-----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, Rj8tDTHAd/F5q4lMc+warx5WGiA1VaSh6Df8vbV0sjKE0NdqIAryqQ+s62tW5DHM iN7sj/mupkMGb4YEgb5Mkg== 0000950146-99-000763.txt : 19990408 0000950146-99-000763.hdr.sgml : 19990408 ACCESSION NUMBER: 0000950146-99-000763 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19990407 EFFECTIVENESS DATE: 19990407 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: 333-01107 FILM NUMBER: 99588946 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-02513 FILM NUMBER: 99588947 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 As filed with the Securities and Exchange Registration No. 333-01107* Commission on April 7, 1999 Registration No. 811-2513 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 - -------------------------------------------------------------------------------- POST-EFFECTIVE AMENDMENT NO. 13 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 (Exact Name of Registrant) Aetna Life Insurance and Annuity Company (Name of Depositor) 151 Farmington Avenue, RE4A, Hartford, Connecticut 06156 (Address of Depositor's Principal Executive Offices) (Zip Code) Depositor's Telephone Number, including Area Code: (860) 273-4686 Julie E. Rockmore, Counsel Aetna Life Insurance and Annuity Company 151 Farmington Avenue, RE4A, 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 3, 1999 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 the following earlier Registration Statements: 33-88720; 33-75964 (which had included a combined prospectus for earlier Registration Statements: 33-75958, 33-75960, and 33-75994); 33-75986 (which had included a combined prospectus for earlier Registration Statements: 33-75970, 33-75954, and 33-75956); 33-75982 (which had included a combined prospectus for earlier Registration Statements: 33-75968, 33-75966, 33-75990, and the individual deferred compensation contracts covered by Registration Statement No. 33-75992); and 33-91846 (which had included a combined prospectus for earlier Registration Statement: 33-75976). VARIABLE ANNUITY ACCOUNT C CROSS REFERENCE SHEET
FORM N-4 ITEM NO. PART A (PROSPECTUS) LOCATION - PROSPECTUS 1 Cover Page........................................... Cover Page 2 Definitions.......................................... Not Applicable 3 Synopsis............................................. Contract Overview; Fee Tables 4 Condensed Financial Information...................... Condensed Financial Information; Appendix VI - Condensed Financial Information 5 General Description of Registrant, Depositor, and Portfolio Companies.................................. Other Topics - The Company, Variable Annuity Account C; Appendix V - Fund Descriptions 6 Deductions and Expenses.............................. Fees 7 General Description of Variable Annuity Contracts.... Contract Overview; Additional Information 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; Withdrawals; Systematic Distribution Options 12 Taxes................................................ Taxation 13 Legal Proceedings.................................... Other Topics - Legal Matters and Proceedings 14 Table of Contents of the Statement of Additional Information.......................................... Statement of Additional Information - Table of Contents
FORM N-4 PART B (STATEMENT OF LOCATION - STATEMENT OF ITEM NO. ADDITIONAL INFORMATION) ADDITIONAL INFORMATION 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; Average Annual Total Return Quotations 22 Annuity Payments..................................... Income Phase Payments 23 Financial Statements................................. 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. VARIABLE ANNUITY ACCOUNT C May 3, 1999 Supplement to May 3, 1999 Prospectus or Contract Prospectus Summary Minnesota State Colleges and Universities Voluntary 403(b) Tax-Deferred Annuity Your plan is administered in part by a third party. Such arrangements are mentioned under the heading "Third Party Compensation Arrangements" in the "Other Topics" section in the prospectus and the Contract Prospectus Summary. In your case, Norwest Bank Minnesota is responsible for handling a portion of administration and service for the contract in which you participate. In exchange for the services provided, we compensate Norwest Bank Minnesota an amount equal to 0.25% of the assets related to the plan on an annual basis (0.0625% is paid quarterly). This is not an additional charge to you, but is part of the charges for the contract. Form No. XCS.01107-99MN May 1999 VARIABLE ANNUITY ACCOUNT C May 3, 1999 Supplement to May 3, 1999 Prospectus or Contract Prospectus Summary Pennsylvania State Association of Boroughs (the "Association") Under a signed agreement, the Association endorses our variable annuity for sale to its employees under the group's Deferred Compensation Plan. We have agreed to compensate the Association $3.50 per year for each participant for which contributions are made under the contract (See "Other Topics--Third Party Compensation Arrangements" in the prospectus or the Contract Prospectus Summary). Form No. XCS.01107-99PA May 1999 VARIABLE ANNUITY ACCOUNT C May 3, 1999 Supplement to May 3, 1999 Prospectus or Contract Prospectus Summary St. John's Regional Health Center The following is a negotiated provision concerning the early withdrawal charge applicable to the Suburban Hospital tax-deferred annuity plan. (See "Fees--Early Withdrawal Charge" in the prospectus or the Contract Prospectus Summary): You may withdraw up to 10% of your current account each year without incurring an early withdrawal charge. This applies only to the first partial withdrawal in each calendar year. The amount eligible will be determined using the account value on the date we receive the withdrawal request. This provision is available to anyone up to age 70-1/2 (instead of between the ages of 59-1/2 and 70-1/2). Outstanding loan amounts on 403(b) accounts are not included in the account value for the purpose of calculating the eligible partial withdrawal. This provision does not apply to full withdrawals or to partial withdrawals due to loan defaults. Form No. XCS.01107-99SJ May 1999 VARIABLE ANNUITY ACCOUNT C VARIABLE ANNUITY ACCOUNT B Aetna Life Insurance and Annuity Company Supplement Dated May __, 1999 to May 3, 1999 Prospectus or Contract Prospectus Summary GENERAL DESCRIPTION OF GET E Series E of the Aetna GET Fund (GET E) is an investment option that may be available during the accumulation phase of the contract. Aetna Life Insurance and Annuity Company (the Company or we) makes a guarantee, as described below, when you direct money into GET E. Aeltus Investment Management, Inc. is the investment adviser to GET E. We will offer GET E shares only during its offering period, which is scheduled to run from June 15, 1999 through the close of business on September 14, 1999. GET E may not be available under your contract, your plan or in your state. Please read the GET E prospectus for a more complete description of GET E, including its charges and expenses. INVESTMENT OBJECTIVE OF GET E GET E seeks to achieve maximum total return, without compromising a targeted minimum rate of return, by participating in favorable equity market performance during its guarantee period. GET E's guarantee period runs from September 15, 1999 through September 14, 2004. During the offering period, all GET E assets will be invested in money market instruments, and during the guarantee period will be invested in a combination of fixed income and equity securities. THE GET FUND GUARANTEE The guarantee period for GET E will end on September 14, 2004, which is GET E's maturity date. The Company guarantees that the value of an accumulation unit of the GET E subaccount under the contract on the maturity date (as valued after the close of business on September 14, 2004), will not be less than its value as determined after the close of business on the last day of the offering period. If the value on the maturity date is lower than it was on the last day of the offering period, we will transfer funds from our general account to the GET E subaccount to make up the difference. If you withdraw or transfer funds from GET E before the maturity date, we will process the transactions at the actual unit value next determined after we receive your order. The guarantee will not apply to these amounts or to amounts deducted as a maintenance fee, if applicable. MATURITY DATE Before the maturity date, we will send a notice to each contract holder or participant who has amounts in GET E. This notice will remind you that the maturity date is approaching and that you must choose other investment options for your GET E amounts. If you do not make a choice, on the maturity date we will transfer your GET E amounts to another available series of the GET Fund that is accepting deposits. If no GET Fund Series is available, we will transfer 50% of your GET E account value to Aetna Growth and Income VP and the remaining 50% to Aetna Bond VP. We will make these transfers as of the unit value next determined after the transfer. INCOME PHASE GET E is not available during the Income Phase. You should not select this option if you wish to begin income payments or to make other withdrawals or transfers before the maturity date. You must transfer your GET E account value to another available investment option before you may elect an annuity option. As stated above, the Company's guarantee will not apply to amounts you withdraw or transfer before the maturity date. SUBJECT TO COMPLETION OR AMENDMENT Information contained herein is subject to completion or amendment. A registered statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus supplement shall not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of these securities in any state in which such offer solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. REINVESTMENT Some contracts allow you to reinvest all or a portion of the proceeds after a full withdrawal. If you withdraw amounts from GET E and then elect to reinvest them, we will reinvest them in a GET Fund series that is then accepting deposits, if one is available. If one is not available, we will reallocate your GET E amounts among the other investment options in which you were invested, on a pro rata basis. The following information supplements the fee table contained in the prospectus or contract prospectus summary: FEES DEDUCTED FROM YOUR INVESTMENTS IN THE SEPARATE ACCOUNT In addition to the amounts currently listed under the heading "Fee Table" in the prospectus or contract prospectus summary, we will make a daily deduction of a GET Guarantee Charge, equal on an annual basis to the percentage shown below, from the amounts allocated to the GET E investment option: GET E Guarantee Charge (deducted daily during the Guarantee Period) ... 0.50% Maximum Total Separate Account Expenses ................................. 2.00%(1)
(1) The Total Separate Account Expenses that apply to your contract may be lower. Please refer to the "Fee Table" section of your prospectus or contract prospectus summary. Aetna GET Fund Series E Annual Expenses (As a percentage of the average net assets)
Investment Total Fund Annual Expenses Advisory Fees(2) Other Expenses(3) (after expense reimbursement)(4) ---------------- ----------------- ------------------------------- Aetna GET Fund Series E 0.60% 0.15% 0.75%
For more information regarding expenses paid out of assets of the fund, see the GET E prospectus. Hypothetical Examples of Account Fees (EXAMPLE)--Aetna GET Fund Series E THIS EXAMPLE IS PURELY HYPOTHETICAL. IT SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR EXPECTED RETURN. ACTUAL EXPENSES AND/OR RETURN MAY BE MORE OR LESS THAN THOSE SHOWN BELOW. The following Examples illustrate the expenses that would have been paid assuming a $1,000 investment in the GET E investment option under the contract (until GET E's maturity date) and a 5% return on assets.(5)
Example A Example B If you withdraw your entire account If you leave your entire account value value at the end of the periods shown, invested or if you select an Income you would pay the following expenses, Phase option at the end of the periods including any applicable Early shown, you would pay the following Withdrawal Charge assessed: expenses (no Early Withdrawal Charge is assessed): 1 Year 3 Years 5 Years 1 Year 3 Years 5 Years - -------- --------- -------- -------- --------- -------- $79 $140 $204 $28 $87 $148
- ----------------------- (2) The Investment Advisory Fee will be 0.25% during the Offering Period. An annual management fee of 0.60% will apply during the Guarantee Period. (3) "Other Expenses" include an annual fund administrative fee of 0.075% of the average daily net assets of GET E and any additional direct fund expenses. (4) The Adviser is contractually obligated through GET E's maturity date to waive all or a portion of its investment advisory fee and/or its administrative fee and/or to reimburse a portion of the Fund's other expenses in order to ensure that the Fund's Total Fund Annual Expenses do not exceed 0.75% of the Fund's average daily net assets. It is not expected that the Fund's actual expenses without this waiver or reimbursement will exceed this amount. (5) The examples shown above reflect an annual mortality and expense risk charge of 1.25%, an annual contract administrative expense charge of 0.25%, an annual GET E guarantee charge of 0.50%, an annual maintenance fee that has been converted to a percentage of assets equal to 0.050%, and all charges and expenses of the GET E Fund. Example A reflects an early withdrawal charge of 5% of the account value at the end of years 1, 3 and 5. (The expenses that you would pay under your contract may be lower. Please refer to the "Fee Table" section of your prospectus or contract prospectus summary.) RH.GETESPON-99 May 1999 Prospectus - May 3, 1999 - -------------------------------------------------------------------------------- The Funds Aetna Ascent VP Aetna Balanced VP, Inc. Aetna Income Shares d/b/a Aetna Bond VP Aetna Crossroads VP Aetna Growth VP Aetna Variable Fund d/b/a Aetna Growth and Income VP Aetna High Yield 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 Variable Encore Fund d/b/a Aetna Money Market VP Aetna Real Estate Securities VP Aetna Small Company VP Aetna Value Opportunity VP AIM V. I. Capital Appreciation Fund AIM V. I. Growth Fund AIM V. I. Growth and Income Fund AIM V. I. Value Fund Calvert Social Balanced Portfolio Fidelity Variable Insurance Products Fund (VIP) Equity-Income Portfolio Fidelity Variable Insurance Products Fund (VIP) Growth Portfolio Fidelity Variable Insurance Products Fund (VIP) Overseas Portfolio Fidelity Variable Insurance Products Fund II (VIP II) Contrafund Portfolio Janus Aspen Aggressive Growth Portfolio Janus Aspen Balanced Portfolio Janus Aspen Flexible Income Portfolio Janus Aspen Growth Portfolio Janus Aspen Worldwide Growth Portfolio Lexington Natural Resources Trust* Oppenheimer Global Securities Fund/VA Oppenheimer Strategic Bond Fund/VA Portfolio Partners MFS Emerging Equities Portfolio Portfolio Partners MFS Research Growth Portfolio Portfolio Partners MFS Value Equity Portfolio Portfolio Partners Scudder International Growth Portfolio Portfolio Partners T. Rowe Price Growth Equity Portfolio The Contracts. The contracts described in this prospectus are group or individual deferred variable annuity contracts issued by Aetna Life Insurance and Annuity Company (the Company). They are intended to be used as funding vehicles for certain types of retirement plans and to qualify for beneficial tax treatment and/or to provide current income reduction 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 your retirement plan, you should read this prospectus. It provides facts about the contract and its investment options. Plan sponsors (generally your employer or a trust) 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 - -------------------------------------------------------------------------------- Contract Design. The contracts are designed to: >Help you save for retirement while receiving beneficial tax treatment >Offer a variety of investment options to help meet long-term financial goals >Provide a benefit to a beneficiary in the event of death >Provide future income payments over a lifetime or for a specified period Investment Options. The contracts offer variable investment options and fixed interest options. When we establish your account(s), the contract holder, or you if permitted by the plan, instructs us to direct account dollars to 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 on the performance and fees of its underlying fund. You do not invest directly in or hold shares of the funds. The funds in which the subaccounts invest have various risks. For information about risks of investing in the funds see "Investment Options" in this prospectus and each fund prospectus. Retain the fund prospectuses for future reference. Fixed Interest Options. >Guaranteed Accumulation Account >Fixed Plus 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. - ------------------------- * Transfers or deposits are not allowed into the subaccount investing in this fund, except from accounts established under the contract before May 1, 1998. As soon as all those who have current allocations to the subaccount under the contract have redirected their allocations to other investment options, we will close the subaccount to all investments (except loan repayments that we automatically deposit into the subaccount according to our loan repayment procedures). Prospectus - May 3, 1999 (continued) - -------------------------------------------------------------------------------- Getting Additional Information. You may obtain the May 3, 1999, Statement of Additional Information (SAI) by indicating your request on your enrollment materials or calling the Company at 1-800-525-4225. 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 are posted on the Securities and Exchange Commission (SEC) web site, http://www.sec.gov and may also be obtained, free of charge, by contacting the SEC Public Reference Room at 202-942-8090. The SAI table of contents is listed on page 46 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 securities 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 securities 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. 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 Sending Requests in Good Order - ------------------------------------------------------
Fee Table ................................... 6 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 .......................... 22 Withdrawals ................................. 24 Loans ....................................... 26 Systematic Distribution Options ............. 26 Death Benefit ............................... 27 The Income Phase ............................ 29 Taxation .................................... 33 Other Topics ................................ 40
The Company - Variable Annuity Account C - Performance Reporting - Voting Rights - Contract Distribution - Contract Modification - Legal Matters and Proceedings - Payment Delay or Suspension - Transfer of Ownership; Assignment - Account Termination - Year 2000 Readiness Contents of the Statement of Additional Information ..................... 46 Appendix I - The Guaranteed Accumulation Account ........................ 47 Appendix II - The Fixed Account ......................................... 49 Appendix III - The Fixed Plus Account ................................... 51 Appendix IV - Appointment of Employer ................................... 55 Appendix V - The Funds .................................................. 56 Appendix VI - Condensed Financial Information Table of Contents ......... 59
3 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. Plan Type: We refer to the retirement plan by the Tax Code section under which it qualifies. For example: a "457 plan" is a plan that qualifies for tax treatment under code section 457. To learn which code section applies to your plan, contact your plan sponsor, your Aetna representative or the Company. Contract Rights: Rights under the contract and who may exercise those rights, may vary by plan type. Also, while the contract may reserve certain rights for the contract holder, the contract holder may permit you to exercise those rights through the plan. 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 who participates in the contract through a retirement plan. Plan Sponsor: The sponsor of your retirement plan. Generally, your employer or a trust. Contract Holder*: The person to whom we issue the contract. Generally, the plan sponsor. We (the Company): Aetna Life Insurance and Annuity Company. We issue the contract. For greater detail please review "Contract Rights and Ownership" and "Purchase." - ------------------------- * Certain contracts are purchased by and issued directly to persons participating in certain plans. The words "you" and "participant" apply to these individuals, except that these individuals have all rights under the contract. The word "contract holder" also applies to these individuals, except that these individuals have no responsibilities to other participants or beneficiaries. Contract Facts Free look/Right to Cancel: Contract holders may cancel the contract no later than 10 days after they receive the contract. Participants in 403(b) plans or in some plans under 401(a)/401(k) or 403(a) may cancel their participation in the contract no later than 10 days after they receive evidence of participation in the contract. 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 "Income Phase." Withdrawals: During the accumulation phase, you may, under some plans, withdraw all or part of your 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: These allow 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: The Tax Code has certain rules that apply to amounts accumulated and distributed under the contract. Tax penalties may apply if rules are not followed. See "Taxation." 4 Contract Phases I. The Accumulation Phase (accumulating retirement benefits) +--------------+ | Payments to | STEP 1: You or the contract | Your Account | holder provide Aetna Life +--------------+ Insurance and Annuity Step 1 [arrow down] Company with your completed +------------------------------------------+ enrollment materials. | Aetna Life Insurance and Annuity Company | According to the plan, we set +------------------------------------------+ up one or more accounts for you. a. [arrow down] Step 2 b. [arrow down] We may set up account(s) for +--------+ +----------------------------+ employer contributions and/or | Fixed | | Variable Annuity | for contributions from your |Interest| | Account C | salary. |Options | | | | | | Variable Investment Options| STEP 2: The contract holder, +--------+ +----------------------------+ or you if permitted by your The Subaccounts plan, directs us to invest your +--------+---------+---------+ account dollars in any of the: | A | B | Etc. | (a) Fixed Interest Options +--------+---------+---------+ (b) Variable Investment Step 2(b)[arrow down] Options. (The variable investment +--------+---------+---------+ options are the subaccounts of | Mutual | Mutual | Etc. | Variable Annuity Account B. Each | Fund A | Fund B | | one invests in a specific mutual +--------+---------+---------+ fund.) STEP 2(b), continued: The subaccount(s) selected purchases shares of its corresponding fund.
II. The Income Phase The contract offers several payment options (see "Income Phase.") In general, you may: > Receive payments over a lifetime or for a specified period > Receive payments monthly, quarterly, semi-annually or annually > Select an option that provides a death benefit to beneficiaries > Select fixed payments or payments that vary based on the performance of the variable investment options you select. Questions? Contact your local representative or write or call the Home Office: Aetna Retirement Services Annuity Services 151 Farmington Avenue Hartford, CT 06156-1277 1-800-525-5225 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. 5 In This Section: >Maximum Transaction Fees >Maximum Fees deducted from investments in the Subaccounts >Fund Fees >Examples of Fee Deductions See "Fees" for: >Early Withdrawal Charge Schedules >How, When and Why Fees are Deducted >Reduction, Waiver and/or Elimination of Certain Fees >Premium and Other Taxes See "Income Phase" for: >Fees during the income phase 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 "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 Maximum Early Withdrawal Charge*........................ 5% of amount withdrawn This is a deferred sales charge. It is a percentage of the amount withdrawn. The percentage will be determined by the applicable early withdrawal charge schedule in the "Fees" section. In certain cases this charge may not apply to a portion or all of your withdrawal. The early withdrawal charge reduces over time. Maximum Annual Maintenance Fee*........................................$20.00 Fees Deducted From the Subaccounts Maximum Amounts* (Daily deductions equal to the given percentage on an annual basis) Mortality and Expense Risk Charge.......................................1.25% Administrative Expense Charge.......................................... 0.25% ----- Total Separate Account Expenses........................................ 1.50% ===== ------------------------- *These fees may be waived, reduced or eliminated in certain circumstances. See "Fees." 6 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, 1998.
Total Fund Net Fund Annual Annual Expenses Expenses Investment Without Total After Advisory Other Waivers or Waivers and Waivers or Fees(1) Expenses Reductions Reductions Reductions ------------ ---------- ------------ ------------- ----------- Aetna Ascent VP(2)(3) 0.60% 0.15% 0.75% 0.00% 0.75% Aetna Balanced VP, Inc.(3) 0.50% 0.09% 0.59% -- 0.59% Aetna Bond VP(3) 0.40% 0.10% 0.50% -- 0.50% Aetna Crossroads VP(2)(3) 0.60% 0.15% 0.75% 0.00% 0.75% Aetna Growth VP(2)(3) 0.60% 0.15% 0.75% 0.00% 0.75% Aetna Growth and Income VP(3) 0.50% 0.08% 0.58% -- 0.58% Aetna High Yield VP(2)(3) 0.65% 0.40% 1.05% 0.25% 0.80% Aetna Index Plus Large Cap VP(2)(3) 0.35% 0.10% 0.45% 0.00% 0.45% Aetna Index Plus Mid Cap VP(2)(3) 0.40% 0.51% 0.91% 0.31% 0.60% Aetna Index Plus Small Cap VP(2)(3) 0.40% 0.61% 1.01% 0.41% 0.60% Aetna International VP(2)(3) 0.85% 1.22% 2.07% 0.92% 1.15% Aetna Legacy VP(2)(3) 0.60% 0.16% 0.76% 0.00% 0.76% Aetna Money Market VP(3) 0.25% 0.09% 0.34% -- 0.34% Aetna Real Estate Securities VP(2)(3) 0.75% 0.73% 1.48% 0.53% 0.95% Aetna Small Company VP(2)(3) 0.75% 0.14% 0.89% 0.00% 0.89% Aetna Value Opportunity VP(2)(3) 0.60% 0.14% 0.74% 0.00% 0.74% AIM V. I. Capital Appreciation Fund(4) 0.62% 0.05% 0.67% -- 0.67% AIM V. I. Growth Fund(4) 0.64% 0.08% 0.72% -- 0.72% AIM V. I. Growth and Income Fund(4) 0.61% 0.04% 0.65% -- 0.65% AIM V. I. Value Fund(4) 0.61% 0.05% 0.66% -- 0.66% Calvert Social Balanced Portfolio(5) 0.70% 0.18% 0.88% 0.02% 0.86% Fidelity VIP Equity-Income Portfolio(6) 0.49% 0.09% 0.58% 0.01% 0.57% Fidelity VIP Growth Portfolio(6) 0.59% 0.09% 0.68% 0.02% 0.66% Fidelity VIP Overseas Portfolio(6) 0.74% 0.17% 0.91% 0.02% 0.89% Fidelity VIP II Contrafund Portfolio(6) 0.59% 0.11% 0.70% 0.04% 0.66% Janus Aspen Aggressive Growth Portfolio(7) 0.72% 0.03% 0.75% 0.00% 0.75% Janus Aspen Balanced Portfolio(7) 0.72% 0.02% 0.74% 0.00% 0.74% Janus Aspen Flexible Income Portfolio(7) 0.65% 0.08% 0.73% 0.00% 0.73% Janus Aspen Growth Portfolio(7) 0.72% 0.03% 0.75% 0.07% 0.68% Janus Aspen Worldwide Growth Portfolio(7) 0.67% 0.07% 0.74% 0.02% 0.72% Lexington Natural Resources Trust(8) 1.00% 0.29% 1.29% 0.00% 2.50% Oppenheimer Global Securities Fund/VA(4) 0.68% 0.06% 0.74% -- 0.74% Oppenheimer Strategic Bond Fund/VA(4) 0.74% 0.06% 0.80% -- 0.80% Portfolio Partners MFS Emerging Equities Portfolio (9) 0.68% 0.13% 0.81% 0.00% 0.83% Portfolio Partners MFS Research Growth Portfolio (9) 0.70% 0.15% 0.85% -- 0.85% Portfolio Partners MFS Value Equity Portfolio(9) 0.65% 0.25% 0.90% -- 0.90% Portfolio Partners Scudder International Growth Portfolio(9) 0.80% 0.20% 1.00% -- 1.00% Portfolio Partners T. Rowe Price Growth Equity Portfolio(9) 0.60% 0.15% 0.75% -- 0.75%
7 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 generally paid out of the management fees and are not charged to investors. For the AIM Funds, the reimbursements may be paid out of fund assets in an amount up to 0.25% annually. Any such reimbursements paid from the AIM Funds' assets are included in the "Other Expenses" column. (2) The investment adviser is contractually obligated through December 31, 1999 to waive all or a portion of its investment advisory fee and/or its administrative services fee and/or to reimburse a portion of other expenses in order to ensure that the portfolio's Total Fund Annual Expenses do not exceed the percentage reflected under Net fund Annual Expenses After Waivers or Reductions. (3) Prior to May 1, 1998, the portfolio's investment adviser provided administrative services to the portfolio and assumed the portfolio's ordinary recurring direct costs under an administrative services agreement. After that date, the portfolio's investment adviser provided administrative services but no longer assumed all of the porfolio's ordinary recurring direct costs under an administrative services agreement. The administrative fee is 0.075% on the first $5 billion in assets and 0.050% on all assets over $5 billion. The "Other Expenses" shown are not based on actual figures for the year ended December 31, 1998, but reflect the fee payable under the new administrative services agreement and estimates the portfolio's ordinary recurring direct costs. (4) Fee waiver/expense reimbursement obligations do not apply to these porfolios. (5) The figures above are based on expenses for fiscal year 1998, and have been restated to reflect the elimination of a performance adjustment. The restatement includes an addition of 0.01% to the portfolio management fee. Other Expenses reflect an indirect fee of 0.02% relating to an expense offset arrangement with the portfolio's custodian. Amount shown under Total Waivers and Reductions reflect a voluntary reduction of fees paid indirectly. (6) A portion of the brokerage commissions that certain funds pay was used to reduce fund expenses. In addition, certain funds, or the investment adviser on behalf of certain funds, have entered into arrangements with their custodian whereby credits realized as a result of uninvested cash balances were used to reduce custodian expenses. These credits are included under Total Waivers and Reductions. (7) All expenses are stated both with and without contractual waivers and fee reductions by Janus Capital. Fee reductions for the Aggressive Growth, Balanced, Growth and Worldwide Growth Portfolios reduce the Management fee to the level of the corresponding Janus retail fund. Other waivers, if applicable, are first applied against the Management Fee and then against Other Expenses. Janus Capital has agreed to continue other waivers and fee reduction until at least the next annual renewal of the advisory agreement. (8) For 1998, the fund's investment adviser voluntarily agreed to limit the total expenses of the fund (excluding interest, taxes, brokerage commissions, and extraordinary expense, but including management fees and operating expenses) to an annual rate of 2.50% of the fund's average daily net assets. This voluntary agreement will remain in effect through December 31, 1999. (9) The investment adviser has agreed to reimburse the portfolios for expenses and/or waive its fees, so that, through at least April 30, 2000, 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. For the Porfolio Partners MFS Emerging Equities Portfolio, the Total Fund Annual Expenses Without Waivers or Reductions for 1998 were less than the percentage reflected under the Net Fund Annual Expenses After Waivers or Reductions column. Nevertheless, the investment adviser will waive fees and/or reimburse expenses if that portfolio's Total Fund Annual Expenses Without Waivers or Reductions for 1999 exceed the percentage reflected under the Net Fund Annual Expenses After Waivers or Reductions column. 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 purpose of these examples, we deducted the maximum allowed under the contract for the following fees: mortality and expense risk charge of 1.25% on an annual basis, administrative expense charge of 0.25% on an annual basis, and a maintenance fee of $20.00 (converted to a percentage of assets equal to 0.050%). The total annual fund expenses used are those shown in the column "Total Annual Expenses Without Waivers or Reductions" in the Fund Expense Table. - ------------------------------------------- > These examples are purely hypothetical > They should not be considered a representation of past or future fees or expected returns > Actual fees and/or returns may be more or less than those shown in these examples. - -------------------------------------------
EXAMPLE A EXAMPLE B --------------------------------------- -------------------------------------- If you leave your entire account If you withdraw your entire account value invested or if you select an income value at the end of the periods shown, phase payment option at the end of the you would pay the following fees, periods shown, you would pay the including any applicable early following fees (no early withdrawal withdrawal charge assessed:* charge is reflected):** 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years -------- --------- --------- ---------- -------- --------- --------- --------- Aetna Ascent VP $75 $126 $180 $264 $23 $ 72 $123 $264 Aetna Balanced VP, Inc. $73 $121 $173 $247 $22 $ 67 $115 $247 Aetna Bond VP $72 $119 $168 $238 $21 $ 64 $110 $238 Aetna Crossroads VP $75 $126 $180 $264 $23 $ 72 $123 $264 Aetna Growth VP $75 $126 $180 $264 $23 $ 72 $123 $264 Aetna Growth and Income VP $73 $121 $172 $246 $22 $ 67 $114 $246 Aetna High Yield VP $78 $135 $194 $293 $26 $ 81 $138 $293 Aetna Index Plus Large Cap VP $72 $117 $166 $233 $20 $ 63 $108 $233 Aetna Index Plus Mid Cap VP $76 $131 $188 $280 $25 $ 77 $131 $280 Aetna Index Plus Small Cap VP $77 $133 $192 $290 $26 $ 80 $136 $290 Aetna International VP $87 $163 $241 $388 $36 $111 $187 $388 Aetna Legacy VP $75 $126 $181 $265 $23 $ 72 $124 $265 Aetna Money Market VP $71 $114 $160 $221 $19 $ 59 $102 $221 Aetna Real Estate Securities VP $82 $147 $214 $335 $31 $ 94 $159 $335 Aetna Small Company VP $76 $130 $187 $278 $25 $ 76 $130 $278 Aetna Value Opportunity VP $75 $126 $180 $263 $23 $ 72 $123 $263 AIM V.I. Capital Appreciation Fund $74 $124 $176 $255 $23 $ 69 $119 $255 AIM V.I. Growth Fund $74 $125 $179 $261 $23 $ 71 $122 $261 AIM V.I. Growth and Income Fund $74 $123 $175 $253 $22 $ 69 $118 $253 AIM V.I. Value Fund $74 $123 $176 $254 $22 $ 69 $118 $254 Calvert Social Balanced Portfolio $76 $130 $186 $277 $25 $ 76 $130 $277 Fidelity VIP Equity-Income Portfolio $73 $121 $172 $246 $22 $ 67 $114 $246 Fidelity VIP Growth Portfolio $74 $124 $177 $256 $23 $ 70 $119 $256 Fidelity VIP II Contrafund Portfolio $74 $125 $178 $258 $23 $ 70 $120 $258 Fidelity VIP Overseas Portfolio $76 $131 $188 $280 $25 $ 77 $131 $280 Janus Aspen Aggressive Growth Portfolio $75 $126 $180 $264 $23 $ 72 $123 $264 Janus Aspen Balanced Portfolio $75 $126 $180 $263 $23 $ 72 $123 $263 Janus Aspen Flexible Income Portfolio $74 $125 $179 $262 $23 $ 71 $122 $262 Janus Aspen Growth Portfolio $75 $126 $180 $264 $23 $ 72 $123 $264 Janus Aspen Worldwide Growth Portfolio $75 $126 $180 $263 $23 $ 72 $123 $263 Lexington Natural Resources Trust $80 $141 $206 $317 $29 $ 88 $150 $317 Oppenheimer Global Securities Fund/VA $75 $126 $180 $263 $23 $ 72 $123 $263 Oppenheimer Strategic Bond Fund/VA $75 $127 $183 $269 $24 $ 73 $126 $269 Portfolio Partners MFS Emerging Equities Portfolio $75 $128 $183 $270 $24 $ 74 $126 $270 Portfolio Partners MFS Research Growth Portfolio $76 $129 $185 $274 $24 $ 75 $128 $274 Portfolio Partners MFS Value Equity Portfolio $76 $130 $187 $279 $25 $ 76 $131 $279 Portfolio Partners Scudder International Growth Portfolio $77 $133 $192 $289 $26 $ 79 $136 $289 Portfolio Partners T. Rowe Price Growth Equity Portfolio $75 $126 $180 $264 $23 $ 72 $123 $264
- ----------------- * This example reflects deduction of an early withdrawal charge calculated using Early Withdrawal Charge Schedule I (based on completed purchase payment periods.) Schedule I is listed in "Fees." Under that schedule, if only one $1,000 payment was made as described above, fewer than 5 purchase payments would have been completed at the end of years 1, 3 and 5, and the 5% charge would apply. At the end of the tenth account year, the early withdrawal charge is waived regardless of the number of purchase payment periods completed, and no early withdrawal charge would apply. ** 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 a certain number of years as specified in the contract. 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 VI, we provide condensed financial information about the Variable Annuity Account C (the separate account) subaccounts available under the contracts. These tables show the values of the subaccounts over the past 10 years. For 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(s), 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 on the performance and fees of its underlying mutual fund. You do not invest directly in or hold shares of the funds. >Fund Descriptions. We provide brief descriptions of the funds in Appendix V. Please refer to the fund prospectuses for additional information. Fund prospectuses may be obtained, free of charge, by calling the Company at the telephone number listed on the cover of this prospectus, by contacting the SEC's website, or by contacting the SEC Public Reference Room. Fixed Interest Options. For descriptions of the fixed interest options, see Appendices I, II and III and the Guaranteed Accumulation Account prospectus. - -------------------------------------------------------------------------------- Selecting Investment Options o Choose options appropriate for you. Your Aetna representative can help you evaluate which subaccounts or fixed interest options may be appropriate for your financial goals. o Understand the risks associated with the options you choose. Some subaccounts invest in funds that 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. o Be informed. Read this prospectus, the fund prospectuses, fixed interest option appendices and the Guaranteed Accumulation Account prospectus. - -------------------------------------------------------------------------------- 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 in compliance with regulatory requirements. 10 Limits on Number of Options Selected. Generally, the contract holder, or you if permitted by the plan, may select no more than 18 investment options at one time during the accumulation phase of your account. If you have an outstanding loan (403(b) and some 401 or 403(a) plans only), you may currently make a total of 18 cumulative selections over the life of the account. Each subaccount, the Fixed Account, Fixed Plus Account, and each classification of the Guaranteed Accumulation Account selected counts toward these limits. If you have a loan on the account, each option counts toward the limit, even after the full value is transferred to other options. 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 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, are 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 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 in order to identify any conflicts which may arise and to determine what action, if any, should be taken to address such conflicts. 11 Transfers - -------------------------------------------------------------------------------- Transfers Among Investment Options. During the accumulation phase and, under some contracts, the income phase, the contract holder, or you if permitted by the plan, may transfer amounts among investment options. Transfers from fixed interest options are restricted as outlined in Appendices I, II and III. Transfers may be requested in writing, by telephone or, where available, electronically. Transfers must be made in accordance with the terms of the contract. Value of Transferred Dollars. The value of amounts transferred in or out of subaccounts will be based on the subaccount unit values next determined after we receive your request in good order at our Home Office. Telephone Transfers: Security Measures. To prevent fraudulent use of telephone 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 transactions. We are not liable for losses resulting from following 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. The Dollar Cost Averaging Program. Certain contracts allow you to participate in our Dollar Cost Averaging Program. There is no additional charge for this service. Dollar cost averaging is a system for investing that buys fixed dollar amounts of an investment at regular intervals, regardless of price. Our program transfers, at regular intervals, a fixed dollar amount to one or more subaccounts that you select. Dollar cost averaging is not permitted into the Lexington Natural Resources Trust subaccount. Dollar cost averaging neither ensures a profit nor guarantees against loss in a declining market. You should consider your financial ability to continue purchases through periods of low price levels. For additional information about this program, contact your local representative or call the Company at the number listed in "Contract Overview--Questions." 12 Contract Purchase and Participation - -------------------------------------------------------------------------------- Contracts Available for Purchase. The contracts available for purchase are group or individual deferred annuity contracts that the Company offers in connection with plans established by eligible organizations under Tax Code sections 401(a), 401(k), 403(a), 403(b), 414(h) and 457. ERISA Notification. Some plans under Sections 401, 403(a) and 403(b) are subject to Title I of the Employee Retirement Income Security Act of 1974 (ERISA) as amended. The contract holder must notify the Company whether Title I of ERISA applies to the plan. Purchasing the Contract. 1. The contract holder submits the required forms and application to the Company 2. We approve the forms and issue a contract to the contract holder Participating in the Contract. 1. We provide you with enrollment materials for completion and return to us (occasionally enrollment is conducted by someone unaffiliated with us who is assisting the contract holder) 2. If your enrollment materials are complete and in good order, we establish one or more accounts for you. Under certain plans we establish an employee account for contributions from your salary and an employer account for employer contributions. Acceptance or Rejection. 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 do 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, we will return the forms and any payments. 13 Methods of Payment. The contract may allow one or more of the following payment methods: >Lump sum payments--A one-time payment to your account in the form of a transfer from a previous plan >Installment payments--More than one payment made over time to your account The plan and the contract may have certain rules or restrictions that apply to use of these two methods. For example, we may require that installment payments meet certain minimums. Under some contracts, we will place the different types of payments in distinct accounts, where each account will have its own early withdrawal charge schedule. (See "Fees--Early Withdrawal Charge Schedules") Allocation of 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 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, and there may be limitations on the number of investment options that can be selected. (See "Investment Options" and "Transfers.") Transfer Credits The Company provides a transfer credit in some cases on transferred assets, as defined by the Company, subject to certain conditions and state approvals. This benefit is provided on a nondiscriminatory basis. If a transfer credit is due under the contract, you will be provided with additional information specific to the contract. Tax Code Restrictions. The Tax Code places some limitations on contributions to your account. (See "Taxation.") Contract Ownership and Rights - -------------------------------------------------------------------------------- Who Owns the Contract? The contract holder. This is the person or entity to whom we issue the contract. Who Owns Money Accumulated Under the Contract? >Under 457 Plans. The Tax Code requires that 457 plan assets of governmental employers be held in trust for the exclusive benefit of you and your beneficiaries. An annuity contract satisfies the trust requirement of the Tax Code. >Under 403(b) Plans. Under the contract we may establish one or more accounts for you. Generally we establish an employee account to receive salary reduction and rollover amounts and an employer account to receive employer contributions. You have the right to the value of your employee account and any employer account to the extent you are vested as interpreted by the contract holder. 14 Under 401(a)/401(k) or 403(a) Plans. Under the contract, we may establish one or more accounts for you. Generally, we establish an employee account to receive salary reduction and rollover amounts and an employer account to receive employer contributions. You have the right to the value of your employee account and any employer account to the extent that you are vested under the plan as interpreted by the contract holder. Who Holds Rights under the Contract? >Under all contracts, except those issued through a voluntary 403(b) plan, the contract holder holds all rights under the contract. The contract holder may permit you to exercise some of those rights. For example, the contract holder may allow you to choose investment options. >If you participate in the contract through a voluntary 403(b) plan, you hold all rights under the contract. Right to Cancel - -------------------------------------------------------------------------------- When and How to Cancel. If the contract holder chooses to cancel a contract, we must receive the contract and a written notice of cancellation within 10 days (or a longer period if required by state law) after the contract holder's receipt of the contract. If you wish to cancel participation in the contract and are allowed to do so under the contract and the plan, you must send the document evidencing your participation and a written notice of cancellation to the Company within 10 days after you receive confirmation of your participation in the contract. Refunds. We will produce a refund not later than seven days after we receive the required documents and written notice in good order at our Home Office. The refund will equal amounts contributed to the contract or account(s), as applicable, plus any earnings or less any losses attributable to the investment options in which amounts were invested. In certain states, we are required to refund contributions. When a refund of contributions is not required, the investor bears any investment risk. 15 Types of Fees There are three types of fees which you may incur under the contract: >Transaction Fees o Early Withdrawal Charge o Annual Maintenance Fee >Fees Deducted from the Subaccounts o Mortality and Expense Risk Charge o Administrative Expense Charge >Fees Deducted by the Funds o Investment Advisory Fees o Other Expenses Terms to Understand in Schedules I and II >Account Year--a 12-month period measured from the date we establish your account, or measured from any anniversary of that date. >Contract Year--a 12-month period measured from the date we establish the contract, or measured from any anniversary of that date. >Purchase Payment Period (for installment payments under some contracts)-- the period of time it takes to complete the number of installment payments expected to be made to your account over a year. For example, if your payment frequency is monthly, a payment period is completed after 12 payments are made. If only 11 payments are made, the payment period is not completed until the twelfth payment is made. At any given time, the number of payment periods completed can not exceed the number of account years completed, regardless of the number of payments made. Fees - -------------------------------------------------------------------------------- The following repeats and adds to information provided in the "Fee Table" section. Please review both this section and the "Fee Table" section for information on fees. I. Transaction Fees Early Withdrawal Charge Withdrawals of all or a portion of your account value may be subject to a charge. Purpose: This is a deferred sales charge. It reimburses us for some of the sales and administrative expenses associated with the contract. Our remaining sales and administrative expenses are covered by our general assets which are attributable in part to the mortality and expense risk charge described below. Amount: The charge is a percentage of the amount that you withdraw from the subaccounts, the Fixed Account and the Guaranteed Accumulation Account. We do not deduct an early withdrawal charge from amounts that you withdraw from the Fixed Plus Account. The percentage is determined by the early withdrawal charge schedule that applies to your account. Some of these schedules are listed below. The charge will never be more than 8.5% of your total payments to the account. Early Withdrawal Charge Schedules. You may determine which schedule applies to you by consulting your certificate, or the contract (held by the contract holder). Schedule I. This is the maximum early withdrawal charge schedule under the contracts. It grades down to zero over a 10-year period, as shown below. Some contracts have schedules that grade down to zero over fewer than 10 years. Each contract will specify whether a schedule is based on one of the following: 1) The number of years since the account was established; 2) the number of years since the contract was established; 3) the number of completed purchase payment periods. Unless the contract provides otherwise, the same schedule applies to installment payments (ongoing contributions) and to single payments (rollovers, exchanges or other one-time contributions). Schedule I - --------------------------------------------------------------------- Payment Periods, Contract Years or Account Years Completed (depending on the contract) 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% - ---------------------------------------------------------------------
16 Schedule II. For contracts where we establish distinct accounts for installment payments and single payments (defined above), Schedule I applies to installment payment accounts and Schedule II applies to single payment accounts. As shown below, Schedule II grades down to zero over a nine-year period as account years are completed. Schedule II - --------------------------------------------------------------------- Account Years Completed Early Withdrawal Charge - --------------------------------------- ------------------------ Fewer than 5 5% 5 or more but fewer than 6 4% 6 or more but fewer than 7 3% 7 or more but fewer than 8 2% 8 or more but fewer than 9 1% 9 or more 0% - ---------------------------------------------------------------------
Early Withdrawal Charge Waivers under all Contracts. These apply to all contracts. Also read the following two subsections regarding additional waivers, reduction or elimination of the charge. This charge is waived for portions of a withdrawal that are: >Used to provide income payments during the income phase; >Paid because of your death before income payments begin; >Paid where your account value is $3,500 or less and no part of the account has been taken as a withdrawal, used to provide income payments or taken as a loan within the prior 12 months; >Taken because of the election of a systematic distribution option (see "Systematic Distribution Options"); >Taken on or after the tenth anniversary of the effective date of the account; or >Taken under accounts with an early withdrawal charge schedule based on completed payment periods, when you are at least age 591/2 and have completed at least nine payment periods. Early Withdrawal Charge Waivers under Certain Contracts. To find out which waivers apply to the contract issued in connection with your plan, consult the certificate or the contract (held by the contract holder). This charge is waived for portions of a withdrawal that are: >Taken after you have separated from service with your employer. Under certain contracts, the employer must provide documentation of separation to the Company; >Used to purchase an Aetna single premium immediate annuity or other contracts allowed by the Company, under the condition that you do not cancel the new contract and obtain a refund during the cancellation period. If you cancel the new contract, we will reinstate the account under the old contract. The amount returned to the account from the new contract may then be withdrawn, subject to any early withdrawal charge that would have applied at the time the new contract was established; >Depending on the plan, due to financial hardship or hardship resulting from an unforeseeable emergency as defined by the Tax Code; >From contracts used with plans under section 401(a)/401(k), section 403(a) or section 403(b) of the Tax Code, that is not more than 10% of your 17 account value and is the first partial withdrawal in a calendar year. To qualify for this waiver you must be between the ages of 59-1/2 and 70-1/2 and cannot have elected the systematic withdrawal option. Any outstanding loans are not included in the account value when determining the 10% amount. This waiver does not apply to full withdrawals or to a withdrawal due to a loan default; >Withdrawn due to the transfer of your account value to another of the retirement products the Company offers under the contract holder's plan, subject to various conditions agreed to by the contract holder and the Company; or >When we terminate an account under the circumstances described in "Involuntary Termination." Reduction, Waiver or Elimination. In addition to the specific waivers described above, we may reduce, waive or eliminate the early withdrawal charge for a particular plan. Any such reduction will reflect the differences we expect in distribution costs or services meant to be defrayed by this charge. Factors we consider for a reduction include, but are not limited to, the following: >The number of participants under the plan >The expected level of assets or cash flow under the plan >Our agent's involvement in sales activities >Our sales-related expenses >Distribution provisions under the plan >The plan's purchase of one or more other variable annuity contracts from us and the features of those contracts >The level of employer involvement in determining eligibility for distributions under the contract >Our assessment of financial risk to the Company relating to withdrawals >Whether the contract results from the exchange of another contract issued by the Company to the same plan sponsor We will not reduce the early withdrawal charge in a manner that is unfairly discriminatory against any person. We may also apply different early withdrawal charge provisions in contracts issued to certain employer groups or associations which have negotiated the contract terms on behalf of their employees. We will offer any resulting early withdrawal charge uniformly to all employees in the group. 18 Reduction for Certain New York Contracts. For master 403(b) plan contracts issued after July 29, 1993 in New York, in addition to waivers or reductions that we grant, the state of New York requires a reduced early withdrawal charge schedule for withdrawals from the Guaranteed Accumulation Account. The schedule grades down over a seven-year period as account years are completed, as shown in the table below. - --------------------------------------------------------------------- Completed Account Years Early Withdrawal Charge - --------------------------------------- ------------------------ Fewer than 3 5% 3 or more but fewer than 4 4% 4 or more but fewer than 5 3% 5 or more but fewer than 6 2% 6 or more but fewer than 7 1% 7 or more 0% - ---------------------------------------------------------------------
Maintenance Fee Maximum Amount: $20.00 When/How: For those plans that have a maintenance fee, each year during the accumulation phase we deduct this fee on your account anniversary and, in some cases, at the time of full withdrawal. It is deducted on a pro rata basis from your account value invested in the subaccounts and the fixed interest options. We do not deduct this fee from a single payment account. Under some plans we deduct the maintenance fee from both employer and employee accounts. Under some installment plans, your employer elects whether the fee is deducted from the employee account, employer account, or a portion from each. The Company may send a bill to your employer at or prior to such deduction. Purpose: This fee helps defray the administrative expenses we incur in establishing and maintaining your account. Reduction or elimination: When a plan meets certain criteria, we may reduce, waive or eliminate the maintenance fee. Factors we consider reflect differences in our level of administrative costs and services, such as: >The size, type and nature of the group to which a contract is issued; >The expected level of assets under the plan. Under some contracts, we may aggregate accounts under different contracts issued by the Company to the same contract holder; >The anticipated level of administrative expenses, such as billing for payments, producing periodic reports, providing for the direct payment of account charges rather than having them deducted from account values, and any other factors pertaining to the level and expense of administrative services we will provide; >The number of eligible participants and the program's participation rate. Due to factors on which the maintenance fee is based, it is possible that it may increase or decrease from year to year as the characteristics of the group changes. We will not unfairly discriminate against any group if we reduce or eliminate the maintenance fee. We will make any reduction according to our own rules in effect at the time we approve the application for a contract. We reserve the right to change these rules from time to time. 19 II. Fees Deducted from the Subaccounts Mortality and Expense Risk Charge Maximum Amount: 1.25% annually of your account value invested in the subaccounts. When/How: This fee is deducted daily from the subaccounts. We do not deduct this from any fixed interest option. Purpose: The fee compensates us for the mortality and expense risks we assume under the contracts. >The mortality risks are those risks associated with our promise to make lifetime payments based on annuity rates specified in the contracts and our funding of the death benefits and other payments we make to owners or beneficiaries of the accounts. >The expense risk is the risk that the actual expenses we incur under the contracts 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. Reduction: We may reduce the mortality and expense risk charge from the maximum when the plan meets certain criteria and we agree to the reduction with the contract holder in writing. Some contracts have a reduced mortality and expense risk charge only during the accumulation phase of the account which then increases during the income phase. Any reduction will reflect differences in expenses for administration based on such factors as: >The expected level of assets under the plan. Under some contracts, we may aggregate accounts under different contracts issued by the Company to the same contract holder. >The size of the prospective group, projected annual number of eligible participants and the program's participation rate. >The plan design. For example, the plan may favor stability of invested assets and limit the conditions for withdrawals, loans and available investment options, which in turn lowers administrative expenses. >The frequency, consistency and method of submitting payments and loan repayments. >The method and extent of onsite services we provide and the contract holder's involvement in services such as enrollment and ongoing participant services. >The contract holder's support and involvement in the communication, enrollment, participant education and other administrative services. >The projected frequency of distributions. >The type and level of other factors that affect the overall administrative expense. We will determine any reduction of mortality and expense risk on a basis that is not unfairly discriminatory according to our rules in effect at the time a contract application is approved. We reserve the right to change these rules from time to time. Under some contracts we will reassess and increase or decrease this fee each year on the anniversary of the date the contract was established. 20 Administrative Expense Charge Maximum Amount: 0.25% annually of your account value invested in the subaccounts. When/How: For all participants who became covered under a contract on or after November 5, 1984, we reserve the right to charge an administrative expense charge of up to 0.25% annually. We are currently deducting this charge under the contracts issued to some plans. If charged, this fee is deducted daily from the subaccounts. We do not deduct this from any fixed interest option. This fee may be assessed during the accumulation phase and/ or the income phase. If we are currently imposing this fee under the contract issued in connection with your plan when you enter the income phase, the fee will apply to you during the entire income phase. Purpose: This fee helps defray our administrative expenses that cannot be covered by the mortality and expense charge described above. The fee is not intended to exceed our average expected cost of administering the contracts. We do not expect to make a profit from this fee. Reduction: Under some contracts, if we charge the administrative expense charge, we may reduce it from the maximum when the plan meets certain criteria and we agree to the reduction with the contract holder, in writing. The level of the fee may be reassessed and increased or decreased at each contract anniversary as the characteristics of the group change. III. 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 fund's investment advisor and operating expenses. IV. 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 on the jurisdiction. When/How: We reserve the right to deduct premium taxes from your account value or from payments to the account at any time, but not before there is a tax liability under state law. Our current practice is to deduct premium taxes at the time of a full withdrawal or the commencement of income phase payments. We will not deduct any municipal premium tax of 1% or less, but we reserve the right to reflect such an expense in our annuity purchase rates. In addition, the Company reserves the right to assess a charge for any federal taxes due against the separate account. (See "Taxation.") 21 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 >Less 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's units at the preceding valuation; >Minus 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. 22 Hypothetical Illustration. As a hypothetical illustration, assume that an investor contributes $5,000 to his account and directs us to invest $3,000 in Fund A and $2,000 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. +-------------------+ |$5,000 contribution| +-------------------+ Step 1: An Investor Step 1 [arrow down] contributes $5000 +----------------------------------------+ |Aetna Life Insurance and Annuity Company| +----------------------------------------+ Step 2: Step 2 [arrow down] +----------------------------------------+ A. He directs us to invest | Variable Annuity Account C | $3,000 in Fund A. His +---------------+-----------------+------+ dollars purchase 300 | Subaccount A | Subaccount B | Etc. | accumulation units of | 300 | 80 | | Subaccount A ($3,000 | accumulation | accumulation | | divided by the current | units | units | | $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 Step 3 [arrow down] then purchases shares of the +------+ +------+ applicable funds at the |Fund A| |Fund B| current market value (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. 23 Payments to Your Account. If all or a portion of initial 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, as described in "Contract Purchase and Participation." 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. Taxes, Fees and Deductions Amounts withdrawn may be subject to one or more of the following: >Early Withdrawal Charge (see "Fees--Early Withdrawal Charge") >Maintenance Fee (see "Fees--Maintenance Fee") >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 Aetna representative or call the Company at the number listed in "Contract Overview--Questions." Withdrawals - -------------------------------------------------------------------------------- Making a Withdrawal. Subject to limitations on withdrawals from the fixed interest options and other restrictions (see "Withdrawal Restrictions" below), the contract holder, or you if permitted by the plan, may withdraw all or a portion of your account value at any time during the accumulation phase. Steps for Making a Withdrawal. The contract holder, or you if permitted by the plan, must: >Select the withdrawal amount o Full Withdrawal: You will receive, reduced by any required withholding tax, your account value allocated to the subaccounts, the Guaranteed Accumulation Account (plus or minus any applicable market value adjustment) and the Fixed Account, minus any applicable early withdrawal charge, plus the amount available for withdrawal from the Fixed Plus Account. o Partial Withdrawal (Percentage or Specified Dollar Amount): You will receive, reduced by any required withholding tax, the amount you specify, subject to the value available in your account. However, the amount actually withdrawn from your account will be adjusted by any applicable early withdrawal charge for amounts withdrawn from the subaccounts, the Guaranteed Accumulation Account or the Fixed Account, and any positive or negative market value adjustments for amounts withdrawn from the Guaranteed Accumulation Account. The amount available from the Fixed Plus Account may be limited. For a description of limitations on withdrawals from the Fixed Plus Account, see Appendix III. >Select investment options. If this is not specified, we will withdraw dollars proportionally from each investment option in which you have an account value. >Properly complete a disbursement form and submit it to the Home Office. Calculation of Your Withdrawal. We determine your account value every normal business day after the close of the New York Stock Exchange. We pay withdrawal amounts based on your account value either: (1) As of the next valuation after we receive a request for withdrawal in good order 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, we will send your payment not later than seven calendar days following our receipt of your disbursement form in good order. 24 Reinvestment Privilege (not applicable to contracts under 457 plans). Some contracts allow one-time use of a reinvestment privilege. Within 30 days after a full withdrawal, if allowed by law and the contract, you 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 your request and the amount to be reinvested. We will credit the amount reinvested proportionally for maintenance fees and 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. Withdrawal Restrictions. Some plans may have other limits on withdrawals, other than or in addition to those listed below. >Section 403(b)(11) of the Tax Code generally prohibits withdrawal under 403(b) contracts prior to your death, disability, attainment of age 591/2, separation from service or financial hardship, of the following: (1) Salary reduction contributions made after December 31, 1988 and; (2) Earnings on those contributions and earnings on amounts held before 1989 and credited after December 31, 1988. >401(k) plans generally prohibit withdrawal of salary reduction contributions and associated earnings prior to your death, disability, attainment of age 59-1/2, separation from service, or financial hardship. Income attributable to salary reduction contributions and credited on or after January 1, 1989 may not be distributed in the case of hardship. >The contract may require that the contract holder certify that you are eligible for the distribution. >If you are married and covered by an ERISA plan, the contract holder must provide certification that Retirement Equity Act requirements have been met. >Participants in Ball State University Alternate Pension Plan--The portion of your account value attributable to employer contributions and applicable earnings may not be withdrawn unless your employment is terminated with Ball State University, or you have died, retired or separated from service. The contract holder may withdraw the employer account value, and you may transfer employer account values pursuant to an IRS Revenue Ruling 90-24 transfer, without regard to this restriction. No early withdrawal charge will apply to the first 20% of the employer account value transferred via a 90-24 transfer in a calendar year. This waiver does not apply to a 90-24 transfer of the full employer account value. >Participants in Texas Optional Retirement Program--You may not receive any distribution before retirement, except upon becoming totally disabled or terminating employment with Texas public institutions of higher learning. Conditions under which you may exercise the right to withdraw and the right to advance the date on which an income phase payment option is to begin are limited. These restrictions are imposed by reason of the Texas Attorney General's interpretation of Texas law. 25 Loans - -------------------------------------------------------------------------------- Availability. For certain 403(b) plans and some 401(a)/401(k) and 403(a) plans, if allowed by the contract and the plan, you may take out a loan from your account value during the accumulation phase. Some contracts restrict loans from your employer account. Loans are only allowed from amounts allocated to certain subaccounts and fixed interest options. Additional restrictions may apply under the Tax Code or due to our administrative practices. Requests. If you are eligible to obtain a loan, you may request one by properly completing the loan request form and submitting it to our Home Office. Read the terms of the loan agreement before submitting any request. Features of a Systematic Distribution Option (SDO) If available under your plan, an SDO allows you to receive regular payments from your account without moving into the income phase. By remaining in the accumulation phase, you retain certain rights and investment flexibility not available during the income phase. Because the account remains in the accumulation phase, all accumulation phase charges continue to apply. Systematic Distribution Options - -------------------------------------------------------------------------------- Availability of Systematic Distribution Options (SDOs) To exercise one of these options the account value must meet any minimum dollar amount and age criteria applicable to that option. To determine what SDOs are available, check with the contract holder or the Company. The Company reserves the right to discontinue the availability of one or all of the SDOs at any time, and/or to change the terms for future elections. SDOs currently available under the contract include the following: >SWO--Systematic Withdrawal Option. SWO is a series of partial withdrawals from your account based on a payment method you select. It is designed for those who want a periodic income while retaining accumulation phase investment flexibility for amounts accumulated under the account. (This option may not be available if you have an outstanding loan.) >ECO--Estate Conservation Option. Also allows you to maintain the account in the accumulation phase and provides periodic payments designed to meet the Tax Code's minimum distribution requirement. Under ECO, the Company calculates the minimum distribution amount required by law at age 70-1/2 (for certain plans, 70-1/2 or retirement, if later) and pays you that amount once a year. For certain contracts issued in the state of New York, no market value adjustment is imposed on ECO withdrawals from the Guaranteed Accumulation Account. >Other SDOs may be available from time to time. Additional information relating to any of the SDOs may be obtained from your local representative or from the Company's Home Office. Electing an SDO. The contract holder, or you if permitted by the plan, makes the election of an SDO. For some contracts, the contract holder must provide the Company with certification that the distribution is in accordance with terms of the plan. Terminating an SDO. Once you elect an SDO, except for accounts that are part of 457 plan contracts, you may revoke it at any time through a written request to our Home Office. Once revoked, an option may not be elected again, nor may any other SDO be elected, unless the Tax Code permits it. 26 Tax Consequences. Withdrawals received through these options may have tax consequences. See "Taxation." During the Income Phase This section provides information about the accumulation phase. For death benefit information applicable to the income phase (see "Income Phase"). Death Benefit - -------------------------------------------------------------------------------- The contract provides a death benefit in the event of your death, which is payable to the beneficiary named under the contract (contract beneficiary). >Under contracts issued in connection with most types of plans except voluntary 403(b) plans, the contract holder must be named as the contract beneficiary, but may direct that we make any payments to the beneficiary you name under the plan (plan beneficiary). >Under contracts issued in connection with voluntary 403(b) plans, you may generally designate your own contract beneficiary, who will normally be your plan beneficiary as well. During the Accumulation Phase Payment Process 1. Following your death, the contract beneficiary (on behalf of the plan beneficiary if applicable), must provide the Company with proof of death acceptable to us and a payment request in good order. 2. The payment request should include selection of a benefit payment option. 3. 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 distributions will be made. Benefit Payment Options. The following payment options are available, if allowed by the Tax Code: >Lump-sum payment >Payment under an available income phase payment option (see "Income Phase--Payment Options") If the contract beneficiary or plan beneficiary is your spouse, payment under an available systematic distribution option (not available under all plans) The following options are also available under some contracts, however, the Tax Code limits how long the death benefit proceeds may be left in these options: >Leaving the account value invested in the contract >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 currently credited on such deposits. The balance on deposit can be withdrawn at any time or paid in accordance with any of the available income phase payment options (see "Income Phase--Payment Options"). 27 Death Benefit Calculation. For most contracts the death benefit will be based on your account value. 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 market value adjustment applies, it would be deducted only if the death benefit is withdrawn more than six months after your death. We describe the market value adjustment in Appendix I and in the GAA prospectus. The death benefit is calculated as of the next time we value your account following the date on which we receive proof of death and payment request in good order. In addition to this amount, some states require we pay interest calculated from date of death at a rate specified by state law. Some contracts provide a guaranteed death benefit if the contract beneficiary (on behalf of the plan beneficiary, if applicable) elects a lump-sum distribution or an income phase payment option within six months of your death. For those contracts, the guaranteed death benefit is the greater of : (a) Your account value on the day that notice of death and request for payment are received in good order at our Home Office, plus any positive aggregate market value adjustment that applies to amounts allocated to the GAA (b) The sum of payments (minus any applicable premium tax) made to your account, minus withdrawals made from your account and any outstanding loan amount. 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. 28 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 The Income Phase - -------------------------------------------------------------------------------- During the income phase you receive payments from your accumulated account value. Initiating Payments. At least 30 days prior to the date you want to start receiving payments, the contract holder, or you if permitted by the plan, must notify us in writing of the following: >Start date >Payment option (see the payment options table in this section) >Payment frequency (i.e., monthly, quarterly, semi-annually or annually) >Choice of fixed or variable payments >Selection of an assumed net investment rate (only if variable payments are elected) >Under some plans, certification from your employer and/or submission of the appropriate forms is also required The account will continue in the accumulation phase until the contract holder or you, as applicable, properly initiate payments. Once a payment option is selected, it may not be changed; however, certain options allow you to withdraw a lump sum. What Affects Payment Amounts? Some of the factors that may affect payment amounts include: your age, your account value, the payment option selected, number of guaranteed payments (if any) selected, and whether you select variable or fixed payments. Fixed Payments. Amounts funding fixed payments will be held in the Company's general account. Fixed payments will remain the same over time. Variable Payments. Amounts funding your income phase payments will be held in the subaccount(s) selected, or a combination of subaccounts and fixed interest options. Some contracts restrict the subaccounts available, the number of investment options to be selected and how many transfers, if any, are allowed among options. For variable payments, an assumed net investment rate must be selected. Payments from the Fixed Plus Account. Under some contracts, if a nonlifetime payment option is selected, payments from the Fixed Plus Account may only be made on a fixed basis. Assumed Net Investment Rate. For variable payments, an assumed net investment rate must be selected. If you select a 5% rate, your first payment will be higher, but subsequent payments will increase only if the investment performance of the subaccounts you selected is greater than 5% annually, after deduction of fees. Payment amounts will decline if the investment performance is less than 5%, after deduction of fees. If you select a 3-1/2% rate, your first payment will be lower and subsequent payments will increase more rapidly or decline more slowly depending on the investment performance of the subaccounts you selected. For more information about selecting an assumed net investment rate, request a copy of the Statement of Additional Information by calling the Company. (see "Contract Overview--Questions"). 29 Selecting an Increasing Payment. Under certain payment options, if you select fixed payments, some contracts will allow you to elect an increase of one, two, or three percent, compounded annually. The higher your percentage, the lower your initial payment will be, while future payments will increase each year at a greater rate. Generally, this feature is not available with cash refund payment options and nonlifetime options. Fees Deducted >If variable payments are elected, we make a daily deduction for mortality and expense risks from any amounts held in the subaccounts. The maximum mortality and expense risk charge during the income phase is 1.25% on an annual basis. Under some contracts, we may reduce this fee based on certain factors. (See "Fees--Mortality and Expense Risk Charge.") >We may also deduct a daily administrative charge from amounts held in the subaccounts. We currently charge this under some contracts and reserve the right to charge it under all others. The maximum amount is 0.25% on an annual basis. If we are currently imposing this fee under the contract issued in connection with your plan when you enter the income phase, the fee will apply throughout the entire income phase. Required Minimum Payment Amounts. The initial payment or the annual payment total must meet the minimums stated in the contract. If your account value is too low to meet these minimum payment amounts, you will receive one lump sum payment. 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 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.") 30 Payment Options The following tables list the payment options and accompanying death benefits which may be available under the contracts. Some contracts restrict the options and the terms available. Refer to your certificate or 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 Payment Options - ----------------------------------------------------------------------------------------------------------------------------------- Length of Payments: For as long as the annuitant lives. It is possible that only one payment will Life Income be made should the annuitant die prior to the 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 your Life Income-- choice of 5-30 years or as otherwise specified in the contract. Guaranteed Pay- Death Benefit--Payment to the Beneficiary: If the annuitant dies before we have made all the ments guaranteed payments, we will pay the beneficiary a lump-sum (unless otherwise requested) 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: Life Income--Two (a) When you select this option you choose for 100%, 662/3% or 50% of the payment to continue Lives after the first death; or (b) 100% of the payment to continue on the second annuitant's death, and 50% of the payment to continue on the annuitant's death. Death Benefit--None: All payments end after the death of both annuitants. - ----------------------------------------------------------------------------------------------------------------------------------- Length of Payments: For as long as either annuitant lives, with payments guaranteed from 5 to 30 years, or as otherwise specified in the contract. Life Income--Two Continuing Payments: 100% of the payment to continue after the first death. Lives--Guaranteed Death Benefit--Payment to the Beneficiary: If both annuitants die before the guaranteed pay- Payments ments have all been paid, we will pay the beneficiary a lump-sum (unless otherwise requested) equal to the present value of the remaining guaranteed payments. - ----------------------------------------------------------------------------------------------------------------------------------- Life Income--Cash Length of Payments: For as long as the annuitant lives. Refund Option Death Benefit--Payment to the Beneficiary: Following the annuitant's death, we will pay a lump (limited sum payment equal to the amount originally applied to the payment option (less any premium availability-- tax) and less the total amount of fixed payments paid. fixed payment only) - ----------------------------------------------------------------------------------------------------------------------------------- Life Income--Two Length of Payments: For as long as either annuitant lives. Lives--Cash Continuing Payment: 100% of the payment to continue after the first death. Refund Option Death Benefit--Payment to the Beneficiary: When both annuitants die, we will pay a lump sum (limited payment equal to the amount applied to the payment option (less any premium tax) and less availability--fixed the total amount of fixed payments paid. payment only) - -----------------------------------------------------------------------------------------------------------------------------------
Table continued [arrow right] 31 Payment options continued
- ----------------------------------------------------------------------------------------------------------------------------------- Nonlifetime Payment Options (1) - ----------------------------------------------------------------------------------------------------------------------------------- Length of Payments: Payments will continue for the number of years you choose, based on what is available under the contract. Under some contracts, for amounts held in the Fixed Plus Account during the accumulation phase, the payment must be on a fixed basis and must be for at least 5 Nonlifetime-- years. In certain cases a lump sum payment may be requested at any time (see below). Guaranteed Death Benefit--Payment to the Beneficiary: If the annuitant dies before we make all the Payments guaranteed payments, we will pay the beneficiary a lump sum (unless otherwise requested) 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, you 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 or five years of payments have been completed as specified by the contract will be treated as a withdrawal during the accumulation phase and we will charge any applicable early withdrawal charge. If the early withdrawal charge is based on completed purchase payment periods, each year that passes after income payments begin will be treated as a completed purchase payment period, even if no additional payments are made. (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 the Home Office. Calculation of Lump Sum Payments: If a lump sum payment is available to a beneficiary or to you in the options above, the rate we use to calculate the present value of the remaining guaranteed payments is the same rate we use to calculate the income phase payments (i.e., the actual fixed rate used for the fixed payments, or the 3-1/2% or 5% assumed net investment rate for variable payments). - -----------------------------------------------------------------------------------------------------------------------------------
(1) For contracts issued to the State of Montana and Board of Trustees, University of Illinois the Nonlifetime option is available only with fixed payments. 32 In This Section I. Introduction II. Your Retirement Plan III. Withdrawals and other Distributions o Taxation of Distributions o 10% Penalty Tax o Withholding IV. Minimum Distribution Requirements o 50% Excise Tax V. Rules Specific to Certain Plans o Code Section 457 Plans o Code Section 403(b) Plans o Code Section 401(a), 401(k) and 403(a) Plans o 415(m) Arrangements o Bona Fide Severance Pay Plans VI. Taxation of the Company When consulting a tax advisor, be certain that he or she has expertise in the Tax Code sections applicable to your tax concerns. Taxation - -------------------------------------------------------------------------------- I. 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. - -------------------------------------------------------------------------------- II. Your Retirement Plan The tax rules applicable to retirement plans vary according to plan type, and terms and conditions of the plan. To understand what tax rules apply, you need to know the code section under which your plan qualifies. Contact your plan sponsor, local representative or the Company to learn which code section applies to your plan. Plan Types. The contract is designed for use with retirement plans that qualify under code sections 401(a), 401(k), 403(a), 403(b) or 457. A code section 457 plan may be either a 457(b) (eligible) plan or a 457 (f) (ineligible) plan. The contract may also be used with code section 415(m) arrangements. 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. III. 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 any death benefit. We report the taxable portion of all distributions to the IRS. Taxation of Distributions. 457(b) Plans. All amounts received under a 457(b) plan are includible in gross income when paid or otherwise made available to you or your beneficiary. 33 457(f) Plans. Compensation deferred under a 457(f) plan is includible in gross income in the first year when it is no longer subject to a "substantial risk of forfeiture" as defined by the Tax Code. 401(a), 401(k), 403(a) or 403(b) 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 on the type of distribution, a portion may be excluded from gross income according to rules detailed in the Tax Code. Taxation of Death Benefits 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(b) plan, unless one or more of the following have occurred: (a) You have attained age 59-1/2; (b) You have become permanently disabled; (c) You have died; (d) You have separated from service with the plan sponsor at or after age 55; (e) 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; or (f) 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), 403(a) or 403(b) 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. 457 Plans. All distributions from a 457 plan, except death benefits, are subject to mandatory federal income tax withholding as wages. No withholding is required on payments to beneficiaries. 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. 34 IV. Minimum Distribution Requirements To avoid certain tax penalties, you and any beneficiary must meet the minimum distribution requirements imposed by the Tax Code. These requirements do not apply to 457(f) plans. 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 >Distribution amounts 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, or >Under 403(b) plans, if you had amounts under the contract as of December 31, 1986. In this case, distribution of these amounts generally must begin by the end of the calendar year in which you attain age 75 or retire, if later. However, if you take any distributions in excess of the minimum required amount, then special rules require that some or all of the December 31, 1986 balance be distributed earlier. 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 Amount (457(b) Plan Only). Any distribution from a 457(b) plan, payable over a period of more than one year, must be made in substantially non-increasing amounts. 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 Benefits. The following applies to all plans except 457(f) plans. 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. 35 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, 1999, your entire balance must be distributed to the beneficiary by December 31, 2004. However, if the 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 >Over a period not extending beyond the life expectancy of the beneficiary For 457(b) plans, if the beneficiary is not your spouse, the time-frame may not exceed fifteen years. 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 >December 31 of the calendar year in which you would have attained age 70-1/2. V. Rules Specific to Certain Plans 457 Plans Code section 457 provides for certain deferred compensation plans. These plans may be offered by state governments, local governments, political subdivisions, agencies, instrumentalities and certain affiliates of such entities, and non-governmental tax exempt organizations. The plan may either be a 457(b)(eligible) plan or a 457(f)(ineligible) plan. Either type of plan may permit participants to specify the form of investment for their deferred compensation account. 457(b) Plan. A 457(b) plan is subject to restrictions on contributions and distributions. 457(f) Plan. A 457(f) plan is not subject to restrictions on contributions or distributions, but must contain a "substantial risk of forfeiture" as defined by the Tax Code. Generally, substantial risk of forfeiture means that your right to receive deferred compensation is dependent upon your performance of future services to an employer or other entity. The Contract. We make this contract available to plans subject to code section 457 only if a governmental employer sponsors the plan. Trust Requirement. 457(b) plans maintained by state or local governments, their political subdivisions, agencies, instrumentalities and certain affiliates are required to hold all assets and income of the plan in trust for the exclusive benefit of plan participants and their beneficiaries. For purposes of meeting this requirement, custodial accounts and annuity contracts are treated as trusts. Contributions Excluded from Gross Income. If your employer's plan is a 457(b) plan, the Tax Code imposes a maximum limit on annual contributions to your account(s) that may be excluded from your gross income. For Section 457(b) plan participants, such limit is generally the lesser of $8,000, as adjusted to reflect changes in the cost of living, or 33% of your includible compensation (25% of gross compensation). 36 Restrictions on Distributions. Under a 457(b) plan, amounts may not be made available to you earlier than (1) the calendar year you attain age 70-1/2, (2) when you separate from service with the employer or (3) when you are faced with an unforeseeable emergency. A 457(b) plan may permit a one-time in-service distribution if the total amount payable to the participant does not exceed $5,000 and no amounts have been deferred by the participant during the 2-year period ending on the date of distribution. 403(b) Plans Under code section 403(b), contributions made by public school systems or nonprofit healthcare organizations and other Section 501(c)(3) tax exempt organizations to purchase annuity contracts for their employees are generally excludable from the gross income of the employee. Adverse tax consequences to the plan and/or to you may result if your beneficial interest in the contract is assigned or transferred to any person except to 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. Exclusions from Gross Income. In order to be excludable from gross income, total annual contributions made by you and your employer cannot exceed the lesser of the following limits set by the Tax Code. >The first limit, under code section 415, is generally the lesser of 25% of your compensation or $30,000. 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 section 125 or 457. >The second limit, which is the exclusion allowance under code section 403(b), is usually calculated according to a formula that takes into account your length of employment, any pretax contributions you and your employer have already made under the plan, and any pretax contributions to certain other retirement plans. These two limits apply to your contributions as well as to any contributions made by your employer on your behalf. >An additional limit specifically limits your salary reduction contributions to generally no more than $10,000 annually (subject to indexing). Your own limit may be higher or lower, depending on certain conditions. 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 403(b)(11) restricts the distribution under Section 403(b) contracts of: >salary reduction contributions made after December 31, 1988; >earnings on those contributions; and >earnings during such period on amounts held as of December 31, 1988. Distribution of those amounts may only occur upon your death, attainment of age 59-1/2, separation from service, disability, or financial hardship. Income attributable to salary reduction contributions and credited on or after January 1, 1989 may not be distributed in the case of hardship. Transfers from 403(b)(7) Custodial Accounts. If, pursuant to Revenue Ruling 90-24, the Company agrees to accept, under any of the contracts, amounts 37 transferred from a code section 403(b)(7) custodial account, such amounts will be subject to the withdrawal restrictions set forth in code section 403(b)(7)(A)(ii). Taxation of Gains Prior to Distribution. Generally no amounts accumulated under the contract will be taxable prior to the time of actual distribution. However, the IRS has stated in published rulings that a variable contract owner, including participants under code section 403(b) plans, will be considered the owner of separate account assets if the contract owner possesses incidents of investment control over the assets. In these circumstances, income and gains from the separate account assets would be currently includible in the variable contract owner's gross income. The Treasury announced that it will issue guidance regarding the extent to which owners could direct their investments among subaccounts without being treated as owners of the underlying assets of the separate account. It is possible that the Treasury's position, when announced, may adversely affect the tax treatment of existing contracts. The Company therefore reserves the right to modify the contract as necessary to attempt to prevent the owner from being considered the federal tax owner of a pro rata share of the assets of the separate account. 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 $30,000. 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 $10,000 annually (subject to indexing). Your own limits may be higher or lower, depending on 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. 38 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 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. Code Section 415(m) Arrangements If you participate in the contract through a qualified governmental excess benefit arrangement, defined in code section 415(m), the amounts provided under the contract may be subject to the same requirements as those applied to code section 457(b) plans described above, except that the limits described in "Contributions Excluded from Taxable Income" do not apply. If the code section 415(m) arrangement is not designed to meet the requirements of code section 457(b), then the amounts provided under the contract are taxed in accordance with code section 451 and are generally taxable when paid or made available to you. Bona Fide Severance Pay Plans If you participate in the contract through certain bona fide severance pay plans, described in code section 457(e)(11), amounts provided under the contract are generally not taxable until paid or made available to you. However, because these plans are not clearly defined in the Code, it may be determined that your plan does not qualify as a bona fide severance pay plan. If the plan does not qualify, then amounts provided under the contract are taxable in the year in which they are deferred. Because of this lack of clarity, it is imperative that you consult your tax adviser for guidance regarding taxation. VI. 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. 39 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 Aetna Inc. Through a merger, our operations include the business of Aetna Variable Annuity 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") in 1976 as a segregated asset account to fund our 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 corresponding 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 >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." 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. 40 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 separate account. Generally, under contracts issued in connection with section 403(b), 401 or 403(a) plans, you have a fully vested interest in the value of your employee account, and in your employer account to the extent of your vested percentage in the plan. Therefore, under such plans you generally have the right to instruct the contract holder how to direct us to vote shares attributable to your account. Under contracts issued in connection with section 457 plans, the contract holder retains 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 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, whole and fractional, any person is entitled to direct will be determined as of the record date set by any fund in which that person invests through the subaccounts. >During the accumulation phase the number of votes is equal to the portion of your 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 will serve as the principal underwriter for the securities sold under this prospectus. The Company is registered as a broker-dealer with the SEC and is a member of the National Association of Securities Dealers, Inc. As principal underwriter, the Company will enter into arrangements with one or more registered broker-dealers, including at least one affiliate of the Company, to offer and sell the contracts described in this prospectus. We call these entities "distributors." 41 We and one or more of our affiliates may also sell the contracts directly. All individuals offering and selling the contracts must be registered representatives of a broker-dealer and must be licensed as insurance agents to sell variable annuity contracts Commission Payments. We may pay commissions to persons who offer and sell the contracts. The maximum percentage amount we ever pay with respect to a given purchase payment is the first-year percentage which ranges from 1% to a maximum of 7% of the first year of payments to an account. We may also pay renewal commissions 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 3% 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, we may provide additional compensation to the Company's supervisory and other management personnel if the overall amount of investments in funds advised by the Company or its affiliates increases over time. We may reimburse the distributor 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 and are not deducted from payments to your account. Third Party Compensation Arrangements. Occasionally, we may: >Pay commissions and fees to distributors affiliated or associated with the contract holder, you and/or other contract participants. >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, and under some contracts, to discontinue accepting payments to existing accounts. Certain changes will require the approval of appropriate state or federal regulatory authorities. In addition, under some contracts we reserve the right, without contract holder consent, to change the tables for determining the amount of income payments or the income payment options available. Such a change would only apply to income payments attributable to contributions accepted after the date of change. 42 Legal Matters and Proceedings We are aware of no material legal proceedings pending which involve the separate account or the Company 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. 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: (a) on any valuation date when the New York Stock Exchange is closed (except customary weekend and holiday closings), or when trading on the Exchange is restricted; (b) when an emergency exists as determined by the SEC so that disposal of securities held in the subaccounts is not reasonably practicable or it is not reasonably practicable for us fairly to determine the value of the subaccount's assets; (c) during any other periods the SEC may by order permit for the protection of investors. 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. Account Termination Under some contracts, where allowed by state law, we reserve the right to terminate an individual account if the account value is less than $3,500 and this value is not due to negative investment performance. We will notify you or the contract holder 90 days prior to terminating the account. If we exercise this right we will not deduct an early withdrawal charge. Year 2000 Readiness As a healthcare and financial services enterprise, Aetna Inc. (referred to collectively with its affiliates and subsidiaries as "Aetna"), is dependent on computer systems and applications to conduct its business. Aetna has developed and is currently executing a comprehensive risk-based plan designed to make its mission-critical information technology (IT) systems and embedded systems Year 2000 ready. The plan for IT systems covers five stages including (i) assessment, (ii) remediation, (iii) testing, (iv) implementation and (v) Year 2000 approval. At year end 1997, Aetna, including the Company, had substantially completed the assessment stage. The remediation of mission- critical IT systems was completed year end 1998. Testing of all mission-critical IT systems is underway with Year 2000 approval targeted for completion by mid-1999. The costs of these efforts will not affect the separate account. 43 The Company, its affiliates and the mutual funds that serve as investment options for the separate account also have relationships with investment advisers, broker dealers, transfer agents, custodians or other securities industry participants or other service providers that are not affiliated with Aetna. Aetna, including the Company, has initiated communication with its critical external relationships to determine the extent to which Aetna may be vulnerable to such parties' failure to resolve their own Year 2000 issues. Aetna and the Company have assessed and are prioritizing responses in an attempt to mitigate risks with respect to the failure of these parties to be Year 2000 ready. There can be no assurance that failure of third parties to complete adequate preparations in a timely manner, and any resulting systems interruptions or other consequences, would not have an adverse effect, directly or indirectly, on the separate account, including, without limitation, its operation or the valuation of its assets and units. 44 OREGON EDUCATION ASSOCIATION CHOICE PERSONAL BENEFIT TRUST ("OEA TRUST") AND THE COMPANY'S AGREEMENT Under past and current agreements, the OEA Trust exclusively endorses our tax deferred variable annuity and other related investment products for sale to its members. Under the current agreement the OEA Trust agrees to: >facilitate Oregon Education Association ("OEA") members' access to the variable annuity and other related investment products; >assist us by providing services such as office space and secretarial/clerical support. The OEA Trust will provide an employee who: >is a registered representative of one of our affiliates; >advertises the Company in OEA's newsletter; >facilitates and coordinates meetings and workshops where registered representatives of the Company's affiliate present the annuity to OEA members; and >acts as a liaison between the Company and OEA members. In return the Company agrees to: >compensate OEA Trust to help it defray the costs incurred in providing the administrative and other support; >reimburse OEA Trust for out-of-pocket travel and meeting expenses of an OEA Trust employee who is also a registered representative of the Company's affiliate. During 1998, the Company paid OEA Trust $200,000 as reimbursement for the costs and services described above. Effective January 1, 1999, the Company will pay the OEA Trust $25,000 each month as reimbursement for the costs and services described above. 45 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 the Company 46 Appendix I Guaranteed Accumulation Account - -------------------------------------------------------------------------------- The Guaranteed Accumulation Account (GAA) is a fixed interest option that may be available during the accumulation phase. This appendix is only a summary of certain facts about the 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 that 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 to 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 on 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" 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. Under some contracts issued in New York, if you have elected ECO as described in "Systematic Distribution Options," no MVA applies to amounts withdrawn from GAA. Guaranteed Terms. The guaranteed term is the period of time account dollars must be left in GAA in order to earn the 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. 47 In general we offer the following guaranteed terms: >short-term--three years or less >long-term--ten years or less, but greater than three years 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 >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 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. 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. Loans. You cannot take a loan from your account value in GAA. However, we include your account value in GAA when determining the amount of your account value we may distribute as a loan. 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. 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. 48 Appendix II Fixed Account - -------------------------------------------------------------------------------- The Fixed Account is an investment option available during the accumulation phase under some contracts. Under some contracts, this option is available to installment purchase plans only. This option is not available in the state of New York under some contracts. - -------------------------------------------------------------------------------- Additional information about this option may be found in the contract. - -------------------------------------------------------------------------------- Amounts allocated to the Fixed Account are held in the Company's general account which supports insurance and annuity obligations. 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 regarding 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. 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, some contracts allow us to defer payment of any withdrawal for a period of up to 6 months or as provided by federal law. Additionally, if allowed by state law, some contracts provide that we may pay withdrawals in equal payments with interest, over a period not to exceed 60 months when: (a) The Fixed Account withdrawal value exceeds $250,000 on the day before withdrawal; and (b) The sum of the current Fixed Account withdrawal and total of all Fixed Account withdrawals within the past 12 calendar months exceeds 20% of the amount in the Fixed Account on the day before the current withdrawal. The contract describes how we will determine the interest rate credited to amounts held in the Fixed Account during the payment period, including the minimum interest rate. 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 you make a withdrawal from amounts in the Fixed Account, an early withdrawal charge may apply. See "Fees--Early Withdrawal Charge." Transfers. During the accumulation phase, you 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 each calendar year or each 12-month period, depending on the contract. We determine the amount available for transfer based on your Fixed Account value either (1) on the January 1st preceding the transfer request or (2) as of the date we receive the transfer request in good order at our Home Office. The 10% limit does not apply to amounts being transferred into the Fixed Plus Account (if available under the contract). 49 By notifying the Home Office at least 30 days before income payments begin you, or the contract holder on your behalf, may elect to have amounts transferred to one or more of the funds available during the income phase to provide variable payments. Contract Loans. If available under your plan, contract loans may be made from account values held in Fixed Account. 50 Appendix III Fixed Plus Account - -------------------------------------------------------------------------------- The Fixed Plus Account is an investment option available during the accumulation phase under some contracts. Amounts allocated to the Fixed Plus 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 Plus Account have not been registered with the SEC in reliance on exemptions under the Securities Act of 1933, as amended. Disclosure in this prospectus regarding the Fixed Plus 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 Plus Account has not been reviewed by the SEC. Certain Restrictions. This option is not available in the state of New York under some contracts. We reserve the right to limit investment in or transfers to the Fixed Plus Account. Under most contracts, you may not elect certain withdrawal options including, under most contracts, the systematic distribution option, if you have requested a Fixed Plus Account transfer or withdrawal in the prior 12-month period. For some contracts, under certain emergency conditions, we may defer payment of a withdrawal from the Fixed Plus Account for a period of up to six months or as provided by federal law. Interest Rates. The Fixed Plus 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. Under some contracts, we credit amounts held in the Fixed Plus Account with a rate 0.25% higher than the then-declared rate beginning in the tenth year after your account was established. Amounts applied to the Fixed Plus Account will earn the interest rate in effect at the time money is applied. Amounts in the Fixed Plus 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. Requests for Partial Withdrawals. The contract holder or you, if permitted by the plan, may take up to 20% of the Fixed Plus Account value as a partial withdrawal in each twelve (12) month period, or under some contracts, in each calendar year. We determine the amount eligible for partial withdrawal as of the date we receive a request for partial withdrawal in good order at our Home Office or as of the January 1st preceding the partial withdrawal request, depending on the terms of the contract. The amount allowed for partial withdrawal is reduced by any Fixed Plus Account withdrawals, transfers, loans or amounts applied to income phase payment options made in the prior 12 months (or, under some contracts, the prior calendar year). Under most contracts, in calculating the 20% limit, we reserve the right to include payments made due to the election of a systematic distribution option. Waiver of Partial Withdrawal Limits. We generally waive the 20% limit if the partial withdrawal is due to the election of an income phase payment option (under some contracts, the waiver does not apply to the election of a nonlifetime payment option with variable payments). We also waive the 20% limit for withdrawals due to your death. Under most contracts, the waiver upon death may only be exercised once, must occur within six months after your date of death and must be made proportionally from all subaccounts and fixed interest options in which the account was invested. 51 Also, under some contracts the 20% limit is waived if the withdrawal is due to hardship from an unforeseeable emergency, or an unforeseeable emergency as defined by the Tax Code, and the following requirements are satisfied: >The hardship is certified (required under most contracts); >The partial withdrawal is taken proportionally from each investment option in which the your account invests; >The amount is paid directly to you; and >The amount paid for all withdrawals due to hardship during the previous 12-month period does not exceed 10% of the average value of your account(s) and all other accounts under the relevant contracts during that same period. Under some contracts, the percentage limit is also waived if the partial withdrawal is due to separation from service and the following conditions are met: >The employer certifies you have separated from service; >The amount withdrawn is paid directly to you; and >The amount paid for all partial and full withdrawals due to separation from service during the previous 12-month period does not exceed 20% of the average value of your account(s) and all other accounts under the relevant contracts providing this waiver during that same period. Additionally, we may allow other waivers of the percentage limit on partial withdrawals to participants in certain plans. You can determine what additional waivers, if any, apply to you by referring to the contract or certificate. Requests for Full Withdrawals. If the contract holder or you, if allowed by the plan, request a full withdrawal of your Fixed Plus Account value, we will pay any amounts held in the Fixed Plus Account, with interest, in five annual payments that will be equal to: >One-fifth of the Fixed Plus Account value on the day the request is received, reduced by any Fixed Plus Account withdrawals, transfers, amounts used to fund income phase payments, or loans made during the prior 12 months (or, under some contracts, during the prior calendar year); >One-fourth of the remaining Fixed Plus Account value 12 months later; >One-third of the remaining Fixed Plus Account value 12 months later; >One-half of the remaining Fixed Plus Account value 12 months later; and >The balance of the Fixed Plus Account value 12 months later. Under some contracts, there is a different method of calculating the amount available each year. The full withdrawal will be paid in installments of 20% of your account value held in the Fixed Plus Account, reduced by any Fixed Plus Account withdrawals, transfers, amounts used to fund income phase payments, or loans made during the prior 12 months in each of four consecutive 12-month periods. Under this provision, the remaining Fixed Plus Account balance in the account may be withdrawn any time after the end of the fourth 12-month period. Once we receive a request for a full withdrawal, no further withdrawals, loans or transfers will be permitted from the Fixed Plus Account. A full withdrawal from the Fixed Plus Account may be canceled at any time before the end of the five-payment period. Waiver of Full Withdrawal Provisions. We will waive the Fixed Plus Account five-installment payout for full withdrawals made due to one or more of the following: (a) Due to the election of an income phase payment option (under some contracts this waiver does not apply to the election of a nonlifetime payment option with variable payments) (b) Due to your death during the accumulation phase. Some contracts require that we be notified of your death, or that the withdrawal be taken, within six months of the death (c) When the Fixed Plus Account value is $3,500 or less ($2,000 or less under some contracts). Most contracts also require that no withdrawals, transfers, loans or elections of income phase payment options have been made from the account within the prior 12 months (or, under some contracts, within the prior calendar year). 52 Additionally, under certain contracts, we will waive the five-payment full withdrawal provision due to one or more of the following: 1. Due to hardship from an unforeseeable emergency, as defined by the Tax Code, if all of the following conditions are met: >The hardship is certified by the employer, and, under some contracts; >The amount is paid directly to you; and >The amount paid for all withdrawals due to hardship during the previous 12-month period does not exceed 10% of the average value of your account(s) and all other accounts under the relevant contract during that same period. 2. Due to your separation from service with the employer, provided that all the following apply*: >The employer certifies that you have separated from service; >The amount withdrawn is paid directly to you (under some contracts it must be paid directly to you only if you withdraw the amounts more than one year after separation); and >Under most contracts, if the amount paid for all partial and full withdrawals due to separation from service during the previous 12-month period does not exceed 20% of the average value of all your account(s) and all other accounts under the relevant contract during that same period. 3. If you are at least age 59-1/2 and have completed nine payment periods 4. If we terminate your account based on our right to do so for accounts below a certain value (usually $3,500). 5. Additionally, we may allow other waivers of the five installment payout for full withdrawals to participants in certain plans. You can determine what additional waivers, if any, apply to you by referring to the contract or certificate. Charges. We do not make deductions from amounts in the Fixed Plus Account to cover mortality and expense risks. We consider these risks when determining the credited rate. Transfers. The contract holder or you, if allowed by the plan, may transfer 20% of your account value held in the Fixed Plus Account in each 12-month period or during each calendar year, depending on the terms of the contract. We determine the amount eligible for transfer on the day we receive a transfer request in good order at our Home Office, or under some contracts, as of the January 1st preceding the transfer request. We will reduce amounts allowed for transfer by any Fixed Plus Account withdrawals, transfers, loans or amounts applied to income phase payment options during the prior 12 months (or, under some contracts, during the prior calendar year). Under most contracts, in calculating the percentage limit on transfers, we reserve the right to include payments made due to the election of any of the systematic distribution options. We will waive the percentage limit on transfers when the value in the Fixed Plus Account is $1,000 or less ($2,000 or less under some contracts). Under some contracts, if you transfer 20% of your account value held in the Fixed Plus Account in each of four consecutive 12-month periods, you may transfer the remaining balance in the succeeding 12-month period provided you do not allocate any amount to or transfer any other amount from the Fixed Plus Account during the five-year period. The 20% amount available to transfer under this provision will be reduced by any amount transferred, taken as a loan or applied to income phase payment options within the 12-month period preceding the first 20% transfer. Also, we may reduce it for payments we made from your Fixed Plus Account value under any systematic distribution option. - ----------------- * Instead of the provisions under number 2 above, some contracts waive the five-payment full withdrawal provision for separation from service if all of the following apply: >The hardship is certified by the employer; >We receive the withdrawal request within 60 days of the date of separation; and >You pay a 3% charge based on the entire Fixed Plus Account value. If you instead choose to have your payout in five annual installments as described above, then we will not assess the charge. 53 Income Phase. Amounts accumulating under the Fixed Plus Account can be transferred to subaccounts to fund variable payments during the income phase. Availability of subaccounts may vary during the income phase. Some contracts do not permit Fixed Plus Account values to fund nonlifetime income options with variable payments. Contract Loans. If permitted under the plan, loans may be made from account values held in the Fixed Plus Account. See the loan agreement for a description of the amount available and possible consequences upon loan default if Fixed Plus Account values are used for a loan. Transfer Credits. The Company provides a transfer credit in certain circumstances. See "Purchase--Transfer Credits." The transfer credit is a specified percentage of the assets transferred to the Company under a contract that remain in the accounts for the period of time specified by the Company, plus the interest that would have been credited had that amount been deposited in the Fixed Plus Account on the first business day of the calendar month following its calculation. We apply the transfer credit to the current value held in the Fixed Plus Account. 54 Appendix IV Employee Appointment of Employer as Agent Under an Annuity Contract - -------------------------------------------------------------------------------- For Plans under Section 403(b), 401 or 403(a) of the Code (except voluntary Section 403(b) Plans) - -------------------------------------------------------------------------------- My employer has adopted a plan under Internal Revenue Code Sections 403(b), 401(a)/401(k) or 403(a) ("Plan") and has purchased an Aetna Life Insurance and Annuity Company ("Company") group variable annuity contract ("Contract") as the funding vehicle. Contributions under this Plan will be made by me through salary reduction to an Employee Account, and by my employer to an Employer Account. By electing to participate in my employer's Plan, I voluntarily appoint my employer, who is the Contract Holder, as my agent for the purposes of all transactions under the Contract in accordance with the terms of the Plan. The Company is not a party to the Plan and does not interpret the Plan provisions. As a Participant in the Plan, I understand and agree to the following terms and conditions: >I own the value of my Employee Account subject to the restrictions of Sections 403(b), 401(a)/401(k) or 403(a) and the terms of the Plan. Subject to the terms of the vesting schedule in the Plan and the restrictions of Sections 403(b), 401(a)/401(k) or 403(a), I have ownership in the value of my Employer Account. >I understand that the Company will process transactions only with my employer's written direction to the Company. I agree to be bound by my employer's interpretation of the Plan provisions and its written direction to the Company. >My employer may permit me to make investment selections under the Employee Account and/or the Employer Account directly with the Company under the terms of the Contract. Without my employer's written permission, I will be unable to make any investment selections under the Contract. >On my behalf, my employer may request a loan in accordance with the terms of the Contract and the provisions of the Plan. The Company will make payment of the loan amount directly to me. I will be responsible for making repayments directly to the Company in a timely manner. >In the event of my death, my employer is the named Beneficiary under the terms of the Contract. I have the right to name a personal Beneficiary as determined under the terms of the Plan and file that Beneficiary election with my employer. It is my employer's responsibility to direct the Company to properly pay any death benefits. 55 Appendix V 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 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) >Aetna Generation Portfolios, Inc.--Aetna Ascent VP seeks to provide capital appreciation. The Portfolio is designed for investors who generally have an investment horizon exceeding 15 years and who have a high level of risk tolerance.(1) >Aetna Generation Portfolios, Inc.--Aetna Crossroads VP seeks to provide total return (i.e., income and capital appreciation, both realized and unrealized). The Portfolio is designed for investors who generally have an investment horizon exceeding 10 years and who have a moderate level of risk tolerance.(1) >Aetna Generation Portfolios, Inc.--Aetna Legacy VP seeks to provide total return consistent with preservation of capital. The Portfolio is designed for investors who generally have an investment horizon exceeding five years and who have a low level of risk tolerance.(1) >Aetna Variable Portfolios, Inc.--Aetna Growth VP seeks growth of capital through investment in a diversified portfolio of common stocks and securities convertible into common stocks believed to offer growth potential.(1) >Aetna Variable Portfolios, Inc.--Aetna High Yield VP seeks high current income and growth of capital primarily through investment in a diversified portfolio of fixed-income securities rated lower than BBB- by Standard and Poor's Corporation or lower than Baa3 by Moody's Investors Service, Inc.(1) >Aetna Variable Portfolios, Inc.--Aetna Index Plus Large Cap VP seeks to outperform the total return performance of the Standard & Poor's 500 Composite Index (S&P 500), while maintaining a market level of risk.(1) >Aetna Variable Portfolios, Inc.--Aetna Index Plus Mid Cap VP seeks to outperform the total return performance of the Standard & Poor's MidCap 400 Index (S&P 400), while maintaining a market level of risk.(1) >Aetna Variable Portfolios, Inc.--Aetna Index Plus Small Cap VP seeks to outperform the total return performance of the Standard & Poor's SmallCap 600 Index (S&P 600), while maintaining a market level of risk.(1) >Aetna Variable Portfolios, Inc.--Aetna International VP seeks long-term capital growth primarily through investment in a diversified portfolio of common stocks principally traded in countries outside of the U.S. Aetna International VP will not target any given level of current income.(1) >Aetna Variable Portfolios, Inc.--Aetna Real Estate Securities VP seeks maximum total return primarily through investment in a diversified 56 portfolio of equity securities issued by real estate companies, the majority of which are real estate investment trusts (REITs).(1) >Aetna Variable Portfolios, Inc.--Aetna Small Company VP seeks growth of capital primarily through investment in a diversified portfolio of common stocks and securities convertible into common stocks of companies with smaller market capitalizations.(1) >Aetna Variable Portfolios, Inc.--Aetna Value Opportunity VP seeks growth of capital primarily through investment in a diversified portfolio of common stocks and securities convertible into common stocks.(1)(a) >AIM V.I. Capital Appreciation Fund seeks growth of capital through investment in common stocks, with emphasis on medium- and small-sized growth companies.(2) >AIM V.I. Growth Fund seeks growth of capital primarily by investing in seasoned and better capitalized companies considered to have strong earnings momentum.(2) >AIM V.I. Growth and Income Fund seeks growth of capital with a secondary objective of current income.(2) >AIM V.I. Value Fund seeks to achieve long-term growth of capital by investing primarily in equity securities judged by the fund's investment advisor to be undervalued relative to the investment advisor's appraisal of the current or projected earnings of the companies issuing the securities, or relative to current market values of assets owned by the companies issuing the securities or relative to the equity market generally. Income is a secondary objective.(2) >Calvert Social Balanced Portfolio is a nondiversified portfolio that seeks to achieve a competitive total return through an actively managed, nondiversified portfolio of stocks, bonds, and money market instruments which offer income and capital growth opportunity and which satisfy the investment and social criteria established for the Portfolio.(3) >Fidelity Variable Insurance Products Fund (VIP)--Equity-Income Portfolio seeks reasonable income. The fund will also consider the potential for capital appreciation. The fund seeks a yield which exceeds the composite yield on the securities comprising the S&P 500.(4) >Fidelity Variable Insurance Products Fund (VIP)--Growth Portfolio seeks capital appreciation by investing primarily in common stocks of companies the investment adviser believes have above-average growth potential.(4) >Fidelity Variable Insurance Products Fund (VIP)--Overseas Portfolio seeks long-term growth of capital by investing in foreign securities, primarily in common stocks.(4) >Fidelity Variable Insurance Products Fund II (VIP II)--Contrafund Portfolio seeks long term capital appreciation by investing primarily in common stocks of companies whose value the investment adviser believes is not fully recognized by the public.(4) >Janus Aspen Series--Aggressive Growth Portfolio is a nondiversified portfolio that seeks long-term growth of capital. The Portfolio pursues its investment objective by investing primarily in common stocks selected for their growth potential, and normally invests at least 50% of its equity assets in medium-sized companies. Medium-sized companies are those whose market capitalizations at the time of investment fall within the range of companies in the S&P MidCap 400 Index. Market capitalization is a commonly used measure of the size and value of a company. The market capitalizations within the Index will vary, but as of December 31, 1998, they ranged from approximately $142 million to $73 billion.(5) >Janus Aspen Series--Balanced Portfolio seeks long-term capital growth, consistent with preservation of capital and balanced by current income. The Portfolio pursues its investment objective by normally investing 40%-60% of its assets in securities selected primarily for their growth potential and 40%-60% of its assets in securities selected primarily for their income potential. This Portfolio normally invests at least 25% of its assets in fixed-income securities.(5) >Janus Aspen Series--Flexible Income Portfolio seeks to obtain maximum total return, consistent with preservation of capital. The Portfolio pursues its investment objective by primarily investing in a wide variety of income-producing securities such as corporate bonds and notes, government securities and preferred stock. As a fundamental policy, the Portfolio will invest at least 80% of its assets in income-producing securities. The Portfolio may own an unlimited amount of high-yield/high-risk securities, and these may be a big part of the 57 portfolio. This Portfolio generates total return from a combination of current income and capital appreciation, but income is usually the dominant portion.(5) >Janus Aspen Series--Growth Portfolio seeks long-term growth of capital in a manner consistent with the preservation of capital. The Portfolio pursues its investment objective by investing primarily in common stocks selected for their growth potential. Although the Portfolio can invest in companies of any size, it generally invests in larger, more established issuers.(5) >Janus Aspen Series--Worldwide Growth Portfolio seeks long-term growth of capital in a manner consistent with the preservation of capital. The Portfolio pursues its investment objective by investing primarily in common stocks of companies of any size throughout the world. The Portfolio normally invests in issuers from at least five different countries, including the United States. The Portfolio may at times invest in fewer than five countries or even a single country.(5) >Lexington Natural Resources Trust is a nondiversified portfolio that seeks long-term growth of capital through investment primarily in common stocks of companies which own or develop natural resources and other basic commodities or supply goods and services to such companies.(6) >Oppenheimer Global Securities Fund/VA seeks long-term capital appreciation by investing a substantial portion of its assets in securities of foreign issuers, "growth-type" companies, cyclical industries and special situations which are considered to have appreciation possibilities.(7) >Oppenheimer Strategic Bond Fund/VA seeks a high level of current income principally derived from interest on debt securities and seeks to enhance such income by writing covered call options on debt securities.(7) >Portfolio Partners, Inc.--MFS Emerging Equities Portfolio seeks long-term growth of capital.(8)(a) >Portfolio Partners, Inc.--MFS Research Growth Portfolio seeks long-term growth of capital and future income.(8)(a) >Portfolio Partners, Inc.--MFS Value Equity Portfolio seeks capital appreciation.(8)(a) >Portfolio Partners, Inc.--Scudder International Growth Portfolio seeks long-term growth of capital.(8)(b) >Portfolio Partners, Inc.--T. Rowe Price Growth Equity Portfolio seeks long-term capital growth, and, secondarily, increasing dividend income.(8)(c) Investment Advisers for each of the Funds: (1) Aeltus Investment Management, Inc. (a) Bradley, Foster & Sargent, Inc. (subadviser) (2) AIM Advisors, Inc. (3) Calvert Asset Management Company, Inc. (4) Fidelity Management & Research Company (adviser) (5) Janus Capital Corporation (6) Lexington Management Corporation (adviser); Market Systems Research Advisors, Inc. (subadviser) (7) OppenheimerFunds, Inc. (8) Aetna Life Insurance and Annuity Company (adviser); (a) Massachusetts Financial Services Company (subadviser) (b) Scudder Kemper Investments, Inc. (subadviser) (c) T. Rowe Price Associates, Inc. (subadviser) 58 Appendix VI Condensed Financial Information TABLE OF CONTENTS - -------------------------------------------------------------------------------- Table I--For Contracts Issued Under 403(b), 401(a) and 401(k) Plans with Total Separate Account Charges of 0.40%, 0.45%, and 0.50% .................................... 60 Table II--For Contracts Issued Under 403(b), 401(a) and 401(k) Plans with Total Separate Account Charges of 0.75%, 0.80%, and 0.85% .................................... 63 Table III--For Contracts Issued Under 403(b), 401(a) and 401(k) Plans with Total Separate Account Charges of 0.90% and 0.95% ............................................ 66 Table IV--For Contracts Issued Under 403(b), 401(a) and 401(k) Plans with Total Separate Account Charges of 1.00% and 1.05% ............................................ 69 Table V--For Contracts Issued Under 403(b), 401(a) and 401(k) Plans with Total Separate Account Charges of 1.10% and 1.15% ............................................ 73 Table VI--For Contracts Issued Under 403(b), 401(a) and 401(k) Plans with Total Separate Account Charges of 1.20% and Those Issued Since 1996 with Total Separate Account Charges of 1.25% ................................... 77 Table VII--For Contracts Issued Under 403(b), 401(a) and 401(k) Plans with Total Separate Account Charges of 1.30% and 1.40% ............................................ 80 Table VIII--For Contracts Issued Since 1996 Under 403(b), 401(a) and 401(k) Plans with Total Separate Account Charges of 1.50% ................................................... 83 Table IX--For Contracts Issued Under 403(b) Plans and Deferred Compensation Plans with Total Separate Account Charges of 1.25% ........................................... 86 Table X--For Multiple Option Contracts Issued to San Bernardino County and Macomb County with Total Separate Account Charges of 1.25% .......................... 90 Table XI--For Contracts Issued Under 403(b) Plans and Deferred Compensation Plans with Total Separate Account Charges of 1.50% (including a 0.25% Administrative Expense Charge Beginning April 7, 1997) ............................ 93 Table XII--For Contracts Containing Limits on Fees Issued Under 403(b) Plans and Deferred Compensation Plans ......... 96 Table XIII--For Deferred Compensation Contracts with Total Separate Account Charges of 0.95% Effective On January 15, 1996 ........................................ 98 Table XIV--For Deferred Compensation Contracts with Total Separate Account Charges of 0.95% Effective On May 25, 1996 ............................................ 102 Table XV--For Deferred Compensation Contracts with Total Separate Account Charges of 0.95% Effective On or After December 16, 1996 .............................. 106
59 Condensed Financial Information - -------------------------------------------------------------------------------- TABLE I FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.40%, 0.45%, AND 0.50% (Selected data for accumulation units outstanding throughout each period) ================================================================================ The condensed financial information presented below for the period ended December 31, 1998 (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, 1998 are included in the Statement of Additional Information.
0.40% Total Charges 0.45% Total Charges 0.50% Total Charges --------------------- --------------------- -------------------- 1998 1998 1998 --------------------- --------------------- -------------------- AETNA ASCENT VP Value at beginning of period $ 13.239(1) $ 9.146(2) $ 10.475(3) Value at end of period $ 14.086 $ 9.519 $ 9.848 Number of accumulation units outstanding at end of period 86,321 779 2,670 AETNA BALANCED VP, INC. Value at beginning of period $ 14.244(1) $ 10.369(4) Value at end of period $ 15.331 $ 11.077 Number of accumulation units outstanding at end of period 653,272 310,846 AETNA BOND VP Value at beginning of period $ 11.893(1) $ 10.118(4) Value at end of period $ 12.079 $ 10.662 Number of accumulation units outstanding at end of period 190,084 88,895 AETNA CROSSROADS VP Value at beginning of period $ 12.991(1) $ 9.531(2) $ 10.298(4) Value at end of period $ 13.628 $ 9.800 $ 10.086 Number of accumulation units outstanding at end of period 51,878 731 1,127 AETNA GROWTH VP Value at beginning of period $ 15.200(1) $ 10.444(2) $ 10.479(4) Value at end of period $ 18.018 $ 11.470 $ 12.397 Number of accumulation units outstanding at end of period 21,805 291 19,997 AETNA GROWTH AND INCOME VP Value at beginning of period $ 15.108(1) $ 9.561(2) $ 10.580(4) Value at end of period $ 16.747 $ 10.152 $ 10.665 Number of accumulation units outstanding at end of period 2,888,622 1,119 719,561 AETNA HIGH YIELD VP Value at beginning of period $ 9.125(1) $ 9.961(3) Value at end of period $ 9.238 $ 9.260 Number of accumulation units outstanding at end of period 1,146 834 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $ 16.874(1) $ 10.639(2) $ 10.708(4) Value at end of period $ 18.916 $ 11.307 $ 12.019 Number of accumulation units outstanding at end of period 87,238 859 13,477 AETNA INDEX PLUS MID CAP VP Value at beginning of period $ 9.480(1) $ 10.050(3) Value at end of period $ 10.921 $ 10.947 Number of accumulation units outstanding at end of period 1,187 2,662 AETNA INDEX PLUS SMALL CAP VP Value at beginning of period $ 8.071(1) $ 9.328(5) Value at end of period $ 8.840 $ 8.861 Number of accumulation units outstanding at end of period 3,928 17 AETNA INTERNATIONAL VP Value at beginning of period $ 9.231(2) $ 8.967(1) Value at end of period $ 9.567 $ 9.815 Number of accumulation units outstanding at end of period 61 562 AETNA LEGACY VP Value at beginning of period $ 12.598(1) $ 10.115(5) Value at end of period $ 13.111 $ 10.293 Number of accumulation units outstanding at end of period 19,291 165
60 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
0.40% Total Charges 0.45% Total Charges 0.50% Total Charges --------------------- --------------------- -------------------- 1998 1998 1998 --------------------- --------------------- -------------------- AETNA MONEY MARKET VP Value at beginning of period $ 11.148(1) $ 10.050(4) Value at end of period $ 11.225 $ 10.399 Number of accumulation units outstanding at end of period 107,285 34,355 AETNA REAL ESTATE SECURITIES VP Value at beginning of period $ 8.679(1) $ 9.655(5) Value at end of period $ 8.898 $ 8.919 Number of accumulation units outstanding at end of period 1,099 649 AETNA SMALL COMPANY VP Value at beginning of period $ 12.820(1) $ 8.583(2) $ 10.719(4) Value at end of period $ 13.714 $ 9.176 $ 9.312 Number of accumulation units outstanding at end of period 15,614 318 7,541 AETNA VALUE OPPORTUNITY VP Value at beginning of period $ 13.986(1) $ 10.508(4) Value at end of period $ 16.125 $ 11.369 Number of accumulation units outstanding at end of period 11,799 993 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 13.635(1) $ 10.217(2) $ 10.377(4) Value at end of period $ 14.976 $ 10.714 $ 10.966 Number of accumulation units outstanding at end of period 38,218 553 50,868 FIDELITY VIP EQUITY-INCOME PORTFOLIO Value at beginning of period $ 14.267(1) $ 9.516(2) $ 10.522(4) Value at end of period $ 15.192 $ 9.968 $ 10.363 Number of accumulation units outstanding at end of period 54,320 519 6,791 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $ 15.510(1) $ 10.651(4) Value at end of period $ 17.525 $ 12.779 Number of accumulation units outstanding at end of period 128,518 18,614 FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $ 12.178(1) $ 10.774(4) Value at end of period $ 13.170 $ 10.183 Number of accumulation units outstanding at end of period 10,817 251 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $ 15.219(1) $ 10.553(2) $ 10.673(4) Value at end of period $ 17.813 $ 11.475 $ 11.985 Number of accumulation units outstanding at end of period 197,022 1,754 8,618 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 11.663(1) $ 10.570(4) Value at end of period $ 14.125 $ 12.541 Number of accumulation units outstanding at end of period 198,264 134,432 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $ 15.614(1) $ 10.945(2) $ 10.615(4) Value at end of period $ 17.878 $ 11.816 $ 12.415 Number of accumulation units outstanding at end of period 39,424 612 30,062 JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 12.743(1) $ 10.457(2) $ 10.186(4) Value at end of period $ 13.053 $ 10.446 $ 10.640 Number of accumulation units outstanding at end of period 21,374 82 13,364 JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 14.790(1) $ 10.286(4) Value at end of period $ 17.807 $ 12.391 Number of accumulation units outstanding at end of period 73,901 7,785 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 15.344(1) $ 9.630(2) $ 10.980(4) Value at end of period $ 17.582 $ 10.235 $ 11.485 Number of accumulation units outstanding at end of period 383,490 1,186 37,288 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 9.754(1) Value at end of period $ 9.626 Number of accumulation units outstanding at end of period 12,237
61 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
0.40% Total Charges 0.45% Total Charges 0.50% Total Charges --------------------- --------------------- -------------------- 1998 1998 1998 --------------------- --------------------- -------------------- OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period $ 9.004(1) $ 10.131(6) Value at end of period $ 10.047 $ 10.070 Number of accumulation units outstanding at end of period 1,564 180 OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period $ 9.695(1) $ 9.975(2) $ 9.995(3) Value at end of period $ 9.923 $ 9.953 $ 9.946 Number of accumulation units outstanding at end of period 1,513 575 14 PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $ 10.705(1) $ 10.094(2) $ 9.990(4) Value at end of period $ 12.776 $ 11.002 $ 10.841 Number of accumulation units outstanding at end of period 339,956 371 178,398 PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $ 9.362(1) $ 9.862(2) $ 10.490(4) Value at end of period $ 10.641 $ 10.577 $ 11.127 Number of accumulation units outstanding at end of period 331,958 473 79,769 PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period $ 14.188(1) $ 9.984(2) $ 10.726(4) Value at end of period $ 15.676 $ 10.673 $ 11.320 Number of accumulation units outstanding at end of period 36,644 192 71,605 PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $ 12.570(1) $ 10.711(4) Value at end of period $ 13.602 $ 10.797 Number of accumulation units outstanding at end of period 168,912 113,511 PORTFOLIO PARTNERS T. ROWE PRICE GROWTH PORTFOLIO Value at beginning of period $ 15.042(1) $ 10.302(2) $ 10.256(4) Value at end of period $ 16.863 $ 11.057 $ 11.551 Number of accumulation units outstanding at end of period 169,615 817 4,869
- ----------------- (1) Funds were first received in this option during November 1998. (2) Funds were first received in this option during December 1998. (3) Funds were first received in this option during May 1998. (4) Funds were first received in this option during April 1998. (5) Funds were first received in this option during June 1998. (6) Funds were first received in this option during July 1998. 62 Condensed Financial Information - -------------------------------------------------------------------------------- TABLE II FOR CONTRACTS ISSUED UNDER 403(b), 401(a) and 401(k) PLANS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.75%, 0.80%, AND 0.85% (Selected data for accumulation units outstanding throughout each period) ================================================================================ The condensed financial information presented below for the period ended December 31, 1998 (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, 1998 are included in the Statement of Additional Information.
0.75% Total Charges 0.80% Total Charges 0.85% Total Charges --------------------- --------------------- -------------------- 1998 1998 1998 --------------------- --------------------- -------------------- AETNA ASCENT VP Value at beginning of period $ 9.913(1) $ 10.604(2) $ 13.699(3) Value at end of period $ 9.502 $ 10.101 $ 14.113 Number of accumulation units outstanding at end of period 43,142 255,775 70,991 AETNA BALANCED VP, INC. Value at beginning of period $ 10.002(1) $ 10.646(2) $ 13.327(3) Value at end of period $ 10.648 $ 11.358 $ 15.360 Number of accumulation units outstanding at end of period 183,347 3,962,527 1,379,122 AETNA BOND VP Value at beginning of period $ 10.058(1) $ 10.157(2) $ 11.381(3) Value at end of period $ 10.502 $ 10.650 $ 12.102 Number of accumulation units outstanding at end of period 51,916 771,660 654,765 AETNA CROSSROADS VP Value at beginning of period $ 9.936(1) $ 10.524(2) $ 13.063(3) Value at end of period $ 9.782 $ 10.312 $ 13.654 Number of accumulation units outstanding at end of period 62,144 213,970 102,916 AETNA GROWTH VP Value at beginning of period $ 9.925(1) $ 11.326(2) $ 13.357(3) Value at end of period $ 11.449 $ 13.030 $ 18.036 Number of accumulation units outstanding at end of period 18,200 303,987 24,240 AETNA GROWTH AND INCOME VP Value at beginning of period $ 9.935(1) $ 10.925(2) $ 14.694(3) Value at end of period $ 10.133 $ 11.108 $ 16.779 Number of accumulation units outstanding at end of period 773,713 15,809,881 5,795,667 AETNA HIGH YIELD VP Value at beginning of period $ 10.145(4) $ 9.939(1) $ 9.899(5) Value at end of period $ 9.284 $ 9.241 $ 9.238 Number of accumulation units outstanding at end of period 0 15,411 644 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $ 10.015(1) $ 11.117(2) $ 14.692(3) Value at end of period $ 11.286 $ 12.587 $ 18.945 Number of accumulation units outstanding at end of period 48,831 1,974,900 459,428 AETNA INDEX PLUS MID CAP VP Value at beginning of period $ 9.822(1) $ 9.576(1) $ 9.028(5) Value at end of period $ 11.183 $ 10.925 $ 10.921 Number of accumulation units outstanding at end of period 1,623 80,312 5,681 AETNA INDEX PLUS SMALL CAP VP Value at beginning of period $ 9.642(1) $ 9.269(1) $ 8.464(5) Value at end of period $ 9.201 $ 8.843 $ 8.840 Number of accumulation units outstanding at end of period 1,481 90,819 6,564 AETNA INTERNATIONAL VP Value at beginning of period $ 9.600(5) $ 10.043(1) $ 9.580(5) Value at end of period $ 9.550 $ 9.795 $ 9.792 Number of accumulation units outstanding at end of period 7 45,801 8,719 AETNA LEGACY VP Value at beginning of period $ 9.977(1) $ 10.359(2) $ 12.497(3) Value at end of period $ 10.054 $ 10.423 $ 13.136 Number of accumulation units outstanding at end of period 21,150 418,989 61,043
63 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
0.75% Total Charges 0.80% Total Charges 0.85% Total Charges --------------------- --------------------- -------------------- 1998 1998 1998 --------------------- --------------------- -------------------- AETNA MONEY MARKET VP Value at beginning of period $ 10.022(1) $ 10.136(2) $ 10.799(3) Value at end of period $ 10.283 $ 10.414 $ 11.246 Number of accumulation units outstanding at end of period 26,810 1,574,454 396,669 AETNA REAL ESTATE SECURITIES VP Value at beginning of period $ 9.792(1) $ 10.041(4) $ 10.041(4) Value at end of period $ 8.944 $ 8.900 8.897 Number of accumulation units outstanding at end of period 9 27,225 398 AETNA SMALL COMPANY VP Value at beginning of period $ 9.812(1) $ 10.578(2) $ 13.558(3) Value at end of period $ 9.159 $ 9.764 $ 13.728 Number of accumulation units outstanding at end of period 13,043 1,165,745 25,298 AETNA VALUE OPPORTUNITY VP Value at beginning of period $ 9.921(1) $ 10.972(2) $ 13.404(3) Value at end of period $ 10.620 $ 11.692 $ 16.141 Number of accumulation units outstanding at end of period 14.488 350,826 15,014 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 10.081(1) $ 10.492(2) $ 13.124(3) Value at end of period $ 10.694 $ 11.254 $ 15.005 Number of accumulation units outstanding at end of period 9,543 91,333 132,605 FIDELITY VIP EQUITY-INCOME PORTFOLIO Value at beginning of period $ 9.914(1) $ 10.873(2) $ 13.708(3) Value at end of period $ 9.950 $ 10.850 $ 15.220 Number of accumulation units outstanding at end of period 67,227 846,660 306,099 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $ 9.956(1) $ 10.887(2) $ 12.857(3) Value at end of period $ 12.150 $ 13.307 $ 17.558 Number of accumulation units outstanding at end of period 63,727 981,477 399,820 FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $ 9.912(1) $ 11.184(2) $ 12.182(3) Value at end of period $ 9.427 $ 10.530 $ 13.195 Number of accumulation units outstanding at end of period 4,502 47,503 13,937 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $ 9.912(1) $ 10.937(2) $ 13.824(3) Value at end of period $ 11.454 $ 12.589 $ 17.847 Number of accumulation units outstanding at end of period 78,075 2,102,805 217,720 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 9.887(1) $ 10.647(2) $ 10.427(3) Value at end of period $ 12.109 $ 13.056 $ 14.152 Number of accumulation units outstanding at end of period 117,103 1,605,726 320,159 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $ 9.856(1) $ 10.741(2) $ 13.744(3) Value at end of period $ 11.794 $ 12.741 $ 17.912 Number of accumulation units outstanding at end of period 26,592 425,125 47,668 JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 10.062(1) $ 10.210(2) $ 12.306(3) Value at end of period $ 10.427 $ 10.643 $ 13.078 Number of accumulation units outstanding at end of period 6,947 367,677 25,566 JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 9.810(1) $ 10.918(2) $ 13.512(3) Value at end of period $ 11.666 $ 12.836 $ 17.841 Number of accumulation units outstanding at end of period 41,104 434,913 446,603 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 9.953(1) $ 11.798(2) $ 14.300(3) Value at end of period $ 10.217 $ 12.009 $ 17.615 Number of accumulation units outstanding at end of period 167,606 4,480,348 710,851
64 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
0.75% Total Charges 0.80% Total Charges 0.85% Total Charges --------------------- --------------------- -------------------- 1998 1998 1998 --------------------- --------------------- -------------------- LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 9.791(1) $ 10.922(2) $ 11.047(3) Value at end of period $ 7.696 $ 8.415 $ 9.645 Number of accumulation units outstanding at end of period 13,175 140,250 14,190 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period $ 9.713(1) $ 10.001(4) $ 9.275(5) Value at end of period $ 10.027 $ 10.050 $ 10.046 Number of accumulation units outstanding at end of period 535 2,686 7,592 OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period $ 10.029(4) $ 10.025(1) $ 9.935(5) Value at end of period $ 9.935 $ 9.926 $ 9.922 Number of accumulation units outstanding at end of period 925 18,786 2,776 PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $ 9.828(1) $ 10.687(2) $ 10.399(3) Value at end of period $ 10.982 $ 11.846 $ 12.800 Number of accumulation units outstanding at end of period 139,547 3,491,454 706,142 PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $ 9.917(1) $ 11.019(2) $ 8.861(3) Value at end of period $ 10.558 $ 11.682 $ 10.661 Number of accumulation units outstanding at end of period 46,475 750,388 616,205 PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period $ 9.963(1) $ 11.274(2) $ 12.661(3) Value at end of period $ 10.653 $ 12.055 $ 15.706 Number of accumulation units outstanding at end of period 49,316 376,471 382,755 PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $ 10.009(1) $ 11.338(2) $ 11.868(3) Value at end of period $ 9.781 $ 11.041 $ 13.628 Number of accumulation units outstanding at end of period 34,688 850,743 434,054 PORTFOLIO PARTNERS T. ROWE PRICE GROWTH PORTFOLIO Value at beginning of period $ 9.961(1) $ 10.967(2) $ 13.562(3) Value at end of period $ 11.036 $ 12.153 $ 16.895 Number of accumulation units outstanding at end of period 42,865 1,058,534 129,123
- ----------------- (1) Funds were first received in this option during June 1998. (2) Funds were first received in this option during May 1998. (3) Funds were first received in this option during January 1998. (4) Funds were first received in this option during July 1998. (5) Funds were first received in this option during August 1998. 65 Condensed Financial Information - -------------------------------------------------------------------------------- TABLE III FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.90% AND 0.95% (Selected data for accumulation units outstanding throughout each period) ================================================================================ The condensed financial information presented below for each of the periods ended December 31, 1998, 1997 and 1996 (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, 1998 are included in the Statement of Additional Information.
0.90% Total Charges 0.95% Total Charges --------------- ------------------------------------------------------- 1998 1998 1997 1996 --------------- ---------------- ---------------- ----------------- AETNA ASCENT VP Value at beginning of period $ 9.227(1) $ 13.624 $ 11.472 $ 10.000(2) Value at end of period $ 9.953 $ 14.076 $ 13.624 $ 11.472 Number of accumulation units outstanding at end of period 212 75,369 119,471 20,237 AETNA BALANCED VP, INC. Value at beginning of period $ 10.451(3) $ 13.226 $ 10.902 $ 10.000(2) Value at end of period $ 11.157 $ 15.320 $ 13.226 $ 10.902 Number of accumulation units outstanding at end of period 1,648 468,468 986,711 702,222 AETNA BOND VP Value at beginning of period $ 10.070(4) $ 11.268 $ 10.503 $ 10.000(2) Value at end of period $ 10.654 $ 12.070 $ 11.268 $ 10.503 Number of accumulation units outstanding at end of period 383 187,653 251,156 161,765 AETNA CROSSROADS VP Value at beginning of period $ 12.980 $ 11.146 $ 10.000(2) Value at end of period $ 13.618 $ 12.980 $ 11.146 Number of accumulation units outstanding at end of period 105,586 117,725 7,882 AETNA GROWTH VP Value at beginning of period $ 10.958(3) $ 13.202 $ 12.787(5) Value at end of period $ 12.681 $ 18.005 $ 13.202 Number of accumulation units outstanding at end of period 628 25,778 1,880 AETNA GROWTH AND INCOME VP Value at beginning of period $ 10.562(4) $ 14.756 $ 11.469 $ 10.000(2) Value at end of period $ 10.804 $ 16.736 $ 14.756 $ 11.469 Number of accumulation units outstanding at end of period 8,243 2,224,467 3,760,076 2,876,728 AETNA HIGH YIELD VP Value at beginning of period $ 10.078(6) Value at end of period $ 9.231 Number of accumulation units outstanding at end of period 799 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $ 10.648(4) $ 14.500 $ 10.934 $ 10.000(7) Value at end of period $ 12.206 $ 18.902 $ 14.500 $ 10.934 Number of accumulation units outstanding at end of period 2,384 108,387 62,360 2,697 AETNA INDEX PLUS MID CAP VP Value at beginning of period $ 10.108(8) Value at end of period $ 10.913 Number of accumulation units outstanding at end of period 564 AETNA INDEX PLUS SMALL CAP VP Value at beginning of period $ 9.582(6) $ 9.366(9) Value at end of period $ 8.837 $ 8.834 Number of accumulation units outstanding at end of period 62 2,625 AETNA INTERNATIONAL VP Value at beginning of period $ 10.103(8) Value at end of period $ 9.785 Number of accumulation units outstanding at end of period 1,247 AETNA LEGACY VP Value at beginning of period $ 10.390(8) $ 12.369 $ 10.905 $ 10.000(2) Value at end of period $ 10.351 $ 13.102 $ 12.369 $ 10.905 Number of accumulation units outstanding at end of period 37 55,494 47,726 61
66 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
0.90% Total Charges 0.95% Total Charges ---------------- -------------------------------------------------------- 1998 1998 1997 1996 ---------------- ---------------- ------------------ ---------------- AETNA MONEY MARKET VP Value at beginning of period $ 10.297(1) $ 10.738 $ 10.277 $ 10.000(2) Value at end of period $ 10.381 $ 11.217 $ 10.738 $ 10.277 Number of accumulation units outstanding at end of period 1,235 127,186 147,123 39,811 AETNA REAL ESTATE SECURITIES VP Value at beginning of period $ 10.053(8) Value at end of period $ 8.891 Number of accumulation units outstanding at end of period 15,245 AETNA SMALL COMPANY VP Value at beginning of period $ 10.939(3) $ 13.684 $ 13.119(10) Value at end of period $ 9.513 $ 13.704 $ 13.684 Number of accumulation units outstanding at end of period 2,604 44,944 2,124 AETNA VALUE OPPORTUNITY VP Value at beginning of period $ 10.515(4) $ 13.290 $ 12.912(10) Value at end of period $ 11.462 $ 16.113 $ 13.290 Number of accumulation units outstanding at end of period 3,526 29,112 587 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 12.994 $ 10.924 $ 10.000(2) Value at end of period $ 14.965 $ 12.994 $ 10.924 Number of accumulation units outstanding at end of period 95,020 93,905 19,808 FIDELITY VIP EQUITY-INCOME PORTFOLIO Value at beginning of period $ 9.265(11) $ 13.729 $ 10.819 $ 10.000(2) Value at end of period $ 10.671 $ 15.180 $ 13.729 $ 10.819 Number of accumulation units outstanding at end of period 20 147,150 125,669 27,639 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $ 10.757(3) $ 12.674 $ 10.362 $ 10.000(2) Value at end of period $ 12.978 $ 17.512 $ 12.674 $ 10.362 Number of accumulation units outstanding at end of period 1,343 165,194 150,612 54,133 FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $ 11.783 $ 10.664 $ 10.000(2) Value at end of period $ 13.160 $ 11.783 $ 10.664 Number of accumulation units outstanding at end of period 9,217 20,273 3,820 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $ 10.737(4) $ 13.825 $ 11.243 $ 10.000(2) Value at end of period $ 12.293 $ 17.800 $ 13.825 $ 11.243 Number of accumulation units outstanding at end of period 1,038 254,734 266,396 95,199 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 10.787(3) $ 10.613 $ 9.510 $ 10.000(2) Value at end of period $ 12.830 $ 14.114 $ 10.613 $ 9.510 Number of accumulation units outstanding at end of period 353 375,663 416,100 125,232 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $ 10.570(3) $ 13.431 $ 11.105 $ 10.000(2) Value at end of period $ 12.490 $ 17.865 $ 13.431 $ 11.105 Number of accumulation units outstanding at end of period 479 81,983 42,699 9,188 JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 10.232(3) $ 12.069 $ 10.902 $ 10.000(7) Value at end of period $ 10.638 $ 13.043 $ 12.069 $ 10.902 Number of accumulation units outstanding at end of period 393 36,740 29,665 1,402 JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 10.569(9) $ 13.242 $ 10.891 $ 10.000(2) Value at end of period $ 12.464 $ 17.794 $ 13.242 $ 10.891 Number of accumulation units outstanding at end of period 128 53,448 92,666 39,841
67 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
0.90% Total Charges 0.95% Total Charges ---------------- -------------------------------------------------------- 1998 1998 1997 1996 ---------------- ---------------- ------------------ ---------------- JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 10.606(4) $ 13.757 $ 11.370 $ 10.000(2) Value at end of period $ 11.745 $ 17.569 $ 13.757 $ 11.370 Number of accumulation units outstanding at end of period 5,140 427,855 555,448 151,935 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 12.082 $ 11.383 $ 10.000(2) Value at end of period $ 9.619 $ 12.082 $ 11.383 Number of accumulation units outstanding at end of period 51,077 85,577 5,295 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period $ 10.182(6) Value at end of period $ 10.039 Number of accumulation units outstanding at end of period 144 OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period $ 10.037(6) Value at end of period $ 9.915 Number of accumulation units outstanding at end of period 614 PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $ 10.233(9) $ 9.940 $ 10.062(12) Value at end of period $ 11.462 $ 12.767 $ 9.940 Number of accumulation units outstanding at end of period 236 626,638 795,375 PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $ 10.954(3) $ 8.727 $ 8.897(12) Value at end of period $ 11.375 $ 10.633 $ 8.727 Number of accumulation units outstanding at end of period 828 237,867 484,407 PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period $ 11.183(3) $ 12.478 $ 12.296(12) Value at end of period $ 11.654 $ 15.664 $ 12.478 Number of accumulation units outstanding at end of period 957 103,317 96,338 PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $ 10.020(1) $ 11.522 $ 11.376(12) Value at end of period $ 11.029 $ 13.592 $ 11.522 Number of accumulation units outstanding at end of period 10 234,075 351,150 PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period $ 10.840(3) $ 13.332 $ 13.062(12) Value at end of period $ 11.792 $ 16.851 $ 13.332 Number of accumulation units outstanding at end of period 169 197,938 238,562
- ----------------- (1) Funds were first received in this option during October 1998. (2) The initial accumulation unit value was established during May 1996 when the fund became available under the contract, when funds were first received in this option or when the applicable daily asset charge was first utilized. (3) Funds were first received in this option during April 1998. (4) Funds were first received in this option during March 1998. (5) Funds were first received in this option during August 1997. (6) Funds were first received in this option during July 1998. (7) The initial accumulation unit value was established during August 1996 when the fund became available under the contract, when funds were first received in this option or when the applicable daily asset charge was first utilized. (8) Funds were first received in this option during May 1998. (9) Funds were first received in this option during June 1998. (10) Funds were first received in this option during December 1997. (11) Funds were first received in this option during September 1998. (12) Funds were first received in this option during November 1997. 68 Condensed Financial Information - -------------------------------------------------------------------------------- TABLE IV FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.00% AND 1.05% (Selected data for accumulation units outstanding throughout each period) ================================================================================ The condensed financial information presented below for each of the periods ended December 31, 1998, 1997 and 1996 (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, 1998 are included in the Statement of Additional Information.
1.00% Total Charges 1.05% Total Charges ---------------------------------------------------- ---------------------------------- 1998 1997 1996 1998 1997 ------------------ ---------------- ---------------- ----------------- ---------------- AETNA ASCENT VP Value at beginning of period $ 13.613 $ 11.468 $ 10.000(1) $ 13.602 $ 11.629(2) Value at end of period $ 14.057 $ 13.613 $ 11.468 $ 14.039 $ 13.602 Number of accumulation units outstanding at end of period 520,438 14,463 13 55,886 24,508 AETNA BALANCED VP, INC. Value at beginning of period $ 13.215 $ 13.054(3) $ 13.204 $ 12.677(3) Value at end of period $ 15.300 $ 13.215 $ 15.279 $ 13.204 Number of accumulation units outstanding at end of period 2,019,116 57,737 61,615 4,205 AETNA BOND VP Value at beginning of period $ 11.258 $ 10.500 $ 10.000(1) $ 11.249 $ 10.587(2) Value at end of period $ 12.054 $ 11.258 $ 10.500 $ 12.038 $ 11.249 Number of accumulation units outstanding at end of period 802,876 64,958 679 50,220 11,619 AETNA CROSSROADS VP Value at beginning of period $ 12.970 $ 12.945(4) $ 12.959 $ 11.292(2) Value at end of period $ 13.600 $ 12.970 $ 13.582 $ 12.959 Number of accumulation units outstanding at end of period 168,964 2,786 38,257 12,847 AETNA GROWTH VP Value at beginning of period $ 12.674(5) $ 13.192 $ 13.184(6) Value at end of period $ 17.989 $ 17.974 $ 13.192 Number of accumulation units outstanding at end of period 194,081 23,219 31 AETNA GROWTH AND INCOME VP Value at beginning of period $ 14.744 $ 11.465 $ 10.000(1) $ 14.732 $ 12.312(2) Value at end of period $ 16.713 $ 14.744 $ 11.465 $ 16.691 $ 14.732 Number of accumulation units outstanding at end of period 9,871,041 362,675 13,125 326,490 44,425 AETNA HIGH YIELD VP Value at beginning of period $ 9.149(7) $ 9.995(8) Value at end of period $ 9.228 $ 9.225 Number of accumulation units outstanding at end of period 9,211 110 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $ 14.491 $ 14.289(9) $ 14.481 $ 14.043(3) Value at end of period $ 18.880 $ 14.491 $ 18.859 $ 14.481 Number of accumulation units Outstanding at end of period 648,540 29 51,170 1,083 AETNA INDEX PLUS MID CAP VP Value at beginning of period $ 7.996(7) $ 9.624(10) Value at end of period $ 10.909 $ 10.906 Number of accumulation units outstanding at end of period 24,016 168 AETNA INDEX PLUS SMALL CAP VP Value at beginning of period $ 9.580(10) $ 9.530(10) Value at end of period $ 8.831 $ 8.827 Number of accumulation units outstanding at end of period 27,047 330 AETNA INTERNATIONAL VP Value at beginning of period $ 10.061(11) $ 8.935(12) Value at end of period $ 9.781 $ 9.778 Number of accumulation units outstanding at end of period 14,898 182
69 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1.00% Total Charges 1.05% Total Charges ------------------------------------------------------ -------------------------------- 1998 1997 1996 1998 1997 ------------------ ------------------ ---------------- --------------- ---------------- AETNA LEGACY VP Value at beginning of period $ 12.358 $ 12.242(2) $ 12.348 $ 11.009(2) Value at end of period $ 13.084 $ 12.358 $ 13.067 $ 12.348 Number of accumulation units outstanding at end of period 190,406 64 62,453 6,221 AETNA MONEY MARKET VP Value at beginning of period $ 10.729 $ 10.274 $ 10.000(1) $ 10.720 $ 10.322(2) Value at end of period $ 11.202 $ 10.729 $ 10.274 $ 11.187 $ 10.720 Number of accumulation units outstanding at end of period 1,039,909 65,496 1,551 43,461 1,863 AETNA REAL ESTATE SECURITIES VP Value at beginning of period $ 9.214(7) $ 9.899(8) Value at end of period $ 8.888 $ 8.885 Number of accumulation units outstanding at end of period 6,500 131 AETNA SMALL COMPANY VP Value at beginning of period $ 14.234(13) $ 13.674 $ 12.485(3) Value at end of period $ 13.692 $ 13.680 $ 13.674 Number of accumulation units outstanding at end of period 404,068 5,235 125 AETNA VALUE OPPORTUNITY VP Value at beginning of period $ 12.765(5) $ 13.281 $ 12.796(6) Value at end of period $ 16.099 $ 16.085 $ 13.281 Number of accumulation units outstanding at end of period 98,683 3,648 17 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 12.983 $ 12.982(14) $ 12.972 $ 12.278(3) Value at end of period $ 14.945 $ 12.983 $ 14.926 $ 12.972 Number of accumulation units outstanding at end of period 108,344 25,620 25,822 766 FIDELITY VIP EQUITY-INCOME PORTFOLIO Value at beginning of period $ 13.718 $ 13.438(14) $ 13.706 $ 11.435(2) Value at end of period $ 15.160 $ 13.718 $ 15.140 $ 13.706 Number of accumulation units outstanding at end of period 409,327 29,808 81,062 34,010 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $ 12.663 $ 10.358 $ 10.000(1) $ 12.653 $ 10.988(2) Value at end of period $ 17.489 $ 12.663 $ 10.358 $ 17.466 $ 12.653 Number of accumulation units outstanding at end of period 581,798 61,043 21 65,095 22,425 FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $ 11.774 $ 11.818(9) $ 11.764 $ 10.798(2) Value at end of period $ 13.143 $ 11.774 $ 13.126 $ 11.764 Number of accumulation units outstanding at end of period 44,183 1,294 9,113 3,858 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $ 13.814 $ 11.239 $ 10.000(1) $ 13.802 $ 12.865(3) Value at end of period $ 17.776 $ 13.814 $ 11.239 $ 17.753 $ 13.802 Number of accumulation units outstanding at end of period 1,138,180 139,417 20,020 90,950 9,650 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 10.604 $ 9.507 $ 10.000(1) $ 10.596 $ 8.894(2) Value at end of period $ 14.096 $ 10.604 $ 9.507 $ 14.077 $ 10.596 Number of accumulation units outstanding at end of period 997,760 106,350 17,055 114,249 38,785 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $ 13.420 $ 13.490(14) $ 13.409 $ 11.587(2) Value at end of period $ 17.841 $ 13.420 $ 17.818 $ 13.409 Number of accumulation units outstanding at end of period 184,550 5,846 37,434 14,527 JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 12.059 $ 10.857(15) $ 12.049 $ 11.571(3) Value at end of period $ 13.026 $ 12.059 $ 13.009 $ 12.049 Number of accumulation units outstanding at end of period 414,151 12,527 13,507 700
70 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1.00% Total Charges 1.05% Total Charges ----------------------------------------------------- ---------------------------------- 1998 1997 1996 1998 1997 ----------------- ------------------ ---------------- ----------------- ---------------- JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 13.231 $ 10.929(15) $ 13.220 $ 13.078(3) Value at end of period $ 17.770 $ 13.231 $ 17.747 $ 13.220 Number of accumulation units outstanding at end of period 220,151 17,098 45,804 7,726 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 13.746 $ 11.366 $ 10.000(1) $ 13.735 $ 12.089(2) Value at end of period $ 17.545 $ 13.746 $ 11.366 $ 17.522 $ 13.735 Number of accumulation units outstanding at end of period 2,151,202 207,630 36,305 202,768 59,673 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 12.072 $ 13.838(14) $ 12.062 $ 12.407(3) Value at end of period $ 9.606 $ 12.072 $ 9.594 $ 12.062 Number of accumulation units outstanding at end of period 75,695 12,963 2,961 791 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period $ 9.484(12) $ 9.801(8) Value at end of period $ 10.036 $ 10.032 Number of accumulation units outstanding at end of period 5,395 180 OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period $ 9.991(11) $ 9.582(16) Value at end of period $ 9.912 $ 9.908 Number of accumulation units outstanding at end of period 7,329 5 PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $ 9.932 $ 10.054(9) $ 9.923 $ 10.046(9) Value at end of period $ 12.750 $ 9.932 $ 12.733 $ 9.923 Number of accumulation units outstanding at end of period 2,223,125 180,890 102,952 26,577 PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $ 8.720 $ 8.890(9) $ 8.713 $ 8.883(9) Value at end of period $ 10.619 $ 8.720 $ 10.605 $ 8.713 Number of accumulation units outstanding at end of period 741,693 55,616 40,974 1,465 PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period $ 12.467 $ 12.287(9) $ 12.457 $ 12.277(9) Value at end of period $ 15.644 $ 12.467 $ 15.623 $ 12.457 Number of accumulation units outstanding at end of period 291,492 68,968 25,784 1,514 PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $ 11.512 $ 11.367(9) $ 11.503 $ 11.358(9) Value at end of period $ 13.574 $ 11.512 $ 13.556 $ 11.503 Number of accumulation units outstanding at end of period 715,389 80,978 29,581 8,780 PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period $ 13.321 $ 13.052(9) $ 13.310 $ 13.042(9) Value at end of period $ 16.829 $ 13.321 $ 16.806 $ 13.310 Number of accumulation units outstanding at end of period 767,053 65,906 51,412 18,429
- ----------------- (1) The initial accumulation unit value was established during May 1996 when the fund became available under the contract, when funds were first received in this option or when the applicable daily asset charge was first utilized. (2) Funds were first received in this option during February 1997. (3) Funds were first received in this option during July 1997. (4) Funds were first received in this option during September 1997. (5) Funds were first received in this option during January 1998. (6) Funds were first received in this option during August 1997. (7) Funds were first received in this option during September 1998. 71 (8) Funds were first received in this option during June 1998. (9) Funds were first received in this option during November 1997. (10) Funds were first received in this option during July 1998. (11) Funds were first received in this option during May 1998. (12) Funds were first received in this option during August 1998. (13) Funds were first received in this option during February 1998. (14) Funds were first received in this option during October 1997. (15) Funds were first received in this option during January 1997. (16) Funds were first received in this option during October 1998. 72 Condensed Financial Information - -------------------------------------------------------------------------------- TABLE V FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.10% AND 1.15% (Selected data for accumulation units outstanding throughout each period) ================================================================================ The condensed financial information presented below for each of the periods ended December 31, 1998, 1997 and 1996 (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, 1998 are included in the Statement of Additional Information.
1.10% Total Charges 1.15% Total Charges ---------------------------------- ------------------------------------------ 1998 1997 1998 1997 1996 --------------- ---------------- --------------- ---------------- ----- AETNA ASCENT VP Value at beginning of period $ 13.590 $ 13.275(1) $ 13.579 $ 11.525(2) Value at end of period $ 14.020 $ 13.590 $ 14.002 $ 13.579 Number of accumulation units outstanding at end of period 9,573 42 26,911 6,392 AETNA BALANCED VP, INC. Value at beginning of period $ 13.194 $ 12.915(1) $ 13.183 $ 11.130(2) Value at end of period $ 15.259 $ 13.194 $ 15.239 $ 13.183 Number of accumulation units outstanding at end of period 10,484 294 275,681 250,060 AETNA BOND VP Value at beginning of period $ 11.240 $ 11.219(3) $ 11.231 $ 10.476(2) Value at end of period $ 12.022 $ 11.240 $ 12.006 $ 11.231 Number of accumulation units outstanding at end of period 2,532 6 106,179 89,517 AETNA CROSSROADS VP Value at beginning of period $ 12.949 $ 12.904(1) $ 12.938 $ 11.182(2) Value at end of period $ 13.564 $ 12.949 $ 13.546 $ 12.938 Number of accumulation units outstanding at end of period 14,611 14 24,882 7,129 AETNA GROWTH VP Value at beginning of period $ 13.188 $ 13.325(1) $ 13.183 $ 13.348(4) Value at end of period $ 17.958 $ 13.188 $ 17.943 $ 13.183 Number of accumulation units outstanding at end of period 1,761 37 14,989 118 AETNA GROWTH AND INCOME VP Value at beginning of period $ 14.720 $ 14.520(1) $ 14.708 $ 11.805(2) Value at end of period $ 16.669 $ 14.720 $ 16.647 $ 14.708 Number of accumulation units outstanding at end of period 33,836 570 581,226 508,938 AETNA HIGH YIELD VP Value at beginning of period $ 9.096(5) $ 9.959(6) Value at end of period $ 9.222 $ 9.218 Number of accumulation units outstanding at end of period 10 1,725 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $ 14.472 $ 14.078(1) $ 14.463 $ 11.663(2) Value at end of period $ 18.837 $ 14.472 $ 18.815 $ 14.463 Number of accumulation units outstanding at end of period 10,488 215 26,210 5,517 AETNA INDEX PLUS MID CAP VP Value at beginning of period $ 9.772(7) $ 9.105(8) Value at end of period $ 10.902 $ 10.898 Number of accumulation units outstanding at end of period 3 96 AETNA INDEX PLUS SMALL CAP VP Value at beginning of period $ 9.569(9) Value at end of period $ 8.821 Number of accumulation units outstanding at end of period 1,234 AETNA INTERNATIONAL VP Value at beginning of period $ 9.763(8) Value at end of period $ 9.771 Number of accumulation units outstanding at end of period 167
73 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1.10% Total Charges 1.15% Total Charges ----------------------------------- ---------------------------------------------------- 1998 1997 1998 1997 1996 ------------------ ---------------- ---------------- ---------------- ------------------ AETNA LEGACY VP Value at beginning of period $ 12.338 $ 12.223(2) $ 12.328 $ 10.927(2) Value at end of period $ 13.050 $ 12.338 $ 13.033 $ 12.328 Number of accumulation units outstanding at end of period 3,369 851 23,052 21,027 AETNA MONEY MARKET VP Value at beginning of period $ 10.711 $ 10.663(1) $ 10.702 $ 10.264 $ 10.000(10) Value at end of period $ 11.172 $ 10.711 $ 11.158 $ 10.702 $ 10.264 Number of accumulation units outstanding at end of period 6,784 145 76,594 44,265 9,856 AETNA REAL ESTATE SECURITIES VP Value at beginning of period $ 9.159(5) $ 10.034(9) Value at end of period $ 8.882 $ 8.879 Number of accumulation units outstanding at end of period 16 2,845 AETNA SMALL COMPANY VP Value at beginning of period $ 13.669 $ 13.331(1) $ 13.664 $ 13.709(4) Value at end of period $ 13.668 $ 13.669 $ 13.657 $ 13.664 Number of accumulation units outstanding at end of period 6,323 650 9,141 119 AETNA VALUE OPPORTUNITY VP Value at beginning of period $ 13.276 $ 12.952(1) $ 13.271 $ 13.244(4) Value at end of period $ 16.071 $ 13.276 $ 16.057 $ 13.271 Number of accumulation units outstanding at end of period 1,219 46 4,025 47 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 13.068(11) $ 12.951 $ 11.071(2) Value at end of period $ 14.906 $ 14.886 $ 12.951 Number of accumulation units outstanding at end of period 1,048 48,553 37,416 FIDELITY VIP EQUITY-INCOME PORTFOLIO Value at beginning of period $ 13.695 $ 13.343(1) $ 13.684 $ 10.805 $ 10.000(10) Value at end of period $ 15.120 $ 13.695 $ 15.100 $ 13.684 $ 10.805 Number of accumulation units outstanding at end of period 4,490 589 62,313 40,977 4,215 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $ 12.643 $ 12.740(1) $ 12.632 $ 10.348 $ 10.000(10) Value at end of period $ 17.443 $ 12.643 $ 17.420 $ 12.632 $ 10.348 Number of accumulation units outstanding at end of period 13,478 416 70,232 43,953 4,472 FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $ 11.754 $ 11.651(3) $ 11.745 $ 10.662(1) Value at end of period $ 13.108 $ 11.754 $ 13.091 $ 11.745 Number of accumulation units outstanding at end of period 1,860 5 9,778 6,203 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $ 13.791 $ 13.502(1) $ 13.780 $ 11.228 $ 10.000(10) Value at end of period $ 17.729 $ 13.791 $ 17.706 $ 13.780 $ 11.228 Number of accumulation units outstanding at end of period 5,768 110 85,591 56,042 4,169 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 10.587 $ 10.337(1) $ 10.578 $ 9.498 $ 10.000(10) Value at end of period $ 14.059 $ 10.587 $ 14.040 $ 10.578 $ 9.498 Number of accumulation units outstanding at end of period 3,032 269 103,123 77,340 4,932 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $ 13.398 $ 13.138(1) $ 13.387 $ 11.090 $ 10.000(10) Value at end of period $ 17.794 $ 13.398 $ 17.771 $ 13.387 $ 11.090 Number of accumulation units outstanding at end of period 4,709 256 36,442 15,461 13 JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 12.039 $ 11.872(1) $ 12.029 $ 10.882(2) Value at end of period $ 12.992 $ 12.039 $ 12.975 $ 12.029 Number of accumulation units outstanding at end of period 2,780 12 8,869 4,140
74 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1.10% Total Charges 1.15% Total Charges ----------------------------------- --------------------------------------------------- 1998 1997 1998 1997 1996 ------------------ ---------------- --------------- ---------------- ------------------ JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 13.209 $ 12.995(1) $ 13.198 $ 11.138(2) Value at end of period $ 17.723 $ 13.209 $ 17.700 $ 13.198 Number of accumulation units outstanding at end of period 2,555 498 39,188 22,179 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 13.724 $ 13.565(1) $ 13.712 $ 11.355 $ 10.000(10) Value at end of period $ 17.499 $ 13.724 $ 17.476 $ 13.712 $ 11.355 Number of accumulation units outstanding at end of period 14,918 971 130,326 77,286 9 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 8.980(8) $ 12.042 $ 11.865(2) Value at end of period $ 9.581 $ 9.568 $ 12.042 Number of accumulation units outstanding at end of period 31 12,059 12,454 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period $ 10.160(9) $ 9.974(9) Value at end of period $ 10.029 $ 10.025 Number of accumulation units outstanding at end of period 27 295 OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period $ 9.720(5) $ 10.052(9) Value at end of period $ 9.905 $ 9.902 Number of accumulation units outstanding at end of period 22 689 PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $ 9.915 $ 10.039(1) $ 9.907 $ 10.031(1) Value at end of period $ 12.716 $ 9.915 $ 12.699 $ 9.907 Number of accumulation units outstanding at end of period 6,017 16 196,772 165,668 PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $ 10.008(12) $ 8.698 $ 8.869(1) Value at end of period $ 10.591 $ 10.577 $ 8.698 Number of accumulation units outstanding at end of period 121 135,559 122,863 PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period $ 14.846(13) $ 12.437 $ 12.258(1) Value at end of period $ 15.602 $ 15.582 $ 12.437 Number of accumulation units outstanding at end of period 1,488 75,920 79,382 PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $ 11.633(11) $ 11.484 $ 11.341(1) Value at end of period $ 13.538 $ 13.520 $ 11.484 Number of accumulation units outstanding at end of period 3,300 88,163 77,528 PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period $ 14.258(14) $ 13.288 $ 13.021(1) Value at end of period $ 16.784 $ 16.762 $ 13.288 Number of accumulation units outstanding at end of period 2,769 60,127 42,110
- ----------------- (1) Funds were first received in this option during November 1997. (2) Funds were first received in this option during January 1997. (3) Funds were first received in this option during December 1997. (4) Funds were first received in this option during September 1997. (5) Funds were first received in this option during September 1998. (6) Funds were first received in this option during June 1998. (7) Funds were first received in this option during December 1998. (8) Funds were first received in this option during August 1998. 75 (9) Funds were first received in this option during July 1998. (10) The initial accumulation unit value was established during May 1996 when the fund became available under the contract, when funds were first received in this option or when the applicable daily asset charge was first utilized. (11) Funds were first received in this option during January 1998. (12) Funds were first received in this option during May 1998. (13) Funds were first received in this option during April 1998. (14) Funds were first received in this option during February 1998. 76 Condensed Financial Information - -------------------------------------------------------------------------------- TABLE VI FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.20% AND THOSE ISSUED SINCE 1996 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 two-year period ended December 31, 1998 (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, 1998 are included in the Statement of Additional Information.
Issued Since 1996 with 1.25% Total 1.20% Total Charges Charges ----------------------------------- ----------------------------------- 1998 1997 1998 1997 ---------------- ---------------- ---------------- ---------------- AETNA ASCENT VP Value at beginning of period $ 13.587(1) $ 13.557 $ 12.564(2) Value at end of period $ 13.983 $ 13.965 $ 13.557 Number of accumulation units outstanding at end of period 90,247 1,249 253 AETNA BALANCED VP, INC. Value at beginning of period $ 13.676(3) $ 13.161 $ 11.921(2) Value at end of period $ 15.219 $ 15.199 $ 13.161 Number of accumulation units outstanding at end of period 33,673 1,535 133 AETNA BOND VP Value at beginning of period $ 11.283(3) $ 11.217(1) Value at end of period $ 11.990 $ 11.975 Number of accumulation units outstanding at end of period 23,608 1,197 AETNA CROSSROADS VP Value at beginning of period $ 12.915(1) $ 12.917 $ 12.024(2) Value at end of period $ 13.528 $ 13.510 $ 12.917 Number of accumulation units outstanding at end of period 499,874 8,075 93 AETNA GROWTH VP Value at beginning of period $ 14.173(3) $ 12.876(1) Value at end of period $ 17.927 $ 17.912 Number of accumulation units outstanding at end of period 7,333 5,419 AETNA GROWTH AND INCOME VP Value at beginning of period $ 14.696 $ 13.746(4) $ 14.684 $ 12.851(5) Value at end of period $ 16.625 $ 14.696 $ 16.603 $ 14.684 Number of accumulation units outstanding at end of period 224,761 25 35,133 1,646 AETNA HIGH YIELD VP Value at beginning of period $ 9.935(6) Value at end of period $ 9.215 Number of accumulation units outstanding at end of period 132 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $ 14.453 $ 13.642(4) $ 14.444 $ 14.070(7) Value at end of period $ 18.794 $ 14.453 $ 18.772 $ 14.444 Number of accumulation units outstanding at end of period 28,911 24 594 10 AETNA INDEX PLUS MID CAP VP Value at beginning of period $ 9.662(6) Value at end of period $ 10.894 Number of accumulation units outstanding at end of period 452 AETNA INDEX PLUS SMALL CAP VP Value at beginning of period $ 9.244(6) Value at end of period $ 8.818 Number of accumulation units outstanding at end of period 989 AETNA INTERNATIONAL VP Value at beginning of period $ 9.973(6) Value at end of period $ 9.768 Number of accumulation units outstanding at end of period 123 AETNA LEGACY VP Value at beginning of period $ 12.606(3) $ 12.308 $ 12.362(8) Value at end of period $ 13.015 $ 12.998 $ 12.308 Number of accumulation units outstanding at end of period 61,973 5,866 2
77 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
Issued Since 1996 with 1.25% Total 1.20% Total Charges Charges ----------------------------------- ----------------------------------- 1998 1997 1998 1997 ---------------- ---------------- ---------------- ---------------- AETNA MONEY MARKET VP Value at beginning of period $ 10.761(3) $ 10.746(3) Value at end of period $ 11.143 $ 11.128 Number of accumulation units outstanding at end of period 15,147 6,649 AETNA REAL ESTATE SECURITIES VP Value at beginning of period $ 9.633(6) Value at end of period $ 8.876 Number of accumulation units outstanding at end of period 372 AETNA SMALL COMPANY VP Value at beginning of period $ 14.380(3) $ 13.203(1) Value at end of period $ 13.645 $ 13.633 Number of accumulation units outstanding at end of period 24,930 7,548 AETNA VALUE OPPORTUNITY VP Value at beginning of period $ 14.033(3) $ 12.844(1) Value at end of period $ 16.044 $ 16.030 Number of accumulation units outstanding at end of period 12,115 1,234 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 13.354(3) $ 12.930 $ 12.790(9) Value at end of period $ 14.867 $ 14.847 $ 12.930 Number of accumulation units outstanding at end of period 2,926 51 6 FIDELITY VIP EQUITY-INCOME PORTFOLIO Value at beginning of period $ 14.168(3) $ 13.661 $ 13.299(9) Value at end of period $ 15.080 $ 15.061 $ 13.661 Number of accumulation units outstanding at end of period 13,584 8,741 6 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $ 13.438(3) $ 12.612 $ 11.704(2) Value at end of period $ 17.397 $ 17.374 $ 12.612 Number of accumulation units outstanding at end of period 58,305 9,906 214 FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $ 12.430(3) $ 11.726 $ 12.512(7) Value at end of period $ 13.074 $ 13.056 $ 11.726 Number of accumulation units outstanding at end of period 5,797 688 22 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $ 13.768 $ 12.889(2) $ 13.757 $ 11.902(5) Value at end of period $ 17.683 $ 13.768 $ 17.659 $ 13.757 Number of accumulation units outstanding at end of period 29,528 27 11,737 390 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 10.956(3) $ 10.561 $ 9.646(2) Value at end of period $ 14.022 $ 14.003 $ 10.561 Number of accumulation units outstanding at end of period 43,050 4,812 262 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $ 14.246(3) $ 13.370(1) Value at end of period $ 17.747 $ 17.724 Number of accumulation units outstanding at end of period 21,105 798 JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 12.212(3) $ 12.112(1) Value at end of period $ 12.958 $ 12.940 Number of accumulation units outstanding at end of period 13,990 126 JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 14.218(3) $ 13.177 $ 13.270(7) Value at end of period $ 17.677 $ 17.653 $ 13.177 Number of accumulation units outstanding at end of period 19,754 5,365 32
78 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
Issued Since 1996 with 1.25% Total 1.20% Total Charges Charges ----------------------------------- ------------------------------------- 1998 1997 1998 1997 ---------------- ---------------- ------------------ ---------------- JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 13.701 $ 13.856(2) $ 13.690 $ 13.125(2) Value at end of period $ 17.453 $ 13.701 $ 17.430 $ 13.690 Number of accumulation units outstanding at end of period 46,824 27 10,441 273 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 11.980(6) $ 12.022 $ 11.717(2) Value at end of period $ 9.556 $ 9.543 $ 12.022 Number of accumulation units outstanding at end of period 2,826 53 35 OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period $ 9.905(10) Value at end of period $ 9.898 Number of accumulation units outstanding at end of period 57 PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $ 11.093(3) $ 9.891 $ 10.015(9) Value at end of period $ 12.683 $ 12.666 $ 9.891 Number of accumulation units outstanding at end of period 88,261 21,617 99 PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $ 9.310(3) $ 8.597(1) Value at end of period $ 10.563 $ 10.549 Number of accumulation units outstanding at end of period 49,879 3,244 PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period $ 13.387(3) $ 12.394(1) Value at end of period $ 15.561 $ 15.541 Number of accumulation units outstanding at end of period 19,782 1,060 PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $ 12.274(3) $ 11.465 $ 11.323(9) Value at end of period $ 13.502 $ 13.485 $ 11.465 Number of accumulation units outstanding at end of period 13,604 2,493 189 PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period $ 14.232(3) $ 13.156((1) Value at end of period $ 16.740 $ 16.718 Number of accumulation units outstanding at end of period 45,971 1,239
- ----------------- (1) Funds were first received in this option during January 1998. (2) Funds were first received in this option during June 1997. (3) Funds were first received in this option during February 1998. (4) Funds were first received in this option during July 1997. (5) Funds were first received in this option during May 1997. (6) Funds were first received in this option during June 1998. (7) Funds were first received in this option during September 1997. (8) Funds were first received in this option during October 1997. (9) Funds were first received in this option during November 1997. (10) Funds were first received in this option during December 1998. 79 Condensed Financial Information - -------------------------------------------------------------------------------- TABLE VII FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS SINCE 1996 WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.30% AND 1.40% (Selected data for accumulation units outstanding throughout each period) ================================================================================ The condensed financial information presented below for each of the periods ended December 31, 1998 and 1997 (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, 1998 are included in the Statement of Additional Information.
1.30% Total Charges 1.40% Total Charges ---------------------------------- -------------------- 1998 1997 1998 --------------- ---------------- -------------------- AETNA ASCENT VP Value at beginning of period $ 13.546 $ 11.759(1) $ 14.731(2) Value at end of period $ 13.946 $ 13.546 $ 13.910 Number of accumulation units outstanding at end of period 1,424 855 136 AETNA BALANCED VP, INC. Value at beginning of period $ 13.150 $ 11.717(3) $ 14.278(2) Value at end of period $ 15.179 $ 13.150 $ 15.139 Number of accumulation units outstanding at end of period 8 459 533 AETNA BOND VP Value at beginning of period $ 11.203 $ 10.974(1) $ 11.423(2) Value at end of period $ 11.959 $ 11.203 $ 11.927 Number of accumulation units outstanding at end of period 59,443 279 189 AETNA CROSSROADS VP Value at beginning of period $ 12.906 $ 11.380(1) $ 13.846(2) Value at end of period $ 13.492 $ 12.906 $ 13.457 Number of accumulation units outstanding at end of period 521 641 501 AETNA GROWTH VP Value at beginning of period $ 15.724(2) Value at end of period $ 17.865 Number of accumulation units outstanding at end of period 211 AETNA GROWTH AND INCOME VP Value at beginning of period $ 14.672 $ 12.519(1) $ 16.562(4) Value at end of period $ 16.581 $ 14.672 $ 16.537 Number of accumulation units outstanding at end of period 2,880 3,082 934 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $ 14.435 $ 11.470(5) $ 16.556(2) Value at end of period $ 18.751 $ 14.435 $ 18.708 Number of accumulation units outstanding at end of period 12,423 8,665 173 AETNA INDEX PLUS MID CAP VP Value at beginning of period $ 9.805(6) Value at end of period $ 10.887 Number of accumulation units outstanding at end of period 41 AETNA INDEX PLUS SMALL CAP VP Value at beginning of period $ 8.198(6) Value at end of period $ 8.812 Number of accumulation units outstanding at end of period 49 AETNA LEGACY VP Value at beginning of period $ 12.298 $ 11.401(3) Value at end of period $ 12.981 $ 12.298 Number of accumulation units outstanding at end of period 30,755 74 AETNA MONEY MARKET VP Value at beginning of period $ 10.676 $ 10.358(5) $ 10.821(2) Value at end of period $ 11.114 $ 10.676 $ 11.084 Number of accumulation units outstanding at end of period 13,000 8,302 161 AETNA SMALL COMPANY VP Value at beginning of period $ 11.872(7) Value at end of period $ 13.598 Number of accumulation units outstanding at end of period 72
80 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1.30% Total Charges 1.40% Total Charges ------------------------------------- -------------------- 1998 1997 1998 ---------------- ------------------ -------------------- AETNA VALUE OPPORTUNITY VP Value at beginning of period $ 15.827(8) $ 15.181(2) Value at end of period $ 16.016 $ 15.988 Number of accumulation units outstanding at end of period 88 39 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 12.919 $ 11.742(3) Value at end of period $ 14.827 $ 12.919 Number of accumulation units outstanding at end of period 13 44 FIDELITY VIP EQUITY-INCOME PORTFOLIO Value at beginning of period $ 13.650 $ 10.942(5) $ 15.124(2) Value at end of period $ 15.041 $ 13.650 $ 15.001 Number of accumulation units outstanding at end of period 3,612 7,817 2,077 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $ 12.601 $ 10.724(1) $ 14.386(2) Value at end of period $ 17.351 $ 12.601 $ 17.305 Number of accumulation units outstanding at end of period 2,636 2,031 4,116 FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $ 11.716 $ 11.785(1) $ 13.828(2) Value at end of period $ 13.039 $ 11.716 $ 13.005 Number of accumulation units outstanding at end of period 408 348 113 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $ 13.746 $ 11.031(5) $ 15.738(4) Value at end of period $ 17.636 $ 13.746 $ 17.590 Number of accumulation units outstanding at end of period 10,681 7,728 1,990 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 10.552 $ 8.944(1) $ 11.943(4) Value at end of period $ 13.985 $ 10.552 $ 13.948 Number of accumulation units outstanding at end of period 3,586 2,527 1,441 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $ 13.354 $ 12.113(3) $ 15.102(2) Value at end of period $ 17.701 $ 13.354 $ 17.654 Number of accumulation units outstanding at end of period 668 369 564 JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 12.225(9) $ 12.375(2) Value at end of period $ 12.923 $ 12.889 Number of accumulation units outstanding at end of period 8,960 30 JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 13.166 $ 10.962(5) $ 15.123(2) Value at end of period $ 17.630 $ 13.166 $ 17.584 Number of accumulation units outstanding at end of period 911 637 2,368 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 13.679 $ 11.961(5) $ 16.231(4) Value at end of period $ 17.407 $ 13.679 $ 17.361 Number of accumulation units outstanding at end of period 6,473 2,018 649 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 12.012 $ 10.678(5) Value at end of period $ 9.340 $ 12.012 Number of accumulation units outstanding at end of period 0 5 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period $ 9.965(8) $ 10.041(10) Value at end of period $ 10.015 $ 10.008 Number of accumulation units outstanding at end of period 139 14 PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $ 9.883 $ 10.007(11) $ 11.707(2) Value at end of period $ 12.649 $ 9.883 $ 12.616 Number of accumulation units outstanding at end of period 5,462 3,595 928
81 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1.30% Total Charges 1.40% Total Charges ----------------------------- -------------------- 1998 1997 1998 --------- ----------------- -------------------- PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $ 8.677 $ 8.848(11) $ 9.977(2) Value at end of period $10.535 $ 8.677 $ 10.507 Number of accumulation units outstanding at end of period 5,146 1,788 220 PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period $12.406 $ 12.230(11) $ 14.631(2) Value at end of period $15.520 $ 12.406 $ 15.479 Number of accumulation units outstanding at end of period 1,074 237 46 PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $11.456 $ 11.314(11) $ 13.542(2) Value at end of period $13.467 $ 11.456 $ 13.431 Number of accumulation units outstanding at end of period 313 200 125 PORTFOLIO PARTNERS T. ROWE PRICE GROWTH PORTFOLIO Value at beginning of period $13.256 $ 12.991(11) $ 15.190(2) Value at end of period $16.696 $ 13.256 $ 16.652 Number of accumulation units outstanding at end of period 2,748 1,649 1,525
- ----------------- (1) Funds were first received in this option during May 1997. (2) Funds were first received in this option during May 1998. (3) Funds were first received in this option during June 1997. (4) Funds were first received in this option during April 1998. (5) Funds were first received in this option during April 1997. (6) Funds were first received in this option during November 1998. (7) Funds were first received in this option during September 1998. (8) Funds were first received in this option during December 1998. (9) Funds were first received in this option during March 1998. (10) Funds were first received in this option during July 1998. (11) Funds were first received in this option during November 1997. 82 Condensed Financial Information - -------------------------------------------------------------------------------- TABLE VIII FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS SINCE 1996 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 three-year period ended December 31, 1998 (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, 1998 are included in the Statement of Additional Information.
1998 1997 1996 ---------------- ---------------- ---------------- AETNA ASCENT VP Value at beginning of period $ 13.502 $ 11.422(1) Value at end of period $ 13.873 $ 13.502 Number of accumulation units outstanding at end of period 14,280 9,985 AETNA BALANCED VP, INC Value at beginning of period $ 13.107 $ 11.009(1) Value at end of period $ 15.099 $ 13.107 Number of accumulation units outstanding at end of period 9,091 7,997 AETNA BOND VP Value at beginning of period $ 11.166 $ 10.442(1) Value at end of period $ 11.896 $ 11.166 Number of accumulation units outstanding at end of period 27,680 2,940 AETNA CROSSROADS VP Value at beginning of period $ 12.864 $ 11.093(1) Value at end of period $ 13.421 $ 12.864 Number of accumulation units outstanding at end of period 22,768 30,806 AETNA GROWTH VP Value at beginning of period $ 13.027(2) Value at end of period $ 17.834 Number of accumulation units outstanding at end of period 3,470 AETNA GROWTH AND INCOME VP Value at beginning of period $ 14.624 $ 11.429 $ 10.000(3) Value at end of period $ 16.493 $ 14.624 $ 11.429 Number of accumulation units outstanding at end of period 47,950 40,309 5 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $ 14.397 $ 11.374(1) Value at end of period $ 18.665 $ 14.397 Number of accumulation units outstanding at end of period 16,814 3,156 AETNA INDEX PLUS MID CAP VP Value at beginning of period $ 9.216(4) Value at end of period $ 10.872 Number of accumulation units outstanding at end of period 45 AETNA INDEX PLUS SMALL CAP VP Value at beginning of period $ 7.150(4) Value at end of period $ 8.800 Number of accumulation units outstanding at end of period 78 AETNA LEGACY VP Value at beginning of period $ 12.257 $ 10.835(5) Value at end of period $ 12.913 $ 12.257 Number of accumulation units outstanding at end of period 14,097 14,983 AETNA MONEY MARKET VP Value at beginning of period $ 10.641 $ 10.249(1) Value at end of period $ 11.055 $ 10.641 Number of accumulation units outstanding at end of period 13,218 13,868 AETNA SMALL COMPANY VP Value at beginning of period $ 13.629 $ 13.952(6) Value at end of period $ 13.574 $ 13.629 Number of accumulation units outstanding at end of period 3,581 47
83 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1998 1997 1996 --------------- ---------------- ---------------- AETNA VALUE OPPORTUNITY VP Value at beginning of period $ 13.237 $ 12.103(7) Value at end of period $ 15.960 $ 13.237 Number of accumulation units outstanding at end of period 2,432 795 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 12.877 $ 10.955(1) Value at end of period $ 14.749 $ 12.877 Number of accumulation units outstanding at end of period 1,709 1,007 FIDELITY VIP EQUITY-INCOME PORTFOLIO Value at beginning of period $ 13.606 $ 10.905(1) Value at end of period $ 14.961 $ 13.606 Number of accumulation units outstanding at end of period 9,414 9,207 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $ 12.560 $ 10.537(1) Value at end of period $ 17.259 $ 12.560 Number of accumulation units outstanding at end of period 12,956 2,793 FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $ 11.678 $ 10.566(1) Value at end of period $ 12.971 $ 11.678 Number of accumulation units outstanding at end of period 468 107 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $ 13.701 $ 11.436(1) Value at end of period $ 17.543 $ 13.701 Number of accumulation units outstanding at end of period 11,751 8,704 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 10.518 $ 9.477 $ 10.000(3) Value at end of period $ 13.911 $ 10.518 $ 9.477 Number of accumulation units outstanding at end of period 13,650 12,648 9 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $ 13.310 $ 11.136(1) Value at end of period $ 17.607 $ 13.310 Number of accumulation units outstanding at end of period 20,319 2,801 JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 11.960 $ 10.955(5) Value at end of period $ 12.855 $ 11.960 Number of accumulation units outstanding at end of period 248 118 JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 13.123 $ 11.002(1) Value at end of period $ 17.537 $ 13.123 Number of accumulation units outstanding at end of period 8,842 5,724 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 13.634 $ 11.483(1) Value at end of period $ 17.315 $ 13.634 Number of accumulation units outstanding at end of period 23,085 16,828 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 11.973 $ 11.712(1) Value at end of period $ 9.480 $ 11.973 Number of accumulation units outstanding at end of period 318 627 OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period $ 9.973(8) Value at end of period $ 9.878 Number of accumulation units outstanding at end of period 3 PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $ 9.850 $ 9.976(9) Value at end of period $ 12.582 $ 9.850 Number of accumulation units outstanding at end of period 5,349 2,413
84 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1998 1997 1996 --------- --------------- ----- PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $ 8.649 $ 8.821(9) Value at end of period $10.479 $ 8.649 Number of accumulation units outstanding at end of period 1,814 442 PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period $12.365 $ 12.192(9) Value at end of period $15.438 $ 12.365 Number of accumulation units outstanding at end of period 1,256 80 PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $11.418 $ 11.279(9) Value at end of period $13.396 $ 11.418 Number of accumulation units outstanding at end of period 3,208 2,665 PORTFOLIO PARTNERS T. ROWE PRICE GROWTH PORTFOLIO Value at beginning of period $13.212 $ 12.951(9) Value at end of period $16.608 $ 13.212 Number of accumulation units outstanding at end of period 5,824 3,802
- ----------------- (1) Funds were first received in this option during January 1997. (2) Funds were first received in this option during January 1998. (3) The initial accumulation unit value was established during May 1996 when the fund became available under the contract, when funds were first received in this option or when the applicable daily asset charge was first utilized. (4) Funds were first received in this option during August 1998. (5) Funds were first received in this option during April 1997. (6) Funds were first received in this option during September 1997. (7) Funds were first received in this option during July 1997. (8) Funds were first received in this option during May 1998. (9) Funds were first received in this option during November 1997. 85 Condensed Financial Information - -------------------------------------------------------------------------------- TABLE IX FOR CONTRACTS ISSUED UNDER 403(b) PLANS AND DEFERRED COMPENSATION PLANS 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, 1998 (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, 1998 are included in the Statement of Additional Information.
1998 1997 1996 1995 ----------------- ------------------ ----------------- ------------------- AETNA ASCENT VP Value at beginning of period $ 15.422 $ 13.025 $ 10.673 $ 10.000(1) Value at end of period $ 15.886 $ 15.422 $ 13.025 $ 10.673 Number of accumulation units outstanding at end of period 3,508,677 3,543,367 1,314,997 393,053 AETNA BALANCED VP Value at beginning of period $ 18.811 $ 15.551 $ 13.673 $ 10.868 Value at end of period $ 21.723 $ 18.811 $ 15.551 $ 13.673 Number of accumulation units outstanding at end of period 25,990,902 34,194,804 36,147,028 38,152,395 AETNA BOND VP Value at beginning of period $ 13.238 $ 12.377 $ 12.098 $ 10.360 Value at end of period $ 14.137 $ 13.238 $ 12.377 $ 12.098 Number of accumulation units outstanding at end of period 15,101,998 18,047,780 20,036,622 21,379,976 AETNA CROSSROADS VP Value at beginning of period $ 14.456 $ 12.450 $ 10.612 $ 10.000(1) Value at end of period $ 15.120 $ 14.456 $ 12.450 $ 10.612 Number of accumulation units outstanding at end of period 2,863,812 2,469,082 918,336 294,673 AETNA GROWTH VP Value at beginning of period $ 13.173 $ 11.635(5) Value at end of period $ 17.912 $ 13.173 Number of accumulation units outstanding at end of period 2,395,680 41,928 AETNA GROWTH AND INCOME VP Value at beginning of period $ 22.194 $ 17.302 $ 14.077 $ 10.778 Value at end of period $ 25.094 $ 22.194 $ 17.302 $ 14.077 Number of accumulation units outstanding at end of period 134,233,828 177,627,474 185,328,132 188,964,022 AETNA HIGH YIELD VP Value at beginning of period $ 9.969(7) Value at end of period $ 9.212 Number of accumulation units outstanding at end of period 91,056 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $ 14.444 $ 10.924 $ 10.000(8) Value at end of period $ 18.772 $ 14.444 $ 10.924 Number of accumulation units outstanding at end of period 7,100,483 4,796,644 879,588 AETNA INDEX PLUS MID CAP VP Value at beginning of period $ 10.107(7) Value at end of period $ 10.891 Number of accumulation units outstanding at end of period 146,921 AETNA INDEX PLUS SMALL CAP VP Value at beginning of period $ 9.996(7) Value at end of period $ 8.815 Number of accumulation units outstanding at end of period 253,184 AETNA INTERNATIONAL VP Value at beginning of period $ 10.182(7) Value at end of period $ 9.765 Number of accumulation units outstanding at end of period 97,660 1994 1993 1992 1991 1990 1989 --------------- -------------- ---------------- -------------- -------------- ---------------- AETNA ASCENT VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA BALANCED VP Value at beginning of period $ 11.057 $ 10.189 $ 12.736(2) $ 10.896 $ 10.437 $ 10.000(3) Value at end of period $ 10.868 $ 11.057 $ 10.189 $ 12.736 $ 10.896 $ 10.437 Number of accumulation units outstanding at end of period 23,139,604 11,368,365 11,508 22,898,099 17,078,985 9,535,986 AETNA BOND VP Value at beginning of period $ 10.905 $ 10.068 $ 36.789(4) $ 31.192 $ 28.943 $ 25.574 Value at end of period $ 10.360 $ 10.905 $ 10.068 $ 36.789 $ 31.192 $ 28.943 Number of accumulation units outstanding at end of period 11,713,354 4,084,142 3,870 7,844,412 6,984,793 6,202,834 AETNA CROSSROADS VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA GROWTH VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA GROWTH AND INCOME VP Value at beginning of period $ 11.020 $ 10.454 $ 97.165(6) $ 77.845 $ 76.311 $ 59.871 Value at end of period $ 10.778 $ 11.020 $ 10.454 $ 97.165 $ 77.845 $ 76.311 Number of accumulation units outstanding at end of period 114,733,035 44,166,470 21,250 20,948,226 18,362,906 17,142,820 AETNA HIGH YIELD VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INDEX PLUS LARGE CAP VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INDEX PLUS MID CAP VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INDEX PLUS SMALL CAP VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INTERNATIONAL VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period
86 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1998 1997 1996 1995 ---------------- ------------------ -------------- ------------------- AETNA LEGACY VP Value at beginning of period $ 13.491 $ 11.930 $ 10.580 $ 10.000(1) Value at end of period $ 14.248 $ 13.491 $ 11.930 $ 10.580 Number of accumulation units outstanding at end of period 11,971,281 1,624,842 513,590 143,637 AETNA MONEY MARKET VP Value at beginning of period $ 11.951 $ 11.473 $ 11.026 $ 10.528 Value at end of period $ 12.447 $ 11.951 $ 11.473 $ 11.026 Number of accumulation units outstanding at end of period 10,102,496 12,191,085 13,898,826 12,999,680 AETNA REAL ESTATE SECURITIES VP Value at beginning of period $ 10.126(7) Value at end of period $ 8.873 Number of accumulation units outstanding at end of period 90,949 AETNA SMALL COMPANY VP Value at beginning of period $ 13.654 $ 12.299(10) Value at end of period $ 13.633 $ 13.654 Number of accumulation units outstanding at end of period 1,696,714 253,548 AETNA VALUE OPPORTUNITY VP Value at beginning of period $ 13.261 $ 12.913(11) Value at end of period $ 16.030 $ 13.261 Number of accumulation units outstanding at end of period 1,079,291 100,928 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 17.840 $ 15.044 $ 13.527 $ 10.554 Value at end of period $ 20.485 $ 17.840 $ 15.044 $ 13.527 Number of accumulation units outstanding at end of period 1,306,652 1,499,989 1,313,324 966,098 FIDELITY VIP EQUITY- INCOME PORTFOLIO Value at beginning of period $ 15.837 $ 12.518 $ 11.092 $ 10.000(2) Value at end of period $ 17.459 $ 15.837 $ 12.518 $ 11.092 Number of accumulation units outstanding at end of period 6,281,077 7,111,490 5,007,706 1,660,304 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $ 13.904 $ 11.402 $ 10.066 $ 10.000(1) Value at end of period $ 19.155 $ 13.904 $ 11.402 $ 10.066 Number of accumulation units outstanding at end of period 7,144,438 6,586,698 5,171,098 1,833,794 FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $ 12.269 $ 11.137 $ 9.961 $ 10.000(1) Value at end of period $ 13.662 $ 12.269 $ 11.137 $ 9.961 Number of accumulation units outstanding at end of period 651,566 718,565 487,709 196,090 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $ 15.270 $ 12.455 $ 10.397 $ 10.000(1) Value at end of period $ 19.601 $ 15.270 $ 12.455 $ 10.397 Number of accumulation units outstanding at end of period 9,575,608 11,399,666 6,812,870 2,116,732 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 15.801 $ 14.202 $ 13.322 $ 10.581 Value at end of period $ 20.951 $ 15.801 $ 14.202 $ 13.322 Number of accumulation units outstanding at end of period 7,536,062 9,271,525 8,835,470 4,887,060 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $ 15.012 $ 12.449 $ 10.850 $ 10.000(1) Value at end of period $ 19.908 $ 15.012 $ 12.449 $ 10.850 Number of accumulation units outstanding at end of period 3,192,160 1,911,789 996,510 93,304 JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 14.373 $ 13.022 $ 12.077 $ 9.873 Value at end of period $ 15.487 $ 14.373 $ 13.022 $ 12.077 Number of accumulation units outstanding at end of period 1,213,451 934,053 619,287 315,361 1994 1993 1992 1991 1990 1989 ------------------ ------------- ------------------ ------------- -------------- ------------- AETNA LEGACY VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA MONEY MARKET VP Value at beginning of period $ 10.241 $ 10.048 $ 33.812(9) $ 32.138 $ 30.012 $ 27.783 Value at end of period $ 10.528 $ 10.241 $ 10.048 $ 33.812 $ 32.138 $ 30.012 Number of accumulation units outstanding at end of period 7,673,528 2,766,044 825 8,430,082 10,220,110 8,286,033 AETNA REAL ESTATE SECURITIES VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA SMALL COMPANY VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA VALUE OPPORTUNITY VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 11.036 $ 10.278 $ 10.000(12) Value at end of period $ 10.554 $ 11.036 $ 10.278 Number of accumulation units outstanding at end of period 521,141 144,168 2,556 FIDELITY VIP EQUITY- INCOME PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 10.000(13) Value at end of period $ 10.581 Number of accumulation units outstanding at end of period 753,862 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 10.000(13) Value at end of period $ 9.873 Number of accumulation units outstanding at end of period 28,543
87 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1998 1997 1996 ----------------- --------------------- ------------- JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 15.414 $ 12.716 $ 10.870 Value at end of period $ 20.651 $ 15.414 $ 12.716 Number of accumulation units outstanding at end of period 2,995,268 3,100,436 2,018,527 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 16.720 $ 13.860 $ 10.877 Value at end of period $ 21.288 $ 16.720 $ 13.860 Number of accumulation units outstanding at end of period 14,519,620 17,194,687 8,715,825 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 15.541 $ 14.686 $ 11.720 Value at end of period $ 12.336 $ 15.541 $ 14.686 Number of accumulation units outstanding at end of period 755,984 1,786,409 966,482 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period $ 10.079(7) Value at end of period $ 10.018 Number of accumulation units outstanding at end of period 39,441 OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period $ 10.015(7) Value at end of period $ 9.895 Number of accumulation units outstanding at end of period 71,074 PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $ 14.927 $ 15.114(14) Value at end of period $ 19.114 $ 14.927 Number of accumulation units outstanding at end of period 11,377,408 16,549,322 PORTFOLIO PARTNERS MFS RESEARCH PORTFOLIO Value at beginning of period $ 13.795 $ 14.067(14) Value at end of period $ 16.758 $ 13.795 Number of accumulation units outstanding at end of period 8,758,123 11,539,850 PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period $ 19.291 $ 19.016(14) Value at end of period $ 24.145 $ 19.291 Number of accumulation units outstanding at end of period 2,186,996 2,879,845 PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $ 16.986 $ 16.776(14) Value at end of period $ 19.978 $ 16.986 Number of accumulation units outstanding at end of period 4,030,904 6,242,299 PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period $ 14.400 $ 14.112(14) Value at end of period $ 18.146 $ 14.400 Number of accumulation units outstanding at end of period 6,541,819 8,296,964 1995 1994 1993 1992 1991 1990 1989 ---------------- ---------- ---------- ------------------ ------ ------ ----- JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 10.000(1) Value at end of period $ 10.870 Number of accumulation units outstanding at end of period 259,196 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 10.000(1) Value at end of period $ 10.877 Number of accumulation units outstanding at end of period 1,036,040 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 10.154 $10.877 $ 9.832 $ 10.000(12) Value at end of period $ 11.720 $10.154 $ 10.877 $ 9.832 Number of accumulation units outstanding at end of period 711,892 703,676 135,614 561 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS MFS RESEARCH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period
- ----------------- (1) The initial accumulation unit value was established at $10.000 during August 1995 when the fund became available under the contract. (2) The accumulation unit value was converted to $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immediately prior to that date, the accumulation unit value of the fund was $13.118. On the date of conversion, additional units were issued so that account values were not changed as a result of the conversion. (3) The initial accumulation unit value was established at $10.000 on June 23, 1989, the date on which the fund commenced operations. 88 (4) The accumulation unit value was converted to $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immediately prior to that date, the accumulation unit value of the fund was $38.521. On the date of conversion, additional units were issued so that account values were not changed as a result of the conversion. (5) Funds were first received in this option during June 1997. (6) The accumulation unit value was converted to $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immediately prior to that date, the accumulation unit value of the fund was $97.817. On the date of conversion, additional units were issued so that account values were not changed as a result of the conversion. (7) Funds were first received in this option during May 1998. (8) The initial accumulation unit value was established at $10.000 during August 1996, when the portfolio became available under the contract. (9) The accumulation unit value was converted to $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immediately prior to that date, the accumulation unit value of the fund was $34.397. On the date of conversion, additional units were issued so that account value were not changed as a result of the conversion. (10) Funds were first received in this option during July 1997. (11) Funds were first received in this option during August 1997. (12) The initial accumulation unit value was established at $10.000 on August 21, 1992, the date on which the fund/portfolio became available under the contract. (13) The initial accumulation unit value was established at $10.000 during October 1994, when the funds were first received in this option. (14) Funds were first received in this option during November 1997. 89 Condensed Financial Information - -------------------------------------------------------------------------------- TABLE X FOR MULTIPLE OPTION CONTRACTS ISSUED TO SAN BERNARDINO COUNTY AND MACOMB COUNTY 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, 1998 (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, 1998 are included in the Statement of Additional Information.
1998 1997 1996 1995 ----------------- ----------------- ------------- ------------- AETNA ASCENT VP Value at beginning of period $ 15.422 $ 13.291(1) Value at end of period $ 15.886 $ 15.422 Number of accumulation units outstanding at end of period 21,430 380 AETNA BALANCED VP, INC Value at beginning of period $ 24.700 $ 20.419 $ 17.954 $ 14.270 Value at end of period $ 28.524 $ 24.700 $ 20.419 $ 17.954 Number of accumulation units outstanding at end of period 2,294,877 2,160,305 2,716,641 9,193,181 AETNA BOND VP Value at beginning of period $ 51.330 $ 47.992 $ 46.913 $ 40.173 Value at end of period $ 54.819 $ 51.330 $ 47.992 $ 46.913 Number of accumulation units outstanding at end of period 994,987 959,336 835,724 2,377,622 AETNA CROSSROADS VP Value at beginning of period $ 14.456 $ 12.577(1) Value at end of period $ 15.120 $ 14.456 Number of accumulation units outstanding at end of period 31,468 873 AETNA GROWTH VP Value at beginning of period $ 11.392(3) Value at end of period $ 13.597 Number of accumulation units outstanding at end of period 17 AETNA GROWTH AND INCOME VP Value at beginning of period $ 217.359 $ 169.448 $ 137.869 $ 105.558 Value at end of period $ 245.765 $ 217.359 $ 169.448 $ 137.869 Number of accumulation units outstanding at end of period 1,747,097 1,826,355 2,071,139 6,364,000 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $ 14.444 $ 14.493(14) Value at end of period $ 18.772 $ 14.444 Number of accumulation units outstanding at end of period 1,302,825 17,771 AETNA INDEX PLUS MID CAP VP Value at beginning of period $ 9.928(4) Value at end of period $ 11.338 Number of accumulation units outstanding at end of period 35,201 AETNA INDEX PLUS SMALL CAP VP Value at beginning of period $ 10.193(4) Value at end of period $ 9.157 Number of accumulation units outstanding at end of period 81,388 AETNA LEGACY VP Value at beginning of period $ 13.491 $ 12.296(5) Value at end of period $ 14.248 $ 13.491 Number of accumulation units outstanding at end of period 95,526 2,279 AETNA MONEY MARKET VP Value at beginning of period $ 41.174 $ 39.528 $ 37.988 $ 36.271 Value at end of period $ 42.883 $ 41.174 $ 39.528 $ 37.988 Number of accumulation units outstanding at end of period 564,537 455,502 597,656 1,836,260 1994 1993 1992 1991 1990 1989 -------------- -------------- -------------- -------------- -------------- ---------------- AETNA ASCENT VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA BALANCED VP, INC Value at beginning of period $ 14.519 $ 13.379 $ 12.736 $ 10.896 $ 10.437 $ 10.000(2) Value at end of period $ 14.270 $ 14.519 $ 13.379 $ 12.736 $ 10.896 $ 10.437 Number of accumulation units outstanding at end of period 21,990,186 30,784,750 34,802,433 22,898,099 17,078,985 9,535,986 AETNA BOND VP Value at beginning of period $ 42.283 $ 39.038 $ 36.789 $ 31.192 $ 28.943 $ 25.574 Value at end of period $ 40.173 $ 42.283 $ 39.038 $ 36.789 $ 31.192 $ 28.943 Number of accumulation units outstanding at end of period 5,108,720 8,210,666 8,507,292 7,844,412 6,984,793 6,202,834 AETNA CROSSROADS VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA GROWTH VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA GROWTH AND INCOME VP Value at beginning of period $ 107.925 $ 102.383 $ 97.165 $ 77.845 $ 76.311 $ 59.871 Value at end of period $ 105.558 $ 107.925 $ 102.383 $ 97.165 $ 77.845 $ 76.311 Number of accumulation units outstanding at end of period 13,966,072 21,148,863 24,201,565 20,948,226 18,362,906 17,142,820 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INDEX PLUS MID CAP VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INDEX PLUS SMALL CAP VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA LEGACY VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA MONEY MARKET VP Value at beginning of period $ 35.282 $ 34.619 $ 33.812 $ 32.138 $ 30.012 $ 27.783 Value at end of period $ 36.271 $ 35.282 $ 34.619 $ 33.812 $ 32.138 $ 30.012 Number of accumulation units outstanding at end of period 3,679,802 5,086,515 7,534,662 8,430,082 10,220,110 8,286,033
90 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1998 1997 1996 1995 ------------------ ---------------- ------------- ----------------- AETNA VALUE OPPORTUNITY VP Value at beginning of period $ 11.472(4) Value at end of period $ 12.088 Number of accumulation units outstanding at end of period 33,957 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 23.675 $ 19.965 $ 17.951 $ 13.990 Value at end of period $ 27.186 $ 23.675 $ 19.965 $ 17.951 Number of accumulation units outstanding at end of period 917,567 929,282 898,279 856,361 FIDELITY VIP EQUITY- INCOME PORTFOLIO Value at beginning of period $ 16.587 $ 13.110 $ 11.617 $ 10.000(7) Value at end of period $ 18.285 $ 16.587 $ 13.110 $ 11.617 Number of accumulation units outstanding at end of period 2,533,673 2,139,178 1,454,755 628,582 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $ 14.087 $ 11.843(8) Value at end of period $ 19.406 $ 14.087 Number of accumulation units outstanding at end of period 72 29 FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $ 11.400 $ 10.197 $ 10.000(9) Value at end of period $ 12.560 $ 11.400 $ 10.197 Number of accumulation units outstanding at end of period 0 1,302 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $ 17.276 $ 14.092 $ 11.763 $ 10.000(7) Value at end of period $ 22.177 $ 17.276 $ 14.092 $ 11.763 Number of accumulation units outstanding at end of period 3,333,320 2,706,862 1,522,169 525,476 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 18.174 $ 16.334 $ 15.323 $ 12.169 Value at end of period $ 24.098 $ 18.174 $ 16.334 $ 15.323 Number of accumulation units outstanding at end of period 2,142,130 1,939,607 1,893,718 1,280,953 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $ 15.016 $ 12.453 $ 10.853 $ 10.000(9) Value at end of period $ 19.914 $ 15.016 $ 12.453 $ 10.853 Number of accumulation units outstanding at end of period 3,698 7,873 231 161 JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 14.430 $ 13.074 $ 12.124 $ 9.911 Value at end of period $ 15.548 $ 14.430 $ 13.074 $ 12.124 Number of accumulation units outstanding at end of period 8,967 5,211 3,761 3,345 JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 16.816 $ 13.872 $ 11.859 $ 10.000(9) Value at end of period $ 22.529 $ 16.816 $ 13.872 $ 11.859 Number of accumulation units outstanding at end of period 1,354,047 1,109,942 663,945 109,717 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 18.690 $ 15.493 $ 12.158 $ 10.000(9) Value at end of period $ 23.797 $ 18.690 $ 15.493 $ 12.158 Number of accumulation units outstanding at end of period 4,687,167 3,873,511 2,090,908 314,653 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 14.403 $ 13.611 $ 10.862 $ 9.412 Value at end of period $ 11.433 $ 14.403 $ 13.611 $ 10.862 Number of accumulation units outstanding at end of period 534,962 650,486 587,248 530,562 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period $ 10.077(12) Value at end of period $ 10.303 Number of accumulation units outstanding at end of period 20,548 1994 1993 1992 1991 1990 1989 ------------------ ---------- ---------- ---------- ---------- ---------------- AETNA VALUE OPPORTUNITY VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 14.640 $ 13.726 $ 12.913 $ 11.233 $ 10.568 $ 10.000(6) Value at end of period $ 13.990 $ 14.640 $ 13.726 $ 12.913 $ 11.233 $ 10.568 Number of accumulation units outstanding at end of period 743,464 705,415 503,006 355,851 148,576 20,710 FIDELITY VIP EQUITY- INCOME PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 10.000(10) Value at end of period $ 12.169 Number of accumulation units outstanding at end of period 393,553 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 10.000(11) Value at end of period $ 9.911 Number of accumulation units outstanding at end of period 1,555 JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 10.071 $ 9.193 $ 9.018 $ 9.608 $ 11.441 $ 10.000(6) Value at end of period $ 9.412 $ 10.071 $ 9.193 $ 9.018 $ 9.608 $ 11.441 Number of accumulation units outstanding at end of period 533,016 341,771 198,338 144,139 75,052 11,481 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period
91 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 ---------------- ------------------- ------ ------ ------ ------ ------ ------ ------ ----- OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period $ 10.055(4) Value at end of period $ 9.935 Number of accumulation units outstanding at end of period 100,555 PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $ 15.046 $ 15.236(13) Value at end of period $ 19.268 $ 15.046 Number of accumulation units outstanding at end of period 3,101,880 2,707,904 PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $ 11.960 $ 12.195(13) Value at end of period $ 14.528 $ 11.960 Number of accumulation units outstanding at end of period 1,379,653 232,418 PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period $ 23.440 $ 23.106(13) Value at end of period $ 29.339 $ 23.440 Number of accumulation units outstanding at end of period 2,244,308 2,018,219 PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $ 17.709 $ 17.490(13) Value at end of period $ 20.829 $ 17.709 Number of accumulation units outstanding at end of period 2,962,631 3,237,710 PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period $ 16.608 $ 16.276(13) Value at end of period $ 20.929 $ 16.608 Number of accumulation units outstanding at end of period 1,564,888 1,317,058
- ----------------- (1) Funds were first received in this option during February 1997. (2) The initial accumulation unit value was established at $10.000 on June 23, 1989, the date on which the fund commenced operations. (3) Funds were first received in this option during September 1998. (4) Funds were first received in this option during May 1998. (5) Funds were first received in this option during February 1997. (6) The initial accumulation unit value was established at $10.000 on May 31, 1989, the date on which the fund/portfolio became available under the contract. (7) The initial accumulation unit value was established at $10.000 during May 1995, when the fund became available under the contract. (8) Funds were first received in this option during January 1997. (9) The initial accumulation unit value was established at $10.000 during July 1995, when the fund became available under the contract. (10) The initial accumulation unit value was established at $10.000 during June 1994, when funds were first received in this option. (11) The initial accumulation unit value was established at $10.000 during November 1994, when funds were first received in this option. (12) Funds were first received in this option during June 1998. (13) Funds were first received in this option during November 1997. (14) Funds were first received in this option during December 1997. 92 Condensed Financial Information - -------------------------------------------------------------------------------- TABLE XI FOR CONTRACTS ISSUED UNDER 403(b) PLANS AND DEFERRED COMPENSATION PLANS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.50% (INCLUDING A 0.25% ADMINISTRATIVE EXPENSE CHARGE BEGINNING APRIL 7, 1997) (Selected data for accumulation units outstanding throughout each period) ================================================================================ The condensed financial information presented below for each of the periods in the two-year period ended December 31, 1998 (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, 1998 are included in the Statement of Additional Information.
1998 1997 --------------- ----------------- AETNA ASCENT VP Value at beginning of period $ 15.394 $ 13.020(1) Value at end of period $ 15.818 $ 15.394 Number of accumulation units outstanding at end of period 38,620 29,840 AETNA BALANCED VP Value at beginning of period $ 18.776 $ 15.674(1) Value at end of period $ 21.629 $ 18.776 Number of accumulation units outstanding at end of period 385,862 478,117 AETNA BOND VP Value at beginning of period $ 13.213 $ 12.302(1) Value at end of period $ 14.076 $ 13.213 Number of accumulation units outstanding at end of period 199,388 215,650 AETNA CROSSROADS VP Value at beginning of period $ 14.430 $ 12.449(1) Value at end of period $ 15.055 $ 14.430 Number of accumulation units outstanding at end of period 32,997 26,483 AETNA GROWTH VP(10) Value at beginning of period $ 13.149 $ 12.739(2) Value at end of period $ 17.834 $ 13.149 Number of accumulation units outstanding at end of period 36,839 3,326 AETNA GROWTH AND INCOME VP Value at beginning of period $ 22.153 $ 17.861(1) Value at end of period $ 24.986 $ 22.153 Number of accumulation units outstanding at end of period 1,587,351 1,699,982 AETNA HIGH YIELD VP Value at beginning of period $ 9.616(3) Value at end of period $ 9.196 Number of accumulation units outstanding at end of period 65 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $ 14.418 $ 11.345(1) Value at end of period $ 18.691 $ 14.418 Number of accumulation units outstanding at end of period 68,841 27,945 AETNA INDEX PLUS MID CAP VP Value at beginning of periodd Value at end of period $ 9.946(4) Value at end of period $ 10.872 Number of accumulation units outstanding at end of period 203 AETNA INDEX PLUS SMALL CAP VP Value at beginning of period $ 9.775(5) Value at end of period $ 8.800 Number of accumulation units outstanding at end of period 598 AETNA INTERNATIONAL VP Value at beginning of period $ 9.737(6) Value at end of period $ 9.748 Number of accumulation units outstanding at end of period 1,095 AETNA LEGACY VP Value at beginning of period $ 13.467 $ 11.873(1) Value at end of period $ 14.187 $ 13.467 Number of accumulation units outstanding at end of period 32,088 14,817 AETNA MONEY MARKET VP Value at beginning of period $ 11.929 $ 11.592(1) Value at end of period $ 12.393 $ 11.929 Number of accumulation units outstanding at end of period 123,429 176,703 AETNA REAL ESTATE SECURITIES VP Value at beginning of period $ 8.524(7) Value at end of period $ 8.857 Number of accumulation units outstanding at end of period 1,342 AETNA SMALL COMPANY VP Value at beginning of period $ 13.629 $ 13.629(2) Value at end of period $ 13.574 $ 13.629 Number of accumulation units outstanding at end of period 21,070 82
93 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1998 1997 --------------- ---------------- AETNA VALUE OPPORTUNITY VP Value at beginning of period $ 13.237 $ 13.237(2) Value at end of period $ 15.960 $ 13.237 Number of accumulation units outstanding at end of period 15,870 84 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 17.808 $ 14.934(1) Value at end of period $ 20.397 $ 17.808 Number of accumulation units outstanding at end of period 24,487 20,521 FIDELITY VIP EQUITY-INCOME PORTFOLIO Value at beginning of period $ 15.808 $ 12.711(1) Value at end of period $ 17.384 $ 15.808 Number of accumulation units outstanding at end of period 222,658 117,588 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $ 13.879 $ 11.373(1) Value at end of period $ 19.072 $ 13.879 Number of accumulation units outstanding at end of period 228,969 104,982 FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $ 12.247 $ 11.253(1) Value at end of period $ 13.603 $ 12.247 Number of accumulation units outstanding at end of period 11,523 8,098 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $ 15.242 $ 12.388(1) Value at end of period $ 19.516 $ 15.242 Number of accumulation units outstanding at end of period 157,444 146,381 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 15.773 $ 12.594(1) Value at end of period $ 20.861 $ 15.773 Number of accumulation units outstanding at end of period 100,075 85,304 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $ 14.984 $ 12.760(1) Value at end of period $ 19.822 $ 14.984 Number of accumulation units outstanding at end of period 53,980 19,967 JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 14.347 $ 13.025(1) Value at end of period $ 15.420 $ 14.347 Number of accumulation units outstanding at end of period 14,524 8,189 JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 15.386 $ 12.975(1) Value at end of period $ 20.562 $ 15.386 Number of accumulation units outstanding at end of period 56,525 53,182 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 16.689 $ 14.439(1) Value at end of period $ 21.196 $ 16.689 Number of accumulation units outstanding at end of period 182,951 168,191 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 15.512 $ 13.756(1) Value at end of period $ 12.283 $ 15.512 Number of accumulation units outstanding at end of period 14,342 26,426 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period $ 9.728(6) Value at end of period $ 10.001 Number of accumulation units outstanding at end of period 152 OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period $ 9.666(8) Value at end of period $ 9.878 Number of accumulation units outstanding at end of period 11 PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $ 14.899 $ 15.090(9) Value at end of period $ 19.032 $ 14.899 Number of accumulation units outstanding at end of period 135,641 131,565 PORTFOLIO PARTNERS MFS RESEARCH PORTFOLIO Value at beginning of period $ 13.770 $ 14.044(9) Value at end of period $ 16.685 $ 13.770 Number of accumulation units outstanding at end of period 146,728 149,523 PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period $ 19.256 $ 18.985(9) Value at end of period $ 24.041 $ 19.256 Number of accumulation units outstanding at end of period 28,002 25,830 PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $ 16.955 $ 16.749(9) Value at end of period $ 19.892 $ 16.955 Number of accumulation units outstanding at end of period 45,320 48,385 PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period $ 14.374 $ 14.090(9) Value at end of period $ 18.068 $ 14.374 Number of accumulation units outstanding at end of period 91,620 79,799
94 Condensed Financial Information (continued) - -------------------------------------------------------------------------------- (1) Funds were first received in this option during April 1997. (2) Funds were first received in this option during December 1997. (3) Funds were first received in this option during August 1998. (4) Funds were first received in this option during July 1998. (5) Funds were first received in this option during May 1998. (6) Funds were first received in this option during June 1998. (7) Funds were first received in this option during September 1998. (8) Funds were first received in this option during November 1998. (9) Funds were first received in this option during November 1997. 95 Condensed Financial Information - -------------------------------------------------------------------------------- TABLE XII FOR CONTRACTS CONTAINING LIMITS ON FEES ISSUED UNDER 403(b) PLANS AND DEFERRED COMPENSATION PLANS (Selected data for accumulation units outstanding throughout each period) ================================================================================ The condensed financial information presented below for each of the periods in the two-year period ended December 31, 1998 (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, 1998 are included in the Statement of Additional Information.
1998 1997 --------------- ----------------- AETNA ASCENT VP Value at beginning of period $ 15.453 $ 13.971(1) Value at end of period $ 15.974 $ 15.453 Number of accumulation units outstanding at end of period 9,888 10,257 AETNA BALANCED VP Value at beginning of period $ 18.837 $ 16.739(1) Value at end of period $ 21.808 $ 18.837 Number of accumulation units outstanding at end of period 429,954 454,232 AETNA BOND VP Value at beginning of period $ 13.249 $ 12.629(1) Value at end of period $ 14.171 $ 13.249 Number of accumulation units outstanding at end of period 421,225 453,723 AETNA CROSSROADS VP Value at beginning of period $ 14.485 $ 13.199(1) Value at end of period $ 15.204 $ 14.485 Number of accumulation units outstanding at end of period 50,297 50,297 AETNA GROWTH VP Value at beginning of period $ 13.173 $ 12.615(2) Value at end of period $ 17.912 $ 13.173 Number of accumulation units outstanding at end of period 25,257 1,565 AETNA GROWTH AND INCOME VP Value at beginning of period $ 22.226 $ 19.673(1) Value at end of period $ 25.193 $ 22.226 Number of accumulation units outstanding at end of period 5,670,691 6,093,102 AETNA HIGH YIELD VP Value at beginning of period $ 9.135(3) Value at end of period $ 9.212 Number of accumulation units outstanding at end of period 2,225 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $ 14.452 $ 12.748(1) Value at end of period $ 18.802 $ 14.452 Number of accumulation units outstanding at end of period 48,459 13,748 AETNA INDEX PLUS SMALL CAP VP Value at beginning of period $ 6.682(4) Value at end of period $ 8.815 Number of accumulation units outstanding at end of period 748 AETNA LEGACY VP Value at beginning of period $ 13.518 $ 12.496(1) Value at end of period $ 14.327 $ 13.518 Number of accumulation units outstanding at end of period 10,684 16,060 AETNA MONEY MARKET VP Value at beginning of period $ 11.951 $ 11.674(1) Value at end of period $ 12.447 $ 11.951 Number of accumulation units outstanding at end of period 553,915 591,901 AETNA SMALL COMPANY VP Value at beginning of period $ 13.654 $ 13.092(2) Value at end of period $ 13.633 $ 13.654 Number of accumulation units outstanding at end of period 4,297 1,779 AETNA VALUE OPPORTUNITY VP Value at beginning of period $ 12.899(5) Value at end of period $ 16.030 Number of accumulation units outstanding at end of period 5,261 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 17.840 $ 16.178(1) Value at end of period $ 20.485 $ 17.840 Number of accumulation units outstanding at end of period 3,612 3,576 FIDELITY VIP EQUITY-INCOME PORTFOLIO Value at beginning of period $ 15.837 $ 14.065(1) Value at end of period $ 17.459 $ 15.837 Number of accumulation units outstanding at end of period 44,812 49,884 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $ 13.904 $ 12.498(1) Value at end of period $ 19.155 $ 13.904 Number of accumulation units outstanding at end of period 41,575 31,477
96 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1998 1997 --------------- ---------------- FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $ 12.269 $ 12.518(1) Value at end of period $ 13.662 $ 12.269 Number of accumulation units outstanding at end of period 1,816 1,206 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $ 15.270 $ 13.443(1) Value at end of period $ 19.601 $ 15.270 Number of accumulation units outstanding at end of period 31,455 29,365 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 15.801 $ 14.156(1) Value at end of period $ 20.951 $ 15.801 Number of accumulation units outstanding at end of period 32,182 26,177 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $ 15.012 $ 13.573(1) Value at end of period $ 19.908 $ 15.012 Number of accumulation units outstanding at end of period 23,035 8,663 JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 14.373 $ 13.448(1) Value at end of period $ 15.487 $ 14.373 Number of accumulation units outstanding at end of period 9,337 323 JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 15.414 $ 13.985(1) Value at end of period $ 20.651 $ 15.414 Number of accumulation units outstanding at end of period 7,088 6,389 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 16.720 $ 15.828(1) Value at end of period $ 21.288 $ 16.720 Number of accumulation units outstanding at end of period 67,482 63,534 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 15.541 $ 15.221(1) Value at end of period $ 12.336 $ 15.541 Number of accumulation units outstanding at end of period 745 8,053 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period $ 8.115(4) Value at end of period $ 10.018 Number of accumulation units outstanding at end of period 2,465 PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $ 14.927 $ 15.114(6) Value at end of period $ 19.114 $ 14.927 Number of accumulation units outstanding at end of period 40,140 56,819 PORTFOLIO PARTNERS MFS RESEARCH PORTFOLIO Value at beginning of period $ 13.795 $ 14.067(6) Value at end of period $ 16.758 $ 13.795 Number of accumulation units outstanding at end of period 56,680 55,233 PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period $ 19.291 $ 19.016(6) Value at end of period $ 24.145 $ 19.291 Number of accumulation units outstanding at end of period 5,460 7,188 PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $ 16.986 $ 16.776(6) Value at end of period $ 19.978 $ 16.986 Number of accumulation units outstanding at end of period 3,855 6,970 PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period $ 14.400 $ 14.112(6) Value at end of period $ 18.146 $ 14.400 Number of accumulation units outstanding at end of period 29,384 24,650
- ----------------- (1) Funds were first received in this option during June 1997. (2) Funds were first received in this option during December 1997. (3) Funds were first received in this option during December 1998. (4) Funds were first received in this option during October 1998. (5) Funds were first received in this option during January 1998. (6) Funds were first received in this option during November 1997. 97 Condensed Financial Information - -------------------------------------------------------------------------------- TABLE XIII FOR DEFERRED COMPENSATION CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.95% EFFECTIVE ON JANUARY 15, 1996 (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, 1998 (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, 1998 are included in the Statement of Additional Information. The accumulation unit values and the percentage change in the value of an accumulation unit reflect a mortality and expense risk charge of 1.25% until January 15, 1996, when the mortality and expense risk charge was reduced to 0.95% during the accumulation phase. It will increase to 1.25% during the income phase.
1998 1997 1996 1995 --------------- ---------------- ---------------- ------------------- AETNA ASCENT VP Value at beginning of period $ 15.514 $ 13.063 $ 10.673 $ 10.000(1) Value at end of period $ 16.028 $ 15.514 $ 13.063 $ 10.673 Number of accumulation units outstanding at end of period 80,754 65,940 22,888 393,053 AETNA BALANCED VP, INC Value at beginning of period $ 18.922 $ 15.596 $ 13.673 $ 10.868 Value at end of period $ 21.917 $ 18.922 $ 15.596 $ 13.673 Number of accumulation units outstanding at end of period 768,510 776,268 768,178 38,152,395 AETNA BOND VP Value at beginning of period $ 13.316 $ 12.413 $ 12.098 $ 10.360 Value at end of period $ 14.264 $ 13.316 $ 12.413 $ 12.098 Number of accumulation units outstanding at end of period 389,466 328,774 354,731 21,379,976 AETNA CROSSROADS VP Value at beginning of period $ 14.541 $ 12.486 $ 10.612 $ 10.000(1) Value at end of period $ 15.255 $ 14.541 $ 12.486 $ 10.612 Number of accumulation units outstanding at end of period 78,788 71,276 35,151 294,673 AETNA GROWTH VP Value at beginning of period $ 13.202 $ 12.787(5) Value at end of period $ 18.005 $ 13.202 Number of accumulation units outstanding at end of period 115,677 6,619 AETNA GROWTH AND INCOME VP Value at beginning of period $ 22.325 $ 17.352 $ 14.077 $ 10.778 Value at end of period $ 25.319 $ 22.325 $ 17.352 $ 14.077 Number of accumulation units outstanding at end of period 5,019,611 5,232,193 4,796,196 188,964,022 AETNA HIGH YIELD VP Value at beginning of period $ 9.216(7) Value at end of period $ 9.231 Number of accumulation units outstanding at end of period 1,842 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $ 14.500 $ 10.934 $ 10.000(8) Value at end of period $ 18.902 $ 14.500 $ 10.934 Number of accumulation units outstanding at end of period 386,036 159,318 27,436 AETNA INDEX PLUS MID CAP VP Value at beginning of period $ 7.633(9) Value at end of period $ 10.913 Number of accumulation units outstanding at end of period 5,166 AETNA INDEX PLUS SMALL CAP VP Value at beginning of period $ 6.425(9) Value at end of period $ 8.834 Number of accumulation units outstanding at end of period 6,054 AETNA INTERNATIONAL VP Value at beginning of period $ 8.779(9) Value at end of period 9.785 Number of accumulation units outstanding at end of period 583 1994 1993 1992 1991 1990 1989 --------------- -------------- ---------------- -------------- -------------- ---------------- AETNA ASCENT VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA BALANCED VP, INC Value at beginning of period $ 11.057 $ 10.189 $ 12.736(2) $ 10.896 $ 10.437 $ 10.000(3) Value at end of period $ 10.868 $ 11.057 $ 10.189 $ 12.736 $ 10.896 $ 10.437 Number of accumulation units outstanding at end of period 23,139,604 11,368,365 11,508 22,898,099 17,078,985 9,535,986 AETNA BOND VP Value at beginning of period $ 10.905 $ 10.068 $ 36.789(4) $ 31.192 $ 28.943 $ 25.574 Value at end of period $ 10.360 $ 10.905 $ 10.068 $ 36.789 $ 31.192 $ 28.943 Number of accumulation units outstanding at end of period 11,713,354 4,084,142 3,870 7,844,412 6,984,793 6,202,834 AETNA CROSSROADS VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA GROWTH VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA GROWTH AND INCOME VP Value at beginning of period $ 11.020 $ 10.454 $ 97.165(6) $ 77.845 $ 76.311 $ 59.871 Value at end of period $ 10.778 $ 11.020 $ 10.454 $ 97.165 $ 77.845 $ 76.311 Number of accumulation units outstanding at end of period 114,733,035 44,166,470 21,250 20,948,226 18,362,906 17,142,820 AETNA HIGH YIELD VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INDEX PLUS LARGE CAP VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INDEX PLUS MID CAP VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INDEX PLUS SMALL CAP VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INTERNATIONAL VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period
98 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1998 1997 1996 1995 --------------- ------------------ ---------- ------------------- AETNA LEGACY VP Value at beginning of period $ 13.571 $ 11.965 $ 10.580 $ 10.000(1) Value at end of period $ 14.375 $ 13.571 $ 11.965 $ 10.580 Number of accumulation units outstanding at end of period 63,385 38,899 13,861 143,637 AETNA MONEY MARKET VP Value at beginning of period $ 12.022 $ 11.506 $ 11.026 $ 10.528 Value at end of period $ 12.558 $ 12.022 $ 11.506 $ 11.026 Number of accumulation units outstanding at end of period 230,562 262,519 228,698 12,999,680 AETNA REAL ESTATE SECURITIES VP Value at beginning of period $ 8.634(9) Value at end of period $ 8.891 Number of accumulation units outstanding at end of period 673 AETNA SMALL COMPANY VP Value at beginning of period $ 13.684 $ 13.119(5) Value at end of period $ 13.704 $ 13.684 Number of accumulation units outstanding at end of period 61,244 1,098 AETNA VALUE OPPORTUNITY VP Value at beginning of period $ 13.290 $ 13.037(11) Value at end of period $ 16.113 $ 13.290 Number of accumulation units outstanding at end of period 54,627 3,417 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 17.946 $ 15.088 $ 13.527 $ 10.554 Value at end of period $ 20.668 $ 17.946 $ 15.088 $ 13.527 Number of accumulation units outstanding at end of period 71,154 66,428 57,557 966,098 FIDELITY VIP EQUITY- INCOME PORTFOLIO Value at beginning of period $ 15.931 $ 12.554 $ 11.092 $ 10.000(1) Value at end of period $ 17.615 $ 15.931 $ 12.554 $ 11.092 Number of accumulation units outstanding at end of period 239,214 196,921 116,432 1,660,304 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $ 13.987 $ 11.435 $ 10.066 $ 10.000(1) Value at end of period $ 19.326 $ 13.987 $ 11.435 $ 10.066 Number of accumulation units outstanding at end of period 292,985 181,487 112,748 1,833,794 FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $ 12.342 $ 11.169 $ 9.961 $ 10.000(1) Value at end of period $ 13.784 $ 12.342 $ 11.169 $ 9.961 Number of accumulation units outstanding at end of period 26,108 22,047 10,848 196,090 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $ 15.360 $ 12.491 $ 10.397 $ 10.000(1) Value at end of period $ 19.776 $ 15.360 $ 12.491 $ 10.397 Number of accumulation units outstanding at end of period 209,707 171,832 92,021 2,116,732 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 15.895 $ 14.243 $ 13.322 $ 10.581 Value at end of period $ 21.139 $ 15.895 $ 14.243 $ 13.322 Number of accumulation units outstanding at end of period 283,821 253,316 226,504 4,887,060 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $ 15.100 $ 12.485 $ 10.850 $ 10.000(1) Value at end of period $ 20.086 $ 15.100 $ 12.485 $ 10.850 Number of accumulation units outstanding at end of period 105,755 45,503 29,442 93,304 JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 14.458 $ 13.060 $ 12.077 $ 9.873 Value at end of period $ 15.626 $ 14.458 $ 13.060 $ 12.077 Number of accumulation units outstanding at end of period 57,101 13,925 6,607 315,361 1994 1993 1992 1991 1990 1989 ------------------ ------------- ------------------ ------------- -------------- ------------- AETNA LEGACY VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA MONEY MARKET VP Value at beginning of period $ 10.241 $ 10.048 $ 33.812(10) $ 32.138 $ 30.012 $ 27.783 Value at end of period $ 10.528 $ 10.241 $ 10.048 $ 33.812 $ 32.138 $ 30.012 Number of accumulation units outstanding at end of period 7,673,528 2,766,044 825 8,430,082 10,220,110 8,286,033 AETNA REAL ESTATE SECURITIES VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA SMALL COMPANY VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA VALUE OPPORTUNITY VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 11.036 $ 10.278 $ 10.000(12) Value at end of period $ 10.554 $ 11.036 $ 10.278 Number of accumulation units outstanding at end of period 521,141 144,168 2,556 FIDELITY VIP EQUITY- INCOME PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 10.000(13) Value at end of period $ 10.581 Number of accumulation units outstanding at end of period 753,862 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 10.000(13) Value at end of period $ 9.873 Number of accumulation units outstanding at end of period 28,543
99 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1998 1997 1996 --------------- ------------------ ---------- JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 15.505 $ 12.753 $ 10.870 Value at end of period $ 20.836 $ 15.505 $ 12.753 Number of accumulation units outstanding at end of period 128,844 83,855 51,761 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 16.819 $ 13.900 $ 10.877 Value at end of period $ 21.478 $ 16.819 $ 13.900 Number of accumulation units outstanding at end of period 655,881 511,940 212,494 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 15.633 $ 14.729 $ 11.720 Value at end of period $ 12.446 $ 15.633 $ 14.729 Number of accumulation units outstanding at end of period 37,897 73,258 42,174 OPPEHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period $ 8.907(9) Value at end of period $ 10.039 Number of accumulation units outstanding at end of period 774 OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period $ 9.660(9) Value at end of period $ 9.915 Number of accumulation units outstanding at end of period 176 PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $ 15.015 $ 15.199(14) Value at end of period $ 19.285 $ 15.015 Number of accumulation units outstanding at end of period 595,462 573,528 PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $ 13.877 $ 14.147(14) Value at end of period $ 16.907 $ 13.877 Number of accumulation units outstanding at end of period 378,798 418,965 PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period $ 19.405 $ 19.123(14) Value at end of period $ 24.361 $ 19.405 Number of accumulation units outstanding at end of period 182,557 192,553 PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $ 17.087 $ 16.871(14) Value at end of period $ 20.157 $ 17.087 Number of accumulation units outstanding at end of period 273,684 295,952 PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period $ 14.485 $ 14.192(14) Value at end of period $ 18.309 $ 14.485 Number of accumulation units outstanding at end of period 277,044 212,654 1995 1994 1993 1992 1991 1990 1989 ---------------- ---------- ---------- ------------------ ------ ------ ----- JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 10.000(1) Value at end of period $ 10.870 Number of accumulation units outstanding at end of period 259,196 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 10.000(1) Value at end of period $ 10.877 Number of accumulation units outstanding at end of period 1,036,040 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 10.154 $10.877 $ 9.832 $ 10.000(12) Value at end of period $ 11.720 $10.154 $ 10.877 $ 9.832 Number of accumulation units outstanding at end of period 711,892 703,676 135,614 561 OPPEHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period
- ----------------- (1) The initial accumulation unit value was established at $10.000 during August 1995, when the fund became available under the contract. (2) The accumulation unit value was converted to $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immediately prior to that date, the accumulation unit value of the fund was $13.118. On the date of conversion, additional units were issued so that account values were not changed as a result of the conversion. (3) The initial accumulation unit value was established at $10.000 on June 23, 1989, the date on which the fund commenced operations. 100 Condensed Financial Information (continued) - -------------------------------------------------------------------------------- (4) The accumulation unit value was converted to $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immediately prior to that date, the accumulation unit value of the fund was $38.521. On the date of conversion, additional units were issued so that account values were not changed as a result of the conversion. (5) Funds were first received in this option during December 1997. (6) The accumulation unit value was converted to $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immediately prior to that date, the accumulation unit value of the fund was $97.817. On the date of conversion, additional units were issued so that account values were not changed as a result of the conversion. (7) Funds were first received in this option during November 1998. (8) The initial accumulation unit value was established during August 1996 when the portfolio became available under the contract, when funds were first received in this option or when the applicable daily asset charge was first utilized. Funds were first received in this option during October 1998. (9) Funds were first received in this option during October 1998. (10) The accumulation unit value was converted to $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immediately prior to that date, the accumulation unit value of the fund was $34.397. On the date of conversion, additional units were issued so that account values were not changed as a result of the conversion. (11) Funds were first received in this option during August 1997. (12) The initial accumulation unit value was established at $10.000 on August 21, 1992, the date on which the fund/portfolio became available under contract. (13) The initial accumulation unit value was established at $10.000 during October 1994, when the funds were first received in this option. (14) Funds were first received in this option during November 1997. 101 Condensed Financial Information - -------------------------------------------------------------------------------- TABLE XIV FOR DEFERRED COMPENSATION CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.95% EFFECTIVE ON MAY 25, 1996 (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, 1998 (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, 1998 are included in the Statement of Additional Information. The accumulation unit values and the percentage change in the value of an accumulation unit reflect a mortality and expense risk charge of 1.25% until May 25, 1996, when the mortality and expense risk charge was reduced to 0.95% during the accumulation phase. It will increase to 1.25% during the income phase.
1998 1997 1996 1995 --------------- ---------------- ---------------- ------------------- AETNA ASCENT VP Value at beginning of period $ 15.497 $ 13.049 $ 10.673 $ 10.000(1) Value at end of period $ 16.011 $ 15.497 $ 13.049 $ 10.673 Number of accumulation units outstanding at end of period 29,149 178,233 35,180 393,053 AETNA BALANCED VP, INC Value at beginning of period $ 18.901 $ 15.579 $ 13.673 $ 10.868 Value at end of period $ 21.893 $ 18.901 $ 15.579 $ 13.673 Number of accumulation units outstanding at end of period 266,636 1,511,041 1,528,051 38,152,395 AETNA BOND VP Value at beginning of period $ 13.301 $ 12.399 $ 12.098 $ 10.360 Value at end of period $ 14.248 $ 13.301 $ 12.399 $ 12.098 Number of accumulation units outstanding at end of period 200,650 463,068 493,485 21,379,976 AETNA CROSSROADS VP Value at beginning of period $ 14.526 $ 12.473 $ 10.612 $ 10.000(1) Value at end of period $ 15.239 $ 14.526 $ 12.473 $ 10.612 Number of accumulation units outstanding at end of period 30,057 99,660 28,829 294,673 AETNA GROWTH VP Value at beginning of period $ 13.202 $ 12.975(5) Value at end of period $ 18.005 $ 13.202 Number of accumulation units outstanding at end of period 81,693 4,360 AETNA GROWTH AND INCOME VP Value at beginning of period $ 22.301 $ 17.333 $ 14.077 $ 10.778 Value at end of period $ 25.291 $ 22.301 $ 17.333 $ 14.077 Number of accumulation units outstanding at end of period 2,491,029 7,667,724 7,250,286 188,964,022 AETNA HIGH YIELD VP Value at beginning of period $ 8.889(7) Value at end of period $ 9.231 Number of accumulation units outstanding at end of period 17 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $ 14.500 $ 10.934 $ 10.000(8) Value at end of period $ 18.902 $ 14.500 $ 10.934 Number of accumulation units outstanding at end of period 145,736 190,348 28,473 AETNA INDEX PLUS MID CAP VP Value at beginning of period $ 9.927(9) Value at end of period $ 10.913 Number of accumulation units outstanding at end of period 9,117 AETNA INDEX PLUS SMALL CAP VP Value at beginning of period $ 9.997(9) Value at end of period $ 8.834 Number of accumulation units outstanding at end of period 12,800 AETNA INTERNATIONAL VP Value at beginning of period $ 10.183(9) Value at end of period $ 9.785 Number of accumulation units outstanding at end of period 7,767 1994 1993 1992 1991 1990 1989 --------------- -------------- ---------------- -------------- -------------- ---------------- AETNA ASCENT VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA BALANCED VP, INC Value at beginning of period $ 11.057 $ 10.189 $ 12.736(2) $ 10.896 $ 10.437 $ 10.000(3) Value at end of period $ 10.868 $ 11.057 $ 10.189 $ 12.736 $ 10.896 $ 10.437 Number of accumulation units outstanding at end of period 23,139,604 11,368,365 11,508 22,898,099 17,078,985 9,535,986 AETNA BOND VP Value at beginning of period $ 10.905 $ 10.068 $ 36.789(4) $ 31.192 $ 28.943 $ 25.574 Value at end of period $ 10.360 $ 10.905 $ 10.068 $ 36.789 $ 31.192 $ 28.943 Number of accumulation units outstanding at end of period 11,713,354 4,084,142 3,870 7,844,412 6,984,793 6,202,834 AETNA CROSSROADS VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA GROWTH VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA GROWTH AND INCOME VP Value at beginning of period $ 11.020 $ 10.454 $ 97.165(6) $ 77.845 $ 76.311 $ 59.871 Value at end of period $ 10.778 $ 11.020 $ 10.454 $ 97.165 $ 77.845 $ 76.311 Number of accumulation units outstanding at end of period 114,733,035 44,166,470 21,250 20,948,226 18,362,906 17,142,820 AETNA HIGH YIELD VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INDEX PLUS LARGE CAP VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INDEX PLUS MID CAP VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INDEX PLUS SMALL CAP VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INTERNATIONAL VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period
102 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1998 1997 1996 1995 ---------------- ---------------- ---------- ------------------- AETNA LEGACY VP Value at beginning of period $ 13.557 $ 11.953 $ 10.580 $ 10.000(1) Value at end of period $ 14.361 $ 13.557 $ 11.953 $ 10.580 Number of accumulation units outstanding at end of period 17,756 58,121 15,755 143,637 AETNA MONEY MARKET VP Value at beginning of period $ 12.009 $ 11.494 $ 11.026 $ 10.528 Value at end of period $ 12.545 $ 12.009 $ 11.494 $ 11.026 Number of accumulation units outstanding at end of period 132,737 328,674 351,832 12,999,680 AETNA REAL ESTATE SECURITIES VP Value at beginning of period $ 10.127(9) Value at end of period $ 8.891 Number of accumulation units outstanding at end of period 11,639 AETNA SMALL COMPANY VP Value at beginning of period $ 13.684 $ 13.248(5) Value at end of period $ 13.704 $ 13.684 Number of accumulation units outstanding at end of period 52,936 12,603 AETNA VALUE OPPORTUNITY VP Value at beginning of period $ 13.290 $ 13.093(5) Value at end of period $ 16.113 $ 13.290 Number of accumulation units outstanding at end of period 19,971 8,131 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 17.926 $ 15.071 $ 13.527 $ 10.554 Value at end of period $ 20.646 $ 17.926 $ 15.071 $ 13.527 Number of accumulation units outstanding at end of period 21,808 40,783 35,511 966,098 FIDELITY VIP EQUITY- INCOME PORTFOLIO Value at beginning of period $ 15.914 $ 12.541 $ 11.092 $ 10.000(1) Value at end of period $ 17.596 $ 15.914 $ 12.541 $ 11.092 Number of accumulation units outstanding at end of period 74,067 121,281 82,568 1,660,304 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $ 13.972 $ 11.423 $ 10.066 $ 10.000(1) Value at end of period $ 19.305 $ 13.972 $ 11.423 $ 10.066 Number of accumulation units outstanding at end of period 100,561 176,877 135,704 1,833,794 FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $ 12.328 $ 11.157 $ 9.961 $ 10.000(1) Value at end of period $ 13.769 $ 12.328 $ 11.157 $ 9.961 Number of accumulation units outstanding at end of period 14,165 40,516 29,108 196,090 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $ 15.343 $ 12.477 $ 10.397 $ 10.000(1) Value at end of period $ 19.755 $ 15.343 $ 12.477 $ 10.397 Number of accumulation units outstanding at end of period 176,553 320,226 175,463 2,116,732 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 15.878 $ 14.227 $ 13.322 $ 10.581 Value at end of period $ 21.116 $ 15.878 $ 14.227 $ 13.322 Number of accumulation units outstanding at end of period 120,002 211,783 171,747 4,887,060 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $ 15.084 $ 12.472 $ 10.850 $ 10.000(1) Value at end of period $ 20.064 $ 15.084 $ 12.472 $ 10.850 Number of accumulation units outstanding at end of period 45,435 58,999 29,198 93,304 JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 14.442 $ 13.046 $ 12.077 $ 9.873 Value at end of period $ 15.609 $ 14.442 $ 13.046 $ 12.077 Number of accumulation units outstanding at end of period 10,857 11,145 9,054 315,361 1994 1993 1992 1991 1990 1989 ------------------ ------------- ------------------ ------------- -------------- ------------- AETNA LEGACY VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA MONEY MARKET VP Value at beginning of period $ 10.241 $ 10.048 $ 33.812(10) $ 32.138 $ 30.012 $ 27.783 Value at end of period $ 10.528 $ 10.241 $ 10.048 $ 33.812 $ 32.138 $ 30.012 Number of accumulation units outstanding at end of period 7,673,528 2,766,044 825 8,430,082 10,220,110 8,286,033 AETNA REAL ESTATE SECURITIES VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA SMALL COMPANY VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA VALUE OPPORTUNITY VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 11.036 $ 10.278 $ 10.000(11) Value at end of period $ 10.554 $ 11.036 $ 10.278 Number of accumulation units outstanding at end of period 521,141 144,168 2,556 FIDELITY VIP EQUITY- INCOME PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 10.000(12) Value at end of period $ 10.581 Number of accumulation units outstanding at end of period 753,862 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 10.000(12) Value at end of period $ 9.873 Number of accumulation units outstanding at end of period 28,543
103 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1998 1997 1996 ------------------ -------------------- ---------- JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 15.489 $ 12.739 $ 10.870 Value at end of period $ 20.813 $ 15.489 $ 12.739 Number of accumulation units outstanding at end of period 47,157 86,733 67,001 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 16.800 $ 13.885 $ 10.877 Value at end of period $ 21.455 $ 16.800 $ 13.885 Number of accumulation units outstanding at end of period 236,904 586,164 241,823 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 15.616 $ 14.713 $ 11.720 Value at end of period $ 12.433 $ 15.616 $ 14.713 Number of accumulation units outstanding at end of period 16,414 72,475 43,665 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period $ 10.080(9) Value at end of period $ 10.039 Number of accumulation units outstanding at end of period 3,153 OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period $ 10.056(13) Value at end of period $ 9.915 Number of accumulation units outstanding at end of period 1,158 PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $ 14.999 $ 15.183 (14) Value at end of period $ 19.264 $ 14.999 Number of accumulation units outstanding at end of period 289,625 586,517 PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $ 13.862 $ 14.131 (14) Value at end of period $ 16.889 $ 13.862 Number of accumulation units outstanding at end of period 158,866 317,033 PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period $ 19.384 $ 19.102 (14) Value at end of period $ 24.335 $ 19.384 Number of accumulation units outstanding at end of period 48,711 84,592 PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $ 17.068 $ 16.853 (14) Value at end of period $ 20.135 $ 17.068 Number of accumulation units outstanding at end of period 81,257 273,402 PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period $ 14.470 $ 14.176(14) Value at end of period $ 18.289 $ 14.470 Number of accumulation units outstanding at end of period 84,842 227,469 1995 1994 1993 1992 1991 1990 1989 ---------------- ---------- ---------- ------------------ ------ ------ ----- JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 10.000(1) Value at end of period $ 10.870 Number of accumulation units outstanding at end of period 259,196 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 10.000(1) Value at end of period $ 10.877 Number of accumulation units outstanding at end of period 1,036,040 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 10.154 $10.877 $ 9.832 $ 10.000(11) Value at end of period $ 11.720 $10.154 $ 10.877 $ 9.832 Number of accumulation units outstanding at end of period 711,892 703,676 135,614 561 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period
- ----------------- (1) The initial accumulation unit value was established at $10.000 during August 1995, when the fund became available under the contract. (2) The accumulation unit value was converted to $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immediately prior to that date, the accumulation unit value of the fund was $13.118. On the date of conversion, additional units were issued so that account values were not changed as a result of the conversion. (3) The initial accumulation unit value was established at $10.000 on June 23, 1989, the date on which the fund commenced operations. 104 (4) The accumulation unit value was converted to $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immediately prior to that date, the accumulation unit value of the fund was $38.521. On the date of conversion, additional units were issued so that account values were not changed as a result of the conversion. (5) Funds were first received in this option during December 1997. (6) The accumulation unit value was converted to $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immediately prior to that date, the accumulation unit value of the fund was $97.817. On the date of conversion, additional units were issued so that account values were not changed as a result of the conversion. (7) Funds were first received in this option during October 1998. (8) The initial accumulation unit value was established during August 1996 when the portfolio became available under the contract, when funds were first received in this option or when the applicable daily asset charge was first utilized. (9) Funds were first received in this option during May 1998. (10)The accumulation unit value was converted to $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immediately prior to that date, the accumulation unit value of the fund was $34.397. On the date of conversion, additional units were issued so that account values were not changed as a result of the conversion. (11)The initial accumulation unit value was established at $10.000 August 21, 1992, the date on which the fund/portfolio became available under the contract. (12)The initial accumulation unit value was established at $10.000 during October 1994, when the funds were first received in this option. (13)Funds were first received in this option during July 1998. (14)Funds were first received in this option during November 1997. 105 Condensed Financial Information - -------------------------------------------------------------------------------- TABLE XV FOR DEFERRED COMPENSATION CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.95% EFFECTIVE ON OR AFTER DECEMBER 16, 1996 (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, 1998 (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, 1998 are included in the Statement of Additional Information. The accumulation unit values and the percentage change in the value of an accumulation unit reflect a mortality and expense risk charge of 1.25% until December 16, 1996, when the mortality and expense risk charge was reduced to 0.95% during the accumulation phase. It will increase to 1.25% during the income phase. The class of accumulation unit value shown below may also be used for contracts with 0.95% total separate account charges issued after December 16, 1996; however, the condensed financial information for periods prior to December 16, 1996 will not be applicable.
1998 1997 1996 1995 ---------------- ---------------- ---------------- ------------------- AETNA ASCENT VP Value at beginning of period $ 15.471 $ 13.027 $ 10.673 $ 10.000(1) Value at end of period $ 15.984 $ 15.471 $ 13.027 $ 10.673 Number of accumulation units outstanding at end of period 38,675 86,255 32,497 393,053 AETNA BALANCED VP, INC Value at beginning of period $ 18.870 $ 15.553 $ 13.673 $ 10.868 Value at end of period $ 21.857 $ 18.870 $ 15.553 $ 13.673 Number of accumulation units outstanding at end of period 771,906 1,144,876 270,688 38,152,395 AETNA BOND VP Value at beginning of period $ 13.279 $ 12.379 $ 12.098 $ 10.360 Value at end of period $ 14.225 $ 13.279 $ 12.379 $ 12.098 Number of accumulation units outstanding at end of period 289,651 553,279 159,594 21,379,976 AETNA CROSSROADS VP Value at beginning of period $ 14.501 $ 12.452 $ 10.612 $ 10.000(1) Value at end of period $ 15.214 $ 14.501 $ 12.452 $ 10.612 Number of accumulation units outstanding at end of period 100,734 101,836 9,415 294,673 AETNA GROWTH VP Value at beginning of period $ 13.202 $ 12.912(5) Value at end of period $ 18.005 $ 13.202 Number of accumulation units outstanding at end of period 59,374 7 AETNA GROWTH AND INCOME VP Value at beginning of period $ 22.264 $ 17.304 $ 14.077 $ 10.778 Value at end of period $ 25.249 $ 22.264 $ 17.304 $ 14.077 Number of accumulation units outstanding at end of period 4,070,904 8,238,898 3,033,655 188,964,022 AETNA HIGH YIELD VP Value at beginning of period $ 10.044(7) Value at end of period $ 9.231 Number of accumulation units outstanding at end of period 1,308 AETNA INDEX PLUS LARGE CAP VP Value at beginning of period $ 14.489 $ 10.925 $ 11.038(8) Value at end of period $ 18.888 $ 14.489 $ 10.925 Number of accumulation units outstanding at end of period 136,252 293,223 23,856 AETNA INDEX PLUS MID CAP VP Value at beginning of period $ 9.962(9) Value at end of period $ 10.913 Number of accumulation units outstanding at end of period 26,111 AETNA INDEX PLUS SMALL CAP VP Value at beginning of period $ 9.876(9) Value at end of period $ 8.834 Number of accumulation units outstanding at end of period 26,257 1994 1993 1992 1991 1990 1989 --------------- -------------- ---------------- -------------- -------------- ---------------- AETNA ASCENT VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA BALANCED VP, INC Value at beginning of period $ 11.057 $ 10.189 $ 12.736(2) $ 10.896 $ 10.437 $ 10.000(3) Value at end of period $ 10.868 $ 11.057 $ 10.189 $ 12.736 $ 10.896 $ 10.437 Number of accumulation units outstanding at end of period 23,139,604 11,368,365 11,508 22,898,099 17,078,985 9,535,986 AETNA BOND VP Value at beginning of period $ 10.905 $ 10.068 $ 36.789(4) $ 31.192 $ 28.943 $ 25.574 Value at end of period $ 10.360 $ 10.905 $ 10.068 $ 36.789 $ 31.192 $ 28.943 Number of accumulation units outstanding at end of period 11,713,354 4,084,142 3,870 7,844,412 6,984,793 6,202,834 AETNA CROSSROADS VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA GROWTH VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA GROWTH AND INCOME VP Value at beginning of period $ 11.020 $ 10.454 $ 97.165(6) $ 77.845 $ 76.311 $ 59.871 Value at end of period $ 10.778 $ 11.020 $ 10.454 $ 97.165 $ 77.845 $ 76.311 Number of accumulation units outstanding at end of period 114,733,035 44,166,470 21,250 20,948,226 18,362,906 17,142,820 AETNA HIGH YIELD VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INDEX PLUS LARGE CAP VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INDEX PLUS MID CAP VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA INDEX PLUS SMALL CAP VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period
106 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1998 1997 1996 1995 ----------------- ---------------- ---------- ------------------- AETNA INTERNATIONAL VP Value at beginning of period $ 9.974(10) Value at end of period $ 9.785 Number of accumulation units outstanding at end of period 168 AETNA LEGACY VP Value at beginning of period $ 13.534 $ 11.932 $ 10.580 $ 10.000(1) Value at end of period $ 14.336 $ 13.534 $ 11.932 $ 10.580 Number of accumulation units outstanding at end of period 80,907 82,178 7,543 143,637 AETNA MONEY MARKET VP Value at beginning of period $ 11.989 $ 11.475 $ 11.026 $ 10.528 Value at end of period $ 12.524 $ 11.989 $ 11.475 $ 11.026 Number of accumulation units outstanding at end of period 300,195 477,490 179,361 12,999,680 AETNA REAL ESTATE SECURITIES VP Value at beginning of period $ 10.024(9) Value at end of period $ 8.891 Number of accumulation units outstanding at end of period 1,415 AETNA SMALL COMPANY VP Value at beginning of period $ 13.684 $ 13.248(5) Value at end of period $ 13.704 $ 13.684 Number of accumulation units outstanding at end of period 49,514 4,993 AETNA VALUE OPPORTUNITY VP Value at beginning of period $ 13.290 $ 13.093(5) Value at end of period $ 16.113 $ 13.290 Number of accumulation units outstanding at end of period 32,612 4,910 CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 17.896 $ 15.046 $ 13.527 $ 10.554 Value at end of period $ 20.612 $ 17.896 $ 15.046 $ 13.527 Number of accumulation units outstanding at end of period 37,944 62,328 21,317 966,098 FIDELITY VIP EQUITY- INCOME PORTFOLIO Value at beginning of period $ 15.887 $ 12.520 $ 11.092 $ 10.000(1) Value at end of period $ 17.567 $ 15.887 $ 12.520 $ 11.092 Number of accumulation units outstanding at end of period 68,970 114,725 27,814 1,660,304 FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period $ 13.948 $ 11.404 $ 10.066 $ 10.000(1) Value at end of period $ 19.273 $ 13.948 $ 11.404 $ 10.066 Number of accumulation units outstanding at end of period 176,188 191,151 60,491 1,833,794 FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period $ 12.308 $ 11.138 $ 9.961 $ 10.000(1) Value at end of period $ 13.746 $ 12.308 $ 11.138 $ 9.961 Number of accumulation units outstanding at end of period 17,178 19,949 2,023 196,090 FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period $ 15.318 $ 12.457 $ 10.397 $ 10.000(1) Value at end of period $ 19.722 $ 15.318 $ 12.457 $ 10.397 Number of accumulation units outstanding at end of period 187,525 263,159 41,394 2,116,732 JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 15.851 $ 14.204 $ 13.322 $ 10.581 Value at end of period $ 21.081 $ 15.851 $ 14.204 $ 13.322 Number of accumulation units outstanding at end of period 212,741 294,623 122,154 4,887,060 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period $ 15.059 $ 12.451 $ 10.850 $ 10.000(1) Value at end of period $ 20.031 $ 15.059 $ 12.451 $ 10.850 Number of accumulation units outstanding at end of period 89,095 78,052 12,340 93,304 1994 1993 1992 1991 1990 1989 ------------------ ------------- ------------------ ------------- -------------- ------------- AETNA INTERNATIONAL VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA LEGACY VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA MONEY MARKET VP Value at beginning of period $ 10.241 $ 10.048 $ 33.812(11) $ 32.138 $ 30.012 $ 27.783 Value at end of period $ 10.528 $ 10.241 $ 10.048 $ 33.812 $ 32.138 $ 30.012 Number of accumulation units outstanding at end of period 7,673,528 2,766,044 825 8,430,082 10,220,110 8,286,033 AETNA REAL ESTATE SECURITIES VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA SMALL COMPANY VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period AETNA VALUE OPPORTUNITY VP Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period CALVERT SOCIAL BALANCED PORTFOLIO Value at beginning of period $ 11.036 $ 10.278 $ 10.000(12) Value at end of period $ 10.554 $ 11.036 $ 10.278 Number of accumulation units outstanding at end of period 521,141 144,168 2,556 FIDELITY VIP EQUITY- INCOME PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period FIDELITY VIP GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period FIDELITY VIP OVERSEAS PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period FIDELITY VIP II CONTRAFUND PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO Value at beginning of period $ 10.000(13) Value at end of period $ 10.581 Number of accumulation units outstanding at end of period 753,862 JANUS ASPEN BALANCED PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period
107 Condensed Financial Information (continued) - --------------------------------------------------------------------------------
1998 1997 1996 1995 ---------------- ------------------ ---------- ---------------- JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 14.418 $ 13.024 $ 12.077 $ 9.873 Value at end of period $ 15.583 $ 14.418 $ 13.024 $ 12.077 Number of accumulation units outstanding at end of period 20,317 13,587 3,861 315,361 JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period $ 15.463 $ 12.718 $ 10.870 $ 10.000(1) Value at end of period $ 20.778 $ 15.463 $ 12.718 $ 10.870 Number of accumulation units outstanding at end of period 61,355 93,386 29,696 259,196 JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period $ 16.773 $ 13.862 $ 10.877 $ 10.000(1) Value at end of period $ 21.419 $ 16.773 $ 13.862 $ 10.877 Number of accumulation units outstanding at end of period 301,775 538,281 124,749 1,036,040 LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 15.590 $ 14.688 $ 11.720 $ 10.154 Value at end of period $ 12.412 $ 15.590 $ 14.688 $ 11.720 Number of accumulation units outstanding at end of period 38,283 103,604 10,977 711,892 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period $ 10.042(9) Value at end of period $ 10.039 Number of accumulation units outstanding at end of period 382 OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period $ 9.992(9) Value at end of period $ 9.915 Number of accumulation units outstanding at end of period 5,938 PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period $ 14.974 $ 15.158(14) Value at end of period $ 19.232 $ 14.974 Number of accumulation units outstanding at end of period 398,717 703,653 PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period $ 13.839 $ 14.108(14) Value at end of period $ 16.861 $ 13.839 Number of accumulation units outstanding at end of period 431,603 627,658 PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period $ 19.352 $ 19.071(14) Value at end of period $ 24.294 $ 19.352 Number of accumulation units outstanding at end of period 171,102 206,191 PORTFOLIO PARTNERS MFS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period $ 17.040 $ 16.825(14) Value at end of period $ 20.102 $ 17.040 Number of accumulation units outstanding at end of period 353,311 457,354 PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period $ 14.445 $ 14.153(14) Value at end of period $ 18.258 $ 14.445 Number of accumulation units outstanding at end of period 109,123 200,374 1994 1993 1992 1991 1990 1989 ------------------ ---------- ------------------ ------ ------ ----- JANUS ASPEN FLEXIBLE INCOME PORTFOLIO Value at beginning of period $ 10.000(13) Value at end of period $ 9.873 Number of accumulation units outstanding at end of period 28,543 JANUS ASPEN GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period LEXINGTON NATURAL RESOURCES TRUST Value at beginning of period $ 10.877 $ 9.832 $ 10.000(12) Value at end of period $ 10.154 $ 10.877 $ 9.832 Number of accumulation units outstanding at end of period 703,676 135,614 561 OPPENHEIMER GLOBAL SECURITIES FUND/VA Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period OPPENHEIMER STRATEGIC BOND FUND/VA Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS MFS SCUDDER INTERNATIONAL GROWTH PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO Value at beginning of period Value at end of period Number of accumulation units outstanding at end of period
108 Condensed Financial Information (continued) - -------------------------------------------------------------------------------- (1) The initial accumulation unit value was established at $10.000 during August 1995, when the fund became available under the contract. (2) The accumulation unit value was converted to $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immedately prior to that date, the accumulation unit value of the fund was $13.118. On the date of conversion, additional units were issued so that account values were not changed as a result of the conversion. (3) The initial accumulation unit value was established at $10.000 on June 23, 1989, the date on which the fund commenced operations. (4) The accumulation unit value was established at $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immediately prior to that date, the accumulation unit value of the fund was $38.521. On the date of conversion, additional units were issued so that account values were not changed as a result of the conversion. (5) Funds were first received in this option during December 1997. (6) The accumulation unit value was converted to $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immediately prior to that date, the accumulation unit value of the fund was $97.817. On the date of conversion, additional units were issued so that account values were not changed as a result of the conversion. (7) Funds were first received in this option during July 1998. (8) The initial accumulation unit value was established during December 1996 when the portfolio became available under the contract, when the funds were first received in this option or when the applicable daily asset charge was first utilized. (9) Funds were first received in this option during May 1998. (10) Funds were first received in this option during August 1998. (11) The accumulation unit value was converted to $10.000 on August 21, 1992 upon the commencement of a new administrative system. Immediately prior to that date, the accumulation unit value of the fund was $34.397. On the date of conversion, additional units were issued so that account values were not changed as a result of the conversion. (12) The initial accumulation unit value was established at $10.000 on August 21, 1992, the date on which the fund/portfolio became available under the contract. (13) The initial accumulation unit value was established at $10.000 during October 1994, when the funds ere first received in this option. (14) Funds were first received in this option during November 1997. 109 For Master Applications Only - -------------------------------------------------------------------------------- I hereby acknowledge receipt of an Account C prospectus dated May 3, 1999, as well as all current prospectuses for the funds available under the Contracts. - --- Please send an Account C Statement of Additional Information (Form No. SAI.01107-99) dated May 3, 1999. - -------------------------------------------------------------------------------- CONTRACT HOLDER'S SIGNATURE - -------------------------------------------------------------------------------- DATE PROS.01107-99 110 - -------------------------------------------------------------------------------- VARIABLE ANNUITY ACCOUNT C OF AETNA LIFE INSURANCE AND ANNUITY COMPANY - -------------------------------------------------------------------------------- Statement of Additional Information dated May 3, 1999 This Statement of Additional Information is not a prospectus and should be read in conjunction with the current prospectus dated May 3, 1999. The contracts offered in connection with the prospectus are group or individual 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 1-800-525-4225 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, 1998, the Company and its subsidiary life company had $43 billion invested through their products, including $29 billion in their separate accounts (of which the Company or an affiliate oversees the management of $21 billion). The Company is ranked based on assets among the top 2% of all life insurance companies rated by A.M. Best Company as of December 31, 1997. The Company is an indirect wholly owned subsidiary of Aetna Inc. 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 principal underwriter and the depositor for the separate account, the Company is a registered investment adviser under the Investment Advisers Act of 1940, and a registered broker-dealer under the Securities Exchange Act of 1934. 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 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: o Aetna Ascent VP o AIM V.I. Value Fund o Aetna Balanced VP, Inc. o Calvert Social Balanced Portfolio o Aetna Income Shares d/b/a Aetna Bond VP o Fidelity Variable Insurance Products Fund (VIP) o Aetna Crossroads VP Equity-Income Portfolio o Aetna Growth VP o Fidelity Variable Insurance Products Fund (VIP) o Aetna Variable Fund d/b/a Aetna Growth and Income VP Growth Portfolio o Aetna High Yield VP o Fidelity Variable Insurance Products Fund (VIP) o Aetna Index Plus Large Cap VP Overseas Portfolio o Aetna Index Plus Mid Cap VP o Fidelity Variable Insurance Product Fund II (VIP II) o Aetna Index Plus Small Cap VP Contrafund Portfolio o Aetna International VP o Janus Aspen Aggressive Growth Portfolio o Aetna Legacy VP o Janus Aspen Balanced Portfolio o Aetna Variable Encore Fund d/b/a Aetna Money Market VP o Janus Aspen Flexible Income Portfolio o Aetna Real Estate Securities VP o Janus Aspen Growth Portfolio o Aetna Small Company VP o Janus Aspen Worldwide Growth Portfolio o Aetna Value Opportunity VP o Lexington Natural Resources Trust* o AIM V.I. Capital Appreciation Fund o Oppenheimer Global Securities Fund/VA o AIM V.I. Growth Fund o Oppenheimer Strategic Bond Fund/VA o AIM V.I. Growth and Income Fund o Portfolio Partners MFS Emerging Equities Portfolio o Portfolio Partners MFS Research Growth Portfolio o Portfolio Partners MFS Value Equity Portfolio o Portfolio Partners Scudder International Growth Portfolio o Portfolio Partners T. Rowe Price Growth Equity Portfolio
* Transfers or deposits are not allowed into the subaccount investing in this fund, except from accounts established under the contract before May 1, 1998. As soon as all those who have current allocations to the subaccount under the contract have redirected their allocations to other investment options, we will close the subaccount to all investments (except loan repayments that we automatically deposit into the subaccount according to our loan repayment procedures). 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 is both the depositor and the principal underwriter for the securities sold under the prospectus. We offer the contracts through life insurance agents licensed to sell variable annuities who are registered representatives of the Company or of other registered broker-dealers who have sales agreements with the Company. 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 Securities and Exchange Commission (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, maintenance fees and early withdrawal charges). These 3 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 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, 1998 for the subaccounts under the contracts. The standardized returns (Table A) assume the maximum mortality and expense risk charge of 1.25%, maximum administrative expense charge of 0.25%, maximum maintenance fee of $20 and early withdrawal charges corresponding to Schedule I in the prospectus that is based on completed payment periods. The non-standardized returns (Table B) assume the same charges but do not include the early withdrawal charges. We may also advertise returns based on other fee schedules that apply to a particular contract. These fee schedules may result in higher returns than those shown. For the subaccounts funded by the Portfolio Partners portfolios, two sets of performance returns are shown for each subaccount: one showing performance based solely on the performance of the Portfolio Partners 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 Portfolio Partners portfolio. For those subaccounts where results are not available for the full calendar period indicated, performance for such partial periods is shown in the column labeled "Since Inception." For standardized performance, the "Since Inception" column shows the average annual return since the date contributions were first received in the fund under the separate account. For non-standardized performance, the "Since Inception" column shows average annual total return since the fund's inception date. 4 TABLE A
- ------------------------------------------------------------------------------------------------ Date Installment Payment Account Contributions ($20 Maintenance Fee) STANDARDIZED First Received Under the Separate Account - ------------------------------------------------------------------------------------------------ Since SUBACCOUNT 1 Year 5 Year 10 Year Inception* - ------------------------------------------------------------------------------------------------ Aetna Ascent VP (2.44%) 13.10% 07/05/1995 - ------------------------------------------------------------------------------------------------ Aetna Balanced VP, Inc. 9.39% 12.96% 10.66% 04/03/1989 - ------------------------------------------------------------------------------------------------ Aetna Bond VP(1) 1.16% 3.94% 7.60% - ------------------------------------------------------------------------------------------------ Aetna Crossroads VP (0.93%) 11.35% 07/05/1995 - ------------------------------------------------------------------------------------------------ Aetna Growth VP 28.80% 30.69% 05/30/1997 - ------------------------------------------------------------------------------------------------ Aetna Growth and Income VP(1) 7.10% 16.35% 14.67% - ------------------------------------------------------------------------------------------------ Aetna High Yield VP (12.40%) 05/04/1998 - ------------------------------------------------------------------------------------------------ Aetna Index Plus Large Cap VP 23.11% 27.65% 10/31/1996 - ------------------------------------------------------------------------------------------------ Aetna Index Plus Mid Cap VP 2.15% 05/04/1998 - ------------------------------------------------------------------------------------------------ Aetna Index Plus Small Cap VP (16.41%) 05/04/1998 - ------------------------------------------------------------------------------------------------ Aetna International VP (9.09%) 05/04/1998 - ------------------------------------------------------------------------------------------------ Aetna Legacy VP 0.03% 9.27% 07/05/1995 - ------------------------------------------------------------------------------------------------ Aetna Money Market VP(1)(2) (1.36%) 2.61% 4.13% - ------------------------------------------------------------------------------------------------ Aetna Real Estate Securities VP (16.94%) 05/04/1998 - ------------------------------------------------------------------------------------------------ Aetna Small Company VP (5.44%) 8.54% 05/30/1997 - ------------------------------------------------------------------------------------------------ Aetna Value Opportunity VP 14.50% 22.52% 05/30/1997 - ------------------------------------------------------------------------------------------------ Calvert Social Balanced Portfolio 8.76% 11.67% 10.04% 05/31/1989 - ------------------------------------------------------------------------------------------------ Fidelity VIP Equity-Income Portfolio 4.42% 17.02% 05/31/1994 - ------------------------------------------------------------------------------------------------ Fidelity VIP Growth Portfolio 30.49% 21.97% 05/31/1994 - ------------------------------------------------------------------------------------------------ Fidelity VIP Overseas Portfolio 5.47% 6.77% 05/31/1994 - ------------------------------------------------------------------------------------------------ Fidelity VIP II Contrafund Portfolio 21.59% 22.89% 05/31/1995 - ------------------------------------------------------------------------------------------------ Janus Aspen Aggressive Growth Portfolio 25.60% 20.02% 06/30/1994 - ------------------------------------------------------------------------------------------------ Janus Aspen Balanced Portfolio 25.62% 20.33% 06/30/1995 - ------------------------------------------------------------------------------------------------ Janus Aspen Flexible Income Portfolio 2.06% 9.43% 10/31/1994 - ------------------------------------------------------------------------------------------------ Janus Aspen Growth Portfolio 26.91% 22.37% 06/30/1995 - ------------------------------------------------------------------------------------------------ Janus Aspen Worldwide Growth Portfolio 20.60% 25.07% 05/31/1995 - ------------------------------------------------------------------------------------------------ Lexington Natural Resources Trust (24.83%) 1.22% 2.60% 10/14/1991 - ------------------------------------------------------------------------------------------------ Oppenheimer Global Securities Fund/VA (5.77%) 05/04/1998 - ------------------------------------------------------------------------------------------------ Oppenheimer Strategic Bond Fund/VA (6.34%) 05/07/1998 - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ Portfolio Partners MFS Emerging Equities 21.30% 17.98% 11/28/1997 Portfolio - ------------------------------------------------------------------------------------------------ Alger American Small Cap/Portfolio Partners 21.30% 12.36% 12.14% 09/30/1993 MFS Emerging Equities(3) - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ Portfolio Partners MFS Research Growth 15.06% 11.69% 11/28/1997 Portfolio - ------------------------------------------------------------------------------------------------ American Century VP Capital Appreciation/Portfolio Partners MFS Research 15.06% 5.40% 7.17% 08/31/1992 Growth(3) - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ Portfolio Partners MFS Value Equity Portfolio 18.56% 18.42% 11/28/1997 - ------------------------------------------------------------------------------------------------ Neuberger Berman AMT Growth/Portfolio Partners 18.56% 13.98% 10.80% 05/31/1989 MFS Value Equity(3) - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ Portfolio Partners Scudder International 11.41% 11.65% 11/28/1997 Growth Portfolio - ------------------------------------------------------------------------------------------------ Scudder International Portfolio Class A/Portfolio Partners Scudder International 11.41% 7.62% 7.99% 07/31/1989 Growth(3) - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ Portfolio Partners T. Rowe Price Growth Equity 19.37% 19.80% 11/28/1997 Portfolio - ------------------------------------------------------------------------------------------------ Alger American Growth/Portfolio Partners T. 19.37% 21.10% 10/31/1994 Rowe Price Growth Equity(3) - ------------------------------------------------------------------------------------------------
Please refer to the discussion preceding the tables for an explanation of the charges included and methodology used in the standardized and non-standardized figures. These figures represent historical performance and should not be considered a projection of future performance. * Reflects performance from the date contributions were first received in the fund under the separate account. (1) These funds have been available through the separate account for more than ten years. (2) The current yield for the subaccount for the 7-day period ended December 31, 1998 (on an annualized basis) was 3.52%. Current yield more closely reflects current earnings than does total return. The current yield reflects the deduction of all charges under the contract that are deducted from the total return quotations shown above except the maximum 5% early withdrawal charge. (3) The fund first listed was replaced with the applicable Portfolio Partners 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 Portfolio Partners Portfolio after that date. The replaced fund may not have been available under all contracts. The "Date Contributions First Received Under the Separate Account" refers to the applicable date for the replaced fund. 5 TABLE B
- ------------------------------------------------------------------------------------------------ Fund Installment Payment Account NON-STANDARDIZED Inception ($20 Maintenance Fee) Date - ------------------------------------------------------------------------------------------------ Since SUBACCOUNT 1 Year 3 Years 5 Years 10 Years Inception** - ------------------------------------------------------------------------------------------------ Aetna Ascent VP 2.70% 13.84% 14.77% 07/05/1995 - ------------------------------------------------------------------------------------------------ Aetna Balanced VP, Inc. 15.15% 16.34% 14.13% 11.25% 04/03/1989 - ------------------------------------------------------------------------------------------------ Aetna Bond VP(1) 6.48% 5.01% 5.01% 7.60% - ------------------------------------------------------------------------------------------------ Aetna Crossroads VP 4.29% 12.19% 13.00% 07/05/1995 - ------------------------------------------------------------------------------------------------ Aetna Growth VP 35.58% 33.23% 12/13/1996 - ------------------------------------------------------------------------------------------------ Aetna Growth and Income VP(1) 12.74% 20.90% 17.55% 14.67% - ------------------------------------------------------------------------------------------------ Aetna High Yield VP (1.81%) (0.40%) 12/10/1997 - ------------------------------------------------------------------------------------------------ Aetna Index Plus Large Cap VP 29.59% 31.29% 09/16/1996 - ------------------------------------------------------------------------------------------------ Aetna Index Plus Mid Cap VP 22.40% 25.40% 12/16/1997 - ------------------------------------------------------------------------------------------------ Aetna Index Plus Small Cap VP (2.87%) 1.21% 12/19/1997 - ------------------------------------------------------------------------------------------------ Aetna International VP 17.10% 19.69% 12/22/1997 - ------------------------------------------------------------------------------------------------ Aetna Legacy VP 5.30% 10.10% 10.89% 07/05/1995 - ------------------------------------------------------------------------------------------------ Aetna Money Market VP(1)(2) 3.84% 3.81% 3.67% 4.13% - ------------------------------------------------------------------------------------------------ Aetna Real Estate Securities VP (14.20%) (10.70%) 12/15/1997 - ------------------------------------------------------------------------------------------------ Aetna Small Company VP (0.46%) 15.36% 12/27/1996 - ------------------------------------------------------------------------------------------------ Aetna Value Opportunity VP 20.52% 29.12% 12/13/1996 - ------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund 17.49% 14.99% 15.46% 16.97% 05/05/1993 - ------------------------------------------------------------------------------------------------ AIM V.I. Growth Fund 32.10% 24.28% 19.60% 19.04% 05/05/1993 - ------------------------------------------------------------------------------------------------ AIM V.I. Growth and Income Fund 25.75% 22.52% 20.64% 05/02/1994 - ------------------------------------------------------------------------------------------------ AIM V.I. Value Fund 30.41% 21.63% 19.86% 20.06% 05/05/1993 - ------------------------------------------------------------------------------------------------ Calvert Social Balanced Portfolio(1) 14.49% 14.50% 12.82% 11.15% - ------------------------------------------------------------------------------------------------ Fidelity VIP Equity-Income Portfolio(1) 9.92% 15.98% 16.96% 13.86% - ------------------------------------------------------------------------------------------------ Fidelity VIP Growth Portfolio(1) 37.37% 23.56% 19.88% 17.59% - ------------------------------------------------------------------------------------------------ Fidelity VIP Overseas Portfolio(1) 11.02% 10.75% 8.02% 8.40% - ------------------------------------------------------------------------------------------------ Fidelity VIP II Contrafund Portfolio 28.00% 23.14% 26.68% 01/03/1995 - ------------------------------------------------------------------------------------------------ Janus Aspen Aggressive Growth Portfolio 32.21% 15.95% 17.52% 20.06% 09/13/1993 - ------------------------------------------------------------------------------------------------ Janus Aspen Balanced Portfolio 32.24% 22.06% 17.29% 17.67% 09/13/1993 - ------------------------------------------------------------------------------------------------ Janus Aspen Flexible Income Portfolio 7.43% 8.32% 8.63% 8.17% 09/13/1993 - ------------------------------------------------------------------------------------------------ Janus Aspen Growth Portfolio 33.59% 23.49% 19.56% 19.03% 09/13/1993 - ------------------------------------------------------------------------------------------------ Janus Aspen Worldwide Growth Portfolio 26.96% 24.72% 19.46% 22.14% 09/13/1993 - ------------------------------------------------------------------------------------------------ Lexington Natural Resources Trust (20.87%) 1.42% 2.26% 3.33% 10/14/1991 - ------------------------------------------------------------------------------------------------ Oppenheimer Global Securities Fund/VA 12.36% 16.25% 7.98% 10.77% 11/12/1990 - ------------------------------------------------------------------------------------------------ Oppenheimer Strategic Bond Fund/VA 1.31% 6.17% 5.19% 5.15% 05/03/1993 - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ Portfolio Partners MFS Emerging Equities 27.69% 23.60% 11/27/1997 Portfolio - ------------------------------------------------------------------------------------------------ Alger American Small Cap/Portfolio Partners 27.69% 12.10% 13.52% 19.16% MFS Emerging Equities(3) - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ Portfolio Partners MFS Research Growth 21.12% 17.02% 11/27/1997 Portfolio - ------------------------------------------------------------------------------------------------ American Century VP Capital Appreciation/Portfolio Partners MFS Research 21.12% 2.92% 6.49% 9.55% Growth(3) - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ Portfolio Partners MFS Value Equity Portfolio 24.80% 23.90% 11/27/1997 - ------------------------------------------------------------------------------------------------ Neuberger Berman AMT Growth/Portfolio 24.80% 18.60% 15.15% 12.96% Partners MFS Value Equity(3) - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ Portfolio Partners Scudder International 17.27% 17.21% 11/27/1997 Growth Portfolio - ------------------------------------------------------------------------------------------------ Scudder International Portfolio Class A/Portfolio Partners Scudder International 17.27% 12.46% 8.73% 10.30% Growth(3) - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ Portfolio Partners T. Rowe Price Growth 25.65% 25.36% 11/27/1997 Equity Portfolio - ------------------------------------------------------------------------------------------------ Alger American Growth/Portfolio Partners T. Rowe Price Growth Equity(3) 25.65% 20.98% 18.90% 18.64% 01/09/1989 - ------------------------------------------------------------------------------------------------
Please refer to the discussion preceding the tables for an explanation of the charges included and methodology used in the standardized and non-standardized figures. These figures represent historical performance and should not be considered a projection of future performance. ** Reflects performance from the fund's inception date. (1) These funds have been in operation for more than ten years. (2) The current yield for the subaccount for the 7-day period ended December 31, 1998 (on an annualized basis) was 3.52%. Current yield more closely reflects current earnings than does total return. The current yield reflects the deduction of all charges under the contract that are deducted from the total return quotations shown above. As in the table above, the maximum 5% early withdrawal charge is not reflected. (3) The fund first listed was replaced with the applicable Portfolio Partners 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 Portfolio Partners Portfolio after that date. The replaced fund may not have been available under all contracts. The "Fund Inception Date" refers to the applicable date for the replaced fund. If no date is shown, the replaced fund has been in operation for more than ten years. 6 INCOME PHASE PAYMENTS When you begin receiving payments under the contract during the income phase (see "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) 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 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. 7 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. *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 Peat Marwick LLP, CityPlace II, Hartford, Connecticut 06103-4103, are the independent auditors for the separate account and for the Company. The services provided to the separate account include primarily the examination of the separate account's financial statements and review of filings made with the SEC. 8 FINANCIAL STATEMENTS VARIABLE ANNUITY ACCOUNT C Index Statement of Assets and Liabilities....................................... S-2 Statements of Operations and Changes in Net Assets........................ S-6 Condensed Financial Information .......................................... S-7 Notes to Financial Statements ............................................ S-27 Independent Auditors' Report.............................................. S-41
S-1 Variable Annuity Account C Statement of Assets and Liabilities - December 31, 1998
ASSETS: Investments, at net asset value: (Note 1) Net Shares Cost Assets ------ ---- ------ Aetna Ascent VP: 6,134,112 $ 84,102,680 $ 86,000,256 Aetna Balanced VP: 64,322,517 924,156,866 1,011,793,195 Aetna Bond VP: 29,408,694 379,592,879 384,077,541 Aetna Crossroads VP: 5,563,073 73,501,226 74,100,133 Aetna Get Fund, Series B: 4,080,903 52,990,050 59,581,177 Aetna Get Fund, Series C: 13,705,460 145,612,096 198,180,953 Aetna Get Fund, Series D: 26,960,783 270,904,139 270,980,130 Aetna Growth and Income VP: 193,821,381 6,185,564,837 6,175,149,210 Aetna Growth VP: 4,793,106 57,756,294 64,850,726 Aetna High Yield VP: 137,652 1,348,506 1,244,378 Aetna Index Plus Bond VP: 139,903 1,485,972 1,425,611 Aetna Index Plus Large Cap VP: 13,588,180 200,817,845 239,016,092 Aetna Index Plus Mid Cap VP: 337,416 3,695,668 4,116,477 Aetna Index Plus Small Cap VP: 502,348 4,557,249 4,953,155 Aetna International VP: 173,945 1,962,427 2,016,027 Aetna Legacy VP: 4,311,341 53,451,493 53,331,289 Aetna Money Market VP: 19,342,066 253,530,714 258,939,971 Aetna Real Estate Securities VP: 183,009 1,671,798 1,561,066 Aetna Small Company VP: 3,751,125 48,380,625 47,976,886 Aetna Value Opportunity VP: 1,997,581 25,293,161 28,785,139 Calvert Social Balanced Portfolio: 29,902,390 54,315,545 63,901,407 Fidelity Investments Variable Insurance Products Fund: Equity-Income Portfolio: 8,898,556 188,619,345 226,201,287 Growth Portfolio: 5,135,023 170,211,305 230,408,503 High Income Portfolio: 139,771 1,602,694 1,611,556 Overseas Portfolio: 738,883 14,561,214 14,814,602 Fidelity Investments Variable Insurance Products Fund II: Asset Manager Portfolio: 1,470,246 22,725,399 26,699,659 Contrafund Portfolio: 14,733,278 253,946,769 360,081,326 Index 500 Portfolio: 660,901 66,696,529 93,352,318 Janus Aspen Series: Aggressive Growth Portfolio: 10,591,848 192,335,439 292,229,082 Balanced Portfolio: 4,216,755 74,736,185 94,876,992 Flexible Income Portfolio: 2,694,962 32,325,750 32,501,248 Growth Portfolio: 5,647,105 98,534,718 132,932,852 Worldwide Growth Portfolio: 21,182,596 478,559,912 616,201,712 Lexington Emerging Markets Fund: 722,126 5,748,692 4,094,455 Lexington Natural Resources Trust Fund: 1,789,785 25,967,652 19,741,327 MFS Funds: Total Return Series: 21,290 364,758 385,767 Oppenheimer Funds: Global Securities Fund: 44,228 885,530 976,121 Strategic Bond Fund: 440,840 2,233,363 2,257,099 Portfolio Partners, Inc. (PPI): PPI MFS Emerging Equities Portfolio: 7,831,597 346,198,947 434,183,761 PPI MFS Research Growth Portfolio: 20,275,336 201,414,681 242,087,516 PPI MFS Value Equity Portfolio: 3,985,534 120,187,249 150,852,476 PPI Scudder International Growth Portfolio: 12,050,466 183,514,369 201,965,809 PPI T. Rowe Price Growth Equity Portfolio: 3,903,977 170,360,011 215,928,990 --------------- --------------- NET ASSETS $11,476,422,581 $12,426,365,277 =============== ===============
S-2 Variable Annuity Account C Statement of Assets and Liabilities - December 31, 1998 (continued): Net Assets represented by: Reserves for annuity contracts in accumulation and payment period: (Notes 1 and 5) Aetna Ascent VP: Annuity contracts in accumulation ............................................ $ 86,000,256 Aetna Balanced VP: Annuity contracts in accumulation ............................................ 982,574,403 Annuity contracts in payment period .......................................... 29,218,792 Aetna Bond VP: Annuity contracts in accumulation ............................................ 377,693,504 Annuity contracts in payment period .......................................... 6,384,037 Aetna Crossroads VP: Annuity contracts in accumulation ............................................ 74,028,644 Annuity contracts in payment period .......................................... 71,489 Aetna Get Fund, Series B: Annuity contracts in accumulation ............................................ 59,581,177 Aetna Get Fund, Series C: Annuity contracts in accumulation ............................................ 198,180,953 Aetna Get Fund, Series D: Annuity contracts in accumulation ............................................ 270,980,130 Aetna Growth and Income VP: Annuity contracts in accumulation ............................................ 5,846,282,205 Annuity contracts in payment period .......................................... 328,867,005 Aetna Growth VP: Annuity contracts in accumulation ............................................ 64,734,239 Annuity contracts in payment period .......................................... 116,487 Aetna High Yield VP: Annuity contracts in accumulation ............................................ 1,244,378 Aetna Index Plus Bond VP: Annuity contracts in accumulation ............................................ 1,425,611 Aetna Index Plus Large Cap VP: Annuity contracts in accumulation ............................................ 238,578,749 Annuity contracts in payment period .......................................... 437,343 Aetna Index Plus Mid Cap VP: Annuity contracts in accumulation ............................................ 4,116,477 Aetna Index Plus Small Cap VP: Annuity contracts in accumulation ............................................ 4,953,155 Aetna International VP: Annuity contracts in accumulation ............................................ 2,016,027 Aetna Legacy VP: Annuity contracts in accumulation ............................................ 53,070,226 Annuity contracts in payment period .......................................... 261,063 Aetna Money Market VP: Annuity contracts in accumulation ............................................ 258,856,854 Annuity contracts in payment period .......................................... 83,117 Aetna Real Estate Securities VP: Annuity contracts in accumulation ............................................ 1,561,066 Aetna Small Company VP: Annuity contracts in accumulation ............................................ 47,966,985 Annuity contracts in payment period .......................................... 9,901
S-3 Variable Annuity Account C Statement of Assets and Liabilities - December 31, 1998 (continued): Aetna Value Opportunity VP: Annuity contracts in accumulation ................... $ 28,785,139 Calvert Social Balanced Portfolio: Annuity contracts in accumulation ................... 63,901,407 Fidelity Investments Variable Insurance Products Fund: Equity-Income Portfolio: Annuity contracts in accumulation ................... 226,201,287 Growth Portfolio: Annuity contracts in accumulation ................... 230,408,503 High Income Portfolio: Annuity contracts in accumulation ................... 1,611,556 Overseas Portfolio: Annuity contracts in accumulation ................... 14,814,602 Fidelity Investments Variable Insurance Products Fund II: Asset Manager Portfolio: Annuity contracts in accumulation ................... 26,699,659 Contrafund Portfolio: Annuity contracts in accumulation ................... 360,081,326 Index 500 Portfolio: Annuity contracts in accumulation ................... 93,352,318 Janus Aspen Series: Aggressive Growth Portfolio: Annuity contracts in accumulation ................... 292,229,082 Balanced Portfolio: Annuity contracts in accumulation ................... 94,876,992 Flexible Income Portfolio: Annuity contracts in accumulation ................... 32,501,248 Growth Portfolio: Annuity contracts in accumulation ................... 132,697,360 Annuity contracts in payment period ................. 235,492 Worldwide Growth Portfolio: Annuity contracts in accumulation ................... 615,835,740 Annuity contracts in payment period ................. 365,972 Lexington Emerging Markets Fund: Annuity contracts in accumulation ................... 4,094,455 Lexington Natural Resources Trust Fund: Annuity contracts in accumulation ................... 19,741,327 MFS Funds: Total Return Series: Annuity contracts in accumulation ................... 385,767 Oppenheimer Funds: Global Securities Fund: Annuity contracts in accumulation ................... 976,121 Strategic Bond Fund: Annuity contracts in accumulation ................... 2,253,578 Annuity contracts in payment period ................. 3,521
S-4 Variable Annuity Account C Statement of Assets and Liabilities - December 31, 1998 (continued): Portfolio Partners, Inc. (PPI): PPI MFS Emerging Equities Portfolio: Annuity contracts in accumulation ...... $ 434,156,330 Annuity contracts in payment period .... 27,431 PPI MFS Research Growth Portfolio: Annuity contracts in accumulation ...... 242,087,516 PPI MFS Value Equity Portfolio: Annuity contracts in accumulation ...... 150,852,476 PPI Scudder International Growth Portfolio: Annuity contracts in accumulation ...... 201,965,809 PPI T. Rowe Price Growth Equity Portfolio: Annuity contracts in accumulation ...... 215,872,943 Annuity contracts in payment period .... 56,047 --------------- $12,426,365,277 ===============
See Notes to Financial Statements S-5 Variable Annuity Account C Statements of Operations and Changes in Net Assets
Year ended December 31, 1998 1997 ------------------- ------------------- INVESTMENT INCOME: Income: (Notes 1, 3 and 5) Dividends .............................................................. $ 1,447,620,640 $ 1,552,106,208 Expenses: (Notes 2 and 5) Valuation period deductions ............................................ (138,558,611) (120,867,375) ---------------- --------------- Net investment income ................................................... 1,309,062,029 1,431,238,833 ---------------- --------------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on sales of investments: (Notes 1, 4 and 5) Proceeds from sales .................................................... 2,443,668,181 2,013,561,413 Cost of investments sold ............................................... 2,067,610,422 1,773,010,971 ---------------- --------------- Net realized gain ..................................................... 376,057,759 240,550,442 Net unrealized gain on investments: (Note 5) Beginning of year ...................................................... 915,465,761 612,391,085 End of year ............................................................ 949,942,696 915,465,761 ---------------- --------------- Net change in unrealized gain ......................................... 34,476,935 303,074,676 ---------------- --------------- Net realized and unrealized gain on investments ......................... 410,534,694 543,625,118 ---------------- --------------- Net increase in net assets resulting from operations .................... 1,719,596,723 1,974,863,951 ---------------- --------------- FROM UNIT TRANSACTIONS: Variable annuity contract purchase payments ............................. 1,136,921,898 1,039,113,157 Transfer from the Company for mortality guarantee adjustments ........... 849,771 2,085,609 Transfers from the Company's fixed account options ...................... 112,197,035 166,510,610 Transfer to the Company's other variable annuity accounts ............... (66,773,776) (88,238,000) Redemptions by contract holders ......................................... (1,591,935,338) (474,257,152) Annuity payments ........................................................ (41,589,989) (31,253,253) Other ................................................................... 1,844,602 1,227,066 ---------------- --------------- Net increase (decrease) in net assets from unit transactions (Note 5) .. (448,485,797) 615,188,037 ---------------- --------------- Change in net assets .................................................... 1,271,110,926 2,590,051,988 NET ASSETS: Beginning of year ....................................................... 11,155,254,351 8,565,202,363 ---------------- --------------- End of year ............................................................. $ 12,426,365,277 $11,155,254,351 ================ ===============
See Notes to Financial Statements S-6 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998
- ------------------------------------------------------------------------------------------------------------------ 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 I $ 13.836 $ 14.260 3.06% 347.4 $ 4,953 Qualified III 15.422 15.886 3.01% 21,430.4 340,447 Qualified V 15.363 15.800 2.84% 1,408.7 22,258 Qualified VI 15.422 15.886 3.01% 3,508,677.1 55,739,609 Qualified VIII 15.419 15.882 3.00% 803.0 12,754 Qualified X (1.15) 15.900 16.395 3.11% 21,004.4 344,364 Qualified X (1.25) 15.860 16.337 3.01% 592,246.9 9,675,801 Qualified XI 15.514 16.028 3.31% 80,753.8 1,294,336 Qualified XII (0.40) 13.239 14.086 6.40% (11) 86,320.6 1,215,931 Qualified XII (0.45) 9.146 9.519 4.08% (12) 778.8 7,414 Qualified XII (0.50) 10.475 9.848 (5.99%) (5) 2,670.4 26,297 Qualified XII (0.75) 9.913 9.502 (4.15%) (6) 43,141.8 409,924 Qualified XII (0.80) 10.604 10.101 (4.74%) (5) 255,775.2 2,583,503 Qualified XII (0.85) 13.699 14.113 3.02% (1) 70,990.9 1,001,901 Qualified XII (0.90) 9.227 9.953 7.87% (10) 211.7 2,107 Qualified XII (0.95) 13.624 14.076 3.32% 75,369.1 1,060,884 Qualified XII (1.00) 13.613 14.057 3.26% 520,438.2 7,315,952 Qualified XII (1.05) 13.602 14.039 3.21% 55,886.3 784,572 Qualified XII (1.10) 13.590 14.020 3.16% 9,573.2 134,219 Qualified XII (1.15) 13.579 14.002 3.12% 26,910.5 376,793 Qualified XII (1.20) 13.587 13.983 2.91% (1) 90,247.0 1,261,945 Qualified XII (1.25) 13.557 13.965 3.01% 1,249.2 17,444 Qualified XII (1.30) 13.546 13.946 2.95% 1,424.3 19,864 Qualified XII (1.40) 14.731 13.910 (5.57%) (5) 136.0 1,891 Qualified XII (1.50) 13.502 13.873 2.75% 14,280.4 198,111 Qualified XIII 15.497 16.011 3.32% 29,149.3 466,701 Qualified XV 15.471 15.984 3.32% 38,675.0 618,187 Qualified XVI 15.394 15.818 2.75% 38,619.9 610,875 Qualified XVII 15.453 15.974 3.37% 9,887.5 157,940 Qualified XVIII 15.892 16.427 3.37% 17,853.0 293,279 - ------------------------------------------------------------------------------------------------------------------ Aetna Balanced VP: Qualified I 24.826 28.687 15.55% 73,629.4 2,112,224 Qualified III 24.700 28.524 15.48% 2,294,876.9 65,458,720 Qualified V 18.777 21.650 15.30% 2,680.4 58,031 Qualified VI 18.811 21.723 15.48% 25,990,902.2 564,602,474 Qualified VII 18.092 20.906 15.55% 266,036.8 5,561,697 Qualified VIII 17.463 20.165 15.47% 3,910.4 78,852 Qualified IX 17.464 20.269 16.06% 3,983.4 80,739 Qualified X (1.15) 18.889 21.836 15.60% 167,719.9 3,662,292 Qualified X (1.25) 18.811 21.723 15.48% 6,268,762.3 136,176,831 Qualified XI 18.922 21.917 15.83% 768,509.7 16,843,580 Qualified XII (0.40) 14.244 15.331 7.63% (11) 653,272.0 10,015,389 Qualified XII (0.50) 10.369 11.077 6.83% (4) 310,845.7 3,443,125 Qualified XII (0.75) 10.002 10.648 6.46% (6) 183,346.5 1,952,257 Qualified XII (0.80) 10.646 11.358 6.69% (5) 3,962,527.0 45,007,206 Qualified XII (0.85) 13.327 15.360 15.25% (1) 1,379,122.4 21,183,810 Qualified XII (0.90) 10.451 11.157 6.76% (4) 1,648.2 18,389 Qualified XII (0.95) 13.226 15.320 15.83% 468,467.7 7,176,841 Qualified XII (1.00) 13.215 15.300 15.78% 2,019,116.4 30,891,695 Qualified XII (1.05) 13.204 15.279 15.71% 61,615.2 941,444 Qualified XII (1.10) 13.194 15.259 15.65% 10,484.1 159,980 Qualified XII (1.15) 13.183 15.239 15.60% 275,680.7 4,201,140 Qualified XII (1.20) 13.676 15.219 11.28% (2) 33,673.0 512,471 Qualified XII (1.25) 13.161 15.199 15.49% 1,535.4 23,337 Qualified XII (1.30) 13.150 15.179 15.43% 7.8 118 Qualified XII (1.40) 14.278 15.139 6.03% (5) 532.9 8,068
S-7 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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 (continued): Qualified XII (1.50) $ 13.107 $ 15.099 15.20% 9,090.9 $ 137,262 Qualified XIII 18.901 21.893 15.83% 266,635.9 5,837,554 Qualified XV 18.870 21.857 15.83% 771,905.7 16,871,521 Qualified XVI 18.776 21.629 15.19% 385,861.9 8,345,934 Qualified XVII 18.837 21.808 15.77% 429,954.4 9,376,647 Qualified XVIII 18.837 21.808 15.77% 643,218.8 14,027,618 Qualified XIX 24.861 28.800 15.84% 122,357.8 3,523,901 Qualified XX 24.735 28.636 15.77% 149,576.3 4,283,256 Annuity contracts in payment period 29,218,792 - ------------------------------------------------------------------------------------------------------------------------------- Aetna Bond VP: Qualified I 51.930 55.494 6.86% 26,694.1 1,481,367 Qualified III 51.330 54.819 6.80% 994,987.1 54,544,521 Qualified V 13.397 14.285 6.63% 8,614.2 123,053 Qualified VI 13.238 14.137 6.79% 15,101,998.1 213,504,437 Qualified VII 12.243 13.083 6.86% 189,500.4 2,479,295 Qualified VIII 12.190 13.018 6.79% 5,300.1 68,997 Qualified IX 12.330 13.221 7.23% 4,239.4 56,049 Qualified X (1.15) 13.293 14.211 6.91% 102,449.7 1,455,907 Qualified X (1.25) 13.238 14.137 6.79% 2,490,831.9 35,214,126 Qualified XI 13.316 14.264 7.12% 389,465.9 5,555,291 Qualified XII (0.40) 11.893 12.079 1.56% (11) 190,084.0 2,295,979 Qualified XII (0.50) 10.118 10.662 5.38% (4) 88,895.1 947,790 Qualified XII (0.75) 10.058 10.502 4.41% (6) 51,915.9 545,210 Qualified XII (0.80) 10.157 10.650 4.85% (5) 771,660.4 8,217,815 Qualified XII (0.85) 11.381 12.102 6.34% (1) 654,764.8 7,923,819 Qualified XII (0.90) 10.070 10.654 5.80% (3) 383.2 4,082 Qualified XII (0.95) 11.268 12.070 7.12% 187,652.9 2,264,942 Qualified XII (1.00) 11.258 12.054 7.07% 802,875.7 9,677,807 Qualified XII (1.05) 11.249 12.038 7.01% 50,220.3 604,552 Qualified XII (1.10) 11.240 12.022 6.96% 2,532.3 30,443 Qualified XII (1.15) 11.231 12.006 6.90% 106,178.7 1,274,807 Qualified XII (1.20) 11.283 11.990 6.27% (2) 23,608.3 283,072 Qualified XII (1.25) 11.217 11.975 6.76% (1) 1,197.4 14,338 Qualified XII (1.30) 11.203 11.959 6.75% 59,442.7 710,861 Qualified XII (1.40) 11.423 11.927 4.41% (5) 189.1 2,255 Qualified XII (1.50) 11.166 11.896 6.54% 27,679.9 329,273 Qualified XIII 13.301 14.248 7.12% 200,649.9 2,858,924 Qualified XV 13.279 14.225 7.12% 289,650.5 4,120,181 Qualified XVI 13.213 14.076 6.53% 199,388.3 2,806,677 Qualified XVII 13.249 14.171 6.96% 421,225.2 5,969,111 Qualified XVIII 13.249 14.171 6.96% 703,076.6 9,963,181 Qualified XIX 51.975 55.625 7.02% 18,270.8 1,016,314 Qualified XX 51.374 54.949 6.96% 24,550.7 1,349,028 Annuity contracts in payment period 6,384,037 - ------------------------------------------------------------------------------------------------------------------------------- Aetna Crossroads VP: Qualified III 14.456 15.120 4.59% 31,468.2 475,808 Qualified V 14.400 15.038 4.43% 266.3 4,005 Qualified VI 14.456 15.120 4.59% 2,863,811.8 43,301,656 Qualified VIII 14.453 15.116 4.59% 1,655.9 25,031 Qualified X (1.15) 14.835 15.532 4.70% 35,562.4 552,349 Qualified X (1.25) 14.797 15.478 4.60% 514,093.4 7,956,893 Qualified XI 14.541 15.255 4.91% 78,787.6 1,201,936 Qualified XII (0.40) 12.991 13.628 4.90% (11) 51,877.8 706,979 Qualified XII (0.45) 9.531 9.800 2.82% (12) 731.1 7,165 Qualified XII (0.50) 10.298 10.086 (2.06%) (4) 1,126.5 11,362 Qualified XII (0.75) 9.936 9.782 (1.55%) (6) 62,143.7 607,879
S-8 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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 Crossroads VP (continued): Qualified XII (0.80) $ 10.524 $ 10.312 (2.01%) (5) 213,969.6 $ 2,206,459 Qualified XII (0.85) 13.063 13.654 4.52% (1) 102,916.2 1,405,196 Qualified XII (0.95) 12.980 13.618 4.92% 105,585.7 1,437,839 Qualified XII (1.00) 12.970 13.600 4.86% 168,963.5 2,297,868 Qualified XII (1.05) 12.959 13.582 4.81% 38,256.6 519,594 Qualified XII (1.10) 12.949 13.564 4.75% 14,611.0 198,182 Qualified XII (1.15) 12.938 13.546 4.70% 24,882.2 337,055 Qualified XII (1.20) 12.915 13.528 4.75% (1) 499,874.0 6,762,356 Qualified XII (1.25) 12.917 13.510 4.59% 8,074.9 109,094 Qualified XII (1.30) 12.906 13.492 4.54% 520.6 7,025 Qualified XII (1.40) 13.846 13.457 (2.81%) (5) 500.9 6,741 Qualified XII (1.50) 12.864 13.421 4.33% 22,767.6 305,573 Qualified XIII 14.526 15.239 4.91% 30,057.3 458,037 Qualified XV 14.501 15.214 4.92% 100,733.6 1,532,512 Qualified XVI 14.430 15.055 4.33% 32,996.7 496,765 Qualified XVII 14.485 15.204 4.96% 50,296.8 764,691 Qualified XVIII 14.827 15.563 4.96% 21,371.1 332,594 Annuity contracts in payment period 71,489 - ------------------------------------------------------------------------------------------------------------------------------ Aetna Get Fund, Series B: Qualified III 20.718 24.374 17.65% 2,484.4 60,555 Qualified VI 20.718 24.374 17.65% 985,962.2 24,031,914 Qualified X (1.25) 20.718 24.374 17.65% 256,573.6 6,253,743 Qualified XI 20.840 24.592 18.00% 239,997.9 5,901,967 Qualified XII (0.75) 10.505 10.948 4.22% (4) 5,251.3 57,493 Qualified XII (1.00) 9.974 10.323 3.50% (6) 2,321.4 23,963 Qualified XII (1.05) 11.069 11.514 4.02% (6) 277,120.5 3,190,757 Qualified XII (1.15) 12.852 15.216 18.39% (1) 35,803.1 544,787 Qualified XII (1.20) 12.870 15.186 18.00% 13,718.5 208,336 Qualified XII (1.25) 13.203 15.172 14.91% (10) 865,901.2 13,137,159 Qualified XII (1.30) 12.825 15.157 18.18% (1) 68,080.8 1,031,891 Qualified XII (1.40) 12.845 15.127 17.77% 1,060.3 16,040 Qualified XII (1.45) 14.415 15.112 4.84% (6) 1,372.5 20,741 Qualified XIII 20.818 24.565 18.00% 93,996.0 2,309,015 Qualified XV 20.783 24.524 18.00% 86,349.0 2,117,644 Qualified XVI 20.680 24.269 17.35% 1,049.7 25,475 Qualified XVII 20.718 24.374 17.65% 26,655.2 649,697 - ------------------------------------------------------------------------------------------------------------------------------ Aetna Get Fund, Series C: Qualified III 12.636 15.904 25.86% 737,715.1 11,732,640 Qualified VI 12.636 15.904 25.86% 7,446,679.1 118,432,185 Qualified XI 12.685 16.014 26.24% 761,714.6 12,197,745 Qualified XII (0.65) 14.392 16.025 11.35% (11) 42,433.1 680,005 Qualified XII (0.75) 10.520 11.696 11.18% (4) 14,905.0 174,326 Qualified XII (1.00) 10.012 10.999 9.86% (6) 10,347.4 113,809 Qualified XII (1.05) 11.056 12.202 10.37% (5) 1,503,095.6 18,340,765 Qualified XII (1.15) 12.877 16.050 24.64% (1) 118,746.7 1,905,910 Qualified XII (1.20) 12.685 16.014 26.24% 75,185.0 1,203,977 Qualified XII (1.25) 12.677 15.995 26.17% 1,498,695.3 23,971,956 Qualified XII (1.30) 12.841 15.977 24.42% (1) 20,116.4 321,400 Qualified XII (1.35) 14.400 15.959 10.83% (5) 2,128.7 33,971 Qualified XII (1.40) 12.653 15.940 25.98% 4,413.8 70,358 Qualified XII (1.45) 14.270 15.922 11.58% (6) 3,012.0 47,957 Qualified XII (1.75) 12.596 15.813 25.54% 495.7 7,839 Qualified XIII 12.685 16.014 26.24% 240,222.9 3,846,819 Qualified XV 12.676 16.002 26.24% 149,252.7 2,388,342 Qualified XVI 12.613 15.835 25.55% 38,452.8 608,917 Qualified XVII 12.636 15.904 25.86% 132,169.9 2,102,032 - ------------------------------------------------------------------------------------------------------------------------------
S-9 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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 D: Qualified III $ 9.997 $ 10.062 0.65% (10) 1,665,880.7 $ 16,761,305 Qualified V 10.020 10.058 0.38% (11) 7,666.4 77,106 Qualified VI 9.997 10.062 0.65% (10) 11,162,070.9 112,307,489 Qualified IX 10.039 10.065 0.26% (12) 2,996.2 30,157 Qualified X (1.15) 10.009 10.062 0.53% (11) 107,240.1 1,078,999 Qualified X (1.25) 9.997 10.062 0.65% (10) 1,726,930.2 17,375,556 Qualified XI 9.998 10.068 0.70% (10) 1,733,084.5 17,449,528 Qualified XII (0.65) 10.020 10.076 0.56% (11) 37,674.2 379,602 Qualified XII (0.75) 10.065 10.079 0.14% (12) 5,093.2 51,334 Qualified XII (0.85) 9.998 10.071 0.73% (10) 143,089.7 1,441,027 Qualified XII (1.00) 9.998 10.073 0.75% (10) 17,547.2 176,755 Qualified XII (1.05) 9.998 10.072 0.74% (10) 3,535,548.4 35,609,867 Qualified XII (1.20) 9.996 10.068 0.72% (10) 94,345.5 949,916 Qualified XII (1.25) 10.000 10.067 0.67% (10) 5,027,992.4 50,618,444 Qualified XII (1.30) 9.998 10.066 0.68% (10) 217,493.5 2,189,324 Qualified XII (1.40) 9.997 10.064 0.67% (10) 18,631.2 187,501 Qualified XII (1.55) 10.002 10.060 0.58% (10) 32,997.9 331,971 Qualified XII (1.75) 10.019 10.056 0.37% (11) 7,346.0 73,870 Qualified XIII 9.998 10.068 0.70% (10) 423,655.2 4,265,565 Qualified XV 9.997 10.068 0.71% (10) 433,459.3 4,364,276 Qualified XVI 9.995 10.056 0.61% (10) 91,815.2 923,270 Qualified XVII 9.995 10.062 0.67% (10) 113,411.8 1,141,096 Qualified XVIII 9.997 10.062 0.65% (10) 317,662.6 3,196,172 - ----------------------------------------------------------------------------------------------------------------- Aetna Growth and Income VP: Qualified I 285.511 323.019 13.14% 140,708.4 45,451,460 Qualified III 217.359 245.765 13.07% 1,747,097.1 429,375,391 Qualified V 22.179 25.037 12.89% 13,723.7 343,603 Qualified VI 22.194 25.094 13.07% 134,233,827.6 3,368,523,807 Qualified VII 20.910 23.657 13.14% 8,868,088.4 209,791,507 Qualified VIII 20.609 23.301 13.06% 46,913.0 1,093,115 Qualified IX 20.525 23.323 13.63% 18,215.5 424,846 Qualified X (1.15) 22.287 25.225 13.18% 548,039.2 13,824,162 Qualified X (1.25) 22.194 25.094 13.07% 19,989,922.4 501,636,068 Qualified XI 22.325 25.319 13.41% 5,019,610.7 127,089,481 Qualified XII (0.40) 15.108 16.747 10.85% (11) 2,888,621.7 48,375,779 Qualified XII (0.45) 9.561 10.152 6.18% (12) 1,118.7 11,357 Qualified XII (0.50) 10.580 10.665 0.80% (4) 719,561.3 7,673,863 Qualified XII (0.75) 9.935 10.133 1.99% (6) 773,713.1 7,840,042 Qualified XII (0.80) 10.925 11.108 1.68% (5) 15,809,881.3 175,619,924 Qualified XII (0.85) 14.694 16.779 14.19% (1) 5,795,666.6 97,245,182 Qualified XII (0.90) 10.562 10.804 2.29% (3) 8,242.8 89,055 Qualified XII (0.95) 14.756 16.735 13.41% 2,224,466.5 37,225,732 Qualified XII (1.00) 14.744 16.713 13.35% 9,871,040.8 164,971,221 Qualified XII (1.05) 14.732 16.691 13.30% 326,490.2 5,449,309 Qualified XII (1.10) 14.720 16.669 13.24% 33,835.9 563,996 Qualified XII (1.15) 14.708 16.647 13.18% 581,225.8 9,675,416 Qualified XII (1.20) 14.696 16.625 13.13% 224,760.7 3,736,553 Qualified XII (1.25) 14.684 16.603 13.07% 35,132.5 583,294 Qualified XII (1.30) 14.672 16.581 13.01% 2,879.7 47,748 Qualified XII (1.40) 16.562 16.537 (0.15%) (4) 934.1 15,447 Qualified XII (1.50) 14.624 16.493 12.78% 47,949.7 790,856 Qualified XIII 22.301 25.291 13.41% 2,491,029.4 63,000,811 Qualified XV 22.264 25.249 13.41% 4,070,904.3 102,786,499 Qualified XVI 22.153 24.986 12.79% 1,587,350.5 39,661,776 Qualified XVII 22.226 25.193 13.35% 5,670,690.8 142,862,116 Qualified XVIII 22.226 25.193 13.35% 6,366,412.9 160,389,491
S-10 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (continued):
- ---------------------------------------------------------------------------------------------------------------------- Value Increase Per Unit (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 XIX $ 285.918 $ 324.288 13.42% 98,421.8 $ 31,917,036 Qualified XX 217.668 246.731 13.35% 195,339.4 48,196,262 Annuity contracts in payment period 328,867,005 - ---------------------------------------------------------------------------------------------------------------------- Aetna Growth VP: Qualified III 11.392 13.597 19.36% (9) 17.1 232 Qualified V 15.281 17.862 16.89% (4) 196.7 3,513 Qualified VI 13.173 17.912 35.98% 2,395,679.9 42,910,679 Qualified VIII 14.183 17.909 26.27% (2) 933.5 16,717 Qualified X (1.15) 13.183 17.943 36.11% 26,152.5 469,247 Qualified X (1.25) 13.173 17.912 35.98% 289,055.2 5,177,468 Qualified XI 13.202 18.005 36.38% 115,676.6 2,082,742 Qualified XII (0.40) 15.200 18.018 18.54% (11) 21,805.3 392,890 Qualified XII (0.45) 10.444 11.470 9.82% (12) 291.1 3,339 Qualified XII (0.50) 10.479 12.397 18.30% (4) 19,997.4 247,910 Qualified XII (0.75) 9.925 11.449 15.36% (6) 18,200.0 208,378 Qualified XII (0.80) 11.326 13.030 15.05% (5) 303,987.0 3,961,021 Qualified XII (0.85) 13.357 18.036 35.03% (1) 24,239.7 437,189 Qualified XII (0.90) 10.958 12.681 15.72% (4) 628.2 7,966 Qualified XII (0.95) 13.202 18.005 36.38% 25,777.5 464,120 Qualified XII (1.00) 12.674 17.989 41.94% (1) 194,080.7 3,491,376 Qualified XII (1.05) 13.192 17.974 36.25% 23,218.5 417,323 Qualified XII (1.10) 13.188 17.958 36.17% 1,760.5 31,615 Qualified XII (1.15) 13.183 17.943 36.11% 14,989.3 268,948 Qualified XII (1.20) 14.173 17.927 26.49% (2) 7,333.1 131,461 Qualified XII (1.25) 12.876 17.912 39.11% (1) 5,418.5 97,054 Qualified XII (1.40) 15.724 17.865 13.62% (5) 210.5 3,760 Qualified XII (1.50) 13.027 17.834 36.90% (1) 3,470.4 61,893 Qualified XIII 13.202 18.005 36.38% 81,692.7 1,470,865 Qualified XV 13.202 18.005 36.38% 59,373.8 1,069,017 Qualified XVI 13.149 17.834 35.63% 36,839.4 657,009 Qualified XVII 13.173 17.912 35.98% 25,257.0 452,395 Qualified XVIII 15.603 18.010 15.43% (5) 11,000.2 198,112 Annuity contracts in payment period 116,487 - ---------------------------------------------------------------------------------------------------------------------- Aetna High Yield VP: Qualified VI 9.969 9.212 (7.59%) (5) 91,056.3 838,818 Qualified X (1.25) 9.968 9.212 (7.58%) (6) 7,393.7 68,111 Qualified XI 9.216 9.231 0.16% (11) 1,841.9 17,003 Qualified XII (0.40) 9.125 9.238 1.24% (11) 1,146.3 10,589 Qualified XII (0.50) 9.961 9.260 (7.04%) (5) 834.1 7,723 Qualified XII (0.75) 10.145 9.284 (8.49%) (7) 0.3 3 Qualified XII (0.80) 9.939 9.241 (7.02%) (6) 15,410.5 142,405 Qualified XII (0.85) 9.899 9.238 (6.68%) (8) 643.7 5,946 Qualified XII (0.95) 10.078 9.231 (8.40%) (7) 798.8 7,374 Qualified XII (1.00) 9.149 9.228 0.86% (9) 9,210.9 84,998 Qualified XII (1.05) 9.995 9.225 (7.70%) (6) 110.4 1,019 Qualified XII (1.10) 9.096 9.222 1.39% (9) 10.2 94 Qualified XII (1.15) 9.959 9.218 (7.44%) (6) 1,725.0 15,902 Qualified XII (1.20) 9.935 9.215 (7.25%) (6) 131.8 1,215 Qualified XIII 8.889 9.231 3.85% (10) 16.5 153 Qualified XV 10.044 9.231 (8.09%) (7) 1,308.2 12,076 Qualified XVI 9.616 9.196 (4.37%) (8) 64.5 593 Qualified XVII 9.135 9.212 0.84% (12) 2,225.0 20,497 Qualified XVIII 10.003 9.212 (7.91%) (6) 1,070.3 9,859 - ---------------------------------------------------------------------------------------------------------------------- Aetna Index Plus Bond VP: Qualified III 10.128 10.578 4.44% (5) 134,777.2 1,425,611 - ----------------------------------------------------------------------------------------------------------------------
S-11 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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 Large Cap VP: Qualified V $ 14.414 $ 18.704 29.76% 3,164.5 $ 59,187 Qualified VI 14.444 18.772 29.96% 7,100,482.5 133,292,287 Qualified VIII 14.443 18.769 29.95% 843.6 15,833 Qualified X (1.15) 14.463 18.815 30.09% 45,787.2 861,504 Qualified X (1.25) 14.444 18.772 29.96% 616,723.6 11,577,311 Qualified XI 14.500 18.902 30.36% 386,035.6 7,296,824 Qualified XII (0.40) 16.874 18.916 12.10% (11) 87,237.6 1,650,175 Qualified XII (0.45) 10.639 11.307 6.28% (12) 859.2 9,715 Qualified XII (0.50) 10.708 12.019 12.24% (4) 13,477.2 161,986 Qualified XII (0.75) 10.015 11.286 12.69% (6) 48,831.3 551,106 Qualified XII (0.80) 11.117 12.587 13.22% (5) 1,974,900.4 24,858,384 Qualified XII (0.85) 14.692 18.945 28.95% (1) 459,427.5 8,704,042 Qualified XII (0.90) 10.648 12.206 14.63% (3) 2,383.9 29,098 Qualified XII (0.95) 14.500 18.902 30.36% 108,387.2 2,048,730 Qualified XII (1.00) 14.491 18.880 30.29% 648,540.4 12,244,624 Qualified XII (1.05) 14.481 18.859 30.23% 51,170.0 964,995 Qualified XII (1.10) 14.472 18.837 30.16% 10,487.9 197,560 Qualified XII (1.15) 14.463 18.815 30.09% 26,209.5 493,143 Qualified XII (1.20) 14.453 18.794 30.04% 28,911.2 543,351 Qualified XII (1.25) 14.444 18.772 29.96% 593.5 11,141 Qualified XII (1.30) 14.435 18.751 29.90% 12,423.1 232,941 Qualified XII (1.40) 16.556 18.708 13.00% (5) 172.5 3,228 Qualified XII (1.50) 14.397 18.665 29.65% 16,814.2 313,835 Qualified XIII 14.500 18.902 30.36% 145,736.2 2,754,698 Qualified XIV 14.444 18.772 29.96% 1,302,824.7 24,456,998 Qualified XV 14.489 18.888 30.36% 136,251.8 2,573,507 Qualified XVI 14.418 18.691 29.64% 68,840.7 1,286,721 Qualified XVII 14.452 18.802 30.10% 48,458.7 911,108 Qualified XVIII 16.559 18.876 13.99% (5) 25,149.7 474,717 Annuity contracts in payment period 437,343 - ------------------------------------------------------------------------------------------------------------------------ Aetna Index Plus Mid Cap VP: Qualified III 9.928 11.338 14.20% (5) 35,201.0 399,109 Qualified VI 10.107 10.891 7.76% (5) 146,921.2 1,600,074 Qualified X (1.25) 9.925 10.891 9.73% (5) 35,030.5 381,506 Qualified XI 7.633 10.913 42.97% (10) 5,165.7 56,375 Qualified XII (0.40) 9.480 10.921 15.20% (11) 1,186.8 12,961 Qualified XII (0.50) 10.050 10.947 8.93% (5) 2,661.9 29,140 Qualified XII (0.75) 9.822 11.183 13.86% (6) 1,622.7 18,147 Qualified XII (0.80) 9.576 10.925 14.09% (6) 80,312.2 877,375 Qualified XII (0.85) 9.028 10.921 20.97% (8) 5,681.1 62,042 Qualified XII (0.95) 10.108 10.913 7.96% (5) 564.1 6,156 Qualified XII (1.00) 7.996 10.909 36.43% (9) 24,015.5 261,997 Qualified XII (1.05) 9.624 10.906 13.32% (7) 167.7 1,829 Qualified XII (1.10) 9.772 10.902 11.56% (12) 2.6 28 Qualified XII (1.15) 9.105 10.898 19.69% (8) 95.5 1,040 Qualified XII (1.20) 9.662 10.894 12.75% (6) 451.6 4,920 Qualified XII (1.30) 9.805 10.887 11.04% (11) 40.6 442 Qualified XII (1.50) 9.216 10.872 17.97% (8) 44.9 488 Qualified XIII 9.927 10.913 9.93% (5) 9,117.4 99,501 Qualified XV 9.962 10.913 9.55% (5) 26,111.0 284,957 Qualified XVI 9.946 10.872 9.31% (7) 202.8 2,204 Qualified XVIII 9.017 10.891 20.78% (8) 1,486.1 16,186 - ------------------------------------------------------------------------------------------------------------------------ Aetna Index Plus Small Cap VP: Qualified III 10.193 9.157 (10.16%) (5) 81,388.0 745,282 Qualified V 6.661 8.806 32.20% (10) 7.3 64 Qualified VI 9.996 8.815 (11.81%) (5) 253,183.9 2,231,889
S-12 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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 X (1.25) $ 9.918 $ 8.815 (11.12%) (5) 40,793.4 $ 359,606 Qualified XI 6.425 8.834 37.49% (10) 6,054.3 53,481 Qualified XII (0.40) 8.071 8.840 9.53% (11) 3,928.4 34,727 Qualified XII (0.50) 9.328 8.861 (5.01%) (6) 17.2 153 Qualified XII (0.75) 9.642 9.201 (4.57%) (6) 1,480.7 13,624 Qualified XII (0.80) 9.269 8.843 (4.60%) (6) 90,819.3 803,093 Qualified XII (0.85) 8.464 8.840 4.44% (8) 6,564.0 58,024 Qualified XII (0.90) 9.582 8.837 (7.77%) (7) 62.0 548 Qualified XII (0.95) 9.366 8.834 (5.68%) (6) 2,625.2 23,190 Qualified XII (1.00) 9.580 8.831 (7.82%) (7) 27,046.5 238,835 Qualified XII (1.05) 9.530 8.827 (7.38%) (7) 329.5 2,909 Qualified XII (1.15) 9.569 8.821 (7.82%) (7) 1,234.1 10,887 Qualified XII (1.20) 9.244 8.818 (4.61%) (6) 989.0 8,721 Qualified XII (1.30) 8.198 8.812 7.49% (11) 48.7 429 Qualified XII (1.50) 7.150 8.800 23.08% (8) 77.6 683 Qualified XIII 9.997 8.834 (11.63%) (5) 12,799.8 113,068 Qualified XV 9.876 8.834 (10.55%) (5) 26,256.7 231,941 Qualified XVI 9.775 8.800 (9.97%) (5) 597.9 5,261 Qualified XVII 6.682 8.815 31.92% (10) 748.3 6,597 Qualified XVIII 8.454 8.815 4.27% (8) 1,150.8 10,143 - -------------------------------------------------------------------------------------------------------------------------- Aetna International VP: Qualified VI 10.182 9.765 (4.10%) (5) 97,659.7 953,611 Qualified X (1.25) 10.182 9.765 (4.10%) (5) 25,090.2 244,996 Qualified XI 8.779 9.785 11.46% (10) 583.1 5,705 Qualified XII (0.45) 9.231 9.567 3.64% (12) 61.4 587 Qualified XII (0.50) 8.967 9.815 9.46% (11) 561.5 5,512 Qualified XII (0.75) 9.600 9.550 (0.52%) (8) 7.1 68 Qualified XII (0.80) 10.043 9.795 (2.47%) (6) 45,800.6 448,617 Qualified XII (0.85) 9.580 9.792 2.21% (8) 8,719.1 85,374 Qualified XII (0.95) 10.103 9.785 (3.15%) (5) 1,246.5 12,197 Qualified XII (1.00) 10.061 9.781 (2.78%) (5) 14,897.8 145,723 Qualified XII (1.05) 8.935 9.778 9.43% (8) 182.1 1,781 Qualified XII (1.15) 9.763 9.771 0.08% (8) 166.5 1,627 Qualified XII (1.20) 9.973 9.768 (2.06%) (6) 122.9 1,201 Qualified XIII 10.183 9.785 (3.91%) (5) 7,766.6 75,995 Qualified XV 9.974 9.785 (1.89%) (8) 168.2 1,646 Qualified XVI 9.737 9.748 0.11% (6) 1,095.3 10,677 Qualified XVIII 10.021 9.765 (2.55%) (6) 2,121.1 20,710 - -------------------------------------------------------------------------------------------------------------------------- Aetna Legacy VP: Qualified III 13.491 14.248 5.61% 95,526.3 1,361,074 Qualified V 13.439 14.171 5.45% 536.8 7,607 Qualified VI 13.491 14.248 5.61% 1,971,280.9 28,087,126 Qualified X (1.15) 13.583 14.360 5.72% 76,396.2 1,097,045 Qualified X (1.25) 13.550 14.310 5.61% 507,368.3 7,260,552 Qualified XI 13.571 14.375 5.92% 63,385.3 911,193 Qualified XII (0.40) 12.598 13.111 4.07% (11) 19,291.3 252,937 Qualified XII (0.50) 10.115 10.293 1.76% (6) 165.1 1,699 Qualified XII (0.75) 9.977 10.054 0.77% (6) 21,150.2 212,634 Qualified XII (0.80) 10.359 10.423 0.62% (5) 418,989.2 4,367,015 Qualified XII (0.85) 12.497 13.136 5.11% (1) 61,042.9 801,884 Qualified XII (0.90) 10.390 10.351 (0.38%) (5) 37.0 383 Qualified XII (0.95) 12.369 13.102 5.93% 55,493.5 727,061 Qualified XII (1.00) 12.358 13.084 5.87% 190,406.2 2,491,362 Qualified XII (1.05) 12.348 13.067 5.82% 62,452.8 816,080 Qualified XII (1.10) 12.338 13.050 5.77% 3,369.4 43,971 Qualified XII (1.15) 12.328 13.033 5.72% 23,052.4 300,435
S-13 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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) $ 12.606 $ 13.015 3.24% (2) 61,972.6 $ 806,604 Qualified XII (1.25) 12.308 12.998 5.61% 5,866.3 76,253 Qualified XII (1.30) 12.298 12.981 5.55% 30,754.8 399,233 Qualified XII (1.50) 12.257 12.913 5.35% 14,096.9 182,030 Qualified XIII 13.557 14.361 5.93% 17,755.5 254,980 Qualified XV 13.534 14.336 5.93% 80,906.6 1,159,876 Qualified XVI 13.467 14.187 5.35% 32,088.1 455,223 Qualified XVII 13.518 14.327 5.98% 10,683.7 153,062 Qualified XVIII 13.577 14.389 5.98% 58,579.8 842,907 Annuity contracts in payment period 261,063 - ------------------------------------------------------------------------------------------------------------------------------- Aetna Money Market VP: Qualified I 41.763 43.523 4.21% 31,408.3 1,366,973 Qualified III 41.174 42.883 4.15% 564,537.2 24,209,040 Qualified V 11.888 12.362 3.99% 16,631.9 205,599 Qualified VI 11.951 12.447 4.15% 10,102,496.1 125,745,345 Qualified VII 11.867 12.367 4.21% 349,707.5 4,324,917 Qualified VIII 11.509 11.986 4.14% 3,278.4 39,294 Qualified IX 11.827 12.349 4.41% 1,816.8 22,435 Qualified X (1.15) 12.002 12.512 4.25% 190,680.2 2,385,820 Qualified X (1.25) 11.951 12.447 4.15% 2,329,194.7 28,991,388 Qualified XI 12.022 12.558 4.46% 230,562.1 2,895,449 Qualified XII (0.40) 11.148 11.225 0.69% (11) 107,235.3 1,203,719 Qualified XII (0.50) 10.050 10.399 3.47% (4) 34,355.4 357,246 Qualified XII (0.75) 10.022 10.283 2.60% (6) 26,809.9 275,699 Qualified XII (0.80) 10.136 10.414 2.74% (5) 1,574,453.7 16,396,164 Qualified XII (0.85) 10.799 11.246 4.14% (1) 396,668.8 4,461,110 Qualified XII (0.90) 10.297 10.381 0.82% (10) 1,235.3 12,824 Qualified XII (0.95) 10.738 11.217 4.46% 127,185.5 1,426,606 Qualified XII (1.00) 10.729 11.202 4.41% 1,039,908.8 11,649,013 Qualified XII (1.05) 10.720 11.187 4.36% 43,460.6 486,200 Qualified XII (1.10) 10.711 11.172 4.30% 6,783.6 75,790 Qualified XII (1.15) 10.702 11.158 4.26% 76,593.5 854,604 Qualified XII (1.20) 10.761 11.143 3.55% (2) 15,146.8 168,779 Qualified XII (1.25) 10.746 11.128 3.55% (2) 6,648.9 73,991 Qualified XII (1.30) 10.676 11.114 4.10% 13,000.2 144,478 Qualified XII (1.40) 10.821 11.084 2.43% (5) 160.5 1,779 Qualified XII (1.50) 10.641 11.055 3.89% 13,218.2 146,126 Qualified XIII 12.009 12.545 4.46% 132,737.2 1,665,127 Qualified XV 11.989 12.524 4.46% 300,194.8 3,759,548 Qualified XVI 11.929 12.393 3.89% 123,429.0 1,529,681 Qualified XVII 11.951 12.447 4.15% 553,914.9 6,894,555 Qualified XVIII 11.951 12.447 4.15% 853,247.4 10,620,334 Qualified XIX 41.763 43.523 4.21% 29,827.3 1,298,164 Qualified XX 41.174 42.883 4.15% 120,538.6 5,169,057 Annuity contracts in payment period 83,117 - ------------------------------------------------------------------------------------------------------------------------------- Aetna Real Estate Securities VP: Qualified VI 10.126 8.873 (12.37%) (5) 90,949.1 806,970 Qualified VIII 10.031 8.872 (11.55%) (7) 182.8 1,622 Qualified X (1.25) 9.904 8.873 (10.41%) (6) 12,789.0 113,474 Qualified XI 8.634 8.891 2.98% (10) 672.8 5,982 Qualified XII (0.40) 8.679 8.898 2.52% (11) 1,098.6 9,775 Qualified XII (0.50) 9.655 8.919 (7.62%) (6) 649.4 5,792 Qualified XII (0.75) 9.792 8.944 (8.66%) (6) 8.6 77 Qualified XII (0.80) 10.041 8.900 (11.36%) (7) 27,224.5 242,309 Qualified XII (0.85) 10.041 8.897 (11.39%) (7) 397.9 3,540 Qualified XII (0.95) 10.053 8.891 (11.56%) (5) 15,245.1 135,547
S-14 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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 Real Estate Securities VP (continued): Qualified XII (1.00) $ 9.214 $ 8.888 (3.54%) (9) 6,500.0 $ 57,773 Qualified XII (1.05) 9.899 8.885 (10.24%) (6) 131.2 1,166 Qualified XII (1.10) 9.159 8.882 (3.02%) (9) 15.5 138 Qualified XII (1.15) 10.034 8.879 (11.51%) (7) 2,845.4 25,264 Qualified XII (1.20) 9.633 8.876 (7.86%) (6) 371.7 3,299 Qualified XIII 10.127 8.891 (12.20%) (5) 11,639.0 103,484 Qualified XV 10.024 8.891 (11.30%) (5) 1,414.9 12,580 Qualified XVI 8.524 8.857 3.91% (9) 1,342.4 11,890 Qualified XVIII 9.907 8.873 (10.44%) (6) 2,297.4 20,384 - --------------------------------------------------------------------------------------------------------------------------------- Aetna Small Company VP: Qualified V 13.186 13.595 3.10% (1) 11.6 158 Qualified VI 13.654 13.633 (0.15%) 1,696,713.8 23,131,181 Qualified VIII 13.346 13.631 2.14% (1) 105.6 1,440 Qualified X (1.15) 13.664 13.657 (0.05%) 20,254.4 276,606 Qualified X (1.25) 13.654 13.633 (0.15%) 208,453.6 2,841,833 Qualified XI 13.684 13.704 0.15% 61,244.3 839,286 Qualified XII (0.40) 12.820 13.714 6.97% (11) 15,613.9 214,129 Qualified XII (0.45) 8.583 9.176 6.91% (12) 317.8 2,916 Qualified XII (0.50) 10.719 9.312 (13.13%) (4) 7,540.9 70,221 Qualified XII (0.75) 9.812 9.159 (6.66%) (6) 13,042.9 119,462 Qualified XII (0.80) 10.578 9.764 (7.70%) (5) 1,165,744.5 11,382,850 Qualified XII (0.85) 13.558 13.728 1.25% (1) 25,298.1 347,283 Qualified XII (0.90) 10.939 9.513 (13.04%) (4) 2,603.8 24,770 Qualified XII (0.95) 13.684 13.704 0.15% 44,944.2 615,911 Qualified XII (1.00) 14.234 13.692 (3.81%) (2) 404,068.0 5,532,521 Qualified XII (1.05) 13.674 13.680 0.04% 5,235.3 71,620 Qualified XII (1.10) 13.669 13.668 (0.01%) 6,323.0 86,425 Qualified XII (1.15) 13.664 13.657 (0.05%) 9,141.2 124,838 Qualified XII (1.20) 14.380 13.645 (5.11%) (2) 24,930.3 340,167 Qualified XII (1.25) 13.203 13.633 3.26% (1) 7,547.6 102,896 Qualified XII (1.40) 11.872 13.598 14.54% (9) 71.7 975 Qualified XII (1.50) 13.629 13.574 (0.40%) 3,580.5 48,602 Qualified XIII 13.684 13.704 0.15% 52,935.6 725,425 Qualified XV 13.684 13.704 0.15% 49,514.4 678,541 Qualified XVI 13.629 13.574 (0.40%) 21,070.1 286,008 Qualified XVII 13.654 13.633 (0.15%) 4,296.5 58,574 Qualified XVIII 15.646 13.708 (12.39%) (5) 3,089.3 42,347 Annuity contracts in payment period 9,901 - --------------------------------------------------------------------------------------------------------------------------------- Aetna Value Opportunity VP: Qualified III 11.472 12.088 5.37% (5) 33,957.0 410,457 Qualified V 14.922 15.985 7.12% (4) 116.2 1,857 Qualified VI 13.261 16.030 20.88% 1,079,290.5 17,300,643 Qualified VIII 14.070 16.028 13.92% (2) 170.3 2,730 Qualified X (1.25) 13.261 16.030 20.88% 112,738.5 1,807,157 Qualified XI 13.290 16.113 21.24% 54,627.0 880,205 Qualified XII (0.40) 13.986 16.125 15.29% (11) 11,799.4 190,264 Qualified XII (0.50) 10.508 11.369 8.19% (4) 992.7 11,286 Qualified XII (0.75) 9.921 10.620 7.05% (6) 14,488.0 153,864 Qualified XII (0.80) 10.972 11.692 6.56% (5) 350,825.7 4,101,946 Qualified XII (0.85) 13.404 16.141 20.42% (1) 15,014.4 242,346 Qualified XII (0.90) 10.515 11.462 9.01% (3) 3,526.4 40,419 Qualified XII (0.95) 13.290 16.113 21.24% 29,112.3 469,087 Qualified XII (1.00) 12.765 16.099 26.12% (1) 98,683.4 1,588,714 Qualified XII (1.05) 13.281 16.085 21.11% 3,647.9 58,677 Qualified XII (1.10) 13.276 16.071 21.05% 1,219.4 19,598
S-15 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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 Value Opportunity VP (continued): Qualified XII (1.15) $ 13.271 $ 16.057 20.99% 4,025.1 $ 64,633 Qualified XII (1.20) 14.033 16.044 14.33% (2) 12,115.1 194,368 Qualified XII (1.25) 12.844 16.030 24.81% (1) 1,234.3 19,786 Qualified XII (1.30) 15.827 16.016 1.19% (12) 87.7 1,405 Qualified XII (1.40) 15.181 15.988 5.32% (5) 39.1 625 Qualified XII (1.50) 13.237 15.960 20.57% 2,432.4 38,822 Qualified XIII 13.290 16.113 21.24% 19,971.3 321,798 Qualified XV 13.290 16.113 21.24% 32,611.7 525,472 Qualified XVI 13.237 15.960 20.57% 15,870.2 253,296 Qualified XVII 12.899 16.030 24.27% (1) 5,260.5 84,325 Qualified XVIII 16.118 16.118 0.00% (12) 84.5 1,359 - ---------------------------------------------------------------------------------------------------------------------- Calvert Social Balanced Portfolio: Qualified III 23.675 27.186 14.83% 917,567.2 24,944,800 Qualified V 18.234 20.904 14.64% 1,516.9 31,708 Qualified VI 17.840 20.485 14.83% 1,306,652.4 26,767,345 Qualified VIII 16.207 18.609 14.82% 6,057.5 112,723 Qualified X (1.25) 9.839 10.500 6.72% (6) 17,067.7 179,203 Qualified XI 17.946 20.668 15.17% 71,154.2 1,470,649 Qualified XII (0.40) 13.635 14.976 9.83% (11) 38,218.1 572,357 Qualified XII (0.45) 10.217 10.714 4.86% (12) 552.8 5,922 Qualified XII (0.50) 10.377 10.966 5.68% (4) 50,868.4 557,814 Qualified XII (0.75) 10.081 10.694 6.08% (6) 9,542.9 102,055 Qualified XII (0.80) 10.492 11.254 7.26% (5) 91,332.8 1,027,864 Qualified XII (0.85) 13.124 15.005 14.33% (1) 132,604.9 1,989,689 Qualified XII (0.95) 12.994 14.965 15.17% 95,020.1 1,421,979 Qualified XII (1.00) 12.983 14.945 15.11% 108,344.1 1,619,237 Qualified XII (1.05) 12.972 14.926 15.06% 25,821.6 385,403 Qualified XII (1.10) 13.068 14.906 14.06% (1) 1,048.3 15,626 Qualified XII (1.15) 12.951 14.886 14.94% 48,552.7 722,766 Qualified XII (1.20) 13.354 14.867 11.33% (2) 2,926.4 43,505 Qualified XII (1.25) 12.930 14.847 14.83% 50.5 750 Qualified XII (1.30) 12.919 14.827 14.77% 13.0 192 Qualified XII (1.50) 12.877 14.749 14.54% 1,708.5 25,199 Qualified XIII 17.926 20.646 15.17% 21,808.2 450,252 Qualified XV 17.896 20.612 15.18% 37,944.0 782,091 Qualified XVI 17.808 20.397 14.54% 24,487.0 499,461 Qualified XVII 17.840 20.485 14.83% 3,612.3 74,000 Qualified XVIII 10.094 10.500 4.02% (7) 9,411.8 98,817 - ---------------------------------------------------------------------------------------------------------------------- Fidelity Investments Variable Insurance Products Fund: Equity-Income Portfolio: Qualified III 16.587 18.285 10.24% 2,533,673.2 46,328,715 Qualified V 15.723 17.305 10.06% 488.1 8,446 Qualified VI 15.837 17.459 10.24% 6,281,076.6 109,662,239 Qualified VIII 15.781 17.395 10.23% 4,737.8 82,416 Qualified X (1.15) 19.890 21.948 10.35% 114,565.1 2,514,522 Qualified X (1.25) 19.818 21.848 10.24% 1,332,062.6 29,102,669 Qualified XI 15.931 17.615 10.57% 239,213.5 4,213,775 Qualified XII (0.40) 14.267 15.192 6.48% (11) 54,319.8 825,201 Qualified XII (0.45) 9.516 9.968 4.75% (12) 519.2 5,176 Qualified XII (0.50) 10.522 10.363 (1.51%) (4) 6,791.1 70,376 Qualified XII (0.75) 9.914 9.950 0.36% (6) 67,227.1 668,920 Qualified XII (0.80) 10.873 10.850 (0.21%) (5) 846,659.8 9,186,377 Qualified XII (0.85) 13.708 15.220 11.03% (1) 306,098.9 4,658,977 Qualified XII (0.90) 9.265 10.671 15.18% (9) 20.0 213 Qualified XII (0.95) 13.729 15.180 10.57% 147,150.0 2,233,784 Qualified XII (1.00) 13.718 15.160 10.51% 409,327.3 6,205,534
S-16 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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 - ----------------------------------------------------------------------------------------------------------------- Equity-Income Portfolio (continued): Qualified XII (1.05) $ 13.706 $ 15.140 10.46% 81,061.5 $ 1,227,296 Qualified XII (1.10) 13.695 15.120 10.41% 4,490.0 67,891 Qualified XII (1.15) 13.684 15.100 10.35% 62,313.0 940,950 Qualified XII (1.20) 14.168 15.080 6.44% (2) 13,583.5 204,846 Qualified XII (1.25) 13.661 15.061 10.25% 8,740.6 131,639 Qualified XII (1.30) 13.650 15.041 10.19% 3,611.9 54,325 Qualified XII (1.40) 15.124 15.001 (0.81%) (5) 2,077.2 31,160 Qualified XII (1.50) 13.606 14.961 9.96% 9,413.6 140,841 Qualified XIII 15.914 17.596 10.57% 74,067.2 1,303,285 Qualified XV 15.887 17.567 10.57% 68,970.1 1,211,581 Qualified XVI 15.808 17.384 9.97% 222,658.2 3,870,640 Qualified XVII 15.837 17.459 10.24% 44,812.1 782,380 Qualified XVIII 19.818 21.848 10.24% 21,380.3 467,113 - ----------------------------------------------------------------------------------------------------------------- Growth Portfolio: Qualified I 13.142 18.115 37.84% 448.8 8,131 Qualified III 14.087 19.406 37.76% 71.9 1,395 Qualified V 14.021 19.285 37.54% 1,160.1 22,372 Qualified VI 13.904 19.155 37.77% 7,144,437.7 136,848,861 Qualified VIII 14.073 19.385 37.75% 5,391.9 104,524 Qualified X (1.15) 19.409 26.764 37.89% 76,868.5 2,057,310 Qualified X (1.25) 19.339 26.641 37.76% 1,278,104.0 34,049,762 Qualified XI 13.987 19.326 38.17% 292,984.6 5,662,140 Qualified XII (0.40) 15.510 17.525 12.99% (11) 128,517.6 2,252,224 Qualified XII (0.50) 10.651 12.779 19.98% (4) 18,614.4 237,873 Qualified XII (0.75) 9.956 12.150 22.04% (6) 63,727.2 774,299 Qualified XII (0.80) 10.887 13.307 22.23% (5) 981,477.1 13,060,689 Qualified XII (0.85) 12.857 17.558 36.56% (1) 399,819.9 7,020,059 Qualified XII (0.90) 10.757 12.978 20.65% (4) 1,343.2 17,433 Qualified XII (0.95) 12.674 17.512 38.17% 165,194.2 2,892,838 Qualified XII (1.00) 12.663 17.489 38.11% 581,798.3 10,174,875 Qualified XII (1.05) 12.653 17.466 38.04% 65,095.3 1,136,925 Qualified XII (1.10) 12.643 17.443 37.97% 13,477.5 235,081 Qualified XII (1.15) 12.632 17.420 37.90% 70,232.0 1,223,407 Qualified XII (1.20) 13.438 17.397 29.46% (2) 58,305.3 1,014,312 Qualified XII (1.25) 12.612 17.374 37.76% 9,906.3 172,109 Qualified XII (1.30) 12.601 17.351 37.70% 2,635.9 45,735 Qualified XII (1.40) 14.386 17.305 20.29% (5) 4,116.0 71,227 Qualified XII (1.50) 12.560 17.259 37.41% 12,955.9 223,609 Qualified XIII 13.972 19.305 38.17% 100,561.3 1,941,310 Qualified XV 13.948 19.273 38.18% 176,188.4 3,395,613 Qualified XVI 13.879 19.072 37.42% 228,968.9 4,366,889 Qualified XVII 13.904 19.155 37.77% 41,575.2 796,355 Qualified XVIII 19.339 26.641 37.76% 22,564.9 601,146 - ----------------------------------------------------------------------------------------------------------------- High Income Portfolio: Qualified III 9.995 9.023 (9.72%) (5) 178,600.9 1,611,556 - ----------------------------------------------------------------------------------------------------------------- Overseas Portfolio: Qualified V 12.222 13.587 11.17% 33.6 457 Qualified VI 12.269 13.662 11.35% 651,566.3 8,901,467 Qualified VIII 12.267 13.658 11.34% 243.9 3,331 Qualified X (1.15) 12.686 14.140 11.46% 15,875.5 224,473 Qualified X (1.25) 12.640 14.074 11.34% 194,687.2 2,740,125 Qualified XI 12.342 13.784 11.68% 26,108.2 359,869 Qualified XII (0.40) 12.178 13.170 8.15% (11) 10,817.1 142,461 Qualified XII (0.50) 10.774 10.183 (5.49%) (4) 251.0 2,556 Qualified XII (0.75) 9.912 9.427 (4.89%) (6) 4,502.1 42,443 Qualified XII (0.80) 11.184 10.530 (5.85%) (5) 47,503.2 500,227
S-17 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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 XII (0.85) $ 12.182 $ 13.195 8.32% (1) 13,936.7 $ 183,897 Qualified XII (0.95) 11.783 13.160 11.69% 9,216.6 121,293 Qualified XII (1.00) 11.774 13.143 11.63% 44,182.9 580,693 Qualified XII (1.05) 11.764 13.126 11.58% 9,112.9 119,612 Qualified XII (1.10) 11.754 13.108 11.52% 1,859.7 24,378 Qualified XII (1.15) 11.745 13.091 11.46% 9,778.0 128,004 Qualified XII (1.20) 12.430 13.074 5.18% (2) 5,796.8 75,785 Qualified XII (1.25) 11.726 13.056 11.34% 687.9 8,982 Qualified XII (1.30) 11.716 13.039 11.29% 408.4 5,325 Qualified XII (1.40) 13.828 13.005 (5.95%) (5) 112.7 1,466 Qualified XII (1.50) 11.678 12.971 11.07% 467.9 6,069 Qualified XIII 12.328 13.769 11.69% 14,164.7 195,030 Qualified XV 12.308 13.746 11.68% 17,178.0 236,126 Qualified XVI 12.247 13.603 11.07% 11,522.9 156,741 Qualified XVII 12.269 13.662 11.35% 1,816.0 24,809 Qualified XVIII 12.640 14.074 11.34% 2,059.3 28,983 - ---------------------------------------------------------------------------------------------------------------- Fidelity Investments Variable Insurance Products Fund II: Asset Manager Portfolio: Qualified III 14.715 16.719 13.62% 1,596,943.4 26,699,659 - ---------------------------------------------------------------------------------------------------------------- Contrafund Portfolio: Qualified III 17.276 22.177 28.37% 3,333,319.6 73,922,966 Qualified V 15.315 19.627 28.16% 1,261.0 24,749 Qualified VI 15.270 19.601 28.36% 9,575,607.6 187,691,926 Qualified VIII 15.371 19.729 28.35% 3,321.4 65,530 Qualified X (1.15) 17.201 22.103 28.50% 19,136.2 422,961 Qualified X (1.25) 17.156 22.023 28.37% 834,976.3 18,388,472 Qualified XI 15.360 19.776 28.75% 209,707.3 4,147,194 Qualified XII (0.40) 15.219 17.813 17.04% (11) 197,022.1 3,509,529 Qualified XII (0.45) 10.553 11.475 8.74% (12) 1,753.8 20,125 Qualified XII (0.50) 10.673 11.985 12.29% (4) 8,618.1 103,285 Qualified XII (0.75) 9.912 11.454 15.56% (6) 78,074.5 894,250 Qualified XII (0.80) 10.937 12.589 15.10% (5) 2,102,804.7 26,471,967 Qualified XII (0.85) 13.824 17.847 29.10% (1) 217,720.3 3,885,627 Qualified XII (0.90) 10.737 12.293 14.49% (3) 1,037.9 12,758 Qualified XII (0.95) 13.825 17.800 28.75% 254,733.6 4,534,200 Qualified XII (1.00) 13.814 17.776 28.68% 1,138,179.9 20,232,652 Qualified XII (1.05) 13.802 17.753 28.63% 90,949.6 1,614,615 Qualified XII (1.10) 13.791 17.729 28.55% 5,767.6 102,257 Qualified XII (1.15) 13.780 17.706 28.49% 85,590.6 1,515,471 Qualified XII (1.20) 13.768 17.683 28.44% 29,528.3 522,139 Qualified XII (1.25) 13.757 17.659 28.36% 11,736.6 207,260 Qualified XII (1.30) 13.746 17.636 28.30% 10,680.8 188,366 Qualified XII (1.40) 15.738 17.590 11.77% (4) 1,990.2 35,007 Qualified XII (1.50) 13.701 17.543 28.04% 11,751.1 206,153 Qualified XIII 15.343 19.755 28.76% 176,552.7 3,487,733 Qualified XV 15.318 19.722 28.75% 187,525.3 3,698,342 Qualified XVI 15.242 19.516 28.04% 157,444.1 3,072,751 Qualified XVII 15.270 19.601 28.36% 31,455.3 616,556 Qualified XVIII 17.156 22.023 28.37% 22,090.1 486,485 - ---------------------------------------------------------------------------------------------------------------- Index 500 Portfolio: Qualified III 18.662 23.650 26.73% 3,947,186.8 93,352,318 - ---------------------------------------------------------------------------------------------------------------- Janus Aspen Series: Aggressive Growth Portfolio: Qualified III 18.174 24.098 32.60% 2,142,129.7 51,620,505 Qualified V 15.720 20.810 32.38% 2,389.5 49,726 Qualified VI 15.801 20.951 32.59% 7,536,062.4 157,891,352
S-18 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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 - ---------------------------------------------------------------------------------------------------------------------- Aggressive Growth Portfolio (continued): Qualified VIII $ 15.798 $ 20.945 32.58% 5,606.5 $ 117,425 Qualified X (1.15) 15.295 20.300 32.72% 15,875.8 322,277 Qualified X (1.25) 15.254 20.226 32.59% 565,274.8 11,433,071 Qualified XI 15.895 21.139 32.99% 283,820.6 5,999,598 Qualified XII (0.40) 11.663 14.125 21.11% (11) 198,263.9 2,800,434 Qualified XII (0.50) 10.570 12.541 18.65% (4) 134,432.0 1,685,956 Qualified XII (0.75) 9.887 12.109 22.47% (6) 117,102.9 1,418,013 Qualified XII (0.80) 10.647 13.056 22.63% (5) 1,605,725.7 20,964,683 Qualified XII (0.85) 10.427 14.152 35.72% (1) 320,159.2 4,530,814 Qualified XII (0.90) 10.787 12.830 18.94% (4) 353.1 4,531 Qualified XII (0.95) 10.613 14.114 32.99% 375,663.3 5,302,265 Qualified XII (1.00) 10.604 14.096 32.93% 997,760.1 14,064,209 Qualified XII (1.05) 10.596 14.077 32.85% 114,249.2 1,608,306 Qualified XII (1.10) 10.587 14.059 32.79% 3,031.6 42,621 Qualified XII (1.15) 10.578 14.040 32.73% 103,123.2 1,447,854 Qualified XII (1.20) 10.956 14.022 27.98% (2) 43,050.2 603,629 Qualified XII (1.25) 10.561 14.003 32.59% 4,812.4 67,388 Qualified XII (1.30) 10.552 13.985 32.53% 3,585.6 50,142 Qualified XII (1.40) 11.943 13.948 16.79% (4) 1,441.3 20,102 Qualified XII (1.50) 10.518 13.911 32.26% 13,650.3 189,886 Qualified XIII 15.878 21.116 32.99% 120,002.0 2,533,930 Qualified XV 15.851 21.081 32.99% 212,741.1 4,484,705 Qualified XVI 15.773 20.861 32.26% 100,074.7 2,087,661 Qualified XVII 15.801 20.951 32.59% 32,181.5 674,250 Qualified XVIII 15.254 20.226 32.59% 10,568.2 213,749 - ---------------------------------------------------------------------------------------------------------------------- Balanced Portfolio: Qualified III 15.016 19.914 32.62% 3,698.2 73,645 Qualified V 14.954 19.800 32.41% 426.9 8,452 Qualified VI 15.012 19.908 32.61% 3,192,160.0 63,550,099 Qualified VIII 15.009 19.903 32.61% 3,145.3 62,600 Qualified X (1.15) 15.616 20.731 32.75% 22,910.9 474,964 Qualified X (1.25) 15.576 20.657 32.62% 447,035.2 9,234,497 Qualified XI 15.100 20.086 33.02% 105,755.4 2,124,205 Qualified XII (0.40) 15.614 17.878 14.50% (11) 39,424.1 704,830 Qualified XII (0.45) 10.945 11.816 7.96% (12) 612.1 7,232 Qualified XII (0.50) 10.615 12.415 16.96% (4) 30,062.0 373,209 Qualified XII (0.75) 9.856 11.794 19.66% (6) 26,591.6 313,619 Qualified XII (0.80) 10.741 12.741 18.62% (5) 425,124.8 5,416,639 Qualified XII (0.85) 13.744 17.912 30.33% (1) 47,668.3 853,846 Qualified XII (0.90) 10.570 12.490 18.16% (4) 478.6 5,977 Qualified XII (0.95) 13.431 17.865 33.01% 81,982.5 1,464,616 Qualified XII (1.00) 13.420 17.841 32.94% 184,550.3 3,292,638 Qualified XII (1.05) 13.409 17.818 32.88% 37,433.9 666,991 Qualified XII (1.10) 13.398 17.794 32.81% 4,709.2 83,797 Qualified XII (1.15) 13.387 17.771 32.75% 36,442.2 647,610 Qualified XII (1.20) 14.246 17.747 24.58% (2) 21,104.5 374,551 Qualified XII (1.25) 13.370 17.724 32.57% (1) 797.9 14,141 Qualified XII (1.30) 13.354 17.701 32.55% 668.1 11,826 Qualified XII (1.40) 15.102 17.654 16.90% (5) 564.4 9,964 Qualified XII (1.50) 13.310 17.607 32.28% 20,319.3 357,771 Qualified XIII 15.084 20.064 33.02% 45,434.7 911,610 Qualified XV 15.059 20.031 33.02% 89,095.1 1,784,651 Qualified XVI 14.984 19.822 32.29% 53,979.8 1,070,002 Qualified XVII 15.012 19.908 32.61% 23,034.8 458,581 Qualified XVIII 15.576 20.657 32.62% 25,387.3 524,429 - ----------------------------------------------------------------------------------------------------------------------
S-19 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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 - -------------------------------------------------------------------------------------------------------------------- Flexible Income Portfolio: Qualified III $ 14.430 $ 15.548 7.75% 8,966.5 $ 139,412 Qualified V 14.299 15.383 7.58% 24.7 380 Qualified VI 14.373 15.487 7.75% 1,213,451.1 18,792,980 Qualified VIII 14.370 15.482 7.74% 283.5 4,389 Qualified X (1.25) 10.054 10.419 3.63% (5) 54,517.2 568,008 Qualified XI 14.458 15.626 8.08% 57,101.4 892,246 Qualified XII (0.40) 12.743 13.053 2.43% (11) 21,373.8 278,992 Qualified XII (0.45) 10.457 10.446 (0.11%) (12) 82.2 859 Qualified XII (0.50) 10.186 10.640 4.46% (4) 13,363.7 142,197 Qualified XII (0.75) 10.062 10.427 3.63% (6) 6,947.4 72,440 Qualified XII (0.80) 10.210 10.643 4.24% (5) 367,677.1 3,913,004 Qualified XII (0.85) 12.306 13.078 6.27% (1) 25,566.1 334,351 Qualified XII (0.90) 10.232 10.638 3.97% (4) 392.7 4,178 Qualified XII (0.95) 12.069 13.043 8.07% 36,739.5 479,207 Qualified XII (1.00) 12.059 13.026 8.02% 414,150.6 5,394,811 Qualified XII (1.05) 12.049 13.009 7.97% 13,507.0 175,712 Qualified XII (1.10) 12.039 12.992 7.92% 2,779.8 36,115 Qualified XII (1.15) 12.029 12.975 7.86% 8,868.9 115,071 Qualified XII (1.20) 12.212 12.958 6.11% (2) 13,990.2 181,278 Qualified XII (1.25) 12.112 12.940 6.84% (1) 126.4 1,636 Qualified XII (1.30) 12.225 12.923 5.71% (3) 8,960.0 115,794 Qualified XII (1.40) 12.375 12.889 4.15% (5) 30.2 389 Qualified XII (1.50) 11.960 12.855 7.48% 247.6 3,183 Qualified XIII 14.442 15.609 8.08% 10,857.1 169,464 Qualified XV 14.418 15.583 8.08% 20,316.8 316,591 Qualified XVI 14.347 15.420 7.48% 14,524.0 223,965 Qualified XVII 14.373 15.487 7.75% 9,336.5 144,596 - -------------------------------------------------------------------------------------------------------------------- Growth Portfolio: Qualified III 16.816 22.529 33.97% 1,354,047.1 30,505,388 Qualified V 15.368 20.556 33.76% 1,053.4 21,653 Qualified VI 15.414 20.651 33.98% 2,995,268.0 61,855,860 Qualified VIII 15.424 20.663 33.97% 1,852.6 38,279 Qualified X (1.15) 16.528 22.165 34.11% 33,675.9 746,443 Qualified X (1.25) 16.485 22.086 33.98% 465,445.6 10,279,993 Qualified XI 15.505 20.836 34.38% 128,843.5 2,684,540 Qualified XII (0.40) 14.790 17.807 20.40% (11) 73,901.1 1,315,941 Qualified XII (0.50) 10.286 12.391 20.46% (4) 7,784.6 96,459 Qualified XII (0.75) 9.810 11.666 18.92% (6) 41,103.5 479,534 Qualified XII (0.80) 10.918 12.836 17.57% (5) 434,912.8 5,582,684 Qualified XII (0.85) 13.512 17.841 32.04% (1) 446,603.2 7,967,771 Qualified XII (0.90) 10.569 12.464 17.93% (6) 127.7 1,591 Qualified XII (0.95) 13.242 17.794 34.38% 53,447.5 951,030 Qualified XII (1.00) 13.231 17.770 34.31% 220,151.3 3,912,152 Qualified XII (1.05) 13.220 17.747 34.24% 45,804.1 812,878 Qualified XII (1.10) 13.209 17.723 34.17% 2,555.4 45,291 Qualified XII (1.15) 13.198 17.700 34.11% 39,188.1 693,632 Qualified XII (1.20) 14.218 17.677 24.33% (2) 19,753.5 349,177 Qualified XII (1.25) 13.177 17.653 33.97% 5,365.3 94,715 Qualified XII (1.30) 13.166 17.630 33.91% 911.2 16,065 Qualified XII (1.40) 15.123 17.584 16.27% (5) 2,368.3 41,643 Qualified XII (1.50) 13.123 17.537 33.64% 8,841.6 155,057 Qualified XIII 15.489 20.813 34.37% 47,156.5 981,469 Qualified XV 15.463 20.778 34.37% 61,354.9 1,274,858 Qualified XVI 15.386 20.562 33.64% 56,524.9 1,162,269 Qualified XVII 15.414 20.651 33.98% 7,087.9 146,374 Qualified XVIII 16.485 22.086 33.98% 21,941.8 484,614 Annuity contracts in payment period 235,492 - --------------------------------------------------------------------------------------------------------------------
S-20 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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: Qualified III $ 18.690 $ 23.797 27.32% 4,687,166.8 $111,538,596 Qualified V 16.782 21.334 27.12% 2,948.4 62,899 Qualified VI 16.720 21.288 27.32% 14,519,619.8 309,094,974 Qualified VIII 16.670 21.223 27.31% 6,944.9 147,391 Qualified X (1.15) 18.828 23.996 27.45% 74,103.7 1,778,187 Qualified X (1.25) 18.779 23.910 27.32% 1,360,741.2 32,534,708 Qualified XI 16.819 21.478 27.70% 655,880.5 14,087,149 Qualified XII (0.40) 15.344 17.582 14.59% (11) 383,490.2 6,742,350 Qualified XII (0.45) 9.630 10.235 6.28% (12) 1,185.6 12,135 Qualified XII (0.50) 10.980 11.485 4.60% (4) 37,288.1 428,241 Qualified XII (0.75) 9.953 10.217 2.65% (6) 167,605.9 1,712,362 Qualified XII (0.80) 11.798 12.009 1.79% (5) 4,480,347.5 53,804,310 Qualified XII (0.85) 14.300 17.615 23.18% (1) 710,850.5 12,521,719 Qualified XII (0.90) 10.606 11.745 10.74% (3) 5,139.9 60,366 Qualified XII (0.95) 13.757 17.569 27.71% 427,855.0 7,516,824 Qualified XII (1.00) 13.746 17.545 27.64% 2,151,201.8 37,743,896 Qualified XII (1.05) 13.735 17.522 27.57% 202,767.8 3,552,963 Qualified XII (1.10) 13.724 17.499 27.51% 14,917.9 261,052 Qualified XII (1.15) 13.712 17.476 27.45% 130,325.6 2,277,589 Qualified XII (1.20) 13.701 17.453 27.38% 46,823.7 817,219 Qualified XII (1.25) 13.690 17.430 27.32% 10,441.4 181,995 Qualified XII (1.30) 13.679 17.407 27.25% 6,473.0 112,676 Qualified XII (1.40) 16.231 17.361 6.96% (4) 648.5 11,260 Qualified XII (1.50) 13.634 17.315 27.00% 23,084.7 399,722 Qualified XIII 16.800 21.455 27.71% 236,904.3 5,082,747 Qualified XV 16.773 21.419 27.70% 301,775.4 6,463,796 Qualified XVI 16.689 21.196 27.01% 182,950.6 3,877,864 Qualified XVII 16.720 21.288 27.32% 67,482.4 1,436,571 Qualified XVIII 18.779 23.910 27.32% 65,838.9 1,574,179 Annuity contracts in payment period 365,972 - --------------------------------------------------------------------------------------------------------------------------- Lexington Emerging Markets Fund: Qualified III 7.715 5.470 (29.10%) 745,855.7 4,094,455 - --------------------------------------------------------------------------------------------------------------------------- Lexington Natural Resources Trust Fund: Qualified III 14.403 11.433 (20.62%) 534,962.3 6,116,289 Qualified V 15.987 12.670 (20.75%) 2,110.3 26,737 Qualified VI 15.541 12.336 (20.62%) 755,983.9 9,325,791 Qualified VIII 13.472 10.693 (20.63%) 652.7 6,979 Qualified XI 15.633 12.446 (20.39%) 37,897.4 471,683 Qualified XII (0.40) 9.754 9.626 ( 1.31%) (11) 12,236.5 117,791 Qualified XII (0.75) 9.791 7.696 (21.40%) (6) 13,174.5 101,395 Qualified XII (0.80) 10.922 8.415 (22.95%) (5) 140,250.4 1,180,144 Qualified XII (0.85) 11.047 9.645 (12.69%) (1) 14,189.8 136,854 Qualified XII (0.95) 12.082 9.619 (20.39%) 51,076.6 491,310 Qualified XII (1.00) 12.072 9.606 (20.43%) 75,695.4 727,160 Qualified XII (1.05) 12.062 9.594 (20.46%) 2,960.6 28,403 Qualified XII (1.10) 8.980 9.581 6.69% (8) 31.3 300 Qualified XII (1.15) 12.042 9.568 (20.54%) 12,058.7 115,382 Qualified XII (1.20) 11.980 9.556 (20.23%) (6) 2,826.2 27,006 Qualified XII (1.25) 12.022 9.543 (20.62%) 52.7 503 Qualified XII (1.50) 11.973 9.480 (20.82%) 317.5 3,010 Qualified XIII 15.616 12.433 (20.38%) 16,413.6 204,067 Qualified XV 15.590 12.412 (20.38%) 38,283.4 475,178 Qualified XVI 15.512 12.283 (20.82%) 14,341.8 176,155 Qualified XVII 15.541 12.336 (20.62%) 745.1 9,190 - ---------------------------------------------------------------------------------------------------------------------------
S-21 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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 - ------------------------------------------------------------------------------------------------------------------- MFS Funds: Total Return Series: Qualified III $ 10.182 $ 10.531 3.43% (5) 36,633.2 $ 385,767 - ------------------------------------------------------------------------------------------------------------------- Oppenheimer Funds: Global Securities Fund: Qualified III 10.077 10.303 2.24% (6) 20,547.5 211,700 Qualified VI 10.079 10.018 (0.61%) (5) 39,441.2 395,141 Qualified X (1.25) 9.865 10.018 1.55% (5) 11,129.0 111,496 Qualified XI 8.907 10.039 12.71% (10) 773.7 7,768 Qualified XII (0.40) 9.004 10.047 11.58% (11) 1,563.9 15,712 Qualified XII (0.50) 10.131 10.070 (0.60%) (7) 179.7 1,810 Qualified XII (0.75) 9.713 10.027 3.23% (6) 535.3 5,367 Qualified XII (0.80) 10.001 10.050 0.49% (7) 2,686.4 26,997 Qualified XII (0.85) 9.275 10.046 8.31% (8) 7,592.4 76,275 Qualified XII (0.95) 10.182 10.039 (1.40%) (7) 144.4 1,450 Qualified XII (1.00) 9.484 10.036 5.82% (8) 5,395.1 54,144 Qualified XII (1.05) 9.801 10.032 2.36% (6) 180.2 1,808 Qualified XII (1.10) 10.160 10.029 (1.29%) (7) 26.8 269 Qualified XII (1.15) 9.974 10.025 0.51% (7) 294.7 2,954 Qualified XII (1.30) 9.965 10.015 0.50% (12) 139.3 1,395 Qualified XII (1.40) 10.041 10.008 (0.33%) (7) 13.5 135 Qualified XIII 10.080 10.039 (0.41%) (5) 3,153.1 31,654 Qualified XV 10.042 10.039 (0.03%) (5) 381.8 3,833 Qualified XVI 9.728 10.001 2.81% (6) 152.2 1,522 Qualified XVII 8.115 10.018 23.45% (10) 2,464.5 24,691 - ------------------------------------------------------------------------------------------------------------------- Strategic Bond Fund: Qualified III 10.055 9.935 (1.19%) (5) 100,555.4 999,000 Qualified VI 10.015 9.895 (1.20%) (5) 71,074.2 703,260 Qualified X (1.25) 9.988 9.895 (0.93%) (5) 13,884.9 137,388 Qualified XI 9.660 9.915 2.64% (10) 176.2 1,747 Qualified XII (0.40) 9.695 9.923 2.35% (11) 1,512.8 15,011 Qualified XII (0.45) 9.975 9.953 (0.22%) (12) 574.6 5,719 Qualified XII (0.50) 9.995 9.946 (0.49%) (5) 14.2 142 Qualified XII (0.75) 10.029 9.935 (0.94%) (7) 924.6 9,186 Qualified XII (0.80) 10.025 9.926 (0.99%) (6) 18,785.5 186,456 Qualified XII (0.85) 9.935 9.922 (0.13%) (8) 2,776.3 27,546 Qualified XII (0.95) 10.037 9.915 (1.22%) (7) 614.0 6,088 Qualified XII (1.00) 9.991 9.912 (0.79%) (5) 7,329.1 72,645 Qualified XII (1.05) 9.582 9.908 3.40% (10) 4.8 47 Qualified XII (1.10) 9.720 9.905 1.90% (9) 22.4 222 Qualified XII (1.15) 10.052 9.902 (1.49%) (7) 688.9 6,821 Qualified XII (1.20) 9.905 9.898 (0.07%) (12) 56.6 561 Qualified XII (1.50) 9.973 9.878 (0.95%) (5) 2.5 25 Qualified XIII 10.056 9.915 (1.40%) (7) 1,158.4 11,486 Qualified XV 9.992 9.915 (0.77%) (5) 5,937.8 58,874 Qualified XVI 9.666 9.878 2.19% (11) 11.1 110 Qualified XVIII 10.023 9.895 (1.28%) (6) 1,136.4 11,244 Annuity contracts in payment period 3,521 - ------------------------------------------------------------------------------------------------------------------- Portfolio Partners, Inc. (PPI): PPI MFS Emerging Equities Portfolio: Qualified III 15.046 19.268 28.06% 3,101,879.7 59,766,560 Qualified V 14.893 19.041 27.85% 4,324.5 82,342 Qualified VI 14.927 19.114 28.05% 11,377,408.3 217,471,707 Qualified VIII 15.638 20.023 28.04% 12,327.2 246,830 Qualified X (1.15) 14.991 19.216 28.18% 72,541.9 1,393,949 Qualified X (1.25) 14.927 19.114 28.05% 1,369,984.2 26,186,352 Qualified XI 15.015 19.285 28.44% 595,462.3 11,483,622
S-22 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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 Emerging Equities Portfolio (continued): Qualified XII (0.40) $ 10.705 $ 12.776 19.35% (11) 339,956.1 $ 4,343,297 Qualified XII (0.45) 10.094 11.002 9.00% (12) 371.1 4,083 Qualified XII (0.50) 9.990 10.841 8.52% (4) 178,397.7 1,933,950 Qualified XII (0.75) 9.828 10.982 11.74% (6) 139,546.5 1,532,495 Qualified XII (0.80) 10.687 11.846 10.84% (5) 3,491,453.8 41,360,324 Qualified XII (0.85) 10.399 12.800 23.09% (1) 706,142.1 9,038,965 Qualified XII (0.90) 10.233 11.462 12.01% (6) 236.2 2,707 Qualified XII (0.95) 9.940 12.767 28.44% 626,638.0 8,000,073 Qualified XII (1.00) 9.932 12.750 28.37% 2,223,124.5 28,344,393 Qualified XII (1.05) 9.923 12.733 28.32% 102,952.0 1,310,884 Qualified XII (1.10) 9.915 12.716 28.25% 6,017.4 76,519 Qualified XII (1.15) 9.907 12.699 28.18% 196,772.2 2,498,884 Qualified XII (1.20) 11.093 12.683 14.33% (2) 88,260.5 1,119,370 Qualified XII (1.25) 9.891 12.666 28.06% 21,617.0 273,798 Qualified XII (1.30) 9.883 12.649 27.99% 5,461.9 69,088 Qualified XII (1.40) 11.707 12.616 7.76% (5) 928.1 11,708 Qualified XII (1.50) 9.850 12.582 27.74% 5,349.1 67,305 Qualified XIII 14.999 19.264 28.44% 289,624.8 5,579,409 Qualified XV 14.974 19.232 28.44% 398,717.2 7,668,212 Qualified XVI 14.899 19.032 27.74% 135,640.9 2,581,496 Qualified XVII 14.927 19.114 28.05% 40,139.8 767,246 Qualified XVIII 14.927 19.114 28.05% 49,217.5 940,762 Annuity contracts in payment period 27,431 - ----------------------------------------------------------------------------------------------------------------------------------- PPI MFS Research Growth Portfolio: Qualified I 9.041 10.989 21.55% 603.1 6,627 Qualified III 11.960 14.528 21.47% 1,379,652.6 21,623,158 Qualified V 13.682 16.593 21.28% 8,235.9 136,659 Qualified VI 13.795 16.758 21.48% 8,758,122.7 146,764,601 Qualified VII 11.627 14.132 21.54% 50,979.3 720,451 Qualified VIII 11.636 14.134 21.47% 12,597.3 178,046 Qualified IX 11.436 13.926 21.77% 1,089.6 15,174 Qualified X (1.15) 13.852 16.844 21.60% 5,155.0 86,830 Qualified X (1.25) 13.795 16.758 21.48% 1,054,685.1 17,673,929 Qualified XI 13.877 16.907 21.83% 378,797.5 6,404,485 Qualified XII (0.40) 9.362 10.641 13.66% (11) 331,957.8 3,532,250 Qualified XII (0.45) 9.862 10.577 7.25% (12) 473.4 5,007 Qualified XII (0.50) 10.490 11.127 6.07% (4) 79,769.0 887,585 Qualified XII (0.75) 9.917 10.558 6.46% (6) 46,474.6 490,680 Qualified XII (0.80) 11.019 11.682 6.02% (5) 750,388.3 8,766,147 Qualified XII (0.85) 8.861 10.661 20.31% (1) 616,204.9 6,569,356 Qualified XII (0.90) 10.954 11.375 3.84% (4) 827.6 9,414 Qualified XII (0.95) 8.727 10.633 21.84% 237,867.2 2,529,201 Qualified XII (1.00) 8.720 10.619 21.78% 741,692.5 7,875,882 Qualified XII (1.05) 8.713 10.605 21.71% 40,973.9 434,517 Qualified XII (1.10) 10.008 10.591 5.83% (5) 121.2 1,283 Qualified XII (1.15) 8.698 10.577 21.60% 135,558.5 1,433,769 Qualified XII (1.20) 9.310 10.563 13.46% (2) 49,879.0 526,859 Qualified XII (1.25) 8.597 10.549 22.71% (1) 3,244.0 34,220 Qualified XII (1.30) 8.677 10.535 21.41% 5,146.2 54,215 Qualified XII (1.40) 9.977 10.507 5.31% (5) 219.8 2,309 Qualified XII (1.50) 8.649 10.479 21.16% 1,814.1 19,011 Qualified XIII 13.862 16.889 21.84% 158,866.2 2,683,093 Qualified XV 13.839 16.861 21.84% 431,603.1 7,277,219 Qualified XVI 13.770 16.685 21.17% 146,727.9 2,448,181
S-23 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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 XVII $ 13.795 $ 16.758 21.48% 56,680.1 $ 949,819 Qualified XVIII 13.795 16.758 21.48% 75,738.1 1,269,184 Qualified XIX 9.041 10.989 21.55% 30,746.7 337,866 Qualified XX 11.960 14.528 21.47% 23,436.6 340,489 - --------------------------------------------------------------------------------------------------------------------------- PPI MFS Value Equity Portfolio: Qualified III 23.440 29.339 25.17% 2,244,308.4 65,845,563 Qualified V 19.248 24.053 24.96% 6,631.6 159,509 Qualified VI 19.291 24.145 25.16% 2,186,996.3 52,805,949 Qualified VIII 16.585 20.756 25.15% 11,497.4 238,643 Qualified X (1.15) 9.473 10.502 10.86% (11) 12,126.4 127,350 Qualified X (1.25) 9.828 10.495 6.79% (5) 42,212.8 443,007 Qualified XI 19.405 24.361 25.54% 182,556.6 4,447,294 Qualified XII (0.40) 14.188 15.676 10.49% (11) 36,644.4 574,430 Qualified XII (0.45) 9.984 10.673 6.90% (12) 191.7 2,046 Qualified XII (0.50) 10.726 11.320 5.54% (4) 71,604.9 810,587 Qualified XII (0.75) 9.963 10.653 6.93% (6) 49,316.4 525,368 Qualified XII (0.80) 11.274 12.055 6.93% (5) 376,470.9 4,538,245 Qualified XII (0.85) 12.661 15.706 24.05% (1) 382,755.1 6,011,447 Qualified XII (0.90) 11.183 11.654 4.21% (4) 957.3 11,156 Qualified XII (0.95) 12.478 15.664 25.53% 103,316.6 1,618,377 Qualified XII (1.00) 12.467 15.644 25.48% 291,491.9 4,559,986 Qualified XII (1.05) 12.457 15.623 25.42% 25,784.2 402,826 Qualified XII (1.10) 14.846 15.602 5.09% (4) 1,487.6 23,210 Qualified XII (1.15) 12.437 15.582 25.29% 75,919.6 1,182,959 Qualified XII (1.20) 13.387 15.561 16.24% (2) 19,782.0 307,830 Qualified XII (1.25) 12.394 15.541 25.39% (1) 1,059.7 16,468 Qualified XII (1.30) 12.406 15.520 25.10% 1,073.5 16,661 Qualified XII (1.40) 14.631 15.479 5.80% (5) 45.6 706 Qualified XII (1.50) 12.365 15.438 24.85% 1,255.5 19,383 Qualified XIII 19.384 24.335 25.54% 48,710.8 1,185,364 Qualified XV 19.352 24.294 25.54% 171,101.9 4,156,785 Qualified XVI 19.256 24.041 24.85% 28,002.3 673,209 Qualified XVII 19.291 24.145 25.16% 5,459.7 131,826 Qualified XVIII 10.055 10.495 4.38% (5) 1,552.3 16,292 - --------------------------------------------------------------------------------------------------------------------------- PPI Scudder International Growth Portfolio: Qualified III 17.709 20.829 17.62% 2,962,630.7 61,707,422 Qualified V 16.782 19.707 17.43% 3,201.7 63,094 Qualified VI 16.986 19.978 17.61% 4,030,904.1 80,530,902 Qualified VIII 14.312 16.832 17.61% 21,064.0 354,542 Qualified X (1.15) 17.056 20.081 17.74% 27,591.3 554,056 Qualified X (1.25) 16.986 19.978 17.61% 467,483.6 9,339,562 Qualified XI 17.087 20.157 17.97% 273,684.1 5,516,618 Qualified XII (0.40) 12.570 13.602 8.21% (11) 168,912.2 2,297,502 Qualified XII (0.50) 10.711 10.797 0.80% (4) 113,510.7 1,225,536 Qualified XII (0.75) 10.009 9.781 (2.28%) (6) 34,687.8 339,267 Qualified XII (0.80) 11.338 11.041 (2.62%) (5) 850,743.3 9,392,885 Qualified XII (0.85) 11.868 13.628 14.83% (1) 434,053.9 5,915,156 Qualified XII (0.90) 10.020 11.029 10.07% (10) 9.8 108 Qualified XII (0.95) 11.522 13.592 17.97% 234,075.3 3,181,491 Qualified XII (1.00) 11.512 13.574 17.91% 715,388.6 9,710,570 Qualified XII (1.05) 11.503 13.556 17.85% 29,581.3 401,001 Qualified XII (1.10) 11.633 13.538 16.38% (1) 3,300.1 44,677 Qualified XII (1.15) 11.484 13.520 17.73% 88,163.2 1,191,979 Qualified XII (1.20) 12.274 13.502 10.00% (2) 13,604.4 183,691 Qualified XII (1.25) 11.465 13.485 17.62% 2,493.0 33,617 Qualified XII (1.30) 11.456 13.467 17.55% 312.5 4,208
S-24 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (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) $ 13.542 $ 13.431 (0.82%) (5) 125.4 $ 1,685 Qualified XII (1.50) 11.418 13.396 17.32% 3,207.5 42,967 Qualified XIII 17.068 20.135 17.97% 81,257.4 1,636,113 Qualified XV 17.040 20.102 17.97% 353,311.2 7,102,088 Qualified XVI 16.955 19.892 17.32% 45,319.7 901,506 Qualified XVII 16.986 19.978 17.61% 3,854.9 77,015 Qualified XVIII 16.986 19.978 17.61% 10,839.2 216,551 - --------------------------------------------------------------------------------------------------------------------------- PPI T. Rowe Price Growth Equity Portfolio: Qualified III 16.608 20.929 26.02% 1,564,888.2 32,751,256 Qualified V 14.647 18.429 25.82% 1,068.6 19,693 Qualified VI 14.400 18.146 26.01% 6,541,818.7 118,710,603 Qualified VIII 14.701 18.525 26.01% 3,988.5 73,886 Qualified X (1.15) 16.172 20.400 26.14% 47,435.8 967,704 Qualified X (1.25) 16.131 20.328 26.02% 717,871.6 14,592,925 Qualified XI 14.485 18.309 26.40% 277,044.4 5,072,289 Qualified XII (0.40) 15.042 16.863 12.11% (11) 169,615.2 2,860,277 Qualified XII (0.45) 10.302 11.057 7.33% (12) 817.4 9,038 Qualified XII (0.50) 10.256 11.551 12.63% (4) 4,868.6 56,236 Qualified XII (0.75) 9.961 11.036 10.79% (6) 42,864.5 473,063 Qualified XII (0.80) 10.967 12.153 10.81% (5) 1,058,534.2 12,864,165 Qualified XII (0.85) 13.562 16.895 24.58% (1) 129,123.4 2,181,602 Qualified XII (0.90) 10.840 11.792 8.78% (4) 168.7 1,989 Qualified XII (0.95) 13.332 16.851 26.40% 197,937.5 3,335,428 Qualified XII (1.00) 13.321 16.829 26.33% 767,052.8 12,908,505 Qualified XII (1.05) 13.310 16.806 26.27% 51,411.7 864,048 Qualified XII (1.10) 14.258 16.784 17.72% (2) 2,769.4 46,482 Qualified XII (1.15) 13.288 16.762 26.14% 60,127.4 1,007,864 Qualified XII (1.20) 14.232 16.740 17.62% (2) 45,970.5 769,546 Qualified XII (1.25) 13.156 16.718 27.08% (1) 1,238.6 20,707 Qualified XII (1.30) 13.256 16.696 25.95% 2,748.4 45,888 Qualified XII (1.40) 15.190 16.652 9.62% (5) 1,524.7 25,389 Qualified XII (1.50) 13.212 16.608 25.70% 5,824.3 96,729 Qualified XIII 14.470 18.289 26.39% 84,841.6 1,551,639 Qualified XV 14.445 18.258 26.40% 109,122.7 1,992,390 Qualified XVI 14.374 18.068 25.70% 91,619.6 1,655,394 Qualified XVII 14.400 18.146 26.01% 29,383.6 533,207 Qualified XVIII 16.131 20.328 26.02% 18,939.4 385,001 Annuity contracts in payment period 56,047 - ---------------------------------------------------------------------------------------------------------------------------
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 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 Group AetnaPlus contracts issued in connection with Tax-Deferred Annuity Plans and Retirement Plus Plans since August 28, 1992.
S-25 Variable Annuity Account C Condensed Financial Information - Year Ended December 31, 1998 (continued): 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 administrative 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 Deferred Compensation Plan contracts shown separately by applicable daily charge. Qualified XIII Certain existing contracts issued in connection with Tax-Deferred Annuity Plans and Retirement Plus Plans issued through product exchange (previously valued under Qualified VI). Qualified XIV Certain existing contracts issued in connection with Tax-Deferred Annuity Plans that were converted to ACES, an administrative system (previously valued under Qualified III). Qualified XV Certain existing contracts issued in connection with Tax-Deferred Annuity Plans (previously valued under Qualified VI). Qualified XVI Group AetnaPlus contracts issued in connection with Deferred Compensation Plans having contract modifications effective April 7, 1997. Qualified XVII Group AetnaPlus contracts issued in connection with Deferred Compensation Plans having contract modifications effective May 29, 1997. Qualified XVIII Group AetnaPlus contracts issued in connection with Deferred Compensation Plans having contract modifications effective May 29, 1997. Qualified XIX Group AetnaPlus contracts issued in connection with Deferred Compensation Plans having contract modifications effective May 29, 1997. Qualified XX Group AetnaPlus contracts issued in connection with Deferred Compensation Plans having contract modifications effective May 29, 1997.
Notes to Condensed Financial Information (1) - Reflects less than a full year of performance activity. Funds were first received in this option during January 1998. (2) - Reflects less than a full year of performance activity. Funds were first received in this option during February 1998. (3) - Reflects less than a full year of performance activity. Funds were first received in this option during March 1998. (4) - Reflects less than a full year of performance activity. Funds were first received in this option during April 1998. (5) - Reflects less than a full year of performance activity. Funds were first received in this option during May 1998. (6) - Reflects less than a full year of performance activity. Funds were first received in this option during June 1998. (7) - Reflects less than a full year of performance activity. Funds were first received in this option during July 1998. (8) - Reflects less than a full year of performance activity. Funds were first received in this option during August 1998. (9) - Reflects less than a full year of performance activity. Funds were first received in this option during September 1998. (10) - Reflects less than a full year of performance activity. Funds were first received in this option during October 1998. (11) - Reflects less than a full year of performance activity. Funds were first received in this option during November 1998. (12) - Reflects less than a full year of performance activity. Funds were first received in this option during December 1998. See Notes to Financial Statements S-26 Variable Annuity Account C Notes to Financial Statements - December 31, 1998 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 generally accepted accounting principles requires management to make estimates and assumptions that affect amounts reported therein. Although actual results could differ from these estimates, any such differences are expected to be immaterial to the net assets of the Account. a. Valuation of Investments Investments in the following Funds are stated at the closing net asset value per share as determined by each Fund on December 31, 1998: Aetna Ascent VP Fidelity Investments Variable Insurance Products Aetna Balanced VP Fund II: Aetna Bond VP o Asset Manager Portfolio Aetna Crossroads VP o Contrafund Portfolio Aetna GET Fund, Series B o Index 500 Portfolio Aetna GET Fund, Series C Janus Aspen Series: Aetna GET Fund, Series D o Aggressive Growth Portfolio Aetna Growth and Income VP o Balanced Portfolio Aetna Growth VP o Flexible Income Portfolio Aetna High Yield VP o Growth Portfolio Aetna Index Plus Bond VP o Worldwide Growth Portfolio Aetna Index Plus Large Cap VP Lexington Emerging Markets Fund Aetna Index Plus Mid Cap VP Lexington Natural Resources Trust Fund Aetna Index Plus Small Cap VP MFS Funds: Aetna International VP o Total Return Series Aetna Legacy VP Oppenheimer Funds: Aetna Money Market VP o Global Securities Fund Aetna Real Estate Securities VP o Strategic Bond Fund Aetna Small Company VP Portfolio Partners, Inc. (PPI): Aetna Value Opportunity VP o PPI MFS Emerging Equities Portfolio Calvert Social Balanced Portfolio o PPI MFS Research Growth Portfolio Fidelity Investments Variable Insurance Products Fund: o PPI MFS Value Equity Portfolio o Equity-Income Portfolio o PPI Scudder International Growth Portfolio o Growth Portfolio o PPI T. Rowe Price Growth Equity Portfolio o High Income Portfolio o Overseas Portfolio
b. Other Investment transactions are accounted for on a trade date basis and dividend income is recorded on the ex-dividend date. The cost of investments sold is determined by specific identification. c. Federal Income Taxes The operations of the Account form a part of, and are taxed with, the total operations of the Company which is taxed as a life insurance company under the Internal Revenue Code of 1986, as amended. d. Annuity Reserves Annuity reserves held in the 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. S-27 Variable Annuity Account C Notes to Financial Statements - December 31, 1998 (continued): 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 Statements of Operations and Changes in Net Assets. 4. Purchases and Sales of Investments The cost of purchases and proceeds from sales of investments other than short-term investments for the years ended December 31, 1998 and 1997 aggregated $3,304,244,413 and $2,443,668,181; $4,059,988,283 and $2,013,561,413, respectively. S-28 Variable Annuity Account C Notes to Financial Statements - December 31, 1998 (continued): 5. Supplemental Information to Statements of Operations and Changes in Net Assets
- ------------------------------------------------------------------------------------------------------------------------- Year Ended December 31, 1998 Valuation Proceeds Cost of Net Period from Investments Realized Dividends Deductions Sales Sold Gain (Loss) - ------------------------------------------------------------------------------------------------------------------------- Aetna Ascent VP: (1) $ 4,099,373 ($ 970,989) $ 11,412,260 $ 8,849,863 $ 2,562,397 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------- Aetna Balanced VP: (2) 164,981,369 (11,769,413) 170,317,767 127,614,543 42,703,224 Annuity contracts in accumulation Annuity contracts in payment period - ------------------------------------------------------------------------------------------------------------------------- Aetna Bond VP: (3) 22,962,206 (4,524,317) 60,705,518 60,183,593 521,925 Annuity contracts in accumulation Annuity contracts in payment period - ------------------------------------------------------------------------------------------------------------------------- Aetna Crossroads VP: (4) 2,857,543 (807,577) 14,346,330 11,896,097 2,450,233 Annuity contracts in accumulation Annuity contracts in payment period - ------------------------------------------------------------------------------------------------------------------------- Aetna Get Fund, Series B: 17,006,590 (1,044,377) 35,975,652 24,014,822 11,960,830 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------- Aetna Get Fund, Series C: 25,369,439 (3,371,574) 95,082,475 71,161,693 23,920,782 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------- Aetna Get Fund, Series D: 1,154,248 (337,762) 0 0 0 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------- Aetna Growth and Income VP: (5) 1,089,290,192 (73,720,169) 1,128,903,988 938,855,493 190,048,495 Annuity contracts in accumulation Annuity contracts in payment period - ------------------------------------------------------------------------------------------------------------------------- Aetna Growth VP: (6) 124,674 (348,321) 5,016,498 4,785,323 231,175 Annuity contracts in accumulation Annuity contracts in payment period - ------------------------------------------------------------------------------------------------------------------------- Aetna High Yield VP: (7) 121,758 (5,391) 1,502,593 1,551,979 (49,386) Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------- Aetna Index Plus Bond VP: 75,564 (3,850) 559,445 551,414 8,031 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------- Aetna Index Plus Large Cap VP: (8) 10,603,464 (1,786,058) 13,329,755 11,362,468 1,967,287 Annuity contracts in accumulation Annuity contracts in payment period - ------------------------------------------------------------------------------------------------------------------------- Aetna Index Plus Mid Cap VP: (9) 198,320 (11,890) 1,297,593 1,306,891 (9,298) Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------- Aetna Index Plus Small Cap VP: (10) 195,090 (14,898) 1,781,711 2,020,397 (238,686) Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------- Aetna International VP: (11) 101,318 (9,462) 1,561,383 1,739,124 (177,741) Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------- Aetna Legacy VP: (12) 2,324,968 (578,374) 11,247,035 10,271,411 975,624 Annuity contracts in accumulation Annuity contracts in payment period - ------------------------------------------------------------------------------------------------------------------------- Aetna Money Market VP: (13) 12,126,669 (3,036,771) 277,970,761 276,464,964 1,505,797 Annuity contracts in accumulation Annuity contracts in payment period - ------------------------------------------------------------------------------------------------------------------------- Aetna Real Estate Securities VP: (14) 77,295 (6,563) 418,128 466,072 (47,944) Annuity contracts in accumulation - -------------------------------------------------------------------------------------------------------------------------
S-29
- ----------------------------------------------------------------------------------------------------------------- Net Net Unrealized Gain (Loss) Net Increase (Decrease) Net Assets - ---------------------------------- Change in In Net Assets -------------------------------------- Beginning End Unrealized from Unit Beginning End of Year of Year Gain (Loss) Transactions of Year of Year - ----------------------------------------------------------------------------------------------------------------- $ 5,507,794 $ 1,897,575 ($ 3,610,219) $ 11,804,390 $ 72,115,304 $ 86,000,256 - ----------------------------------------------------------------------------------------------------------------- 141,499,248 87,636,330 (53,862,918) (119,806,746) 968,354,403 982,574,403 21,193,276 29,218,792 - ----------------------------------------------------------------------------------------------------------------- (1,128,028) 4,484,663 5,612,691 (19,343,273) 372,629,553 377,693,504 6,218,756 6,384,037 - ----------------------------------------------------------------------------------------------------------------- 2,614,303 598,907 (2,015,396) 21,876,020 49,739,310 74,028,644 0 71,489 - ----------------------------------------------------------------------------------------------------------------- 22,946,346 6,591,127 (16,355,219) (31,539,579) 79,552,932 59,581,177 - ----------------------------------------------------------------------------------------------------------------- 46,742,374 52,568,856 5,826,482 (90,386,869) 236,822,693 198,180,953 - ----------------------------------------------------------------------------------------------------------------- 0 75,991 75,991 270,087,653 0 270,980,130 - ----------------------------------------------------------------------------------------------------------------- 438,575,885 (10,415,627) (448,991,512) (952,072,750) 6,078,549,136 5,846,282,205 292,045,818 328,867,005 - ----------------------------------------------------------------------------------------------------------------- (237,223) 7,094,432 7,331,655 56,413,060 1,098,483 64,734,239 0 116,487 - ----------------------------------------------------------------------------------------------------------------- 0 (104,129) (104,129) 1,281,526 0 1,244,378 - ----------------------------------------------------------------------------------------------------------------- 0 (60,361) (60,361) 1,406,227 0 1,425,611 - ----------------------------------------------------------------------------------------------------------------- 6,964,574 38,198,247 31,233,673 113,822,649 83,098,319 238,578,749 76,758 437,343 - ----------------------------------------------------------------------------------------------------------------- 0 420,810 420,810 3,518,535 0 4,116,477 - ----------------------------------------------------------------------------------------------------------------- 0 395,906 395,906 4,615,743 0 4,953,155 - ----------------------------------------------------------------------------------------------------------------- 0 53,600 53,600 2,048,312 0 2,016,027 - ----------------------------------------------------------------------------------------------------------------- 588,337 (120,205) (708,542) 18,514,701 32,749,254 53,070,226 53,658 261,063 - ----------------------------------------------------------------------------------------------------------------- 5,712,842 5,409,256 (303,586) 8,301,664 240,346,197 258,856,854 0 83,117 - ----------------------------------------------------------------------------------------------------------------- 0 (110,732) (110,732) 1,649,010 0 1,561,066 - -----------------------------------------------------------------------------------------------------------------
S-30 Variable Annuity Account C Notes to Financial Statements - December 31, 1998 (continued): 5. Supplemental Information to Statements of Operations and Changes in Net Assets (continued):
- ----------------------------------------------------------------------------------------------------------------------------- Year Ended December 31, 1998 Valuation Proceeds Cost of Net Period from Investments Realized Dividends Deductions Sales Sold Gain (Loss) - ----------------------------------------------------------------------------------------------------------------------------- Aetna Small Company VP: (15) $ 408,671 ($ 374,596) $12,808,646 $13,441,212 ($ 632,566) Annuity contracts in accumulation Annuity contracts in payment period - ----------------------------------------------------------------------------------------------------------------------------- Aetna Value Opportunity VP: (16) 321,076 (248,765) 5,237,037 5,066,190 170,847 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Calvert Social Balanced Portfolio: 4,618,537 (706,037) 6,463,168 4,551,117 1,912,051 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Fidelity Investments Variable Insurance Products Fund: Equity-Income Portfolio: 12,563,282 (2,635,293) 26,794,870 20,300,865 6,494,005 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Growth Portfolio: 18,444,780 (2,023,269) 12,322,259 10,024,949 2,297,310 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- High Income Portfolio: 0 (5,690) 112,691 124,297 (11,606) Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Overseas Portfolio: 1,074,038 (179,663) 7,836,104 7,260,256 575,848 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Fidelity Investments Variable Insurance Products Fund II: Asset Manager Portfolio: 2,980,690 (315,932) 2,910,017 2,416,750 493,267 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Contrafund Portfolio: 15,297,373 (3,578,430) 26,959,224 18,010,395 8,948,829 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Index 500 Portfolio: 2,402,321 (956,584) 3,863,355 2,441,761 1,421,594 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Janus Aspen Series: Aggressive Growth Portfolio: 0 (2,715,064) 29,546,424 20,073,556 9,472,868 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Balanced Portfolio: 2,769,822 (716,695) 5,961,535 4,458,066 1,503,469 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Flexible Income Portfolio: 1,688,473 (284,556) 6,263,674 5,778,906 484,768 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Growth Portfolio: 6,243,312 (1,192,652) 10,856,472 7,922,879 2,933,593 Annuity contracts in accumulation Annuity contracts in payment period - ----------------------------------------------------------------------------------------------------------------------------- Worldwide Growth Portfolio: 20,289,794 (6,298,518) 89,412,749 61,701,159 27,711,590 Annuity contracts in accumulation Annuity contracts in payment period - ----------------------------------------------------------------------------------------------------------------------------- Lexington Emerging Markets Fund: 401,401 (60,257) 3,629,654 4,888,912 (1,259,258) Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Lexington Natural Resources Trust Fund: 1,725,445 (338,985) 20,532,500 19,980,740 551,760 Annuity contracts in accumulation - -----------------------------------------------------------------------------------------------------------------------------
S-31
- --------------------------------------------------------------------------------------------------------- Net Net Unrealized Gain (Loss) Net Increase (Decrease) Net Assets - -------------------------------- Change in In Net Assets ------------------------------ Beginning End Unrealized from Unit Beginning End of Year of Year Gain (Loss) Transactions of Year of Year - --------------------------------------------------------------------------------------------------------- ($166,700) ($403,739) ($237,039) $43,856,203 $4,956,212 $47,966,985 0 9,901 - --------------------------------------------------------------------------------------------------------- (274,002) 3,491,978 3,765,980 22,736,361 2,039,640 28,785,139 - --------------------------------------------------------------------------------------------------------- 7,196,636 9,585,862 2,389,226 1,243,219 54,444,411 63,901,407 - --------------------------------------------------------------------------------------------------------- 33,998,298 37,581,942 3,583,644 15,460,299 190,735,350 226,201,287 - --------------------------------------------------------------------------------------------------------- 22,394,599 60,197,198 37,802,599 45,629,738 128,257,345 230,408,503 - --------------------------------------------------------------------------------------------------------- 0 8,863 8,863 1,619,989 0 1,611,556 - --------------------------------------------------------------------------------------------------------- 225,478 253,388 27,910 (132,737) 13,449,206 14,814,602 - --------------------------------------------------------------------------------------------------------- 3,922,056 3,974,260 52,204 290,089 23,199,341 26,699,659 - --------------------------------------------------------------------------------------------------------- 50,217,979 106,134,557 55,916,578 26,948,171 256,548,805 360,081,326 - --------------------------------------------------------------------------------------------------------- 11,512,547 26,655,788 15,143,241 17,619,975 57,721,771 93,352,318 - --------------------------------------------------------------------------------------------------------- 36,485,267 99,893,644 63,408,377 11,462,457 210,600,444 292,229,082 - --------------------------------------------------------------------------------------------------------- 4,804,494 20,140,807 15,336,313 38,532,102 37,451,981 94,876,992 - --------------------------------------------------------------------------------------------------------- 381,113 175,498 (205,615) 16,062,139 14,756,039 32,501,248 - --------------------------------------------------------------------------------------------------------- 11,683,190 34,398,134 22,714,944 22,205,253 79,992,417 132,697,360 35,986 235,492 - --------------------------------------------------------------------------------------------------------- 62,504,868 137,641,800 75,136,932 70,151,913 429,093,163 615,835,740 116,838 365,972 - --------------------------------------------------------------------------------------------------------- (968,279) (1,654,236) (685,957) (90,067) 5,788,593 4,094,455 - --------------------------------------------------------------------------------------------------------- 1,786,893 (6,226,325) (8,013,218) (17,149,400) 42,965,725 19,741,327 - ---------------------------------------------------------------------------------------------------------
S-32 Variable Annuity Account C Notes to Financial Statements - December 31, 1998 (continued): 5. Supplemental Information to Statements of Operations and Changes in Net Assets (continued):
- ----------------------------------------------------------------------------------------------------------------------------------- Year Ended December 31, 1998 Valuation Proceeds Cost of Net Period from Investments Realized Dividends Deductions Sales Sold Gain (Loss) ---------------- ------------------ ---------------- ----------------- -------------- MFS Fund: Total Return Series: $0 ($980) $12,895 $13,063 ($168) Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Funds: Global Securities Fund: 0 (3,966) 1,212,566 1,238,363 (25,797) Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------------- Strategic Bond Fund: 0 (10,626) 961,012 980,672 (19,660) Annuity contracts in accumulation Annuity contracts in payment period - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio Partners, Inc. (PPI): PPI MFS Emerging Equities Portfolio: 1,085,565 (4,502,863) 75,859,428 69,641,869 6,217,559 Annuity contracts in accumulation Annuity contracts in payment period - ----------------------------------------------------------------------------------------------------------------------------------- PPI MFS Research Growth Portfolio: 52,603 (2,749,051) 46,349,744 43,146,611 3,203,133 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------------- PPI MFS Value Equity Portfolio: 176,769 (1,585,851) 15,602,083 13,837,807 1,764,276 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------------- PPI Scudder International Growth Portfolio: 366,652 (2,452,299) 173,282,604 152,346,231 20,936,373 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------------- PPI T. Rowe Price Growth Equity Portfolio: 1,039,956 (2,274,233) 27,448,578 24,867,649 2,580,929 Annuity contracts in accumulation Annuity contracts in payment period - ----------------------------------------------------------------------------------------------------------------------------------- Total Variable Annuity Account C $1,447,620,640 ($138,558,611) $2,443,668,181 $2,067,610,422 $376,057,759 ===================================================================================================================================
(1) Effective May 1, 1998, Aetna Ascent Variable Portfolio's name changed to Aetna Ascent VP. (2) Effective May 1, 1998, Aetna Investment Advisors Fund's name changed to Aetna Balanced VP. (3) Effective May 1, 1998, Aetna Income Shares' name changed to Aetna Bond Fund VP. (4) Effective May 1, 1998, Aetna Crossroads Variable Portfolio's name changed to Aetna Crossroads VP. (5) Effective May 1, 1998, Aetna Variable Fund's name changed to Aetna Growth and Income VP. (6) Effective May 1, 1998, Aetna Variable Growth Portfolio's name changed to Aetna Growth VP. (7) Effective May 1, 1998, Aetna High Yield Portfolio's name changed to Aetna High Yield VP. (8) Effective May 1, 1998, Aetna Variable Index Plus Portfolio's name changed to Aetna Index Plus Large Cap VP. (9) Effective May 1, 1998, Aetna Index Plus Mid Cap Portfolio's name changed to Aetna Index Plus Mid Cap VP. (10) Effective May 1, 1998, Aetna Index Plus Small Cap Portfolio's name changed to Aetna Index Plus Small Cap VP. (11) Effective May 1, 1998, Aetna International Portfolio's name changed to Aetna International VP. (12) Effective May 1, 1998, Aetna Legacy Variable Portfolio's name changed to Aetna Legacy VP. (13) Effective May 1, 1998, Aetna Variable Encore Fund's name changed to Aetna Money Market VP. (14) Effective May 1, 1998, Aetna Real Estate Securities Portfolio's name changed to Aetna Real Estate Securities VP. (15) Effective May 1, 1998, Aetna Variable Small Company Portfolio's name changed to Aetna Small Company VP. (16) Effective May 1, 1998, Aetna Variable Capital Appreciation Portfolio's name changed to Aetna Value Opportunity VP. S-33
- --------------------------------------------------------------------------------------------------------------- Net Unrealized Net Gain (Loss) Net Increase (Decrease) Net Assets - -------------------------------- Change in In Net Assets ------------------------------------- Beginning End Unrealized from Unit Beginning End of Year of Year Gain (Loss) Transactions of Year of Year - --------------------------------------------------------------------------------------------------------------- $0 $21,009 $21,009 $365,906 $0 $385,767 - --------------------------------------------------------------------------------------------------------------- 0 90,591 90,591 915,293 0 976,121 - --------------------------------------------------------------------------------------------------------------- 0 23,736 23,736 2,263,649 0 2,253,578 - --------------------------------------------------------------------------------------------------------------- 0 3,521 - --------------------------------------------------------------------------------------------------------------- (3,901,193) 87,984,814 91,886,007 (13,492,672) 352,966,999 434,156,330 - --------------------------------------------------------------------------------------------------------------- 23,166 27,431 (4,166,217) 40,672,835 44,839,052 (30,288,218) 227,029,997 242,087,516 - --------------------------------------------------------------------------------------------------------------- 1,637,084 30,665,227 29,028,143 5,182,435 116,286,704 150,852,476 - --------------------------------------------------------------------------------------------------------------- 3,033,630 18,451,441 15,417,811 (35,002,543) 202,699,815 201,965,809 - --------------------------------------------------------------------------------------------------------------- 3,371,568 45,568,978 42,197,410 2,934,376 169,450,553 215,872,943 0 56,047 - --------------------------------------------------------------------------------------------------------------- $915,465,761 $949,942,696 $34,476,935 ($ 448,485,797) $11,155,254,351 $12,426,365,277 ===============================================================================================================
S-34 Variable Annuity Account C Notes to Financial Statements - December 31, 1998 (continued): 5. Supplemental Information to Statements of Operations and Changes in Net Assets (continued):
- ----------------------------------------------------------------------------------------------------------------------------- Year Ended December 31, 1997 Valuation Proceeds Cost of Net Period from Investments Realized Dividends Deductions Sales Sold Gain (Loss) - ----------------------------------------------------------------------------------------------------------------------------- Aetna Variable Fund: $1,291,034,822 ($ 68,500,273) $205,088,291 $150,120,010 $ 54,968,281 Annuity contracts in accumulation Annuity contracts in payment period - ----------------------------------------------------------------------------------------------------------------------------- Aetna Income Shares: 22,258,737 (4,263,839) 46,789,033 49,260,722 (2,471,689) Annuity contracts in accumulation Annuity contracts in payment period - ----------------------------------------------------------------------------------------------------------------------------- Aetna Variable Encore Fund: 9,635,587 (2,938,575) 206,958,669 210,166,945 (3,208,276) Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Aetna Investment Advisers Fund, Inc.: 128,304,517 (10,844,018) 37,558,168 27,770,494 9,787,674 Annuity contracts in accumulation Annuity contracts in payment period - ----------------------------------------------------------------------------------------------------------------------------- Aetna GET Fund, Series B: 13,341,021 (1,078,816) 7,648,728 4,940,723 2,708,005 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Aetna GET Fund, Series C: 3,678,012 (3,257,441) 13,972,003 11,896,317 2,075,686 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Aetna Ascent Variable Portfolio: 4,541,482 (578,657) 498,613 380,091 118,522 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Aetna Crossroads Variable Portfolio: 3,316,159 (392,434) 409,248 325,568 83,680 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Aetna Legacy Variable Portfolio: 1,788,369 (229,584) 2,265,127 2,019,840 245,287 Annuity contracts in accumulation Annuity contracts in payment period - ----------------------------------------------------------------------------------------------------------------------------- Aetna Variable Portfolios Inc: Aetna Variable Capital Appreciation Portfolio: 312,433 (2,197) 123,165 113,851 9,314 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Aetna Variable Growth Portfolio: 249,335 (1,093) 80,207 72,190 8,017 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Aetna Variable Index Plus Portfolio: 3,327,658 (542,532) 29,980,862 29,823,433 157,429 Annuity contracts in accumulation Annuity contracts in payment period - ----------------------------------------------------------------------------------------------------------------------------- Aetna Variable Small Company Portfolio: 269,004 (5,868) 478,457 428,319 50,138 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Alger American Funds: Growth Portfolio: (1) 1,199,482 (1,526,918) 169,481,196 134,718,793 34,762,403 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------- Small Capitalization Portfolio: (7) 11,721,861 (3,575,543) 403,516,606 343,440,431 60,076,175 Annuity contracts in accumulation Annuity contracts in payment period - -----------------------------------------------------------------------------------------------------------------------------
S-35
- ------------------------------------------------------------------------------------------------------------------ Net Net Unrealized Gain (Loss) Net Increase (Decrease) Net Assets - ----------------------------------- Change in In Net Assets ----------------------------------- Beginning End Unrealized from Unit Beginning End of Year of Year Gain (Loss) Transactions of Year of Year - ------------------------------------------------------------------------------------------------------------------ $327,744,944 $438,575,885 $110,830,941 $75,435,966 $4,694,078,344 $6,078,549,136 212,746,872 292,045,818 - ------------------------------------------------------------------------------------------------------------------ (9,314,233) (1,128,028) 8,186,205 (4,710,418) 354,233,289 372,629,553 5,616,023 6,218,756 - ------------------------------------------------------------------------------------------------------------------ (750,036) 5,712,842 6,462,878 (14,909,883) 245,304,466 240,346,197 - ------------------------------------------------------------------------------------------------------------------ 97,219,569 141,499,248 44,279,679 2,724,400 800,532,626 968,354,403 14,762,802 21,193,276 - ------------------------------------------------------------------------------------------------------------------ 17,286,695 22,946,346 5,659,651 (6,139,082) 65,062,153 79,552,932 - ------------------------------------------------------------------------------------------------------------------ 2,983,885 46,742,374 43,758,489 (8,490,216) 199,058,163 236,822,693 - ------------------------------------------------------------------------------------------------------------------ 1,716,824 5,507,794 3,790,970 42,582,396 21,660,591 72,115,304 - ------------------------------------------------------------------------------------------------------------------ 838,329 2,614,303 1,775,974 30,197,010 14,758,921 49,739,310 - ------------------------------------------------------------------------------------------------------------------ 112,482 588,337 475,855 21,455,983 9,067,002 32,749,254 0 53,658 - ------------------------------------------------------------------------------------------------------------------ 0 (274,002) (274,002) 1,994,092 0 2,039,640 - ------------------------------------------------------------------------------------------------------------------ 0 (237,223) (237,223) 1,079,447 0 1,098,483 - ------------------------------------------------------------------------------------------------------------------ 80,325 6,964,574 6,884,249 62,694,836 10,653,437 83,098,319 0 76,758 - ------------------------------------------------------------------------------------------------------------------ 0 (166,700) (166,700) 4,809,638 0 4,956,212 - ------------------------------------------------------------------------------------------------------------------ 6,730,808 0 (6,730,808) (132,576,331) 104,872,172 0 - ------------------------------------------------------------------------------------------------------------------ 39,364,541 0 (39,364,541) (352,729,122) 323,871,170 0 0 0 - ------------------------------------------------------------------------------------------------------------------
S-36 Variable Annuity Account C Notes to Financial Statements - December 31, 1998 (continued): 5. Supplemental Information to Statements of Operations and Changes in Net Assets (continued):
- ------------------------------------------------------------------------------------------------------------------------ Year Ended December 31, 1997 Valuation Proceeds Cost of Net Period from Investments Realized Dividends Deductions Sales Sold Gain (Loss) - ------------------------------------------------------------------------------------------------------------------------ American Century Investments - Capital Appreciation Fund: (2) $ 5,882,464 ($ 2,974,651) $347,378,690 $348,986,817 ($ 1,608,127) Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------ Calvert Social Balanced Portfolio: 3,787,208 (578,804) 1,767,421 1,342,657 424,764 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------ Fidelity Investments Variable Insurance Products Fund: Equity-Income Portfolio: 11,536,379 (1,844,101) 2,876,456 2,187,102 689,354 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------ Growth Portfolio: 3,033,640 (1,277,878) 1,967,157 1,268,813 698,344 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------ Overseas Portfolio: 762,691 (144,474) 6,265,740 5,529,606 736,134 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------ Fidelity Investments Variable Insurance Products Fund II: Asset Manager Portfolio: 2,134,313 (253,981) 1,353,806 1,132,813 220,993 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------ Contrafund Portfolio: 4,376,096 (2,382,593) 989,526 754,795 234,731 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------ Index 500 Portfolio: 890,215 (515,853) 2,042,782 1,517,607 525,175 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------ Franklin Government Securities Trust: (3) 1,578,341 (279,189) 35,001,358 34,302,739 698,619 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------ Janus Aspen Series: Aggressive Growth Portfolio: 0 (2,188,842) 16,697,333 12,596,723 4,100,610 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------ Balanced Portfolio: 940,676 (329,511) 1,236,230 981,509 254,721 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------ Flexible Income Portfolio: 757,640 (131,213) 4,035,296 3,816,553 218,743 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------ Growth Portfolio: 1,871,919 (768,752) 1,933,431 1,461,183 472,248 Annuity contracts in accumulation Annuity contracts in payment period - ------------------------------------------------------------------------------------------------------------------------ Short-Term Bond Portfolio: (4) 64,108 (25,465) 5,452,797 5,400,161 52,636 Annuity contracts in accumulation - ------------------------------------------------------------------------------------------------------------------------ Worldwide Growth Portfolio: 5,510,563 (4,109,527) 16,620,763 10,266,465 6,354,298 Annuity contracts in accumulation Annuity contracts in payment period - ------------------------------------------------------------------------------------------------------------------------
S-37
- ----------------------------------------------------------------------------------------------------------- Net Net Unrealized Gain (Loss) Net Increase (Decrease) Net Assets - ------------------------------- Change in In Net Assets ------------------------------- Beginning End Unrealized from Unit Beginning End of Year of Year Gain (Loss) Transactions of Year of Year - ----------------------------------------------------------------------------------------------------------- $8,139,519 $0 ($8,139,519) ($339,404,560) $346,244,393 $0 - ----------------------------------------------------------------------------------------------------------- 2,963,927 7,196,636 4,232,709 6,589,199 39,989,335 54,444,411 - ----------------------------------------------------------------------------------------------------------- 10,675,870 33,998,298 23,322,428 50,561,862 106,469,428 190,735,350 - ----------------------------------------------------------------------------------------------------------- 5,256,264 22,394,599 17,138,335 28,222,857 80,442,047 128,257,345 - ----------------------------------------------------------------------------------------------------------- 649,630 225,478 (424,152) 4,069,619 8,449,388 13,449,206 - ----------------------------------------------------------------------------------------------------------- 2,502,591 3,922,056 1,419,465 2,575,422 17,103,129 23,199,341 - ----------------------------------------------------------------------------------------------------------- 15,161,493 50,217,979 35,056,486 100,377,564 118,886,521 256,548,805 - ----------------------------------------------------------------------------------------------------------- 2,304,865 11,512,547 9,207,682 26,383,649 21,230,903 57,721,771 - ----------------------------------------------------------------------------------------------------------- 405,959 0 (405,959) (24,948,755) 23,356,943 0 - ----------------------------------------------------------------------------------------------------------- 17,668,916 36,485,267 18,816,351 16,995,758 172,876,567 210,600,444 - ----------------------------------------------------------------------------------------------------------- 751,567 4,804,494 4,052,927 17,251,901 15,281,267 37,451,981 - ----------------------------------------------------------------------------------------------------------- 140,666 381,113 240,447 5,252,958 8,417,464 14,756,039 - ----------------------------------------------------------------------------------------------------------- 2,192,571 11,683,190 9,490,619 28,161,560 40,800,809 79,992,417 0 35,986 - ----------------------------------------------------------------------------------------------------------- (6,468) 0 6,468 (1,788,353) 1,690,606 0 - ----------------------------------------------------------------------------------------------------------- 16,710,390 62,504,868 45,794,478 203,261,915 172,398,274 429,093,163 0 116,838 - -----------------------------------------------------------------------------------------------------------
S-38 Variable Annuity Account C Notes to Financial Statements - December 31, 1998 (continued): 5. Supplemental Information to Statements of Operations and Changes in Net Assets (continued):
- ----------------------------------------------------------------------------------------------------------------------------------- Year Ended December 31, 1997 Valuation Proceeds Cost of Net Period from Investments Realized Dividends Deductions Sales Sold Gain (Loss) - ----------------------------------------------------------------------------------------------------------------------------------- Lexington Emerging Markets Fund: $4,375 ($79,412) $1,639,618 $1,424,729 $214,889 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------------- Lexington Natural Resources Trust Fund: 1,239,038 (531,930) 14,866,827 11,618,994 3,247,833 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------------- Neuberger and Berman Advisers Management Trust - Growth Portfolio: (5) 8,158,940 (1,195,227) 128,039,479 103,983,767 24,055,712 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio Partners, Inc.: PPI MFS Emerging Equities Portfolio: 0 (406,682) 3,797,005 3,880,012 (83,007) Annuity contracts in accumulation Annuity contracts in payment period - ----------------------------------------------------------------------------------------------------------------------------------- PPI MFS Research Growth Portfolio: 0 (262,081) 1,453,829 1,486,006 (32,177) Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------------- PPI MFS Value Equity Portfolio: 0 (133,426) 928,145 929,114 (969) Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------------- PPI MFS Scudder International Growth Portfolio: 0 (235,626) 13,091,485 12,881,912 209,573 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------------- PPI MFS T. Rowe Price Growth Equity Portfolio: 0 (193,734) 891,088 887,544 3,544 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------------- Scudder Variable Life Investment Fund - International Portfolio: (6) 4,599,123 (2,286,635) 278,386,778 238,895,623 39,491,155 Annuity contracts in accumulation - ----------------------------------------------------------------------------------------------------------------------------------- Total Variable Annuity Account C $1,552,106,208 ($120,867,375) $2,013,561,413 $1,773,010,971 $240,550,442 ===================================================================================================================================
(1) Effective November 28, 1997, this funds assets were transferred to the PPI T. Rowe Price Growth Equity Portfolio. (2) Effective November 28, 1997, this funds assets were transferred to the PPI MFS Research Growth Portfolio. (3) Effective November 28, 1997, this funds assets were transferred to Aetna Income Shares. (4) Effective November 28, 1997, this funds assets were transferred to the Aetna Variable Encore Fund. (5) Effective November 28, 1997, this funds assets were transferred to the PPI MFS Value Equity Portfolio. (6) Effective November 28, 1997, this funds assets were transferred to the PPI Scudder International Growth Portfolio. (7) Effective November 28, 1997, this funds assets were transferred to the PPI MFS Emerging Equities Portfolio. S-39
- ------------------------------------------------------------------------------------------------------------------- Net Unrealized Net Gain (Loss) Net Increase (Decrease) Net Assets - ---------------------------------- Change in In Net Assets ------------------------------------ Beginning End Unrealized from Unit Beginning End of Year of Year Gain (Loss) Transactions of Year of Year - ------------------------------------------------------------------------------------------------------------------- $ 102,991 ($ 968,279) ($ 1,071,270) $ 1,874,530 $ 4,845,481 $ 5,788,593 - ------------------------------------------------------------------------------------------------------------------- 3,997,171 1,786,893 (2,210,278) 17,376,715 23,844,347 42,965,725 - ------------------------------------------------------------------------------------------------------------------- 9,459,521 0 (9,459,521) (116,641,588) 95,081,684 0 - ------------------------------------------------------------------------------------------------------------------- 0 (3,901,193) (3,901,193) 357,381,047 0 352,966,999 0 23,166 - ------------------------------------------------------------------------------------------------------------------- 0 (4,166,217) (4,166,217) 231,490,472 0 227,029,997 - ------------------------------------------------------------------------------------------------------------------- 0 1,637,084 1,637,084 114,784,015 0 116,286,704 - ------------------------------------------------------------------------------------------------------------------- 0 3,033,630 3,033,630 199,692,238 0 202,699,815 - ------------------------------------------------------------------------------------------------------------------- 0 3,371,568 3,371,568 166,269,175 0 169,450,553 - ------------------------------------------------------------------------------------------------------------------- 29,299,509 0 (29,299,509) (204,019,879) 191,515,746 0 - ------------------------------------------------------------------------------------------------------------------- $612,391,085 $915,465,761 $303,074,676 $ 615,188,037 $8,565,202,363 $11,155,254,351 ===================================================================================================================
S-40 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, 1998, and the related statements of operations and changes in net assets for each of the years in the two-year period then ended and condensed financial information for the year ended December 31, 1998. These financial statements and 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 generally accepted auditing standards. 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 and condensed financial information. Our procedures included confirmation of securities owned as of December 31, 1998, 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, 1998, the results of its operations and changes in its net assets for each of the years in the two-year period then ended and condensed financial information for the year ended December 31, 1998, in conformity with generally accepted accounting principles. /s/ KPMG LLP Hartford, Connecticut February 26, 1999 S-41 AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARY Index to Consolidated Financial Statements
Page ---- Independent Auditors' Report F-2 Consolidated Financial Statements: Consolidated Statements of Income for the Years Ended December 31, 1998, 1997 and 1996 F-3 Consolidated Balance Sheets as of December 31, 1998 and 1997 F-4 Consolidated Statements of Changes in Shareholder's Equity For the Years Ended December 31, 1998, 1997 and 1996 F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 1998, 1997 and 1996 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 Subsidiary as of December 31, 1998 and 1997, and the related consolidated statements of income, changes in shareholder's equity and cash flows for each of the years in the three-year period ended December 31, 1998. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the aforementioned consolidated financial statements present fairly, in all material respects, the financial position of Aetna Life Insurance and Annuity Company and Subsidiary at December 31, 1998 and 1997, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1998, in conformity with generally accepted accounting principles. /s/ KPMG LLP Hartford, Connecticut February 3, 1999 F-2 AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARY (A wholly owned subsidiary of Aetna Retirement Holdings, Inc.) Consolidated Statements of Income (millions)
Years Ended December 31, ------------------------------------ 1998 1997 1996 ---------- ---------- ---------- Revenue: Premiums $ 79.4 $ 69.1 $ 84.9 Charges assessed against policyholders 324.3 262.0 197.0 Net investment income 877.6 878.8 852.6 Net realized capital gains 10.4 29.7 17.0 Other income 29.6 38.3 43.6 ---------- ---------- ---------- Total revenue 1,321.3 1,277.9 1,195.1 ---------- ---------- ---------- Benefits and expenses: Current and future benefits 714.4 720.4 728.3 Operating expenses 313.2 286.5 275.8 Amortization of deferred policy acquisition costs 106.7 82.8 28.0 Severance and facilities charges -- -- 47.1 ---------- ---------- ---------- Total benefits and expenses 1,134.3 1,089.7 1,079.2 ---------- ---------- ---------- Income from continuing operations before income taxes 187.0 188.2 115.9 Income taxes 47.4 50.7 30.7 ---------- ---------- ---------- Income from continuing operations 139.6 137.5 85.2 Discontinued Operations, net of tax Income from operations 61.8 67.8 55.9 Gain on sale 59.0 -- -- ---------- ---------- ---------- Net income $ 260.4 $ 205.3 $ 141.1 ========== ========== ==========
See Notes to Consolidated Financial Statements F-3 AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARY (A wholly owned subsidiary of Aetna Retirement Holdings, Inc.) Consolidated Balance Sheets (millions, except share data)
December 31, December 31, 1998 1997 ------------ ------------ Assets Investments: Debt securities available for sale, at fair value, (amortized cost: $11,570.3 and $12,912.2) $12,067.2 $13,463.8 Equity securities, at fair value, Nonredeemable preferred stock (cost: $202.6 and $131.7) 203.3 147.6 Investment in affiliated mutual funds (cost: $96.8 and$78.1) 100.1 83.0 Common stock (cost: $1.0 and $0.2) 2.0 .6 Short-term investments 47.9 95.6 Mortgage loans 12.7 12.8 Policy loans 292.2 469.6 ------------ ------------ Total investments 12,725.4 14,273.0 Cash and cash equivalents 608.4 565.4 Short-term investments under securities loan agreement 277.3 -- Accrued investment income 151.6 163.0 Premiums due and other receivables 46.7 51.9 Reinsurance recoverable 2,959.8 11.8 Deferred policy acquisition costs 864.0 1,654.6 Reinsurance loan to affiliate -- 397.2 Deferred tax asset 120.6 -- Other assets 66.6 46.8 Separate accounts assets 29,458.4 22,982.7 ------------ ------------ Total assets $47,278.8 $40,146.4 ============ ============ Liabilities and Shareholder's Equity Liabilities: Future policy benefits $ 3,815.9 $ 3,763.7 Unpaid claims and claim expenses 18.8 38.0 Policyholders' funds left with the Company 11,305.6 11,143.5 ------------ ------------ Total insurance reserve liabilities 15,140.3 14,945.2 Payables under securities loan agreement 277.3 -- Other liabilities 793.2 312.8 Income taxes: Current 279.8 12.4 Deferred -- 72.0 Separate accounts liabilities 29,430.2 22,970.0 ------------ ------------ Total liabilities 45,920.8 38,312.4 ------------ ------------ Shareholder's equity: Common stock, par value $50 (100,000 shares authorized; 55,000 shares issued and outstanding) 2.8 2.8 Paid-in capital 427.3 418.0 Accumulated other comprehensive income 104.8 92.9 Retained earnings 823.1 1,320.3 ------------ ------------ Total shareholder's equity 1,358.0 1,834.0 ------------ ------------ Total liabilities and shareholder's equity $47,278.8 $40,146.4 ============ ============
See Notes to Consolidated Financial Statements F-4 AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARY (A wholly owned subsidiary of Aetna Retirement Holdings, Inc.) Consolidated Statements of Changes in Shareholder's Equity (millions)
Years Ended December 31, -------------------------------------- 1998 1997 1996 ---------- ---------- ---------- Shareholder's equity, beginning of year $1,834.0 $1,609.5 $1,583.0 Comprehensive income Net income 260.4 205.3 141.1 Other comprehensive income (loss), net of tax: Unrealized gains (losses) on securities ($18.2 million, $49.9 million and $(110.6) million, pretax, respectively) 11.9 32.4 (72.0) ---------- ---------- ---------- Total comprehensive income 272.3 237.7 69.1 ---------- ---------- ---------- Capital contributions 9.3 -- 10.4 Other changes 1.4 4.1 (49.5) Common stock dividends (759.0) (17.3) (3.5) ---------- ---------- ---------- Shareholder's equity, end of year $1,358.0 $1,834.0 $1,609.5 ========== ========== ==========
See Notes to Consolidated Financial Statements F-5 AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARY (A wholly owned subsidiary of Aetna Retirement Holdings, Inc.) Consolidated Statements of Cash Flows (millions)
Years Ended December 31, --------------------------------------- 1998 1997 1996 --------- --------- --------- Cash Flows from Operating Activities: Net income $ 260.4 $ 205.3 $ 141.1 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Net accretion of discount on investments (29.5) (66.4) (68.0) Gain on sale of discontinued operations (88.3) -- -- --------- --------- --------- Cash flows provided by operating activities and net realized capital gains before changes in assets and liabilities 142.6 138.9 73.1 Net realized capital gains (11.1) (36.0) (19.7) --------- --------- --------- Cash flows provided by operating activities before changes in assets and liabilities 131.5 102.9 53.4 Changes in assets and liabilities: Decrease (increase) in accrued investment income 11.4 (4.0) 16.5 (Increase) decrease in premiums due and other receivables (16.3) (33.3) 1.6 Decrease (increase) in policy loans 177.4 (70.3) (60.7) Increase in deferred policy acquisition costs (117.3) (139.3) (174.0) Decrease in reinsurance loan to affiliate 397.2 231.1 27.2 Net increase in universal life account balances 122.9 157.1 146.6 Decrease in other insurance reserve liabilities (41.8) (120.3) (114.9) Net (decrease) increase in other liabilities and other assets (50.8) (41.7) 3.1 Increase (decrease) in income taxes 100.4 (31.4) (26.7) Other, net -- -- 1.1 --------- --------- --------- Net cash provided by (used for) operating activities 714.6 50.8 (126.8) --------- --------- --------- Cash Flows from Investing Activities: Proceeds from sales of: Debt securities available for sale 6,790.2 5,311.3 5,182.2 Equity securities 150.1 103.1 190.5 Mortgage loans 0.3 0.2 8.7 Life business 966.5 -- -- Investment maturities and collections of: Debt securities available for sale 1,290.3 1,212.7 885.2 Short-term investments 129.9 89.3 35.0 Cost of investment purchases in: Debt securities available for sale (6,701.4) (6,732.8) (6,534.3) Equity securities (125.7) (113.3) (118.1) Other investments (2,725.9) -- -- Short-term investments (81.9) (149.9) (54.7) Other, net -- -- (17.6) --------- --------- --------- Net cash used for investing activities (307.6) (279.4) (423.1) --------- --------- --------- Cash Flows from Financing Activities: Deposits and interest credited for investment contracts 1,571.1 1,621.2 1,579.5 Withdrawals of investment contracts (1,393.1) (1,256.3) (1,146.2) Capital contribution to Separate Account -- (25.0) -- Return of capital from Separate Account 1.7 12.3 -- Capital contribution from HOLDCO 9.3 -- 10.4 Dividends paid to shareholder (553.0) (17.3) (3.5) --------- --------- --------- Net cash (used for) provided by financing activities (364.0) 334.9 440.2 --------- --------- --------- Net increase (decrease) in cash and cash equivalents 43.0 106.3 (109.7) Cash and cash equivalents, beginning of year 565.4 459.1 568.8 --------- --------- --------- Cash and cash equivalents, end of year $ 608.4 $ 565.4 $ 459.1 ========= ========= ========= Supplemental cash flow information: Income taxes paid, net $ 48.4 $ 119.6 $ 85.5 ========= ========== ==========
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 and its wholly owned subsidiary (collectively, the "Company") are providers of financial services in the United States. Prior to the sale of the domestic individual life insurance business on October 1, 1998, the Company had two business segments: financial services and individual life insurance. On October 1, 1998, the Company sold its domestic individual life insurance operations to Lincoln National Corporation ("Lincoln") and accordingly they are now classified as Discontinued Operations. (Refer to note 2) Financial services 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, and non-qualified annuity contracts. These contracts may be deferred or immediate ("payout annuities"). Financial services also include investment advisory services and pension plan administrative services. Discontinued Operations include universal life, variable universal life, traditional whole life and term insurance. Basis of Presentation --------------------- The consolidated financial statements include Aetna Life Insurance and Annuity Company and its wholly owned subsidiary, Aetna Insurance Company of America. Aetna Life Insurance and Annuity Company is a wholly owned subsidiary of Aetna Retirement Holdings, Inc. ("HOLDCO"). HOLDCO is a wholly owned subsidiary of Aetna Retirement Services, Inc. ("ARS"), whose ultimate parent is Aetna Inc. ("Aetna"). The consolidated financial statements have been prepared in accordance with generally accepted accounting principles. Certain reclassifications have been made to 1997 and 1996 financial information to conform to the 1998 presentation. New Accounting Standards ------------------------ Disclosures about Segments of an Enterprise and Related Information As of December 31, 1998, the Company adopted Financial Accounting Standard ("FAS") No. 131, Disclosures about Segments of an Enterprise and Related Information. This statement establishes standards for the reporting of information relating to operating segments. This statement supersedes FAS No. 14, Financial Reporting for Segments of a Business Enterprise, which requires reporting segment information by industry and geographic area (industry approach). Under FAS No. 131, operating segments are defined as components of a company for which separate financial information is available and is used by management to allocate resources and assess performance (management approach). The adoption of this statement did not change the composition or the results of operations of any of the operating segments of the Company, which are consistent with the management approach. F-7 Notes to Consolidated Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Accounting for the Costs of Computer Software Developed and Obtained for Internal Use On January 1, 1998, the Company adopted Statement of Position ("SOP") 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, issued by the American Institute of Certified Public Accountants ("AICPA"). This statement requires that certain costs incurred in developing internal use computer software (in process at, and subsequent to the adoption date) be capitalized, and provides guidance for determining whether computer software is considered to be for internal use. The Company amortizes these costs over a period of 3 to 5 years. Previously, the Company expensed the cost of internal-use computer software as incurred. The adoption of this statement resulted in a net after-tax increase to the results of operations of $6.5 million for the year ended December 31, 1998. Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities In June 1996, the Financial Accounting Standards Board ("FASB") issued FAS No. 125, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, that provides accounting and reporting standards for transfers of financial assets and extinguishments of liabilities. FAS No. 125 was effective for 1997 financial statements; however, certain provisions relating to accounting for repurchase agreements and securities lending were not effective until January 1, 1998. The adoption of those provisions effective in 1998 did not have a material effect on the Company's financial position or results of operations. Future Application of Accounting Standards ------------------------------------------ Deposit Accounting: Accounting for Insurance and Reinsurance Contracts That Do Not Transfer Insurance Risk In October 1998, the AICPA issued SOP 98-7, Deposit Accounting: Accounting for Insurance and Reinsurance Contracts That Do Not Transfer Insurance Risk, which 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. This statement is effective for the Company's financial statements beginning January 1, 2000, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this statement and the potential effect on its financial position and results of operations. Accounting for Derivative Instruments and Hedging Activities In June 1998, the FASB issued FAS No. 133, Accounting for Derivative Instruments and Hedging Activities. This standard 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. This standard is effective for the Company's financial statements beginning January 1, 2000, with early adoption permitted. The Company is currently evaluating the impact of adoption of this statement and the potential effect on its financial position and results of operations. F-8 Notes to Consolidated Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Accounting by Insurance and Other Enterprises for Insurance-Related Assessments In December 1997, the AICPA issued SOP 97-3, Accounting by Insurance and Other Enterprises for Insurance-Related Assessments, which provides guidance for determining when an insurance or other enterprise should recognize a liability for guaranty-fund and other insurance-related assessments and guidance for measuring the liability. This statement is effective for 1999 financial statements with early adoption permitted. The Company does not expect adoption of this statement to have a material effect on its financial position or results of operations. Use of Estimates ---------------- The preparation of financial statements in conformity with generally accepted accounting principles 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. These securities are written down (as realized capital losses) for other than temporary declines in value. Unrealized capital gains and losses related to available-for-sale investments, other than amounts allocable to experience-rated contractholders, are reflected in shareholder's equity, net of related taxes. 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. F-9 Notes to Consolidated Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) At December 31, 1998 and 1997, the Company loaned securities (which are reflected as invested assets) with a fair value of approximately $277.3 million and $385.1 million, respectively. Purchases and sales of debt and equity securities are recorded on the trade date. The investment in affiliated mutual funds represents an investment in Aetna managed mutual funds which have been seeded by the Company, and is carried at fair value. Mortgage loans and policy loans are carried at unpaid principal balances, net of impairment reserves. Sales of mortgage loans are recorded on the closing date. 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 4.) 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. Deferred Policy Acquisition Costs --------------------------------- Certain costs of acquiring 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 expenses. For fixed ordinary life contracts (prior to the sale of the domestic individual life insurance business to Lincoln on October 1, 1998, refer to Note 2), such costs are amortized over expected premium-paying periods (up to 20 years). For universal life (prior to the sale of the domestic individual life insurance business to Lincoln on October 1, 1998, refer to Note 2), and certain annuity contracts, F-10 Notes to Consolidated Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) 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 50 years for universal life and up to 20 years for certain annuity contracts). 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 losses and expenses. Insurance Reserve Liabilities ----------------------------- Future policy benefits include reserves for universal life, immediate annuities with life contingent payouts and traditional life insurance contracts. Prior to the sale of the domestic individual life insurance business on October 1, 1998, (refer to note 2), reserves for universal life products were equal to cumulative deposits less withdrawals and charges plus credited interest thereon, plus (less) net realized capital gains (losses) (which were reflected through credited interest rates). These reserves also included unrealized capital gains (losses) related to FAS No. 115. As a result of the sale and transfer of assets supporting the business, reserves for universal life products will no longer include net realized capital gains (losses) and unrealized gains (losses) related to FAS No. 115 for the years ended December 31, 1998 and beyond. Reserves for immediate annuities with life contingent payouts and traditional life insurance contracts are for immediate annuities with life contingent-payouts and traditional life insurance 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 1.50% to 11.25% for all years presented. Investment yield is based on the Company's experience. Mortality and withdrawal rate assumptions are based on relevant Aetna 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 3.00% to 8.10% 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. F-11 Notes to Consolidated Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Premiums, Charges Assessed Against Policyholders, Benefits and Expenses ----------------------------------------------------------------------- For universal life (prior to the sale of the domestic individual life insurance business to Lincoln on October 1, 1998, refer to Note 2) and 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. Life insurance premiums, other than premiums for universal life (prior to the sale of the domestic individual life insurance business to Lincoln on October 1, 1998, refer to Note 2) and certain annuity contracts, are recorded as premium revenue when due. 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 ----------------- Assets held under variable universal life and variable annuity contracts are segregated in Separate Accounts and are invested, as designated by the contractholder or participant under a contract (who bears the investment risk subject, in some cases, to minimum guaranteed rates) in shares of mutual funds which are managed by an affiliate of the Company, or other selected mutual funds not managed by the Company. As of December 31, 1998, Separate Accounts assets are carried at fair value. At December 31, 1998, unrealized gains of $10.0 million, after taxes, on assets supporting a guaranteed interest option are reflected in shareholder's equity. At December 31, 1997, Separate Account assets supporting the guaranteed interest option were carried at an amortized cost of $658.6 million (fair value $668.7 million). 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 3.00% to 8.10% in 1998 and 4.10% to 8.10% in 1997. 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. F-12 Notes to Consolidated Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) 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 recoverables deemed probable of recovery are reflected as assets on the Company's Consolidated Balance Sheets. The majority of the reinsurance recoverable on the Consolidated Balance Sheets at December 31, 1998 is related to the reinsurance recoverable from Lincoln arising from the sale of the domestic life insurance business. (Refer to Note 2) Income Taxes ------------ The Company is included in the consolidated federal income tax return of Aetna. 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. 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. Insurance reserves ceded as of December 31, 1998 were $2.9 billion. Deferred policy acquisition costs related to the life policies of $907.9 million were written off against the gain on the sale. Certain invested assets related to and supporting the life policies were sold to consummate the life sale, 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 $58 million will be deferred and amortized over approximately 15 years (as profits in the book of business sold emerge). The remaining portion of the gain was recognized immediately in net income and was largely attributed to the sale of the domestic life insurance business for access to the agency sales force and brokerage distribution channel. The unamortized portion of the gain is presented in other liabilities on the Consolidated Balance Sheets. The operating results of the domestic individual life insurance business are presented as Discontinued Operations. All prior year income statement data has been restated to reflect the presentation as Discontinued Operations. Revenues for the individual life segment were $652.2 million, $620.4 million and $445.7 million for 1998, 1997 and 1996, respectively. Premiums ceded and reinsurance recoveries made in 1998 totaled $153.4 million and $57.7 million, respectively. F-13 Notes to Consolidated Financial Statements (continued) 3. Investments Debt securities available for sale as of December 31, 1998 were as follows:
Gross Gross Amortized Unrealized Unrealized Fair 1998 (Millions) Cost Gains Losses Value -------------------------------------------------------------------------------------------------------------- U.S. government and government agencies and authorities $ 718.9 $ 60.4 $ 0.2 $ 779.1 States, municipalities and political subdivisions 0.3 -- -- 0.3 U.S. corporate securities: Utilities 615.2 29.8 4.1 640.9 Financial 2,259.2 94.6 5.6 2,348.2 Transportation/capital goods 580.8 33.0 1.1 612.7 Health care/consumer products 1,328.2 69.8 4.8 1,393.2 Natural resources 254.5 6.9 2.3 259.1 Other corporate securities 261.7 5.8 7.4 260.1 -------------------------------------------------------------------------------------------------------------- Total U.S. corporate securities 5,299.6 239.9 25.3 5,514.2 -------------------------------------------------------------------------------------------------------------- Foreign securities: Government, including political subdivisions 507.6 30.4 32.9 505.1 Utilities 147.0 32.4 -- 179.4 Other 511.2 14.9 1.8 524.3 -------------------------------------------------------------------------------------------------------------- Total foreign securities 1,165.8 77.7 34.7 1,208.8 -------------------------------------------------------------------------------------------------------------- Residential mortgage-backed securities: Pass-throughs 671.9 38.4 2.9 707.4 Collateralized mortgage obligations 1,879.6 119.7 10.4 1,988.9 -------------------------------------------------------------------------------------------------------------- Total residential mortgage-backed securities 2,551.5 158.1 13.3 2,696.3 -------------------------------------------------------------------------------------------------------------- Commercial/Multifamily mortgage-backed securities 1,114.9 30.9 9.8 1,136.0 Other asset-backed securities 719.3 13.8 0.6 732.5 -------------------------------------------------------------------------------------------------------------- Total debt securities $11,570.3 $580.8 $83.9 $12,067.2 ==============================================================================================================
F-14 Notes to Consolidated Financial Statements (continued) 3. Investments (continued) Debt securities available for sale as of December 31, 1997 were as follows:
Gross Gross Amortized Unrealized Unrealized Fair 1997 (Millions) Cost Gains Losses Value -------------------------------------------------------------------------------------------------------------- U.S. government and government agencies and authorities $ 1,219.7 $ 74.0 $ 0.1 $ 1,293.6 States, municipalities and political subdivisions 0.3 -- -- 0.3 U.S. corporate securities: Utilities 521.3 23.5 0.9 543.9 Financial 2,370.7 84.6 1.3 2,454.0 Transportation & capital goods 528.2 33.2 0.1 561.3 Healthcare & consumer products 728.5 27.0 2.6 752.9 Natural resources 143.5 5.5 -- 149.0 Other corporate securities 545.2 27.2 0.1 572.3 -------------------------------------------------------------------------------------------------------------- Total U.S. corporate securities 4,837.4 201.0 5.0 5,033.4 -------------------------------------------------------------------------------------------------------------- Foreign securities: Government, including political subdivisions 612.5 36.7 23.6 625.6 Utilities 177.5 28.7 -- 206.2 Other 857.9 27.7 42.8 842.8 -------------------------------------------------------------------------------------------------------------- Total foreign securities 1,647.9 93.1 66.4 1,674.6 -------------------------------------------------------------------------------------------------------------- Residential mortgage-backed securities: Pass-throughs 784.4 71.3 2.0 853.7 Collateralized mortgage obligations 2,280.5 137.4 2.0 2,415.9 -------------------------------------------------------------------------------------------------------------- Total residential mortgage-backed securities 3,064.9 208.7 4.0 3,269.6 -------------------------------------------------------------------------------------------------------------- Commercial/Multifamily mortgage-backed securities 1,127.8 34.0 0.4 1,161.4 Other asset-backed securities 1,014.2 17.1 0.4 1,030.9 -------------------------------------------------------------------------------------------------------------- Total debt securities $12,912.2 $627.9 $76.3 $13,463.8 ==============================================================================================================
F-15 Notes to Consolidated Financial Statements (continued) 3. Investments (continued) At December 31, 1998 and 1997, net unrealized appreciation of $496.9 million and $551.6 million, respectively, on available-for-sale debt securities included $355.8 million and $429.3 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 debt securities for the year ended December 31, 1998 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 $ 553.5 $ 554.6 After one year through five years 2,619.7 2,692.4 After five years through ten years 1,754.0 1,801.7 After ten years 2,257.4 2,453.7 Mortgage-backed securities 3,666.4 3,832.3 Other asset-backed securities 719.3 732.5 --------------------------------------------------------------- Total $11,570.3 $12,067.2 ===============================================================
At December 31, 1998 and 1997, debt securities carried at $8.8 million and $8.2 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, 1998. Included in the Company's debt securities were residential collateralized mortgage obligations ("CMOs") supporting the following:
1998 1997 ----------------------- ----------------------- Fair Amortized Fair Amortized (Millions) Value Cost Value Cost - ------------------------------------------------------------------------------------------------------- Total residential CMOs (1) $ 1,988.9 $1,879.6 $ 2,415.9 $2,280.5 ======================================================================================================= Percentage of total: Supporting experience rated products 81.7% 81.6% Supporting remaining products 18.3% 18.4% - ------------------------------------------------------------------------------------------------------- 100.0% 100.0% =======================================================================================================
(1) At December 31, 1998 and 1997, approximately 66% and 73%, respectively, of the Company's residential CMO holdings were backed by government agencies such as GNMA, FNMA, FHLMC. F-16 Notes to Consolidated Financial Statements (continued) 3. Investments (continued) There are various categories of CMOs which are subject to different degrees of risk from changes in interest rates and, for nonagency-backed CMOs, 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, 1998 and 1997, approximately 2% and 4%, 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 available for sale as of December 31 were as follows:
(Millions) 1998 1997 ------------------------------------------------------- Amortized Cost $300.4 $210.0 Gross unrealized gains 13.1 21.3 Gross unrealized losses 8.1 .1 ------------------------------------------------------- Fair Value $305.4 $231.2 =======================================================
4. Financial Instruments Estimated Fair Value -------------------- The carrying values and estimated fair values of certain of the Company's financial instruments at December 31, 1998 and 1997 were as follows:
1998 1997 --------------------- ----------------------- Carrying Fair Carrying Fair (Millions) Value Value Value Value - ---------------------------------------------------------------------------------------- Assets: Mortgage loans $ 12.7 $ 12.3 $ 12.8 $ 12.4 Liabilities: Investment contract liabilities: With a fixed maturity $ 1,063.9 $ 984.3 $ 1,030.3 $1,005.4 Without a fixed maturity 10,241.7 9,686.2 10,113.2 9,587.5 - -----------------------------------------------------------------------------------------
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-17 Notes to Consolidated Financial Statements (continued) 4. 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. 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 as of December 31, 1998 were $1.5 million, respectively. The carrying values and estimated fair values as of December 31, 1997 were $.6 million, respectively. F-18 Notes to Consolidated Financial Statements (continued) 4. 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, 1998 was as follows:
Amortized Fair (Millions) Cost Value ----------------------------------------------------------------------------- Residential collateralized mortgage obligations $1,879.6 $1,988.9 Principal-only strips (included above) 20.2 24.0 Interest-only strips (included above) 17.3 18.0 Other structured securities with derivative characteristics (1) 87.3 80.6 -----------------------------------------------------------------------------
(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. 5. Net Investment Income Sources of net investment income were as follows:
1998 1997 1996 ---------------------------------------------------------------------------- Debt securities $ 798.8 $ 814.6 $ 805.3 Nonredeemable preferred stock 18.4 12.9 5.8 Investment in affiliated mutual funds 6.6 3.8 10.8 Mortgage loans 0.6 0.3 0.6 Policy loans 7.2 5.7 6.4 Reinsurance loan to affiliate 2.3 5.5 9.3 Cash equivalents 44.6 38.8 27.1 Other 16.7 9.5 1.8 ----------------------------------------------------------------------------- Gross investment income 895.2 891.1 867.1 Less: investment expenses (17.6) (12.3) (14.5) ----------------------------------------------------------------------------- Net investment income $ 877.6 $ 878.8 $ 852.6 =============================================================================
Net investment income includes amounts allocable to experience rated contractholders of $655.6 million, $673.8 million and $649.5 million for the years ended December 31, 1998, 1997 and 1996, respectively. Interest credited to contractholders is included in current and future benefits. F-19 Notes to Consolidated Financial Statements (continued) 6. Dividend Restrictions and Shareholder's Equity The Company paid $553.0 million and $17.3 million in cash dividends to HOLDCO in 1998 and 1997, respectively. Additionally, at December 31, 1998, the Company accrued $206.0 million in dividends. Of the $759.0 million dividends paid and 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. In January 1999, the accrued dividends of $206.0 million were paid by the Company to HOLDCO. Further dividends to be paid by the Company to HOLDCO during 1999 will need to be approved by the Insurance Department of the State of Connecticut (the "Department") prior to payment. The Department recognizes as net income and shareholder's 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 $148.1 million, $80.5 million and $57.8 million for the years ended December 31, 1998, 1997 and 1996, respectively. Statutory capital and surplus was $773.0 million and $778.7 million as of December 31, 1998 and 1997, respectively. As of December 31, 1998, 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. 7. 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 on investments were as follows:
(Millions) 1998 1997 1996 ---------------------------------------------------------------------------- Debt securities $ 7.4 $21.1 $ 9.5 Equity securities 3.0 8.6 7.5 ---------------------------------------------------------------------------- Pretax realized capital gains $10.4 $29.7 $17.0 ============================================================================ After-tax realized capital gains $ 7.3 $19.2 $11.1 ============================================================================
Net realized capital gains of $15.0 million, $83.7 million and $52.5 million for 1998, 1997 and 1996, 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 were $118.6 million and $120.1 million at December 31, 1998 and 1997, respectively. F-20 Notes to Consolidated Financial Statements (continued) 7. Capital Gains and Losses on Investment Operations (continued) Proceeds from the sale of available-for-sale debt securities and the related gross gains and losses were as follows:
(Millions) 1998 1997 1996 ---------------------------------------------------------------------------- Proceeds on sales $6,790.2 $5,311.3 $5,182.2 Gross gains 98.8 23.8 22.1 Gross losses 91.4 2.7 12.6 ----------------------------------------------------------------------------
Changes in shareholder's equity related to changes in accumulated other comprehensive income (unrealized capital gains and losses on securities, excluding those related to experience-rated contractholders) were as follows:
(Millions) 1998 1997 1996 ----------------------------------------------------------------------------------- Debt securities $ 18.9 $44.3 $(100.1) Equity securities (16.1) 5.6 (10.5) Other 15.4 -- -- ----------------------------------------------------------------------------------- Subtotal 18.2 49.9 (110.6) Increase (decrease) in deferred income taxes (Refer to note 8) 6.3 17.5 (38.6) ----------------------------------------------------------------------------------- Net changes in accumulated other comprehensive income $ 11.9 $32.4 $ (72.0) ===================================================================================
Net unrealized capital gains allocable to experience-rated contracts of $355.8 million at December 31, 1998 are reflected on the Consolidated Balance Sheets in Policyholders' funds left with the Company and are not included in shareholder's equity. At December 31, 1997, net unrealized capital gains of $356.7 million and $72.6 million at December 31, 1997 are reflected on the Consolidated Balance Sheets in policyholders' funds left with the Company and future policy benefits, respectively, and are not included in shareholder's equity. F-21 Notes to Consolidated Financial Statements (continued) 7. Capital Gains and Losses on Investment Operations (continued) Shareholder's equity included the following accumulated other comprehensive income, which are net of amounts allocable to experience-rated contractholders, at December 31:
(Millions) 1998 1997 1996 ---------------------------------------------------------------------------------- Debt securities: Gross unrealized capital gains $157.3 $140.6 $101.7 Gross unrealized capital losses (16.2) (18.4) (23.8) ---------------------------------------------------------------------------------- 141.1 122.2 77.9 ---------------------------------------------------------------------------------- Equity securities: Gross unrealized capital gains 13.1 21.2 16.3 Gross unrealized capital losses (8.1) (0.1) (0.8) ---------------------------------------------------------------------------------- 5.0 21.1 15.5 ---------------------------------------------------------------------------------- Other: Gross unrealized capital gains 17.1 -- -- Gross unrealized capital losses (1.7) -- -- ---------------------------------------------------------------------------------- 15.4 -- -- ---------------------------------------------------------------------------------- Deferred income taxes (Refer to note 8) 56.7 50.4 32.9 ---------------------------------------------------------------------------------- Net accumulated other comprehensive income $104.8 $ 92.9 $ 60.5 ==================================================================================
Changes in accumulated other comprehensive income related to changes in unrealized gains (losses) on securities (excluding those related to experience-rated contractholders) were as follows:
(Millions) 1998 1997 1996 ---------------------------------------------------------------------------------- Unrealized holding gains (losses) arising during the year (1) $38.3 $98.8 $(14.8) Less: reclassification adjustment for gains and other items included in net income (2) 26.4 66.4 57.2 ----------------------------------------------------------------------------------- Net unrealized gains (losses) on securities $11.9 $32.4 $(72.0) ===================================================================================
(1) Pretax unrealized holding gains (losses) arising during the year were $58.8 million, $152.3 million and ($22.9) million for 1998, 1997 and 1996, respectively. (2) Pretax reclassification adjustments for gains and other items included in net income were $40.6 million, $102.4 million and $87.7 million for 1998, 1997 and 1996, respectively. F-22 Notes to Consolidated Financial Statements (continued) 8. Income Taxes The Company is included in the consolidated federal income tax return, the combined returns of Connecticut and New York, and the Illinois unitary state income tax returns of Aetna. Aetna allocates to each member an amount approximating the tax it would have incurred were it not a member of the consolidated group, and credits the member for the use of its tax saving attributes in the consolidated federal income tax return. Income taxes from continuing operations consist of the following:
(Millions) 1998 1997 1996 ------------------------------------------------------------------------------- Current taxes (benefits): Federal $ 246.4 $ 28.7 $ 30.0 State 1.3 2.0 2.3 Net realized capital gains 16.8 39.1 24.4 ------------------------------------------------------------------------------ 264.5 69.8 56.7 ------------------------------------------------------------------------------ Deferred taxes (benefits): Federal (203.2) 9.4 (7.6) Net realized capital (losses) (13.9) (28.5) (18.4) ------------------------------------------------------------------------------ (217.1) (19.1) (26.0) ------------------------------------------------------------------------------ Total $ 47.4 $ 50.7 $ 30.7 ==============================================================================
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:
(Millions) 1998 1997 1996 ------------------------------------------------------------------------------ Income from continuing operations before income taxes $187.0 $188.2 $115.9 Tax rate 35% 35% 35% ------------------------------------------------------------------------------ Application of the tax rate 65.5 65.9 40.6 Tax effect of: State income tax, net of federal benefit 0.9 1.3 1.5 Excludable dividends (17.1) (15.6) (10.8) Other, net (1.9) (0.9) (0.6) ------------------------------------------------------------------------------ Income taxes $ 47.4 $ 50.7 $ 30.7 ==============================================================================
F-23 Notes to Consolidated Financial Statements (continued) 8. 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) 1998 1997 ------------------------------------------------------------------------ Deferred tax assets: Insurance reserves $ 324.1 $415.8 Unrealized gains allocable to experience rated contracts 124.5 150.1 Investment (gains) losses (0.3) 6.6 Postretirement benefits other than pensions 26.0 26.3 Deferred compensation 38.6 31.2 Restructuring charge 2.9 9.5 Depreciation 1.7 3.9 Sale of individual life 48.9 - Other 16.0 8.8 ------------------------------------------------------------------------ Total gross assets 582.4 652.2 ------------------------------------------------------------------------ Deferred tax liabilities: Deferred policy acquisition costs 272.7 515.6 Market discount 4.5 5.1 Net unrealized capital gains 181.2 200.5 Pension 3.9 3.6 Other (0.5) (0.6) ------------------------------------------------------------------------ Total gross liabilities 461.8 724.2 ------------------------------------------------------------------------ Net deferred tax (asset) liability $(120.6) $ 72.0 ========================================================================
Net unrealized capital gains and losses are presented in shareholder's equity net of deferred taxes. As of December 31, 1998 and 1997, no valuation allowances were required for unrealized capital gains and losses. Management believes that it is more likely than not that the Company will realize the benefit of the net deferred tax asset. The Company expects sufficient taxable income in the future to realize the net deferred tax asset because of the Company's long-term history of having taxable income, which is projected to continue. 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, 1998. This amount would be taxed only under certain conditions. F-24 Notes to Consolidated Financial Statements (continued) 8. Income Taxes (Continued) 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. The Internal Revenue Service (the "Service") has completed examinations of the consolidated federal income tax returns of Aetna through 1990. 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 1991 through 1994. 9. Benefit Plans Aetna has noncontributory defined benefit pension plans covering substantially all employees. Aetna's accrued pension cost has been allocated to its subsidiaries, including the Company, under an allocation based on eligible salaries. Data on a separate company basis regarding the proportionate share of the projected benefit obligation and plan assets is not available. The accumulated benefit obligation and plan assets are recorded by Aetna. As of the measurement date (i.e., September 30), the accumulated plan assets exceeded accumulated plan benefits. Allocated pretax charges to operations for the pension plan (based on the Company's total salary cost as a percentage of Aetna's total salary cost) were $0.8 million, $2.7 million and $4.3 million for the years ended December 31, 1998, 1997 and 1996, respectively. In addition to providing pension benefits, Aetna currently 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 50 with 15 years of service or at age 65 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 Aetna. The costs to the Company associated with the Aetna postretirement plans for 1998, 1997 and 1996 were $0.9 million, $2.7 million and $1.8 million, respectively. As of December 31, 1996, Aetna transferred to the Company approximately $77.7 million of accrued liabilities, primarily related to the pension and postretirement benefit plans described above, that had been previously recorded by Aetna. The after-tax amount of this transfer (approximately $50.5 million) is reported as a reduction in retained earnings. The Company, in conjunction with Aetna, 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., September 30), the accumulated plan assets exceeded accumulated plan benefits. The Company, in conjunction with Aetna, 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 1998, 1997 and 1996 were $1.4 million, $0.6 million and $0.7 million, respectively. Effective January 1, 1999, the Company, in conjunction with Aetna, changed the formula for providing pension benefits from the existing final average pay formula to a cash balance formula, F-25 Notes to Consolidated Financial Statements (continued) 9. Benefit Plans (continued) which will credit 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 the Company's results of operations, liquidity or financial condition. Incentive Savings Plan--Substantially all employees are eligible to participate in a savings plan under which designated contributions, which may be invested in common stock of Aetna or certain other investments, are matched, up to 5% of compensation, by Aetna. Pretax charges to operations for the incentive savings plan were $4.7 million, $4.4 million and $5.4 million in 1998, 1997 and 1996, respectively. Stock Plans--Aetna has a stock incentive plan that provides for stock options, deferred contingent common stock or equivalent cash awards or restricted stock to certain key employees. Executive and middle management employees may be granted options to purchase common stock of Aetna at or above the market price on the date of grant. Options generally become 100% vested three years after the grant is made, with one-third of the options vesting each year. Aetna does 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 may be granted incentive units which are rights to receive common stock or an equivalent value in cash. The incentive units may vest within a range from 0% to 175% at the end of a four year period based on the attainment of performance goals. The costs to the Company associated with the Aetna stock plans for 1998, 1997 and 1996, were $4.1 million, $2.9 million and $8.1 million, respectively. As of December 31, 1996, Aetna transferred to the Company approximately $1.1 million of deferred tax benefits related to stock options. This amount is reported as an increase in retained earnings. In 1998, other changes in shareholder's equity include an additional increase of $0.7 million reflecting revisions to the allocation of the deferred tax benefit. 10. Related Party Transactions Investment Advisory and Other Fees ---------------------------------- In February 1998 and May 1998, Aeltus Investment Management Inc. ("Aeltus"), an affiliate of the Company, assumed investment advisory services for Aetna managed mutual funds and variable funds (collectively, the Funds), respectively. In connection with that assumption of duties, Aeltus entered into participation agreements with the Company. Participation fees paid to the Company, from Aeltus, included in charges assessed against policyholders amounted to $26.9 million for 1998. Prior to assuming investment advisory services, Aeltus served as subadvisor to the Funds. Since August 1996, Aeltus has served as advisor for most of the Company's General Account assets. Fees paid by the Company to Aeltus, included in both charges assessed against policyholders and net investment income, on an annual basis, range from 0.06% to 0.55% of the average daily net assets under management. For the years ended December 31, 1998, 1997 and 1996, the Company paid $21.7 million, $45.5 million and $16.0 million, respectively, in such fees. Prior to February 1998 and May 1998, the Company served as investment advisor to the Funds. Under the advisory agreements, the funds paid the Company a daily fee which, on an annual basis, ranged, F-26 Notes to Consolidated Financial Statements (continued) 10. Related Party Transactions (continued) depending on the fund, from 0.25% to 0.85% of their average daily net assets. 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 2.15% 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, amounted to $287.0 million, $271.2 million and $186.6 million in 1998, 1997 and 1996, respectively. Reinsurance Transactions ------------------------ Since 1981, all domestic individual non-participating life insurance of Aetna and its subsidiaries has been issued by the Company. Effective December 31, 1988, the Company entered into a reinsurance agreement with Aetna Life Insurance Company ("Aetna Life") 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. A $6.1 million and a $108.0 million commission, paid by the Company to Aetna Life in 1996 and 1988, respectively, was capitalized as deferred policy acquisition costs. In consideration for the assumption of this business, a loan was established relating to the assets held by Aetna Life which support the insurance reserves. Effective January 1, 1997, this agreement was amended to transition (based on underlying investment rollover in Aetna Life) from a modified coinsurance to a coinsurance arrangement. As a result of this change, reserves were ceded to the Company from Aetna Life as investment rollover occurred and the loan previously established was reduced. The Company maintained insurance reserves of $574.5 million ($397.2 million relating to the modified coinsurance agreement and $177.3 million relating to the coinsurance agreement) as of December 31, 1997 relating to the business assumed. The fair value of the loan relating to assets held by Aetna Life was $412.3 million as of December 31, 1997 and was based upon the fair value of the underlying assets. Effective October 1, 1998, this agreement was fully transitioned to a coinsurance arrangement and this business along with the Company's direct domestic individual non-participating life insurance business was sold to Lincoln. (Refer to note 2). The operating results of the domestic individual life business are presented as Discontinued Operations. Premiums of $336.3 million, $176.7 million and $25.3 million and current and future benefits of $341.1 million, $183.9 million and $39.5 million, were assumed in 1998, 1997 and 1996, respectively. Investment income of $17.0 million, $37.5 million and $44.1 million was generated from the reinsurance loan to affiliate for the years ended December 31, 1998, 1997 and 1996, respectively. 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. Premium amounts related to this agreement were $2.0 million, $5.9 million and $5.2 million for 1998, 1997 and 1996, respectively. This agreement was terminated effective October 1, 1998. Effective October 1, 1997, the Company entered into a reinsurance agreement with Aetna Life to assume amounts in excess of $0.2 million for certain of its participating life insurance, on a yearly F-27 Notes to Consolidated Financial Statements (continued) 10. Related Party Transactions (continued) renewable term basis. Premium amounts related to this agreement were $4.4 million and $0.7 million in 1998 and 1997, respectively. 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 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 $87.8 million and $32.5 million were maintained for this contract as of December 31, 1998 and 1997, respectively. Capital Transactions -------------------- The Company received a capital contribution of $9.3 million and $10.4 million in cash from HOLDCO in 1998 and 1996, respectively. The Company received no capital contributions in 1997. The Company paid $553.0 million, $17.3 million and 3.5 million in cash dividends to HOLDCO in 1998, 1997 and 1996, respectively. Additionally, in 1998, the Company accrued $206.0 million in dividends. (Refer to Note 6) Other ----- Premiums due and other receivables include $1.6 million and $37.0 million due from affiliates in 1998 and 1997, respectively. Other liabilities include $2.2 million and $1.2 million due to affiliates for 1998 and 1997, respectively. As of December 31, 1998, Aetna transferred to the Company $0.7 million based on its decision not to settle state tax liabilities for the years 1998 and 1997. The amount transferred as of December 31, 1997 was $2.5 million. This amount has been reported as an other change in retained earnings. Substantially all of the administrative and support functions of the Company are provided by Aetna and its affiliates. The financial statements reflect allocated charges for these services based upon measures appropriate for the type and nature of service provided. 11. 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 2) 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. F-28 Notes to Consolidated Financial Statements (continued) 11. Reinsurance (continued) The following table includes premium amounts ceded/assumed to/from affiliated companies as discussed in Note 10 above.
Ceded to Assumed Direct Other from Other Net (Millions) Amount Companies Companies Amount ------------------------------------------------------------------------------------ 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 ==================================================================================== 1997 ---- Premiums: Discontinued Operations $ 35.7 $ 15.1 $177.4 $198.0 Accident and Health Insurance 5.6 5.6 -- -- Annuities 67.9 -- 1.2 69.1 ------------------------------------------------------------------------------------ Total earned premiums $109.2 $ 20.7 $178.6 $267.1 ==================================================================================== 1996 ---- Premiums: Discontinued Operations $ 34.6 $ 11.2 $ 25.3 $ 48.7 Accident and Health Insurance 6.3 6.3 -- -- Annuities 84.3 -- 0.6 84.9 ------------------------------------------------------------------------------------ Total earned premiums $125.2 $ 17.5 $ 25.9 $133.6 ====================================================================================
F-29 Notes to Consolidated Financial Statements (continued) 12. Segment Information Prior to October 1, 1998, the Company's operations were reported through two major business segments: Financial Services and Individual Life Insurance (now Discontinued Operations). Summarized financial information for the Company's principal operations was as follows:
(4) (4) Financial Discontinued 1998 (Millions) Services Operations Other Total ---------------------------------------------------------------------------------------------------- Revenue from external customers $ 433.3 -- -- $ 433.3 Net investment income 877.6 -- -- 877.6 ---------------------------------------------------------------------------------------------------- Total revenue excluding realized capital gains $ 1,310.9 -- -- $ 1,310.9 ==================================================================================================== Amortization of deferred policy acquisition costs $ 106.7 -- -- $ 106.7 ---------------------------------------------------------------------------------------------------- Income taxes $ 57.7 $ (10.3) $ 47.4 ---------------------------------------------------------------------------------------------------- Operating earnings (1) $ 151.5 -- -- $ 151.5 Unusual items (2) -- -- $ (19.2) (19.2) Realized capital gains, net of tax 7.3 -- -- 7.3 ---------------------------------------------------------------------------------------------------- Income from continuing operations $ 158.8 -- $ (19.2) $ 139.6 Discontinued operations, net of tax: Income from operations -- $ 61.8 -- 61.8 Gain on sale -- 59.0 -- 59.0 ---------------------------------------------------------------------------------------------------- Net income $ 158.8 $ 120.8 $ (19.2) $ 260.4 ==================================================================================================== Segment assets $43,458.6 $3,820.2 -- $47,278.8 ---------------------------------------------------------------------------------------------------- Expenditures for long-lived assets (3) -- -- $ 5.3 $ 5.3 ----------------------------------------------------------------------------------------------------
(1) Operating earnings are comprised of net income excluding net realized capital gains and any unusual items. (2) Unusual items excluded from operating earnings include an after-tax severance benefit of $1.6 million and after-tax Year 2000 costs of $20.8 million. (3) Expenditures of long-lived assets represents additions to property and equipment not allocable to business segments. (4) Financial Services products include annuity contracts and Discontinued Operations include life insurance products. (Refer to Note 1) F-30 Notes to Consolidated Financial Statements (continued) 12. Segment Information (Continued)
(3) (3) Financial Discontinued 1997 (Millions) Services Operations Other Total ---------------------------------------------------------------------------------------------- Revenue from external customers $ 369.4 -- -- $ 369.4 Net investment income 878.8 -- -- 878.8 ---------------------------------------------------------------------------------------------- Total revenue excluding realized capital gains $ 1,248.2 -- -- $ 1,248.2 ============================================================================================== Amortization of deferred policy acquisition costs $ 82.8 -- -- $ 82.8 ---------------------------------------------------------------------------------------------- Income taxes $ 50.7 -- -- $ 50.7 ---------------------------------------------------------------------------------------------- Operating earnings (1) $ 118.3 -- -- $ 118.3 Realized capital gains, net of tax 19.2 -- -- 19.2 ---------------------------------------------------------------------------------------------- Income from continuing operations $ 137.5 -- -- $ 137.5 Discontinued Operations, net of tax: Income from operations -- $ 67.8 -- 67.8 ---------------------------------------------------------------------------------------------- Net Income $ 137.5 $ 67.8 -- $ 205.3 ============================================================================================== Segment assets $36,638.8 $3,507.6 -- $40,146.4 ---------------------------------------------------------------------------------------------- Expenditures for long-lived assets (2) -- -- $9.6 $ 9.6 ----------------------------------------------------------------------------------------------
(1) Operating earnings are comprised of net income excluding net realized capital gains and any unusual items. (2) Expenditures for long-lived assets represents additions to property and equipment not allocable to business segments. (3) Financial Services products include annuity contracts and Discontinued Operations include life insurance products. (Refer to Note 1) F-31 Notes to Consolidated Financial Statements (continued) 12. Segment Information (Continued)
(3) (3) Financial Discontinued 1996 (Millions) Services Operations Other Total ----------------------------------------------------------------------------------------------------- Revenue from external customers $ 325.5 -- -- $ 325.5 Net investment income 852.6 -- -- 852.6 ----------------------------------------------------------------------------------------------------- Total revenue excluding realized capital gains $1,178.1 -- -- $1,178.1 ===================================================================================================== Amortization of deferred policy acquisition costs $ 28.0 -- -- $ 28.0 ----------------------------------------------------------------------------------------------------- Income taxes $ 35.6 -- $ (4.9) $ 30.7 ----------------------------------------------------------------------------------------------------- Operating earnings (losses) (1) $ 83.2 -- -- $ 83.2 Unusual items (2) -- -- (9.1) (9.1) Realized capital gains, net of tax: 11.1 -- -- 11.1 ----------------------------------------------------------------------------------------------------- Income from continuing operations $ 94.3 $ (9.1) $ 85.2 Discontinued operations, net of tax Income from operations -- $55.9 -- 55.9 ----------------------------------------------------------------------------------------------------- Net income (loss) $ 94.3 $55.9 $ (9.1) $ 141.1 =====================================================================================================
(1) Operating earnings are comprised of net income excluding net realized capital gains and any unusual items. (2) Unusual items excluded from operating earnings represent $9.1 million after-tax corporate facilities and severance charges not directly allocable to the business segments. (3) Financial Services products include annuity contracts and Discontinued Operations include life insurance products. (Refer to Note 1) 13. Commitments and Contingent Liabilities 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 and 1997, the Company had commitments to purchase investments of $68.7 million and $38.7 million, respectively. The fair value of the investments at December 31, 1998 and 1997 approximated $68.9 million and $39.0 million, respectively. Litigation ---------- The Company is involved in numerous lawsuits arising, for the most part, in the ordinary course of its business operations. While the ultimate outcome of litigation against the Company cannot be determined at this time, after consideration of the defenses available to the Company and any related reserves established, it is 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-32 Form No. SAI.01107-99 ALIAC Ed. May 1999 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, 1998 - Statements of Operations and Changes in Net Assets for the years ended December 31, 1998 and 1997 - Condensed Financial Information for the year ended December 31, 1998 - Notes to Financial Statements - Independent Auditors' Report Financial Statements of the Depositor: - Independent Auditors' Report - Consolidated Statements of Income for the years ended December 31, 1998, 1997 and 1996 - Consolidated Balance Sheets as of December 31, 1998 and 1997 - Consolidated Statements of Changes in Shareholder's Equity for the years ended December 31, 1998, 1997 and 1996 - Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996 - 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) (4.1) Variable Annuity Contract (G-CDA(99)) (4.2) Variable Annuity Contract Certificate (C-CDA(99)) (4.3) Group Combination Annuity Contract (Nonparticipating) (A001RP95)(4) (4.4) Group Combination Annuity Certificate (Nonparticipating) (A007RC95)(4) (4.5) Group Combination Annuity Contract (Nonparticipating) (A020RV95)(4) (4.6) Group Combination Annuity Certificate (Nonparticipating) (A027RV95)(4) (4.7) Variable Annuity Contract (G-CDA-IA(RP))(3) (4.8) Variable Annuity Contract Certificate (GTCC-IA(RP))(5) (4.9) Variable Annuity Contract (G-CDA-IA(RPM/XC))(3) (4.10) Variable Annuity Contract (G-CDA-HF)(6) (4.11) Variable Annuity Certificate (GTCC-HF)(7) (4.12) Variable Annuity Contract (G-CDA-HD)(8) (4.13) Variable Annuity Contract Certificate (GTCC-HD)(5) (4.14) Variable Annuity Contract (GID-CDA-HO)(9) (4.15) Variable Annuity Contract (GLID-CDA-HO)(9) (4.16) Variable Annuity Contract (GSD-CDA-HO)(9) (4.17) Variable Annuity Contract (GST-CDA-HO)(10) (4.18) Variable Annuity Contract (I-CDA-HD)(10) (4.19) Variable Annuity Contract (G-CDA-IB(ATORP))(11) (4.20) Variable Annuity Contract and Certificate (G-CDA-95(TORP)) and (GTCC-95(TORP))(11) (4.21) Variable Annuity Contract (G-CDA-IB(AORP))(11) (4.22) Variable Annuity Contract and Certificate (G-CDA-95(ORP)) and (GTCC-95(ORP))(11) (4.23) Variable Annuity Contracts and Certificate (G-CDA-ORP), (G-CDA-IB(TORP)) and (GTCC-95(TORP))(11) (4.24) Variable Annuity Contract (G-CDA-96(TORP))(12) (4.25) Variable Annuity Contract (IA-CDA-IA)(13) (4.26) Variable Annuity Contract (GIT-CDA-HO)(10) (4.27) Variable Annuity Contract (GLIT-CDA-HO)(10) (4.28) Variable Annuity Contract (I-CDA-98(ORP))(5) (4.29) Endorsement for Exchanged Contracts (EINRP95) to Contract A001RP95(4) (4.30) Endorsement for Exchanged Contracts (EINRV95) to Contract A020RV95(4) (4.31) Endorsement (GET 9/96) to Contracts A001RP95 and A020RV95(12) (4.32) Endorsement (GET-1 (9/96)) to Contract A001RP95 and A020RV95(14) (4.33) Endorsement (E1OMNI97) to Contract A001RP95(15) (4.34) Endorsement (E2OMNI97) to Contract A001RP95(15) (4.35) Endorsement (E1FXPL97) to Contract A001RP95(15) (4.36) Endorsement (E3FXPL97) to Contracts A001RP95 and A020RV95(5) (4.37) Endorsement (EINRP97) to Contract A001RP95(5) (4.38) Endorsement (EINRV97) to Contract A020RV95(5) (4.39) Endorsement (E1PAY97) to Contracts A001RP95 and A020RV95(5) (4.40) Endorsement (E4OMNI98) to Contracts A001RP95 and A020RV95(16) (4.41) Endorsement (EINRV98) to Contract A020RV95(5) (4.42) Endorsement (EINRP98) to Contract A001RP95(5) (4.43) Endorsement (EGET-IC(R)) to Contracts G-CDA-IA(RP), G-CDA-HF, G-CDA-IB(ATORP), G-CDA-IB(AORP) and G-CDA-HD(3) (4.44) Endorsement (EGETE-IC(R)) to Contract G-CDA-IA(RPM/XC) and GLID-CDA-HO(17) (4.45) Endorsement (EGHDHFRPSDO97) to Contracts G-CDA-HF, G-CDA-HD and G-CDA-IA(RP)(18) (4.46) Endorsement (EG403-GIE-98) to Contracts G-CDA-HF, G-CDA-HD, G-CDA-IA(RP), A001RP95, A020RV95 and Certificates GTCC-HF, GTCC-HD, GTCC-IA(RP), A007RC95 and A027RV95 (19) (4.47) Endorsement (EG403-GIHC-98) to Contracts G-CDA-IA(RP), A001RP95 and A020RV95 and Certificates GTCC-IA(RP), A007RC95 and A027RV95(19) (4.48) Endorsement (EG403-GI-98) to Contract G-CDA-HF and Certificate GTCC-HF(20) (4.49) Endorsement (EFUND97) to Contracts GID-CDA-HO, GLID-CDA-HO, GSD-CDA-HO, and GST-CDA-HO(21) (4.50) Endorsement (E98-G-CDA-HF/HD) to Contracts G-CDA-HF and G-CDA-HD and Certificates GTCC-HD and GTCC-HF(22) (4.51) Endorsement (E98-CDA-HO) to Contracts GLID-CDA-HO, GID-CDA-HO and GSD-CDA-HO(22) (4.52) Endorsement (E3KSDC96) to Variable Annuity Contract GLID-CDA-HO(23) (4.53) Endorsement (EMETHO96) to Variable Annuity Contract GLID-CDA-HO(24) (4.54) Endorsement (ENEMHF96) to Variable Annuity Contract G-CDA-HF(24) (4.55) Endorsement (E2ME96) to Variable Annuity Contract GLID-CDA-HO(25) (4.56) Endorsement (GET 9/96) to Variable Annuity Contracts G-CDA-95(TORP) and G-CDA-95(ORP) and Certificates GTCC-95(TORP) and GTCC-95(ORP)(12) (4.57) Endorsements (EIGET-IC(R)), (EIGF-IC) and (EGF-IC(SPD)) to Contract IA-CDA-IA(26) (4.58) Endorsement (EIHDIASDO) to Contracts I-CDA-HD and IA-CDA-IA(27) (4.59) Endorsement (EHOSDO) to Contracts GIT-CDA-HO, GLIT-CDA-HO and GST-CDA-HO(27) (4.60) Endorsement (EHOTABLE97) to Contracts GIT-CDA-HO, GLIT-CDA-HO and GST-CDA-HO(27) (4.61) Endorsement (EI403-GI-98) to Contract IA-CDA-IA(5) (4.62) Endorsement (E-MMGDB(99)) to Contract G-CDA(99) and Certificate C-CDA (99) (4.63) Endorsement (E-MMFPEX(99)) to Contract G-CDA(99) and Certificate C-CDA(99) (4.64) Endorsement (E-MMLOAN(99)) to Contract G-CDA(99) and Certificate C-CDA(99) (4.65) Endorsement (E-MMLSWC(99)) to Contract G-CDA(99) and Certificate C-CDA(99) (4.66) Endorsement (E-MMTC(5/99)) to Contract G-CDA(99) and Certificate C-CDA(99) (4.67) Endorsement (EGET-99) to Contracts and Certificates Nos.: A001RP95, A007RC95, A020RV95, A027RV95, G-CDA-IA(RP), GTCC-IA(RP), G-CDA-HF, GTCC-HF, G-CDA-HD, GTCC-HD, GID-CDA-HO, GLID-CDA-HO, GIT-CDA-HO, GLIT-CDA-HO, GSD-CDA-HO, GST-CDA-HO, I-CDA-HD, G-CDA-IB(ATORP), G-CDA-IB(TORP), G-CDA-IB(AORP), G-CDA-96(TORP), IA-CDA-IA, and I-CDA-98(ORP) (4.68) Variable Annuity Contract Schedule I (A001RP95(1/98))(5) (4.69) Variable Annuity Contract Schedule I (A020RV95)(1/98)(5) (5.1) Variable Annuity Contract Application (300-MOP-96)(28) (5.2) Variable Annuity Contract Application (300-GTD-IA)(29) (5.3) Variable Annuity Contract Application (710.00.16H(11/97))(30) (5.4) Variable Annuity Contract Application (710.00.16H(NY)(11/97))(30) (6.1) Certification of Incorporation of Aetna Life Insurance and Annuity Company(30) (6.2) Amendment of Certificate of Incorporation of Aetna Life Insurance and Annuity Company(10) (6.3) By-Laws as amended September 17, 1997 of Aetna Life Insurance and Annuity Company(31) (7) Not applicable (8.1) Fund Participation Agreement between Aetna Life Insurance and Annuity Company and AIM dated June 30, 1998(32) (8.2) Service Agreement between Aetna Life Insurance and Annuity Company and AIM effective June 30, 1998(32) (8.3) 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) (8.4) 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(33) (8.5) 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) (8.6) 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(33) (8.7) Fund Participation Agreement among Calvert Responsibly Invested Balanced Portfolio, Calvert Asset Management Company, Inc. and Aetna Life Insurance and Annuity Company dated December 1, 1997(34) (8.8) Service Agreement between Calvert Asset Management Company, Inc. and Aetna Life Insurance and Annuity Company Dated December 1, 1997(34) (8.9) Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996(10) (8.10) Fifth Amendment dated as of May 1, 1997 to the Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996(35) (8.11) Sixth Amendment dated November 6, 1997 to the Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996 and May 1, 1997(36) (8.12) Seventh Amendment dated as of May 1, 1998 to the Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996, May 1, 1997 and November 6, 1997(2) (8.13) Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1,1996(10) (8.14) Fifth Amendment dated as of May 1, 1997 to the Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1, 1996(35) (8.15) Sixth Amendment dated as of January 20, 1998 to the Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996 and May 1, 1997(37) (8.16) Seventh Amendment dated as of May 1, 1998 to the Fund Participation Agreement between Aetna Life Insurance and Annuity Company, Variable Insurance Products Fund II and Fidelity Distributors Corporation dated February 1, 1994 and amended on December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1, 1996, May 1, 1997 and January 20, 1998(2) (8.17) Service Agreement between Aetna Life Insurance and Annuity Company and Fidelity Investments Institutional Operations Company dated as of November 1, 1995(24) (8.18) Amendment dated January 1, 1997 to Service Agreement between Aetna Life Insurance and Annuity Company and Fidelity Investments Institutional Operations Company dated as of November 1, 1995(35) (8.19) Service Contract between Fidelity Distributors Corporation and Aetna Life Insurance and Annuity Company dated May 2, 1997(33) (8.20) Fund Participation Agreement among Janus Aspen Series and Aetna Life Insurance and Annuity Company and Janus Capital Corporation dated December 8, 1997(24) (8.21) Amendment dated October 12, 1998 to Fund Participation Agreement among Janus Aspen Series and Aetna Life Insurance and Annuity Company and Janus Capital Corporation dated December 8, 1997(33) (8.22) Service Agreement between Janus Capital Corporation and Aetna Life Insurance and Annuity Company dated December 8, 1997(38) (8.23) Fund Participation Agreement between Aetna Life Insurance and Annuity Company and Lexington Management Corporation regarding Natural Resources Trust dated December 1, 1988 and amended February 11, 1991(3) (8.24) Fund Participation Agreement dated March 11, 1997 between Aetna Life Insurance and Annuity Company and Oppenheimer Variable Annuity Account Funds and Oppenheimer Funds, Inc.(39) (8.25) Service Agreement effective as of March 11, 1997 between Oppenheimer Funds, Inc. and Aetna Life Insurance and Annuity Company(39) (9) Opinion and Consent of Counsel (10) Consent of Independent Auditors (11) Not applicable (12) Not applicable (13) Schedule for Computation of Performance Data(16) (14) Not applicable (15.1) Powers of Attorney(40) (15.2) 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 Registration Statement on Form N-4 (File No. 333-01107), as filed on February 21, 1996. 5. Incorporated by reference to Post-Effective Amendment No. 12 to Registration Statement on Form N-4 (File No. 333-01107), as filed on February 4, 1999. 6. 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. 7. 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. 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. 12 to Registration Statement on Form N-4 (File No. 33-75982), as filed on February 20, 1997. 10. 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. 11. Incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement on Form N-4 (File No. 33-91846), as filed on April 15, 1996. 12. Incorporated by reference to Post-Effective Amendment No. 6 to Registration Statement on Form N-4 (File No. 33-91846), as filed on August 6, 1996. 13. 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. 14. Incorporated by reference to Post-Effective Amendment No. 10 to Registration Statement on Form N-4 (File No. 333-01107), as filed on July 22, 1998. 15. Incorporated by reference to Post-Effective Amendment No. 4 to Registration Statement on Form N-4 (File No. 333-01107), as filed on February 26, 1997. 16. Incorporated by reference to Post-Effective Amendment No. 9 to Registration Statement on Form N-4 (File No. 333-01107), as filed on April 7, 1998. 17. Incorporated by reference to Post-Effective Amendment No. 8 to Registration Statement on Form N-4 (File No. 33-75986), as filed on August 30, 1996. 18. Incorporated by reference to Post-Effective Amendment No. 13 to Registration Statement on Form N-4 (File No. 33-75986), as filed on April 11, 1997. 19. Incorporated by reference to Post-Effective Amendment No. 11 to Registration Statement on Form N-4 (File No. 333-01107), as filed on September 10, 1998. 20. Incorporated by reference to Post-Effective Amendment No. 15 to Registration Statement on Form N-4 (File No. 33-75962), as filed on September 15, 1998. 21. 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. 22. Incorporated by reference to Post-Effective Amendment No. 15 to Registration Statement on Form N-4 (File No. 33-75982), as filed on April 13, 1998. 23. Incorporated by reference to Post-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 33-88720), as filed on April 22, 1996. 24. Incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement on Form N-4 (File No. 33-88720), as filed on June 28, 1996. 25. Incorporated by reference to Post-Effective Amendment No. 5 to Registration Statement on Form N-4 (File No. 33-88720), as filed on February 21, 1997. 26. Incorporated by reference to Post Effective Amendment No. 8 to Registration Statement on Form N-4 (File No. 33-75964), as filed on August 30, 1996. 27. Incorporated by reference to Post-Effective Amendment No. 13 to Registration Statement on Form N-4 (File No. 33-75964), as filed on April 11, 1997. 28. Incorporated by reference to Post-Effective Amendment No. 13 to Registration Statement on Form N-4 (File No. 33-91846), as filed on April 13, 1998. 29. Incorporated by reference to Post-Effective Amendment No. 14 to Registration Statement on Form N-4 (File No. 33-75986), as filed on August 19, 1997. 30. 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. 31. 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. 32. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 333-56297), as filed on August 4, 1998. 33. Incorporated by reference to Post-Effective Amendment No. 2 to Registration Statement on Form N-4 (File No. 333-56297), as filed on December 14, 1998. 34. Incorporated by reference to Post-Effective Amendment No. 8 to Registration Statement on Form N-4 (File No. 333-01107), as filed on February 19, 1998. 35. Incorporated by reference to Post-Effective Amendment No. 30 to Registration Statement on Form N-4 (File No. 33-34370), as filed on September 29, 1997. 36. Incorporated by reference to Post-Effective Amendment No. 16 to Registration Statement on Form N-4 (File No. 33-75964), as filed on February 9, 1998. 37. Incorporated by reference to Post-Effective Amendment No. 7 to Registration Statement on Form S-6 (File No. 33-75248), as filed on February 24, 1998. 38. Incorporated by reference to Post-Effective Amendment No. 10 to Registration Statement on Form N-4 (File No. 33-75992), as filed on December 31, 1997. 39. Incorporated by reference to Post-Effective Amendment No. 27 to Registration Statement on Form N-4 (File No. 33-34370), as filed on April 16, 1997. 40. Incorporated by reference to Post-Effective Amendment No. 5 to Registration Statement on Form N-4 (File No. 333-56297), as filed on February 25, 1999. Item 25. Directors and Officers of the Depositor - ------------------------------------------------
Name and Principal Business Address* Positions and Offices with Depositor - ----------------- ------------------------------------ Thomas J. McInerney Director and President Catherine H. Smith Director, Chief Financial Officer and Senior Vice President Shaun P. Mathews Director and Senior Vice President Deborah Koltenuk Vice President, Treasurer and Corporate Controller Therese M. Squillacote Vice President and Chief Compliance Officer Kirk P. Wickman Senior Vice President, General Counsel and Corporate Secretary
* The principal business address of all directors and officers listed is 151 Farmington Avenue, Hartford, Connecticut 06156. Item 26. Persons Controlled by or Under Common Control with the Depositor or - ---------------------------------------------------------------------------- Registrant ---------- Incorporated herein by reference to Item 24 of Post-Effective Amendment No. 14 to Registration Statement on Form N-1A (File No. 33-12723), as filed on March 10, 1999. Item 27. Number of Contract Owners - ---------------------------------- As of February 28, 1999, there were 603,783 individuals holding interests in variable annuity contracts funded through Variable Annuity Account C. Item 28. Indemnification - ------------------------ Section 21 of Public Act No. 97-246 of the Connecticut General Assembly (the "Act") provides that a corporation may provide indemnification of or advance expenses to a director, officer, employee or agent only as permitted by Sections 33-770 to 33-778, inclusive, of the Connecticut General Statutes, as amended by Sections 12 to 20, inclusive, of this Act. Reference is hereby made to Section 33-771(e) of the Connecticut General Statutes ("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. 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, employer or agent of the corporation. Consistent with the statute, Aetna Inc. has procured insurance from Lloyd's of London and several major United States excess insurers for its directors and officers and the directors and officers of its subsidiaries, including the Depositor. Item 29. Principal Underwriter - ------------------------------ (a) In addition to serving as the principal underwriter and depositor for the Registrant, Aetna Life Insurance and Annuity Company (Aetna) also acts as the principal underwriter, only, for Aetna Variable Encore Fund, Aetna Variable Fund, Aetna Generation Portfolios, Inc., Aetna Income Shares, Aetna Balanced VP, Inc. (formerly Aetna Investment Advisers Fund, Inc.), Aetna GET Fund, and Aetna Variable Portfolios, Inc. and as the principal underwriter and investment adviser for Portfolio Partners, Inc. (all management investment companies registered under the Investment Company Act of 1940 (1940 Act)). Additionally, Aetna acts as the principal underwriter and depositor for Variable Life Account B 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). Aetna 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) See Item 25 regarding the Depositor. (c) Compensation as of December 31, 1998:
(1) (2) (3) (4) (5) Name of Net Underwriting Compensation on Principal Discounts and Redemption or Brokerage Underwriter Commissions or Annuitization Commissions Compensation* - ----------- ----------- ---------------- ----------- ------------- Aetna Life Insurance $6,483,000 $142,398,000 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. Item 30. Location of Accounts and Records - ----------------------------------------- All accounts, books and other documents required to be maintained by Section 31(a) of the 1940 Act and the rules under it relating to the securities described in and issued under this Registration Statement are located at the home office of the Depositor as follows: Aetna Life Insurance and Annuity Company 151 Farmington Avenue Hartford, Connecticut 06156 Item 31. Management Services - ---------------------------- Not applicable Item 32. Undertakings - --------------------- Registrant hereby undertakes: (a) to file a post-effective amendment to this registration statement on Form N-4 as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than sixteen months old for as long as payments under the variable annuity contracts may be accepted; (b) to include as part of any application to purchase a contract offered by a prospectus which is part of this registration statement on Form N-4, a space that an applicant can check to request a Statement of Additional Information; and (c) to deliver any Statement of Additional Information and any financial statements required to be made available under this Form N-4 promptly upon written or oral request. (d) The Company hereby represents that it is relying upon and complies with the provisions of Paragraphs (1) through (4) of the SEC Staff's No-Action Letter dated November 28, 1988 with respect to language concerning withdrawal restrictions applicable to plans established pursuant to Section 403(b) of the Internal Revenue Code. See American Counsel of Life Insurance; SEC No-Action Letter, [1988 WL 1235221 *13 (S.E.C.)]. (e) Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (f) Aetna Life Insurance and Annuity Company represents that the fees and charges deducted under the contracts covered by this registration statement, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the insurance company. SIGNATURES As required by the Securities Act of 1933, and the Investment Company Act of 1940, the Registrant, Variable Annuity Account 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. 333-01107) and has duly 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 7th day of April, 1999. 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. 13 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 ) ) Catherine H. Smith* Director and Chief Financial Officer ) April - ------------------------------------- ) 7, 1999 Catherine H. Smith ) ) Shaun P. Mathews* Director ) - ------------------------------------- ) Shaun P. Mathews ) ) Deborah Koltenuk* Vice President, Treasurer and 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.4.1 Variable Annuity Contract (G-CDA(99)) ------------ 99-B.4.2 Variable Annuity Contract Certificate (C-CDA(99)) ------------ 99-B.4.62 Endorsement (E-MMGDB(99)) to Contract G-CDA(99) and Certificate C-CDA(99) ------------ 99-B.4.63 Endorsement (E-MMFPEX(99)) to Contract G-CDA(99) and Certificate C-CDA(99) ------------ 99-B.4.64 Endorsement (E-MMLOAN(99)) to Contract G-CDA(99) and Certificate C-CDA(99) ------------ 99-B.4.65 Endorsement (E-MMLSWC(99)) to Contract G-CDA(99) and Certificate C-CDA(99) ------------ 99-B.4.66 Endorsement (E-MMTC(5/99)) to Contract G-CDA(99) and Certificate C-CDA(99) ------------ 99-B.4.67 Endorsement (EGET-99) to Contracts and Certificates Nos.: A001RP95, A007RC95, A020RV95, A027RV95, G-CDA-IA(RP), GTCC-IA(RP), G-CDA-HF, GTCC-HF, G-CDA-HD, GTCC-HD, GID-CDA-HO, GLID-CDA-HO, GIT-CDA-HO, GSD-CDA-HO, GST-CDA-HO, I-CDA-HD, G-CDA-IB(ATORP), G-CDA-IB(AORP), G-CDA-IB(TORP), G-CDA-96(TORP), IA-CDA-IA, and I-CDA-98(ORP) ------------ 99-B.9 Opinion and Consent of Counsel ------------ 99-B.10 Consent of Independent Auditors ------------
EX-99.B.4.1 2 Exhibit 99-B.4.1 ================================================== Aetna Life Insurance and Annuity Company 151 Farmington Avenue Hartford, Connecticut 06156 800-525-4225 If you have questions about the Contract, call the toll-free number shown above. Group, Combination, Deferred Annuity Contract (Nonparticipating) Aetna Life Insurance and Annuity Company (ALIAC), a stock company, will pay benefits according to the terms and conditions set forth in this Contract. This Contract is delivered in [YOUR STATE] and is subject to the laws of that jurisdiction. Please read this Contract carefully. It states ALIAC's contractual rights and obligations as well as the rights and obligations of the Contract Holder and Participants. Specifications ================================================================================ Plan SPECIMEN ================================================================================ Type of Plan SPECIMEN ================================================================================ Contract Holder SPECIMEN ================================================================================ Contract No. SPECIMEN ================================================================================ Contract Effective Date SPECIMEN Right to Cancel ================================================================================ The Contract Holder may cancel this Contract within 10 calendar days of receiving it by returning it to ALIAC at the address shown above, or to the agent from whom it was purchased. Within seven calendar days of receiving the cancellation request at its Home Office, ALIAC will return any Contributions received, plus any increase, or minus any decrease in value, on the amount, if any, allocated to the Separate Account. Signed at the Home Office on the Effective Date. /s/ Thomas J. McInerney /s/ Kirk Wickman - ----------------------------------- ----------------------------------------- President Secretary All payments and values provided by the group Contract, when based on the investment experience of the Separate Account, are variable and are not guaranteed as to fixed dollar amount. Amounts allocated to the Guaranteed Accumulation Account, if withdrawn before a guaranteed term maturity date, may be subject to a market value adjustment. The market value adjustment may result in an increase, or a decrease, in the Individual Account value. G-CDA-99 Table of Contents Page Contract Schedule I. Accumulation Phase S I - 1 Contract Schedule II. Annuity Phase S II - 1 Definitions 1 Section 1. General Contract Provisions 3 1.01 Entire Contract .......................................... 3 1.02 Nonparticipating Contract ................................ 3 1.03 Control of Contract ...................................... 3 1.04 Certificate .............................................. 3 1.05 Incontestability ......................................... 3 1.06 Grace Period ............................................. 3 1.07 Change of Contract ....................................... 3 1.08 Payments ................................................. 4 1.09 Deferral of Payment ...................................... 4 1.10 Proof of Age ............................................. 4 1.11 Evidence of Survival ..................................... 4 1.12 Misstatements and Adjustments ............................ 5 1.13 Reports .................................................. 5 1.14 State Laws ............................................... 5 1.15 Claims of Creditors ...................................... 5 1.16 Maintenance Fee .......................................... 5 1.17 Charges for Additional Services .......................... 5 1.18 Charges Subject to Change ................................ 5 Part I. Accumulation Phase 6 Section 2. Contributions and Individual Account Value 6 2.01 Contributions ............................................ 6 2.02 Premium Tax .............................................. 6 2.03 Individual Account ....................................... 6 2.04 Experience Credit ........................................ 6 2.05 Individual Account Value ................................. 6 Section 3. Separate Account 7 3.01 General .................................................. 7 3.02 Funds Available .......................................... 7 3.03 Change or Substitution of Funds .......................... 7 3.04 Accumulation Units ....................................... 7 3.05 Accumulation Unit Value .................................. 7 3.06 Net Investment Factor .................................... 7 3.07 Charges to the Separate Account .......................... 8 3.08 Fund Transfers ........................................... 8 3.09 Withdrawals from the Separate Account .................... 8 i Page Section 4. Aetna GET Fund 8 4.01 GET Fund Guarantee Period ............................... 8 4.02 GET Fund Offering Period ................................ 8 4.03 GET Fund Guarantee ...................................... 9 4.04 GET Fund Maturity Date .................................. 9 4.05 Transfers or Withdrawals from the GET Fund .............. 9 Section 5. Fixed Account 9 5.01 Fixed Account Minimum Guaranteed Interest Rate .......... 9 5.02 Transfers from the Fixed Account ........................10 5.03 Withdrawals from the Fixed Account ......................10 Section 6. Fixed Plus Account 10 6.01 Fixed Plus Account Minimum Guaranteed Interest Rate .....10 6.02 Transfers from the Fixed Plus Account ...................10 6.03 Partial Withdrawals from the Fixed Plus Account .........11 6.04 Full Withdrawal of the Total Amount in the Fixed Plus Account ............................................11 6.05 Waiver of Fixed Plus Account Full Withdrawal Provision ..11 Section 7. Guaranteed Accumulation Account (GAA) 11 7.01 Nonunitized Separate Account ............................11 7.02 GAA Minimum Guaranteed Interest Rate ....................12 7.03 Deposit Period ..........................................12 7.04 Guaranteed Term .........................................12 7.05 Guaranteed Term Groups ..................................12 7.06 Maturity Date, Maturity Value and Reinvestment ..........12 7.07 Transfers and Withdrawals from the GAA ..................12 7.08 Application of the Market Value Adjustment ..............13 7.09 Market Value Adjustment (MVA) ...........................13 Section 8. Transfers, Withdrawals and Distributions 14 8.01 Transfers ...............................................14 8.02 Withdrawals .............................................14 8.03 Withdrawal Restrictions Under the Code ..................14 8.04 Withdrawal Charge .......................................15 8.05 Waiver of Withdrawal Charge .............................15 8.06 Reinstatement ...........................................15 8.07 Required Distributions ..................................15 8.08 Systematic Distribution Options (SDOs) ..................16 8.09 Individual Account Termination ..........................16 Section 9. Loans 16 9.01 Loan Availability .......................................16 Section 10. Death Benefit During the Accumulation Phase 16 10.01 Death Benefit ...........................................16 10.02 Contract Beneficiary ....................................16 10.03 Distribution of Death Benefit ...........................16 ii Page Part II. Annuity Phase 17 Section 11. General Provisions 17 11.01 Election .................................................17 11.02 Change of Annuity Provisions .............................17 11.03 Annuity Options ..........................................17 11.04 Mortality Table ..........................................18 11.05 Payments .................................................18 11.06 Investment Options .......................................18 11.07 Fixed Annuity Minimum Guaranteed Interest Rate ...........19 11.08 Variable Annuity Assumed Annual Net Return Rate Election .19 11.09 Variable Annuity Transfers ...............................19 11.10 Fund Annuity Units .......................................19 11.11 Fund Annuity Unit Value ..................................19 11.12 Fund Annuity Net Return Factor ...........................20 11.13 Death Benefit During the Annuity Phase ...................20 Annuity Tables 21 iii Contract Schedule I Accumulation Phase Control of Contract (see 1.03) [The Contract Holder controls this Contract. By notifying us in writing, the Contract Holder may allow Participants to choose Investment Options for an Individual Account. The Contract Holder may, however, retain the right to choose Investment Options for employer Contributions. Unless otherwise provided by the Plan, we will make payments only at the written direction of the Contract Holder and a Participant. Unless otherwise specified by the Plan, we will make an inservice transfer under Internal Revenue Service Revenue Ruling 90-24 only at the written direction of the Contract Holder and a Participant and will make checks payable to the acquiring investment provider(s). The Contract and Individual Accounts are nontransferable and nonassignable except to us in the event of a loan (if allowed under the Contract) or in the event of a qualified domestic relations order as allowed under the Retirement Equity Act of 1984 (REA). Participants have a nonforfeitable right to the value of employer Contributions made to their Individual Accounts subject to any Plan vesting limits as determined by the Contract Holder. Participants have a nonforfeitable right to the value of employee Contributions made to their Individual Accounts as provided by Code Section 403(b) and subject to the terms of the Plan. The Contract Holder must notify us in writing if the Plan is, or becomes, subject to the Employee Retirement Income Security Act of 1974 (ERISA) and/or related law or regulations including REA. We will rely on the Contract Holder's determination and representation of the applicability of such laws. If the Plan is subject to ERISA, before we will make a distribution from an Individual Account, the Contract Holder must certify in writing that all applicable REA requirements have been met and that the distribution complies with the Plan.] Maximum Maintenance Fee (see 1.16) The maintenance fee for each Individual Account will never be more than [$30]. Contribution Limits (see 2.01) [Each year, Contributions to the Contract are limited to the lesser of: (a) The maximum exclusion allowance (MEA) limit under Code Section 403(b); or (b) The amount set forth in Code Section 415, generally, 25% of compensation up to $30,000. In addition, salary reduction Contributions as defined in Code Section 402(g) may not exceed $10,000, or such larger amount as adjusted by the Secretary of the Treasury, unless the alternative limitation under Code Section 402(g)(8) applies.] Maximum Daily Charges to the Separate Account (see 3.07) Charges to the Separate Account will never be more than the following: Mortality and Expense Risk Charge: [1.50%] (annual basis) Administrative Charge: [0.25%] (annual basis) Aetna GET Fund Guarantee Charge (if applicable): [0.75%] (annual basis)
S I - 1 Fixed Interest Options Available (see Section 5, Section 6, and Section 7) [Fixed Account - Fixed Account is available for transferred amounts only (no ongoing Contributions). Fixed Plus Account Guaranteed Accumulation Account] Fixed Account Minimum Guaranteed Interest Rate (see 5.01) The interest rate will never be less than [3%] (annual basis). Fixed Account Annual Transfer Limit (see 5.02) [10%.] Fixed Plus Account Minimum Guaranteed Interest Rate (see 6.01) The interest rate will never be less than [3%] (annual basis) Fixed Plus Annual Account Transfer and Partial Withdrawal Limit (see 6.02 and 6.03) [20%] Waiver of Fixed Plus Account Transfer Limit (see 6.05) [$2,000] Waiver of Fixed Plus Account Full Withdrawal Provision (see 6.05) When a full withdrawal is requested, payment from the Fixed Plus Account is not limited as described in 6.04 when the withdrawal is made: [(a) To a Participant who has attained age 59 1/2 and, if applicable, has completed nine Contribution periods; (b) When a Participant is separated from service, and when: (1) Separation from service is documented in a form acceptable to us; (2) The amount is paid directly to the Participant; and (3) When the amount paid for all withdrawals due to separation from service during the previous [12-months] does not exceed [20%] of the average value of all Individual Accounts under the Contract during that period. (c) Due to financial hardship as defined in the Code, and when: (1) The financial hardship is certified by the employer if applicable; (2) The amount is paid directly to the Participant; and (3) When the amount paid for all withdrawals due to financial hardship during the previous [12-months] does not exceed [20%] of the average value of all Individual Accounts under the Contract during that period. (d) When the amount in the Fixed Plus Account is [$2,000] or less (or as otherwise required by the Plan for a lump-sum cash-out without Participant consent) and during the previous [12] months no amounts have been withdrawn, transferred, taken as a loan (if allowed under the Contract), or used to purchase Annuity payments; (e) Due to a Participant's death before Annuity payments begin and paid within six months of the Participant's death; (f) As provided in Section 8.09; or (g) To purchase Annuity payments on a life-contingent basis or payments for a stated period on a fixed-only basis.] S I - 2 Guaranteed Accumulation Account Minimum Guaranteed Interest Rate (see 7.02) The interest rate will never be less than [3%] (annual basis). Withdrawal Restrictions Under the Code (see 8.03) [Limitations apply to partial and full withdrawals of the "restricted amount" from this Contract as required by Code Section 403(b)(11). The restricted amount is the sum of: (1) Contributions attributable to a Participant's salary reduction Contributions made on and after January 1, 1989; plus (2) The net increase, if any, in the Individual Account value after December 31, 1988 attributable to investment gains and losses and credited interest. The "restricted amount" may be partially or fully withdrawn only if one or more of the following conditions are met. The Participant has: (a) Separated from service; (b) Attained age 59 1/2; (c) Died; (d) Become disabled, as defined by the Code; (e) Experienced financial hardship as defined by the Code. The amount available for financial hardship is limited to the lesser of the amount necessary to satisfy the need or Contributions attributable to salary reduction Contributions made on or after January 1, 1989; or (f) Met other circumstances as otherwise allowed by federal law, regulations or rulings. No limitations apply to salary reduction Contributions made and earnings credited to such Contributions made on or before December 31, 1988. In addition, any portion of an Individual Account representing amounts transferred from a Code Section 403(b)(7) custodial account will be subject to the restrictions set forth in the Code.] Withdrawal Charge (see 8.04) For each withdrawal from an Individual Account, we may deduct a withdrawal charge. This charge is a percentage of the amount withdrawn. The withdrawal charge is as follows. [Number of Years Since Individual Account Established] 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% 10 or more 0%] The withdrawal charge will never exceed [8.5%] of total Contributions, or the maximum permitted by National Association of Securities Dealers, Inc. (NASD) rules. S I - 3 Waiver of Withdrawal Charge (see 8.05) The withdrawal charge does not apply when the withdrawal is: [(a) Used to purchase Annuity payments; (b) Used to purchase a single premium immediate Annuity or individual retirement Annuity issued by ALIAC or one of its affiliates, provided that the right to cancel under the new Contract is not exercised. We will treat exercise of the right to cancel as a reinstatement and any subsequent withdrawal may then be subject to the withdrawal charge applicable on the date of the withdrawal; (c) Under a systematic distribution option (see 8.08); (d) In an amount equal to up to [10%] of the Individual Account value when the withdrawal is the first partial withdrawal in a calendar year and is made to a Participant who is at least age 59 1/2 and not older than age 70 1/2 (not available when a systematic distribution option is in effect); (e) When we terminate an Individual Account as provided in 8.09; (f) When the Individual Account value is [$3,500] or less and during the previous 12 months no amounts have been withdrawn, transferred, taken as a loan (if allowed under the Contract), or used to purchase Annuity payments; (g) Made by a Participant who has attained age 59 1/2 and, if applicable, has completed nine Contribution periods; (h) Made to a Participant who is separated from service as documented in a form acceptable to us; (i) Due to financial hardship as defined in the Code; or (j) Due to a Participant's death before Annuity payments begin.] Required Distributions (see 8.07) [Generally, for Contributions made and earnings credited after December 31, 1986, distribution must begin by April 1 of the calendar year following the later of (1) the calendar year in which a Participant attains age 70 1/2, or (2) retires. For Individual Account values as of December 31, 1986, distribution must begin by the last day of the year in which a Participant attains age 75 or retires, whichever is later. In addition, any portion of an Individual Account representing amounts transferred from a Code Section 403(b)(7) custodial account will be subject to the restrictions set forth in the Code. The entire Individual Account value must be distributed, or begin to be distributed, over the life or life expectancy of a Participant, or lives or life expectancies of a Participant and a beneficiary.] Individual Account Termination Amount (see 8.09) [$10,000] Contract Beneficiary (see 10.02) [The Contract Holder is the Contract beneficiary. A Participant may designate a beneficiary under the Plan (the Plan beneficiary).] S I - 4 Contract Schedule II Annuity Phase Payment Period (see 11.03) The period for which we will guarantee Annuity payments must be at least [five] years and no more than [30] years. Mortality Table (see 11.04) [Society of Actuaries' 1983 Table a.] Maximum Number of Funds (see 11.07) The maximum number of Funds is [five]. Fixed Annuity Minimum Guaranteed Interest Rate (see 11.08) [3%] (annual basis). Maximum Daily Charges to the Separate Account (see 11.12) Charges to the Separate Account will never be more than the following: Mortality and Expense Risk Charge: [1.25%] (annual basis) Administrative Charge: [0.25%] (annual basis) Number of Annual Transfers Among Funds (see 11.09) Each calendar year, we allow [five] transfers among funds. S II - 1 Definitions ================================================================================ Accumulation Phase The time between an Individual Account Effective Date and the date on which the entire Individual Account value is used to purchase Annuity payments, or otherwise distributed. Aetna GET Fund (GET Fund) The Aetna GET Fund is an Investment Option which may be available during the Accumulation Phase. The GET Fund operates as a series offering. Each series is a separate Fund. Aetna Life Insurance and Annuity Company (ALIAC) Aetna Life Insurance and Annuity Company ("we," and "our," and "us" refer to ALIAC). Annuitant The person whose life expectancy determines the amount and/or duration of the payments under a life-contingent Annuity option. Annuity Payment of an income: (a) For a stated period; (b) For the life of one or two people; or (c) Some combination of (a) and (b). A fixed Annuity is one in which the payment amount does not vary. A variable Annuity is one in which the payment amount may vary based on the net investment results of the Funds. Annuity Phase The time during which we make Annuity payments. Business Day Each day our Home Office is open for business. Code The Internal Revenue Code of 1986, as it is amended from time to time. Contract This agreement between ALIAC and the Contract Holder. Contract Holder The entity, or person, named in the specifications section on the face page, to which the Contract is issued. Contribution The payment made to us during the Accumulation Phase. The Contribution may be reduced by any applicable premium tax due. Effective Date The date, shown in the specifications section on the face page, on which we issue the Contract or establish an Individual Account. Fixed Account A Fixed Interest Option. The Fixed Account is an obligation of our General Account. Fixed Interest Options Investment options, including the Fixed Account, the Fixed Plus Account and the Guaranteed Accumulation Account that credit interest. The Fixed Interest Options available during the Accumulation Phase are shown on Contract Schedule I under Fixed Interest Options Available. Fixed Plus Account A Fixed Interest Option. Limitations apply to withdrawals from the Fixed Plus Account. The Fixed Plus Account is an obligation of our General Account. 1 Fund A variable Investment Option available under this Contract. The Funds are open-end, registered investment management companies (mutual funds) in which the Separate Account invests. General Account The account that holds our assets other than those held in the Separate Account or Nonunitized Separate Account. Guaranteed Accumulation Account (GAA) A Fixed Interest Option that may be available during the Accumulation Phase. Under this option, we guarantee specified rates of interest for specified periods of time. Amounts allocated to the Guaranteed Accumulation Account are held in the Nonunitized Separate Account. Good Order Instructions that are complete and clear enough to allow us to act without exercising discretion. Home Office Our main office located at 151 Farmington Avenue, Hartford, Connecticut 06156. Individual Account An account, or accounts (including, if applicable, employer and employee accounts) established for each Participant to maintain a record of transactions and the value of Contributions as invested. Investment Options The Funds and Fixed Interest Options available under this Contract. Maturity Date The last day of a GAA guaranteed term or the last day of the guarantee period of an Aetna GET Fund series. Nonunitized Separate Account A separate account that holds assets allocated to the Guaranteed Accumulation Account. Participant A person who is covered under the retirement Plan or program for which this Contract is issued and who has an interest in this Contract. Plan The retirement plan or program for which this Contract is issued. Premium Tax Any tax assessed by any governmental entity on Contributions or amounts used to purchase Annuity payments. Separate Account An account that buys and holds shares of the Funds through its subaccounts. Valuation Date The date and time at which accumulation unit values and Annuity unit values are calculated. Currently, this calculation is made after the close of business of the New York Stock Exchange on any normal business day, Monday through Friday, the New York Stock Exchange is open. 2 Section 1. General Contract Provisions ================================================================================ 1.01 Entire Contract The entire Contract consists of this document and any endorsements incorporated. The Plan, if applicable, is not part of the Contract and ALIAC is not bound by its terms. 1.02 Nonparticipating Contract This Contract is nonparticipating. The Contract Holder, a Participant or a Contract beneficiary have no right to share in our earnings. 1.03 Control of Contract Control of the Contract is as shown on Contract Schedule I under Control of Contract. 1.04 Certificate Any certificate provided to a Participant summarizes Contract provisions; it is for information only and is not part of the Contract. We will provide certificates as required by state law in the state where the Contract is delivered and as allowed under the Plan. 1.05 Incontestability We will not cancel this Contract because of any error of fact. 1.06 Grace Period Except as provided in 8.09, this Contract and all Individual Accounts will remain in effect even if Contributions are not continued. 1.07 Change of Contract Only an ALIAC officer at the level of Vice President or higher, or an officer with written delegation of authority from a Vice President or higher officer, may change the terms of this Contract. No other ALIAC officer, employee, agent or representative can change this Contract. Except as noted below, this Contract may be changed at any time by written mutual agreement between the Contract Holder and ALIAC. For changes we initiate requiring Contract Holder consent, we notify the Contract Holder 60 calendar days in advance of the change and consider that the Contract Holder has agreed to the change unless we receive written notice that the Contract Holder does not agree to the change at least 30 calendar days before the date the change becomes effective. If we propose a change requiring Contract Holder consent and the Contract Holder does not agree to the change, we have the right to not establish new Individual Accounts and to stop accepting Contributions to existing Individual Accounts. We will not reduce the minimum guaranteed interest rate for the Fixed Account and the Fixed Plus Account. We have the right to change the following without Contract Holder consent: (a) Net Investment Factor (see 3.06) We may change the net investment factor by notifying the Contract Holder in writing at least 30 calendar days before the change becomes effective. If we do this, the change will apply only to Individual Accounts established, and Contributions received, after the date the change becomes effective. 3 (b) Guaranteed Accumulation Account (GAA) market value adjustment (see 7.09) We may change the GAA market value adjustment by notifying the Contract Holder in writing at least 90 calendar days before the change becomes effective. If we do this, the change will apply only to guaranteed terms offered in deposit periods after the date the change becomes effective. (c) Systematic Distribution Options (see 8.08) We may change systematic distribution options by notifying the Contract Holder in writing at least 30 calendar days before the change becomes effective. If we do this, the change will not apply to Participants or beneficiaries receiving payments under an option before the date the change becomes effective. (d) Annuity Options (see 11.03) We may change Annuity options by notifying the Contract Holder in writing at least 30 calendar days before the date the change becomes effective. If we do this, the change will not take effect until at least 12 months after the Effective Date of the Contract, or until at least 12 months after any previous change. Any change will not apply to Participants or beneficiaries receiving Annuity payments before the date the change becomes effective. (e) Mortality Table (see 11.04) We may change the mortality table by notifying the Contract Holder in writing at least 30 calendar days before the date the change becomes effective. If we do this, the new table will not apply to Individual Accounts established before the date the change becomes effective. In addition, we may change this Contract as required to comply with state and federal law without Contract Holder consent by notifying the Contract Holder at least 30 calendar days before the date the change becomes effective. Any unilateral change will not apply to Individual Accounts established before the date the change becomes effective, but will apply to Individual Accounts established on or after the date the change becomes effective. If we make a unilateral change, the Contract Holder or Participants, as applicable, are permitted to terminate participation in the Contract before the date the change becomes effective under the terms of the Contract in effect prior to the date the change becomes effective. As required by law, we will make any change of Contract by endorsement, which may be subject to regulatory approval in the state where the Contract is delivered. 1.08 Payments We make payments as directed by the Contract Holder or a Participant, as applicable. Payment requests must be in writing or as we otherwise allow in our administrative practice. We determine the amount of any payment based on the Individual Account value as of the next Valuation Date following our receipt of a payment request in Good Order at our Home Office. Generally, we make payments within seven calendar days. 1.09 Deferral of Payment We may defer payment up to a period of six months or as otherwise provided by state and/or federal law. 1.10 Proof of Age If a life-contingent Annuity option is elected, we may require proof of the age of an Annuitant. 1.11 Evidence of Survival We may require proof that any Annuitant under a life-contingent Annuity option is living. 4 1.12 Misstatements and Adjustments If we learn that the age of any Annuitant or second Annuitant is misstated, we will use the correct age to adjust payments. We reserve the right to obtain reimbursement, or to adjust future payments for any amount we overpaid. We will pay the amount of any underpayment. 1.13 Reports Each calendar year we provide the Contract Holder or a Participant, as applicable, with a report of the Individual Account value. We also provide an annual report for the Separate Account. 1.14 State Laws This Contract complies with the laws of the state in which it is delivered. Any cash, death or Annuity payments are equal to or greater than the minimum required. To determine legal reserve valuation, we use Annuity tables as required by law; such tables may be different from those we use to determine Annuity payments. 1.15 Claims of Creditors Individual Accounts are not subject to the claim of any creditor of the Contract Holder, a Participant or a beneficiary, except to the extent permitted by law. 1.16 Maintenance Fee We may deduct an annual maintenance fee during the Accumulation Phase. The amount of the maintenance fee, if any, for this Contract will never be more than the amount shown on Contract Schedule I under Maximum Maintenance Fee. The fee, if any, is deducted proportionately from each Investment Option in which the Individual Account is invested on the anniversary of the Individual Account Effective Date. The fee is also deducted if the entire Individual Account value is withdrawn. If a Participant has more than one Individual Account, we may deduct the fee proportionately from all Individual Accounts. We may eliminate the fee for an Individual Account established with one lump-sum Contribution. 1.17 Charges for Additional Services At the request of the Contract Holder, we, or our authorized representatives, may provide administrative services to the Plan. We reserve the right to charge for such services. 1.18 Charges Subject to Change The maintenance fee (see 1.16) and charges to the Separate Account (see 3.07) may vary (increase, decrease, or be eliminated) based on the total assets held in all Individual Accounts under the Contract. In determining total assets, we may aggregate Individual Accounts established under different ALIAC Contracts. The aggregate amount is equal to the sum of assets in all Individual Accounts under this Contract, plus the value of Individual Accounts under other ALIAC Contracts of the same class issued to the Contract Holder. We may determine the amount of the maintenance fee and/or charges to the Separate Account based on total assets on an annual basis. We will determine initial charges based on our estimate of the amount that will be allocated to the Contract during a period mutually agreed upon by the Contract Holder and us. 5 Part I. Accumulation Phase Section 2. Contributions and Individual Account Value ================================================================================ 2.01 Contributions We allocate Contributions in whole percentages among the Investment Options available as directed by the Contract Holder or a Participant, as applicable. Changes in future Contribution allocation may be made at any time without charge. The Contract Holder or a Participant, as applicable, may also establish an Individual Account with one lump-sum Contribution. We reserve the right to establish minimum Contribution amounts and to refuse to accept any Contribution. Contributions to Individual Accounts may be limited as provided in the Code. The limits, if any, are shown on Contract Schedule I under Contribution Limits. 2.02 Premium Tax We pay any applicable premium tax when it is due. We will deduct the amount of any applicable premium tax from the Individual Account value no earlier than when there is a tax liability. We reserve the right to deduct any premium tax due before a Contribution is allocated to an Individual Account. 2.03 Individual Account We will establish an Individual Account for each Participant. If required, we will provide accounts that distinguish between employer and employee Contributions for each Participant. 2.04 Experience Credit We may apply experience credits (investment, administrative, mortality or other) under this Contract and may apply such credits as: (a) A reduction in the maintenance fee; (b) A reduction in the mortality and expense risk charge to the Separate Account; (c) A reduction in the administrative charge to the Separate Account; and (d) An increase in a Fixed Interest Option interest rate. We will apply experience credits at our sole discretion as we deem appropriate for the class of contracts to which the Contract is issued. 2.05 Individual Account Value As of the most recent Valuation Date, the Individual Account value is equal to the total of all Contributions: (a) Plus any interest added on the amount, if any, allocated to a Fixed Interest Option(s), (b) Plus or minus the investment experience on the amount, if any, held in the Separate Account; (c) Minus any applicable maintenance fees, any amounts withdrawn, or used to purchase Annuity payments, or any applicable premium tax; and (d) Minus any applicable fees or charges deducted. 6 Section 3. Separate Account ================================================================================ 3.01 General The Separate Account, established under Title 38a, Section 38a-433 of the Connecticut General Statutes, buys and holds shares of the Funds available. The Separate Account is registered as a unit investment trust under the Investment Company Act of 1940. We own the assets held in the Separate Account; we are not a trustee of those assets. Income, gains or losses, realized or unrealized, are credited to or charged against the Separate Account without regard to our other income, gains or losses. Separate Account assets, to the extent of reserves and other Contract liabilities, cannot be charged with liabilities arising out of any other business we conduct. 3.02 Funds Available We reserve the right to limit the number of Funds in which an Individual Account may be invested, at one time or cumulatively, during the Accumulation Phase and/or Annuity Phase. 3.03 Change or Substitution of Funds We reserve the right to stop offering any Fund or to add Funds. We may substitute shares of a Fund for shares of another Fund. We will provide the Contract Holder with reasonable advance notice of any elimination, addition or substitution of a Fund. If the Plan is subject to ERISA, we will seek Contract Holder consent in advance of any Fund substitution. Consent will be deemed given unless, following notice of substitution and within a prescribed time period, the Contract Holder notifies us in writing that it does not consent and provides us with alternative investment instructions for the shares that would otherwise be affected by the substitution. 3.04 Accumulation Units Each Contribution allocated to one or more of the Funds is credited to an Individual Account as accumulation units. The number of accumulation units is calculated by dividing the amount of the Contribution allocated to the Fund by the accumulation unit value (see 3.05) as of the next Valuation Date following our receipt of the Contribution in Good Order at our Home Office. 3.05 Accumulation Unit Value The value of each accumulation unit for any Fund for each Valuation Date is computed by multiplying the net investment factor (see 3.06) by the accumulation unit value for such Valuation Date. Accumulation unit values may increase or decrease from Valuation Date to Valuation Date. 3.06 Net Investment Factor The net investment factor is used to compute the accumulation unit value for any Fund. For each Valuation Date, for each Fund, the net investment factor is equal to 1.0000000, plus the net return rate. The net return rate equals: [a - b - c] ------------- - e - f d Where: a is the value of the shares of the Fund held by the Separate Account on the prior Valuation Date; b is the value of the shares of the Fund held by the Separate Account on the current Valuation Date; c is taxes or provisions for taxes, if any, on the Separate Account (with any federal income tax liability offset by foreign tax credits to the extent allowed); 7 d is the total value of the accumulation units and Annuity units of the Separate Account on the prior Valuation Date; e is Separate Account daily charges for mortality and expense risk and a daily administrative charge as shown on Contract Schedule I under Daily Charges to the Separate Account; and f is if applicable, a fee for the GET Fund guarantee, which is deducted daily during the guarantee period. The fee, which is determined before the beginning of each offering period (see 4.02), is shown on Contract Schedule I under Maximum Daily Charges to the Separate Account. The net return rate may be greater or less than zero percent. 3.07 Charges to the Separate Account During the Accumulation Phase, we may deduct a mortality and expense risk charge from the Individual Account value invested in the Separate Account. In addition, we reserve the right to impose an administrative charge. The charges to the Separate Account are shown on Contract Schedule I under Maximum Daily Charges to the Separate Account and are deducted daily. 3.08 Fund Transfers During the Accumulation Phase, any portion or all of the Individual Account value held in a Fund may be transferred to any other Fund or any available Fixed Interest Option. The Individual Account value will be based on the Fund's accumulation unit value next determined after we receive a transfer request in Good Order. 3.09 Withdrawals from the Separate Account If the Contract Holder or a Participant, as applicable, requests a partial or full withdrawal (see 8.02) from the Funds, a withdrawal charge may apply (see 8.04). Section 4. Aetna GET Fund (GET Fund) ================================================================================ The following provisions apply if the GET Fund is available. 4.01 GET Fund Guarantee Period For each GET Fund series, the period for which the GET Fund guarantee applies. The guarantee period ends on the Maturity Date. 4.02 GET Fund Offering Period The period, usually from one to three months, during which the Contract Holder or a Participant, as applicable, may transfer or allocate amounts to a GET Fund series. Each GET Fund series has a specific offering period. Amounts transferred or allocated prior to the date on which the guarantee period begins are invested in money market instruments. We will specify a minimum total asset amount required at the end of an offering period to offer a GET Fund series. If the minimum is not achieved, we reserve the right not to begin the guarantee period. If a GET Fund series is not begun, we will mail a notice to all Contract Holders or Participants, as applicable, who have made allocations to that GET Fund series no less than 15 calendar days after the end of the offering period. The Contract Holder or a Participant, as applicable, then has 45 calendar days from the end of the offering period to reallocate the amount allocated to the GET Fund to any other available Investment Options. During this time, GET Fund assets are invested in money market instruments. If the Contract Holder or a Participant, as applicable, makes no election by the end of the 45-day period, at the next Valuation Date, we will allocate the amount in the terminated GET Fund series to the money market fund available under the Contract. 8 We reserve the right to specify a maximum total asset amount for a GET Fund series. If the maximum is achieved, we reserve the right to set a date on which we will stop accepting allocations for that GET Fund series. We will announce the date on which we will stop accepting transfers and allocations 10 calendar days prior to that date. 4.03 GET Fund Guarantee On the Maturity Date of each GET Fund series, the GET Fund accumulation unit value for that series will not be less than the GET Fund accumulation unit value determined at the close of business on the last day of the offering period. If necessary to offset any shortfall in the GET Fund accumulation unit value, we will transfer funds from our General Account to the Separate Account. The GET Fund guarantee does not apply to transfers or withdrawals made before the Maturity Date. If GET Fund accumulation units are adjusted at any time during the guarantee period, the GET Fund guarantee will be restated. We calculate the restated guarantee so that it is equivalent to the original guarantee for that GET Fund series. A daily charge is assessed on the amount, if any, allocated to the GET Fund. This charge for the GET Fund guarantee is shown on Contract Schedule I under Maximum Daily Charges to the Separate Account. 4.04 GET Fund Maturity Date The GET Fund Maturity Date is the date on which the guarantee period ends and GET Fund accumulation units are liquidated. Prior to the Maturity Date for each series, we send a written notice of the date to each Contract Holder or Participant, as applicable, who has an Individual Account value in that series. In response, the Contract Holder or Participant, as applicable, must tell us to which available Investment Options to transfer the amount in the GET Fund on the Maturity Date. If we do not receive instructions, on the Maturity Date we transfer the portion of the Individual Account value held in the GET Fund to another GET Fund series, if available. If no GET Fund series is available, we transfer the amount to the Fund or Funds we designate in the written notice. 4.05 Transfers or Withdrawals from the GET Fund Transfers or withdrawals from the GET Fund before the Maturity Date are based on the GET Fund unit value for the next Valuation Date following our receipt of the request in Good Order (see 8.01 and 8.02). Section 5. Fixed Account ================================================================================ The following provisions apply if the Fixed Account is available as shown on Contract Schedule I under Fixed Interest Options Available. 5.01 Fixed Account Minimum Guaranteed Interest Rate The Fixed Account minimum guaranteed interest rate is shown on Contract Schedule I under Fixed Account Minimum Guaranteed Interest Rate. Each calendar year, we will set an annual minimum guaranteed interest rate which will apply to all amounts held in the Fixed Account during the calendar year. The one year minimum guaranteed interest rate will be established prior to each calendar year and will be made available to the Contract Holder or Participants, as applicable, in advance of the calendar year. We, at our discretion, may credit a higher interest rate, which is not guaranteed; we will make the current rate, and the period for which it will be credited, available to the Contract Holder or Participants, as applicable. 9 5.02 Transfers from the Fixed Account Each calendar year, the percentage shown on Contract Schedule I under Fixed Account Annual Transfer Limit of the amount in the Fixed Account may be transferred to any available Investment Options. The amount available for transfer will be based on the Individual Account value in the Fixed Account as of the date we receive the transfer request in Good Order at our Home Office. We may, on a temporary basis, allow transfer of a larger percentage. There is no limit on the amount that may be transferred to the Fixed Plus Account. 5.03 Withdrawals from the Fixed Account If the Contract Holder or a Participant, as applicable, requests a partial or full withdrawal (see 8.02) from the Fixed Account, a withdrawal charge may apply (see 8.04). Section 6. Fixed Plus Account ================================================================================ The following provisions apply if the Fixed Plus Account is available as shown on Contract Schedule I under Fixed Interest Options Available. 6.01 Fixed Plus Account Minimum Guaranteed Interest Rate The Fixed Plus Account minimum guaranteed interest rate is shown on Contract Schedule I under Fixed Plus Account Minimum Guaranteed Interest Rate. Each calendar year, we will set an annual minimum guaranteed interest rate which will apply to all amounts held in the Fixed Plus Account during the calendar year. The one year minimum guaranteed interest rate will be established prior to each calendar year and will be made available to the Contract Holder or Participants, as applicable, in advance of the calendar year. We, at our discretion, may credit a higher interest rate, which is not guaranteed; we will make the current rate, and the period for which it will be credited, available to the Contract Holder or Participants, as applicable. 6.02 Transfers from the Fixed Plus Account During each rolling 12-month period, the percentage shown on Contract Schedule I under Fixed Plus Account Annual Transfer and Partial Withdrawal Limit of the amount in the Fixed Plus Account may be transferred to any available Investment Option. The amount available for transfer is based on the Individual Account value in the Fixed Plus Account on the date we receive the transfer request in Good Order at our Home Office, reduced by any amount withdrawn, transferred, taken as a loan (if allowed under the Contract) or used to purchase Annuity payments during the 12 months prior to the transfer request. In addition, we reserve the right to reduce the amount available for transfer by amounts withdrawn under a systematic distribution option. Twenty percent of the amount in the Fixed Plus Account may be transferred in each of four consecutive 12-months and the balance transferred in the fifth year subject to the following conditions: (a) During the five-year period, no additional amounts are allocated to or transferred from the Fixed Plus Account; (b) We will include any amount transferred, taken as a loan (if allowed under the Contract) or used to purchase Annuity payments during the prior 12-month period when calculating the amount which equals 20%; and (c) We reserve the right to include amounts paid under a systematic distribution option when calculating the amount which equals 20%. In addition, we reserve the right to waive the transfer limit when the amount in the Fixed Plus Account is less than or equal to the amount shown on Contract Schedule I under Waiver of Fixed Plus Account Transfer Limit. 10 6.03 Partial Withdrawals from the Fixed Plus Account During each rolling 12-month period, the percentage shown on Contract Schedule I under Fixed Plus Account Annual Transfer and Partial Withdrawal Limit may be withdrawn from the Fixed Plus Account. The amount available for withdrawal is based on the Individual Account value in the Fixed Plus Account on the date we receive the withdrawal request in Good Order at our Home Office, reduced by any amount withdrawn, transferred, taken as a loan (if allowed under the Contract), or used to purchase Annuity payments during the 12-months prior to the request. In addition, we reserve the right to reduce the amount available by deducting any amount withdrawn under a systematic distribution option. The withdrawal limit does not apply when the partial withdrawal is: (a) Due to a Participant's death during the Accumulation Phase and is made within six months of the date of death (this exception applies to only one partial withdrawal); (b) Used to purchase Annuity payments; or (c) Due to other conditions as we may allow without discrimination. 6.04 Full Withdrawal of the Total Amount in the Fixed Plus Account The Contract Holder, or a Participant, as applicable, may withdraw the full amount held in the Fixed Plus Account. When we receive a request for a full withdrawal, no additional transfers, partial withdrawals or loans (if allowed under the Contract) are allowed. (a) Twenty percent of the Individual Account value in the Fixed Plus Account as of the date we receive the withdrawal request in Good Order at our Home Office reduced by the amount, if any, transferred, withdrawn, taken as a loan (if allowed under the contract) or used to purchase Annuity payments during the prior 12 months; then (b) Twenty percent of the remaining amount 12 months later; then (c) Twenty percent of the remaining amount 12 months later; then (d) Twenty percent of the remaining amount 12 months later; then (e) The balance of the Individual Account value in the Fixed Plus Account 12 months later. No withdrawal charge applies to amounts withdrawn. The Contract Holder or Participant, as applicable, may cancel a full withdrawal request from the Fixed Plus Account at any time. 6.05 Waiver of Fixed Plus Account Full Withdrawal Provision When a full withdrawal is requested, payment from the Fixed Plus Account is not limited as described in 6.04 when the withdrawal is as noted on Contract Schedule I under Waiver of Fixed Plus Full Withdrawal Provision. Section 7. Guaranteed Accumulation Account (GAA) ================================================================================ The following provisions apply if the Guaranteed Accumulation Account is available as shown on Contract Schedule I under Fixed Interest Options Available. 7.01 Nonunitized Separate Account The Nonunitized Separate Account is established under Title 38a, Section 38a-433 of the Connecticut General Statutes. There are no discrete units for this account. We own the assets held in the Nonunitized Separate Account; we are not a trustee of those assets. Income, gains or losses, realized or unrealized, are credited to or charged against the Nonunitized Separate Account without regard to our other income, gains or losses. Nonunitized Separate Account assets, to the extent of reserves and other Contract liabilities, cannot be charged with liabilities arising out of any other business we conduct. 11 7.02 GAA Minimum Guaranteed Interest Rate All Contributions allocated to a GAA guaranteed term (see 7.04) earn a rate of interest which we determine and which is guaranteed when the Contribution remains in the guaranteed term until the Maturity Date. The rate credited will never be less than the minimum interest rate shown on Contract Schedule I under Guaranteed Accumulation Account Minimum Guaranteed Interest Rate. For guaranteed terms of one year or less, one guaranteed rate is credited for the full guaranteed term. For longer guaranteed terms, we may credit an initial guaranteed interest rate from the date of deposit to the end of a specified period within the guaranteed term. We may credit different interest rates for subsequent specified periods throughout the guaranteed term. 7.03 Deposit Period A deposit period is the period of time we determine during which we accept allocations (Contributions, transfers, or reinvestments) to one or more guaranteed terms. We reserve the right to extend the deposit period. 7.04 Guaranteed Term A guaranteed term is the period of time for which we guarantee the declared interest rate for allocations (Contributions, transfers, or reinvestments) to GAA guaranteed terms. We may offer guaranteed terms ranging in duration from one to ten years. During each deposit period, we may offer more than one guaranteed term of varying lengths. The guaranteed term begins the day after the deposit period ends. The Contract Holder or a Participant, as applicable, may allocate new Contributions or transfers to any or all guaranteed terms available in the current deposit period. 7.05 Guaranteed Term Groups A guaranteed term group is comprised of all GAA guaranteed terms of the same duration. 7.06 Maturity Date, Maturity Value and Reinvestment The Maturity Date is the last day of a guaranteed term. The maturity value is the amount we pay at the end of a guaranteed term. At least 18 calendar days before any guaranteed term Maturity Date, we notify the Contract Holder or a Participant, as applicable, of the projected maturity value and the guaranteed terms (and the guaranteed interest rates for each) available during the then-current deposit period. The Contract Holder, or a Participant, as applicable, may then tell us how to allocate the maturity value. If the Contract Holder or a Participant, as applicable, does not tell us how to reinvest the maturity value, we reinvest it in a guaranteed term of the same duration if one is available. If no guaranteed term of the same duration is available, we reinvest the maturity value in the guaranteed term with the next shortest duration. If no shorter guaranteed term is available, we reinvest the maturity value in the next longest term. We mail a confirmation of reinvestment. The confirmation includes the guaranteed term in which we have reinvested the maturity value and the guaranteed interest rate for that term. If we have reinvested the maturity value, during the month following the Maturity Date, the Contract Holder or a Participant, as applicable, may transfer or withdraw the reinvested amount, with interest earned (as of the date we receive the request) without incurring a market value adjustment (see 7.08). 7.07 Transfers and Withdrawals from the GAA Except as noted below, the Contract Holder or a Participant, as applicable, may transfer any portion or all of the amount held in the GAA. Transfers or withdrawals before the Maturity Date may be subject to a market value adjustment (see 7.08). Amounts invested in a guaranteed term may not be transferred during the deposit period or for a period of 90 calendar days after the close of the deposit period. 12 Unless directed otherwise, when the Contract Holder or a Participant, as applicable, requests a transfer or withdrawal from the GAA, we withdraw amounts proportionately from each guaranteed term in which the Individual Account is invested. Within a guaranteed term group, we withdraw first from the oldest deposit period and then from the next oldest and so on until the amount requested is withdrawn. 7.08 Application of the Market Value Adjustment Transfers or withdrawals from the GAA before the Maturity Date are subject to a market value adjustment, except for: (a) A one-month period following the Maturity Date on which we have automatically reinvested the value on the Maturity Date; (b) Distributions under certain systematic distribution options; and (c) When the withdrawal is equal to the minimum distribution amount required under the Code, using a method permitted by the Code and which we offer. For withdrawals and transfers from the GAA made (1) within six months of a Participant's death; or (2) to purchase Annuity payments under a life-contingent Annuity option, the amount withdrawn from the GAA is the greater of: (a) The aggregate market value adjustment amount which is the sum of all market value adjusted amounts calculated due to a withdrawal before the Maturity Date (which may be positive or negative); or (b) The amount in the GAA. For withdrawals made after the six month period following death, the withdrawal or transfer amount is the aggregate MVA amount. An MVA applies to amounts withdrawn to purchase Annuity payment under a period certain Annuity option. We may change the GAA market value adjustment by notifying the Contract Holder in writing at least 90 calendar days before the change becomes effective. Any such change will apply only to guaranteed terms offered in deposit periods after the date the change becomes effective and will apply to existing and new Individual Accounts. 7.09 Market Value Adjustment (MVA) The market value adjustment reflects any change in yields on U.S. Treasury Notes from the time an amount is allocated to a GAA guaranteed term to the time of a transfer or withdrawal prior to the Maturity Date. When the market value adjustment is applied, the amount transferred or withdrawn from the GAA is multiplied by a factor which is calculated as follows: x ------- 365 (1 + I) ----------------------- x ------- 365 (1 + j) 13 Where: I is the deposit period yield j is the current yield x is the number of days remaining (computed from Wednesday of the week of withdrawal) in the guaranteed term. The deposit period yield and the current yield are determined as follows: Deposit Period Yield At the close of the last business day of each week of a deposit period, we compute a yield that is the average of the yields on U.S. Treasury Notes which mature in the last three months of the guaranteed term. The deposit period yield is the average of those yields for the deposit period. If a withdrawal is made prior to the close of the deposit period, the deposit period yield is the average of the yields of U.S. Treasury Notes for each week preceding the withdrawal. In the event that no U.S. Treasury Notes will mature in the last three months of the guaranteed term, we reserve the right to use the U.S. Treasury Notes that mature in a following quarter. Current Yield The Current Yield is the average of the yields of the same U.S. Treasury Notes used to calculate the deposit period yield on the last business day of the week preceding withdrawal. Section 8. Transfers, Withdrawals and Distributions ================================================================================ 8.01 Transfers During the Accumulation Phase, the Contract Holder or a Participant, as applicable, may transfer all or any portion of the Individual Account value among the available Investment Options. The Individual Account value on any amount transferred from a Fund will be based on the Fund's accumulation unit value next determined after we receive the transfer request In Good Order at our Home Office. The Contract Holder or a Participant, as applicable, may request a transfer by properly completing a transfer request form and sending it to our Home Office, or by otherwise complying with our administrative procedures. We reserve the right to establish a minimum transfer amount. 8.02 Withdrawals As allowed by the Plan, if applicable, and subject to provisions of the Code (see 8.03), during the Accumulation Phase, the Contract Holder or a Participant, as applicable, may withdraw any portion or all of the Individual Account value. The Individual Account value of any amount withdrawn from a Fund will be based on the Fund's accumulation unit value next determined after we receive the transfer request In Good Order. The Contract Holder or a Participant, as applicable, may request a withdrawal by properly completing a withdrawal request form and forwarding it to our Home Office, or by otherwise complying with our administrative procedures. Unless the Contract Holder or a Participant, as applicable, requests otherwise, the withdrawal will be made proportionately from the Investment Options in which the Individual Account is invested. A withdrawal charge may apply to amounts withdrawn (see 8.04). In addition, a market value adjustment may apply to amounts withdrawn from the GAA (see 7.08 and 7.09) and limitations may apply to withdrawals from the Fixed Plus Account (see 6.04). 8.03 Withdrawal Restrictions Under the Code The Code may impose restrictions on the amount and timing of withdrawals. The restrictions applicable to this Contract are shown on Contract Schedule I under Withdrawal Restrictions Under the Code. Withdrawals that do not comply with the Code may be subject to tax penalties. 14 8.04 Withdrawal Charge During the Accumulation Phase, we may deduct a withdrawal charge from the Individual Account value withdrawn. The charge, if any, is a percentage of the amount withdrawn from the Funds and/or Fixed Interest Options (except, if applicable, the Fixed Plus Account). The withdrawal charge will never exceed 8.5% of the total amount of Contributions. The withdrawal charge, if any, is shown on Contract Schedule I under Withdrawal Charge. 8.05 Waiver of Withdrawal Charge The withdrawal charge (see 8.04) does not apply in any of the circumstances shown on Contract Schedule I under Waiver of Withdrawal Charge. In addition, we reserve the right to reduce, waive or eliminate the withdrawal charge. 8.06 Reinstatement Within 30 calendar days after a withdrawal, the Contract Holder or a Participant, as applicable may elect to reinstate all or a portion of the proceeds of a full withdrawal if allowed by applicable law. We must receive the reinstated amount within 60 calendar days of the withdrawal. Any maintenance fee and withdrawal charge imposed at the time of the withdrawal is included in the reinstatement. If only a portion of the amount withdrawn is reinstated, the amount of any maintenance fee and withdrawal charge deducted will be restored proportionally. The amount of any market value adjustment deducted from any amount withdrawn from GAA is not included in the amount reinstated. Any amount reinstated to the GA Account will be credited to guaranteed terms available in the current deposit period. We will reinvest it in a guaranteed term of the same duration if one is available. If no guaranteed term of the same duration is available, we reinvest the maturity value in the guaranteed term with the next shortest duration. If no shorter guaranteed term is available, we reinvest the maturity value in the next longest term. Amounts withdrawn from a GET Fund series are reinstated to the current offering period if one is available. If no GET Fund offering period is available, any amount withdrawn from the GET Fund is reinstated equally among all other Investment Options in which the Individual Account is invested. Amounts are reinstated among the Investment Options in the same proportion as they were held at the time of withdrawal, except, as noted above, for amounts from the GET Fund. Any maintenance fee which falls due after the withdrawal and before the reinstatement is deducted from the amount reinstated. The number of accumulation units reinstated to any Fund is based on the accumulation unit values next computed after we receive the reinstatement request in Good Order at our Home Office. Reinstatement is permitted only once. 8.07 Required Distributions While an Individual Account remains in the Accumulation Phase, the Code may require distribution of all or a portion of the Individual Account value. The Contract Holder, a Participant or Contract beneficiary, as applicable, must tell us when to begin distributions. We have no responsibility for adverse tax consequences as the result of the Contract Holder, Participant or Contract beneficiary, as applicable, not complying with minimum distribution requirements. The distribution requirements, if any, are shown on Contract Schedule I under Required Distributions. Generally, to meet distribution requirements, the Contract Holder, a Participant or Contract beneficiary, as applicable, may request partial withdrawals, a systematic distribution option (see 8.08) or an Annuity option. 15 8.08 Systematic Distribution Options (SDOs) During the Accumulation Phase, we may offer one or more distribution options under which we make regularly scheduled automatic partial distributions of the Individual Account value. To request an SDO, the Contract Holder, a Participant or Contract beneficiary, as applicable, must complete an SDO election form and forward it to our Home Office. Each option is available without discrimination to any class of Contracts. The availability of any specific option may be subject to terms and conditions applicable to that option. We may discontinue the availability of an SDO option for future election. Payments will, however, continue to Participants who elected the option before the date it is no longer available. 8.09 Individual Account Termination If the Individual Account value is an amount equal to or less than the amount shown on Contract Schedule I under Individual Account Termination Amount and we have received no Contributions for 12 months, we reserve the right to terminate an Individual Account. Before we do this, we notify the Contract Holder or Participant, as applicable, 90 calendar days in advance. When we terminate an Individual Account, we do not deduct a withdrawal charge. We do not exercise this right when the Individual Account value is equal to or less than the amount shown on Contract Schedule I under Individual Account Termination Amount due to investment performance. Section 9. Loans ================================================================================ 9.01 Loan Availability If loans are available under the Contract, a loan endorsement is attached. Section 10. Death Benefit During the Accumulation Phase ================================================================================ 10.01 Death Benefit If a Participant dies during the Accumulation Phase, we pay a death benefit. The amount of the death benefit is the Individual Account value as of the next Valuation Date following our receipt of acceptable proof of death at our Home Office (see 7.08 for amounts in the GAA). 10.02 Contract Beneficiary The Contract beneficiary is shown on Contract Schedule I under Contract beneficiary. Generally, the Participant may name a beneficiary under the Plan (the Plan beneficiary). If allowed by the Plan, when designating the beneficiary, the Contract Holder or a Participant, as applicable, may specify, the form of payment as permitted by the Code. The Contract beneficiary and the form of payment, if applicable, may be designated or changed in writing or as we may otherwise allow in our administrative procedures. 10.03 Distribution of Death Benefit Generally, if the Plan beneficiary is the Participant's surviving spouse, distribution of the death benefit must begin no later than the year the Participant would have attained age 70 1/2 or any other date allowed under federal law or regulations. If the Plan beneficiary is not the Participant's surviving spouse, generally, the death benefit must be used to purchase Annuity payments within one year of the year of the Participant's death or otherwise paid within five years of the year of the Participant's death. Annuity payments to a Plan beneficiary may not extend beyond the period specified in the Code. 16 Part II. Annuity Phase Section 11. General Provisions ================================================================================ 11.01 Election The Contract Holder, a Participant, Contract or Plan beneficiary, as applicable, may elect an Annuity option by properly completing an election form and forwarding it to our Home Office no later than 30 calendar days before the desired first Annuity payment date. All Annuity option elections must comply with any Plan requirements and regulatory requirements including the Code minimum distribution requirements. All or any portion of the Individual Account value (after the deduction of any applicable premium tax) may be used to purchase Annuity payments (for amounts from the GAA, see 7.08). The Contract Holder, a Participant, Contract or Plan beneficiary, as applicable, must also select an Annuity option (see 11.03) and the Investment Options (see 11.06). Once payments begin, an Annuity option may not be revoked, nor may any amount be withdrawn except as noted below. 11.02 Change of Annuity Provisions We reserve the right to change or eliminate Annuity options (see 11.03) and to change the mortality table (see 11.04) we use to calculate payment rates for life-contingent Annuity payments. If we do this, any change will not take effect until at least 12 months after the Contract Effective Date, or until at least 12 months after any previous change. A change to Annuity options or the mortality table used to calculate payment rates will not apply to Individual Accounts established before the date the change becomes effective. 11.03 Annuity Options The Contract Holder, a Participant, Contract or Plan beneficiary, as applicable, must elect one of the following: Option 1: Payments for a Stated Period This option provides payments for a stated period. The number of years in the stated period must fall within the range shown on Contract Schedule II under Payment Period. If payments for this option are under a Variable Annuity, the present value of any remaining payments may be withdrawn at any time. If a withdrawal is requested within five years of the first payment, the lump-sum payment is treated as a withdrawal during the Accumulation Phase and any applicable withdrawal charge applies (see 8.04). If the payments are fixed-only, an annual increase of one, two or three percent (compounded annually) may be elected at the time the Annuity option is chosen (if permitted by the Code). Option 2: Life Income for One Annuitant This option provides payments for the life of the Annuitant. If this option is elected, the Contract Holder, a Participant or Contract beneficiary, as applicable, must also choose one of the following: (a) Payments cease at the death of the Annuitant; or (b) Payments are guaranteed for a period within the range shown on Contract Schedule II under Payment Period; or (c) Fixed-only cash refund: at the death of the Annuitant, the beneficiary receives a lump-sum payment in an amount equal to the amount applied to the Annuity (minus any applicable premium tax), minus the amount of payments made to the Annuitant. Under (a) or (b), if the payments are fixed-only, an annual increase of one, two or three percent (compounded annually) may be elected at the time the Annuity option is chosen (if permitted by the Code). 17 Option 3: Life Income for Two Annuitants This option provides payments for the lives of the Annuitant and a second Annuitant. Payments continue until both Annuitants have died. If this option is elected, the Contract Holder, a Participant, Contract or Plan beneficiary as applicable, must also choose one of the following: (a) 100% of the payment amount to continue after the first death; or (b) 66 2/3% of the payment amount to continue after the first death; or (c) 50% of the payment amount to continue after the first death; or (d) 100% of the payment amount to continue after the first death with payments guaranteed to the beneficiary after the second death for a period within the range shown on Contract Schedule II under Payment Period; or (e) 100% of the payment amount to continue at the death of the specified second Annuitant and 50% of the payment amount to continue at the death of the specified Annuitant; or (f) 100% of the fixed-only payment amount to continue after the first death with a cash refund to the Contract beneficiary after the second death. The amount of the cash refund is equal to the amount applied to the Annuity (minus any applicable premium tax), minus the amount of payments made. Under (a) or (d), if the payments are fixed-only, an annual increase of one, two or three percent (compounded annually) may be elected at the time the Annuity option is chosen (if permitted by the Code). Other Options As allowed under applicable state law, we reserve the right to make other options available. 11.04 Mortality Table The mortality table for this Contract is shown on Contract Schedule II under Mortality Table. 11.05 Payments The first payment amount must be at least $50 per month or $250 per year. We reserve the right to increase the minimum first payment amount, if allowed by state law, based on increases reflected in the Consumer Price Index-Urban (CPI-U) since July 1, 1993. To calculate the guaranteed first payment of a variable Annuity or the payments for a fixed Annuity, we will use the Annuitant's adjusted age and, if applicable, the second Annuitant's adjusted age. The Annuitant's adjusted age and, if applicable, the second Annuitant's adjusted age is the person's age as of the birthday closest to the day Annuity payments begin, reduced as follows: (a) Reduced by one year for payments before January 31, 2000; (b) Reduced by two years for payments beginning during the period from January 1, 2000 through December 31, 2009; (c) Starting on January 1, 2010, reduced by one additional year for payments beginning in each succeeding decade. If a fixed Annuity is elected, we will use the applicable current settlement option rates if they will provide higher fixed Annuity payments. 11.06 Investment Options When an Annuity option is elected, the Contract Holder, a Participant, Contract or Plan beneficiary, as applicable, must elect: (a) A fixed Annuity for which the underlying investment is our General Account; 18 (b) A variable Annuity for which the underlying investment is one or more of the available Funds; or (c) A combination of (a) and (b). For a variable Annuity, the maximum number of Funds available during the Annuity Phase is shown on Contract Schedule II under Maximum Number of Funds. The Funds available during the Annuity Phase may not be the same as those available during the Accumulation Phase. 11.07 Fixed Annuity Minimum Guaranteed Interest Rate For a fixed Annuity, the interest rate will never be less than the minimum guaranteed rate shown on Contract Schedule II under Fixed Annuity Minimum Guaranteed Interest Rate. 11.08 Variable Annuity Assumed Annual Net Return Rate Election If a variable Annuity is elected, the Contract Holder, or Participant, as applicable must also elect an assumed annual net return rate of 3.5% or 5%. The initial Annuity payment for the option elected will reflect the assumed annual net return rate. If subsequent Annuity payments are to remain level, the Separate Account must earn this rate, plus enough to cover the mortality and expense risk charge shown on Contract Schedule II under Maximum Daily Charges to the Separate Account plus any applicable administrative charge. 11.09 Variable Annuity Transfers If a variable Annuity is elected, the Contract Holder, a Participant, Contract or Plan beneficiary, as applicable, may request that we transfer all or a portion of the amount allocated to a Fund to any other available Fund. Transfer requests must be expressed as a percentage of the allocation among the Funds on which the variable payment is based. The number of transfers allowed each calendar year is shown on Contract Schedule II under Number of Annual Transfers Among Funds. We reserve the right to allow additional transfers. Transfers are effective as of the next Valuation Date following our receipt of a transfer request in Good Order at our Home Office. 11.10 Fund Annuity Units The number of Fund Annuity units is based on the amount of the first variable Annuity payment which is equal to: (a) The portion of the Individual Account value (minus any applicable premium tax) used to purchase a variable Annuity; divided by (b) One thousand; multiplied by (c) The payment rate for the option chosen. Such amount, or portion of the variable payment will be divided by the appropriate Fund's, or Funds', Annuity unit value (see 11.11) on the tenth Valuation Date before the due date of the first payment to determine the number of Fund Annuity units. The number of each Fund's Annuity units remains fixed unless changed by a subsequent Fund transfer or if the Annuity option provides for a change in units (i.e., under life income for two annuitants option after the first death). Each future payment is equal to the sum of the products of each Fund's Annuity unit value multiplied by the appropriate number of units. The Fund Annuity unit value on the tenth Valuation Date before the payment due date is used. 11.11 Fund Annuity Unit Value For any Valuation Date, a Fund's Annuity unit value is equal to: (a) The Annuity unit value for the prior Valuation Date; multiplied by (b) The Annuity unit net return factor (see 11.12) for the current Valuation Date; multiplied by (c) A factor to reflect the assumed annual net return rate. The factor for an assumed annual net return rate of 5% is 0.9998663; for 3.5% it is 0.9999058. 19 The dollar value of a Fund Annuity unit and the amount of a variable Annuity payment may increase or decrease due to investment gain or loss. We will not change the payment amount due to changes in mortality, expense results, or the administrative charge. 11.12 Fund Annuity Net Return Factor The Annuity net return factor(s) are used to compute all variable Annuity payments for any Fund. The net return factor(s) for each Fund is equal to 1.0000000 plus the net return rate. The net return rate equals: [a - b - c] ------------- - e d Where: a is the value of the shares of the Fund held by the Separate Account on the current Valuation Date; b is the value of the shares of the Fund held by the Separate Account on the prior Valuation Date; c is taxes or provisions for taxes, if any, on the Separate Account (with any federal income tax liability offset by foreign tax credits to the extent allowed); d is the total value of the accumulation units and Annuity units of the Separate Account on the current Valuation Date; e is Separate Account daily charges for mortality and expense risk and a daily administrative charge as shown on Contract II under Maximum Daily Charges to the Separate Account. A net return rate may be more or less than 0%. The value of a share of a Fund is equal to the net assets of the Fund divided by the number of shares outstanding. 11.13 Death Benefit During the Annuity Phase The Contract Holder or a Participant, as applicable, must name a beneficiary for the Annuity Phase. Unless not allowed by the Plan, or restricted by the Contract Holder, or a Participant, as applicable, the beneficiary may name a beneficiary. If an Annuitant(s) dies, any remaining guaranteed payments continue to the beneficiary. Payments are made at least as rapidly as provided by the option in effect at the death of the Annuitant. Annuity payments to an beneficiary may not extend beyond (1) the life of the beneficiary, or (2) any period certain greater than the beneficiary's life expectancy as determined by the Code. The beneficiary may also elect a lump-sum payment equal to the present value of any remaining payments. The interest rate used to determine the first Annuity payment is used to calculate the present value. The present value is determined as of the next Valuation Date following our receipt of acceptable proof of death and a written claim for the death benefit. Unless not allowed by the Plan or restricted by the Contract Holder, or a Participant, as applicable, if the beneficiary dies while receiving payments, the present value of any remaining guaranteed payments is paid in a lump-sum to the beneficiary's beneficiary or to the beneficiary's estate. 20 OPTION 1: Payments for a Specified Period ================================================================================ Monthly Amount for Each $1,000* Rates for a Fixed Annuity with a 3% Guaranteed Interest Rate ================================================================================ Years Payment Years Payment ================================================================================ 5 $17.91 20 $5.51 10 9.61 25 4.71 15 6.87 30 4.18 ================================================================================ ================================================================================ First Monthly Amount for Each $1,000* Rates for a Variable Annuity with a 3.5% Assumed Interest Rate (AIR) ================================================================================ Years Payment Years Payment ================================================================================ 5 $18.12 20 $5.75 10 9.83 25 4.96 15 7.10 30 4.45 ================================================================================ ================================================================================ First Monthly Amount for Each $1,000* Rates for a Variable Annuity with a 5% Assumed Interest Rate (AIR) ================================================================================ Years Payment Years Payment ================================================================================ 5 $18.74 20 $6.51 10 10.51 25 5.76 15 7.82 30 5.28 ================================================================================ * Net of any applicable premium tax deduction 21 Option 2: Life Income Based on the Life of One Annuitant ================================================================================ Monthly Payment Amount for Each $1,000* Rates for a Fixed Annuity Payment with 3% Guaranteed Interest Rate ================================================================================
==================================================================================================================================== Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b): Option 2(c): Adjusted payments for payments payments payments payments Cash Refund Age of life guaranteed guaranteed guaranteed guaranteed Annuitant 5 years 10 years 15 years 20 years ==================================================================================================================================== 55 4.44 4.42 4.39 4.32 4.22 4.19 60 4.95 4.93 4.86 4.73 4.55 4.57 65 5.65 5.61 5.47 5.22 4.89 5.06 66 5.82 5.77 5.61 5.33 4.96 5.18 70 6.64 6.54 6.23 5.76 5.19 5.70 75 8.06 7.82 7.14 6.25 5.38 6.51 ====================================================================================================================================
============================================================================================================== First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 3.5% Assumed Interest Rate ============================================================================================================== Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b): Adjusted payments for payments payments payments payments Age of life guaranteed guaranteed guaranteed guaranteed Annuitant 5 years 10 years 15 years 20 years ============================================================================================================== 55 4.72 4.71 4.67 4.60 4.50 60 5.23 5.21 5.13 5.00 4.82 65 5.94 5.89 5.73 5.48 5.15 70 6.92 6.81 6.49 6.00 5.43 75 8.35 8.08 7.38 6.48 5.62 ==============================================================================================================
============================================================================================================== First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 5% Assumed Interest Rate ============================================================================================================== Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b): Adjusted payments for payments payments payments payments Age of life guaranteed guaranteed guaranteed guaranteed Annuitant 5 years 10 years 15 years 20 years ============================================================================================================== 55 5.63 5.61 5.56 5.47 5.36 60 6.12 6.09 6.00 5.85 5.65 65 6.82 6.75 6.57 6.30 5.95 70 7.80 7.67 7.30 6.78 6.21 75 9.23 8.93 8.16 7.23 6.38 ==============================================================================================================
* Net of any applicable premium tax deduction 22 Option 3: Life Income Based on the Lives of Two Annuitants
==================================================================================================================================== First Monthly Payment Amount for Each $1,000* Rates for a Fixed Annuity Payment with 3.0% Guaranteed Interest Rate ==================================================================================================================================== Adjusted Ages payments ============================ guaranteed Primary Secondary 10 years Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) Option 3(f) ==================================================================================================================================== 55 50 $3.69 $4.05 $4.27 $3.69 $4.03 $3.67 55 60 3.99 4.44 4.71 3.98 4.20 3.94 65 60 4.38 4.97 5.32 4.38 4.93 4.29 65 70 4.93 5.68 6.15 4.91 5.27 4.74 75 70 5.69 6.68 7.32 5.62 6.67 5.29 75 80 6.78 8.11 8.99 6.54 7.36 5.93 ====================================================================================================================================
========================================================================================================================== First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 3.5% Assumed Interest Rate ========================================================================================================================== Adjusted Ages payments =============================== guaranteed Primary Secondary 10 years Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) ========================================================================================================================== 55 50 $3.97 $4.35 $4.56 $3.97 $4.31 55 60 4.27 4.73 5.00 4.26 4.48 65 60 4.66 5.25 5.61 4.65 5.22 65 70 5.19 5.97 6.44 5.17 5.54 75 70 5.95 6.96 7.61 5.87 6.95 75 80 7.04 8.39 9.29 6.79 7.64 ==========================================================================================================================
========================================================================================================================== First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 5% Assumed Interest Rate ========================================================================================================================== Adjusted Ages payments =============================== guaranteed Primary Secondary 10 years Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) ========================================================================================================================== 55 50 $4.88 $5.26 $5.48 $4.88 $5.23 55 60 5.15 5.63 5.91 5.14 5.38 65 60 5.52 6.14 6.51 5.51 6.10 65 70 6.04 6.84 7.34 6.00 6.41 75 70 6.77 7.84 8.51 6.68 7.81 75 80 7.86 9.28 10.20 7.57 8.49 ==========================================================================================================================
* Net of any applicable premium tax deduction 23 Aetna Life Insurance and Annuity Company Home Office: 151 Farmington Avenue Hartford, Connecticut 06156 Group Combination, Deferred Annuity Contract (Nonparticipating) EX-99.B.4.2 3 Exhibit 99-B.4.2 ================================================== Aetna Life Insurance and Annuity Company 151 Farmington Avenue Hartford, Connecticut 06156 800-525-4225 If you have questions about the Contract, call the toll-free number shown above. Group, Combination, Deferred Annuity Certificate (Nonparticipating) Aetna Life Insurance and Annuity Company (ALIAC), a stock company, will pay benefits according to the terms and conditions set forth group Contract. Please read this Certificate carefully. It states ALIAC's contractual rights and obligations as well as the rights and obligations of the Contract Holder and you. Specifications ================================================================================ Contract Holder SPECIMEN ================================================================================ Group Annuity Contract Number SPECIMEN ================================================================================ Type of Plan SPECIMEN ================================================================================ Participant SPECIMEN ================================================================================ Certificate Number SPECIMEN ================================================================================ Effective Date SPECIMEN Right to Cancel ================================================================================ You may cancel your participation in the group Contract within 10 calendar days of receiving this Certificate by returning it to ALIAC at the address shown above, or to the agent from whom it was purchased. Within seven calendar days of receiving the cancellation request at its Home Office, ALIAC will return any Contributions received, plus any increase, or minus any decrease in value, on the amount, if any, allocated to the Separate Account. Signed at the Home Office on the Effective Date. /s/ Thomas J. McInerney /s/ Kirk Wickman - ----------------------------------- ----------------------------------------- President Secretary All payments and values provided by the group Contract, when based on the investment experience of the Separate Account, are variable and are not guaranteed as to fixed dollar amount. Amounts allocated to the Guaranteed Accumulation Account, if withdrawn before a guaranteed term maturity date, may be subject to a market value adjustment. The market value adjustment may result in an increase, or a decrease, in the Individual Account value. C-CDA-99 Table of Contents Page Contract Schedule I. Accumulation Phase S I - 1 Contract Schedule II. Annuity Phase S II - 1 Definitions 1 Section 1. General Contract Provisions 3 1.01 Entire Contract .......................................... 3 1.02 Nonparticipating Contract ................................ 3 1.03 Control of Contract ...................................... 3 1.04 Certificate .............................................. 3 1.05 Incontestability ......................................... 3 1.06 Grace Period ............................................. 3 1.07 Change of Contract ....................................... 3 1.08 Payments ................................................. 4 1.09 Deferral of Payment ...................................... 4 1.10 Proof of Age ............................................. 4 1.11 Evidence of Survival ..................................... 4 1.12 Misstatements and Adjustments ............................ 5 1.13 Reports .................................................. 5 1.14 State Laws ............................................... 5 1.15 Claims of Creditors ...................................... 5 1.16 Maintenance Fee .......................................... 5 1.17 Charges for Additional Services .......................... 5 1.18 Charges Subject to Change ................................ 5 Part I. Accumulation Phase 6 Section 2. Contributions and Individual Account Value 6 2.01 Contributions ............................................ 6 2.02 Premium Tax .............................................. 6 2.03 Individual Account ....................................... 6 2.04 Experience Credit ........................................ 6 2.05 Individual Account Value ................................. 6 Section 3. Separate Account 7 3.01 General .................................................. 7 3.02 Funds Available .......................................... 7 3.03 Change or Substitution of Funds .......................... 7 3.04 Accumulation Units ....................................... 7 3.05 Accumulation Unit Value .................................. 7 3.06 Net Investment Factor .................................... 7 3.07 Charges to the Separate Account .......................... 8 3.08 Fund Transfers ........................................... 8 3.09 Withdrawals from the Separate Account .................... 8 i Page Section 4. Aetna GET Fund 8 4.01 GET Fund Guarantee Period ................................ 8 4.02 GET Fund Offering Period ................................. 8 4.03 GET Fund Guarantee ....................................... 9 4.04 GET Fund Maturity Date ................................... 9 4.05 Transfers or Withdrawals from the GET Fund ............... 9 Section 5. Fixed Account 9 5.01 Fixed Account Minimum Guaranteed Interest Rate ........... 9 5.02 Transfers from the Fixed Account .........................10 5.03 Withdrawals from the Fixed Account .......................10 Section 6. Fixed Plus Account 10 6.01 Fixed Plus Account Minimum Guaranteed Interest Rate ......10 6.02 Transfers from the Fixed Plus Account ....................10 6.03 Partial Withdrawals from the Fixed Plus Account ..........11 6.04 Full Withdrawal of the Total Amount in the Fixed Plus Account .............................................11 6.05 Waiver of Fixed Plus Account Full Withdrawal Provision ...11 Section 7. Guaranteed Accumulation Account (GAA) 11 7.01 Nonunitized Separate Account .............................11 7.02 GAA Minimum Guaranteed Interest Rate .....................12 7.03 Deposit Period ...........................................12 7.04 Guaranteed Term ..........................................12 7.05 Guaranteed Term Groups ...................................12 7.06 Maturity Date, Maturity Value and Reinvestment ...........12 7.07 Transfers and Withdrawals from the GAA ...................12 7.08 Application of the Market Value Adjustment ...............13 7.09 Market Value Adjustment (MVA) ............................13 Section 8. Transfers, Withdrawals and Distributions 14 8.01 Transfers ................................................14 8.02 Withdrawals ..............................................14 8.03 Withdrawal Restrictions Under the Code ...................14 8.04 Withdrawal Charge ........................................15 8.05 Waiver of Withdrawal Charge ..............................15 8.06 Reinstatement ............................................15 8.07 Required Distributions ...................................15 8.08 Systematic Distribution Options (SDOs) ...................16 8.09 Individual Account Termination ...........................16 Section 9. Loans 16 9.01 Loan Availability ........................................16 Section 10. Death Benefit During the Accumulation Phase 16 10.01 Death Benefit ............................................16 10.02 Contract Beneficiary .....................................16 10.03 Distribution of Death Benefit ............................16 ii Page Part II. Annuity Phase 17 Section 11. General Provisions 17 11.01 Election .................................................17 11.02 Change of Annuity Provisions .............................17 11.03 Annuity Options ..........................................17 11.04 Mortality Table ..........................................18 11.05 Payments .................................................18 11.06 Investment Options .......................................18 11.07 Fixed Annuity Minimum Guaranteed Interest Rate ...........19 11.08 Variable Annuity Assumed Annual Net Return Rate Election .................................................19 11.09 Variable Annuity Transfers ...............................19 11.10 Fund Annuity Units .......................................19 11.11 Fund Annuity Unit Value ..................................19 11.12 Fund Annuity Net Return Factor ...........................20 11.13 Death Benefit During the Annuity Phase ...................20 Annuity Tables 21 iii Contract Schedule I Accumulation Phase Control of Contract (see 1.03) [The Contract Holder controls this Contract. By notifying us in writing, the Contract Holder may allow you to choose Investment Options for an Individual Account. The Contract Holder may, however, retain the right to choose Investment Options for employer Contributions. Unless otherwise provided by the Plan, we will make payments only at the written direction of the Contract Holder and you. Unless otherwise specified by the Plan, we will make an inservice transfer under Internal Revenue Service Revenue Ruling 90-24 only at the written direction of the Contract Holder and you and will make checks payable to the acquiring investment provider(s). The Contract and Individual Accounts are nontransferable and nonassignable except to us in the event of a loan (if allowed under the Contract) or in the event of a qualified domestic relations order as allowed under the Retirement Equity Act of 1984 (REA). You have a nonforfeitable right to the value of employer Contributions made to their Individual Accounts subject to any Plan vesting limits as determined by the Contract Holder. You have a nonforfeitable right to the value of employee Contributions made to their Individual Accounts as provided by Code Section 403(b) and subject to the terms of the Plan. The Contract Holder must notify us in writing if the Plan is, or becomes, subject to the Employee Retirement Income Security Act of 1974 (ERISA) and/or related law or regulations including REA. We will rely on the Contract Holder's determination and representation of the applicability of such laws. If the Plan is subject to ERISA, before we will make a distribution from an Individual Account, the Contract Holder must certify in writing that all applicable REA requirements have been met and that the distribution complies with the Plan.] Maximum Maintenance Fee (see 1.16) The maintenance fee for each Individual Account will never be more than [$30]. Contribution Limits (see 2.01) [Each year, Contributions to the Contract are limited to the lesser of: (a) The maximum exclusion allowance (MEA) limit under Code Section 403(b); or (b) The amount set forth in Code Section 415, generally, 25% of compensation up to $30,000. In addition, salary reduction Contributions as defined in Code Section 402(g) may not exceed $10,000, or such larger amount as adjusted by the Secretary of the Treasury, unless the alternative limitation under Code Section 402(g)(8) applies.] Maximum Daily Charges to the Separate Account (see 3.07) Charges to the Separate Account will never be more than the following: Mortality and Expense Risk Charge: [1.50%] (annual basis) Administrative Charge: [0.25%] (annual basis) Aetna GET Fund Guarantee Charge (if applicable): [0.75%] (annual basis)
S I - 1 Fixed Interest Options Available (see Section 5, Section 6, and Section 7) [Fixed Account - Fixed Account is available for transferred amounts only (no ongoing Contributions). Fixed Plus Account Guaranteed Accumulation Account] Fixed Account Minimum Guaranteed Interest Rate (see 5.01) The interest rate will never be less than [3%] (annual basis). Fixed Account Annual Transfer Limit (see 5.02) [10%.] Fixed Plus Account Minimum Guaranteed Interest Rate (see 6.01) The interest rate will never be less than [3%] (annual basis) Fixed Plus Annual Account Transfer and Partial Withdrawal Limit (see 6.02 and 6.03) [20%] Waiver of Fixed Plus Account Transfer Limit (see 6.05) [$2,000] Waiver of Fixed Plus Account Full Withdrawal Provision (see 6.05) When a full withdrawal is requested, payment from the Fixed Plus Account is not limited as described in 6.04 when the withdrawal is made: [(a) When you have attained age 59 1/2 and, if applicable, has completed nine Contribution periods; (b) When you are separated from service, and when: (1) Separation from service is documented in a form acceptable to us; (2) The amount is paid directly to you; and (3) When the amount paid for all withdrawals due to separation from service during the previous [12-months] does not exceed [20%] of the average value of all Individual Accounts under the Contract during that period. (c) Due to financial hardship as defined in the Code, and when: (1) The financial hardship is certified by your employer if applicable; (2) The amount is paid directly to you; and (3) When the amount paid for all withdrawals due to financial hardship during the previous [12-months] does not exceed [20%] of the average value of all Individual Accounts under the Contract during that period. (d) When the amount in the Fixed Plus Account is [$2,000] or less (or as otherwise required by the Plan for a lump-sum cash-out without your consent) and during the previous [12] months no amounts have been withdrawn, transferred, taken as a loan (if allowed under the Contract), or used to purchase Annuity payments; (e) Due to your death before Annuity payments begin and paid within six months of your death; (f) As provided in Section 8.09; or (g) To purchase Annuity payments on a life-contingent basis or payments for a stated period on a fixed-only basis.] S I - 2 Guaranteed Accumulation Account Minimum Guaranteed Interest Rate (see 7.02) The interest rate will never be less than [3%] (annual basis). Withdrawal Restrictions Under the Code (see 8.03) [Limitations apply to partial and full withdrawals of the "restricted amount" from this Contract as required by Code Section 403(b)(11). The restricted amount is the sum of: (1) Contributions attributable to your salary reduction Contributions made on and after January 1, 1989; plus (2) The net increase, if any, in the Individual Account value after December 31, 1988 attributable to investment gains and losses and credited interest. The "restricted amount" may be partially or fully withdrawn only if one or more of the following conditions are met. You have: (a) Separated from service; (b) Attained age 59 1/2; (c) Died; (d) Become disabled, as defined by the Code; (e) Experienced financial hardship as defined by the Code. The amount available for financial hardship is limited to the lesser of the amount necessary to satisfy the need or Contributions attributable to salary reduction Contributions made on or after January 1, 1989; or (f) Met other circumstances as otherwise allowed by federal law, regulations or rulings. No limitations apply to salary reduction Contributions made and earnings credited to such Contributions made on or before December 31, 1988. In addition, any portion of an Individual Account representing amounts transferred from a Code Section 403(b)(7) custodial account will be subject to the restrictions set forth in the Code.] Withdrawal Charge (see 8.04) For each withdrawal from an Individual Account, we may deduct a withdrawal charge. This charge is a percentage of the amount withdrawn. The withdrawal charge is as follows. [Number of Years Since Individual Account Established] 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% 10 or more 0%] The withdrawal charge will never exceed [8.5%] of total Contributions, or the maximum permitted by National Association of Securities Dealers, Inc. (NASD) rules. S I - 3 Waiver of Withdrawal Charge (see 8.05) The withdrawal charge does not apply when the withdrawal is: [(a) Used to purchase Annuity payments; (b) Used to purchase a single premium immediate Annuity or individual retirement Annuity issued by ALIAC or one of its affiliates, provided that the right to cancel under the new Contract is not exercised. We will treat exercise of the right to cancel as a reinstatement and any subsequent withdrawal may then be subject to the withdrawal charge applicable on the date of the withdrawal; (c) Under a systematic distribution option (see 8.08); (d) In an amount equal to up to [10%] of the Individual Account value when the withdrawal is the first partial withdrawal in a calendar year and you are at least age 59 1/2 and not older than age 70 1/2 (not available when a systematic distribution option is in effect); (e) When we terminate an Individual Account as provided in 8.09; (f) When the Individual Account value is [$3,500] or less and during the previous 12 months no amounts have been withdrawn, transferred, taken as a loan (if allowed under the Contract), or used to purchase Annuity payments; (g) When you have attained age 59 1/2 and, if applicable, has completed nine Contribution periods; (h) Made when you have separated from service as documented in a form acceptable to us; (i) Due to financial hardship as defined in the Code; or (j) Due to your death before Annuity payments begin.] Required Distributions (see 8.07) [Generally, for Contributions made and earnings credited after December 31, 1986, distribution must begin by April 1 of the calendar year following the later of (1) the calendar year in which you attain age 70 1/2, or (2) retire. For Individual Account values as of December 31, 1986, distribution must begin by the last day of the year in which you attain age 75 or retire, whichever is later. In addition, any portion of an Individual Account representing amounts transferred from a Code Section 403(b)(7) custodial account will be subject to the restrictions set forth in the Code. The entire Individual Account value must be distributed, or begin to be distributed, over your life or life expectancy, or the lives or life expectancies of you and a beneficiary.] Individual Account Termination Amount (see 8.09) [$10,000] Contract Beneficiary (see 10.02) [The Contract Holder is the Contract beneficiary. You may designate a beneficiary under the Plan (the Plan beneficiary).] S I - 4 Contract Schedule II Annuity Phase Payment Period (see 11.03) The period for which we will guarantee Annuity payments must be at least [five] years and no more than [30] years. Mortality Table (see 11.04) [Society of Actuaries' 1983 Table a.] Maximum Number of Funds (see 11.07) The maximum number of Funds is [five]. Fixed Annuity Minimum Guaranteed Interest Rate (see 11.08) [3%] (annual basis). Maximum Daily Charges to the Separate Account (see 11.12) Charges to the Separate Account will never be more than the following: Mortality and Expense Risk Charge: [1.25%] (annual basis) Administrative Charge: [0.25%] (annual basis) Number of Annual Transfers Among Funds (see 11.09) Each calendar year, we allow [five] transfers among funds. S II - 1 Definitions ================================================================================ Accumulation Phase The time between an Individual Account Effective Date and the date on which the entire Individual Account value is used to purchase Annuity payments, or otherwise distributed. Aetna GET Fund (GET Fund) The Aetna GET Fund is an Investment Option which may be available during the Accumulation Phase. The GET Fund operates as a series offering. Each series is a separate Fund. Aetna Life Insurance and Annuity Company (ALIAC) Aetna Life Insurance and Annuity Company ("we," and "our," and "us" refer to ALIAC). Annuitant The person whose life expectancy determines the amount and/or duration of the payments under a life-contingent Annuity option. Annuity Payment of an income: (a) For a stated period; (b) For the life of one or two people; or (c) Some combination of (a) and (b). A fixed Annuity is one in which the payment amount does not vary. A variable Annuity is one in which the payment amount may vary based on the net investment results of the Funds. Annuity Phase The time during which we make Annuity payments. Business Day Each day our Home Office is open for business. Code The Internal Revenue Code of 1986, as it is amended from time to time. Contract This agreement between ALIAC and the Contract Holder. Contract Holder The entity, or person, named in the specifications section on the face page, to which the Contract is issued. Contribution The payment made to us during the Accumulation Phase. The Contribution may be reduced by any applicable premium tax due. Effective Date The date, shown in the specifications section on the face page, on which we issue the Contract or establish an Individual Account. Fixed Account A Fixed Interest Option. The Fixed Account is an obligation of our General Account. Fixed Interest Options Investment options, including the Fixed Account, the Fixed Plus Account and the Guaranteed Accumulation Account that credit interest. The Fixed Interest Options available during the Accumulation Phase are shown on Contract Schedule I under Fixed Interest Options Available. Fixed Plus Account A Fixed Interest Option. Limitations apply to withdrawals from the Fixed Plus Account. The Fixed Plus Account is an obligation of our General Account. 1 Fund A variable Investment Option available under this Contract. The Funds are open-end, registered investment management companies (mutual funds) in which the Separate Account invests. General Account The account that holds our assets other than those held in the Separate Account or Nonunitized Separate Account. Guaranteed Accumulation Account (GAA) A Fixed Interest Option that may be available during the Accumulation Phase. Under this option, we guarantee specified rates of interest for specified periods of time. Amounts allocated to the Guaranteed Accumulation Account are held in the Nonunitized Separate Account. Good Order Instructions that are complete and clear enough to allow us to act without exercising discretion. Home Office Our main office located at 151 Farmington Avenue, Hartford, Connecticut 06156. Individual Account An account, or accounts (including, if applicable, employer and employee accounts) established for you to maintain a record of transactions and the value of Contributions as invested. Investment Options The Funds and Fixed Interest Options available under this Contract. Maturity Date The last day of a GAA guaranteed term or the last day of the guarantee period of an Aetna GET Fund series. Nonunitized Separate Account A separate account that holds assets allocated to the Guaranteed Accumulation Account. Participant The person who is covered under the retirement Plan or program for which this Contract is issued and who has an interest in this Contract ("you" and "your" refer to the Participant). The name of the Participant is shown in the specification section on the face page of this Certificate. Plan The retirement plan or program for which this Contract is issued. Premium Tax Any tax assessed by any governmental entity on Contributions or amounts used to purchase Annuity payments. Separate Account An account that buys and holds shares of the Funds through its subaccounts. Valuation Date The date and time at which accumulation unit values and Annuity unit values are calculated. Currently, this calculation is made after the close of business of the New York Stock Exchange on any normal business day, Monday through Friday, the New York Stock Exchange is open. 2 Section 1. General Contract Provisions ================================================================================ 1.01 Entire Contract The entire Contract consists of this document and any endorsements incorporated. The Plan, if applicable, is not part of the Contract and ALIAC is not bound by its terms. 1.02 Nonparticipating Contract This Contract is nonparticipating. The Contract Holder, you or a Contract beneficiary have no right to share in our earnings. 1.03 Control of Contract Control of the Contract is as shown on Contract Schedule I under Control of Contract. 1.04 Certificate Any certificate summarizes Contract provisions; it is for information only and is not part of the Contract. We will provide certificates as required by state law in the state where the Contract is delivered and as allowed under the Plan. 1.05 Incontestability We will not cancel this Contract because of any error of fact. 1.06 Grace Period Except as provided in 8.09, this Contract and all Individual Accounts will remain in effect even if Contributions are not continued. 1.07 Change of Contract Only an ALIAC officer at the level of Vice President or higher, or an officer with written delegation of authority from a Vice President or higher officer, may change the terms of this Contract. No other ALIAC officer, employee, agent or representative can change this Contract. Except as noted below, this Contract may be changed at any time by written mutual agreement between the Contract Holder and ALIAC. For changes we initiate requiring Contract Holder consent, we notify the Contract Holder 60 calendar days in advance of the change and consider that the Contract Holder has agreed to the change unless we receive written notice that the Contract Holder does not agree to the change at least 30 calendar days before the date the change becomes effective. If we propose a change requiring Contract Holder consent and the Contract Holder does not agree to the change, we have the right to not establish new Individual Accounts and to stop accepting Contributions to existing Individual Accounts. We will not reduce the minimum guaranteed interest rate for the Fixed Account and the Fixed Plus Account. We have the right to change the following without Contract Holder consent: (a) Net Investment Factor (see 3.06) We may change the net investment factor by notifying the Contract Holder in writing at least 30 calendar days before the change becomes effective. If we do this, the change will apply only to Individual Accounts established, and Contributions received, after the date the change becomes effective. 3 (b) Guaranteed Accumulation Account (GAA) market value adjustment (see 7.09) We may change the GAA market value adjustment by notifying the Contract Holder in writing at least 90 calendar days before the change becomes effective. If we do this, the change will apply only to guaranteed terms offered in deposit periods after the date the change becomes effective. (c) Systematic Distribution Options (see 8.08) We may change systematic distribution options by notifying the Contract Holder in writing at least 30 calendar days before the change becomes effective. If we do this, the change will not apply to you or beneficiaries receiving payments under an option before the date the change becomes effective. (d) Annuity Options (see 11.03) We may change Annuity options by notifying the Contract Holder in writing at least 30 calendar days before the date the change becomes effective. If we do this, the change will not take effect until at least 12 months after the Effective Date of the Contract, or until at least 12 months after any previous change. Any change will not apply to you or beneficiaries receiving Annuity payments before the date the change becomes effective. (e) Mortality Table (see 11.04) We may change the mortality table by notifying the Contract Holder in writing at least 30 calendar days before the date the change becomes effective. If we do this, the new table will not apply to Individual Accounts established before the date the change becomes effective. In addition, we may change this Contract as required to comply with state and federal law without Contract Holder consent by notifying the Contract Holder at least 30 calendar days before the date the change becomes effective. Any unilateral change will not apply to Individual Accounts established before the date the change becomes effective, but will apply to Individual Accounts established on or after the date the change becomes effective. If we make a unilateral change, the Contract Holder or you, as applicable, are permitted to terminate participation in the Contract before the date the change becomes effective under the terms of the Contract in effect prior to the date the change becomes effective. As required by law, we will make any change of Contract by endorsement, which may be subject to regulatory approval in the state where the Contract is delivered. 1.08 Payments We make payments as directed by the Contract Holder or you, as applicable. Payment requests must be in writing or as we otherwise allow in our administrative practice. We determine the amount of any payment based on the Individual Account value as of the next Valuation Date following our receipt of a payment request in Good Order at our Home Office. Generally, we make payments within seven calendar days. 1.09 Deferral of Payment We may defer payment up to a period of six months or as otherwise provided by state and/or federal law. 1.10 Proof of Age If a life-contingent Annuity option is elected, we may require proof of the age of an Annuitant. 1.11 Evidence of Survival We may require proof that any Annuitant under a life-contingent Annuity option is living. 4 1.12 Misstatements and Adjustments If we learn that the age of any Annuitant or second Annuitant is misstated, we will use the correct age to adjust payments. We reserve the right to obtain reimbursement, or to adjust future payments for any amount we overpaid. We will pay the amount of any underpayment. 1.13 Reports Each calendar year we provide the Contract Holder or you, as applicable, with a report of the Individual Account value. We also provide an annual report for the Separate Account. 1.14 State Laws This Contract complies with the laws of the state in which it is delivered. Any cash, death or Annuity payments are equal to or greater than the minimum required. To determine legal reserve valuation, we use Annuity tables as required by law; such tables may be different from those we use to determine Annuity payments. 1.15 Claims of Creditors Individual Accounts are not subject to the claim of any creditor of the Contract Holder, you or a beneficiary, except to the extent permitted by law. 1.16 Maintenance Fee We may deduct an annual maintenance fee during the Accumulation Phase. The amount of the maintenance fee, if any, for this Contract will never be more than the amount shown on Contract Schedule I under Maximum Maintenance Fee. The fee, if any, is deducted proportionately from each Investment Option in which the Individual Account is invested on the anniversary of the Individual Account Effective Date. The fee is also deducted if the entire Individual Account value is withdrawn. If you have more than one Individual Account, we may deduct the fee proportionately from all Individual Accounts. We may eliminate the fee for an Individual Account established with one lump-sum Contribution. 1.17 Charges for Additional Services At the request of the Contract Holder, we, or our authorized representatives, may provide administrative services to the Plan. We reserve the right to charge for such services. 1.18 Charges Subject to Change The maintenance fee (see 1.16) and charges to the Separate Account (see 3.07) may vary (increase, decrease, or be eliminated) based on the total assets held in all Individual Accounts under the Contract. In determining total assets, we may aggregate Individual Accounts established under different ALIAC Contracts. The aggregate amount is equal to the sum of assets in all Individual Accounts under this Contract, plus the value of Individual Accounts under other ALIAC Contracts of the same class issued to the Contract Holder. We may determine the amount of the maintenance fee and/or charges to the Separate Account based on total assets on an annual basis. We will determine initial charges based on our estimate of the amount that will be allocated to the Contract during a period mutually agreed upon by the Contract Holder and us. 5 Part I. Accumulation Phase Section 2. Contributions and Individual Account Value ================================================================================ 2.01 Contributions We allocate Contributions in whole percentages among the Investment Options available as directed by the Contract Holder or you, as applicable. Changes in future Contribution allocation may be made at any time without charge. The Contract Holder or you, as applicable, may also establish an Individual Account with one lump-sum Contribution. We reserve the right to establish minimum Contribution amounts and to refuse to accept any Contribution. Contributions to Individual Accounts may be limited as provided in the Code. The limits, if any, are shown on Contract Schedule I under Contribution Limits. 2.02 Premium Tax We pay any applicable premium tax when it is due. We will deduct the amount of any applicable premium tax from the Individual Account value no earlier than when there is a tax liability. We reserve the right to deduct any premium tax due before a Contribution is allocated to an Individual Account. 2.03 Individual Account We will establish an Individual Account for you. If required, we will provide accounts that distinguish between your employer's and your Contributions. 2.04 Experience Credit We may apply experience credits (investment, administrative, mortality or other) under this Contract and may apply such credits as: (a) A reduction in the maintenance fee; (b) A reduction in the mortality and expense risk charge to the Separate Account; (c) A reduction in the administrative charge to the Separate Account; and (d) An increase in a Fixed Interest Option interest rate. We will apply experience credits at our sole discretion as we deem appropriate for the class of contracts to which the Contract is issued. 2.05 Individual Account Value As of the most recent Valuation Date, the Individual Account value is equal to the total of all Contributions: (a) Plus any interest added on the amount, if any, allocated to a Fixed Interest Option(s), (b) Plus or minus the investment experience on the amount, if any, held in the Separate Account; (c) Minus any applicable maintenance fees, any amounts withdrawn, or used to purchase Annuity payments, or any applicable premium tax; and (d) Minus any applicable fees or charges deducted. 6 Section 3. Separate Account ================================================================================ 3.01 General The Separate Account, established under Title 38a, Section 38a-433 of the Connecticut General Statutes, buys and holds shares of the Funds available. The Separate Account is registered as a unit investment trust under the Investment Company Act of 1940. We own the assets held in the Separate Account; we are not a trustee of those assets. Income, gains or losses, realized or unrealized, are credited to or charged against the Separate Account without regard to our other income, gains or losses. Separate Account assets, to the extent of reserves and other Contract liabilities, cannot be charged with liabilities arising out of any other business we conduct. 3.02 Funds Available We reserve the right to limit the number of Funds in which an Individual Account may be invested, at one time or cumulatively, during the Accumulation Phase and/or Annuity Phase. 3.03 Change or Substitution of Funds We reserve the right to stop offering any Fund or to add Funds. We may substitute shares of a Fund for shares of another Fund. We will provide the Contract Holder with reasonable advance notice of any elimination, addition or substitution of a Fund. If the Plan is subject to ERISA, we will seek Contract Holder consent in advance of any Fund substitution. Consent will be deemed given unless, following notice of substitution and within a prescribed time period, the Contract Holder notifies us in writing that it does not consent and provides us with alternative investment instructions for the shares that would otherwise be affected by the substitution. 3.04 Accumulation Units Each Contribution allocated to one or more of the Funds is credited to an Individual Account as accumulation units. The number of accumulation units is calculated by dividing the amount of the Contribution allocated to the Fund by the accumulation unit value (see 3.05) as of the next Valuation Date following our receipt of the Contribution in Good Order at our Home Office. 3.05 Accumulation Unit Value The value of each accumulation unit for any Fund for each Valuation Date is computed by multiplying the net investment factor (see 3.06) by the accumulation unit value for such Valuation Date. Accumulation unit values may increase or decrease from Valuation Date to Valuation Date. 3.06 Net Investment Factor The net investment factor is used to compute the accumulation unit value for any Fund. For each Valuation Date, for each Fund, the net investment factor is equal to 1.0000000, plus the net return rate. The net return rate equals: [a - b - c] ------------- - e - f d Where: a is the value of the shares of the Fund held by the Separate Account on the prior Valuation Date; b is the value of the shares of the Fund held by the Separate Account on the current Valuation Date; c is taxes or provisions for taxes, if any, on the Separate Account (with any federal income tax liability offset by foreign tax credits to the extent allowed); 7 d is the total value of the accumulation units and Annuity units of the Separate Account on the prior Valuation Date; e is Separate Account daily charges for mortality and expense risk and a daily administrative charge as shown on Contract Schedule I under Daily Charges to the Separate Account; and f is if applicable, a fee for the GET Fund guarantee, which is deducted daily during the guarantee period. The fee, which is determined before the beginning of each offering period (see 4.02), is shown on Contract Schedule I under Maximum Daily Charges to the Separate Account. The net return rate may be greater or less than zero percent. 3.07 Charges to the Separate Account During the Accumulation Phase, we may deduct a mortality and expense risk charge from the Individual Account value invested in the Separate Account. In addition, we reserve the right to impose an administrative charge. The charges to the Separate Account are shown on Contract Schedule I under Maximum Daily Charges to the Separate Account and are deducted daily. 3.08 Fund Transfers During the Accumulation Phase, any portion or all of the Individual Account value held in a Fund may be transferred to any other Fund or any available Fixed Interest Option. The Individual Account value will be based on the Fund's accumulation unit value next determined after we receive a transfer request in Good Order. 3.09 Withdrawals from the Separate Account If the Contract Holder or you, as applicable, requests a partial or full withdrawal (see 8.02) from the Funds, a withdrawal charge may apply (see 8.04). Section 4. Aetna GET Fund (GET Fund) ================================================================================ The following provisions apply if the GET Fund is available. 4.01 GET Fund Guarantee Period For each GET Fund series, the period for which the GET Fund guarantee applies. The guarantee period ends on the Maturity Date. 4.02 GET Fund Offering Period The period, usually from one to three months, during which the Contract Holder or you, as applicable, may transfer or allocate amounts to a GET Fund series. Each GET Fund series has a specific offering period. Amounts transferred or allocated prior to the date on which the guarantee period begins are invested in money market instruments. We will specify a minimum total asset amount required at the end of an offering period to offer a GET Fund series. If the minimum is not achieved, we reserve the right not to begin the guarantee period. If a GET Fund series is not begun, we will mail a notice to all Contract Holders or you, as applicable, who have made allocations to that GET Fund series no less than 15 calendar days after the end of the offering period. The Contract Holder or you, as applicable, then has 45 calendar days from the end of the offering period to reallocate the amount allocated to the GET Fund to any other available Investment Options. During this time, GET Fund assets are invested in money market instruments. If the Contract Holder or you, as applicable, makes no election by the end of the 45-day period, at the next Valuation Date, we will allocate the amount in the terminated GET Fund series to the money market fund available under the Contract. 8 We reserve the right to specify a maximum total asset amount for a GET Fund series. If the maximum is achieved, we reserve the right to set a date on which we will stop accepting allocations for that GET Fund series. We will announce the date on which we will stop accepting transfers and allocations 10 calendar days prior to that date. 4.03 GET Fund Guarantee On the Maturity Date of each GET Fund series, the GET Fund accumulation unit value for that series will not be less than the GET Fund accumulation unit value determined at the close of business on the last day of the offering period. If necessary to offset any shortfall in the GET Fund accumulation unit value, we will transfer funds from our General Account to the Separate Account. The GET Fund guarantee does not apply to transfers or withdrawals made before the Maturity Date. If GET Fund accumulation units are adjusted at any time during the guarantee period, the GET Fund guarantee will be restated. We calculate the restated guarantee so that it is equivalent to the original guarantee for that GET Fund series. A daily charge is assessed on the amount, if any, allocated to the GET Fund. This charge for the GET Fund guarantee is shown on Contract Schedule I under Maximum Daily Charges to the Separate Account. 4.04 GET Fund Maturity Date The GET Fund Maturity Date is the date on which the guarantee period ends and GET Fund accumulation units are liquidated. Prior to the Maturity Date for each series, we send a written notice of the date to each Contract Holder or you, as applicable, who has an Individual Account value in that series. In response, the Contract Holder or you, as applicable, must tell us to which available Investment Options to transfer the amount in the GET Fund on the Maturity Date. If we do not receive instructions, on the Maturity Date we transfer the portion of the Individual Account value held in the GET Fund to another GET Fund series, if available. If no GET Fund series is available, we transfer the amount to the Fund or Funds we designate in the written notice. 4.05 Transfers or Withdrawals from the GET Fund Transfers or withdrawals from the GET Fund before the Maturity Date are based on the GET Fund unit value for the next Valuation Date following our receipt of the request in Good Order (see 8.01 and 8.02). Section 5. Fixed Account ================================================================================ The following provisions apply if the Fixed Account is available as shown on Contract Schedule I under Fixed Interest Options Available. 5.01 Fixed Account Minimum Guaranteed Interest Rate The Fixed Account minimum guaranteed interest rate is shown on Contract Schedule I under Fixed Account Minimum Guaranteed Interest Rate. Each calendar year, we will set an annual minimum guaranteed interest rate which will apply to all amounts held in the Fixed Account during the calendar year. The one year minimum guaranteed interest rate will be established prior to each calendar year and will be made available to the Contract Holder or you, as applicable, in advance of the calendar year. We, at our discretion, may credit a higher interest rate, which is not guaranteed; we will make the current rate, and the period for which it will be credited, available to the Contract Holder or you, as applicable. 9 5.02 Transfers from the Fixed Account Each calendar year, the percentage shown on Contract Schedule I under Fixed Account Annual Transfer Limit of the amount in the Fixed Account may be transferred to any available Investment Options. The amount available for transfer will be based on the Individual Account value in the Fixed Account as of the date we receive the transfer request in Good Order at our Home Office. We may, on a temporary basis, allow transfer of a larger percentage. There is no limit on the amount that may be transferred to the Fixed Plus Account. 5.03 Withdrawals from the Fixed Account If the Contract Holder or you, as applicable, requests a partial or full withdrawal (see 8.02) from the Fixed Account, a withdrawal charge may apply (see 8.04). Section 6. Fixed Plus Account ================================================================================ The following provisions apply if the Fixed Plus Account is available as shown on Contract Schedule I under Fixed Interest Options Available. 6.01 Fixed Plus Account Minimum Guaranteed Interest Rate The Fixed Plus Account minimum guaranteed interest rate is shown on Contract Schedule I under Fixed Plus Account Minimum Guaranteed Interest Rate. Each calendar year, we will set an annual minimum guaranteed interest rate which will apply to all amounts held in the Fixed Plus Account during the calendar year. The one year minimum guaranteed interest rate will be established prior to each calendar year and will be made available to the Contract Holder or you, as applicable, in advance of the calendar year. We, at our discretion, may credit a higher interest rate, which is not guaranteed; we will make the current rate, and the period for which it will be credited, available to the Contract Holder or you, as applicable. 6.02 Transfers from the Fixed Plus Account During each rolling 12-month period, the percentage shown on Contract Schedule I under Fixed Plus Account Annual Transfer and Partial Withdrawal Limit of the amount in the Fixed Plus Account may be transferred to any available Investment Option. The amount available for transfer is based on the Individual Account value in the Fixed Plus Account on the date we receive the transfer request in Good Order at our Home Office, reduced by any amount withdrawn, transferred, taken as a loan (if allowed under the Contract) or used to purchase Annuity payments during the 12 months prior to the transfer request. In addition, we reserve the right to reduce the amount available for transfer by amounts withdrawn under a systematic distribution option. Twenty percent of the amount in the Fixed Plus Account may be transferred in each of four consecutive 12-months and the balance transferred in the fifth year subject to the following conditions: (a) During the five-year period, no additional amounts are allocated to or transferred from the Fixed Plus Account; (b) We will include any amount transferred, taken as a loan (if allowed under the Contract) or used to purchase Annuity payments during the prior 12-month period when calculating the amount which equals 20%; and (c) We reserve the right to include amounts paid under a systematic distribution option when calculating the amount which equals 20%. In addition, we reserve the right to waive the transfer limit when the amount in the Fixed Plus Account is less than or equal to the amount shown on Contract Schedule I under Waiver of Fixed Plus Account Transfer Limit. 10 6.03 Partial Withdrawals from the Fixed Plus Account During each rolling 12-month period, the percentage shown on Contract Schedule I under Fixed Plus Account Annual Transfer and Partial Withdrawal Limit may be withdrawn from the Fixed Plus Account. The amount available for withdrawal is based on the Individual Account value in the Fixed Plus Account on the date we receive the withdrawal request in Good Order at our Home Office, reduced by any amount withdrawn, transferred, taken as a loan (if allowed under the Contract), or used to purchase Annuity payments during the 12-months prior to the request. In addition, we reserve the right to reduce the amount available by deducting any amount withdrawn under a systematic distribution option. The withdrawal limit does not apply when the partial withdrawal is: (a) Due to your death during the Accumulation Phase and is made within six months of the date of death (this exception applies to only one partial withdrawal); (b) Used to purchase Annuity payments; or (c) Due to other conditions as we may allow without discrimination. 6.04 Full Withdrawal of the Total Amount in the Fixed Plus Account The Contract Holder, or you, as applicable, may withdraw the full amount held in the Fixed Plus Account. When we receive a request for a full withdrawal, no additional transfers, partial withdrawals or loans (if allowed under the Contract) are allowed. (a) Twenty percent of the Individual Account value in the Fixed Plus Account as of the date we receive the withdrawal request in Good Order at our Home Office reduced by the amount, if any, transferred, withdrawn, taken as a loan (if allowed under the contract) or used to purchase Annuity payments during the prior 12 months; then (b) Twenty percent of the remaining amount 12 months later; then (c) Twenty percent of the remaining amount 12 months later; then (d) Twenty percent of the remaining amount 12 months later; then (e) The balance of the Individual Account value in the Fixed Plus Account 12 months later. No withdrawal charge applies to amounts withdrawn. The Contract Holder or you, as applicable, may cancel a full withdrawal request from the Fixed Plus Account at any time. 6.05 Waiver of Fixed Plus Account Full Withdrawal Provision When a full withdrawal is requested, payment from the Fixed Plus Account is not limited as described in 6.04 when the withdrawal is as noted on Contract Schedule I under Waiver of Fixed Plus Full Withdrawal Provision. Section 7. Guaranteed Accumulation Account (GAA) ================================================================================ The following provisions apply if the Guaranteed Accumulation Account is available as shown on Contract Schedule I under Fixed Interest Options Available. 7.01 Nonunitized Separate Account The Nonunitized Separate Account is established under Title 38a, Section 38a-433 of the Connecticut General Statutes. There are no discrete units for this account. We own the assets held in the Nonunitized Separate Account; we are not a trustee of those assets. Income, gains or losses, realized or unrealized, are credited to or charged against the Nonunitized Separate Account without regard to our other income, gains or losses. Nonunitized Separate Account assets, to the extent of reserves and other Contract liabilities, cannot be charged with liabilities arising out of any other business we conduct. 11 7.02 GAA Minimum Guaranteed Interest Rate All Contributions allocated to a GAA guaranteed term (see 7.04) earn a rate of interest which we determine and which is guaranteed when the Contribution remains in the guaranteed term until the Maturity Date. The rate credited will never be less than the minimum interest rate shown on Contract Schedule I under Guaranteed Accumulation Account Minimum Guaranteed Interest Rate. For guaranteed terms of one year or less, one guaranteed rate is credited for the full guaranteed term. For longer guaranteed terms, we may credit an initial guaranteed interest rate from the date of deposit to the end of a specified period within the guaranteed term. We may credit different interest rates for subsequent specified periods throughout the guaranteed term. 7.03 Deposit Period A deposit period is the period of time we determine during which we accept allocations (Contributions, transfers, or reinvestments) to one or more guaranteed terms. We reserve the right to extend the deposit period. 7.04 Guaranteed Term A guaranteed term is the period of time for which we guarantee the declared interest rate for allocations (Contributions, transfers, or reinvestments) to GAA guaranteed terms. We may offer guaranteed terms ranging in duration from one to ten years. During each deposit period, we may offer more than one guaranteed term of varying lengths. The guaranteed term begins the day after the deposit period ends. The Contract Holder or you, as applicable, may allocate new Contributions or transfers to any or all guaranteed terms available in the current deposit period. 7.05 Guaranteed Term Groups A guaranteed term group is comprised of all GAA guaranteed terms of the same duration. 7.06 Maturity Date, Maturity Value and Reinvestment The Maturity Date is the last day of a guaranteed term. The maturity value is the amount we pay at the end of a guaranteed term. At least 18 calendar days before any guaranteed term Maturity Date, we notify the Contract Holder or you, as applicable, of the projected maturity value and the guaranteed terms (and the guaranteed interest rates for each) available during the then-current deposit period. The Contract Holder, or you, as applicable, may then tell us how to allocate the maturity value. If the Contract Holder or you, as applicable, does not tell us how to reinvest the maturity value, we reinvest it in a guaranteed term of the same duration if one is available. If no guaranteed term of the same duration is available, we reinvest the maturity value in the guaranteed term with the next shortest duration. If no shorter guaranteed term is available, we reinvest the maturity value in the next longest term. We mail a confirmation of reinvestment. The confirmation includes the guaranteed term in which we have reinvested the maturity value and the guaranteed interest rate for that term. If we have reinvested the maturity value, during the month following the Maturity Date, the Contract Holder or you, as applicable, may transfer or withdraw the reinvested amount, with interest earned (as of the date we receive the request) without incurring a market value adjustment (see 7.08). 7.07 Transfers and Withdrawals from the GAA Except as noted below, the Contract Holder or you, as applicable, may transfer any portion or all of the amount held in the GAA. Transfers or withdrawals before the Maturity Date may be subject to a market value adjustment (see 7.08). Amounts invested in a guaranteed term may not be transferred during the deposit period or for a period of 90 calendar days after the close of the deposit period. 12 Unless directed otherwise, when the Contract Holder or you, as applicable, requests a transfer or withdrawal from the GAA, we withdraw amounts proportionately from each guaranteed term in which the Individual Account is invested. Within a guaranteed term group, we withdraw first from the oldest deposit period and then from the next oldest and so on until the amount requested is withdrawn. 7.08 Application of the Market Value Adjustment Transfers or withdrawals from the GAA before the Maturity Date are subject to a market value adjustment, except for: (a) A one-month period following the Maturity Date on which we have automatically reinvested the value on the Maturity Date; (b) Distributions under certain systematic distribution options; and (c) When the withdrawal is equal to the minimum distribution amount required under the Code, using a method permitted by the Code and which we offer. For withdrawals and transfers from the GAA made (1) within six months of your death; or (2) to purchase Annuity payments under a life-contingent Annuity option, the amount withdrawn from the GAA is the greater of: (a) The aggregate market value adjustment amount which is the sum of all market value adjusted amounts calculated due to a withdrawal before the Maturity Date (which may be positive or negative); or (b) The amount in the GAA. For withdrawals made after the six month period following death, the withdrawal or transfer amount is the aggregate MVA amount. An MVA applies to amounts withdrawn to purchase Annuity payment under a period certain Annuity option. We may change the GAA market value adjustment by notifying the Contract Holder in writing at least 90 calendar days before the change becomes effective. Any such change will apply only to guaranteed terms offered in deposit periods after the date the change becomes effective and will apply to existing and new Individual Accounts. 7.09 Market Value Adjustment (MVA) The market value adjustment reflects any change in yields on U.S. Treasury Notes from the time an amount is allocated to a GAA guaranteed term to the time of a transfer or withdrawal prior to the Maturity Date. When the market value adjustment is applied, the amount transferred or withdrawn from the GAA is multiplied by a factor which is calculated as follows: x ------- 365 (1 + I) ----------------------- x ------- 365 (1 + j) 13 Where: I is the deposit period yield j is the current yield x is the number of days remaining (computed from Wednesday of the week of withdrawal) in the guaranteed term. The deposit period yield and the current yield are determined as follows: Deposit Period Yield At the close of the last business day of each week of a deposit period, we compute a yield that is the average of the yields on U.S. Treasury Notes which mature in the last three months of the guaranteed term. The deposit period yield is the average of those yields for the deposit period. If a withdrawal is made prior to the close of the deposit period, the deposit period yield is the average of the yields of U.S. Treasury Notes for each week preceding the withdrawal. In the event that no U.S. Treasury Notes will mature in the last three months of the guaranteed term, we reserve the right to use the U.S. Treasury Notes that mature in a following quarter. Current Yield The Current Yield is the average of the yields of the same U.S. Treasury Notes used to calculate the deposit period yield on the last business day of the week preceding withdrawal. Section 8. Transfers, Withdrawals and Distributions ================================================================================ 8.01 Transfers During the Accumulation Phase, the Contract Holder or you, as applicable, may transfer all or any portion of the Individual Account value among the available Investment Options. The Individual Account value on any amount transferred from a Fund will be based on the Fund's accumulation unit value next determined after we receive the transfer request In Good Order at our Home Office. The Contract Holder or you, as applicable, may request a transfer by properly completing a transfer request form and sending it to our Home Office, or by otherwise complying with our administrative procedures. We reserve the right to establish a minimum transfer amount. 8.02 Withdrawals As allowed by the Plan, if applicable, and subject to provisions of the Code (see 8.03), during the Accumulation Phase, the Contract Holder or you, as applicable, may withdraw any portion or all of the Individual Account value. The Individual Account value of any amount withdrawn from a Fund will be based on the Fund's accumulation unit value next determined after we receive the transfer request In Good Order. The Contract Holder or you, as applicable, may request a withdrawal by properly completing a withdrawal request form and forwarding it to our Home Office, or by otherwise complying with our administrative procedures. Unless the Contract Holder or you, as applicable, requests otherwise, the withdrawal will be made proportionately from the Investment Options in which the Individual Account is invested. A withdrawal charge may apply to amounts withdrawn (see 8.04). In addition, a market value adjustment may apply to amounts withdrawn from the GAA (see 7.08 and 7.09) and limitations may apply to withdrawals from the Fixed Plus Account (see 6.04). 8.03 Withdrawal Restrictions Under the Code The Code may impose restrictions on the amount and timing of withdrawals. The restrictions applicable to this Contract are shown on Contract Schedule I under Withdrawal Restrictions Under the Code. Withdrawals that do not comply with the Code may be subject to tax penalties. 14 8.04 Withdrawal Charge During the Accumulation Phase, we may deduct a withdrawal charge from the Individual Account value withdrawn. The charge, if any, is a percentage of the amount withdrawn from the Funds and/or Fixed Interest Options (except, if applicable, the Fixed Plus Account). The withdrawal charge will never exceed 8.5% of the total amount of Contributions. The withdrawal charge, if any, is shown on Contract Schedule I under Withdrawal Charge. 8.05 Waiver of Withdrawal Charge The withdrawal charge (see 8.04) does not apply in any of the circumstances shown on Contract Schedule I under Waiver of Withdrawal Charge. In addition, we reserve the right to reduce, waive or eliminate the withdrawal charge. 8.06 Reinstatement Within 30 calendar days after a withdrawal, the Contract Holder or you, as applicable may elect to reinstate all or a portion of the proceeds of a full withdrawal if allowed by applicable law. We must receive the reinstated amount within 60 calendar days of the withdrawal. Any maintenance fee and withdrawal charge imposed at the time of the withdrawal is included in the reinstatement. If only a portion of the amount withdrawn is reinstated, the amount of any maintenance fee and withdrawal charge deducted will be restored proportionally. The amount of any market value adjustment deducted from any amount withdrawn from GAA is not included in the amount reinstated. Any amount reinstated to the GA Account will be credited to guaranteed terms available in the current deposit period. We will reinvest it in a guaranteed term of the same duration if one is available. If no guaranteed term of the same duration is available, we reinvest the maturity value in the guaranteed term with the next shortest duration. If no shorter guaranteed term is available, we reinvest the maturity value in the next longest term. Amounts withdrawn from a GET Fund series are reinstated to the current offering period if one is available. If no GET Fund offering period is available, any amount withdrawn from the GET Fund is reinstated equally among all other Investment Options in which the Individual Account is invested. Amounts are reinstated among the Investment Options in the same proportion as they were held at the time of withdrawal, except, as noted above, for amounts from the GET Fund. Any maintenance fee which falls due after the withdrawal and before the reinstatement is deducted from the amount reinstated. The number of accumulation units reinstated to any Fund is based on the accumulation unit values next computed after we receive the reinstatement request in Good Order at our Home Office. Reinstatement is permitted only once. 8.07 Required Distributions While an Individual Account remains in the Accumulation Phase, the Code may require distribution of all or a portion of the Individual Account value. The Contract Holder, you or Contract beneficiary, as applicable, must tell us when to begin distributions. We have no responsibility for adverse tax consequences as the result of the Contract Holder, you or Contract beneficiary, as applicable, not complying with minimum distribution requirements. The distribution requirements, if any, are shown on Contract Schedule I under Required Distributions. Generally, to meet distribution requirements, the Contract Holder, you or Contract beneficiary, as applicable, may request partial withdrawals, a systematic distribution option (see 8.08) or an Annuity option. 15 8.08 Systematic Distribution Options (SDOs) During the Accumulation Phase, we may offer one or more distribution options under which we make regularly scheduled automatic partial distributions of the Individual Account value. To request an SDO, the Contract Holder, you or Contract beneficiary, as applicable, must complete an SDO election form and forward it to our Home Office. Each option is available without discrimination to any class of Contracts. The availability of any specific option may be subject to terms and conditions applicable to that option. We may discontinue the availability of an SDO option for future election. Payments will, however, continue to you who elected the option before the date it is no longer available. 8.09 Individual Account Termination If the Individual Account value is an amount equal to or less than the amount shown on Contract Schedule I under Individual Account Termination Amount and we have received no Contributions for 12 months, we reserve the right to terminate an Individual Account. Before we do this, we notify the Contract Holder or you, as applicable, 90 calendar days in advance. When we terminate an Individual Account, we do not deduct a withdrawal charge. We do not exercise this right when the Individual Account value is equal to or less than the amount shown on Contract Schedule I under Individual Account Termination Amount due to investment performance. Section 9. Loans ================================================================================ 9.01 Loan Availability If loans are available under the Contract, a loan endorsement is attached. Section 10. Death Benefit During the Accumulation Phase ================================================================================ 10.01 Death Benefit If you die during the Accumulation Phase, we pay a death benefit. The amount of the death benefit is the Individual Account value as of the next Valuation Date following our receipt of acceptable proof of death at our Home Office (see 7.08 for amounts in the GAA). 10.02 Contract Beneficiary The Contract beneficiary is shown on Contract Schedule I under Contract beneficiary. Generally, you may name a beneficiary under the Plan (the Plan beneficiary). If allowed by the Plan, when designating the beneficiary, the Contract Holder or you, as applicable, may specify, the form of payment as permitted by the Code. The Contract beneficiary and the form of payment, if applicable, may be designated or changed in writing or as we may otherwise allow in our administrative procedures. 10.03 Distribution of Death Benefit Generally, if the Plan beneficiary is your surviving spouse, distribution of the death benefit must begin no later than the year you would have attained age 70 1/2 or any other date allowed under federal law or regulations. If the Plan beneficiary is not your surviving spouse, generally, the death benefit must be used to purchase Annuity payments within one year of the year of your death or otherwise paid within five years of the year of your death. Annuity payments to a Plan beneficiary may not extend beyond the period specified in the Code. 16 Part II. Annuity Phase Section 11. General Provisions ================================================================================ 11.01 Election The Contract Holder, you, Contract or Plan beneficiary, as applicable, may elect an Annuity option by properly completing an election form and forwarding it to our Home Office no later than 30 calendar days before the desired first Annuity payment date. All Annuity option elections must comply with any Plan requirements and regulatory requirements including the Code minimum distribution requirements. All or any portion of the Individual Account value (after the deduction of any applicable premium tax) may be used to purchase Annuity payments (for amounts from the GAA, see 7.08). The Contract Holder, you, Contract or Plan beneficiary, as applicable, must also select an Annuity option (see 11.03) and the Investment Options (see 11.06). Once payments begin, an Annuity option may not be revoked, nor may any amount be withdrawn except as noted below. 11.02 Change of Annuity Provisions We reserve the right to change or eliminate Annuity options (see 11.03) and to change the mortality table (see 11.04) we use to calculate payment rates for life-contingent Annuity payments. If we do this, any change will not take effect until at least 12 months after the Contract Effective Date, or until at least 12 months after any previous change. A change to Annuity options or the mortality table used to calculate payment rates will not apply to Individual Accounts established before the date the change becomes effective. 11.03 Annuity Options The Contract Holder, you, Contract or Plan beneficiary, as applicable, must elect one of the following: Option 1: Payments for a Stated Period This option provides payments for a stated period. The number of years in the stated period must fall within the range shown on Contract Schedule II under Payment Period. If payments for this option are under a Variable Annuity, the present value of any remaining payments may be withdrawn at any time. If a withdrawal is requested within five years of the first payment, the lump-sum payment is treated as a withdrawal during the Accumulation Phase and any applicable withdrawal charge applies (see 8.04). If the payments are fixed-only, an annual increase of one, two or three percent (compounded annually) may be elected at the time the Annuity option is chosen (if permitted by the Code). Option 2: Life Income for One Annuitant This option provides payments for the life of the Annuitant. If this option is elected, the Contract Holder, you or Contract beneficiary, as applicable, must also choose one of the following: (a) Payments cease at the death of the Annuitant; or (b) Payments are guaranteed for a period within the range shown on Contract Schedule II under Payment Period; or (c) Fixed-only cash refund: at the death of the Annuitant, the beneficiary receives a lump-sum payment in an amount equal to the amount applied to the Annuity (minus any applicable premium tax), minus the amount of payments made to the Annuitant. Under (a) or (b), if the payments are fixed-only, an annual increase of one, two or three percent (compounded annually) may be elected at the time the Annuity option is chosen (if permitted by the Code). 17 Option 3: Life Income for Two Annuitants This option provides payments for the lives of the Annuitant and a second Annuitant. Payments continue until both Annuitants have died. If this option is elected, the Contract Holder, you, Contract or Plan beneficiary as applicable, must also choose one of the following: (a) 100% of the payment amount to continue after the first death; or (b) 66 2/3% of the payment amount to continue after the first death; or (c) 50% of the payment amount to continue after the first death; or (d) 100% of the payment amount to continue after the first death with payments guaranteed to the beneficiary after the second death for a period within the range shown on Contract Schedule II under Payment Period; or (e) 100% of the payment amount to continue at the death of the specified second Annuitant and 50% of the payment amount to continue at the death of the specified Annuitant; or (f) 100% of the fixed-only payment amount to continue after the first death with a cash refund to the Contract beneficiary after the second death. The amount of the cash refund is equal to the amount applied to the Annuity (minus any applicable premium tax), minus the amount of payments made. Under (a) or (d), if the payments are fixed-only, an annual increase of one, two or three percent (compounded annually) may be elected at the time the Annuity option is chosen (if permitted by the Code). Other Options As allowed under applicable state law, we reserve the right to make other options available. 11.04 Mortality Table The mortality table for this Contract is shown on Contract Schedule II under Mortality Table. 11.05 Payments The first payment amount must be at least $50 per month or $250 per year. We reserve the right to increase the minimum first payment amount, if allowed by state law, based on increases reflected in the Consumer Price Index-Urban (CPI-U) since July 1, 1993. To calculate the guaranteed first payment of a variable Annuity or the payments for a fixed Annuity, we will use the Annuitant's adjusted age and, if applicable, the second Annuitant's adjusted age. The Annuitant's adjusted age and, if applicable, the second Annuitant's adjusted age is the person's age as of the birthday closest to the day Annuity payments begin, reduced as follows: (a) Reduced by one year for payments before January 31, 2000; (b) Reduced by two years for payments beginning during the period from January 1, 2000 through December 31, 2009; (c) Starting on January 1, 2010, reduced by one additional year for payments beginning in each succeeding decade. If a fixed Annuity is elected, we will use the applicable current settlement option rates if they will provide higher fixed Annuity payments. 11.06 Investment Options When an Annuity option is elected, the Contract Holder, you, Contract or Plan beneficiary, as applicable, must elect: (a) A fixed Annuity for which the underlying investment is our General Account; 18 (b) A variable Annuity for which the underlying investment is one or more of the available Funds; or (c) A combination of (a) and (b). For a variable Annuity, the maximum number of Funds available during the Annuity Phase is shown on Contract Schedule II under Maximum Number of Funds. The Funds available during the Annuity Phase may not be the same as those available during the Accumulation Phase. 11.07 Fixed Annuity Minimum Guaranteed Interest Rate For a fixed Annuity, the interest rate will never be less than the minimum guaranteed rate shown on Contract Schedule II under Fixed Annuity Minimum Guaranteed Interest Rate. 11.08 Variable Annuity Assumed Annual Net Return Rate Election If a variable Annuity is elected, the Contract Holder, or you, as applicable must also elect an assumed annual net return rate of 3.5% or 5%. The initial Annuity payment for the option elected will reflect the assumed annual net return rate. If subsequent Annuity payments are to remain level, the Separate Account must earn this rate, plus enough to cover the mortality and expense risk charge shown on Contract Schedule II under Maximum Daily Charges to the Separate Account plus any applicable administrative charge. 11.09 Variable Annuity Transfers If a variable Annuity is elected, the Contract Holder, you, Contract or Plan beneficiary, as applicable, may request that we transfer all or a portion of the amount allocated to a Fund to any other available Fund. Transfer requests must be expressed as a percentage of the allocation among the Funds on which the variable payment is based. The number of transfers allowed each calendar year is shown on Contract Schedule II under Number of Annual Transfers Among Funds. We reserve the right to allow additional transfers. Transfers are effective as of the next Valuation Date following our receipt of a transfer request in Good Order at our Home Office. 11.10 Fund Annuity Units The number of Fund Annuity units is based on the amount of the first variable Annuity payment which is equal to: (a) The portion of the Individual Account value (minus any applicable premium tax) used to purchase a variable Annuity; divided by (b) One thousand; multiplied by (c) The payment rate for the option chosen. Such amount, or portion of the variable payment will be divided by the appropriate Fund's, or Funds', Annuity unit value (see 11.11) on the tenth Valuation Date before the due date of the first payment to determine the number of Fund Annuity units. The number of each Fund's Annuity units remains fixed unless changed by a subsequent Fund transfer or if the Annuity option provides for a change in units (i.e., under life income for two annuitants option after the first death). Each future payment is equal to the sum of the products of each Fund's Annuity unit value multiplied by the appropriate number of units. The Fund Annuity unit value on the tenth Valuation Date before the payment due date is used. 11.11 Fund Annuity Unit Value For any Valuation Date, a Fund's Annuity unit value is equal to: (a) The Annuity unit value for the prior Valuation Date; multiplied by (b) The Annuity unit net return factor (see 11.12) for the current Valuation Date; multiplied by (c) A factor to reflect the assumed annual net return rate. The factor for an assumed annual net return rate of 5% is 0.9998663; for 3.5% it is 0.9999058. 19 The dollar value of a Fund Annuity unit and the amount of a variable Annuity payment may increase or decrease due to investment gain or loss. We will not change the payment amount due to changes in mortality, expense results, or the administrative charge. 11.12 Fund Annuity Net Return Factor The Annuity net return factor(s) are used to compute all variable Annuity payments for any Fund. The net return factor(s) for each Fund is equal to 1.0000000 plus the net return rate. The net return rate equals: [a - b - c] ------------- - e d Where: a is the value of the shares of the Fund held by the Separate Account on the current Valuation Date; b is the value of the shares of the Fund held by the Separate Account on the prior Valuation Date; c is taxes or provisions for taxes, if any, on the Separate Account (with any federal income tax liability offset by foreign tax credits to the extent allowed); d is the total value of the accumulation units and Annuity units of the Separate Account on the current Valuation Date; e is Separate Account daily charges for mortality and expense risk and a daily administrative charge as shown on Contract II under Maximum Daily Charges to the Separate Account. A net return rate may be more or less than 0%. The value of a share of a Fund is equal to the net assets of the Fund divided by the number of shares outstanding. 11.13 Death Benefit During the Annuity Phase The Contract Holder or you, as applicable, must name a beneficiary for the Annuity Phase. Unless not allowed by the Plan, or restricted by the Contract Holder, or you, as applicable, the beneficiary may name a beneficiary. If an Annuitant(s) dies, any remaining guaranteed payments continue to the beneficiary. Payments are made at least as rapidly as provided by the option in effect at the death of the Annuitant. Annuity payments to an beneficiary may not extend beyond (1) the life of the beneficiary, or (2) any period certain greater than the beneficiary's life expectancy as determined by the Code. The beneficiary may also elect a lump-sum payment equal to the present value of any remaining payments. The interest rate used to determine the first Annuity payment is used to calculate the present value. The present value is determined as of the next Valuation Date following our receipt of acceptable proof of death and a written claim for the death benefit. Unless not allowed by the Plan or restricted by the Contract Holder, or you, as applicable, if the beneficiary dies while receiving payments, the present value of any remaining guaranteed payments is paid in a lump-sum to the beneficiary's beneficiary or to the beneficiary's estate. 20 OPTION 1: Payments for a Specified Period ================================================================================ Monthly Amount for Each $1,000* Rates for a Fixed Annuity with a 3% Guaranteed Interest Rate ================================================================================ Years Payment Years Payment ================================================================================ 5 $17.91 20 $5.51 10 9.61 25 4.71 15 6.87 30 4.18 ================================================================================ ================================================================================ First Monthly Amount for Each $1,000* Rates for a Variable Annuity with a 3.5% Assumed Interest Rate (AIR) ================================================================================ Years Payment Years Payment ================================================================================ 5 $18.12 20 $5.75 10 9.83 25 4.96 15 7.10 30 4.45 ================================================================================ ================================================================================ First Monthly Amount for Each $1,000* Rates for a Variable Annuity with a 5% Assumed Interest Rate (AIR) ================================================================================ Years Payment Years Payment ================================================================================ 5 $18.74 20 $6.51 10 10.51 25 5.76 15 7.82 30 5.28 ================================================================================ * Net of any applicable premium tax deduction 21 Option 2: Life Income Based on the Life of One Annuitant ================================================================================ Monthly Payment Amount for Each $1,000* Rates for a Fixed Annuity Payment with 3% Guaranteed Interest Rate ================================================================================
==================================================================================================================================== Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b): Option 2(c): Adjusted payments for payments payments payments payments Cash Refund Age of life guaranteed guaranteed guaranteed guaranteed Annuitant 5 years 10 years 15 years 20 years ==================================================================================================================================== 55 4.44 4.42 4.39 4.32 4.22 4.19 60 4.95 4.93 4.86 4.73 4.55 4.57 65 5.65 5.61 5.47 5.22 4.89 5.06 66 5.82 5.77 5.61 5.33 4.96 5.18 70 6.64 6.54 6.23 5.76 5.19 5.70 75 8.06 7.82 7.14 6.25 5.38 6.51 ====================================================================================================================================
============================================================================================================== First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 3.5% Assumed Interest Rate ============================================================================================================== Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b): Adjusted payments for payments payments payments payments Age of life guaranteed guaranteed guaranteed guaranteed Annuitant 5 years 10 years 15 years 20 years ============================================================================================================== 55 4.72 4.71 4.67 4.60 4.50 60 5.23 5.21 5.13 5.00 4.82 65 5.94 5.89 5.73 5.48 5.15 70 6.92 6.81 6.49 6.00 5.43 75 8.35 8.08 7.38 6.48 5.62 ==============================================================================================================
============================================================================================================== First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 5% Assumed Interest Rate ============================================================================================================== Option 2(a): Option 2(b): Option 2(b): Option 2(b): Option 2(b): Adjusted payments for payments payments payments payments Age of life guaranteed guaranteed guaranteed guaranteed Annuitant 5 years 10 years 15 years 20 years ============================================================================================================== 55 5.63 5.61 5.56 5.47 5.36 60 6.12 6.09 6.00 5.85 5.65 65 6.82 6.75 6.57 6.30 5.95 70 7.80 7.67 7.30 6.78 6.21 75 9.23 8.93 8.16 7.23 6.38 ==============================================================================================================
* Net of any applicable premium tax deduction 22 Option 3: Life Income Based on the Lives of Two Annuitants
==================================================================================================================================== First Monthly Payment Amount for Each $1,000* Rates for a Fixed Annuity Payment with 3.0% Guaranteed Interest Rate ==================================================================================================================================== Adjusted Ages payments ============================ guaranteed Primary Secondary 10 years Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) Option 3(f) ==================================================================================================================================== 55 50 $3.69 $4.05 $4.27 $3.69 $4.03 $3.67 55 60 3.99 4.44 4.71 3.98 4.20 3.94 65 60 4.38 4.97 5.32 4.38 4.93 4.29 65 70 4.93 5.68 6.15 4.91 5.27 4.74 75 70 5.69 6.68 7.32 5.62 6.67 5.29 75 80 6.78 8.11 8.99 6.54 7.36 5.93 ====================================================================================================================================
========================================================================================================================== First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 3.5% Assumed Interest Rate ========================================================================================================================== Adjusted Ages payments =============================== guaranteed Primary Secondary 10 years Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) ========================================================================================================================== 55 50 $3.97 $4.35 $4.56 $3.97 $4.31 55 60 4.27 4.73 5.00 4.26 4.48 65 60 4.66 5.25 5.61 4.65 5.22 65 70 5.19 5.97 6.44 5.17 5.54 75 70 5.95 6.96 7.61 5.87 6.95 75 80 7.04 8.39 9.29 6.79 7.64 ==========================================================================================================================
========================================================================================================================== First Monthly Payment Amount for Each $1,000* Rates for a Variable Annuity Payment with 5% Assumed Interest Rate ========================================================================================================================== Adjusted Ages payments =============================== guaranteed Primary Secondary 10 years Annuitant Annuitant Option 3(a) Option 3(b) Option 3(c) Option 3(d) Option 3(e) ========================================================================================================================== 55 50 $4.88 $5.26 $5.48 $4.88 $5.23 55 60 5.15 5.63 5.91 5.14 5.38 65 60 5.52 6.14 6.51 5.51 6.10 65 70 6.04 6.84 7.34 6.00 6.41 75 70 6.77 7.84 8.51 6.68 7.81 75 80 7.86 9.28 10.20 7.57 8.49 ==========================================================================================================================
*Net of any applicable premium tax deduction 23 Aetna Life Insurance and Annuity Company Home Office: 151 Farmington Avenue Hartford, Connecticut 06156 Group Combination, Deferred Annuity Contract (Nonparticipating) EX-99.B.4.62 4 Exhibit 99-B.4.62 Aetna Life Insurance and Annuity Company ENDORSEMENT The Contract, and the Certificate if applicable, are endorsed as follows. Delete Section 10.01, Death Benefit, and replace it with the following: If a Participant dies during the Accumulation Phase, we pay a death benefit. If the Contract Beneficiary requests payment of the death benefit as a lump sum or Annuity option within six months of the Participant's death, the amount of the death benefit on the date we receive notice of death and a request for payment in Good Order is guaranteed to be the greater of: (a) The Individual Account value, minus any outstanding loan balance, plus any applicable aggregate positive MVA; or (b) The total of Contributions to the Individual Account, minus: (1) Any amount withdrawn, (2) Any outstanding loan balance, (3) Or any amount used to purchase Annuity payments. Endorsed and made part of the Contract, and the Certificate if applicable, on the Contract Effective Date. /s/ Thomas J. McInerney ------------------------------------------ President Aetna Life Insurance and Annuity Company E-MMGDB-99 EX-99.B.4.63 5 Exhibit 99-B.4.63 Aetna Life Insurance and Annuity Company ENDORSEMENT The Contract, and the Certificate if applicable, are endorsed as follows. For an Individual Account established under an exchanged contract, any amount allocated to the Fixed Plus Account after the Contract Effective Date will be subject to the Fixed Plus Account provisions stated in this Contract except as provided below. For amounts held in the Fixed Plus Account under the previous ALIAC contract, the amount, if any, transferred to the Fixed Plus Account under this Contract will be subject to the Fixed Plus Account provisions of the previous contract unless the Contract Holder or Participant, as applicable, elects to have the provisions of this Contract apply. The election must be in writing or as otherwise allowed under our administrative practices during the [three months] beginning on the Contract Effective Date. Such an election cannot be revoked. Endorsed and made part of the Contract, and the Certificate if applicable, on the Contract Effective Date. /s/ Thomas J. McInerney ----------------------------------------- President Aetna Life Insurance and Annuity Company E-MMFPEX-99 EX-99.B.4.64 6 Exhibit 99-B.4.64 Aetna Life Insurance and Annuity Company ENDORSEMENT The Contract, and the Certificate if applicable, are endorsed as follows. Subject to the provisions below, loans are available under the Contract. During the Accumulation Phase, loans are available (1) as permitted under applicable law, and (2) subject to the terms and conditions of the loan agreement. The Loan Account For each loan, an amount equal to the loan amount is transferred from the Investment Options in which the Individual Account is invested and is credited to the loan account. The loan account is then credited with interest at a rate which is not less than the loan interest rate (which is the rate we charge on a loan as defined below), less [2.5%], on an annual basis. Loan Effective Date The loan effective date is the date we receive a loan request in Good Order at our Home Office. For loan requests received in Good Order on the 29th, 30th, or 31st day of the month, however, the loan effective date is the first business day of the following month. Amount Available For Loan The amount available for loan is limited to the Individual Account value attributable to employee contributions, plus any additional amounts allowed by the Plan as determined by the Contract Holder (the vested Individual Account value). For plans subject to ERISA, the minimum loan amount is $1,000; for plans not subject to ERISA, the minimum loan amount is defined in the loan agreement. The maximum loan amount is the lesser of: (1) Fifty percent of the vested Individual Account value, including the amount, if any, in the loan account, reduced by the amount of any outstanding loan balance on the date we receive a loan agreement in Good Order at Our Home Office; or (2) Fifty thousand dollars reduced by the highest outstanding loan balance for the preceding 12 months. The total amount of all outstanding loans cannot exceed $50,000. Amounts available from some Investment Options may be subject to limitations specified in the loan agreement. To obtain the loan amount requested, these limitations may require transfer of funds among Investment Options. A market value adjustment may apply to amounts transferred from the Guaranteed Accumulation Account. The amount, if any, from the Fixed Plus Account may be subject to a default charge if the Participant defaults on the loan. Loan Interest Rate For plans subject to ERISA: We set a loan interest rate on the first calendar day of each month. The rate will be equal to the Monthly Average Corporates (which is Moody's Corporate Bond Yield Average-Monthly Average Corporates published by Moody's Investor Service or its successor, or a substantially similar average that may be allowed by law or regulation) for the calendar month beginning two months before the loan interest rate is effective. The initial rate for each loan is the rate for the calendar month in which the Loan Effective Date occurs. The initial interest rate is effective for not less than three months and not more than one year. For each subsequent period, the interest rate is adjusted if the new rate is at least 0.5% higher or lower than the current rate. We provide reasonable notification in writing of any change to the loan interest rate. For plans not subject to ERISA: The loan interest rate will be not greater than 8% on an annual basis. Loan repayment A loan may be repaid as described in the loan agreement, or repaid in full at any time. Partial Withdrawal(s) While A Loan Is Outstanding While a loan is outstanding, the amount available for partial withdrawal is equal to the vested Individual Account value, including the loan account, minus 125% of the outstanding loan balance. E-MMLOAN-99 Full Withdrawal While A Loan Is Outstanding When a full withdrawal is requested while a loan is outstanding, one of the following occurs: (1) If the amount of the vested Individual Account value available for distribution is sufficient to repay (a) the outstanding loan balance, plus (b) any applicable Fixed Plus Account default charge, and (c) any applicable withdrawal charge due on the outstanding loan balance, that amount (the total of a, b, and c,), minus the loan account balance, is deducted from the vested Individual Account value and the loan is canceled. The outstanding loan balance, if not previously reported, will be reported to the Internal Revenue Service as a distribution. (2) If the amount of the vested Individual Account value available for distribution is not sufficient to repay (a) the outstanding loan balance, plus (b) any applicable Fixed Plus Account default charge, and (c) any applicable withdrawal charge due on the outstanding loan balance, the withdrawal cannot be made until the loan is repaid in full. Electing An Annuity Option While A Loan Is Outstanding Before all or any portion of the vested Individual Account value is used to purchase Annuity payments, the Participant may repay any outstanding loan balance, or the vested Individual Account value is adjusted to cancel the loan as described in "Full Withdrawal While a Loan Is Outstanding" above. Death Of The Participant While A Loan Is Outstanding If a death benefit claim is submitted for an Individual Account with an outstanding loan, the vested Individual Account value, including the amount of the loan account, is reduced by the amount of the outstanding loan balance before the death benefit amount is determined. [Loan Default: If we do not receive a loan payment when it is due, the defaulted payment is treated as follows: (1) If the amount of the vested Individual Account value available for distribution is sufficient to repay (a) the defaulted payment, plus (b) any applicable Fixed Plus Account default charge, and (c) any withdrawal charge due on the defaulted payment, then that amount (the total of a, b, and c,) is deducted from the vested Individual Account value. The amount of the defaulted payment is reported to the Internal Revenue Service as a distribution. (2) If the amount of the vested Individual Account value available for distribution is not sufficient to repay (a) the defaulted payment, plus (b) any applicable Fixed Plus Account default charge, and (c) any withdrawal charge due on the defaulted payment, until such time that the amount due (the total of a, b and c) can be distributed, the loan account continues to earn interest, and interest is charged on the defaulted payment. The amount of the defaulted payment is reported to the Internal Revenue Service as a deemed distribution. At the time the amount due can be distributed, it is withdrawn from the vested Individual Account value.] This endorsement is effective and made part of the Contract, and the Certificate if applicable, on the Effective Date of the Contract. /s/ Thomas J. McInerney ------------------------------------------ President Aetna Life Insurance and Annuity Company [Loan Default: If we do not receive a loan payment when due, the loan is treated as follows: (1) If the amount of the vested Individual Account value available for distribution is sufficient to repay (a) the outstanding loan balance, plus (b) any applicable Fixed Plus Account default charge, and (c) any withdrawal charge due on the outstanding loan balance, then that amount (the total of a, b, and c,) is deducted from the vested Individual Account value and the loan is canceled. (2) If the amount of the vested Individual Account value available for distribution is not sufficient to repay (a) the outstanding loan balance, plus (b) any applicable Fixed Plus Account default charge, and (c) any withdrawal charge due on the outstanding loan balance, until such time that the amount due (the total of a, b and c) can be distributed, the loan account continues to earn interest, and interest is charged on the outstanding loan balance. The amount of the outstanding loan balance is reported to the Internal Revenue Service as a deemed distribution. At the time the amount can be distributed, the amount due is withdrawn from the vested Individual Account value.] E-MMLOAN-99 EX-99.B.4.65 7 Exhibit 99-B.4.65 Aetna Life Insurance and Annuity Company ENDORSEMENT The Contract, and the Certificate if applicable, are endorsed as follows. For an Individual Account established with one lump-sum Contribution, the Withdrawal Charge shown on Contract Schedule I does not apply; it is replaced with the following. Withdrawal Charge (see 8.04) For each withdrawal from an Individual Account, we may deduct a withdrawal charge. This charge is a percentage of the amount withdrawn. The withdrawal charge for an Individual Account established with a single Contribution is: [Number of Years Since Individual Account Established] Withdrawal Charge [Fewer than 5 years 5% 5 or more, but fewer than 6 years 4% 6 or more, but fewer than 7 years 3% 7 or more, but fewer than 8 years 2% 8 or more, but fewer than 9 years 1% 9 or more years 0%] The withdrawal charge will never exceed [8.5%] of total Contributions, or the maximum permitted by National Association of Securities Dealers, Inc. (NASD) rules. Endorsed and made part of the Contract, and the Certificate if applicable, on the Contract Effective Date. /s/ Thomas J. McInerney ------------------------------------------ President Aetna Life Insurance and Annuity Company E-MMLSWC-99 EX-99.B.4.66 8 Exhibit 99-B.4.66 Aetna Life Insurance and Annuity Company ENDORSEMENT The Contract, and the Certificate if applicable, are endorsed as follows. We will apply a transfer credit to assets transferred from another investment provider and allocated to Individual Accounts under this Contract. The amount of the transfer credit will equal [two percent] of the amount of transferred assets, less any applicable premium tax. The transfer credit amount is calculated on the first anniversary of an Individual Account Effective Date. The amount of the transfer credit is based on transferred assets allocated to an Individual Account, minus any withdrawals. The transfer credit amount is deposited in the Fixed Plus Account. The amount deposited will include any interest that would have accrued had the transfer credit amount been deposited to the Fixed Plus Account on the first business day of the calendar month following its calculation. Endorsed and made part of the Contract, and the Certificate if applicable, on the Contract or Certificate Effective Date. /s/ Thomas J. McInerney ----------------------------------------- President Aetna Life Insurance and Annuity Company E-MMTC-99 EX-99.B.4.67 9 ENDORSEMENT Ex 99-B.4.67 Aetna Life Insurance and Annuity Company Endorsement The Contract or Certificate is endorsed to add the following provisions. Any previous references to GET or the Aetna GET Fund (GET) will not apply to any GET series offered on or after June 1, 1999. Aetna GET Fund Each Aetna GET Fund series is a separate Fund. Aetna GET Fund Offering Period (Offering Period) The period, usually from one to three months, during which Owners/Contract Holders/Certificate Holders, whichever applies, may transfer or deposit amounts to an Aetna GET Fund series. Each Aetna GET Fund series has a specified Offering Period. Amounts transferred or deposited prior to the date on which the Guarantee Period begins are invested in money market instruments. Aetna reserves the right to state the minimum amount Owners/Contract Holders/Certificate Holders, whichever applies, may transfer or deposit to each Offering Period. Aetna also reserves the right to extend an Offering Period or accept transfers or deposits to an Aetna GET Fund series during the series' Guarantee Period. Aetna reserves the right to specify a minimum total asset amount required at the end of an Offering Period to continue to offer an Aetna GET Fund series. If the minimum is not achieved or if the Fund's Board of Trustees determines due to unfavorable market conditions not to operate the GET Fund series in accordance with its investment objective and strategies, Aetna reserves the right not to begin the Guarantee Period. If the Guarantee Period will not commence, Aetna will send written notice to all Owners/Contract Holders/Certificate Holders who have made transfers or deposits to that Aetna GET Fund series. Notice will be mailed no later than 15 calendar days after the end of the Offering Period. Owners/Contract Holders/Certificate Holders then have 45 calendar days from the end of the Offering Period to redirect amounts in the terminated Aetna GET Fund series to one or more investment options available under the Contract. During this time, GET Fund assets are invested in money market instruments. If no election is made by the end of the 45-day period, at the next Valuation Period, Aetna will transfer the amount in the terminated Aetna GET Fund series to the money market fund investment option available under the Contract. Aetna reserves the right to specify a maximum total asset amount for an Aetna GET Fund series. If the maximum is achieved, Aetna also reserves the right to set a date on which it will stop accepting transfers or deposits for that Aetna GET Fund series. Aetna GET Fund Reinvestment In the event of a Contract surrender and reinstatement (if available under the Contract), amounts attributable to GET will be reinstated to a GET series if an Offering Period is available. If no GET series Offering Period is available, amounts will be reallocated among the other available investment options under the Contract in which the Owner/Contract Holder/Certificate Holder was invested, on a proportionate basis. Aetna GET Fund Guarantee Period (Guarantee Period) For each Aetna GET Fund series, the period for which the Aetna GET Fund Guarantee applies. The Guarantee Period ends on the Maturity Date. EGET-99 1 Aetna GET Fund Maturity Date (Maturity Date) The date on which a series' Guarantee Period ends and GET Fund Record Units for the series are liquidated. Prior to the Maturity Date for each Aetna GET Fund series, Aetna sends a written notice of the date to all Owners/Contract Holders/Certificate Holders, whichever applies, who have Current Value in that series. Owners/Contract Holders/Certificate Holders must then inform Aetna of the investment option(s) to which to transfer that Current Value. If an Owner/Contract Holder/Certificate Holder does not make an election, on the Maturity Date Aetna will transfer the Current Value to the then available Aetna GET Fund series, if an Offering Period is available. If no Offering Period is available, Aetna will transfer the Current Value to the fund or funds designated by Aetna in the written notice. Aetna GET Fund Guarantee On the Maturity Date of each Aetna GET Fund series, the GET Fund Record Unit Value for that series will not be less than the GET Fund Record Unit Value determined at the close of business on the last day of the Offering Period. If necessary, Aetna will transfer funds from its General Account to the Separate Account to offset any shortfall in the GET Fund Record Unit Value. The Aetna GET Fund Guarantee does not apply to withdrawals or transfers made before the Maturity Date. If Aetna GET Fund Record Units are adjusted at any time during an Aetna GET Fund Guarantee Period, the Aetna GET Fund Guarantee will be restated. The restated Aetna GET Fund Guarantee will be calculated so that it is equivalent to the original Aetna GET Fund Guarantee for that series. Charge for Aetna GET Fund Guarantee The Separate Account or Fund Investment Increment or Net Return Factor(s) or Net Return Rate will be minus a fee for the Aetna GET Fund Guarantee which is deducted daily during the Guarantee Period. The fee is determined prior to the beginning of each series' Offering Period. The daily charge for the Aetna GET Fund Guarantee for each series offered on or after June 1, 1999 will be at an annual rate of no more than 0.75%. Aetna GET Fund Transfer or Withdrawal A transfer or withdrawal from an Aetna GET Fund series before the Maturity Date will be based on the GET Fund Record Unit Value for the next Valuation Period following the date on which Aetna receives a transfer request in good order at its home office. Endorsed and made part of the Contract or Certificate on June 1, 1999 or on the Effective Date, whichever is later. /s/ Thomas J. McInerney ---------------------------------------- President Aetna Life Insurance and Annuity Company EGET-99 2 EX-99.B.9 10 OTHER CONTRACTS [AETNA LOGO] [AETNA LETTERHEAD] 151 Farmington Avenue Hartford, CT 06156 Julie E. Rockmore Counsel Law Division, RE4A April 7, 1999 Investments & Financial Services (860) 273-4686 Fax: (860) 273-8340 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. 13 to Registration Statement on Form N-4 Prospectus Title: Multiple Sponsored Retirement Options File Nos.: 333-01107* 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. 13 (the "Registration Statement"). 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 the following earlier Registration Statements: 33-88720; 33-75964 (which had included a combined prospectus for earlier Registration Statements: 33-75958, 33-75960, and 33-75994); 33-75986 (which had included a combined prospectus for earlier Registration Statements: 33-75970, 33-75954, and 33-75956); 33-75982 (which had included a combined prospectus for earlier Registration Statements: 33-75986, 33-75996, 33-75990, and the individual deferred compensation contracts covered by Registration Statement No. 33-75992); and 33-91846 (which had included a combined prospectus for earlier Registration Statement: 33-75976). 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.B.10 11 CONSENT OF INDEPENDENT AUDITORS Consent of Independent Auditors The Board of Directors of Aetna Life Insurance and Annuity Company and Contractholders of Variable Annuity Account C: We consent to the use of our reports dated February 3, 1999 and February 26, 1999 included herein this Post-Effective Amendment No. 13 to Registration Statement (File No. 333-01107) 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 LLP ----------------------------------- KPMG LLP Hartford, Connecticut April 7, 1999 -----END PRIVACY-ENHANCED MESSAGE-----