENDED DECEMBER 31, 1999 Net Net Change in Net Realized Unrealized Investment Gain (Loss) Gain (Loss) Income (Loss) on Investments on Investments AETNA ASCENT VP Annuity contracts in accumulation $4,484,625 $3,126,744 $2,132,558 AETNA BALANCED VP, INC. Annuity contracts in accumulation 118,239,538 37,431,264 (42,591,986) Annuity contracts in payment period AETNA BOND VP Annuity contracts in accumulation 16,461,643 1,046,894 (24,239,538) Annuity contracts in payment period AETNA CROSSROADS VP Annuity contracts in accumulation 3,308,843 1,917,397 531,876 Annuity contracts in payment period AETNA GET FUND, SERIES B Annuity contracts in accumulation 19,358,523 (12,039,286) (6,591,127) AETNA GET FUND, SERIES C Annuity contracts in accumulation 47,270,301 19,146,788 (33,331,150) AETNA GET FUND, SERIES D Annuity contracts in accumulation 3,201,347 1,995,462 25,614,792 AETNA GET FUND, SERIES E Annuity contracts in accumulation 184,959 90,964 10,381,800 AETNA GET FUND, SERIES G Annuity contracts in accumulation 56,051 5,862 1,305,419 AETNA GET FUND, SERIES H Annuity contracts in accumulation (453) 0 2,236 AETNA GROWTH AND INCOME VP Annuity contracts in accumulation 1,020,531,624 147,882,214 (270,740,512) Annuity contracts in payment period AETNA GROWTH VP Annuity contracts in accumulation 5,660,733 3,300,255 24,309,959 Annuity contracts in payment period AETNA HIGH YIELD VP Annuity contracts in accumulation 216,022 (90,872) (8,453) AETNA INDEX PLUS BOND VP Annuity contracts in accumulation 48,545 (79,227) (3,880) AETNA INDEX PLUS LARGE CAP VP Annuity contracts in accumulation 15,724,982 6,079,736 55,890,076 Annuity contracts in payment period AETNA INDEX PLUS MID CAP VP Annuity contracts in accumulation 962,713 414,344 (273,056) AETNA INDEX PLUS SMALL CAP VP Annuity contracts in accumulation (57,013) 502,554 276,131 YEAR ENDED DECEMBER 31, 1999 Net Increase (Decrease) Net Assets in Net Assets ---------- from Unit Beginning End Transactions of Year of Year AETNA ASCENT VP Annuity contracts in accumulation ($13,863,249) $86,000,256 $81,880,934 AETNA BALANCED VP, INC. Annuity contracts in accumulation (131,531,827) 982,574,403 958,810,376 Annuity contracts in payment period 29,218,792 34,529,808 AETNA BOND VP Annuity contracts in accumulation (59,574,107) 377,693,504 312,007,882 Annuity contracts in payment period 6,384,037 5,764,551 AETNA CROSSROADS VP Annuity contracts in accumulation (12,384,759) 74,028,644 67,400,270 Annuity contracts in payment period 71,489 73,220 AETNA GET FUND, SERIES B Annuity contracts in accumulation (60,309,287) 59,581,177 0 AETNA GET FUND, SERIES C Annuity contracts in accumulation (60,859,707) 198,180,953 170,407,185 AETNA GET FUND, SERIES D Annuity contracts in accumulation 169,649,573 270,980,130 471,441,304 AETNA GET FUND, SERIES E Annuity contracts in accumulation 147,163,657 0 157,821,380 AETNA GET FUND, SERIES G Annuity contracts in accumulation 44,301,023 0 45,668,355 AETNA GET FUND, SERIES H Annuity contracts in accumulation 1,780,802 0 1,782,585 AETNA GROWTH AND INCOME VP Annuity contracts in accumulation (946,107,352) 5,846,282,205 5,753,192,035 Annuity contracts in payment period 328,867,005 373,523,149 AETNA GROWTH VP Annuity contracts in accumulation 47,381,121 64,734,239 145,431,206 Annuity contracts in payment period 116,487 71,588 AETNA HIGH YIELD VP Annuity contracts in accumulation 816,418 1,244,378 2,177,493 AETNA INDEX PLUS BOND VP Annuity contracts in accumulation (391,345) 1,425,611 999,704 AETNA INDEX PLUS LARGE CAP VP Annuity contracts in accumulation 158,281,330 238,578,749 473,757,587 Annuity contracts in payment period 437,343 1,234,629 AETNA INDEX PLUS MID CAP VP Annuity contracts in accumulation 3,990,282 4,116,477 9,210,760 AETNA INDEX PLUS SMALL CAP VP Annuity contracts in accumulation 2,602,681 4,953,155 8,277,508
S-52 VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS - December 31, 2000 (continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
YEAR ENDED DECEMBER 31, 1999 Net Net Change in Net Realized Unrealized Investment Gain (Loss) Gain (Loss) Income (Loss) on Investments on Investments AETNA INTERNATIONAL VP Annuity contracts in accumulation $506,421 $274,738 $1,218,868 AETNA LEGACY VP Annuity contracts in accumulation 1,926,317 581,133 36,729 Annuity contracts in payment period AETNA MONEY MARKET VP Annuity contracts in accumulation 8,294,242 3,567,509 (1,354,469) Annuity contracts in payment period AETNA REAL ESTATE SECURITIES VP Annuity contracts in accumulation 75,050 (233,415) 37,873 AETNA SMALL COMPANY VP Annuity contracts in accumulation 217,851 496,621 13,504,421 Annuity contracts in payment period AETNA VALUE OPPORTUNITY VP Annuity contracts in accumulation 1,269,847 1,776,481 2,281,833 AIM V.I. FUNDS: CAPITAL APPRECIATION FUND Annuity contracts in accumulation 31,993 133,328 166,754 GROWTH AND INCOME FUND Annuity contracts in accumulation 50,560 15,298 1,220,016 GROWTH FUND Annuity contracts in accumulation 144,013 14,730 497,930 VALUE FUND Annuity contracts in accumulation 107,787 44,964 835,034 CALVERT SOCIAL BALANCED PORTFOLIO Annuity contracts in accumulation 5,750,754 2,809,577 (1,784,527) FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND: EQUITY-INCOME PORTFOLIO Annuity contracts in accumulation 7,630,657 10,615,100 (7,600,032) GROWTH PORTFOLIO Annuity contracts in accumulation 23,503,440 6,451,416 75,728,469 HIGH INCOME PORTFOLIO Annuity contracts in accumulation 124,194 (41,988) 34,123 OVERSEAS PORTFOLIO Annuity contracts in accumulation 391,037 978,239 4,823,117 FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND II: ASSET MANAGER PORTFOLIO Annuity contracts in accumulation 1,657,402 869,135 1,190 CONTRAFUND PORTFOLIO Annuity contracts in accumulation 9,818,964 15,275,881 61,433,098 YEAR ENDED DECEMBER 31, 1999 Net Increase (Decrease) Net Assets in Net Assets ---------- from Unit Beginning End Transactions of Year of Year AETNA INTERNATIONAL VP Annuity contracts in accumulation $3,698,655 $2,016,027 $7,714,709 AETNA LEGACY VP Annuity contracts in accumulation (12,977,974) 53,070,226 42,650,270 Annuity contracts in payment period 261,063 247,224 AETNA MONEY MARKET VP Annuity contracts in accumulation 56,001,252 258,856,854 325,367,721 Annuity contracts in payment period 83,117 80,784 AETNA REAL ESTATE SECURITIES Annuity contracts in accumulation 543,051 1,561,066 1,983,625 AETNA SMALL COMPANY VP Annuity contracts in accumulation 734,295 47,966,985 62,919,038 Annuity contracts in payment period 9,901 11,036 AETNA VALUE OPPORTUNITY VP Annuity contracts in accumulation 526,409 28,785,139 34,639,709 AIM V.I. FUNDS: CAPITAL APPRECIATION FUND Annuity contracts in accumulation 1,498,214 0 1,830,289 GROWTH AND INCOME FUND Annuity contracts in accumulation 8,466,129 0 9,752,003 GROWTH FUND Annuity contracts in accumulation 4,044,040 0 4,700,713 VALUE FUND Annuity contracts in accumulation 7,550,284 0 8,538,069 CALVERT SOCIAL BALANCED PORTF Annuity contracts in accumulation (2,584,906) 63,901,407 68,092,305 FIDELITY INVESTMENTS VARIABLE EQUITY-INCOME PORTFOLIO Annuity contracts in accumulation (22,905,250) 226,201,287 213,941,762 GROWTH PORTFOLIO Annuity contracts in accumulation 104,243,427 230,408,503 440,335,255 HIGH INCOME PORTFOLIO Annuity contracts in accumulation 146,104 1,611,556 1,873,989 OVERSEAS PORTFOLIO Annuity contracts in accumulation 1,026,570 14,814,602 22,033,565 FIDELITY INVESTMENTS VARIABLE ASSET MANAGER PORTFOLIO Annuity contracts in accumulation (1,496,641) 26,699,659 27,730,745 CONTRAFUND PORTFOLIO Annuity contracts in accumulation 28,744,136 360,081,326 475,353,405
S-53 VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS - December 31, 2000 (continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
YEAR ENDED DECEMBER 31, 1999 Net Net Change in Net Realized Unrealized Investment Gain (Loss) Gain (Loss) Income (Loss) on Investments on Investments INDEX 500 PORTFOLIO Annuity contracts in accumulation $221,114 $10,243,611 $8,479,708 JANUS ASPEN SERIES: AGGRESSIVE GROWTH PORTFOLIO Annuity contracts in accumulation 13,303,149 18,380,825 490,048,109 BALANCED PORTFOLIO Annuity contracts in accumulation 2,407,967 2,695,537 33,691,755 FLEXIBLE INCOME PORTFOLIO Annuity contracts in accumulation 1,905,340 102,768 (1,858,291) GROWTH PORTFOLIO Annuity contracts in accumulation (878,661) 4,203,879 85,432,344 Annuity contracts in payment period WORLDWIDE GROWTH PORTFOLIO Annuity contracts in accumulation (7,230,405) 28,651,722 399,415,491 Annuity contracts in payment period LEXINGTON FUNDS: EMERGING MARKETS FUND Annuity contracts in accumulation (38,024) 920,198 4,929,162 NATURAL RESOURCES TRUST FUND Annuity contracts in accumulation (100,558) (1,949,728) 4,103,785 MFS TOTAL RETURN SERIES Annuity contracts in accumulation 21,607 9,440 (22,187) OPPENHEIMER FUNDS: GLOBAL SECURITIES FUND/VA (1) Annuity contracts in accumulation 32,268 233,178 1,327,431 STRATEGIC BOND FUND/VA (2) Annuity contracts in accumulation 124,247 (40,619) (26,322) Annuity contracts in payment period PORTFOLIO PARTNERS, INC. (PPI): PPI MFS EMERGING EQUITIES PORTFOLIO Annuity contracts in accumulation (459,744) 19,466,353 177,745,248 Annuity contracts in payment period PPI MFS RESEARCH GROWTH PORTFOLIO Annuity contracts in accumulation (2,267,821) 10,075,588 40,977,917 PPI MFS VALUE EQUITY PORTFOLIO Annuity contracts in accumulation 2,847,222 6,015,052 62,469,848 Annuity contracts in payment period PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO Annuity contracts in accumulation 6,448,822 59,250,743 42,048,531 YEAR ENDED DECEMBER 31, 1999 Net Increase (Decrease) Net Assets in Net Assets ---------- from Unit Beginning End Transactions of Year of Year INDEX 500 PORTFOLIO Annuity contracts in accumulation $10,276,427 $93,352,318 $122,573,178 JANUS ASPEN SERIES: AGGRESSIVE GROWTH PORTFOLIO Annuity contracts in accumulation 279,468,672 292,229,082 1,093,429,837 BALANCED PORTFOLIO Annuity contracts in accumulation 101,738,423 94,876,992 235,410,674 FLEXIBLE INCOME PORTFOLIO Annuity contracts in accumulation 257,212 32,501,248 32,908,277 GROWTH PORTFOLIO Annuity contracts in accumulation 141,722,099 132,697,360 362,723,120 Annuity contracts in payment period 235,492 689,393 WORLDWIDE GROWTH PORTFOLIO Annuity contracts in accumulation 100,021,912 615,835,740 1,136,307,574 Annuity contracts in payment period 365,972 752,858 LEXINGTON FUNDS: EMERGING MARKETS FUND Annuity contracts in accumulation 1,680,324 4,094,455 11,586,115 NATURAL RESOURCES TRUST FUN Annuity contracts in accumulation (5,286,357) 19,741,327 16,508,469 MFS TOTAL RETURN SERIES Annuity contracts in accumulation 289,569 385,767 684,196 OPPENHEIMER FUNDS: GLOBAL SECURITIES FUND/VA ( Annuity contracts in accumulation 3,302,879 976,121 5,871,877 STRATEGIC BOND FUND/VA (2) Annuity contracts in accumulation 1,177,371 2,253,578 3,464,259 Annuity contracts in payment period 3,521 27,517 PORTFOLIO PARTNERS, INC. (PPI PPI MFS EMERGING EQUITIES P Annuity contracts in accumulation (33,182,887) 434,156,330 597,714,231 Annuity contracts in payment period 27,431 38,500 PPI MFS RESEARCH GROWTH POR Annuity contracts in accumulation (35,109,323) 242,087,516 255,763,877 PPI MFS VALUE EQUITY PORTFO Annuity contracts in accumulation 4,623,083 150,852,476 226,770,707 Annuity contracts in payment period 0 36,974 PPI SCUDDER INTERNATIONAL G Annuity contracts in accumulation (18,230,281) 201,965,809 291,483,624
S-54 VARIABLE ANNUITY ACCOUNT C NOTES TO FINANCIAL STATEMENTS - December 31, 2000 (continued): 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CHANGES IN NET ASSETS (continued):
YEAR ENDED DECEMBER 31, 1999 Net Net Change in Net Realized Unrealized Investment Gain (Loss) Gain (Loss) Income (Loss) on Investments on Investments PPI T. ROWE PRICE GROWTH EQUITY PORTFOLIO Annuity contracts in accumulation $2,793,773 $9,179,295 $31,045,275 Annuity contracts in payment period TOTAL VARIABLE ANNUITY ACCOUNT C $1,336,283,808 $421,797,682 $1,273,553,376 YEAR ENDED DECEMBER 31, 1999 Net Increase (Decrease) Net Assets in Net Assets ---------- from Unit Beginning End Transactions of Year of Year PPI T. ROWE PRICE GROWTH EQ Annuity contracts in accumulation ($15,852,163) $215,872,943 $243,032,240 Annuity contracts in payment period 56,047 62,930 TOTAL VARIABLE ANNUITY ACCOUNT C $5,100,009 $12,426,365,277 $15,463,100,152
(1) - Effective May 1, 1999, Oppenheimer Global Securities Fund's name changed to Oppenheimer Global Securities Fund/VA. (2) - Effective May 1, 1999, Oppenheimer Strategic Bond Fund's name changed to Oppenheimer Strategic Bond Fund/VA. S-55 INDEPENDENT AUDITORS' REPORT The Board of Directors of Aetna Life Insurance and Annuity Company and Contract Owners of Variable Annuity Account C: We have audited the accompanying statement of assets and liabilities of Aetna Life Insurance and Annuity Company Variable Annuity Account C (the "Account") as of December 31, 2000, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended and the condensed financial information for the year ended December 31, 2000. These financial statements and the condensed financial information are the responsibility of the Account's management. Our responsibility is to express an opinion on these financial statements and condensed financial information based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and condensed financial information are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and condensed financial information referred to above present fairly, in all material respects, the financial position of Aetna Life Insurance and Annuity Company Variable Annuity Account C as of December 31, 2000, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended and the condensed financial information for the year then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ KPMG LLP Hartford, Connecticut February 2, 2001 S-56 AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page ---- Independent Auditors' Report...................... F-2 Consolidated Financial Statements: 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..... F-3 Consolidated Balance Sheets as of December 31, 2000 and 1999................. F-4 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........... F-5 Consolidated Statements of Cash Flows 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....................................... F-6 Notes to Consolidated Financial Statements.... F-7
F-1 INDEPENDENT AUDITORS' REPORT The Shareholder and Board of Directors Aetna Life Insurance and Annuity Company: We have audited the accompanying consolidated balance sheets of Aetna Life Insurance and Annuity Company and Subsidiaries as of December 31, 2000 ("Successor Company") and December 31, 1999 ("Preacquisition Company"), and the related consolidated statements of income, changes in shareholder's equity and cash flows for the period from December 1, 2000 to December 31, 2000 ("Successor Company"), and for the period from January 1, 2000 to November 30, 2000 and the years ended December 31, 1999 and 1998 ("Preacquisition Company"). These consolidated financial statements are the responsibility of the Companies' management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the Successor Company's consolidated financial statements referred to above present fairly, in all material respects, the financial position of Aetna Life Insurance and Annuity Company and Subsidiaries at December 31, 2000, and the results of their operations and their cash flows for the period from December 1, 2000 to December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. Further, in our opinion, the Preacquisition Company's consolidated financial statements referred to above present fairly, in all material respects, the financial position of Aetna Life Insurance and Annuity Company and Subsidiaries at December 31, 1999, and the results of their operations and their cash flows for the period from January 1, 2000 to November 30, 2000, and the years ended December 31, 1999 and 1998, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1 to the consolidated financial statements, effective November 30, 2000, ING America Insurance Holdings Inc. acquired all of the outstanding stock of Aetna Inc., Aetna Life Insurance and Annuity Company's indirect parent and sole shareholder in a business combination accounted for as a purchase. As a result of the acquisition, the consolidated financial information for the periods after the acquisition is presented on a different cost basis than that for the periods before the acquisition and, therefore, is not comparable. /s/ KPMG LLP Hartford, Connecticut March 27, 2001 F-2 AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly owned subsidiary of Aetna Retirement Holdings, Inc.) CONSOLIDATED STATEMENTS OF INCOME (millions)
Preacquisition ------------------------------------------------ One month Eleven months ended ended Year ended Year ended December 31, November 30, December 31, December 31, 2000 2000 1999 1998 ------------- -------------- ------------- ------------- Revenue: Premiums $ 16.5 $ 137.7 $ 107.5 $ 79.4 Charges assessed against policyholders 36.4 424.6 388.3 324.3 Net investment income 78.6 833.8 886.3 871.8 Net realized capital (losses) gains 1.8 (37.2) (21.5) 10.4 Other income 13.4 148.7 129.7 100.2 ------ -------- -------- -------- Total revenue 146.7 1,507.6 1,490.3 1,386.1 ------ -------- -------- -------- Benefits and expenses: Current and future benefits 68.9 726.7 746.2 714.4 Operating expenses: Salaries and related benefits 29.9 187.5 153.0 141.0 Other 19.2 227.1 213.7 199.6 Amortization of deferred policy acquisition costs and value of business acquired 10.2 116.7 104.9 91.2 ------ -------- -------- -------- Total benefits and expenses 128.2 1,258.0 1,217.8 1,146.2 ------ -------- -------- -------- Income from continuing operations before income taxes 18.5 249.6 272.5 239.9 Income taxes 5.9 78.1 90.6 67.1 ------ -------- -------- -------- Income from continuing operations 12.6 171.5 181.9 172.8 Discontinued operations, net of tax: Income from operations -- -- -- 61.8 Amortization of deferred gain on sale -- 5.7 5.7 -- Immediate gain on sale -- -- -- 59.0 ------ -------- -------- -------- Net income $ 12.6 $ 177.2 $ 187.6 $ 293.6 ====== ======== ======== ========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. F-3 AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly owned subsidiary of Aetna Retirement Holdings, Inc.) CONSOLIDATED BALANCE SHEETS (millions, except share data)
December 31, December 31, 2000 1999 ------------- ------------- ASSETS Investments: Debt securities available for sale, at fair value (amortized cost: $11,120.0 and $11,657.9) $11,244.7 $11,410.1 Equity securities, at fair value: Nonredeemable preferred stock (cost: $109.0 and $134.7) 100.7 130.9 Investment in affiliated mutual funds (cost: $9.6 and $63.5) 12.7 64.1 Common stock (cost: $2.2 and $6.7) 3.5 11.5 Short-term investments 109.4 74.2 Mortgage loans 4.6 6.7 Policy loans 339.3 314.0 Other investments 13.4 13.2 Securities pledged to creditors (amortized cost: $126.8) 129.0 -- --------- --------- Total investments 11,957.3 12,024.7 Cash and cash equivalents 796.3 694.4 Short-term investments under securities loan agreement 131.8 238.8 Accrued investment income 147.2 150.7 Premiums due and other receivables 82.9 298.3 Reinsurance recoverable 3,005.8 3,001.2 Current income taxes 40.6 -- Deferred income taxes -- 150.4 Deferred policy acquisition costs 12.3 1,046.4 Value of business acquired 1,780.9 -- Goodwill 2,297.4 -- Other assets 154.7 96.5 Separate Accounts assets 36,745.8 38,692.6 --------- --------- Total assets $57,153.0 $56,394.0 ========= ========= LIABILITIES AND SHAREHOLDER'S EQUITY Liabilities: Future policy benefits $ 3,977.7 $ 3,850.4 Unpaid claims and claim expenses 29.6 27.3 Policyholders' funds left with the Company 11,125.6 11,121.7 --------- --------- Total insurance reserve liabilities 15,132.9 14,999.4 Payables under securities loan agreement 131.8 238.8 Current income taxes -- 14.7 Deferred income taxes 248.0 -- Other liabilities 549.9 1,062.8 Separate Accounts liabilities 36,745.8 38,692.6 --------- --------- Total liabilities 52,808.4 55,008.3 --------- --------- 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 4,303.8 431.9 Accumulated other comprehensive gain (loss) 25.4 (44.8) Retained earnings 12.6 995.8 --------- --------- Total shareholder's equity 4,344.6 1,385.7 --------- --------- Total liabilities and shareholder's equity $57,153.0 $56,394.0 ========= =========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. F-4 AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly owned subsidiary of Aetna Retirement Holdings, Inc.) CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY (millions)
Preacquisition ------------------------------------------------ One month Eleven months ended ended Year ended Year ended December 31, November 30, December 31, December 31, 2000 2000 1999 1998 ------------- -------------- ------------- ------------- Shareholder's equity, beginning of period $4,313.4 $1,385.7 $1,394.5 $1,853.3 Comprehensive income: Net income 12.6 177.2 187.6 293.6 Other comprehensive income (loss), net of tax: Unrealized gains (losses) on securities ($28.7, $79.4, ($230.2), $18.2 pretax) (1) 18.6 51.6 (149.6) 11.9 -------- -------- -------- -------- Total comprehensive income 31.2 228.8 38.0 305.5 -------- -------- -------- -------- Capital contributions: Cash -- 73.5 -- 9.3 Assets -- 56.0 -- -- -------- -------- -------- -------- Total capital contributions -- 129.5 -- 9.3 -------- -------- -------- -------- Other changes -- 0.8 2.9 2.4 -------- -------- -------- -------- Common stock dividends -- (10.1) (49.7) (776.0) -------- -------- -------- -------- Adjustment for purchase accounting -- 2,578.7 -- -- -------- -------- -------- -------- Shareholder's equity, end of period $4,344.6 $4,313.4 $1,385.7 $1,394.5 ======== ======== ======== ========
(1) Net of reclassification adjustments. SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. F-5 AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES (A wholly owned subsidiary of Aetna Retirement Holdings, Inc.) CONSOLIDATED STATEMENTS OF CASH FLOWS (millions)
Preacquisition --------------------------------------------------- One month Eleven months ended ended Year ended Year ended December 31, November 30, December 31, December 31, 2000 2000 1999 1998 ------------- ------------- ------------- ------------- Cash Flows from Operating Activities: Net income $ 12.6 $ 177.2 $ 187.6 $ 293.6 Adjustments to reconcile net income to net cash (used for) provided by operating activities: Net accretion of discount on investments (2.7) (32.6) (26.5) (29.5) Amortization of deferred gain on sale -- (5.7) (5.7) 0.0 Immediate gain on sale -- -- -- (59.0) Net realized capital gains (losses) (1.8) 37.2 21.5 (11.1) Changes in assets and liabilities: Decrease (increase) in accrued investment income 6.6 (3.1) 0.9 11.4 Decrease (increase) in premiums due and other receivables 31.1 (23.7) 23.3 (24.0) Decrease (increase) in policy loans 0.1 (25.4) (21.8) 177.4 Increase in deferred policy acquisition costs/value of business acquired (12.2) (136.6) (153.3) (132.8) Decrease in reinsurance loan to affilitate -- -- -- 397.2 Net (decrease) increase in universal life account balances (3.8) 23.8 55.7 122.9 (Decrease) increase in other insurance reserve liabilities (5.3) 85.6 (28.6) (41.8) Increase (decrease) in other liabilities and other assets 103.9 (75.2) (42.5) (35.3) (Decrease) increase in income taxes (14.3) 23.1 (259.8) 106.5 ------- ---------- --------- --------- Net cash provided by (used for) operating activities 114.2 44.6 (249.2) 775.5 ------- ---------- --------- --------- Cash Flows from Investing Activities: Proceeds from sales of fixed maturities Debt securities available for sale 233.0 10,083.2 5,890.1 6,790.2 Equity securities 1.5 118.4 111.2 150.1 Mortgage loans 0.1 2.1 6.1 0.3 Life Business -- -- -- 966.5 Investment maturities and collections of: Debt securities available for sale 53.7 573.1 1,216.5 1,296.3 Short-term investments 0.4 59.9 80.6 135.3 Cost of investment purchases in: Debt securities available for sale (230.7) (10,505.5) (7,099.7) (6,706.4) Equity securities (27.8) (17.6) (13.0) (125.7) Short-term investments (10.0) (113.1) (106.0) (83.9) Decrease (increase) in property and equipment 1.9 5.4 (5.7) Other, net 0.3 (4.0) 3.7 (2,725.9) ------- ---------- --------- --------- Net cash provided by (used for) investing activities 22.4 201.9 83.8 (312.2) ------- ---------- --------- --------- Cash Flows from Financing Activities: Deposits and interest credited for investment contracts 164.2 1,529.7 2,040.2 1,571.1 Withdrawals of investment contracts (156.3) (1,832.6) (1,680.8) (1,393.1) Capital contribution from HOLDCO -- 73.5 -- 9.3 Return of capital to Separate Account -- -- -- 1.7 Dividends paid to shareholder -- (10.1) (255.7) (570.0) Other, net (73.6) 22.0 126.7 (34.3) ------- ---------- --------- --------- Net cash (used for) provided by financing activities (65.7) (217.5) 230.4 (415.3) ------- ---------- --------- --------- Net increase in cash and cash equivalents 70.9 29.0 65.0 48.0 Effect of exchange rate changes on cash and cash equivalents -- 2.0 -- -- Cash and cash equivalents, beginning of period 725.4 694.4 629.4 581.4 ------- ---------- --------- --------- Cash and cash equivalents, end of period $ 796.3 $ 725.4 $ 694.4 $ 629.4 ======= ========== ========= ========= Supplemental cash flow information: Income taxes paid, net $ 20.3 $ 39.9 $ 316.9 $ 60.9 ======= ========== ========= =========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. F-6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Aetna Life Insurance and Annuity Company ("ALIAC") and its wholly owned subsidiaries (collectively, the "Company") are providers of financial products and services and investment management services in the United States. The Company has two business segments: Financial 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 (refer to Note 3). 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 has been accounted for as of November 30, 2000 using the purchase method. The application of the purchase method, including the recognition of goodwill, is being pushed down and reflected on the financial statements of certain ARSI (a subsidiary of Lion) subsidiaries, including the Company. The Balance Sheet changes related to accounting for this purchase were entirely non-cash in nature and accordingly have been excluded from the pre-acquisition Consolidated Statement of Cash Flow for the eleven months ended November 30, 2000. 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. The allocation of the purchase price to assets and liabilities is subject to further refinement. The net increase to assets reflects the write off of deferred acquisition costs of $1,183.0 million, which was the balance as of November 30, 2000, the establishment of value of business acquired of $1,780.9, an increase to other assets of $6.0 million and a decrease of $12.0 million in current income taxes. The increase to other assets reflects the write down of certain fixed assets and capitalized software costs resulting from conforming accounting policies, the establishment of a favorable lease asset and the reclassification of certain pension assets (previously reflected in other liabilities). The balances in other assets and current income taxes prior to push down accounting were $148.7 million and $52.6 million, respectively. The net increase to liabilities reflects an increase to insurance reserves of $60.0 million representing the revaluation of the reserves using current assumptions, an increase to deferred tax liabilities of $266.4 million primarily representing the deferred tax effect of the purchase accounting adjustments and a decrease to other liabilities of $15.8 million. The decrease in other liabilities includes the write-off of the deferred gain related to the sale of the individual life insurance business (refer to Note 3) partially offset by the establishment of a severance liability F-7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) and the revaluation of certain benefit plan liabilities. The balances in insurance reserves and other liabilities prior to push down accounting were $15,072.9 million and $565.7 million. With respect to deferred taxes, prior to push down accounting, the Company had a deferred tax asset of $18.4 million. As a result of the application of push down accounting, retained earnings immediately prior to the sale was reclassified to paid-in capital. Additionally, the Company established goodwill of $2.3 billion. Goodwill is being amortized over a period of 40 years. Unaudited proforma consolidated income from continuing operations and net income of the Company for the period from January 1, 2000 to November 30, 2000 and for the year-ended December 31, 1999, assuming that the acquisition of the Company occurred at the beginning of each period, would have been approximately $118.1 million and $123.5 million, respectively. The pro forma adjustments, which do not affect revenues, reflect primarily goodwill amortization, amortization of the favorable lease asset and the elimination of amortization of the deferred gain on sale associated with the life business. Financial Products include annuity contracts that offer a variety of funding and payout options for individual and employer-sponsored retirement plans qualified under Internal Revenue Code Sections 401, 403, 408 and 457, nonqualified annuity contracts and mutual funds. 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 mutual funds (both ALIAC and nonaffiliated mutual funds), variable and fixed investment options. Financial Products also include investment advisory services and pension plan administrative services. 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 Aetna Series Fund Inc.; distribution services for other company products; and trustee, administrative, and other fiduciary services to retirement plans requiring or otherwise utilizing a trustee or custodian. Discontinued Operations include universal life, variable universal life, traditional whole life and term insurance. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include 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 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 ultimately owned by ING Groep N.V. F-8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (ING). HOLDCO contributed AIS to the Company on June 30, 2000 and contributed IA Holdco to the Company on July 1, 1999 (refer to Note 2). The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The contributions of AIS and IA Holdco to the Company were 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 both companies. Certain reclassifications have been made to 1999 and 1998 financial information to conform to the 2000 presentation. NEW ACCOUNTING STANDARDS ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES In September 2000, the Financial Accounting Standard Board ("FASB") issued Financial Accounting Standard ("FAS") No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, which replaces FAS No. 125, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This standard revises the accounting for securitizations, other financial asset transfers and collateral associated with securities lending transactions and requires certain additional disclosures. FAS No. 140 is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. However, for recognition and disclosure of collateral and for additional disclosures related to securitization transactions, FAS No. 140 was effective for the Company's December 31, 2000 financial statements. With respect to the provisions effective December 31, 2000, the Company reclassified debt securities on loan to other institutions from "Debt Securities" to "Securities Pledged to Creditors" on the Company's Consolidated Balance Sheet. The Company does not expect the adoption of those provisions effective after March 31, 2001 to have a material effect on its financial position or results of operations (Refer to Note 4). DEPOSIT ACCOUNTING: ACCOUNTING FOR INSURANCE AND REINSURANCE CONTRACTS THAT DO NOT TRANSFER INSURANCE RISK On January 1, 2000, the Company adopted Statement of Position 98-7, Deposit Accounting: Accounting for Insurance and Reinsurance Contracts That Do Not Transfer Insurance Risk, issued by the American Institute of Certified Public Accountants. This statement provides guidance on how to account for all insurance and reinsurance contracts that do not transfer insurance risk, except for long-duration life and health insurance contracts. The adoption of this standard had no impact on the Company's financial position or results of operations. F-9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) FUTURE APPLICATION OF ACCOUNTING STANDARDS ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES In June 1998, the FASB issued FAS No. 133, Accounting for Derivative Instruments and Hedging Activities. This June 2000, further guidance related to accounting for derivative instruments and hedging activities was provided when the FASB issued FAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities--an Amendment of FASB Statement No. 133. This standard, as amended, requires companies to record all derivatives on the balance sheet as either 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 values of those derivatives depends on the use of the derivative and whether it qualifies for hedge accounting. As amended by FAS No. 137, Accounting for Derivative Instruments and Hedging Activities--Deferral of the Effective Date of FASB Statement No. 133, this standard is effective for the Company's financial statements beginning January 1, 2001, with early adoption permitted. The impact to the Company, of the adoption of this standard, as amended, will not have a material effect on the Company's financial position or results of operations. USE OF ESTIMATES 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 the amounts reported in the financial statements and accompanying notes. Actual results could differ from reported results using those estimates. CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash on hand, money market instruments and other debt issues with a maturity of 90 days or less when purchased. INVESTMENTS Debt and equity securities are classified as available for sale and carried at fair value. Securities are written down (as realized capital losses) for other than temporary declines in value. Included in available-for-sale securities are investments that support experience-rated products. Experience-rated products are products where the customer, not the Company, assumes investment (including realized capital gains and losses) and other risks, subject to, among other things, minimum guarantees. As long as minimum guarantees are not triggered, the effect of experience-rated products' investment performance does not impact the Company's results of operations. Realized and unrealized capital gains and losses on investments supporting these products are reflected in policyholders' funds left with the Company. Realized capital gains and losses on all other investments are reflected in the Company's results of operations. Unrealized capital gains and losses on all other investments are reflected in shareholder's equity, net of related income taxes. F-10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Purchases and sales of debt and equity securities are recorded on the trade date. Sales of mortgage loans are recorded on the closing date. Fair values for debt and equity securities are based on quoted market prices or dealer quotations. Where quoted market prices or dealer quotations are not available, fair values are measured utilizing quoted market prices for similar securities or by using discounted cash flow methods. Cost for mortgage-backed securities is adjusted for unamortized premiums and discounts, which are amortized using the interest method over the estimated remaining term of the securities, adjusted for anticipated prepayments. The Company does not accrue interest on problem debt securities when management believes the collection of interest is unlikely. The Company engages in securities lending whereby certain securities from its portfolio are loaned to other institutions for short periods of time. Initial collateral, primarily cash, is required at a rate of 102% of the market value of a loaned domestic security and 105% of the market value of a loaned foreign security. The collateral is deposited by the borrower with a lending agent, and retained and invested by the lending agent according to the Company's guidelines to generate additional income. The market value of the loaned securities is monitored on a daily basis with additional collateral obtained or refunded as the market value of the loaned securities fluctuates. In September 2000, the FASB issued FAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. In accordance with this new standard, general account securities on loan are reflected on the balance sheet as "Securities pledged to creditors", which includes the following:
Gross Gross December 31, 2000 Amortized Unrealized Unrealized Fair (Millions) Cost Gains Losses Value ---------------------------------------------------------------------------------------------- Debt securities $124.5 $5.3 $3.1 $126.7 Short-term investments 2.3 -- -- 2.3 ---------------------------------------------------------------------------------------------- Total securities pledged to creditors $126.8 $5.3 $3.1 $129.0 ----------------------------------------------------------------------------------------------
At December 31, 1999, the Company had securities pledged to creditors with a fair value of approximately $232.5 million reflected as debt securities. The investment in affiliated mutual funds represents an investment in Aetna managed mutual funds by the Company, and is carried at fair value. Mortgage loans and policy loans are carried at unpaid principal balances, net of impairment reserves. F-11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Short-term investments, consisting primarily of money market instruments and other debt issues purchased with an original maturity of 91 days to one year, are considered available for sale and are carried at fair value, which approximates amortized cost. The Company utilizes futures contracts for other than trading purposes in order to hedge interest rate risk (i.e. market risk, refer to Note 5). Futures contracts are carried at fair value and require daily cash settlement. Changes in the fair value of futures contracts allocable to experience rated contracts are deducted from capital gains and losses with an offsetting amount reported in future policy benefits. Changes in the fair value of futures contracts allocable to non-experienced-rated contracts that qualify as hedges are deferred and recognized as an adjustment to the hedged asset or liability. Deferred gains or losses on such futures contracts are amortized over the life of the acquired asset or liability as a yield adjustment or through net realized capital gains or losses upon disposal of an asset. Changes in the fair value of futures contracts that do not qualify as hedges are recorded in net realized capital gains or losses. Hedge designation requires specific asset or liability identification, a probability at inception of high correlation with the position underlying the hedge, and that high correlation be maintained throughout the hedge period. If a hedging instrument ceases to be highly correlated with the position underlying the hedge, hedge accounting ceases at that date and excess gains or losses on the hedging instrument are reflected in net realized capital gains or losses. Included in common stock are warrants which represent the right to purchase specific securities. Upon exercise, the cost of the warrants is added to the basis of the securities purchased. On occasion, the Company sells call options written on underlying securities which are carried at fair value. Changes in fair value of these options are recorded in net realized capital gains or losses. GOODWILL Goodwill, which represents the excess of cost over the fair value of net assets acquired, is amortized on a straight-line basis over 40 years. The Company regularly evaluates the recoverability of goodwill. The carrying value of goodwill would be reduced through a direct write-off, if, in management's judgement, it was probable that projected future operating income (before amortization of goodwill) would not be sufficient on an undiscounted basis to recover the carrying value. Operating earnings considered in such an analysis are those of the entity acquired, if separately identifiable, or the business segment that acquired the entity if the entity's earnings are not separately identifiable. DEFERRED POLICY ACQUISITION COSTS Certain costs of acquiring certain insurance business are deferred. These costs, all of which vary with and are primarily related to the production of new and renewal business, consist principally of commissions, certain expenses of underwriting and issuing contracts, and certain agency F-12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) expenses. For certain annuity and pension contracts, such costs are amortized in proportion to estimated gross profits and adjusted to reflect actual gross profits over the life of the contracts (up to 20 years for annuity and pension contracts.) Periodically, modifications may be made to deferred annuity contract features, such as shortening the surrender charge period or waiving the surrender charge, changing the mortality and expense fees, etc. Unamortized deferred policy acquisition costs associated with these modified contracts are not written off, but rather, continue to be associated with the original block of business to which these costs were previously recorded. Such costs are amortized based on revised estimates of expected gross profits based upon the contract after the modification. Deferred policy acquisition costs are written off to the extent that it is determined that future policy premiums and investment income or gross profits are not adequate to cover related expenses. Refer to "Principles of Consolidation" within Note 1 for related discussions regarding the application of the purchase method to deferred policy acquisition costs. VALUE OF BUSINESS ACQUIRED Value of business acquired ("VOBA") is an asset and represents the present value ofestimated net cash flows embedded in the Company's contracts 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). VOBA is written off to the extent that it is determined that gross profits are not adequate to recover the asset. The estimated amount of VOBA to be amortized, net of interest, over the next five years is $104.3 million, $112.6 million, $114.3 million, $110.8 million and $106.3 million for the years 2001, 2002, 2003, 2004 and 2005, respectively. Actual amortization incurred during these years may vary as assumptions are modified to incorporate actual results. INSURANCE RESERVE LIABILITIES Future policy benefits include reserves for universal life, immediate annuities with life contingent payouts and traditional life insurance contracts. Reserves for universal life products are equal to cumulative deposits less withdrawals and charges plus credited interest thereon. Reserves for traditional life insurance contracts represent the present value of future benefits to be paid to or on behalf of policyholders and related expenses less the present value of future net premiums. Reserves for immediate annuities with life contingent payouts contracts are computed on the basis of assumed investment yield, mortality, and expenses, including a margin for adverse deviations. Such assumptions generally vary by plan, year of issue and policy duration. Reserve interest rates range from 2.0% to 9.5% for all years presented. Investment yield is based on the Company's experience. Mortality and withdrawal rate assumptions are based on relevant F-13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Company experience and are periodically reviewed against both industry standards and experience. Because the sale of the domestic individual life insurance business was substantially in the form of an indemnity reinsurance agreement, the Company reported an addition to its reinsurance recoverable approximating the Company's total individual life reserves at the sale date. Policyholders' funds left with the Company include reserves for deferred annuity investment contracts and immediate annuities without life contingent payouts. Reserves on such contracts are equal to cumulative deposits less charges and withdrawals plus credited interest thereon (rates range from 2.0% to 14.0% for all years presented) net of adjustments for investment experience that the Company is entitled to reflect in future credited interest. These reserves also include unrealized gains/losses related to FAS No. 115. Reserves on contracts subject to experience rating reflect the rights of contractholders, plan participants and the Company. Unpaid claims for all lines of insurance include benefits for reported losses and estimates of benefits for losses incurred but not reported. REVENUE RECOGNITION For certain annuity contracts, charges assessed against policyholders' funds for the cost of insurance, surrender charges, actuarial margin and other fees are recorded as revenue in charges assessed against policyholders. Other amounts received for these contracts are reflected as deposits and are not recorded as revenue. Related policy benefits are recorded in relation to the associated premiums or gross profit so that profits are recognized over the expected lives of the contracts. When annuity payments with life contingencies begin under contracts that were initially investment contracts, the accumulated balance in the account is treated as a single premium for the purchase of an annuity and reflected as an offsetting amount in both premiums and current and future benefits in the Consolidated Statements of Income. SEPARATE ACCOUNTS Separate Accounts assets and liabilities generally represent funds maintained to meet specific investment objectives of contractholders who bear the investment risk, subject, in some cases, to minimum guaranteed rates. Investment income and investment gains and losses generally accrue directly to such contractholders. The assets of each account are legally segregated and are not subject to claims that arise out of any other business of the Company. Separate Account assets supporting variable options under universal life and annuity contracts are invested, as designated by the contractholder or participant under a contract (who bears the investment risk subject, in limited cases, to minimum guaranteed rates) in shares of mutual funds which are managed by the Company, or other selected mutual funds not managed by the Company. F-14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Separate Accounts assets are carried at fair value. At December 31, 2000 and 1999, unrealized gains of $9.5 million and unrealized losses of $8.0 million, respectively, after taxes, on assets supporting a guaranteed interest option are reflected in shareholder's equity. Separate Accounts liabilities are carried at fair value, except for those relating to the guaranteed interest option. Reserves relating to the guaranteed interest option are maintained at fund value and reflect interest credited at rates ranging from 3.8% to 14.0% in 2000 and 3.7% to 12.0% in 1999. Separate Accounts assets and liabilities are shown as separate captions in the Consolidated Balance Sheets. Deposits, investment income and net realized and unrealized capital gains and losses of the Separate Accounts are not reflected in the Consolidated Financial Statements (with the exception of realized and unrealized capital gains and losses on the assets supporting the guaranteed interest option). The Consolidated Statements of Cash Flows do not reflect investment activity of the Separate Accounts. REINSURANCE The Company utilizes indemnity reinsurance agreements to reduce its exposure to large losses in all aspects of its insurance business. Such reinsurance permits recovery of a portion of losses from reinsurers, although it does not discharge the primary liability of the Company as direct insurer of the risks reinsured. The Company evaluates the financial strength of potential reinsurers and continually monitors the financial condition of reinsurers. Only those reinsurance recoverable balances deemed probable of recovery are reflected as assets on the Company's Consolidated Balance Sheets. Of the reinsurance recoverable on the Consolidated Balance Sheets at December 31, 2000 and 1999, $2,991 million and $2,989 million, respectively, is related to the reinsurance recoverable from Lincoln arising from the sale of the Company's domestic life insurance business. (Refer to Note 3). INCOME TAXES The Company is included in the consolidated federal income tax return of Lion through December 13, 2000. Subsequent to December 13, 2000 the Company will file a consolidated return with AICA. The Company is taxed at regular corporate rates after adjusting income reported for financial statement purposes for certain items. Deferred income tax expenses/ benefits result from changes during the year in cumulative temporary differences between the tax basis and book basis of assets and liabilities. 2. RECENT DEVELOPMENTS CONTRIBUTIONS OF AIS AND IA HOLDCO 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 F-15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 2. RECENT DEVELOPMENTS (continued) AIS is acting as underwriter for ALIAC's manufactured products, as well as the sale of fixed and variable annuities and mutual funds through its registered representatives. On July 1, 1999, HOLDCO contributed IA Holdco to the Company. The primary operating subsidiary of IA Holdco is Aeltus Investment Management, Inc. ("Aeltus") which has two wholly-owned operating subsidiaries: Aeltus Capital, Inc. ("ACI"), a broker dealer, and Aeltus Trust Company ("ATC"), a limited purpose banking entity. Aeltus is a registered investment advisor under the Investment Advisers Act of 1940 and provides investment advisory services to institutional and retail clients on a fee-for-service basis. In addition, Aeltus, through its ACI subsidiary, serves as underwriter to the Aetna Series Fund, Inc. and provides distribution services for other Company products. Aeltus' ATC subsidiary provides trustee, administrative, and other fiduciary services to retirement plans requiring or otherwise utilizing a trustee or custodian. 3. DISCONTINUED OPERATIONS-INDIVIDUAL LIFE INSURANCE On October 1, 1998, the Company sold its domestic individual life insurance business to Lincoln for $1 billion in cash. The transaction was generally in the form of an indemnity reinsurance arrangement, under which Lincoln contractually assumed from the Company certain policyholder liabilities and obligations, although the Company remains directly obligated to policyholders. Assets related to and supporting the life policies were transferred to Lincoln and the Company recorded a reinsurance recoverable from Lincoln. The transaction resulted in an after-tax gain on the sale of approximately $117 million, of which $57.7 million was deferred and was being recognized over approximately 15 years. The remaining portion of the gain was recognized immediately in net income and was largely attributed to access to the agency sales force and brokerage distribution channel. Approximately $5.7 million and $5.2 million (after tax) of the deferred gain was recognized during 2000 and 1999, respectively. During the fourth quarter of 1999, the Company refined certain accrual and tax estimates which had been established in connection with the recording of the deferred gain. As a result, the deferred gain was increased by $12.9 million (after tax) to $65.4 million at December 31, 1999. In conjunction with the accounting for the acquisition of the Aetna Financial Services business, of which the Company is a part, the deferred gain, which was previously part of other liabilities, was written off. (Refer to Note 1). The operating results of the domestic individual life insurance business are presented as Discontinued Operations. Revenues for the individual life segment were $652.2 million for 1998. Premiums ceded and reinsurance recoveries made in 2000 totaled $419.1 million and $416.1 million, respectively, and in 1999 totaled $476.5 million and $513.4 million, respectively. F-16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 4. INVESTMENTS Debt securities available for sale as of December 31 were as follows:
Gross Gross Amortized Unrealized Unrealized Fair 2000 (Millions) Cost Gains Losses Value --------------------------------------------------------------------------------------------- U.S. government and government agencies and authorities $ 920.8 $ 34.3 $ 2.1 $ 953.0 States, municipalities and political subdivisions 0.3 -- -- 0.3 U.S. corporate securities: Utilities 282.2 13.8 6.2 289.8 Financial 1,753.1 33.8 21.2 1,765.7 Transportation/capital goods 660.2 21.4 11.3 670.3 Health care/consumer products 758.9 16.2 27.9 747.2 Natural resources 499.3 7.6 15.6 491.3 Other corporate securities 972.0 7.1 52.3 926.8 --------------------------------------------------------------------------------------------- Total U.S. corporate securities 4,925.7 99.9 134.5 4,891.1 --------------------------------------------------------------------------------------------- Foreign securities: Government, including political subdivisions 384.7 23.9 4.3 404.3 Utilities 122.9 18.6 -- 141.5 Other 31.2 -- 9.3 21.9 --------------------------------------------------------------------------------------------- Total foreign securities 538.8 42.5 13.6 567.7 --------------------------------------------------------------------------------------------- Residential mortgage-backed securities: Pass-throughs 1,390.3 37.1 4.1 1,423.3 Collateralized mortgage obligations 1,606.6 61.2 7.1 1,660.7 --------------------------------------------------------------------------------------------- Total residential mortgage-backed securities 2,996.9 98.3 11.2 3,084.0 --------------------------------------------------------------------------------------------- Commercial/Multifamily mortgage-backed securities 1,108.3 27.5 24.2 1,111.6 Other asset-backed securities 753.7 13.4 3.4 763.7 --------------------------------------------------------------------------------------------- Total debt securities, including debt securities pledged to creditors 11,244.5 315.9 189.0 11,371.4 Less: Debt securities pledged to creditors 124.5 5.3 3.1 126.7 --------------------------------------------------------------------------------------------- Debt securities $11,120.0 $310.6 $185.9 $11,244.7 =============================================================================================
F-17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 4. INVESTMENTS (continued) Debt securities available for sale as of December 31 were as follows:
Gross Gross Amortized Unrealized Unrealized Fair 1999 (Millions) Cost Gains Losses Value --------------------------------------------------------------------------------------------- U.S. government and government agencies and authorities $ 1,087.2 $ 4.6 $ 22.1 $ 1,069.7 States, municipalities and political subdivisions 0.3 -- -- 0.3 U.S. corporate securities: Utilities 514.5 5.6 12.7 507.4 Financial 1,869.8 8.2 44.7 1,833.3 Transportation/capital goods 623.4 .9 39.0 585.3 Health care/consumer products 1,138.7 9.3 51.3 1,096.7 Natural resources 424.6 1.3 15.4 410.5 Other corporate securities 214.0 1.0 14.9 200.1 --------------------------------------------------------------------------------------------- Total U.S. corporate securities 4,785.0 26.3 178.0 4,633.3 --------------------------------------------------------------------------------------------- Foreign securities: Government, including political subdivisions 364.6 17.1 11.9 369.8 Utilities 196.4 7.3 .4 203.3 Other 748.2 8.9 34.3 722.8 --------------------------------------------------------------------------------------------- Total foreign securities 1,309.2 33.3 46.6 1,295.9 --------------------------------------------------------------------------------------------- Residential mortgage-backed securities: Pass-throughs 1,055.9 19.8 17.6 1,058.1 Collateralized mortgage obligations 1,683.1 25.1 37.7 1,670.5 --------------------------------------------------------------------------------------------- Total residential mortgage-backed securities 2,739.0 44.9 55.3 2,728.6 --------------------------------------------------------------------------------------------- Commercial/Multifamily mortgage-backed securities 1,031.5 3.4 48.7 986.2 Other asset-backed securities 705.7 0.3 9.9 696.1 --------------------------------------------------------------------------------------------- Debt securities $11,657.9 $112.8 $360.6 $11,410.1 =============================================================================================
F-18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 4. INVESTMENTS (continued) At December 31, 2000 and 1999, net unrealized appreciation (depreciation) of $126.9 million and $(247.8) million, respectively, on available-for-sale debt securities including debt securities pledged to creditors, herein after referred to as "total debt securities", included $92.9 million and $(189.7) million, respectively, related to experience-rated contracts, which were not reflected in shareholder's equity but in insurance reserves. The amortized cost and fair value of total debt securities for the year ended December 31, 2000 are shown below by contractual maturity. Actual maturities may differ from contractual maturities because securities may be restructured, called, or prepaid.
Amortized Fair (Millions) Cost Value ---------------------------------------------------------------------------- Due to mature: One year or less $ 405.4 $ 405.9 After one year through five years 2,272.8 2,299.2 After five years through ten years 1,754.3 1,731.5 After ten years 1,953.1 1,975.6 Mortgage-backed securities 4,105.2 4,195.5 Other asset-backed securities 753.7 763.7 ---------------------------------------------------------------------------- Less: Debt securities pledged to creditors 124.5 126.7 ============================================================================ Debt securities $11,120.0 $11,244.7 ============================================================================
At December 31, 2000 and 1999, debt securities carried at fair value of $8.6 million and $8.7 million, respectively, were on deposit as required by regulatory authorities. The Company did not have any investments in a single issuer, other than obligations of the U.S. government, with a carrying value in excess of 10% of the Company's shareholder's equity at December 31, 2000. Included in the Company's total debt securities were residential collateralized mortgage obligations ("CMOs") supporting the following:
2000 1999 ------------------------ ------------------------ Amortized Fair Amortized Fair (Millions) Cost Value Cost Value ------------------------------------------------------------------------------------------------- Total residential CMOs (1) $1,606.6 $1,660.7 $1,683.1 $1,670.5 ================================================================================================= Percentage of total: Supporting experience rated products 80.6% 80.7% Supporting remaining products 19.4% 19.3% ------------------------------------------------------------------------------------------------- 100.0% 100.0% =================================================================================================
(1) At December 31, 2000 and 1999, approximately 84% and 81%, respectively, of the Company's residential CMO holdings were backed by government agencies such as GNMA, FNMA, and FHLMC.
F-19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 4. INVESTMENTS (continued) There are various categories of CMOs which are subject to different degrees of risk from changes in interest rates and, for CMO's that are not agency-backed, defaults. The principal risks inherent in holding CMOs are prepayment and extension risks related to dramatic decreases and increases in interest rates resulting in the repayment of principal from the underlying mortgages either earlier or later than originally anticipated. At December 31, 2000 and 1999, approximately 2% and 1%, respectively, of the Company's CMO holdings were invested in types of CMOs which are subject to more prepayment and extension risk than traditional CMOs (such as interest- or principal-only strips). Investments in equity securities as of December 31 were as follows:
(Millions) 2000 1999 ----------------------------------------------------------------------------------- Amortized Cost $120.8 $204.9 Gross unrealized gains 6.0 12.5 Gross unrealized losses 9.9 10.9 ----------------------------------------------------------------------------------- Fair Value $116.9 $206.5 ===================================================================================
5. FINANCIAL INSTRUMENTS ESTIMATED FAIR VALUE The carrying values and estimated fair values of certain of the Company's financial instruments at December 31, 2000 and 1999 were as follows:
2000 1999 ----------------------- ----------------------- Carrying Fair Carrying Fair (Millions) Value Value Value Value ------------------------------------------------------------------------------------------------- Assets: Mortgage loans $ 4.6 $ 4.5 $ 6.7 $ 6.8 Liabilities: Investment contract liabilities: With a fixed maturity 1,041.0 982.3 1,055.3 991.0 Without a fixed maturity 10,084.6 9,549.9 10,066.4 9,452.8 -------------------------------------------------------------------------------------------------
Fair value estimates are made at a specific point in time, based on available market information and judgments about the financial instrument, such as estimates of timing and amount of future cash flows. Such estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument, nor do they consider the tax impact of the realization of unrealized gains or losses. In many cases, the fair value estimates cannot be substantiated by comparison to independent markets, nor can the disclosed value be realized in immediate settlement of the instrument. In evaluating the Company's management of interest rate, price and liquidity risks, the fair values of all assets and liabilities should be taken into consideration, not only those presented above. F-20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 5. FINANCIAL INSTRUMENTS (continued) The following valuation methods and assumptions were used by the Company in estimating the fair value of the above financial instruments: MORTGAGE LOANS: Fair values are estimated by discounting expected mortgage loan cash flows at market rates which reflect the rates at which similar loans would be made to similar borrowers. The rates reflect management's assessment of the credit quality and the remaining duration of the loans. INVESTMENT CONTRACT LIABILITIES (INCLUDED IN POLICYHOLDERS' FUNDS LEFT WITH THE COMPANY): WITH A FIXED MATURITY: Fair value is estimated by discounting cash flows at interest rates currently being offered by, or available to, the Company for similar contracts. WITHOUT A FIXED MATURITY: Fair value is estimated as the amount payable to the contractholder upon demand. However, the Company has the right under such contracts to delay payment of withdrawals which may ultimately result in paying an amount different than that determined to be payable on demand. OFF-BALANCE-SHEET AND OTHER FINANCIAL INSTRUMENTS FUTURES CONTRACTS: Futures contracts are used to manage interest rate risk in the Company's bond portfolio. 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. The notional amounts, carrying values and estimated fair values of the Company's open treasury futures as of December 31, 1998 were $250.9 million, $.1 million, and $.1 million, respectively. There were no open treasury futures at December 31, 2000 and 1999. WARRANTS: Included in common stocks are warrants which are instruments giving the Company the right, but not the obligation to buy a security at a given price during a specified period. The carrying values and estimated fair values of the Company's warrants to purchase equity securities at December 31, 2000 were both $0.3 million. The carrying values and estimated fair values at December 31, 1999 were both $6.5 million. OPTIONS: As of December 31, 2000 and 1999, the Company earned $1.1 million and $0.4 million respectively, of investment income for writing call options on underlying securities. At December 31, 2000 and 1999, there were no option contracts outstanding. F-21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 5. FINANCIAL INSTRUMENTS (continued) DEBT INSTRUMENTS WITH DERIVATIVE CHARACTERISTICS: The Company also had investments in certain debt instruments with derivative characteristics, including those whose market value is at least partially determined by, among other things, levels of or changes in domestic and/or foreign interest rates (short- or long-term), exchange rates, prepayment rates, equity markets or credit ratings/spreads. The amortized cost and fair value of these securities, included in the debt securities portfolio, as of December 31, 2000 was as follows:
Amortized Fair (Millions) Cost Value ---------------------------------------------------------------------------------- Residential collateralized mortgage obligations $1,606.6 $1,660.7 Principal-only strips (included above) 28.1 32.1 Interest-only strips (included above) 8.2 9.7 Other structured securities with derivative characteristics (1) 51.5 51.5 ----------------------------------------------------------------------------------
(1) Represents non-leveraged instruments whose fair values and credit risk are based on underlying securities, including fixed income securities and interest rate swap agreements.
6. NET INVESTMENT INCOME Sources of net investment income were as follows:
One month Eleven months ended ended Year ended Year ended December 31, November 30, December 31, December 31, (Millions) 2000 2000 1999 1998 -------------------------------------------------------------------------------------------------------------- Debt securities $70.3 $768.9 $823.3 $798.8 Nonredeemable preferred stock 1.8 9.5 17.1 18.4 Investment in affiliated mutual funds 0.5 2.1 2.4 6.6 Mortgage loans 0.1 0.5 1.1 0.6 Policy loans 0.7 7.9 7.7 7.2 Cash equivalents 4.4 50.3 39.0 46.1 Other 2.6 13.1 15.3 15.5 -------------------------------------------------------------------------------------------------------------- Gross investment income 80.4 852.3 905.9 893.2 Less: investment expenses (1.8) (18.5) (19.6) (21.4) -------------------------------------------------------------------------------------------------------------- Net investment income $78.6 $833.8 $886.3 $871.8 ==============================================================================================================
Net investment income includes amounts allocable to experience rated contractholders of $55.9 million and $622.2 million for the one month and eleven month periods ended December 31, 2000 and November 30, 2000, respectively, and $659.6 million and $655.6 million for the years ended December 31, 1999 and 1998, respectively. Interest credited to contractholders is included in current and future benefits. F-22 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 7. DIVIDEND RESTRICTIONS AND SHAREHOLDER'S EQUITY The Company paid $10.1 million, $255.7 million and $570.0 million in cash dividends to HOLDCO in 2000, 1999 and 1998, respectively. Of the $255.7 million paid in 1999, $206.0 million was accrued for in 1998. Of the $776.0 million dividends paid or accrued in 1998, $756.0 million (all of which was approved by the Insurance Commissioner of the State of Connecticut) was attributable to proceeds from the sale of the domestic individual life insurance business. The Insurance Department of the State of Connecticut (the "Department") recognizes as net income and capital and surplus those amounts determined in conformity with statutory accounting practices prescribed or permitted by the Department, which differ in certain respects from generally accepted accounting principles. Statutory net income was $100.6 million, $133.9 million and $148.1 million for the years ended December 31, 2000, 1999 and 1998, respectively. Statutory capital and surplus was $931.1 million and $844.9 million as of December 31, 2000 and 1999, respectively. As of December 31, 2000, the Company does not utilize any statutory accounting practices which are not prescribed by state regulatory authorities that, individually or in the aggregate, materially affect statutory capital and surplus. For 2001, the Company is required to implement statutory accounting changes ratified by the NAIC and state insurance departments ("Codification"). The cumulative effect of Codification to the Company's statutory surplus as of January 1, 2001 is estimated to be an increase of $27.4 million. 8. CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS Realized capital gains or losses are the difference between the carrying value and sale proceeds of specific investments sold. Net realized capital gains (losses) on investments were as follows:
One month Eleven months ended ended Year ended Year ended December 31, November 30, December 31, December 31, (Millions) 2000 2000 1999 1998 - ------------------------------------------------------------------------------------------------- Debt securities $1.2 $(36.3) $(23.6) $ 7.4 Equity securities 0.6 (0.9) 2.1 3.0 - ------------------------------------------------------------------------------------------------- Pretax realized capital gains (losses) $1.8 $(37.2) $(21.5) $10.4 ================================================================================================= After-tax realized capital gains (losses) $1.3 $(24.3) $(14.0) $ 7.3 =================================================================================================
Net realized capital (losses) gains of $(16.8) million, $(36.7) million and $15.0 million for 2000, 1999 and 1998, respectively, allocable to experience rated contracts, were deducted from net realized capital gains and an offsetting amount was reflected in Policyholders' funds left with the Company. Net unamortized gains allocable to experienced-rated contractholders were $45.1 million and $68.5 million at December 31, 2000 and 1999, respectively. F-23 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 8. CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS (continued) Proceeds from the sale of total debt securities and the related gross gains and losses were as follows:
One month Eleven months ended ended Year ended Year ended December 31, November 30, December 31, December 31, (Millions) 2000 2000 1999 1998 ------------------------------------------------------------------------------------------------ Proceeds on sales $233.0 $10,083.2 $5,890.1 $6,790.2 Gross gains 1.4 2.5 10.5 98.8 Gross losses -- 39.0 34.1 91.4 ------------------------------------------------------------------------------------------------
Changes in shareholder's equity related to changes in accumulated other comprehensive income (unrealized capital gains and losses on securities including securities pledged to creditors, excluding those related to experience-rated contractholders) were as follows:
(Millions) 2000 1999 1998 --------------------------------------------------------------------------------------------------- Debt securities $ 92.1 $(199.2) $ 18.9 Equity securities (5.5) (3.4) (16.1) Other 21.5 (27.6) 15.4 --------------------------------------------------------------------------------------------------- Subtotal 108.1 (230.2) 18.2 Increase (decrease) in deferred income taxes (Refer to Note 10) 37.9 (80.6) 6.3 --------------------------------------------------------------------------------------------------- Net changes in accumulated other comprehensive income (loss) $ 70.2 $(149.6) $ 11.9 ===================================================================================================
F-24 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 8. CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS (continued) Net unrealized capital gains (losses) allocable to experience-rated contracts of $92.9 million and $(189.7) million at December 31, 2000 and 1999, respectively, are reflected on the Consolidated Balance Sheets in Policyholders' funds left with the Company and are not included in shareholder's equity. Shareholder's equity included the following accumulated other comprehensive (loss) income, which is net of amounts allocable to experience-rated contractholders, at December 31:
(Millions) 2000 1999 1998 ----------------------------------------------------------------------------------------------------- Total debt securities: Gross unrealized capital gains $ 78.5 $ 18.6 $157.3 Gross unrealized capital losses (44.5) (76.7) (16.2) ----------------------------------------------------------------------------------------------------- 34.0 (58.1) 141.1 ----------------------------------------------------------------------------------------------------- Equity securities: Gross unrealized capital gains 6.0 12.5 13.1 Gross unrealized capital losses (9.9) (10.9) (8.1) ----------------------------------------------------------------------------------------------------- (3.9) 1.6 5.0 ----------------------------------------------------------------------------------------------------- Other: Gross unrealized capital gains 15.0 1.3 17.1 Gross unrealized capital losses (5.9) (13.7) (1.8) ----------------------------------------------------------------------------------------------------- 9.1 (12.4) 15.3 ----------------------------------------------------------------------------------------------------- Deferred income taxes (Refer to Note 10) 13.8 (24.1) 56.6 ----------------------------------------------------------------------------------------------------- Net accumulated other comprehensive income (loss) $ 25.4 $(44.8) $104.8 =====================================================================================================
Changes in accumulated other comprehensive income related to changes in unrealized gains (losses) on securities, including securities pledged to creditors (excluding those related to experience-rated contractholders) were as follows:
(Millions) 2000 1999 1998 ------------------------------------------------------------------------------------------------------ Unrealized holding gains (losses) arising during the year (1) $70.1 $(146.3) $38.3 Less: reclassification adjustment for (losses) gains and other items included in net income (2) (0.1) 3.3 26.4 ====================================================================================================== Net unrealized gains (losses) on securities $70.2 $(149.6) $11.9 ======================================================================================================
(1) Pretax unrealized holding gains (losses) arising during the year were $108.0 million, $(225.2) million and $58.8 million for 2000, 1999 and 1998, respectively. (2) Pretax reclassification adjustments for (losses) gains and other items included in net income were $(0.1) million, $5.0 million and $40.6 million for 2000, 1999 and 1998, respectively.
F-25 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 9. SEVERANCE In December 2000, the Company, in accounting for its acquisition by ING, established a severance liability of $10.7 million related to actions taken or expected to be taken with respect to the integration of the Company's and ING's businesses. The severance liability is based on a plan to eliminate approximately 175 positions (primarily in the retail annuity operations). The severance liability is reflected in other liabilities in the Consolidated Balance Sheets. Severance actions are expected to be substantially completed by December 31, 2001. No significant severance actions took place in 2000. 10. INCOME TAXES The Company is included in the consolidated federal income tax return of Lion through December 13, 2000. For tax settlements related to tax periods ending on or prior to December 13, 2000, the purchase agreement between ING America Insurance Holdings, Inc. and the former Aetna provides for the settlement of balances owed by the Company based on an amount approximating the tax the Company would have incurred were it not a member of the consolidated group, and owed to the Company for the use of its tax saving attributes in the consolidated federal income tax return. Subsequent to December 13, 2000, as a result of the sale, the Company will be filing a consolidated return with AICA. The Company allocates to each member, an amount approximating the tax the member would have incurred were it not a member of the consolidated group, and credits the member for use of its tax saving attributes in the consolidated federal income tax return. Income taxes from continuing operations consist of the following:
One month Eleven months ended ended Year ended Year ended December 31, November 30, December 31, December 31, (Millions) 2000 2000 1999 1998 - ------------------------------------------------------------------------------------------------- Current taxes (benefits): Federal $ 9.4 $ 5.3 $ 64.3 $ 257.9 State 0.2 2.6 2.5 3.0 Net realized capital (losses) gains 0.3 (11.5) (20.1) 16.8 - ------------------------------------------------------------------------------------------------- 9.9 (3.6) 46.7 277.7 - ------------------------------------------------------------------------------------------------- Deferred taxes (benefits): Federal (4.3) 83.2 31.3 (196.7) Net realized capital gains (losses) 0.3 (1.5) 12.6 (13.9) - ------------------------------------------------------------------------------------------------- (4.0) 81.7 43.9 (210.6) - ------------------------------------------------------------------------------------------------- Total $ 5.9 $ 78.1 $ 90.6 $ 67.1 =================================================================================================
F-26 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 10. INCOME TAXES (continued) Income taxes were different from the amount computed by applying the federal income tax rate to income from continuing operations before income taxes for the following reasons:
One month Eleven months ended ended Year ended Year ended December 31, November 30, December 31, December 31, (Millions) 2000 2000 1999 1998 ---------------------------------------------------------------------------------------------------------------- Income from continuing operations before income taxes $ 18.5 $ 249.6 $ 272.5 $ 239.9 Tax rate 35% 35% 35% 35% ---------------------------------------------------------------------------------------------------------------- Application of the tax rate 6.4 87.4 95.4 84.0 Tax effect of: State income tax, net of federal benefit 0.1 1.7 1.6 2.0 Excludable dividends (0.9) (12.6) (6.1) (17.1) Other, net 0.3 1.6 (0.3) (1.8) ---------------------------------------------------------------------------------------------------------------- Income taxes $ 5.9 $ 78.1 $ 90.6 $ 67.1 ================================================================================================================
F-27 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 10. INCOME TAXES (continued) The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 31 are presented below:
(Millions) 2000 1999 ----------------------------------------------------------------------------------------------- Deferred tax assets: Deferred policy acquisition costs $ 44.8 $ -- Insurance reserves 306.3 323.1 Unrealized gains allocable to experience rated contracts 32.5 -- Net unrealized capital losses -- 90.5 Investment losses 9.0 1.3 Postretirement benefits other than pensions 5.8 24.8 Deferred compensation 65.6 42.5 Sale of individual life insurance business -- 44.9 Other 21.1 23.7 ----------------------------------------------------------------------------------------------- Total gross assets 485.1 550.8 ----------------------------------------------------------------------------------------------- Deferred tax liabilities: Value of business acquired 623.3 -- Deferred policy acquisition costs -- 324.0 Market discount 4.9 6.5 Net unrealized capital gains 46.3 -- Unrealized losses allocable to experience rated contracts -- 66.4 Depreciation 4.4 3.5 Sale of Individual life insurance business 15.1 -- Excludable dividends 5.0 -- Other 34.1 -- ----------------------------------------------------------------------------------------------- Total gross liabilities 733.1 400.4 ----------------------------------------------------------------------------------------------- Net deferred tax (liability) asset $(248.0) $150.4 ===============================================================================================
Net unrealized capital gains and losses are presented in shareholder's equity net of deferred taxes. As of December 31, 2000 and 1999, no valuation allowance was required for unrealized capital gains and losses. The "Policyholders' Surplus Account," which arose under prior tax law, is generally that portion of a life insurance company's statutory income that has not been subject to taxation. As of December 31, 1983, no further additions could be made to the Policyholders' Surplus Account for tax return purposes under the Deficit Reduction Act of 1984. The balance in such account was approximately $17.2 million at December 31, 2000. This amount would be taxed only under certain conditions. No income taxes have been provided on this amount since management believes under current tax law the conditions under which such taxes would become payable are remote. F-28 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 10. INCOME TAXES (continued) The Internal Revenue Service (the "Service") has completed examinations of the consolidated federal income tax returns of Lion through 1994. Discussions are being held with the Service with respect to proposed adjustments. Management believes there are adequate defenses against, or sufficient reserves to provide for, any such adjustments. The Service has commenced its examinations for the years 1995 through 1997. 11. BENEFIT PLANS ALIAC, in conjunction with ING, has noncontributory defined benefit pension plans covering substantially all employees. The plans provide pension benefits based on years of service and average annual compensation (measured over 60 consecutive months of highest earnings in a 120 - month period). Contributions are determined using the Projected Unit Credit Method and, for qualified plans subject to ERISA requirements, are limited to the amount that are tax-deductible. The accumulated benefit obligation and plan assets are recorded by ALIAC. As of the measurement date (i.e. December 13, 2000), fair value of plan assets exceed projected benefit obligations. Allocated pretax charges to operations for the former Aetna pension plan (based on the Company's total salary cost as a percentage of former Aetna's total salary cost) were $3.7 million and $6.6 million for the years ended December 31, 2000 and 1999, respectively. There were no charges in 1998 due to favorable plan asset performance. Effective January 1, 1999 ALIAC, in conjunction with former Aetna, changed the formula for providing pension benefits from the existing final average pay formula to a cash balance formula, which credits employees annually with an amount equal to a percentage of eligible pay based on age and years of service as well as an interest credit based on individual account balances. The formula also provides for a transition period until December 1, 2006, which allows certain employees to receive vested benefits at the higher of the final average pay or cash balance formula. The changing of this formula will not have a material effect on ALIAC's results of operations, liquidity or financial condition. In addition to providing pension benefits, ALIAC, in conjunction with ING, provides certain health care and life insurance benefits for retired employees. A comprehensive medical and dental plan is offered to all full-time employees retiring at age 45 with 10 years of service. There is a cap on the portion of the cost paid by the Company relating to medical and dental benefits. Retirees are generally required to contribute to the plans based on their years of service with the Company. The costs to the Company associated with the former Aetna postretirement plans for 2000, 1999 and 1998 were $1.2 million, $2.1 million and $1.0 million, respectively. ALIAC, in conjunction with ING, has a non-qualified pension plan covering certain agents. The plan provides pension benefits based on annual commission earnings. As of the measurement date (i.e. December 13, 2000), the projected benefit obligation exceeded the fair value of plan assets. The Company, in conjunction with ING, also provides certain postretirement health care and life insurance benefits for certain agents. The costs to the Company associated with the agents' postretirement plans for 2000, 1999 and 1998 were $1.4 million, $2.1 million and $1.4 million, respectively. F-29 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 11. BENEFIT PLANS (continued) Incentive Savings Plan--Substantially all employees are eligible to participate in a savings plan under which designated contributions, which may be invested in certain investments are matched, up to 5% of compensation, by ING. Pretax charges to operations for former Aetna the incentive savings plan were $9.0 million, $7.7 million and $5.3 million in 2000, 1999 and 1998, respectively. Stock Plans--ALIAC, in conjunction with former Aetna, had a stock incentive plan that provided for stock options, deferred contingent common stock or equivalent cash awards or restricted stock to employees. Certain executive, middle management and non-management employees were granted options to purchase common stock of former Aetna at or above the market price on the date of grant. Options generally became 100% vested three years after the grant was made, with one-third of the options vesting each year. The former Aetna did not recognize compensation expense for stock options granted at or above the market price on the date of grant under its stock incentive plans. In addition, executives were, from time to time, granted incentive units which were rights to receive common stock or an equivalent value in cash. The sale of ALIAC to ING America Insurance Holdings, Inc by former Aetna caused all outstanding stock options to vest immediately. The costs to the Company associated with the former Aetna stock plans for 2000, 1999 and 1998, were $2.7 million, $0.4 million and $4.2 million, respectively. During 2001, the benefits plans offered by ALIAC to its employees and agents will be transitioned to plans directly offered by ING. These plans are substantially similar to those offered by ALIAC, in conjunction with ING, and any differences are not expected to be material in nature. Effective January 1, 1998, Aeltus established an additional deferred incentive compensation plan, designed to attract, retain and incent key members of Aeltus. The plan had a five year vesting period. Payments under the plan were conditioned upon continued employment and were based upon an imputed share price of Aeltus at the end of the vesting period. The plan value was determined annually and the cost of the plan was expensed ratably over the vesting period. A change in control at Aeltus, as defined in the plan, would cause immediate full vesting of all outstanding shares. The purchase of Aetna Inc. by ING meets this definition. As a result, all outstanding shares became fully vested based on Aeltus's imputed value at the date of the sale and were subsequently paid out in early 2001. The appropriate annual share of the cost of the plan, including the additional cost in 2000 associated with this full vesting, has been reflected in salaries and related benefits in the Consolidated Statements of Income for each of the three years ended December 31, 2000. The costs to Aeltus associated with the deferred incentive compensation plan for 2000, 1999 and 1998, were $42.2 million, $4.7 million and $3.1 million, respectively. 12. RELATED PARTY TRANSACTIONS INVESTMENT ADVISORY AND OTHER FEES ALIAC and Aeltus serve as investment advisors and administrators to the Company's mutual funds and variable funds (collectively, the Funds). Company Funds pay Aeltus or ALIAC, as F-30 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 12. RELATED PARTY TRANSACTIONS (continued) investment advisor or administrator, a daily fee which, on an annual basis, ranged, depending on the fund, from 0.33% to 1.15% of their average daily net assets. All of the funds managed by ALIAC and certain of the Funds managed by Aeltus are subadvised by investment advisors, in which case, Aeltus or ALIAC pays a subadvisory fee to the investment advisors. The Company is also compensated by the Separate Accounts (variable funds) for bearing mortality and expense risks pertaining to variable life and annuity contracts. Under the insurance and annuity contracts, the Separate Accounts pay the Company a daily fee, which, on an annual basis is, depending on the product, up to 3.40% of their average daily net assets. The amount of compensation and fees received from the Funds and Separate Accounts, included in charges assessed against policyholders and other income, amounted to $506.3 million, $424.2 million and $349.0 million in 2000, 1999 and 1998, respectively. CAPITAL TRANSACTIONS The Company received capital contributions in the form of cash and assets of $73.5 million, and $56.0 million, respectively from HOLDCO in 2000. In 1998, the Company received capital contributions in the form of cash of $9.3 million from HOLDCO. The Company received no capital contribution in 1999. Refer to Note 7 for dividends paid to HOLDCO. OTHER Premiums due and other receivables include $4.7 million and $10.5 million due from affiliates in 2000 and 1999, respectively. Other liabilities include $4.1 million and $1.9 million due to affiliates for 2000 and 1999, respectively. Former Aetna transferred to the Company $.4 million, $.8 million and $1.7 million based on its decision not to settle state tax liabilities for the years 2000, 1999 and 1998, respectively, as permitted under the tax sharing arrangement, which is reported in other changes in retained earnings. Certain administrative and support functions of the Company are provided by former Aetna and its affiliates for a specified transition period. At the end of the transition period, these functions will be provided by ING affiliates. The financial statements reflect allocated charges for these services based upon measures appropriate for the type and nature of the service provided. 13. REINSURANCE On October 1, 1998, the Company sold its domestic individual life insurance business to Lincoln for $1 billion in cash. The transaction is generally in the form of an indemnity reinsurance arrangement, under which Lincoln contractually assumed from the Company certain policyholder liabilities and obligations, although the Company remains directly obligated to policyholders. (Refer to Note 3). F-31 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 13. REINSURANCE (continued) Effective January 1, 1998, 90% of the mortality risk on substantially all individual universal life product business written from June 1, 1991 through October 31, 1997 was reinsured externally. Beginning November 1, 1997, 90% of new business written on these products was reinsured externally. Effective October 1, 1998 this agreement was assigned from the third party reinsurer to Lincoln. Effective December 31, 1988, the Company entered into a modified coinsurance reinsurance agreement ("MODCO") with Aetna Life Insurance Company ("Aetna Life"), (formerly an affiliate of the Company), in which substantially all of the non-participating individual life and annuity business written by Aetna Life prior to 1981 was assumed by the Company. Effective January 1, 1997, this agreement was amended to transition (based on underlying investment rollover in Aetna Life) from a modified coinsurance arrangement to a coinsurance agreement. As a result of this change, reserves were ceded to the Company from Aetna Life as investment rollover occurred. Effective October 1, 1998, this agreement was fully transitioned to a coinsurance arrangement and this business along with the Company's direct individual non-participation life insurance business, with the exception of certain supplementary contracts with reserves of $74.9 million and $81.9 million as of December 31, 2000 and 1999, respectively, was sold to Lincoln (refer to Note 3). The operating results of the domestic individual life business are presented as Discontinued Operations. Premiums of $15.8 million, $17.9 million and $336.3 million and current and future benefits of $34.6 million, $8.6 million and $341.1 million, were assumed in 2000, 1999 and 1998, respectively. Investment income of $17.0 million was generated from a reinsurance loan to affiliate for the year ended December 31, 1998. Prior to the sale of the domestic individual life insurance business to Lincoln on October 1, 1998, the Company's retention limit per individual life was $2.0 million and amounts in excess of this limit, up to a maximum of $8.0 million on any new individual life business was reinsured with Aetna Life on a yearly renewable term basis. The premium amount related to this agreement was $2.0 million for 1998. This agreement was terminated effective October 1, 1998. Effective October 1, 1997, the Company entered into a reinsurance agreement with Aetna Life, (formerly an affiliate of the Company) to assume amounts in excess of $0.2 million for certain of its participating life insurance, on a yearly renewable term basis. Premium amounts related to this agreement were $4.4 million in 1998. The business assumed under this agreement was retroceded to Lincoln effective October 1, 1998. On December 16, 1988, the Company assumed $25.0 million of premium revenue from Aetna Life, (formerly an affiliate of the Company) for the purchase and administration of a life contingent single premium variable payout annuity contract. In addition, the Company is also responsible for administering fixed annuity payments that are made to annuitants receiving variable payments. Reserves of $29.2 million and $33.4 million were maintained for this contract as of December 31, 2000 and 1999, respectively. F-32 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 13. REINSURANCE (continued) The following table includes premium amounts ceded/assumed.
Ceded to Assumed Direct Other from Other Net (Millions) Amount Companies Companies Amount --------------------------------------------------------------------------------------------- 2000 ----------------------------------------- Premiums: Discontinued Operations $366.6 $382.4 $ 15.8 $ -- Accident and Health Insurance 15.2 15.2 -- -- Annuities 160.4 7.1 0.9 154.2 --------------------------------------------------------------------------------------------- Total earned premiums $542.2 $404.7 $ 16.7 $154.2 ============================================================================================= 1999 ----------------------------------------- Premiums: Discontinued Operations $460.1 $478.0 $ 17.9 $ -- Accident and Health Insurance 33.4 33.4 -- -- Annuities 111.5 4.9 0.9 107.5 --------------------------------------------------------------------------------------------- Total earned premiums $605.0 $516.3 $ 18.8 $107.5 ============================================================================================= 1998 ----------------------------------------- Premiums: Discontinued Operations $166.8 $165.4 $340.6 $342.0 Accident and Health Insurance 16.3 16.3 -- -- Annuities 80.8 2.9 1.5 79.4 --------------------------------------------------------------------------------------------- Total earned premiums $263.9 $184.6 $342.1 $421.4 =============================================================================================
F-33 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 14. SEGMENT INFORMATION Summarized financial information for the Company's principal operations was as follows:
Investment Year ended December 31, 2000 Financial Management Discontinued (Millions) (1) Products (2) Services (2) Operations (2) Other (2) Total ------------------------------------------------------------------------------------------------------------------ Revenue from external customers $ 692.1 $138.2 -- $(53.0) $ 777.3 Net investment income 905.8 2.8 -- 3.8 912.4 ------------------------------------------------------------------------------------------------------------------ Total revenue excluding net realized capital (losses) gains $ 1,597.9 $141.0 -- $(49.2) $ 1,689.7 ================================================================================================================== Amortization of deferred policy acquisition costs $ 115.6 $ 11.3 $ 126.9 ------------------------------------------------------------------------------------------------------------------ Income taxes (benefits) $ 79.0 $ 9.0 -- $ (4.0) $ 84.0 ------------------------------------------------------------------------------------------------------------------ Operating earnings (losses) (3) $ 204.7 $ 9.7 -- $ (7.3) $ 207.1 Net realized capital (losses) gains, net of tax (23.1) 0.1 -- -- (23.0) ------------------------------------------------------------------------------------------------------------------ Income (loss) from continuing operations 181.6 9.8 -- (7.3) 184.1 Discontinued operations, net of tax: Amortization of deferred gain on sale (4) -- -- $ 5.7 -- 5.7 ------------------------------------------------------------------------------------------------------------------ Net income (loss) $ 181.6 $ 9.8 $ 5.7 $ (7.3) $ 189.8 ================================================================================================================== Segment assets $54,117.7 $ 44.1 $2,991.2 -- $57,153.0 ------------------------------------------------------------------------------------------------------------------ Expenditures for long-lived assets (5) -- -- -- $ 3.4 $ 3.4 ------------------------------------------------------------------------------------------------------------------ Balance of long-lived assets -- -- -- $ 54.3 $ 54.3 ------------------------------------------------------------------------------------------------------------------
(1) Year ended 2000 data reflects an aggregation of the pre-acquisition period of the eleven months ended November 30, 2000 and the post-acquisition period of one month ended December 31, 2000. (2) Financial Products include: deferred and immediate annuity contracts, mutual funds, distribution services for annuities and mutual funds and programs offered to qualified plans and nonqualified deferred compensation plans that package administrative and recordkeeping services along with a menu of investment options, investment advisory services and pension plan administrative services. Investment Management Services include the following services: investment advisory to affiliated and unaffiliated institutional and retail clients, underwriting, distribution for Company's mutual funds and affiliate's separate accounts; and trustee, administrative and other services to retirement plans. (Refer to Notes 1 and 2.) Discontinued operations include life insurance products. (Refer to Note 3.) Other includes consolidating adjustments and Year 2000 costs. (3) Operating earnings is comprised of net income (loss) excluding net realized capital gains and losses and any other items. 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 operating income or net income as a measure of profitability. (4) Taxes on the amortization of deferred gain on sale amounted to $3.3 million. (5) Expenditures of long-lived assets represent additions to property and equipment not allocable to business segments.
F-34 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 14. SEGMENT INFORMATION (continued)
Investment Year ended December 31, 1999 Financial Management Discontinued (Millions) Products (1) Services (1) Operations (1) Other (1) Total - ---------------------------------------------------------------------------------------------------------------------- Revenue from external customers $ 551.1 $118.3 -- $(43.9) $ 625.5 Net investment income 881.5 1.5 -- 3.3 886.3 - ---------------------------------------------------------------------------------------------------------------------- Total revenue excluding net realized capital losses $ 1,432.6 $119.8 -- $(40.6) $ 1,511.8 ====================================================================================================================== Amortization of deferred policy acquisition costs $ 93.4 -- -- $ 11.5 $ 104.9 - ---------------------------------------------------------------------------------------------------------------------- Income taxes (benefits) $ 87.5 $ 16.5 -- $(13.4) $ 90.1 - ---------------------------------------------------------------------------------------------------------------------- Operating earnings (losses) (2) $ 192.8 $ 28.1 -- $ (7.5) $ 213.4 Other item (3) -- -- -- (17.5) (17.5) Net realized capital losses, net of tax (14.0) -- -- -- (14.0) - ---------------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations 178.8 28.1 -- (25.0) 181.9 Discontinued operations, net of tax: Amortization of deferred gain on sale (4) -- -- $ 5.7 -- 5.7 - ---------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 178.8 $ 28.1 $ 5.7 $(25.0) $ 187.6 ====================================================================================================================== Segment assets $53,362.1 $ 36.6 $2,989.0 -- $56,387.7 - ---------------------------------------------------------------------------------------------------------------------- Expenditures for long-lived assets (5) -- -- -- $ 3.9 $ 3.9 - ---------------------------------------------------------------------------------------------------------------------- Balance of long-lived assets -- -- -- $ 12.2 $ 12.2 - ----------------------------------------------------------------------------------------------------------------------
(1) Financial Products include: deferred and immediate annuity contracts, mutual funds, distribution services for annuities and mutual funds and programs offered to qualified plans and nonqualified deferred compensation plans that package administrative and recordkeeping services along with a menu of investment options, investment advisory services and pension plan administrative services. Investment Management Services include the following services: investment advisory to affiliated and unaffiliated institutional and retail clients, underwriting, distribution for Company's mutual funds and affiliate's separate accounts; and trustee, administrative and other services to retirement plans. (Refer to Notes 1 and 2.) Discontinued operations include life insurance products. (Refer to Note 3.) Other includes consolidating adjustments and Year 2000 costs (2) Operating earnings is comprised of net income (loss) excluding net realized capital gains and losses and any other items. 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 operating income or net income as a measure of profitability. (3) Other item excluded from operating earnings represents after-tax Year 2000 costs. (4) Taxes on the amortization of deferred gain on sale amounted to $3.2 million. (5) Expenditures of long-lived assets represent additions to property and equipment not allocable to business segments.
F-35 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 14. SEGMENT INFORMATION (continued)
Investment Year ended December 31, 1998 Financial Management Discontinued (Millions) Products (1) Services (1) Operations (1) Other (1) Total ----------------------------------------------------------------------------------------------------------------- Revenue from external customers $ 445.6 $96.7 -- $(38.4) $ 503.9 Net investment income 865.3 1.5 -- 5.0 871.8 ----------------------------------------------------------------------------------------------------------------- Total revenue excluding net realized capital gains $ 1,310.9 $98.2 -- $(33.4) $ 1,375.7 ================================================================================================================= Amortization of deferred policy acquisition costs $ 80.3 -- -- $ 10.9 $ 91.2 ----------------------------------------------------------------------------------------------------------------- Income Taxes (benefits) $ 68.2 $14.7 -- $(15.8) $ 67.1 ----------------------------------------------------------------------------------------------------------------- Operating earnings (2) $ 171.0 $24.0 -- $ (7.1) $ 187.9 Other item (3) -- -- -- (22.4) (22.4) Net realized capital gains, net of tax 7.3 -- -- -- 7.3 ----------------------------------------------------------------------------------------------------------------- Income from continuing operations 178.3 24.0 -- (29.5) 172.8 Discontinued operations, net of tax: Income from operations (4) -- -- $ 61.8 -- 61.8 Immediate gain on sale (4) -- -- 59.0 -- 59.0 ----------------------------------------------------------------------------------------------------------------- Net income (loss) $ 178.3 $24.0 $ 120.8 $(29.5) $ 293.6 ================================================================================================================= Segment assets $44,367.4 $13.4 $2,946.4 -- $47,327.2 ----------------------------------------------------------------------------------------------------------------- Expenditures for long-lived assets (5) -- -- -- $ 6.4 $ 6.4 ----------------------------------------------------------------------------------------------------------------- Balance of long-lived assets -- -- -- $ 12.2 $ 12.2 -----------------------------------------------------------------------------------------------------------------
(1) Financial Products include: deferred and immediate annuity contracts, mutual funds, distribution services for annuities and mutual funds and programs offered to qualified plans and nonqualified deferred compensation plans that package administrative and recordkeeping services along with a menu of investment options, investment advisory services and pension plan administrative services. Investment Management Services include the following services: investment advisory to affiliated and unaffiliated institutional and retail clients, underwriting, distribution for Company's mutual funds and affiliate's separate accounts; and trustee, administrative and other services to retirement plans. (Refer to Notes 1 and 2.) Discontinued operations include life insurance products. (Refer to Note 3.) Other includes consolidating adjustments and Year 2000 costs. (2) Operating earnings is comprised of net income (loss) excluding net realized capital gains and losses and any other items. 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 operating income or net income as a measure of profitability. (3) Other item excluded from operating earnings represents after-tax Year 2000 costs. (4) Taxes on the income from operations and the immediate gain on sale amounted to $32.1million and $29.3 million, respectively. (5) Expenditures of long-lived assets represent additions to property and equipment not allocable to business segments.
F-36 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 14. COMMITMENTS AND CONTINGENT LIABILITIES LEASES In conjunction with the acquisition by ING, the Company entered into with or assumed from a former affiliate operating leases for office space. Since December 13, 2000, rent expense for these leases was immaterial. The future net minimum payments under noncancelable leases for 2001 through 2005 are estimated to be $25.5 million, $24.5 million, $21.5 million, $19.1 million and $16.3 million, respectively, and 29.9 million, thereafter. COMMITMENTS Through the normal course of investment operations, the Company commits to either purchase or sell securities or money market instruments 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. At December 31,1998, the Company had off-balance sheet commitments to purchase investments of $68.7 million with an estimated fair value of $68.9 million. At December 31, 2000 and 1999, there were no off-balance sheet commitments. LITIGATION In recent years, 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. This litigation is in the preliminary stages. 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 expected to result in liability for amounts material to the financial condition of the Company, although it may adversely affect results of operations in future periods. F-37 VARIABLE ANNUITY ACCOUNT C PART C - OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements: (1) Included in Part A: Condensed Financial Information (2) Included in Part B: Financial Statements of Variable Annuity Account C: - 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 Financial Statements of the 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 31, 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 Months Ended November 30, 2000 and for the years ended December 31, 1999 and 1998 - Notes to Consolidated Financial Statements
(b) Exhibits (1) Resolution of the Board of Directors of Aetna Life Insurance and Annuity Company establishing Variable Annuity Account C(1) (2) Not applicable (3.1) Broker-Dealer Agreement(2) (3.2) Alternative Form of Wholesaling Agreement and Related Selling Agreement(3) (3.3) 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(4) (3.4) Underwriting Agreement dated November 17, 2000 between Aetna Life Insurance and Annuity Company and Aetna Investment Services LLC(4) (4.1) Variable Annuity Contract (G-CDA-HF)(5) (4.2) Variable Annuity Certificate (GTCC-HF)(6) (4.3) Variable Annuity Contract (I-CDA-HD)(7) (4.4) Variable Annuity Contract (GIH-CDA-HB)(6) (4.5) Variable Annuity Contract (IMT-CDA-HO)(6)
(4.6) Variable Annuity Contract (G-CDA-HD)(8) (4.7) Variable Annuity Contract (GIP-CDA-HB)(9) (4.8) Endorsement (EGAAE-IO) to Contract GIH-CDA-HB(6) (4.9) Endorsement (EGISA-IA) to Contracts GIH-CDA-HB and IMT-CDA-HO(6) (4.10) Endorsement (EVPE-IC) to Contracts GIH-CDA-HB and IMT-CDA-HO(6) (4.11) Endorsement (EGE2MF5-IB) to Contract GIH-CDA-HB(7) (4.12) Endorsement (EGAWA-HC) to Contracts GIH-CDA-HB and GIP-CDA-HB(6) (4.13) Endorsement (EGAWGU-HC) to Contracts GIH-CDA-HB and GIP-CDA-HB(6) (4.14) Endorsement (ETCI-IB) to Contracts GIH-CDA-HB, GIP-CDA-HB and IMT-CDA-HO(6) (4.15) Endorsement (EGP-MDRPM-96) to Contracts GIH-CDA-HB and GIP-CDA-HB(6) (4.16) Endorsement (EGP-MDRHF-96) to Contract G-CDA-HF(6) (4.17) Endorsement (EGP-MDRHD-96) to Contract G-CDA-HD(6) (4.18) Endorsement (EIP-MDRHD-96) to Contract I-CDA-HD(6) (4.19) Endorsement (EIP-MDRPM-96) to Contract IMT-CDA-HO(6) (4.20) Endorsement (ESVB-HB) to Contracts IMT-CDA-HO and GIH-CDA-HB(6) (4.21) Endorsement (EUSR-HC) to Contract IMT-CDA-HO(6) (4.22) Endorsement (EGAWI-HC) to Contract IMT-CDA-HO(6) (4.23) Endorsement (ERPH-HB) to Contract IMT-CDA-HO(6) (4.24) Endorsement (EIECVT-HI) to Contract IMT-CDA-HO(6) (4.25) Endorsement (ESF-GPHIMT-HD) to Contracts IMT-CDA-HO and GIH-CDA-HB(6) (4.26) Endorsement (EEIMEDH-IB) to Contract IMT-CDA-HO(6) (4.27) Endorsement (EEGEDP-IB) to Contract GIH-CDA-HB(6) (4.28) Endorsement (EPUMF-IC) to Contract GIH-CDA-HB(6) (4.29) Endorsement (EGECVT-HI) to Contract GIH-CDA-HB(6) (4.30) Endorsement (ERPH-HB) to Contract GIH-CDA-HB(6) (4.31) Endorsement (EEIMEDH-IB) to Contract GIH-CDA-HB(6) (4.32) Endorsement (EPAMAR-HD) to Contracts GIH-CDA-HB and GIP-CDA-HB(6) (4.33) Endorsement (EFUND97) to Contract IMT-CDA-HO(5) (4.34) Endorsement (EG401-GIE-98) to Contracts G-CDA-HF, GIH-CDA-HB, G-CDA-HD and GIP-CDA-HB(10) (5.1) Variable Annuity Contract Application (300-GPP-10)(9) (5.2) Variable Annuity Contract Application (200-IMC-HG)(6) (6.1) Certificate of Incorporation of Aetna Life Insurance and Annuity Company(11)
(6.2) Amendment of Certificate of Incorporation of Aetna Life Insurance and Annuity Company(7) (6.3) By-Laws as amended September 17, 1997 of Aetna Life Insurance and Annuity Company(12) (7) Not applicable (8.1) Fund Participation Agreement 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. dated as of May 1, 1998(2) (8.2) Amendment dated November 9, 1998 to Fund Participation Agreement 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. dated as of May 1, 1998(13) (8.3) Second Amendment dated December 31, 1999 to Fund Participation Agreement 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. dated as of May 1, 1998 and amended on November 9, 1998(14) (8.4) Third Amendment dated February 11, 2000 to Fund Participation Agreement 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. dated as of May 1, 1998 and amended on November 9, 1998 and December 31, 1999(15) (8.5) Fourth Amendment dated May 1, 2000 to Fund Participation Agreement 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. dated as of May 1, 1998 and amended on November 9, 1998, December 31, 1999 and February 11, 2000(15) (8.6) Fifth Amendment dated February 27, 2001 to Fund Participation Agreement 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 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. dated as of May 1, 1998 and amended on November 9, 1998, December 31, 1999, February 11, 2000 and May 1, 2000(16) (8.7) Service Agreement 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 dated as of May 1, 1998(2) (8.8) Amendment dated November 4, 1998 to Service Agreement 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 dated as of May 1, 1998(13) (8.9) Second Amendment dated February 11, 2000 to Service Agreement 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 dated as of May 1, 1998 and November 4, 1998(15) (8.10) Third Amendment dated May 1, 2000 to Service Agreement 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 dated as of May 1, 1998, November 4, 1998 and February 11, 2000(15) (9) Opinion and Consent of Counsel (10) Consent of Independent Auditors (11) Not applicable (12) Not applicable (13) Schedule for Computation of Performance Data(17) (14.1) Powers of Attorney(18) (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 Registration Statement on Form N-4 (File No. 333-56297), as filed on June 8, 1998.
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 Pre-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 333-49176), as filed on November 30, 2000. 5. Incorporated by reference to Post-Effective Amendment No. 14 to Registration Statement on Form N-4 (File No. 33-75964), as filed on July 29, 1997. 6. Incorporated by reference to Post-Effective Amendment No. 6 to Registration Statement on Form N-4 (File No. 33-75980), as filed on February 12, 1997. 7. 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. 8. Incorporated by reference to Post-Effective Amendment No. 6 to Registration Statement on Form N-4 (File No. 33-75982), as filed on April 22, 1996. 9. Incorporated by reference to Post-Effective Amendment No. 8 to Registration Statement on Form N-4 (File No. 33-75980), as filed on August 19, 1997. 10. Incorporated by reference to Post-Effective Amendment No. 10 to Registration Statement on Form N-4 (File No. 33-75974), as filed on April 15, 1999. 11. 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. 12. 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. 13. 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. 14. 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. 15. 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. 16. Incorporated by reference to Post-Effective Amendment No. 18 to Registration Statement on Form N-4 (File No. 33-81216), as filed on April 9, 2001. 17. Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 33-75980), as filed on April 17, 1998. 18. Incorporated by reference to Post-Effective Amendment No. 2 to Registration Statement on Form S-2 (File No. 333-34014), as filed on April 4, 2001.
ITEM 25. DIRECTORS AND 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 all directors and officers listed 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 herein by reference to Item 26 of Post-Effective Amendment No. 16 to the Registration Statement on Form N-4 (File No. 33-81216), as filed on January 19, 2001. ITEM 27. NUMBER OF CONTRACT OWNERS As of February 28, 2001, there were 615,205 individuals holding interests in variable annuity contracts funded through Variable Annuity Account C. 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 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 Aetna Life Insurance and Annuity Company (Aetna), Variable Life Account B of Aetna, Variable Life Account C of Aetna, Variable Annuity Account B 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 Allan Baker* Director and Senior Vice President Robert L. Francis** Director and Senior Vice President Steven A. Haxton* Senior Vice President Gary J. Hegedus* Senior Vice President Deborah Koltenuk* Vice President, Treasurer and Chief Financial Officer Therese Squillacote* Vice President and Chief Compliance Officer John F. Todd* Corporate Secretary and Counsel (Chief Legal Officer) Martin T. Conroy* Vice President and Assistant Treasurer Reginald Bowen* Vice President Christina Lareau* Vice President Dwyatt McClain* Vice President Terran Titus* Vice President 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 Floor, Woodbridge, NJ 07095
Name and Principal Positions and Offices with Business Address Principal Underwriter - ---------------- --------------------- Ronald R. Barhorst Vice President 7676 Hazard Ctr. Dr. San Diego, CA 92108 Robert H. Barley*** 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 Floor 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 Vice President 1601 Trapelo Rd. Waltham, MA 02451 Brian P. Harrington Vice President 12701 Fair Lakes Cir., Ste. 470 Fairfax, VA 22033 Bernard P. Heffernon**** Vice President William S. Jasien**** Vice President Jess D. Kravitz** Vice President George D. Lessner Vice President 1755 N. Collins Blvd, Ste. 350 Richardson, TX 75080 Katherine E. Lewis Vice President 2675 N. Mayfair Rd., Ste. 501 Milwaukee, WI 53226
Name and Principal Positions and Offices with Business Address Principal Underwriter - ---------------- --------------------- 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., Suite 702 Syracuse, NY 13202 Joseph F. McClain* Vice President Pamela Mulvey* Vice President W. Michael Montgomery Vice President 5100 W. Lemon St., Ste 213 Tampa, FL 33609 Scott T. Neeb** Vice President Patrick F. O'Christie Vice President The Pavilions, 1700 Lyons Rd., Ste D Dayton, OH 45458 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
Name and Principal Positions and Offices with Business Address Principal Underwriter - ---------------- --------------------- 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 Mark Woolhiser Vice President 26957 Northwestern Hwy., Ste. 150 Southfield, MI 48034 David A. Kelsey* Assistant Vice President
* 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 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 Discounts and Redemption Brokerage Underwriter Commissions or Annuitization Commissions Compensation* - ----------- ----------- ---------------- ----------- ------------- Aetna Life $4,282,754 $178,558,430 Insurance 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 C. Of this amount, $13,700,318 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 Principal Discounts and on Redemption Brokerage Underwriter Commissions or 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, $61,297 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 C. 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) 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. (e) 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 C 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. 33-75980) and has caused this Post-Effective Amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Hartford, State of Connecticut, on the 13th day of April, 2001. VARIABLE ANNUITY ACCOUNT C 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. 15 to the Registration Statement 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 ) April 13, 2001 - ----------------------------------- ) Phillip R. Lowery ) ) Robert C. Salipante* Director ) - ----------------------------------- ) Robert C. Salipante ) ) Mark A. Tullis* Director ) - ----------------------------------- ) Mark A. Tullis )
Deborah Koltenuk* Corporate Controller ) - ----------------------------------- ) Deborah Koltenuk )
By: /s/ Julie E. Rockmore -------------------------------------------------- Julie E. Rockmore *Attorney-in-Fact VARIABLE ANNUITY ACCOUNT C EXHIBIT INDEX
Exhibit No. Exhibit - ---------- ------- 99-B.9 Opinion and Consent of Counsel ----------------- 99-B.10 Consent of Independent Auditors -----------------
EX-99.B9 2 a2035445zex-99_b9.txt CONSENT OF COUNSEL [ING LOGO] AMERICAS US Legal Services JULIE E. ROCKMORE COUNSEL (860) 273-4686 FAX: (860) 273-0385 ROCKMOREJE@ING-AFS.COM April 13, 2001 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549 RE: AETNA LIFE INSURANCE AND ANNUITY COMPANY AND ITS VARIABLE ANNUITY ACCOUNT C POST-EFFECTIVE AMENDMENT NO. 15 TO REGISTRATION STATEMENT ON FORM N-4 PROSPECTUS TITLE: GROUP INSTALLMENT VARIABLE ANNUITY CONTRACTS FOR HR 10 PLANS AND REWRITE OF QUALIFIED 401 PLANS FILE NOS.: 33-75980* AND 811-2513 Dear Sir or Madam: The undersigned serves as counsel to Aetna Life Insurance and Annuity Company, a Connecticut life insurance company (the "Company"). It is my understanding that the Company, as depositor, has registered an indefinite amount of securities (the "Securities") under the Securities Act of 1933 (the "Securities Act") as provided in Rule 24f-2 under the Investment Company Act of 1940 (the "Investment Company Act"). In connection with this opinion, I or those for whom I have supervisory responsibility, have reviewed the N-4 Registration Statement, as amended to the date hereof, and this Post-Effective Amendment No. 15. I have also examined originals or copies, certified or otherwise identified to my satisfaction, of such documents, trust records and other instruments I have deemed necessary or appropriate for the purpose of rendering this opinion. For purposes of such examination, I have assumed the genuineness of all signatures on original documents and the conformity to the original of all copies. I am admitted to practice law in Connecticut, and do not purport to be an expert on the laws of any other state. My opinion herein as to any other law is based upon a limited inquiry thereof which I have deemed appropriate under the circumstances. - ------------------ * 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 securities covered by Registration Statement No. 33-75984. Hartford Site ING North America Insurance Corporation 151 Farmington Avenue, TS31 Hartford, CT 06156-8975 Based upon the foregoing, and, assuming the Securities are sold in accordance with the provisions of the prospectus, I am of the opinion that the Securities being registered will be legally issued and will represent binding obligations of the Company. I consent to the filing of this opinion as an exhibit to the Registration Statement. Sincerely, /s/ Julie E. Rockmore Julie E. Rockmore EX-99.B10 3 a2035445zex-99_b10.txt CONSENT OF INDEPENDENT ACCOUNTANTS CONSENT OF INDEPENDENT AUDITORS The Board of Directors of Aetna Life Insurance and Annuity Company and Contract Owners of Variable Annuity Account C: We consent to the use of our report dated February 2, 2001, relating to the financial statements of Variable Annuity Account C and our report dated March 27, 2001, relating to the consolidated financial statements of Aetna Life Insurance and Annuity Company, which are included in this Post-Effective Amendment No. 15 to Registration Statement (File No. 33-75980) on Form N-4 and to the references to our firm under the headings "Condensed Financial Information" in the prospectus and "Independent Auditors" in the statement of additional information. /s/ KPMG LLC Hartford, Connecticut April 12, 2001 -----END PRIVACY-ENHANCED MESSAGE-----