485BPOS 1 direct0508abc.txt As filed with the Securities and Exchange Commission on May 1, 2008 ================================================================================ File No. 333-70065 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE [X] SECURITIES ACT OF 1933 [ ] Pre-Effective Amendment No. [X] Post-Effective Amendment No. 10 and/or REGISTRATION STATEMENT UNDER THE [X] INVESTMENT COMPANY ACT OF 1940 [X] Amendment No. 30 (Check appropriate box or boxes) AUL AMERICAN INDIVIDUAL VARIABLE ANNUITY UNIT TRUST (Exact Name of Registrant) AMERICAN UNITED LIFE INSURANCE COMPANY(R) (Name of Depositor) One American Square, Indianapolis, Indiana 46282 (Address of Depositor's Principal Executive Offices) (Zip Code) Depositor's Telephone Number: (317) 285-1588 Richard M. Ellery Associate General Counsel One American Square Indianapolis, Indiana 46282 (Name and Address of Agent for Service) Title of Securities Being Registered: Interests in individual variable annuity contracts It is proposed that this filing will become effective (Check appropriate Space) _____ immediately upon filing pursuant to paragraph (b) of Rule 485 X _____ on May 1, 2008 pursuant to paragraph (b) of Rule 485 --------------- _____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485 _____ on (date) pursuant to paragraph (a)(1) of Rule 485 If appropriate, check the following box: _____ this post-effective amendment designates a new effective date for a previously filed amendment.
CROSS REFERENCE SHEET Pursuant to Rule 495 Showing Location in Part A (Prospectus) and Part B (Statement of Additional Information) of Registration Statement of Information Required by Form N-4 PART A - PROSPECTUS Item of Form N-4 Prospectus Caption ---------------- ------------------ 1. Cover Page ........................... Cover Page 2. Definitions .......................... Definitions 3. Synopsis ............................. Summary; Expense Table 4. Condensed Financial Information ...... Not Applicable 5. General Description of Registrant, Depositor, and Portfolio Companies.... Information About AUL, The Variable Account, and the Funds; Voting of Shares of the Funds 6. Deductions and Expenses .............. Charges and Deductions 7. General Description of Variable Annuity Contracts .................... The Contracts; Premiums and Account Values During the Accumulation Period; Distributions; Summary 8. Annuity Period ....................... Distributions 9. Death Benefit ........................ Distributions 10. Purchases and Contract Values ........ Premiums and Account Values During the Accumulation Period 11. Redemptions .......................... Distributions 12. Taxes ................................ Federal Tax Matters 13. Legal Proceedings .................... Other Information 14. Table of Contents for the Statement of Additional Information ............ Statement of Additional Information Table of Contents PART B - STATEMENT OF ADDITIONAL INFORMATION Statement of Additional Information Statement of Additional Information Item of Form N-4 Caption ----------------------------------- ------------------------------------ 15. Cover Page ........................... Cover Page 16. Table of Contents .................... Table of Contents 17. General Information and History ...... General Information and History 18. Services ............................. Custody of Assets; Independent Auditors 19. Purchase of Securities Being Offered . Distribution of Contracts; (Prospectus) Charges and Deductions 20. Underwriters ......................... Distribution of Contracts 21. Calculation of Performance Data ...... Performance Information 22. Annuity Payments ..................... (Prospectus) Distributions 23. Financial Statements ................. Financial Statements PART C - OTHER INFORMATION Item of Form N-4 Part C Caption ---------------- -------------- 24. Financial Statements and Exhibits .... (Statement of Additional Information) Financial Statements and Exhibits 25. Directors and Officers of the Depositor............................. Directors and Officers of AUL 26. Persons Controlled By or Under Common Control with the Depositor or Registrant............................ Persons Controlled By or Under Common Control of Depositor or Registrant 27. Number of Contractowners ............. Number of Contractholders 28. Indemnification ...................... Indemnification 29. Principal Underwriters ............... Principal Underwriters 30. Location of Accounts and Records ..... Location of Accounts and Records 31. Management Services .................. Management Services 32. Undertakings.......................... Undertakings Signatures ......................... Signatures
[LOGO OF AMERICAN UNITED LIFE INSURANCE COMPANY(R)] D I R E C T P O I N T PROSPECTUS FOR: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY (No withdrawal charge contract) May 1, 2008 SPONSORED BY: American United Life Insurance Company(R) One American Square P.O. Box 7127 Indianapolis, IN 46206-7127 (800) 537-6442 - www.oneamerica.com PROSPECTUS INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY (NO WITHDRAWAL CHARGE CONTRACT) INDIVIDUAL VARIABLE ANNUITY CONTRACTS OFFERED BY: AMERICAN UNITED LIFE INSURANCE COMPANY(R); ONE AMERICAN SQUARE INDIANAPOLIS, INDIANA 46282; (317) 285-1877 VARIABLE PRODUCTS SERVICE OFFICE: P.O. BOX 7127, INDIANAPOLIS, INDIANA 46206-7127; (800) 537-6442; WWW.ONEAMERICA.COM This Prospectus describes individual variable annuity contracts (the "Contracts") offered by American United Life Insurance Company(R) ("AUL") subject to approval in individual states. AUL designed the Contracts for use in connection with retirement plans and deferred compensation plans for individuals. Contract Owners may use the Contracts in connection with retirement plans that meet the requirements of Sections 401(a), 403(b), 408, 408A or 457 of the Internal Revenue Code. This Prospectus describes a flexible premium contract: Contracts for which Premiums may vary in amount and frequency, subject to certain limitations. The Contract provides for the accumulation of values on a variable basis, a fixed basis, or both. The Contract also provides several options for fixed and variable annuity payments to begin on a future date. A Contract Owner may allocate Premiums designated to accumulate on a variable basis to one (1) or more of the Investment Accounts of a separate account of AUL. The separate account is named the AUL American Individual Variable Annuity Unit Trust (the "Variable Account"). Each Investment Account invests exclusively in shares of one (1) of the following Fund Portfolios: AIM Variable Insurance Funds Alger American Fund AllianceBernstein Variable Products Series Fund, Inc. American Century(R) Variable Portfolios, Inc. Calvert Variable Series, Inc. Columbia Funds Variable Insurance Trust Dreyfus Investment Portfolios Dreyfus Variable Investment Fund Fidelity(R) Variable Insurance Products Freedom Funds Fidelity(R) Variable Insurance Products Funds Franklin Templeton Variable Insurance Products Trust Janus Aspen Series Neuberger Berman Advisers Management Trust Old Mutual Insurance Series Fund OneAmerica Funds, Inc. Pioneer Variable Contracts Trust T. Rowe Price Equity Series, Inc. Royce Capital Fund T. Rowe Price Fixed Income Series, Inc. Timothy Plan(R) Portfolio Variable Series Vanguard(R) Variable Insurance Fund Premiums allocated to an Investment Account of the Variable Account will increase or decrease in dollar value depending on the investment performance of the corresponding fund portfolio in which the Investment Account invests. These amounts are not guaranteed. In the alternative, a Contract Owner may allocate Premiums to AUL's Fixed Account. Such allocations will earn interest at rates that are paid by AUL as described in "The Fixed Account(s)." This Prospectus concisely sets forth information about the Contracts and the Variable Account that a prospective investor should know before investing. Certain additional information is contained in a "Statement of Additional Information," dated May 1, 2008 which has been filed with the Securities and Exchange Commission (the "SEC"). The Statement of Additional Information is incorporated by reference into this Prospectus. A prospective investor may obtain a copy of the Statement of Additional Information without charge by calling or writing to AUL at the telephone number or address indicated above. A post card affixed to the printed prospectus can be removed to send for a Statement of Additional Information. The table of contents of the Statement of Additional Information is located at the end of this Prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the prospectus. Any representation to the contrary is a criminal offense. This Prospectus should be accompanied by the current prospectuses for the fund or funds being considered. Each of these prospectuses should be read carefully and retained for future reference. THE DATE OF THIS PROSPECTUS IS MAY 1, 2008. TABLE OF CONTENTS
Description Page DEFINITIONS ....................................................... 4 SUMMARY ........................................................... 6 Purpose of the Contracts ........................................ 6 The Variable Account and the Funds .............................. 6 Summary of the Fixed Accounts ................................... 10 Market Value Adjusted Fixed Accounts .......................... 10 Non-Market Value Adjusted Fixed Account ....................... 10 Premiums ........................................................ 10 Right to Examine ................................................ 10 Transfers ....................................................... 10 Charges ......................................................... 10 Distributions ................................................... 10 Withdrawals ................................................... 10 Loan Privileges ............................................... 10 The Death Benefit ............................................. 11 Dollar Cost Averaging Program ................................. 11 Portfolio Rebalancing Program ................................... 11 Portfolio Optimization Program .................................. 11 Contacting AUL .................................................. 11 EXPENSE TABLE ..................................................... 11 CONDENSED FINANCIAL INFORMATION ................................... 13 INFORMATION ABOUT AUL, THE VARIABLE ACCOUNT, AND THE FUNDS .......................................... 21 American United Life Insurance Company(R) ....................... 21 Variable Account ................................................ 21 The Funds ....................................................... 21 Revenue AUL Receives ............................................ 21 AIM Variable Insurance Funds .................................... 22 AIM V.I. Dynamics Fund ........................................ 22 AIM V.I. Financial Services Fund .............................. 22 AIM V.I. Global Health Care Fund .............................. 22 AIM V.I. Global Real Estate Fund .............................. 23 AIM V.I. High Yield Fund ...................................... 23 AIM V.I. Utilities Fund ....................................... 23 Alger American Fund ............................................. 23 Alger American Growth Portfolio ............................... 23 Alger American Small Capitalization Portfolio ................. 23 AllianceBernstein Variable Products Series Fund, Inc. ........... 24 AllianceBernstein VPS International Growth Portfolio .......... 24 AllianceBernstein VPS International Value Portfolio ........... 24 AllianceBernstein VPS Small/Mid Cap Value Portfolio ........... 24 American Century(R) Variable Portfolios, Inc. ................... 24 American Century(R) VP Income & Growth Portfolio .............. 24 American Century(R) VP International Portfolio ................ 24 American Century(R) VP Ultra(R) ............................... 24 American Century(R) VP Vista(SM) .............................. 24 Calvert Variable Series, Inc..................................... 25 Calvert Social Mid Cap Growth Portfolio ....................... 25 Columbia Funds Variable Insurance Trust ......................... 25 Columbia Federal Securities Fund, Variable Series ............. 25 Columbia Small Cap Value Fund, Variable Series ................ 25 Dreyfus Investment Portfolios ................................... 25 Dreyfus DIP Technology Growth Portfolio ....................... 25 Dreyfus Variable Investment Fund .............................. 26 Dreyfus VIF Appreciation Portfolio ............................ 26 Fidelity(R) Variable Insurance Products Freedom Funds ........... 26 Fidelity(R) VIP Freedom Income Portfolio ...................... 26 Fidelity(R) VIP Freedom 2005 Portfolio ........................ 26 Fidelity(R) VIP Freedom 2010 Portfolio ........................ 26 Fidelity(R) VIP Freedom 2015 Portfolio ........................ 26 Fidelity(R) VIP Freedom 2020 Portfolio ........................ 26 Fidelity(R) VIP Freedom 2025 Portfolio ........................ 26 Fidelity(R) VIP Freedom 2030 Portfolio ........................ 27 Fidelity(R) Variable Insurance Products Fund .................... 27 Fidelity(R) VIP Asset Manager(SM) Portfolio ................... 27 Fidelity(R) VIP Contrafund(R) Portfolio ....................... 27 Fidelity(R) VIP Equity-Income Portfolio ....................... 27 Fidelity(R) VIP Growth Portfolio .............................. 27 Fidelity(R) VIP High Income Portfolio ......................... 27 Fidelity(R) VIP Index 500 Portfolio ........................... 27 Fidelity(R) VIP Overseas Portfolio ............................ 27 Franklin Templeton Variable Insurance Products Trust ............ 28 Franklin Small Cap Value Securities Fund ...................... 28 Franklin Templeton VIP Founding Funds Allocation Fund ............................................. 28 Templeton Global Income Securities Fund ....................... 28 Janus Aspen Series .............................................. 28 Janus Aspen Flexible Bond Portfolio ........................... 28 Janus Aspen Forty Portfolio ................................... 28 Janus Aspen Worldwide Growth Portfolio ........................ 28 Neuberger Berman Advisers Management Trust ...................... 28 LB AMT Short Duration Bond Portfolio (Formerly Neuberger Berman AMT Limited Maturity Bond Portfolio) ....... 28 Neuberger Berman AMT Regency Portfolio ........................ 28 Neuberger Berman AMT Small Cap Growth Portfolio (Formerly Neuberger Berman AMT Fasciano Portfolio) .......... 29 Old Mutual Insurance Series Fund ................................ 29 Old Mutual Columbus Circle Technology and Communications Portfolio .................................... 29 Old Mutual Growth II Portfolio ................................ 29 Old Mutual Mid-Cap Portfolio .................................. 29 Old Mutual Small Cap Portfolio ................................ 29 OneAmerica Funds, Inc. .......................................... 29 OneAmerica Asset Director Portfolio ........................... 29 OneAmerica Investment Grade Bond Portfolio .................... 29 OneAmerica Money Market Portfolio ............................. 30 OneAmerica Value Portfolio .................................... 30 Pioneer Variable Contracts Trust ................................ 30 Pioneer Emerging Markets VCT Portfolio ........................ 30 Pioneer Fund VCT Portfolio .................................... 30 Pioneer Growth Opportunities VCT Portfolio .................... 30 Royce Capital Fund .............................................. 30 Royce Small-Cap Fund .......................................... 30 T. Rowe Price Equity Series, Inc. ............................... 30 T. Rowe Price Blue Chip Growth Portfolio ...................... 30 T. Rowe Price Equity Income Portfolio ......................... 30 T. Rowe Price Mid-Cap Growth Portfolio ........................ 31 T. Rowe Price Fixed Income Series, Inc. ......................... 31 T. Rowe Price Limited-Term Bond Portfolio ..................... 31
2 TABLE OF CONTENTS (CONTINUED)
Description Page INFORMATION ABOUT AUL, THE VARIABLE ACCOUNT, AND THE FUNDS (continued) Timothy Plan(R) Portfolio Variable Series ....................... 31 Timothy Plan(R) Conservative Growth Variable .................. 31 Timothy Plan(R) Strategic Growth Variable ..................... 31 Vanguard(R) Variable Insurance Fund ............................. 31 Vanguard(R) Diversified Value Portfolio ....................... 31 Vanguard(R) VIF Mid-Cap Index Portfolio ....................... 31 Vanguard(R) VIF Small Company Growth Portfolio ................ 31 Vanguard(R) VIF Total Bond Market Index Portfolio ............. 31 THE CONTRACTS ..................................................... 32 General ....................................................... 32 PREMIUMS AND ACCOUNT VALUES DURING THE ACCUMULATION PERIOD .................................. 32 Application for a Contract .................................... 32 Premiums Under the Contracts .................................. 32 Right to Examine Period ....................................... 32 Allocation of Premiums ........................................ 32 Transfers of Account Value .................................... 33 Abusive Trading Practices ..................................... 33 Late Trading ................................................ 33 Market Timing ............................................... 33 Dollar Cost Averaging Program ................................. 34 Portfolio Rebalancing Program ................................. 34 Portfolio Optimization Program .................................. 35 The Service ................................................... 35 The Portfolio Optimization Models ............................. 35 Periodic Updates of the Portfolio Optimization Model and Notices of Updates ................................ 35 Selecting a Portfolio Optimization Model ...................... 36 Quarterly Reports ............................................. 36 Risks ......................................................... 36 Contract Owner's Variable Account Value ......................... 36 Accumulation Units ............................................ 36 Accumulation Unit Value ....................................... 37 Net Investment Factor ......................................... 37 CHARGES AND DEDUCTIONS ............................................ 37 Premium Tax Charge .............................................. 37 Withdrawal Charge ............................................... 37 Mortality and Expense Risk Charge ............................... 37 Annual Contract Fee ............................................. 37 Rider Charges ................................................... 37 Other Charges ................................................... 38 Variations in Charges ........................................... 38 Guarantee of Certain Charges .................................... 38 Expenses of the Funds ........................................... 38 DISTRIBUTIONS ..................................................... 38 Cash Withdrawals ................................................ 38 Loan Privileges ................................................. 38 Death Proceeds Payment Provisions ............................... 39 Standard Contractual Death Benefit ............................ 39 Enhanced Death Benefit Rider .................................. 39 Death of the Owner ............................................ 39 Death of the Annuitant ........................................ 39 Payments from the Variable Account .............................. 40 Annuity Period .................................................. 40 General ....................................................... 40 Fixed Payment Annuity ......................................... 40 Variable Payment Annuity ...................................... 40 Payment Options ............................................... 41 Selection of an Option ........................................ 41 THE FIXED ACCOUNT(S) .............................................. 41 Summary of the Fixed Account(s) ................................. 41 Non-Market Value Adjusted Fixed Account ....................... 41 Market Value Adjusted Fixed Account ........................... 41 Withdrawals ..................................................... 42 Transfers ....................................................... 42 Contract Charges ................................................ 42 Payments from the Fixed Account(s) .............................. 42 MORE ABOUT THE CONTRACTS ......................................... 43 Designation and Change of Beneficiary ........................... 43 Assignability ................................................... 43 Proof of Age and Survival ....................................... 43 Misstatements ................................................... 43 Acceptance of New Premiums ...................................... 43 Optional Benefits ............................................... 43 Enhanced Death Benefit Rider .................................. 43 Guaranteed Minimum Annuitization Benefit Rider ............................................... 43 FEDERAL TAX MATTERS ............................................... 44 Introduction .................................................... 44 Diversification Standards ....................................... 44 Taxation of Annuities in General-Non-Qualified Plans ............ 44 Additional Considerations ....................................... 45 Qualified Plans ................................................. 46 Qualified Plan Federal Taxation Summary ......................... 47 403(b) Programs-Constraints on Withdrawals ...................... 47 401 or 403(b) Programs-Loan Privileges .......................... 47 OTHER INFORMATION ................................................. 47 Voting of Shares of the Funds ................................... 47 Substitution of Investments ..................................... 47 Changes to Comply with Law and Amendments ....................... 49 Reservation of Rights ........................................... 49 Periodic Reports ................................................ 49 Legal Proceedings ............................................... 49 Legal Matters ................................................... 49 Financial Statements ............................................ 49 STATEMENT OF ADDITIONAL INFORMATION ............................... 50 PROSPECTUS EXHIBIT 1 - FORM ADV PART II ........................... 50
3 DEFINITIONS Various terms commonly used in this Prospectus are defined as follows: 403(b) PLAN - An arrangement by a public school organization or an organization that is described in Section 501(c)(3) of the Internal Revenue Code, including certain charitable, educational and scientific organizations, under which employees are permitted to take advantage of the federal income tax deferral benefits provided for in Section 403(b) of the Internal Revenue Code. 408 or 408A PLAN - A plan of individual retirement accounts or annuities, including a simplified employee pension plan, SIMPLE IRA or Roth IRA plan established by an employer, that meets the requirements of Section 408 or 408A of the Internal Revenue Code. 457 PLAN - A plan established by a unit of a state or local government or a tax-exempt organization under Section 457 of the Internal Revenue Code. ACCOUNT VALUE - The total of a Contract Owner's value in the Variable Account, the Fixed Account(s) and the Loan Account. Initially, it is equal to the initial Premium less any applicable Premium tax and thereafter will reflect the net result of Premiums, investment experience, charges deducted, and any withdrawals taken. ACCUMULATION PERIOD - The period starting on the Contract Date and ending when the Contract is terminated, either through surrender, withdrawal(s), annuitization, payment of charges, payment of the death benefit, or a combination thereof. ACCUMULATION UNIT - A unit of measure used to record amounts of increases to, decreases from, and accumulations in the Investment Accounts of the Variable Account during the Accumulation Period. ANNUITANT - The person or persons on whose life or lives annuity payments depend. ANNUITY - A series of payments made by AUL to an Annuitant, Beneficiary or payee during the period specified in the Annuity Option. ANNUITY DATE - The first (1st) day of any month in which an annuity begins under a Contract, which shall not be later than the required beginning date under applicable federal requirements. ANNUITY OPTIONS - Options under a Contract that prescribe the provisions under which a series of annuity payments are made to an Annuitant, contingent Annuitant, or Beneficiary. ANNUITY PERIOD - The period during which annuity payments are made. ASSUMED INTEREST RATE (AIR) - The investment rate built into the Variable Payment Annuity table used to determine the first annuity payment. AUL - American United Life Insurance Company(R). BENEFICIARY - The person having the right to receive the death proceeds, if any, payable upon the death of the Contract Owner during the Accumulation Period, and the person having the right to benefits, if any, payable upon the death of an Annuitant during the Annuity Period under any Annuity Option other than a survivorship option (i.e., Option 3-under which the contingent Annuitant has the right to benefits payable upon the death of an Annuitant). BUSINESS DAY - A day on which AUL's Corporate office is customarily open for business. Traditionally, in addition to federal holidays, AUL is not open for business on the day after Thanksgiving; but, AUL may not be open for business on other days. CASH VALUE - An Owner's Account Value plus or minus any applicable Market Value Adjustment. CONTRACT ANNIVERSARY - The yearly anniversary of the Contract Date. CONTRACT DATE - The date shown as the Contract Date in a Contract. It will not be later than the date the initial Premium is accepted under a Contract, and it is the date used to determine Contract Years and Contract Anniversaries. CORPORATE OFFICE - The Variable Products Service Office at AUL's principal business office, One American Square, P.O. Box 7127, Indianapolis, Indiana 46206-7127, (800) 537-6442. www.oneamerica.com. CONTRACT OWNER - The person entitled to the ownership rights under the Contract and in whose name the Contract is issued. A trustee or custodian may be designated to exercise an Owner's rights and responsibilities under a Contract in connection with a retirement plan that meets the requirements of Section 401 or 408 of the Internal Revenue Code. An administrator, custodian, or other person performing similar functions may be designated to exercise an Owner's responsibilities under a Contract in connection with a 403(b) or 457 Program. The term "Owner," as used in this Prospectus, shall include, where appropriate, such a trustee, custodian, or administrator. CONTRACT YEAR - A period beginning with one (1) Contract Anniversary, or, in the case of the first (1st) Contract Year, beginning on the Contract Date, and ending the day before the next Contract Anniversary. DEATH PROCEEDS - The amount payable to the Beneficiary by reason of the death of the Annuitant or Owner during the 4 DEFINITIONS (CONTINUED) Accumulation Period in accordance with the terms of the Contract. EMPLOYEE BENEFIT PLAN - A pension or profit sharing plan established by an Employer for the benefit of its employees and which is qualified under Section 401 of the Internal Revenue Code. FIXED ACCOUNT - An account that is part of AUL's General Account, and is not part of or dependent on the investment performance of the Variable Account. FIXED ACCOUNT VALUE - The total value under a Contract allocated to any of the Fixed Account(s). FUNDS - A diversified, open-end management investment company commonly referred to as a fund, or a portfolio thereof. GENERAL ACCOUNT - All assets of AUL other than those allocated to the Variable Account or to any other separate account of AUL. GUARANTEED PERIOD - The period of time in years that the interest rate on an MVA Fixed Account is guaranteed. Guaranteed Periods may be one (1), three (3), five (5), seven (7), or ten (10) years in length or other duration offered from time to time by AUL. HR-10 PLAN - An Employee Benefit Plan established by a self-employed person in accordance with Section 401 of the Internal Revenue Code. INVESTMENT ACCOUNT/INVESTMENT OPTION - One (1) or more of the subdivisions of the Separate Account. Each Investment Account is invested in a corresponding Portfolio of a particular fund. LOAN ACCOUNT - A portion of the Account Value which is collateral for loan amounts. MARKET VALUE ADJUSTMENT - An upward or downward adjustment in the value of an MVA Fixed Account if withdrawals or transfers are made prior to the expiration of the Guaranteed Period. MVA FIXED ACCOUNT - A subaccount of the Fixed Account, having a particular Guaranteed Period, and subject to a Market Value Adjustment. NET CASH VALUE - Cash Value less outstanding loan and loan interest. OWNER - See "Contract Owner." PREMIUM(S) - The amounts paid to AUL as consideration for the Contract. In those states that require the payment of Premium tax upon receipt of a premium by AUL, the term "premium" shall refer to the amount received by AUL net of the amount deducted for premium tax. PROPER NOTICE - Notice that is received at AUL's Corporate Office in a form that is acceptable to AUL. SEPARATE ACCOUNT - AUL American Individual Variable Annuity Unit Trust. The Separate Account is segregated into several Investment Accounts each of which invests in a corresponding fund portfolio. VALUATION DATE - Each date on which the Investment Accounts are valued, which currently includes each Business Day that is also a day on which the New York Stock Exchange is open for trading. VALUATION PERIOD - The Valuation Period begins at the close of one (1) Valuation Date and ends at the close of the next succeeding Valuation Date. Generally, the Valuation Date is "closed" at or about 4:00 P.M. EDT, on each day the NYSE is open for trading. The Valuation Date may close earlier than 4:00 P.M. EDT if the NYSE closes earlier than 4:00 P.M. and it is possible to determine the net asset value at that time. VARIABLE ACCOUNT - The Separate Account. VARIABLE ACCOUNT VALUE - The Account Value of this Contract which is invested in one (1) or more Investment Accounts. 5 SUMMARY This summary is intended to provide a brief overview of the more significant aspects of the Contract. Later sections of this Prospectus, the Statement of Additional Information, and the Contract provide further detail. Unless the context indicates otherwise, the discussion in this summary and the remainder of the Prospectus relates to the portion of the Contract involving the Variable Account. The pertinent Contract and "The Fixed Account" section of this Prospectus briefly describe the Fixed Account. PURPOSE OF THE CONTRACTS AUL offers the individual variable annuity contracts ("Contracts") described in this Prospectus for use in connection with taxable contribution retirement plans and deferred compensation plans for individuals (collectively "non-Qualified Plans"). AUL also offers the Contracts for use by individuals in connection with retirement plans that meet the requirements of Sections 401, 403(b), 457, 408 or 408A of the Internal Revenue Code, using pre-tax contributions (collectively "Qualified Plans"). While variable annuities may provide a Contract Owner with additional investment and insurance or annuity-related benefits when used in connection with such a tax qualified program, any tax deferral is provided by the program or plan and not the annuity Contract. A variable annuity Contract presents a dynamic concept in retirement planning designed to give Contract Owners flexibility in attaining investment goals. A Contract provides for the accumulation of values on a variable basis, a fixed basis, or both, and provides several options for fixed and variable annuity payments. During the Accumulation Period, a Contract Owner can allocate Premiums to the various Investment Accounts of the Variable Account or to the Fixed Account. See "The Contracts." Investors should carefully consider the tax benefits and disadvantages of a Contract, and should consult a tax advisor. The tax benefits can be important for investors seeking retirement income. The Contract may be disadvantageous for those who do not plan to use the Contract as a source of retirement income. The tax treatment may not be important for investors using the Contract in connection with certain Qualified Plans. Investors should also consider the investment and annuity benefits offered by the Contracts. THE VARIABLE ACCOUNT AND THE FUNDS AUL will allocate Premiums designated to accumulate on a variable basis to the Variable Account. See "Variable Account." The Variable Account is currently divided into subaccounts referred to as Investment Accounts. Each Investment Account invests exclusively in shares of one (1) of the portfolios of the following funds:
INVESTMENT ACCOUNT AND CORRESPONDING FUND PORTFOLIO FUND INVESTMENT ADVISOR ---------------------------- ---- ------------------ AIM V.I. Dynamics Fund AIM Variable Insurance Funds AIM Funds Management Inc. (AIM Funds Management Inc. anticipates changing its name to Invesco Trimark Investment Management Inc. on or prior to December 31, 2008); Invesco Global Asset Management (N.A.), Inc.; Invesco Institutional (N.A.), Inc.; Invesco Senior Secured Management, Inc.; Invesco Hong Kong Limited; Invesco Asset Management Limited; Invesco Asset Management (Japan) Limited; Invesco Asset Management Deutschland, GmbH; and Invesco Australia Limited AIM V.I. Financial Services Fund AIM Variable Insurance Funds AIM Funds Management Inc. (AIM Funds Management Inc. anticipates changing its name to Invesco Trimark Investment Management Inc. on or prior to December 31, 2008); Invesco Global Asset Management (N.A.), Inc.; Invesco Institutional (N.A.), Inc.; Invesco Senior Secured Management, Inc.; Invesco Hong Kong Limited; Invesco Asset Management Limited; Invesco Asset Management (Japan) Limited; Invesco Asset Management Deutschland, GmbH; and Invesco Australia Limited
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INVESTMENT ACCOUNT AND CORRESPONDING FUND PORTFOLIO FUND INVESTMENT ADVISOR ---------------------------- ---- ------------------ AIM V.I. Global Health Care Fund AIM Variable Insurance Funds AIM Funds Management Inc. (AIM Funds Management Inc. anticipates changing its name to Invesco Trimark Investment Management Inc. on or prior to December 31, 2008); Invesco Global Asset Management (N.A.), Inc.; Invesco Institutional (N.A.), Inc.; Invesco Senior Secured Management, Inc.; Invesco Hong Kong Limited; Invesco Asset Management Limited; Invesco Asset Management (Japan) Limited; Invesco Asset Management Deutschland, GmbH; and Invesco Australia Limited AIM V.I. Global Real Estate Fund AIM Variable Insurance Funds AIM Funds Management Inc. (AIM Funds Management Inc. anticipates changing its name to Invesco Trimark Investment Management Inc. on or prior to December 31, 2008); Invesco Global Asset Management (N.A.), Inc.; Invesco Institutional (N.A.), Inc.; Invesco Senior Secured Management, Inc.; Invesco Hong Kong Limited; Invesco Asset Management Limited; Invesco Asset Management (Japan) Limited; Invesco Asset Management Deutschland, GmbH; and Invesco Australia Limited AIM V.I. High Yield Fund AIM Variable Insurance Funds AIM Funds Management Inc. (AIM Funds Management Inc. anticipates changing its name to Invesco Trimark Investment Management Inc. on or prior to December 31, 2008); Invesco Global Asset Management (N.A.), Inc.; Invesco Institutional (N.A.), Inc.; Invesco Senior Secured Management, Inc.; Invesco Hong Kong Limited; Invesco Asset Management Limited; Invesco Asset Management (Japan) Limited; Invesco Asset Management Deutschland, GmbH; and Invesco Australia Limited AIM V.I. Utilities Fund AIM Variable Insurance Funds AIM Funds Management Inc. (AIM Funds Management Inc. anticipates changing its name to Invesco Trimark Investment Management Inc. on or prior to December 31, 2008); Invesco Global Asset Management (N.A.), Inc.; Invesco Institutional (N.A.), Inc.; Invesco Senior Secured Management, Inc.; Invesco Hong Kong Limited; Invesco Asset Management Limited; Invesco Asset Management (Japan) Limited; Invesco Asset Management Deutschland, GmbH; and Invesco Australia Limited Alger American Growth Portfolio Alger American Fund Fred Alger Management, Inc. Alger American Small Alger American Fund Fred Alger Management, Inc. Capitalization Portfolio AllianceBernstein VPS AllianceBernstein Variable Products AllianceBernstein L.P. International Growth Portfolio Series Fund, Inc. AllianceBernstein VPS International AllianceBernstein Variable Products AllianceBernstein L.P. Value Portfolio Series Fund, Inc. AllianceBernstein VPS Small/Mid Cap AllianceBernstein Variable Products AllianceBernstein L.P. Value Portfolio Series Fund, Inc. American Century(R) VP Income & American Century(R) Variable American Century(R) Investment Growth Portfolio Portfolios, Inc. Management, Inc. American Century(R) VP International American Century(R) Variable American Century(R) Investment Portfolio Portfolios, Inc. Management, Inc. American Century(R) VP Ultra(R) American Century(R) Variable American Century(R) Investment Portfolios, Inc. Management, Inc.
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INVESTMENT ACCOUNT AND CORRESPONDING FUND PORTFOLIO FUND INVESTMENT ADVISOR ---------------------------- ---- ------------------ American Century(R) VP Vista(SM) American Century(R) Variable American Century(R) Investment Portfolios, Inc. Management, Inc. Calvert Social Mid Cap Growth Calvert Variable Series, Inc. Calvert Asset Management Corporation Portfolio Columbia Federal Securities Fund, Columbia Funds Variable Insurance Columbia Advisors Variable Series Trust Columbia Small Cap Value Fund, Columbia Funds Variable Insurance Columbia Advisors Variable Series Trust Dreyfus DIP Technology Growth Dreyfus Investment Portfolios Dreyfus Investments, a division of Dreyfus Service Portfolio Corporation, Dreyfus Investment Portfolios Dreyfus VIF Appreciation Portfolio Dreyfus Variable Investment Fund The Dreyfus Corporation, Fayez Sarofim & Co., Sub-adviser, Dreyfus Variable Investment Fund Fidelity(R) VIP Freedom Income Fidelity(R) Variable Insurance Fidelity(R) Management & Research Company Portfolio Products Freedom Funds Fidelity(R)VIP Freedom 2005 Fidelity(R) Variable Insurance Fidelity(R) Management & Research Company Portfolio Products Freedom Funds Fidelity(R) VIP Freedom 2010 Fidelity(R) Variable Insurance Fidelity(R) Management & Research Company Portfolio Products Freedom Funds Fidelity(R) VIP Freedom 2015 Fidelity(R) Variable Insurance Fidelity(R) Management & Research Company Portfolio Products Freedom Funds Fidelity(R) VIP Freedom 2020 Fidelity(R) Variable Insurance Fidelity(R) Management & Research Company Portfolio Products Freedom Funds Fidelity(R) VIP Freedom 2025 Fidelity(R) Variable Insurance Fidelity(R) Management & Research Company Portfolio Products Freedom Funds Fidelity(R) VIP Freedom 2030 Fidelity(R) Variable Insurance Fidelity(R) Management & Research Company Portfolio Products Freedom Funds Fidelity(R) VIP Asset Manager(SM) Fidelity(R) Variable Insurance Fidelity(R) Management & Research Company Portfolio Products Fund Fidelity(R) VIP Contrafund(R) Fidelity(R) Variable Insurance Fidelity(R) Management & Research Company Portfolio Products Fund Fidelity(R) VIP Equity-Income Fidelity(R) Variable Insurance Fidelity(R) Management & Research Company Portfolio Products Fund Fidelity(R) VIP Growth Fidelity(R) Variable Insurance Fidelity(R) Management & Research Company Portfolio Products Fund Fidelity(R) VIP High Income Fidelity(R) Variable Insurance Fidelity(R) Management & Research Company Portfolio Products Fund Fidelity(R) VIP Index 500 Fidelity(R) Variable Insurance Fidelity(R) Management & Research Company Portfolio Products Fund Fidelity(R) VIP Overseas Fidelity(R) Variable Insurance Fidelity(R) Management & Research Company Portfolio Products Fund Franklin Small Cap Value Securities Franklin Templeton Variable Franklin Advisory Services, LLC Fund Insurance Products Trust Franklin Templeton VIP Founding Franklin Templeton Variable Franklin Advisory Services, LLC Funds Allocation Fund Insurance Products Trust Templeton Global Income Securities Franklin Templeton Variable Franklin Advisory Services, LLC Fund Insurance Products Trust Janus Aspen Flexible Bond Portfolio Janus Aspen Series Janus Capital Management LLC Janus Aspen Forty Portfolio Janus Aspen Series Janus Capital Management LLC Janus Aspen Worldwide Growth Janus Aspen Series Janus Capital Management LLC Portfolio LB AMT Short Duration Bond Neuberger Berman Advisers Neuberger Berman Management Inc. Portfolio (Formerly Neuberger Management Trust Berman AMT Limited Maturity Bond Portfolio) Neuberger Berman AMT Regency Neuberger Berman Advisers Neuberger Berman Management Inc. Portfolio Management Trust Neuberger Berman AMT Small Cap Neuberger Berman Advisers Management Neuberger Berman Management Inc. Growth Portfolio (Formerly Trust Neuberger Berman AMT Fasciano Portfolio) Old Mutual Columbus Circle Old Mutual Insurance Series Fund Old Mutual Capital, Inc. Technology & Communications Portfolio Old Mutual Growth II Portfolio Old Mutual Insurance Series Fund Old Mutual Capital, Inc. Old Mutual Mid-Cap Portfolio Old Mutual Insurance Series Fund Old Mutual Capital, Inc. Old Mutual Small Cap Portfolio Old Mutual Insurance Series Fund Old Mutual Capital, Inc. OneAmerica Asset Director Portfolio OneAmerica Funds, Inc. American United Life Insurance Company(R) OneAmerica Investment Grade OneAmerica Funds, Inc. American United Life Insurance Company(R) Bond Portfolio OneAmerica Money Market Portfolio OneAmerica Funds, Inc. American United Life Insurance Company(R) OneAmerica Value Portfolio OneAmerica Funds, Inc. American United Life Insurance Company(R)
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INVESTMENT ACCOUNT AND CORRESPONDING FUND PORTFOLIO FUND INVESTMENT ADVISOR ---------------------------- ---- ------------------ Pioneer Emerging Markets VCT Pioneer Variable Contracts Trust Pioneer Investment Management, Inc. Portfolio Pioneer Fund VCT Portfolio Pioneer Variable Contracts Trust Pioneer Investment Management, Inc. Pioneer Growth Opportunities Pioneer Variable Contracts Trust Pioneer Investment Management, Inc. VCT Portfolio Royce Small-Cap Portfolio Royce Capital Fund Royce & Associates, LLC T. Rowe Price Equity Income T. Rowe Price Equity Series, Inc. T. Rowe Price Associates, Inc. Portfolio T. Rowe Price Blue Chip Growth T. Rowe Price Equity Series, Inc. T. Rowe Price Associates, Inc. Portfolio T. Rowe Price Mid-Cap Growth T. Rowe Price Equity Series, Inc. T. Rowe Price Associates, Inc. Portfolio T. Rowe Price Limited-Term Bond T. Rowe Price Fixed Income Series, T. Rowe Price Associates, Inc. Portfolio Inc. Timothy Plan(R) Conservative Timothy Plan(R) Portfolio Variable The Timothy Plan(R), Inc. Growth Variable Series Timothy Plan(R) Strategic Growth Timothy Plan(R) Portfolio Variable The Timothy Plan(R), Inc. Variable Series Vanguard(R) Diversified Value Vanguard(R) Variable Insurance Fund Barrow, Hanley, Mewhinney & Strauss, Inc. Portfolio Vanguard(R) VIF Mid-Cap Index Vanguard(R) Variable Insurance Fund The Vanguard Group, Inc. Portfolio Vanguard(R) VIF Small Company Vanguard(R) Variable Insurance Fund The Vanguard Group, Inc. Growth Portfolio Vanguard(R) VIF Total Bond Market Vanguard(R) Variable Insurance Fund The Vanguard Group, Inc. Index Portfolio
Each of the Funds has a different investment objective. A Contract Owner may allocate Premiums to one (1) or more of the Investment Accounts available under a Contract. Premiums allocated to a particular Investment Account will increase or decrease in dollar value depending upon the investment performance of the corresponding fund portfolio in which the Investment Account invests. These amounts are not guaranteed. The Contract Owner bears the investment risk for amounts allocated to an Investment Account of the Variable Account. 9 SUMMARY OF THE FIXED ACCOUNTS A Contract Owner may allocate Premiums to one (1) of several fixed accounts which are part of AUL's general account. The Contracts will offer either Market Value Adjusted ("MVA") fixed accounts or a Non-Market Value Adjusted ("Non-MVA") fixed account. The MVA and Non-MVA Fixed Account(s) may not be available in all states. MARKET VALUE ADJUSTED FIXED ACCOUNTS MVA Fixed Accounts provide a guaranteed rate of interest over specified maturity durations. AUL will credit the Fixed Account the declared interest rate for the duration selected unless a distribution from the MVA Fixed Account occurs for any reason. If such a distribution occurs, AUL will subject the proceeds to a market value adjustment, resulting in either an increase or decrease in the value of the distributed proceeds, depending on interest rate fluctuations. No market value adjustment will be applied to a MVA Fixed Account if the allocations are held until maturity. In that case, the MVA Fixed Account will be credited the declared rate for the duration selected. A Contract Owner must allocate a minimum amount of $1,000 to a MVA Fixed Account. MVA FIXED ACCOUNTS ARE NOT AVAILABLE IN ALL STATES. MVA FIXED ACCOUNTS ARE NOT AVAILABLE IN ALL CONTRACTS. NON-MARKET VALUE ADJUSTED FIXED ACCOUNT A Contract Owner may allocate Premiums to the Non-MVA Fixed Account only where MVA Fixed is not available. The Non-MVA Fixed Account is part of AUL's General Account. Amounts allocated to the Non-MVA Fixed Account earn interest at rates periodically determined by AUL. Generally, any current rate that exceeds the guaranteed rate will be effective for the Contract for a period of at least one (1) year. These rates are guaranteed to be at least equal to a minimum effective annual rate of 3 percent. THE NON-MVA FIXED ACCOUNT MAY NOT BE AVAILABLE IN ALL STATES. PREMIUMS The Contract Owner may vary Premiums in amount and frequency. However, the minimum monthly APP (Automatic Premium Payment) Premium payment is $50. Otherwise, the minimum Premium is $1,000. RIGHT TO EXAMINE The Contract Owner has the right to return the Contract for any reason within ten (10) calendar days of receipt (or a longer period if required by state law). If the Contract Owner exercises this right, AUL will treat the Contract as void from its inception. AUL will refund to the Contract Owner the Account Value plus any amounts deducted for premium taxes and other expenses. The Contract Owner bears all of the investment risk prior to the AUL's receipt of request for cancellation. AUL will refund the Premium paid in those states where required by law and for all individual retirement accounts, created under 408 and 408(a) plans. TRANSFERS A Contract Owner may transfer his or her Variable Account Value among the available Investment Accounts or to any of the available Fixed Accounts at any time during the Accumulation Period. The Contract Owner may transfer part of his or her Fixed Account Value to one (1) or more of the available Investment Accounts during the Accumulation Period, subject to certain restrictions. The minimum transfer amount from any one (1) Investment Account or from the Fixed Account is $500. If the Contract Value in an Investment Account or the Fixed Account prior to a transfer is less than $500, then the minimum transfer amount is the Contract Owner's remaining Account Value in that account. If, after any transfer, the remaining Account Value in an Investment Account or in the Fixed Account would be less than $25, then AUL will treat that request as a request for a transfer of the entire Contract Value. If AUL determines that the transfers made by or on behalf of one (1) or more Owners are to the disadvantage of other Owners, AUL may restrict the rights of certain Owners. AUL also reserves the right to limit the size of transfers and remaining balances, to limit the number and frequency of transfers, and to discontinue telephone or internet based transfers. Transfers may result in a charge to the Contract Owner. Amounts transferred from the Non-MVA Fixed Account to an Investment Account cannot exceed 20 percent of the Owner's Non-MVA Fixed Account Value as of the beginning of that Contract Year. See "Transfers of Account Value." CHARGES AUL will deduct certain charges in connection with the operation of the Contracts and the Variable Account. These charges include a mortality and expense risk charge, a premium tax charge, and an annual Contract fee. In addition, the Funds pay investment advisory fees and other expenses. For further information on these charges and expenses, see "Charges and Deductions." DISTRIBUTIONS WITHDRAWALS The Contract Owner may surrender or take a withdrawal from the Account Value at any time before the Annuity Date. Withdrawals and surrenders are subject to the limitations under any applicable Qualified Plan and applicable law. The minimum withdrawal amount is $200. Certain retirement programs, such as 403(b) Programs, are subject to constraints on withdrawals and surrenders. See "403(b) Programs-Constraints on Withdrawals." See "Cash Withdrawals" for more information, including the possible charges and tax consequences of withdrawals and surrenders. LOAN PRIVILEGES Prior to the annuity date, the Owner of a Contract qualified under Section 401 or 403(b) may take a loan from the Account Value subject to the terms of the Contract. The Plan and the Internal Revenue Code may impose restrictions on loans. 10 Outstanding loans will reduce the amount of any Death Proceeds as well as reduce the amount of Account Value available for surrender. THE DEATH BENEFIT If a Contract Owner dies during the Accumulation Period, AUL will pay a death benefit to the Beneficiary. The amount of the death benefit is equal to the Death Proceeds. A death benefit will not be payable if the Contract Owner dies on or after the Annuity Date, except as may be provided under the Annuity Option elected. See "Death Proceeds Payment Provisions" and "Annuity Period." DOLLAR COST AVERAGING PROGRAM At any time, the Contract Owner may purchase units of an Investment Account over a period of time through the Dollar Cost Averaging ("DCA") Program. Under the DCA Program, the Contract Owner authorizes AUL to transfer a specific dollar amount from the OneAmerica Money Market Investment Account, ("MMIA") into one (1) or more other Investment Accounts at the unit values determined on the dates of the transfers. These transfers will continue automatically until AUL receives notice to discontinue the Program, or until there is not enough money in the MMIA to continue the Program. To participate in the Program, AUL requires a minimum deposit of $10,000 into the MMIA. For further information, see the explanation under "Dollar Cost Averaging Program." PORTFOLIO REBALANCING PROGRAM If the Contract Owner does not participate in the Portfolio Optimization Program, he or she may elect to automatically adjust his or her Investment Account balances consistent with the allocation most recently requested. AUL can do this on a quarterly or annual basis from the date on which the Portfolio Rebalancing Program commences. PORTFOLIO OPTIMIZATION PROGRAM Portfolio Optimization is diversification among asset classes to help reduce volatility over the long-term. If the Owner selects a Portfolio Optimization model, the Owner's initial purchase payment will be allocated to the investment options according to the model the Owner selects. Subsequent purchase payments will also be allocated accordingly. The Program automatically rebalances the Owner's Contract annually, to maintain the asset allocation given in the Owner's Portfolio Optimization model (which may be updated annually; see below). Generally on an annual basis all the Portfolio Optimization models are evaluated. Each model may change and investment options may be added to or deleted from a model as a result of the annual analysis. After the annual analysis, AUL will automatically update the Owner's model to the new version. This means the Owner's allocations, and potentially the underlying investment options, will automatically change and the Owner's Account Value will be automatically rebalanced among the investment options in the Owner's model each year. The Portfolio Optimization Program must be chosen if the Owner elects certain riders. If the Owner elects one (1) of these riders and later terminate the Portfolio Optimization Program, the rider will automatically terminate. CONTACTING AUL Individuals should direct all written requests, notices, and forms required under the Contracts, and any questions or inquiries to AUL's Variable Products Office at the address and phone number shown in the front of this Prospectus. EXPENSE TABLE The following tables describe the fees and expenses that the Owner will pay when buying, owning, and surrendering the Contract. The first (1st) table describes the fees and expenses that the Owner will pay at the time that the Owner buys the Contract, surrenders the Contract, or transfers Account Value between Investment Accounts. State Premium taxes may also be deducted. See "Premium Tax Charge." The information contained in the table is not generally applicable to amounts allocated to the Fixed Account or to annuity payments under an Annuity Option. CONTRACT OWNER TRANSACTION EXPENSES DEFERRED SALES LOAD (AS A PERCENTAGE OF AMOUNT SURRENDERED) This Contract does not assess any sales charges (also referred to as "Withdrawal Charges.") The next table describes the fees and expenses that the Owner will pay periodically during the time that the Owner owns the Contract, not including Fund expenses. 11 EXPENSE TABLE (CONTINUED)
ANNUAL CONTRACT FEE Maximum annual Contract fee (per year)(1) ................................................... $30 SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF THE ANNUAL ACCOUNT VALUE)(2) Standard Individual Deferred Variable Annuity Mortality and expense risk fee ............................................................ 1.45% yrs 1 - 10 ............................................................................................. 1.35% yrs 11+ Optional Rider Expenses (as an equivalent annual percentage of average account value)(3) Enhanced Death Benefit Rider Option ....................................................... 0.15% Enhanced Death Benefit and Guaranteed Minimum Annuitization Benefit Rider Option(4) ....... 0.35%
(1) The Annual Contract Fee may be less than $30.00 per year, based on the Owner's Account Value. The maximum charge imposed will be the lesser of 2 percent of the Owner's Account Value or $30.00 per year. The Annual Contract Fee is waived if the Account Value equals or exceeds $50,000 on a Contract Anniversary. (2) The Variable Account expenses set forth apply exclusively to allocations made to the Investment Account(s) of the Variable Account. Such charges do not apply to, and will not be assessed against allocations made to the Fixed Account(s). The total Variable Account expenses shown include the Standard Contractual Death Benefit (See Death Proceeds Payment Provisions). The Variable Account expenses are deducted from the Account Value on a monthly basis. (3) At the time of application, the applicant may choose any of the Enhanced Benefit riders in lieu of receiving the Standard Contractual Death Benefit option and no Enhanced Living Benefits. Should the applicant choose a Rider Option, AUL will deduct the appropriate rider charge from the Account Value on a monthly basis. (4) The total current charge for the Enhanced Death Benefit and the Guaranteed Minimum Annuitization Benefit is 0.35 percent. AUL reserves the right to increase the total charge to 0.55 percent. The next table shows the minimum and maximum total operating expenses charged by the Funds that the Owner may pay periodically during the time that the Owner owns the Contract. More detail concerning each Fund's fees and expenses is contained in the prospectus for each Fund.
TOTAL FUND ANNUAL OPERATING EXPENSES MINIMUM MAXIMUM (expenses that are deducted from Fund assets, including management fees, distribution and/or service (12b-1) fees, and other expenses) .................................. 0.10% 2.23%
EXAMPLE The Example is intended to help the Owner compare the cost of investing in the Contract with the cost of investing in other variable annuity Contracts. These costs include Contract Owner transaction expenses, Contract fees, separate account annual expenses, and Fund fees and expenses. The Example assumes that the Owner invests $10,000 in the Contract for the time periods indicated. The Example also assumes that the Owner's investment has a 5 percent return each year and assumes the maximum fees and expenses of any of the funds. Although the Owner's actual costs may be higher or lower, based on these assumptions, the Owner's costs would be: (1) If the Owner surrenders his or her Contract at the end of the applicable time period:
1 Year 3 Years 5 Years 10 Years $43.36 $131.50 $221.03 $451.70
(2) If the Owner annuitizes at the end of the applicable time period:
1 Year 3 Years 5 Years 10 Years $43.36 $131.50 $221.03 $451.70
(3) If the Owner does not surrender his or her Contract:
1 Year 3 Years 5 Years 10 Years $43.36 $131.50 $221.03 $451.70
12 CONDENSED FINANCIAL INFORMATION The following table presents Condensed Financial Information with respect to each of the Investment Accounts of the Variable Account for the period from the date of first deposit on April 30, 1999 to December 31, 2007. The following tables should be read in conjunction with the Variable Account's financial statements, which are included in the Variable Account's Annual Report dated as of December 31, 2007. The Variable Account's financial statements have been audited by PricewaterhouseCoopers LLP, the Variable Account's Independent Registered Public Accounting Firm.
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS INVESTMENT ACCOUNT* AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD ------------------- ---------------------- ---------------- ---------------------------- OneAmerica Asset Director Portfolio 2007 $9.96 $10.47 1,975,472 2006 9.01 9.96 2,248,461 2005 8.37 9.01 2,488,389 2004 7.50 8.37 2,631,540 2003 5.89 7.50 2,720,058 2002 6.04 5.89 2,139,150 2001 5.46 6.04 712,689 2000 4.73 5.46 122,198 1999 5.00 (04/30/1999) 4.73 48,423 OneAmerica Investment Grade Bond Portfolio 2007 $7.34 $ 7.81 1,095,317 2006 7.07 7.34 1,477,922 2005 6.92 7.07 1,747,896 2004 6.65 6.92 1,875,790 2003 6.34 6.65 2,032,827 2002 5.88 6.34 2,048,612 2001 5.49 5.88 971,660 2000 4.95 5.49 218,082 1999 5.00 (04/30/1999) 4.95 56,480 OneAmerica Money Market Portfolio 2007 $1.25 $ 1.31 5,522,149 2006 1.20 1.25 3,998,487 2005 1.16 1.20 5,234,531 2004 1.15 1.16 6,671,556 2003 1.15 1.15 9,071,550 2002 1.13 1.15 31,692,949 2001 1.09 1.13 32,417,607 2000 1.03 1.09 12,747,263 1999 1.00 (04/30/1999) 1.03 2,004,240 OneAmerica Value Portfolio 2007 $10.87 $11.22 1,817,743 2006 9.58 10.87 2,061,740 2005 8.72 9.58 2,224,712 2004 7.58 8.72 2,213,771 2003 5.55 7.58 2,180,495 2002 5.97 5.55 1,791,285 2001 5.36 5.97 645,711 2000 4.56 5.36 150,669 1999 5.00 (04/30/1999) 4.56 26,106 AIM Dynamics Fund 2007 $6.81 $ 7.64 138,229 2006 5.87 6.81 117,449 2005 5.30 5.87 154,113 2004 4.67 5.30 166,468 2003 3.38 4.67 238,724 2002 5.05 3.38 117,347 2001 5.00 (08/28/2001) 5.05 21,967
*All Investment Accounts represent Class A units. 13 CONDENSED FINANCIAL INFORMATION (CONTINUED)
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS INVESTMENT ACCOUNT* AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD ------------------- ---------------------- ---------------- ---------------------------- AIM Financial Services Fund 2007 $ 7.44 $ 5.79 50,579 2006 6.39 7.44 51,341 2005 6.04 6.39 61,655 2004 5.49 6.04 71,726 2003 4.24 5.49 76,523 2002 5.02 4.24 67,306 2001 5.00 (08/28/2001) 5.02 7,568 AIM Global Health Care Fund 2007 $ 5.96 $ 6.66 153,644 2006 5.66 5.96 168,054 2005 5.24 5.66 164,379 2004 4.79 5.24 177,050 2003 3.76 4.79 189,880 2002 5.02 3.76 146,777 2001 5.00 (08/28/2001) 5.02 14,080 AIM High Yield Fund 2007 $ 6.18 $ 6.26 138,199 2006 5.58 6.18 142,719 2005 5.43 5.58 103,048 2004 5.77 5.43 107,492 2003 4.41 5.77 118,212 2002 4.48 4.41 66,804 2001 5.00 (08/28/2001) 4.48 5,869 AIM Real Estate Opportunity Fund 2007 $16.46 $15.55 132,211 2006 11.55 16.46 167,271 2005 10.11 11.55 138,660 2004 7.28 10.11 127,962 2003 5.27 7.28 143,127 2002 4.98 5.27 105,438 2001 5.00 (08/28/2001) 4.98 1,428 AIM Utilities 2007 $ 7.65 $ 9.22 179,058 2006 6.09 7.65 189,391 2005 5.22 6.09 238,333 2004 4.07 5.22 193,329 2003 3.46 4.07 194,039 2002 4.45 3.46 147,633 2001 5.00 (08/28/2001) 4.45 10,269 Alger American Growth Portfolio 2007 $ 5.10 $ 6.12 1,851,195 2006 4.85 5.10 2,347,950 2005 4.33 4.85 2,935,774 2004 4.10 4.33 3,584,545 2003 3.04 4.10 4,053,074 2002 4.53 3.04 3,950,646 2001 5.14 4.53 3,525,503 2000 6.03 5.14 2,638,476 1999 5.00 (04/30/1999) 6.03 732,954
*All Investment Accounts represent Class A units. 14 CONDENSED FINANCIAL INFORMATION (CONTINUED)
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS INVESTMENT ACCOUNT* AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD ------------------- ---------------------- ---------------- ---------------------------- Alger American Small Cap Portfolio 2007 $4.59 $5.39 835,099 2006 3.83 4.59 764,475 2005 3.28 3.83 911,060 2004 2.81 3.28 1,021,892 2003 1.97 2.81 1,349,693 2002 2.68 1.97 704,831 2001 3.80 2.68 768,352 2000 5.00 (05/01/2000) 3.80 183,854 American Century(R) VP Income & Growth Portfolio 2007 $6.61 $6.60 526,854 2006 5.64 6.61 691,294 2005 5.39 5.64 780,781 2004 4.77 5.39 800,844 2003 3.69 4.77 744,361 2002 4.58 3.69 642,729 2001 4.99 4.58 417,648 2000 5.59 4.99 233,692 1999 5.00 (04/30/1999) 5.59 23,497 American Century VP(R) International Portfolio 2007 $7.37 $8.70 516,610 2006 5.90 7.37 404,932 2005 5.20 5.90 411,549 2004 4.53 5.20 307,549 2003 3.64 4.53 438,612 2002 4.57 3.64 253,505 2001 6.45 4.57 217,946 2000 7.75 6.45 123,237 1999 5.00 (04/30/1999) 7.75 15,100 American Century(R) VP Ultra(R) Portfolio 2007 $5.36 $6.48 7,535 2006 5.54 5.36 5,414 2005 5.00 (04/20/2005) 5.54 2,065 American Century(R) VP Vista(SM) Portfolio 2007 $6.29 $8.79 32,161 2006 5.77 6.29 130,716 2005 5.00 (04/20/2005) 5.77 2,966 Calvert Social Mid-Cap Growth Portfolio 2007 $5.70 $6.28 173,815 2006 5.33 5.70 213,659 2005 5.31 5.33 267,376 2004 4.86 5.31 296,172 2003 3.69 4.86 335,385 2002 5.14 3.69 308,759 2001 5.85 5.14 313,493 2000 5.25 5.85 121,959 1999 5.00 (04/30/1999) 5.25 9,364 Dreyfus Technology Growth Portfolio 2007 $5.54 $6.34 11,172 2006 5.33 5.54 5,466 2005 5.15 5.33 2,061 2004 5.00 (05/28/2004) 5.15 499
*All Investment Accounts represent Class A units. 15 CONDENSED FINANCIAL INFORMATION (CONTINUED)
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS INVESTMENT ACCOUNT* AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD ------------------- ---------------------- ---------------- ---------------------------- Dreyfus VIF Appreciation Portfolio 2007 $6.29 $6.72 15,012 2006 5.42 6.29 11,253 2005 5.20 5.42 3,234 2004 5.00 (05/28/2004) 5.20 246 Fidelity(R) Freedom 2005 Portfolio 2007 $5.84 $6.35 3,833 2006 5.38 (01/01/2006) 5.84 4,820 Fidelity(R) Freedom 2010 Portfolio 2007 $5.87 $6.38 6,524 2006 5.40 (01/01/2006) 5.87 458 Fidelity(R) Freedom 2015 Portfolio 2007 $6.02 $6.58 10,164 2006 5.39 6.02 9,002 2005 5.00 (5/20/2005) 5.39 1,355 Fidelity(R) Freedom 2020 Portfolio 2007 $6.13 $6.76 8,857 2006 5.55 (01/01/2006) 6.13 4,890 Fidelity(R) Freedom 2025 Portfolio 2007 $6.20 $6.85 6,314 2006 5.59 (01/01/2006) 6.20 6,168 Fidelity(R) Freedom 2030 Portfolio 2007 $6.29 $7.00 21,864 2006 5.65 (01/01/2006) 6.29 20,827 Fidelity(R) Freedom Income Portfolio 2007 $5.43 $5.89 8,957 2006 5.14 5.43 1,709 2005 5.00 (5/20/2005) 5.14 394 Fidelity(R) VIP Asset Manager(SM) Portfolio 2007 $6.29 $7.27 853,309 2006 5.86 6.29 1,093,664 2005 5.63 5.86 1,334,763 2004 5.34 5.63 1,618,248 2003 4.53 5.34 1,786,207 2002 4.96 4.53 1,699,659 2001 5.17 4.96 1,589,777 2000 5.38 5.17 1,251,519 1999 5.00 (04/30/1999) 5.38 320,165 Fidelity(R) VIP Contrafund Portfolio 2007 $8.30 $9.76 1,644,691 2006 7.43 8.30 1,923,434 2005 6.36 7.43 2,175,445 2004 5.50 6.36 2,268,110 2003 4.28 5.50 2,326,389 2002 4.73 4.28 2,128,787 2001 5.39 4.73 1,598,992 2000 5.77 5.39 1,194,512 1999 5.00 (04/30/1999) 5.77 351,784
*All Investment Accounts represent Class A units. 16 CONDENSED FINANCIAL INFORMATION (CONTINUED)
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS INVESTMENT ACCOUNT* AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD ------------------- ---------------------- ---------------- ---------------------------- Fidelity(R) VIP Equity-Income Portfolio 2007 $7.57 $7.69 1,003,896 2006 6.30 7.57 1,218,706 2005 5.95 6.30 1,163,221 2004 5.34 5.95 1,458,809 2003 4.09 5.34 1,565,255 2002 4.93 4.09 1,365,713 2001 5.19 4.93 809,426 2000 4.78 5.19 413,997 1999 5.00 (04/30/1999) 4.78 148,240 Fidelity(R) VIP Growth Portfolio 2007 $5.02 $6.37 1,280,750 2006 4.70 5.02 1,564,742 2005 4.44 4.70 1,865,701 2004 4.30 4.44 2,285,066 2003 3.23 4.30 2,516,096 2002 4.63 3.23 2,349,525 2001 5.62 4.63 2,272,877 2000 6.31 5.62 1,706,866 1999 5.00 (04/30/1999) 6.31 483,747 Fidelity(R) VIP High Income Portfolio 2007 $5.53 $5.68 421,604 2006 4.97 5.53 475,546 2005 4.84 4.97 550,324 2004 4.41 4.84 599,767 2003 3.47 4.41 1,018,982 2002 3.35 3.47 490,498 2001 3.80 3.35 441,105 2000 4.90 3.80 323,604 1999 5.00 (04/30/1999) 4.90 79,913 Fidelity(R) VIP Index 500 Portfolio 2007 $5.92 $6.24 2,656,901 2006 5.11 5.92 3,133,386 2005 4.88 5.11 3,823,741 2004 4.41 4.88 4,289,798 2003 3.43 4.41 4,427,110 2002 4.42 3.43 3,866,013 2001 5.02 4.42 3,164,881 2000 5.54 5.02 2,308,450 1999 5.00 (04/30/1999) 5.54 679,942 Fidelity(R) VIP Overseas Portfolio 2007 $7.74 $9.07 520,205 2006 6.55 7.74 572,209 2005 5.50 6.55 417,901 2004 4.84 5.50 400,637 2003 3.38 4.84 399,726 2002 4.24 3.38 206,101 2001 5.37 4.24 161,593 2000 6.64 5.37 130,138 1999 5.00 (04/30/1999) 6.64 26,030
*All Investment Accounts represent Class A units. 17 CONDENSED FINANCIAL INFORMATION (CONTINUED)
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS INVESTMENT ACCOUNT* AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD ------------------- ---------------------- ---------------- ---------------------------- Janus Aspen Flexible Income Portfolio 2007 $7.44 $ 7.97 1,055,264 2006 7.14 7.44 1,035,023 2005 7.00 7.14 1,133,288 2004 6.74 7.00 1,209,486 2003 6.33 6.74 1,322,754 2002 5.73 6.33 1,139,282 2001 5.32 5.73 505,442 2000 5.01 5.32 227,478 1999 5.00 (04/30/1999) 5.01 56,703 Janus Aspen Worldwide Growth Portfolio 2007 $6.00 $ 6.58 1,045,095 2006 5.08 6.00 1,253,535 2005 4.80 5.08 1,555,458 2004 4.58 4.80 1,867,012 2003 3.69 4.58 2,092,184 2002 4.96 3.69 2,096,588 2001 6.39 4.96 1,730,283 2000 7.58 6.39 1,231,773 1999 5.00 (04/30/1999) 7.58 235,301 Neuberger LB Short Duration Bond Portfolio (Formerly Neuberger Berman AMT Limited Maturity Bond Portfolio) 2007 $5.38 $ 5.64 269,409 2006 5.16 5.38 344,388 2005 5.09 5.16 264,856 2004 5.05 5.09 136,858 2003 5.00 (05/01/2003) 5.05 1,301 Neuberger AMT Regency Portfolio 2007 $9.99 &10.32 69,051 2006 8.99 9.99 186,972 2005 8.02 8.99 208,936 2004 6.56 8.02 50,210 2003 5.00 (05/01/2003) 6.56 1,849 Neuberger Berman AMT Small Cap Growth Portfolio (Formerly Neuberger Berman AMT Fasciano Portfolio) 2007 $7.64 $ 7.68 26,946 2006 7.26 7.64 33,602 2005 7.05 7.26 30,581 2004 6.30 7.05 37,186 2003 5.00 (05/01/2003) 6.30 7,165 Old Mutual Growth II Portfolio 2007 $4.76 $ 5.87 254,343 2006 4.44 4.76 283,262 2005 3.98 4.44 359,837 2004 3.74 3.98 410,501 2003 2.97 3.74 476,727 2002 4.27 2.97 465,432 2001 7.18 4.27 528,259 2000 8.61 7.18 337,948 1999 5.00 (04/30/1999) 8.61 36,740
*All Investment Accounts represent Class A units. 18 CONDENSED FINANCIAL INFORMATION (CONTINUED)
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS INVESTMENT ACCOUNT* AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD ------------------- ---------------------- ---------------- ---------------------------- Old Mutual Mid-Cap Value Portfolio 2007 $ 9.12 $ 9.27 17,244 2006 8.20 9.12 29,599 2005 7.76 8.20 48,783 2004 6.53 7.76 22,102 2003 5.00 (05/01/2003) 6.53 22,464 Old Mutual Small Cap Portfolio 2007 $ 9.22 $ 9.83 22,639 2006 7.89 9.22 16,609 2005 7.78 7.89 14,432 2004 6.70 7.78 10,952 2003 5.00 (05/01/2003) 6.70 2,343 Old Mutual Technology & Communications Portfolio 2007 $ 2.80 $ 3.74 630,928 2006 2.68 2.80 740,272 2005 2.44 2.68 961,177 2004 2.29 2.44 1,081,166 2003 1.58 2.29 1,299,327 2002 3.42 1.58 1,291,191 2001 7.18 3.42 1,263,071 2000 12.41 7.18 854,262 1999 5.00 (04/30/1999) 12.41 320,093 Pioneer Growth Opportunities Portfolio 2007 $ 7.94 $ 7.63 395,125 2006 7.52 7.94 534,216 2005 7.05 7.52 608,499 2004 5.76 7.05 758,107 2003 4.03 5.76 805,764 2002 6.47 4.03 623,788 2001 5.43 6.47 409,107 2000 5.78 5.43 193,071 1999 5.00 (04/30/1999) 5.78 29,591 Pioneer VCT Portfolio 2007 $ 4.99 $ 5.24 405,379 2006 4.28 4.99 269,225 2005 4.03 4.28 329,696 2004 3.74 4.03 355,113 2003 3.00 3.74 401,646 2002 4.05 3.00 420,636 2001 4.47 4.05 418,561 2000 5.01 4.47 289,801 1999 5.00 (04/30/1999) 5.01 139,120 T. Rowe Price Blue Chip Growth Portfolio 2007 $ 6.23 $ 7.03 32,017 2006 5.68 6.23 13,830 2005 5.00 (04/20/2005) 5.68 13,291
*All Investment Accounts represent Class A units. 19 CONDENSED FINANCIAL INFORMATION (CONTINUED)
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS INVESTMENT ACCOUNT* AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD ------------------- ---------------------- ---------------- ---------------------------- T. Rowe Price Equity Income Portfolio 2007 $8.36 $8.63 1,762,315 2006 7.03 8.36 2,155,931 2005 6.76 7.03 2,448,055 2004 5.89 6.76 2,691,703 2003 4.69 5.89 2,840,459 2002 5.40 4.69 2,647,960 2001 5.32 5.40 1,537,211 2000 4.71 5.32 883,644 1999 5.00 (04/30/1999) 4.71 330,769 T. Rowe Price Limited-Term Bond Portfolio 2007 $6.90 $7.28 457,695 2006 6.63 6.90 542,508 2005 6.51 6.63 657,395 2004 6.44 6.51 798,838 2003 6.17 6.44 808,155 2002 5.86 6.17 698,214 2001 5.40 5.86 238,860 2000 5.00 (05/01/2000) 5.40 20,303 T. Rowe Price Mid-Cap Growth Portfolio 2007 $7.89 $9.27 630,919 2006 7.40 7.89 848,889 2005 6.45 7.40 964,924 2004 5.45 6.45 1,030,272 2003 3.94 5.45 1,038,125 2002 5.00 3.94 802,660 2001 5.05 5.00 331,592 2000 5.00 (05/01/2000) 5.05 72,220 Timothy Conservative Growth Variable 2007 $5.96 $6.48 126,219 2006 5.46 5.96 46,111 2005 5.00 (04/20/2005) 5.46 29,863 Timothy Strategic Growth Variable 2007 $6.23 $6.86 95,981 2006 5.67 6.23 219,264 2005 5.00 (04/20/2005) 5.67 212,851 Vanguard(R) VF Mid Cap Index Portfolio 2007 $6.75 $7.16 137,813 2006 5.93 6.75 107,048 2005 5.00 (04/20/2005) 5.93 27,148 Vanguard(R) VF Small Company Growth Portfolio 2007 $6.56 $6.80 89,395 2006 5.95 6.56 27,846 2005 5.00 (04/20/2005) 5.95 6,694 Vanguard(R) VF Total Bond Market Index Portfolio 2007 $5.30 $5.67 76,118 2006 5.08 5.30 53,734 2005 5.00 (04/20/2005) 5.08 9,616
*All Investment Accounts represent Class A units. 20 INFORMATION ABOUT AUL, THE VARIABLE ACCOUNT, AND THE FUNDS AMERICAN UNITED LIFE INSURANCE COMPANY(R) AUL is a stock insurance company existing under the laws of the State of Indiana. It was originally incorporated as a fraternal society on November 7, 1877, under the laws of the federal government, and reincorporated as a mutual insurance company under the laws of the State of Indiana in 1933. On December 17, 2000, AUL converted from a mutual life insurance company to a stock life insurance company ultimately controlled by a mutual holding company, American United Mutual Insurance Holding Company ("MHC"). After conversion, AUL issued voting stock to a newly-formed stock holding company, OneAmerica Financial Partners, Inc. (the "Stock Holding Company"). The Stock Holding Company may, at some future time, offer shares of its stock publicly or privately; however, the MHC must always hold at least 51 percent of the voting stock of the Stock Holding Company, which in turn owns 100 percent of the voting stock of AUL. No plans have been formulated to issue any shares of capital stock of the Stock Holding Company at this time. The Stock Holding Company issued $200 million aggregate principal amount of its 7 percent senior notes due 2033 in 2003. AUL conducts a conventional life insurance and annuity business. At December 31, 2007, the OneAmerica Financial Partners, Inc. enterprise, in which AUL is a subsidiary, had assets of $19,921.0 million and had equity of $1,320.8 million. The principal underwriter for the Contracts is OneAmerica Securities, Inc., a wholly owned subsidiary of AUL. OneAmerica Securities, Inc. is registered as a broker-dealer with the SEC. VARIABLE ACCOUNT AUL American Individual Variable Annuity Unit Trust was established by AUL on November 11, 1998, under procedures established under Indiana law. The income, gains, or losses of the Variable Account are credited to or charged against the assets of the Variable Account without regard to other income, gains, or losses of AUL. Assets in the Variable Account attributable to the reserves and other liabilities under the Contracts are not chargeable with liabilities arising from any other business that AUL conducts. AUL owns the assets in the Variable Account and is required to maintain sufficient assets in the Variable Account to meet all Variable Account obligations under the Contracts. AUL may transfer to its General Account assets that exceed anticipated obligations of the Variable Account. All obligations arising under the Contracts are general corporate obligations of AUL. AUL may invest its own assets in the Variable Account, and may accumulate in the Variable Account proceeds from Contract charges and investment results applicable to those assets. The Variable Account is currently divided into sub-accounts referred to as Investment Accounts. Each Investment Account invests exclusively in shares of one (1) of the Funds. Premiums may be allocated to one (1) or more Investment Accounts available under a Contract. AUL may in the future establish additional Investment Accounts of the Variable Account, which may invest in other securities, funds, or investment vehicles. The Variable Account is registered with the SEC as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"). Registration with the SEC does not involve supervision by the SEC of the administration or investment practices of the Variable Account or of AUL. THE FUNDS Each of the Funds is a diversified, open-end management investment company commonly referred to as a Fund, or a portfolio thereof. Each of the Funds is registered with the SEC under the 1940 Act. Such registration does not involve supervision by the SEC of the investments or investment policies or practices of the Fund. Each Fund has its own investment objective or objectives and policies. The shares of a Fund are purchased by AUL for the corresponding Investment Account at the Fund's net asset value per share, i.e., without any sales load. All dividends and capital gain distributions received from a Fund are automatically reinvested in such Fund at net asset value, unless otherwise instructed by AUL. AUL has entered into agreements with the Distributors/Advisors of AIM Variable Insurance Fund, Alger American Fund, AllianceBernstein Variable Products Series Fund, Inc., American Century(R) Variable Portfolios, Inc., Calvert Variable Series, Inc., Columbia Funds Variable Insurance Trust, Dreyfus Investment Portfolios, Dreyfus Variable Investment Fund, Fidelity(R) Variable Insurance Products Freedom Funds, Fidelity(R) Variable Insurance Products Funds, Franklin Templeton Variable Insurance Products Trust, Janus Aspen Series, Neuberger Berman, Old Mutual Capital, Inc., Pioneer Investment Management, Inc., Royce Capital Fund, T. Rowe Price Equity Series, Inc., T. Rowe Price Fixed Income Series, Inc., The Timothy Plan(R) and The Vanguard Group, Inc., under which AUL has agreed to render certain services and to provide information about these Funds to its Contract Owners and/or Participants who invest in these Funds. Under these agreements and for providing these services, AUL receives compensation from the Distributor/Advisor of these Funds, ranging from zero basis points until a certain level of Fund assets have been purchased to 60 basis points based on an annual service fee of average daily market value of shares owned by the Separate Account. REVENUE AUL RECEIVES Under the agreements listed in the immediately preceding paragraph, AUL has agreed to render certain services and to provide information about the funds in the preceding paragraph to its Contract Owners and/or Participants who invest in these funds. Further, under these agreements, AUL may directly or indirectly receive payments from the underlying fund portfolios, their advisers, subadvisers, distributors or affiliates thereof, in connection with these certain administrative, marketing and other services AUL provides and expenses AUL incurs. AUL generally receives these types of payments: RULE 12b-1 FEES. By virtue of the agreements entered into between the funds and AUL, AUL receives compensation from the Distributor/Advisor of the funds, ranging from zero basis points until a certain level of fund assets have been purchased 21 to 60 basis points based on an annual service fee of average daily market value of shares owned by the Separate Account. AUL retains any such 12b-1 fees it receives that are attributable to AUL's variable insurance products. Administrative, Marketing and Support Service Fees ("Support Fees"). As noted above, an investment advisor, sub-advisor, administrator and/or distributor (or affiliates thereof) of the underlying fund portfolios may make payments to AUL. These payments may be derived, in whole or in part, from the advisory fee deducted from the underlying fund portfolio assets. Contract Owners and /or Participants, through their indirect investment in the underlying fund portfolios, bear the costs of these advisory fees. The amount of the payments AUL receives is based on a percentage of the assets of the particular underlying fund portfolios attributable to the policy and to certain other variable insurance products that AUL issues. These percentages differ and may be significant. Some advisers or sub-advisers pay AUL more than others. The investment advisors of the Funds are identified in the Summary. All of the investment advisors are registered with the SEC as investment advisors. The Funds offer their shares as investment vehicles to support variable annuity contracts. The advisors or distributors to certain of the Funds may advise and distribute other investment companies that offer their shares directly to the public, some of which have names similar to the names of the Funds in which the Investment Accounts invest. These investment companies offered to the public should not be confused with the Funds in which the Investment Accounts invest. The Funds are described in their prospectuses, which accompany this prospectus. A summary of the investment objective or objectives of each Fund is provided below. There can be no assurance that any Fund will achieve its objective or objectives. More detailed information is contained in the Prospectus for the Funds, including information on the risks associated with the investments and investment techniques of each Fund. AIM VAIRABLE INSURANCE FUNDS. AIM V.I. DYNAMICS FUND The funds investment objective is long-term capital growth. The Fund seeks to meet its objective by investing, normally, at least 65% of its assets in equity securities of mid-capitalization companies. The Fund considers a company to be a mid-sized company if it has market capitalization, at the time of purchase, within the range of the largest and smallest capitalized companies included in the Russell Mid Cap(R) Index during the most recent 11-month period (based on month-end data) plus the most recent data during the current month. The portfolio managers actively manage the fund using a two-step stock selection process that combines quantitative and fundamental analyses. The quantitative analysis involves using a stock rating model to rank stocks based primarily upon: (1) earnings, (2) quality, and (3) valuation. The fundamental analysis focuses on identifying both industries and companies that, in the portfolio managers' view, have high growth potential and are also favorably priced relative to the growth expectations for that company. The portfolio managers base their selection of stocks for the fund on an analysis of individual companies. AIM V.I. FINANCIAL SERVICES FUND The funds investment objective is capital growth. The Fund seeks to meet its objective by investing, normally, at least 80% of its net assets, plus the amount of borrowings for investment purposes, in equity securities of issuers engaged primarily in the financial services-related industries. sector. The fund considers a company to be doing business in financial services-related industries if it meets at least one of the following tests: (1) at least 50% of its gross income or its net sales come from activities in financial services-related industries; (2) at least 50% of its assets are devoted to producing revenues in the financial services-related industries; or (3) based on other available information, the portfolio managers determine that its primary business is within the financial services-related industries. The principal type of equity securities purchased by the fund is common stocks. Companies in financial services-related industries include, but are not limited to, banks, insurance companies, investment banking and brokerage companies, credit finance companies, asset management companies and companies providing other financial-related services. The Fund may invest up to 25% of its total assets in securities of non-U.S. issuers doing business in the financial services sector. Securities of Canadian issuers and American Depositary Receipts are not subject to this 25% limitation. AIM V.I. GLOBAL HEALTH CARE FUND The fund's investment objective is capital growth. The fund's investment objective may be changed by the Board of Trustees (the Board) without shareholder approval. The fund seeks to meet its objective by investing, normally, at least 80% of its assets in securities of health care industry companies. In complying with this 80% investment requirement, the fund will invest primarily in marketable equity securities, including convertible securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. The fund considers a health care industry company to be one that (1) derives at least 50% of its revenues or earnings from health care activities; or (2) devotes at least 50% of its assets to such activities, based on its most recent fiscal year. Such companies include those that design, manufacture, or sell products or services used for or in connection with health care or medicine (such as pharmaceutical companies, biotechnology research firms companies that sell medical products and companies that own or operate health care facilities). The fund may invest securities issued by health care industry companies, or in equity and debt securities of other companies the portfolio managers believe will benefit from developments in the health care industry. The fund will normally invest in the securities of companies located in at least three different countries, including the United States, and may invest a significant portion of its assets in the securities of U.S. issuers. However, the fund will invest no more than 50% of its total assets in the securities of issuers in any one country, other than the U.S. The fund may invest up to 20% of its total assets in companies 22 located in developing countries, i.e., those countries that are in the initial stages of their industrial cycles. AIM V.I. GLOBAL REAL ESTATE FUND The funds investment objective is high total return through growth of capital and current income. The fund seeks to meet its objective by investing, normally, at least 80% of its assets in securities of real estate and real estate related companies, including real estate investment trusts (REITS). The fund may purchase debt securities including U.S. Treasury and agency bonds and notes. The fund will normally invest in the securities of companies located in at least three different countries, including the United States. The fund may invest in non-investment grade debt securities (commonly known as "junk bonds"). The fund may engage in short sales of securities. A short sale occurs when the fund sells a security, but does not deliver a security it owns when the sale settles. Instead, it borrows that security for delivery when the sale settles. The fund may engage in short sales with respect to securities it owns (short sales against the box) or securities it does not own. Generally, the fund may sell a security short to (1) take advantage of an expected decline in the security price in anticipation of purchasing the same security at a later date at a lower price, or (2) to protect a profit in a security that it owns (short sale against the box). The fund will not sell a security short, if as a result of such short sale, the aggregate market value of all securities sold short exceeds 10% of the fund's total assets. The fund may invest in equity and debt securities of companies unrelated to the real estate industry that the portfolio managers believe are undervalued and have potential for growth of capital. The fund limits its investments in debt securities unrelated to the real estate industry to those that are investment-grade or deemed by the fund's portfolio managers to be of comparable quality. AIM V.I. HIGH YIELD FUND The funds investment objective is a high level of current income. The fund seeks to meet its objective by investing, normally, at least 80% of its net assets in debt securities that are determined to be below investment grade quality because they are rated BB/Ba or lower by Standard & Poor's Ratings Services, Moody's Investors Service, Inc., or any other nationally recognized statistical rating organization (NRSRO), or are determined by the portfolio managers to be of comparable quality to such rated securities. These types of securities are commonly known as "junk bonds." The fund will principally invest in junk bonds rated B or above by an NRSRO or deemed to be of comparable quality by the portfolio managers. The Fund may also invest up to 25% of its total assets in foreign securities. The fund may also invest in securities, whether or not considered foreign securities, which carry foreign credit exposure. The fund may invest up to 15% of its total assets in securities of companies located in developing countries. AIM V.I. UTILITIES FUND The funds investment objective is capital growth and current income. The Fund seeks to meet its objective by investing, normally, at least 80% of its net assets, plus the amount of borrowings for investment purposes, in equity securities of issuers engaged primarily in utilities-related industries. The principal type of equity securities purchased by the fund is common stocks. Companies in utilities-related industries may include, but are not limited to, those that provide, generate, transmit, store or distribute natural gas, oil, water or electricity as well as companies that provide telecommunications services, including local, long distance and wireless services. The Fund may invest up to 25% of its total assets in securities of non-U.S. issuers doing business in the utilities-related industries Securities of Canadian issuers and American Depositary Receipts are not subject to this 25% limitation. FOR ADDITIONAL INFORMATION CONCERNING AIM VARIABLE INSURANCE FUNDS AND ITS PORTFOLIOS, PLEASE SEE THE AIM VARIABLE INSURANCE FUNDS PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. ALGER AMERICAN FUND ALGER AMERICAN GROWTH PORTFOLIO Seeks long-term capital appreciation. The Portfolio focuses on growing companies that generally have broad product lines, markets, financial resources and depth of management. Under normal circumstances, the Portfolio invests primarily in the equity securities of companies that have a market capitalization of $1 billion or greater. The Alger American Growth Portfolio is hereby providing shareholders with notice of a new name and principal strategy. Effective July 1, 2008 the Portfolio will be named the Alger American LargeCap Growth Portfolio. Rather than representing a change in the Portfolio's investment strategies, the new name and related policies will better reflect the Portfolio's current actual investment practice. From July 1, 2008, as now, the Portfolio will focus on growing companies that generally have broad product lines, markets, financial resources and depth of management. Effective July 1, 2008 under normal circumstances the Portfolio will invest at least 80% of its net assets in equity securities of companies that, at the time of purchase of the securities, have a market capitalization equal to or greater than the market capitalization of companies included in the Russell 1000 Growth Index, updated quarterly as reported as of the most recent quarter-end. This index is designed to track the performance of large-capitalization growth stocks. At December 31, 2007, the market capitalization of the companies in this index ranged from $624 million to $527.7 billion. ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO Seeks long-term capital appreciation. The portfolio focuses on small, fast-growing companies that offer innovative products, services or technologies to a rapidly-expanding marketplace. Under normal circumstances, the portfolio invests at least 80% of its net assets in the equity securities of companies that, at the time of purchase of securities, have a total market capitalization within the range of the companies included in the Russell 2000 Growth Index or the S&P Small Cap 600 Index, updated quarterly. Both indexes are broad indexes of small capitalization stocks. 23 FOR ADDITIONAL INFORMATION CONCERNING THE ALGER AMERICAN FUND AND ITS PORTFOLIOS, PLEASE SEE THE ALGER AMERICAN FUND PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. ALLIANCEBERNSTEIN VPS INTERNATIONAL GROWTH PORTFOLIO The Portfolio's investment objective is long-term growth of capital. The Portfolio invests primarily in an international portfolio of equity securities of companies located in both developed and emerging countries. The Portfolio's investment process relies upon comprehensive fundamental company research produced by the Adviser's large research team of analysts covering both developed and emerging markets around the globe. Research driven stock selection is the primary driver of the Portfolio's return and all other decisions, such as country allocation, are generally the result of the stock selection process. ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO The Portfolio's investment objective is long-term growth of capital. The Portfolio will invest primarily in a diversified portfolio of equity securities of established companies selected from more than 40 industries and more than 40 developed and emerging market countries. The Portfolio normally invests in companies in at least three countries other than the United States. These countries currently include the developed nations in Europe and the Far East, Canada, Australia and emerging market countries worldwide. The Portfolio invests in companies that are determined by the Adviser's Bernstein unit to be undervalued, using a fundamental value approach. In selecting securities for the Portfolio's portfolio, Bernstein uses its fundamental and quantitative research to identify companies whose long-term earnings power is not reflected in the current market price of their securities. ALLIANCEBERNSTEIN VPS SMALL/MID CAP VALUE PORTFOLIO The Portfolio's investment objective is long-term growth of capital. The Portfolio invests primarily in a diversified portfolio of equity securities of small- to mid-capitalization U.S. companies, generally representing 60 to 110 companies. For purposes of this policy, "small- to mid-capitalization companies" are those that, at the time of investment, fall within the capitalization range between the smallest company in the Russell 2500(TM) Value Index and the greater of $5 billion or the market capitalization of the largest company in the Russell 2500(TM) Value Index. Under normal circumstances, the Portfolio will invest at least 80% of its net assets in these types of securities. The Portfolio invests in companies that are determined by the Adviser to be undervalued, using its Bernstein unit's fundamental value approach. In selecting securities for the Portfolio's portfolio, Bernstein uses its fundamental research to identify companies whose long-term earnings power is not reflected in the current market price of their securities. FOR ADDITIONAL INFORMATION CONCERNING ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. AND ITS PORTFOLIO, PLEASE SEE THE ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. PROSPECTUS , WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. AMERICAN CENTURY(R) VARIABLE PORTFOLIOS, INC. AMERICAN CENTURY(R) VP INCOME & GROWTH PORTFOLIO Seeking capital growth by investing in common stocks. Income is a secondary objective. This Fund employs a quantitative management approach with the goal of producing a total return that exceeds its benchmark, the S&P 500(R). The Fund invests mainly in large-company stocks, such as those in the S&P 500(R). The Fund invests mainly in the 1,500 largest publicly traded companies in the United States. The management team strives to outperform the S&P 500(R) over time while matching the risk characteristics of the index. Under normal market conditions, the Fund strives to remain essentially fully invested in stocks at all times. The Fund is typically diversified across a variety of industries and sectors. Individuals cannot invest directly in any index. AMERICAN CENTURY(R) VP INTERNATIONAL PORTFOLIO Seeking capital growth. This Fund invests in common stocks of foreign companies that are considered by management to have better-than-average prospects for appreciation. The Fund invests primarily in securities of at least three issuers located in developed markets (excluding the United States). Although the primary investment of the Fund will be common stocks, the Fund may also invest its assets in varying amounts in other types of securities consistent with the accomplishment of the Fund's objectives. The Fund may make foreign investments either directly in foreign securities or indirectly by purchasing depositary receipts for foreign securities. International investing involves special risks such as political instability and currency fluctuations. AMERICAN CENTURY(R) VP ULTRA(R) Seeking long-term capital growth. This Fund is a growth fund that focuses primarily on larger companies with rapidly accelerating earnings that can maintain their growth. The Fund follows a fully invested strategy. Although the Fund invests primarily in U.S. stocks, it may invest in foreign securities. AMERICAN CENTURY(R) VP VISTA(SM) Seeking long-term growth. The Fund invests mainly in U.S. mid-sized growth companies that exhibit sustainable, accelerating earnings and revenues. The Fund strives to remain fully-invested in order to maximize upside potential. FOR ADDITIONAL INFORMATION CONCERNING AMERICAN CENTURY(R) VARIABLE PORTFOLIOS, INC. AND ITS PORTFOLIOS, PLEASE SEE THE AMERICAN CENTURY(R) VARIABLE PORTFOLIOS, INC. PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. 24 CALVERT VARIABLE SERIES, INC. CALVERT SOCIAL MID CAP GROWTH PORTFOLIO The Calvert Social Mid Cap Growth Portfolio seeks long-term capital appreciation by investing primarily in a non-diversified portfolio of the equity securities of mid-sized companies that are undervalued but demonstrate a potential for growth. Investments may also include, but are not limited to foreign securities. The Portfolio seeks to invest in companies and other enterprises that demonstrate positive environmental, social and governance performance as they address corporate responsibility and sustainability challenges. Calvert believes that there are long-term benefits in an investment philosophy that attaches material weight to the environment, workplace relations, human rights, indigenous peoples' rights, community relations, and positive product and business practices, as well as corporate governance. Calvert also believes that managing risks and opportunities related to these issues can contribute positively to company as well as investment performance. Investments for the Portfolio are first selected for financial soundness and then evaluated according to the Portfolio's social criteria. Investments for the Portfolio must be consistent with the Portfolio's current financial and social criteria. FOR ADDITIONAL INFORMATION CONCERNING CALVERT VARIABLE SERIES, INC. AND ITS PORTFOLIO, PLEASE SEE THE CALVERT VARIABLE SERIES, INC. PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING COLUMBIA FUNDS VARIABLE INSURANCE TRUST COLUMBIA FEDERAL SECURITIES FUND, VARIABLE SERIES The Fund seeks total return, consisting of current income and capital appreciation. Under normal circumstances, the Fund invests at least 80% of net assets in U.S. Government securities, including U.S. Treasury securities and securities of various U.S. Government agencies and instrumentalities. Agency securities include mortgage-backed securities. Under normal circumstances, the Fund's duration will be between three and ten years. The Fund may invest up to 20% of net assets in corporate bonds or mortgage and other asset-backed securities issued by non-governmental entities that, at the time of purchase, are rated investment grade. The Fund may also participate in mortgage dollar rolls up to the Fund's then current position in mortgage-backed securities. COLUMBIA SMALL CAP VALUE FUND, VARIABLE SERIES The Fund seeks long-term capital appreciation. Under normal circumstances, the Fund invests at least 80% of net assets in equity securities of companies that have market capitalizations in the range of the companies in the Russell 2000(R) ValueIndex at the time of purchase (between $72 million and $5.2 billion as of September 28, 2007), that the Advisor believes are undervalued. The Fund may invest up to 20% of total assets in foreign securities. The Advisor may sell a security when the security's price reaches a target set by the Advisor; if the Advisor believes that there is deterioration in the issuer's financial circumstances or fundamental prospects, or that other investments are more attractive; or for other reasons. The Fund's policy regarding the 80% investment requirement of "net assets" (which includes net assets plus any borrowings for investment purposes) discussed above may be changed by the Board without shareholder approval as long as shareholders are given 60 days notice of the change. Under normal market conditions, the Fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in small-cap stocks. Small-cap stocks are stocks of small-size companies that have market capitalizations similar in size to those companies in the Russell 2000 Value Index. As of December 31, 2006, that index included companies with capitalizations between approximately $39.0 million and $3.1 billion. All market capitalizations are determined at the time of purchase. When purchasing securities for the Fund, the Fund's investment advisor may choose securities of companies it believes are undervalued. The Fund may invest up to 20% of its assets in foreign securities, including American Depositary Receipts. The Fund may invest in real estate investment trusts. FOR ADDITIONAL INFORMATION CONCERNING COLUMBIA FUNDS VARIABLE INSURANCE TRUST AND ITS PORTFOLIO, PLEASE SEE THE COLUMBIA FUNDS VARIABLE INSURANCE TRUST PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. DREYFUS INVESTMENT PORTFOLIOS DREYFUS DIP TECHNOLOGY GROWTH PORTFOLIO The portfolio seeks capital appreciation. To pursue this goal, the portfolio normally invests at least 80% of its assets in the stocks of growth companies of any size that Dreyfus believes to be leading producers or beneficiaries of technological innovation. Up to 25% of the portfolio's assets may be invested in foreign securities. The portfolio's stock investments may include common stocks, preferred stocks and convertible securities. In choosing stocks, the portfolio looks for technology companies with the potential for strong earnings or revenue growth rates, although some of the portfolio's investments may currently be experiencing losses. The portfolio focuses on the technology sectors that are expected to outperform on a relative scale. The more attractive sectors are overweighted. Among the sectors evaluated are those that develop, produce or distribute products or services in the computer, semiconductor, electronics, communications, health care, biotechnology, medical services, computer software and hardware, electronic components and systems, network and cable broadcasting, telecommunications, defense and aerospace, and environmental sectors. The portfolio typically sells a stock when the manager believes there is a more attractive alternative, the stock's valuation is excessive or there are deteriorating fundamentals, such as a loss of competitive advantage, a failure in management execution or deteriorating capital structure. The portfolio also may sell stocks when the manager's evaluation of a sector has changed. Although the portfolio looks for companies with the potential for strong earnings growth rates, some of the portfolio's investments may currently be experiencing losses. Moreover, the portfolio may invest in small-, mid- and large-cap securities in all available trading markets, including initial public offerings ("IPOs") and the aftermarket. The portfolio may, but is not required to, use 25 derivatives, such as futures and options, as a substitute for taking a position in an underlying asset, to increase returns, or as part of a hedging strategy. The portfolio also may engage in short-selling, typically for hedging purposes, such as to limit exposure to a possible market decline in the value of its portfolio securities. FOR ADDITIONAL INFORMATION CONCERNING DREYFUS INVESTMENT PORTFOLIOS, PLEASE SEE THE DREYFUS INVESTMENT PORTFOLIO PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. DREYFUS VARIABLE INVESTMENT FUND DREYFUS VIF APPRECIATION PORTFOLIO The portfolio seeks long-term capital growth consistent with the preservation of capital. Its secondary goal is current income. To pursue these goals, the portfolio normally invests at least 80% of its assets in common stocks. The portfolio focuses on "blue chip" companies with total market capitalizations of more than $5 billion at the time of purchase, including multinational companies. These established companies have demonstrated sustained patterns of profitability, strong balance sheets, an expanding global presence and the potential to achieve predictable, above-average earnings growth. In choosing stocks, the portfolio first identifies economic sectors it believes will expand over the next three to five years or longer. Using fundamental analysis, the portfolio then seeks companies within these sectors that have proven track records and dominant positions in their industries. The portfolio also may invest in companies which it considers undervalued in terms of earnings, assets or growth prospects. The portfolio employs a "buy-and-hold" investment strategy, which generally has resulted in an annual portfolio turnover of below 15%. The portfolio typically sells a stock when the portfolio manager believes there is a significant adverse change in a company's business fundamentals that may lead to a sustained impairment in earnings power. FOR ADDITIONAL INFORMATION CONCERNING THE DREYFUS VARIABLE INVESTMENT FUND AND ITS PORTFOLIO, PLEASE SEE THE DREYFUS VARIABLE INVESTMENT FUND PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. FIDELITY(R) VARIABLE INSURANCE PRODUCTS FREEDOM FUNDS FIDELITY(R) VIP FREEDOM INCOME PORTFOLIO Seeks high total return with a secondary objective of principal preservation. Investing in a combination of underlying Fidelity(R) Variable Insurance Products (VIP) equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors already in retirement. FIDELITY(R) VIP FREEDOM 2005 PORTFOLIO Seeks high total return with a secondary objective of principal preservation as the fund approaches its target date and beyond. Strategic Advisers' principal investment strategies include: investing in a combination of underlying Fidelity(R) VIP equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year 2005; allocating assets among underlying Fidelity(R) funds according to an asset allocation strategy that becomes increasingly conservative until it reaches 20% in domestic equity funds, 35% in investment-grade fixed-income funds, 5% in high yield fixed-income funds, and 40% in short-term funds (approximately ten to fifteen years after the year 2005). FIDELITY(R) VIP FREEDOM 2010 PORTFOLIO Seeks high total return with a secondary objective of principal preservation as the fund approaches its target date and beyond. Strategic Advisers' principal investment strategies include: investing in a combination of underlying Fidelity(R) VIP equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year 2010; allocating assets among underlying Fidelity(R) funds according to an asset allocation strategy that becomes increasingly conservative until it reaches 20% in domestic equity funds, 35% in investment-grade fixed-income funds, 5% in high yield fixed-income funds, and 40% short-term funds (approximately ten to fifteen years after the year 2010). FIDELITY(R) VIP FREEDOM 2015 PORTFOLIO Seeks high total return with a secondary objective of principal preservation as the fund approaches its target date and beyond. Strategic Advisers' principal investment strategies include: investing in a combination of underlying Fidelity(R) VIP equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year 2015; allocating assets among underlying Fidelity(R) funds according to an asset allocation strategy that becomes increasingly conservative until it reaches 20% in domestic equity funds, 35% in investment-grade fixed-income funds, 5% in high yield fixed-income funds, and 40% in short-term funds (approximately ten to fifteen years after the year 2015). FIDELITY(R) VIP FREEDOM 2020 PORTFOLIO Seeks high total return with a secondary objective of principal preservation as the fund approaches its target date and beyond. Strategic Advisers' principal investment strategies include: investing in a combination of underlying Fidelity(R) VIP equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year 2020; allocating assets among underlying Fidelity(R) funds according to an asset allocation strategy that becomes increasingly conservative until it reaches 20% in domestic equity funds, 35% in investment-grade fixed-income funds, 5% in high yield fixed-income funds, and 40% in short-term funds (approximately ten to fifteen years after the year 2020). FIDELITY(R) VIP FREEDOM 2025 PORTFOLIO Seeks high total return with a secondary objective of principal preservation as the fund approaches its target date and beyond. 26 Strategic Advisers' principal investment strategies include: investing in a combination of underlying Fidelity(R) VIP equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year 2025; allocating assets among underlying Fidelity(R) funds according to an asset allocation strategy that becomes increasingly conservative until it reaches 20% in domestic equity funds, 35% in investment-grade fixed-income funds, 5% in high yield fixed-income funds, and 40% in short-term funds (approximately ten to fifteen years after the year 2025). FIDELITY(R) VIP FREEDOM 2030 PORTFOLIO Seeks high total return with a secondary objective of principal preservation as the fund approaches its target date and beyond. Strategic Advisers' principal investment strategies include: investing in a combination of underlying Fidelity(R) VIP equity, fixed-income, and short-term funds using a moderate asset allocation strategy designed for investors expecting to retire around the year 2030; allocating assets among underlying Fidelity(R) funds according to an asset allocation strategy that becomes increasingly conservative until it reaches 20% in domestic equity funds, 35% in investment-grade fixed-income funds, 5% in high yield fixed-income funds and 40% in short-term funds (approximately ten to fifteen years after the year 2030). FOR ADDITIONAL INFORMATION CONCERNING Fidelity(R) VARIABLE INSURANCE PRODUCTS FREEDOM FUNDS AND ITS PORTFOLIOS, PLEASE SEE THE Fidelity(R) VARIABLE INSURANCE PRODUCTS FREEDOM FUNDS PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. FIDELITY(R) VARIABLE INSURANCE PRODUCTS FUND FIDELITY(R) VIP ASSET MANAGER(SM) PORTFOLIO Seeks to obtain high total return with reduced risk over the long term by allocating its assets among stocks, bonds, and short-term instruments. Fidelity(R) Management & Research Company (FMR)'s principal investment strategies include: Allocating the fund's assets among stocks, bonds, and short-term and money market instruments, either through direct investment or by investing in Fidelity central funds that hold such investments; maintaining a neutral mix over time of 50% of assets in stocks, 40% of assets in bonds, and 10% of assets in short-term and money market instruments; adjusting allocation among asset classes gradually within the following ranges-stock class (30%-70%), bond class (20%-60%), and short-term/money market class (0%-50%); investing in domestic and foreign issuers; analyzing an issuer using fundamental and/or quantitative factors and evaluating each security's current price relative to estimated long-term value to select investments. FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO Seeks long-term capital appreciation. Fidelity(R) Management & Research Company (FMR)'s principal investment strategies include: Normally investing primarily in common stocks; investing in securities of companies whose value FMR believes is not fully recognized by the public; investing in domestic and foreign issuers; investing in either "growth" stocks or "value" stocks or both; and using fundamental analysis of each issuer's financial condition and industry position and market and economic conditions to select investments. FIDELITY(R) VIP EQUITY-INCOME PORTFOLIO Seeks reasonable income. The fund will also consider the potential for capital appreciation. The fund's goal is to achieve a yield which exceeds the composite yield on the securities comprising the Standard & Poor's 500SM Index (S&P 500(R). Fidelity(R) Management & Research Company (FMR)'s principal investment strategies include: Normally investing at least 80% of assets in equity securities; normally investing primarily in income-producing equity securities, which tends to lead to investments in large cap "value" stocks; potentially investing in other types of equity securities and debt securities, including lower-quality debt securities; investing in domestic and foreign issuers and using fundamental analysis of each issuer's financial condition and industry position and market and economic conditions to select investments. FIDELITY(R) VIP GROWTH PORTFOLIO Seeks to achieve capital appreciation. Fidelity(R) Management & Research Company (FMR)'s principal investment strategies include: Normally investing primarily in common stocks; investing in companies that FMR believes have above-average growth potential (stocks of these companies are often called "growth" stocks); investing in domestic and foreign issuers; and using fundamental analysis of each issuer's financial condition and industry position and market and economic conditions to select investments. FIDELITY(R) VIP HIGH INCOME PORTFOLIO Seeks a high level of current income, while also considering growth of capital. Fidelity(R) Management & Research Company (FMR)'s principal investment strategies include: Normally investing primarily in income-producing debt securities, preferred stocks, and convertible securities, with an emphasis on lower-quality debt securities; potentially investing in non-income producing securities, including defaulted securities and common stocks; investing in companies in troubled or uncertain financial condition; investing in domestic and foreign issuers; using fundamental analysis of each issuer's financial condition and industry position and market and economic conditions to select investments. FIDELITY(R) VIP INDEX 500 PORTFOLIO Seeks investment results that correspond to the total return of common stocks publicly traded in the United States, as represented by the S&P 500(R). Fidelity(R) Management & Research Company (FMR)'s principal investment strategies include: normally investing at least 80% of assets in common stocks included in the S&P 500(R) and lending securities to earn income for the fund. FIDELITY(R) VIP OVERSEAS PORTFOLIO Seeks long-term growth of capital. Fidelity(R) Management & Research Company (FMR)'s principal investment strategies 27 include: Normally investing at least 80% of assets in non-U.S. securities; normally investing primarily in common stocks; allocating investments across countries and regions considering the size of the market in each country and region relative to the size of the international market as a whole and using fundamental analysis of each issuer's financial condition and industry position and market and economic conditions to select investments. FOR ADDITIONAL INFORMATION CONCERNING FIDELITY(R) VARIABLE INSURANCE PRODUCTS FUND ("VIP") AND ITS PORTFOLIOS, PLEASE SEE THE VIP PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST FRANKLIN SMALL CAP VALUE SECURITIES FUND Seeks long-term total return. The Fund normally invests at least 80% of its net assets in investments of small capitalization companies and normally invests predominantly in equity securities. FRANKLIN TEMPLETON VIP FOUNDING FUNDS ALLOCATION FUND Seeks capital appreciation, with income as a secondary goal. The Fund normally invests equal portions in Class 1 shares of Franklin Income Securities Fund; Mutual Shares Securities Fund; and Templeton Growth Securities Fund. TEMPLETON GLOBAL INCOME SECURITIES FUND Seeks high current income, consistent with preservation of capital, with capital appreciation as a secondary consideration. The Fund normally invests mainly in debt securities of governments and their political subdivisions and agencies, supranational organizations and companies located anywhere in the world, including emerging markets. FOR ADDITIONAL INFORMATION CONCERNING THE FRANKLIN TEMPLETON VARIALBE INSURANCE PRODUCTS TRUST AND ITS PORTFOLIOS, PLEASE SEE THE RANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. JANUS ASPEN SERIES JANUS ASPEN FLEXIBLE BOND PORTFOLIO Seeking maximum total return consistent with preservation of capital. The Janus Aspen Flexible Bond Portfolio invests under normal circumstances, at least 80% of its assets in bonds. Bonds include, but are not limited to, government bonds, corporate bonds, convertible bonds, mortgage-backed securities, and zero-coupon bonds. The Portfolio will invest at least 65% of its assets in investment grade debt securities and will maintain an average-weighted effective maturity of five to ten years. The Portfolio will limit its investment in high-yield/high-risk bonds to 35% or less of its net assets. This Portfolio generates total return from a combination of current income and capital appreciation, but income is usually the dominant portion. JANUS ASPEN FORTY PORTFOLIO Forty Portfolio is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. The Portfolio pursues its investment objective by normally investing primarily in a core group of 20-40 common stocks selected for their growth potential. The Portfolio may invest in companies of any size, from larger, well established companies to smaller, emerging growth companies. JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Seeking long-term growth of capital in a manner consistent with the preservation of capital. The Janus Aspen Worldwide Growth Portfolio invests primarily in common stocks of companies of any size located throughout the world. The Portfolio normally invests in issuers from several different countries, including the United States. The Portfolio may, under unusual circumstances, invest in a single country. The Portfolio may have significant exposure to emerging markets. Within the parameters of its specific investment policies, the Portfolio may invest in foreign equity and debt securities, which may include investments in emerging markets. FOR ADDITIONAL INFORMATION CONCERNING JANUS ASPEN SERIES AND ITS PORTFOLIOS, PLEASE SEE THE JANUS ASPEN SERIES PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST LB AMT SHORT DURATION BOND PORTFOLIO (FORMERLY NEUBERGER BERMAN AMT LIMITED MATURITY BOND PORTFOLIO) Seeks the highest available current income consistent with liquidity and low risk to principal; total return is a secondary goal. The Portfolio invests mainly in investment-grade bonds and other debt securities from U.S. government and corporate issuers. These may include mortgage- and asset-backed securities. To enhance yield and add diversification, the Portfolio may invest up to 10% of net assets in securities that are below investment grade provided that, at the time of purchase, they are rated at least B by Moody's or Standard and Poor's, or if unrated by either of these, are believed by the managers to be of comparable quality. The Portfolio may also invest in foreign debt securities to enhance yield and/or total return. Although the Portfolio may invest in securities of any maturity, it normally maintains an average Portfolio duration of four years or less. The Portfolio is authorized to change its goal without shareholder approval, although it currently does not intend to do so. It normally invests at least 80% of its assets in bonds and other debt securities and will not alter this policy without providing at least 60 days' prior notice to shareholders. NEUBERGER BERMAN AMT REGENCY PORTFOLIO Seeks growth of capital. The Portfolio invests mainly in common stocks of mid-capitalization companies. It seeks to reduce risk by diversifying among different companies and industries. The 28 managers look for well-managed companies whose stock prices are undervalued. The Portfolio has the ability to change its goal without shareholder approval, although it does not currently intend to do so. NEUBERGER BERMAN AMT SMALL CAP GROWTH PORTFOLIO (FORMERLY NEUBERGER BERMAN AMT FASCIANO PORTFOLIO) Seeks long-term capital growth. The Portfolio manager also may consider a company's potential for current income prior to selecting it for the Portfolio. The Portfolio invests primarily in the common stocks of smaller companies, i.e. those with market capitalizations of less than $1.5 billion at the time the Portfolio first invests in them. The fund may continue to hold a position in a stock after the issuer has grown beyond 1.5 billion. The manager will look for companies with: strong business franchises that are likely to sustain long-term rates of earnings growth for a three to five year time horizon; and stock prices that the market has undervalued relative to the value of similar companies and that offer excellent potential to appreciate over a three to five year time horizon. The Portfolio has the ability to change its goal without shareholder approval, although it does not currently intend to do so. FOR ADDITIONAL INFORMATION CONCERNING NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST AND ITS PORTFOLIOS, PLEASE SEE THE NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. OLD MUTUAL INSURANCE SERIES FUND OLD MUTUAL COLUMBUS CIRCLE TECHNOLOGY AND COMMUNICATIONS PORTFOLIO The Portfolio seeks to provide investors with long-term growth of capital. To pursue this goal, the Old Mutual Columbus Circle Technology and Communications Portfolio normally invests at least 80% of its assets in equity securities of companies in the technology and communications sectors. The Portfolio's holdings may range from smaller companies developing new technologies or pursuing scientific breakthroughs to large, blue chip firms with established track records in developing, using or marketing scientific advances. Equity securities in which the Portfolio may invest include common and preferred stocks. OLD MUTUAL GROWTH II PORTFOLIO The Portfolio seeks to provide investors with capital appreciation. To pursue this goal, the Old Mutual Growth II Portfolio normally invests at least 65% of its assets in equity securities of small and medium sized companies with growth characteristics. The companies in which the Portfolio invests generally have market capitalizations similar to the market capitalizations of the companies in the Russell Midcap(R) Growth Index at the time of the Portfolio's investment. Equity securities in which the Portfolio may invest include common and preferred stocks. OLD MUTUAL MID-CAP PORTFOLIO The Portfolio seeks to provide investors with above-average total return over a 3 to 5 year market cycle, consistent with reasonable risk. To pursue this goal, the Old Mutual Mid-Cap Portfolio normally invests at least 80% of its assets in equity securities of mid-capitalization companies. The companies in which the Portfolio invests generally have market capitalizations similar to the market capitalizations of companies in the Russell MidCap(R) Index at the time of the Portfolio's investment. Equity securities in which the Portfolio may invest include common and preferred stocks. OLD MUTUAL SMALL CAP PORTFOLIO The Portfolio seeks to provide investors with above-average total return over a 3 to 5 year market cycle, consistent with reasonable risk. To pursue this goal, the Old Mutual Small Cap Portfolio normally invests at least 80% of its assets in equity securities of small-capitalization companies. The companies in which the Portfolio invests generally have market capitalizations similar to the market capitalizations of the companies in the Russell 2000(R) Index at the time of the Portfolio's investment. Equity securities in which the Portfolio may invest include common and preferred stocks. FOR MORE COMPLETE INFORMATION, INCLUDING INFORMATION ON CHARGES AND EXPENSES, CONCERNING THE OLD MUTUAL INSURANCE SERIES FUND, PLEASE CALL (800) 433-0051 OR WRITE THE OLD MUTUAL INSURANCE SERIES FUND FOR A PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. ONEAMERICA FUNDS, INC. ONEAMERICA ASSET DIRECTOR PORTFOLIO Seeking long-term capital appreciation and some income to help cushion the volatility of equity investments. The OneAmerica Asset Director Portfolio invests in assets allocated among publicly traded common stock, debt securities (including convertible debentures) and money market securities utilizing a fully managed investment policy. The composition of the Portfolio will vary from time-to-time, based upon the advisor's evaluation of economic and market trends and the anticipated relative total return available from a particular type of security. Accordingly, at any given time, up to 100% of the Portfolio may be invested in any one asset class such as common stocks, debt securities or money market instruments. ONEAMERICA INVESTMENT GRADE BOND PORTFOLIO Seeking a high level of income with prudent investment risk and capital appreciation consistent with the primary objective. The OneAmerica Investment Grade Bond Portfolio invests primarily in investment grade fixed income securities. The Portfolio may invest no more than 10% of its assets in securities rated less than BBB or Baa (investment grade). It is intended that the Portfolio securities generally will be of sufficient credit quality to provide a high level of protection against loss of principal or interest. The Portfolio may also invest in money market instruments, repurchase agreements, reverse repurchase agreements, dollar-denominated foreign securities and other debt securities that are consistent with the maturity and credit quality criteria. 29 ONEAMERICA MONEY MARKET PORTFOLIO Seeking to provide a level of current income while preserving assets and maintaining liquidity and investment quality. The OneAmerica Money Market Portfolio invests in short-term money market instruments of the highest quality that the advisor has determined present minimal credit risk. The Portfolio invests only in money market instruments denominated in U.S. dollars that mature in 13 months or less from the date of purchase. These instruments may include U.S. Government securities, commercial paper, short-term corporate bonds, repurchase agreements, reverse repurchase agreements, certificates of deposit and money market funds. ONEAMERICA VALUE PORTFOLIO Seeking long-term capital appreciation. The OneAmerica Value Portfolio invests primarily in equity securities selected on the basis of fundamental investment research for their long-term growth prospects. The Portfolio uses a value-driven approach in selecting securities, concentrating on companies which appear undervalued compared to the market and to their own historic valuation levels. Typically, at least 65% of the Portfolio's assets will be invested in common stocks listed on a national securities exchange or actively traded over-the-counter on the NASDAQ National Market System. FOR ADDITIONAL INFORMATION CONCERNING ONEAMERICA FUNDS, INC. AND ITS PORTFOLIOS, PLEASE SEE THE ONEAMERICA FUNDS, INC. PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. PIONEER VARIABLE CONTRACTS TRUST PIONEER EMERGING MARKETS VCT PORTFOLIO The portfolio invests primarily in securities of emerging market issuers. Although the portfolio invests in both equity and debt securities, it normally emphasizes equity securities in its portfolio. Normally, the portfolio invests at least 80% of its total assets in the securities of emerging market corporate and government issuers, i.e., securities of companies that are domiciled or primarily doing business in emerging countries and securities of these countries' governmental issuers. PIONEER FUND VCT PORTFOLIO Seeking reasonable income and capital growth, the portfolio invests in a broad list of carefully selected, reasonably priced securities rather than in securities whose prices reflect a premium resulting from their current market popularity. The portfolio invests the major portion of its assets in equity securities, primarily of U.S. issuers. For purposes of the portfolio's investment policies, equity securities include common stocks, convertible debt and other equity instruments, such as depositary receipts, warrants, rights, exchange-traded funds (ETFs) that invest primarily in equity securities and equity interests in real estate investment trusts (REITs) and preferred stocks. PIONEER GROWTH OPPORTUNITIES VCT PORTFOLIO Seeking Growth of capital, the portfolio invests primarily in equity securities of companies that Pioneer Investment Management, Inc., the portfolio's investment adviser, considers to be reasonably priced or undervalued, with above average growth potential. For purposes of the portfolio's investment policies, equity securities include common stocks, convertible debt and other equity instruments, such as exchange-traded funds (ETFs) that invest primarily in equity securities, depositary receipts, equity interests in real estate investment trusts (REITs), warrants, rights and preferred stocks. The portfolio may invest a significant portion of its assets in equity securities of small companies. FOR ADDITIONAL INFORMATION CONCERNING PIONEER VARIABLE CONTRACT TRUST PORTFOLIOS, PLEASE SEE THE PIONEER RESOURCE SERIES TRUST PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. ROYCE CAPITAL FUND ROYCE SMALL-CAP FUND Royce Small-Cap Portfolio's investment goal is long-term growth of capital. Royce invests the Fund's assets primarily in equity securities issued by small companies, those with market capitalizations from $500 million to $2.5 billion. Royce generally looks for companies that have excellent business strengths and/or prospects for growth, high internal rates of return and low leverage, and that are trading significantly below its estimate of their current worth. FOR ADDITIONAL INFORMATION CONCERNING THE ROYCE CAPITAL FUND AND ITS PORTFOLIO, PLEASE SEE THE ROYCE CAPTIAL FUND PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. T. ROWE PRICE EQUITY SERIES, INC. T. ROWE PRICE BLUE CHIP GROWTH PORTFOLIO Seeking to provide long-term growth of capital by investing primarily in the common stocks of large- and medium-sized blue chip companies with the potential for above-average growth. Income is a secondary objective. Fund Managers carefully select companies which are well-established in their respective industries, and which possess some or all of the following characteristics: leading market positions; seasoned management teams; and strong financial fundamentals. Some of the companies the Fund targets will have good prospects for dividend growth. The Fund may invest up to 20% of its total assets in foreign securities. T. ROWE PRICE EQUITY INCOME PORTFOLIO Seeking to provide substantial dividend income and long-term capital growth. The Fund normally invests in common stocks of well-established companies expected to pay above-average dividends. The fund manager typically employs a value- oriented investment approach by seeking companies that appear to be undervalued by various measures and may be temporarily out of favor but have good prospects for capital appreciation and dividend growth. In selecting investments, management focuses on companies with an above-average dividend yield relative to the S&P 500(R); low price/earnings ratio relative to the S&P 500(R); a sound balance sheet and other positive financial characteristics and a low stock price relative 30 to a company's underlying value as measured by assets, cash flow or business franchises. T. ROWE PRICE MID-CAP GROWTH PORTFOLIO Seeking long-term capital appreciation through investments in mid-cap stocks with potential for above-average earnings growth. The Fund will normally invest at least 80% of net assets in a diversified Portfolio of common stocks of mid-cap companies whose earnings T. Rowe Price expects to grow at a faster rate than the average company. Mid-Cap companies are defined as those whose market capitalization falls within the range of either the S&P Mid Cap 400 Index or the Russell Mid cap Growth Index. In selecting investments, management generally favors companies that have proven products or services; have a record of above-average earnings growth; have demonstrated potential to sustain earnings growth; operate in industries experiencing increasing demand; or have stock prices that appear to undervalue their growth prospects. While most of the assets will be invested in U.S. common stocks, the Portfolio may hold other securities including foreign securities, futures and options in keeping with the Portfolio's objective. Effective May 1, 2004, this Portfolio will not be available to new contracts. T. ROWE PRICE FIXED INCOME SERIES, INC. T. ROWE PRICE LIMITED-TERM BOND PORTFOLIO Seeking high level of income consistent with moderate fluctuations in principal value. The Fund normally invests at least 80% of its net assets in bonds and 65% of total assets in short- and intermediate-term bonds. There are no maturity limitations on individual securities but the Fund's dollar-weighted average effective maturity will not exceed five years. At least 90% of the Fund's Portfolio will consist of investment-grade securities that have been rated in the four highest credit categories. In an effort to enhance yield, up to 10% of assets can be invested in below-investment-grade securities. Holdings may also include mortgage-backed securities, derivatives and foreign investments. FOR ADDITIONAL INFORMATION CONCERNING T. ROWE PRICE EQUITY SERIES, INC. AND T. ROWE PRICE FIXED INCOME SERIES, INC. AND THEIR PORTFOLIOS, PLEASE SEE THE T. ROWE PRICE EQUITY SERIES, INC. AND THE T. ROWE PRICE FIXED INCOME SERIES, INC. PROSPECTUSES, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. TIMOTHY PLAN(R) PORTFOLIO VARIABLE SERIES TIMOTHY PLAN(R) CONSERVATIVE GROWTH VARIABLE Seeking long-term growth of capital through investing in a diversified mix of Timothy Plan's morally screened domestic equity and fixed income funds. Except for highly unusual defensive periods, the fund is fully invested in Timothy Fixed Income Fund, Timothy Large/Mid-Cap Value Fund, Timothy Large/Mid-Cap Growth Fund, Timothy Small-Cap Value Fund and Timothy Money Market Fund in accordance with an asset allocation formula that is appropriate for investors willing to accept a degree of investment risk but maintain a generally conservative mix. The allocations are reviewed and revised if appropriate each year. TIMOTHY PLAN(R) STRATEGIC GROWTH VARIABLE Seeking long-term growth of capital through investing in a diversified mix of Timothy Plan's morally screened domestic equity funds. Except for highly defensive periods, the fund strives to stay fully invested in Timothy Fixed Income Fund, Timothy Large/Mid-Cap Value Fund, Timothy Large/Mid-Cap Growth Fund, Timothy Small-Cap Value Fund and Timothy Aggressive Growth Fund in accordance with an asset allocation formula that is appropriate for investors who are willing to accept greater investment fluctuation and volatility to achieve this goal. The allocations are reviewed and revised if appropriate each year. FOR ADDITIONAL INFORMATION CONCERNING TIMOTHY PLAN(R) PORTFOLIO VARIABLE SERIES AND THEIR PORTFOLIOS, PLEASE SEE THE TIMOTHY PLAN(R) PORTFOLIO VARIABLE SERIES PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. VANGUARD(R) VARIABLE INSURANCE FUND VANGUARD(R) DIVERSIFIED VALUE PORTFOLIO The Portfolio invests mainly in large- and mid-capitalization companies whose stocks are considered by the advisor to be undervalued. Undervalued stocks are generally those that are out of favor with investors and that the advisor feels are trading at prices that are below average in relation to such measures as earnings and book value. These stocks often have above average dividend yields. VANGUARD(R) VIF MID-CAP INDEX PORTFOLIO Seeking to track the performance of a benchmark index that measures the investment return of mid-capitalization stocks. The Fund employs a passive management approach designed to track the performance of the MSCI(R) US Mid Cap 450 Index. Invests all, or substantially all, of its assets in the stocks that make up the Index, holding each stock in approximately the same proportion as its weighting in the Index. VANGUARD(R) VIF SMALL COMPANY GROWTH PORTFOLIO Seeking to track the performance of a benchmark index that measures the investment return of mid-capitalization stocks. The Fund employs a passive management approach designed to track the performance of the MSCI(R) US Mid Cap 450 Index. Invests all, or substantially all, of its assets in the stocks that make up the Index, holding each stock in approximately the same proportion as its weighting in the Index. VANGUARD(R) VIF TOTAL BOND MARKET INDEX PORTFOLIO Seeking to track the performance of a broad, market-weighted bond index. The Portfolio employs a passive management strategy designed to track the performance of the Lehman Brothers Aggregate Bond Index. FOR ADDITIONAL INFORMATION CONCERNING VANGUARD VARIABLE INSURANCE FUND AND ITS PORTFOLIOS, PLEASE SEE THE VANGUARD VARIABLE INSURANCE FUND PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING. VANGUARD IS A TRADEMARK OF THE VANGUARD GROUP, INC. 31 THE CONTRACTS GENERAL The Contracts are offered for use in connection with non-tax qualified retirement plans by an individual. The Contracts are also eligible for use in connection with certain tax qualified retirement plans that meet the requirements of Sections 401, 403(b), 408 or 408A of the Internal Revenue Code. Certain federal tax advantages are currently available to retirement plans that qualify as (1) self-employed individuals' retirement plans under Section 401, such as HR-10 Plans, (2) pension or profit-sharing plans established by an employer for the benefit of its employees under Section 401, (3)Section 403(b)annuity purchase plans for employees of public schools or a charitable, educational, or scientific organization described under Section 501(c)(3), and (4)individual retirement accounts or annuities, including those established by an employer as a simplified employee pension plan or SIMPLE IRA plan under Section 408, Roth IRA plan under Section 408A or (5)deferred compensation plans for employees established by a unit of a state or local government or by a tax-exempt organization under Section 457. PREMIUMS AND ACCOUNT VALUES DURING THE ACCUMULATION PERIOD APPLICATION FOR A CONTRACT Any person or, in the case of Qualified Plans, any qualified organization, wishing to purchase a Contract must submit an application and an initial Premium to AUL, and provide any other form or information that AUL may require. AUL reserves the right to reject an application or Premium for any reason, subject to AUL's underwriting standards and guidelines. PREMIUMS UNDER THE CONTRACTS Premium payments under Flexible Premium Contracts may vary at any time during the Contract Owner's life and before the Contract's Annuity Date. Premiums for Flexible Premium Contracts may vary in amount and frequency, but each Premium payment must be at least $50 if paying Premiums through monthly APP (Automatic Premium Payment). Otherwise, the minimum is $1,000. Premiums may not total more than $1 million in each of the first two (2) Contract Years and $15,000 in any subsequent Contract Year unless otherwise agreed to by AUL. Annual Premiums under any Contract purchased in connection with a Qualified Plan will be subject to maximum limits imposed by the Internal Revenue Code and possibly by the terms of the Qualified Plan. See the Statement of Additional Information for a discussion of these limits or consult the pertinent Qualified Plan document. Such limits may change without notice. Initial Premiums must be credited to a Contract no later than the end of the second Business Day after it is received by AUL at its Corporate Office if it is preceded or accompanied by a completed application that contains all the information necessary for issuing the Contract and properly crediting the Premium. If AUL does not receive a complete application, AUL will notify the applicant that AUL does not have the necessary information to issue a Contract. If the necessary information is not provided to AUL within five (5) Business Days after the Business Day on which AUL first receives an initial Premium or if AUL determines it cannot otherwise issue a Contract, AUL will return the initial Premium to the applicant, unless consent is received to retain the initial Premium until the application is made complete. Subsequent Premiums (other than initial Premiums) are credited as of the end of the Valuation Period in which they are received by AUL at its Corporate Office. AUL reserves the right to refuse to accept new Premiums for a Contract at any time. RIGHT TO EXAMINE PERIOD The Owner has the right to return the Contract for any reason within the Right to Examine Period which is a ten (10) day period beginning when the Owner receives the Contract. If a particular state requires a longer Right to Examine Period, then eligible Owners in that state will be allowed the longer statutory period to return the Contract. The returned Contract will be deemed void and AUL will refund the Account Value as of the end of the Valuation Period in which AUL receives the Contract. The Contract Owner bears the investment risk during the period prior to the AULs receipt of request for cancellation. AUL will refund the Premium paid in those states where required by law and for individual retirement accounts, created under 408 and 408(a) plans (if returned within seven (7) days of receipt). ALLOCATION OF PREMIUMS In the Policy application, the Owner specifies the percentage of a Premium to be allocated to the investment accounts and to the Fixed Account(s). The sum of the allocations must equal 100 percent, with at least 1 percent of each Premium payment allocated to each account selected by the Owner. All Premium allocations must be in whole percentages. AUL reserves the right to limit the number of Investment Accounts to which Premiums may be allocated. The Owner can change the allocation percentages at any time, subject to these rules, by providing Proper Notice to the Corporate Office. The change will apply to the Premium payments received with or after receipt of such notice. The initial Premium generally is allocated to the available Fixed Account(s) and the Investment Accounts in accordance with the Owner's allocation instructions on the date AUL receives the Premium at AUL's Corporate Office. Subsequent Premiums are allocated as of the end of the Valuation Period during which AUL receives the Premium at AUL's Corporate Office. 32 In those states that require the refund of the greater of Premiums paid or account value, AUL generally allocates all Premiums received to AUL's general account prior to the end of the "right to examine" period. AUL will credit interest daily on Premiums so allocated. However, AUL reserves the right to allocate Premiums to the available fixed account(s) and the investment accounts of the separate account in accordance with the Owner's allocation instructions prior to the expiration of the "right to examine" period. At the end of the Right to Examine period, AUL transfers the Net Premium and interest to the Fixed Account(s) and the Investment Accounts based on the percentages selected in the application. For purposes of determining the end of the Right to Examine period, solely as it applies to this transfer, AUL assumes that receipt of this Contract occurs five (5) calendar days after the Contract Date. TRANSFERS OF ACCOUNT VALUE All or part of an Owner's Account Value may be transferred among the Investment Accounts of the Variable Account or to the Fixed Account at any time during the Accumulation Period upon receipt of Proper Notice by AUL at its Corporate Office. The minimum amount that may be transferred from any one (1) Investment Account is $500 or, if less than $500, the Owner's remaining Account Value in the Investment Account, provided however, that amounts transferred from the Fixed Account to an Investment Account during any given Contract Year cannot exceed 20 percent of the Owner's Non-MVA Fixed Account Value as of the beginning of that Contract Year. If, after any transfer, the Owner's remaining Account Value in an Investment Account or in the Fixed Account would be less than $25, then such request will be treated as a request for a transfer of the entire Account Value. Currently, there are no limitations on the number of transfers among Investment Accounts available under a Contract or the Fixed Account. In addition, no charges are currently imposed upon transfers. AUL reserves the right, however, at a future date, to change the limitation on the minimum transfer, to assess transfer charges, to change the limit on remaining balances, to limit the number and frequency of transfers, and to suspend any transfer privileges. If AUL determines that the transfers made by or on behalf of one (1) or more Owners are to the disadvantage of other Owners, the transfer right may be restricted. AUL also reserves the right to limit the size of transfers and remaining balances, to limit the number and frequency of transfers, and to discontinue telephone or internet based transfers. Any transfer from an Investment Account of the Variable Account shall be effected as of the end of the Valuation Date in which AUL receives the request in proper form. AUL has established procedures to confirm that instructions communicated by telephone or via the internet are genuine, which include the use of personal identification numbers and recorded telephone calls. Neither AUL nor its agents will be liable for acting upon instructions believed by AUL or its agents to be genuine, provided AUL has complied with its procedures. Part of a Contract Owner's Fixed Account Value may be transferred to one (1) or more Investment Accounts of the Variable Account during the Accumulation Period subject to certain limitations as described in "The Fixed Account." Transfers into some investment accounts could result in termination of certain riders. ABUSIVE TRADING PRACTICES LATE TRADING Some investors attempt to profit from trading in Investment Accounts after the close of the market, but before the Variable Account has actually been priced. Because the market has closed, these investors have actual knowledge of the price of the securities prior to its calculation. They are, therefore, executing trades with information that was not readily available to the market, thereby benefiting financially to the detriment of other Owners and Participants. AUL prohibits late trading in its Investment Accounts. The Variable Account dates and time stamps all trades from whatever source and allows only those trades received prior to the close of the market to receive that day's unit value. All trades received after this point will receive the next day's calculated unit value. MARKET TIMING Some investors attempt to profit from various short-term or frequent trading strategies commonly known as market timing. Excessive purchases and redemptions disrupt underlying portfolio management, hurt underlying fund performance and drive underlying fund expenses higher. These costs are borne by all Owners, including long-term investors who do not generate these costs. AUL discourages market timing and excessive trading. If the Owner intends to engage in such practices, do not invest in the Variable Account. AUL reserves the right to reject any request to purchase or redeem units which it reasonably determines to be in connection with market timing or excessive trading by an investor or by accounts of investors under common control (for example, related contract owners, or a financial advisor with discretionary trading authority for multiple accounts). AUL does not always know and cannot always reasonably detect such trading. AUL's policies and procedures only address market timing after the fact and are not prophylactic measures; they will only prevent market timing going forward once discovered. AUL has entered into agreements, pursuant to SEC Rule 22c-2, with all Funds offered under the contract. The agreements require AUL to provide requested transaction detail to the Funds in order for the Funds to monitor market timing according to each Fund's respective policy. Once a possible abuse is flagged, AUL will restrict trading to the extent permitted under applicable laws and the contract. Generally, policyholder trading history is reviewed to confirm if the trading activity is indeed abusive short-term trading. This procedure is enforced against all policyholders consistently. If it is determined that the trading activity violates either AUL's or any other Fund's policy, then the policyholder is 33 notified of restrictions on their account. The policyholder's access to internet and interactive voice response trades are turned off and they are limited to a specific number of trades per month, as determined by AUL or the respective Funds. AUL will not enter into any agreement with any individual, corporation, Plan or other entity that would permit such activity for that entity while discouraging it for other Owners. Some Funds may charge a redemption fee for short-term trading in their Fund. Furthermore, as stated above, the Funds monitor trading at the omnibus level and enforce their own policies and procedures based on suspected abusive trading. AUL will cooperate and may share Participant-level trading information with the Funds to the extent necessary to assist in the enforcement of these policies. Please consult the Funds' prospectuses for more details. DOLLAR COST AVERAGING PROGRAM Owners who wish to purchase units of an Investment Account over a period of time may do so through the DCA Program. The theory of DCA is that greater numbers of Accumulation Units are purchased at times when the unit prices are relatively low than are purchased when the prices are higher. This has the effect, when purchases are made at different prices, of reducing the aggregate average cost per Accumulation Unit to less than the average of the Accumulation Unit prices on the same purchase dates. However, participation in the DCA does not assure a Contract Owner of greater profits from the purchases under the Program, nor will it prevent or necessarily alleviate losses in a declining market. For example, assume that a Contract Owner requests that $1,000 per month be transferred from MMIA to the OneAmerica Value Investment Account. The following table illustrates the effect of DCA over a six (6) month period.
TRANSFER UNIT UNITS MONTH AMOUNT VALUE PURCHASED ----- -------- ----- --------- 1 $1,000 $20 50 2 $1,000 $25 40 3 $1,000 $30 33.333 4 $1,000 $40 25 5 $1,000 $35 28.571 6 $1,000 $30 33.333
The average price per unit for these purchases is the sum of the prices ($180) divided by the number of monthly transfers (6) or $30. The average cost per Accumulation Unit for these purchases is the total amount transferred ($6,000) divided by the total number of Accumulation Units purchased (210.237) or $28.54. THIS TABLE IS FOR ILLUSTRATIVE PURPOSES ONLY AND IS NOT REPRESENTATIVE OF FUTURE RESULTS. There is currently no fee for the DCA Program. Transfers under the DCA Program will not count toward the) free transfers granted to each Contract per year. Under the DCA Program, the owner deposits Premiums into the MMIA and then authorizes AUL to transfer a specific dollar amount from the MMIA into one (1) or more other Investment Accounts at the unit values determined on the dates of the transfers. This may be done monthly, quarterly, semi-annually, or annually. These transfers will continue automatically until AUL receives notice to discontinue the Program, or until there is not enough money in the MMIA to continue the Program, whichever occurs first. Currently, the minimum required amount of each transfer is $500, although AUL reserves the right to change this minimum transfer amount in the future. Transfers to or from any of the Fixed Accounts are not permitted under the DCA Program. At least seven (7) days advance written notice to AUL is required before the date of the first proposed transfer under the DCA Program. AUL offers the DCA Program to Contract Owners at no charge and AUL reserves the right to temporarily discontinue, terminate, or change the Program at any time. Contract Owners may change the frequency of scheduled transfers, or may increase or decrease the amount of scheduled transfers, or may discontinue participation in the Program at any time by providing written notice to AUL, provided that AUL must receive written notice of such a change at least five (5) days before a previously scheduled transfer is to occur. Contract Owners may initially elect to participate in the DCA Program, and if this election is made at the time the Contract is applied for, the Program will take effect on the first monthly, quarterly, semi-annual, or annual transfer date following the Premium receipt by AUL at its Corporate Office. The Contract Owner may select the particular date of the month, quarter, or year that the transfers are to be made and such transfers will automatically be performed on such date, provided that such date selected is a day that AUL is open for business and provided further that such date is a Valuation Date. If the date selected is not a Business Day or is not a Valuation Date, then the transfer will be made on the next succeeding Valuation Date. To participate in the Program, a minimum deposit of $10,000 is required. PORTFOLIO REBALANCING PROGRAM The Owner may elect to automatically adjust the Owner's investment account balances to be consistent with the allocation most recently requested. This will be done on a quarterly or annual basis from the date on which the Portfolio Rebalancing Program commences. The redistribution will not count toward the free transfers permitted each Policy Year. If the DCA program has been elected, the Portfolio Rebalancing Program will not commence until the date following the termination of the DCA Program. The Owner may elect this plan at any time. The Portfolio Rebalancing Program is not available on Contracts with outstanding loans. Portfolio rebalancing will terminate when the Owner requests any transfer or the day AUL receives Proper Notice instructing AUL to cancel the Portfolio Rebalancing Program. Portfolio Rebalancing is not available if the Owner chooses the Portfolio Optimization Program, as annual rebalancing is independently a part of that Program. 34 PORTFOLIO OPTIMIZATION PROGRAM THE SERVICE Portfolio Optimization is an asset allocation service that AUL offers at no additional charge for use within this variable annuity. Asset allocation refers to the manner that investments are distributed among asset classes to help attain an investment goal. For the Owner's variable annuity, Portfolio Optimization can help with decisions about how the Owner should allocate the Owner's Account Value among available Investment Options. The theory behind Portfolio Optimization is that diversification among asset classes can help reduce volatility over the long term. As part of AUL's Portfolio Optimization service, AUL has developed several asset allocation models ("Portfolio Optimization Models" or "Models"), each based on different profiles of an investor's willingness to accept investment risk. If the Owner decides to subscribe to the Portfolio Optimization service and select one (1) of the Portfolio Optimization Models, the Owner's initial purchase payment (in the case of a new application) or Account Value, as applicable, will be allocated to the Investment Options according to the Model the Owner selects. Subsequent purchase payments, if allowed under the Owner's Contract, will also be allocated accordingly. If the Owner subscribes to Portfolio Optimization, AUL will serve as the Owner's investment advisor for the service, with all associated fiduciary responsibilities, solely for purposes of development of the Portfolio Optimization Models and periodic updates of the Models. On a periodic basis (typically annually) or when AUL believes appropriate, the Portfolio Optimization Models are evaluated and the Models are updated. If the Owner subscribes to Portfolio Optimization, AUL will automatically reallocate the Owner's Account Value in accordance with the Model the Owner selects as it is updated from time to time based on discretionary authority that the Owner grants to AUL, unless the Owner instructs AUL otherwise. For more information on AUL's role as investment advisor for the Portfolio Optimization service, please see AUL's brochure from AUL's Form ADV, the SEC investment adviser registration form, which is included as an exhibit and delivered with this prospectus. In developing and periodically updating the Portfolio Optimization Models, AUL currently relies on the recommendations of an independent third-party analytical firm. AUL may change the firm that AUL uses from time to time, or, to the extent permissible under applicable law, use no independent firm at all. THE PORTFOLIO OPTIMIZATION MODELS AUL offers five (5) asset allocation models, each comprised of a carefully selected combination of AUL-offered Funds. Development of the Portfolio Optimization models is a two (2)step process. First, an optimization analysis is performed to determine the breakdown of asset classes. Optimization analysis requires forecasting returns, standard deviations and correlation coefficients of asset classes over the desired investing horizon and an analysis using a state-of-the art program and a statistical analytical technique known as "mean-variance optimization." Next, after the asset class exposures are known, a determination is made of how available Investment Options (underlying Portfolios) can be used to implement the asset class level allocations. The Investment Options are selected by evaluating the asset classes represented by the underlying Portfolios and combining Investment Options to arrive at the desired asset class exposures. The Portfolio-specific analysis uses historical returns-based style analysis and asset performance and regression and attribution analyses. It may also include portfolio manager interviews. Based on this analysis, Investment Options are selected in a way intended to optimize potential returns for each Model, given a particular level of risk tolerance. This process could, in some cases, result in the inclusion of an Investment Option in a Model based on its specific asset class exposure or other specific optimization factors, even where another Investment Option may have better historical performance. PERIODIC UPDATES OF THE PORTFOLIO OPTIMIZATION MODEL AND NOTICES OF UPDATES Each of the Portfolio Optimization Models are evaluated periodically (generally, annually) to assess whether the combination of Investment Options within each Model should be changed to better seek to optimize the potential return for the level of risk tolerance intended for the Model. As a result of the periodic analysis, each Model may change and Investment Options may be added to a Model (including Investment Options not currently available), or Investment Options may be deleted from a Model. When the Owner's Portfolio Optimization Model is updated, AUL will automatically reallocate the Owner's Account Value (and subsequent Premiums, if applicable) in accordance with any changes to the Model the Owner has selected. This means the allocation of the Owner's Account Value, and potentially the Investment Options in which the Owner is invested, will automatically change and the Owner's Account Value (and subsequent Premiums, if applicable) will be automatically reallocated among the Investment Options in the Owner's updated Model. AUL requires that the Owner grants AUL discretionary investment authority to periodically reallocate the Owner's Account Value (and subsequent Premiums, if applicable) in accordance with the updated version of the Portfolio Optimization Model the Owner has selected, if the Owner wishes to participate in Portfolio Optimization. When AUL updates the Portfolio Optimization Models, AUL will send the Owner written notice of the updated Models at least thirty (30) days in advance of the date AUL intends the updated version of the Model to be effective. The Owner should carefully review these notices. If the Owner wishes to accept the changes in Your selected Model, the Owner will not need to take any action, as the Owner's Account Value (or subsequent Premiums, if applicable) will be reallocated in 35 accordance with the updated Model automatically. If the Owner does not wish to accept the changes to the Owner's selected Model, the Owner can change to a different Model or withdraw from the Portfolio Optimization service. Some of the riders available under the Contract require the Owner to participate in a specific asset allocation service. If the Owner purchased any of these riders, such riders will terminate if the Owner withdraws from Portfolio Optimization or allocate any portion of Y the Owner's subsequent Premiums or Account Value to an Investment Option that is not currently allowed with the rider (as more fully described in each rider). SELECTING A PORTFOLIO OPTIMIZATION MODEL If the Owner chooses to subscribe to the Portfolio Optimization service, the Owner must determine which Portfolio Optimization Model is best for the Owner. AUL will not make this decision. The Owner should consult with his or her registered representative on this decision. The Owner's registered representative can help the Owner determine which Model is best suited to his or her financial needs, investment time horizon, and willingness to accept investment risk. The Owner should periodically review these factors with his or her registered representative to determine if the Owner should change Models to keep up with changes in the Owner's personal circumstances. Your registered representative can assist the Owner in completing the proper forms to subscribe to the Portfolio Optimization service or to change to a different Model. The Owner may, in consultation with his or her registered representative, utilize analytical tools made available by AUL, including an investor profile questionnaire, which asks questions intended to help the Owner or his or her registered representative assess his or her financial needs, investment time horizon, and willingness to accept investment risk. It is the Owner's decision, in consultation with the Owner's registered representative, to select a Model or to change to a different Model, and AUL bears no responsibility for this decision. The Owner may change to a different Model at any time with a proper written request or by telephone or electronic instructions provided a valid telephone/electronic authorization is on file with AUL. QUARTERLY REPORTS If the Owner selects a Portfolio Optimization Model, the Owner will be sent a quarterly report that provides information about the Investment Options within the Owner's selected Model, in addition to or as part of the Owner's usual quarterly statement. RISKS Although the Models are designed to optimize returns given the various levels of risk, there is no assurance that a Model portfolio will not lose money or that investment results will not experience volatility. Investment performance of the Owner's Account Value could be better or worse by participating in a Portfolio Optimization Model than if the Owner had not participated. A Model may perform better or worse than any single Investment Option or asset class or other combinations of Investment Options or asset classes. Model performance is dependent upon the performance of the component Investment Options (and their underlying Portfolios). The timing of the Owner's investment and the rebalancing may affect performance. The Owner's r Account Value will fluctuate, and when redeemed, may be worth more or less than the original cost. A Portfolio Optimization Model may not perform as intended. Although the Models are intended to optimize returns given various levels of risk tolerance, portfolio, market and asset class performance may differ in the future from the historical performance and assumptions upon which the Models are based, which could cause the Models to be ineffective or less effective in reducing volatility. Periodic updating of the Portfolio Optimization Models can cause the underlying Portfolios to incur transactional expenses to raise cash for money flowing out of the Portfolios or to buy securities with money flowing into the Portfolios. These expenses can adversely affect performance of the pertinent Portfolios and the Models. AUL may be subject to competing interests that have the potential to influence its decision making with regard to Portfolio Optimization. For example, one (1) Portfolio may provide a higher fee to AUL than another Portfolio, and provide AUL with incentive to use the Portfolio with the higher fee as part of a Portfolio Optimization Model. In addition, AUL may believe that certain Portfolios may benefit from additional assets or could be harmed by redemptions. As advisor to OneAmerica Funds, Inc., AUL monitors performance of the Portfolios, and may, from time to time, recommend to the Fund's Board of Directors a change in portfolio management firm or strategy or the closure or merger of a Portfolio, all of which could impact a Model. All Fund Portfolios are analyzed by the independent third party analytical firm. AUL does not dictate to the third party analytical firm the number of Portfolios in a Model, the percent that any Portfolio represents in a Model, or which Portfolios may be selected (other than to require exclusion of any Portfolio that is expected to be liquidated, merged into another Portfolio, or otherwise closed). AUL believes our reliance on the recommendations of an independent third-party analytical firm to develop and update the Models (as described above) reduces or eliminates the potential for AUL to be influenced by these competing interests, but there can be no assurance of this. AUL is under no contractual obligation to continue this service and has the right to terminate or change the Portfolio Optimization service at any time. CONTRACT OWNER'S VARIABLE ACCOUNT VALUE ACCUMULATION UNITS Premiums allocated to the Investment Accounts available under a Contract are credited to the Contract in the form of Accumulation Units. The number of Accumulation Units to be credited is determined by dividing the dollar amount allocated 36 to the particular Investment Account by the Accumulation Unit value for the particular Investment Account as of the end of the Valuation Period in which the Premium is credited. The number of Accumulation Units so credited to the Contract shall not be changed by a subsequent change in the value of an Accumulation Unit, but the dollar value of an Accumulation Unit may vary from Valuation Date to Valuation Date depending upon the investment experience of the Investment Account and charges against the Investment Account. ACCUMULATION UNIT VALUE AUL determines the Accumulation Unit value for each Investment Account of the Variable Account on each Valuation Date. The Accumulation Unit value for the MMIA was initially set at one dollar ($1) and all the other Investment Accounts were initially set at five dollars ($5). Subsequently, on each Valuation Date, the Accumulation Unit value for each Investment Account is determined by multiplying the Net Investment Factor determined as of the end of the Valuation Date for the particular Investment Account by the Accumulation Unit value for the Investment Account as of the immediately preceding Valuation Period. The Accumulation Unit value for each Investment Account may increase, decrease, or remain the same from Valuation Period to Valuation Period in accordance with the Net Investment Factor. NET INVESTMENT FACTOR The Net Investment Factor is used to measure the investment performance of an Investment Account from one (1) Valuation Period to the next. For any Investment Account for a Valuation Period, the Net Investment Factor is determined by dividing (a) by (b) where: (a) is equal to: (1) the net asset value per share of the Fund in which the Investment Account invests, determined as of the end of the Valuation Period, plus (2) the per share amount of any dividend or other distribution, if any, paid by the Fund during the Valuation Period, plus or minus (3) a credit or charge with respect to taxes, if any, paid or reserved for AUL during the Valuation Period that are determined by AUL to be attributable to the operation of the Investment Account (although no federal income taxes are applicable under present law and no such charge is currently assessed); (b) is the net asset value per share of the Fund determined as of the end of the preceding Valuation Period plus the per share credit or charge for any taxes reserved for the immediately preceding valuation period. CHARGES AND DEDUCTIONS PREMIUM TAX CHARGE Various states impose a tax on Premiums received by insurance companies. Whether or not a premium tax is imposed will depend upon, among other things, the Owner's state of residence, the Annuitant's state of residence, the insurance tax laws, and AUL's status in a particular state. AUL may assess a premium tax charge to reimburse itself for premium taxes that it incurs. This charge will be deducted as premium taxes are incurred by AUL, which is usually when an annuity is effected. Premium tax rates currently range from 0 percent to 3.5 percent, but are subject to change. WITHDRAWAL CHARGE No deduction for sales charges is made from Premiums for a Contract. If a cash withdrawal is made or the Contract is surrendered by the Owner, no withdrawal charge (which may also be referred to as a contingent deferred sales charge) will be assessed by AUL on the amount withdrawn. A withdrawal may result in taxable income to the Contract Owner. MORTALITY AND EXPENSE RISK CHARGE AUL deducts a monthly charge from the Variable Account Value pro rata based on the amounts in each account. Refer to the Expense Table for current charges. This amount is intended to compensate AUL for certain mortality and expense risks AUL assumes in offering and administering the Contracts and in operating the Variable Account. The expense risk is the risk that AUL's actual expenses in issuing and administering the Contracts and operating the Variable Account will be more than the charges assessed for such expenses. The mortality risk borne by AUL is the risk that the Annuitants, as a group, will live longer than AUL's actuarial tables predict. AUL may ultimately realize a profit from this charge to the extent it is not needed to address mortality and administrative expenses, but AUL may realize a loss to the extent the charge is not sufficient. AUL may use any profit derived from this charge for any lawful purpose. ANNUAL CONTRACT FEE AUL deducts an annual Contract fee from each Owner's Contract Value equal to the lesser of 2 percent of the Account Value or $30 a year. The fee is assessed every year on a Contract if the Contract is in effect on the Contract Anniversary, and is assessed only during the Accumulation Period. The annual Contract fee is waived on each Contract Anniversary when the Account Value, at the time the charge would otherwise have been imposed, exceeds $50,000. When a Contract Owner annuitizes or surrenders on any day other than a Contract Anniversary, a pro rata portion of the charge for that portion of the year will not be assessed. The charge is deducted proportionately from the Account Value allocated among the Investment Accounts and the Fixed Account(s). The purpose of this fee is to reimburse AUL for the expenses associated with administration of the Contracts and operation of the Variable Account. AUL does not expect to profit from this fee. RIDER CHARGES The addition of any riders will result in additional charges which will be deducted proportionately from the Account Value allocated among the Investment Accounts. 37 OTHER CHARGES AUL may charge the Investment Accounts of the Variable Account for the federal, state, or local income taxes incurred by AUL that are attributable to the Variable Account and its Investment Accounts. No such charge is currently assessed. VARIATIONS IN CHARGES AUL may reduce or waive the amount of the annual Contract fee for a Contract where the expenses associated with the sale of the Contract or the administrative costs associated with the Contract are reduced. For example, the annual Contract fee may be reduced in connection with acquisition of the Contract in exchange for another annuity Contract issued by AUL. AUL may also reduce or waive the annual Contract fee on Contracts sold to the directors or employees of AUL or any of its affiliates or to directors or any employees of any of the Funds. GUARANTEE OF CERTAIN CHARGES AUL guarantees that the mortality and expense risk charge shall not increase once a Contract has been sold. AUL reserves the right to increase the mortality and expense risk charge on future Contracts. AUL may increase the Annual Contract fee, but only to the extent necessary to recover the expenses associated with administration of the Contracts and operations of the Variable Account. EXPENSES OF THE FUNDS Each Investment Account of the Variable Account purchases shares at the net asset value of the corresponding Fund. The net asset value reflects the investment advisory fee and other expenses that are deducted from the assets of the Fund. The advisory fees and other expenses are not fixed or specified under the terms of the Contract and are described in the Funds' Prospectuses. DISTRIBUTIONS CASH WITHDRAWALS During the lifetime of the Annuitant, at any time after the Right to Examine period and before the Annuity Date and subject to the limitations under any applicable Qualified Plan and applicable law, a Contract may be surrendered or a withdrawal may be taken from a Contract. A surrender or withdrawal request will be effective as of the end of the Valuation Date that a Proper Notice is received by AUL at its Corporate Office. Generally, surrender or withdrawal requests will be paid within seven calendar days. Withdrawals are not available during the Right to Examine Period. If AUL receives Proper Notice of a full surrender request, AUL will pay the Owner's Net Cash Value as of the end of the Valuation Period. A withdrawal may be requested for a specified percentage or dollar amount of an Owner's Account Value. Upon payment, the Owner's Account Value will be reduced by an amount equal to the payment, plus any positive or negative market value adjustment on the amounts withdrawn from the MVA Fixed Accounts. AUL reserves the right to treat requests for a withdrawal that would leave an Account Value of less than $2,500 as a request for a full surrender. AUL may change or waive this provision at its discretion. The minimum amount that may be withdrawn from a Contract Owner's Account Value is $200 for qualified plans and $500 for non-qualified plans. In addition, connection with certain retirement programs may be subject to constraints on withdrawals and surrenders. The amount of a withdrawal will be taken from the Investment Accounts and the Fixed Account(s) as instructed. If the Owner does not specify, withdrawals will be made in proportion to the Owner's Account Value in the various Investment Accounts and the Fixed Account(s). A withdrawal will not be effected until Proper Notice is received by AUL at its Corporate Office. In addition to any applicable market value adjustments, a surrender or a withdrawal may be subject to a premium tax charge for any tax on Premiums that may be imposed by various states. See "Premium Tax Charge." A surrender or withdrawal may result in taxable income and in some cases a tax penalty. See "Tax Penalty for All Annuity Contracts" in the Statement of Additional Information. Owners of Contracts used in connection with a Qualified Plan should refer to the terms of the applicable Qualified Plan for any limitations or restrictions on cash withdrawals. The tax consequences of a surrender or withdrawal under the Contracts should be carefully considered. See "Federal Tax Matters." LOAN PRIVILEGES Loan privileges are only available on Contracts qualified under 401 or 403(b). Prior to the Annuitization Date, the Owner of a qualified Contract may receive a loan from the Account Value subject to the terms of the Contract, the specific plan, and the Internal Revenue Code, which may impose restrictions on loans. Loans from a qualified Contract are available beginning thirty (30) days after the Issue Date. The Contract Owner may borrow a minimum of $1,000. Loans may only be secured by the Account Value. In non-ERISA plans, for Account Values up to $20,000, the maximum loan balance which may be outstanding at any time is 80 percent of the Account Value, but not more than $10,000. If the Account Value is $20,000 or more, the maximum loan balance which may be outstanding at any time is 40 percent of the Account Value, but not more than $50,000. For ERISA plans, the maximum loan balance which may be outstanding at any time is 50 percent of the Account Value, but not more than $50,000. The $50,000 limit will be reduced by the highest loan balances owed during the prior one (1) year period. Additional loans are subject to the Contract minimum amount. The aggregate of all loans may not exceed the Account Value limitations stated above. AUL reserves the right to limit the number of loans outstanding at any time. Loans will be administered according to the specific loan agreement, which may be requested from the Corporate Office. Loans must be repaid in substantially level payments, not less frequently than quarterly, within five (5) years. Loans used to 38 purchase the principal residence of the Contract Owner may be repaid within fifteen (15) years. Loan repayments will be processed in the same manner as a Premium Payment. A loan repayment must be clearly marked as "loan repayment" or it will be credited as a Premium. If the Contract is surrendered while the loan is outstanding, the Account Value will be reduced by the amount of the loan outstanding plus accrued interest. If the Contract Owner/Annuitant dies while the loan is outstanding, the Death Benefit will be reduced by the amount of the outstanding loan plus accrued interest. If annuity payments start while the loan is outstanding, the Cash Value will be reduced by the amount of the outstanding loan plus accrued interest. Until the loan is repaid, AUL reserves the right to restrict any transfer of the Contract which would otherwise qualify as a transfer as permitted in the Internal Revenue Code. If a loan payment is not made when due, interest will continue to accrue. If a loan payment is not made when due, the entire loan will be treated as a deemed Distribution, may be taxable to the borrower, and may be subject to a tax penalty. Interest which subsequently accrues on defaulted amounts may also be treated as additional deemed Distributions each year. Any defaulted amounts, plus accrued interest, will be deducted from the Contract when the participant becomes eligible for a Distribution of at least that amount, and this amount may again be treated as a Distribution where required by law. Additional loans may not be available while a previous loan remains in default. AUL reserves the right to modify the term or procedures if there is a change in applicable law. AUL also reserves the right to assess a loan processing fee. Loans may also be subject to additional limitations or restrictions under the terms of the employer's plan. Loans permitted under this Contract may still be taxable in whole or part if the participant has additional loans from other plans or Contracts. DEATH PROCEEDS PAYMENT PROVISIONS The Death Proceeds will be determined as of the end of the Valuation Period in which due proof of death is received by AUL at its Corporate Office. At the time of application, Contract Owners may select one (1) of two (2) death benefits available under the Contract as listed below (not all death benefit option riders may be available in all states at the time of application). If no selection is made at the time of application, the Death Benefit will be the Standard Contractual Death Benefit. STANDARD CONTRACTUAL DEATH BENEFIT The Death Proceeds under the Standard Contractual Death Benefit are equal to the greater of: 1) the Account Value less any outstanding loan and accrued interest 2) the total of all Premiums paid less an adjustment for prior withdrawals, including withdrawal charges, and less any outstanding loan and accrued interest. ENHANCED DEATH BENEFIT RIDER The Death Proceeds under the Enhanced Death Benefit Rider are equal to the greatest of: 1) the Account Value less any outstanding loan and accrued interest; 2) the total of all Premiums paid less an adjustment for prior withdrawals, including any withdrawal charges, and less any outstanding loan and accrued interest; or, 3) the highest Account Value on any Contract Anniversary before the Owner's 86th birthday, less an adjustment for amounts previously surrendered, plus Premiums paid less any outstanding loan and accrued interest after the last Contract Anniversary. After the Owner's 86th birthday, the Death Benefit will be equal to the highest Account Value on any Contract Anniversary at any time prior to the Owner's 86th birthday, less an adjustment for amounts previously surrendered, plus Premiums paid less any outstanding loan and accrued interest after the last Contract Anniversary. Withdrawals will reduce the death benefit on a proportional basis. DEATH OF THE OWNER If the Contract Owner dies before the Annuity Date and the Beneficiary is not the Contract Owner's surviving spouse, the Death Proceeds will be paid to the Beneficiary. Such Death Proceeds will be paid in a lump-sum, unless the Beneficiary elects to have this value applied under a settlement option. The option also must have payments which are payable over the life of the Beneficiary or over a period which does not extend beyond the life expectancy of the Beneficiary. If the Contract is non-qualified, the payments must begin within one (1) year of the Contract Owner's death, or the entire amount must be distributed by the fifth (5th) anniversary of the Contract Owner's death. If the Contract is an IRA or qualified retirement plan, the payments must begin by December 31 of the year after the Contract Owner's death, or the entire amount must be distributed by December 31 of the fifth (5th) year after the Contract Owner's death. If the Contract Owner dies before the Annuity Date and the Beneficiary is the Contract Owner's surviving spouse, the surviving spouse will become the new Contract Owner. The Contract will continue with its terms unchanged and the Contract Owner's spouse will assume all rights as Contract Owner. Within one hundred-twenty (120) days of the original Contract Owner's death, the Contract Owner's spouse may elect to receive the Death Proceeds or withdraw any of the Account Value without any early withdrawal charge. However, depending upon the circumstances, income tax and a tax penalty may be imposed upon such a withdrawal. Any amount payable under a Contract will not be less than the minimum required by the law of the state where the Contract is delivered. DEATH OF THE ANNUITANT If the Annuitant dies before the Annuity Date and the Annuitant is not also the Contract Owner, then: (1) if the Contract Owner is not an individual, the Death Proceeds will 39 be paid to the Contract Owner in a lump-sum; or (2) if the Contract Owner is an individual, a new Annuitant may be named and the Contract will continue. If a new Annuitant is not named within one hundred-twenty (120) days of the Annuitant's death, the Account Value will be paid to the Contract Owner in a lump-sum. The Death Proceeds will be paid to the Beneficiary or Contract Owner, as appropriate, in a single sum or under one (1) of the Annuity Options, as directed by the Contract Owner or as elected by the Beneficiary. If the Beneficiary is to receive annuity payments under an Annuity Option, there may be limits under applicable law on the amount and duration of payments that the Beneficiary may receive, and requirements respecting timing of payments. A tax advisor should be consulted in considering payout options. PAYMENTS FROM THE VARIABLE ACCOUNT Payment of an amount from the Variable Account resulting from a surrender, withdrawal, transfer from an Owner's Account Value allocated to the Variable Account, or payment of the Death Proceeds, normally will be made within seven (7) days from the date Proper Notice is received at AUL's Corporate Office. However, AUL can postpone the calculation or payment of such an amount to the extent permitted under applicable law, which is currently permissible for any period: (a) during which the New York Stock Exchange is closed other than customary weekend and holiday closings; (b) during which trading on the New York Stock Exchange is restricted, as determined by the SEC; (c) during which an emergency, as determined by the SEC, exists as a result of which disposal of securities held by the Variable Account is not reasonably practicable, or it is not reasonably practicable to determine the value of the assets of the Variable Account; or (d) for such other periods as the SEC may, by order, permit for the protection of investors. For information concerning payment of an amount from the Fixed Account(s), see "The Fixed Account(s)." ANNUITY PERIOD GENERAL On the Annuity Date, the adjusted value of the Owner's Account Value may be applied to provide an annuity option on a fixed or variable basis, or a combination thereof. The Annuity Date is the date chosen for annuity payments to begin. Such date will be the first (1st) day of a calendar month unless otherwise agreed upon by AUL. During the Accumulation Period, the Owner may change the Annuity Date subject to approval by AUL. Annuitization is irrevocable once request for annuitization is received in good order, unless a variable payment annuity with no life contingency is selected. When the Owner annuitizes, The Owner must choose: 1. An annuity payout option, and 2. Either a fixed payment annuity, variable payment annuity, or any available combination. A Contract Owner may designate an Annuity Date, Annuity Option, contingent Annuitant, and Beneficiary on "An Annuity Election Form" that must be received by AUL at its Corporate Office prior to the Annuity Date. AUL may also require additional information before annuity payments commence. If the Contract Owner is an individual, the Annuitant may be changed at any time prior to the Annuity Date. The Annuitant must also be an individual and must be the Contract Owner, or someone chosen from among the Contract Owner's spouse, parents, brothers, sisters, and children. Any other choice requires AUL's consent. If the Contract Owner is not an individual, a change in the Annuitant will not be permitted without AUL's consent. The Beneficiary, if any, may be changed at any time and the Annuity Date and the Annuity Option may also be changed at any time prior to the Annuity Date. For Contracts used in connection with a Qualified Plan, reference should be made to the terms of the Qualified Plan for pertinent limitations regarding annuity dates and options. FIXED PAYMENT ANNUITY The payment amount under a Fixed Payment Annuity option will be determined by applying the selected portion of the Contract Proceeds to the Fixed Payment Annuity table then in effect, after deducting applicable premium taxes. The annuity payments are based upon annuity rates that vary with the Annuity Option selected and the age of the Annuitant, except that in the case of Option 1, Income for a Fixed Period, age is not a consideration. Payments under the Fixed Payment Annuity are guaranteed as to dollar amount for the duration of the Annuity Period. VARIABLE PAYMENT ANNUITY The first payment amount under a Variable Payment Annuity option is set at the first valuation date after the Annuity Date by applying the selected portion of the Contract Proceeds to the Variable Payment Annuity table the Owner selects, after deducting applicable premium taxes. Payments under the Variable Payment Annuity option will vary depending on the performance of the underlying Investment Accounts. The dollar amount of each variable payment may be higher or lower than the previous payment. 1. Annuity Units and Payment Amount - The dollar amount of the first payment is divided by the value of an Annuity Unit as of the Annuity Date to establish the number of Annuity Units representing each annuity payment. The number of Annuity Units established remains fixed during the annuity payment period. The dollar amount of subsequent annuity payments is determined by multiplying the fixed number of Annuity Units by the Annuity Unit Value for the Valuation Period in which the payment is due. 2. Assumed Investment Rate - The Assumed Investment Rate (AIR) is the investment rate built into the Variable Payment Annuity table used to determine the Owner's first annuity payment. The Owner may select an AIR from 3 percent, 4 percent or 5 percent when the Owner annuitizes. A higher AIR means the Owner would receive a higher initial payment, but subsequent payments would rise more slowly or fall more rapidly. A lower AIR has the opposite effect. If actual investment experience equals the AIR the Owner chooses, annuity payments will remain level. 40 3. Value of an Annuity Unit - The value of an Annuity Unit for an Investment Account for any subsequent Valuation Period is determined by multiplying the Annuity Unit Value for the immediately preceding Valuation Period by the Net Investment Factor for the Valuation Period for which the Annuity Unit Value is being calculated, and multiplying the result by an interest factor to neutralize the AIR built into the Variable Payment Annuity table which the Owner selected. 4. Transfers - During the Annuity Period, transfers between Investment Accounts must be made in writing. AUL reserves the right to restrict transfers to no more frequently than once a year. Currently, there are no restrictions. Transfers will take place on the anniversary of the Annuity Date unless otherwise agreed to by AUL. Variable payment annuities may not be available at the time of annuitization. PAYMENT OPTIONS All or any part of the proceeds paid at death or upon full surrender of this Contract may be paid in one (1) sum or according to one (1) of the following options: 1. Income for a Fixed Period - Proceeds are payable in monthly installments for a specified number of years, not to exceed twenty (20.) 2. Life Annuity - Proceeds are payable in monthly installments for as long as the payee lives. A number of payments can be guaranteed, such as one hundred-twenty (120), or the number of payments required to refund the proceeds applied. 3. Survivorship Annuity -. Proceeds are payable in monthly installments for as long as either the first payee or surviving payee lives. The Contract Proceeds may be paid in any other method or frequency of payment acceptable to AUL. Contract Proceeds payable in one (1) sum will accumulate at interest from the date of due proof of death or surrender to the payment date at the rate of interest then paid by AUL or at the rate specified by statute, whichever is greater. SELECTION OF AN OPTION Contract Owners should carefully review the Annuity Options with their financial or tax advisors. For Contracts used in connection with a Qualified Plan, the terms of the applicable Qualified Plan should be referenced for pertinent limitations respecting the form of annuity payments, the commencement of distributions, and other matters. For instance, annuity payments under a Qualified Plan generally must begin no later than April 1 of the calendar year following the calendar year in which the Contract Owner reaches age 70 1/2 and is no longer employed. For Option 1, Income for a Fixed Period, the period elected for receipt of annuity payments under the terms of the Annuity Option generally may be no longer than the joint life expectancy of the Annuitant and Beneficiary in the year that the Annuitant reaches age 70 1/2 and must be shorter than such joint life expectancy if the Beneficiary is not the Annuitant's spouse and is more than ten (10) years younger than the Annuitant. THE FIXED ACCOUNT(S) SUMMARY OF THE FIXED ACCOUNT(S) Premiums designated to accumulate on a fixed basis may be allocated to one (1) of several Fixed Accounts which are part of AUL's general account. Either MVA Fixed Account(s) or a Non-MVA fixed account will be available under the Contract. THE MVA AND NON-MVA FIXED ACCOUNT(S) MAY NOT BE AVAILABLE IN ALL STATES. MVA FIXED ACCOUNTS ARE NOT AVAILABLE IN ALL CONTRACTS. Contributions or transfers to the Fixed Account(s) become part of AUL's General Account. The General Account is subject to regulation and supervision by the Indiana Insurance Department as well as the insurance laws and regulations of other jurisdictions in which the Contracts are distributed. In reliance on certain exemptive and exclusionary provisions, interests in the Fixed Account(s) have not been registered as securities under the Securities Act of 1933 (the "1933 Act") and the Fixed Account(s) has not been registered as an investment company under the Investment Company Act of 1940 ("1940 Act"). Accordingly, neither the Fixed Account(s) nor any interests therein are generally subject to the provisions of the 1933 Act or the 1940 Act. AUL has been advised that the staff of the SEC has not reviewed the disclosure in this Prospectus relating to the Fixed Account(s). This disclosure, however, may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in the Prospectus. This Prospectus is generally intended to serve as a disclosure document only for aspects of a Contract involving the Variable Account and contains only selected information regarding the Fixed Account(s). For more information regarding the Fixed Account(s), see the Contract itself. NON-MARKET VALUE ADJUSTED FIXED ACCOUNT The Account Value in the Fixed Account earns interest at one (1) or more interest rates determined by AUL at its discretion and declared in advance ("Current Rate"), which are guaranteed by AUL to be at least equal to a minimum effective annual rate of 3 percent ("Guaranteed Rate"). AUL will determine a Current Rate from time to time and, generally, any Current Rate that exceeds the Guaranteed Rate will be effective for the Contract for a period of at least one (1) year. AUL reserves the right to change the method of crediting from time to time, provided that such changes do not have the effect of reducing the guaranteed rate of interest. AUL bears the investment risk for Owner's Non-MVA Fixed Account(s) values and for paying interest at the Current Rate on amounts allocated to the Non-MVA Fixed Account(s). MARKET VALUE ADJUSTED FIXED ACCOUNT MVA Fixed Accounts provide a guaranteed rate of interest over specified maturity durations. A guaranteed interest rate, 41 determined and declared by AUL for any Guaranteed Period selected, will be credited unless a distribution from the MVA occurs for any reason. The minimum amount of any allocation made to MVA Fixed Account must be $1,000. MVA FIXED ACCOUNTS MAY NOT BE AVAILABLE IN EVERY STATE JURISDICTION. MVA FIXED ACCOUNTS ARE NOT AVAILABLE IN ALL CONTRACTS. Generally, the market value adjustment will increase or decrease the value of distributed proceeds depending on how prevailing interest rates compare to the MVA option rates in effect. When prevailing rates are lower than the MVA option rate in effect for the Guaranteed Period elected, distribution proceeds will increase in value. Conversely, when prevailing rates are higher than the MVA option rate in effect for the Guaranteed Period elected, distribution proceeds will decrease in value. In no event will the adjustment reduce the Cash Value attributable to that MVA Fixed Account below that necessary to satisfy statutory nonforfeiture requirements. The effect of a market value adjustment should be carefully considered before electing to surrender allocations in MVA Fixed Account. During the MVA Free Window, the Owner may transfer or withdraw amounts from MVA Fixed Accounts with expiring Guaranteed Periods without MVA. The MVA Free Window is currently set at thirty (30) days prior to the end of the maturity duration selected. AUL reserves the right to change the MVA Free Window. Such amounts may be transferred to the Investment Accounts or reinvested in different MVA Fixed Accounts for different Guaranteed Periods. If the Owner takes no such action, the amount available at the end of the Guaranteed Period will remain in the MVA Fixed Account and a new Guaranteed Period and Current Rate will apply. MVA Fixed Accounts are available during the accumulation phase of a Contract only and are not available as fixed accounts during the annuitization phase of a Contract. In addition, MVA Fixed Accounts are not available for use in conjunction with Contract Owner services such as DCA and portfolio rebalancing. WITHDRAWALS A Contract Owner may make a surrender or a withdrawal from his or her Fixed Account Value subject to the provisions of the Contract. A surrender of a Contract Owner's Fixed Account Value will result in a withdrawal payment equal to the value of the Contract Owner's Fixed Account Value as of the day the surrender is effected, minus any applicable market value adjustment. A withdrawal may be requested for a specified percentage or dollar amount of the Contract Owner's Fixed Account Value. For a further discussion of surrenders and withdrawals as generally applicable to a Contract Owner's Variable Account Value and Fixed Account Value, see "Cash Withdrawals." TRANSFERS The Contract Owner's Fixed Account Values may be transferred from the Fixed Account(s) to the Variable Account subject to certain limitations. The minimum amount that may be transferred from a Fixed Account is $500 or, if that Fixed Account Value is less than $500, the Contract Owner's remaining Account Value in that Fixed Account. If the amount remaining in a Fixed Account after a transfer would be less than $25, the remaining amount will be transferred with the amount that has been requested. The maximum amount that may be transferred in any one (1) Contract Year from a Non-MVA Fixed Account is the lesser of 20 percent of that Non-MVA Fixed Account Value as of the last Contract Anniversary or the entire Non-MVA Fixed Account Value if it would be less than $500 after the transfer. Transfers and withdrawals of a Contract Owner's Non-MVA Fixed Account Value will be effected on a last-in first-out basis. Transfers from MVA Fixed Accounts may be subject to market value adjustment. Transfers from MVA Fixed Accounts to the Variable Account are not subject to the 20 percent Fixed Account transfer limitation. Transfers and withdrawals of a Contract Owner's MVA Fixed Account Value will be made from the Guaranteed Periods the Owner has indicated. Transfers may result in a charge to the Contract Owner. For a discussion of transfers as generally applicable to a Contract Owner's Variable Account Value and Fixed Account Value, see "Transfers of Account Value." CONTRACT CHARGES The annual Contract fee will be the same whether or not an Owner's Contract Value is allocated to the Variable Account or the Fixed Account(s). The charge for mortality and expense risks will not be assessed against the Fixed Account(s), and any amounts that AUL pays for income taxes allocable to the Variable Account will not be charged against the Fixed Account(s). In addition, the investment advisory fees and operating expenses paid by the Funds will not be paid directly or indirectly by Contract Owners to the extent the Account Value is allocated to the Fixed Account(s); however, such Contract Owners will not participate in the investment experience of the Variable Account. See "Charges and Deductions." PAYMENTS FROM THE FIXED ACCOUNT(S) Surrenders, cash withdrawals, and transfers from the Fixed Account(s) and payment of Death Proceeds based upon a Contract Owner's Fixed Account Values may be delayed for up to six (6) months after a written request in proper form is received by AUL at its Corporate Office. During the period of deferral, interest at the applicable interest rate or rates will continue to be credited to the Contract Owner's Fixed Account Values. 42 MORE ABOUT THE CONTRACTS DESIGNATION AND CHANGE OF BENEFICIARY The Beneficiary designation contained in an application for the Contracts will remain in effect until changed. The interests of a Beneficiary who dies before the Contract Owner will pass to any surviving Beneficiary, unless the Contract Owner specifies otherwise. Unless otherwise provided, if no designated Beneficiary is living upon the death of the Contract Owner prior to the Annuity Date, the Contract Owner's estate is the Beneficiary. Unless otherwise provided, if no designated Beneficiary under an Annuity Option is living after the Annuity Date, upon the death of the Annuitant, the Owner is the Beneficiary. If the Contract Owner is not an individual, the Contract Owner will be the Beneficiary. Subject to the rights of an irrevocably designated Beneficiary, the designation of a Beneficiary may be changed or revoked at any time while the Contract Owner is living by filing with AUL a written beneficiary designation or revocation in such form as AUL may require. The change or revocation will not be binding upon AUL until it is received by AUL at its Corporate Office. When it is so received, the change or revocation will be effective as of the date on which the beneficiary designation or revocation was signed, but the change or revocation will be without prejudice to AUL if any payment has been made or any action has been taken by AUL prior to receiving the change or revocation. For Contracts issued in connection with Qualified Plans, reference should be made to the terms of the particular Qualified Plan, if any, and any applicable law for any restrictions on the beneficiary designation. For instance, under an Employee Benefit Plan, the Beneficiary (or contingent Annuitant) must be the Contract Owner's spouse if the Contract Owner is married, unless the spouse properly consents to the designation of a Beneficiary (or contingent Annuitant) other than the spouse. ASSIGNABILITY Subject to applicable Federal and state laws, rules and regulations, a Contract Owner may assign a Contract, but the rights of the Contract Owner and any Beneficiary will be secondary to the interests of the assignee. AUL assumes no responsibility for the validity of an assignment. Any assignment will not be binding upon AUL until received in writing at its Corporate Office. An assignment may be a taxable event, so Contract Owners should consult a tax advisor as to the tax consequences resulting from such an assignment. PROOF OF AGE AND SURVIVAL AUL may require proof of age, sex, or survival of any person on whose life annuity payments depend. MISSTATEMENTS If the age or sex of an Annuitant or contingent Annuitant has been misstated, the correct amount paid or payable by AUL shall be such as the Contract would have provided for the correct age and sex. ACCEPTANCE OF NEW PREMIUMS AUL reserves the right to refuse to accept new Premiums for a Contract at any time. OPTIONAL BENEFITS There are several riders available at time of application which are described below. These riders carry their own charges which are described in the Expense Table in this Prospectus. Some riders are not available in all states. ENHANCED DEATH BENEFIT RIDER The Death Proceeds under the Enhanced Death Benefit Rider are equal to the greatest of: 1) the Account Value less any outstanding loan and accrued interest; 2) the total of all Premiums paid less an adjustment for amounts previously surrendered and less any outstanding loan and accrued interest. Withdrawals will reduce the death benefit on a proportional basis; 3) the highest Account Value on any Contract Anniversary before the Annuitant's 86th birthday, less an adjustment for amounts previously surrendered, plus Premiums paid less any outstanding loan and accrued interest after the last Contract Anniversary. After the Annuitant's 86th birthday, the Death Benefit will be equal to the highest Account Value on any Contract Anniversary at any time prior to the Annuitant's 86th birthday, less an adjustment for amounts previously surrendered, plus Premiums paid less any outstanding loan and accrued interest after the last Contract Anniversary. GUARANTEED MINIMUM ANNUITIZATION BENEFIT RIDER For those Contracts which have elected the Guaranteed Minimum Annuitization Benefit Rider at the time of application, the following provisions apply. If the Owner's Contract is annuitized, and the Owner chooses a life annuitization option, at any time after the tenth (10th) Contract Anniversary, the amount applied to the then current annuity table will be the greater of: 1. The Account Value at that time, or 2. The total of all Premiums paid with interest credited at the rate shown on the Policy Data Page, less an adjustment for amounts previously withdrawn. The Account value is reduced proportionally for any withdrawals. Any transfer of Account Value to any Investment Account not listed on the Policy Data Page as approved for use with this benefit will terminate the rider. This Rider is only available if the Portfolio Optimization Program is chosen. If the Program is later terminated, the Rider will be terminated automatically. 43 FEDERAL TAX MATTERS INTRODUCTION The Contracts described in this Prospectus are designed for use in connection with non-tax qualified retirement plans for individuals and for use by individuals in connection with retirement plans under the provisions of Sections 401(a), 403(b), 457, 408 or 408A of the Internal Revenue Code ("Code"). The ultimate effect of federal income taxes on values under a Contract, on annuity payments, and on the economic benefits to the Owner, the Annuitant, and the Beneficiary or other payee, may depend upon the type of plan for which the Contract is purchased and a number of different factors. The discussion contained herein and in the Statement of Additional Information is general in nature. It is based upon AUL's understanding of the present federal income tax laws as currently interpreted by the Internal Revenue Service ("IRS"), and is not intended as tax advice. No representation is made regarding the likelihood of continuation of the present federal income tax laws or of the current interpretations by the IRS. Future legislation may affect annuity contracts adversely. Moreover, no attempt is made to consider any applicable state or other laws. Because of the inherent complexity of such laws and the fact that tax results will vary according to the terms of the plan and the particular circumstances of the individual involved, any person contemplating the purchase of a Contract, or receiving annuity payments under a Contract, should consult a qualified tax advisor. AUL DOES NOT MAKE ANY GUARANTEE OR REPRESENTATION REGARDING THE TAX STATUS OF ANY CONTRACT OR ANY TRANSACTION INVOLVING THE CONTRACTS. CONSULT THE OWNER'S TAX ADVISOR. DIVERSIFICATION STANDARDS Treasury Department regulations under Section 817(h) of the Code prescribe asset diversification requirements which are expected to be met by the investment companies whose shares are sold to the Investment Accounts. Failure to meet these requirements would jeopardize the tax status of the Contracts. See the Statement of Additional Information for additional details. In connection with the issuance of the regulations governing diversification under Section 817(h) of the Code, the Treasury Department announced that it would issue future regulations or rulings addressing the circumstances in which a variable Contract owner's control of the investments of a separate account may cause the Contract owner, rather than the iAUL, to be treated as the owner of the assets held by the separate account. If the variable Contract owner is considered the owner of the securities underlying the separate account, income and gains produced by those securities would be included currently in a Contract owner's gross income. It is not clear, at present, what these regulations or rulings may provide. It is possible that when the regulations or rulings are issued, the Contracts may need to be modified in order to remain in compliance. AUL intends to make reasonable efforts to comply with any such regulations or rulings so that the Contracts will be treated as annuity Contracts for federal income tax purposes and reserves the right to make such changes as it deems appropriate for that purpose. TAXATION OF ANNUITIES IN GENERAL-NON-QUALIFIED PLANS Section 72 of the Code governs taxation of annuities. In general, a Contract Owner is not taxed on increases in value under an annuity Contract until some form of distribution is made under the Contract. However, the increase in value may be subject to tax currently under certain circumstances. See "Contracts Owned by Non-Natural Persons" and "Diversification Standards." 1. SURRENDERS OR WITHDRAWALS PRIOR TO THE ANNUITY DATE Code Section 72 provides that amounts received upon a surrender or withdrawal from a Contract prior to the annuity date generally will be treated as gross income to the extent that the Cash Value of the Contract exceeds the "investment in the Contract." In general, the "investment in the Contract" is that portion, if any, of Premiums paid under a Contract less any distributions received previously under the Contract that are excluded from the recipient's gross income. The taxable portion is taxed at ordinary income tax rates. For purposes of this rule, a pledge or assignment of a Contract is treated as a payment received on account of a withdrawal from a Contract. Similarly, loans under a Contract generally are treated as distributions under the Contract. 2. SURRENDERS OR WITHDRAWALS ON OR AFTER THE ANNUITY DATE Upon receipt of a lump-sum payment or an annuity payment under an annuity Contract, the recipient is taxed if the Cash Value of the Contract exceeds the investment in the Contract. For fixed annuity payments, the taxable portion of each payment is determined by using a formula known as the "exclusion ratio," which establishes the ratio that the investment in the Contract bears to the total expected amount of annuity payments for the term of the Contract. That ratio is then applied to each payment to determine the non-taxable portion of the payment. That remaining portion of each payment is taxed at ordinary income rates. Once the excludable portion of annuity payments to date equals the investment in the Contract, the balance of the annuity payments will be fully taxable. Withholding of federal income taxes on all distributions may be required unless a recipient who is eligible elects not to have any amounts withheld and properly notifies AUL of that election. Special rules apply to withholding on distributions from Employee Benefit Plans that are qualified under Section 401(a) of the Code. 3. AMOUNTS RECEIVED AS AN ANNUITY For amounts received as an Annuity, the taxable portion of each payment is determined by using a formula known as the "exclusion ratio," which establishes the ratio that the investment 44 in the Contract bears to the total expected amount of annuity payments for the term of the Contract. That ratio is then applied to each payment to determine the non-taxable portion of the payment. That remaining portion of each payment is taxed at ordinary income rates. Once the excludable portion of annuity payments to date equals the investment in the Contract, the balance of the annuity payments will be fully taxable. Withholding of federal income taxes on all distributions may be required unless a recipient who is eligible elects not to have any amounts withheld and properly notifies AUL of that election. Special rules apply to withholding on distributions from Employee Benefit Plans and 403(b) arrangements. 4. PENALTY TAX ON CERTAIN SURRENDERS AND WITHDRAWALS With respect to amounts withdrawn or distributed before the Contract Owner reaches age 59 1/2, a penalty tax is imposed equal to 10 percent of the portion of such amount which is includable in gross income. However, the penalty tax is not applicable to withdrawals: (1) made on or after the death of the owner (or where the owner is not an individual, the death of the "primary annuitant," who is defined as the individual the events in whose life are of primary importance in affecting the timing and amount of the payout under the Contract); (2) attributable to the Contract Owner's becoming totally disabled within the meaning of Code Section 72(m)(7); or (3) which are part of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Contract Owner, or the joint lives (or joint life expectancies) of the Contract Owner and his beneficiary. The 10 percent penalty also does not apply in certain other circumstances described in Code Section 72. If the penalty tax does not apply to a surrender or withdrawal as a result of the application of item (3) above, and the series of payments are subsequently modified (other than by reason of death or disability), the tax for the first (1st) year in which the modification occurs will be increased by an amount (determined in accordance with IRS regulations) equal to the tax that would have been imposed but for item (3) above, plus interest for the deferral period, if the modification takes place (a) before the close of the period which is five (5) years from the date of the first payment and after the Contract Owner attains age 59 1/2, or (b) before the Contract Owner reaches age 59 1/2. ADDITIONAL CONSIDERATIONS 1. DISTRIBUTION-AT-DEATH RULES In order to be treated as an annuity Contract, a Contract must provide the following two (2) distribution rules: (a) if the Owner dies on or after the Annuity Commencement Date, and before the entire interest in the Contract has been distributed, the remaining interest must be distributed at least as quickly as the method in effect on the Owner's death; and (b) if the Owner dies before the Annuity Date, the entire interest in the Contract must generally be distributed within five (5) years after the date of death, or, if payable to a designated beneficiary, must be distributed over the life of that designated beneficiary or over a period not extending beyond the life expectancy of that beneficiary, commencing within one (1) year after the date of death of the Owner. If the designated beneficiary is the spouse of the Owner, the Contract may be continued in the name of the spouse as Owner. For purposes of determining the timing of distributions under the foregoing rules, where the Owner is not an individual, the primary annuitant is considered the Owner. In that case, a change in the primary annuitant will be treated as the death of the Owner. Finally, in the case of joint Owners, the distribution-at-death rules will be applied by treating the death of the first Owner as the one (1) to be taken into account in determining how generally distributions must commence, unless the sole surviving Owner is the deceased Owner's spouse. The endorsement that allows for joint ownership applies to spouses only. 2. GIFT OF ANNUITY CONTRACTS Generally, a donor must pay income tax on the gain of the Contract if he makes a gift of the Contract before the Annuity Date. The donee's basis in the Contract is increased by the amount included in the donor's income. This provision does not apply to certain transfers incident to a divorce or transfers to a spouse. The 10 percent penalty tax on pre-age 59 1/2 withdrawals and distributions and gift tax also may be applicable. 3. CONTRACTS OWNED BY NON-NATURAL PERSONS If the Contract is held by a non-natural person (for example, a corporation in connection with its non-tax qualified deferred compensation plan) the income on that Contract (generally the Account Value less the Premium payments and amounts includable in gross income for prior taxable years with respect to the Contract) is includable in taxable income each year. Other taxes (such as the alternative minimum tax and the environmental tax imposed under Code Section 59A) may also apply. The rule does not apply where the Contract is acquired by the estate of a decedent, where the Contract is held by certain types of retirement plans, where the Contract is a qualified funding asset for structured settlements, where the Contract is purchased on behalf of an employee upon termination of an Employee Benefit Plan, and in the case of immediate annuity. Code Section 457 (deferred compensation) plans for employees of state and local governments and tax-exempt organizations are not within the purview of the exceptions. However, the income of state and local governments and tax-exempt organizations generally is exempt from federal income tax. 4. MULTIPLE CONTRACT RULE For purposes of determining the amount of any distribution under Code Section 72(e) (amounts not received as annuities) that is includable in gross income, all annuity Contracts issued by the same insurer to the same Contract owner during any calendar year must be aggregated and treated as one (1)Contract. Thus, any amount received under any such Contract prior to the Contract's Annuity Commencement Date, such as a partial surrender, dividend, or loan, will be taxable (and possibly subject to the 10 percent penalty tax) to the extent of the combined income in all such Contracts. 45 In addition, the Treasury Department has broad regulatory authority in applying this provision to prevent avoidance of the purposes of this rule. QUALIFIED PLANS The Contract may be used with certain types of Qualified Plans as described under "The Contracts." The tax rules applicable to participants in such Qualified Plans vary according to the type of plan and the terms and conditions of the plan itself. No attempt is made herein to provide more than general information about the use of the Contract with the various types of Qualified Plans. Contract Owners, Annuitants, and Beneficiaries, are cautioned that the rights of any person to any benefits under such Qualified Plans will be subject to the terms and conditions of the plans themselves and may be limited by applicable law, regardless of the terms and conditions of the Contract issued in connection therewith. For example, AUL may accept beneficiary designations and payment instructions under the terms of the Contract without regard to any spousal consents that may be required under the Code or the Employee Retirement Income Security Act of 1974 ("ERISA"). Consequently, a Contract Owner's Beneficiary designation or elected payment option may not be enforceable. The following are brief descriptions of the various types of Qualified Plans and the use of the Contract therewith: 1. INDIVIDUAL RETIREMENT ANNUITIES Code Section 408 permits an eligible individual to contribute to an individual retirement program through the purchase of Individual Retirement Annuities ("IRAs"). The Contract may be purchased as an IRA. IRAs are subject to limitations on the amount that may be contributed, the persons who may be eligible, and the time when distributions must commence. Depending upon the circumstances of the individual, contributions to an IRA may be made on a deductible or nondeductible basis. IRAs may not be transferred, sold, assigned, discounted, or pledged as collateral for a loan or other obligation. The annual Premium for an IRA may not exceed a certain limit under the laws in effect as of the writing of this prospectus, reduced by any contribution to that individual's Roth IRA. In addition, distributions from certain other types of Qualified Plans may be placed on a tax-deferred basis into an IRA. 2. ROTH IRA Effective January 1, 1998, a Roth IRA under Code Section 408A is available for retirement savings for individuals with earned income. The Contract may be purchased as a Roth IRA. Roth IRA allows an individual to contribute non-deductible contributions for retirement purposes, with the earnings income tax-deferred, and the potential ability to withdraw the money income tax-free under certain circumstances. Roth IRAs are subject to limitations on the amount that may be contributed, the persons who may be eligible, and the time when distributions must commence. Roth IRAs may not be transferred, sold, assigned, discounted, or pledged as collateral for a loan or other obligation. The annual Premium for a Roth IRA may not exceed certain limits, reduced by any contribution to that individual's IRA. In addition, a taxpayer may elect to convert an IRA to a Roth IRA, accelerating deferred income taxes on previous earnings in the IRA to a current year. 3. CORPORATE PENSION AND PROFIT SHARING PLANS Code Section 401(a) permits employers to establish various types of retirement plans for their employees. For this purpose, self-employed individuals (proprietors or partners operating a trade or business) are treated as employees eligible to participate in such plans. Such retirement plans may permit the purchase of Contracts to provide benefits thereunder. In order for a retirement plan to be "qualified" under Code Section 401(a), it must: (1) meet certain minimum standards with respect to participation, coverage and vesting; (2) not discriminate in favor of "highly compensated" employees; (3) provide contributions or benefits that do not exceed certain limitations; (4) prohibit the use of plan assets for purposes other than the exclusive benefit of the employees and their beneficiaries covered by the plan; (5) provide for distributions that comply with certain minimum distribution requirements; (6) provide for certain spousal survivor benefits; and (7) comply with numerous other qualification requirements. A retirement plan qualified under Code Section 401(a) may be funded by employer contributions, employee contributions or a combination of both. Plan participants are not subject to tax on employer contributions until such amounts are actually distributed from the plan. Depending upon the terms of the particular plan, employee contributions may be made on a pre-tax or after-tax basis. In addition, plan participants are not taxed on plan earnings derived from either employer or employee contributions until such earnings are distributed. 4. TAX-DEFERRED ANNUITIES Section 403(b) of the Code permits the purchase of "tax-deferred annuities" by public schools and organizations described in Section 501(c)(3) of the Code, including certain charitable, educational and scientific organizations. These qualifying employers may pay Premiums under the Contracts for the benefit of their employees. Such Premiums are not includable in the gross income of the employee until the employee receives distributions from the Contract. The amount of Premiums to the tax-deferred annuity is limited to certain maximums imposed by the Code. Furthermore, the Code sets forth additional restrictions governing such items as transferability, distributions, nondiscrimination and withdrawals. Any employee should obtain competent tax advice as to the tax treatment and suitability of such an investment. On July 26, 2007, the IRS issued final regulations for tax-sheltered annuity arrangements under section 403(b). Given that these are the first significant updates of the original regulations issued by the IRS in 1964, they provide for significant changes in the way 403(b) plans must be maintained and administered. The final regulations are generally effective for plan years beginning on or after January 1, 2009. The intended effect of these regulations is to make the rules governing 403(b) similar to the rules governing other arrangements that include salary reduction contributions, such as 401(k) plans and 457(b) plans. 46 Items of particular interest or significance covered by these new regulations are 1) by January 1, 2009, all 403(b) arrangements must have a written plan, 2) as of September 24, 2007, transfers previously permitted, pursuant to Revenue Ruling 90-24 are no longer allowed, 3) nontaxable transfers of assets is permitted provided that the transfer is a change of investment among approved vendors within the same plan, to a plan of another employer, or if there is an information-sharing agreement in place with the successor vendor, 4) plans may include language that permits plan termination and distribution of benefits, 5) employers must ensure that loans and hardship distributions are made in accordance with the applicable plan and IRS rules, 6) employers must have a services agreement in place with each approved vendor, 7) employers must have a process to ensure contributions are made in compliance with the applicable limits, and 8) contributions must be transferred to an approved vendor within a reasonable time, but in no event later than fifteen (15) days after the end of the month. 5. DEFERRED COMPENSATION PLANS Section 457 of the Code permits employees of state and local governments and units and agencies of state and local governments as well as tax-exempt organizations described in Section 501(c)(3) of the Code to defer a portion of their compensation without paying current taxes. Distributions received by an employee from a 457 Plan will be taxed as ordinary income. QUALIFIED PLAN FEDERAL TAXATION SUMMARY The above description of the federal income tax consequences of the different types of Qualified Plans which may be funded by the Contract offered by this Prospectus is only a brief summary and is not intended as tax advice. The rules governing the provisions of Qualified Plans are extremely complex and often difficult to comprehend. Anything less than full compliance with the applicable rules, all of which are subject to change, may have adverse tax consequences. A prospective Contract Owner considering adoption of a Qualified Plan and purchase of a Contract in connection therewith should first consult a qualified and competent tax advisor with regard to the suitability of the Contract as an investment vehicle for the Qualified Plan. Periodic distributions (e.g., annuities and installment payments) from a Qualified Plan that will last for a period of ten (10) or more years are generally subject to voluntary income tax withholding. The amount withheld on such periodic distributions is determined at the rate applicable to wages. The recipient of a periodic distribution may generally elect not to have withholding apply. Nonperiodic distributions (e.g., lump-sums and annuities or installment payments of less than 10 years) from a Qualified Plan (other than an IRA) are generally subject to mandatory 20 percent income tax withholding. However, no withholding is imposed if the distribution is transferred directly to another eligible Qualified Plan or IRA. Nonperiodic distributions from an IRA are subject to income tax withholding at a flat 10 percent rate. The recipient of such a distribution may elect not to have withholding apply. 403(b) PROGRAMS - CONSTRAINTS ON WITHDRAWALS Section 403(b) of the Internal Revenue Code permits public school employees and employees of organizations specified in Section 501(c)(3) of the Internal Revenue Code, such as certain types of charitable, educational, and scientific organizations, to purchase annuity Contracts, and subject to certain limitations, to exclude the amount of purchase payments from gross income for federal tax purposes. Section 403(b) imposes restrictions on certain distributions from tax-deferred annuity Contracts meeting the requirements of Section 403(b) that apply to tax years beginning on or after January 1, 1989. Section 403(b) requires that distributions from Section 403(b) tax-deferred annuities that are attributable to employee contributions made after December 31, 1988 under a salary reduction agreement not begin before the employee reaches age 59 1/2, separates from service, dies, becomes disabled, or incurs a hardship. Furthermore, distributions of income or gains attributable to such contributions accrued after December 31, 1988 may not be made on account of hardship. Hardship, for this purpose, is generally defined as an immediate and heavy financial need, such as paying for medical expenses, the purchase of a principal residence, or paying certain tuition expenses. An Owner of a Contract purchased as a tax-deferred Section 403(b) annuity Contract will not, therefore, be entitled to exercise the right of surrender or withdrawal, as described in this Prospectus, in order to receive his or her Contract Value attributable to Premiums paid under a salary reduction agreement or any income or gains credited to such Contract Owner under the Contract unless one (1) of the above-described conditions has been satisfied, or unless the withdrawal is otherwise permitted under applicable federal tax law. In the case of transfers of amounts accumulated in a different Section 403(b) Contract to this Contract under a Section 403(b) Program, the withdrawal constraints described above would not apply to the amount transferred to the Contract attributable to a Contract Owner's December 31, 1988 account balance under the old Contract, provided that the amounts transferred between Contracts meets certain conditions. An Owner's Contract may be able to be transferred to certain other investment or funding alternatives meeting the requirements of Section 403(b) that are available under an employer's Section 403(b) arrangement. 401 OR 403(b) PROGRAMS - LOAN PRIVILEGES Generally, to the extent loans are permitted under the Contract, loans are non-taxable. However, loans under a 401 or 403(b) Contract are taxable in the event that the loan is in default. Please consult the Owner's tax advisor for more details. 47 OTHER INFORMATION VOTING OF SHARES OF THE FUNDS AUL is the legal owner of the shares of the Portfolios of the Funds held by the Investment Accounts of the Variable Account. In accordance with its view of present applicable law, AUL will exercise voting rights attributable to the shares of the Funds held in the Investment Accounts at regular and special meetings of the shareholders of the Funds on matters requiring shareholder voting under the 1940 Act. AUL will exercise these voting rights based on instructions received from persons having the voting interest in corresponding Investment Accounts of the Variable Account and consistent with any requirements imposed on AUL under Contracts with any of the Funds, or under applicable law. However, if the 1940 Act or any regulations thereunder should be amended, or if the present interpretation thereof should change, and as a result AUL determines that it is permitted to vote the shares of the Funds in its own right, it may elect to do so. The person having the voting interest under a Contract is the Contract Owner. AUL or the pertinent Fund shall send to each Contract Owner a Fund's proxy materials and forms of instruction by means of which instructions may be given to AUL on how to exercise voting rights attributable to the Fund's shares. Unless otherwise required by applicable law or under a Contract with any of the Funds, with respect to each of the Funds, the number of Fund shares as to which voting instructions may be given to AUL is determined by dividing the value of all of the Accumulation Units of the corresponding Investment Account attributable to a Contract on a particular date by the net asset value per share of that Fund as of the same date. After the Annuity Date, the number of Fund shares as to which voting instructions may be given to AUL is determined by dividing the value of all of the Annuity Units by the net asset value per share of that Fund as of the same date. Fractional votes will be counted. The number of votes as to which voting instructions may be given will be determined as of the date coinciding with the date established by a Fund for determining shareholders eligible to vote at the meeting of the Fund. If required by the SEC or under a Contract with any of the Funds, AUL reserves the right to determine in a different fashion the voting rights attributable to the shares of the Fund. Voting instructions may be cast in person or by proxy. Voting rights attributable to the Contracts for which no timely voting instructions are received will be voted by AUL in the same proportion as the voting instructions which are received in a timely manner for all Contracts participating in that Investment Account. AUL will vote shares of any Investment Account, if any, that it owns beneficially in its own discretion, except that if a Fund offers it shares to any insurance company separate account that funds variable life insurance Contracts or if otherwise required by applicable law or Contract, AUL will vote its own shares in the same proportion as the voting instructions that are received in a timely manner for Contracts participating in the Investment Account. Neither the Variable Account nor AUL is under any duty to inquire as to the instructions received or the authority of Owners or others to instruct the voting of shares of any of the Funds. SUBSTITUTION OF INVESTMENTS AUL reserves the right, subject to compliance with the law as then in effect, to make additions to, deletions from, substitutions for, or combinations of the securities that are held by the Variable Account or any Investment Account or that the Variable Account or any Investment Account may purchase. If shares of any or all of the Funds should become unavailable for investment, or if, in the judgment of AUL's management, further investment in shares of any or all of the Funds should become inappropriate in view of the purposes of the Contracts, AUL may substitute shares of another fund for shares already purchased, or to be purchased in the future under the Contracts. AUL may also purchase, through the Variable Account, other securities for other classes of Contracts, or permit a conversion between classes of Contracts on the basis of requests made by Contract Owners or as permitted by federal law. Where required under applicable law, AUL will not substitute any shares attributable to a Contract Owner's interest in an Investment Account or the Variable Account without notice, Contract Owner approval, or prior approval of the SEC or a state insurance commissioner, and without following the filing or other procedures established by applicable state insurance regulators. AUL also reserves the right to establish additional Investment Accounts of the Variable Account that would invest in another investment company, a series thereof, or other suitable investment vehicle. New Investment Accounts may be established in the sole discretion of AUL, and any new Investment Account will be made available to existing Contract Owners on a basis to be determined by AUL. AUL may also eliminate or combine one (1) or more Investment Accounts or cease permitting new allocations to an Investment Account if, in its sole discretion, marketing, tax, or investment conditions so warrant. Subject to any required regulatory approvals, AUL reserves the right to transfer assets of any Investment Account of the Variable Account to another separate account or Investment Account. In the event of any such substitution or change, AUL may, by appropriate endorsement, make such changes in these and other Contracts as may be necessary or appropriate to reflect such substitution or change. AUL reserves the right to operate the Variable Account as a management investment company under the 1940 Act or any other form permitted by law, an Investment Account may be deregistered under that Act in the event such registration is no longer required, or it may be combined with other separate accounts of AUL or an affiliate thereof. Subject to compliance with applicable law, AUL also may combine one (1) or more Investment Accounts and may establish a committee, board, or other group to manage one (1) or more aspects of the operation of the Variable Account. 48 CHANGES TO COMPLY WITH LAW AND AMENDMENTS AUL reserves the right, without the consent of Contract Owners, to make any change to the provisions of the Contracts to comply with, or to give Contract Owners the benefit of, any federal or state statute, rule, or regulation, including, but not limited to, requirements for annuity Contracts and retirement plans under the Internal Revenue Code and regulations thereunder or any state statute or regulation. RESERVATION OF RIGHTS AUL reserves the right to refuse to accept new Premiums under a Contract and to refuse to accept any application for a Contract. PERIODIC REPORTS AUL will send quarterly statements showing the number, type, and value of Accumulation Units credited to the Contract. AUL will also send statements reflecting transactions in a Contract Owner's Account as required by applicable law. In addition, every person having voting rights will receive such reports or Prospectuses concerning the Variable Account and the Funds as may be required by the 1940 Act and the 1933 Act. LEGAL PROCEEDINGS There are no legal proceedings pending to which the Variable Account or the Variable Account's principal underwriter or depositor (or any subsidiary) is a party, or which would materially affect the Variable Account. LEGAL MATTERS Legal matters in connection with the issue and sale of the Contracts described in this Prospectus and the organization of AUL, its authority to issue the Contracts under Indiana law, and the validity of the forms of the Contracts under Indiana law have been passed upon by Thomas M. Zurek, General Counsel of AUL. Legal matters relating to the federal securities and federal income tax laws have been passed upon by Dechert LLP , Washington, D.C. FINANCIAL STATEMENTS Financial statements of OneAmerica Financial Partners, Inc., as of December 31, 2007, are included in the Statement of Additional Information. 49 STATEMENT OF ADDITIONAL INFORMATION The Statement of Additional Information contains more specific information and financial statements relating to AUL. The Table of Contents of the Statement of Additional Information is set forth below:
Description Page ----------- ---- GENERAL INFORMATION AND HISTORY ........................................................ 3 DISTRIBUTION OF CONTRACTS .............................................................. 3 CUSTODY OF ASSETS ...................................................................... 3 TAX STATUS OF AUL AND THE VARIABLE ACCOUNT ............................................. 3 TAX TREATMENT OF AND LIMITS ON PREMIUMS UNDER RETIREMENT PLANS ......................... 3 403(b) Programs ..................................................................... 4 408 and 408A Programs ............................................................... 4 457 Programs ........................................................................ 4 Employee Benefit Plans .............................................................. 5 Tax Penalty for All Annuity Contracts ............................................... 5 Withholding for Employee Benefit Plans and Tax-Deferred Annuities ................... 5 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM .......................................... 6 FINANCIAL STATEMENTS ................................................................... 7
A Statement of Additional Information may be obtained without charge by calling or writing AUL at the telephone number and address set forth in the front of this Prospectus. A postage pre-paid envelope is included for this purpose. -------------------------------------------------------------------------------- PROSPECTUS EXHIBIT 1 FORM ADV PART II -------------------------------------------------------------------------------- 50 --------------------------- OMB APPROVAL --------------------------- FORM ADV UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION OMB Number: 3235-0049 PART II - PAGE 1 Expires: July 31, 2008 Estimated average burden hours per response...9.402 ----------------------------
-------------------------------------------------------------------------------- Name of Investment Adviser: AMERICAN UNITED LIFE INSURANCE COMPANY --------------------------------------------------------------------------------
Address: (Number and Street) (City) (State) (Zip Code) Area Code: Telephone Number: ONE AMERICAN SQ. PO BOX 368 INDIANAPOLIS IN 46206 317 285-1877 ----------------------------------------------------------------------------------------------------------------
THIS PART OF FORM ADV GIVES INFORMATION ABOUT THE INVESTMENT ADVISER AND ITS BUSINESS FOR THE USE OF CLIENTS. THE INFORMATION HAS NOT BEEN APPROVED OR VERIFIED BY ANY GOVERNMENTAL AUTHORITY.
TABLE OF CONTENTS ITEM ---- NUMBER ITEM PAGE ------ ---- ---- 1 Advisory Services and Fees 2 2 Types of Clients 2 3 Types of Investments 3 4 Methods of Analysis, Sources of Information and Investment Strategies 3 5 Education and Business Standards 4 6 Education and Business Background 4 7 Other Business Activities 4 8 Other Financial Industry Activities or Affiliations 5 9 Participation or Interest in Client Transactions 5 10 Conditions for Managing Accounts 5 11 Review of Accounts 6 12 Investment or Brokerage Discretion 6 13 Additional Compensation 7 14 Balance Sheet 7 Continuation Sheet Schedule F
-------------------------------------------------------------------------------- (Schedules A, B, C, D, and E are included with Part I of this Form, for the use of regulatory bodies, and are not distributed to clients.) -------------------------------------------------------------------------------- POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER. FORM ADV ----------------------------------------------------------------------------------------------- PART II - PAGE 2 Applicant: SEC File Number: Date: AMERICAN UNITED LIFE INSURANCE COMPANY 801 - 8074 03/21/2008 ----------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------- 1. A. ADVISORY SERVICES AND FEES. (check the applicable boxes) For each type of service provided, state the approximate % of total Applicant: advisory billings from that service. (See instruction below.)
[x] (1) Provides investment supervisory services 99.00% ----- [x] (2) Manages investment advisory accounts not involving investment supervisory services 1.00% ----- [ ] (3) Furnishes investment advice through consultations not included in either service described above % [ ] (4) Issues periodicals about securities by subscription % [ ] (5) Issues special reports about securities not included in any service described above % [ ] (6) Issues, not as part of any service described above, any charts, graphs, formulas' or other devices which clients may use to evaluate securities % [ ] (7) On more than an occasional basis, furnishes advice to clients on matters not involving securities % [ ] (8) Provides a timing service % [ ] (9) Furnishes advice about securities in any manner not described above % (Percentages should be based on applicant's last fiscal year. If applicant has not completed its first fiscal year, provide estimates of advisory billings for that year and state that the percentages are estimates.)
----------------------------------------------------------------------------------------------------------------------------- Yes No B. Does applicant call any of the services it checked above financial planning or some similar term? [ ] [x] ----------------------------------------------------------------------------------------------------------------------------- C. Applicant offers investment advisory services for: (check all that apply) [x] (1) A percentage of assets under management [ ] (4) Subscription fees [ ] (2) Hourly charges [ ] (5) Commissions [x] (3) Fixed fees (not including subscription fees) [ ] (6) Other ----------------------------------------------------------------------------------------------------------------------------- D. For each check box in A above, describe on Schedule F: o the services provided, including the name of any publication or report issued by the adviser on a subscription basis or for a fee o applicant's basic fee schedule, how fees are charged and whether its fees are negotiable o when compensation is payable, and if compensation is payable before service is provided, how a client may get a refund or may terminate an investment advisory contract before its expiration date ----------------------------------------------------------------------------------------------------------------------------- 2. TYPES OF CLIENTS -- Applicant generally provides investment advice to: (check those that apply) [x] A. Individuals [ ] E. Trusts, estates, or charitable organizations [ ] B. Banks or thrift institutions [x] F. Corporations or business entities other than those listed above [x] C. Investment companies [ ] G. Other (describe on Schedule F) [x] D. Pension and profit sharing plans ============================================================================================================================= Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1). -----------------------------------------------------------------------------------------------------------------------------
FORM ADV ----------------------------------------------------------------------------------------------- PART II - PAGE 3 Applicant: SEC File Number: Date: AMERICAN UNITED LIFE INSURANCE COMPANY 801 - 8074 03/21/2008
---------------------------------------------------------------------------------------------------------------------------- 3. TYPES OF INVESTMENTS. Applicant offers advice on the following: (check those that apply) A. Equity Securities [x] H. United States government securities [x] (1) exchange-listed securities [x] (2) securities traded over-the-counter I. Options contracts on: [x] (3) Foreign issuers [ ] (1) securities [ ] (2) commodities [ ] B. Warrants J. Futures contracts on: [x] C. Corporate debt securities [ ] (1) tangibles (other than commercial paper) [ ] (2) intangibles [x] D. Commercial paper K. Interests in partnerships investing in: [ ] (1) real estate [x] E. Certificates of deposit [ ] (2) oil and gas interests [ ] (3) other (explain on Schedule F) [x] F. Municipal securities [ ] L. Other (explain on Schedule F) G. Investment company securities: [x] (1) variable life insurance [x] (2) variable annuities [x] (3) mutual fund shares ----------------------------------------------------------------------------------------------------------------------------
4. METHODS OF ANALYSIS, SOURCES OF INFORMATION, AND INVESTMENT STRATEGIES. A. Applicant's security analysis methods include: (check those that apply) (1) [ ] Charting (4) [ ] Cyclical (2) [x] Fundamental (5) [x] Other (explain on Schedule F) (3) [x] Technical ---------------------------------------------------------------------------------------------------------------------------- B. The main sources of information applicant uses include: (check those that apply) (1) [x] Financial newspapers and magazines (5) [ ] Timing services (2) [x] Inspections of corporate activities (6) [x] Annual reports, prospectuses, filings with the Securities and Exchange Commission (3) [x] Research materials prepared by others (7) [x] Company press releases (4) [x] Corporate rating services (8) [ ] Other (explain on Schedule F) ----------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------- Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1). -----------------------------------------------------------------------------------------------------------------------------
FORM ADV ----------------------------------------------------------------------------------------------- PART II - PAGE 4 Applicant: SEC File Number: Date: AMERICAN UNITED LIFE INSURANCE COMPANY 801 - 8074 03/21/2008
---------------------------------------------------------------------------------------------------------------------------- C. The investment strategies used to implement any investment advice given to clients include: (check those that apply) (1) [x] Long term purchases (securities held at least a year) (5) [ ] Margin transactions (2) [x] Short term purchases (securities sold within a year) (6) [ ] Option writing, including covered options, uncovered options or spreading strategies (3) [x] Trading (securities sold within 30 days) (7) [ ] Other (explain on Schedule F) (4) [ ] Short sales ---------------------------------------------------------------------------------------------------------------------------- 5. EDUCATION AND BUSINESS STANDARDS. Are there any general standards of education or business experience that applicant requires of those involved in determining or giving investment advice to clients? (If yes, please describe these standards on Schedule F) Yes No [x] [ ] ---------------------------------------------------------------------------------------------------------------------------- 6. EDUCATION AND BUSINESS BACKGROUND. For: o each member of the investment committee or group that determines general investment advice to be given to clients, or o if the applicant has no investment committee or group, each individual who determines general investment advice clients (if more than five, respond only for their supervisors) o each principal executive officer of applicant or each person with similar status or performing similar functions. On Schedule F, give the: o name o formal education after high school o year of birth o business background for the preceding five years ---------------------------------------------------------------------------------------------------------------------------- 7. OTHER BUSINESS ACTIVITIES. (check those that apply) [x] A. Applicant is actively engaged in a business other than giving investment advice. [x] B. Applicant sells products or services other than investment advice to clients. [x] C. The principal business of applicant or its principal executive officers involves something other than providing investment advice. (For each checked box describe the other activities, including the time spent on them, on Schedule F.) ---------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------- Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1). ----------------------------------------------------------------------------------------------------------------------------
FORM ADV ----------------------------------------------------------------------------------------------- PART II - PAGE 5 Applicant: SEC File Number: Date: AMERICAN UNITED LIFE INSURANCE COMPANY 801 - 8074 03/21/2008
---------------------------------------------------------------------------------------------------------------------------- 8. OTHER FINANCIAL INDUSTRY ACTIVITIES OR AFFILIATIONS. (check those that apply) [ ] A. Applicant is registered (or has an application pending) as a securities broker-dealer. [ ] B. Applicant is registered (or has an application pending) as a futures commission merchant, commodity pool operator or commodity trading adviser. [ ] C. Applicant has arrangements that are material to its advisory business or its clients with a related person who is a: [x] (1) broker-dealer [ ] (7) accounting firm [x] (2) investment company [ ] (8) law firm [x] (3) other investment adviser [x] (9) insurance company or agency [ ] (4) financial planning firm [ ] (10) pension consultant [ ] (5) commodity pool operator, commodity [ ] (11) real estate broker or dealer trading adviser or futures commission merchant [ ] (6) banking or thrift institution [ ] (12) entity that creates or packages limited partnerships (For each checked box in C, on Schedule F identify the related person and describe the relationship and the arrangements.) D. Is applicant or a related person a general partner in any partnership in which clients are solicited to invest? (If yes, describe on Schedule F the partnerships and what they invest in.) Yes No [ ] [x] ----------------------------------------------------------------------------------------------------------------------------
9. PARTICIPATION OR INTEREST IN CLIENT TRANSACTIONS. Applicant or a related person: (check those that apply) [ ] A. As principal, buys securities for itself from or sells securities it owns to any client. [ ] B. As broker or agent effects securities transactions for compensation for any client. [ ] C. As broker or agent for any person other than a client effects transactions in which client securities are sold to or bought from a brokerage customer. [ ] D. Recommends to clients that they buy or sell securities or investment products in which the applicant or a related person has some financial interest. [x] E. Buys or sells for itself securities it also recommends to clients. (For each box checked, describe on Schedule F when the applicant or a related person engages in these transactions and what restrictions, internal procedures, or disclosures are used for conflicts of interest in those transactions.) Describe on Schedule F, your code of ethics, and state that you will provide a copy of your code of ethics to any client or prospective client upon request. ---------------------------------------------------------------------------------------------------------------------------- 10. CONDITIONS FOR MANAGING ACCOUNTS. Does the applicant provide investment advisory services, manage investment advisory accounts or hold itself out as providing financial planning or some similarly termed services and impose a minimum dollar value of assets or other condition for starting or maintaining an account? (If yes, describe on Schedule F) Yes No [ ] [x] ---------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------- Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1). ----------------------------------------------------------------------------------------------------------------------------
FORM ADV ----------------------------------------------------------------------------------------------- PART II - PAGE 6 Applicant: SEC File Number: Date: AMERICAN UNITED LIFE INSURANCE COMPANY 801 - 8074 03/21/2008
---------------------------------------------------------------------------------------------------------------------------- 11. REVIEW OF ACCOUNTS. If applicant provides investment supervisory services, manages investment advisory account, or holds itself out as providing financial planning or some similarly termed services: A. Describe below the reviews and reviewers of the accounts. FOR REVIEWS, include their frequency, different levels, and triggering factors. FOR REVIEWERS, include the number of reviewers, their titles and functions, instructions they receive from applicant on performing reviews, and number of accounts assigned each. AUL AS THE INVESTMENT ADVISOR, IS RESPONSIBLE FOR PROVIDING A CONTINUOUS PROGRAM FOR THE MANAGEMENT OF DAY-TO-DAY INVESTMENT OPERATIONS, SUBJECT TO THE OVERALL SUPERVISION OF THE BOARD OF DIRECTORS OF THE ONEAMERICA FUNDS, INC. THE FOLLOWING AUL EMPLOYEES REGULARLY PERFORM QUARTERLY REVIEWS OF THE PERFORMANCE AND INVESTMENT OF EACH PORTFOLIO FOR THE ONEAMERICA FUND, INC.'S BOARD OF DIRECTORS: G. DAVID SAPP, Sr. V.P., INVESTMENTS KATHRYN E. HUDSPETH, V.P., EQUITIES DAVID WEISENBURGER, ASSISTANT V.P., FIXED INCOME SECURITIES SUCH REVIEWS AND BOARD REPORTS USUALLY CONTAIN INFORMATION RELATING TO MARKET ACTIVITY, GENERAL ECONOMIC CONDITIONS, AND PERFORMANCE OF THE PORTFOLIO SECURITIES. THE COST OF BROKER COMMISSIONS AND THE INTENDED INVESTMENT STRATEGY BASED ON CURRENT CONDITIONS ARE REPORTED ANNUALLY TO THE BOARD. B. Describe below the nature and frequency of regular reports to clients on their accounts. SEE ANSWER TO 11A ABOVE IBBOTSON REVIEWS THE PORTFOLIO OPTIMIZATION MODELS ON AN ANNUAL BASIS AND UPDATES THE ASSET ALLOCATION MODELS. ACCOUNTS ARE UPDATED CONSISTENT WITH THIS ANALYSIS. ---------------------------------------------------------------------------------------------------------------------------- 12. INVESTMENT OR BROKERAGE DISCRETION. A. Does applicant or any related person have authority to determine, without obtaining specific client consent, the: (1) securities to be bought or sold? Yes No [x] [ ] (2) amount of securities to be bought or sold? Yes No [x] [ ] (3) broker or dealer to be used? Yes No [x] [ ] (4) commission rates paid? Yes No [x] [ ] ---------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------- Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1). ----------------------------------------------------------------------------------------------------------------------------
FORM ADV ----------------------------------------------------------------------------------------------- PART II - PAGE 7 Applicant: SEC File Number: Date: AMERICAN UNITED LIFE INSURANCE COMPANY 801 - 8074 03/21/2008
---------------------------------------------------------------------------------------------------------------------------- B. Does applicant or a related person suggest brokers to clients? Yes No [ ] [x] For each yes answer to A describe on Schedule F any limitations on the authority. For each yes to A(3), A(4) or B, describe on Schedule F the factors considered in selecting brokers and determining the reasonableness of their commissions. If the value of products, research and services given to the applicant or a related person is a factor, describe: o the products, research and services o whether clients may pay commissions higher than those obtainable from other brokers in return for those products and services o whether research is used to service all of applicant's accounts or just those accounts paying for it; and o any procedures the applicant used during the last fiscal year to direct client transactions to a particular broker in return for product and research services received. ---------------------------------------------------------------------------------------------------------------------------- 13. ADDITIONAL COMPENSATION. Does the applicant or a related person have any arrangements, oral or in writing, where it: A. is paid cash by or receives some economic benefit (including commissions, equipment or non-research services) from a non-client in connection with giving advice to clients? Yes No [ ] [x] B. directly or indirectly compensates any person for client referrals? (For each yes, describe the arrangements on Schedule F.) Yes No [ ] [x] ---------------------------------------------------------------------------------------------------------------------------- 14. BALANCE SHEET. Applicant must provide a balance sheet for the most recent fiscal year on Schedule G if applicant: o has custody of client funds or securities (unless applicant is registered or registering only with the Securities and Exchange Commission); or o requires prepayment of more than $500 in fees per client and 6 or more in advance Has applicant provided a Schedule G balance sheet? Yes No [ ] [x] ---------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------- Answer all items. Complete amended pages in full, circle amended items and file with execution page (page 1). ----------------------------------------------------------------------------------------------------------------------------
SCHEDULE F OF ---------------------------------------------------------------------------------------- FORM ADV Applicant: SEC File Number: Date: CONTINUATION SHEET FOR FORM ADV PART II AMERICAN UNITED LIFE INSURANCE COMPANY 801 - 8074 03/21/2008 ----------------------------------------------------------------------------------------------------------------------------- (Do not use this Schedule as a continuation sheet for Form ADV Part I or any other schedules.) -----------------------------------------------------------------------------------------------------------------------------
ITEM OF FORM (IDENTIFY) ANSWER ----------------------------------------------------------------------------------------------------------------------------- II 1.A AMERICAN UNITED LIFE INSURANCE COMPANY ("AUL") OFFERS GROUP VARIABLE ANNUITY CONTRACTS TO BE USED IN CONNECTION WITH CERTAIN RETIREMENT PLANS AND INDIVIDUAL VARIABLE ANNUITY AND LIFE CONTRACTS. THESE CONTRACTS PROVIDE FOR THE ACCUMULATION OF VALUES ON A VARIABLE BASIS, FIXED BASIS OR BOTH. CONTRIBUTIONS DESIGNATED TO ACCUMULATE ON A VARIABLE BASIS MAY BE ALLOCATED TO ONE OR MORE OF THE INVESTMENT ACCOUNTS OF THE AUL AMERICAN UNIT TRUST, AUL AMERICAN INDIVIDUAL UNIT TRUST, AUL AMERICAN INDIVIDUAL VARIABLE ANNUITY TRUST AND AUL AMERICAN INDIVIDUAL VARIABLE LIFE ANNUITY UNIT TRUST REGISTERED UNIT INVESTMENT TRUSTS AND SEPARATE ACCOUNTS OF AUL. AUL ACTS AS THE INVESTMENT ADVISOR TO THE ONEAMERICA FUNDS, INC. ("THE FUND"). OTHER MUTUAL FUND SHARES MAY BE PURCHASED BY THE SEPARATE ACCOUNTS FROM MUTUAL FUNDS WHICH HAVE INVESTMENT ADVISORS OTHER THAN AUL. THE FUND AND AUL (THE "ADVISOR") ENTERED INTO AN INVESTMENT ADVISOR AGREEMENT IN 1990, ("THE AGREEMENT") WHICH WAS APPROVED BY THE FUND SHAREHOLDERS AND TRUST PARTICIPANTS ON MAY 8, 1991. THEREAFTER, THE AGREEMENT HAS BEEN REVIEWED ANNUALLY BY THE FUND'S BOARD OF DIRECTORS UNLESS OTHERWISE REQUIRED BY FEDERAL SECURITIES LAWS. SUBJECT TO THE OVERALL SUPERVISION OF THE FUND'S BOARD OF DIRECTORS, THE ADVISOR EXERCISES RESPONSIBILITY FOR THE INVESTMENT AND REINVESTMENT OF THE FUND'S ASSETS. THE ADVISOR MANAGES THE DAY-TO-DAY INVESTMENT OPERATIONS OF THE FUND AND THE COMPOSITION OF EACH OF THE PORTFOLIOS, INCLUDING THE PURCHASE, RETENTION AND DISPOSITION OF THE INVESTMENTS, SECURITIES AND CASH CONTAINED THEREIN IN ACCORDANCE WITH EACH PORTFOLIO'S INVESTMENT OBJECTIVES AND POLICIES AS STATED IN THE FUND'S CURRENT PROSPECTUS. THE AGREEMENT WAS LAST APPROVED BY THE BOARD OF DIRECTORS ON FEBRUARY 29, 2008. UNDER THE AGREEMENT, THE ADVISOR IS COMPENSATED FOR ITS SERVICES AT A MONTHLY FEE BASED ON AN ANNUAL PERCENTAGE OF THE AVERAGE DAILY NET ASSETS OF EACH PORTFOLIO. FOR EACH PORTFOLIO, THE FUND PAYS THE ADVISOR A FEE AT AN ANNUAL RATE OF THE PORTFOLIO'S AVERAGE DAILY NET ASSETS OF 0.50 PERCENT FOR THE VALUE, INVESTMENT GRADE BOND AND ASSET DIRECTOR PORTFOLIOS; 0.40 PERCENT FOR THE MONEY MARKET PORTFOLIO; AND 0.70 PERCENT FOR THE SOCIALLY RESPONSIVE PORTFOLIO. THE ADVISOR IS ALSO THE DISTRIBUTOR OF CONTRACTS IN WHICH THE PORTFOLIOS ARE OFFERED. THE ADVISOR IS ENTITLED TO 0.30 PERCENT OF THE AVERAGE DAILY NET ASSETS OF EACH PORTFOLIO'S ADVISOR CLASS SHARES FOR DISTRIBUTION AND SHAREHOLDER SERVICES PROVIDED (12b-1 FEES) TO THE SHAREHOLDERS. THE STATE LIFE INSURANCE COMPANY, ("STATE LIFE") IS A SUBSIDIARY OF ONEAMERICA FINANCIAL PARTNERS, INC. AUL PERFORMS CERTAIN INVESTMENT MANAGEMENT SERVICES FOR AND ON BEHALF OF STATE LIFE AND PURSUANT TO AN AGREEMENT BETWEEN THE TWO (2) COMPANIES. UNDER THE AGREEMENT BETWEEN AUL AND STATE LIFE, AUL PROVIDES A CONTINUOUS INVESTMENT PROGRAM AND IS RESPONSIBLE FOR THE COMPOSITION OF STATE LIFE'S INVESTMENT PORTFOLIO. IN CONSIDERATION THEREOF, STATE LIFE PAYS AUL THIRTEEN (13) BASIS POINTS ANNUALLY BASED UPON STATE LIFE'S MEAN INVESTED ASSETS FOR EACH YEAR THE AGREEMENT REMAINS IN EFFECT. STATE LIFE IS RESPONSIBLE FOR ALL OF THE EXPENSES AND LIABILITIES RELATING TO ITS INVESTMENT PORTFOLIO AND FOR ESTABLISHING THE INVESTMENT OBJECTIVES FOR AUL TO FOLLOW. AUL AGREES TO MAINTAIN AND PRESERVE REQUIRED RECORDS RELATED TO STATE LIFE INVESTMENTS. PIONEER MUTUAL LIFE INSURANCE COMPANY, ("PML") IS A SUBSIDIARY OF ONEAMERICA FINANCIAL PARTNERS, INC. PML PAYS AUL THIRTEEN (13) BASIS POINTS ANNUALLY BASED UPON PML'S MEAN INVESTED ASSETS FOR EACH YEAR. ----------------------------------------------------------------------------------------------------------------------------- (C) 1996 ProFormWare, Inc. (portions of software only)
----------------------------------------------------------------------------------------------------------------------------- MISCELLANEOUS INVESTMENT ADVISORY CLIENTS AUL HAS ENTERED INTO AGREEMENTS WITH MISCELLANEOUS INVESTMENT ADVISORY CLIENTS WHEREBY AUL OFFERS TO THESE ENTITIES CERTAIN PRIVATE PLACEMENT FIXED INCOME INVESTMENTS IN WHICH AUL IS PARTICIPATING. THESE ENTITIES MAINTAIN ULTIMATE DISCRETION IN ALL SECURITIES PURCHASES. THEY PAY AUL AN ANNUAL FEE ON A QUARTERLY BASIS IN ARREARS FOR THE SERVICES RENDERED UNDER THE AGREEMENTS IN THE AMOUNT UP TO TEN (10) BASIS POINTS OF THE OUTSTANDING AGGREGATE PRINCIPAL VALUE OF THE ASSETS HELD AT THE END OF EACH QUARTER WHICH WERE PURCHASED UNDER THIS AGREEMENT. AUL HAS ENTERED INTO A AN AGREEMENT WHEREBY IBBOTSON ASSOCIATES ASSISTS IN PROVIDING ADVICE TO PLAN SPONSORS REGARDING THE INVESTMENT OPTIONS TO BE INCLUDED IN THE PLAN. IBBOTSON REVIEWS THE INVESTMENT OPTIONS ON THE AUL PLATFORM AND PROVIDES QUALITATIVE DATA ON THE INVESTMENT OPTION IN ORDER FOR A PREFERRED LIST OF OPTIONS TO BE CREATED FOR PLAN SPONSORS TO CHOOSE FROM FOR THEIR PARTICIPANTS. AUL WILL CHARGE A MAXIMUM FEE OF $2,000, DEPENDING ON PLAN ASSETS. AUL PAYS IBBOTSON A FLAT FEE OF $125,000 PER YEAR FOR THE SERVICE. PORTFOLIO OPTIMIZATION PROGRAM AUL OFFERS, THROUGH SOME VARIABLE ANNUITY AND VARIABLE LIFE CONTRACTS, ASSET ALLOCATION PROGRAMS THAT MAY CONSTITUTE THE PROVISION OF INVESTMENT ADVICE UNDER SEC RULES. UNDER THESE PROGRAMS, AUL HAS DEVELOPED SEVERAL ASSET ALLOCATIONS MODELS, EACH BASED ON DIFFERENT PROFILES OF AN INVESTOR'S WILLINGNESS TO ACCEPT INVESTMENT RISK. IF THE CLIENT DECIDES TO SUBSCRIBE TO THE PORTFOLIO OPTIMIZATION SERVICE, INITIAL PREMIUMS OR VARIABLE ACCOUNT VALUE, AS APPLICABLE, WILL BE ALLOCATED TO THE INVESTMENT OPTIONS ACCORDING TO THE MODEL SELECTED. SUBSEQUENT PURCHASE PAYMENTS, IF ALLOWED UNDER THE CONTRACT, WILL ALSO BE ALLOCATED ACCORDINGLY. AUL WILL SERVE AS THE INVESTMENT ADVISOR FOR THE SERVICE, WITH ALL ASSOCIATED FIDUCIARY RESPONSIBILITIES, SOLELY FOR PURPOSES OF DEVELOPMENT OF THE PORTFOLIO OPTIMIZATION MODELS AND PERIODIC UPDATES OF THE MODELS. EACH MODEL IS EVALUATED ANNUALLY TO ASSESS WHETHER THE COMBINATION OF INVESTMENT OPTIONS WITHIN THE MODEL SHOULD BE CHANGED TO BETTER OPTIMIZE THE POTENTIAL RETURN FOR THE LEVEL OF RISK TOLERANCE INTENDED FOR THE MODEL. AS A RESULT OF THE PERIODIC ANALYSIS, EACH MODEL MAY CHANGE AND INVESTMENT OPTIONS MAY BE DELETED FROM A MODEL. WHEN AUL UPDATES THE MODELS, IT WILL SEND WRITTEN NOTICE OF THE UPDATED MODELS AT LEAST THIRTY (30) DAYS IN ADVANCE OF THE DATE IT INTENDS THE UPDATED VERSION OF THE MODEL TO BE EFFECTIVE. IF THE CLIENT TAKES NO ACTION, THE VARIABLE ACCOUNT VALUE (OR SUBSEQUENT PREMIUMS, IF APPLICABLE) WILL BE REALLOCATED IN ACCORDANCE WITH THE UPDATED MODEL AUTOMATICALLY. IF THE CLIENT DOES NOT WISH TO ACCEPT THE CHANGES TO THE SELECTED MODEL, THE CLIENT CAN CHANGE TO A DIFFERENT MODEL OR WITHDRAW FROM THE PORTFOLIO OPTIMIZATION SERVICE BY PROVIDING NOTICE TO AUL. SOME OF THE RIDERS AVAILABLE UNDER THE CONTRACT REQUIRE THE CLIENT TO PARTICIPATE IN AN ASSET ALLOCATION SERVICE. IF THE CLIENT PURCHASES ANY OF THESE RIDERS, SUCH RIDERS WILL TERMINATE IF THE CLIENT WITHDRAWS FROM PORTFOLIO OPTIMIZATION OR ALLOCATES ANY PORTION OF THE CLIENT'S SUBSEQUENT PREMIUMS OR ACCOUNT VALUE TO AN INVESTMENT OPTION THAT IS NOT CURRENTLY INCLUDED IN A MODEL (AS FULLY DESCRIBED IN EACH RIDER.) PARTICIPANTS IN GROUP VARIABLE ANNUITIES MAY RECEIVE INVESTMENT ADVICE FROM A THIRD PARTY INVESTMENT ADVICE PROVIDER. THERE IS NO COST TO THE PARTICIPANT WHEN USING THE BASIC INVESTMENT ADVICE SERVICE. AUL MAY ALSO ASSESS AN ACCOUNT MANAGEMENT FEE DIRECTLY AGAINST THE ACCOUNT OF EACH PARTICIPANT WHO UTILIZES THE MORE DETAILED, HANDS-ON MANAGED ACCOUNTS SERVICE. THE FEE FOR THE MANAGED ACCOUNT SERVICES IS A MAXIMUM OF ONE PERCENT OF THE TOTAL ACCOUNT VALUE, PAID IN 0.25 PERCENT QUARTERLY INSTALLMENTS. AUL MAY FORWARD A PORTION OF THE FEE TO THE INVESTMENT ADVICE PROVIDER AND TO THE BROKER AS A FINDER'S FEE. II 4.A APPLICANT'S SECURITY ANALYSIS METHODS INCLUDE QUANTITATIVE MODELING. II 5. IN GENERAL, THE APPLICANT REQUIRES ALL INDIVIDUALS INVOLVED IN DETERMINING OR GIVING INVESTMENT ADVICE HAVE A COLLEGE DEGREE AND APPROXIMATELY 2-3 YEARS OF BUSINESS EXPERIENCE. ----------------------------------------------------------------------------------------------------------------------------- (C) 1996 ProFormWare, Inc. (portions of software only)
----------------------------------------------------------------------------------------------------------------------------- II 6. * OF APPLICANT KENT ADAMS, CFA DOB: 03/11/48 EDUCATION: GRADUATE OF INDIANA UNIVERSITY VICE PRESIDENT, FIXED INCOME SECURITIES *01/1992 TO PRESENT MICHAEL I. BULLOCK, CFA DOB: 07/26/62 EDUCATION: GRADUATE OF INDIANA UNIVERSITY & BUTLER UNIVERSITY VICE PRESIDENT, PRIVATE PLACEMENTS *11/2004 TO PRESENT ASST. VICE PRESIDENT, MORTGAGE-BACKED SECURITIES *11/2000 TO 11/2004 RICHARD M. ELLERY DOB: 07/25/71 EDUCATION: GRADUATE OF PURDUE UNIVERSITY & INDIANA UNIVERSITY SCHOOL OF LAW INVESTMENT ADVISOR CHIEF COMPLIANCE OFFICER *06/2007 TO PRESENT ASSOCIATE GENERAL COUNSEL * 01/2007 TO PRESENT ASSISTANT GENERAL COUNSEL *05/2004 TO 01/2007 SENIOR COUNSEL * 11/2001 TO 05/2004 ROBERT E. FERGUSON DOB: 03/31/57 EDUCATION: GRADUATE OF INDIANA UNIVERSITY & INDIANA UNIVERSITY SCHOOL OF LAW DEPUTY COUNSEL *8/06/2006 TO PRESENT ASSOCIATE GENERAL COUNSEL *08/2004 TO 08/2006 ASSISTANT GENERAL COUNSEL *12/1995 TO 08/2004 STEVEN T. HOLLAND DOB: 10/10/58 EDUCATION: GRADUATE OF MIAMI UNIVERSITY & INDIANA UNIVERSITY V.P., MORTGAGE LOANS *06/1997 TO PRESENT KATHRYN E. HUDSPETH, CFA DOB: 05/09/59 EDUCATION: GRADUATE OF INDIANA WESLEYAN & BALL STATE UNIVERSITY VICE PRESIDENT, EQUITIES *11/1994 TO PRESENT ERIK LEIGHTON DOB: 11/24/71 EDUCATION: GRADUATE OF DEPAUW UNIVERSITY & BUTLER UNIVERSITY ASST. EQUITY PORTFOLIO MANAGER *07/2006 TO PRESENT SENIOR RESEARCH ANALYST *10/2003 TO 07/2006 INVESTMENT RESEARCH ANALYST *08/2001 TO 10/2003 JOHN C. MASON, CFA DOB: 08/23/64 EDUCATION: GRADUATE OF INDIANA UNIVERSITY VICE PRESIDENT, MARKETABLE CORPORATE BONDS *05/2003 TO PRESENT ASST. VICE PRESIDENT, MARKETABLE CORPORATE BONDS *08/1998 TO 04/2003 DAVID C. McCONAHA, CFA DOB: 06/04/1976 EDUCATION: GRADUATE OF BALL STATE UNIVERSITY & INDIANA UNIVERSITY RESEARCH ANALYST * 07/2006 TO PRESENT FINANCIAL ANALYST, 07/2004 TO 07/2006 MAGELLAN HEALTH SERVICES REGISTERED REPRESENTATIVE, CHARLES SCHWAB 06/1998 TO 06/2004 DAYTON H. MOLENDORP DOB: 04/08/47 EDUCATION: GRADUATE OF WESTMAR COLLEGE CHAIRMAN* 02/2007 TO PRESENT PRESIDENT AND CEO* 09/2004 TO PRESENT ----------------------------------------------------------------------------------------------------------------------------- (C) 1996 ProFormWare, Inc. (portions of software only)
----------------------------------------------------------------------------------------------------------------------------- EXECUTIVE VICE PRESIDENT * 02/2003 TO 09/2004 DIRECTOR, AUL, *12/2000 - PRESENT G. DAVID SAPP, CFA DOB: 12/03/46 EDUCATION: GRADUATE OF INDIANA UNIVERSITY Sr. VICE PRESIDENT INVESTMENTS *01/1992 TO PRESENT MARK A. SCHMAHL, CFA DOB: 08/01/72 EDUCATION: GRADUATE OF INDIANA UNIVERSITY RESEARCH ANALYST *06/ 2007 TO PRESENT VICE PRESIDENT, CAPITAL MARKETS UNDERWRITER, FIFTH THIRD BANK 08/2003 TO 06/2007 DAVID WEISENBURGER, CFA DOB: 08/10/65 EDUCATION: GRADUATE OF UNIVERSITY OF CINCINNATI ASST. V.P., FIXED INCOME SECURITIES *09/2007 TO PRESENT ASST. V.P., SENIOR PORTFOLIO MANAGER, OHIO CASUALTY 04/2006 TO 09/2007 MANAGING DIRECTOR, FIXED INCOMES AND DERIVATIVES, SUMMIT INVESTMENT PARTNERS 07/1996 TO 04/2006 EDWARD ZHOU, CFA DOB: 01/29/71 EDUCATION: GRADUATE OF XIAMEN UNIVERSITY & UNIVERSITY OF AKRON SENIOR RESEARCH ANALYST *08/2006 TO PRESENT PRIVATE BUSINESS CONSULTANT 06/2006 TO 07/2006 SENIOR INVESTMENT ADVISOR, FORTIS HAITONG INVESTMENT MANAGEMENT 06/2004 TO 05/2006 GRADUATE ASSISTANT, BOSTON COLLEGE CARROLL SCHOOL OF MANAGEMENT 09/2003 TO 03/2004 II 7. (A)(B)(C) AUL IS A STOCK LIFE INSURANCE COMPANY EXISTING UNDER THE LAWS OF THE STATE OF INDIANA. AUL PRIMARILY CONDUCTS A CONVENTIONAL LIFE INSURANCE, HEALTH INSURANCE, ANNUITY BUSINESS AND REINSURANCE. APPLICANT SPENDS APPROXIMATELY 90 PERCENT OF ITS TIME CONDUCTING THESE ACTIVITIES. SEE ANSWER PROVIDED IN II 1.A OF THIS SCHEDULE F. THE BOARD OF DIRECTORS HAS ADOPTED INVESTMENT OBJECTIVES FOR EACH OF THE ONEAMERICA PORTFOLIOS. ADDITIONALLY, THE PORTFOLIOS ARE SUBJECT TO CERTAIN INVESTMENT RESTRICTIONS. NEITHER THE INVESTMENT OBJECTIVES NOR THE INVESTMENT RESTRICTIONS MAY BE CHANGED WITHOUT A MAJORITY VOTE OF THE SHAREHOLDERS OF THE AFFECTED PORTFOLIO WITH THE EXCEPTION OF THE SOCIALLY RESPONSIVE PORTFOLIO WHICH DOES NOT REQUIRE SHAREHOLDER APPROVAL. THE APPLICANT HAS THE AUTHORITY TO DETERMINE, WITHOUT OBTAINING SPECIFIC CLIENT CONSENT, THE AMOUNT AND TYPE OF SECURITIES TO BE BOUGHT OR SOLD, PROVIDED THAT THE INVESTMENT OBJECTIVES AND INVESTMENT RESTRICTIONS ARE FOLLOWED. IN EXECUTING TRANSACTIONS, THE ADVISOR WILL ATTEMPT TO OBTAIN THE BEST EXECUTION FOR A PORTFOLIO TAKING INTO ACCOUNT SUCH FACTORS AS PRICE (INCLUDING THE APPLICABLE BROKERAGE COMMISSION OR DOLLAR SPREAD), SIZE OF ORDER, THE NATURE OF THE MARKET FOR THE SECURITY, THE TIMING OF THE TRANSACTION, THE REPUTATION, EXPERIENCE AND FINANCIAL STABILITY OF THE BROKER- DEALER INVOLVED, THE QUALITY OF THE SERVICE, THE DIFFICULTY OF EXECUTION AND OPERATIONAL FACILITIES OF THE FIRMS INVOLVED, AND THE FIRMS RISK IN POSITIONING A BLOCK OF SECURITIES. IN EFFECTING PURCHASES AND SALES, THE ADVISOR MAY PAY HIGHER COMMISSION RATES THAN THE LOWEST AVAILABLE WHEN THE ADVISOR BELIEVES IT IS REASONABLE TO DO SO IN LIGHT OF THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED BY THE BROKER-DEALER EFFECTING THE TRANSACTION, AS DESCRIBED BELOW. II 8.C(1) ONEAMERICA SECURITIES, INC., A REGISTERED BROKER-DEALER AND REGISTERED INVESTMENT ADVISOR LOCATED AT ONE AMERICAN SQUARE, INDIANAPOLIS, IN 46206 IS A WHOLLY OWNED SUBSIDIARY OF AUL AND IS THE DISTRIBUTOR OF ALL REGISTERED PRODUCTS OFFERED BY AUL. II 8.C(2) SEE ANSWER PROVIDED IN II 1.A OF THIS SCHEDULE F. ----------------------------------------------------------------------------------------------------------------------------- (C) 1996 ProFormWare, Inc. (portions of software only)
----------------------------------------------------------------------------------------------------------------------------- II 8.C(3) SEE ANSWER PROVIDED IN II 1.A OF THIS SCHEDULE F. II 8.C(9) SEE ANSWER PROVIDED IN II 1.A OF THIS SCHEDULE F. II 9. THE CODE OF ETHICS HAS BEEN DRAFTED BY THE ADVISOR AND ADOPTED BY THE INVESTMENT COMMITTEE OF THE ADVISOR AND ONEAMERICA FUNDS, INC. IF ANY CLIENT OR PROSPECTIVE CLIENT REQUESTS A COPY OF THE CODE OF ETHICS, A COPY WILL BE DISTRIBUTED TO THEM. II 9.E SOME EQUITY SECURITIES CONSIDERED FOR INVESTMENT BY THE ADVISOR MAY ALSO BE APPROPRIATE FOR THE ADVISOR'S GENERAL ACCOUNT AS WELL AS FOR OTHER ACCOUNTS SERVED BY THE ADVISOR. IF A PURCHASE OR SALE OF EQUITY SECURITIES CONSISTENT WITH THE INVESTMENT POLICIES OF A PORTFOLIO AND ONE OR MORE OF THESE ACCOUNTS SERVED BY THE ADVISOR IS CONSIDERED AT OR ABOUT THE SAME TIME, IT IS THE POLICY OF THE ADVISOR TO AGGREGATE THE TRADES IN ORDER TO ASSIST WITH ITS OBLIGATIONS TO SEEK BEST EXECUTION FOR ITS CLIENTS. IT IS ALSO THE POLICY OF THE ADVISOR NOT TO FAVOR ANY ONE ACCOUNT OR PORTFOLIO OVER ANOTHER IN THE EVENT THAT SECURITY TRADES ARE AGGREGATED. ANY PURCHASE OR SALE ORDERS EXECUTED CONTEMPORANEOUSLY ARE ALLOCATED AT THE AVERAGE PRICE AND AS NEARLY AS PRACTICABLE ON A PRO RATA BASIS IN PROPORTION TO THE AMOUNTS DESIRED TO BE PURCHASED OR SOLD BY EACH ACCOUNT OR PORTFOLIO. HOWEVER, ADDITIONAL FACTORS WILL ALSO BE TAKEN INTO CONSIDERATION WHEN DETERMINING PROPER SHARE ALLOCATION, SO THAT THE FINAL ALLOCATION MAY NOT BE BASED SOLELY ON A PRO RATA CALCULATION. THESE FACTORS INCLUDE BUT ARE NOT LIMITED TO, THE FOLLOWING: 1) PERCENTAGE OF THE TRADE EXECUTED 2) TOTAL NUMBER OF SHARES TRADED 3) CASH FLOW ISSUES FOR EACH PORTFOLIO 4) EQUITY ALLOCATION FOR EACH PORTFOLIO PRIOR TO TRADE EXECUTION 5) TARGETED STOCK ALLOCATION FOR EACH PORTFOLIO PRIOR TO TRADE EXECUTION WHILE IT IS CONCEIVABLE THAT IN CERTAIN INSTANCES THESE PROCEDURES COULD ADVERSELY AFFECT THE PRICE OR NUMBER OF SHARES INVOLVED IN A PARTICULAR PORTFOLIO TRANSACTION, IT IS BELIEVED THAT THESE PROCEDURES GENERALLY CONTRIBUTE TO BETTER OVERALL EXECUTION. THE BOARD OF DIRECTORS HAS ADOPTED INVESTMENT OBJECTIVES FOR EACH OF THE PORTFOLIOS. ADDITIONALLY, THE PORTFOLIOS ARE SUBJECT TO CERTAIN INVESTMENT RESTRICTIONS. NEITHER THE INVESTMENT OBJECTIVES NOR THE INVESTMENT RESTRICTIONS MAY BE CHANGED WITHOUT A MAJORITY VOTE OF THE SHAREHOLDERS OF THE AFFECTIVE PORTFOLIO, WITH THE EXCEPTION OF THE ONEAMERICA SOCIALLY RESPONSIVE PORTFOLIO. THE APPLICANT HAS THE AUTHORITY TO DETERMINE, WITHOUT OBTAINING SPECIFIC CLIENT CONSENT, THE AMOUNT AND TYPE OF SECURITIES TO BE BOUGHT OR SOLD, PROVIDED THAT THE INVESTMENT OBJECTIVES AND INVESTMENT RESTRICTIONS ARE FOLLOWED. IN EXECUTING TRANSACTIONS, THE ADVISOR WILL ATTEMPT TO OBTAIN THE BEST EXECUTION FOR A PORTFOLIO, TAKING INTO ACCOUNT SUCH FACTORS AS PRICE (INCLUDING THE APPLICABLE BROKERAGE COMMISSION OR DOLLAR SPREAD), SIZE OF ORDER, THE NATURE OF THE MARKET FOR THE SECURITY, THE TIMING OF THE TRANSACTION, THE REPUTATION, EXPERIENCE AND FINANCIAL STABILITY OF THE BROKER- DEALER INVOLVED, THE QUALITY OF SERVICE, THE DIFFICULTY OF EXECUTION, THE OPERATIONAL FACILITIES OF THE FIRMS INVOLVED AND THE FIRMS RISK IN POSITIONING A BLOCK OF SECURITIES. IN EFFECTING PURCHASES AND SALES, THE ADVISOR MAY PAY HIGHER COMMISSION RATES THAN THE LOWEST AVAILABLE WHEN THE ADVISOR BELIEVES IT IS REASONABLE TO DO SO IN LIGHT OF THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES PROVIDED BY THE BROKER-DEALER EFFECTING THE TRANSACTION. THE ADVISOR MAY USE RESEARCH SERVICES FOR CLIENTS OTHER THAN THE CLIENT ON WHOSE BEHALF THE RESEARCH WAS ACTUALLY EARNED. WHILE IT IS CONCEIVABLE THAT IN CERTAIN INSTANCES THESE PROCEDURES COULD ADVERSELY AFFECT THE PRICE OR NUMBER OF SHARES INVOLVED IN A PARTICULAR PORTFOLIO TRANSACTION, IT IS BELIEVED THAT THESE PROCEDURES GENERALLY CONTRIBUTE TO BETTER OVERALL EXECUTION. ----------------------------------------------------------------------------------------------------------------------------- (C) 1996 ProFormWare, Inc. (portions of software only)
----------------------------------------------------------------------------------------------------------------------------- II 12.A (1) & (2) THE BOARD OF DIRECTORS HAS ADOPTED INVESTMENT OBJECTIVES FOR EACH OF THE PORTFOLIOS. ADDITIONALLY, THE PORTFOLIOS ARE SUBJECT TO CERTAIN INVESTMENT RESTRICTIONS. NEITHER THE INVESTMENT OBJECTIVES NOR THE INVESTMENT RESTRICTIONS MAY BE CHANGED WITHOUT A MAJORITY VOTE OF THE SHAREHOLDERS OF THE AFFECTIVE PORTFOLIO, WITH THE EXCEPTION OF THE SOCIALLY RESPONSIVE PORTFOLIO WHICH DOES NOT REQUIRE SHAREHOLDER APPROVAL. THE APPLICANT HAS THE AUTHORITY TO DETERMINE, WITHOUT OBTAINING SPECIFIC CLIENT CONSENT, THE AMOUNT AND TYPE OF SECURITIES TO BE BOUGHT OR SOLD, PROVIDED THAT THE INVESTMENT OBJECTIVES AND INVESTMENT RESTRICTIONS ARE FOLLOWED. IN EXECUTING TRANSACTIONS, THE ADVISOR WILL ATTEMPT TO OBTAIN THE BEST EXECUTION FOR A PORTFOLIO, TAKING INTO ACCOUNT BELIEVES IT IS REASONABLE TO DO SO IN LIGHT OF THE VALUE OF THE BROKERAGE AND RESEARCH SERVICES SUCH FACTORS AS PRICE (INCLUDING THE APPLICABLE BROKERAGE COMMISSION OR DOLLAR SPREAD), SIZE OF ORDER, THE NATURE OF THE MARKET FOR THE SECURITY, THE TIMING OF THE TRANSACTION, THE REPUTATION, EXPERIENCE AND FINANCIAL STABILITY OF THE BROKER-DEALER INVOLVED, THE QUALITY OF SERVICE, THE DIFFICULTY OF EXECUTION, THE OPERATIONAL FACILITIES OF THE FIRMS INVOLVED AND THE FIRMS RISK IN POSITIONING A BLOCK OF SECURITIES. IN EFFECTING PURCHASES AND SALES, THE ADVISOR MAY PAY HIGHER COMMISSION RATES THAN THE LOWEST AVAILABLE WHEN THE ADVISOR PROVIDED BY THE BROKER. ----------------------------------------------------------------------------------------------------------------------------- Complete amended pages in full, circle amended items and file with execution page (page 1). ----------------------------------------------------------------------------------------------------------------------------- (C) 1996 ProFormWare, Inc. (portions of software only)
No dealer, salesman or any other person is authorized by the AUL American Individual Variable Annuity Unit Trust or by AUL to give any information or to make any representation other than as contained in this Prospectus in connection with the offering described herein. There has been filed with the Securities and Exchange Commission, Washington, D.C., a Registration Statement under the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, with respect to the offering herein described. For further information with respect to the AUL American Individual Variable Annuity Unit Trust, AUL and its variable annuities, reference is made thereto and the exhibits filed therewith or incorporated therein, which include all contracts or documents referred to herein. The products described herein are not insured by the Federal Deposit Insurance Corporation; are not deposits or other obligations of the financial institution and are not guaranteed by the financial institution; and are subject to investment risks, including possible loss of the principal invested. -------------------------------------------------------------------------------- INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY (NO WITHDRAWAL CHARGE CONTRACT) INDIVIDUAL VARIABLE ANNUITY CONTRACTS SOLD BY AMERICAN UNITED LIFE INSURANCE COMPANY(R) ONE AMERICAN SQUARE INDIANAPOLIS, INDIANA 46282 PROSPECTUS Dated: May 1, 2008 -------------------------------------------------------------------------------- This prospectus must be preceded or accompanied by current prospectuses for the underlying investment options. Individual Variable Annuity Contracts issued by American United Life Insurance Company(R) (AUL) are distributed by OneAmerica Securities , Inc., member FINRA, SIPC, a wholly-owned subsidiary of AUL. [LOGO OF AUL] American United Life Insurance Company(R) AUL One American Square, P.O. Box 7127 A ONEAMERICA(R) Indianapolis, IN 46206-7127 FINANCIAL PARTNER www.aul.com (C) 2008 American United Life Insurance Company(R). All rights reserved. OneAmerica(TM) and the OneAmerica banner are all trademarks of OneAmerica Financial Partners, Inc. Form No. 3-14773F (05/08) STATEMENT OF ADDITIONAL INFORMATION MAY 1, 2008 INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY (NO WITHDRAWAL CHARGE CONTRACT) INDIVIDUAL VARIABLE ANNUITY CONTRACTS OFFERED BY AMERICAN UNITED LIFE INSURANCE COMPANY(R) ONE AMERICAN SQUARE, P.O. BOX 7127 INDIANAPOLIS, INDIANA 46206-7127 (800) 537-6442 - www.oneamerica.com This Statement of Additional Information is not a prospectus and should be read in conjunction with the current Prospectus for Individual Flexible Premium Deferred Variable Annuity (No Withdrawal Charge Contract), dated May 1, 2008. A Prospectus is available without charge by calling the number listed Above or by mailing to American United Life Insurance Company(R) ("AUL") at the address listed above. TABLE OF CONTENTS
Description Page GENERAL INFORMATION AND HISTORY ...................................................... 3 DISTRIBUTION OF CONTRACTS ............................................................ 3 CUSTODY OF ASSETS .................................................................... 3 TAX STATUS OF AUL AND THE VARIABLE ACCOUNT ........................................... 3 TAX TREATMENT OF AND LIMITS ON PREMIUMS UNDER RETIREMENT PROGRAMS .................... 3 403(b) Programs .................................................................. 4 408 and 408A Programs ............................................................ 4 457 Programs ..................................................................... 5 Employee Benefit Plans ........................................................... 5 Tax Penalty for All Annuity Contracts ............................................ 5 Withholding for Employee Benefit Plans and Tax-Deferred Annuities ................ 5 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ........................................ 6 FINANCIAL STATEMENTS ................................................................. 6
2 GENERAL INFORMATION AND HISTORY For a general description of AUL and AUL American Individual Variable Annuity Unit Trust (the "Variable Account"), see the section entitled "Information about AUL, The Variable Account, and The Funds" in the Prospectus. Defined terms used in this Statement of Additional Information have the same meaning as terms defined in the Prospectus. DISTRIBUTION OF CONTRACTS OneAmerica Securities, Inc. is the Principal Underwriter and the Distributor for the variable annuity contracts (the "Contracts") described in the Prospectus and in this Statement of Additional Information. OneAmerica Securities, Inc. is a wholly owned subsidiary of AUL and is registered with the Securities and Exchange Commission (the "SEC") as a broker-dealer. The Contracts are currently being sold in a continuous offering. While AUL does not anticipate discontinuing the offering of the Contracts, it reserves the right to do so. Registered representatives of OneAmerica Securities, Inc., who are also licensed insurance agents, sell the Contracts. AUL also has sales agreements with various broker-dealers under which the Contracts will be sold by registered representatives of the broker-dealers. The registered representatives are required to be authorized under applicable state regulations to sell variable annuity contracts. The broker-dealers are required be registered with the SEC and members of the Financial Industry Regulation Authority, ("FINRA"). OneAmerica Securities, Inc. serves as the Principal Underwriter without compensation from the Variable Account. CUSTODY OF ASSETS The assets of the Variable Account are held by AUL. The assets are maintained separate and apart from the assets of other separate accounts of AUL and from AUL's General Account assets. AUL maintains records of all purchases and redemptions of shares of the Funds. TAX STATUS OF AUL AND THE VARIABLE ACCOUNT The operations of the Variable Account form a part of AUL, so AUL will be responsible for any federal income and other taxes that become payable with respect to the income of the Variable Account. Each Investment Account will bear its allocable share of such liabilities, but under current law, no dividend, interest income, or realized capital gain attributable, at a minimum, to appreciation of the Investment Accounts will be taxed to AUL to the extent it is applied to increase reserves under the Contracts. Each of the Funds in which the Variable Account invests has advised AUL that it intends to qualify as a "regulated Investment Company" under the Code. AUL does not guarantee that any Fund will so qualify. If the requirements of the Code are met, a Fund will not be taxed on amounts distributed on a timely basis to the Variable Account. Were such a Fund not to so qualify, the tax status of the Contracts as annuities might be lost, which could result in immediate taxation of amounts earned under the Contracts (except those held in Employee Benefit Plans and 408 Programs). Under regulations promulgated under Code Section 817(h), each Investment Account must meet certain diversification standards. Generally, compliance with these standards is determined by taking into account an Investment Account's share of assets of the appropriate underlying Fund. To meet this test, on the last day of each calendar quarter, no more than 55 percent of the total assets of a Fund may be represented by any one investment, no more than 70 percent may be represented by any two investments, no more than 80 percent may be represented by any three investments, and no more than 90 percent may be represented by any four (4) investments. For the purposes of Section 817(h), securities of a single issuer generally are treated as one investment, but obligations of the U.S. Treasury and each U.S. governmental agency or instrumentality generally are treated as securities of separate issuers. TAX TREATMENT OF AND LIMITS ON PREMIUMS UNDER RETIREMENT PROGRAMS The Contracts may be offered for use with several types of qualified or non-qualified retirement programs as described in the Prospectus. The tax rules applicable to Owners of Contracts used in connection with qualified retirement programs vary according to the type of retirement plan and its terms and conditions. Therefore, no attempt is made herein to provide more than general information about the use of the Contracts with the various types of qualified retirement programs. Owners, Annuitants, Beneficiaries and other payees are cautioned that the rights of any person to any benefits under these programs may be subject to the terms and conditions of the Qualified Plans themselves, regardless of the terms and conditions of the Contracts issued in connection therewith. Generally, no taxes are imposed on the increases in the value of a Contract by reason of investment experience or employer contributions until a distribution occurs, either as a lump-sum 3 payment or annuity payments under an elected Annuity Option or in the form of cash withdrawals, surrenders, or other distributions prior to the Annuity Date. The amounts of Premiums that may be paid under a Contract issued in connection with a Qualified Plan are subject to limitations that may vary depending on the type of Qualified Plan. In addition, early distributions from most Qualified Plans may be subject to penalty taxes, or in the case of distributions of amounts contributed under salary reduction agreements, could cause the Qualified Plan to be disqualified. Furthermore, distributions from most Qualified Plans are subject to certain minimum distribution rules. Failure to comply with these rules could result in disqualification of the Qualified Plan or subject the Annuitant to penalty taxes. As a result, the minimum distribution rules could limit the availability of certain Annuity Options to Contract Owners and their Beneficiaries. Below are brief descriptions of various types of qualified retirement programs and the use of the Contracts in connection therewith. Unless otherwise indicated in the context of the description, these descriptions reflect the assumption that the Contract Owner is a Participant in the retirement program. For Employee Benefit Plans that are defined benefit plans, a Contract generally would be purchased by a Participant, but owned by the plan itself. 403(b) PROGRAMS Premiums paid pursuant to a 403(b) Program are excludable from a Contract Owner's gross income if they do not exceed the smallest of the limits calculated under Sections 402(g) and 415 of the Code. Section 402(g) generally limits a Contract Owner's salary reduction Premiums to $15,500 for 2008. The limit may be reduced by salary reduction Premiums to another type of retirement plan. A Contract Owner with at least fifteen (15) years of service for a "qualified employer" (i.e., an educational organization, hospital, home health service agency, health and welfare service agency, church or convention or association of churches) generally may exceed this limit by $3,000 per year, subject to an aggregate limit of $15,500 for all years. Section 415(c) also provides an overall limit on the amount of employer and Contract Owner's salary reduction Premiums to a Section 403(b) Program that will be excludable from an employee's gross income in a given year. The Section 415(c) limit is the lesser of (a) $46,000, or (b) 100 percent of the Contract Owner's annual compensation (reduced by his salary reduction Premiums to the 403(b) Program and certain other employee plans). This limit will be reduced if a Contract Owner also participates in an Employee Benefit Plan maintained by a business that he or she controls. The limits described above do not apply to amounts "rolled over" from another Section 403(b) Program. A Contract Owner who receives an "eligible rollover distribution" will be permitted either to roll over such amount to another Section 403(b) Program or an IRA within sixty (60) days of receipt or to make a direct rollover to another Section 403(b) Program or an IRA without recognition of income. An "eligible rollover distribution" means any distribution to a Contract Owner of all or any taxable portion of the balance of his credit under a Section 403(b) Program, other than a required minimum distribution to a Contract Owner who has reached age 70 1/2 and excluding any distribution which is one of a series of substantially equal payments made (1) over the life expectancy of the Contract Owner or the joint life expectancy of the Contract Owner and the Contract Owner's beneficiary or (2) over a specified period of ten (10) years or more. Provisions of the Internal Revenue Code require that 20 percent of every eligible rollover distribution that is not directly rolled over be withheld by the payor for federal income taxes 408 AND 408A PROGRAMS Code Sections 219, 408 and 408A permit eligible individuals to contribute to an individual retirement program, including a Simplified Employee Pension Plan, an Employer Association Established Individual Retirement Account Trust, known as an Individual Retirement Account ("IRA") and a Roth IRA. These IRA accounts are subject to limitations on the amount that may be contributed, the persons who may be eligible, and on the time when distributions may commence. In addition, certain distributions from some other types of retirement plans may be placed on a tax-deferred basis in an IRA. Sale of the Contracts for use with IRAs may be subject to special requirements imposed by the Internal Revenue Service. Purchasers of the Contracts for such purposes will be provided with such supplementary information as may be required by the Internal Revenue Service or other appropriate agency, and will have the right to revoke the Contract under certain circumstances. If an Owner of a Contract issued in connection with a 408 Program surrenders the Contract or makes a withdrawal, the Contract Owner will realize income taxable at ordinary tax rates on the amount received to the extent that the amount exceeds the 408 Premiums that were not excludable from the taxable income of the employee when paid. Premiums paid to the individual retirement account of a Contract Owner under a 408 Program that is described in Section 408(c) of the Internal Revenue Code are subject to the limits on Premiums paid to individual retirement accounts under Section 219(b) of the Internal Revenue Code. Under Section 219(b) of the Code, Premiums paid to an individual retirement account are limited to the lesser of $5,000 or the Contract Owner's annual compensation. In the case of an individual who has attained the age of 50 before the close of the taxable year, the deductible amount for such taxable year shall increase by $1,000. For tax years beginning after 1996, if a married couple files a joint return, each spouse may, in the great majority of cases, make contributions to his or her IRA up to the $5,000 limit for 2008; The extent to which a Contract Owner may deduct Premiums paid in connection with this type of 408 Program depends on his and his spouse's gross income for the year and whether either participate in another employer-sponsored retirement plan. Premiums paid in connection with a 408 Program that is a simplified employee pension plan are subject to limits under Section 402(h) of the Internal Revenue Code. Section 402(h) currently limits Premiums paid in connection with a simplified employee pension plan to the lesser of (a) 25 percent of the Contract Owner's compensation, or (b) $46,000. Premiums paid through salary reduction are subject to additional annual limits. Withdrawals from Roth IRAs may be made tax-free under certain circumstances. Please consult your tax advisor for more details. 4 \ 457 PROGRAMS Deferrals by an eligible individual to a 457 Program generally are limited under Section 457(b) of the Internal Revenue Code to the lesser of (a) $15,500, or (b) 100 percent of the Contract Owner's includable compensation. If the Contract Owner participates in more than one 457 Program, the limit applies to contributions to all such programs. The limit is reduced by the amount of any salary reduction contribution the Contract Owner makes to a 403(b) Program, a 408 Program, or an Employee Benefit Program. The Section 457(b) limit is increased during the last three (3) years ending before the Contract Owner reaches his normal retirement age under the 457 Program. EMPLOYEE BENEFIT PLANS Code Section 401 permits business employers and certain associations to establish various types of retirement plans for employees. Such retirement plans may permit the purchase of Contracts to provide benefits thereunder. If an Owner of a Contract issued in connection with an Employee Benefit Plan who is a participant in the Plan receives a lump-sum distribution, the portion of the distribution equal to any Premiums that were taxable to the Contract Owner in the year when paid is generally received tax-free. The balance of the distribution will generally be treated as ordinary income. Special ten (10) year averaging and a capital-gains election may be available to a Contract Owner who reached age 50 before 1986. Under an Employee Benefit Plan under Section 401 of the Code, when annuity payments commence (as opposed to a lump-sum distribution), under Section 72 of the Code, the portion of each payment attributable to Premiums that were taxable to the Participant in the year made, if any, is excluded from gross income as a return of the Participant's investment. The portion so excluded is determined at the time the payments commence by dividing the Participant's investment in the Contract by the expected return for Non-Qualified Plans and by a specific number of payments for Qualified Plans. The periodic payments in excess of this amount are taxable as ordinary income. Once the Participant's investment has been recovered, the full annuity payment will be taxable. If the annuity should stop before the investment has been received, the unrecovered portion is deductible on the Annuitant's final return. If the Contract Owner paid no Premiums that were taxable to the Contract Owner in the year made, there would be no portion excludable. The applicable annual limits on premiums paid in connection with an Employee Benefit Plan depend upon the type of plan. Total premiums paid on behalf of a Contract Owner who is a Participant to all defined contribution plans maintained by an Employer are limited under Section 415(c) of the Internal Revenue Code to the lesser of (a) $46,000, or (b) 100 percent of a Participant's annual compensation. Premiums paid through salary reduction to a cash-or-deferred arrangement under a profit sharing plan are subject to additional annual limits. Premiums paid to a defined benefit pension plan are actuarially determined based upon the amount of benefits the Participant will receive under the plan formula. The maximum annual benefit any Participant may receive under an Employer's defined benefit plan is limited under Section 415(b) of the Internal Revenue Code. The limits determined under Section 415(b) and (c) of the Internal Revenue Code are further reduced for a Participant who participates in a defined contribution plan and a defined benefit plan maintained by the same employer. TAX PENALTY FOR ALL ANNUITY CONTRACTS Any distribution made to a Contract Owner who is a Participant from an Employee Benefit Plan or a 408 Program other than on account of one or more of the following events will be subject to a 10 percent penalty tax on the amount distributed: (a) the Contract Owner has attained age 59 1/2; (b) the Contract Owner has died; or (c) the Contract Owner is disabled. In addition, a distribution from an Employee Benefit Plan will not be subject to a 10 percent excise tax on the amount distributed if the Contract Owner is 55 and has separated from service. Distributions received at least annually as part of a series of substantially equal periodic payments made for the life of the Participant will not be subject to an excise tax. Certain other exceptions may apply. Consult your tax advisor. WITHHOLDING FOR EMPLOYEE BENEFIT PLANS AND TAX-FREE DEFERRED ANNUITIES Distributions from an Employee Benefit Plan to an employee, surviving spouse, or former spouse who is an alternate payee under a qualified domestic relations order, in the form a lump-sum settlement or periodic annuity payments for a fixed period of fewer than 10 years are subject to mandatory federal income tax withholding of 20 percent of the taxable amount of the distribution, unless the distributee directs the transfer of such amounts to another Employee Benefit Plan or to an Individual Retirement Account under Code Section 408. The taxable amount is the amount of the distribution, less the amount allocable to after-tax Premiums. All other types of distributions from Employee Benefit Plans and all distributions from Individual Retirement Accounts are subject to federal income tax withholding on the taxable amount unless the distributee elects not to have the withholding apply. The amount withheld is based on the type of distribution. Federal tax will be withheld from annuity payments (other than those subject to mandatory 20 percent withholding) pursuant to the recipient's withholding certificate. If no withholding certificate is filed with AUL, tax will be withheld on the basis that the payee is married with three (3) withholding exemptions. Tax on all surrenders and lump-sum distributions from Individual Retirement Accounts will be withheld at a flat 10 percent rate. Withholding on annuity payments and other distributions from the Contract will be made in accordance with regulations of the Internal Revenue Service. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The combined balance sheets for OneAmerica Financial Partners, Inc. at December 31, 2007 and 2006 and the related combined statements of operations, changes in shareholder's equity and comprehensive income and statements of cash flows for the years then ended December 31, 2007, December 31, 2006 and December 31, 2005, appearing herein have been audited by PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm, as set forth in their report thereon appearing elsewhere herein, and are included herein in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. FINANCIAL STATEMENTS FINANCIALS OF THE REGISTRANT The financial statements of the AUL American Individual Variable Annuity Unit Trust as of December 31, 2007 are included in this Statement of Additional Information. A MESSAGE FROM THE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF AMERICAN UNITED LIFE INSURANCE COMPANY(R) TO PARTICIPANTS IN AUL AMERICAN INDIVIDUAL VARIABLE ANNUITY UNIT TRUST The year 2007 can be described as a year of disappointments, surprises and increased volatility. The topic of every conversation seemed to focus on the subprime mortgage meltdown. As the year progressed, it also became apparent that the deteriorating credit situation was having a negative impact on consumer spending. This, in turn, has threatened to drag the U.S. economy into a recession. The first half of 2007 provided attractive stock market gains with the Dow Jones Industrial Average (DJIA) breaking above two price level milestones -- 13000 and 14000. But worries about the housing crisis and the potential for a U.S. recession caused increased pressure on stock prices in the second half of the year. Although the broad market indices ended the year in positive territory, the DJIA experienced its first formal correction since 2003 by declining 10 percent from its October peak. By late summer, the world of fixed income finance had also changed materially. Words like "subprime", "collateralized" and "structured securities" were being uttered on trading desks and in boardrooms across America. Rumors abounded, enormous write-downs were taken, and CEOs "resigned." As a result of this increased risk aversion, Treasury securities provided superior returns within the bond market and also outperformed the S&P 500. During 2008, we can expect a continuation of the heightened volatility that became commonplace in 2007. The Federal Reserve intervened by lowering the federal funds rate 225 basis points since last August. Congress has also crafted an economic stimulus package targeted primarily to individuals and corporations. Unfortunately, it is too early to determine the effectiveness of these efforts. As a result, we believe the investment environment will remain challenging in the current year. In closing, American United Life Insurance Company(R) remains committed to serving your investment needs. We appreciate your continued confidence and support. Dayton H. Molendorp, CLU Chairman, President & Chief Executive Officer of American United Life Insurance Company(R) Indianapolis, Indiana February 28, 2008 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Contract Owners of AUL American Individual Variable Annuity Unit Trust and Board of Directors of American United Life Insurance Company: In our opinion, the accompanying statements of net assets and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of each of the subaccounts constituting AUL American Individual Variable Annuity Unit Trust (the "Trust") at December 31,2007, the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the applicable periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of investments at December 31,2007 by correspondence with the mutual funds, provide a reasonable basis for our opinion. /s/ PricewaterhouseCooper LLP Indianapolis, Indiana April 25, 2008 AUL American Individual Variable Annuity Unit Trust OneAmerica Funds Value -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 67,642,225 $ 65,848,781 2,733,007 Receivables: investments sold 160,340 ============== ============== Payables: investments redeemed (7,579) -------------- Net assets $ 67,794,986 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 20,387,619 1,817,743 $ 11.22 Class B 47,407,366 4,989,382 9.50 -------------- -------------- Total $ 67,794,986 6,807,125 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 1,059,580 Mortality & expense charges 644,868 -------------- Net investment income (loss) 414,712 -------------- Gain (loss) on investments: Net realized gain (loss) 2,849,865 Realized gain distributions 4,236,737 Net change in unrealized appreciation (depreciation) (5,789,084) -------------- Net gain (loss) 1,297,518 -------------- Increase (decrease) in net assets from operations $ 1,712,230 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 414,712 $ 400,587 Net realized gain (loss) 2,849,865 2,135,969 Realized gain distributions 4,236,737 4,277,460 Net change in unrealized appreciation (depreciation) (5,789,084) 602,273 ------------ ------------- Increase (decrease) in net assets from operations 1,712,230 7,416,289 ------------ ------------- Contract owner transactions: Proceeds from units sold 13,705,562 16,198,401 Cost of units redeemed (14,265,215) (13,220,885) Account charges (695,804) (637,732) ------------ ------------- Increase (decrease) (1,255,457) 2,339,784 ------------ ------------- Net increase (decrease) 456,773 9,756,073 Net assets, beginning 67,338,213 57,582,140 ------------ ------------- Net assets, ending $ 67,794,986 $ 67,338,213 ============ ============= Units sold 1,408,453 1,796,829 Units redeemed (1,496,302) (1,501,407) ------------ ------------- Net increase (decrease) (87,849) 295,422 Units outstanding, beginning 6,894,974 6,599,552 ------------ ------------- Units outstanding, ending 6,807,125 6,894,974 ============ =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 98,899,904 Cost of units redeemed (53,648,626) Account charges (2,691,013) Net investment income (loss) 1,658,058 Net realized gain (loss) 7,512,783 Realized gain distributions 14,270,436 Net change in unrealized appreciation (depreciation) 1,793,444 --------------- $ 67,794,986 ===============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 11.22 1,818 $ 20,388 N/A 3.2% 12/31/06 10.87 2,062 22,417 N/A 13.5% 12/31/05 9.58 2,224 21,304 N/A 9.9% 12/31/04 8.72 2,213 19,293 N/A 15.0% 12/31/03 7.58 2,180 16,528 N/A 36.6%
CLASS B
Units Expense as a Unit Value Outstanding Net Assets % of Average (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 9.50 4,989 $ 47,407 1.30% 2.2% 12/31/06 9.29 4,833 44,921 1.30% 12.1% 12/31/05 8.29 4,376 36,278 1.30% 8.4% 12/31/04 7.65 3,824 29,253 1.30% 13.5% 12/31/03 6.74 2,101 14,162 1.30% 34.8%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 1.6% 12/31/06 1.5% 12/31/05 1.2% 12/31/04 0.8% 12/31/03 1.0%
AUL American Individual Variable Annuity Unit Trust OneAmerica Funds Money Market -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 26,827,948 $ 26,827,948 26,750,088 Receivables: investments sold 13,819 ============== ============== Payables: investments redeemed (91,679) -------------- Net assets $ 26,750,088 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 7,235,291 5,522,149 $ 1.31 Class B 19,514,797 18,222,545 1.07 -------------- -------------- Total $ 26,750,088 23,744,694 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 1,450,420 Mortality & expense charges 299,201 -------------- Net investment income (loss) 1,151,219 -------------- Gain (loss) on investments: Net realized gain (loss) - Realized gain distributions - Net change in unrealized appreciation (depreciation) - -------------- Net gain (loss) - -------------- Increase (decrease) in net assets from operations $ 1,151,219 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 1,151,219 $ 902,535 Net realized gain (loss) - - Realized gain distributions - - Net change in unrealized appreciation (depreciation) - - ------------ ------------- Increase (decrease) in net assets from operations 1,151,219 902,535 ------------ ------------- Contract owner transactions: Proceeds from units sold 59,739,281 66,052,855 Cost of units redeemed (64,512,009) (53,467,385) Account charges (285,831) (246,935) ------------ ------------- Increase (decrease) (5,058,559) 12,338,535 ------------ ------------- Net increase (decrease) (3,907,340) 13,241,070 Net assets, beginning 30,657,428 17,416,358 ------------ ------------- Net assets, ending $ 26,750,088 $ 30,657,428 ============ ============= Units sold 54,873,945 62,341,769 Units redeemed (59,920,190) (49,925,723) ------------ ------------- Net increase (decrease) (5,046,245) 12,416,046 Units outstanding, beginning 28,780,392 16,364,346 ------------ ------------- Units outstanding, ending 23,744,694 28,780,392 ============ =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 3,418,141,660 Cost of units redeemed (3,393,059,896) Account charges (2,062,005) Net investment income (loss) 3,730,329 Net realized gain (loss) - Realized gain distributions - Net change in unrealized appreciation (depreciation) - --------------- $ 26,750,088 ===============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 1.31 5,522 $ 7,235 N/A 3.4% 12/31/06 1.25 3,998 4,999 N/A 4.2% 12/31/05 1.20 5,214 6,257 N/A 3.4% 12/31/04 1.16 6,692 7,763 N/A 0.9% 12/31/03 1.15 9,100 10,465 N/A 0.0%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 1.07 18,223 $ 19,515 1.30% 4.0% 12/31/06 1.04 24,782 25,658 1.30% 4.0% 12/31/05 1.00 11,160 11,160 1.30% 1.0% 12/31/04 0.99 10,118 10,017 1.30% 0.0% 12/31/03 0.99 10,335 10,232 1.30% -1.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 5.1% 12/31/06 4.7% 12/31/05 2.7% 12/31/04 0.7% 12/31/03 0.7%
AUL American Individual Variable Annuity Unit Trust OneAmerica Funds Investment Grade Bond -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 45,902,949 $ 46,513,764 4,101,344 Receivables: investments sold 121,613 ============== ============== Payables: investments redeemed (1,290,512) -------------- Net assets $ 44,734,050 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 8,555,334 1,095,317 $ 7.81 Class B 6,178,717 6,267,536 5.77 -------------- -------------- Total $ 44,734,050 7,362,853 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 2,091,003 Mortality & expense charges 347,329 -------------- Net investment income (loss) 1,743,674 -------------- Gain (loss) on investments: Net realized gain (loss) (71,466) Realized gain distributions - Net change in unrealized appreciation (depreciation) 556,170 -------------- Net gain (loss) 484,704 -------------- Increase (decrease) in net assets from operations $ 2,228,378 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 1,743,674 $ 1,242,408 Net realized gain (loss) (71,466) (272,382) Realized gain distributions - - Net change in unrealized appreciation (depreciation) 556,170 (210,860) ------------ ------------- Increase (decrease) in net assets from operations 2,228,378 759,166 ------------ ------------- Contract owner transactions: Proceeds from units sold 21,980,361 7,694,415 Cost of units redeemed (8,081,500) (9,999,859) Account charges (356,622) (310,648) ------------ ------------- Increase (decrease) 13,542,239 (2,616,092) ------------ ------------- Net increase (decrease) 15,770,617 (1,856,926) Net assets, beginning 28,963,433 30,820,359 ------------ ------------- Net assets, ending $44,734,050 $ 28,963,433 ============ ============= Units sold 3,982,226 1,419,052 Units redeemed (1,392,463) (1,835,575) ------------ ------------- Net increase (decrease) 2,589,763 (416,523) Units outstanding, beginning 4,773,090 5,189,613 ------------ ------------- Units outstanding, ending 7,362,853 4,773,090 ============ =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 95,015,136 Cost of units redeemed (54,545,090) Account charges (1,662,436) Net investment income (loss) 6,481,176 Net realized gain (loss) 45,250 Realized gain distributions 10,829 Net change in unrealized appreciation (depreciation) (610,815) --------------- $ 44,734,050 ===============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 7.81 1,095 $ 8,555 N/A 6.4% 12/31/06 7.34 1,478 10,850 N/A 3.8% 12/31/05 7.07 1,748 12,360 N/A 2.2% 12/31/04 6.92 1,876 12,985 N/A 4.1% 12/31/03 6.65 2,032 13,515 N/A 4.9%
CLASS B
Units Expense as a Unit Value Outstanding Net Assets % of Average (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 5.77 6,268 $ 36,179 1.30% 5.0% 12/31/06 5.50 3,295 18,113 1.30% 2.6% 12/31/05 5.36 3,444 18,460 1.30% 0.8% 12/31/04 5.32 1,923 10,232 1.30% 2.7% 12/31/03 5.18 1,665 8,625 1.30% 3.6%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 5.7% 12/31/06 4.9% 12/31/05 3.9% 12/31/04 3.6% 12/31/03 4.3%
AUL American Individual Variable Annuity Unit Trust OneAmerica Funds Asset Director -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 65,212,481 $ 62,244,464 3,508,578 Receivables: investments sold 2 ============== ============== Payables: investments redeemed (37,681) -------------- Net assets $ 65,174,802 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 20,678,265 1,975,472 $ 10.47 Class B 44,496,537 5,340,556 8.33 -------------- -------------- Total $ 65,174,802 7,316,028 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 1,629,371 Mortality & expense charges 603,995 -------------- Net investment income (loss) 1,025,376 -------------- Gain (loss) on investments: Net realized gain (loss) 2,941,177 Realized gain distributions 2,005,646 Net change in unrealized appreciation (depreciation) (3,143,183) -------------- Net gain (loss) 1,803,640 -------------- Increase (decrease) in net assets from operations $ 2,829,016 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 1,025,376 $ 937,652 Net realized gain (loss) 2,941,177 1,905,790 Realized gain distributions 2,005,646 2,591,039 Net change in unrealized appreciation (depreciation) (3,143,183) 387,735 ------------ ------------- Increase (decrease) in net assets from operations 2,829,016 5,822,216 ------------ ------------- Contract owner transactions: Proceeds from units sold 13,159,763 12,619,594 Cost of units redeemed (16,227,848) (13,421,763) Account charges (643,301) (617,791) ------------ ------------- Increase (decrease) (3,711,386) (1,419,960) ------------ ------------- Net increase (decrease) (882,370) 4,402,257 Net assets, beginning 66,057,172 61,654,915 ------------ ------------- Net assets, ending $ 65,174,802 $ 66,057,172 ============ ============= Units sold 1,567,667 1,605,623 Units redeemed (1,935,617) (1,737,134) ------------ ------------- Net increase (decrease) (367,950) (131,511) Units outstanding, beginning 7,683,978 7,815,489 ------------ ------------- Units outstanding, ending 7,316,028 7,683,978 ============ =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 100,161,621 Cost of units redeemed (55,205,853) Account charges (2,766,329) Net investment income (loss) 4,184,014 Net realized gain (loss) 6,729,612 Realized gain distributions 9,103,717 Net change in unrealized appreciation (depreciation) 2,968,020 --------------- $ 65,174,802 ===============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 10.47 1,975 $ 20,678 N/A 5.1% 12/31/06 9.96 2,248 22,395 N/A 10.6% 12/31/05 9.01 2,489 22,429 N/A 7.6% 12/31/04 8.37 2,632 22,029 N/A 11.6% 12/31/03 7.50 2,722 20,413 N/A 27.3%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 8.33 5,341 $ 44,497 1.30% 3.7% 12/31/06 8.03 5,436 43,662 1.30% 9.1% 12/31/05 7.36 5,330 39,226 1.30% 6.2% 12/31/04 6.93 4,319 29,932 1.30% 10.2% 12/31/03 6.29 2,410 15,159 1.30% 25.8%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 2.5% 12/31/06 2.3% 12/31/05 1.8% 12/31/04 1.7% 12/31/03 2.0%
AUL American Individual Variable Annuity Unit Trust Fidelity VIP High Income -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 6,266,303 $ 6,696,365 1,046,832 Receivables: investments sold - ============== ============== Payables: investments redeemed (5,914) -------------- Net assets $ 6,260,389 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 2,395,178 421,604 $ 5.68 Class B 3,865,211 503,704 7.67 -------------- -------------- Total $ 6,260,389 925,308 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 524,640 Mortality & expense charges 52,863 -------------- Net investment income (loss) 471,777 -------------- Gain (loss) on investments: Net realized gain (loss) 23,004 Realized gain distributions - Net change in unrealized appreciation (depreciation) (359,533) -------------- Net gain (loss) (336,529) -------------- Increase (decrease) in net assets from operations $ 135,248 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 471,777 $ 422,465 Net realized gain (loss) 23,004 (283,323) Realized gain distributions - - Net change in unrealized appreciation (depreciation) (359,533) 560,053 ------------ ------------- Increase (decrease) in net assets from operations 135,248 699,195 ------------ ------------- Contract owner transactions: Proceeds from units sold 867,516 3,657,029 Cost of units redeemed (1,404,168) (8,411,692) Account charges (61,970) (87,832) ------------ ------------- Increase (decrease) (598,622) (4,842,495) ------------ ------------- Net increase (decrease) (463,374) (4,143,300) Net assets, beginning 6,723,763 10,867,063 ------------ ------------- Net assets, ending $ 6,260,389 $ 6,723,763 ============ ============= Units sold 138,718 556,685 Units redeemed (230,407) (1,270,633) ------------ ------------- Net increase (decrease) (91,689) (713,948) Units outstanding, beginning 1,016,997 1,730,945 ------------ ------------- Units outstanding, ending 925,308 1,016,997 ============ =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 28,021,077 Cost of units redeemed (23,415,857) Account charges (409,012) Net investment income (loss) 3,102,294 Net realized gain (loss) (608,051) Realized gain distributions - Net change in unrealized appreciation (depreciation) (430,062) --------------- $ 6,260,389 ===============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 5.68 422 $ 2,395 N/A 2.8% 12/31/06 5.53 476 2,629 N/A 11.2% 12/31/05 4.97 550 2,734 N/A 2.7% 12/31/04 4.84 600 2,902 N/A 9.8% 12/31/03 4.41 1,020 4,498 N/A 27.1%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 7.67 504 $ 3,865 1.30% 1.5% 12/31/06 7.56 541 4,095 1.30% 9.8% 12/31/05 6.89 1,180 8,133 1.30% 1.5% 12/31/04 6.79 765 5,196 1.30% 8.1% 12/31/03 6.28 409 2,567 1.30% 25.6%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 8.1% 12/31/06 5.8% 12/31/05 14.8% 12/31/04 8.8% 12/31/03 5.2%
AUL American Individual Variable Annuity Unit Trust Fidelity VIP Growth -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 13,406,118 $ 8,859,922 297,002 Receivables: investments sold - ============== ============== Payables: investments redeemed (5,136) -------------- Net assets $ 13,400,982 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 8,163,517 1,280,750 $ 6.37 Class B 5,237,465 567,086 9.24 -------------- -------------- Total $ 13,400,982 1,847,836 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 112,098 Mortality & expense charges 67,469 -------------- Net investment income (loss) 44,629 -------------- Gain (loss) on investments: Net realized gain (loss) 706,955 Realized gain distributions 10,956 Net change in unrealized appreciation (depreciation) 2,295,464 -------------- Net gain (loss) 3,013,375 -------------- Increase (decrease) in net assets from operations $ 3,058,004 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 44,629 $ (14,279) Net realized gain (loss) 706,955 (55,577) Realized gain distributions 10,956 - Net change in unrealized appreciation (depreciation) 2,295,464 881,818 ------------ ------------- Increase (decrease) in net assets from operations 3,058,004 811,962 ------------ ------------- Contract owner transactions: Proceeds from units sold 1,005,787 1,504,115 Cost of units redeemed (3,736,099) (3,037,663) Account charges (149,467) (156,798) ------------ ------------- Increase (decrease) (2,879,779) (1,690,346) ------------ ------------- Net increase (decrease) 178,225 (878,384) Net assets, beginning 13,222,757 14,101,141 ------------ ------------- Net assets, ending $ 13,400,982 $ 13,222,757 ============ ============= Units sold 151,447 264,326 Units redeemed (596,608) (600,557) ------------ ------------- Net increase (decrease) (445,161) (336,231) Units outstanding, beginning 2,292,997 2,629,228 ------------ ------------- Units outstanding, ending 1,847,836 2,292,997 ============ =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 40,036,107 Cost of units redeemed (27,302,535) Account charges (1,164,261) Net investment income (loss) 1,121,251 Net realized gain (loss) (3,846,732) Realized gain distributions 10,956 Net change in unrealized appreciation (depreciation) 4,546,196 --------------- $ 13,400,982 ===============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 6.37 1,281 $ 8,164 N/A 27.0% 12/31/06 5.02 1,565 7,856 N/A 6.8% 12/31/05 4.70 1,865 8,766 N/A 5.9% 12/31/04 4.44 2,286 10,148 N/A 3.3% 12/31/03 4.30 2,514 10,809 N/A 33.1%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 9.24 567 $ 5,237 1.30% 25.3% 12/31/06 7.37 728 5,367 1.30% 5.4% 12/31/05 6.99 763 5,335 1.30% 4.5% 12/31/04 6.69 856 5,725 1.30% 2.0% 12/31/03 6.56 570 3,740 1.30% 31.2%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.8% 12/31/06 0.4% 12/31/05 0.5% 12/31/04 0.3% 12/31/03 0.3%
AUL American Individual Variable Annuity Unit Trust Fidelity VIP Overseas -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------------- ------------- -------------- Investments $ 40,672,025 $ 35,506,934 1,625,456 Receivables: investments sold 520,805 ============= ============== Payables: investments redeemed (36,284) ----------------- Net assets $ 41,156,546 ================= Units Accumulation Net Assets Outstanding Unit Value ----------------- ------------- -------------- Class A $ 4,720,527 520,205 $ 9.07 Class B 36,436,019 2,894,507 12.59 ----------------- ------------- Total $ 41,156,546 3,414,712 ================= =============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 1,426,037 Mortality & expense charges 500,331 ------------- Net investment income (loss) 925,706 ------------- Gain (loss) on investments: Net realized gain (loss) 7,233,045 Realized gain distributions 3,085,974 Net change in unrealized appreciation (depreciation) (4,306,419) ------------- Net gain (loss) 6,012,600 ------------- Increase (decrease) in net assets from operations $ 6,938,306 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------- ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 925,706 $ (146,648) Net realized gain (loss) 7,233,045 208,517 Realized gain distributions 3,085,974 163,738 Net change in unrealized appreciation (depreciation) (4,306,419) 5,254,004 ------------- ------------- Increase (decrease) in net assets from operations 6,938,306 5,479,611 ------------- ------------- Contract owner transactions: Proceeds from units sold 18,226,076 18,486,050 Cost of units redeemed (27,019,241) (4,907,675) Account charges (377,811) (299,328) ------------- ------------- Increase (decrease) (9,170,976) 13,279,047 ------------- ------------- Net increase (decrease) (2,232,670) 18,758,658 Net assets, beginning 43,389,216 24,630,558 ------------- ------------- Net assets, ending $ 41,156,546 $ 43,389,216 ------------- ------------- Units sold 1,661,503 1,976,000 Units redeemed (2,400,431) (584,971) ------------- ------------- Net increase (decrease) (738,928) 1,391,029 Units outstanding, beginning 4,156,184 2,765,155 ------------- ------------- Units outstanding, ending 3,414,712 4,156,184 ============= =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 316,882,415 Cost of units redeemed (293,734,932) Account charges (981,444) Net investment income (loss) 759,440 Net realized gain (loss) 9,734,168 Realized gain distributions 3,331,808 Net change in unrealized appreciation (depreciation) 5,165,091 ------------- $ 41,156,546 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 9.07 520 $ 4,721 N/A 17.3% 12/31/06 7.74 572 4,426 N/A 18.1% 12/31/05 6.55 418 2,738 N/A 19.1% 12/31/04 5.50 401 2,205 N/A 13.6% 12/31/03 4.84 400 1,936 N/A 43.2%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 12.59 2,895 $ 36,436 1.30% 15.8% 12/31/06 10.87 3,584 38,963 1.30% 16.5% 12/31/05 9.33 2,347 21,893 1.30% 17.5% 12/31/04 7.94 1,535 12,190 1.30% 12.1% 12/31/03 7.08 52 365 1.30% 41.6%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 3.4% 12/31/06 0.7% 12/31/05 0.6% 12/31/04 1.1% 12/31/03 0.6%
AUL American Individual Variable Annuity Unit Trust Fidelity VIP Asset Manager -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------------- ------------- -------------- Investments $ 9,380,262 $ 7,820,868 574,627 Receivables: investments sold 163,883 ============= ============== Payables: investments redeemed (23,867) ----------------- Net assets $ 9,520,278 ================= Units Accumulation Net Assets Outstanding Unit Value ----------------- ------------- -------------- Class A $ 6,199,606 853,309 $ 7.27 Class B 3,320,672 441,651 7.52 ----------------- ------------- Total $ 9,520,278 1,294,960 ================= =============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 590,565 Mortality & expense charges 43,253 ------------- Net investment income (loss) 547,312 ------------- Gain (loss) on investments: Net realized gain (loss) 268,119 Realized gain distributions 284,881 Net change in unrealized appreciation (depreciation) 289,339 ------------- Net gain (loss) 842,339 ------------- Increase (decrease) in net assets from operations $ 1,389,651 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------- ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 547,312 $ 277,197 Net realized gain (loss) 268,119 109,599 Realized gain distributions 284,881 - Net change in unrealized appreciation (depreciation) 289,339 285,875 ------------- ------------- Increase (decrease) in net assets from operations 1,389,651 672,671 ------------- ------------- Contract owner transactions: Proceeds from units sold 425,499 339,220 Cost of units redeemed (2,375,014) (3,057,406) Account charges (121,067) (134,694) ------------- ------------- Increase (decrease) (2,070,582) (2,852,880) ------------- ------------- Net increase (decrease) (680,931) (2,180,209) Net assets, beginning 10,201,209 12,381,417 ------------- ------------- Net assets, ending $ 9,520,278 $ 10,201,209 ============= ============= Units sold 73,189 57,024 Units redeemed (375,605) (526,533) ------------- ------------- Net increase (decrease) (302,416) (469,509) Units outstanding, beginning 1,597,376 2,066,885 ------------- ------------- Units outstanding, ending 1,294,960 1,597,376 ============= =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 23,477,043 Cost of units redeemed (16,598,627) Account charges (976,626) Net investment income (loss) 2,637,480 Net realized gain (loss) (867,813) Realized gain distributions 289,427 Net change in unrealized appreciation (depreciation) 1,559,394 ------------- $ 9,520,278 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 7.27 853 $ 6,200 N/A 15.5% 12/31/06 6.29 1,094 6,879 N/A 7.3% 12/31/05 5.86 1,335 7,823 N/A 4.1% 12/31/04 5.63 1,619 9,116 N/A 5.4% 12/31/03 5.34 1,787 9,541 N/A 17.9%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 7.52 442 $ 3,321 1.30% 14.0% 12/31/06 6.60 504 3,322 1.30% 5.9% 12/31/05 6.23 732 4,558 1.30% 2.8% 12/31/04 6.06 750 4,542 1.30% 4.1% 12/31/03 5.82 455 2,650 1.30% 16.4%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 6.0% 12/31/06 2.9% 12/31/05 2.9% 12/31/04 2.8% 12/31/03 3.5%
AUL American Individual Variable Annuity Unit Trust Fidelity VIP Index 500 -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------------- ------------- -------------- Investments $ 73,064,037 $ 61,462,860 443,354 Receivables: investments sold 24,569 ============= ============== Payables: investments redeemed (347,473) ----------------- Net assets $ 72,741,133 ================= Units Accumulation Net Assets Outstanding Unit Value ----------------- ------------- -------------- Class A $ 16,571,764 2,656,901 $ 6.24 Class B 56,169,369 6,592,076 8.52 ----------------- ------------- Total $ 72,741,133 9,248,977 ================= =============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 2,506,682 Mortality & expense charges 668,774 ------------- Net investment income (loss) 1,837,908 ------------- Gain (loss) on investments: Net realized gain (loss) 1,849,547 Realized gain distributions - Net change in unrealized appreciation (depreciation) (879,940) ------------- Net gain (loss) 969,607 ------------- Increase (decrease) in net assets from operations $ 2,807,515 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------- ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 1,837,908 $ 392,213 Net realized gain (loss) 1,849,547 1,738,396 Realized gain distributions - - Net change in unrealized appreciation (depreciation) (879,940) 5,719,568 ------------- ------------- Increase (decrease) in net assets from operations 2,807,515 7,850,177 ============= ============= Contract owner transactions: Proceeds from units sold 21,827,915 16,214,994 Cost of units redeemed (14,083,326) (10,224,285) Account charges (678,526) (567,134) ------------- ------------- Increase (decrease) 7,066,063 5,423,575 ------------- ------------- Net increase (decrease) 9,873,578 13,273,752 Net assets, beginning 62,867,555 49,593,803 ------------- ------------- Net assets, ending $ 72,741,133 $ 62,867,555 ============= ============= Units sold 2,713,433 2,287,776 Units redeemed (2,012,442) (1,756,152) ------------- ------------- Net increase (decrease) 700,991 531,624 Units outstanding, beginning 8,547,986 8,016,362 ------------- ------------- Units outstanding, ending 9,248,977 8,547,986 ============= =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 119,132,720 Cost of units redeemed (59,095,286) Account charges (2,835,206) Net investment income (loss) 3,364,804 Net realized gain (loss) 572,924 Realized gain distributions - Net change in unrealized appreciation (depreciation) 11,601,177 ------------- $ 72,741,133 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 6.24 2,657 $ 16,572 N/A 5.4% 12/31/06 5.92 3,133 18,536 N/A 15.8% 12/31/05 5.11 3,825 19,545 N/A 4.7% 12/31/04 4.88 4,286 20,918 N/A 10.7% 12/31/03 4.41 4,425 19,516 N/A 28.6%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 8.52 6,592 $ 56,169 1.30% 4.1% 12/31/06 8.19 5,415 44,332 1.30% 14.2% 12/31/05 7.17 4,191 30,049 1.30% 3.5% 12/31/04 6.93 2,753 19,075 1.30% 9.3% 12/31/03 9.34 965 9,011 1.30% 26.8%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 3.7% 12/31/06 1.5% 12/31/05 1.8% 12/31/04 1.3% 12/31/03 1.3%
AUL American Individual Variable Annuity Unit Trust Fidelity VIP Equity-Income -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $40,381,413 $43,027,898 1,696,027 Receivables: investments sold 202,000 =========== ============= Payables: investments redeemed (31,324) ----------- Net assets $40,552,089 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $ 7,718,771 1,003,896 $ 7.69 Class B 32,833,318 3,731,621 8.80 ----------- ----------- Total $40,552,089 4,735,517 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 763,807 Mortality & expense charges 442,811 ------------- Net investment income (loss) 320,996 ------------- Gain (loss) on investments: Net realized gain (loss) 2,973,008 Realized gain distributions 3,368,697 Net change in unrealized appreciation (depreciation) (6,182,123) ------------- Net gain (loss) 159,582 ------------- Increase (decrease) in net assets from operations $ 480,578 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 320,996 $ 792,762 Net realized gain (loss) 2,973,008 296,301 Realized gain distributions 3,368,697 4,170,235 Net change in unrealized appreciation (depreciation) (6,182,123) 718,104 ------------ ------------- Increase (decrease) in net assets from operations 480,578 5,977,402 ------------ ------------- Contract owner transactions: Proceeds from units sold 16,761,106 13,839,526 Cost of units redeemed (17,925,224) (4,657,042) Account charges (398,245) (324,283) ------------ ------------- Increase (decrease) (1,562,363) 8,858,201 ------------ ------------- Net increase (decrease) (1,081,785) 14,835,603 Net assets, beginning 41,633,874 26,798,271 ------------ ------------- Net assets, ending $ 40,552,089 $ 41,633,874 ============ ============= Units sold 1,965,429 1,797,206 Units redeemed (2,139,262) (681,984) ------------ ------------- Net increase (decrease) (173,833) 1,115,222 Units outstanding, beginning 4,909,350 3,794,128 ------------ ------------- Units outstanding, ending 4,735,517 4,909,350 ============ =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 68,324,785 Cost of units redeemed (37,450,440) Account charges (1,401,380) Net investment income (loss) 1,728,106 Net realized gain (loss) 3,546,562 Realized gain distributions 8,450,941 Net change in unrealized appreciation (depreciation) (2,646,485) ------------- $ 40,552,089 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions.
CLASS A Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 7.69 1,004 $ 7,719 N/A 1.5% 12/31/06 7.57 1,219 9,230 N/A 20.2% 12/31/05 6.30 1,163 7,329 N/A 5.9% 12/31/04 5.95 1,459 8,682 N/A 11.4% 12/31/03 5.34 1,564 8,353 N/A 30.6%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 8.80 3,732 $ 32,833 1.30% 0.2% 12/31/06 8.78 3,691 32,404 1.30% 18.6% 12/31/05 7.40 2,631 19,469 1.30% 4.5% 12/31/04 7.08 1,815 12,850 1.30% 10.1% 12/31/03 6.43 480 3,086 1.30% 28.6%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 1.9% 12/31/06 3.3% 12/31/05 1.8% 12/31/04 1.5% 12/31/03 1.6%
AUL American Individual Variable Annuity Unit Trust Fidelity VIP Contrafund(R) -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $43,751,443 $41,021,020 1,566,801 Receivables: investments sold - =========== ============= Payables: investments redeemed (38,602) ----------- Net assets $43,712,841 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $16,058,245 1,644,691 $ 9.76 Class B 27,654,596 2,589,952 10.68 ----------- ----------- Total $43,712,841 4,234,643 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 394,098 Mortality & expense charges 353,987 ------------- Net investment income (loss) 40,111 ------------- Gain (loss) on investments: Net realized gain (loss) 3,220,446 Realized gain distributions 10,528,530 Net change in unrealized appreciation (depreciation) (7,084,783) ------------- Net gain (loss) 6,664,193 ------------- Increase (decrease) in net assets from operations $ 6,704,304 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 40,111 $ 206,217 Net realized gain (loss) 3,220,446 2,184,037 Realized gain distributions 10,528,530 3,311,164 Net change in unrealized appreciation (depreciation) (7,084,783) (1,532,653) ------------ ------------- Increase (decrease) in net assets from operations 6,704,304 4,168,765 ------------ ------------- Contract owner transactions: Proceeds from units sold 6,080,458 7,607,821 Cost of units redeemed (10,234,075) (8,663,870) Account charges (431,033) (417,665) ------------ ------------- Increase (decrease) (4,584,650) (1,473,714) ------------ ------------- Net increase (decrease) 2,119,654 2,695,051 Net assets, beginning 41,593,187 38,898,136 ------------ ------------- Net assets, ending $ 43,712,841 $ 41,593,187 ============ ============= Units sold 669,754 938,061 Units redeemed (1,143,744) (1,129,516) ------------ ------------- Net increase (decrease) (473,990) (191,455) Units outstanding, beginning 4,708,633 4,900,088 ------------ ------------- Units outstanding, ending 4,234,643 4,708,633 ============ =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 59,680,425 Cost of units redeemed (36,375,914) Account charges (2,013,640) Net investment income (loss) 593,759 Net realized gain (loss) 5,251,995 Realized gain distributions 13,845,793 Net change in unrealized appreciation (depreciation) 2,730,423 ------------- $ 43,712,841 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 9.76 1,645 $ 16,058 N/A 17.6% 12/31/06 8.30 1,923 15,970 N/A 11.7% 12/31/05 7.43 2,176 16,168 N/A 16.8% 12/31/04 6.36 2,267 14,416 N/A 15.6% 12/31/03 5.50 2,328 12,804 N/A 28.5%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 10.68 2,590 $ 27,655 1.30% 16.1% 12/31/06 9.20 2,785 25,623 1.30% 10.3% 12/31/05 8.34 2,725 22,730 1.30% 15.4% 12/31/04 7.23 2,472 17,876 1.30% 14.0% 12/31/03 6.34 1,715 10,876 1.30% 26.8%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.9% 12/31/06 1.3% 12/31/05 0.3% 12/31/04 2.8% 12/31/03 0.4%
AUL American Individual Variable Annuity Unit Trust Fidelity Freedom 2005 -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $ 209,992 $ 210,824 18,116 Receivables: investments sold - =========== ============= Payables: investments redeemed (20) ----------- Net assets $ 209,972 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $ 24,324 3,833 $ 6.35 Class B 185,648 30,266 6.13 ----------- ----------- Total $ 209,972 34,099 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 5,736 Mortality & expense charges 2,578 ------------- Net investment income (loss) 3,158 ------------- Gain (loss) on investments: Net realized gain (loss) 11,845 Realized gain distributions 8,907 Net change in unrealized appreciation (depreciation) (8,291) ------------- Net gain (loss) 12,461 ------------- Increase (decrease) in net assets from operations $ 15,619 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 3,158 $ 4,408 Net realized gain (loss) 11,845 105 Realized gain distributions 8,907 919 Net change in unrealized appreciation (depreciation) (8,291) 4,212 ------------ ------------- Increase (decrease) in net assets from operations 15,619 9,644 ------------ ------------- Contract owner transactions: Proceeds from units sold 96,059 113,236 Cost of units redeemed (117,067) (458) Account charges (921) (349) ------------ ------------- Increase (decrease) (21,929) 112,429 ------------ ------------- Net increase (decrease) (6,310) 122,073 Net assets, beginning 216,282 94,209 ------------ ------------- Net assets, ending $ 209,972 $ 216,282 ============ ============= Units sold 16,280 20,038 Units redeemed (19,894) (239) ------------ ------------- Net increase (decrease) (3,614) 19,799 Units outstanding, beginning 37,713 17,914 ------------ ------------- Units outstanding, ending 34,099 37,713 ============ =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 300,285 Cost of units redeemed (117,525) Account charges (1,270) Net investment income (loss) 7,529 Net realized gain (loss) 11,959 Realized gain distributions 9,826 Net change in unrealized appreciation (depreciation) (832) ------------- $ 209,972 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions.
CLASS A Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 6.35 4 $ 24 N/A 8.7% 12/31/06 5.84 5 28 N/A 9.6% 12/31/05 5.33 - - N/A 0.0% 05/20/05 5.00 - - N/A 0.0%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 6.13 30 $ 186 1.30% 7.2% 12/31/06 5.72 33 188 1.30% 8.7% 12/31/05 5.26 18 94 1.30% 5.2% 05/20/05 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 2.7% 12/31/06 3.7% 12/31/05 0.0%
AUL American Individual Variable Annuity Unit Trust Fidelity Freedom 2010 -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $ 94,713 $ 91,799 7,916 Receivables: investments sold - =========== ============= Payables: investments redeemed (37) ----------- Net assets $ 94,676 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $ 41,647 6,524 $ 6.38 Class B 53,029 8,594 6.17 ----------- ----------- Total $ 94,676 15,118 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 2,299 Mortality & expense charges 549 ------------- Net investment income (loss) 1,750 ------------- Gain (loss) on investments: Net realized gain (loss) 116 Realized gain distributions 2,005 Net change in unrealized appreciation (depreciation) 1,193 ------------- Net gain (loss) 3,314 ------------- Increase (decrease) in net assets from operations $ 5,064 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 1,750 $ 267 Net realized gain (loss) 116 13 Realized gain distributions 2,005 149 Net change in unrealized appreciation (depreciation) 1,193 1,720 ------------ ------------- Increase (decrease) in net assets from operations 5,064 2,149 ------------ ------------- Contract owner transactions: Proceeds from units sold 54,784 33,440 Cost of units redeemed (87) - Account charges (543) (131) ------------ ------------- Increase (decrease) 54,154 33,309 ------------ ------------- Net increase (decrease) 59,218 35,458 Net assets, beginning 35,458 - ------------ ------------- Net assets, ending $ 94,676 $ 35,458 ============ ============= Units sold 9,064 6,180 Units redeemed (102) (24) ------------ ------------- Net increase (decrease) 8,962 6,156 Units outstanding, beginning 6,156 - ------------ ------------- Units outstanding, ending 15,118 6,156 ============ =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 88,224 Cost of units redeemed (87) Account charges (674) Net investment income (loss) 2,017 Net realized gain (loss) 129 Realized gain distributions 2,154 Net change in unrealized appreciation (depreciation) 2,913 ------------- $ 94,676 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions.
CLASS A Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 6.38 7 $ 42 N/A 8.7% 12/31/06 5.87 0 2 N/A 9.8% 12/31/05 5.35 - - N/A 0.0% 05/20/05 5.00 - - N/A 0.0%
CLASS B Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 6.17 9 $ 53 1.30% 7.3% 12/31/06 5.75 6 33 1.30% 8.5% 12/31/05 5.30 - - 0.00% 0.0% 05/20/05 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 3.5% 12/31/06 3.4% 12/31/05 0.0%
AUL American Individual Variable Annuity Unit Trust Fidelity 2015 -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $ 130,914 $ 125,571 10,655 Receivables: investments sold 45 =========== ============= Payables: investments redeemed (7) ----------- Net assets $ 130,952 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $ 66,926 10,164 $ 6.58 Class B 64,026 10,060 6.36 ----------- ----------- Total $ 130,952 20,224 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 3,573 Mortality & expense charges 752 ------------- Net investment income (loss) 2,821 ------------- Gain (loss) on investments: Net realized gain (loss) 588 Realized gain distributions 3,644 Net change in unrealized appreciation (depreciation) 2,392 ------------- Net gain (loss) 6,624 ------------- Increase (decrease) in net assets from operations $ 9,445 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 2,821 $ 796 Net realized gain (loss) 588 2,443 Realized gain distributions 3,644 741 Net change in unrealized appreciation (depreciation) 2,392 2,193 ------------ ------------- Increase (decrease) in net assets from operations 9,445 6,173 ------------ ------------- Contract owner transactions: Proceeds from units sold 41,949 85,512 Cost of units redeemed (19,696) (33,160) Account charges (876) (385) ------------ ------------- Increase (decrease) 21,377 51,967 ------------ ------------- Net increase (decrease) 30,822 58,140 Net assets, beginning 100,130 41,990 ------------ ------------- Net assets, ending $ 130,952 $ 100,130 ============ ============= Units sold 7,129 16,387 Units redeemed (3,691) (7,401) ------------ ------------- Net increase (decrease) 3,438 8,986 Units outstanding, beginning 16,786 7,800 ------------ ------------- Units outstanding, ending 20,224 16,786 ============ =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 168,648 Cost of units redeemed (52,856) Account charges (1,355) Net investment income (loss) 3,754 Net realized gain (loss) 3,032 Realized gain distributions 4,385 Net change in unrealized appreciation (depreciation) 5,344 ------------- $ 130,952 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions.
CLASS A Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 6.58 10 $ 67 N/A 9.3% 12/31/06 6.02 9 54 N/A 11.7% 12/31/05 5.39 1 7 N/A 7.8% 05/20/05 5.00 - - N/A 0.0%
CLASS B Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 6.36 10 $ 64 1.30% 7.9% 12/31/06 5.90 8 46 1.30% 10.2% 12/31/05 5.35 6 34 1.30% 7.0% 05/20/05 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 3.1% 12/31/06 1.6% 12/31/05 1.4%
AUL American Individual Variable Annuity Unit Trust Fidelity Freedom 2020 -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $ 1,024,730 $ 1,070,909 81,125 Receivables: investments sold - =========== ============= Payables: investments redeemed (128) ----------- Net assets $ 1,024,602 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $ 59,831 8,857 $ 6.76 Class B 964,771 147,757 6.53 ----------- ----------- Total $ 1,024,602 156,614 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 21,221 Mortality & expense charges 3,247 ------------- Net investment income (loss) 17,974 ------------- Gain (loss) on investments: Net realized gain (loss) 2,653 Realized gain distributions 23,120 Net change in unrealized appreciation (depreciation) (50,990) ------------- Net gain (loss) (25,217) ------------- Increase (decrease) in net assets from operations $ (7,243) =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 17,974 $ 671 Net realized gain (loss) 2,653 2,265 Realized gain distributions 23,120 856 Net change in unrealized appreciation (depreciation) (50,990) 3,293 ------------ ------------- Increase (decrease) in net assets from operations (7,243) 7,085 ------------ ------------- Contract owner transactions: Proceeds from units sold 965,087 68,165 Cost of units redeemed (28,384) (37,885) Account charges (1,261) (368) ------------ ------------- Increase (decrease) 935,442 29,912 ------------ ------------- Net increase (decrease) 928,199 36,997 Net assets, beginning 96,403 59,406 ------------ ------------- Net assets, ending $ 1,024,602 $ 96,403 ============ ============= Units sold 145,336 11,821 Units redeemed (4,683) (6,862) ------------ ------------- Net increase (decrease) 140,653 4,959 Units outstanding, beginning 15,961 11,002 ------------ ------------- Units outstanding, ending 156,614 15,961 ============ =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 1,091,064 Cost of units redeemed (66,269) Account charges (1,709) Net investment income (loss) 18,800 Net realized gain (loss) 4,923 Realized gain distributions 23,975 Net change in unrealized appreciation (depreciation) (46,182) ------------- $ 1,024,602 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions.
CLASS A Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 6.76 9 $ 60 N/A 10.2% 12/31/06 6.13 5 30 N/A 12.0% 12/31/05 5.47 - - N/A 0.0% 05/20/05 5.00 - - N/A 0.0%
CLASS B Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 6.53 148 $ 965 1.30% 8.8% 12/31/06 6.00 11 66 1.30% 11.1% 12/31/05 5.40 11 59 1.30% 8.0% 05/20/05 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 3.8% 12/31/06 1.8% 12/31/05 0.0%
AUL American Individual Variable Annuity Unit Trust Fidelity Freedom 2025 -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007 1
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $ 339,510 $ 318,942 26,637 Receivables: investments sold 2 =========== ============= Payables: investments redeemed (953) ----------- Net assets $ 338,559 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $ 43,271 6,314 $ 6.85 Class B 295,288 44,578 6.62 ----------- ----------- Total $ 338,559 50,892 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 6,770 Mortality & expense charges 3,476 ------------- Net investment income (loss) 3,294 ------------- Gain (loss) on investments: Net realized gain (loss) 1,207 Realized gain distributions 11,487 Net change in unrealized appreciation (depreciation) 9,191 ------------- Net gain (loss) 21,885 ------------- Increase (decrease) in net assets from operations $ 25,179 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 3,294 $ 2,098 Net realized gain (loss) 1,207 2,348 Realized gain distributions 11,487 3,791 Net change in unrealized appreciation (depreciation) 9,191 10,674 ------------ ------------- Increase (decrease) in net assets from operations 25,179 18,911 ------------ ------------- Contract owner transactions: Proceeds from units sold 60,197 259,958 Cost of units redeemed (26,092) (35,236) Account charges (642) (220) ------------ ------------- Increase (decrease) 33,463 224,502 ------------ ------------- Net increase (decrease) 58,642 243,413 Net assets, beginning 279,917 36,504 ------------ ------------- Net assets, ending $ 338,559 $ 279,917 ============ ============= Units sold 9,152 45,517 Units redeemed (4,219) (6,232) ------------ ------------- Net increase (decrease) 4,933 39,285 Units outstanding, beginning 45,959 6,674 ------------ ------------- Units outstanding, ending 50,892 45,959 ============ =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 360,304 Cost of units redeemed (65,715) Account charges (926) Net investment income (loss) 5,506 Net realized gain (loss) 3,541 Realized gain distributions 15,278 Net change in unrealized appreciation (depreciation) 20,571 ------------- $ 338,559 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions.
CLASS A Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 6.85 6 $ 43 N/A 10.5% 12/31/06 6.20 6 38 N/A 12.6% 12/31/05 5.51 - - N/A 0.0% 05/20/05 5.00 - - N/A 0.0%
CLASS B Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 6.62 45 $ 295 1.30% 9.1% 12/31/06 6.07 40 242 1.30% 11.6% 12/31/05 5.44 7 36 1.30% 8.8% 05/20/05 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 2.2% 12/31/06 2.9% 12/31/05 0.0%
AUL American Individual Variable Annuity Unit Trust Fidelity Freedom 2030 -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $ 242,803 $ 233,015 18,665 Receivables: investments sold 233 =========== ============= Payables: investments redeemed (2) ----------- Net assets $ 243,034 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $ 153,148 21,864 $ 7.00 Class B 89,886 13,276 6.77 ----------- ----------- Total $ 243,034 35,140 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 5,006 Mortality & expense charges 968 ------------- Net investment income (loss) 4,038 ------------- Gain (loss) on investments: Net realized gain (loss) 6,160 Realized gain distributions 9,374 Net change in unrealized appreciation (depreciation) 1,904 ------------- Net gain (loss) 17,438 ------------- Increase (decrease) in net assets from operations $ 21,476 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 4,038 $ 2,226 Net realized gain (loss) 6,160 (1,293) Realized gain distributions 9,374 1,875 Net change in unrealized appreciation (depreciation) 1,904 7,877 ------------ ------------- Increase (decrease) in net assets from operations 21,476 10,685 ------------ ------------- Contract owner transactions: Proceeds from units sold 97,195 286,123 Cost of units redeemed (57,422) (113,118) Account charges (2,202) (741) ------------ ------------- Increase (decrease) 37,571 172,264 ------------ ------------- Net increase (decrease) 59,047 182,949 Net assets, beginning 183,987 1,038 ------------ ------------- Net assets, ending $ 243,034 $ 183,987 ============ ============= Units sold 14,651 51,445 Units redeemed (8,943) (22,201) ------------ ------------- Net increase (decrease) 5,708 29,244 Units outstanding, beginning 29,432 188 ------------ ------------- Units outstanding, ending 35,140 29,432 ============ =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 397,481 Cost of units redeemed (184,307) Account charges (2,946) Net investment income (loss) 6,237 Net realized gain (loss) 5,534 Realized gain distributions 11,249 Net change in unrealized appreciation (depreciation) 9,786 ------------- $ 243,034 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions.
CLASS A Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 7.00 22 $ 153 N/A 11.4% 12/31/06 6.29 21 131 N/A 13.1% 12/31/05 5.56 - - N/A 0.0% 05/20/05 5.00 - - N/A 0.0%
CLASS B Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 6.77 13 $ 90 1.30% 9.9% 12/31/06 6.16 9 53 1.30% 11.6% 12/31/05 5.52 0 1 1.30% 10.4% 05/20/05 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 2.3% 12/31/06 2.9% 12/31/05 0.0%
AUL American Individual Variable Annuity Unit Trust Fidelity Freedom Income -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $ 1,197,981 $ 1,207,308 110,910 Receivables: investments sold 3,664 =========== ============= Payables: investments redeemed (3,830) ----------- Net assets $ 1,197,815 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $ 52,773 8,957 $ 5.89 Class B 1,145,042 201,066 5.69 ----------- ----------- Total $ 1,197,815 210,023 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 46,245 Mortality & expense charges 13,439 ------------- Net investment income (loss) 32,806 ------------- Gain (loss) on investments: Net realized gain (loss) 29,134 Realized gain distributions 10,496 Net change in unrealized appreciation (depreciation) (26,386) ------------- Net gain (loss) 13,244 ------------- Increase (decrease) in net assets from operations $ 46,050 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 32,806 $ 6,847 Net realized gain (loss) 29,134 1,557 Realized gain distributions 10,496 1,874 Net change in unrealized appreciation (depreciation) (26,386) 11,698 ------------ ------------- Increase (decrease) in net assets from operations 46,050 21,976 ------------ ------------- Contract owner transactions: Proceeds from units sold 1,188,298 29,962 Cost of units redeemed (440,886) (30,601) Account charges (7,698) (3,378) ------------ ------------- Increase (decrease) 739,714 (4,017) ------------ ------------- Net increase (decrease) 785,764 17,959 Net assets, beginning 412,051 394,092 ------------ ------------- Net assets, ending $ 1,197,815 $ 412,051 ============ ============= Units sold 246,915 6,159 Units redeemed (112,736) (6,888) ------------ ------------- Net increase (decrease) 134,179 (729) Units outstanding, beginning 75,844 76,573 ------------ ------------- Units outstanding, ending 210,023 75,844 ============ =============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 1,625,530 Cost of units redeemed (486,214) Account charges (12,710) Net investment income (loss) 37,261 Net realized gain (loss) 30,905 Realized gain distributions 12,370 Net change in unrealized appreciation (depreciation) (9,327) ------------- $ 1,197,815 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions.
CLASS A Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 5.89 9 $ 53 N/A 8.5% 12/31/06 5.43 2 9 N/A 5.6% 12/31/05 5.14 0 2 N/A 2.8% 05/20/05 5.00 - - N/A 0.0%
CLASS B Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 5.69 201 $ 1,145 1.30% 4.8% 12/31/06 5.43 74 403 1.30% 6.5% 12/31/05 5.10 76 388 1.30% 2.0% 05/20/05 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 5.8% 12/31/06 3.0% 12/31/05 0.0%
AUL American Individual Variable Annuity Unit Trust American Century VP International -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 60,094,763 $ 50,713,764 5,107,403 Receivables: investments sold 490,313 ============== ============== Payables: investments redeemed (11,218) -------------- Net assets $ 60,573,858 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 4,495,152 516,610 $ 8.70 Class B 56,078,706 5,003,329 11.21 -------------- -------------- Total $ 60,573,858 5,519,939 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 157,757 Mortality & expense charges 407,862 -------------- Net investment income (loss) (250,105) -------------- Gain (loss) on investments: Net realized gain (loss) 496,393 Realized gain distributions - Net change in unrealized appreciation (depreciation) 5,287,048 -------------- Net gain (loss) 5,783,441 -------------- Increase (decrease) in net assets from operations $ 5,533,336 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------- ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (250,105) $ 122,055 Net realized gain (loss) 496,393 1,602,316 Realized gain distributions - - Net change in unrealized appreciation (depreciation) 5,287,048 1,777,549 ------------- ------------ Increase (decrease) in net assets from operations 5,533,336 3,501,920 ------------- ------------ Contract owner transactions: Proceeds from units sold 40,248,975 10,518,613 Cost of units redeemed (5,604,176) (11,043,874) Account charges (351,878) (179,793) ------------- ------------ Increase (decrease) 34,292,921 (705,054) ------------- ------------ Net increase (decrease) 39,826,257 2,796,866 Net assets, beginning 20,747,601 17,950,735 ------------- ------------ Net assets, ending $ 60,573,858 $ 20,747,601 ============= ============ Units sold 3,904,479 1,294,552 Units redeemed (636,169) (1,446,386) ------------- ------------ Net increase (decrease) 3,268,310 (151,834) Units outstanding, beginning 2,251,629 2,403,463 ------------- ------------ Units outstanding, ending 5,519,939 2,251,629 ============= ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 129,775,382 Cost of units redeemed (79,871,479) Account charges (705,945) Net investment income (loss) (97,483) Net realized gain (loss) 2,092,384 Realized gain distributions - Net change in unrealized appreciation (depreciation) 9,380,999 ------------- $ 60,573,858 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------- 12/31/07 $ 8.70 517 $ 4,495 N/A 18.1% 12/31/06 7.37 405 2,985 N/A 24.9% 12/31/05 5.90 411 2,426 N/A 13.5% 12/31/04 5.20 308 1,601 N/A 14.8% 12/31/03 4.53 438 1,986 N/A 24.5%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------- 12/31/07 $ 11.21 4,999 $ 56,034 1.30% 16.5% 12/31/06 9.62 1,847 17,763 1.30% 23.5% 12/31/05 7.79 1,993 15,525 1.30% 11.8% 12/31/04 6.97 295 2,056 1.30% 13.3% 12/31/03 6.15 65 397 1.30% 23.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.4% 12/31/06 1.7% 12/31/05 1.0% 12/31/04 0.5% 12/31/03 0.6%
AUL American Individual Variable Annuity Unit Trust American Century VP Income & Growth -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 24,516,351 $ 23,204,500 2,912,852 Receivables: investments sold 128,392 ============== ============== Payables: investments redeemed (2,017) -------------- Net assets $ 24,642,726 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 3,479,417 526,854 $ 6.60 Class B 21,163,309 2,523,705 8.39 -------------- -------------- Total $ 24,642,726 3,050,559 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 851,846 Mortality & expense charges 410,812 -------------- Net investment income (loss) 441,034 -------------- Gain (loss) on investments: Net realized gain (loss) 7,017,630 Realized gain distributions - Net change in unrealized appreciation (depreciation) (5,972,442) -------------- Net gain (loss) 1,045,188 -------------- Increase (decrease) in net assets from operations $ 1,486,222 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------- ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ 441,034 $ 126,235 Net realized gain (loss) 7,017,630 355,527 Realized gain distributions - - Net change in unrealized appreciation (depreciation) (5,972,442) 5,098,893 ------------- ------------ Increase (decrease) in net assets from operations 1,486,222 5,580,655 ------------- ------------ Contract owner transactions: Proceeds from units sold 12,980,973 18,049,477 Cost of units redeemed (33,514,741) (4,384,615) Account charges (330,176) (319,378) ------------- ------------ Increase (decrease) (20,863,944) 13,345,484 ------------- ------------ Net increase (decrease) (19,377,722) 18,926,139 Net assets, beginning 44,020,448 25,094,309 ------------- ------------ Net assets, ending $ 24,642,726 $ 44,020,448 ============= ============ Units sold 1,573,304 2,413,366 Units redeemed (3,856,648) (674,837) ------------- ------------ Net increase (decrease) (2,283,344) 1,738,529 Units outstanding, beginning 5,331,685 3,593,156 ------------- ------------ Units outstanding, ending 3,050,559 5,331,685 ============= ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 62,633,809 Cost of units redeemed (46,765,382) Account charges (1,058,219) Net investment income (loss) 802,352 Net realized gain (loss) 7,718,315 Realized gain distributions - Net change in unrealized appreciation (depreciation) 1,311,851 ------------- $ 24,642,726 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------- 12/31/07 $ 6.60 527 $ 3,479 N/A 0.1% 12/31/06 6.60 692 4,568 N/A 16.9% 12/31/05 5.64 781 4,407 N/A 4.6% 12/31/04 5.39 801 4,320 N/A 13.0% 12/31/03 4.77 745 3,553 N/A 29.3%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------- 12/31/07 $ 8.39 2,521 $ 21,145 1.30% -1.4% 12/31/06 8.50 4,640 39,452 1.30% 15.5% 12/31/05 7.36 2,811 20,687 1.30% 3.4% 12/31/04 7.12 1,665 11,854 1.30% 11.6% 12/31/03 6.38 416 2,654 1.30% 27.6%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 2.5% 12/31/06 1.5% 12/31/05 2.0% 12/31/04 1.4% 12/31/03 1.3%
AUL American Individual Variable Annuity Unit Trust American Century VP Ultra 1 -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 238,539 $ 202,143 19,636 Receivables: investments sold 8 ============== ============== Payables: investments redeemed (20) -------------- Net assets $ 238,527 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 48,852 7,535 $ 6.48 Class B 189,675 30,290 6.26 -------------- -------------- Total $ 238,527 37,825 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ - Mortality & expense charges 1,593 -------------- Net investment income (loss) (1,593) -------------- Gain (loss) on investments: Net realized gain (loss) 1,908 Realized gain distributions - Net change in unrealized appreciation (depreciation) 31,121 -------------- Net gain (loss) 33,029 -------------- Increase (decrease) in net assets from operations $ 31,436 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------- ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (1,593) $ (876) Net realized gain (loss) 1,908 3,660 Realized gain distributions - - Net change in unrealized appreciation (depreciation) 31,121 4,677 ------------- ------------ Increase (decrease) in net assets from operations 31,436 7,461 ------------- ------------ Contract owner transactions: Proceeds from units sold 110,400 291,339 Cost of units redeemed (23,586) (189,627) Account charges (1,509) (682) ------------- ------------ Increase (decrease) 85,305 101,030 ------------- ------------ Net increase (decrease) 116,741 108,491 Net assets, beginning 121,786 13,295 ------------- ------------ Net assets, ending $ 238,527 $ 121,786 ============= ============ Units sold 19,359 58,296 Units redeemed (4,639) (37,593) ------------- ------------ Net increase (decrease) 14,720 20,703 Units outstanding, beginning 23,105 2,402 ------------- ------------ Units outstanding, ending 37,825 23,105 ============= ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 414,481 Cost of units redeemed (213,213) Account charges (2,234) Net investment income (loss) (2,472) Net realized gain (loss) 5,569 Realized gain distributions - Net change in unrealized appreciation (depreciation) 36,396 ------------- $ 238,527 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------- 12/31/07 $ 6.48 8 $ 49 N/A 21.0% 12/31/06 5.36 5 29 N/A -3.3% 12/31/05 5.54 2 11 N/A 10.8% 04/20/05 5.00 - - N/A 0.0% CLASS B Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------- 12/31/07 $ 6.26 30 $ 190 1.30% 19.4% 12/31/06 5.24 18 93 1.30% -4.7% 12/31/05 5.50 0 2 1.30% 10.0% 04/20/05 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.0% 12/31/06 0.0% 12/31/05 0.0%
AUL American Individual Variable Annuity Unit Trust American Century VP Vista -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 1,204,798 $ 1,110,325 54,349 Receivables: investments sold 12 ============== ============== Payables: investments redeemed (9,031) -------------- Net assets $ 1,195,779 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 282,654 32,161 $ 8.79 Class B 913,125 107,570 8.49 -------------- -------------- Total $ 1,195,779 139,731 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ - Mortality & expense charges 158,962 -------------- Net investment income (loss) (158,962) -------------- Gain (loss) on investments: Net realized gain (loss) 6,662,884 Realized gain distributions - Net change in unrealized appreciation (depreciation) (1,398,374) -------------- Net gain (loss) 5,264,510 -------------- Increase (decrease) in net assets from operations $ 5,105,548 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------- ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (158,962) $ (121,389) Net realized gain (loss) 6,662,884 1,451 Realized gain distributions - 117 Net change in unrealized appreciation (depreciation) (1,398,374) 1,491,562 ------------- ------------ Increase (decrease) in net assets from operations 5,105,548 1,371,741 ------------- ------------ Contract owner transactions: Proceeds from units sold 6,353,655 21,204,767 Cost of units redeemed (31,851,690) (819,352) Account charges (113,625) (88,322) ------------- ------------ Increase (decrease) (25,611,660) 20,297,093 ------------- ------------ Net increase (decrease) (20,506,112) 21,668,834 Net assets, beginning 21,701,891 33,057 ------------- ------------ Net assets, ending $ 1,195,779 $ 21,701,891 ============= ============ Units sold 966,629 3,684,236 Units redeemed (4,351,054) (165,835) ------------- ------------ Net increase (decrease) (3,384,425) 3,518,402 Units outstanding, beginning 3,524,156 5,754 ------------- ------------ Units outstanding, ending 139,731 3,524,156 ============= ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 27,590,409 Cost of units redeemed (32,671,168) Account charges (202,021) Net investment income (loss) (280,373) Net realized gain (loss) 6,664,342 Realized gain distributions 117 Net change in unrealized appreciation (depreciation) 94,473 ------------- $ 1,195,779 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------- 12/31/07 $ 8.79 32 $ 283 N/A 39.8% 12/31/06 6.29 131 822 N/A 9.0% 12/31/05 5.77 3 17 N/A 15.4% 04/20/05 5.00 - - N/A 0.0% CLASS B Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------- 12/31/07 $ 8.49 109 $ 922 1.30% 38.0% 12/31/06 6.15 3,393 20,880 1.30% 7.6% 12/31/05 5.72 3 16 1.30% 14.4% 12/31/04 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.0% 12/31/06 0.0% 12/31/05 0.0%
AUL American Individual Variable Annuity Unit Trust Alger American Growth -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 19,711,053 $ 12,710,693 401,045 Receivables: investments sold 72,944 ============== ============== Payables: investments redeemed (24,221) -------------- Net assets $ 19,759,776 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 11,324,365 1,851,195 $ 6.12 Class B 8,435,411 893,572 9.44 -------------- -------------- Total $ 19,759,776 2,744,767 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 70,714 Mortality & expense charges 108,936 -------------- Net investment income (loss) (38,222) -------------- Gain (loss) on investments: Net realized gain (loss) 1,351,565 Realized gain distributions - Net change in unrealized appreciation (depreciation) 2,223,383 -------------- Net gain (loss) 3,574,948 -------------- Increase (decrease) in net assets from operations $ 3,536,726 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------- ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (38,222) $ (82,461) Net realized gain (loss) 1,351,565 725,832 Realized gain distributions - - Net change in unrealized appreciation (depreciation) 2,223,383 256,026 ------------- ------------ Increase (decrease) in net assets from operations 3,536,726 899,397 ------------- ------------ Contract owner transactions: Proceeds from units sold 1,378,161 1,315,619 Cost of units redeemed (5,202,293) (4,943,431) Account charges (232,955) (247,085) ------------- ------------ Increase (decrease) (4,057,087) (3,874,897) ------------- ------------ Net increase (decrease) (520,361) (2,975,500) Net assets, beginning 20,280,137 23,255,637 ------------- ------------ Net assets, ending $ 19,759,776 $ 20,280,137 ============= ============ Units sold 204,863 241,162 Units redeemed (849,663) (960,970) ------------- ------------ Net increase (decrease) (644,800) (719,808) Units outstanding, beginning 3,389,567 4,109,375 ------------- ------------ Units outstanding, ending 2,744,767 3,389,567 ============= ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 260,610,762 Cost of units redeemed (242,653,181) Account charges (1,814,709) Net investment income (loss) 2,880,480 Net realized gain (loss) (6,263,936) Realized gain distributions - Net change in unrealized appreciation (depreciation) 7,000,360 ------------- $ 19,759,776 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------- 12/31/07 $ 6.12 1,851 $ 11,324 N/A 19.9% 12/31/06 5.10 2,348 11,974 N/A 5.2% 12/31/05 4.85 2,936 14,240 N/A 12.0% 12/31/04 4.33 3,584 15,519 N/A 5.6% 12/31/03 4.10 4,057 16,633 N/A 34.9% CLASS B Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------- 12/31/07 $ 9.44 894 $ 8,435 1.30% 18.4% 12/31/06 7.97 1,042 8,306 1.30% 3.8% 12/31/05 7.68 1,174 9,016 1.30% 10.5% 12/31/04 6.95 1,330 9,245 1.30% 4.2% 12/31/03 6.67 1,103 7,355 1.30% 33.4%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.4% 12/31/06 0.1% 12/31/05 0.2% 12/31/04 0.0% 12/31/03 0.0%
AUL American Individual Variable Annuity Unit Trust Alger American Small Cap -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 35,941,338 $ 33,153,889 1,084,819 Receivables: investments sold 213,525 ============== ============== Payables: investments redeemed (8,392) -------------- Net assets $ 36,146,471 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 4,498,404 835,099 $ 5.39 Class B 31,648,067 2,475,151 12.79 -------------- -------------- Total $ 36,146,471 3,310,250 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ - Mortality & expense charges 215,288 -------------- Net investment income (loss) (215,288) -------------- Gain (loss) on investments: Net realized gain (loss) 661,681 Realized gain distributions - Net change in unrealized appreciation (depreciation) 1,515,110 -------------- Net gain (loss) 2,176,791 -------------- Increase (decrease) in net assets from operations $ 1,961,503 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------- ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (215,288) $ (65,171) Net realized gain (loss) 661,681 1,653,804 Realized gain distributions - - Net change in unrealized appreciation (depreciation) 1,515,110 (468,560) ------------- ------------ Increase (decrease) in net assets from operations 1,961,503 1,120,073 ------------- ------------ Contract owner transactions: Proceeds from units sold 31,690,801 3,363,756 Cost of units redeemed (3,374,048) (8,189,742) Account charges (186,956) (84,914) ------------- ------------ Increase (decrease) 28,129,797 (4,910,900) ------------- ------------ Net increase (decrease) 30,091,300 (3,790,827) Net assets, beginning 6,055,171 9,845,998 ------------- ------------ Net assets, ending $ 36,146,471 $ 6,055,171 ============= ============ Units sold 2,793,311 437,072 Units redeemed (477,662) (1,035,257) ------------- ------------ Net increase (decrease) 2,315,649 (598,185) Units outstanding, beginning 994,601 1,592,786 ------------- ------------ Units outstanding, ending 3,310,250 994,601 ============= ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 1,713,314,372 Cost of units redeemed (1,681,845,820) Account charges (618,248) Net investment income (loss) (343,356) Net realized gain (loss) 2,852,073 Realized gain distributions - Net change in unrealized appreciation (depreciation) 2,787,450 --------------- $ 36,146,471 ===============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------- 12/31/07 5.39 835 $ 4,498 N/A 17.2% 12/31/06 4.59 764 3,512 N/A 19.8% 12/31/05 3.83 911 3,488 N/A 16.8% 12/31/04 3.28 1,020 3,347 N/A 16.7% 12/31/03 2.81 1,349 3,792 N/A 42.6% CLASS B Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------- 12/31/07 $ 12.79 2,475 $ 31,648 1.30% 15.7% 12/31/06 11.05 230 2,543 1.30% 18.4% 12/31/05 9.33 681 6,358 1.30% 15.5% 12/31/04 8.08 229 1,852 1.30% 14.9% 12/31/03 7.03 71 500 1.30% 40.6%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.0% 12/31/06 0.0% 12/31/05 0.0% 12/31/04 0.0% 12/31/03 0.0%
AUL American Individual Variable Annuity Unit Trust Calvert Social Mid-Cap Growth -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 1,572,774 $ 1,229,076 53,081 Receivables: investments sold 48,289 ============== ============== Payables: investments redeemed (7) -------------- Net assets $ 1,621,056 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 1,091,440 173,815 $ 6.28 Class B 529,616 66,410 7.97 -------------- -------------- Total $ 1,621,056 240,225 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ - Mortality & expense charges 5,997 -------------- Net investment income (loss) (5,997) -------------- Gain (loss) on investments: Net realized gain (loss) 68,392 Realized gain distributions 31,775 Net change in unrealized appreciation (depreciation) 62,833 -------------- Net gain (loss) 163,000 -------------- Increase (decrease) in net assets from operations $ 157,003 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------- ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (5,997) $ (5,537) Net realized gain (loss) 68,392 37,826 Realized gain distributions 31,775 - ------------- ------------ Net change in unrealized appreciation (depreciation) 62,833 78,220 ------------- ------------ Increase (decrease) in net assets from operations 157,003 110,509 ------------- ------------ Contract owner transactions: Proceeds from units sold 167,555 172,451 Cost of units redeemed (325,211) (425,433) Account charges (18,695) (20,293) ------------- ------------ Increase (decrease) (176,351) (273,275) ------------- ------------ Net increase (decrease) (19,348) (162,766) Net assets, beginning 1,640,404 1,803,170 ------------- ------------ Net assets, ending $ 1,621,056 $ 1,640,404 ============= ============ Units sold 24,488 28,793 Units redeemed (55,528) (79,151) ------------- ------------ Net increase (decrease) (31,040) (50,358) Units outstanding, beginning 271,265 321,623 ------------- ------------ Units outstanding, ending 240,225 271,265 ============= ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 4,288,437 Cost of units redeemed (2,687,809) Account charges (137,547) Net investment income (loss) 142,391 Net realized gain (loss) (359,889) Realized gain distributions 31,775 Net change in unrealized appreciation (depreciation) 343,698 ------------- $ 1,621,056 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------- 12/31/07 $ 6.28 174 $ 1,091 N/A 10.2% 12/31/06 5.70 214 1,218 N/A 6.9% 12/31/05 5.33 268 1,426 N/A 0.4% 12/31/04 5.31 296 1,573 N/A 9.3% 12/31/03 4.86 335 1,629 N/A 31.7% CLASS B Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------- 12/31/07 $ 7.97 66 $ 530 1.30% 8.7% 12/31/06 7.33 58 422 1.30% 5.5% 12/31/05 6.95 54 377 1.30% -0.9% 12/31/04 7.01 38 263 1.30% 7.8% 12/31/03 6.50 7 43 1.30% 30.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 1.6% 12/31/06 0.0% 12/31/05 0.0% 12/31/04 0.0% 12/31/03 0.0%
AUL American Individual Variable Annuity Unit Trust Old Mutual Growth II -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $ 1,966,480 $ 1,537,213 127,240 Receivables: investments sold 9,823 =========== ============= Payables: investments redeemed (14,194) ----------- Net assets $ 1,962,109 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $ 1,493,055 254,343 $ 5.87 Class B 469,054 50,699 9.25 ----------- ----------- Total $ 1,962,109 305,042 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 2,596 Mortality & expense charges 5,601 ------------- Net investment income (loss) (3,005) ------------- Gain (loss) on investments: Net realized gain (loss) 49,623 Realized gain distributions - Net change in unrealized appreciation (depreciation) 331,171 ------------- Net gain (loss) 380,794 ------------- Increase (decrease) in net assets from operations $ 377,789 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (3,005) $ (4,611) Net realized gain (loss) 49,623 10,629 Realized gain distributions - - Net change in unrealized appreciation (depreciation) 331,171 114,589 ------------ ------------ Increase (decrease) in net assets from operations 377,789 120,607 ------------ ------------ Contract owner transactions: Proceeds from units sold 180,284 103,726 Cost of units redeemed (288,000) (421,728) Account charges (21,130) (21,681) ------------ ------------ Increase (decrease) (128,846) (339,683) ------------ ------------ Net increase (decrease) 248,943 (219,076) Net assets, beginning 1,713,166 1,932,242 ------------ ------------ Net assets, ending $ 1,962,109 $ 1,713,166 ============ ============ Units sold 32,196 19,231 Units redeemed (58,617) (94,393) ------------ ------------ Net increase (decrease) (26,421) (75,162) Units outstanding, beginning 331,463 406,625 ------------ ------------ Units outstanding, ending 305,042 331,463 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 405,994,013 Cost of units redeemed (403,107,867) Account charges (206,799) Net investment income (loss) 28,616 Net realized gain (loss) (1,175,121) Realized gain distributions - Net change in unrealized appreciation (depreciation) 429,267 ------------- $ 1,962,109 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 5.87 254 $ 1,493 N/A 23.4% 12/31/06 4.76 283 1,347 N/A 7.1% 12/31/05 4.44 359 1,596 N/A 11.6% 12/31/04 3.98 411 1,636 N/A 6.4% 12/31/03 3.74 476 1,782 N/A 25.9%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 9.25 50 $ 465 1.30% 21.8% 12/31/06 7.59 48 366 1.30% 5.8% 12/31/05 7.18 47 336 1.30% 10.0% 12/31/04 6.53 43 281 1.30% 5.3% 12/31/03 6.20 25 153 1.30% 24.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.1% 12/31/06 0.0% 12/31/05 0.0% 12/31/04 0.0% 12/31/03 0.0%
AUL American Individual Variable Annuity Unit Trust Old Mutual Technology & Communication -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007 1
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $ 2,995,018 $ 2,220,114 840,891 Receivables: investments sold - =========== ============= Payables: investments redeemed (1,350) ----------- Net assets $ 2,993,668 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $ 2,359,542 630,928 $ 3.74 Class B 634,126 57,024 11.12 ----------- ----------- Total $ 2,993,668 687,952 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ - Mortality & expense charges 6,647 ------------- Net investment income (loss) (6,647) ------------- Gain (loss) on investments: Net realized gain (loss) 118,944 Realized gain distributions - Net change in unrealized appreciation (depreciation) 660,067 ------------- Net gain (loss) 779,011 ------------- Increase (decrease) in net assets from operations $ 772,364 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (6,647) $ (5,720) Net realized gain (loss) 118,944 4,218 Realized gain distributions - - Net change in unrealized appreciation (depreciation) 660,067 115,131 ------------ ------------ Increase (decrease) in net assets from operations 772,364 113,629 ------------ ------------ Contract owner transactions: Proceeds from units sold 448,433 310,730 Cost of units redeemed (721,750) (809,717) Account charges (33,871) (34,924) ------------ ------------ Increase (decrease) (307,188) (533,911) ------------ ------------ Net increase (decrease) 465,176 (420,282) Net assets, beginning 2,528,492 2,948,774 ------------ ------------ Net assets, ending $ 2,993,668 $ 2,528,492 ============ ============ Units sold 111,430 72,407 Units redeemed (217,255) (285,546) ------------ ------------ Net increase (decrease) (105,825) (213,139) Units outstanding, beginning 793,777 1,006,916 ------------ ------------ Units outstanding, ending 687,952 793,777 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 255,388,138 Cost of units redeemed (242,651,326) Account charges (394,398) Net investment income (loss) 2,859,909 Net realized gain (loss) (12,983,560) Realized gain distributions - Net change in unrealized appreciation (depreciation) 774,905 ------------- $ 2,993,668 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 3.74 631 $ 2,360 N/A 33.6% 12/31/06 2.80 742 2,076 N/A 4.5% 12/31/05 2.68 961 2,575 N/A 9.8% 12/31/04 2.44 1,080 2,635 N/A 6.6% 12/31/03 2.29 1,300 2,976 N/A 44.9%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 11.12 57 $ 634 1.30% 31.6% 12/31/06 8.45 54 452 1.30% 3.3% 12/31/05 8.18 46 374 1.30% 8.5% 12/31/04 7.54 36 272 1.30% 5.2% 12/31/03 7.17 15 104 1.30% 43.4%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.0% 12/31/06 0.0% 12/31/05 0.0% 12/31/04 0.0% 12/31/03 0.0%
AUL American Individual Variable Annuity Unit Trust Old Mutual Mid-Cap Value -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $ 781,818 $ 810,232 130,657 Receivables: investments sold 3,506 =========== ============= Payables: investments redeemed (74) ----------- Net assets $ 785,250 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $ 159,878 17,244 $ 9.27 Class B 625,372 71,670 8.73 ----------- ----------- Total $ 785,250 88,914 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ - Mortality & expense charges 27,564 ------------- Net investment income (loss) (27,564) ------------- Gain (loss) on investments: Net realized gain (loss) (2,115,268) Realized gain distributions 2,537,903 Net change in unrealized appreciation (depreciation) (133,662) ------------- Net gain (loss) 288,973 ------------- Increase (decrease) in net assets from operations $ 261,409 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (27,564) $ (63,013) Net realized gain (loss) (2,115,268) (42,161) Realized gain distributions 2,537,903 159,117 Net change in unrealized appreciation (depreciation) (133,662) 101,641 ------------ ------------ Increase (decrease) in net assets from operations 261,409 155,584 ------------ ------------ Contract owner transactions: Proceeds from units sold 686,505 2,838,962 Cost of units redeemed (3,728,257) (6,864,255) Account charges (18,750) (51,859) ------------ ------------ Increase (decrease) (3,060,502) (4,077,152) ------------ ------------ Net increase (decrease) (2,799,093) (3,921,568) Net assets, beginning 3,584,343 7,505,911 ------------ ------------ Net assets, ending $ 785,250 $ 3,584,343 ============ ============ Units sold 79,576 349,160 Units redeemed (401,286) (883,926) ------------ ------------ Net increase (decrease) (321,710) (534,766) Units outstanding, beginning 410,624 945,390 ------------ ------------ Units outstanding, ending 88,914 410,624 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 11,029,774 Cost of units redeemed (11,067,606) Account charges (105,510) Net investment income (loss) (133,942) Net realized gain (loss) (2,068,209) Realized gain distributions 3,159,157 Net change in unrealized appreciation (depreciation) (28,414) ------------- $ 785,250 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 9.27 17 $ 160 N/A 1.6% 12/31/06 9.12 30 270 N/A 11.3% 12/31/05 8.20 49 400 N/A 5.7% 12/31/04 7.76 22 172 N/A 18.8% 12/31/03 6.53 23 147 N/A 30.6%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 8.73 71 $ 622 1.30% 0.3% 12/31/06 8.70 381 3,314 1.30% 9.7% 12/31/05 7.93 896 7,106 1.30% 4.5% 12/31/04 7.59 36 276 1.30% 17.3% 12/31/03 6.47 2 11 1.30% 29.4%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.0% 12/31/06 0.2% 12/31/05 0.0% 12/31/04 0.0% 12/31/03 0.0%
AUL American Individual Variable Annuity Unit Trust Old Mutual Small Cap -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $ 1,048,658 $ 1,037,217 46,917 Receivables: investments sold - =========== ============= Payables: investments redeemed (83) ----------- Net assets $ 1,048,575 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $ 222,473 22,639 $ 9.83 Class B 826,102 89,322 9.25 ----------- ----------- Total $ 1,048,575 111,961 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ - Mortality & expense charges 10,303 ------------- Net investment income (loss) (10,303) ------------- Gain (loss) on investments: Net realized gain (loss) 32,896 Realized gain distributions 126,939 Net change in unrealized appreciation (depreciation) (101,683) ------------- Net gain (loss) 58,152 ------------- Increase (decrease) in net assets from operations $ 47,849 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- 1
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (10,303) $ (8,666) Net realized gain (loss) 32,896 11,755 Realized gain distributions 126,939 - Net change in unrealized appreciation (depreciation) (101,683) 112,835 ------------ ------------ Increase (decrease) in net assets from operations 47,849 115,924 ------------ ------------ Contract owner transactions: Proceeds from units sold 412,828 192,467 Cost of units redeemed (233,198) (208,303) Account charges (6,265) (4,258) ------------ ------------ Increase (decrease) 173,365 (20,094) ------------ ------------ Net increase (decrease) 221,214 95,830 Net assets, beginning 827,361 731,531 ------------ ------------ Net assets, ending $ 1,048,575 $ 827,361 ============ ============ Units sold 44,007 24,463 Units redeemed (25,395) (26,535) ------------ ------------ Net increase (decrease) 18,612 (2,072) Units outstanding, beginning 93,349 95,421 ------------ ------------ Units outstanding, ending 111,961 93,349 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 1,391,811 Cost of units redeemed (554,633) Account charges (14,746) Net investment income (loss) (27,245) Net realized gain (loss) 115,008 Realized gain distributions 126,939 Net change in unrealized appreciation (depreciation) 11,441 ------------- $ 1,048,575 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 9.83 23 $ 222 N/A 6.6% 12/31/06 9.22 17 153 N/A 16.8% 12/31/05 7.89 14 114 N/A 1.4% 12/31/04 7.78 11 85 N/A 16.1% 12/31/03 6.70 2 16 N/A 34.0%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 9.25 89 $ 826 1.30% 5.3% 12/31/06 8.79 77 674 1.30% 15.2% 12/31/05 7.63 81 618 1.30% 0.3% 12/31/04 7.61 35 266 1.30% 14.6% 12/31/03 6.64 9 63 1.30% 32.8%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.0% 12/31/06 0.0% 12/31/05 0.0% 12/31/04 0.0% 12/31/03 0.0%
AUL American Individual Variable Annuity Unit Trust T. Rowe Price Equity Income -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $32,241,909 $31,578,124 1,361,203 Receivables: investments sold 16,500 =========== ============= Payables: investments redeemed (7,048) ----------- Net assets $32,251,361 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $15,216,536 1,762,315 $ 8.63 Class B 17,034,825 1,974,573 8.63 ----------- ----------- Total $32,251,361 3,736,888 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 651,063 Mortality & expense charges 332,606 ------------- Net investment income (loss) 318,457 ------------- Gain (loss) on investments: Net realized gain (loss) 3,224,341 Realized gain distributions 2,131,270 Net change in unrealized appreciation (depreciation) (3,628,711) ------------- Net gain (loss) 1,726,900 ------------- Increase (decrease) in net assets from operations $ 2,045,357 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ 318,457 $ 354,862 Net realized gain (loss) 3,224,341 89,458 Realized gain distributions 2,131,270 1,278,080 Net change in unrealized appreciation (depreciation) (3,628,711) 5,584,261 ------------ ------------ Increase (decrease) in net assets from operations 2,045,357 7,306,661 ------------ ------------ Contract owner transactions: Proceeds from units sold 7,067,946 11,322,975 Cost of units redeemed (25,715,954) (8,002,376) Account charges (429,497) (448,864) ------------ ------------ Increase (decrease) (19,077,505) 2,871,735 ------------ ------------ Net increase (decrease) (17,032,148) 10,178,396 Net assets, beginning 49,283,509 39,105,113 ------------ ------------ Net assets, ending $ 32,251,361 $ 49,283,509 ============ ============ Units sold 855,393 1,511,657 Units redeemed (2,967,177) (1,149,459) ------------ ------------ Net increase (decrease) (2,111,784) 362,198 Units outstanding, beginning 5,848,672 5,486,474 ------------ ------------ Units outstanding, ending 3,736,888 5,848,672 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 70,604,035 Cost of units redeemed (54,119,776) Account charges (2,088,681) Net investment income (loss) 2,343,975 Net realized gain (loss) 8,982,579 Realized gain distributions 5,865,444 Net change in unrealized appreciation (depreciation) 663,785 ------------- $ 32,251,361 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 8.63 1,762 $ 15,217 N/A 3.3% 12/31/06 8.36 2,156 18,027 N/A 18.9% 12/31/05 7.03 2,448 17,206 N/A 4.0% 12/31/04 6.76 2,693 18,204 N/A 14.8% 12/31/03 5.89 2,838 16,716 N/A 25.6%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 8.63 1,975 $ 17,035 1.30% 1.9% 12/31/06 8.46 3,693 31,257 1.30% 17.4% 12/31/05 7.21 3,037 21,899 1.30% 2.6% 12/31/04 7.03 1,883 13,241 1.30% 13.6% 12/31/03 6.19 1,347 8,341 1.30% 23.8%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 1.6% 12/31/06 1.6% 12/31/05 1.6% 12/31/04 1.6% 12/31/03 1.7%
AUL American Individual Variable Annuity Unit Trust T. Rowe Price Limited-Term Bond -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $ 8,261,775 $ 8,347,163 1,678,202 Receivables: investments sold 33,342 =========== ============= Payables: investments redeemed (4,800) ----------- Net assets $ 8,290,317 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $ 3,329,806 457,695 $ 7.28 Class B 4,960,511 898,970 5.52 ----------- ----------- Total $ 8,290,317 1,356,665 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 374,737 Mortality & expense charges 67,560 ------------- Net investment income (loss) 307,177 ------------- Gain (loss) on investments: Net realized gain (loss) (46,469) Realized gain distributions - Net change in unrealized appreciation (depreciation) 98,133 ------------- Net gain (loss) 51,664 ------------- Increase (decrease) in net assets from operations $ 358,841 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ 307,177 $ 314,893 Net realized gain (loss) (46,469) (58,449) Realized gain distributions - - Net change in unrealized appreciation (depreciation) 98,133 54,650 ------------ ------------ Increase (decrease) in net assets from operations 358,841 311,094 ------------ ------------ Contract owner transactions: Proceeds from units sold 592,029 732,305 Cost of units redeemed (1,840,676) (1,901,824) Account charges (91,684) (104,817) ------------ ------------ Increase (decrease) (1,340,331) (1,274,336) ------------ ------------ Net increase (decrease) (981,490) (963,242) Net assets, beginning 9,271,807 10,235,049 ------------ ------------ Net assets, ending $ 8,290,317 $ 9,271,807 ============ ============ Units sold 112,423 135,817 Units redeemed (341,809) (346,725) ------------ ------------ Net increase (decrease) (229,386) (210,908) Units outstanding, beginning 1,586,051 1,796,959 ------------ ------------ Units outstanding, ending 1,356,665 1,586,051 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 31,034,723 Cost of units redeemed (23,404,117) Account charges (646,935) Net investment income (loss) 1,742,347 Net realized gain (loss) (371,871) Realized gain distributions 21,558 Net change in unrealized appreciation (depreciation) (85,388) ------------- $ 8,290,317 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 7.28 458 $ 3,330 N/A 5.5% 12/31/06 6.90 543 3,742 N/A 4.0% 12/31/05 6.63 657 4,356 N/A 1.8% 12/31/04 6.51 799 5,201 N/A 1.1% 12/31/03 6.44 808 5,205 N/A 4.2%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 5.52 899 $ 4,961 1.30% 4.1% 12/31/06 5.30 1,044 5,530 1.30% 2.7% 12/31/05 5.16 1,139 5,879 1.30% 0.4% 12/31/04 5.14 2,112 10,857 1.30% -0.2% 12/31/03 5.15 1,169 6,019 1.30% 3.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 4.3% 12/31/06 4.0% 12/31/05 3.6% 12/31/04 3.2% 12/31/03 3.8%
AUL American Individual Variable Annuity Unit Trust T. Rowe Price Mid-Cap Growth -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $17,885,882 $15,735,707 712,516 Receivables: investments sold - =========== ============= Payables: investments redeemed (58,283) ----------- Net assets $17,827,599 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $ 5,850,327 630,919 $ 9.27 Class B 11,977,272 1,085,576 11.03 ----------- ----------- Total $17,827,599 1,716,495 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 38,481 Mortality & expense charges 166,350 ------------- Net investment income (loss) (127,869) ------------- Gain (loss) on investments: Net realized gain (loss) 2,036,160 Realized gain distributions 1,904,801 Net change in unrealized appreciation (depreciation) (842,912) ------------- Net gain (loss) 3,098,049 ------------- Increase (decrease) in net assets from operations $ 2,970,180 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (127,869) $ (165,267) Net realized gain (loss) 2,036,160 1,017,384 Realized gain distributions 1,904,801 2,406,713 Net change in unrealized appreciation (depreciation) (842,912) (2,177,867) ------------ ------------ Increase (decrease) in net assets from operations 2,970,180 1,080,963 ------------ ------------ Contract owner transactions: Proceeds from units sold 1,245,738 1,676,610 Cost of units redeemed (5,610,733) (3,258,163) Account charges (194,744) (205,844) ------------ ------------ Increase (decrease) (4,559,739) (1,787,397) ------------ ------------ Net increase (decrease) (1,589,559) (706,434) Net assets, beginning 19,417,158 20,123,592 ------------ ------------ Net assets, ending $ 17,827,599 $ 19,417,158 ============ ============ Units sold 135,948 209,561 Units redeemed (605,523) (425,245) ------------ ------------ Net increase (decrease) (469,575) (215,684) Units outstanding, beginning 2,186,070 2,401,754 ------------ ------------ Units outstanding, ending 1,716,495 2,186,070 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 54,913,060 Cost of units redeemed (47,592,758) Account charges (904,135) Net investment income (loss) (612,241) Net realized gain (loss) 4,454,096 Realized gain distributions 5,419,402 Net change in unrealized appreciation (depreciation) 2,150,175 ------------- $ 17,827,599 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 9.27 631 $ 5,850 N/A 17.5% 12/31/06 7.89 849 6,698 N/A 6.6% 12/31/05 7.40 965 7,140 N/A 14.7% 12/31/04 6.45 1,030 6,644 N/A 18.3% 12/31/03 5.45 1,038 5,657 N/A 38.3%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 11.03 1,086 $ 11,977 1.30% 16.0% 12/31/06 9.51 1,337 12,719 1.30% 5.2% 12/31/05 9.04 1,436 12,984 1.30% 13.3% 12/31/04 7.98 1,549 12,360 1.30% 16.8% 12/31/03 6.83 1,121 7,655 1.30% 36.6%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.2% 12/31/06 0.0% 12/31/05 0.0% 12/31/04 0.0% 12/31/03 0.0%
AUL American Individual Variable Annuity Unit Trust T. Rowe Price Blue Chip Growth -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares ----------- ----------- ------------- Investments $ 986,059 $ 906,956 83,607 Receivables: investments sold 1,457 =========== ============= Payables: investments redeemed (98) ----------- Net assets $ 987,418 =========== Units Accumulation Net Assets Outstanding Unit Value ----------- ----------- ------------- Class A $ 225,034 32,017 $ 7.03 Class B 762,384 112,305 6.79 ----------- ----------- Total $ 987,418 144,322 =========== ===========
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 4,072 Mortality & expense charges 6,712 ------------- Net investment income (loss) (2,640) ------------- Gain (loss) on investments: Net realized gain (loss) 14,753 Realized gain distributions - Net change in unrealized appreciation (depreciation) 48,940 ------------- Net gain (loss) 63,693 ------------- Increase (decrease) in net assets from operations $ 61,053 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (2,640) $ (1,096) Net realized gain (loss) 14,753 6,449 Realized gain distributions - - Net change in unrealized appreciation (depreciation) 48,940 22,723 ------------ ------------ Increase (decrease) in net assets from operations 61,053 28,076 ------------ ------------ Contract owner transactions: Proceeds from units sold 537,267 343,666 Cost of units redeemed (69,509) (79,707) Account charges (5,028) (2,002) ------------ ------------ Increase (decrease) 462,730 261,957 ------------ ------------ Net increase (decrease) 523,783 290,033 Net assets, beginning 463,635 173,602 ------------ ------------ Net assets, ending $ 987,418 463,635 ============ ============ Units sold 82,188 60,168 Units redeemed (13,563) (15,162) ------------ ------------ Net increase (decrease) 68,625 45,006 Units outstanding, beginning 75,697 30,691 ------------ ------------ Units outstanding, ending 144,322 75,697 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 1,048,013 Cost of units redeemed (149,216) Account charges (7,527) Net investment income (loss) (3,987) Net realized gain (loss) 21,032 Realized gain distributions - Net change in unrealized appreciation (depreciation) 79,103 ------------- $ 987,418 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 7.03 32 $ 225 N/A 12.7% 12/31/06 6.23 14 86 N/A 9.8% 12/31/05 5.68 13 76 N/A 13.6% 04/20/05 5.00 - - N/A 0.0%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------- 12/31/07 $ 6.79 112 $ 762 1.30% 11.3% 12/31/06 6.10 62 377 1.30% 8.2% 12/31/05 5.64 17 98 1.30% 12.8% 04/20/05 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.6% 12/31/06 0.4% 12/31/05 0.2%
AUL American Individual Variable Annuity Unit Trust Janus Worldwide Growth -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 14,319,905 $ 10,831,736 405,779 ============== ============== Receivables: investments sold 9,059 Payables: investments redeemed (187) -------------- Net assets $ 14,328,777 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 6,878,896 1,045,095 $ 6.58 Class B 7,449,881 892,138 8.35 -------------- -------------- Total $ 14,328,777 1,937,233 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 112,454 Mortality & expense charges 99,494 -------------- Net investment income (loss) 12,960 -------------- Gain (loss) on investments: Net realized gain (loss) 1,125,260 Realized gain distributions - Net change in unrealized appreciation (depreciation) 183,227 -------------- Net gain (loss) 1,308,487 -------------- Increase (decrease) in net assets from operations $ 1,321,447 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- 1
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ 12,960 $ 161,252 Net realized gain (loss) 1,125,260 553,335 Realized gain distributions - - Net change in unrealized appreciation (depreciation) 183,227 1,591,904 ------------ ------------ Increase (decrease) in net assets from operations 1,321,447 2,306,491 ------------ ------------ Contract owner transactions: Proceeds from units sold 2,086,772 1,225,104 Cost of units redeemed (3,814,442) (3,048,561) Account charges (169,552) (163,800) ------------ ------------ Increase (decrease) (1,897,222) (1,987,257) ------------ ------------ Net increase (decrease) (575,775) 319,234 Net assets, beginning 14,904,552 14,585,318 ------------ ------------ Net assets, ending $ 14,328,777 $ 14,904,552 ============ ============ Units sold 279,641 204,816 Units redeemed (551,952) (561,355) ------------ ------------ Net increase (decrease) (272,311) (356,539) Units outstanding, beginning 2,209,544 2,566,083 ------------ ------------ Units outstanding, ending 1,937,233 2,209,544 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 73,350,195 Cost of units redeemed (59,779,583) Account charges (1,127,730) Net investment income (loss) 1,112,072 Net realized gain (loss) (2,714,346) Realized gain distributions - Net change in unrealized appreciation (depreciation) 3,488,169 ------------ $ 14,328,777 ============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------------- 12/31/07 $ 6.58 1,045 $ 6,879 N/A 9.6% 12/31/06 6.00 1,254 7,527 N/A 18.2% 12/31/05 5.08 1,555 7,901 N/A 5.8% 12/31/04 4.80 1,866 8,958 N/A 4.8% 12/31/03 4.58 2,092 9,580 N/A 24.1%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------------- 12/31/07 $ 8.35 892 $ 7,450 1.30% 8.2% 12/31/06 7.72 956 7,378 1.30% 16.8% 12/31/05 6.61 1,011 6,684 1.30% 4.4% 12/31/04 6.33 1,022 6,472 1.30% 3.4% 12/31/03 6.12 861 5,270 1.30% 22.4%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 1 12/31/07 0.8% 12/31/06 1.7% 12/31/05 1.4% 12/31/04 1.0% 12/31/03 1.2%
AUL American Individual Variable Annuity Unit Trust Janus Flexible Income Bond -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 90,386,421 $ 90,760,647 7,919,430 Receivables: investments sold 391,086 ============== ============== Payables: investments redeemed (693) -------------- Net assets $ 90,776,814 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 8,408,105 1,055,264 $ 7.97 Class B 82,368,709 13,967,365 5.90 -------------- -------------- Total $ 90,776,814 15,022,629 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 4,033,835 Mortality & expense charges 724,929 -------------- Net investment income (loss) 3,308,906 -------------- Gain (loss) on investments: Net realized gain (loss) (320,407) Realized gain distributions - Net change in unrealized appreciation (depreciation) 1,696,996 -------------- Net gain (loss) 1,376,589 -------------- Increase (decrease) in net assets from operations $ 4,685,495 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ 3,308,906 $ 1,496,882 Net realized gain (loss) (320,407) (223,210) Realized gain distributions - 72,669 Net change in unrealized appreciation (depreciation) 1,696,996 (46,284) ------------ ------------ Increase (decrease) in net assets from operations 4,685,495 1,300,057 ------------ ------------ Contract owner transactions: Proceeds from units sold 57,146,556 17,319,006 Cost of units redeemed (9,988,513) (5,113,410) Account charges (597,166) (326,546) ------------ ------------ Increase (decrease) 46,560,877 11,879,050 ------------ ------------ Net increase (decrease) 51,246,372 13,179,107 Net assets, beginning 39,530,442 26,351,335 ------------ ------------ Net assets, ending $ 90,776,814 $ 39,530,442 ============ ============ Units sold 10,190,646 3,185,385 Units redeemed (1,904,690) (946,685) ------------ ------------ Net increase (decrease) 8,285,956 2,238,700 Units outstanding, beginning 6,736,673 4,497,973 ------------ ------------ Units outstanding, ending 15,022,629 6,736,673 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $117,243,484 Cost of units redeemed (33,081,331) Account charges (1,678,462) Net investment income (loss) 8,189,326 Net realized gain (loss) (534,720) Realized gain distributions 1,012,744 Net change in unrealized appreciation (depreciation) (374,227) ------------ $ 90,776,814 ============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------------- 12/31/07 $ 7.97 1,055 $ 8,408 N/A 7.0% 12/31/06 7.44 1,035 7,704 N/A 4.3% 12/31/05 7.14 1,134 8,095 N/A 2.0% 12/31/04 7.00 1,210 8,469 N/A 3.9% 12/31/03 6.74 1,322 8,909 N/A 6.5%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------------- 12/31/07 $ 5.90 13,967 $ 82,369 1.30% 5.6% 12/31/06 5.58 5,702 31,826 1.30% 2.8% 12/31/05 5.43 3,362 18,257 1.30% 0.7% 12/31/04 5.39 2,528 13,627 1.30% 2.7% 12/31/03 5.25 1,460 7,667 1.30% 5.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 6.2% 12/31/06 5.5% 12/31/05 5.4% 12/31/04 5.8% 12/31/03 4.7%
AUL American Individual Variable Annuity Unit Trust Pioneer VCT Portfolio -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 40,493,592 $ 41,393,052 1,585,197 Receivables: investments sold 288,226 ============== ============== Payables: investments redeemed (10,542) -------------- Net assets $ 40,771,276 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 2,124,769 405,379 $ 5.24 Class B 38,646,507 4,721,338 8.19 -------------- -------------- Total $ 40,771,276 5,126,717 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 284,928 Mortality & expense charges 255,108 -------------- Net investment income (loss) 29,820 -------------- Gain (loss) on investments: Net realized gain (loss) 161,992 Realized gain distributions - Net change in unrealized appreciation (depreciation) (1,303,371) -------------- Net gain (loss) (1,141,379) -------------- Increase (decrease) in net assets from operations $ (1,111,559) ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ 29,820 $ 18,511 Net realized gain (loss) 161,992 69,080 Realized gain distributions - - Net change in unrealized appreciation (depreciation) (1,303,371) 253,433 ------------ ------------ Increase (decrease) in net assets from operations (1,111,559) 341,024 ------------ ------------ Contract owner transactions: Proceeds from units sold 42,329,502 380,187 Cost of units redeemed (2,705,915) (601,851) Account charges (192,133) (25,540) ------------ ------------ Increase (decrease) 39,431,454 (247,204) ------------ ------------ Net increase (decrease) 38,319,895 93,820 Net assets, beginning 2,451,381 2,357,561 ------------ ------------ Net assets, ending $ 40,771,276 $ 2,451,381 ============ ============ Units sold 5,147,018 64,440 Units redeemed (429,703) (122,653) ------------ ------------ Net increase (decrease) 4,717,315 (58,213) Units outstanding, beginning 409,402 467,615 ------------ ------------ Units outstanding, ending 5,126,717 409,402 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 48,221,053 Cost of units redeemed (6,351,031) Account charges (345,411) Net investment income (loss) 172,825 Net realized gain (loss) (26,700) Realized gain distributions - Net change in unrealized appreciation (depreciation) (899,460) ------------ $ 40,771,276 ============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------------- 12/31/07 $ 5.24 405 $ 2,121 N/A 5.0% 12/31/06 4.99 269 1,344 N/A 16.6% 12/31/05 4.28 330 1,411 N/A 6.2% 12/31/04 4.03 355 1,432 N/A 7.8% 12/31/03 3.74 402 1,504 N/A 24.7%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------------- 12/31/07 $ 8.19 4,721 $ 38,643 1.30% 3.6% 12/31/06 7.90 140 1,107 1.30% 15.1% 12/31/05 6.86 138 946 1.30% 4.7% 12/31/04 6.55 140 915 1.30% 6.3% 12/31/03 6.16 104 642 1.30% 23.2%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 1.3% 12/31/06 1.3% 12/31/05 1.3% 12/31/04 1.1% 12/31/03 1.0%
AUL American Individual Variable Annuity Unit Trust Pioneer Growth Opportunities -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 6,835,444 $ 7,376,346 304,134 Receivables: investments sold 1,044 ============== ============== Payables: investments redeemed (12,860) -------------- Net assets $ 6,823,628 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 3,016,090 395,125 $ 7.63 Class B 3,807,538 429,092 8.87 -------------- -------------- Total $ 6,823,628 824,217 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ - Mortality & expense charges 60,866 -------------- Net investment income (loss) (60,866) -------------- Gain (loss) on investments: Net realized gain (loss) 272,080 Realized gain distributions 1,116,911 Net change in unrealized appreciation (depreciation) (1,588,105) -------------- Net gain (loss) (199,114) -------------- Increase (decrease) in net assets from operations $ (259,980) ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS -------------------------------------------------------------------------------- 1
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (60,866) $ (65,708) Net realized gain (loss) 272,080 223,908 Realized gain distributions 1,116,911 - Net change in unrealized appreciation (depreciation) (1,588,105) 248,762 ------------ ------------ Increase (decrease) in net assets from operations (259,980) 406,962 1 ------------ ------------ Contract owner transactions: Proceeds from units sold 542,824 1,796,131 Cost of units redeemed 2,658,484) (2,248,912) Account charges (89,731) (102,744) ------------ ------------ Increase (decrease) 2,205,391) (555,525) ------------ ------------ Net increase (decrease) (2,465,371) (148,563) Net assets, beginning 9,288,999 9,437,562 ------------ ------------ Net assets, ending $ 6,823,628 $ 9,288,999 ============ ============ Units sold 73,017 210,974 Units redeemed (322,795) (287,477) ------------ ------------ Net increase (decrease) (249,778) (76,503) Units outstanding, beginning 1,073,995 1,150,498 ------------ ------------ Units outstanding, ending 824,217 1,073,995 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 15,760,141 Cost of units redeemed (11,523,463) Account charges (511,999) Net investment income (loss) (78,610) Net realized gain (loss) 2,581,991 Realized gain distributions 1,126,616 Net change in unrealized appreciation (depreciation) (531,048) ------------ $ 6,823,628 ============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------------- 12/31/07 $ 7.63 395 $ 3,016 N/A -3.9% 12/31/06 7.94 534 4,241 N/A 5.6% 12/31/05 7.52 608 4,575 N/A 6.7% 12/31/04 7.05 758 5,343 N/A 22.4% 12/31/03 5.76 806 4,642 N/A 42.9%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return --------------------------------------------------------------------------- 12/31/07 $ 8.87 429 $ 3,808 1.30% -5.1% 12/31/06 9.35 540 5,048 1.30% 4.2% 12/31/05 8.97 542 4,862 1.30% 5.3% 12/31/04 8.52 527 4,489 1.30% 20.9% 12/31/03 7.05 415 2,928 1.30% 41.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.0% 12/31/06 0.0% 12/31/05 0.0% 12/31/04 0.0% 12/31/03 0.0%
AUL American Individual Variable Annuity Unit Trust AIM Dynamics -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 8,326,799 $ 8,201,531 437,148 Receivables: investments sold 84,200 ============== ============== Payables: investments redeemed (219) -------------- Net assets $ 8,410,780 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 1,056,211 138,229 $ 7.64 Class B 7,354,569 696,571 10.56 -------------- -------------- Total $ 8,410,780 834,800 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ - Mortality & expense charges 49,695 ------------ Net investment income (loss) (49,695) ------------ Gain (loss) on investments: Net realized gain (loss) 110,047 Realized gain distributions - Net change in unrealized appreciation (depreciation) (60,012) ------------ Net gain (loss) 50,035 ------------ Increase (decrease) in net assets from operations $ 340 ============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (49,695) $ (6,572) Net realized gain (loss) 110,047 253,223 Realized gain distributions - - Net change in unrealized appreciation (depreciation) (60,012) (41,020) ------------ ------------ Increase (decrease) in net assets from operations 340 205,631 ------------ ------------ Contract owner transactions: Proceeds from units sold 7,737,805 1,249,827 Cost of units redeemed (648,626) (1,281,191) Account charges (41,649) (15,475) ------------ ------------ Increase (decrease) 7,047,530 (46,839) ------------ ------------ Net increase (decrease) 7,047,870 158,791 Net assets, beginning 1,362,910 1,204,119 ------------ ------------ Net assets, ending $ 8,410,780 $ 1,362,910 ============ ============ Units sold 740,632 168,231 Units redeemed (82,323) (181,929) ------------ ------------ Net increase (decrease) 658,309 (13,698) Units outstanding, beginning 176,491 190,189 ------------ ------------ Units outstanding, ending 834,800 176,491 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 195,675,335 Cost of units redeemed (187,988,127) Account charges (114,581) Net investment income (loss) (62,332) Net realized gain (loss) 775,220 Realized gain distributions - Net change in unrealized appreciation (depreciation) 125,265 ------------- $ 8,410,780 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions.
CLASS A Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------------- 12/31/07 $ 7.64 138 $ 1,056 N/A 12.2% 12/31/06 6.81 117 800 N/A 16.0% 12/31/05 5.87 154 904 N/A 10.8% 12/31/04 5.30 166 882 N/A 13.5% 12/31/03 4.67 239 1,115 N/A 38.2% CLASS B Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------------- 12/31/07 $ 10.56 697 $ 7,355 1.30% 10.7% 12/31/06 9.54 59 563 1.30% 14.6% 12/31/05 8.32 36 300 1.30% 9.3% 12/31/04 7.61 30 228 1.30% 11.6% 12/31/03 6.82 22 151 1.30% 36.4%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.0% 12/31/06 0.0% 12/31/05 0.0% 12/31/04 0.0% 12/31/03 0.0%
AUL American Individual Variable Annuity Unit Trust AIM Financial Services -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 774,359 $ 984,666 63,159 ============== ============== Receivables: investments sold 2 Payables: investments redeemed (81) -------------- Net assets $ 774,280 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 292,881 50,579 $ 5.79 Class B 481,399 76,053 6.33 --------------- -------------- Total $ 774,280 126,632 =============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 16,542 Mortality & expense charges 7,318 ------------ Net investment income (loss) 9,224 ------------ Gain (loss) on investments: Net realized gain (loss) 44,711 Realized gain distributions 62,448 Net change in unrealized appreciation (depreciation) (331,807) ------------ Net gain (loss) (224,648) ------------ Increase (decrease) in net assets from operations $ (215,424) ============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ -------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 9,224 $ 7,996 Net realized gain (loss) 44,711 58,648 Realized gain distributions 62,448 5,436 Net change in unrealized appreciation (depreciation) (331,807) 53,484 ------------ -------------- Increase (decrease) in net assets from operations (215,424) 125,564 ------------ -------------- Contract owner transactions: Proceeds from units sold 397,201 417,768 Cost of units redeemed (350,470) (379,086) Account charges (8,605) (8,359) ------------ -------------- Increase (decrease) 38,126 30,323 ------------ -------------- Net increase (decrease) (177,298) 155,886 Net assets, beginning 951,578 795,692 ------------ -------------- Net assets, ending $ 774,280 $ 951,578 ============ ============== Units sold 55,708 59,122 Units redeemed (49,466) (56,354) ------------ -------------- Net increase (decrease) 6,242 2,768 Units outstanding, beginning 120,390 117,622 ------------ -------------- Units outstanding, ending 126,632 120,390 ============ ==============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 1,717,021 Cost of units redeemed (976,628) Account charges (38,402) Net investment income (loss) 30,605 Net realized gain (loss) 184,106 Realized gain distributions 67,883 Net change in unrealized appreciation (depreciation) (210,305) ----------- $ 774,280 ===========
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions.
CLASS A Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ---------------------------------------------------------------------------- 12/31/07 $ 5.79 51 $ 293 N/A -22.2% 12/31/06 7.44 51 382 N/A 16.5% 12/31/05 6.39 62 394 N/A 5.8% 12/31/04 6.04 72 433 N/A 10.0% 12/31/03 5.49 77 420 N/A 29.5% CLASS B Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ---------------------------------------------------------------------------- 12/31/07 $ 6.33 76 $ 481 1.30% -23.2% 12/31/06 8.24 69 569 1.30% 15.0% 12/31/05 7.17 56 401 1.30% 4.5% 12/31/04 6.86 42 285 1.30% 7.2% 12/31/03 6.40 4 24 1.30% 28.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 1.9% 12/31/06 1.6% 12/31/05 1.3% 12/31/04 0.7% 12/31/03 0.7%
AUL American Individual Variable Annuity Unit Trust AIM Global Health Care -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 1,568,604 $ 1,263,669 65,190 ============== ============== Receivables: investments sold - Payables: investments redeemed (153) -------------- Net assets $ 1,568,451 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 1,024,003 153,644 $ 6.66 Class B 544,448 66,396 8.20 -------------- -------------- Total $ 1,568,451 220,040 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ - Mortality & expense charges 7,817 ------------- Net investment income (loss) (7,817) ------------- Gain (loss) on investments: Net realized gain (loss) 75,541 Realized gain distributions - Net change in unrealized appreciation (depreciation) 101,591 ------------- Net gain (loss) 177,132 ------------- Increase (decrease) in net assets from operations $ 169,315 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ -------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ (7,817) $ (7,341) Net realized gain (loss) 75,541 37,383 Realized gain distributions - - Net change in unrealized appreciation (depreciation) 101,591 39,709 ------------ -------------- Increase (decrease) in net assets from operations 169,315 69,751 ------------ -------------- Contract owner transactions: Proceeds from units sold 170,008 420,727 Cost of units redeemed (355,882) (313,791) Account charges (17,041) (16,830) ------------ -------------- Increase (decrease) (202,915) 90,106 ------------ -------------- Net increase (decrease) (33,600) 159,857 Net assets, beginning 1,602,051 1,442,194 ------------ -------------- Net assets, ending $ 1,568,451 $ 1,602,051 ============ ============== Units sold 25,808 68,997 Units redeemed (54,693) (55,985) ------------ -------------- Net increase (decrease) (28,885) 13,012 Units outstanding, beginning 248,925 235,913 ------------ -------------- Units outstanding, ending 220,040 248,925 ============ ==============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 2,394,459 Cost of units redeemed (1,287,099) Account charges (76,006) Net investment income (loss) (22,902) Net realized gain (loss) 255,064 Realized gain distributions - Net change in unrealized appreciation (depreciation) 304,935 ----------- $ 1,568,451 ===========
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions.
CLASS A Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ---------------------------------------------------------------------------- 12/31/07 $ 6.66 154 $ 1,024 N/A 11.9% 12/31/06 5.96 168 1,001 N/A 5.3% 12/31/05 5.66 164 931 N/A 8.0% 12/31/04 5.24 177 927 N/A 9.4% 12/31/03 4.79 190 909 N/A 27.4% CLASS B Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ---------------------------------------------------------------------------- 12/31/07 $ 8.20 66 $ 544 1.30% 10.4% 12/31/06 7.43 81 601 1.30% 3.9% 12/31/05 7.15 71 511 1.30% 6.7% 12/31/04 6.70 47 313 1.30% 6.5% 12/31/03 6.29 10 64 1.30% 25.8%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.0% 12/31/06 0.0% 12/31/05 0.0% 12/31/04 0.0% 12/31/03 0.0%
AUL American Individual Variable Annuity Unit Trust AIM Utilities -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 5,841,378 $ 5,002,024 243,558 ============== ============== Receivables: investments sold - Payables: investments redeemed (4,605) -------------- Net assets $ 5,836,773 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 1,651,571 179,058 $ 9.22 Class B 4,185,202 347,966 12.03 -------------- -------------- Total $ 5,836,773 527,024 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 106,091 Mortality & expense charges 51,504 ------------- Net investment income (loss) 54,587 ------------- Gain (loss) on investments: Net realized gain (loss) 637,331 Realized gain distributions 274,977 Net change in unrealized appreciation (depreciation) (5,417) ------------- Net gain (loss) 906,891 ------------- Increase (decrease) in net assets from operations $ 961,478 =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ -------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 54,587 $ 115,200 Net realized gain (loss) 637,331 415,893 Realized gain distributions 274,977 94,122 Net change in unrealized appreciation (depreciation) (5,417) 315,720 ------------ -------------- Increase (decrease) in net assets from operations 961,478 940,935 ------------ -------------- Contract owner transactions: Proceeds from units sold 2,411,838 1,453,023 Cost of units redeemed (2,360,090) (1,512,022) Account charges (48,063) (40,016) ------------ -------------- Increase (decrease) 3,685 (99,015) ------------ -------------- Net increase (decrease) 965,163 841,920 Net assets, beginning 4,871,610 4,029,690 ------------ -------------- Net assets, ending $ 5,836,773 $ 4,871,610 ============ ============== Units sold 245,412 185,892 Units redeemed (246,728) (211,897) ------------ -------------- Net increase (decrease) (1,316) (26,005) Units outstanding, beginning 528,340 554,345 ------------ -------------- Units outstanding, ending 527,024 528,340 ============ ==============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 8,759,725 Cost of units redeemed (5,682,375) Account charges (153,403) Net investment income (loss) 300,558 Net realized gain (loss) 1,403,815 Realized gain distributions 369,099 Net change in unrealized appreciation (depreciation) 839,354 ------------ $ 5,836,773 ============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions.
CLASS A Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ---------------------------------------------------------------------------- 12/31/07 $ 9.22 179 $ 1,652 N/A 20.6% 12/31/06 7.65 189 1,448 N/A 25.5% 12/31/05 6.09 238 1,452 N/A 16.7% 12/31/04 5.22 193 1,008 N/A 28.3% 12/31/03 4.07 194 790 N/A 17.6%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ---------------------------------------------------------------------------- 12/31/07 $ 12.03 348 $ 4,185 1.30% 19.1% 12/31/06 10.10 339 3,424 1.30% 23.8% 12/31/05 8.16 316 2,577 1.30% 15.4% 12/31/04 7.07 208 1,470 1.30% 21.7% 12/31/03 5.81 169 980 1.30% 16.2%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 2.0% 12/31/06 3.4% 12/31/05 3.1% 12/31/04 2.4% 12/31/03 2.7%
AUL American Individual Variable Annuity Unit Trust AIM Real Estate Opportunity -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 5,986,223 $ 7,136,803 273,831 ============== ============== Receivables: investments sold 6,199 Payables: investments redeemed (1,060) -------------- Net assets $ 5,991,362 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 2,056,111 132,211 $ 15.55 Class B 3,935,251 287,844 13.67 -------------- -------------- Total $ 5,991,362 420,055 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 374,241 Mortality & expense charges 58,903 ------------ Net investment income (loss) 315,338 ------------ Gain (loss) on investments: Net realized gain (loss) 861,941 Realized gain distributions 893,228 Net change in unrealized appreciation (depreciation) (2,556,037) ------------ Net gain (loss) (800,868) ------------ Increase (decrease) in net assets from operations $ (485,530) ============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ -------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 315,338 $ 31,428 Net realized gain (loss) 861,941 406,388 Realized gain distributions 893,228 213,208 Net change in unrealized appreciation (depreciation) (2,556,037) 946,028 ------------ -------------- Increase (decrease) in net assets from operations (485,530) 1,597,052 ------------ -------------- Contract owner transactions: Proceeds from units sold 3,000,563 3,715,714 Cost of units redeemed (3,137,064) (1,522,182) Account charges (59,571) (40,408) ------------ -------------- Increase (decrease) (196,072) 2,153,124 ------------ -------------- Net increase (decrease) (681,602) 3,750,176 Net assets, beginning 6,672,964 2,922,788 ------------ -------------- Net assets, ending $ 5,991,362 $ 6,672,964 ============ ============== Units sold 199,679 294,877 Units redeemed (214,161) (125,895) ------------ -------------- Net increase (decrease) (14,482) 168,982 Units outstanding, beginning 434,537 265,555 ------------ -------------- Units outstanding, ending 420,055 434,537 ============ ==============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 10,635,137 Cost of units redeemed (6,678,997) Account charges (154,833) Net investment income (loss) 414,206 Net realized gain (loss) 1,717,564 Realized gain distributions 1,208,865 Net change in unrealized appreciation (depreciation) (1,150,580) ------------ $ 5,991,362 ============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions.
CLASS A Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ---------------------------------------------------------------------------- 12/31/07 $ 15.55 132 $ 2,056 N/A -5.5% 12/31/06 16.46 167 2,754 N/A 42.5% 12/31/05 11.55 139 1,601 N/A 14.2% 12/31/04 10.11 128 1,293 N/A 38.9% 12/31/03 7.28 143 1,042 N/A 38.1%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ---------------------------------------------------------------------------- 12/31/07 $ 13.67 288 $ 3,933 1.30% -6.8% 12/31/06 14.66 267 3,919 1.30% 40.7% 12/31/05 10.42 127 1,322 1.30% 12.8% 12/31/04 9.24 44 409 1.30% 35.3% 12/31/03 6.83 14 99 1.30% 36.6%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 5.9% 12/31/06 1.3% 12/31/05 1.1% 12/31/04 0.9% 12/31/03 3.1%
AUL American Individual Variable Annuity Unit Trust AIM High Yield -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 14,041,478 $ 15,135,884 2,460,141 ============== ============== Receivables: investments sold 79,776 Payables: investments redeemed - -------------- Net assets $ 14,121,254 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 864,958 138,199 $ 6.26 Class B 13,256,296 2,221,603 5.97 -------------- -------------- Total $ 14,121,254 2,359,802 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 1,022,620 Mortality & expense charges 148,457 ------------- Net investment income (loss) 874,163 ------------- Gain (loss) on investments: Net realized gain (loss) 2,037 Realized gain distributions - Net change in unrealized appreciation (depreciation) (976,431) ------------- Net gain (loss) (974,394) ------------- Increase (decrease) in net assets from operations $ (100,231) =============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ -------------- Increase (decrease) in net assets from operations: Net investment income (loss) $ 874,163 $ 748,747 Net realized gain (loss) 2,037 5,451 Realized gain distributions - - Net change in unrealized appreciation (depreciation) (976,431) (74,896) ------------ -------------- Increase (decrease) in net assets from operations (100,231) 679,302 ------------ -------------- Contract owner transactions: Proceeds from units sold 6,050,158 8,532,459 Cost of units redeemed (1,568,723) (535,776) Account charges (111,480) (45,045) ------------ -------------- Increase (decrease) 4,369,955 7,951,638 ------------ -------------- Net increase (decrease) 4,269,724 8,630,940 Net assets, beginning 9,851,530 1,220,590 ------------ -------------- Net assets, ending $ 14,121,254 $ 9,851,530 ============ ============== Units sold 1,023,303 1,530,270 Units redeemed (308,181) (106,771) ------------ -------------- Net increase (decrease) 715,122 1,423,499 Units outstanding, beginning 1,644,680 221,181 ------------ -------------- Units outstanding, ending 2,359,802 1,644,680 ============ ==============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 19,847,892 Cost of units redeemed (6,447,527) Account charges (185,433) Net investment income (loss) 1,934,924 Net realized gain (loss) 65,803 Realized gain distributions - Net change in unrealized appreciation (depreciation) (1,094,405) ------------ $ 14,121,254 ============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions.
CLASS A Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ---------------------------------------------------------------------------- 12/31/07 $ 6.26 138 $ 865 N/A 1.2% 12/31/06 6.18 143 883 N/A 10.8% 12/31/05 5.58 103 575 N/A 2.8% 12/31/04 5.43 108 584 N/A 8.6% 04/29/04 5.00 114 570 N/A 0.0%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ---------------------------------------------------------------------------- 12/31/07 $ 5.97 2,219 $ 13,241 1.30% -0.1% 12/31/06 5.97 1,502 8,968 1.30% 9.4% 12/31/05 5.46 118 645 1.30% 1.3% 12/31/04 5.39 79 426 1.30% 7.8% 04/29/04 5.00 75 377 1.30% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 8.5% 12/31/06 14.5% 12/31/05 9.2% 12/31/04 16.1%
AUL American Individual Variable Annuity Unit Trust Neuberger Berman AMT Small Cap Growth Class S -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007 1
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 925,489 $ 889,972 63,830 Receivables: investments sold 75 ============== ============== Payables: investments redeemed (25) -------------- Net assets $ 925,539 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 206,879 26,946 $ 7.68 Class B 718,660 99,461 7.23 -------------- -------------- Total $ 925,539 126,407 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ - Mortality & expense charges 11,479 -------------- Net investment income (loss) (11,479) -------------- Gain (loss) on investments: Net realized gain (loss) 66,134 Realized gain distributions 7,199 Net change in unrealized appreciation (depreciation) (48,492) -------------- Net gain (loss) 24,841 -------------- Increase (decrease) in net assets from operations $ 13,362 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (11,479) $ (11,949) Net realized gain (loss) 66,134 9,957 Realized gain distributions 7,199 30,912 Net change in unrealized appreciation (depreciation) (48,492) 14,415 ------------ ------------ Increase (decrease) in net assets from operations 13,362 43,335 ------------ ------------ Contract owner transactions: Proceeds from units sold 106,278 292,699 Cost of units redeemed (427,382) (145,682) Account charges (6,721) (7,388) ------------ ------------ Increase (decrease) (327,825) 139,629 ------------ ------------ Net increase (decrease) (314,463) 182,964 Net assets, beginning 1,240,002 1,057,038 ------------ ------------ Net assets, ending $ 925,539 $ 1,240,002 ============ ============ Units sold 14,692 42,799 Units redeemed (56,904) (23,895) ------------ ------------ Net increase (decrease) (42,212) 18,904 Units outstanding, beginning 168,619 149,715 ------------ ------------ Units outstanding, ending 126,407 168,619 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 4,410,930 Cost of units redeemed (3,663,159) Account charges (38,577) Net investment income (loss) (56,573) Net realized gain (loss) 189,383 Realized gain distributions 48,018 Net change in unrealized appreciation (depreciation) 35,517 ------------ $ 925,539 ============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ------------------------------------------------------------------------------- 12/31/07 $ 7.68 27 $ 207 N/A 0.5% 12/31/06 7.64 34 257 N/A 5.2% 12/31/05 7.26 31 222 N/A 3.0% 12/31/04 7.05 37 262 N/A 11.9% 12/31/03 6.30 7 45 N/A 26.0%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ------------------------------------------------------------------------------- 12/31/07 $ 7.23 99 $ 719 1.30% -0.8% 12/31/06 7.28 135 983 1.30% 3.9% 12/31/05 7.01 119 835 1.30% 1.6% 12/31/04 6.90 289 1,992 1.30% 10.4% 12/31/03 6.25 21 133 1.30% 25.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.0% 12/31/06 0.0% 12/31/05 0.4% 12/31/04 0.0% 12/31/03 0.1%
AUL American Individual Variable Annuity Unit Trust Neuberger Berman AMT Regency -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 2,603,448 $ 2,687,016 164,073 Receivables: investments sold 62,525 ============== ============== Payables: investments redeemed (2) -------------- Net assets $ 2,665,971 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 712,610 69,051 $ 10.32 Class B 1,953,361 200,316 9.75 -------------- -------------- Total $ 2,665,971 269,367 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 12,798 Mortality & expense charges 79,789 -------------- Net investment income (loss) (66,991) -------------- Gain (loss) on investments: Net realized gain (loss) 1,530,317 Realized gain distributions 76,904 Net change in unrealized appreciation (depreciation) (530,686) -------------- Net gain (loss) 1,076,535 -------------- Increase (decrease) in net assets from operations $ 1,009,544 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (66,991) $ (91,696) Net realized gain (loss) 1,530,317 572,115 Realized gain distributions 76,904 567,269 Net change in unrealized appreciation (depreciation) (530,686) (276,952) ------------ ------------ Increase (decrease) in net assets from operations 1,009,544 770,736 ------------ ------------ Contract owner transactions: Proceeds from units sold 2,558,872 6,506,837 Cost of units redeemed (12,137,493) (8,233,946) Account charges (64,947) (112,574) ------------ ------------ Increase (decrease) (9,643,568) (1,839,683) ------------ ------------ Net increase (decrease) (8,634,024) (1,068,947) Net assets, beginning 11,299,995 12,368,942 ------------ ------------ Net assets, ending $ 2,665,971 $ 11,299,995 ============ ============ Units sold 265,142 731,797 Units redeemed (1,168,966) (971,283) ------------ ------------ Net increase (decrease) (903,824) (239,486) Units outstanding, beginning 1,173,191 1,412,677 ------------ ------------ Units outstanding, ending 269,367 1,173,191 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 21,741,436 Cost of units redeemed (21,910,133) Account charges (262,041) Net investment income (loss) (244,819) Net realized gain (loss) 2,149,408 Realized gain distributions 1,275,690 Net change in unrealized appreciation (depreciation) (83,570) ------------ $ 2,665,971 ============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ------------------------------------------------------------------------------- 12/31/07 $ 10.32 69 $ 713 N/A 3.3% 12/31/06 9.99 187 1,868 N/A 11.1% 12/31/05 8.99 209 1,878 N/A 12.1% 12/31/04 8.02 50 403 N/A 22.3% 12/31/03 6.56 2 12 N/A 31.2%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ------------------------------------------------------------------------------- 12/31/07 $ 9.75 200 $ 1,953 1.30% 2.0% 12/31/06 9.56 986 9,432 1.30% 9.7% 12/31/05 8.72 1,203 10,491 1.30% 10.7% 12/31/04 7.88 350 2,761 1.30% 24.3% 12/31/03 6.34 - - 0.00% 26.8%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.2% 12/31/06 0.3% 12/31/05 0.1% 12/31/04 0.0% 12/31/03 0.0%
AUL American Individual Variable Annuity Unit Trust Neuberger Berman Limited Maturity Bond -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 48,893,697 $ 48,239,643 3,777,585 Receivables: investments sold 234,081 ============== ============== Payables: investments redeemed - -------------- Net assets $ 49,127,778 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 1,518,539 269,409 $ 5.64 Class B 47,609,239 8,974,984 5.30 -------------- -------------- Total $ 49,127,778 9,244,393 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 1,265,126 Mortality & expense charges 627,091 -------------- Net investment income (loss) 638,035 -------------- Gain (loss) on investments: Net realized gain (loss) 163,492 Realized gain distributions - Net change in unrealized appreciation (depreciation) 839,224 -------------- Net gain (loss) 1,002,716 -------------- Increase (decrease) in net assets from operations $ 1,640,751 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ 638,035 $ 925,603 Net realized gain (loss) 163,492 (195,042) Realized gain distributions - - Net change in unrealized appreciation (depreciation) 839,224 464,536 ------------ ------------ Increase (decrease) in net assets from operations 1,640,751 1,195,097 ------------ ------------ Contract owner transactions: Proceeds from units sold 22,625,622 27,073,600 Cost of units redeemed (24,566,529) (9,926,656) Account charges (451,106) (380,009) ------------ ------------ Increase (decrease) (2,392,013) 16,766,935 ------------ ------------ Net increase (decrease) (751,262) 17,962,032 Net assets, beginning 49,879,040 31,917,008 ------------ ------------ Net assets, ending $ 49,127,778 $ 49,879,040 ============ ============ Units sold 4,505,059 5,472,767 Units redeemed (4,967,475) (2,156,570) ------------ ------------ Net increase (decrease) (462,416) 3,316,197 Units outstanding, beginning 9,706,809 6,390,612 ------------ ------------ Units outstanding, ending 9,244,393 9,706,809 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 84,445,708 Cost of units redeemed (37,187,073) Account charges (1,022,006) Net investment income (loss) 2,285,945 Net realized gain (loss) (48,850) Realized gain distributions - Net change in unrealized appreciation (depreciation) 654,054 ------------ $ 49,127,778 ============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ------------------------------------------------------------------------------- 12/31/07 $ 5.64 269 $ 1,519 N/A 4.8% 12/31/06 5.38 344 1,853 N/A 4.3% 12/31/05 5.16 265 1,367 N/A 1.4% 12/31/04 5.09 137 697 N/A 0.8% 12/31/03 5.05 1 7 N/A 1.0%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ------------------------------------------------------------------------------- 12/31/07 $ 5.30 8,975 $ 47,609 1.30% 3.4% 12/31/06 5.13 9,362 48,026 1.30% 2.8% 12/31/05 4.99 6,122 30,550 1.30% 0.2% 12/31/04 4.98 1,472 7,331 1.30% -0.6% 12/31/03 5.01 3 16 1.30% 0.2%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 2.6% 12/31/06 3.5% 12/31/05 3.2% 12/31/04 7.1% 12/31/03 0.0%
AUL American Individual Variable Annuity Unit Trust Dreyfys VIF Appreciation -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 382,746 $ 342,456 8,584 Receivables: investments sold 8,053 ============== ============== Payables: investments redeemed (34) -------------- Net assets $ 390,765 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 100,928 15,012 $ 6.72 Class B 289,837 45,172 6.42 -------------- -------------- Total $ 390,765 60,184 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 4,568 Mortality & expense charges 3,583 -------------- Net investment income (loss) 985 -------------- Gain (loss) on investments: Net realized gain (loss) 6,047 Realized gain distributions - Net change in unrealized appreciation (depreciation) 10,877 -------------- Net gain (loss) 16,924 -------------- Increase (decrease) in net assets from operations $ 17,909 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ 985 $ (394) Net realized gain (loss) 6,047 1,777 Realized gain distributions - - Net change in unrealized appreciation (depreciation) 10,877 26,954 ------------ ------------ Increase (decrease) in net assets from operations 17,909 28,337 ------------ ------------ Contract owner transactions: Proceeds from units sold 57,876 250,418 Cost of units redeemed (40,355) (43,923) Account charges (2,127) (1,216) ------------ ------------ Increase (decrease) 15,394 205,279 ------------ ------------ Net increase (decrease) 33,303 233,616 Net assets, beginning 357,462 123,846 ------------ ------------ Net assets, ending $ 390,765 $ 357,462 ============ ============ Units sold 8,724 43,347 Units redeemed (6,907) (8,262) ------------ ------------ Net increase (decrease) 1,817 35,085 Units outstanding, beginning 58,367 23,282 ------------ ------------ Units outstanding, ending 60,184 58,367 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 494,212 Cost of units redeemed (149,939) Account charges (4,075) Net investment income (loss) 483 Net realized gain (loss) 9,794 Realized gain distributions - Net change in unrealized appreciation (depreciation) 40,290 ------------ $ 390,765 ============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ------------------------------------------------------------------------------- 12/31/07 $ 6.72 15 $ 101 N/A 6.9% 12/31/06 6.29 11 71 N/A 16.1% 12/31/05 5.42 3 18 N/A 4.2% 12/31/04 5.20 0 1 N/A 4.0% 05/28/04 5.00 - - N/A 0.0%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ------------------------------------------------------------------------------- 12/31/07 $ 6.42 45 $ 290 1.30% 5.5% 12/31/06 6.08 47 286 1.30% 14.8% 12/31/05 5.30 20 106 1.30% 2.7% 12/31/04 5.16 13 68 1.30% 3.2% 05/28/04 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 1.2% 12/31/06 0.6% 12/31/05 0.0% 12/31/04 1.4%
AUL American Individual Variable Annuity Unit Trust Dreyfys Technology Growth -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 254,030 $ 232,271 23,919 Receivables: investments sold 28 ============== ============== Payables: investments redeemed (50) -------------- Net assets $ 254,008 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 70,876 11,172 $ 6.34 Class B 183,132 30,287 6.05 -------------- -------------- Total $ 254,008 41,459 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ - Mortality & expense charges 1,521 -------------- Net investment income (loss) (1,521) -------------- Gain (loss) on investments: Net realized gain (loss) 7,629 Realized gain distributions - Net change in unrealized appreciation (depreciation) 14,421 -------------- Net gain (loss) 22,050 -------------- Increase (decrease) in net assets from operations $ 20,529 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (1,521) $ (804) Net realized gain (loss) 7,629 2,585 Realized gain distributions - - Net change in unrealized appreciation (depreciation) 14,421 3,347 ------------ ------------ Increase (decrease) in net assets from operations 20,529 5,128 ------------ ------------ Contract owner transactions: Proceeds from units sold 171,917 78,916 Cost of units redeemed (45,111) (35,219) Account charges (1,235) (706) ------------ ------------ Increase (decrease) 125,571 42,991 ------------ ------------ Net increase (decrease) 146,100 48,119 Net assets, beginning 107,908 59,789 ------------ ------------ Net assets, ending $ 254,008 $ 107,908 ============ ============ Units sold 31,105 18,024 Units redeemed (9,610) (9,483) ------------ ------------ Net increase (decrease) 21,495 8,541 Units outstanding, beginning 19,964 11,423 ------------ ------------ Units outstanding, ending 41,459 19,964 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 310,419 Cost of units redeemed (83,318) Account charges (2,246) Net investment income (loss) (2,717) Net realized gain (loss) 10,112 Realized gain distributions - Net change in unrealized appreciation (depreciation) 21,758 ------------ $ 254,008 ============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ------------------------------------------------------------------------------- 12/31/07 $ 6.34 11 $ 71 N/A 14.4% 12/31/06 5.54 5 30 N/A 4.0% 12/31/05 5.33 2 11 N/A 3.5% 12/31/04 5.15 0 2 N/A 3.0% 05/28/04 5.00 - - N/A 0.0%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ------------------------------------------------------------------------------- 12/31/07 $ 6.05 30 $ 183 1.30% 13.0% 12/31/06 5.35 14 78 1.30% 2.7% 12/31/05 5.21 9 49 1.30% 2.2% 12/31/04 5.10 2 8 1.30% 2.0% 05/28/04 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.0% 12/31/06 0.0% 12/31/05 0.0% 12/31/04 0.0%
AUL American Individual Variable Annuity Unit Trust Vanguard VF Mid Cap Index -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 18,961,027 $ 18,975,393 1,026,842 Receivables: investments sold 120,664 ============== ============== Payables: investments redeemed (1) -------------- Net assets $ 19,081,690 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 986,843 137,813 $ 7.16 Class B 18,094,847 2,616,306 6.92 -------------- -------------- Total $ 19,081,690 2,754,119 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 152,435 Mortality & expense charges 188,067 -------------- Net investment income (loss) (35,632) -------------- Gain (loss) on investments: Net realized gain (loss) 15,449 Realized gain distributions 1,283,969 Net change in unrealized appreciation (depreciation) (1,038,830) -------------- Net gain (loss) 260,588 -------------- Increase (decrease) in net assets from operations $ 224,956 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (35,632) $ (51,156) Net realized gain (loss) 15,449 12,510 Realized gain distributions 1,283,969 36,993 Net change in unrealized appreciation (depreciation) (1,038,830) 1,000,567 ------------ ------------ Increase (decrease) in net assets from operations 224,956 998,914 ------------ ------------ Contract owner transactions: Proceeds from units sold 10,205,726 9,793,193 Cost of units redeemed (1,827,959) (613,057) Account charges (131,900) (44,120) ------------ ------------ Increase (decrease) 8,245,867 9,136,016 ------------ ------------ Net increase (decrease) 8,470,823 10,134,930 Net assets, beginning 10,610,867 475,937 ------------ ------------ Net assets, ending $ 19,081,690 $ 10,610,867 ============ ============ Units sold 1,465,367 1,636,702 Units redeemed (316,172) (112,490) ------------ ------------ Net increase (decrease) 1,149,195 1,524,212 Units outstanding, beginning 1,604,924 80,712 ------------ ------------ Units outstanding, ending 2,754,119 1,604,924 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 20,455,713 Cost of units redeemed (2,443,851) Account charges (177,159) Net investment income (loss) (87,845) Net realized gain (loss) 28,237 Realized gain distributions 1,320,962 Net change in unrealized appreciation (depreciation) (14,367) ------------ $ 19,081,690 ============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ------------------------------------------------------------------------------- 12/31/07 $ 7.16 138 $ 987 N/A 6.1% 12/31/06 6.75 107 722 N/A 13.8% 12/31/05 5.93 27 161 N/A 18.6% 04/20/05 5.00 - - N/A 0.0%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ------------------------------------------------------------------------------- 12/31/07 $ 6.92 2,616 $ 18,095 1.30% 4.8% 12/31/06 6.60 1,498 9,889 1.30% 12.3% 12/31/05 5.88 54 315 1.30% 17.6% 04/20/05 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 1.0% 12/31/06 0.2% 12/31/05 0.0%
AUL American Individual Variable Annuity Unit Trust Vanguard VF Small Company Growth -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 13,261,860 $ 13,847,218 737,168 Receivables: investments sold 117,520 ============== ============== Payables: investments redeemed (1) -------------- Net assets $ 13,379,379 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 608,254 89,395 $ 6.80 Class B 12,771,125 1,943,362 6.57 -------------- -------------- Total $ 13,379,379 2,032,757 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 3,493 Mortality & expense charges 85,015 -------------- Net investment income (loss) (81,522) -------------- Gain (loss) on investments: Net realized gain (loss) (15,986) Realized gain distributions 61,661 Net change in unrealized appreciation (depreciation) (599,087) -------------- Net gain (loss) (553,412) -------------- Increase (decrease) in net assets from operations $ (634,934) ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (81,522) $ (2,605) Net realized gain (loss) (15,986) (9,323) Realized gain distributions 61,661 20,533 Net change in unrealized appreciation (depreciation) (599,087) 11,613 ------------ ------------ Increase (decrease) in net assets from operations (634,934) 20,218 ------------ ------------ Contract owner transactions: Proceeds from units sold 14,286,902 735,156 Cost of units redeemed (852,241) (215,538) Account charges (59,870) (3,316) ------------ ------------ Increase (decrease) 13,374,791 516,302 ------------ ------------ Net increase (decrease) 12,739,857 536,520 Net assets, beginning 639,522 103,002 ------------ ------------ Net assets, ending $ 13,379,379 $ 639,522 ============ ============ Units sold 2,085,852 117,836 Units redeemed (152,153) (36,180) ------------ ------------ Net increase (decrease) 1,933,699 81,656 Units outstanding, beginning 99,058 17,402 ------------ ------------ Units outstanding, ending 2,032,757 99,058 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 15,129,331 Cost of units redeemed (1,073,946) Account charges (63,391) Net investment income (loss) (84,218) Net realized gain (loss) (25,232) Realized gain distributions 82,194 Net change in unrealized appreciation (depreciation) (585,359) -------------- $ 13,379,379 ==============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------------- 12/31/07 $ 6.80 89 $ 608 N/A 3.8% 12/31/06 6.56 28 183 N/A 10.2% 12/31/05 5.95 7 40 N/A 19.0% 04/20/05 5.00 - - N/A 0.0%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------------- 12/31/07 $ 6.57 1,943 $ 12,771 1.30% 2.4% 12/31/06 6.42 71 457 1.30% 8.8% 12/31/05 5.90 11 63 1.30% 18.0% 04/20/05 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.0% 12/31/06 0.2% 12/31/05 0.0%
AUL American Individual Variable Annuity Unit Trust Vanguard VF Total Bond Market Index -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 1,830,705 $ 1,765,352 159,281 Receivables: investments sold 7,324 ============== ============== Payables: investments redeemed (3) -------------- Net assets $ 1,838,026 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 431,251 76,118 $ 5.67 Class B 1,406,775 257,086 5.47 -------------- -------------- Total $ 1,838,026 333,204 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ 38,406 Mortality & expense charges 11,763 -------------- Net investment income (loss) 26,643 -------------- Gain (loss) on investments: Net realized gain (loss) 1,607 Realized gain distributions - Net change in unrealized appreciation (depreciation) 56,323 -------------- Net gain (loss) 57,930 -------------- Increase (decrease) in net assets from operations $ 84,573 ==============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ 26,643 $ 10,065 Net realized gain (loss) 1,607 (1,812) Realized gain distributions - - Net change in unrealized appreciation (depreciation) 56,323 8,476 ------------ ------------ Increase (decrease) in net assets from operations 84,573 16,729 ------------ ------------ Contract owner transactions: Proceeds from units sold 1,348,185 647,930 Cost of units redeemed (266,576) (81,978) Account charges (11,647) (4,256) ------------ ------------ Increase (decrease) 1,069,962 561,696 ------------ ------------ Net increase (decrease) 1,154,535 578,425 Net assets, beginning 683,491 105,066 ------------ ------------ Net assets, ending $ 1,838,026 $ 683,491 ============ ============ Units sold 256,596 126,905 Units redeemed (54,110) (16,975) ------------ ------------ Net increase (decrease) 202,486 109,930 Units outstanding, beginning 130,719 20,789 ------------ ------------ Units outstanding, ending 333,205 130,719 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 2,108,632 Cost of units redeemed (355,760) Account charges (16,417) Net investment income (loss) 36,390 Net realized gain (loss) (168) Realized gain distributions - Net change in unrealized appreciation (depreciation) 65,349 -------------- $ 1,838,026 ==============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------------- 12/31/07 $ 5.67 76 $ 431 N/A 7.0% 12/31/06 5.30 54 284 N/A 4.2% 12/31/05 5.08 10 49 N/A 1.6% 04/20/05 5.00 - - N/A 0.0%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------------- 12/31/07 $ 5.47 257 $ 1,407 1.30% 5.6% 12/31/06 5.18 77 399 1.30% 3.0% 12/31/05 5.03 11 56 1.30% 0.6% 04/20/05 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 3.0% 12/31/06 3.2% 12/31/05 0.0%
AUL American Individual Variable Annuity Unit Trust Timothy Conservative Growth Variable -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 31,552,693 $ 30,146,977 2,441,473 Receivables: investments sold 90,944 ============== ============== Payables: investments redeemed (6,224) -------------- Net assets $ 31,637,413 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- -------------- Class A $ 818,362 126,219 $ 6.48 Class B 30,819,051 4,921,446 6.26 -------------- -------------- Total $ 31,637,413 5,047,665 ============== ==============
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ - Mortality & expense charges 335,407 ------------ Net investment income (loss) (335,407) ------------ Gain (loss) on investments: Net realized gain (loss) 482,751 Realized gain distributions 567,105 Net change in unrealized appreciation (depreciation) 1,014,909 ------------ Net gain (loss) 2,064,765 ------------ Increase (decrease) in net assets from operations $ 1,729,358 ============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (335,407) $ 370,089 Net realized gain (loss) 482,751 54,879 Realized gain distributions 567,105 444,977 Net change in unrealized appreciation (depreciation) 1,014,909 186,006 ------------ ------------ Increase (decrease) in net assets from operations 1,729,358 1,055,951 ------------ ------------ Contract owner transactions: Proceeds from units sold 14,853,123 13,135,081 Cost of units redeemed (4,859,347) (922,097) Account charges (197,877) (100,282) ------------ ------------ Increase (decrease) 9,795,899 12,112,702 ------------ ------------ Net increase (decrease) 11,525,257 13,168,653 Net assets, beginning 20,112,156 6,943,503 ------------ ------------ Net assets, ending $ 31,637,413 $ 20,112,156 ============ ============ Units sold 2,460,602 2,361,338 Units redeemed (859,067) (197,289) ------------ ------------ Net increase (decrease) 1,601,535 2,164,049 Units outstanding, beginning 3,446,130 1,282,081 ------------ ------------ Units outstanding, ending 5,047,665 3,446,130 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 35,762,222 Cost of units redeemed (6,789,044) Account charges (322,287) Net investment income (loss) 11,482 Net realized gain (loss) 550,520 Realized gain distributions 1,018,805 Net change in unrealized appreciation (depreciation) 1,405,715 ------------- $ 31,637,413 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------------- 12/31/07 $ 6.48 126 $ 818 N/A 8.7% 12/31/06 5.96 46 275 N/A 9.2% 12/31/05 5.46 30 163 N/A 9.2% 04/20/05 5.00 - - N/A 0.0%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------------- 12/31/07 $ 6.26 4,921 $ 30,819 1.30% 7.3% 12/31/06 5.83 3,400 19,837 1.30% 7.6% 12/31/05 5.42 1,251 6,780 1.30% 8.4% 04/20/05 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.0% 12/31/06 4.0% 12/31/05 0.2%
AUL American Individual Variable Annuity Unit Trust Timothy Strategic Growth Variable -------------------------------------------------------------------------------- STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- December 31, 2007
Investments Cost of Mutual Fund at Value Investments Shares -------------- -------------- -------------- Investments $ 11,872,594 $ 11,773,185 937,496 Receivables: investments sold 153,387 ============== ============== Payables: investments redeemed (268) -------------- Net assets $ 12,025,713 ============== Units Accumulation Net Assets Outstanding Unit Value -------------- -------------- ------------- Class A $ 658,258 95,981 $ 6.86 Class B 11,367,455 1,716,117 6.62 -------------- -------------- Total $ 12,025,713 1,812,098 -------------- --------------
-------------------------------------------------------------------------------- STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- For the year ended December 31, 2007 Investment income: Dividend income $ - Mortality & expense charges 93,556 ------------ Net investment income (loss) (93,556) ------------ Gain (loss) on investments: Net realized gain (loss) 276,835 Realized gain distributions 406,822 Net change in unrealized appreciation (depreciation) 1,282 ------------ Net gain (loss) 684,939 ------------ Increase (decrease) in net assets from operations $ 591,383 ============
-------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Year ended Year ended 12/31/2007 12/31/2006 ------------ ------------ Increase (decrease) in net assets from operations: Net investment income (loss) $ (93,556) $ 82,917 Net realized gain (loss) 276,835 13,803 Realized gain distributions 406,822 245,875 Net change in unrealized appreciation (depreciation) 1,282 32,529 ------------ ------------ Increase (decrease) in net assets from operations 591,383 375,124 ------------ ------------ Contract owner transactions: Proceeds from units sold 7,550,473 4,464,490 Cost of units redeemed (2,596,587) (327,863) Account charges (56,209) (31,940) ------------ ------------ Increase (decrease) 4,897,677 4,104,687 ------------ ------------ Net increase (decrease) 5,489,060 4,479,811 Net assets, beginning 6,536,653 2,056,842 ------------ ------------ Net assets, ending $ 12,025,713 $ 6,536,653 ============ ============ Units sold 1,181,085 769,557 Units redeemed (436,903) (65,734) ------------ ------------ Net increase (decrease) 744,182 703,823 Units outstanding, beginning 1,067,916 364,093 ------------ ------------ Units outstanding, ending 1,812,098 1,067,916 ============ ============
-------------------------------------------------------------------------------- Cumulative Net Assets at December 31, 2007 -------------------------------------------------------------------------------- Proceeds from units sold $ 14,061,005 Cost of units redeemed (3,005,864) Account charges (95,981) Net investment income (loss) (12,874) Net realized gain (loss) 292,876 Realized gain distributions 687,141 Net change in unrealized appreciation (depreciation) 99,410 ------------- $ 12,025,713 =============
The accompanying notes are an integral part of the financial statements -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Accumulation Unit Value - A summary of unit values, units outstanding, net assets, expense ratios (excluding expenses of the underlying mutual funds and account charges), and the total return for each of the five years for the period ending December 31 or from commencement of operations are presented below. The total returns presented are based on the change in unit values extended to six decimal places net of mortality and expense risk charges. The Variable Account uses these unit values for processing participant transactions. CLASS A
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------------- 12/31/07 $ 6.86 96 $ 658 N/A 10.1% 12/31/06 6.23 219 1,366 N/A 9.8% 12/31/05 5.67 213 1,207 N/A 13.4% 04/20/05 5.00 - - N/A 0.0%
CLASS B
Units Expense as a Outstanding Net Assets % of Average Unit Value (000s) (000s) Net Assets Total Return ----------------------------------------------------------------------------- 12/31/07 $ 6.62 1,716 $ 11,367 1.30% 8.7% 12/31/06 6.09 849 5,171 1.30% 8.4% 12/31/05 5.62 151 850 1.30% 12.4% 04/20/05 5.00 - - 0.00% 0.0%
Investment income ratio - The following represents the ratio of gross income (ie; dividend income) to average net assets expressed as a percent. Ratios for fund commencing during the year are annualized. The information pertains to years 2003 thru 2007 or from commencement date. A zero ratio indicates no gross income has been received during the year. 12/31/07 0.0% 12/31/06 2.8% 12/31/05 0.0%
AUL American Individual Variable Annuity Unit Trust NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The AUL American Individual Variable Annuity Unit Trust (Variable Account) was established by American United Life Insurance Company (AUL) on November 11, 1998, under procedures established by Indiana law and is registered as a unit investment trust under the Investment Company Act of 1940, as amended. The Variable Account commenced operations on April 30, 1999. The Variable Account is a segregated investment account for individual variable annuity contracts issued by AUL and invests exclusively in shares of mutual fund portfolios offered by: ------------------------------------------------------------------------------- OneAmerica Funds, Inc OneAmerica Funds ------------------------------------------------------------------------------- Fidelity Variable Insurance Products Fund Fidelity ------------------------------------------------------------------------------- American Century Variable Portfolios, Inc. American Century ------------------------------------------------------------------------------- Alger American Fund Alger ------------------------------------------------------------------------------- T. Rowe Price Equity Series, Inc T. Rowe Price ------------------------------------------------------------------------------- T. Rowe Price Fixed Income Series, Inc. T. Rowe Price ------------------------------------------------------------------------------- Janus Aspen Series Janus ------------------------------------------------------------------------------- Pioneer Variable Contracts Trust Pioneer ------------------------------------------------------------------------------- Old Mutual Insurance Series Funds Old Mutual ------------------------------------------------------------------------------- AIM Variable Insurance Funds AIM ------------------------------------------------------------------------------- Neuberger Berman Advisers Management Trust Neuberger Berman ------------------------------------------------------------------------------- Calvert Variable Series, Inc. Calvert ------------------------------------------------------------------------------- Dreyfus Variable Investment Portfolio, Inc. Dreyfus ------------------------------------------------------------------------------- Dreyfus Variable Investment Fund Dreyfus ------------------------------------------------------------------------------- Vanguard Variable Insurance Funds Vanguard ------------------------------------------------------------------------------- Timothy Plan Portfolio Variable Series Timothy -------------------------------------------------------------------------------
This annual report includes information related to investment subaccounts for which there has been no investing or income and expense transactions through December 31, 2007 or for which investment income and expense transactions commenced at various dates during 2007 and prior years. For periods prior to commencement of investing transactions, management has presented the unit values, expenses as a percentage of average net assets and total return for these investment subaccounts using an inception date unit value of $5.00, adjusted for contractual expense rates. This information is unaudited and therefore not covered by the Report of Independent Registered Public Accounting Firm appearing on page 2. Accumulation Units and Unit Value Classes In the Statement of Net Assets the units outstanding and accumulation unit values have been rounded to the nearest whole unit or nearest cent, respectively. Based upon the contract issued the Variable Account issues two classes of accumulation units. The table below illustrates the class of units issued by contract AUL American Individual Variable Annuity Unit Trust NOTES TO FINANCIAL STATEMENTS 1. Organization and Summary of Significant Accounting Policies (continued) ----------------------------------------------- CLASS A CLASS B ----------------------------------------------- Select Point Variable Star Point Variable Annuity Annuity ----------------------------------------------- Direct Point Variable Voyage Variable Annuity Annuity -----------------------------------------------
Security Valuation, Transactions and Related Income The value of the investments is based on the Net Asset Value (NAV) reported by the underlying mutual funds (which value their investment securities at market value or, in the absence of readily available market quotations, at fair value) and the number of shares owned by the Variable Account. Investment transactions are accounted for on the trade date. Dividend income and capital gains from realized gains distributions are recorded on the ex-date. Related Party Transactions AUL, the sponsor of the Variable Account, also acts as the investment advisor for OneAmerica Funds, Inc., a mutual fund offered within the Variable Account. The OneAmerica Funds, Inc. is comprised of Value, Money Market, Asset Director, Investment Grade Bond, and Socially Responsive (not available for the Variable Account) Portfolios. OneAmerica Funds, Inc. has an investment advisory agreement with AUL. Under the investment advisory agreement, AUL is compensated for its services by a monthly fee based on an annual percentage of the average daily net assets of each portfolio as follows: Value 0.50% Investment Grade Bond 0.50% Money Market 0.40% Asset Director 0.50% Such fees are included in the calculation of the Net Asset Value per share of the underlying mutual fund. Taxes Operations of the Variable Account are part of, and are taxed with, the operations of AUL, which is taxed as a "life insurance company" under the Internal Revenue Code. Under current law, investment income, including realized and unrealized capital gains of the investment accounts, is not taxed to AUL to the extent it is applied to increase reserves under the contracts. The Variable Account has not been charged for federal and state income taxes since none have been imposed. AUL American Individual Variable Annuity Unit Trust NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Reporting Periods Periods less than a calendar year represent the date of commencement of operations to the end of the applicable year. 2. Account Charges Class A No Withdrawal Charge Contract (DirectPoint): AUL assesses (1) premium tax charges ranging from 0% to 3.5% when assessed by a state or municipality, (2) mortality and expense risk charges of 1.45% per year for the first 10 policy years and 1.35% per year thereafter, (3) an annual contract charge of $30.00 each year in which an account value does not exceed a specific amount; and (4) other charges for federal, state, or local income taxes incurred by AUL that are attributable to the variable account. No charge is currently being assessed. The cost of additional policy riders is assessed on a monthly basis and will vary depending upon the riders chosen. Withdrawal Charge Contract (SelectPoint): AUL assesses (1) premium tax charges ranging from 0% to 3.5% when assessed by a state or municipality, (2) mortality and expense risk charges ranges from 1.10% to 1.25% per year, (3) an annual contract charge of $30.00 each year in which an account value does not exceed a specific amount, (4) other charges for federal, state, or local income taxes (if incurred by AUL) that are attributable to the variable account and (5) withdrawal charges ranging from 10% to 0%, depending on policy duration, for flexible premium contracts, and 7% to 0%, depending on policy duration, for one year flexible premium contracts. A 12% free out provision may apply. The cost of additional policy riders is assessed on a monthly basis and will vary depending upon the riders chosen. Account Charges With respect to individual variable annuity policies funded by the Variable Account, total account charges during the periods ended December 31, 2007 and December 31, 2006 were $8,569,213 and $7,091,714, respectively AUL American Individual Variable Annuity Unit Trust NOTES TO FINANCIAL STATEMENTS 2. Account Charges (continued) Class B Withdrawal Charge Contract (Star Point and Voyager): AUL assesses (1) premium tax charges ranging from 0% to 3.5% when assessed by a state or municipality, (2) mortality and expense risk charges of 1.15% per year, (3) an annual contract fee of up to $50.00 per year in which the account value does not exceed a specified amount, (4) administrative fee of 0.15% per year, (5) withdrawal charges on surrenders exceeding 12% of the account value that range from 7% to 0%, depending on the policy duration, (6) a transfer charge for all transfers in excess of 24 per contract year, (7) other charges for federal, state or local income taxes incurred by AUL that are attributable to the Variable Account. No charge is currently being assessed. The cost of additional riders is assessed on a monthly basis and will vary depending upon the riders chosen. The mortality and expense risk (item 2 above) and administrative fees (item 4 above) incurred during the periods ended December 31, 2007 and during the period ended December 31, 2006 were $8,947,045 and $6,364,289, respectively. 3. New Accounting Standards Financial Accounting Standards Board Statement Interpretation No. 48 In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2007 and is to be applied to all open tax years as of the effective date. At this time, management is evaluating the implications of FIN 48 and does not expect the adoption of FIN 48 will have a significant impact on the net assets or results of operations of the Variable Account. Financial Accounting Standards Board Statement on Financial Accounting Standards No.157 In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 157 "Fair Value Measurements." This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosure about fair value measurements. SFAS No.157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The changes to current generally AUL American Individual Variable Annuity Unit Trust NOTES TO FINANCIAL STATEMENTS 3. New Accounting Standards (continued) accepted accounting principles from the application of this standard relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair measurements. Effective January 1, 2008, the Variable Account adopted SFAS No. 157. Adoption of SFAS No. 157 did not impact the financial statement amounts; however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements on changes in net assets for the period. ONEAMERICA FINANCIAL PARTNERS, INC. REPORT OF INDEPENDENT AUDITORS ON CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2007, 2006 AND 2005 REPORT OF INDEPENDENT AUDITORS To the Board of Directors of American United Mutual Insurance Holding Company and OneAmerica Financial Partners, Inc. In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, changes in shareholder's equity and comprehensive income, and cash flows present fairly, in all material respects, the financial position of OneAmerica Financial Partners, Inc., and subsidiaries (the "Company") at December 31, 2007 and December 31, 2006, and the results of their operations and their cash flows for the years then ended December 31, 2007, December 31, 2006 and December 31, 2005, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America. These 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. Indianapolis, Indiana March 24, 2008 ONEAMERICA FINANCIAL PARTNERS, INC. CONSOLIDATED BALANCE SHEETS
December 31 2007 (in millions) 2006 ------------------------------------------------------------------------------------------------------------------ ASSETS Investments: Fixed maturities - available for sale, at fair value: (amortized cost: 2007 - $7,290.7; 2006 - $6,779.9) $ 7,369.3 $ 6,801.5 Equity securities at fair value: (cost: 2007 - $35.5; 2006 - $37.0) 47.8 49.3 Mortgage loans 1,394.6 1,351.3 Real estate, net 45.5 34.9 Policy loans 225.3 179.0 Short-term and other invested assets 9.8 22.1 Cash and cash equivalents 152.7 165.5 ------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS 9,245.0 8,603.6 Accrued investment income 101.5 96.6 Reinsurance receivables 2,017.1 1,991.0 Deferred acquisition costs 647.9 600.6 Value of business acquired 105.6 114.6 Property and equipment, net 61.6 67.1 Insurance premiums in course of collection 21.6 26.5 Other assets 87.6 106.5 Assets held in separate accounts 7,633.1 6,884.8 ------------------------------------------------------------------------------------------------------------------ TOTAL ASSETS $19,921.0 $18,491.3 ================================================================================================================== LIABILITIES AND SHAREHOLDER'S EQUITY LIABILITIES Policy reserves $ 9,819.5 $ 9,298.5 Other policyholder funds 205.5 212.4 Pending policyholder claims 245.6 264.1 Surplus notes and notes payable 275.0 275.0 Other liabilities and accrued expenses 354.0 253.1 Deferred gain on indemnity reinsurance 67.5 80.7 Liabilities related to separate accounts 7,633.1 6,884.8 ------------------------------------------------------------------------------------------------------------------ TOTAL LIABILITIES 18,600.2 17,268.6 ================================================================================================================== SHAREHOLDER'S EQUITY Common stock, no par value - authorized 1,000 shares; issued and outstanding 100 shares - - Retained earnings 1,278.0 1,201.8 Accumulated other comprehensive income: Unrealized appreciation of securities, net of tax 54.5 20.9 Benefit plans, net of tax (11.7) - ------------------------------------------------------------------------------------------------------------------ TOTAL SHAREHOLDER'S EQUITY 1,320.8 1,222.7 ------------------------------------------------------------------------------------------------------------------ TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $19,921.0 $18,491.3 ==================================================================================================================
The accompanying notes are an integral part of the consolidated financial statements. 2 ONEAMERICA FINANCIAL PARTNERS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31 (in millions) 2007 2006 2005 --------------------------------------------------------------------------------------------------------------- REVENUES: Insurance premiums and other considerations $ 344.4 $ 406.4 $ 445.6 Policy and contract charges 190.4 173.9 142.0 Net investment income 534.3 522.6 451.9 Realized investment losses, net (2.7) (5.3) (3.5) Other income 37.4 28.8 28.2 --------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 1,103.8 1,126.4 1,064.2 =============================================================================================================== BENEFITS AND EXPENSES: Policy benefits 355.3 399.4 406.3 Interest expense on annuities and financial products 238.6 235.6 188.6 General operating expenses 190.9 193.3 189.2 Commissions 66.1 73.1 66.1 Amortization 85.2 84.9 79.9 Dividends to policyholders 27.4 27.0 27.1 Interest expense on surplus notes and notes payable 19.8 19.8 19.8 --------------------------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 983.3 1,033.1 977.0 =============================================================================================================== Income before income tax expense 120.5 93.3 87.2 Income tax expense 32.4 25.6 25.1 --------------------------------------------------------------------------------------------------------------- NET INCOME $ 88.1 $ 67.7 $ 62.1 ===============================================================================================================
The accompanying notes are an integral part of the consolidated financial statements. 3 ONEAMERICA FINANCIAL PARTNERS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY AND COMPREHENSIVE INCOME
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) --------------------------- UNREALIZED APPRECIATION BENEFIT COMMON RETAINED OF SECURITIES, PLANS, (in millions) STOCK EARNINGS NET OF TAX NET OF TAX TOTAL --------------------------------------------------------------------------------------------------------------------------- BALANCES, DECEMBER 31, 2004 $- $1,064.9 $127.4 $(10.0) $1,182.3 Comprehensive income: Net income - 62.1 - - 62.1 Other comprehensive income (loss) - - (59.2) 9.6 (49.6) -------- Total comprehensive income 12.5 --------------------------------------------------------------------------------------------------------------------------- BALANCES, DECEMBER 31, 2005 - 1,127.0 68.2 (0.4) 1,194.8 Comprehensive income: Net income - 67.7 - - 67.7 Other comprehensive income (loss) - - (47.3) 0.4 (46.9) -------- Total comprehensive income 20.8 Cumulative effect adjustment from adoption of SAB No. 108 - 7.1 - - 7.1 --------------------------------------------------------------------------------------------------------------------------- BALANCES, DECEMBER 31, 2006 - 1,201.8 20.9 (0.0) 1,222.7 Comprehensive income: Net income - 88.1 - - 88.1 Other comprehensive income - - 33.6 - 33.6 -------- Total comprehensive income 121.7 Cumulative effect adjustments; Adoption of SOP 05-1, net of tax - (11.5) - - (11.5) Adoption of SFAS No. 158, net of tax - (0.4) - (11.7) (12.1) --------------------------------------------------------------------------------------------------------------------------- BALANCES, DECEMBER 31, 2007 $- $1,278.0 $ 54.5 $(11.7) $1,320.8 ===========================================================================================================================
The accompanying notes are an integral part of the consolidated financial statements. 4 ONEAMERICA FINANCIAL PARTNERS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31 (in millions) 2007 2006 2005 -------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 88.1 $ 67.7 $ 62.1 Adjustments to reconcile net income to net cash: Amortization 85.2 84.9 79.9 Depreciation 14.2 15.7 14.8 Deferred taxes 8.5 10.8 9.6 Realized investment losses, net 2.7 5.3 3.5 Policy acquisition costs capitalized (80.8) (90.6) (99.2) Interest credited to deposit liabilities 241.0 235.8 187.5 Fees charged to deposit liabilities (78.1) (76.6) (55.8) Amortization and accrual of investment income (4.4) (3.3) (5.1) Increase (decrease) in insurance liabilities (24.9) 125.1 121.6 Decrease in other assets 1.6 (170.6) (143.1) Increase (decrease) in other liabilities 28.0 (43.5) 14.4 -------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 277.9 160.7 190.2 ========================================================================================================================== CASH FLOWS FROM INVESTING ACTIVITIES: Purchases: Fixed maturities, available-for-sale (1,317.5) (846.4) (1,528.8) Equity securities (8.3) (12.1) (3.0) Mortgage loans (230.5) (180.0) (168.4) Real estate (14.6) (2.1) (5.2) Short-term and other invested assets (13.7) (3.4) (4.7) Proceeds from sales, calls or maturities: Fixed maturities, available-for-sale 801.0 885.4 1,107.7 Equity securities 10.8 9.0 3.6 Mortgage loans 187.2 166.8 139.2 Real estate 4.6 0.9 0.5 Short-term and other invested assets 27.2 3.2 0.8 Net transfer from disposal of financial institutions operations - 11.3 - Transfer from indemnity reinsurance transactions, net 551.9 - 363.7 -------------------------------------------------------------------------------------------------------------------------- Net cash provided (used) by investing activities (1.9) 32.6 (94.6) ========================================================================================================================== CASH FLOWS FROM FINANCING ACTIVITIES: Deposits to insurance liabilities 2,025.6 1,854.1 1,652.0 Withdrawals from insurance liabilities (2,325.2) (2,074.8) (1,699.2) Other 10.8 (2.3) (1.4) -------------------------------------------------------------------------------------------------------------------------- Net cash used by financing activities (288.8) (223.0) (48.6) ========================================================================================================================== NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (12.8) (29.7) 47.0 ========================================================================================================================== CASH AND CASH EQUIVALENTS BEGINNING OF YEAR 165.5 195.2 148.2 ========================================================================================================================== CASH AND CASH EQUIVALENTS END OF YEAR $ 152.7 $ 165.5 $ 195.2 ========================================================================================================================== NON-CASH TRANSACTIONS RELATED TO THE INDEMNITY REINSURANCE TRANSACTIONS: Fixed maturities $ - $ - $ 1,287.4 Policy loans 39.8 - - Transfer of reserves, net 591.7 - 1,651.1 ==========================================================================================================================
The accompanying notes are an integral part of the consolidated financial statements. 5 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. NATURE OF OPERATIONS OneAmerica Financial Partners, Inc. (OneAmerica or the Company) is a wholly owned subsidiary of American United Mutual Insurance Holding Company (AUMIHC), a mutual insurance holding company based in Indiana. The consolidated financial statements of OneAmerica include the accounts of OneAmerica and its subsidiaries; American United Life Insurance Company (AUL), OneAmerica Securities Inc., The State Life Insurance Company (State Life), AUL Reinsurance Management Services, LLC, Pioneer Mutual Life Insurance Company (PML) and R.E. Moulton, Inc (Moulton). AUMIHC will at all times, in accordance with the Indiana Mutual Holding Company Law, control at least a majority of the voting shares of the capital stock of AUL, State Life and PML through OneAmerica. Policyholder membership rights exist at AUMIHC, while the policyholder contract rights remain with AUL, State Life or PML. The Company's focus is to provide a range of insurance and financial products and services to customers throughout the United States. Business is conducted through three primary operating divisions: o Through the Retirement Services Division the Company offers 401(k) and other corporate retirement plans, tax deferred annuity plans and individual retirement account rollover products to the employer- sponsored market and to retired individuals. These products are distributed through sales and service representatives located in regional offices, selling through independent agents and brokers, third-party administrators, employee benefit plan marketing organizations and the Company's career agents. o Individual Operations offers a broad range of life, annuity and long-term care products to individuals, families, small business owners and the retirement and pre-retirement markets. Products marketed by Individual Operations are distributed through a career agency force, brokers, personal producing general agents and banks. o Employee Benefits (formerly "Group") Operations offers traditional and voluntary group life, medical stop-loss, and disability products primarily to employer groups. These products are distributed through brokers, agents and marketing alliances, third party administrators and managing general underwriters. 2. SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Significant intercompany transactions have been eliminated. AUL, State Life, and PML file separate financial statements with insurance regulatory authorities, which are prepared on the basis of statutory accounting practices that are significantly different from financial statements prepared in accordance with GAAP. These financial statements are described in detail in Note 14-Statutory Information. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 6 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 2. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED INVESTMENTS Fixed maturity securities, which may be sold to meet liquidity and other needs of the Company, are categorized as available-for-sale and are stated at fair value. Unrealized gains and losses resulting from carrying available-for-sale securities at fair value are reported in equity, net of deferred taxes and valuation adjustment. Equity securities are stated at fair value. Costs incurred or fees received upon origination of investments are deferred. Such costs, fees, discounts and premiums are amortized as yield adjustments over the contractual lives of the investments. The Company considers anticipated prepayments on mortgage-backed securities in determining estimated future yields on such securities. Mortgage loans on real estate are carried at their unpaid principal balance, less an impairment allowance for estimated uncollectible amounts. Real estate is reported at cost, less accumulated depreciation. Depreciation is calculated (straight line) over the estimated useful lives of the related assets. Investment in real estate is net of accumulated depreciation of $48.7 million and $46.0 million at December 31, 2007 and 2006, respectively. Depreciation expense for investment in real estate amounted to $2.9 million, $2.5 million and $2.4 million for 2007, 2006, and 2005, respectively. Policy loans are carried at their unpaid balance. Other invested assets are reported at cost, plus the Company's equity in undistributed net equity since acquisition. Short-term investments include investments with maturities of one year or less at the date of acquisition and are carried at amortized cost, which approximates market value. Short-term certificates of deposit and savings certificates with durations less than three months are considered to be cash equivalents. The carrying amount for cash and cash equivalents approximates market value. Realized gains and losses on sale or call of investments are based upon specific identification of the investments sold and do not include amounts allocable to separate accounts. The Company's accounting policy requires that a decline in the fair value of a security below its amortized cost basis be assessed to determine if the decline is other-than-temporary. If so, the security is deemed to be other-than-temporarily impaired and a net realized loss is recorded for the difference between the fair value and amortized cost basis of the security. The fair value of the impaired investment becomes its new cost basis. DEFERRED POLICY ACQUISITION COSTS Those costs of acquiring new business, which vary with and are primarily related to the production of new business, have been deferred to the extent that such costs are deemed recoverable. Such costs include commissions, certain costs of policy underwriting and issue, and certain variable agency expenses. These costs are amortized with interest over the lifetime of the contract, which is approximated as follows: o For participating whole life insurance products, over 30 years in relation to the present value of estimated gross margins from expenses, investments and mortality, discounted using the expected investment yield. o For universal life-type policies and investment contracts, over 30 years and 20 years, respectively, in relation to the present value of estimated gross profits from surrender charges and investment, mortality and expense margins, discounted using the interest rate credited to the policy. o For recently issued term life insurance products, over the level premium period, which ranges from 10 to 20 years, in relation to the anticipated annual premium revenue, using the same assumptions used in calculating policy benefits. For older term life insurance products, over 30 years, in relation to the anticipated annual premium revenue, using the same assumptions used in calculating policy benefits. 7 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 2. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED o For miscellaneous group life and individual and group health policies, straight-line over the expected life of the policy. Recoverability of the unamortized balance of deferred policy acquisition costs is evaluated regularly. For universal life-type contracts, investment contracts and participating whole life policies, the accumulated amortization is adjusted (increased or decreased) whenever there is a material change in the estimated gross profits or gross margins expected over the life of a block of business to maintain a constant relationship between cumulative amortization and the present value of gross profits or gross margins. For most other contracts, the unamortized asset balance is reduced by a charge to income only when the present value of future cash flows, net of the policy liabilities, is not sufficient to cover such asset balance. Deferred acquisition costs, for applicable products, are adjusted for the impact of unrealized gains or losses on investments as if these gains or losses had been realized, with corresponding credits or charges included in "Accumulated other comprehensive income" and this adjustment is reflected as "valuation adjustment" in Note 5 - Other Comprehensive Income and Note 7 - Valuation of Business Acquired. PROPERTY AND EQUIPMENT Property and equipment includes real estate owned and occupied by the Company. Property and equipment is carried at cost, net of accumulated depreciation of $110.8 million and $103.3 million as of December 31, 2007 and 2006, respectively. The Company provides for depreciation of property and equipment using the straight-line method over its estimated useful life. Depreciation expense for 2007, 2006 and 2005 was $11.3 million, $13.2 million and $12.4 million, respectively. ASSETS HELD IN SEPARATE ACCOUNTS Separate accounts are funds on which investment income and gains or losses accrue directly to certain policies, primarily variable annuity contracts, equity-based pension and profit sharing plans and variable universal life policies. The assets of these accounts are legally segregated and are valued at fair value. The related liabilities are recorded at amounts equal to the underlying assets; the fair value of these liabilities is equal to their carrying amount. PREMIUM REVENUE AND BENEFITS TO POLICYHOLDERS The premiums and benefits for whole life and term insurance products and certain annuities with life contingencies (immediate annuities) are fixed and guaranteed. Such premiums are recognized as premium revenue when due. Group insurance premiums are recognized as premium revenue over the time period to which the premiums relate. Benefits and expenses are associated with earned premiums so as to result in recognition of profits over the life of the contracts. This association is accomplished by means of the provision for liabilities for future policy benefits and the amortization of deferred policy acquisition costs. Universal life policies and investment contracts are policies with terms that are not fixed and guaranteed. The terms that may be changed could include one or more of the amounts assessed the policyholder, premiums paid by the policyholder or interest accrued to policyholder balances. The amounts collected from policyholders for these policies are considered deposits, and only the deductions during the period for cost of insurance, policy administration and surrenders are included in revenue. Policy benefits and claims that are charged to expense include net interest credited to contracts and benefit claims incurred in the period in excess of related policy account balances. 8 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 2. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED RESERVES FOR FUTURE POLICY AND CONTRACT BENEFITS Liabilities for future policy benefits for participating whole life policies are calculated using the net level premium method and assumptions as to interest and mortality. The interest rate is the dividend fund interest rate and the mortality rates are those guaranteed in the calculation of cash surrender values described in the contract. Liabilities for future policy benefits for term life insurance and life reinsurance policies are calculated using the net level premium method and assumptions as to investment yields, mortality, withdrawals and expenses. The assumptions are based on projections of past experience and include provisions for possible unfavorable deviation. These assumptions are made at the time the contract is issued. Liabilities for future policy benefits on universal life and investment contracts consist principally of policy account values, plus certain deferred policy fees, which are amortized using the same assumptions and factors used to amortize the deferred policy acquisition costs. If the future benefits on investment contracts are guaranteed (immediate annuities with benefits paid for a period certain), the liability for future benefits is the present value of such guaranteed benefits. The liabilities for group products are generally calculated as an unearned premium reserve. Claim liabilities include provisions for reported claims and estimates based on historical experience for claims incurred but not reported. CERTAIN NONTRADITIONAL LONG-DURATION CONTRACTS The Company issues variable annuity contracts which include certain guarantees payable in the event of death, annuitization or at specified dates. The latter two benefits are referred to as living benefits. For those guarantees of benefits payable in the event of death, the net amount at risk is defined as the current guaranteed minimum death benefit in excess of the account balance. For the living benefit guarantees, the net amount at risk is based on the present value of the guaranteed minimum annuity payments in excess of the account balance. The net amount at risk for the combination of the death and living benefit guarantees was $17.3 million and $18.9 million at December 31, 2007 and 2006, respectively. The associated reserves for these guarantees were $4.7 million and $3.1 million as of December 31, 2007 and 2006, respectively. The Company defers certain sales inducements and amortizes them over the anticipated life of the policy as a result of the Company's adoption of SOP 03-01 "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts" (SOP 03-01). Sales inducements deferred totaled $9.0 million, $7.4 million and $6.2 million for 2007, 2006 and 2005, respectively. Amounts amortized totaled $2.8 million, $1.6 million and $1.0 million for 2007, 2006 and 2005, respectively. The unamortized balance of deferred sales inducements are included in "Other assets" and totaled $26.2 million and $20.0 million at December 31, 2007 and 2006, respectively. INCOME TAXES The provision for income taxes includes amounts currently payable and deferred income taxes resulting from the temporary differences in the assets and liabilities determined on a tax and financial reporting basis. COMPREHENSIVE INCOME Comprehensive income is the change in equity of the Company that results from recognized transactions and other economic events of the period other than transactions with the policyholders. Comprehensive income includes net income, the impact of cumulative adjustments resulting from the adoption of accounting pronouncements, net unrealized gains (losses) on available-for-sale securities and changes in benefits plans, including minimum pension liability. RECLASSIFICATION Certain 2006 and 2005 financial statement balances have been reclassified to conform to the 2007 presentation. 9 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 2. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED DERIVATIVES The Company has adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments and hedging activities, and requires recognition of all derivatives as either assets or liabilities measured at fair value. At December 31, 2007, the Company did not hold any derivative instruments or hedges. GOODWILL AND OTHER INTANGIBLE ASSETS SFAS No. 141, "Business Combinations", requires the Company to account for all business combinations within the scope of the statement under the purchase method except for mergers of mutual companies. SFAS No. 142, "Goodwill and Other Intangible Assets," requires that an intangible asset acquired either individually or with a group of other assets shall initially be recognized and measured based on fair value. An intangible asset with a finite life is amortized over its useful life; an intangible asset with an indefinite useful life, including goodwill, is not amortized. All indefinite lived intangible assets shall be tested for impairment at least annually in accordance with SFAS No. 142. The Company performed this test during 2007 and 2006 and determined the carrying value of goodwill was not impaired. The Company ceased the amortization of goodwill as of January 1, 2002. Total goodwill, which is included in 'Other assets' on the consolidated balance sheet, was $17.3 million at both December 31, 2007 and 2006. The Company reports a financial asset representing the value of business acquired ("VOBA"), which is an intangible asset with a finite life. VOBA represents the present value of future profits embedded in acquired insurance and annuities. VOBA is being amortized over the expected life of the acquired contracts based on estimated gross profits from the contracts and anticipated future experience, which is updated periodically. The effects of changes in estimated gross profits, which are evaluated regularly, are reflected in amortization expense in the period such estimates of expected future profits are revised. For further detail refer to Note 3-Acquisitions and Other Significant Transactions and Note 7-Value of Business Acquired. RECENT ACCOUNTING PRONOUNCEMENTS In July 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are "more likely than not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more likely than not threshold would be recorded as a tax benefit or expense in the current year. The guidance is effective for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. The Company has adopted FIN 48, refer to Note 10-Federal Income Taxes for additional detail. In December 2007, the FASB issued FAS 141R, "Business Combinations" (SFAS 141R). The objective of SFAS 141R is to improve the relevance, representational faithfulness, and comparability of the information reported in the financial reports about a business combination and its effects. This statement is to be applied prospectively to business combinations in the first annual reporting period beginning on or after December 15, 2008. 10 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 2. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED The FASB issued FAS 155, "Accounting for Certain Hybrid Financial Instruments" (SFAS 155) in February 2006 and is effective for 2007. SFAS 155 amends FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" and FASB Statement No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". SFAS 155 permits the fair value remeasurement of hybrid investments containing an embedded derivative. The Company's adoption of SFAS 155 did not have a material effect on the Company's consolidated financial statements. In September 2006, the FASB issued FAS 157, "Fair Value Measurements" (SFAS 157). This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS 157 applies to fair value measurements already required or permitted by existing standards. The changes to current generally accepted accounting principles from the application of this statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. As of December 31, 2007, the Company does not believe the adoption of SFAS 157 will have a material impact on the financial statement amounts; however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements on the statement of operations. In September 2006, the FASB issued FAS 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plan" (SFAS 158). This statement requires recognition of the overfunded or underfunded status of defined benefit pension and other postretirement plans as an asset or a liability in the balance sheet and changes in the funded status to be recognized in other comprehensive income. The statement also requires the measurement of the funded status of a plan as of the date of the balance sheet. The Company has adopted FAS 158, refer to Note 9-Benefits Plans for additional detail. In February 2007, the FASB issued FAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities - including an amendment of SFAS 115" (SFAS 159). This standard permits entities to elect to measure financial instruments and certain other items at fair value. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Company is currently assessing the potential effects of SFAS 159 on the consolidated financial statements. In September 2005, the Accounting Standards Executive Committee issued SOP 05-1, "Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts" (SOP 05-1) for 2007. SOP 05-1 provides guidance on internal replacements of insurance and investment contracts, whereby an existing policyholder exchanges a current contract for a new contract, and whether certain acquisition costs associated with the original contract may continue to be deferred or must be expensed immediately. Under the terms of SOP 05-1, internal replacements qualifying for continued deferral of original acquisition costs must demonstrate that the new contract is substantially unchanged from the original contract, including coverage provided, insured individual, investment returns, and any dividend participation rights. The implementation of SOP 05-1 reduced retained earnings by $11.5 million, net of tax in 2007. In September 2006, the SEC issued Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" (SAB 108). This guidance was issued in order to eliminate diversity of practice surrounding misstatements in financial statements. The provisions of SAB 108 have been adopted using the cumulative effect transition methodology in connection with the 2006 consolidated financial statements. The cumulative effects adjustment related to deferred taxes from a 2002 transaction that were previously considered immaterial, and resulted in a $7.1 million increase to a deferred tax asset and an increase to retained earnings. 11 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 3. ACQUISITIONS AND OTHER SIGNIFICANT TRANSACTIONS Effective July 1, 2007, AUL and Transamerica Life Insurance Company entered into an agreement whereby AUL acquired, through an indemnity reinsurance transaction, a significant block of 403(b) business. The following table represents the assets and liabilities assumed:
(in millions) -------------------------------------------------------------------- Total invested assets $591.7 Deferred acquisition costs 65.6 Reinsurance receivable 76.4 -------------------------------------------------------------------- Total assets acquired $733.7 -------------------------------------------------------------------- Policy reserves $656.1 Other liabilities and accrued expenses 77.6 -------------------------------------------------------------------- Total liabilities assumed $733.7 ====================================================================
On May 1, 2006, AUL disposed of its Financial Institutions operations. This transaction included the Financial Institutions reporting unit consisting of CNL Financial Corporation (CNL) and its subsidiaries and all credit-related insurance business issued by AUL. The sale was a stock sale of the CNL companies and an indemnity reinsurance arrangement for AUL's Financial Institutions business. The transaction did not result in a material gain or loss to the enterprise and resulted in net proceeds of $11.3 million received in 2006. In October 2005, State Life assumed a block of life insurance and annuity contracts from Golden Rule Insurance Company (Golden Rule), a subsidiary of United Healthcare, Inc. under an indemnity reinsurance agreement. The transaction included a transfer of cash, accrued interest and invested assets of $1,675.8 million to State Life, net of a ceding commission to Golden Rule. The transaction resulted in VOBA of $117.1 million. Also refer to Note 7 - Value of Business Acquired for further detail regarding current VOBA activity. On July 1, 2002, Employers Reassurance Corporation ("ERAC") began reinsuring the majority of the Company's reinsurance operations, including its life, long term care and international reinsurance business. The transaction structure involved two indemnity reinsurance agreements and the sale of certain assets. The liabilities and obligations associated with the reinsured contracts remain on the balance sheet of the Company with a corresponding reinsurance receivable from ERAC. In connection with the transaction, a trust account has been established which provides for securities to be held in support of the reinsurance receivables. The market value of investments held in this trust was $1,357.5 million at December 31, 2007. As a result of the ERAC transaction, a deferred gain of $107.1 million was generated, and was recorded as a deferred gain on the Company's balance sheet in accordance with the requirements of SFAS 113, "Reporting for Reinsurance of Short-Duration and Long-Duration Contracts." The gain is being amortized into earnings at the rate that earnings on the reinsured business are expected to emerge. The Company recognized $13.2 million, $4.8 million and $7.8 million of deferred gain amortization in 2007, 2006 and 2005, respectively, which is included in other income. The increase in 2007 deferred gain amortization was caused by a liability commutation arrangement agreed to by ERAC and a ceding company from the Long Term Care reinsurance business. The commutation extinguished the liability held by AUL and accelerated recognition of a portion of the deferred gain. 12 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 4. INVESTMENTS The amortized cost and fair value of investments in fixed maturity and marketable equity securities by type of investment were as follows:
DECEMBER 31, 2007 ------------------------------------------------------------------------------------------------------- GROSS UNREALIZED DESCRIPTION OF SECURITIES AMORTIZED -------------------- FAIR (in millions) COST GAINS LOSSES VALUE ------------------------------------------------------------------------------------------------------- Available-for-sale: Obligations of U.S. government, states, political subdivisions and foreign governments $ 159.9 $ 4.6 $ 2.5 $ 162.0 Corporate securities 5,318.1 129.9 66.2 5,381.8 Mortgage-backed securities 1,812.7 24.5 11.7 1,825.5 ------------------------------------------------------------------------------------------------------- Total fixed maturities 7,290.7 159.0 80.4 7,369.3 Equity securities 35.5 12.3 - 47.8 ------------------------------------------------------------------------------------------------------- Total $7,326.2 $171.3 $80.4 $7,417.1 =======================================================================================================
December 31, 2006 ------------------------------------------------------------------------------------------------------- Gross Unrealized Description of Securities Amortized ------------------- Fair (in millions) Cost Gains Losses Value ------------------------------------------------------------------------------------------------------- Available-for-sale: Obligations of U.S. government, states, political subdivisions and foreign governments $ 197.2 $ 4.4 $ 3.7 $ 197.9 Corporate securities 4,898.6 107.7 79.2 4,927.1 Mortgage-backed securities 1,684.1 13.8 21.4 1,676.5 ------------------------------------------------------------------------------------------------------- Total fixed maturities 6,779.9 125.9 104.3 6,801.5 Equity securities 37.0 12.3 - 49.3 ------------------------------------------------------------------------------------------------------- Total $6,816.9 $138.2 $104.3 $6,850.8 =======================================================================================================
The following tables show the gross unrealized losses and fair value of Company's investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position. 13 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 4. INVESTMENTS, CONTINUED Gross Unrealized Loss Positions for Fixed Maturities as of December 31, 2007:
------------------------------------------------------------------------------------------------------------------- LESS THAN 12 MONTHS 12 MONTHS OR MORE TOTAL ---------------------- ---------------------- --------------------- DESCRIPTION OF SECURITIES FAIR UNREALIZED FAIR UNREALIZED FAIR UNREALIZED (in millions) VALUE LOSSES VALUE LOSSES VALUE LOSSES ------------------------------------------------------------------------------------------------------------------- Obligations of U.S. government, states, political subdivisions and foreign governments $ 18.3 $ 1.0 $ 50.1 $ 1.5 $ 68.4 $ 2.5 Corporate securities 1,090.4 25.7 1,195.4 40.5 2,285.8 66.2 Mortgage-backed securities 363.3 3.7 358.7 8.0 722.0 11.7 ------------------------------------------------------------------------------------------------------------------- $1,472.0 $30.4 $1,604.2 $50.0 $3,076.2 $80.4 ===================================================================================================================
Gross Unrealized Loss Positions for Fixed Maturities as of December 31, 2006:
------------------------------------------------------------------------------------------------------------------- Less Than 12 Months 12 Months or More Total ---------------------- ---------------------- --------------------- Description of Securities Fair Unrealized Fair Unrealized Fair Unrealized (in millions) Value Losses Value Losses Value Losses ------------------------------------------------------------------------------------------------------------------- Obligations of U.S. government, states, political subdivisions and foreign governments $ 25.4 $ 0.3 $ 93.8 $ 3.4 $ 119.2 $ 3.7 Corporate securities 1,162.1 17.0 1,746.9 62.2 2,909.0 79.2 Mortgage-backed securities 465.5 4.9 614.8 16.5 1,080.3 21.4 ------------------------------------------------------------------------------------------------------------------- $1,653.0 $22.2 $2,455.5 $82.1 $4,108.5 $104.3 ===================================================================================================================
OBLIGATIONS OF U.S. GOVERNMENT, STATES, POLITICAL SUBDIVISIONS AND FOREIGN GOVERNMENTS. The unrealized losses on the Company's investments in obligations of U.S. government, states, political subdivisions and foreign governments were primarily caused by interest rate increases. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the Company has the ability and intent to hold these investments until a recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2007. CORPORATE SECURITIES. The $66.2 million of gross unrealized losses is comprised of $60.1 million related to investment grade securities and $6.1 million related to below investment grade securities. Approximately $1.7 million of the total gross unrealized losses represented declines in value of greater than 10 percent, none of which had been in that position for a period of 12 months or more, and substantially all of which were less than six months. The $40.5 million of gross unrealized losses of 12 months or more crossed all sectors of business and were mostly interest related. There were no individual issuers with gross unrealized losses greater than $1.7 million. Based on a review of the above information in conjunction with other factors as outlined in the Company's policy surrounding other-than-temporary impairments, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2007. 14 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 4. INVESTMENTS, CONTINUED MORTGAGE BACKED SECURITIES. The unrealized losses on the Company's investment in federal agency mortgage backed securities were caused by interest rate increases. The Company purchased these investments at a discount relative to their face amount, and the contractual cash flows of these investments are guaranteed by an agency of the U.S. government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company's investment. Because the decline in market value is attributable to changes in interest rates and not credit quality and because the Company has the ability and intent to hold these investments until a recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2007. MARKETABLE EQUITY SECURITIES. As of December 31, 2007, gross unrealized losses on equity securities were less than $.1 million. Based on a review of this information in conjunction with other factors outlined in the Company's policy related to other-than-temporary impairments, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2007. The amortized cost and fair value of fixed maturity securities at December 31, 2007, by contractual average maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
AVAILABLE-FOR-SALE --------------------------------- (in millions) AMORTIZED COST FAIR VALUE -------------------------------------------------------------------------- Due in one year or less $ 265.3 $ 265.5 Due after one year through five years 1,620.3 1,657.4 Due after five years through 10 years 2,189.3 2,203.8 Due after 10 years 1,403.1 1,417.1 -------------------------------------------------------------------------- 5,478.0 5,543.8 Mortgage-backed securities 1,812.7 1,825.5 -------------------------------------------------------------------------- $7,290.7 $7,369.3 ==========================================================================
Net investment income for the years ended December 31, consisted of the following:
(in millions) 2007 2006 2005 ------------------------------------------------------------------ Fixed maturity securities $405.7 $395.1 $334.5 Equity securities 1.8 1.2 1.1 Mortgage loans 99.1 99.5 97.7 Real estate 16.9 16.1 15.8 Policy loans 12.3 11.0 10.4 Other 23.0 22.9 15.1 ------------------------------------------------------------------ Gross investment income 558.8 545.8 474.6 Investment expenses 24.5 23.2 22.7 ------------------------------------------------------------------ Net investment income $534.3 $522.6 $451.9 ==================================================================
15 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 4. INVESTMENTS, CONTINUED Investment detail regarding fixed maturities for the years ended December 31, were as follows:
(in millions) 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------ Proceeds from the sale of investments in fixed maturities $329.2 $ 328.2 $ 598.1 Gross realized gains on the sale of fixed maturities 1.8 2.5 0.9 Gross realized losses on sale of fixed maturities (3.6) (10.1) (4.9) Change in unrealized appreciation 57.0 (111.4) (144.4) ------------------------------------------------------------------------------------------------------------------
The Company does not continue to accrue income on non-income producing investments. At December 31, 2007 the Company did not have any non-income producing fixed maturity investments. At December 31, 2006, the Company had one fixed maturity investment that was non-income-producing, with a total book value of $1 thousand. Realized investment gains (losses), for the years ended December 31, consisted of the following:
(in millions) 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------ Fixed maturity securities $(1.8) $(7.6) $(4.0) Equity securities 1.0 1.2 0.5 Real estate 2.8 1.1 - Impairments (4.7) - - ------------------------------------------------------------------------------------------------------------------ Realized investment losses $(2.7) $(5.3) $(3.5) ==================================================================================================================
The Company maintains a diversified mortgage loan portfolio and exercises internal limits on concentrations of loans by geographic area, industry, use and individual mortgagor. At December 31, 2007, the largest geographic concentrations of commercial mortgage loans were in Texas, California, and Illinois where approximately 27 percent of the portfolio was invested. A total of 32 percent of the mortgage loans have been issued on retail properties, primarily backed by long-term leases or guarantees from strong credits. The Company had outstanding mortgage loan commitments of approximately $42.7 million and $81.9 million at December 31, 2007 and 2006, respectively. The Company has no exposure to losses from subprime loans. To date, the Company has managed risk in the subprime market by avoiding these investments. Additionally, the Company had no investments in securitized assets that are supported by subprime or Alt-A loans. Within the mortgage-backed securities portfolio, all of the residential mortgages are guaranteed by one of the three government-sponsored enterprises (FNMA, FHLMS, or GNMA), with one exception. This exception is a $5.8 million investment in a senior tranche of a non-agency mortgage backed security that is backed by jumbo, prime loans. 16 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 5. OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income, at December 31, consisted of the following:
(in millions) 2007 2006 2005 ----------------------------------------------------------------------------------------------------------------- Unrealized appreciation: Fixed maturity securities $ 78.6 $ 21.6 $133.0 Equity securities 12.3 12.3 9.5 Valuation adjustment (6.8) (1.6) (36.5) Deferred taxes (29.6) (11.4) (37.8) ----------------------------------------------------------------------------------------------------------------- Total unrealized appreciation, net of tax 54.5 20.9 68.2 Benefit plans, net of tax (11.7) - (0.4) ----------------------------------------------------------------------------------------------------------------- Accumulated other comprehensive income $ 42.8 $ 20.9 $ 67.8 =================================================================================================================
The components of comprehensive income (loss), other than net income, for the years ended December 31, are illustrated below:
(in millions) 2007 2006 2005 ----------------------------------------------------------------------------------------------------------------- Other comprehensive income, net of tax: Minimum pension liability adjustment, net of tax-2007, $0; 2006, ($0.2); 2005, ($5.2) $ - $ 0.4 $ 9.6 Adoption of SFAS 158, net of tax-2007, $6.2 (11.7) - - Unrealized appreciation on securities, net of tax-2007, ($18.2); 2006, $26.4; 2005, $31.9 32.2 (52.3) (61.7) Reclassification adjustment for gains included in net income, net of tax-2007, ($0.8); 2006, ($2.6); 2005, ($1.3) 1.4 5.0 2.5 ----------------------------------------------------------------------------------------------------------------- Other comprehensive income (loss), net of tax $ 21.9 $(46.9) $(49.6) =================================================================================================================
6. DEFERRED POLICY ACQUISITION COSTS The balances of and changes in deferred policy acquisition costs, for the years ended December 31, are as follows:
(in millions) 2007 2006 2005 ----------------------------------------------------------------------------------------------------------------- Balance, beginning of year $600.6 $583.6 $509.3 Acquired deferred acquisition costs 65.6 - - Capitalization of deferred acquisition costs 80.8 90.6 99.2 Amortization of deferred acquisition costs (77.4) (76.1) (76.9) Adoption of SOP 05-1 (17.4) - - Disposal of credit insurance operations - (27.6) - Valuation adjustment (4.3) 30.1 52.0 ----------------------------------------------------------------------------------------------------------------- Balance, end of year $647.9 $600.6 $583.6 =================================================================================================================
17 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 7. VALUATION OF BUSINESS ACQUIRED The balance of and changes in VOBA, for the years ended December 31, are as follows:
(in millions) 2007 2006 2005 ----------------------------------------------------------------------------------------------------------------- Balance, beginning of year $109.8 $118.5 $ 4.4 Acquisitions - - 117.1 Amortization (7.8) (8.7) (3.0) ----------------------------------------------------------------------------------------------------------------- Subtotal 102.0 109.8 118.5 Valuation adjustment 3.6 4.8 - ----------------------------------------------------------------------------------------------------------------- Balance, end of year $105.6 $114.6 $118.5 =================================================================================================================
The average expected life of VOBA varies by product, and is 26 years for the overall block of acquired business. The interest accrual rate for amortization varies by product, and is 4 percent for the overall block of acquired business. The following table provides estimated future amortization, net of interest, for the periods indicated:
VOBA (in millions) AMORTIZATION -------------------------------------------------------------------------------- 2008 $ 6.7 2009 6.5 2010 6.2 2011 6.0 2012 5.6 2013 and thereafter 71.0 -------------------------------------------------------------------------------- Total $102.0 ================================================================================
18 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 8. INSURANCE LIABILITIES Insurance liabilities consisted of the following:
-------------------------------------------------------------------------------------------------------------------------------- MORTALITY OR WITHDRAWAL MORBIDITY INTEREST RATE DECEMBER 31, (in millions) ASSUMPTION ASSUMPTION ASSUMPTION 2007 2006 -------------------------------------------------------------------------------------------------------------------------------- Future policy benefits: Participating whole life contracts COMPANY COMPANY 2.5% to 6.0% $ 965.5 $ 930.7 EXPERIENCE EXPERIENCE Universal life-type contracts N/A N/A N/A 1,780.0 1,706.3 Other individual life contracts COMPANY COMPANY 2.5% TO 6.0% 859.5 802.4 EXPERIENCE EXPERIENCE Accident and health COMPANY N/A 606.1 679.2 N/A EXPERIENCE Annuity products N/A N/A N/A 5,151.9 4,712.9 Group life and health N/A N/A N/A 456.5 467.0 Other policyholder funds N/A N/A N/A 205.5 212.4 Pending policyholder claims N/A N/A N/A 245.6 264.1 -------------------------------------------------------------------------------------------------------------------------------- Total insurance liabilities $10,270.6 $9,775.0 ================================================================================================================================
Participating life insurance policies, for which dividends are expected to be paid, represent approximately 24.9 percent and 24.3 percent of the total individual life insurance in force at both December 31, 2007 and 2006, respectively. These participating policies represented 33.7 percent and 32.0 percent of statutory life net premium income for 2007 and 2006, respectively. The amount of dividends to be paid is determined annually by the Board of Directors. 9. BENEFIT PLANS The Company sponsors a noncontributory defined benefit pension plan that covers substantially all of its employees. Company contributions to the employee plan are made periodically in an amount between the minimum ERISA required contribution and the maximum tax-deductible contribution. The plan provides defined benefits based on years of service and final average salary. The assets of the defined benefit plan are held by the Company under a group annuity contract. The Company sponsors a non-contributory, unfunded defined supplemental excess benefit plan for certain executives where benefits accrue and vest at the same rate as the qualified plan, which is included in Other Benefits in the following disclosures. The Company also has multiple postretirement benefit plans covering substantially all of its retired employees and certain career agents (retirees). Employees and agents with at least 10 years of plan participation may become eligible for such benefits if they reach retirement age while working for the Company. Employees hired on or after October 1, 2004, are no longer eligible for retiree health benefits. The medical plans are contributory, with retiree contributions adjusted annually. The Company contributions for pre-65 retirees were frozen at the 2005 contribution level. For post-65 retirees the Company's contributions were frozen at the 2000 contribution level. The life insurance plans are noncontributory. There are no specific plan assets for this postretirement liability as of December 31, 2007 and 2006. Claims incurred for benefits are funded by Company contributions. 19 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 9. BENEFIT PLANS, CONTINUED The Company uses a December 31 measurement date for the defined benefit plan and the other postretirement benefit plans. Obligations and Funded Status:
PENSION BENEFITS OTHER BENEFITS ----------------------- ----------------------- (in millions) 2007 2006 2007 2006 ------------------------------------------------------------------------------------------------------------------ Employer contributions $ 0.7 $16.7 $ 1.7 $ 1.8 Employee contributions - - 1.3 1.2 Benefit payments 2.7 2.0 3.1 3.0 Funded status (deficit) 11.0 8.1 (39.2) (40.2) ==================================================================================================================
As previously discussed, the Company adopted the recognition and disclosure provisions of SFAS 158 on December 31, 2007. The measurement date was changed from September 30 to December 31 in 2007 for 'Other Benefits' resulting in a $0.4 million reduction to retained earnings. The incremental effect of applying SFAS 158 on individual line items to the balance sheet as of December 31, 2007 including tax effects is as follows:
PRIOR TO EFFECT OF AS REPORTED ADOPTING ADOPTING UNDER SFAS (in millions) SFAS 158 SFAS 158 158 ------------------------------------------------------------------------------------------------------------------ Other assets $ 106.6 (19.0) $ 87.6 Other liabilities (including deferred income taxes) 360.9 (6.9) 354.0 Accumulated other comprehensive income 54.5 (11.7) 42.8 Retained earnings 1,278.4 (0.4) 1,278.0 ==================================================================================================================
Amounts recognized in the balance sheet:
PENSION BENEFITS OTHER BENEFITS ------------------------- -------------------------- (in millions) 2007 2006 2007 2006 ------------------------------------------------------------------------------------------------------------------ Other assets $11.0 $32.7 $ - $ - Accrued benefit obligation - - (39.2) (40.6) Accumulated other comprehensive income - - - (0.7) ------------------------------------------------------------------------------------------------------------------ Net amount recognized $11.0 $32.7 $(39.2) $(41.3) ------------------------------------------------------------------------------------------------------------------
Amounts recognized in other accumulated comprehensive income: Net actuarial (gains) losses $25.2 n/a $(0.3) n/a Net prior service costs (benefits) (1.2) n/a (0.7) n/a Net transition obligation (5.0) n/a - n/a ------------------------------------------------------------------------------------------------------------------ Net amount recognized $19.0 n/a $(1.0) n/a ==================================================================================================================
20 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 9. BENEFIT PLANS, CONTINUED The following table represents plan assets and obligations for the defined benefit plan:
DECEMBER 31, (in millions) 2007 2006 ------------------------------------------------------------------------------------------------------------------ Projected benefit obligation $116.3 $112.3 Accumulated benefit obligation 98.5 93.5 Fair value of plan assets 127.3 120.4 ==================================================================================================================
The following table represents net periodic pension and other benefit costs expense:
PENSION BENEFITS OTHER BENEFITS ------------------------- -------------------------- (in millions) 2007 2006 2005 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------ Decrease in minimum pension liability included in other comprehensive income, net of tax $ - $ - $(9.3) $ - $(0.4) $(0.3) Net periodic benefit cost 3.5 6.7 6.4 4.6 5.0 5.7 ==================================================================================================================
Over the next year, the estimated amount of amortization from accumulated other comprehensive income into net periodic benefit cost related to net actuarial losses, prior service costs, and transition obligation is ($0.3) million, $1.2 million and ($0.2) million, respectively. Weighted-average assumptions used to determine benefit obligations at December 31:
PENSION BENEFITS OTHER BENEFITS ------------------------- -------------------------- 2007 2006 2007 2006 ------------------------------------------------------------------------------------------------------------------ Discount rate 6.50% 6.15% 6.50% 5.80% Rate of compensation increase 4.00% 4.00% 4.00% 4.00% ==================================================================================================================
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:
PENSION BENEFITS OTHER BENEFITS ------------------------- -------------------------- 2007 2006 2005 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------ Discount rate 6.15% 5.75% 6.15% 6.15% 5.50% 5.80% Expected long-term return on plan assets 8.75% 8.75% 8.75% - - - Rate of compensation increase 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% ==================================================================================================================
21 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 9. BENEFIT PLANS, CONTINUED The expected long-term return on plan assets was established based on the median long-term returns for large company stocks, small company stocks, and long-term corporate bonds. The weighting between these asset classes was based on the assets in our plan. The long-term returns are updated and evaluated annually. Assumed health care trend rates at December 31:
2007 2006 ------------------------------------------------------------------------------------------------ Health care trend rate assumed for next year 10.00% 12.50% Rate to which the cost trend rate is assumed to decline 5.00% 5.00% Year that the rate reaches the ultimate trend rate 2013 2013 ================================================================================================
PLAN ASSETS The actual pension plan weighted-average asset allocations, by asset category, are 75 percent equity securities and 25 percent debt securities at both December 31, 2007 and 2006. The pension plan maintains an investment policy statement, which outlines objectives and guidelines for supervising investment strategy and evaluating the investment performance of plan assets. The Plan seeks to attain diversification by investing in a blend of asset classes and styles. The target asset allocation is to maintain 75 percent of plan assets in equities and 25 percent in debt securities. To maintain a longer-term focus, the performance objectives of the plan are monitored quarterly using a rolling 5-year time period net of fees. For evaluation purposes, the total return of each investment option is compared to an appropriate index based on the investment style of each investment option. Investment restrictions are established by asset category and are designed to control the level of overall risk and liquidity of the investment program. The investment policy maintains a longer-term focus and is intended to match the benefit obligations. CONTRIBUTIONS The Company does not expect to contribute to its pension plan but does expect to contribute $2.4 million to its other postretirement benefit plans in 2008. ESTIMATED FUTURE BENEFIT PAYMENTS The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
(in millions) PENSION BENEFITS OTHER BENEFITS ------------------------------------------------------------------------------------------------- 2008 $2.5 $2.3 2009 2.8 2.5 2010 3.3 2.6 2011 3.7 2.8 2012 4.5 3.3 Years 2013-2017 32.2 18.5 =================================================================================================
22 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 9. BENEFIT PLANS, CONTINUED DEFINED CONTRIBUTION PLANS AND DEFERRED COMPENSATION The Company sponsors a defined contribution savings plan for employees. Beginning January 1, 2005 the Company began providing a match of 50 percent of employee contributions up to 7.0 percent of eligible earnings. Additional employee voluntary contributions may be made to the plan subject to contribution guidelines. Company contributions to the plan were $2.4 million, $2.5 million and $2.6 million in 2007, 2006 and 2005, respectively. The Company has two defined contribution pension plans covering substantially all career agents, except for general agents. Contributions of 4.5 percent of defined commissions (plus 4.5 percent for commissions over the Social Security wage base) are made to the pension plan and an additional contribution of up to 4.0 percent (subject to matching on agents' contributions) of defined commissions are made to the 401(k) plan. Company contributions expensed for these plans were $1.3 million, $1.2 million and $1.1 million in 2007, 2006 and 2005, respectively. The Company has entered into deferred compensation agreements with directors, certain employees, career agents and general agents. These deferred amounts are payable according to the terms and conditions of the agreements. Annual costs of the agreements were $3.5 million, $2.6 million and $1.4 million for 2007, 2006 and 2005, respectively. 10. FEDERAL INCOME TAXES The Company and its subsidiaries file consolidated and separate federal, state and local income tax returns. The federal income tax expense, for the years ended December 31, was as follows:
(in millions) 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------ Current $23.9 $14.8 $15.5 Deferred 8.5 10.8 9.6 ------------------------------------------------------------------------------------------------------------------ Income tax expense $32.4 $25.6 $25.1 ==================================================================================================================
A reconciliation of the income tax attributable to continuing operations computed at the federal statutory tax rate to the income tax expense included in the statement of operations, for the years ended December 31, were as follows:
(in millions) 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------ Income tax computed at statutory tax rate: $42.2 $32.7 $30.5 Tax preferenced investment income (7.9) (7.3) (4.9) Nondeductible goodwill expense - - (0.4) Disposition of Financial Institutions operations - 1.6 - Credits available to offset tax (2.2) (1.8) - Other 0.3 0.4 (0.1) ------------------------------------------------------------------------------------------------------------------ Income tax expense $32.4 $25.6 $25.1 ==================================================================================================================
23 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 10. FEDERAL INCOME TAXES, CONTINUED The federal income tax (asset) liability which is included in other liabilities for the years ended December 31, were as follows:
(in millions) 2007 2006 ------------------------------------------------------------------------------------------------------------------ Current $(1.9) $(5.9) Deferred 87.0 73.2 ------------------------------------------------------------------------------------------------------------------ Total federal income tax liability $85.1 $67.3 ==================================================================================================================
The significant components of deferred assets and liabilities, as of December 31, are as follows:
(in millions) 2007 2006 ------------------------------------------------------------------------------------------------------------------ Deferred tax assets Insurance liabilities $125.5 $112.7 Deferred gain on indemnity reinsurance (1) 23.6 28.2 Employee benefit plans 17.3 7.9 Other 12.4 14.6 ------------------------------------------------------------------------------------------------------------------ Total deferred tax assets 178.8 163.4 ------------------------------------------------------------------------------------------------------------------ Deferred tax liabilities Deferred policy acquisition costs 220.6 207.7 Fixed assets and software 11.6 12.9 Unrealized appreciation 29.6 11.4 Other 4.0 4.6 ------------------------------------------------------------------------------------------------------------------ Total deferred tax liabilities 265.8 236.6 ------------------------------------------------------------------------------------------------------------------ Total net deferred liability $ 87.0 $ 73.2 ==================================================================================================================
(1) Includes a cumulative effect adjustment under SAB 108 of $7.1 million in 2006 related to a 2002 transaction. Refer to Note 2-Significant Accounting Policies for additional detail. Federal income taxes paid were $20.0 million and $23.1 million in 2007 and 2006, respectively. The Company has $9.4 million of net operating losses available to offset future taxable income. The losses are non-life losses and therefore, are limited in their ability to offset life insurance company taxable income. If unused, the losses will expire between 2019 and 2027. If the Company determines that any portion of its deferred tax assets will not be utilized in future years, a valuation allowance must be established for that portion of the deferred tax asset in doubt. Based upon best available information and expectations, management believes that it is more likely than not the deferred asset will be realized. As previously discussed, the Company adopted Financial Accounting Standards Board Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" (FIN 48) effective January 1, 2007. As of January 1, 2007 management reviewed open tax years for major jurisdictions and concluded that the adoption of FIN 48 resulted in no impact to the Company's financial position. There is no significant tax liability resulting from unrecognized tax benefits relating to uncertain tax positions. The Company is not aware of any tax position for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next 12 months. 24 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 10. FEDERAL INCOME TAXES, CONTINUED The implementation of FIN 48 requires management to review all open tax years, for all major income taxing jurisdictions (including federal and state). Open tax years are those that are open to examination by the tax authorities (e.g. the last four tax year ends and the interim tax period since then). In September 2007, the Internal Revenue Service concluded its examination of the 2004 consolidated federal income tax return without assessment. The Company has not been formally apprised of the Service's intent to audit subsequent years. 11. REINSURANCE The Company uses reinsurance to mitigate the risks it underwrites on a direct basis. For individual life policies, the Company cedes the portion of the total risk in excess of $0.5 million. For other policies, the Company has established various limits of coverage it will retain on any one policyholder and cedes the remainder of such coverage. The Company is party to various reinsurance contracts under which it receives premiums as a reinsurer and reimburses the ceding company for portions of the claims incurred. Reinsurance amounts included in the Consolidated Statements of Operations for the years ended December 31, were as follows:
(in millions) 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------ Direct premiums $ 466.1 $ 528.7 $ 567.9 Reinsurance assumed 420.0 508.4 480.3 Reinsurance ceded (541.7) (630.7) (602.6) ------------------------------------------------------------------------------------------------------------------ Net premiums 344.4 406.4 445.6 ------------------------------------------------------------------------------------------------------------------ Reinsurance recoveries $ 424.4 $ 439.9 $ 386.1 ==================================================================================================================
The Company reviews all reinsurance agreements for transfer of risk and evaluates the proper accounting methods based upon the terms of the contract. If companies to which reinsurance has been ceded are unable to meet obligations under the reinsurance agreements, the Company would remain liable. Seven reinsurers account for approximately 88 percent of the Company's December 31, 2007, ceded reserves for life and accident and health insurance. These reinsurers maintain A.M. Best ratings between A+ and A-. The remainder of such ceded reserves is spread among numerous reinsurers. Refer to Note 3 - Acquisitions and Other Significant Transactions for details on the reinsurance transaction in 2002 with ERAC, the Golden Rule transaction in 2005 and the Transamerica 403(b) transaction in 2007. The Company reported an after-tax net loss of approximately $15 million in 2001 related to the September 11, 2001 terrorist attack. The net loss included anticipated reinsurance recoveries from the Company's reinsurers. The Company continues to pay claims and recover amounts from the various reinsurance companies. The anticipated reinsurance recoveries are approximately $93 million at December 31, 2007 compared to $107 million at December 31, 2006. These claims are workers' compensation related, including survivor benefits, and will be paid out over many years. The Company's reinsurance program consists of financially strong reinsurance companies. The Company has recorded no significant additional net loss in 2007 or 2006 related to the September 11th tragedy. 25 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 12. SURPLUS NOTES, NOTES PAYABLE AND LINES OF CREDIT In September 2006, the Company enhanced its financial flexibility through its membership in the Federal Home Loan Bank of Indiana (FHLB) for both AUL and State Life. FHLB membership provides ready access to funds and borrowing capacity. On October 6, 2003, the Company issued Senior Notes with a face value of $200 million, due October 15, 2033. Interest is payable semi-annually on April 15th and October 15th at a 7 percent annual rate. The notes are an unsecured senior obligation and will rank equally with any of the Company's senior unsecured indebtedness. The notes will effectively rank junior to any future secured indebtedness as to the assets securing such indebtedness and to all indebtedness and other obligations, including insurance and annuity liabilities, of the subsidiaries. The indenture for the Senior Notes imposes restrictions on stock transactions and indebtedness of subsidiaries, and includes conditions regarding mergers or consolidations. Interest payments made were $14.0 million in both 2007 and 2006. On February 16, 1996, AUL issued $75 million of surplus notes, due March 30, 2026. Interest is payable semi-annually on March 30 and September 30 at a 7.75 percent annual rate. Any payment of principal or interest on the notes may be made only with the prior approval of the Commissioner of the Indiana Department of Insurance. The surplus notes may not be redeemed at the option of AUL or any holders of the surplus notes. Interest paid during 2007 and 2006 was $5.8 million in each year. Surplus Notes and Senior Notes:
(in millions) 2007 2006 ------------------------------------------------------------------------------------------------------------------ Senior notes, 7%, due 2033 $200.0 $200.0 Surplus notes, 7.75%, due 2026 75.0 75.0 ------------------------------------------------------------------------------------------------------------------ Total notes payable $275.0 $275.0 ==================================================================================================================
13. COMMITMENTS AND CONTINGENCIES Various lawsuits have arisen in the ordinary course of the Company's business. In each of the matters and collectively, the Company believes the ultimate resolution of such litigation will not result in any material adverse impact to the financial condition, operations or cash flows of the Company. 14. STATUTORY INFORMATION AUL, State Life and PML prepare statutory financial statements in accordance with accounting practices prescribed or permitted by the department of insurance for their respective state of domicile. Prescribed statutory accounting practices (SAP) currently include state laws, regulations and general administrative rules applicable to all insurance enterprises domiciled in a particular state, as well as practices described in National Association of Insurance Commissioners' (NAIC) publications. 26 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 14. STATUTORY INFORMATION, CONTINUED A reconciliation of SAP surplus to GAAP equity at December 31 follows:
(in millions) 2007 2006 ------------------------------------------------------------------------------------------------------------------ SAP surplus $ 850.8 $ 816.7 Asset valuation reserve 62.1 57.9 Deferred policy acquisition costs 658.4 606.7 Value of business acquired 100.9 108.2 Adjustments to policy reserves (189.9) (160.3) Interest maintenance reserves 22.0 27.9 Unrealized gain on invested assets, net 54.5 20.9 Surplus notes (75.0) (75.0) Deferred gain on indemnity reinsurance (67.5) (80.7) Deferred income taxes (87.0) (87.7) Other, net 8.5) (11.9) ------------------------------------------------------------------------------------------------------------------ GAAP equity $1,320.8 $1,222.7 ==================================================================================================================
A reconciliation of SAP net income to GAAP net income for the years ended December 31 follows:
(in millions) 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------ SAP net income (loss) $76.0 $ 91.8 $(10.6) Deferred policy acquisition costs 24.0 0.7 20.4 Value of business acquired (1) (7.3) (8.2) 67.1 Adjustments to policy reserves 12.2 16.3 6.7 Deferred income taxes (8.5) (10.8) (9.6) Disposition of Financial Institutions operations - (10.8) (1.0) Other, net (8.3) (11.3) (10.9) ------------------------------------------------------------------------------------------------------------------ GAAP net income $88.1 $ 67.7 $ 62.1 ==================================================================================================================
(1) 2005 contains a ceding commission of $68.4 million on acquisition of business, less amortization, which resulted in the statutory net loss in 2005. Life insurance companies are required to maintain certain amounts of assets on deposit with state regulatory authorities. Such assets had an aggregate carrying value of $28.8 million and $28.7 million at December 31, 2007 and 2006, respectively. State statutes and the mutual insurance holding company law limit dividends from AUL, State Life and PML to OneAmerica. AUL paid $35 million and $40 million in dividends to OneAmerica in 2007 and 2006, respectively. State statutes allow the greater of 10 percent of statutory surplus or 100 percent of net income as of the most recently preceding year-end to be paid as dividends without prior approval from state insurance departments. Under state statutes, dividends would be limited to approximately $88 million in 2008. 27 ONEAMERICA FINANCIAL PARTNERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 15. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair values for financial instruments are based on various assumptions and estimates as of a specific point in time. They do not represent liquidation values and may vary significantly from amounts that will be realized in actual transactions. Therefore, the fair values presented in the table should not be construed as the underlying value of the Company. The disclosure of fair value information about certain financial instruments is based primarily on quoted market prices. The fair values of short-term investments and contract loans approximate the carrying amounts reported in the balance sheet. Fair values for fixed maturity and equity securities, and surplus notes payable are based on quoted market prices where available. For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing services or, in the case of private placements, are estimated by discounting expected future cash flows using a current market rate applicable to the yield, credit quality and maturity of the investments. The fair value of the aggregate mortgage loan portfolio was estimated by discounting the future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings for similar maturities. The estimated fair values of the liabilities for interest-bearing policyholder funds approximate the statement values because interest rates credited to account balances approximate current rates paid on similar funds and are not generally guaranteed beyond one year. Fair values for other insurance reserves are not required to be disclosed. However, the estimated fair values for all insurance liabilities are taken into consideration in the Company's overall management of interest rate risk, which minimizes exposure to changing interest rates through the matching of investment maturities with amounts due under insurance contracts. The fair value of certain financial instruments, along with the corresponding carrying values at December 31 follows:
2007 2006 ------------------------------------------------------------------------------------------------------------------ CARRYING CARRYING (in millions) AMOUNT FAIR VALUE AMOUNT FAIR VALUE ------------------------------------------------------------------------------------------------------------------ Fixed maturity securities - available-for-sale $7,369.3 $7,369.3 $6,801.5 $6,801.5 Equity securities 47.8 47.8 49.3 49.3 Mortgage loans 1,394.6 1,444.4 1,351.3 1,372.4 Policy loans 225.3 225.3 179.0 179.0 Surplus notes and notes payable 275.0 279.9 275.0 293.5 Short-term & other invested assets 9.8 9.8 22.1 22.1 ==================================================================================================================
28 DIRECTPOINT Part C: Other Information Item 24. Financial Statements and Exhibits (a) Financial Statements 1. Included in Prospectus (Part A): Condensed Financial Information (9) 2. Included in Statement of Additional Information (Part B): (a) Financial Statements of OneAmerica Financial Partners, Inc. (9) Report of Independent Auditors Consolidated Balance Sheets as of December 31, 2007 and 2006 Consolidated Statements of Operations for years ended December 31, 2007 and 2006 Consolidated Statements of Changes in Shareholder's Equity and Comprehensive Income as of December 31, 2007, 2006 and 2005 Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005 Notes to Consolidated Financial Statements (b) Financial Statements of AUL American Individual Variable Annuity Unit Trust (9) A Message from the Chairman, President & CEO of American United Life Insurance Company(R) Report of Independent Registered Public Accounting Firm Statements of Net Assets as of December 31, 2007 Statements of Operations for the year ended December 31, 2007 Statements of Changes in Net Assets as of December 31, 2007 and 2006 Notes to Financial Statements (b) Exhibits 1. Resolution of the Executive Committee of American United Life Insurance Company(R) ("AUL") establishing AUL American Individual Unit Trust (1) 2. Not applicable 3. Underwriting Agreements 3.1 Distribution Agreement between American United Life Insurance Company(R) and OneAmerica Securities, Inc. (5) 3.2 Form of Selling Agreement (7) 4. Individual Variable Annuity Contract Forms 4.1 Flexible Premium Variable Annuity Contract (1) 4.2 One Year Flexible Premium Variable Annuity Contract (1) 4.1 Form of No Load Flexible Premium Variable Annuity Contract NLIVA99 (1) 4.2 Form of Enhanced Death Benefit Rider LR-162 (1) 4.3 Form of Guaranteed Minimum Income Benefit Rider LR-163 (2) 4.4 Form of Long Term Care Facility and Terminal Illness Benefit Rider LR-165 (1) 5. Individual Variable Annuity Enrollment Form (3) 6. Certificate of Incorporation and By-Laws of the Depositor 6.1 Articles of Merger between American Central Life Insurance Company and United Mutual Life Insurance Company (1) 6.2 Certification of the Indiana Secretary of State as to the filing of the Articles of Merger between American Central Life Insurance Company and United Mutual Life Insurance Company (1) 6.3 Second Amended and Restated Articles of Incorporation of American United Life Insurance Company(R) (5) 6.4 Second Amended and Restated Bylaws of American United Life Insurance Company(R) (5) 7. Not applicable 8. Form of Participation Agreements: 8.1 Form of Participation Agreement with Alger American Fund (2) 8.2 Form of Participation Agreement with American Century Variable Portfolios (2) 8.3 Form of Participation Agreement with Calvert Variable Series (2) 8.4 Form of Participation Agreement with Fidelity Variable Insurance Products Fund (2) 8.5 Form of Participation Agreement with Fidelity Variable Insurance Products Fund II (2) 8.6 Form of Participation Agreement with Janus Aspen Series (2) 8.7 Form of Participation Agreement with PBHG Funds, Inc. (2) 8.8 Form of Participation Agreement with Safeco Resource Series Trust (2) 8.9 Form of Participation Agreement with T. Rowe Price Equity Series, Inc. (2) 8.10 Form of Participation Agreement with INVESCO Variable Investment Funds, Inc. (3) 8.11 Form of Amendment to the Participation Agreement with INVESCO Variable Investment Funds, Inc. (4) 8.12 Form of Participation Agreement with Neuberger Berman (4) 8.13 Form of Participation Agreement between American United Life Insurance Company(R) and AIM Variable Insurance Funds (5) 8.14 Form of Participation Agreement between American United Life Insurance Company(R) and Dreyfus Investment Portfolios and Dreyfus Variable Investment Fund (5) 8.15 Form of Participation Agreement between AIM Variable Insurance Funds and American United Life Insurance Company(R) (6) 8.16 Form of Participation Agreement between Pioneer Funds Distributor, Inc. and American United Life Insurance Company(R) (6) 8.17 Form of Amendment to Schedule A of Participation Agreement between American United Life Insurance Company(R) and T. Rowe Price Equity Series, Inc. (6) 8.18 Form of Addendum to the Account Services Agreement between American United Life Insurance Company(R) and Thornburg Investment Management, Inc. (6) 8.19 Form of Participation Agreement between American United Life Insurance Company(R) and the Timothy Plan (6) 8.20 Form of Participation Agreement between American United Life Insurance Company(R) and Vanguard Variable Insurance Fund (6) 8.21 Form of Participation Agreement between American United Life Insurance Company, Columbia Funds Variable Insurance Trust, Columbia Management Advisors, LLC and Columbia Management Distributors (9) 8.22 Form of Participation Agreement between American United Life Insurance Company, Royce Captial Fund and Royce Fund Services, Inc.(9) 8.23 Form of Participation Agreement between American United Life Insurance Company,Franklin Templeton Variable Insurance Products Trust and Franklin/Templeton Distributors, Inc. (9) 8.24 Form of Participation Agreement between American United Life Insurance Company(R) and AllianceBernstien (9) 9. Opinion and Consent of Associate General Counsel of AUL as to the legality of the Contracts being registered (2) 10. Miscellaneous Consents 10.1 Consent of Independent Accountants (9) 10.2 Consent of Dechert Price & Rhoads (2) 10.3 Powers of Attorney (9) 10.4 Rule 483 Certified Resolution (9) 11. Not applicable 12. Not applicable -------------------------------------------------------------------------------- (1) Filed with the Registrant's Registration Statement on December 31, 1998 (2) Filed with the Registrant's Pre-Effective Amendment No. 1 on April 1, 1999 (3) Filed with the Registrant's Post-Effective Amendment No. 3 to the Registration Statement on August 28, 2001 (4) Filed with the Registrant's Post-Effective Amendment No. 4 to the Registration Statement on April 30, 2002 (5) Filed with the Registrant's Post-Effective Amendment No. 6 to the Registration Statement on April 28, 2004 (6) Filed with the Registrant's Post-Effective Amendment No. 7 to the Registration Statement on April 29, 2005 (7) Filed with the Registrant's Post-Effective Amendment No. 8 to the Registration Statement on April 28, 2006 (8) Filed with the Registrant's Post-Effective Amendment No. 9 to the Registration Statement on May 1, 2007 (9) Filed with the Registrant's Post-Effective Amendment No. 10 to the Registration Statement on May 1, 2008 Item 25. Directors and Officers of AUL Name and Address Positions and Offices with AUL ---------------- ------------------------------ J. Scott Davison* Chief Financial Officer, AUL (6/04 - present); Senior Vice President, Strategic Planning and Corporate Development (7/02 -6/04); Director, AUL (7/02 - present) Vice President, Corporate Planning (1/00 - 7/02) Constance E. Lund* Senior Vice President, Corporate Finance (1/00 - present); Director, AUL, (12/00 - present); Vice President, Reporting and Research (1/99 - 1/00); Assistant Vice President, Reporting & Research (5/95 - 1/99) Dayton H. Molendorp* Chairman, AUL (2/2007 to Present); President and Chief Executive Officer, AUL (9/04 - present); Executive Vice President, AUL (2/03 - 9/04); Senior Vice President, Individual Division (9/99 - 2/03); Director, AUL, (12/00 - present); Vice President, Individual Division (11/98 - 9/99); Vice President, Marketing, Individual Division (6/92 - 9/98) Mark C. Roller* Senior Vice President, Human Resources & Corporate Support, (12/01 - present); Director, AUL (12/01 - present); Vice President Human Resources, (11/99 - 12/01); Vice President, Corporate Planning, (9/95 - 11/99) G. David Sapp* Senior Vice President, Investments (1/92 - present); Director, AUL (12/00 - present) Thomas M. Zurek* General Counsel & Secretary (8/02 - present); Director, AUL (8/02 - present) ---------------------------------------------- *One American Square, Indianapolis, Indiana 46282
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT AMERICAN UNITED LIFE INSURANCE COMPANY ("AUL") is a stock insurance company existing under the laws of the State of Indiana. It was originally incorporated as a fraternal society on November 7, 1877, under the laws of the federal government, and reincorporated as a mutual insurance company under the laws of the State of Indiana in 1933. On December 17, 2000, AUL converted from a mutual life insurance company to a stock life insurance company ultimately controlled by a mutual holding company, American United Mutual Insurance Holding Company. AMERICAN UNITED MUTUAL INSURANCE HOLDING COMPANY ("AUMIHC") is a mutual holding company created on December 17, 2000, under the laws of the state of Indiana. The rights of policyowners of American United Life Insurance Company, including the right to elect directors to the Board of Directors, reside with this entity, which must hold at least 51% of the voting stock of the stock holding company, OneAmerica Financial Partners, Inc. AUL AMERICAN INDIVIDUAL VARIABLE LIFE UNIT TRUST (File No. 811-8311), is a separate account of AUL, organized for the purpose of the sale of individual variable life insurance products. AUL REINSURANCE MANAGEMENT SERVICES, LLC ("RMS") is a limited liability company organized under the laws of Indiana on November 3, 1999. RMS is a reinsurance manager. Since divestiture of AUL's reinsurance division, all remaining reinsurance and AUL Long Term Care Solutions, Inc. was transferred to GE Employers Reinsurance Corporation on July 1, 2002. AUL has a 100% equity interest in AUL Reinsurance Management Services Canada, Ltd. FOUNTAIN SQUARE LIFE REINSURANCE COMPANY ("Fountain Square") was incorporated on December 31, 2002 and is a company domiciled in the Turks and Caicos, British West Indies whose business is the reinsurance of credit life and disability risks issued through its parent, Fifth-Third Banc Corp. The new entity is the successor of its predecessor, Fountain Square Insurance Company, by operation of law and possesses all of the rights and powers of its predecessor and is subject to all the restrictions, debts, liabilities, etc., of the former entity. AUL received 260 shares of preferred stock of Fountain Square, in exchange for 26,000 shares of preferred stock of Fountain Square Insurance Company. AUL owned the same percentage of the outstanding stock of Fountain Square as it owned in Fountain Square Insurance Company. The Fountain Square Insurance Company stock was valued at $96.16 per share and the Fountain Square stock is valued at $9,616.00 per share. On December 23, 2003, AUL invested $2,501,031.75 and received 260 shares of preferred stock in Fountain Square. As a result of the transaction, AUL has acquired a 20.6% equity interest in that company. OLD KENT FINANCIAL LIFE INSURANCE COMPANY ("Old Kent") is an Arizona domestic insurance company whose business is the reinsurance of credit life and disability risks issued through its parent, Fifth-Third Banc Corp. On August 16, 2001 AUL invested $2,500,000 and received 26,000 shares of preferred stock in Old Kent, until then a wholly-owned subsidiary of Fifth-Third Banc Corp. On September 25, 2007, Old Kent exercised a call option for all 26,000 shares of preferred stock to Old Kent for $2,500,000. As a result of the transaction, AUL no longer has any equity interest in that company. ONEAMERICA FINANCIAL PARTNERS, INC. ("OAFP") is the stock holding company which owns all of the shares of American United Life Insurance Company, formerly an Indiana mutual insurance company, which is now an Indiana stock insurance company. ONEAMERICA FUNDS, INC. (the "Fund") (File No. 811-5850) was incorporated under the laws of Maryland on July 26, 1989, and is an open-end management investment company under the Investment Company Act of 1940. It was established for the primary purpose of providing a funding vehicle for group and individual variable annuity contracts known as American Series Contracts. On May 1, 2002, the name of this corporation was changed. The prior name was AUL American Series Funds, Inc. As of December 31, 2007, there are 620 million authorized shares; currently, 612 million shares have been allocated and issued. AUL owns 0.00 percent of the Value portfolio, 0.00 percent of the Investment Grade Bond portfolio, 0.00 percent of the Asset Director portfolio, 66.8 percent of the Socially Responsive portfolio and 0.00 percent of the Money Market portfolio shares as of December 31, 2007. As a result of the transaction, the separate accounts of AUL have acquired a 99.86% equity interest in the fund. ONEAMERICA SECURITIES, INC. (broker-dealer No. 801-56819) is a wholly owned subsidiary of AUL and was incorporated on June 4, 1969, and acts as a broker-dealer of securities products. On January 1, 2002, the name of this corporation was changed. The prior name was AUL Equity Sales Corp. As of December 31, 2007, the total number of shares, all without par value, that the corporation is authorized to issue is 1,000 shares. As of December 31, 2007, 400 shares are issued and outstanding, all of which were purchased and are owned by AUL. As a result of the transaction, AUL has acquired a 100% equity interest in that company. PIONEER MUTUAL LIFE INSURANCE COMPANY A STOCK SUBSIDIARY OF AUMIHC ("Pioneer") is a North Dakota domestic insurance company whose principal business is the sale of life insurance policies. During calendar year 2001, Pioneer, pursuant to the authority of the North Dakota and Indiana Insurance Commissioners, and with the approval of its members, reorganized from a mutual insurance company to become part of AUMIHC. Effective January 1, 2002, Pioneer is wholly owned by OneAmerica, which is wholly owned by AUMIHC, and its former members are now voting members of AUMIHC. As a result of the transaction, AUL has acquired a 0% equity interest in that company. R. E. MOULTON, INC. ("RE Moulton") is a Massachusetts corporation operating as a managing general agent for employer stop-loss insurance policies issued to self-funded employee benefit plans. Effective October 1, 2003, OneAmerica purchased 100% of the outstanding stock of R.E. Moulton, Inc. for $27,400,000. As a result of this transaction, AUL has acquired a 0% equity interest in that company. REGISTRANT, AUL AMERICAN INDIVIDUAL VARIABLE ANNUITY UNIT TRUST (File No. 811-9193), AUL AMERICAN INDIVIDUAL UNIT TRUST (File No. 811-8536) and AUL AMERICAN UNIT TRUST (File No. 811-5929) are separate accounts of AUL, organized for the purpose of the sale of individual and group variable annuity contracts, respectively. THE STATE LIFE INSURANCE COMPANY ("State Life") is an Indiana domestic stock subsidiary of AUMIHC whose principal business is the sale of life insurance and long-term care insurance products. State Life became part of the insurance holding company system on September 23, 1994. During calendar year 2004, State Life, pursuant to the authority of the Indiana Insurance Commissioner and with the approval of its members, reorganized from a mutual insurance company to become a stock insurance subsidiary of AUMIHC. Effective December 30, 2004, State Life is wholly owned by OneAmerica, which is wholly owned by AUMIHC, and its former members are now voting members of AUMIHC. As a result of the transaction, AUL has acquired a 0% equity interest in that company. 3 Item 27. Number of Contractholders As of April 24, 2007, AUL has issued 16,609 Individual variable annuity contracts associated with the Registrant, 1,134 of which are the No Withdrawal Charge contracts (DirectPoint); 4,898 of which are the SelectPoint contracts; 9,284 of which are the StarPoint contracts; and, 1,293 were Voyage Protector contracts. Item 28. Indemnification Article IX, Section 1 of the Second Amended and Restated Articles of Incorporation of American United Life Insurance Company(R) provides as follows: (a) Coverage. The Corporation shall indemnify as a matter of right every person made a party to a proceeding because such person (an "Indemnitee") is or was: (i) a member of the Board of Directors of the Corporation, (ii) an officer of the Corporation, or (iii)while a director or officer of the Corporation, serving at the Corporation's request as a director, officer, partner, trustee, member, manager, employee, or agent of another foreign or domestic corporation, limited liability company, partnership, joint venture, trust, employee benefit plan, or other enterprise, whether for profit or not, Notwithstanding the foregoing, it must be determined in the specific case that indemnification of the Indemnitee is permissible in the circumstances because the Indemnitee has met the standard of conduct for indemnification specified in Indiana Code 27-1-7.5-8 (or any successor provision). The Corporation shall pay for or reimburse the reasonable expenses incurred by an Indemnitee in connection with any such proceeding in advance of final disposition thereof in accordance with the procedures and subject to the conditions specified in Indiana Code 27-1-7.5-10 (or any successor provision). The Corporation shall indemnify as a matter of right an Indemnitee who is wholly successful, on the merits or otherwise, in the defense of any such proceeding, against reasonable expenses incurred by the Indemnitee in connection with the proceeding without the requirement of a determination as set forth in the first sentence of this paragraph. (b) Determination. Upon demand by a person for indemnification or advancement of expenses, as the case may be, the Corporation shall expeditiously determine whether the person is entitled thereto in accordance with this Article and the procedures specified in Indiana Code 27-1-7.5-12 (or any successor provision). (c) Effective Date. The indemnification provided under this Article shall apply to any proceeding arising from acts or omissions occurring before or after the adoption of this Article. Item 29. Principal Underwriters a. Other Activity. In additional to Registrant, OneAmerica Securities, Inc. acts as the principal underwriter for policies offered by AUL through AUL American Individual Unit Trust (File No. 811-08536), AUL American Unit Trust (File No. 811-05929) and AUL American Individual Variable Life Unit Trust (File No. 811-08311). b. Management. The directors and principal officers of OneAmerica Securities, Inc. are as follows: Name and Principal Positions and Offices Business Address* with OneAmerica Securities, Inc. ------------------- -------------------------------- George H. Brandt Vice President& Chief Marketing Officer James Crampton Tax Director Richard M. Ellery Secretary Nicholas A. Filing Chairman of the Board, President & Director Constance E. Lund Treasurer, Acting Financial Operations Principal & Director Mark A. Wilkerson Director William F. Yoerger Director John W. Zeigler Vice President, Insurance Agency Registrations ------------------------------ * The Principal business address of all of the persons listed is One American Square, Indianapolis, Indiana 46282
(c) Not applicable Item 30. Location of Accounts and Records The accounts, books and other documents required to be maintained by Registrant pursuant to Section 31(a) of the investment Company Act of 1940 and the rules under that section will be maintained at One American Square, Indianapolis, IN 46282. Item 31. Management Services There are no management-related service contracts not discussed in Part A or Part B. 4 Item 32. Undertakings The registrant hereby undertakes: (a) to file a post-effective amendment to this registration statement as frequently as is necessary to ensure that the audited financial statements in this registration statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted, unless otherwise permitted. (b) to include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a Statement of Additional Information. (c) to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request. Additional Representations: (a) The Registrant and its Depositor are relying upon American Council of Life Insurance, SEC No-Action Letter, SEC Ref. No. IP-6-88 (November 28, 1988) with respect to annuity contract offered as funding vehicles for retirement plans meeting the requirements of Section 403(b) of the Internal Revenue Code, and the provisions of paragraphs (1) - (4) of this letter have been complied with. (b) The Registrant represents that the aggregate fees and charges deducted under the variable annuity contracts are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the Insurance Company. 5 SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this post effective amendment to the Registration Statement and has caused this post-effective amendment to the Registration Statement to be signed on its behalf, in the City of Indianapolis, and the State of Indiana on this 1st day of May, 2008. AUL AMERICAN INDIVIDUAL VARIABLE LIFE UNIT TRUST (Registrant) By: American United Life Insurance Company By: ____________________________________________ Name: Dayton H. Molendorp* Title: Chairman, President & CEO AMERICAN UNITED LIFE INSURANCE COMPANY(R) (Depositor) By: ____________________________________________ Name: Dayton H. Molendorp* Title: Chairman, President & CEO * By: /s/ Richard M. Ellery ______________________ Richard M. Ellery as attorney-in-fact Date: As required by the Securities Act of 1933, this post-effective amendment to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- _______________________________ Director, Chief May 1, 2008 J. Scott Davison* Financial Officer _______________________________ Director May 1, 2008 Constance E. Lund* _______________________________ Director May 1, 2008 Dayton H. Molendorp* _______________________________ Director May 1, 2008 Mark C. Roller* _______________________________ Director May 1, 2008 G. David Sapp* _______________________________ Director May 1, 2008 Thomas M. Zurek* /s/ Richard M. Ellery ___________________________________________ *By: Richard M. Ellery as Attorney-in-fact Date: May 1, 2008 EXHIBIT LIST Exhibit Exhibit Number in Form N-4, Item 24(b) Name of Exhibit ---------------- --------------- 8.21 Form of Participation Agreement between American United Life Insurance Company, Columbia Funds Variable Insurance Trust, Columbia Management Advisors, LLC and Columbia Management Distributors 8.22 Form of Participation Agreement between American United Life Insurance Company, Royce Captial Fund and Royce Fund Services, Inc.(9) 8.23 Form of Participation Agreement between American United Life Insurance Company,Franklin Templeton Variable Insurance Products Trust and Franklin/Templeton Distributors, Inc. (9) 8.24 Form of Participation Agreement between American United Life Insurance Company(R) and AllianceBernstien 10.1 Consent of Independent Auditors 10.3 Powers of Attorney 10.4 Rule 483 Certified Resolution