497 1 e31337_497.txt 497 Jefferson National -------------------------------------------------------------------------------- Advantage Plus The Fixed and Variable Annuity issued by JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H AND JEFFERSON NATIONAL LIFE INSURANCE COMPANY This prospectus describes the Advantage Plus individual flexible premium deferred annuity Contract, fixed and variable accounts (Contract) offered by Jefferson National Life Insurance Company (We, Us, Our). This Contract provides for the accumulation of Contract Values and subsequent Annuity Payments on a fixed basis, a variable basis or a combination of both. We no longer issue Contracts to non-natural owners. The Contract has a Purchase Payment Credit feature. Each time you make a Purchase Payment, We will credit an additional 4% to that payment. The expenses for this Contract are higher than other annuity Contracts We offer that do not have a Purchase Payment Credit (also referred to as a bonus). The benefit of the Purchase Payment Credit may be more than offset by the higher expenses, relative to other annuity Contracts We offer, attributable to the Purchase Payment Credit. The Contract has a variety of Investment Options, which include a Fixed Account and several Sub-accounts that invest in the Investment Portfolios listed below. You can put your money in the Fixed Account and/or the Sub-accounts. Money you put in a Sub-account is invested exclusively in a single Investment Portfolio. Your investments in the Investment Portfolios are not guaranteed. You could lose your money. The Fixed Account offers interest rates which are guaranteed by Jefferson National not to be less than the minimum rate prescribed by applicable state law. In certain states, your Contract may not contain a Fixed Account option. A I M Variable Insurance Funds Managed by A I M Advisors, Inc. o AIM V.I. Basic Value - Series II shares o AIM V.I. Core Equity - Series I shares o AIM V.I. Financial Services - Series I shares o AIM V.I. Global Health Care - Series I shares o AIM V.I. Global Real Estate Fund - Series I shares o AIM V.I. High Yield - Series I shares o AIM V.I. Mid Cap Core Equity - Series II shares o AIM V.I. Technology - Series I shares The Alger American Fund Managed by Fred Alger Management, Inc. o Alger American Growth - Class O (name changing to Alger American Large Cap Growth 7/1/2008) o Alger American Capital Appreciation - Class O o Alger American MidCap Growth P- Class O o Alger American Small Cap Growth -Class O (closed to new investors) AllianceBernstein Variable Products Series Fund, Inc. Managed by AllianceBernstein L.P. o AllianceBernstein Growth and Income American Century Variable Portfolios, Inc. Managed by American Century Investment Management, Inc. o American Century VP Balanced (Class I) o American Century VP Income & Growth (Class I) o American Century VP Inflation Protection (Class II) o American Century VP Value (Class I) Managed by American Century Global Investment Management, Inc. o American Century VP International (Class I) The DireXion Insurance Trust Managed by Rafferty Asset Management, LLC o DireXion Dynamic VP HY Bond The Dreyfus Investment Portfolios (Service Shares) Managed by The Dreyfus Corporation o Dreyfus IP - Small Cap Stock Index o Dreyfus Socially Responsible Growth (initial shares) Dreyfus Stock Index Fund, Inc. (Initial Shares) Managed by The Dreyfus Corporation and Mellon Equity Associates. Dreyfus Variable Investment Fund ("Dreyfus VIF") (Initial Shares) Managed by The Dreyfus Corporation o Dreyfus VIF--International Value (Initial Shares) Federated Insurance Series Managed by Federated Investment Management Company o Federated Capital Income II o Federated High Income Bond II (Primary Shares) Managed by Federated Global Investment Management Corp. o Federated International Equity II Janus Aspen Series Managed by Janus Capital Management LLC o Janus Aspen Growth and Income (Institutional Shares) o Janus Aspen International Growth (Institutional Shares) o Janus Aspen Large Cap Growth (Institutional Shares) o Janus Aspen Mid Cap Growth (Institutional Shares) o Janus Aspen Worldwide Growth (Institutional Shares) Lazard Retirement Series, Inc. Managed by Lazard Asset Management LLC o Lazard Retirement Emerging Markets Equity o Lazard Retirement International Equity -------------------------------------------------------------------------------- The Securities and Exchange Commission has not approved or disapproved these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense 1 -------------------------------------------------------------------------------- o Lazard Retirement U.S. Small Cap Equity o Lazard Retirement US Strategic Equity Legg Mason Partners Variable Equity Trust Subadvised by ClearBridge Advisors, LLC o Legg Mason Partners Variable Aggressive Growth o Legg Mason Partners Variable Capital and Income (Formerly Legg Mason Partners Variable Total Return Portfolio) o Legg Mason Partners Variable Fundamental Value (Formerly Legg Mason Partners Variable All Cap Portfolio) o Legg Mason Partners Variable Large Cap Growth Legg Mason Partners Variable Income Trust Subadvised by West Asset Management Company o Legg Mason Partners Variable Global High Yield Bond o Legg Mason Partners Variable Strategic Bond Lord Abbett Series Fund, Inc. Managed by Lord, Abbett & Co. LLC o Lord Abbett Series Fund, Inc. - America's Value o Lord Abbett Series Fund, Inc. - Growth and Income Neuberger Berman Advisers Management Trust ("Neuberger Berman AMT") Managed by Neuberger Berman Management, Inc. o Lehman Brothers High Income o Lehman Brothers Short Duration Bond o Neuberger Berman AMT Small Cap Growth (Class S) o Neuberger Berman AMT Mid-Cap Growth o Neuberger Berman AMT Partners o Neuberger Berman AMT Regency o Neuberger Berman AMT Socially Responsive Northern Lights Variable Trust Managed by JNF Advisors, Inc. o JNF Chicago Equity Partners Balanced o JNF Chicago Equity Partners Equity o JNF Loomis Sayles Bond o JNF Money Market PIMCO Variable Insurance Trust Managed by Pacific Investment Management Company LLC o PIMCO VIT Real Return (Administrative Class) o PIMCO VIT Short-Term (Administrative Class) o PIMCO VIT Total Return (Administrative Class) Pioneer Variable Contracts Trust (Class II Shares) Managed by Pioneer Investment Management, Inc. o Pioneer Equity Income VCT o Pioneer Fund VCT o Pioneer High Yield VCT o Pioneer International Value VCT o Pioneer Mid Cap Value VCT Royce Capital Fund Managed by Royce & Associates, LLC o Royce Micro-Cap o Royce Small-Cap Rydex Variable Trust Managed by Rydex Investments o Rydex Banking o Rydex Basic Materials o Rydex Biotechnology o Rydex Commodities Strategy o Rydex Consumer Products o Rydex Dow 2x Strategy o Rydex NASDAQ-100(R) 2x Strategy o Rydex S&P 500 2x Strategy o Rydex Strengthening Dollar 2x Strategy o Rydex Weakening Dollar 2x Strategy o Rydex Electronics o Rydex Energy o Rydex Energy Services o Rydex Europe 1.25x Stratetgy o Rydex Financial Services o Rydex Government Long Bond 1.2x Strategy o Rydex Health Care o Rydex Internet o Rydex Inverse Dow 2x Strategy o Rydex Inverse Government Long Bond Strategy o Rydex Inverse Mid-Cap Strategy o Rydex Inverse NASDAQ-100(R) Strategy o Rydex Inverse Russell 2000(R) Strategy o Rydex Inverse S&P 500 Strategy o Rydex Japan 1.25x Strategy o Rydex Large-Cap Growth o Rydex Large-Cap Value o Rydex Leisure o Rydex Mid Cap 1.5x Strategy o Rydex Mid-Cap Growth o Rydex Nova o Rydex NASDAQ-100(R) Strategy o Rydex Precious Metals o Rydex Real Estate o Rydex Retailing o Rydex Russell 2000 1.5x Strategy o Rydex Sector Rotation o Rydex Small-Cap Growth o Rydex Small-Cap Value o Rydex Technology o Rydex Telecommunications o Rydex Transportation o Rydex U.S. Government Money Market o Rydex Utilities o CLS AdvisorOne Amerigo o CLS AdvisorOne Clermont Seligman Portfolios, Inc. Managed by J. & W. Seligman & Co. Incorporated o Seligman Communications and Information o Seligman Global Technology Third Avenue Variable Series Trust Managed by Third Avenue Management LLC o Third Avenue Value Van Eck Worldwide Insurance Trust Managed by Van Eck Associates Corporation o Van Eck Worldwide Absolute Return o Van Eck Worldwide Bond o Van Eck Worldwide Emerging Markets o Van Eck Worldwide Hard Assets o Van Eck Worldwide Real Estate Wells Fargo Advantage Funds Managed by Wells Fargo Funds Management, LLC 2 -------------------------------------------------------------------------------- o Wells Fargo Advantage VT Discovery o Wells Fargo Advantage VT Opportunity Please read this prospectus before investing. You should keep it for future reference. It contains important information about the Contract. To learn more about the Contract, you can obtain a copy of Our Statement of Additional Information (SAI) dated May 1, 2008. The SAI has been filed with the Securities and Exchange Commission (SEC) and is legally a part of this prospectus. The SEC has a Web site (http:/www.sec.gov) that contains the SAI, material incorporated by reference, and other information regarding companies that file electronically with the SEC. The SAI's Table of Contents is at the end of this prospectus. For a free copy of the SAI, call Us at (866) 667-0561 or write Us at Our administrative office: o Address for correspondence sent via U.S. Mail: P.O. Box 36840, Louisville, Kentucky 40233; o Address for correspondence sent via courier or overnight mail: 9920 Corporate Campus Drive, Suite 1000, Louisville, KY 40223. The Contracts: o are not bank deposits o are not federally insured o are not endorsed by any bank or government agency o are not guaranteed and may be subject to loss of principal May 1, 2008 3 -------------------------------------------------------------------------------- Table of Contents Page Definitions of Special Terms .............................................. 6 Highlights ................................................................ 8 Fee Table ................................................................. 9 Condensed Financial Information ........................................... 12 The Company ............................................................... 13 The Advantage Plus Annuity Contract ....................................... 13 Free Look .............................................................. 13 Ownership .............................................................. 13 Beneficiary ............................................................ 13 Assignment ............................................................. 13 Requesting Transaction or Obtaining Information About Your Contract .... 13 Purchase .................................................................. 14 Purchase Payments ...................................................... 14 Purchase Payment Credit Feature ........................................ 14 Allocation of Purchase Payments ........................................ 14 Investment Options ....................................................... 15 Investment Portfolios .................................................. 15 Administrative, Marketing and Support Services Fees .................... 15 The Fixed Account ...................................................... 15 The General Account .................................................... 16 Voting Rights .......................................................... 16 Substitution ........................................................... 16 Transfers .............................................................. 16 Excessive Trading Limits ............................................... 16 Dollar Cost Averaging Program .......................................... 18 Rebalancing Program .................................................... 18 Advisory Fee Withdrawals ............................................... 18 Interest Sweep Program ................................................. 18 Expenses .................................................................. 18 Insurance Charges ...................................................... 18 Contract Maintenance Charge ............................................ 19 Contingent Deferred Sales Charge ....................................... 19 Waiver of Contingent Deferred Sales Charge ............................. 19 Reduction or Elimination of Contingent Deferred Sales Charge ........... 20 Investment Portfolio Expenses .......................................... 20 Transfer Fee ........................................................... 20 Premium Taxes .......................................................... 20 Income Taxes ........................................................... 20 Contract Value ............................................................ 20 Accumulation Units ..................................................... 20 Access to Your Money ...................................................... 20 Systematic Withdrawal Program .......................................... 21 Suspension of Payments or Transfers .................................... 21 Death Benefit ............................................................. 21 Upon Your Death During the Accumulation Period ......................... 21 Standard Death Benefit Amount During the Accumulation Period ........... 21 Optional Guaranteed Minimum Death Benefit .............................. 21 Payment of the Death Benefit During the Accumulation Period ............ 22 Death of Contract Owner During the Annuity Period ...................... 22 4 -------------------------------------------------------------------------------- Death of Annuitant ..................................................... 22 Annuity Payments (The Annuity Period) ..................................... 22 Annuity Payment Amount ................................................. 22 Optional Guaranteed Minimum Income Benefit (GMIB) ...................... 23 Annuity Options ........................................................ 23 Taxes ..................................................................... 24 Annuity Contracts in General ........................................... 24 Tax Status of the Contracts ............................................ 24 Taxation of Non-Qualified Contracts .................................... 24 Taxation of Qualified Contracts ........................................ 25 Possible Tax Law Changes ............................................... 25 Other Information ......................................................... 25 Legal Proceedings ...................................................... 25 The Separate Account ................................................... 26 Distributor ............................................................ 26 Financial Statements ................................................... 26 Independent Registered Public Accounting Firm .......................... 26 Appendix A--More Information About the Investment Portfolios .............. 27 Appendix B--Condensed Financial Information ............................... 38 Privacy Policy ............................................................ 58 Table of Contents of the Statement of Additional Information .............. 59 5 -------------------------------------------------------------------------------- Definitions of Special Terms Because of the complex nature of the Contract, We have used certain words or terms in this prospectus, which may need additional explanation. We have identified the following as some of these words or terms. ACCUMULATION PERIOD: The period during which you invest money in your Contract. ACCUMULATION UNIT: A measurement We use to calculate the value of the variable portion of your Contract during the Accumulation Period. ADJUSTED PARTIAL WITHDRAWAL: Adjusted Partial Withdrawal means the amount of the partial withdrawal (including the applicable Contingent Deferred Sales Charges and premium taxes); multiplied by the Death Benefit Amount just before the partial withdrawal; and divided by the Contract Value just before the partial withdrawal. ANNUITANT(S): The natural person(s) on whose life (lives), We base Annuity Payments. On or after the Annuity Date, the Annuitant shall also include any joint Annuitant. In the event of joint Annuitants, the lives of both Annuitants are used to determine Annuity Payments. ANNUITY DATE: The date on which Annuity Payments are to begin, as selected by you, or as required by the Contract. ANNUITY OPTIONS: Income plans which can be elected to provide periodic Annuity Payments beginning on the Annuity Date. ANNUITY PAYMENTS: Periodic income payments provided under the terms of one of the Annuity Options. ANNUITY PERIOD: The period during which We make income payments to you. ANNUITY UNIT: A measurement We use to calculate the amount of Annuity Payments you receive from the variable portion of your Contract during the Income Phase. BENEFICIARY: The person designated to receive any benefits under the Contract if you, or under certain circumstances, the Annuitant dies. BUSINESS DAY: Generally, any day on which the New York Stock Exchange ("NYSE") is open for trading. Our Business Day ends at 4:00 PM Eastern Time or the closing of regular trading on the NYSE, if earlier. Some of the Investment Options may impose earlier deadlines for trading. These deadlines are described in further detail under the heading "Purchase - Allocation of Purchase Payments". COMPANY: Jefferson National Life Insurance Company, also referred to as Jefferson National, We, Us, and Our. CONTINGENT DEFERRED SALES CHARGE: The Contingent Deferred Sales Charge is the charge that may be applied if Purchase Payments are withdrawn from the Contract during a certain period of time after they are made. CONTRACT: The Advantage Plus individual flexible premium deferred annuity contract, which provides fixed and variable Investment Options offered by the Company. CONTRACT ANNIVERSARY: The anniversary of the Business Day you purchased the Contract. CONTRACT VALUE: Your Contract Value is the sum of amounts held under your Contract in the Sub-accounts of the Separate Account and the Fixed Account. The Contract Value may not be the value available for withdrawal, surrender or annuitization. DEATH BENEFIT AMOUNT: The Death Benefit Amount is amount payable to the Beneficiary upon the death of the Owner or for a Contract owned by a non-natural person the death of the Annuitant. The Death Benefit Amount includes any amounts payable in excess of the Contract Value under the terms of the standard death benefit provision or the optional Guaranteed Minimum Death Benefit Rider. FIXED ACCOUNT: The Fixed Account is an Investment Option which invests in the general account of the Company and offers an interest rate that is guaranteed by Us to be no less than the minimum rate prescribed by the applicable state law. FREE LOOK PERIOD: The Free Look Period is the period of time within which you may cancel your Contract without incurring a Contingent Deferred Sales Charge. This period of time is generally 10 Business Days from receipt, but certain states require a longer period. INSURANCE CHARGES: The Insurance Charges compensate Us for assuming certain insurance risks. These charges include the Separate Account Annual Expenses, the charges for the optional Guaranteed Minimum Death Benefit, and charges for the optional Guaranteed Minimum Income Benefit. These charges are included in our calculation of the value of the Accumulation Units and the Annuity Units of the Sub-accounts. INVESTMENT ALLOCATIONS OF RECORD: The Investment Allocations of Record specify what percentage of each Purchase Payment is directed to the Fixed Account (if available) and the Sub-accounts you select. You initially establish your initial Investment Allocations of Record at the time you apply for the Contract. The Investment Allocations of Record can be changed by notifying Us in accordance with Our procedures. Any change in Investment Allocations of Record will apply to Purchase Payments received after the change of Investment Allocations of Record is processed. INVESTMENT ADVISOR: A registered investment adviser, an investment adviser who is exempt from registration with the Securities and Exchange Commission or other adviser selected by You to provide asset allocation and investment advisory services. INVESTMENT OPTIONS: The investment choices available to Owners. These choices include the Sub-accounts of the Separate Account and the Fixed Account. INVESTMENT PORTFOLIOS: The variable Investment Options available under the contract. Each Sub-account has its own investment objective and is invested in the underlying Investment Portfolio. JOINT OWNER: The individual who co-owns the Contract with another person. Joint Owners must be spouses (except in those states where this restriction is not allowed). NON-QUALIFIED (CONTRACT): A Contract purchased with after-tax dollars. In general, these Contracts are not issued in conjunction with any pension plan, specially sponsored program or individual retirement account ("IRA"). 6 -------------------------------------------------------------------------------- OWNER: You, the purchaser of the Contract are the Owner. PURCHASE PAYMENT: The money you give Us to buy the Contract, as well as any additional money you give Us to invest in the Contract after you own it. PURCHASE PAYMENT CREDIT: The Purchase Payment Credit is an additional amount added to your Contract. We contribute the Purchase Payment Credit on each Purchase Payment added to the Contract. Purchase Payment Credits are considered earnings under the Contract. QUALIFIED (CONTRACT): A Contract purchased with pretax dollars. These Contracts are generally purchased under a pension plan, specially sponsored program or IRA. REGISTERED REPRESENTATIVE: A person, appointed by Us, who is licensed by the Financial Industry Regulatory Authority ("FINRA") to sell variable products and is sponsored by a FINRA member broker/dealer that is party to a selling group agreement with the Company. SEPARATE ACCOUNT: Jefferson National Life Annuity Account H of Jefferson National Life Insurance Company, which invests in the Investment Portfolios. SUB-ACCOUNT: A segment within the Separate Account which invests in a single Investment Portfolio. TAX DEFERRAL: Benefit provided by the Contract under which earnings and appreciation on the Purchase Payments in your Contract are not taxed until you take them out of the Contract either in the form of a withdrawal, income payments or the payment of a death benefit. WEBSITE: www.jeffnat.com , which is the Website of Jefferson National Life Insurance Company. You may obtain information about your Contract and request certain transactions through the Website. 7 -------------------------------------------------------------------------------- Highlights The variable annuity Contract that We are offering is a contract between you (the Owner) and Us (Company). The Contract provides a way for you to invest on a tax-deferred basis in the Sub-accounts of Jefferson National Life Annuity Account H (Separate Account) and the Fixed Account. The Fixed Account may not be available in your state. The Contract is intended to be used to accumulate money for retirement or other long-term tax-deferred investment purposes. We no longer issue Contracts to non-natural owners. The Contract has a Purchase Payment Credit feature under which We will credit an additional 4% to each Purchase Payment (Purchase Payment Credit or bonus) you make. We call this the bonus feature. The Contract includes a standard minimum death benefit that is guaranteed by Us. This benefit is described in detail under the heading "Standard Death Benefit During the Accumulation Period." The Contract also offers a Guaranteed Minimum Death Benefit option. This benefit is guaranteed by Us. There is an additional charge for this option. This option may not be available in your state. This benefit is described in detail under the heading "Optional Guaranteed Minimum Death Benefit." We offer, for an additional charge, a Guaranteed Minimum Income Benefit option. If you elect the Guaranteed Minimum Income Benefit option, you must also elect the Guaranteed Minimum Death Benefit option. If you elect this option, We guarantee that a minimum dollar amount will be applied to your Annuity Option, irrespective of your Contract Value, on your Annuity Date. This optional benefit may not be available in your state. This benefit is described in more detail under the heading "Optional Guaranteed Minimum Income Benefit." All deferred annuity Contracts, like the Contract, have two periods: the Accumulation Period and the Annuity Period. During the Accumulation Period, any earnings accumulate on a tax-deferred basis and are taxed as ordinary income when you make a withdrawal. If you make a withdrawal during the Accumulation Period, We may assess a Contingent Deferred Sales Charge (CDSC) of up to 8% of each Purchase Payment withdrawn depending on when the withdrawal is made. The Annuity Period occurs when you begin receiving regular Annuity Payments from your Contract. You can choose to receive Annuity Payments on a variable basis, on a fixed basis or a combination of both. If you choose variable Annuity Payments, the amount of the variable Annuity Payments will depend upon the investment performance of the Investment Portfolios you select for the Annuity Period. If you choose fixed Annuity Payments, the amount of the fixed Annuity Payments are constant for the entire Annuity Period. FREE LOOK. If you cancel the Contract within 10 Business Days after receiving it (or whatever longer time period is required in your state), We will cancel the Contract without assessing a Contingent Deferred Sales Charge. We deem this period as ending 15 days after we mail a Contract. Our Insurance charges, the charges for the Guaranteed Minimum Death Benefit and the Guaranteed Minimum Income Benefit will have been deducted. You will receive whatever your Contract is worth on the Business Day We receive your request for cancellation (less the Purchase Payment Credit). This may be more or less than your original payment. We will return your original payment if required by law. TAX PENALTY. In general, your earnings are not taxed until you take money out of your Contract. If you are younger than age 59 1/2 when you take money out, you may be charged a 10% federal tax penalty on the amount treated as income. For Non-Qualified Contracts, Annuity Payments during the Annuity Period are considered partly a return of your original investment. Therefore, the part of each Annuity Payment that is a return of your investment is not taxable as income. Once you have recovered the full amount of your investment, however, the entire amount of your Annuity Payment will be taxable income to you. For Qualified Contracts, the full Annuity Payment is taxable. INQUIRIES. If you need more information, please visit Our Website (www.jeffnat.com) or contact Us at: Jefferson National Life Insurance Company P.O. Box 36840 Louisville, Kentucky 40233 (866) 667-0561 8 -------------------------------------------------------------------------------- Fee Table The following tables describe the fees and expenses that you will pay when buying, owning and surrendering the Contract. The first table describes the fees and expenses that you will pay at the time you buy the Contract, surrender the Contract, or transfer amounts between Investment Options. State premium taxes may also be deducted. Owner Transaction Expenses Contingent Deferred Sales Charge (as a percentage of Purchase Payments withdrawn) (1)........................... 8% Transfer Fee(2) ........................................... You may make a transfer once very 30 days without charge. If you transfer more often, We may charge a fee of $25 per transfer.
The next table describes the fees and expenses that you will pay periodically during the time that you own the Contract, not including the Investment Portfolios' fees and expenses.
Current Charge Maximum Charge Contract Maintenance Charge(3) ........................................... $30 per Contract per year $60 per Contract per year Separate Account Annual Expenses (as a percentage of average Separate Account Contract Value) Mortality and Expense Risk and Administrative Charges .................... 1.40% 1.65% Total Separate Account Annual Expenses (without optional riders) ................................................ 1.40% 1.65% Optional Guaranteed Minimum Death Benefit Rider (as a percentage of average Separate Account Contract Value) ............. 0.30% 0.45% Optional Guaranteed Minimum Death Benefit and Optional Guaranteed Minimum Income Benefit Riders (as a percentage of average Separate Account Contract Value)(4) .......... 0.60% 0.65% Maximum Total Separate Account Annual Expenses (assuming Optional Guaranteed Minimum Death Benefit and Optional Guaranteed Minimum Income Benefit riders) ................................ 2.00% 2.30%
9 -------------------------------------------------------------------------------- The next item shows the minimum and maximum total operating expenses charged by the Investment Portfolios that you may pay periodically during the time that you own the Contract. More detail concerning each Investment Portfolio's fees and expenses is contained in the prospectus for each Investment Portfolio.
Minimum Maximum Total Investment Portfolio Operating Expenses (expenses that are deducted from Investment Portfolio assets, including management fees, Gross: 0.27% Gross: 5.50% distribution and/or service (12b-1) fees, and other expenses)(5) .................................. Net: 0.27% Net: 3.83%
(1) The Contingent Deferred Sales Charge, which applies separately to each Purchase Payment, decreases to zero over time in accordance with the following schedule:
Number of Contract years from Contingent Deferred Receipt of Purchase Payment Sales Charge Percent 0-1 ............................................................................................... 8% 2 ................................................................................................. 8% 3 ................................................................................................. 8% 4 ................................................................................................. 8% 5 ................................................................................................. 7% 6 ................................................................................................. 6% 7 ................................................................................................. 5% 8 ................................................................................................. 3% 9 ................................................................................................. 1% 10 and more ....................................................................................... 0%
Subject to any applicable limitations, each Contract year, you can take money out of your Contract without a Contingent Deferred Sales Charge. The amount of money you can withdraw without a Contingent Deferred Sales Charge is the greater of: (i) 10% of the value of your Contract (on a non-cumulative basis)(excluding payments made by Us to Your Investment Adviser); (ii) the IRS minimum distribution requirement for your Contract if issued in connection with certain Individual Retirement Annuities or Qualified Plans; or (iii) the total of your Purchase Payments that have been in the Contract more than 9 complete Contract years. (2) Transfers made for the Dollar Cost Averaging Program, Interest Sweep Program or Rebalancing Program do not count toward the one transfer per 30-day limit. All reallocations made on the same Business Day involving the same Investment Portfolio count as one transfer. Certain restrictions apply as further described under the heading "Transfers - Excessive Trading Limits" and "Transfers - Short Term Trading Risk". (3) Jefferson National will not charge the Contract Maintenance charge if the value of your Contract is $50,000 or more. We reserve the right to reduce or waive the fee. (4) You can purchase the Guaranteed Minimum Income Benefit rider only if you purchase the Guaranteed Minimum Death Benefit rider. (5) The minimum and maximum total Investment Portfolio Operating Expenses may be affected by voluntary or contractual waivers or expense reimbursements. These waivers and expense reimbursements will reduce the actual Total Portfolio Operating Expenses for the affected Investment Portfolios. Please refer to the underlying Investment Portfolio prospectuses for details about the specific expenses of each Investment Portfolio. The net numbers displayed above reflect the minimum and maximum charges after contractual waivers that have been committed through at least April 30, 2009. The gross numbers reflect the minimum and maximum charges without giving effect to the agreed upon waivers. 10 -------------------------------------------------------------------------------- Examples of Fees and Expenses This Example is intended to help you compare the cost of investing in the Contract with the cost of investing in other variable annuity contracts. These costs include owner transaction expenses, contract fees, Separate Account Annual Expenses, and Investment Portfolio fees and expenses. The Example assumes that you invest $10,000 in the Contract for the time periods indicated. The Example also assumes that your investment has a 5% return each year. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: (1) If you surrender your Contract at the end of the applicable time period and have not purchased any riders: Assuming Maximum Investment 1 year 3 years 5 years 10 years Portfolio Operating Expenses...................................... $1382.02 $2959.15 $4355.93 $7067.27 Assuming Minimum Investment 1 year 3 years 5 years 10 years Portfolio Operating Expenses...................................... $1008.82 $1548.36 $2022.74 $2933.49
(2) If you annuitize at the end of the applicable time period and have not purchased any riders (except under certain circumstances): Assuming Maximum Investment 1 year 3 years 5 years 10 years Portfolio Operating Expenses...................................... $1382.02 $2959.15 $3692.34 $7067.27 Assuming Minimum Investment 1 year 3 years 5 years 10 years Portfolio Operating Expenses...................................... $1008.82 $1548.36 $1377.03 $2933.49
(3) If you do not surrender your Contract and have not purchased any riders: Assuming Maximum Investment 1 year 3 years 5 years 10 years Portfolio Operating Expenses...................................... $632.32 $2204.98 $3692.34 $7067.27 Assuming Minimum Investment 1 year 3 years 5 years 10 years Portfolio Operating Expenses...................................... $262.08 $805.90 $1377.03 $2933.49
(4) If you surrender your Contract at the end of the applicable time period and have purchased the optional Guaranteed Minimum Death Benefit and optional Guaranteed Minimum Income Benefit riders with a maximum charge of 2.30%: Assuming Maximum Investment 1 year 3 years 5 years 10 years Portfolio Operating Expenses...................................... $1450.16 $3143.41 $4628.38 $7454.77 Assuming Minimum Investment 1 year 3 years 5 years 10 years Portfolio Operating Expenses...................................... $1076.96 $1751.40 $2358.14 $3581.97
(5) If you annuitize at the end of the applicable time period and have purchased the optional Guaranteed Minimum Death Benefit and optional Guaranteed Minimum Income Benefit riders with a maximum charge of 2.30% (except under certain circumstances): Assuming Maximum Investment 1 year 3 years 5 years 10 years Portfolio Operating Expenses...................................... $1450.16 $3143.41 $3962.67 $7454.77 Assuming Minimum Investment 1 year 3 years 5 years 10 years Portfolio Operating Expenses...................................... $1076.96 $1751.40 $1709.85 $3581.97
(6) If you do not surrender your Contract and have purchased the optional Guaranteed Minimum Death Benefit and optional Guaranteed Minimum Income Benefit riders with a maximum charge of 2.30%: 11 --------------------------------------------------------------------------------
Assuming Maximum Investment 1 year 3 years 5 years 10 years Portfolio Operating Expenses...................................... $699.92 $2387.70 $3962.67 $7454.77 Assuming Minimum Investment 1 year 3 years 5 years 10 years Portfolio Operating Expenses....................................... $329.68 $1007.25 $1709.85 $3581.97
Condensed Financial Information Appendix B to this prospectus contains tables that show Accumulation Unit values and the number of Accumulation Units outstanding for each of the Sub-accounts of the Separate Account. The financial data included in the tables should be read in conjunction with the financial statements and the related notes that are in the Statement of Additional Information. 12 -------------------------------------------------------------------------------- The Company Jefferson National Life Insurance Company (Jefferson National) was originally organized in 1937. Prior to May 1, 2003, We were known as Conseco Variable Insurance Company and prior to October 7, 1998, We were known as Great American Reserve Insurance Company. We are principally engaged in the life insurance business in 49 states and the District of Columbia. We are a stock company organized under the laws of the state of Texas and are a subsidiary of Jefferson National Financial Corp. The obligations under the Contracts are obligations of Jefferson National Life Insurance Company. The Advantage Plus Annuity Contract This prospectus describes the variable annuity Contract We are offering. An annuity is a Contract between you (the Owner) and Us. Until you decide to begin receiving Annuity Payments, your Contract is in the Accumulation Period. Once you begin receiving Annuity Payments, your Contract is in the Annuity Period. The Contract benefits from Tax Deferral. Tax Deferral means that you are not taxed on any earnings or appreciation on the assets in your Contract until you take money out of your Contract. The Contracts may be issued in conjunction with certain plans qualifying for special income tax treatment under the Code. You should be aware that this annuity will fund a retirement plan that already provides tax deferral under the Code. In such situations, the tax deferral of the annuity does not provide additional benefits. In addition, you should be aware that there are fees and charges in an annuity that may not be included in other types of investments, which may be more or less costly. However, the fees and charges under the Contract are also designed to provide for certain payment guarantees and features other than Tax Deferral that may not be available through other investments. These features are explained in detail in this prospectus. You should consult with your tax or legal adviser to determine if the Contract is suitable for your tax qualified plan. The Contract is called a variable annuity because you can choose to invest in the Investment Portfolios through the Sub-accounts of the Separate Account, and depending upon market conditions, you can make or lose money in any of these Investment Portfolios. If you select the variable annuity portion of the Contract, the amount of money you are able to accumulate in your Contract during the Accumulation Period depends upon the investment performance of the Investment Portfolio(s) you select. In certain states, the Contract may also offer a Fixed Account Investment Option. The Fixed Account is part of the general account assets of the Company. Interest is credited at a rate that is guaranteed by Us to be no less than the minimum rate prescribed in your Contract. The Fixed Account is only available for investment during the Accumulation Period. You can choose to receive Annuity Payments on a variable basis, fixed basis or a combination of both. If you choose variable Annuity Payments, the amount of the Annuity Payments you receive will depend upon the investment performance of the Investment Portfolio(s) you select for the Annuity Period. If you elect to receive Annuity Payments on a fixed basis, the Annuity Payments you receive will remain level for the period of time selected. We no longer issue Contracts to non-natural owners. Free Look If you change your mind about owning the Contract, you can cancel it within 10 Business Days after receiving it (or whatever longer time period is required in your state). We call this the Free Look Period. We deem this period as ending 15 days after we mail a Contract. When you cancel the Contract within this time period, We will not assess a Contingent Deferred Sales Charge. However, Our Insurance Charges, the charges for the Guaranteed Minimum Withdrawal Benefit and Investment Portfolio operating expenses will have been deducted. On the Business Day We receive your request at Our administrative office, We will return the value of your Contract, less the Purchase Payment Credits. In some states, We may be required to refund your Purchase Payment. Ownership OWNER. You, as the Owner of the Contract, have all the rights under the Contract. The Owner is as designated at the time the Contract is issued, unless changed. You can change the Owner at any time. A change will automatically revoke any prior Owner designation. You must notify Us in writing of a change of Owner. We will not be liable for any payment or other action We take in accordance with the Contract before We receive notice of the change. A change of Owner may be a taxable event. JOINT OWNER. A Non-Qualified Contract can be owned by Joint Owners. Any Joint Owner must be the spouse of the other Owner (except if state law does not permit this restriction). Upon the death of either Joint Owner, the surviving Joint Owner will be the primary Beneficiary. Any other Beneficiary designation on record at the time of death will be treated as a contingent Beneficiary unless you have previously notified Us in writing otherwise. Beneficiary The Beneficiary is the person(s) or entity you name to receive any Death Benefit Amount. The Beneficiary is named at the time the Contract is issued. If no Beneficiary is designated, your estate will be the Beneficiary. Unless an irrevocable Beneficiary has been named, you can change the Beneficiary at any time before you die. We will not be liable for any payment or other action We take in accordance with the Contract before We receive notice of the change of Beneficiary. Assignment Subject to applicable law, you can assign the Contract at any time during your lifetime. We will not be bound by the assignment until We receive the written notice of the assignment. We will not be liable for any payment or other action We take in accordance with the Contract before We receive notice of the assignment. If the Contract is a Qualified Contract, there are limitations on your ability to assign the Contract. An assignment may be a taxable event. Requesting Transactions or Obtaining Information About Your Contract You may request transactions or obtain information about your Contract by submitting a request to Us in writing via U.S. Mail. Subject to Our administrative rules and procedures, We 13 -------------------------------------------------------------------------------- may also allow you to submit a request through other means. TELEPHONE AND WEBSITE TRANSACTIONS. You can elect to request transactions and receive information about your Contract by telephone or though our Website (www.jeffnat.com). All transaction requests are processed subject to Our administrative rules and procedures. If you do not want the ability to request transactions or receive information about your Contract by telephone or through Our Website, you should notify Us in writing. We will accept transaction requests from your Registered Representative and/or your Investment Advisor. You can also authorize someone else, via submitting a power of attorney in good order, to request transactions for you. If you own the Contract with a Joint Owner, unless We are instructed otherwise, We will accept instructions from and provide information to either you or the other Owner. We will use reasonable procedures to confirm that instructions given to Us by telephone are genuine. All telephone calls will be recorded and the caller will be asked to produce personalized data about the Owner before We will make the telephone transaction. A password will be required for Website transfers. We will send you a confirmation of all transactions. If We fail to use such procedures We may be liable for any losses due to unauthorized or fraudulent instructions. Purchase Purchase Payments A Purchase Payment is the money you give Us to buy the Contract. You can make Purchase Payments at any time before the Annuity Date. The minimum initial Purchase Payment We will accept is $5,000 when the Contract is bought as a Non-Qualified Contract. If you are buying the Contract as a Qualified Contract, the minimum initial Purchase Payment We will accept is $2,000. We reserve the right to issue Qualified or Non-Qualified Contracts for less than the minimum. We will accept up to $2,000,000 in Purchase Payments without Our prior approval and subject to such terms and conditions as We may require. Jefferson National reserves the right to refuse any Purchase Payment. You can make additional Purchase Payments of $500 or more to a Non-Qualified Contract and $50 or more to a Qualified Contract. If you select the systematic payment option or electronic funds transfer (EFT), you can make additional Purchase Payments of $100 each month for Non-Qualified Contracts and $50 each month for Qualified Contracts. We reserve the right to accept subsequent purchase payments for less than the minimum. Purchase Payment Credit Feature Each time you make a Purchase Payment, We will credit an additional 4% to that Purchase Payment. We refer to these amounts as Purchase Payment Credits or the Bonus. In the future, We may increase the percentage of the Purchase Payment Credit. Purchase Payment Credits will be allocated in the same way as your Purchase Payment. An amount equal to the Purchase Payment Credits will be deducted if you make a withdrawal during the Free Look Period. After the Free Look Period ends, you will have a vested interest in the Purchase Payment Credit. Contract charges are deducted from Contract Value. Therefore, when We credit your Contract with a Purchase Payment Credit, your Contract incurs expenses on the total Contract Value, which includes the Purchase Payment Credits and earnings on these amounts. When you cancel your Contract during the Free Look Period, you will forfeit your Purchase Payment Credit. Since charges will have been assessed during the Free Look Period against the higher amount (that is, the Purchase Payment plus the Purchase Payment Credit), it is possible that upon surrender, particularly in a declining market, you will receive less money back than you would have if you had not received the Purchase Payment Credit. We expect to profit from certain charges assessed under the Contract, including certain charges (i.e., the Contingent Deferred Sales Charge and the Insurance Charges) associated with the Purchase Payment Credit. The Purchase Payment Credit feature may not be available in your state. Allocation of Purchase Payments You control where your Purchase Payments are invested. When you purchase a Contract, We will allocate your Purchase Payment and any Purchase Payment Credit according to your Investment Allocation of Record, which you can change at any time for future Purchase Payments. When you make additional Purchase Payments, We will allocate them and any Purchase Payment Credit based on the Investment Allocations of Record in effect when We receive the Purchase Payment. Allocation percentages must be in whole numbers. Once We receive your Purchase Payment and the necessary information, We will issue your Contract and allocate your first Purchase Payment within 2 Business Days. If you do not provide Us all of the information needed, We will contact you to get it. If for some reason We are unable to complete this process within 5 Business Days, We will either send back your money or get your permission to keep it until We get all of the necessary information. The method of payment (e.g., check, wire transfer, electronic funds transfer) may affect when your Purchase Payment is received by Us. If you add more money to your Contract by making additional Purchase Payments, We will credit these amounts to your Contract as of the Business Day We receive your Purchase Payment. Our Business Day closes when the New York Stock Exchange closes, usually 4:00 P.M. Eastern time. Any transaction involving a Rydex Investment Portfolio listed below received after the applicable cut-off time set forth in the chart below, including a transfer request involving any other Investment Portfolio not listed or any Investment Portfolio with an earlier cut-off time, will be processed on the next Business Day. -------------------------------------------------------------------------------- 15 Minutes Before NYSE Close -------------------------------------------------------------------------------- Dow 2x Strategy NASDAQ-100(R) 2x S&P 500 2x Strategy Strategy -------------------------------------------------------------------------------- Government Long Bond Europe 1.25x Strategy Inverse Dow 2x 1.2x Strategy Strategy -------------------------------------------------------------------------------- Inverse Government Inverse Mid-Cap Inverse NASDAQ- Long Bond Strategy 100(R) Strategy -------------------------------------------------------------------------------- Inverse Russell 2000(R) Inverse S&P 500 Japan Advantage Strategy Strategy 1.25x Strategy -------------------------------------------------------------------------------- Large-Cap Growth Large-Cap Value Mid Cap 1.5x Strategy -------------------------------------------------------------------------------- Mid-Cap Growth Mid-Cap Value Nova -------------------------------------------------------------------------------- NASDAQ-100(R) Russell 2000 1.5x Small-Cap Growth Strategy Strategy -------------------------------------------------------------------------------- 14 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 30 Minutes Before NYSE Close -------------------------------------------------------------------------------- Banking Basic Materials Biotechnology -------------------------------------------------------------------------------- Energy Consumer Products Electronics -------------------------------------------------------------------------------- Health Care Energy Services Financial Services -------------------------------------------------------------------------------- Precious Metals Internet Leisure -------------------------------------------------------------------------------- Technology Real Estate Retailing -------------------------------------------------------------------------------- Utilities Telecommunication Transportation -------------------------------------------------------------------------------- Similarly, any transaction involving the DireXion Dynamic VP HY Bond Fund received after 2:00 P.M., including a transfer request involving the DireXion Dynamic VP HY Bond Fund and any other Investment Portfolio, will be processed on the next Business Day. Investment Options Investment Portfolios The Contract offers several Sub-accounts, each of which invests exclusively in an Investment Portfolio listed at the beginning of this prospectus. During the Accumulation Period, money you invest in the Sub-accounts may grow in value, decline in value, or grow less than you expect, depending on the investment performance of the Investment Portfolios in which those Sub-accounts invest. You bear the investment risk that those Investment Portfolios might not meet their investment objectives. Additional Investment Portfolios may be available in the future. If you elect variable Annuity Payments, during the Annuity Period, the variable portion of your Annuity Payment will vary based on the performance of the Investment Portfolios. You should read the prospectuses for the Investment Portfolios carefully. Copies of these prospectuses will be sent to you with your Contract. If you would like a copy of the Investment Portfolio prospectuses, call Us at: (866) 667-0561 or visit Our Website. See Appendix A for a summary of investment objectives and strategies for each Investment Portfolio. The investment objectives and policies of certain of the Investment Portfolios are similar to the investment objectives and policies of other mutual funds managed by the same investment advisers. Although the objectives and policies may be similar, the investment results of the Investment Portfolios may be higher or lower than the results of such other mutual funds. The investment advisers cannot guarantee, and make no representation that, the investment results of similar funds will be comparable even though the Investment Portfolios have the same investment advisers. A significant portion of the assets of certain of the Investment Portfolios come from investors who take part in certain strategic and tactical asset allocation programs. These Investment Portfolios anticipate that investors who take part in these programs may frequently redeem or exchange shares of these Investment Portfolios, which may cause the Investment Portfolios to experience high portfolio turnover. Higher portfolio turnover may result in the Investment Portfolios paying higher levels of transaction costs. Large movements of assets into and out of the Investment Portfolios may also negatively impact a Investment Portfolios' ability to achieve its investment objective. In addition, the extent to which Contracts are owned by investors who engage in frequent redemptions or exchanges involving Investment Portfolios which do not limit such activity may result in more redemption and exchange activity in other Investment Portfolios which impose limits on such activity. The adverse impact, if any, of such activity will be constrained by the limits those other Investment Portfolios impose on frequent redemption or exchange activity. Refer to the Investment Portfolios' prospectuses for more details on the risks associated with any specific Investment Portfolio. Shares of the Investment Portfolios may be offered in connection with certain variable annuity contracts and variable life insurance policies of other life insurance companies which may or may not be affiliated with Us. Certain Investment Portfolios may also be sold directly to qualified plans. The Investment Portfolios do not believe that offering their shares in this manner will be disadvantageous to you. Administrative, Marketing and Support Services Fees Jefferson National and the principal underwriter for the Contracts have arrangements with the investment advisor, subadvisor, distributor, and/or affiliated companies of most of the Investment Portfolios under which Jefferson National and the principal underwriter for the Contracts receive payments in connection with the provision of administrative, marketing or other support services to the Investment Portfolios. Proceeds of these payments may be used for any corporate purpose, including payment of expenses that the Company and the principal underwriter for the contracts incur in promoting, issuing, distributing and administering the contracts. The Company and its affiliates may profit from these fees. The payments are generally based on a percentage of the average assets of each Investment Portfolio allocated to the investment options under the Contract or other contracts offered by the Company. The amount of the fee that an Investment Portfolio and its affiliates pay the Company and/or the Company's affiliates is negotiated and varies with each Investment Portfolio. Aggregate fees relating to the different Investment Portfolio may be as much as .50% of the average net assets of an Investment Portfolio attributable to the relevant contracts. This amount may change at any time without notice. A portion of these payments may come from revenue derived from the distribution and/or service fees (12b-1 fees) that are paid by an Investment Portfolio out of its assets as part of its total annual operating expenses. The Fixed Account During the Accumulation Period, you can invest in the Fixed Account. The Fixed Account offers an interest rate that is guaranteed by Us to be no less than 3% or the minimum rate prescribed by applicable state law. From time to time, We may change the interest rate credited to amounts invested in the Fixed Account. If you select the Fixed Account, your money will be placed with Our other general account assets. The Fixed Account may not be available in your state. See your Contract for more information on the Fixed Account. The Fixed Account is not registered under the federal securities laws and it is generally not subject to its provisions. The staff of the SEC has not reviewed the disclosure related to the Fixed Account. The disclosure may, however, be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. The Separate Account Annual Expenses do not apply to 15 -------------------------------------------------------------------------------- amounts allocated to the Fixed Account. See your Contract for more information regarding the Fixed Account. The General Account During the Annuity Period, the portion of your annuity Payments that are fixed will be paid out of Our general account. We guarantee a specified interest rate used in determining the payments. If you elect a fixed Annuity Payment, the fixed portion of your Annuity Payments will remain level. Voting Rights Jefferson National is the legal owner of the Investment Portfolio shares. However, when an Investment Portfolio solicits proxies in conjunction with a vote of its shareholders, We will send you and other owners materials describing the matters to be voted on. You instruct Us how you want Us to vote your shares. When We receive those instructions, We will vote all of the shares We own and those for which no timely instructions are received in proportion to those instructions timely received. As a result of proportional voting, the vote of a small number of contract owners could determine the outcome of a proposal subject to a shareholder vote. Should We determine that We are no longer required to follow this voting procedure, We will vote the shares ourselves. Substitution It may be necessary to discontinue one or more of the Investment Portfolios or substitute a new Investment Portfolio for one of the Investment Portfolios you have selected. New or substitute Investment Portfolios may have different fees and expenses and their availability may be limited to certain classes of purchasers. We will notify you of Our intent to do this. We will obtain any required prior approval from the Securities and Exchange Commission before any such change is made. Transfers You can transfer money among the Fixed Account and the Sub-accounts. Such transfers may be submitted in writing to Our administrative offices. Transfers may be deferred as permitted or required by law. See Suspension of Payments or Transfers Section below. TRANSFERS DURING THE ACCUMULATION PERIOD. You can transfer money to or from the Fixed Account, and to or from any Sub-account. Transfers may be made by contacting our administrative offices or through Our Website. The following apply to any transfer during the Accumulation Period: 1. If you make more than one transfer in 30 days, a transfer fee of $25 may be deducted. 2. Limits on transfers out of the Fixed Account may apply. 3. Your request for a transfer must clearly state which Sub-account(s) are involved in the transfer. 4. Your request for transfer must clearly state how much the transfer is for. 5. Your right to make transfers is subject to modification if We determine, in Our sole opinion, that the exercise of the right by one or more Owners is, or would be, to the disadvantage of other Owners. Restrictions may be applied in any manner reasonably designed to prevent any use of the transfer right which is considered by Us to be to the disadvantage of other Owners. A modification could be applied to transfers to, or from, one or more of the Investment Portfolios and could include, but is not limited to: a. the requirement of a minimum time period between each transfer; b. not accepting a transfer request from an agent acting under a power of attorney on behalf of more than one Owner; or c. limiting the dollar amount that may be transferred between Sub-accounts by an Owner at any one time. 6. We reserve the right, at any time, and without prior notice to any party, to terminate, suspend or modify the transfer privilege during the Accumulation Period. TRANSFERS DURING THE ANNUITY PERIOD. You can make two transfers per Contract year during the Annuity Period. Thereafter, We may impose a transfer fee $25 charge per transfer. We measure a year from the anniversary of the Business Day We issued your Contract. We reserve the right to change the amount of the transfer fee and the frequency of permitted transfers. The following rules also apply to any transfer during the Annuity Period: 1. Transfers made between the Fixed Account and the Investment Portfolios are limited to 20% of the Fixed Account Value every six months. We reserve the right to waive this restriction. 2. We reserve the right, at any time, and without prior notice to any party, to terminate, suspend or modify the transfer privilege during the Annuity Period. This product is not designed for professional market timing strategies by third parties. We reserve the right to modify (including terminating) the transfer privileges described above. Excessive Trading Limits The Contracts are first and foremost annuity contracts, designed for retirement or other long-term financial planning purposes, and are not designed for market timers or other persons that make frequent transfers. The use of such transfers can be disruptive to any underlying Investment Portfolio and harmful to other contract owners invested in the Investment Portfolio. We reserve the right to limit transfers in any Contract year, or to refuse any transfer request for an Owner, Registered Representative, Investment Advisor or other third party acting under a Limited Power of Attorney, for any reason, including without limitation, if: o We believe, in Our sole discretion, that excessive trading by the Owner, or a specific transfer request, submitted by a third party advisor, or a group of transfer requests, may have a detrimental effect on the Accumulation Unit values of any subaccount or the share prices of any Investment Portfolio or would be detrimental to other Owners; or o We are informed by one or more Investment Portfolios that they intend to restrict the purchase of Investment Portfolio shares because of excessive trading or because they believe that a specific transfer or group of transfers would have a detrimental effect on the price of Investment Portfolio shares; or o the requested transaction violates Our administrative rules designed to detect and prevent market timing. The restrictions imposed may include, but are not limited to, 16 -------------------------------------------------------------------------------- restrictions on transfers (e.g., by not processing requested transfers, limiting the number of transfers allowed, and/or the dollar amount, requiring holding periods, allowing transfer requests by U.S. Mail only, etc.) or even prohibitions on them for particular owners who, in Our view, have abused or appear likely to abuse the transfer privilege. These restrictions do not apply to redemptions from the Contract. We may apply restrictions in any manner reasonably designed to prevent transfers that We consider disadvantageous to other Owners. These excessive trading limits apply to all owners. However, using our processes and procedures, we may not detect all market timers, prevent frequent transfers, or prevent harm caused by excessive transfers. The difficulty in detecting market timing activity may have the effect of allowing some to engage in market timing activities while preventing others. SHORT-TERM TRADING RISK. Frequent exchanges among Investment Portfolios by Owners can reduce the long-term returns of the underlying mutual funds. The reduced returns could adversely affect the owners, annuitants, insureds or beneficiaries of any variable annuity or variable life insurance contract issued by any insurance company with respect to values allocated to the underlying fund. Frequent exchanges may reduce the underlying fund's performance by increasing costs paid by the fund (such as brokerage commissions); they can disrupt portfolio management strategies; and they can have the effect of diluting the value of the shares of long term shareholders in cases in which fluctuations in markets are not fully priced into the fund's net asset value. The insurance-dedicated mutual funds available through the Investment Portfolios are also available in products issued by other insurance companies. These funds carry a significant risk that short-term trading may go undetected. The funds themselves generally cannot detect individual contract owner exchange activity, because they are owned primarily by insurance company separate accounts that aggregate exchange orders from owners of individual contracts. Accordingly, the funds are dependent in large part on the rights, ability and willingness of all participating insurance companies to detect and deter short-term trading by contract owners. As outlined below, We have adopted policies regarding frequent trading, but can provide no assurance that other insurance companies using the same underlying funds have adopted comparable procedures. There is also the risk that these policies and procedures concerning short-term trading will prove ineffective in whole or in part to detect or prevent frequent trading. The difficulty in detecting market timing activity may have the effect of allowing some to engage in market timing while preventing others. Please review the underlying funds' prospectuses for specific information about the funds' short-term trading policies and risks. We have adopted policies and procedures with respect to frequent transfers. These policies apply to all Investment Portfolios except for Investment Portfolios that contain disclosure permitting active trading. As of the date of this prospectus, the only Investment Portfolios which permit active trading are those of the Rydex Variable Trust (other than Rydex Sector Rotation Fund, which do not permit active trading), the DireXion Dynamic VP HY Bond Fund, and the JNF Money Market Portfolio. This list may change any time without notice. Pursuant to this policy, we block trades that are the second transaction in a purchase and sale or sale and purchase involving the same Investment Portfolio in less than seven (7) days (or whatever greater time period is required by the Investment Portfolio). As of the date of this prospectus, We impose longer hold periods for the funds set forth in the following table. -------------------------------------------------------------------------------- 30 Day Hold -------------------------------------------------------------------------------- American Century American Century VP American Century VP Balanced Income & Growth VP Inflation Protection -------------------------------------------------------------------------------- American Century American Century VP Value VP International -------------------------------------------------------------------------------- Federated Capital Income Fund II -------------------------------------------------------------------------------- Federated High Federated Legg Mason Income Bond Fund II International Aggressive Growth Equity Fund II -------------------------------------------------------------------------------- Legg Mason Capital Legg Mason Legg Mason High and Income Fundamental Value Yield Bond -------------------------------------------------------------------------------- Legg Mason Large Legg Mason Lord Abbett Cap Growth Strategic Bond America's Value -------------------------------------------------------------------------------- Lord Abbett Growth Rydex Sector Rotation and Income -------------------------------------------------------------------------------- 60 Day Hold -------------------------------------------------------------------------------- Dreyfus Dreyfus Small Cap Dreyfus Socially International Value Stock Index Responsible Growth -------------------------------------------------------------------------------- Dreyfus Stock Index Third Avenue Value -------------------------------------------------------------------------------- 90 Day Hold -------------------------------------------------------------------------------- AllianceBernstein Janus Aspen Growth Janus Aspen Growth and Income and Income International Growth -------------------------------------------------------------------------------- Janus Aspen Large Janus Aspen Mid Janus Aspen Cap Growth Cap Growth Small Company Value -------------------------------------------------------------------------------- Janus Aspen Worldwide Growth -------------------------------------------------------------------------------- This list may change at any time without notice. If only one portion of a transfer request involving multiple Investment Portfolios violates our policy, the entire transfer request is blocked. We monitor transfers and impose these rules across multiple Contracts owned by the same owner. Thus, if you own two Contracts and make a purchase in an Investment Portfolio in Contract 1, you will have to wait at least seven (7) days (or such greater time period as set forth in the table above) to make a sale in the same Investment Portfolio in Contract 2. With the exception of contributions to, and withdrawals from, the Contract, all transfers are monitored, including without limitation, systematic transfers such as dollar cost averaging, rebalancing, systematic contributions and systematic withdrawals. Transactions are not monitored if they are scheduled at least 7 days in advance. . These policies apply to all Investment Options except for Investment Options that contain disclosure permitting active trading. The statement of additional information contains more information about market timing arrangements, if any, and disclosure of Investment Portfolio securities holdings to individuals, if any. If you (or your agent's) Website transfer request is restricted or denied, we will send notice via U.S. Mail. 17 -------------------------------------------------------------------------------- Dollar Cost Averaging Program The Dollar Cost Averaging Program (DCA Program) allows you to systematically transfer a set amount either monthly, quarterly, semi-annually or annually. By allocating amounts on a regular schedule as opposed to allocating the total amount at one particular time, you may be less susceptible to the impact of market fluctuations. However, this is not guaranteed. Subject to Our administrative procedures, you may specify the day of the month on which dollar cost averaging transfers will be made. You can sign up for the DCA Program for a specified time period. The DCA Program will end when the value in the Investment Option(s) from which you are transferring is zero. We will notify you when that happens. A transfer request will not automatically terminate the DCA Program. The transfers made under the DCA Program are not taken into account in determining any transfer fee. There is no additional charge for the DCA Program. However, We reserve the right to charge for the DCA Program in the future. We reserve the right, at any time and without prior notice, to terminate, suspend or modify the DCA Program. The DCA Program may vary by state. Dollar cost averaging does not assure a profit and does not protect against loss in declining markets. Dollar cost averaging involves continuous investment in the Fixed Account or selected Investment Portfolio(s) regardless of fluctuating price levels of the Investment Portfolio(s). You should consider your financial ability to continue the DCA Program through periods of fluctuating price levels. Rebalancing Program Once your money has been allocated among the Sub-accounts, the performance of each Investment Portfolio may cause your allocation to shift. You can direct Us to automatically rebalance your Contract to return to your Investment Allocation of Record or some other allocation of your choosing by selecting Our Rebalancing Program. When you elect the Rebalancing Program, you must specify the date on which you would like the initial rebalancing to occur and the frequency of the rebalancing (i.e. quarterly, semi-annually or annually). We will measure the rebalancing periods from the initial rebalancing date selected. You must use whole percentages in 1% increments for rebalancing. Rebalancing does not include assets allocated to the Fixed Account. You can discontinue the Rebalancing Program at any time. You can change your rebalancing percentages for future rebalancing by submitting your request prior to the next rebalancing date. The transfers made under the Rebalancing Program are not taken into account in determining any transfer fee. Currently, there is no charge for participating in the Rebalancing Program. We reserve the right, at any time and without prior notice, to terminate, suspend or modify this program. EXAMPLE: Assume that you want your initial Purchase Payment split between 2 Sub-accounts. You want 40% to be in the Fixed Income Portfolio Sub-account and 60% to be in the Growth Portfolio Sub-account. Over the next 2 1/2 months the bond market does very well while the stock market performs poorly. At the end of the first quarter, the Fixed Income Portfolio Sub-account now represents 50% of your holdings because of its increase in value. If you had chosen to have your holdings rebalanced quarterly, on the first Business Day of the next quarter, We would sell some of your units in the Fixed Income Portfolio Sub-account to bring its value back to 40% and use the money to buy more units in the Growth Portfolio Sub-account to increase those holdings to 60%. Advisory Fee Withdrawals Jefferson National understands the importance to you of having advice from a financial advisor regarding your investments in the Contract. Certain investment advisors have made arrangements with us to make their services available to you. Jefferson National has not made any independent investigation of these investment advisors and is not endorsing such programs. You may be required to enter into an advisory agreement with your Investment Advisor to have the fees paid out of your Contract during the Accumulation Period. Jefferson National will, pursuant to an agreement with you, make a partial withdrawal from the value of your Contract to pay for the services of your Investment Advisor. If the Contract is non-qualified, the withdrawal will be treated like any other distribution and may be included in gross income for federal tax purposes. Further, if you are under age 59 1/2 it may be subject to a tax penalty. If the Contract is qualified, the withdrawal for the payment of fees may not be treated as a taxable distribution if certain conditions are met. Additionally, any withdrawals for this purpose may be subject to a Contingent Deferred Sales Charge. You should consult a tax advisor regarding the tax treatment of the payment of investment advisor fees from your Contract. Interest Sweep Program You can elect to transfer (sweep) your interest from the Fixed Account to the Sub-accounts on a periodic and systematic basis. Currently, there is no charge for the Interest Sweep Program. Expenses There are charges and other expenses associated with the Contract that reduce the return on your investment in the Contract. These charges and expenses are: Insurance Charges Each Business Day, We make a deduction for Insurance Charges. The Insurance Charges do not apply to amounts allocated to the Fixed Account. The Insurance Charges will vary depending on whether, at the time you apply for the Contract, you choose the Guaranteed Minimum Death Benefit (GMDB) and/or the Guaranteed Minimum Income Benefit (GMIB). The Insurance Charges compensate the Company for all the insurance benefits, e.g., guarantee of annuity rates, the death benefit, for certain expenses of the Contract, and for assuming the risk (expense risk) that the current charges will be insufficient in the future to cover the cost of administering the Contract. The Insurance Charges are included as part of Our calculation of the value of the Accumulation Units and the Annuity Units. If the Insurance Charges are insufficient, then We will bear the loss. Any profits we derive from the Insurance Charges will become part of our general account assets and can be used for any lawful purpose, including the costs of selling the contracts. The Insurance Charges will be as follows: 18 -------------------------------------------------------------------------------- Current Maximum GMDB GMIB Insurance Insurance Elected Elected Charge Charge No No 1.40% 1.65% Yes No 1.70% 2.10% Yes Yes 2.00% 2.30% Contract Maintenance Charge On each Contract Anniversary during the Accumulation Period, We deduct $30 (as allowed by state law, this charge can be increased up to a maximum of $60 per Contract per year) from your Contract as a Contract Maintenance Charge. This charge is for certain administrative expenses associated with the Contract. We do not deduct the Contract Maintenance Charge if the value of your Contract is $50,000 or more on the Contract Anniversary. We reserve the right to reduce or waive the Contract Maintenance Charge. If you make a full withdrawal on other than a Contract Anniversary, and the Contract Value is less than $50,000, We will deduct the full Contract Maintenance Charge at the time of the full withdrawal. If, when you begin to receive Annuity Payments, the Annuity Date is a different date than your Contract Anniversary We will deduct the full Contract Maintenance Charge on the Annuity Date unless the Contract Value on the Annuity Date is $50,000 or more. The Contract Maintenance Charge will be deducted first from the Fixed Account. If there is insufficient value in the Fixed Account, the fee will then be deducted from the Investment Portfolio with the largest balance. No Contract Maintenance Charge is deducted during the Annuity Period. Contingent Deferred Sales Charge During the Accumulation Period, you can make withdrawals from your Contract. Withdrawals are taken from earnings first and then Purchase Payments. A Contingent Deferred Sales Charge may be assessed against Purchase Payments withdrawn. Each Purchase Payment has its own Contingent Deferred Sales Charge period. When you make a withdrawal, the charge is deducted from Purchase Payments (oldest to newest). Subject to the waivers discussed below, if you make a withdrawal and it has been less than the stated number of years since you made your Purchase Payment, you will have to pay a Contingent Deferred Sales Charge. The Contingent Deferred Sales Charge compensates Us for expenses associated with selling the Contract. The charge is as follows: NUMBER OF YEARS CONTINGENT FROM RECEIPT OF DEFERRED SALES PURCHASE PAYMENT CHARGE 0-1 8% 2 8% 3 8% 4 8% 5 7% 6 6% 7 5% 8 3% 9 1% 10 or more 0% FREE WITHDRAWALS. Once each Contract year you can withdraw money from your Contract, without a Contingent Deferred Sales Charge, in an amount equal to the greater of: o 10% of the value of your Contract (on a non-cumulative basis) (excluding payments made by Us to Your Investment Advisor); o the IRS minimum distribution requirement for this Contract if it was issued as an individual retirement annuity or in conjunction with certain qualified retirement plans; or o the total of your Purchase Payments that have been in the Contract for 10 or more complete years. Waiver of Contingent Deferred Sales Charge In addition to the free withdrawal amount discussed above, the Contingent Deferred Sales Charge may be waived under certain circumstances. If the Contract is owned by Joint Owners, these benefits apply to either owner. If the Contract is owned by a non-natural person, then these benefits apply to the Annuitant. UNEMPLOYMENT. You may make one free withdrawal of up to 50% of your Contract Value if: o your Contract has been in force for at least 1 year; o you provide Us with a letter of determination from your state's Department of Labor indicating that you qualify for and have been receiving unemployment benefits for at least 60 consecutive days; o you were employed on a full time basis and working at least 30 hours per week on the date your Contract was issued; o your employment was involuntarily terminated by your employer; and o you certify to Us in writing that you are still unemployed when you make the withdrawal request. This benefit may be used by only one person including in the case of Joint Owners or if the Contract is continued by a spouse after the death of the Owner. This benefit may not be available in your state. NURSING CARE CONFINEMENT. Once per Contract year, We will allow an additional free withdrawal of up to 10% of your Contract Value if: o you are confined in a qualified nursing care center (as defined in the rider to the Contract) for 90 consecutive days; o confinement begins after the first Contract year; o confinement is prescribed by a qualified physician and is medically necessary; o request for this benefit is made during confinement or within 60 days after confinement ends; and o We receive due proof of confinement. This benefit may be used by only one person including in the case of Joint Owners or If the Contract is continued by a spouse after the death of the Owner. This benefit may not be available in your state. TERMINAL ILLNESS. You may take one free withdrawal of up to 100% of your Contract Value after a qualified physician (as defined in the rider to the Contract) provides notice that the owner has a terminal illness (which is expected to result in death within 12 months from the notice). o To qualify, the diagnosis and notice must occur after the first Contract year ends. o This benefit is not available if you have a terminal illness on the date the Contract is issued. All other limitations under the Contract apply. o This benefit may only be used one time including in the 19 -------------------------------------------------------------------------------- case of Joint Owners or if the Contract is continued by a spouse after the death of the Owner. This benefit may not be available in your state. Reduction or Elimination of the Contingent Deferred Sales Charge We may reduce or eliminate the amount of the Contingent Deferred Sales Charge when the Contract is sold under circumstances that reduce Our sales expenses. Some examples are: if there is a large group of individuals that will be purchasing the Contract or a prospective purchaser already had a relationship with Us. We will not deduct a Contingent Deferred Sales Charge when a Contract is issued to an officer, director or employee of Our company or any of Our affiliates. Any circumstances resulting in the reduction or elimination of the Contingent Deferred Sales Charge requires Our prior written approval. In no event will reduction or elimination of the Contingent Deferred Sales Charge be permitted where it would be unfairly discriminatory to any person. Investment Portfolio Operating Expenses There are deductions from and expenses paid out of the assets of the various Investment Portfolios, which are described in the Investment Portfolio prospectuses. The Investment Portfolio Operating Expenses are included as part of Our calculation of the value of the Accumulation Units and the Annuity Units. We reserve the right to charge transfer fees imposed by the Investment Portfolios for excessive transfers. Transfer Fee You can make one transfer per 30 days. If you make more than one transfer per 30 days, you may be charged a transfer fee of $25 per transfer. As allowed by law, We reserve the right to change the transfer fee. During the Accumulation Period, the transfer fee is deducted from the Investment Option that you transfer your funds from. If you transfer your entire interest from an Investment Option, the transfer fee is deducted from the amount transferred. If there are multiple Investment Options from which you transfer funds, the transfer fee will be deducted first from the Fixed Account, and then from the Sub-account with the largest balance that is involved in the transfer. During the Annuity Period, the transfer fee will be deducted from the Annuity Payment immediately following your transfer. If the transfer is part of the Dollar Cost Averaging Program, the Rebalancing Program or the Interest Sweep Program it will not count in determining the transfer fee. All reallocations made on the same date count as one transfer. Premium Taxes Some states and other governmental entities (e.g., municipalities) charge premium taxes or similar taxes. We are responsible for the payment of these taxes and will make a deduction from the Contract Value for them. These taxes are due either when the Contract is issued or when Annuity Payments begin. It is Our current practice to deduct these taxes when either Annuity Payments begin. We may in the future discontinue this practice and assess the charge when the tax is due. Premium taxes currently range from 0% to 3.5%, depending on the jurisdiction. Income Taxes We will deduct from the Contract any income taxes which We incur because of the Contract. At the present time, We are not making any such deductions. Contract Value Your Contract Value is the sum of amounts held under your Contract in the various Sub-accounts of the Separate Account and the Fixed Account. The Contract Value may not be the value available for withdrawal, surrender or annuitization. The value of any assets in the Sub-account(s) will vary depending upon the investment performance of the Investment Portfolio(s) you choose. In order to keep track of your Contract Value in a Sub-account, We use a unit of measure called an Accumulation Unit. During the Annuity Period of your Contract We call the unit an Annuity Unit. Your Contract Value is affected by the investment performance of the Investment Portfolios, the expenses of the Investment Portfolios and the deduction of fees and charges under the Contract. Accumulation Units Every Business Day, We determine the value of an Accumulation Unit for each of the Sub-accounts by multiplying the Accumulation Unit value for the prior Business Day by a factor for the current Business Day. The factor is determined by: 1. dividing the value of an Sub-account share at the end of the current Business Day (and any charges for taxes) by the value of an Sub-account share for the previous Business Day; and 2. subtracting the daily amount of the Insurance Charges. The value of an Accumulation Unit may go up or down from Business Day to Business Day. When you make a Purchase Payment, We credit your Contract with Accumulation Units. The number of Accumulation Units credited is determined by dividing the amount of the Purchase Payment allocated, including any Purchase Payment Credit, to an Sub-account by the value of the Accumulation Unit for that Sub-account. When you make a withdrawal, We deduct Accumulation Units from your Contract representing the withdrawal. We also deduct Accumulation Units when We deduct certain charges under the Contract. Whenever We use an Accumulation Unit value, it will be based on the value next determined after receipt of the request or the Purchase Payment. We calculate the value of an Accumulation Unit for each Sub-account after the New York Stock Exchange closes each Business Day and then credit your Contract. EXAMPLE: On Wednesday, We receive an additional Purchase Payment of $4,000 from you and We credit your Contract with the 4% Purchase Payment Credit. You have told Us you want this to go to the Equity Portfolio Sub-account. When the New York Stock Exchange closes on that Wednesday, We determine that the value of an Accumulation Unit for the Equity Portfolio Sub-account is $12.25. We then divide $4,160 ($4,000 Purchase Payment plus $160 Purchase Payment Credit) by $12.25 and credit your Contract on Wednesday night with 339.59 Accumulation Units for the Equity Portfolio Sub-account. Access to Your Money You can have access to the money in your Contract: o by making a withdrawal (either a partial or a complete withdrawal); 20 -------------------------------------------------------------------------------- o by electing to receive Annuity Payments; or o when a death benefit is paid to your Beneficiary. Withdrawals can only be made during the Accumulation Period. When you make a complete withdrawal, you will receive your Contract Value on the Business Day you made the withdrawal, (i) less any applicable Contingent Deferred Sales Charge; (ii) less any Contract Maintenance Charge; and (iii) less any applicable premium tax. You must tell Us which Investment Option you want the partial withdrawal to come from. Under most circumstances, the amount of any partial withdrawal from any Investment Option must be at least $500. There must be at least $500 left in at least one Sub-Account after you make a partial withdrawal. If you do not have at least $500 in one Sub-Account, We reserve the right to terminate the Contract and pay you the Contract Value less any applicable fees and charges. Once We receive your written request for a withdrawal from an Investment Option, We will pay the amount of that withdrawal within 7 Business Days. Withdrawals may be deferred as permitted or required by law. See "Suspension of Payments or Transfers" section. A withdrawal may result in a withdrawal charge and/or tax consequences (including an additional 10% tax penalty under certain circumstances). Certain withdrawal restrictions may apply if your Contract is issued in connection with a Section 403(b) tax-qualified plan (also known as a tax-sheltered annuity). See "Contingent Deferred Sales Charge" and "Taxes" in this Prospectus. Systematic Withdrawal Program The systematic withdrawal program allows you to receive automatic payments either monthly, quarterly, semi-annually or annually. Subject to Our administrative procedures, you can instruct Us to withdraw a specific amount, which can be a percentage of the Contract Value, or a dollar amount. All systematic withdrawals will be withdrawn from the Investment Options on a pro-rata basis, unless you instruct Us otherwise. You may elect to end the Systematic Withdrawal Program by notifying Us prior to the next systematic withdrawal. The Systematic Withdrawal Program will terminate automatically when the Contract Value is exhausted. We do not currently charge for the Systematic Withdrawal Program, however, the withdrawals may be subject to a Contingent Deferred Sales Charge. Income taxes, tax penalties and certain restrictions may apply to systematic withdrawals. Suspension of Payments or Transfers We may be required to suspend or postpone payments for withdrawals or transfers for any period when: 1. the New York Stock Exchange is closed (other than customary weekend and holiday closings); 2. trading on the New York Stock Exchange is restricted; 3. an emergency exists as a result of which disposal of shares of the Investment Portfolios is not reasonably practicable or We cannot reasonably value the shares of the Investment Portfolios; 4. during any other period when the SEC, by order, so permits for the protection of Owners. We have reserved the right to defer payment for a withdrawal or transfer from the Fixed Account for the period permitted by law but not for more than six months. If mandated under applicable law, We may be required to reject a Purchase Payment and/or otherwise block access to a Owner's Contract and thereby refuse to pay any request for transfers, partial or full withdrawals, annuity benefits, or death benefits. Once blocked, monies would be held in that Contract until instructions are received from the appropriate regulator. Death Benefit Upon Your Death During the Accumulation Period If you, or your Joint Owner, die before Annuity Payments begin, We will pay a death benefit to your Beneficiary. If you have a Joint Owner, the surviving Joint Owner will be treated as the primary Beneficiary. Any other Beneficiary designation on record at the time of death will be treated as a contingent Beneficiary. The Contract Value for purposes of calculating any Death Benefit Amount will be determined as of the Business Day We receive due proof of death and an election for the payment method (see below). After the Death Benefit Amount is calculated, it will remain in the Sub-Accounts and/or the Fixed Account until distribution begins. Until We distribute the Death Benefit Amount, the Death Benefit Amount in the Sub-Accounts will be subject to investment risk, which is borne by the Beneficiary. If you designate multiple beneficiaries, upon payment of the Death Benefit Amount to the first beneficiary, any remaining Death Benefit Amount that is invested in the Investment Portfolios will be placed in a money market account until we receive an election for the payment of the remaining Death Benefit Amount. Standard Death Benefit Amount During the Accumulation Period If death occurs prior to age 80 and you did not elect the optional Guaranteed Minimum Death Benefit, the Death Benefit Amount will be the greater of: (1) the Contract Value as of the Business Day We receive due proof of death and a payment election; or (2) the total Purchase Payments you have made, less any partial withdrawals and Contingent Deferred Sales Charges. If you are age 80 or over, the Death Benefit Amount will be equal to the Contract Value as of the Business Day We receive due proof of death and a payment election. Optional Guaranteed Minimum Death Benefit For an extra charge, at the time you purchase the Contract, you can choose the optional Guaranteed Minimum Death Benefit. Under this option, if you die before age 80, the Death Benefit Amount will be the greater of: (1) the total Purchase Payments you have made, less all partial withdrawals, Contingent Deferred Sales Charges and any applicable premium taxes; (2) the Contract Value as of the Business Day We receive due proof of death and a payment election; or (3) the largest Contract Value on any Contract Anniversary before the Owner or Joint Owner's death, less any Adjusted Partial Withdrawals, and limited to no more than twice the amount of Purchase Payments paid less any Adjusted Partial Withdrawals. If death occurs at age 80 or later, the Death Benefit Amount will be the greater of: (1) the Contract Value as of the 21 -------------------------------------------------------------------------------- Business Day We receive due proof of death and a payment election; or (2) the death benefit as of the last Contract Anniversary before your 80th birthday, less any Adjusted Partial Withdrawals. If Joint Owners are named, the Death Benefit Amount is determined based on the age of the oldest Owner and is payable on the first death. If the Owner is a non-natural person, the death of an Annuitant will be treated as the death of the Owner. It is possible that the IRS may take the position that charges for the Optional Guaranteed Minimum Death Benefits are deemed to be taxable distributions to you. Although We do not believe that such charges should be treated as taxable distributions, you should consult your tax adviser prior to selecting these riders. If you take a partial withdrawal at a time when the Death Benefit Amount is greater than your Contract Value, then your Death Benefit Amount may be reduced by an amount greater than the amount withdrawn. If the Beneficiary is the spouse of the Owner of the Contact and elects to continue the Contract after the Owner's death, the Beneficiary may not elect to continue the optional Guaranteed Minimum Death Benefit. This benefit may not be available in your state. Payment of the Death Benefit During the Accumulation Period Unless already selected by you, a Beneficiary must elect to have the Death Benefit Amount paid under one of the options described below in the event of the death of the Owner or Joint Owner during the Accumulation Period (including without limitation, non-qualified stretch options). OPTION 1--lump sum payment of the Death Benefit Amount; or OPTION 2--the payment of the entire Death Benefit Amount within 5 years of the date of death of the Owner or Joint Owner; or OPTION 3--payment of the Death Benefit Amount under an Annuity Option over the lifetime of the Beneficiary, or over a period not extending beyond the life expectancy of the Beneficiary, with distribution beginning within 1 year of the date of the death of the Owner or any Joint Owner. Unless you have previously designated one of the payment options above, a Beneficiary who is a spouse of the deceased Owner may elect to: o continue the Contract in his or her own name at the Death Benefit Amount; o elect a lump sum payment of the Death Benefit Amount; or o apply the Death Benefit Amount to an Annuity Option. If the spouse elects to continue the Contract, the Contract Value will be the Death Benefit Amount for the purpose of determining benefits under the Contract for the continuing spouse. The spouse may not elect the optional guaranteed minimum death benefit. If a lump sum payment is requested, the Death Benefit Amount will be paid within 7 days, unless the Suspension of Payments provision is in effect. Payment to the Beneficiary, in any other form than a lump sum, may only be elected during the 60 day period beginning with the date of receipt by Us of due proof of death. Death of Contract Owner During the Annuity Period If you or a Joint Owner, who is not the Annuitant, dies during the Annuity Period, any remaining Annuity Payments under the Annuity Option elected will continue to be made at least as rapidly as under the method of distribution in effect at the time of the Owner's or Joint Owner's death. Upon the Owner's death during the Annuity Period, the Beneficiary becomes the Owner. Upon the death of any Joint Owner during the Annuity Period, the surviving Owner, if any, will be treated as the primary Beneficiary. Any other Beneficiary designation on record at the time of death will be treated as a contingent Beneficiary. Death of Annuitant If the Annuitant, who is not an Owner or Joint Owner, dies during the Accumulation Period, you will automatically become the Annuitant. A change of Annuitant by the Owner may result in a taxable event. You may designate a new Annuitant subject to Our approval. If the Owner is a non-natural person (for example, a corporation), then the death of the Annuitant will be treated as the death of the Owner, and a new Annuitant may not be named. Upon the death of the Annuitant during the Annuity Period, the death benefit, if any, will be as provided for in the Annuity Option selected. The death benefit will be paid at least as rapidly as under the method of distribution in effect at the Annuitant's death. Annuity Payments (The Annuity Period) Under the Contract you can receive regular income payments. We call these payments Annuity Payments. You can choose the date on which the Annuity Payments begin. We call that date the Annuity Date. The Annuitant is the person whose life We look to when We determine Annuity Payments. The Annuity Date must be the first day of a calendar month and must be at least 90 days after the Contract issue date. For a Contract held under a tax-qualified retirement arrangement (other than an IRA), the Annuity Date generally may not be later than (i) April 1 of the year after the year in which the Annuitant attains age 70 1/2, or (ii) the calendar year in which the Annuitant retires if later. You can also choose among income plans. We call those Annuity Options. You can elect an Annuity Option by providing Us with a written request. You can change the Annuity Option any time up to 30 days before the existing Annuity Date. If you do not choose an Annuity Option, We will assume that you selected Option 2 which provides a life annuity with 10 years of guaranteed payments. During the Annuity Period, you can choose to have fixed Annuity Payments (these payments will come from Jefferson National's general account), variable Annuity Payments (these payments will be based on the performance of the Investment Portfolios) or a combination of both. If you do not tell Us otherwise, your Annuity Payments will be based on the investment allocations that were in place on the Annuity Date. Unless you tell us otherwise, any money in the Fixed Account will be applied to a fixed annuity. Annuity Payment Amount If you choose to have any portion of your Annuity Payments based on the performance of the Investment Portfolio(s), the dollar amount of your payment will depend upon: 22 -------------------------------------------------------------------------------- 1) The value of your Contract in the Sub-Account(s) on the Annuity Date or the Death Benefit Amount if the Annuity Option is selected to pay the death benefit 2) the 3% or 5% (as you selected) Assumed Investment Rate used in the annuity table for the Contract; 3) the performance of the Investment Portfolio(s) you selected; and 4) the Annuity Option you selected. You can choose either a 3% or a 5% assumed investment rate (AIR). If the actual performance exceeds the 3% or 5% (as you selected) AIR, your Annuity Payments will increase. Similarly, if the actual rate is less than 3% or 5% (as you selected) your Annuity Payments will decrease. Using a higher AIR results in a higher initial Annuity Payment, but later payments will increase more slowly when investment performance rises and decrease more rapidly when investment performance declines. On the Annuity Date, your Contract Value, less any premium tax, less any Contingent Deferred Sales Charge, and less any Contract Maintenance Charge will be applied under the Annuity Option you selected. If you select an Annuity Date that is on or after the 5th Contract Anniversary, and you choose an Annuity Option that has a life contingency for a minimum of 5 years, We will apply your Contract Value, less any premium tax and less any Contract Maintenance Charge to the Annuity Option you elect. Annuity Payments are made monthly unless you have less than $5,000 to apply toward purchasing an Annuity Option. In that case, We may make a single lump sum payment to you instead of Annuity Payments. Likewise, if your Annuity Payments would be less than $50 a month, We have the right to change the frequency of payments so that your Annuity Payments are at least $50. Unless you notify Us otherwise, We will pay the Annuity Payments to you. You can change the payee at any time prior to the Annuity Date. Income from any distribution will be reported to you for tax purposes. Optional Guaranteed Minimum Income Benefit (GMIB) For an extra charge, you can elect the Guaranteed Minimum Income Benefit. You may not select this benefit unless you also select the optional Guaranteed Minimum Death Benefit. Under the Guaranteed Minimum Income Benefit, a Guaranteed Minimum Income Benefit base will be applied to your Annuity Option to provide Annuity Payments. Prior to your 80th birthday, this amount is equal to: 1) the largest Contract Value on any Contract Anniversary; less 2) any adjusted partial withdrawals; and 3) limited to no more than twice the amount of Purchase Payments made less any Adjusted Partial Withdrawals. This amount is limited to no more than twice the amount of Purchase Payments made less any partial withdrawals. The Guaranteed Minimum Income Benefit base after your 80th birthday is equal to the greater of: 1) the value of your Contract, less any premium tax, less any Contingent Deferred Sales Charge, and less any Contract Maintenance Charge; or 2) the Guaranteed Minimum Income Benefit base as of the last Contract Anniversary, prior to age 80, less any adjusted partial withdrawals. If you elect the Guaranteed Minimum Income Benefit, the following limitations will apply: o You must choose either Annuity Option 2 or 4, unless otherwise agreed to by Us. If you do not choose an Annuity Option, Annuity Option 2, which provides a life annuity with 10 years of guaranteed Annuity Payments, will be applied. o If you are age 50 or over on the date We issue the Contract, the Annuity Date must be on or after the later of your 65th birthday, or the 7th Contract Anniversary. o If you are under age 50 on the date We issue your Contract, the Annuity Date must be on or after the 15th Contract Anniversary. o The Annuity Date selected must occur within 30 days following a Contract Anniversary. o If there are Joint Owners, the age of the oldest Owner will be used to determine the Guaranteed Minimum Income Benefit. If the Contract is owned by a non-natural person, then Owner will mean the Annuitant for purposes of this benefit. On the Annuity Date, the initial income benefit will not be less than the Guaranteed Minimum Income Benefit base applied to the guaranteed Annuity Payment factors under the Annuity Option elected. It is possible that the IRS may take the position that charges for the Optional Guaranteed Minimum Income Benefits are deemed to be taxable distributions to you. Although We do not believe that such charges should be treated as taxable distributions, you should consult your tax adviser prior to selecting these riders. This benefit may not be available in your state. Annuity Options You can choose one of the following Annuity Options or any other Annuity Option which is acceptable to Us. After Annuity Payments begin, you cannot change the Annuity Option. OPTION 1. INCOME FOR A SPECIFIED PERIOD. We will pay income for a specific number of years in equal installments. However, if the Annuitant dies and We have made Annuity Payments for less than the specified number of years, you may elect to receive a single lump sum payment which will be equal to the present value of the remaining Annuity Payments (as of the Business Day We receive due proof of death) discounted at the assumed investment rate (AIR) for a variable Annuity Option. OPTION 2. INCOME FOR LIFE WITH PAYMENT GUARANTEED FOR A FIXED NUMBER OF YEARS. We will make monthly Annuity Payments so long as the Annuitant is alive but at least for a specified period certain. If an Annuitant, who is not the Owner, dies before We have made all of the guaranteed Annuity Payments, We will continue to make the Annuity Payments for the remainder of the specified guarantee period to you. If you do not want to receive Annuity Payments after the Annuitant's death, you can request a single lump sum payment which will be equal to the present value of the remaining Annuity Payments (as of the Business Day We receive due proof of death) discounted at the assumed investment rate (AIR) for a variable Annuity Option. OPTION 3. INCOME OF SPECIFIED AMOUNT. We will pay income of a specified amount until the principal and interest 23 -------------------------------------------------------------------------------- are exhausted. However, if the Annuitant dies and We have made Annuity Payments totaling less than the specified amount, you may elect to receive a single lump sum payment, which will be equal to the present value of the remaining Annuity Payments (as of the Business Day We receive due proof of death) discounted at the assumed investment rate (AIR) for a variable Annuity Option. OPTION 4. JOINT AND SURVIVOR INCOME FOR LIFE. We will make monthly Annuity Payments so long as the Annuitant and a joint Annuitant are both alive. The Annuitant must be at least 50 years old, and the joint Annuitant must be at least 45 years old at the time of the first monthly Annuity Payment. Taxes NOTE: Jefferson National has prepared the following information on taxes as a general discussion of the subject. Further information on taxes is contained in the Statement of Additional Information. It is not intended as tax advice to any individual. No attempt is made to consider any applicable state tax or other tax laws, or to address any federal estate, or state and local estate, inheritance and other tax consequences of ownership or receipt of distributions under a Contract. You should consult your tax adviser about your own circumstances. Annuity Contracts in General When you invest in an annuity contract, you usually do not pay taxes on your investment gains until you withdraw the money--generally for retirement purposes. If you invest in a variable annuity as part of a pension plan or employer-sponsored retirement program, your Contract is called a Qualified Contract. If your annuity is independent of any formal retirement or pension plan, it is termed a Non-Qualified Contract. The tax rules applicable to Qualified Contracts vary according to the type of retirement plan and the terms and conditions of the plan. Tax Status of the Contracts Tax law imposes several requirements that variable annuities must satisfy in order to receive the tax treatment normally accorded to annuity contracts. Diversification Requirements. The Internal Revenue Code (Code) requires that the investments of each investment division of the Variable Account underlying the Contracts be "adequately diversified" in order for the Contracts to be treated as annuity contracts for Federal income tax purposes. It is intended that each investment division, through the Investment Portfolio in which it invests, will satisfy these diversification requirements. Owner Control. In certain circumstances, owners of variable annuity contracts have been considered for Federal income tax purposes to be the owners of the assets of the Variable Account supporting their contracts due to their ability to exercise investment control over those assets. When this is the case, the Contract owners have been currently taxed on income and gains attributable to the variable account assets. While We believe that the Contracts do not give owners investment control over Variable Account assets, We reserve the right to modify the Contracts as necessary to prevent an owner from being treated as the owner of the Variable Account assets supporting the Contract. Required Distributions. In order to be treated as an annuity contract for Federal income tax purposes, Section 72(s) of the Code requires any Non-Qualified Contract to contain certain provisions specifying how your interest in the Contract will be distributed in the event of the death of an Owner of the Contract. The Non-Qualified Contracts contain provisions that are intended to comply with these Code requirements, although no regulations interpreting these requirements have yet been issued. We intend to review such provisions and modify them if necessary to assure that they comply with the applicable requirements when such requirements are clarified by regulation or otherwise. Distributions from a Tax Sheltered Annuity, Individual Retirement Annuity, SEP IRA or Simple IRA 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. Distributions may be paid in a lump sum or in substantially equal payments over periods of time specified in the Code and applicable Treasury Regulations. The rules for Roth IRAs do not require distributions to begin during the Owner's lifetime, therefore, the required beginning date is not applicable to Roth IRAs. If the Owner dies before the required beginning date (in the case of a Tax Sheltered Annuity, Individual Retirement Annuity, SEP IRA or Simple IRA) or before the entire contract value is distributed (in the case of Roth IRAs), any remaining interest in the contract must be distributed over a period not exceeding the applicable distribution periods, which are discussed in the Statement of Additional Information. For Individual Retirement Annuities, SEP IRAs and Simple IRAs, all or a portion of each distribution will be included in the recipient's gross income and taxed at ordinary income tax rates. The portion of a distribution which is taxable is based on the ratio between the amount by which non-deductible purchase payments exceed prior non-taxable distributions and total account balances at the time of the distribution. The owner of an Individual Retirement Annuity, SEP IRA or Simple IRA must annually report the amount of non-deductible purchase payments, the amount of any distribution, the amount by which non-deductible purchase payments for all years exceed non-taxable distributions for all years, and the total balance of all Individual Retirement Annuities, SEP IRAs or Simple IRAs. Distributions from Roth IRAs may be either taxable or nontaxable, depending upon whether they are "qualified distributions" or "non-qualified distributions". Other rules may apply to Qualified Contracts. Taxation of Non-Qualified Contracts Non-Natural Person. If a non-natural person (e.g., a corporation or certain trusts) owns a Non-Qualified Contract, the taxpayer generally must include in income any increase in the excess of the Contract value over the investment in the Contract (generally, the Purchase Payments or other consideration paid for the Contract) during the taxable year. There are some exceptions to this rule and a prospective Owner that is not a natural person should discuss these with a tax adviser. The following discussion generally applies to Contracts owned by natural persons. Withdrawals. When a withdrawal from a Non-Qualified 24 -------------------------------------------------------------------------------- Contract occurs, the amount received will be treated as ordinary income subject to tax up to an amount equal to the excess (if any) of the Contract value immediately before the distribution over the Owner's investment in the Contract (generally, the Purchase Payments or other consideration paid for the Contract, reduced by any amount previously distributed from the Contract that was not subject to tax) at that time. In the case of a surrender under a Non-Qualified Contract, the amount received generally will be taxable only to the extent it exceeds the Owner's investment in the Contract. Penalty Tax on Certain Withdrawals. In the case of a distribution from a Non-Qualified Contract, there may be imposed a federal tax penalty equal to ten percent of the amount treated as income. In general, however, there is no penalty on distributions: o made on or after the taxpayer reaches age 59 1/2; o made on or after the death of an Owner; o attributable to the taxpayer's becoming disabled; or o made as part of a series of substantially equal periodic payments for the life (or life expectancy) of the taxpayer and the Beneficiary. If the series of substantially equal periodic payments is modified before the later of the Owner attaining age 59 1/2 or five years from the date of the first periodic payment, then the tax for the year of the modification is increased by an amount equal to the tax which would have been imposed (the 10% penalty tax) but for the exception, plus interest for the tax years in which the exception was used. Other exceptions may be applicable under certain circumstances and special rules may be applicable in connection with the exceptions enumerated above. Also, additional exceptions apply to distributions from a Qualified Contract. You should consult a tax adviser with regard to exceptions from the penalty tax. Annuity Payments. Although tax consequences may vary depending on the payout option elected under an annuity contract, a portion of each Annuity Payment is generally not taxed and the remainder is taxed as ordinary income. The non-taxable portion of an Annuity Payment is generally determined in a manner that is designed to allow you to recover your investment in the Contract ratably on a tax-free basis over the expected stream of Annuity Payments, as determined when Annuity Payments start. Once your investment in the Contract has been fully recovered, however, the full amount of each Annuity Payment is subject to tax as ordinary income. Taxation of Death Benefit Proceeds. Amounts may be distributed from a Contract because of your death or the death of the Annuitant. Generally, such amounts are includible in the income of the recipient as follows: (i) if distributed in a lump sum, they are taxed in the same manner as a surrender of the Contract, or (ii) if distributed under a payout option, they are taxed in the same way as annuity payments. Transfers, Assignments or Exchanges of a Contract. A transfer or assignment of ownership of a Contract, the designation of an Annuitant, the selection of certain maturity dates, or the exchange of a contract may result in certain tax consequences to you that are not discussed herein. An Owner contemplating any such transfer, assignment or exchange, should consult a tax advisor as to the tax consequences. Withholding. Annuity distributions are generally subject to withholding for the recipient's federal income tax liability. Recipients can generally elect, however, not to have tax withheld from distributions. Multiple Contracts. All Non-Qualified deferred annuity contracts that are issued by Us (or Our affiliates) to the same Owner during any calendar year are treated as one annuity contract for purposes of determining the amount includible in such Owner's income when a taxable distribution occurs. Taxation of Qualified Contracts The tax rules applicable to Qualified Contracts vary according to the type of retirement plan and the terms and conditions of the plan. Your rights under a Qualified Contract may be subject to the terms of the retirement plan itself, regardless of the terms of the Qualified Contract. Adverse tax consequences may result if you do not ensure that contributions, distributions and other transactions with respect to the Contract comply with the law. The Statement of Additional Information contains a summary discussion of certain tax rules generally applicable to Individual Retirement Accounts (IRAs), as defined in Section 408 of the Code, Roth IRAs, as described in Code Section 408A, corporate pension and profit-sharing plans under Section 401(a) of the Code, Tax Sheltered Annuities under section 403(b) of the Code and certain deferred compensation plans under Code Section 457. Possible Tax Law Changes Although the likelihood of legislative changes is uncertain, there is always the possibility that the tax treatment of the Contract could change by legislation or otherwise. Consult a tax adviser with respect to legislative developments and their effect on the Contract. We have the right to modify the Contract in response to legislative changes that could otherwise diminish the favorable tax treatment that Contract Owners currently receive. We make no guarantee regarding the tax status of any Contract and do not intend the above discussion as tax advice. Other Information Legal Proceedings Like other life insurance companies, there is a possibility that We may become involved in lawsuits. Currently, however, there are no legal proceedings to which the Separate Account is a party or to which the assets of the Separate Account are subject. Neither Jefferson National nor Jefferson National Securities Corporation, the distributor of the Contracts, is involved in any litigation that is of material importance in relation to their total assets or that relates to the Separate Account. On August 9, 2004, Jefferson National and Inviva, Inc., a shareholder of Jefferson National and its former parent, without admitting or denying any wrongdoing, settled an administrative proceeding with the Securities and Exchange Commission ("SEC") regarding disclosure of "market timing" arrangements which, to the greatest extent, involved The Monument variable annuity and, to a much lesser extent, the Advantage Plus variable annuity. The market timing arrangements were in place when Inviva acquired Jefferson National in October 2002 and were terminated in October 2003. Under the terms of the settlement, a $5 million pool, $1.5 million of which is characterized as a penalty, has been established for distribution to investors who have suffered 25 -------------------------------------------------------------------------------- losses by virtue of the market timing. This pool will be distributed in accordance with a methodology developed by an independent distribution consultant acceptable to the SEC. On August 9, 2004, Jefferson National and Inviva submitted a Stipulation of Settlement to the New York Attorney General("NYAG") based on the same set of facts, again without admitting or denying any wrongdoing. The settlement with NYAG recognizes the payments being made in connection with the SEC settlement and did not require Jefferson National or Inviva to make any additional payments. The Separate Account We established a Separate Account, Jefferson National Life Annuity Account H (Separate Account), to hold the assets that underlie the Contracts. Prior to May 1, 2003, the Separate Account was known as Conseco Variable Annuity Account H. The Board of Directors of Jefferson National adopted a resolution to establish the Separate Account under Texas Insurance law on November 1, 1999. The Separate Account is registered with the Securities and Exchange Commission as a unit investment trust under the Investment Company Act of 1940. The Separate Account is divided into Sub-accounts. Registration under the 1940 Act does not involve the supervision by the SEC of the management or investment policies or practices of the Variable Account. The Variable Account is regulated by the Insurance Department of Texas. Regulation by the state, however, does not involve any supervision of the Variable Account, except to determine compliance with broad statutory criteria. The assets of the Separate Account are held in Our name on behalf of the Separate Account and legally belong to Us. However, those assets that underlie the Contracts, are not chargeable with liabilities arising out of any other business We may conduct. All the income, gains and losses (realized or unrealized) resulting from these assets are credited to or charged against the Contracts and not against any other Contracts We may issue. Where permitted by law, We may: o create new separate accounts; o combine separate Accounts, including combining the Separate Account with another separate account established by the Company; o transfer assets of the Separate Account, which We determine to be associated with the class of policies to which this policy belongs, to another separate account; o transfer the Separate Account to another insurance company; o add new Sub-accounts to or remove Sub-accounts from the Separate Account, or combine Sub-accounts; o make the Sub-accounts available under other policies We issue; o add new Investment Portfolios or remove existing Investment Portfolios; o substitute new Investment Portfolios for any existing Investment Portfolio which We determine is no longer appropriate in light of the purposes of the Separate Account; o deregister the Separate Account under the Investment Company Act of 1940; and o operate the Separate Account under the direction of a committee or in another form. Distributor Jefferson National Securities Corporation (JNSC), 9920 Corporate Campus Drive, Suite 1000, Louisville, Kentucky 40223, acts as the distributor of the Contracts. JNSC is a broker-dealer registered under the Securities Exchange Act of 1934 and a member of the Financial Industry Regulatory Authority. Sales of the Contracts will be made by registered representatives of broker-dealers authorized to sell the Contracts. The registered representatives of the broker-dealers will also be licensed insurance representatives of Jefferson National. See the Statement of Additional Information for more information. Commissions will be paid to broker-dealers who sell the Contracts. Broker-dealer commissions may be paid up to 8.50% of Purchase Payments and may include reimbursement of promotional or distribution expenses associated with the marketing of the Contracts. We may, by agreement with the broker-dealer, pay commissions as a combination of a certain percentage amount at the time of sale and a trail commission. This combination may result in the broker-dealer receiving more commission over time than would be the case if it had elected to receive only a commission at the time of sale. The commission rate paid to the broker-dealer will depend upon the nature and level of services provided by the broker-dealer. In addition, under certain circumstances, payments may be made to certain sellers or Financial Advisors for other services not directly related to the sale of contracts. Financial Statements Our financial statements have been included in the Statement of Additional Information and should be considered only as bearing upon the ability of the Company to meet its obligations under the Contract. They should not be considered as bearing on the investment performance of the Investment Portfolios. The value of the Investment Portfolios is affected primarily by the performance of the underlying investments. The financial statements of Jefferson National Life Annuity Account H are included in the Statement of Additional Information. Independent Registered Public Accounting Firm The statutory-basis financial statements of Jefferson National Life Insurance Company as of December 31, 2006 and 2007, each of the three years in the period then ended December 31, 2007, and the financial statements of Jefferson National Life Annuity Account H as of December 31, 2007 and for each of the two years in the period then ended December 31, 2007 appearing in this Statement of Additional Information have been audited by BDO Seidman LLP, Independent Registered Public Accounting Firm, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing. 26 -------------------------------------------------------------------------------- APPENDIX A--MORE INFORMATION ABOUT THE INVESTMENT PORTFOLIOS Below is a summary of the investment objectives and strategies of each Investment Portfolio available under the Contract. There can be no assurance that the investment objectives will be achieved. The Investment Portfolio prospectuses contain more complete information including a description of the investment objectives, policies, restrictions and risks of each Investment Portfolio. The following descriptions are qualified in their entirety by the prospectus for each Investment Portfolio. AIM VARIABLE INSURANCE FUNDS The AIM Variable Insurance Funds is a mutual fund with multiple portfolios. Invesco Aim Advisors, Inc. serves as the investment advisor. 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 serves as the investment subadvisors.. The following Investment Portfolios are available under the Contract: AIM V.I. Basic Value - Series II shares The fund's investment objective is long-term growth of capital. The fund seeks to meet its objective by investing, normally, at least 65% of its total assets in equity securities of U.S. issuers that have market capitalizations in excess of $5 billion. AIM V.I. Core Equity -- Series I shares The fund's investment objective is growth of capital. The fund seeks to meet its objective by investing normally at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities, including convertible securities, of established companies that have long-term above average growth in earnings, and growth companies that are believed to have the potential for above-average growth in earnings. AIM V.I. Financial Services - Series I shares The fund's investment objective is capital growth. The fund seeks to meet its objective by investing, normally, least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities of issuers engaged primarily in financial services-related services. AIM V.I. Global Health Care - Series I shares The fund's investment objective is capital growth. The fund seeks to meet this objective by investing, normally, at least 80% of its assets in securities of health care industry companies. AIM V.I. Global Real Estate - Series I shares The fund's 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). AIM V.I. High Yield - Series I shares The fund's investment objective is a high level of current income. The fund seeks to meet its objective by investing, normally, at least 80% of its 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. AIM V.I. Mid Cap Core Equity - Series II shares The fund's investment objective is long-term growth of capital. The fund seeks to meet this objective by investing, normally, at least 80% of its assets in equity securities, including convertible securities, of mid-capitalization companies. AIM V.I. Technology - Series I shares The fund's 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 any borrowings for investment purposes, in equity securities of issuers engaged primarily in technology-related industries. THE ALGER AMERICAN FUND The Alger American Fund is a mutual fund with multiple portfolios. The manager of the fund is Fred Alger Management, Inc. The following Investment Portfolios are available under the Contract: Alger American Capital Appreciation (f/k/a Alger American Leveraged AllCap) The Fund seeks long-term capital appreciation. Under normal market circumstances, the Portfolio invests at least 85% of its net assets plus any borrowings for investment purposes in equity securities of companies of any market capitalization that the Manager believes demonstrate promising growth potential. The Portfolio can leverage, that is, borrow money to buy additional securities. By borrowing money, the Portfolio has the potential to increase its returns if the increase in the value of the securities purchased exceeds the cost of borrowing, including interest paid on the money borrowed. Alger American Growth (name changing to Alger American LargeCap Growth 7/1/2008) The Fund seeks long-term capital appreciation. The following principal strategy is in effect through June 30, 2008: 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. 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 27 -------------------------------------------------------------------------------- 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 MidCap Growth The Fund seeks long-term capital appreciation. The Portfolio focuses on mid-sized companies that the Manager believes demonstrate promising growth potential. Under normal circumstances, the Portfolio invests at least 80% of its net assets in equity securities of companies that, at the time of purchase of the securities, have total market capitalization within the range of companies included in the Russell Midcap Growth Index or the S&P MidCap 400 Index, as reported by the indexes as of the most recent quarter-end. Both indexes are designed to track the performance of medium-capitalization stocks. At December 31, 2007, the market capitalization of the companies in these indexes ranged from $263 million to $42 billion. Alger American Small Cap Growth (f/k/a Alger American Small Capitalization) Closed to new investors The Alger American Small Capitalization Portfolio seeks long-term capital appreciation. It 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 the securities, have a total market capitalization within the range of companies included in the Russell 2000 Growth Index or the S&P SmallCap 600 Index, updated quarterly. Both indexes are broad indexes of small capitalization stocks. ALLIANCEBERNSTEIN L.P. AllianceBernstein L.P. is one of the largest publicly traded global asset management firms in the world with approximately $800 billion in assets under management at December 31, 2007. AllianceBernstein provides diversified, investment management services that include global growth, value and style blend equities, and fixed income services to institutional, high net worth and retail clients worldwide. AllianceBernstein Growth and Income The Portfolio's investment objective is long-term growth of capital. The Portfolio invests primarily in the equity securities of U.S. companies that the Adviser believes are undervalued. The Adviser believes that, over time, a company's stock price will come to reflect its intrinsic economic value. The Adviser uses a disciplined investment process to evaluate the companies in the Adviser's extensive research universe and to identify the stocks of companies that offer the best combination of value and potential for price appreciation. The Portfolio may invest in companies of any size and in any industry. AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. American Century Variable Portfolios, Inc. is a registered open-end management investment company with multiple funds. The funds' investment adviser is American Century Investment Management, Inc, except for American Century Investments VP International Fund, which has American Century Global Investment Management, Inc. as an investment adviser. The following Investment Portfolios are available under the Contract: American Century Investments VP Balanced The American Century Investments VP Balanced Fund seeks long-term capital growth and current income by investing approximately 60% of its assets in equity securities and the remainder in bonds and other fixed-income securities. American Century Investments VP Income & Growth The VP Income & Growth Fund seeks capital growth by investing in common stocks. Income is a secondary objective. American Century Investments VP Inflation Protection The American Century VP Inflation Protection Fund pursues long-term total return using a strategy that seeks to protect against U.S. inflation. American Century Investments VP International The American Century VP International Fund seeks capital growth by investing primarily in securities of foreign companies that management believes to have potential for appreciation. American Century Investments VP Value The American Century VP Value Fund seeks long-term capital growth with income as a secondary objective. It invests primarily in equity securities of well-established companies that management believes to be undervalued at the time of purchase. THE DIREXION INSURANCE TRUST The DireXion Insurance Trust is managed by Rafferty Asset Management, LLC, which provides investment services to the Fund. Rafferty is located at 33 Whitehall St. 10th Floor, New York, NY 10004. As of the date of this prospectus the DireXion Dynamic VP HY Bond Fund permits active trading. This may change at any time without notice. For more information, see the prospectus. The following Investment Portfolio is available under the Contract: DireXion Dynamic VP HY Bond DireXion Dynamic VP HY Bond Fund is an open-end fund. The Fund's objective is to maximize total return. The fund invests at least 80% of the fund's net assets (plus any borrowing for investment purposes) in high yield debt instruments, commonly referred to as "junk bonds", or derivatives of such instruments. The fund is designed to provide liquidity for active asset allocators. THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. (Initial Shares) The Dreyfus Socially Responsible Growth Fund, Inc. is a mutual fund. The investment adviser for the fund is The Dreyfus Corporation. The Dreyfus Socially Responsible Growth Fund, Inc. seeks to provide capital growth, with current income as a secondary goal. To pursue these goals, the fund invests at least 80% of its assets in the common stock of companies that, in the opinion of the fund's management, meet traditional investment standards and conduct their business in a manner that contributes to the enhancement of the quality of life in America. DREYFUS INVESTMENT PORTFOLIOS (Service Shares) The Dreyfus Investment Portfolios ("Dreyfus IP") is a mutual fund with multiple portfolios. The investment adviser to the fund is The Dreyfus Corporation. The following Investment Portfolios are available under the Contract: 28 -------------------------------------------------------------------------------- DREYFUS IP - Small Cap Stock Index The portfolio seeks to match the performance of the Standard & Poor's (S&P) SmallCap 600 Index (R). To pursue this goal, the portfolio invests in a representative sample of stocks included in the S&P SmallCap 600 Index(R), and in futures whose performance is related to the index, rather than attempt to replicate the index. DREYFUS STOCK INDEX FUND, INC. (Initial Shares) The Dreyfus Stock Index Fund is a mutual fund. The investment adviser for the fund is The Dreyfus Corporation and the sub-adviser is Mellon Capital Management. The Dreyfus Stock Index Fund seeks to match the total return of the Standard & Poor's 500 Composite Stock Price Index. To pursue this goal, the fund generally invests in all 500 stocks in the S&P 500 in proportion to their weighting in the index. DREYFUS VARIABLE INVESTMENT FUND (Initial Shares) The Dreyfus Variable Investment Fund ("Dreyfus VIF") is a mutual fund with multiple portfolios. The investment adviser for the fund is The Dreyfus Corporation. The following Investment Portfolios are available under the Contract: Dreyfus VIF--International Value The Dreyfus VIF--International Value Portfolio seeks long-term capital growth. To pursue this goal, the portfolio invests at least 80% of its assets in stocks. The Portfolio ordinarily invests most of its assets in foreign issuers which Dreyfus considers to be "value" companies. FEDERATED INSURANCE SERIES Federated Insurance Series is a mutual fund with multiple portfolios. Federated Investment Management Company is the adviser to the Federated High Income Bond Fund II (Primary Shares). Federated Global Investment Management Corp. is the adviser to the Federated International Equity Fund II. Federated Equity Management Company of Pennsylvania is the adviser to the Federated Kaufmann Fund II, the Federated Market Opportunity Fund II and the Federated Capital Income II. Capital Income II's sub-adviser is the Federated Investment Management Company. The following Investment Portfolios are available under the Contract: Federated Capital Income II The Federated Capital Income Fund II seeks high current income and moderate capital appreciation. The Fund pursues its investment objective by investing primarily in equity fixed income securities that have higher relative income potential. The Fund's investment objective is to achieve high current income and moderate capital appreciation. The Fund pursues its investment objectives by investing in both equity and fixed-income securities that have high relative income potential. Federated High Income Bond II (Primary Shares) The Federated High Income Bond Fund II seeks high current income by investing primarily in a professionally managed, diversified portfolio of high yield, lower rated corporate bonds (also known as "junk bonds"). The Fund's investment objective is to seek high current income. The Fund pursues its investment objective by investing primarily in a diversified portfolio of high-yield lower-rated corporate bonds (also known as "junk bonds"). Federated International Equity II The Federated International Equity Fund II seeks to obtain a total return on its assets. The Fund's total return will consist of two components: (1) changes in the market value of its portfolio securities (both realized and unrealized appreciation); and (2) income received from its portfolio securities. The Fund's investment objective is to obtain a total return on its assets. The Fund pursues its investment objective by investing primarily in equity securities of companies based outside the United States. JANUS ASPEN SERIES Each Portfolio is a series of Janus Aspen Series, a Delaware statutory trust. Janus Capital Management LLC is the investment adviser to the Portfolios. Janus Aspen Mid Cap Value Portfolio is subadvised by Perkins, Wolf, McDonnell and Company, LLC. The following Investment Portfolios are available under your Contract: Janus Aspen Growth and Income (Institutional Shares) The Janus Aspen Series Growth and Income Portfolio seeks long-term capital growth and current income. It pursues its objective by normally emphasizing investments in common stocks. It will normally invest up to 75% of its assets in equity securities selected primarily for their growth potential, and at least 25% of its assets in securities the portfolio manager believes have income potential. Janus Aspen International Growth (Institutional Shares) The Janus Aspen International Growth Portfolio seeks long-term growth of capital. It invests, under normal circumstances, at least 80% of its net assets in securities of issuers from countries outside of the United States. The Portfolio normally invests in securities of issuers from several different countries, excluding the United States. Although the Portfolio intends to invest substantially all of its assets in issuers located outside the United States, it may at times invest in U.S. issuers, and it may, under unusual circumstances, invest all of its assets 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. Janus Aspen Large Cap Growth (Institutional Shares) The Janus Aspen Large Cap Growth Portfolio seeks long-term growth of capital in a manner consistent with the preservation of capital. It pursues its investment objective by investing, under normal circumstances, at least 80% of its net assets in common stocks of large-sized companies. Large-sized companies are those whose market capitalization falls within the range of companies in the Russell 1000(R) Index at the time of purchase. 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. Janus Aspen Mid Cap Growth (Institutional Shares) The Janus Aspen Mid Cap Growth Portfolio seeks long- term growth of capital. It pursues its investment objective by investing, under normal circumstances, at least 80% of its net assets in equity securities of mid-sized companies whose market capitalization falls, at the time of purchase, in the 12-month average of the capitalization range of the Russell Midcap(R) Growth Index. 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. Janus Aspen Worldwide Growth (Institutional Shares) The Janus Aspen Worldwide Growth Portfolio seeks long- 29 -------------------------------------------------------------------------------- term growth of capital in a manner consistent with the preservation of capital. It pursues its investment objective by investing 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. LAZARD RETIREMENT SERIES, INC. Lazard Retirement Series, Inc. is a mutual fund with multiple portfolios. Lazard Asset Management LLC serves as the investment manager of the portfolios. Lazard Asset Management LLC ("Lazard" or "LAM") is a Delaware limited liability company. It is a subsidiary of Lazard Freres & Co. LLC, (LF&Co), a New York limited liability company with one member, Lazard Group LLC, a Delaware limited liability company. The following Investment Portfolios are available under the Contract: Lazard Retirement Emerging Markets Equity The Portfolio seeks long-term capital appreciation. The Portfolio invests primarily in equity securities, principally common stocks, of non-U.S. companies whose principal activities are located in emerging market countries and that the Investment Manager believes are undervalued based on their earnings, cash flow or asset values. Emerging market countries include all countries represented by the Morgan Stanley Capital International (MSCI) Emerging Market (EM) Index, which currently includes: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey and Venezuela. Under normal circumstances, the Portfolio invests at least 80% of its assets in equity securities of companies whose principal business activities are located in emerging market countries. The allocation of the Portfolio's assets among emerging market countries may shift from time to time based on the Investment Manager's judgment and its analysis of market conditions. However, the Portfolio is likely to focus on companies in Latin America, the Pacific Basin and Eastern Europe. Lazard Retirement International Equity The Portfolio seeks long-term capital appreciation. The Portfolio invests primarily in equity securities, principally common stock, of relatively large non-U.S. companies with market capitalizations in the range of companies included the Morgan Stanley Capital International (MSCI(R)) Europe, Australia and Far East (EAFE(R)) Index that the Investment Manager believes are undervalued based on their earnings, cash flow or asset values. In choosing stocks for the Portfolio, the Investment Manager looks for established companies in economically developed countries. The allocation of the Portfolio's assets among geographic sectors may shift from time to time based on the Investment Manager's judgment. Under normal circumstances, the Portfolio invests at least 80% of its assets in equity securities. The portfolio may invest up to 30% of its assets in securities of companies whose principal business activities are located in emerging market countries, although the allocation of the Portfolio's assets to emerging market countries may vary from time to time. The securities of emerging market countries can be extremely volatile. The Portfolio's performance will be influenced by political, social and economic factors affecting companies in emerging market counties. Emerging market countries can generally have economic structures that are less diverse and mature, and political systems that are less stable, than those of developed countries. Lazard Retirement U.S. Small Cap Equity The Portfolio seeks long-term capital appreciation. The Portfolio invests primarily in equity securities, principally common stocks, of relatively small U.S. companies that the Investment Manager believes are undervalued based on their earnings, cash flow or asset values. The Investment Manager considers "small cap companies" to be those companies that at the time of initial purchase by the Portfolio, have market capitalizations within the range of companies included in the Russell 2000(R) Index (up to $2.75 billion as of March 31, 2004). Because small cap companies are defined by reference to an index, the market capitalizations of companies in which the Portfolio may invest may vary with market conditions. Under normal circumstances, the Portfolio invests at least 80% of its assets in equity securities of small cap companies. These securities generally have, in the Investment Manager's opinion, one or more of the following characteristics: o The potential to become a larger factor in the company's business sector o Significant debt but high levels of free cash flow o A relatively short corporate history with the expectation that the business may grow o The Portfolio may invest up to 20% of its assets in equity securities of larger U.S. companies. Lazard Retirement U.S. Strategic Equity The Portfolio seeks long-term capital appreciation. Under normal circumstances the Portfolio will invest at least 80% of its net assets, plus any borrowings for investment purposes in equity securities of U.S. companies (or other investments with similar economic characteristics) and certain investment strategies and policies. The Portfolio will generally focus on large-sized companies, although the market capitalizations of issuers in which the Portfolio invests may vary with market conditions and the portfolio will have opportunistic exposure to mid cap companies. From time to time, the Portfolio may invest in companies with market capitalization as small as $500 millions. LEGG MASON PARTNERS FUND ADVISOR, LLC INVESTMENT MANAGER AND SUBADVISORS Legg Mason Partners Fund Advisor, LLC ("LMPFA"), with offices at 620 Eighth Avenue, New York, New York 10018, is the funds' investment manager. LMPFA provides administrative and certain oversight services to the funds and manages the equity funds' cash and short-term investments. ClearBridge Advisors, LLC ("ClearBridge") provides the day-to-day portfolio management of certain of the funds. ClearBridge has offices at 620 Eighth Avenue, New York, New York 10018 and is an investment adviser that was formed to succeed to the equity securities portfolio management business of Citigroup Asset Management, which was acquired by Legg Mason, Inc. in December 2005. 30 -------------------------------------------------------------------------------- Western Asset Management Company ("Western Asset") and Western Asset Management Company Limited ("Western Asset Limited") provide the day-to-day portfolio management of certain of the funds as subadvisors. Western Asset, established in 1971 and having offices at 385 East Colorado Boulevard, Pasadena, California 91101, and Western Asset Limited, with offices at 10 Exchange Place, London, England, act as investment advisers to institutional accounts, such as corporate pension plans, mutual funds and endowment funds. Legg Mason Partners Variable Aggressive Growth The fund seeks capital appreciation. It invests primarily in common stocks of companies that the manager believes are experiencing, or will experience, growth in earnings and/or cash flow that exceeds the average rate of earnings growth of the companies comprising the S&P 500 Index. The fund may invest in the securities of large, well-known companies that offer prospects of long-term earnings growth. However, because higher earnings growth rates are often achieved by small- to medium-sized companies, a significant portion of the fund's assets may be invested in the securities of such companies. Legg Mason Partners Variable Capital and Income The fund seeks total return (that is, a combination of income and long-term capital appreciation). The fund invests in equity and fixed income securities of both U.S. and foreign issuers. The fund seeks to generate income and appreciation by allocating fund assets to income and non-income producing equity and equity related securities, including common stocks, real estate investment trusts and convertible securities. To generate income and enhance exposure to the equity markets, the fund will purchase investment grade and high yield fixed income securities or unrated securities of equivalent quality along with options on securities indices. Fixed income securities may be of any maturity. By investing in a combination of equity and fixed income securities, the fund seeks to produce a pattern of total return that moves with the S&P 500 Index, while generating high income. The fund may also use options, futures and options on futures to increase exposure to part or all of the market or to hedge against adverse changes in the market value of its securities. Legg Mason Partners Variable Fundamental Value The fund seeks long term capital growth. Current income is a secondary consideration. The fund invests primarily in common stocks and common stock equivalents of companies the manager believes are undervalued in the marketplace. While the manager selects investments primarily for their capital appreciation potential, secondary consideration is given to a company's dividend record and the potential for an improved dividend return. The fund generally invests in securities of large well-known companies but may also invest a significant portion of its assets in securities of small to medium-sized companies when the manager believes smaller companies offer more attractive value opportunities. Legg Mason Partners Variable Global High Yield Bond The fund seeks to maximize total return, consistent with the preservation of capital. The fund invests primarily in high yield fixed income securities issued by U.S. and foreign corporations and foreign governments and their agencies and instrumentalities. The fund invests, under normal circumstances, at least 80% of its assets in high yield bonds and related investments. The fund will limit its investments in emerging market governmental issuers to 35% of its assets. The fund invests primarily in fixed income securities rated below investment grade by a recognized rating agency or, if unrated, of equivalent quality as determined by the manager. The fund may also invest up to 20% of its assets in equity and equity related securities and invest up to 100% of its assets in securities of foreign issuers. The fund normally maintains an average portfolio duration of between 3 and 7 years. However, the fund may invest in individual securities of any duration. Legg Mason Partners Variable Large Cap Growth The fund invests, under normal market conditions, at least 80% of the value of its net assets, plus any borrowings for investment purposes, in equity securities or other investments with similar economic characteristics of U.S. companies with large market capitalizations. Large market capitalization companies are currently defined as those whose market capitalizations are similar to companies in the Russell 1000 Index. Up to 20% of the value of the fund's net assets may be invested in companies with smaller market capitalizations. Legg Mason Partners Variable Strategic Bond The fund seeks to maximize total return, consistent with the preservation of capital. The fund invests primarily in a globally diverse portfolio of fixed income securities. The fund invests, under normal circumstances, at least 80% of its assets in fixed income securities and related investments. The manager has broad discretion to allocate the fund's assets among the following segments of the international market for fixed income securities: o U.S. government obligations o Mortgage and asset-backed securities o Investment and non-investment securities grade U.S. and foreign corporate debt; and o Investment and non-investment debt grade sovereign debt, including issuers in emerging markets The fund invests in fixed income securities across a range of credit qualities and may invest a substantial portion of the fund's assets in obligations rated below investment grade by a recognized rating agency, or, if unrated, of equivalent quality as determined by the manager. The fund normally maintains an average portfolio duration of between 3 and 7 years. The fund may hold individual securities of any duration and may at times hold a substantial portion of its assets in short-term instruments. LORD ABBETT SERIES FUND, INC. Lord Abbett Series Fund, Inc. is a mutual fund with multiple portfolios. The fund's investment adviser is Lord, Abbett & Co. LLC ("Lord Abbett"), a Delaware limited liability company, which is registered as an investment adviser with the SEC. The following Investment Portfolios are available under the Contract: Lord Abbett Series Fund, Inc.--America's Value The Portfolio's investment objective is to seek current income and capital appreciation. To pursue this goal, the Portfolio normally invests in equity securities of companies with market capitalizations greater than $500 million at the time of purchase and fixed income securities of various types. This market capitalization threshold may vary in response to changes in the markets. The Portfolio generally uses a value approach to identify particular investments for the Portfolio. The mix of the Portfolio's investments at any time will depend 31 -------------------------------------------------------------------------------- on our judgments regarding the degree to which we believe specific securities are undervalued (that is, with the highest projected total return/yield potential) and is subject to change. Under normal circumstances, the Portfolio invests at least 50% of its net assets in equity securities and may invest its remaining assets in equity or fixed income securities. The Portfolio invests under normal circumstances at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity and fixed income securities issued by companies organized in or maintaining their principal place of business in the United States, or whose securities are traded primarily in the United States. The Portfolio will provide shareholders with at least 60 days' notice of any change in this policy. The Portfolio may invest up to 20% of its net assets in foreign securities that are primarily traded outside the United States. Lord Abbett Series Fund, Inc.--Growth and Income The Portfolio's investment objective is long-term growth of capital and income without excessive fluctuations in market value. To pursue this goal, the Portfolio primarily purchases equity securities of large, seasoned, U.S. and multinational companies that we believe are undervalued. Under normal circumstances, the Portfolio will invest at least 80% of its net assets in equity securities of large companies. A large company is defined as a company having a market capitalization at the time of purchase that falls within the market capitalization range of companies in the Russell 1000(R) Index, a widely used benchmark for large-cap stock performance. As of June 30, 2007, following its annual reconstitution the market capitalization range of the Russell 1000(R) Index was $1.5 billion to $472.5 billion. This range varies daily. Equity securities in which the Portfolio may invest may include common stocks, preferred stocks, convertible securities, warrants, and similar instruments. Common stocks, the most familiar type of equity security, represent an ownership interest in a company. NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST Neuberger Berman Advisers Management Trust ("Neuberger Berman AMT") is a registered investment company offering multiple portfolios. The portfolios are managed by Neuberger Berman Management Inc and sub-advised by Neuberger Berman, LLC (except for Lehman Brothers High Income Bond Portfolio (formerly, High Income Bond Portfolio) and Lehman Brothers Short Duration Bond Portfolio (formerly Limited Maturity Bond Portfolio), which are each sub-advised by Lehman Brothers Asset Management LLC, an affiliate of Neuberger Berman. The following portfolios are available under the Contract: Lehman Brothers High Income Bond The Fund's investment objective is to seek high total returns consistent with capital preservation. To pursue this goal, the Fund normally invests primarily in a diversified portfolio of intermediate term, U.S. dollar-denominated, high-yield corporate bonds of U. S. issuers (including those sometimes known as "junk bonds") rated at the time of investment "Baa1" or below by Moody's Investors Service, Inc. ("Moody's"), or "BBB+" or below by Standard & Poor's ("S&P"), or unrated bonds deemed by the Portfolio Managers to be of comparable quality. Lehman Brothers Short Duration Bond The fund seeks the highest available current income consistent with liquidity and low risk to principal; total return is a secondary goal. To pursue these goals, the Fund 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 Fund may invest up to 10% of its 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 & Poor's or, if unrated by either of these, deemed by the investment manager to be of comparable quality. When the Portfolio Managers believe there are attractive opportunities in foreign markets, the Fund may also invest in foreign debt securities to enhance yield and/or total return. Neuberger Berman AMT Small-Cap Growth (Class S) The Fund seeks long-term capital growth. To pursue this goal, under normal market conditions, at least 80% of the Fund's net assets, plus the amount of any borrowings for investment purposes, will be invested in common stocks of small-capitalization companies which it defines as those with a total market capitalization within the market capitalization range of the Russell 2000 Index at the time of purchase. The Fund may continue to hold or add to a position in a stock after the issuer has grown beyond the capitalization range of the Russell 2000 Index. Neuberger Berman AMT Mid-Cap Growth The Fund seeks growth of capital. To pursue this goal, the portfolio invests mainly in common stocks of mid-capitalization companies. To pursue this goal, the Fund normally invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in common stocks of mid-capitalization companies, which it defines as those with a total market capitalization within the market capitalization range of the Russell Midcap(R) Index at the time of purchase. The Fund may continue to hold or add to a position in a stock after the issuer has grown beyond the capitalization range of the Russell Midcap(R) Index. Neuberger Berman AMT Partners Portfolio The fund seeks growth of capital. The Fund invests mainly in common stocks, of mid- to large- capitalization companies. To pursue this goal, the Fund invests mainly in common stocks of mid- to large capitalization companies. The Fund seeks to reduce risk by diversifying amount many companies and industries. The Portfolio Manager looks for well-managed companies with strong balance sheets whose stock prices are undervalued. Neuberger Berman AMT Regency The Fund seeks growth of capital. To pursue this goal, the Fund invests mainly in common stocks of mid-capitalization companies which it defines as those with a total market capitalization within the market capitalization range of the Russell Midcap(R) Index. The Fund seeks to reduce risk by diversifying among many companies, sectors and industries. Neuberger Berman AMT Socially Responsive The Fund seeks long-term growth of capital by investing primarily in securities of companies that meet the Fund's financial criteria and social policy. The Fund seeks to reduce risk by investing across many different industries. 32 -------------------------------------------------------------------------------- NORTHERN LIGHTS VARIABLE INSURANCE TRUST The Northern Lights Variable Insurance Trust is a Delaware Statutory trust offering multiple portfolios. JNF Advisors, Inc. is the investment manager for the JNF series. It retains Chicago Equity Partners as sub-advisers to manage it's portfolios as described below. The following Investment Portfolios are available under the Contract: JNF Chicago Equity Partners Balanced The JNF Chicago Equity Partners Balanced Fund seeks to provide long-term growth of capital and income consistent with preservation of capital and a prudent level of risk. Normally the portfolio invests approximately 65-70% of its assets in mid to large cap equity securities, and the remainder in a combination of fixed-income securities, or cash equivalents. The equity investment strategy is designed to deliver a consistent exposure to the domestic equity market and utilizes a proprietary multi-factor model to identify securities with positive exposure to specific growth, value, quality and momentum factors. The goal of the process is to outperform the benchmark through specific security selection while reducing portfolio risks that lead to volatility and are not consistently rewarded. The fixed income strategy is designed to generate excess return through sector allocation, security selection and maturity distribution. The asset allocation strategy focuses on shifting the allocation to provide additional excess return over the benchmark at a prudent risk level. JNF Chicago Equity Partners Equity The JNF Chicago Equity Partners Equity Fund seeks to provide a high total return consistent with preservation of capital and a prudent level of risk. The investment strategy is designed to deliver a consistent exposure to the domestic mid capitalization equity market and utilizes a proprietary multi-factor model to identify securities with positive exposure to specific growth, value, quality and momentum factors. The goal of the process is to outperform the benchmark through specific stock selection while reducing portfolio risks that lead to volatility and are not consistently rewarded. JNF Loomis Sayles Bond The Fund seeks high total investment return through a combination of current income and capital appreciation by investing at least 80% of its net assets (plus any borrowings made for investment purposes) in fixed-income securities. JNF Money Market The Money Market Fund seeks to provide as high a level of current income as is consistent with preservation of capital and daily liquidity by investing at least 95% of its total assets in a diversified portfolio of money market securities that are in the highest rating category for short-term obligations. The Portfolio also may invest up to 5% of its total assets in money market securities that are in the second-highest rating category for short-term obligations. PIMCO VARIABLE INSURANCE TRUST The PIMCO Variable Insurance Trust is a mutual fund with multiple portfolios. Pacific Investment Management Company LLC ("PIMCO") serves as investment adviser and the administrator for the Portfolios. The following Investment Portfolios are available under the Contract: PIMCO VIT Real Return The Portfolio seeks maximum real return, consistent with preservation of real capital and prudent investment management. The Portfolio seeks its investment objective by investing under normal circumstances at least 80% of its net assets in inflation-indexed bonds of varying maturities issued by the U.S. and non-U.S. governments, their agencies or government-sponsored enterprises and corporations. PIMCO VIT Short Term Seeks maximum current income, consistent with preservation of capital and daily liquidity. Invests in money market instruments and short maturity fixed income securities. The average portfolio duration will normally not exceed one year, but will vary based on PIMCO'S forecast for interest rates. PIMCO VIT Total Return The Portfolio seeks maximum total return, consistent with preservation of capital and prudent investment management. The Portfolio seeks to achieve its investment objective by investing under normal circumstances at least 65% of its total assets in a diversified portfolio of Fixed Income Instruments of varying maturities. PIONEER VARIABLE CONTRACTS TRUST (Class II Shares) Pioneer Variable Contracts Trust is an open-ended management investment company consisting of distinct investment portfolios. Pioneer Investment Management, Inc. (Pioneer) is the investment adviser to each portfolio. Pioneer Equity Income VCT The Pioneer Equity Income VCT Portfolio seeks current income and long-term growth of capital from a portfolio consisting primarily of income producing equity securities of U.S. corporations. Pioneer Fund VCT The Pioneer Fund VCT Portfolio seeks 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. Pioneer High Yield VCT The Pioneer High Yield VCT Portfolio seeks to maximize total return through a combination of income and capital appreciation. Normally, the portfolio invests at least 80% of its total assets in below investment grade (high yield) debt securities and preferred stocks. Pioneer International Value VCT The Pioneer International Value VCT Portfolio seeks long-term growth of capital. Normally, the portfolio invests at least 80% of its total assets in equity securities of non-U.S. issuers. Pioneer Mid Cap Value VCT The Pioneer Mid Cap Value VCT Portfolio seeks capital appreciation by investing in a diversified portfolio of securities consisting primarily of common stocks. Normally, the portfolio invests at least 80% of its total assets in equity securities of mid-size companies. Mid-size companies are those with market values, at the time of investment, that do not exceed the greater of the market capitalization of the largest company within the Russell Midcap Value Index or the 3-year rolling average of the market capitalization of the largest company within the Russell Midcap Value Index as measured at the end of the preceding month, and are not less than the smallest company within the index. 33 -------------------------------------------------------------------------------- ROYCE CAPITAL FUND Royce Capital Fund is a registered management investment company with multiple Portfolios. Royce & Associates, LLC ("Royce") is the investment adviser and is responsible for the management of the Portfolios' assets. The following Investment Portfolios are available under the Contract: Royce Capital Fund--Micro-Cap This Portfolio's primary investment goal is long-term growth of capital. Royce invests the Portfolio's assets primarily in a broadly diversified portfolio of securities issued by micro-cap companies. Royce selects these securities from a universe of more than 5,500 micro-cap companies, generally focusing on factors such as balance sheet quality and cash flow levels. The Portfolio normally invests at least 80% of its net assets in the equity securities of micro-cap companies, defined by Royce as companies with stock market capitalizations less than $500 million. Although the Portfolio normally focuses on the securities of U.S. companies, it may invest up to 10% of its assets in the securities of foreign issuers. Royce Capital Fund--Small-Cap This Portfolio's primary investment goal is long-term growth of capital. 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. Any production of income is incidental to the Fund's investment goal. The Portfolio normally invests at least 80% of its assets in the equity securities of small-cap companies, defined as companies with stock market capitalizations of less than $2.5 billion at the time of investment. Although the Portfolio normally focuses on the securities of U.S. companies, it may invest up to 10% of its assets in the securities of foreign issuers. RYDEX VARIABLE TRUST Rydex Variable Trust is a mutual fund with multiple portfolios which are managed by Rydex Investments. As of the date of this prospectus, all of the Investment Portfolios permit active trading (other than the Rydex Sector Rotation Fund, CLS AdvisorOne Amerigo Fund, CLS AdvisorOne Clermont Fund, Rydex Absolute Return Strategies Fund, Rydex Multi-Cap Core Equity Fund, Rydex Hedged Equity Fund, Rydex Essential Portfolio Conservative, Rydex Essential Portfolio Aggressive, and Rydex Essential Portfolio Moderate which do not permit active trading) This list may change at any time without notice. For more information, see the prospectus for these Investment Portfolios. The following Investment Portfolios are available under the Contract: Rydex Banking The Fund seeks to provide capital appreciation by investing in companies that are involved in the banking sector, including commercial banks (and their holding companies) and savings and loan institutions ("Banking Companies"). Rydex Basic Materials The Fund seeks capital appreciation by investing in companies engaged in the mining, manufacture, or sale of basic materials, such as lumber, steel, iron, aluminum, concrete, chemicals and other basic building and manufacturing materials. Rydex Biotechnology The Fund seeks capital appreciation by investing in companies that are involved in the biotechnology industry, including companies involved in research and development, genetic or other biological engineering, and in the design, manufacture, or sale of related biotechnology products or services. Rydex Commodities Strategy The Fund seeks to provide investment results that correlate to the performance of a benchmark for commodities. The Fund's current benchmark is the GSCI(R) Total Return Index. It is anticipated that the Fund's investment exposure will tend to be heavily weighted toward oil and other energy-related commodities. Rydex Consumer Products The Fund seeks capital appreciation by investing in companies engaged in manufacturing finished goods and services both domestically and internationally. Rydex Dow 2x Strategy (f/k/a Dynamic Dow) The Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund's current benchmark is 200% of the performance of the Dow Jones Industrial Average. Rydex NASDAQ-100(R) 2x Strategy (f/k/a Dynamic OTC) The Fund seeks to provide investment results that will match the performance of specific benchmark on a daily basis. The Fund's current benchmark is 200% of the performance of the Nasdaq 100 Index(R). Rydex S&P 500 2x Strategy (f/k/a Dynamic S&P 500) The Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund's current benchmark is 200% of the performance of the S&P 500(R) Index. Rydex Strengthening Dollar 2x Strategy (f/k/a Dynamic Strengthening Dollar) The Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund's current benchmark is 200% of the performance of the US Dollar Index(R). The US Dollar Index(R) (USDX) is a broad based, diversified index representing an investment in the U.S. Dollar (USD). The New York Board of Trade determines the value of the US Dollar Index(R) by averaging the exchange rates between the USD and the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona, and Swiss Franc. Rydex Weakening Dollar 2x Strategy (f/k/a Dynamic Weakening Dollar) The Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund's current benchmark is 200% of the inverse (opposite) performance of the US Dollar Index(R). The US Dollar Index(R) (USDX) is a broad based, diversified index representing an investment in the U.S. Dollar (USD). The New York Board of Trade determines the value of the US Dollar Index(R) by averaging the exchange rates between the 34 -------------------------------------------------------------------------------- USD and the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona, and Swiss Franc. Rydex Electronics The Fund seeks capital appreciation by investing in companies that are involved in the electronics sector, including semiconductor manufacturers and distributors, and makers and vendors of other electronic components and devices. Rydex Energy The Fund seeks capital appreciation by investing in companies involved in the energy field, including the exploration, production, and development of oil, gas, coal and alternative sources of energy. Rydex Energy Services The Fund seeks capital appreciation by investing in companies that are involved in the energy services field, including those that provide services and equipment in the areas of oil, coal, and gas exploration and production. Rydex Europe 1.25x Strategy (f/k/a Europe Advantage) The Fund seeks to provide investment results that correlate to a daily price movement of a specific benchmark. The Fund's current benchmark is the Dow Jones Stoxx 50 Index(SM). The Fund's investment advisor will attempt to consistently apply leverage to increase the Fund's exposure to 125% of its benchmark. Rydex Financial Services The Fund seeks capital appreciation by investing in companies that are involved in the financial services sector. Rydex Government Long Bond 1.2x Strategy (f/k/a Government Long Bond Advantage) The Fund seeks to provide investment results that correspond to a benchmark for U.S. Government securities. The Fund's current benchmark is 120% of the price movement of the Long Treasury Bond. Rydex Health Care The Fund seeks capital appreciation by investing in companies that are involved in the health care industry. Rydex Internet The Fund seeks capital appreciation by investing in companies that provide products or services designed for or related to the Internet. Rydex Inverse Dow 2x Strategy (f/k/a Inverse Dynamic Dow) The Fund seeks to provide investment results that will match the performance of a specific benchmark on a daily basis. The Fund's current benchmark is 200% of the inverse (opposite) performance of the Dow Jones Industrial Average. Rydex Inverse Government Long Bond Strategy (f/k/a Inverse Government Long Bond) The Fund seeks to provide total returns that will inversely correlate to the price movements of a benchmark for U.S. Treasury debt instruments or futures contract on a specified debt instrument. The Fund's current benchmark is the inverse of the daily price movement of the Long Treasury Bond. Rydex Inverse Mid-Cap Strategy (f/k/a Inverse Mid-Cap) The Fund seeks to provide investment results that will match the performance of a specific benchmark. The Fund's current benchmark is the inverse of the performance of the S&P MidCap 400 Index (the "underlying index"). Unlike a traditional index fund, the Fund's objective is to perform exactly the opposite of the underlying index. Rydex Inverse NASDAQ-100(R) Strategy (f/k/a Inverse OTC) The Fund seeks to provide investment results that will match the performance of a specific benchmark. The Fund's current benchmark is the inverse of the performance of the Nasdaq 100 Index(R) (the "underlying index"). Unlike a traditional index fund, the Inverse OTC Fund's benchmark is to perform exactly opposite the underlying index. Rydex Inverse Russell 2000(R) Strategy (f/k/a Inverse Russell 2000) The Fund seeks to provide investment results that will match the performance of a specific benchmark. The Fund's current benchmark is inverse of the performance of the Russell 2000 Index(R) (the "underlying index"). Unlike a traditional index fund, the Fund's objective is to perform exactly the opposite of the underlying index. Rydex Inverse S&P 500 Strategy (f/k/a Inverse S&P 500) The Fund seeks to provide investment results that will inversely correlate to the performance of the S&P 500(R) Index. Unlike a traditional index fund, the Inverse S&P 500 Fund's benchmark is to perform exactly opposite the underlying index. Rydex Japan 1.25x Strategy (f/k/a Japan Advantage) The Fund seeks to provide investment results that correlate to a daily price movement of a specific benchmark. The Fund's current benchmark is the Topix 100 Index. The Fund's investment advisor will attempt to consistently apply leverage to increase the Fund's exposure to 125% of its benchmark. Rydex Large Cap Growth The Fund seeks to provide investment results that match the performance of a benchmark for large cap growth securities. The Fund's current benchmark is the S&P 500/Citigroup Pure Growth Index. Rydex Large Cap Value The Fund seeks to provide investment results that match the performance of a benchmark for large cap value securities. The Fund's current benchmark is the S&P 500/Citigroup Pure Value Index. Rydex Leisure The Fund seeks capital appreciation by investing in companies engaged in leisure and entertainment businesses. Rydex Mid Cap 1.5x Strategy (f/k/a Mid-Cap Advantage) The Fund seeks to provide investment results that correlate to the performance of a specific benchmark for mid-cap securities. The Fund's current benchmark is the S&P MidCap 400(R) Index. The Fund's investment advisor will attempt to consistently apply leverage to increase the Fund's exposure to 150% of its benchmark. Rydex Mid-Cap Growth The Fund seeks to provide investment results that match the performance of a benchmark for mid cap growth securities. The Fund's current benchmark is the S&P MidCap 400/Citigroup Pure Growth Index. Rydex Nova The Fund seeks to provide investment results that match the performance of a specific benchmark on a daily basis. The Fund's current benchmark is 150% of the performance of the S&P 500(R) Index (the "underlying index"). Rydex NASDAQ-100(R) Strategy (f/k/a OTC) The Fund seeks to provide investment results that correspond to a benchmark for over-the-counter securities. 35 -------------------------------------------------------------------------------- The Fund's current benchmark is the Nasdaq 100 Index(R) (the "underlying index"). Rydex Precious Metals The Fund seeks to provide capital appreciation by investing in U.S. and foreign companies that are involved in the precious metals sector, including exploration, mining, production and development, and other precious metals-related services. Rydex Real Estate The Fund seeks to provide capital appreciation by investing in companies that are involved in the real estate industry including real estate investment trusts. Rydex Retailing The Fund seeks capital appreciation by investing in companies engaged in merchandising finished goods and services, including department stores, restaurant franchises, mail order operations and other companies involved in selling products to consumers. Rydex Russell 2000(R) 1.5x Strategy (f/k/a Russell 2000 Advantage) The Fund seeks to provide investment results that correlate to the performance of a specific benchmark for small-cap securities. The Fund's current benchmark is the Russell 2000 Index(R). The Fund's investment advisor will attempt to consistently apply leverage to increase the Fund's exposure to 150% of its benchmark. Rydex Sector Rotation The Fund seeks long term capital appreciation. The Fund seeks to respond to the dynamically changing economy by moving its investments among different sectors or industries. Rydex Small-Cap Growth The Fund seeks to provide investment results that match the performance of a benchmark for small cap growth securities. The Fund's current benchmark is the S&P SmallCap 600/Citigroup Pure Growth Index. Rydex Small-Cap Value The Fund seeks to provide investment results that match the performance of a benchmark for small cap value securities. The Fund's current benchmark is the S&P SmallCap 600/Citigroup Pure Value Index. Rydex Technology The Fund seeks capital appreciation by investing in companies that are involved in the technology sector, including computer software and service companies, semiconductor manufacturers, networking and telecommunications equipment manufacturers, PC hardware and peripherals companies. Rydex Telecommunications The Fund seeks capital appreciation by investing in companies engaged in the development, manufacture, or sale of communications services or communications equipment. Rydex Transportation The Fund seeks capital appreciation by investing in companies engaged in providing transportation services or companies engaged in the design, manufacture, distribution, or sale of transportation equipment. Rydex U.S. Government Money Market The Fund seeks to provide security of principal, high current income, and liquidity. The U.S. Government Money Market Fund invests primarily in money market instruments issued or guaranteed as to principal and interest by the U.S. Government, its agencies or instrumentalities, and enters into repurchase agreements fully collateralized by U.S. Government securities. Rydex Utilities The Fund seeks capital appreciation by investing in companies that operate public utilities. CLS AdvisorOne Amerigo The Fund seeks long-term growth of capital without regard to current income. The Fund invests in Underlying Funds that seek capital growth or appreciation by investing in common stock or securities convertible into or exchangeable for common stock (such as convertible preferred stock, convertible debentures or warrants), including the stock of foreign issuers, or in individual securities that may provide capital growth or appreciation. CLS AdvisorOne Clermont The objective of the Clermont Fund is a combination of current income and growth of capital. The Fund's principal investment strategies include: Investing in Underlying Funds that seek capital growth or appreciation by investing in common stock or securities convertible into or exchangeable for common stock (such as convertible preferred stock, convertible debentures or warrants), including the stock of foreign issuers, or in individual securities that may provide capital growth or appreciation. Investing at least 20% of its total assets in Underlying Funds that invest in long, medium, or short-term bonds and other fixed income securities of varying qualities in order to maximize the Fund's total return, or in individual securities that may provide current income. Some of the Underlying Funds in which the Fund invests may invest part or all of their assets in securities of foreign issuers or engage in foreign currency transactions with respect to these investments. The Fund may also invest in individual securities of foreign issuers and engage in foreign currency transactions. The Fund may invest up to 80% of its total assets in Underlying Funds that invest in futures contracts and options on futures contracts, or invest directly in futures contracts and options on futures contracts. SELIGMAN PORTFOLIOS, INC. Seligman Portfolios, Inc. is a mutual fund with multiple portfolios which are managed by J.& W. Seligman & Co. Incorporated. The following Investment Portfolios are available under the Contract: Seligman Communications and Information The Seligman Communications and Information Portfolio seeks capital gain. The Portfolio invests at least 80% of its net assets in securities of companies operating in the communications, information and related industries. Seligman Global Technology The Seligman Global Technology Portfolio seeks long-term capital appreciation. The Portfolio generally invests at least 80% of its net assets in equity securities of U.S. and non-U.S. companies with business operations in technology and technology-related industries. THIRD AVENUE VARIABLE SERIES TRUST The Third Avenue Variable Series Trust is a mutual fund with one portfolio. Third Avenue Management LLC is the investment adviser for the Portfolio and is responsible for the management of the Portfolio's investments. The following Investment Portfolio is available under the Contract: 36 -------------------------------------------------------------------------------- Third Avenue Value The Third Avenue Value Portfolio seeks long-term capital appreciation. The Portfolio seeks to achieve its objective mainly by acquiring common stocks of well-financed companies (meaning companies without significant liabilities in comparison to their overall resources) at a discount to what the adviser believes is their intrinsic value. The Portfolio also seeks to acquire senior securities, such as preferred stocks and debt instruments (including high yield securities) that the adviser believes are undervalued. VAN ECK WORLDWIDE INSURANCE TRUST Van Eck Worldwide Insurance Trust is a mutual fund with multiple portfolios. Van Eck Associates Corporation serves as investment adviser to the funds. The following Investment Portfolios are available under the Contract: Van Eck Worldwide Absolute Return The Van Eck Worldwide Absolute Return Fund seeks to achieve consistent absolute (positive) returns in various market cycles. The Fund's objective is fundamental and may only be changed with the approval of shareholders. Van Eck Worldwide Bond The Van Eck Worldwide Bond Fund seeks high total return--income plus capital appreciation--by investing globally, primarily in a variety of debt securities. Van Eck Worldwide Emerging Markets The Van Eck Worldwide Emerging Markets Fund seeks long-term capital appreciation by investing primarily in equity securities in emerging markets around the world. Van Eck Worldwide Hard Assets The Van Eck Worldwide Hard Assets Fund seeks long-term capital appreciation by investing primarily in hard asset securities. Income is a secondary consideration. Van Eck Worldwide Real Estate The Van Eck Worldwide Real Estate Fund seeks to maximize return by investing in equity securities of domestic and foreign companies that own significant real estate assets or that principally are engaged in the real estate industry. WELLS FARGO ADVANTAGE FUNDS The Wells Fargo Advantage Funds referenced below are managed by Wells Fargo Funds Management, LLC and sub advised by Wells Capital Management Incorporated The following Funds are available under the Contract: Wells Fargo Advantage VT Opportunity The Wells Fargo Advantage VT Opportunity Fund seeks long-term capital appreciation. We invest in equity securities of medium-capitalization companies that we believe are under-priced yet, have attractive growth prospects. We base the analysis on a comparison between the company's public value, based on market quotations, with its "private market value"--the price an investor would be willing to pay for the entire company given its management strength, financial health and growth potential. We determine a company's private market value based on a fundamental analysis of a company's cash flows, asset valuations, competitive situation, and franchise value. Wells Fargo Advantage VT Discovery The Wells Fargo Advantage VT Discovery Fund seeks long-term capital appreciation. We invest principally in securities of small- and medium-capitalization companies that we believe offer attractive opportunities for growth. We define small- and medium-capitalization companies as those with market capitalizations equal to or lower than the company with the largest market capitalization in the Russell Midcap(R) Index, at the time of purchase. The largest capitalization was $16.5 billion as of June 30, 2006, and is expected to change frequently. We analyze potential investment opportunities by using a disciplined investment process that emphasizes in-depth fundamental analysis across multiple dimensions such as visits with company management, suppliers/distributors, competitors and customers as well as detailed analysis of a company's financial statements. We select securities that exhibit the strongest sustainable growth characteristics such as earnings growth, returns on invested capital and competitive positioning. We may invest in any sector, and at times we may emphasize on or more particular sectors. We also may invest up to 25% of the Fund's assets in foreign securities through ADRs and similar investments. 37 APPENDIX B - CONDENSED FINANCIAL INFORMATION Accumulation Unit Value History The following schedule includes Accumulation Unit values for the periods indicated. This data has been taken from the Jefferson National Life Annuity Account H's financial statements. This information should be read in conjunction with Jefferson National Life Annuity Account H's financial statements and related notes which are included in the Statement of Additional Information. The tables below provide per unit information about the financial history of each Sub-Account for the periods ended December 31.
2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ AIM VARIABLE INSURANCE FUNDS: Basic Value Fund (inception date May 1, 2003) Beginning AUV (a) $16.342 $14.673 $14.113 $12.913 $10.000 N/A N/A N/A (b) $15.986 $14.439 $13.972 $12.860 $10.000 N/A N/A N/A Ending AUV (a) $16.333 $16.342 $14.673 $14.113 $12.913 N/A N/A N/A (b) $15.882 $15.986 $14.439 $13.972 $12.860 N/A N/A N/A Ending Number of AUs 4,511 4,511 4,898 4,278 5,618 N/A N/A N/A Core Equity Fund (inception date May 1, 2006) Beginning AUV (a) $10.861 $10.043 N/A N/A N/A N/A N/A N/A (b) $10.817 $10.043 N/A N/A N/A N/A N/A N/A Ending AUV (a) $11.578 $10.861 N/A N/A N/A N/A N/A N/A (b) $11.462 $10.817 N/A N/A N/A N/A N/A N/A Ending Number of AUs 18,733 22,132 N/A N/A N/A N/A N/A N/A Financial Services Fund (inception date May 1, 2001) Beginning AUV (a) $13.354 $11.629 $11.135 $10.391 $8.132 $9.691 $10.078 N/A (b) $12.907 $11.308 $10.892 $10.225 $8.051 $9.652 $10.078 N/A Ending AUV (a) $10.242 $13.354 $11.629 $11.135 $10.391 $8.132 $9.691 N/A (b) $9.840 $12.907 $11.308 $10.892 $10.225 $8.051 $9.652 N/A Ending Number of AUs 11,277 17,354 14,454 18,295 17,189 42,470 39,618 N/A Global Health Care Fund (inception date May 1, 2001) Beginning AUV (a) $11.269 $10.859 $10.182 $9.599 $7.618 $10.226 $10.050 N/A (b) $10.892 $10.559 $9.960 $9.447 $7.542 $10.185 $10.050 N/A Ending AUV (a) $12.429 $11.269 $10.859 $10.182 $9.599 $7.618 $10.226 N/A (b) $11.941 $10.892 $10.559 $9.960 $9.447 $7.542 $10.185 N/A Ending Number of AUs 17,375 10,807 11,148 16,692 13,781 21,633 44,001 N/A Global Real Estate Fund (inception date May 1, 2001) Beginning AUV (a) $30.971 $22.024 $19.551 $14.517 $10.604 $10.110 $10.030 N/A (b) $29.937 $21.416 $19.125 $14.286 $10.499 $10.069 $10.030 N/A Ending AUV (a) $28.847 $30.971 $22.024 $19.551 $14.517 $10.604 $10.110 N/A (b) $27.715 $29.937 $21.416 $19.125 $14.286 $10.499 $10.069 N/A Ending Number of AUs 17,411 32,512 20,420 16,802 14,229 19,234 547 N/A High Yield Fund (inception date May 1, 2004) Beginning AUV (a) $11.911 $10.907 $10.768 $9.966 N/A N/A N/A N/A (b) $11.722 $10.798 $10.724 $9.965 N/A N/A N/A N/A Ending AUV (a) $11.890 $11.911 $10.907 $10.768 N/A N/A N/A N/A (b) $11.631 $11.722 $10.798 $10.724 N/A N/A N/A N/A Ending Number of AUs 23,987 33,646 29,267 38,758 N/A N/A N/A N/A
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2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ AIM VARIABLE INSURANCE FUNDS: (continued) Mid Cap Core Equity Fund (inception date May 1, 2003) Beginning AUV (a) $16.082 $14.694 $13.891 $12.404 $9.958 N/A N/A N/A (b) $15.732 $14.461 $13.752 $12.354 $9.958 N/A N/A N/A Ending AUV (a) $17.329 $16.082 $14.694 $13.891 $12.404 N/A N/A N/A (b) $16.850 $15.732 $14.461 $13.752 $12.354 N/A N/A N/A Ending Number of AUs 11,944 8,763 8,801 10,133 8,079 N/A N/A N/A Technology Fund (inception date May 1, 2001) Beginning AUV (a) $6.155 $5.649 $5.607 $5.434 $3.793 $7.236 $10.251 N/A (b) $5.949 $5.493 $5.484 $5.348 $3.754 $7.207 $10.251 N/A Ending AUV (a) $6.536 $6.155 $5.649 $5.607 $5.434 $3.793 $7.236 N/A (b) $6.279 $5.949 $5.493 $5.484 $5.348 $3.754 $7.207 N/A Ending Number of AUs 5,259 11,089 8,006 14,377 15,614 11,734 29,853 N/A ------------------------------------------------------------------------------------------------------------------------------------ THE ALGER AMERICAN FUND: Growth Portfolio (inception date February 11, 2000) Beginning AUV (a) $14.073 $13.572 $12.284 $11.808 $8.859 $13.409 $15.421 $18.274 (b) $13.480 $13.078 $11.908 $11.516 $8.692 $13.235 $15.313 $18.243 Ending AUV (a) $16.643 $14.073 $13.572 $12.284 $11.808 $8.859 $13.409 $15.421 (b) $15.846 $13.480 $13.078 $11.908 $11.516 $8.692 $13.235 $15.313 Ending Number of AUs 88,734 97,968 117,092 109,087 85,781 97,572 173,741 136,434 Capital Appreciation Portfolio (inception date February 11, 2000) Beginning AUV (a) $19.666 $16.721 $14.816 $13.888 $10.454 $16.041 $19.351 $27.188 (b) $18.837 $16.113 $14.362 $13.544 $10.256 $15.833 $19.216 $27.141 Ending AUV (a) $25.894 $19.666 $16.721 $14.816 $13.888 $10.454 $16.041 $19.351 (b) $24.654 $18.837 $16.113 $14.362 $13.544 $10.256 $15.833 $19.216 Ending Number of AUs 64,786 68,376 77,705 105,441 160,451 132,760 153,735 144,826 MidCap Growth Portfolio (inception date February 11, 2000) Beginning AUV (a) $21.225 $19.542 $18.044 $16.187 $11.107 $15.987 $17.345 $16.997 (b) $20.331 $18.831 $17.491 $15.787 $10.897 $15.779 $17.224 $16.968 Ending AUV (a) $27.533 $21.225 $19.542 $18.044 $16.187 $11.107 $15.987 $17.345 (b) $26.215 $20.331 $18.831 $17.491 $15.787 $10.897 $15.779 $17.224 Ending Number of AUs 77,178 74,407 102,078 129,081 137,546 155,522 258,585 195,894 SmallCap Growth Portfolio (inception date February 11, 2000) Beginning AUV (a) $12.650 $10.689 $9.273 $8.068 $5.747 $7.901 $11.368 $17.030 (b) $12.117 $10.299 $8.989 $7.867 $5.639 $7.798 $11.288 $17.001 Ending AUV (a) $14.624 $12.650 $10.689 $9.273 $8.068 $5.747 $7.901 $11.368 (b) $13.923 $12.117 $10.299 $8.989 $7.867 $5.639 $7.798 $11.288 Ending Number of AUs 40,280 72,137 67,625 89,935 151,159 49,224 198,979 100,287
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2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC.: Growth and Income Portfolio (inception date October 26, 2001) Beginning AUV (a) $13.554 $11.719 $11.332 $10.311 $7.890 $10.266 $10.046 N/A (b) $13.139 $11.428 $11.118 $10.176 $7.835 $10.255 $10.046 N/A Ending AUV (a) $14.049 $13.554 $11.719 $11.332 $10.311 $7.890 $10.266 N/A (b) $13.537 $13.139 $11.428 $11.118 $10.176 $7.835 $10.255 N/A Ending Number of AUs 18,298 6,922 6,393 11,130 12,799 9,625 16,127 N/A ------------------------------------------------------------------------------------------------------------------------------------ AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. VP Balanced Fund (inception date May 1, 2005) Beginning AUV (a) $11.457 $10.599 $10.042 N/A N/A N/A N/A N/A (b) $11.343 $10.556 $10.041 N/A N/A N/A N/A N/A Ending AUV (a) $11.855 $11.457 $10.599 N/A N/A N/A N/A N/A (b) $11.666 $11.343 $10.556 N/A N/A N/A N/A N/A Ending Number of AUs 8,322 787 0 N/A N/A N/A N/A N/A VP Income & Growth Fund (inception date February 11, 2000) Beginning AUV (a) $15.049 $13.034 $12.632 $11.337 $8.887 $11.178 $12.370 $13.065 (b) $14.416 $12.560 $12.246 $11.057 $8.719 $11.033 $12.283 $13.042 Ending AUV (a) $14.829 $15.049 $13.034 $12.632 $11.337 $8.887 $11.178 $12.370 (b) $14.120 $14.416 $12.560 $12.246 $11.057 $8.719 $11.033 $12.283 Ending Number of AUs 38,274 47,332 46,149 84,575 66,614 92,079 82,725 55,251 VP Inflation Protection Fund (inception date May 1, 2004) Beginning AUV (a) $10.587 $10.569 $10.553 $10.044 N/A N/A N/A N/A (b) $10.419 $10.464 $10.511 $10.043 N/A N/A N/A N/A Ending AUV (a) $11.431 $10.587 $10.569 $10.553 N/A N/A N/A N/A (b) $11.182 $10.419 $10.464 $10.511 N/A N/A N/A N/A Ending Number of AUs 5,773 3,576 4,220 4,935 N/A N/A N/A N/A VP International Fund (inception date February 11, 2000) Beginning AUV (a) $15.487 $12.561 $11.247 $9.925 $8.083 $10.295 $14.741 $19.265 (b) $14.834 $12.104 $10.903 $9.679 $7.931 $10.161 $14.638 $19.232 Ending AUV (a) $18.027 $15.487 $12.561 $11.247 $9.925 $8.083 $10.295 $14.741 (b) $17.164 $14.834 $12.104 $10.903 $9.679 $7.931 $10.161 $14.638 Ending Number of AUs 50,080 40,790 33,385 38,954 39,726 53,317 61,191 89,074 VP Value Fund (inception date February 11, 2000) Beginning AUV (a) $19.384 $16.566 $15.994 $14.186 $11.156 $12.947 $11.638 $8.867 (b) $18.567 $15.964 $15.505 $13.835 $10.945 $12.779 $11.557 $8.852 Ending AUV (a) $18.130 $19.384 $16.566 $15.994 $14.186 $11.156 $12.947 $11.638 (b) $17.263 $18.567 $15.964 $15.505 $13.835 $10.945 $12.779 $11.557 Ending Number of AUs 84,290 106,212 106,929 121,736 128,153 143,921 205,580 97,583
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2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ DIREXION INSURANCE TRUST Dynamic VP HY Bond Fund (inception date May 1, 2005) Beginning AUV (a) $10.925 $10.431 $10.056 N/A N/A N/A N/A N/A (b) $10.816 $10.389 $10.055 N/A N/A N/A N/A N/A Ending AUV (a) $10.582 $10.925 $10.431 N/A N/A N/A N/A N/A (b) $10.414 $10.816 $10.389 N/A N/A N/A N/A N/A Ending Number of AUs 1,006 986 1,103 N/A N/A N/A N/A N/A ------------------------------------------------------------------------------------------------------------------------------------ THE DREYFUS INVESTMENT PORTFOLIOS: Small Cap Stock Index Portfolio (inception date May 1, 2005) Beginning AUV (a) $12.966 $11.492 $10.131 N/A N/A N/A N/A N/A (b) $12.837 $11.446 $10.131 N/A N/A N/A N/A N/A Ending AUV (a) $12.701 $12.966 $11.492 N/A N/A N/A N/A N/A (b) $12.499 $12.837 $11.446 N/A N/A N/A N/A N/A Ending Number of AUs 1,043 3,355 1,289 N/A N/A N/A N/A N/A ------------------------------------------------------------------------------------------------------------------------------------ The Dreyfus Socially Responsible Growth Fund, Inc, (inception date February 11, 2000) Beginning AUV (a) $10.568 $9.813 $9.604 $9.170 $7.380 $10.534 $13.798 $15.216 (b) $10.122 $9.456 $9.310 $8.943 $7.241 $10.397 $13.702 $15.189 Ending AUV (a) $11.231 $10.568 $9.813 $9.604 $9.170 $7.380 $10.534 $13.798 (b) $10.693 $10.122 $9.456 $9.310 $8.943 $7.241 $10.397 $13.702 Ending Number of AUs 15,734 21,460 27,679 74,387 38,489 43,424 53,322 45,515 ------------------------------------------------------------------------------------------------------------------------------------ Dreyfus Stock Index Fund (inception date February 11, 2000) Beginning AUV (a) $13.881 $12.187 $11.805 $10.820 $8.548 $11.166 $12.895 $13.601 (b) $13.296 $11.744 $11.443 $10.552 $8.387 $11.021 $12.804 $13.577 Ending AUV (a) $14.406 $13.881 $12.187 $11.805 $10.820 $8.548 $11.166 $12.895 (b) $13.716 $13.296 $11.744 $11.443 $10.552 $8.387 $11.021 $12.804 Ending Number of AUs 165,593 211,248 223,223 294,063 261,098 390,970 389,128 236,454 ------------------------------------------------------------------------------------------------------------------------------------ DREYFUS VARIABLE INVESTMENT FUND: International Value Portfolio (inception date February 11, 2000) Beginning AUV (a) $17.742 $14.676 $13.300 $11.238 $8.358 $9.657 $11.285 $10.970 (b) $16.995 $14.142 $12.894 $10.960 $8.200 $9.531 $11.206 $10.951 Ending AUV (a) $18.221 $17.742 $14.676 $13.300 $11.238 $8.358 $9.657 $11.285 (b) $17.349 $16.995 $14.142 $12.894 $10.960 $8.200 $9.531 $11.206 Ending Number of AUs 33,750 56,610 43,643 60,351 104,766 39,655 17,400 8,588 ------------------------------------------------------------------------------------------------------------------------------------ FEDERATED INSURANCE SERIES: Capital Income Fund II (inception date February 11, 2000) Beginning AUV (a) $10.085 $8.843 $8.437 $7.784 $6.542 $8.723 $10.254 $11.425 (b) $9.660 $8.522 $8.179 $7.591 $6.418 $8.610 $10.182 $11.406 Ending AUV (a) $10.345 $10.085 $8.843 $8.437 $7.784 $6.542 $8.723 $10.254 (b) $9.850 $9.660 $8.522 $8.179 $7.591 $6.418 $8.610 $10.182 Ending Number of AUs 35,365 34,173 15,752 21,934 31,101 128,278 48,490 31,998
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2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ FEDERATED INSURANCE SERIES: (continued) High Income Bond Fund II (inception date February 11, 2000) Beginning AUV (a) $13.009 $11.905 $11.760 $10.797 $8.959 $8.963 $8.966 $9.909 (b) $12.460 $11.471 $11.400 $10.529 $8.789 $8.847 $8.903 $9.892 Ending AUV (a) $13.267 $13.009 $11.905 $11.760 $10.797 $8.959 $8.963 $8.966 (b) $12.631 $12.460 $11.471 $11.400 $10.529 $8.789 $8.847 $8.903 Ending Number of AUs 54,643 79,751 54,058 72,940 120,823 187,163 123,507 39,697 International Equity Fund II (inception date February 11, 2000) Beginning AUV (a) $15.583 $13.292 $12.357 $10.986 $8.449 $11.094 $15.941 $23.610 (b) $14.927 $12.808 $11.979 $10.714 $8.290 $10.950 $15.830 $23.569 Ending AUV (a) $16.832 $15.583 $13.292 $12.357 $10.986 $8.449 $11.094 $15.941 (b) $16.026 $14.927 $12.808 $11.979 $10.714 $8.290 $10.950 $15.830 Ending Number of AUs 23,248 28,132 27,805 38,895 51,741 39,681 29,140 25,959 ------------------------------------------------------------------------------------------------------------------------------------ JANUS ASPEN SERIES: Growth and Income Portfolio (inception date March 21, 2003) Beginning AUV (a) $15.982 $14.998 $13.539 $12.266 $10.227 N/A N/A N/A (b) $15.624 $14.750 $13.395 $12.208 $10.227 N/A N/A N/A Ending AUV (a) $17.139 $15.982 $14.998 $13.539 $12.266 N/A N/A N/A (b) $16.654 $15.624 $14.750 $13.395 $12.208 N/A N/A N/A Ending Number of AUs 31,188 54,593 63,956 61,727 67,990 N/A N/A N/A International Growth Portfolio (inception date March 21, 2003) Beginning AUV (a) $32.031 $22.093 $16.934 $14.438 $10.136 N/A N/A N/A (b) $31.314 $21.727 $16.754 $14.370 $10.136 N/A N/A N/A Ending AUV (a) $40.527 $32.031 $22.093 $16.934 $14.438 N/A N/A N/A (b) $39.381 $31.314 $21.727 $16.754 $14.370 N/A N/A N/A Ending Number of AUs 40,257 41,231 15,112 4,538 2,157 N/A N/A N/A Large Cap Growth Portfolio (inception date February 11, 2000) Beginning AUV (a) $12.321 $11.218 $10.908 $10.584 $8.147 $11.243 $15.150 $18.730 (b) $11.801 $10.809 $10.574 $10.321 $7.993 $11.097 $15.044 $18.697 Ending AUV (a) $13.982 $12.321 $11.218 $10.908 $10.584 $8.147 $11.243 $15.150 (b) $13.312 $11.801 $10.809 $10.574 $10.321 $7.993 $11.097 $15.044 Ending Number of AUs 105,699 124,855 138,814 194,648 219,841 258,519 305,481 324,873 Mid Cap Growth Portfolio (inception date February 11, 2000) Beginning AUV (a) $16.052 $14.328 $12.937 $10.865 $8.156 $11.477 $19.224 $32.871 (b) $15.375 $13.806 $12.541 $10.596 $8.001 $11.328 $19.089 $32.819 Ending AUV (a) $19.316 $16.052 $14.328 $12.937 $10.865 $8.156 $11.477 $19.224 (b) $18.391 $15.375 $13.806 $12.541 $10.596 $8.001 $11.328 $19.089 Ending Number of AUs 66,317 77,154 96,221 124,120 125,233 141,232 189,429 200,530
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2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ JANUS ASPEN SERIES: (continued) Worldwide Growth Portfolio (inception date February 11, 2000) Beginning AUV (a) $13.845 $11.878 $11.378 $11.012 $9.006 $12.260 $16.031 $21.113 (b) $13.262 $11.446 $11.029 $10.739 $8.836 $12.101 $15.919 $21.077 Ending AUV (a) $14.966 $13.845 $11.878 $11.378 $11.012 $9.006 $12.260 $16.031 (b) $14.250 $13.262 $11.446 $11.029 $10.739 $8.836 $12.101 $15.919 Ending Number of AUs 84,306 91,390 106,339 143,925 161,794 194,934 263,602 249,957 ------------------------------------------------------------------------------------------------------------------------------------ LAZARD RETIREMENT SERIES INC.: Emerging Markets Equity Portfolio (inception date May 1, 2004) Beginning AUV (a) $22.510 $17.566 $12.653 $9.816 N/A N/A N/A N/A (b) $22.153 $17.391 $12.602 $9.816 N/A N/A N/A N/A Ending AUV (a) $29.587 $22.510 $17.566 $12.653 N/A N/A N/A N/A (b) $28.943 $22.153 $17.391 $12.602 N/A N/A N/A N/A Ending Number of AUs 30,465 28,729 32,640 6,259 N/A N/A N/A N/A International Equity Portfolio (inception date May 1, 2004) Beginning AUV (a) $14.888 $12.321 $11.292 $9.932 N/A N/A N/A N/A (b) $14.652 $12.199 $11.247 $9.931 N/A N/A N/A N/A Ending AUV (a) $16.263 $14.888 $12.321 $11.292 N/A N/A N/A N/A (b) $15.909 $14.652 $12.199 $11.247 N/A N/A N/A N/A Ending Number of AUs 6,548 7,627 7,440 929 N/A N/A N/A N/A U.S. Small Cap Equity Portfolio (inception date February 11, 2000) Beginning AUV (a) $19.687 $17.200 $16.772 $14.805 $10.941 $13.478 $11.522 $9.382 (b) $18.858 $16.575 $16.259 $14.439 $10.735 $13.303 $11.442 $9.366 Ending AUV (a) $18.014 $19.687 $17.200 $16.772 $14.805 $10.941 $13.478 $11.522 (b) $17.152 $18.858 $16.575 $16.259 $14.439 $10.735 $13.303 $11.442 Ending Number of AUs 24,865 34,759 43,740 80,488 110,673 90,146 110,878 33,692 US Strategic Equity Portfolio (inception date February 11, 2000) Beginning AUV (a) $13.804 $11.915 $11.687 $10.602 $8.670 $10.498 $11.507 $10.639 (b) $13.222 $11.481 $11.330 $10.340 $8.506 $10.362 $11.426 $10.621 Ending AUV (a) $13.481 $13.804 $11.915 $11.687 $10.602 $8.670 $10.498 $11.507 (b) $12.835 $13.222 $11.481 $11.330 $10.340 $8.506 $10.362 $11.426 Ending Number of AUs 15,229 15,022 12,738 15,404 19,301 20,925 9,027 4,286 ------------------------------------------------------------------------------------------------------------------------------------ LEGG MASON PARTNERS VARIABLE EQUITY TRUST: Aggressive Growth Portfolio (inception date April 30, 2007) Beginning AUV (a) $9.898 N/A N/A N/A N/A N/A N/A N/A (b) $9.898 N/A N/A N/A N/A N/A N/A N/A Ending AUV (a) $9.557 N/A N/A N/A N/A N/A N/A N/A (b) $9.518 N/A N/A N/A N/A N/A N/A N/A Ending Number of AUs 550 N/A N/A N/A N/A N/A N/A N/A
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2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ LEGG MASON PARTNERS VARIABLE EQUITY TRUST: (continued) Capital and Income Portfolio (inception date April 30, 2007) Beginning AUV (a) $9.951 N/A N/A N/A N/A N/A N/A N/A (b) $9.951 N/A N/A N/A N/A N/A N/A N/A Ending AUV (a) $10.012 N/A N/A N/A N/A N/A N/A N/A (b) $9.971 N/A N/A N/A N/A N/A N/A N/A Ending Number of AUs 321 N/A N/A N/A N/A N/A N/A N/A Fundamental Value Portfolio (inception date April 30, 2007) Beginning AUV (a) $9.903 N/A N/A N/A N/A N/A N/A N/A (b) $9.902 N/A N/A N/A N/A N/A N/A N/A Ending AUV (a) $9.497 N/A N/A N/A N/A N/A N/A N/A (b) $9.458 N/A N/A N/A N/A N/A N/A N/A Ending Number of AUs 524 N/A N/A N/A N/A N/A N/A N/A Large Cap Growth Portfolio (inception date April 30, 2007) Beginning AUV (a) $9.896 N/A N/A N/A N/A N/A N/A N/A (b) $9.895 N/A N/A N/A N/A N/A N/A N/A Ending AUV (a) $9.921 N/A N/A N/A N/A N/A N/A N/A (b) $9.881 N/A N/A N/A N/A N/A N/A N/A Ending Number of AUs 535 N/A N/A N/A N/A N/A N/A N/A ------------------------------------------------------------------------------------------------------------------------------------ LEGG MASON PARTNERS VARIABLE INCOME TRUST: Global High Yield Bond Portfolio (inception date May 1, 2005) Beginning AUV (a) $11.512 $10.551 $10.009 N/A N/A N/A N/A N/A (b) $11.398 $10.509 $10.009 N/A N/A N/A N/A N/A Ending AUV (a) $11.344 $11.512 $10.551 N/A N/A N/A N/A N/A (b) $11.163 $11.398 $10.509 N/A N/A N/A N/A N/A Ending Number of AUs 15,606 10,857 34,219 N/A N/A N/A N/A N/A Strategic Bond Portfolio (inception date May 1, 2004) Beginning AUV (a) $11.107 $10.724 $10.613 $9.998 N/A N/A N/A N/A (b) $10.931 $10.617 $10.570 $9.998 N/A N/A N/A N/A Ending AUV (a) $11.170 $11.107 $10.724 $10.613 N/A N/A N/A N/A (b) $10.927 $10.931 $10.617 $10.570 N/A N/A N/A N/A Ending Number of AUs 14,604 16,182 14,781 1,170 N/A N/A N/A N/A ------------------------------------------------------------------------------------------------------------------------------------ LORD ABBETT SERIES FUND, INC.: America's Value Portfolio (inception date May 1, 2003) Beginning AUV (a) $16.219 $14.358 $14.029 $12.215 $10.000 N/A N/A N/A (b) $15.867 $14.130 $13.889 $12.166 $10.000 N/A N/A N/A Ending AUV (a) $16.498 $16.219 $14.358 $14.029 $12.215 N/A N/A N/A (b) $16.043 $15.867 $14.130 $13.889 $12.166 N/A N/A N/A Ending Number of AUs 19,697 4,542 6,852 5,390 409 N/A N/A N/A
44
2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ LORD ABBETT SERIES FUND, INC. (continued): Growth and Income Portfolio (inception date February 11, 2000) Beginning AUV (a) $17.852 $15.437 $15.162 $13.649 $10.565 $13.071 $14.211 $11.333 (b) $17.100 $14.875 $14.698 $13.311 $10.365 $12.902 $14.112 $11.314 Ending AUV (a) $18.208 $17.852 $15.437 $15.162 $13.649 $10.565 $13.071 $14.211 (b) $17.336 $17.100 $14.875 $14.698 $13.311 $10.365 $12.902 $14.112 Ending Number of AUs 75,300 90,918 98,837 152,944 166,653 200,817 166,589 71,692 ------------------------------------------------------------------------------------------------------------------------------------ NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST: Lehman Brothers High Income Bond Portfolio (inception date May 1, 2005) Beginning AUV (a) $10.939 $10.322 $9.999 N/A N/A N/A N/A N/A (b) $10.830 $10.280 $9.998 N/A N/A N/A N/A N/A Ending AUV (a) $10.900 $10.939 $10.322 N/A N/A N/A N/A N/A (b) $10.727 $10.830 $10.280 N/A N/A N/A N/A N/A Ending Number of AUs 1,268 1,171 0 N/A N/A N/A N/A N/A Lehman Brothers Short Term Duration Bond Portfolio (inception date February 11, 2000) Beginning AUV (a) $12.390 $12.058 $12.053 $12.129 $12.009 $11.561 $10.779 $10.212 (b) $11.869 $11.619 $11.685 $11.830 $11.783 $11.411 $10.703 $10.194 Ending AUV (a) $12.800 $12.390 $12.058 $12.053 $12.129 $12.009 $11.561 $10.779 (b) $12.187 $11.869 $11.619 $11.685 $11.830 $11.783 $11.411 $10.703 Ending Number of AUs 48,933 45,722 54,583 82,604 97,477 179,433 104,394 39,731 Small-Cap Growth Portfolio (inception date May 1, 2003) Beginning AUV (a) $14.571 $14.038 $13.835 $12.541 $10.040 N/A N/A N/A (b) $14.254 $13.815 $13.697 $12.491 $10.040 N/A N/A N/A Ending AUV (a) $14.441 $14.571 $14.038 $13.835 $12.541 N/A N/A N/A (b) $14.042 $14.254 $13.815 $13.697 $12.491 N/A N/A N/A Ending Number of AUs 69 298 205 1,986 5,830 N/A N/A N/A Mid Cap Growth Portfolio (inception date May 1, 2001) Beginning AUV (a) $11.023 $9.746 $8.689 $7.576 $5.999 $8.610 $10.077 N/A (b) $10.655 $9.477 $8.500 $7.456 $5.939 $8.575 $10.077 N/A Ending AUV (a) $13.318 $11.023 $9.746 $8.689 $7.576 $5.999 $8.610 N/A (b) $12.795 $10.655 $9.477 $8.500 $7.456 $5.939 $8.575 N/A Ending Number of AUs 50,102 52,273 43,809 88,770 9,060 4,730 36,241 N/A Partners Portfolio (inception date February 11, 2000) Beginning AUV (a) $15.259 $13.786 $11.843 $10.094 $7.578 $10.131 $10.573 $10.062 (b) $14.616 $13.285 $11.480 $9.845 $7.435 $9.999 $10.499 $10.044 Ending AUV (a) $16.450 $15.259 $13.786 $11.843 $10.094 $7.578 $10.131 $10.573 (b) $15.663 $14.616 $13.285 $11.480 $9.845 $7.435 $9.999 $10.499 Ending Number of AUs 62,557 64,203 79,324 48,719 37,951 32,320 33,020 13,605
45
2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST (continued): Regency Portfolio (inception date May 1, 2003) Beginning AUV (a) $19.039 $17.368 $15.725 $13.033 $10.010 N/A N/A N/A (b) $18.625 $17.092 $15.568 $12.981 $10.010 N/A N/A N/A Ending AUV (a) $19.393 $19.039 $17.368 $15.725 $13.033 N/A N/A N/A (b) $18.857 $18.625 $17.092 $15.568 $12.981 N/A N/A N/A Ending Number of AUs 4,599 9,262 10,657 6,357 0 N/A N/A N/A Socially Responsive Portfolio (inception date May 1, 2004) Beginning AUV (a) $13.345 $11.902 $11.295 $10.015 N/A N/A N/A N/A (b) $13.133 $11.783 $11.249 $10.014 N/A N/A N/A N/A Ending AUV (a) $14.160 $13.345 $11.902 $11.295 N/A N/A N/A N/A (b) $13.852 $13.133 $11.783 $11.249 N/A N/A N/A N/A Ending Number of AUs 2,395 7,303 8,698 0 N/A N/A N/A N/A ------------------------------------------------------------------------------------------------------------------------------------ NORTHERN LIGHTS VARIABLE TRUST: JNF Balanced Portfolio (inception date May 1, 2007) --------------------------------------------------- Beginning AUV (a) $10.028 N/A N/A N/A N/A N/A N/A N/A (b) $10.028 N/A N/A N/A N/A N/A N/A N/A Ending AUV (a) $9.787 N/A N/A N/A N/A N/A N/A N/A (b) $9.748 N/A N/A N/A N/A N/A N/A N/A Ending Number of AUs 203,074 N/A N/A N/A N/A N/A N/A N/A JNF Equity Portfolio (inception date May 1, 2007) ------------------------------------------------- Beginning AUV (a) $10.012 N/A N/A N/A N/A N/A N/A N/A (b) $10.012 N/A N/A N/A N/A N/A N/A N/A Ending AUV (a) $8.963 N/A N/A N/A N/A N/A N/A N/A (b) $8.927 N/A N/A N/A N/A N/A N/A N/A Ending Number of AUs 231,778 N/A N/A N/A N/A N/A N/A N/A ------------------------------------------------------------------------------------------------------------------------------------ PIMCO VARIABLE INSURANCE TRUST: Real Return Portfolio (inception date May 1, 2003) Beginning AUV (a) $11.292 $11.370 $11.294 $10.516 $10.035 N/A N/A N/A (b) $11.046 $11.190 $11.181 $10.474 $10.035 N/A N/A N/A Ending AUV (a) $12.318 $11.292 $11.370 $11.294 $10.516 N/A N/A N/A (b) $11.977 $11.046 $11.190 $11.181 $10.474 N/A N/A N/A Ending Number of AUs 32,598 27,445 25,710 16,400 8,171 N/A N/A N/A Short Term Portfolio (inception date May 1, 2004) Beginning AUV (a) $10.407 $10.120 $10.011 $10.000 N/A N/A N/A N/A (b) $10.242 $10.020 $9.970 $9.999 N/A N/A N/A N/A Ending AUV (a) $10.722 $10.407 $10.120 $10.011 N/A N/A N/A N/A (b) $10.488 $10.242 $10.020 $9.970 N/A N/A N/A N/A Ending Number of AUs 64,864 31,401 12,569 3,884 N/A N/A N/A N/A
46
2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ PIMCO VARIABLE INSURANCE TRUST: (continued) Total Return Portfolio (inception date May 1, 2003) Beginning AUV (a) $10.819 $10.566 $10.458 $10.112 $10.010 N/A N/A N/A (b) $10.584 $10.398 $10.354 $10.071 $10.010 N/A N/A N/A Ending AUV (a) $11.600 $10.819 $10.566 $10.458 $10.112 N/A N/A N/A (b) $11.280 $10.584 $10.398 $10.354 $10.071 N/A N/A N/A Ending Number of AUs 70,883 66,501 50,410 29,957 3,393 N/A N/A N/A ------------------------------------------------------------------------------------------------------------------------------------ PIONEER VARIABLE CONTRACT TRUST: Equity Income Portfolio (inception date January 2, 2001) Beginning AUV (a) $13.103 $10.880 $10.456 $9.138 $7.579 $9.155 $9.867 N/A (b) $12.640 $10.558 $10.208 $8.974 $7.488 $9.100 $9.867 N/A Ending AUV (a) $12.990 $13.103 $10.880 $10.456 $9.138 $7.579 $9.155 N/A (b) $12.455 $12.640 $10.558 $10.208 $8.974 $7.488 $9.100 N/A Ending Number of AUs 36,939 75,231 45,757 35,771 41,134 28,175 28,729 N/A Fund Portfolio (inception date January 2, 2001) Beginning AUV (a) $11.139 $9.708 $9.293 $8.496 $6.980 $8.766 $9.835 N/A (b) $10.745 $9.421 $9.072 $8.344 $6.896 $8.714 $9.835 N/A Ending AUV (a) $11.509 $11.139 $9.708 $9.293 $8.496 $6.980 $8.766 N/A (b) $11.036 $10.745 $9.421 $9.072 $8.344 $6.896 $8.714 N/A Ending Number of AUs 31,150 32,828 38,874 53,460 28,717 17,787 11,282 N/A High Yield Portfolio (inception date May 1, 2005) Beginning AUV (a) $11.149 $10.445 $10.003 N/A N/A N/A N/A N/A (b) $11.038 $10.403 $10.003 N/A N/A N/A N/A N/A Ending AUV (a) $11.608 $11.149 $10.445 N/A N/A N/A N/A N/A (b) $11.423 $11.038 $10.403 N/A N/A N/A N/A N/A Ending Number of AUs 36,229 18,624 3,384 N/A N/A N/A N/A N/A International Value Portfolio (December 15, 2006) Beginning AUV (a) $10.049 $9.982 N/A N/A N/A N/A N/A N/A (b) $10.046 $9.981 N/A N/A N/A N/A N/A N/A Ending AUV (a) $11.220 $10.049 N/A N/A N/A N/A N/A N/A (b) $11.150 $10.046 N/A N/A N/A N/A N/A N/A Ending Number of AUs 20,100 14,206 N/A N/A N/A N/A N/A N/A Mid Cap Value Portfolio (inception date May 1, 2005) Beginning AUV (a) $12.073 $10.904 $10.057 N/A N/A N/A N/A N/A (b) $11.952 $10.861 $10.057 N/A N/A N/A N/A N/A Ending AUV (a) $12.540 $12.073 $10.904 N/A N/A N/A N/A N/A (b) $12.341 $11.952 $10.861 N/A N/A N/A N/A N/A Ending Number of AUs 2,974 2,769 8,711 N/A N/A N/A N/A N/A
47
2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ ROYCE CAPITAL FUND: Micro-Cap Portfolio (inception date May 1, 2003) Beginning AUV (a) $21.770 $18.234 $16.567 $14.758 $10.052 N/A N/A N/A (b) $21.297 $17.945 $16.402 $14.698 $10.052 N/A N/A N/A Ending AUV (a) $22.319 $21.770 $18.234 $16.567 $14.758 N/A N/A N/A (b) $21.703 $21.297 $17.945 $16.402 $14.698 N/A N/A N/A Ending Number of AUs 13,210 14,393 12,400 31,198 11,106 N/A N/A N/A Small-Cap Portfolio (inception date May 1, 2003) Beginning AUV (a) $20.939 $18.373 $17.163 $13.929 $9.982 N/A N/A N/A (b) $20.484 $18.082 $16.991 $13.873 $9.982 N/A N/A N/A Ending AUV (a) $20.205 $20.939 $18.373 $17.163 $13.929 N/A N/A N/A (b) $19.647 $20.484 $18.082 $16.991 $13.873 N/A N/A N/A Ending Number of AUs 25,468 36,131 43,422 38,418 11,892 N/A N/A N/A ------------------------------------------------------------------------------------------------------------------------------------ RYDEX VARIABLE TRUST: CLS AdvisorOne Amerigo Fund (inception date May 1, 2005) Beginning AUV (a) $12.481 $11.267 $10.041 N/A N/A N/A N/A N/A (b) $12.357 $11.222 $10.040 N/A N/A N/A N/A N/A Ending AUV (a) $14.002 $12.481 $11.267 N/A N/A N/A N/A N/A (b) $13.779 $12.357 $11.222 N/A N/A N/A N/A N/A Ending Number of AUs 3,422 3,119 0 N/A N/A N/A N/A N/A CLS AdvisorOne Clermont Fund (inception date May 1, 2005) Beginning AUV (a) $11.250 $10.527 $10.027 N/A N/A N/A N/A N/A (b) $11.138 $10.485 $10.027 N/A N/A N/A N/A N/A Ending AUV (a) $11.783 $11.250 $10.527 N/A N/A N/A N/A N/A (b) $11.596 $11.138 $10.485 N/A N/A N/A N/A N/A Ending Number of AUs 1,278 869 0 N/A N/A N/A N/A N/A Banking Fund (inception date May 1, 2004) Beginning AUV (a) $12.177 $11.100 $11.576 $10.096 N/A N/A N/A N/A (b) $11.984 $10.989 $11.529 $10.095 N/A N/A N/A N/A Ending AUV (a) $8.755 $12.177 $11.100 $11.576 N/A N/A N/A N/A (b) $8.564 $11.984 $10.989 $11.529 N/A N/A N/A N/A Ending Number of AUs 1,857 492 5,240 1,628 N/A N/A N/A N/A Basic Materials Fund (inception date May 1, 2004) Beginning AUV (a) $15.302 $12.688 $12.367 $9.969 N/A N/A N/A N/A (b) $15.059 $12.562 $12.317 $9.968 N/A N/A N/A N/A Ending AUV (a) $20.213 $15.302 $12.688 $12.367 N/A N/A N/A N/A (b) $19.773 $15.059 $12.562 $12.317 N/A N/A N/A N/A Ending Number of AUs 23,014 17,041 14,240 2,445 N/A N/A N/A N/A
48
2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ RYDEX VARIABLE TRUST: (continued) Biotechnology Fund (inception date May 1, 2004) Beginning AUV (a) $9.624 $10.095 $9.250 $9.795 N/A N/A N/A N/A (b) $9.471 $9.994 $9.212 $9.795 N/A N/A N/A N/A Ending AUV (a) $9.907 $9.624 $10.095 $9.250 N/A N/A N/A N/A (b) $9.691 $9.471 $9.994 $9.212 N/A N/A N/A N/A Ending Number of AUs 3,221 0 3,193 0 N/A N/A N/A N/A Commodities Fund (inception date October 21, 2005) Beginning AUV (a) $7.803 $9.635 $10.048 N/A N/A N/A N/A N/A (b) $7.748 $9.624 $10.047 N/A N/A N/A N/A N/A Ending AUV (a) $10.081 $7.803 $9.635 N/A N/A N/A N/A N/A (b) $9.949 $7.748 $9.624 N/A N/A N/A N/A N/A Ending Number of AUs 2,025 879 673 N/A N/A N/A N/A N/A Consumer Products Fund (inception date May 1, 2004) Beginning AUV (a) $11.832 $10.218 $10.403 $10.096 N/A N/A N/A N/A (b) $11.644 $10.116 $10.361 $10.096 N/A N/A N/A N/A Ending AUV (a) $12.959 $11.832 $10.218 $10.403 N/A N/A N/A N/A (b) $12.677 $11.644 $10.116 $10.361 N/A N/A N/A N/A Ending Number of AUs 737 5,768 1,402 0 N/A N/A N/A N/A Dow 2X Strategy Fund (inception date July 15, 2004) Beginning AUV (a) $13.479 $10.470 $11.038 $9.918 N/A N/A N/A N/A (b) $13.284 $10.381 $11.009 $9.918 N/A N/A N/A N/A Ending AUV (a) $14.374 $13.479 $10.470 $11.038 N/A N/A N/A N/A (b) $14.081 $13.284 $10.381 $11.009 N/A N/A N/A N/A Ending Number of AUs 6,177 5,286 1,389 2,225 N/A N/A N/A N/A Electronics Fund (inception date May 1, 2004) Beginning AUV (a) $9.419 $9.319 $9.098 $9.740 N/A N/A N/A N/A (b) $9.269 $9.226 $9.061 $9.740 N/A N/A N/A N/A Ending AUV (a) $9.055 $9.419 $9.319 $9.098 N/A N/A N/A N/A (b) $8.857 $9.269 $9.226 $9.061 N/A N/A N/A N/A Ending Number of AUs 1,362 3,011 1,614 0 N/A N/A N/A N/A Energy Fund (inception date May 1, 2004) Beginning AUV (a) $18.239 $16.525 $12.095 $10.225 N/A N/A N/A N/A (b) $17.950 $16.360 $12.047 $10.224 N/A N/A N/A N/A Ending AUV (a) $23.958 $18.239 $16.525 $12.095 N/A N/A N/A N/A (b) $23.436 $17.950 $16.360 $12.047 N/A N/A N/A N/A Ending Number of AUs 34,992 32,806 50,857 12,506 N/A N/A N/A N/A
49
2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ RYDEX VARIABLE TRUST: (continued) Energy Services Fund (inception date May 1, 2004) Beginning AUV (a) $19.343 $17.674 $12.085 $10.174 N/A N/A N/A N/A (b) $19.036 $17.498 $12.037 $10.173 N/A N/A N/A N/A Ending AUV (a) $26.148 $19.343 $17.674 $12.085 N/A N/A N/A N/A (b) $25.578 $19.036 $17.498 $12.037 N/A N/A N/A N/A Ending Number of AUs 31,087 17,860 26,884 10,781 N/A N/A N/A N/A Europe 1.25X Strategy Fund (inception date May 1, 2004) Beginning AUV (a) $16.124 $12.625 $12.038 $10.113 N/A N/A N/A N/A (b) $15.869 $12.500 $11.989 $10.112 N/A N/A N/A N/A Ending AUV (a) $17.976 $16.124 $12.625 $12.038 N/A N/A N/A N/A (b) $17.584 $15.869 $12.500 $11.989 N/A N/A N/A N/A Ending Number of AUs 10,760 23,304 0 2,716 N/A N/A N/A N/A Financial Services Fund (inception date May 1, 2004) Beginning AUV (a) $13.460 $11.692 $11.469 $10.048 N/A N/A N/A N/A (b) $13.246 $11.576 $11.423 $10.047 N/A N/A N/A N/A Ending AUV (a) $10.776 $13.460 $11.692 $11.469 N/A N/A N/A N/A (b) $10.541 $13.246 $11.576 $11.423 N/A N/A N/A N/A Ending Number of AUs 1,188 10,361 6,713 452 N/A N/A N/A N/A Government Long Bond 1.2X Strategy Fund (inception date May 1, 2003) Beginning AUV (a) $10.487 $10.979 $10.336 $9.667 $9.985 N/A N/A N/A (b) $10.259 $10.805 $10.233 $9.629 $9.985 N/A N/A N/A Ending AUV (a) $11.350 $10.487 $10.979 $10.336 $9.667 N/A N/A N/A (b) $11.036 $10.259 $10.805 $10.233 $9.629 N/A N/A N/A Ending Number of AUs 30,339 17,053 18,077 9,290 3,065 N/A N/A N/A Health Care Fund (inception date May 1, 2004) Beginning AUV (a) $11.376 $10.975 $10.059 $10.065 N/A N/A N/A N/A (b) $11.195 $10.866 $10.018 $10.065 N/A N/A N/A N/A Ending AUV (a) $11.893 $11.376 $10.975 $10.059 N/A N/A N/A N/A (b) $11.634 $11.195 $10.866 $10.018 N/A N/A N/A N/A Ending Number of AUs 3,031 13,754 29,536 8 N/A N/A N/A N/A Internet Fund (inception date May 1, 2004) Beginning AUV (a) $11.772 $10.882 $11.189 $9.793 N/A N/A N/A N/A (b) $11.585 $10.773 $11.144 $9.792 N/A N/A N/A N/A Ending AUV (a) $12.813 $11.772 $10.882 $11.189 N/A N/A N/A N/A (b) $12.534 $11.585 $10.773 $11.144 N/A N/A N/A N/A Ending Number of AUs 2,371 4,126 1,214 608 N/A N/A N/A N/A Inverse Dow 2X Strategy Fund (inception date July 15, 2004) Beginning AUV (a) $6.735 $8.730 $8.711 $10.077 N/A N/A N/A N/A (b) $6.637 $8.655 $8.688 $10.077 N/A N/A N/A N/A Ending AUV (a) $6.044 $6.735 $8.730 $8.711 N/A N/A N/A N/A (b) $5.920 $6.637 $8.655 $8.688 N/A N/A N/A N/A Ending Number of AUs 290 4,624 1,253 0 N/A N/A N/A N/A
50
2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ RYDEX VARIABLE TRUST: (continued) Inverse Government Long Bond Strategy Fund (inception date May 1, 2003) Beginning AUV (a) $8.631 $8.096 $8.664 $9.835 $10.000 N/A N/A N/A (b) $8.443 $7.967 $8.577 $9.796 $10.000 N/A N/A N/A Ending AUV (a) $8.126 $8.631 $8.096 $8.664 $9.835 N/A N/A N/A (b) $7.902 $8.443 $7.967 $8.577 $9.796 N/A N/A N/A Ending Number of AUs 49,973 49,093 56,017 85,611 236 N/A N/A N/A Inverse Mid Cap Strategy Fund (inception date July 15, 2004) Beginning AUV (a) $7.509 $7.918 $8.742 $9.942 N/A N/A N/A N/A (b) $7.400 $7.850 $8.720 $9.942 N/A N/A N/A N/A Ending AUV (a) $7.257 $7.509 $7.918 $8.742 N/A N/A N/A N/A (b) $7.109 $7.400 $7.850 $8.720 N/A N/A N/A N/A Ending Number of AUs 0 966 1,243 0 N/A N/A N/A N/A Inverse NASDAQ-100 Strategy Fund (inception date May 1, 2004) Beginning AUV (a) $8.383 $8.622 $8.634 $10.109 N/A N/A N/A N/A (b) $8.250 $8.536 $8.599 $10.109 N/A N/A N/A N/A Ending AUV (a) $7.334 $8.383 $8.622 $8.634 N/A N/A N/A N/A (b) $7.174 $8.250 $8.536 $8.599 N/A N/A N/A N/A Ending Number of AUs 1,050 1,723 702 0 N/A N/A N/A N/A Inverse Russell 2000 Strategy Fund (inception date July 15, 2004) Beginning AUV (a) $7.021 $8.086 $8.458 $9.964 N/A N/A N/A N/A (b) $6.919 $8.017 $8.436 $9.964 N/A N/A N/A N/A Ending AUV (a) $7.294 $7.021 $8.086 $8.458 N/A N/A N/A N/A (b) $7.146 $6.919 $8.017 $8.436 N/A N/A N/A N/A Ending Number of AUs 4,186 6,020 1,679 0 N/A N/A N/A N/A Inverse S&P 500 Strategy Fund (inception date May 1, 2003) Beginning AUV (a) $6.337 $6.948 $7.100 $8.020 $9.985 N/A N/A N/A (b) $6.199 $6.837 $7.029 $7.987 $9.985 N/A N/A N/A Ending AUV (a) $6.301 $6.337 $6.948 $7.100 $8.020 N/A N/A N/A (b) $6.126 $6.199 $6.837 $7.029 $7.987 N/A N/A N/A Ending Number of AUs 1,534 1,331 1,014 286 286 N/A N/A N/A Japan 1.25X Strategy Fund (inception date May 1, 2004) Beginning AUV (a) $12.696 $12.246 $10.318 $9.875 N/A N/A N/A N/A (b) $12.495 $12.124 $10.277 $9.874 N/A N/A N/A N/A Ending AUV (a) $11.113 $12.696 $12.246 $10.318 N/A N/A N/A N/A (b) $10.871 $12.495 $12.124 $10.277 N/A N/A N/A N/A Ending Number of AUs 6,199 11,367 25,878 91 N/A N/A N/A N/A
51
2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ RYDEX VARIABLE TRUST: (continued) Large Cap Growth Fund (inception date July 15, 2004) Beginning AUV (a) $10.942 $10.527 $10.489 $9.955 N/A N/A N/A N/A (b) $10.784 $10.438 $10.462 $9.955 N/A N/A N/A N/A Ending AUV (a) $11.319 $10.942 $10.527 $10.489 N/A N/A N/A N/A (b) $11.089 $10.784 $10.438 $10.462 N/A N/A N/A N/A Ending Number of AUs 9,059 12,632 3,064 62 N/A N/A N/A N/A Large Cap Value Fund (inception date July 15, 2004) Beginning AUV (a) $13.313 $11.474 $11.167 $9.964 N/A N/A N/A N/A (b) $13.121 $11.376 $11.138 $9.964 N/A N/A N/A N/A Ending AUV (a) $12.423 $13.313 $11.474 $11.167 N/A N/A N/A N/A (b) $12.169 $13.121 $11.376 $11.138 N/A N/A N/A N/A Ending Number of AUs 5,939 37,551 110 0 N/A N/A N/A N/A Leisure Fund (inception date May 1, 2004) Beginning AUV (a) $13.143 $10.794 $11.507 $10.021 N/A N/A N/A N/A (b) $12.934 $10.687 $11.460 $10.020 N/A N/A N/A N/A Ending AUV (a) $12.630 $13.143 $10.794 $11.507 N/A N/A N/A N/A (b) $12.355 $12.934 $10.687 $11.460 N/A N/A N/A N/A Ending Number of AUs 1,086 7,093 255 1,531 N/A N/A N/A N/A Mid Cap 1.5X Strategy Fund (inception date May 1, 2003) Beginning AUV (a) $21.880 $20.086 $17.856 $14.826 $10.000 N/A N/A N/A (b) $21.404 $19.767 $17.678 $14.766 $10.000 N/A N/A N/A Ending AUV (a) $22.350 $21.880 $20.086 $17.856 $14.826 N/A N/A N/A (b) $21.732 $21.404 $19.767 $17.678 $14.766 N/A N/A N/A Ending Number of AUs 2,973 2,628 3,699 10,211 5,196 N/A N/A N/A Mid Cap Growth Fund (inception date July 15, 2004) Beginning AUV (a) $12.364 $12.158 $11.061 $10.057 N/A N/A N/A N/A (b) $12.186 $12.054 $11.032 $10.057 N/A N/A N/A N/A Ending AUV (a) $13.222 $12.364 $12.158 $11.061 N/A N/A N/A N/A (b) $12.952 $12.186 $12.054 $11.032 N/A N/A N/A N/A Ending Number of AUs 3,813 4,909 9,904 0 N/A N/A N/A N/A Mid Cap Value Fund (inception date July 15, 2004) Beginning AUV (a) $13.960 $12.091 $11.319 $10.040 N/A N/A N/A N/A (b) $13.758 $11.988 $11.290 $10.040 N/A N/A N/A N/A Ending AUV (a) $13.097 $13.960 $12.091 $11.319 N/A N/A N/A N/A (b) $12.831 $13.758 $11.988 $11.290 N/A N/A N/A N/A Ending Number of AUs 7,386 21,730 103 0 N/A N/A N/A N/A
52
2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ RYDEX VARIABLE TRUST: (continued) Nova Fund (inception date February 11, 2000) Beginning AUV (a) $13.523 $11.498 $11.214 $9.922 $7.228 $11.405 $15.135 $18.407 (b) $12.993 $11.113 $10.904 $9.706 $7.113 $11.291 $15.074 $18.407 Ending AUV (a) $13.485 $13.523 $11.498 $11.214 $9.922 $7.228 $11.405 $15.135 (b) $12.877 $12.993 $11.113 $10.904 $9.706 $7.113 $11.291 $15.074 Ending Number of AUs 36,241 38,895 37,636 67,415 123,701 65,223 254,850 83,067 NASDAQ-100 2X Strategy Fund (inception date May 1, 2004) Beginning AUV (a) $11.975 $11.581 $12.111 $9.767 N/A N/A N/A N/A (b) $11.785 $11.465 $12.062 $9.766 N/A N/A N/A N/A Ending AUV (a) $15.138 $11.975 $11.581 $12.111 N/A N/A N/A N/A (b) $14.808 $11.785 $11.465 $12.062 N/A N/A N/A N/A Ending Number of AUs 7,982 9,592 5,827 1,013 N/A N/A N/A N/A NASDAQ-100 Fund (inception date February 11, 2000) Beginning AUV (a) $14.643 $14.039 $14.079 $13.058 $9.106 $15.102 $23.626 $39.086 (b) $14.068 $13.568 $13.689 $12.773 $8.960 $14.951 $23.531 $39.086 Ending AUV (a) $17.012 $14.643 $14.039 $14.079 $13.058 $9.106 $15.102 $23.626 (b) $16.246 $14.068 $13.568 $13.689 $12.773 $8.960 $14.951 $23.531 Ending Number of AUs 32,993 32,959 32,962 72,156 84,834 105,086 178,136 70,102 Precious Metals Fund (inception date May 1, 2004) Beginning AUV (a) $16.354 $13.658 $11.457 $9.998 N/A N/A N/A N/A (b) $16.095 $13.521 $11.410 $9.998 N/A N/A N/A N/A Ending AUV (a) $19.279 $16.354 $13.658 $11.457 N/A N/A N/A N/A (b) $18.858 $16.095 $13.521 $11.410 N/A N/A N/A N/A Ending Number of AUs 36,510 35,796 14,799 381 N/A N/A N/A N/A Real Estate Fund (inception date May 1, 2004) Beginning AUV (a) $18.214 $14.129 $13.372 $10.091 N/A N/A N/A N/A (b) $17.926 $13.989 $13.318 $10.091 N/A N/A N/A N/A Ending AUV (a) $14.526 $18.214 $14.129 $13.372 N/A N/A N/A N/A (b) $14.210 $17.926 $13.989 $13.318 N/A N/A N/A N/A Ending Number of AUs 3,476 11,060 4,384 341 N/A N/A N/A N/A Retailing Fund (inception date May 1, 2004) Beginning AUV (a) $12.041 $11.093 $10.665 $9.991 N/A N/A N/A N/A (b) $11.850 $10.982 $10.622 $9.990 N/A N/A N/A N/A Ending AUV (a) $10.377 $12.041 $11.093 $10.665 N/A N/A N/A N/A (b) $10.151 $11.850 $10.982 $10.622 N/A N/A N/A N/A Ending Number of AUs 296 434 472 0 N/A N/A N/A N/A
53
2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ RYDEX VARIABLE TRUST: (continued) Russell 2000 1.5X Strategy Fund (inception date May 1, 2003) Beginning AUV (a) $23.849 $20.012 $19.529 $15.818 $10.014 N/A N/A N/A (b) $23.331 $19.694 $19.334 $15.755 $10.014 N/A N/A N/A Ending AUV (a) $21.931 $23.849 $20.012 $19.529 $15.818 N/A N/A N/A (b) $21.325 $23.331 $19.694 $19.334 $15.755 N/A N/A N/A Ending Number of AUs 8,811 6,713 272 15,412 10,953 N/A N/A N/A S&P 500 2X Strategy Fund (inception date May 1, 2004) Beginning AUV (a) $14.375 $11.784 $11.559 $10.054 N/A N/A N/A N/A (b) $14.147 $11.667 $11.512 $10.053 N/A N/A N/A N/A Ending AUV (a) $14.261 $14.375 $11.784 $11.559 N/A N/A N/A N/A (b) $13.950 $14.147 $11.667 $11.512 N/A N/A N/A N/A Ending Number of AUs 5,968 20,140 11,510 407 N/A N/A N/A N/A Sector Rotation Fund (inception date May 1, 2003) Beginning AUV (a) $16.806 $15.300 $13.644 $12.498 $10.025 N/A N/A N/A (b) $16.440 $15.057 $13.508 $12.448 $10.025 N/A N/A N/A Ending AUV (a) $20.340 $16.806 $15.300 $13.644 $12.498 N/A N/A N/A (b) $19.778 $16.440 $15.057 $13.508 $12.448 N/A N/A N/A Ending Number of AUs 4,289 3,618 6,758 4,022 5,621 N/A N/A N/A Small Cap Growth Fund (inception date July 15, 2004) Beginning AUV (a) $12.828 $12.075 $11.530 $10.056 N/A N/A N/A N/A (b) $12.643 $11.972 $11.500 $10.056 N/A N/A N/A N/A Ending AUV (a) $12.635 $12.828 $12.075 $11.530 N/A N/A N/A N/A (b) $12.378 $12.643 $11.972 $11.500 N/A N/A N/A N/A Ending Number of AUs 11,461 12,849 3,251 0 N/A N/A N/A N/A Small Cap Value Fund (inception date July 15, 2004) Beginning AUV (a) $13.813 $11.750 $11.497 $10.043 N/A N/A N/A N/A (b) $13.613 $11.650 $11.468 $10.043 N/A N/A N/A N/A Ending AUV (a) $10.847 $13.813 $11.750 $11.497 N/A N/A N/A N/A (b) $10.626 $13.613 $11.650 $11.468 N/A N/A N/A N/A Ending Number of AUs 6,062 9,617 935 0 N/A N/A N/A N/A Strengthening Dollar 2X Strategy Fund (inception date October 21, 2005) Beginning AUV (a) $9.122 $10.350 $10.120 N/A N/A N/A N/A N/A (b) $9.057 $10.338 $10.120 N/A N/A N/A N/A N/A Ending AUV (a) $8.015 $9.122 $10.350 N/A N/A N/A N/A N/A (b) $7.910 $9.057 $10.338 N/A N/A N/A N/A N/A Ending Number of AUs 668 0 0 N/A N/A N/A N/A N/A
54
2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ RYDEX VARIABLE TRUST: (continued) Technology Fund (inception date May 1, 2004) Beginning AUV (a) $11.110 $10.639 $10.463 $9.844 N/A N/A N/A N/A (b) $10.933 $10.533 $10.421 $9.843 N/A N/A N/A N/A Ending AUV (a) $12.091 $11.110 $10.639 $10.463 N/A N/A N/A N/A (b) $11.828 $10.933 $10.533 $10.421 N/A N/A N/A N/A Ending Number of AUs 2,506 3,386 1,165 0 N/A N/A N/A N/A Telecommunications Fund (inception date May 1, 2004) Beginning AUV (a) $12.732 $10.803 $10.829 $9.887 N/A N/A N/A N/A (b) $12.530 $10.696 $10.785 $9.886 N/A N/A N/A N/A Ending AUV (a) $13.712 $12.732 $10.803 $10.829 N/A N/A N/A N/A (b) $13.414 $12.530 $10.696 $10.785 N/A N/A N/A N/A Ending Number of AUs 1,309 1,798 1,399 0 N/A N/A N/A N/A Transportation Fund (inception date May 1, 2004) Beginning AUV (a) $14.229 $13.437 $12.561 $10.022 N/A N/A N/A N/A (b) $14.004 $13.303 $12.510 $10.022 N/A N/A N/A N/A Ending AUV (a) $12.802 $14.229 $13.437 $12.561 N/A N/A N/A N/A (b) $12.523 $14.004 $13.303 $12.510 N/A N/A N/A N/A Ending Number of AUs 390 4,011 8,692 901 N/A N/A N/A N/A U.S. Government Money Market Fund (inception date May 1, 2001) Beginning AUV (a) $9.987 $9.754 $9.696 $9.809 $9.947 $10.040 $10.000 N/A (b) $9.653 $9.484 $9.485 $9.654 $9.847 $10.000 $10.000 N/A Ending AUV (a) $10.229 $9.987 $9.754 $9.696 $9.809 $9.947 $10.040 N/A (b) $9.828 $9.653 $9.484 $9.485 $9.654 $9.847 $10.000 N/A Ending Number of AUs 54,144 75,962 343,324 373,637 44,469 2,946,729 276,865 N/A Utilities Fund (inception date May 1, 2004) Beginning AUV (a) $14.994 $12.570 $11.529 $10.058 N/A N/A N/A N/A (b) $14.756 $12.445 $11.482 $10.057 N/A N/A N/A N/A Ending AUV (a) $16.687 $14.994 $12.570 $11.529 N/A N/A N/A N/A (b) $16.323 $14.756 $12.445 $11.482 N/A N/A N/A N/A Ending Number of AUs 26,232 29,191 18,443 11,505 N/A N/A N/A N/A Weakening Dollar 2X Strategy Fund (inception date July 15, 2005) Beginning AUV (a) $11.117 $9.659 $9.880 N/A N/A N/A N/A N/A (b) $11.038 $9.648 $9.880 N/A N/A N/A N/A N/A Ending AUV (a) $12.948 $11.117 $9.659 N/A N/A N/A N/A N/A (b) $12.779 $11.038 $9.648 N/A N/A N/A N/A N/A Ending Number of AUs 6,328 657 0 N/A N/A N/A N/A N/A
55
2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ SELIGMAN PORTFOLIOS, INC. Communications and Information Portfolio (inception date February 11, 2000) Beginning AUV (a) $7.153 $5.945 $5.606 $5.129 $3.610 $5.742 $5.542 $10.000 (b) $6.872 $5.745 $5.451 $5.016 $3.553 $5.684 $5.520 $10.000 Ending AUV (a) $8.118 $7.153 $5.945 $5.606 $5.129 $3.610 $5.742 $5.542 (b) $7.753 $6.872 $5.745 $5.451 $5.016 $3.553 $5.684 $5.520 Ending Number of AUs 41,600 54,742 42,633 61,967 68,908 82,694 176,741 128,113 Global Technology Portfolio (inception date February 11, 2000) Beginning AUV (a) $5.893 $5.077 $4.769 $4.658 $3.472 $5.162 $6.729 $10.000 (b) $5.661 $4.907 $4.637 $4.556 $3.416 $5.110 $6.702 $10.000 Ending AUV (a) $6.698 $5.893 $5.077 $4.769 $4.658 $3.472 $5.162 $6.729 (b) $6.397 $5.661 $4.907 $4.637 $4.556 $3.416 $5.110 $6.702 Ending Number of AUs 27,292 28,216 28,210 36,292 39,725 34,956 80,633 74,199 ------------------------------------------------------------------------------------------------------------------------------------ THIRD AVENUE VARIABLE SERIES TRUST: Value Portfolio (inception date May 1, 2003) Beginning AUV (a) $20.971 $18.368 $16.249 $13.744 $9.999 N/A N/A N/A (b) $20.515 $18.076 $16.087 $13.689 $9.999 N/A N/A N/A Ending AUV (a) $19.684 $20.971 $18.368 $16.249 $13.744 N/A N/A N/A (b) $19.141 $20.515 $18.076 $16.087 $13.689 N/A N/A N/A Ending Number of AUs 43,417 50,516 37,937 16,000 5,617 N/A N/A N/A ------------------------------------------------------------------------------------------------------------------------------------ VAN ECK WORLDWIDE INSURANCE TRUST: Absolute Return Fund (inception date May 1, 2003) Beginning AUV (a) $10.332 $9.643 $9.759 $9.926 $10.000 N/A N/A N/A (b) $10.108 $9.490 $9.661 $9.886 $10.000 N/A N/A N/A Ending AUV (a) $10.601 $10.332 $9.643 $9.759 $9.926 N/A N/A N/A (b) $10.308 $10.108 $9.490 $9.661 $9.886 N/A N/A N/A Ending Number of AUs 10,040 2,842 2,580 1,574 0 N/A N/A N/A Bond Fund (inception date February 11, 2000) Beginning AUV (a) $14.214 $13.537 $14.156 $13.153 $11.288 $9.409 $10.057 $9.858 (b) $13.616 $13.045 $13.723 $12.827 $11.075 $9.287 $9.986 $9.841 Ending AUV (a) $15.376 $14.214 $13.537 $14.156 $13.153 $11.288 $9.409 $10.057 (b) $14.641 $13.616 $13.045 $13.723 $12.827 $11.075 $9.287 $9.986 Ending Number of AUs 13,864 18,423 18,631 15,124 18,605 42,391 15,138 9,753 Emerging Markets Fund (inception date February 11, 2000) Beginning AUV (a) $23.887 $17.365 $13.341 $10.747 $7.068 $7.382 $7.625 $14.919 (b) $22.881 $16.734 $12.932 $10.481 $6.934 $7.286 $7.571 $14.893 Ending AUV (a) $32.413 $23.887 $17.365 $13.341 $10.747 $7.068 $7.382 $7.625 (b) $30.862 $22.881 $16.734 $12.932 $10.481 $6.934 $7.286 $7.571 Ending Number of AUs 50,278 67,425 53,543 61,515 72,276 57,303 39,317 32,748
56
2007 2006 2005 2004 2003 2002 2001 2000 ------------------------------------------------------------------------------------------------------------------------------------ VAN ECK WORLDWIDE INSURANCE TRUST (continued): Hard Assets Fund (inception date February 11, 2000) Beginning AUV (a) $25.135 $20.474 $13.689 $11.197 $7.827 $8.170 $9.253 $7.839 (b) $24.077 $19.730 $13.270 $10.920 $7.679 $8.064 $9.188 $7.825 Ending AUV (a) $36.025 $25.135 $20.474 $13.689 $11.197 $7.827 $8.170 $9.253 (b) $34.301 $24.077 $19.730 $13.270 $10.920 $7.679 $8.064 $9.188 Ending Number of AUs 62,350 46,573 48,104 44,915 51,114 43,348 7,218 1,197 Real Estate Fund (inception date February 11, 2000) Beginning AUV (a) $26.236 $20.322 $17.030 $12.679 $9.560 $10.150 $9.772 $8.068 (b) $25.132 $19.583 $16.509 $12.366 $9.379 $10.018 $9.704 $8.054 Ending AUV (a) $26.100 $26.236 $20.322 $17.030 $12.679 $9.560 $10.150 $9.772 (b) $24.850 $25.132 $19.583 $16.509 $12.366 $9.379 $10.018 $9.704 Ending Number of AUs 9,907 19,382 15,330 17,318 14,958 29,226 36,153 9,298 ------------------------------------------------------------------------------------------------------------------------------------ WELLS FARGO ADVANTAGE VARIABLE TRUST: Discovery Fund (inception date April 8, 2005) Beginning AUV (a) $12.838 $11.355 $9.303 N/A N/A N/A N/A N/A (b) $12.705 $11.306 $9.299 N/A N/A N/A N/A N/A Ending AUV (a) $15.484 $12.838 $11.355 N/A N/A N/A N/A N/A (b) $15.232 $12.705 $11.306 N/A N/A N/A N/A N/A Ending Number of AUs 59,875 64,397 75,909 N/A N/A N/A N/A N/A Opportunity Fund: (inception date February 11, 2000) Beginning AUV (a) $19.341 $17.478 $16.428 $14.093 $10.431 $14.455 $15.224 $14.103 (b) $18.527 $16.842 $15.926 $13.744 $10.234 $14.267 $15.117 $14.079 Ending AUV (a) $20.336 $19.341 $17.478 $16.428 $14.093 $10.431 $14.455 $15.224 (b) $19.362 $18.527 $16.842 $15.926 $13.744 $10.234 $14.267 $15.117 Ending Number of AUs 32,301 49,552 66,847 86,584 71,566 113,045 113,065 60,409 ------------------------------------------------------------------------------------------------------------------------------------
Notes: (a) Standard contract with lowest annual mortality and expense fee of 1.40%. (b) Standard contract plus guaranteed minimum death benefit and guaranteed income benefit with the highest annual mortality and expense fee of 2.00%. 57 -------------------------------------------------------------------------------- PRIVACY NOTICE of Jefferson National Life Insurance Company REVISED Notice of Privacy Policy 01/2008 We take your privacy seriously. This notice describes how we treat data about our customers. We do not sell our customer data. We have physical, electronic and procedural security measures in place that comply with legal standards to protect your personal data. Access to customer data is limited to employees who need access to do their jobs. We get most of the data we have about you through your application and administrative forms. We may also receive data from outside sources with your consent, such as: o The Medical Information Bureau o Consumer Reporting Agencies o Service Providers who conduct marketing services on our behalf o Motor Vehicle Bureaus o Other Data Providers Data we collect may include: o Name, address, e-mail address, phone number o Social Security Number o Demographic Data o Health data (for life insurance buyers) or other data about illness, disability or injury o Internet Cookies (cookies help our Internet application process - they do not store any personal data) We may share customer data we collect with the following with your consent or as permitted by law: o Insurance companies, agents, reinsurers o Group policyholders for purpose of reporting claims experience o Medical Laboratories and Prescription or Pharmacy Database Managers o Medical Information and Motor Vehicle Bureaus or similar institutions o A court or governmental agency when there is a lawful request o Law enforcement officials to prevent criminal activity and/or fraud o Service providers that perform marketing services for us o Service providers that perform administrative services for us o Joint Marketing Partners o Unaffiliated Fund Families o Unaffiliated Third Parties We do not share your health data with anyone without your written consent. We use your health data to: o Underwrite policies o Process, evaluate or defend claims When we use service providers and joint marketers they agree to keep your personal data private and not use it for any other purpose. Data obtained from an insurance support organization, such as, the Medical Information Bureau, may be retained and disclosed by this organization to other persons. For our Internet customers we require you to enter a user name and password to access your online account. You have a right to review your personal data. To do so please send a written request to the Customer Service Department: 9920 Corporate Campus Drive, Suite 1000 Louisville, KY 40223 Please include your name, address, telephone number, and policy number. Also, let us know what kind of data you want to see. We may charge a small fee to collect and send the data to you. If you see any errors, let us know and we will review it. If we agree, we will correct our files. If we disagree, you may file a short statement of dispute with us. Your statement will be included with any data we disclose in the future. You can also request that we send it to anyone who received your data from us in the past 2 years. If we change our privacy notice we will give you notice ahead of time of any change in our privacy practices by providing a new Notice and any opt-in or opt-out rights you may have under any federal or state laws at that time. If you provide personal data to third parties, for example, independent agents or brokers, please note that this Notice will not cover their use of such data. If you provide personal data to us on a website that we sponsor with another financial institution, please note that you are providing your personal data to us and the third party. Accordingly, you should review the privacy notice of any such third parties. 58 -------------------------------------------------------------------------------- TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION General Information General Information Regarding Jefferson National Life Insurance Company Jefferson National Life Annuity Account H Certain Federal Income Tax Consequences Published Ratings Administration Annuity Provisions Distribution Reduction or Elimination of the Contingent Deferred Sales Charge Financial Statements -------------------------------------------------------------------------------- (cut along dotted line) If you would like a free copy of the Statement of Additional Information (Form # JNL-PLUS-SAI-H-0508) dated May 1, 2008 for this Prospectus, please complete this form, detach, and mail to: Jefferson National Life Insurance Company Administrative Office P.O. Box 36840 Louisville, Kentucky 40233 Please send me a free copy of the Statement of Additional Information for the Jefferson National Life Insurance Annuity Account H fixed and variable annuity at the following address: Name:___________________________________________________________________________ Mailing Address:________________________________________________________________ ________________________________________________________________________________ Sincerely, ________________________________________________________________________________ (Signature) -------------------------------------------------------------------------------- Jefferson National Life Insurance Company P.O. Box 36840 Louisville, Kentucky 40233 (C) 2008, Jefferson National Life Insurance Company JNL-PLUS-PROS-H-0508 59 STATEMENT OF ADDITIONAL INFORMATION INDIVIDUAL FLEXIBLE PREMIUM DEFERRED ANNUITY CONTRACT ISSUED BY JEFFERSON NATIONAL LIFE INSURANCE COMPANY AND JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H ADMINISTRATIVE OFFICE: P.O. BOX 36840, LOUISVILLE, KENTUCKY 40233 PHONE: (866) 667-0561 (TOLL FREE) MAY 1, 2008 This Statement of Additional Information is not a prospectus and should be read in conjunction with the current prospectus for Jefferson National Life Annuity Account H (the "Separate Account"), dated May 1, 2008. You may obtain a copy of the current prospectus on our Website or by writing to us at our Administrative Office: P.O. Box 36840, Louisville, Kentucky 40233, telephone: (866) 667-0561. B-1 TABLE OF CONTENTS PAGE GENERAL INFORMATION B-3 CERTAIN FEDERAL INCOME TAX CONSEQUENCES B-3 PUBLISHED RATINGS B-6 ADMINISTRATION B-6 ANNUITY PROVISIONS B-6 DISTRIBUTION B-7 ARRANGEMENTS REGARDING FREQUENT PURCHASES AND REDEMPTIONS B-7 FINANCIAL STATEMENTS B-7 B-2 GENERAL INFORMATION GENERAL INFORMATION REGARDING JEFFERSON NATIONAL LIFE INSURANCE COMPANY: Jefferson National Life Insurance Company ("Jefferson National", "Company", "we", "our" or "us") is a subsidiary of Jefferson National Financial Corp., a Delaware corporation. We are organized as a Texas stock life insurance company, and are subject to Texas law governing insurance companies. We are licensed to sell insurance products in forty-nine of the fifty states of the United States (all states except New York), and the District of Columbia. Jefferson National's executive offices are at 435 Hudson Street, 2nd Floor, New York, NY 10014. Our principal business office is 9920 Corporate Campus Drive, Suite 1000, Louisville, KY 40223. Prior to January 3, 2008, Jefferson National was an indirect, wholly-owned subsidiary of Inviva, Inc. Prior to May 1, 2003, Jefferson National was known as Conseco Variable Insurance Company ("CVIC"). On October 23, 2002 CVIC was purchased by Inviva, Inc. from Conseco Life Insurance Company of Texas. Prior to October 7, 1998, CVIC was known as Great American Reserve Insurance Company. JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H: Jefferson National Life Annuity Account H, also referred to as the "Separate Account", was established on November 1, 1999 pursuant to Texas law. Prior to May 1, 2003, the Separate Account was known as Conseco Variable Annuity Account H. The Separate Account meets the definition of a "separate account" under the federal securities laws and is registered with the Securities and Exchange Commission (the "SEC") as a unit investment trust under the Investment Company Act of 1940 ("Investment Company Act"). This registration does not involve supervision of the management of the separate account or the Company by the SEC. The assets of the Separate Account are the property of the Company. However, the assets of the separate account, equal to its reserves and other contract liabilities, are not chargeable with liabilities arising out of any other business the Company may conduct. Income, gains, and losses, whether or not realized, from assets allocated to the Separate Account are credited to or charged against the Separate Account without regard to other income, gains, or losses of the Company. The Separate Account holds assets of annuities issued by us with values and benefits that vary according to the investment performance of the underlying Investment Portfolios offered as Sub-accounts of the Separate Account. Each Sub-account invests exclusively in an Investment Portfolio. You will find additional information about the Investment Portfolios in their respective prospectuses. We do not guarantee the investment results of any Sub-account. You bear the entire investment risk. We offer a number of Sub-accounts. Certain Sub-accounts may not be available in all jurisdictions. If and when we obtain approval of the applicable authorities to make such Sub-accounts available, we will notify Owners of the availability of such Sub-accounts. A brief summary of the investment objectives and policies of each Investment Portfolio is found in the Prospectus. More detailed information about the investment objectives, policies, risks, costs and management of the Investment Portfolios are found in the prospectuses and statements of additional information for the Investment Portfolios. Also included in such information is the investment policy of each Investment Portfolio regarding the acceptable ratings by recognized rating services for bonds and other debt obligations. There can be no guarantee that any Investment Portfolio will meet its investment objectives. Each underlying Investment Portfolio is registered under the Investment Company Act, as amended, as an open-end management investment company. Each underlying Investment Portfolio thereof may or may not be diversified as defined in the Investment Company Act. The trustees or directors, as applicable, of an underlying Investment Portfolio may add, eliminate or substitute Investment Portfolios from time to time. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following summary does not constitute tax advice. It is a general discussion of certain of the expected federal income tax consequences of investment in and distributions with respect to a Contract, based on the Internal Revenue Code of 1986, as amended, proposed and final Treasury regulations thereunder, judicial authority, and current administrative rulings and practice. This summary discusses only certain federal income tax consequences to "United States Persons," and does not discuss state, local, or foreign tax consequences. United States Persons means citizens or residents of the United States, domestic corporations, domestic partnerships, trusts with respect to which a court within the United States is able to exercise primary supervision over such trusts' administration and with respect to which one or more United States Persons (as defined herein) have the authority to control such trusts' substantial decisions and estates that are subject to United States federal income tax regardless of the source of their income. TAX STATUS OF THE CONTRACT The following discussion is based on the assumption that the Contract qualifies as an annuity contract for federal income tax purposes. DIVERSIFICATION REQUIREMENTS. Section 817(h) of the Code provides that in order for a variable contract which is based on a segregated asset account to qualify as an annuity contract under the Code, the investments made by such account must be "adequately diversified" in accordance with Treasury regulations. The Treasury regulations issued under Section 817(h) (Treas. Reg. Section 1.817-5) apply a diversification requirement to each of the Sub-accounts of the Separate Account. The Separate Account, through the funds and their Investment Portfolios, intends to comply with the diversification requirements of the Treasury. B-3 Section 817(h) applies to variable annuity contracts other than pension plan contracts. The regulations reiterate that the diversification requirements do not apply to pension plan contracts. All of the qualified retirement plans (described below) are defined as pension plan contracts for these purposes. Notwithstanding the exception of qualified contracts from application of the diversification rules, the investment vehicle for Jefferson National's qualified Contracts (i.e., the funds) will be structured to comply with the diversification standards because it serves as the investment vehicle for nonqualified contracts as well as qualified contracts. OWNER CONTROL. In certain circumstances, owners of variable annuity contracts may be considered the owners, for federal income tax purposes, of the assets of the Separate Account used to support their contracts. In those circumstances, income and gains from the separate account assets would be includable in the variable annuity contract owner's gross income. The IRS has stated in published rulings that a variable contract owner will be considered the owner of Separate Account assets if the contract owner possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. The Treasury Department subsequently announced, in connection with the issuance of regulations concerning investment diversification, that those regulations "do not provide guidance concerning the circumstances in which investor control of the investments of a segregated asset account may cause the investor, rather than the insurance company, to be treated as the owner of the assets in the account." This announcement also stated that guidance would be issued by way of regulations or rulings on the "extent to which contract owners may direct their investments to particular Sub-accounts without being treated as owners of underlying assets." The IRS has issued Revenue Ruling 2003-91 in which it ruled that the ability to choose among 20 sub-accounts and make not more than one transfer per month without charge did not result in the owner of the Contract being treated as the owner of the assets in the sub-accounts under the investor control doctrine. The ownership rights under the Contract are similar to, but different in certain respects from, those described by the IRS in rulings in which it was determined that contract owners were not owners of Separate Account assets. Although we do not believe this to be the case, these differences could result in owners being treated as the owners of the assets of the Separate Account. We, therefore, reserve the right to modify the Contracts as necessary to attempt to prevent the owners of the Contracts from being considered the owners of a pro rata share of the assets of the Separate Account. DISTRIBUTION REQUIREMENTS. The Code also requires that nonqualified contracts contain specific provisions for distribution of contract proceeds upon the death of an owner. In order to be treated as an annuity contract for federal income tax purposes, the Code requires that such contracts provide that if any owner dies on or after the maturity date and before the entire interest in the contract has been distributed, the remaining portion must be distributed at least as rapidly as under the method in effect on such owner's death. If any owner dies before the maturity date, the entire interest in the contract must generally be distributed within five years after such owner's date of death or be applied to provide an immediate annuity under which payments will begin within one year of such owner's death and will be made for the life of the beneficiary or for a period not extending beyond the life expectancy of the beneficiary. However, if such owner's death occurs prior to the maturity date, and such owner's surviving spouse is named beneficiary, then the contract may be continued with the surviving spouse as the new owner. If any owner is not a natural person, then for purposes of these distribution requirements, the primary annuitant shall be treated as an owner and any death or change of such primary annuitant shall be treated as the death of the owner. The Contract contains provisions intended to comply with these requirements of the Code. No regulations interpreting these requirements of the Code have yet been issued and thus no assurance can be given that the provisions contained in the Contracts satisfy all such Code requirements. The provisions contained in the Contracts will be reviewed and modified if necessary to maintain their compliance with the Code requirements when clarified by regulation or otherwise. If the Owner dies before the required beginning date (in the case of a Tax Sheltered Annuity, Individual Retirement Annuity, SEP IRA or Simple IRA) or before the entire contract value is distributed (in the case of Roth IRAs), any remaining interest in the Contract must be distributed over a period not exceeding the applicable distribution period, which is determined as follows: (a) if the only designated beneficiary is the Owner's spouse, the applicable distribution period is the surviving spouse's life expectancy using the surviving spouse's birthday for each distribution calendar year after the calendar year of the Owner's death. For calendar years after the death of the Owner's surviving spouse, the applicable distribution period is the spouse's remaining life expectancy using the spouse's age in the calendar year of the spouse's death, reduced by one for each calendar year that elapsed since the calendar year immediately following the calendar year of the spouse's death; (b) if the designated beneficiary is not solely the Owner's surviving spouse, or if the Owner did not designate a surviving spouse at all, the applicable distribution period is the designated beneficiary's life expectancy using the designated beneficiary's birthday in the calendar year immediately following the calendar year of the Owner's death, reduced by one for each calendar year that elapsed thereafter; and (c) if there is no designated beneficiary, the entire balance of the contract must be distributed by December 31 of the fifth year following the Owner's death. If the Owner dies on or after the required beginning date, the interest in the Tax Sheltered Annuity, Individual Retirement Annuity, SEP IRA or Simple IRA must be distributed over a period not exceeding the applicable distribution period. B-4 WITHHOLDING. The portion of any distribution under a Contract that is includable in gross income will be subject to federal income tax withholding unless the recipient of such distribution elects not to have federal income tax withheld and properly notifies us. For certain qualified Contracts, certain distributions are subject to mandatory withholding. The withholding rate varies according to the type of distribution and the owner's tax status. For qualified Contracts, "eligible rollover distributions" from section 401(a) plans, section 403(a) annuities, section 403(b) tax-sheltered annuities and governmental section 457 deferred compensation plans are subject to a mandatory federal income tax withholding of 20%. An eligible rollover distribution is a distribution from such a plan, except certain distributions such as distributions required by the Code, hardship distributions, certain after-tax contributions, or distributions in a specified annuity form. The 20% withholding does not apply, however, to certain nontaxable distributions if the owner chooses a "direct rollover" from the plan to another tax-qualified plan or IRA. QUALIFIED CONTRACTS. The qualified Contract is designed for use with several types of tax-qualified retirement plans. The tax rules applicable to participants and beneficiaries in tax-qualified retirement plans vary according to the type of plan and the terms and conditions of the plan. Special favorable tax treatment may be available for certain types of contributions and distributions. Adverse tax consequences may result from contributions in excess of specified limits; distributions prior to age 59 1/2 (subject to certain exceptions); distributions that do not conform to specified commencement and minimum distribution rules; and in other specified circumstances. Some retirement plans are subject to distribution and other requirements that are not incorporated into the Contracts and our Contract administration procedures. Owners, participants and beneficiaries are responsible for determining that contributions, distributions and other transactions with respect to the Contract comply with applicable law. For qualified plans under sections 401(a), 403(a), 403(b), and 457, the Code requires that distributions generally must commence no later than the later of April 1 of the calendar year following the calendar year in which the owner (or plan participant) (i) reaches age 70 1/2 or (ii) retires, and must be made in a specified form or manner. If the plan participant is a "5 percent owner" (as defined in the Code), distributions generally must begin no later than April 1 of the calendar year in which the owner (or plan participant) reaches age 70 1/2. Each owner is responsible for requesting distributions under the Contract that satisfy applicable tax rules. We make no attempt to provide more than general information about use of the Contract with the various types of retirement plans. Purchasers of Contracts for use with any retirement plan should consult their legal counsel and tax advisor regarding the suitability of the Contract. INDIVIDUAL RETIREMENT ANNUITIES. In order to qualify as a traditional individual retirement annuity ("IRA") under section 408(b) of the Code, a Contract must contain certain provisions: (i) the owner must be the annuitant; (ii) the Contract generally is not transferable by the owner, e.g., the owner may not designate a new owner, designate a contingent owner or assign the Contract as collateral security; (iii) subject to special rules, the total purchase payments for any tax year on behalf of any individual may not exceed $5,000 for 2008 ($6,000 if age 50 or older by the end of 2008), except in the case of a rollover amount or contribution under sections 402(c), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code; (iv) annuity payments or partial withdrawals must begin no later than April 1 of the calendar year following the calendar year in which the annuitant attains age 70 1/2 and must be made in a specified form and manner; (v) an annuity payment option with a period certain that will guarantee annuity payments beyond the life expectancy of the annuitant and the beneficiary may not be selected; (vi) certain payments of death benefits must be made in the event the annuitant dies prior to the distribution of the annuity value; and (vii) the entire interest of the owner is non-forfeitable. Contracts intended to qualify as traditional IRAs under section 408(b) of the Code contain such provisions. Amounts in the IRA (other than nondeductible contributions) are taxed when distributed from the IRA. Distributions prior to age 59 1/2 (unless certain exceptions apply) are subject to a 10% penalty tax. Additionally, unless certain annual distribution requirements are met, a penalty tax of 50% will be levied on the difference between the amount that should have been distributed for that year and the amount that actually was distributed for that year. ROTH INDIVIDUAL RETIREMENT ANNUITIES (ROTH IRA). The Roth IRA, under section 408A of the Code, contains many of the same provisions as a traditional IRA. However, there are some differences. First, the contributions are not deductible and must be made in cash or as a rollover or transfer from another Roth IRA or other IRA. A rollover from or conversion of an IRA to a Roth IRA may be subject to tax and other special rules may apply to the rollover or conversion and to distributions attributable thereto. You should consult a tax advisor before combining any converted amounts with any other Roth IRA contributions, including any other conversion amounts from other tax years. The Roth IRA is available to individuals with earned income and whose modified adjusted gross income is under $116,000 for single filers, $169,000 for married filing jointly, and $10,000 for married filing separately. The amount per individual that may be contributed to all IRAs (Roth and traditional) is $5,000 for 2008 ($6,000 if age 50 or older by the end of 2008). Secondly, the distributions are taxed differently. The Roth IRA offers tax-free distributions when made five tax years after the first contribution to any Roth IRA of the individual and made after attaining age 59 1/2, or to pay for qualified first time homebuyer expenses (lifetime maximum of $10,000), or due to death or disability. All other distributions are subject to income tax when made from earnings and may be subject to a premature withdrawal penalty tax unless an exception applies. A 10% penalty tax may apply to amounts attributable to a conversion from an IRA if the amounts are distributed within the five taxable years beginning with the year in which the conversion was made. Unlike the traditional IRA, there are no minimum required distributions during the owner's lifetime; however, required distributions at death are generally the same. SECTION 403(b) PLANS. Under section 403(b) of the Code, payments made by public school systems and certain tax exempt organizations to purchase Contracts for their employees are excludable from the gross income of the employee, subject to certain limitations. However, such payments may be subject to FICA (Social Security) taxes. The Contract includes a death benefit that in some cases may exceed the greater of the purchase payments or the annuity value. The death benefit could be characterized as an B-5 incidental benefit, the amount of which is limited in any tax-sheltered annuity under section 403(b). Because the death benefit may exceed this limitation, employers using the Contract in connection with such plans should consult their tax advisor. Additionally, in accordance with the requirements of the Code, section 403(b) annuities generally may not permit distribution of (i) elective contributions made in years beginning after December 31, 1988, (ii) earnings on those contributions, and (iii) earnings on amounts attributed to elective contributions held as of the end of the last year beginning before January 1, 1989. Distributions of such amounts will be allowed only upon the death of the employee, on or after attainment of age 59 1/2, severance from employment, disability, or financial hardship, except that income attributable to elective contributions may not be distributed in the case of hardship. CORPORATE PENSION, PROFIT SHARING PLANS AND H.R. 10 PLANS. Sections 401(a) and 403(a) of the Code permit corporate employers to establish various types of retirement plans for employees and self-employed individuals to establish qualified plans for themselves and their employees. Such retirement plans may permit the purchase of the Contracts to accumulate retirement savings. Adverse tax consequences to the plan, the participant or both may result if the Contract is assigned or transferred to any individual as a means to provide benefit payments. The Contract includes a death benefit that in some cases may exceed the greater of the purchase payments or the annuity value. The death benefit could be characterized as an incidental benefit, the amount of which is limited in a pension or profit-sharing plan. Because the death benefit may exceed this limitation, employers using the Contract in connection with such plans should consult their tax advisor. DEFERRED COMPENSATION PLANS. Section 457 of the Code, while not actually providing for a qualified plan (as that term is used in the Code), provides for certain deferred compensation plans with respect to service for state governments, local governments, political subdivisions, agencies, instrumentalities and certain affiliates of such entities, and tax exempt organizations. The Contracts can be used with such plans. Under such plans a participant may specify the form of investment in which his or her participation will be made. For non-governmental section 457 plans, all such investments, however, are owned by the sponsoring employer, and are subject to the claims of the general creditors of the sponsoring employer. Depending on the terms of the particular plan, a non-governmental employer may be entitled to draw on deferred amounts for purposes unrelated to its section 457 plan obligations. TAXATION OF JEFFERSON NATIONAL Jefferson National at present is taxed as a life insurance company under Part I of Subchapter L of the Code. The separate account is treated as part of us and, accordingly, will not be taxed separately as a "regulated investment company" under Subchapter M of the Code. At present, we do not expect to incur any federal income tax liability with respect to investment income and net capital gains arising from the activities of the separate account retained as part of the reserves under the Contract. Based on this expectation, it is anticipated that no charges will be made against the separate account for federal income taxes. If, in future years, any federal income taxes are incurred by us with respect to the separate account, we may make charges to the separate account. PUBLISHED RATINGS We may from time to time publish in advertisements, sales literature and reports to owners, the ratings and other information assigned to the Company by one or more independent rating organizations, such as A.M. Best Company, Standard and Poor's Insurance Rating Services, Moody's Investors Service, Inc. and Fitch Ratings. These ratings are opinions of an operating insurance company's financial strength and capacity to meet its obligations to Contract owners. These ratings do not apply to the separate account, its Sub-accounts, the Investment Portfolios or to their performance. ADMINISTRATION Jefferson National Financial Corp. performs administrative services for the Contracts. These services include issuance of the Contracts, maintenance of the records concerning the contracts and certain valuation services. ANNUITY PROVISIONS The Company makes available several annuity options that can include either fixed or variable payments or a combination of both. VARIABLE ANNUITY PAYOUT A variable annuity is an annuity with payments which: (1) are not predetermined as to dollar amount; and (2) will vary in amount with the net investment results of the applicable investment portfolio. Annuity payments also depend upon the age of the annuitant and any joint annuitant and the assumed interest factor utilized. The Annuity Table used will depend upon the annuity option chosen. The dollar amount of annuity payments after the first is determined as follows: 1. The dollar amount of the first variable annuity payment is divided by the value of an annuity unit for each investment portfolio as of the annuity date. This sets the number of annuity units for each monthly payment for the applicable investment portfolio. 2. The fixed number of annuity units for each payment in each investment portfolio is multiplied by the annuity unit value for that investment portfolio for the last valuation period of the month preceding the month for which the payment is due. This result is the dollar amount of the payment for each applicable investment portfolio. The total dollar amount of each variable annuity payment is the sum of all variable annuity payments reduced by the applicable portion of the contract maintenance charge. The calculation of the first annuity payment is made on the annuity date. The Company assesses the insurance charges during both the accumulation phase and the annuity phase. The deduction of the insurance charges will affect the amount of the first and any B-6 subsequent annuity payments. In addition, under certain circumstances, the Company may assess a contingent deferred sales charge and/or the contract maintenance charge on the annuity date, which would affect the amount of the first annuity payment (see "Expenses" and "Annuity Payments" in the prospectus). ANNUITY UNIT The annuity unit value at the end of any subsequent valuation period is determined as follows: 1. The net investment factor for the current valuation period is multiplied by the value of the annuity unit for investment portfolio for the immediately preceding valuation period. 2. The result in (1) is then divided by the assumed investment rate factor, which equals 1.00 plus the assumed investment rate for the number of days since the previous valuation period. The owner can choose either a 5% or a 3% assumed investment rate. FIXED ANNUITY PAYOUT A fixed annuity is an annuity with payments which are guaranteed as to dollar amount by the Company and do not vary with the investment experience of the investment portfolios. The dollar amount of each fixed annuity payment is determined in accordance with Annuity Tables contained in the Contract. DISTRIBUTION Jefferson National Securities Corporation, a registered broker-dealer and a member of the Financial Industry Regulatory Authority ("Distributor"), acts as the principal underwriter of the Contracts. The Distributor's address is 9920 Corporate Campus Drive, Suite 1000, Louisville, Kentucky 40223. The Distributor is an affiliated person of ours. We offer the Contracts for sale on a continuous basis through the Distributor. No compensation was paid to the Distributor during the last fiscal year related to the sale of the Contracts. REDUCTION OR ELIMINATION OF THE CONTINGENT DEFERRED SALES CHARGE The amount of the Contingent Deferred Sales Charge on the contracts may be reduced or eliminated when sales of the contracts are made to individuals or to a group of individuals in a manner that results in savings of sales expenses. The entitlement to reduction of the Contingent Deferred Sales Charge will be determined by the Company after examination of all the relevant factors such as: 1. The size and type of group to which sales are to be made will be considered. Generally, the sales expenses for a larger group are less than for a smaller group because of the ability to implement large numbers of contracts with fewer sales contacts. 2. The total amount of purchase payments to be received will be considered. Per contract sales expenses are likely to be less on larger purchase payments than on smaller ones. 3. Any prior or existing relationship with the Company will be considered. Per contract sales expenses are likely to be less when there is a prior existing relationship because of the likelihood of implementing the contract with fewer sales contacts. 4. There may be other circumstances, of which the Company is not presently aware, which could result in reduced sales expenses. If, after consideration of the foregoing factors, the Company determines that there will be a reduction in sales expenses, the Company may provide for a reduction or elimination of the Contingent Deferred Sales Charge. The Contingent Deferred Sales Charge may be eliminated when the contracts are issued to an officer, director or employee of the Company or any of its affiliates. In no event will any reduction or elimination of the Contingent Deferred Sales Charge be permitted where the reduction or elimination will be unfairly discriminatory to any person. ARRANGEMENTS REGARDING FREQUENT PURCHASES AND REDEMPTIONS The Company has no arrangements with any contract owners, financial advisors or other individuals or entities to permit purchases and redemptions other than in accordance with the administrative rules described in the prospectus for Jefferson National Life Annuity Account H, dated May 1, 2008. FINANCIAL STATEMENTS The financial statements of the Company and the Separate Account included in this Statement of Additional Information should be considered only as bearing upon the ability of the Company to meet its obligations under the Contracts. JEFFERSON NATIONAL LIFE INSURANCE COMPANY Annual Report to Contract Owners December 31, 2007 Jefferson National Life Annuity Account H ANNUAL REPORT TO CONTRACT OWNERS TABLE OF CONTENTS DECEMBER 31, 2007
============================================================================================================= JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H PAGE Statement of Assets and Liabilities as of December 31, 2007 .......................................... 2 Statements of Operations and Changes in Net Assets for the year ended December 31, 2007 .............. 14 Statements of Operations and Changes in Net Assets for the year ended December 31, 2006 .............. 34 Notes to Financial Statements ........................................................................ 53 Report of Independent Registered Public Accounting Firm .............................................. 78
1 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2007
================================================================================================================== SHARES COST VALUE ------------------------------------------------------------------------------------------------------------------ Assets: Investments in portfolio shares, at net asset value (Note 2): AIM Variable Insurance Funds: Basic Value Fund ............................................ 6,459.112 $ 91,090 $ 81,514 Core Equity Fund ............................................ 7,450.847 205,181 216,894 Financial Services Fund ..................................... 9,353.541 150,297 114,674 Global Health Care Fund ..................................... 8,869.370 190,704 213,397 Global Real Estate Fund ..................................... 22,912.232 619,241 501,319 High Yield Fund ............................................. 49,680.375 310,450 285,166 Mid Cap Core Equity Fund .................................... 14,302.470 201,666 206,671 Technology Fund ............................................. 2,261.488 33,633 34,148 The Alger American Fund: Growth Portfolio ............................................ 29,833.891 1,182,206 1,469,916 Leveraged AllCap Portfolio .................................. 30,166.680 1,135,224 1,670,933 MidCap Growth Portfolio ..................................... 89,467.298 1,813,748 2,113,218 Small Capitalization Portfolio .............................. 17,823.661 459,505 593,884 AllianceBernstein Variable Products Series Fund, Inc.: Growth and Income Portfolio ................................. 9,527.546 239,018 255,529 American Century Variable Portfolios, Inc: Balanced Fund ............................................... 13,437.872 98,344 98,500 Income & Growth Fund ........................................ 66,844.047 526,836 565,501 Inflation Protection Fund ................................... 6,233.563 63,666 65,765 International Fund .......................................... 75,260.401 788,512 892,588 Value Fund .................................................. 203,615.345 1,634,645 1,521,006 DireXion Insurance Trust: Dynamic VP HY Bond Fund ..................................... 545.406 11,042 10,646 The Dreyfus Investment Portfolios: Small Cap Stock Index Portfolio ............................. 749.695 14,725 13,224 The Dreyfus Socially Responsible Growth Fund, Inc .............. 5,717.327 142,801 174,378 Dreyfus Stock Index Fund: ...................................... 63,289.733 1,976,860 2,367,036 Dreyfus Variable Investment Fund: International Value Portfolio ............................... 35,186.988 619,817 613,309 Federated Insurance Series: Capital Income Fund II ...................................... 37,889.671 359,628 364,498 High Income Bond Fund II .................................... 96,526.202 731,559 722,981 International Equity Fund II ................................ 20,750.391 331,205 388,241 Janus Aspen Series: Growth and Income Portfolio ................................. 26,747.811 470,667 532,014 International Growth Portfolio .............................. 24,926.864 1,275,878 1,627,974 Large Cap Growth Portfolio .................................. 55,605.811 1,074,195 1,469,106 Mid Cap Growth Portfolio .................................... 31,875.508 853,759 1,273,109 Worldwide Growth Portfolio .................................. 35,508.699 948,502 1,254,523 Lazard Retirement Series, Inc: Emerging Markets Portfolio .................................. 35,012.990 871,156 897,732 International Equity Portfolio .............................. 8,952.121 124,075 119,510 Small Cap Portfolio ......................................... 44,607.611 621,636 445,184 US Strategic Equity Portfolio ............................... 20,071.011 250,971 204,122 Legg Mason Partners Variable Equity Trust: Aggressive Growth Portfolio ................................. 322.357 5,463 5,258 Capital and Income Portfolio ................................ 259.164 3,752 3,216 Fundamental Value Portfolio ................................. 475.627 11,383 10,316 Large Cap Growth Portfolio .................................. 319.714 5,672 5,307 Legg Mason Partners Variable Income Trust: Global High Yield Bond Portfolio ............................ 19,535.089 192,008 176,792 Government Portfolio ........................................ 4,363.534 48,346 46,428 Strategic Bond Portfolio .................................... 16,424.865 170,041 163,099 Lord Abbett Series Fund, Inc: America's Value Portfolio ................................... 21,906.078 345,637 323,991 Growth and Income Portfolio ................................. 48,833.758 1,340,457 1,362,950
The accompanying notes are an integral part of these financial statements. 2 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF ASSETS AND LIABILITIES - CONTINUED DECEMBER 31, 2007
============================================================================================================================= SHARES COST VALUE ----------------------------------------------------------------------------------------------------------------------------- Assets: (continued) Investments in portfolio shares, at net asset value (Note 2): (continued) Neuberger Berman Advisers Management Trust: Lehman Brothers High Income Bond Portfolio ........................ 1,502.896 $ 14,753 $ 13,827 Lehman Brothers Short Duration Bond Portfolio ..................... 48,001.828 615,669 624,023 Fasciano Portfolio ................................................ 67.420 1,084 978 Mid-Cap Growth Portfolio .......................................... 23,320.513 545,253 664,635 Partners Portfolio ................................................ 50,000.567 1,072,923 1,038,512 Regency Portfolio ................................................. 5,495.467 88,486 89,191 Socially Responsive Portfolio ..................................... 1,893.853 34,050 33,919 Northern Lights Variable Trust: JNF Balanced Portfolio ............................................ 129,010.461 2,040,016 1,986,761 JNF Equity Portfolio .............................................. 96,764.393 2,295,920 2,076,564 PIMCO Variable Insurance Trust: Money Market Portfolio ............................................ 5,327,662.160 5,327,662 5,327,663 Real Return Portfolio ............................................. 32,314.339 395,400 406,191 Short Term Portfolio .............................................. 69,181.766 693,027 692,509 Total Return Portfolio ............................................ 78,278.817 793,363 821,145 Pioneer Variable Contracts Trust: Equity Income Portfolio ........................................... 20,012.820 492,256 478,107 Fund Portfolio .................................................... 14,226.188 350,327 365,045 High Yield Portfolio .............................................. 38,030.587 421,018 419,858 International Value Portfolio ..................................... 12,125.161 219,194 225,528 Mid Cap Value Portfolio ........................................... 1,947.880 41,595 37,263 Royce Capital Fund: Micro-Cap Portfolio ............................................... 21,707.585 319,600 292,401 Small-Cap Portfolio ............................................... 51,522.379 513,129 513,163 Rydex Variable Trust: CLS AdvisorOne Amerigo Fund ....................................... 1,224.629 47,793 47,920 CLS AdvisorOne Clermont Fund ...................................... 562.040 17,309 15,057 Banking Fund ...................................................... 713.068 16,115 16,258 Basic Materials Fund .............................................. 11,164.133 468,087 465,097 Biotechnology Fund ................................................ 1,479.539 32,653 31,914 Commodities Strategy Fund ......................................... 858.645 19,557 20,419 Consumer Products Fund ............................................ 257.825 10,361 9,545 Dow 2X Strategy Fund .............................................. 3,437.321 92,233 88,339 Electronics Fund .................................................. 901.963 12,402 12,330 Energy Fund ....................................................... 21,042.773 834,847 838,134 Energy Services Fund .............................................. 21,008.498 814,265 812,399 Europe 1.25X Strategy Fund ........................................ 6,447.157 220,278 193,093 Financial Services Fund ........................................... 582.757 13,095 12,797 Government Long Bond 1.2X Strategy Fund ........................... 28,064.510 338,564 343,510 Health Care Fund .................................................. 1,214.788 36,288 35,970 Internet Fund ..................................................... 1,702.157 30,295 30,384 Inverse Dow 2X Strategy Fund ...................................... 60.840 1,921 1,752 Inverse Government Long Bond Strategy Fund ........................ 20,740.037 467,733 406,090 Inverse OTC Strategy Fund ......................................... 453.430 7,867 7,704 Inverse Russell 2000 Strategy Fund ................................ 881.035 31,997 30,537 Inverse S&P 500 Strategy Fund ..................................... 228.950 9,727 9,664 Japan 1.25X Strategy Fund ......................................... 3,030.896 77,678 68,892 Large Cap Growth Fund ............................................. 3,742.635 105,731 102,436 Large Cap Value Fund .............................................. 2,907.402 93,058 73,760 Leisure Fund ...................................................... 639.896 15,011 13,579 Mid Cap 1.5X Strategy Fund ........................................ 3,055.536 67,187 66,367 Mid-Cap Growth Fund ............................................... 1,706.349 51,838 50,371 Mid-Cap Value Fund ................................................ 4,641.291 110,949 96,724 Nova Fund ......................................................... 48,562.061 499,494 488,534 OTC 2X Strategy Fund .............................................. 4,014.462 113,945 120,354 OTC Fund .......................................................... 30,634.576 518,059 555,099 Precious Metals Fund .............................................. 46,508.872 681,998 699,493
The accompanying notes are an integral part of these financial statements. 3 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF ASSETS AND LIABILITIES - CONTINUED DECEMBER 31, 2007
============================================================================================================================= SHARES COST VALUE ----------------------------------------------------------------------------------------------------------------------------- Assets: (continued) Investments in portfolio shares, at net asset value (Note 2): (continued) Rydex Variable Trust: (continued) Real Estate Fund .................................................. 1,469.753 $ 53,585 $ 50,486 Retailing Fund .................................................... 272.619 3,190 3,072 Russell 2000 1.5X Strategy Fund ................................... 5,648.659 203,644 193,185 S&P 500 2X Strategy Fund .......................................... 4,393.530 88,026 84,531 Sector Rotation Fund .............................................. 5,665.536 81,527 86,853 Small-Cap Growth Fund ............................................. 5,343.786 166,132 144,656 Small-Cap Value Fund .............................................. 3,608.928 86,809 65,755 Strengthening Dollar 2X Strategy Fund ............................. 265.848 5,187 5,352 Technology Fund ................................................... 1,862.705 30,821 30,306 Telecommunications Fund ........................................... 744.406 18,103 17,784 Transportation Fund ............................................... 336.587 5,069 4,998 U.S. Government Money Market Fund ................................. 552,031.225 552,031 552,031 Utilities Fund .................................................... 19,547.649 472,186 435,717 Weakening Dollar 2X Strategy Fund ................................. 2,864.843 87,719 81,935 Seligman Portfolios, Inc.: Communications and Information Portfolio .......................... 17,446.507 262,902 336,193 Global Technology Portfolio ....................................... 9,946.098 126,508 181,516 Third Avenue Variable Series Trust: Value Portfolio ................................................... 32,927.403 962,283 853,478 Van Eck Worldwide Insurance Trust: Absolute Return Fund .............................................. 10,032.930 106,529 107,453 Bond Fund ......................................................... 17,525.923 200,658 212,415 Emerging Markets Fund ............................................. 58,619.896 1,403,704 1,624,944 Hard Assets Fund .................................................. 54,254.373 1,787,658 2,234,737 Real Estate Fund .................................................. 15,150.142 261,700 255,886 Wells Fargo Advantage VT Funds: Discovery Fund .................................................... 46,080.799 626,722 926,685 Opportunity Fund .................................................. 29,629.698 652,628 652,742 ----------------------------------------------------------------------------------------------------------------------------- Total assets ................................................... $ 56,490,082 =============================================================================================================================
The accompanying notes are an integral part of these financial statements. 4 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF ASSETS AND LIABILITIES - CONTINUED DECEMBER 31, 2007
================================================================================================================================== UNIT SUB-ACCOUNT UNITS VALUE VALUE TOTAL ---------------------------------------------------------------------------------------------------------------------------------- Net assets attributable to: Contract owners' deferred annuity reserves: AIM Variable Insurance Funds: Basic Value Fund Standard .................................................... 4,463.717 $ 16.332864 $ 72,905 GMDB & GMIB ................................................. 47.533 15.881533 755 $ 73,660 ------------ Core Equity Fund Standard .................................................... 18,732.973 11.578199 216,894 216,894 ------------ Financial Services Fund Standard .................................................... 9,248.243 10.241617 94,717 GMDB & GMIB ................................................. 2,028.263 9.839647 19,957 114,674 ------------ Global Health Care Fund Standard .................................................... 12,155.315 12.428699 151,075 GMDB & GMIB ................................................. 5,219.245 11.940861 62,322 213,397 ------------ Global Real Estate Fund Standard .................................................... 16,115.632 28.846829 464,885 GMDB ........................................................ 965.663 28.275169 27,304 GMDB & GMIB ................................................. 329.438 27.715289 9,130 501,319 ------------ High Yield Fund Standard .................................................... 23,710.282 11.890172 281,919 GMDB ........................................................ 254.214 11.759863 2,990 GMDB & GMIB ................................................. 22.053 11.631125 257 285,166 ------------ Mid Cap Core Equity Fund Standard .................................................... 11,319.894 17.329027 196,163 GMDB & GMIB ................................................. 623.606 16.850239 10,508 206,671 ------------ Technology Fund Standard .................................................... 3,832.315 6.536114 25,048 GMDB ........................................................ 1,129.414 6.406468 7,236 GMDB & GMIB ................................................. 296.919 6.279490 1,864 34,148 ------------ The Alger American Fund: Growth Portfolio Standard .................................................... 75,482.965 16.643417 1,256,294 GMDB ........................................................ 9,250.919 16.239881 150,234 GMDB & GMIB ................................................. 4,000.117 15.846452 63,388 1,469,916 ------------ Leveraged AllCap Portfolio Standard .................................................... 55,242.488 25.893924 1,430,445 GMDB ........................................................ 8,500.980 25.266169 214,787 GMDB & GMIB ................................................. 1,042.448 24.654006 25,701 1,670,933 ------------ MidCap Growth Portfolio Standard .................................................... 61,749.654 27.532665 1,700,133 GMDB ........................................................ 13,266.410 26.865263 356,406 GMDB & GMIB ................................................. 2,162.140 26.214505 56,679 2,113,218 ------------ Small Capitalization Portfolio Standard .................................................... 33,492.069 14.623948 489,786 GMDB ........................................................ 6,783.189 14.269235 96,791 GMDB & GMIB ................................................. 4.616 13.923419 64 586,641 ------------ AllianceBernstein Variable Products Series Fund, Inc.: Growth and Income Portfolio Standard .................................................... 13,864.616 14.048731 194,780 GMDB ........................................................ 2,892.000 13.790405 39,882 GMDB & GMIB ................................................. 1,541.454 13.537066 20,867 255,529 ------------ American Century Variable Portfolios, Inc: Balanced Fund Standard .................................................... 7,465.972 11.854850 88,508 GMDB & GMIB ................................................. 856.453 11.666332 9,992 98,500 ------------ Income & Growth Fund Standard .................................................... 33,161.750 14.828896 491,752 GMDB ........................................................ 4,453.032 14.469813 64,435 GMDB & GMIB ................................................. 659.644 14.119662 9,314 565,501 ------------
The accompanying notes are an integral part of these financial statements. 5 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF ASSETS AND LIABILITIES - CONTINUED DECEMBER 31, 2007
=========================================================================================================================== UNIT SUB-ACCOUNT UNITS VALUE VALUE TOTAL --------------------------------------------------------------------------------------------------------------------------- Net assets attributable to: (continued) Contract owners' deferred annuity reserves: (continued) American Century Variable Portfolios, Inc: (continued) Inflation Protection Fund Standard .......................................... 4,843.322 $ 11.431103 $ 55,365 GMDB & GMIB ....................................... 930.029 11.182028 10,400 $ 65,765 ----------- International Fund Standard .......................................... 35,647.374 18.027448 642,631 GMDB .............................................. 5,234.980 17.590510 92,086 GMDB & GMIB ....................................... 9,197.620 17.164357 157,871 892,588 ----------- Value Fund Standard .......................................... 72,041.935 18.130460 1,306,153 GMDB .............................................. 7,962.725 17.691072 140,869 GMDB & GMIB ....................................... 4,285.803 17.262631 73,984 1,521,006 ----------- DireXion Insurance Trust: Dynamic VP HY Bond Fund Standard .......................................... 1,006.073 10.582065 10,646 10,646 ----------- The Dreyfus Investment Portfolios: Small Cap Stock Index Portfolio Standard .......................................... 955.049 12.701023 12,130 GMDB & GMIB ....................................... 87.561 12.499006 1,094 13,224 ----------- The Dreyfus Socially Responsible Growth Fund, Inc. Standard .......................................... 7,982.797 11.231173 89,656 GMDB .............................................. 6,920.612 10.958867 75,842 GMDB & GMIB ....................................... 830.443 10.693316 8,880 174,378 ----------- Dreyfus Stock Index Fund: Standard .......................................... 122,733.209 14.405865 1,768,078 GMDB .............................................. 32,563.054 14.056628 457,727 GMDB & GMIB ....................................... 10,296.727 13.716121 141,231 2,367,036 ----------- Dreyfus Variable Investment Fund: International Value Portfolio Standard .......................................... 30,079.160 18.221099 548,075 GMDB .............................................. 3,590.050 17.779407 63,829 GMDB & GMIB ....................................... 80.985 17.348659 1,405 613,309 ----------- Federated Insurance Series: Capital Income Fund II Standard .......................................... 30,936.178 10.345234 320,042 GMDB .............................................. 3,401.100 10.094482 34,332 GMDB & GMIB ....................................... 1,027.842 9.850000 10,124 364,498 ----------- High Income Bond Fund II Standard .......................................... 49,958.826 13.266831 662,795 GMDB .............................................. 3,260.659 12.944692 42,208 GMDB & GMIB ....................................... 1,423.351 12.630517 17,978 722,981 ----------- International Equity Fund II Standard .......................................... 17,136.901 16.832246 288,453 GMDB .............................................. 4,659.089 16.424168 76,522 GMDB & GMIB ....................................... 1,451.724 16.026225 23,266 388,241 ----------- Janus Aspen Series: Growth and Income Portfolio Standard .......................................... 23,700.507 17.138780 406,198 GMDB .............................................. 4,625.076 16.894492 78,138 GMDB & GMIB ....................................... 2,862.849 16.653958 47,678 532,014 ----------- International Growth Portfolio Standard .......................................... 36,101.534 40.526636 1,463,074 GMDB .............................................. 2,215.870 39.949346 88,523 GMDB & GMIB ....................................... 1,939.449 39.380954 76,377 1,627,974 ----------- Large Cap Growth Portfolio Standard .......................................... 81,433.635 13.981847 1,138,593 GMDB .............................................. 22,657.287 13.642771 309,108 GMDB & GMIB ....................................... 1,607.915 13.312128 21,405 1,469,106 -----------
The accompanying notes are an integral part of these financial statements. 6 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF ASSETS AND LIABILITIES - CONTINUED DECEMBER 31, 2007
=========================================================================================================================== UNIT SUB-ACCOUNT UNITS VALUE VALUE TOTAL --------------------------------------------------------------------------------------------------------------------------- Net assets attributable to: (continued) Contract owners' deferred annuity reserves: (continued) Janus Aspen Series: (continued) Mid Cap Growth Portfolio Standard .......................................... 50,220.410 $ 19.316084 $ 970,062 GMDB .............................................. 15,345.393 18.847518 289,223 GMDB & GMIB ....................................... 751.664 18.390670 13,824 $ 1,273,109 ----------- Worldwide Growth Portfolio Standard .......................................... 65,465.044 14.966225 979,765 GMDB .............................................. 17,741.295 14.603373 259,083 GMDB & GMIB ....................................... 1,100.038 14.249547 15,675 1,254,523 ----------- Lazard Retirement Series, Inc: Emerging Markets Portfolio Standard .......................................... 24,335.191 29.587330 720,013 GMDB .............................................. 911.432 29.263245 26,671 GMDB & GMIB ....................................... 5,218.801 28.943105 151,048 897,732 ----------- International Equity Portfolio Standard .......................................... 5,776.909 16.263164 93,951 GMDB .............................................. 471.332 16.084933 7,581 GMDB & GMIB ....................................... 299.854 15.908839 4,770 106,302 ----------- Small Cap Portfolio Standard .......................................... 20,014.503 18.014479 360,551 GMDB .............................................. 3,394.090 17.577860 59,661 GMDB & GMIB ....................................... 1,455.928 17.152090 24,972 445,184 ----------- US Strategic Equity Portfolio Standard .......................................... 13,411.591 13.480718 180,798 GMDB & GMIB ....................................... 1,817.197 12.835359 23,324 204,122 ----------- Legg Mason Partners Variable Equity Trust: Aggressive Growth Portfolio Standard .......................................... 550.116 9.557220 5,258 5,258 ----------- Capital and Income Portfolio Standard .......................................... 231.617 10.012004 2,319 GMDB .............................................. 89.800 9.991517 897 3,216 ----------- Fundamental Value Portfolio Standard .......................................... 523.682 9.497129 4,973 4,973 ----------- Large Cap Growth Portfolio Standard .......................................... 534.950 9.921015 5,307 5,307 ----------- Legg Mason Partners Variable Income Trust: Global High Yield Bond Portfolio Standard .......................................... 14,297.157 11.343814 162,184 GMDB & GMIB ....................................... 1,308.594 11.163387 14,608 176,792 ----------- Government Portfolio Standard .......................................... 2,496.230 10.392615 25,942 GMDB & GMIB ....................................... 2,003.033 10.227287 20,486 46,428 ----------- Strategic Bond Portfolio Standard .......................................... 14,343.745 11.170254 160,223 GMDB .............................................. 260.280 11.047794 2,876 163,099 ----------- Lord Abbett Series Fund, Inc: America's Value Portfolio Standard .......................................... 17,342.784 16.498403 286,128 GMDB .............................................. 401.825 16.268741 6,537 GMDB & GMIB ....................................... 1,952.648 16.042576 31,326 323,991 ----------- Growth and Income Portfolio Standard .......................................... 60,300.581 18.207798 1,097,941 GMDB .............................................. 11,552.989 17.766483 205,256 GMDB & GMIB ....................................... 3,446.747 17.336161 59,753 1,362,950 ----------- Neuberger Berman Advisers Management Trust: Lehman Brothers High Income Bond Portfolio Standard .......................................... 1,268.443 10.900483 13,827 13,827 -----------
The accompanying notes are an integral part of these financial statements. 7 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF ASSETS AND LIABILITIES - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== UNIT SUB-ACCOUNT UNITS VALUE VALUE TOTAL ------------------------------------------------------------------------------------------------------------------------------------ Net assets attributable to: (continued) Contract owners' deferred annuity reserves: (continued) Neuberger Berman Advisers Management Trust: (continued) Lehman Brothers Short Duration Bond Portfolio Standard ...................................................... 42,167.404 $ 12.800060 $ 539,745 GMDB .......................................................... 6,023.051 12.489854 75,227 GMDB & GMIB ................................................... 742.684 12.187411 9,051 $ 624,023 ----------- Fasciano Portfolio Standard ...................................................... 17.434 14.441033 252 GMDB & GMIB ................................................... 51.698 14.041960 726 978 ----------- Mid-Cap Growth Portfolio Standard ...................................................... 43,379.687 13.318043 577,733 GMDB .......................................................... 3,414.450 13.053909 44,572 GMDB & GMIB ................................................... 3,308.274 12.795268 42,330 664,635 ----------- Partners Portfolio Standard ...................................................... 62,557.151 16.450391 1,029,090 1,029,090 ----------- Regency Portfolio Standard ...................................................... 4,599.205 19.392791 89,191 89,191 ----------- Socially Responsive Portfolio Standard ...................................................... 2,395.328 14.160406 33,919 33,919 ----------- Northern Lights Variable Trust: JNF Balanced Portfolio Standard ...................................................... 172,734.977 9.787255 1,690,601 GMDB .......................................................... 21,385.561 9.767565 208,885 GMDB & GMIB ................................................... 8,953.169 9.747931 87,275 1,986,761 ----------- JNF Equity Portfolio Standard ...................................................... 198,253.413 8.962538 1,776,854 GMDB .......................................................... 25,236.226 8.944493 225,725 GMDB & GMIB ................................................... 8,288.239 8.926507 73,985 2,076,564 ----------- PIMCO Variable Insurance Trust: Money Market Portfolio Standard ...................................................... 388,186.269 10.784142 4,186,256 GMDB .......................................................... 84,821.503 10.665910 904,699 GMDB & GMIB ................................................... 21,510.449 10.549144 226,917 5,317,872 ----------- Real Return Portfolio Standard ...................................................... 31,280.285 12.317776 385,304 GMDB .......................................................... 1,176.776 12.146230 14,293 GMDB & GMIB ................................................... 140.768 11.977278 1,686 401,283 ----------- Short Term Portfolio Standard ...................................................... 43,996.998 10.721847 471,729 GMDB .......................................................... 16,561.179 10.604334 175,620 GMDB & GMIB ................................................... 4,305.778 10.488234 45,160 692,509 ----------- Total Return Portfolio Standard ...................................................... 67,168.762 11.600147 779,168 GMDB .......................................................... 553.134 11.438592 6,327 GMDB & GMIB ................................................... 3,160.610 11.279509 35,650 821,145 ----------- Pioneer Variable Contracts Trust: Equity Income Portfolio Standard ...................................................... 33,651.579 12.989967 437,133 GMDB .......................................................... 98.712 12.719736 1,256 GMDB & GMIB ................................................... 3,188.809 12.455329 39,718 478,107 ----------- Fund Portfolio Standard ...................................................... 26,548.787 11.509406 305,561 GMDB .......................................................... 1,580.896 11.269902 17,817 GMDB & GMIB ................................................... 3,020.255 11.035536 33,330 356,708 ----------- High Yield Portfolio Standard ...................................................... 32,196.814 11.607735 373,732 GMDB .......................................................... 658.408 11.514994 7,582 GMDB & GMIB ................................................... 3,374.213 11.423098 38,544 419,858 -----------
The accompanying notes are an integral part of these financial statements. 8 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF ASSETS AND LIABILITIES - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== UNIT SUB-ACCOUNT UNITS VALUE VALUE TOTAL ------------------------------------------------------------------------------------------------------------------------------------ Net assets attributable to: (continued) Contract owners' deferred annuity reserves: (continued) Pioneer Variable Contracts Trust: (continued) International Value Portfolio Standard ...................................................... 20,012.493 $ 11.220371 $ 224,548 GMDB .......................................................... 87.657 11.185186 980 $ 225,528 ----------- Mid Cap Value Portfolio Standard ...................................................... 2,598.643 12.540156 32,587 GMDB .......................................................... 375.852 12.439980 4,676 37,263 ----------- Royce Capital Fund: Micro-Cap Portfolio Standard ...................................................... 8,684.995 22.319415 193,844 GMDB .......................................................... 1,183.923 22.008783 26,057 GMDB & GMIB ................................................... 3,340.594 21.702861 72,500 292,401 ----------- Small-Cap Portfolio Standard ...................................................... 21,558.635 20.205411 435,601 GMDB .......................................................... 2,747.681 19.924185 54,745 GMDB & GMIB ................................................... 1,161.310 19.647213 22,817 513,163 ----------- Rydex Variable Trust: CLS AdvisorOne Amerigo Fund Standard ...................................................... 3,422.387 14.001841 47,920 47,920 ----------- CLS AdvisorOne Clermont Fund Standard ...................................................... 1,277.822 11.783386 15,057 15,057 ----------- Banking Fund Standard ...................................................... 1,856.959 8.755141 16,258 16,258 ----------- Basic Materials Fund Standard ...................................................... 22,759.062 20.213091 460,031 GMDB .......................................................... 119.719 19.991606 2,393 GMDB & GMIB ................................................... 135.209 19.772793 2,673 465,097 ----------- Biotechnology Fund Standard ...................................................... 3,221.299 9.907101 31,914 31,914 ----------- Commodities Strategy Fund Standard ...................................................... 2,025.481 10.080885 20,419 20,419 ----------- Consumer Products Fund Standard ...................................................... 736.522 12.959205 9,545 9,545 ----------- Dow 2X Strategy Fund Standard ...................................................... 4,653.967 14.373569 66,894 GMDB & GMIB ................................................... 1,522.991 14.080793 21,445 88,339 ----------- Electronics Fund Standard ...................................................... 1,361.722 9.054583 12,330 12,330 ----------- Energy Fund Standard ...................................................... 34,427.166 23.958045 824,808 GMDB .......................................................... 376.316 23.695509 8,917 GMDB & GMIB ................................................... 188.134 23.436141 4,409 838,134 ----------- Energy Services Fund Standard ...................................................... 29,999.477 26.148176 784,432 GMDB .......................................................... 536.628 25.861605 13,878 GMDB & GMIB ................................................... 550.816 25.578463 14,089 812,399 ----------- Europe 1.25X Strategy Fund Standard ...................................................... 9,870.187 17.975744 177,424 GMDB .......................................................... 73.941 17.778746 1,315 GMDB & GMIB ................................................... 816.300 17.584128 14,354 193,093 ----------- Financial Services Fund Standard ...................................................... 1,187.585 10.775929 12,797 12,797 ----------- Government Long Bond 1.2X Strategy Fund Standard ...................................................... 27,053.968 11.349859 307,059 GMDB .......................................................... 1,292.159 11.191785 14,462 GMDB & GMIB ................................................... 1,992.490 11.036086 21,989 343,510 -----------
The accompanying notes are an integral part of these financial statements. 9 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF ASSETS AND LIABILITIES - CONTINUED DECEMBER 31, 2007
================================================================================================================================== UNIT SUB-ACCOUNT UNITS VALUE VALUE TOTAL ---------------------------------------------------------------------------------------------------------------------------------- Net assets attributable to: (continued) Contract owners' deferred annuity reserves: (continued) Rydex Variable Trust: (continued) Health Care Fund Standard .................................................... 2,448.856 $ 11.892872 $ 29,124 GMDB ........................................................ 582.021 11.762480 6,846 $ 35,970 ----------- Internet Fund Standard .................................................... 2,371.247 12.813312 30,384 30,384 ----------- Inverse Dow 2X Strategy Fund Standard .................................................... 289.820 6.043691 1,752 1,752 ----------- Inverse Government Long Bond Strategy Fund Standard .................................................... 49,973.102 8.126171 406,090 406,090 ----------- Inverse OTC Strategy Fund Standard .................................................... 1,050.473 7.333621 7,704 7,704 ----------- Inverse Russell 2000 Strategy Fund Standard .................................................... 4,186.428 7.294188 30,537 30,537 ----------- Inverse S&P 500 Strategy Fund Standard .................................................... 1,533.811 6.300607 9,664 9,664 ----------- Japan 1.25X Strategy Fund Standard .................................................... 6,199.409 11.112712 68,892 68,892 ----------- Large Cap Growth Standard .................................................... 8,601.794 11.319445 97,368 GMDB & GMIB ................................................. 457.069 11.088800 5,068 102,436 ----------- Large Cap Value Fund Standard .................................................... 5,886.444 12.422508 73,124 GMDB & GMIB ................................................. 52.303 12.169437 636 73,760 ----------- Leisure Fund Standard .................................................... 80.681 12.630330 1,019 GMDB ........................................................ 1,005.422 12.491894 12,560 13,579 ----------- Mid Cap 1.5X Strategy Fund Standard .................................................... 2,831.494 22.349868 63,284 GMDB & GMIB ................................................. 141.848 21.732473 3,083 66,367 ----------- Mid-Cap Growth Fund Standard .................................................... 3,659.402 13.221873 48,384 GMDB & GMIB ................................................. 153.426 12.952498 1,987 50,371 ----------- Mid-Cap Value Standard .................................................... 7,334.590 13.097449 96,064 GMDB & GMIB ................................................. 51.445 12.830651 660 96,724 ----------- Nova Fund Standard .................................................... 35,989.484 13.484529 485,301 GMDB & GMIB ................................................. 251.068 12.877430 3,233 488,534 ----------- OTC 2X Strategy Fund Standard .................................................... 5,910.242 15.138086 89,470 GMDB ........................................................ 1,262.522 14.972130 18,903 GMDB & GMIB ................................................. 809.086 14.808203 11,981 120,354 ----------- OTC Fund Standard .................................................... 23,389.600 17.011790 397,899 GMDB ........................................................ 3,134.234 16.624116 52,104 GMDB & GMIB ................................................. 6,469.199 16.245552 105,096 555,099 ----------- Precious Metals Fund Standard .................................................... 19,655.248 19.278714 378,928 GMDB ........................................................ 12,987.763 19.067264 247,641 GMDB & GMIB ................................................. 3,866.951 18.858380 72,924 699,493 ----------- Real Estate Fund Standard .................................................... 3,475.544 14.526075 50,486 50,486 ----------- Retailing Fund Standard .................................................... 296.087 10.376882 3,072 3,072 ----------- Russell 2000 1.5X Strategy Fund Standard .................................................... 8,747.087 21.930793 191,831 GMDB & GMIB ................................................. 63.476 21.324955 1,354 193,185 -----------
10 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF ASSETS AND LIABILITIES - CONTINUED DECEMBER 31, 2007
================================================================================================================================== UNIT SUB-ACCOUNT UNITS VALUE VALUE TOTAL ---------------------------------------------------------------------------------------------------------------------------------- Net assets attributable to: (continued) Contract owners' deferred annuity reserves: (continued) Rydex Variable Trust: (continued) S&P 500 2X Strategy Fund Standard .................................................... 4,122.942 $ 14.260791 $ 58,796 GMDB & GMIB ................................................. 1,844.802 13.950083 25,735 $ 84,531 ----------- Sector Rotation Fund Standard .................................................... 3,590.668 20.339861 73,034 GMDB & GMIB ................................................. 698.706 19.777968 13,819 86,853 ----------- Small-Cap Growth Fund Standard .................................................... 10,769.524 12.635193 136,075 GMDB ........................................................ 187.119 12.505744 2,340 GMDB & GMIB ................................................. 504.226 12.377780 6,241 144,656 ----------- Small-Cap Value Fund Standard .................................................... 6,062.101 10.846851 65,755 65,755 ----------- Strengthening Dollar 2X Strategy Fund Standard .................................................... 667.719 8.014605 5,352 5,352 ----------- Technology Fund Standard .................................................... 2,506.480 12.091149 30,306 30,306 ----------- Telecommunications Fund Standard .................................................... 772.594 13.712381 10,594 GMDB & GMIB ................................................. 536.002 13.413553 7,190 17,784 ----------- Transportation Fund Standard .................................................... 390.419 12.802388 4,998 4,998 ----------- U.S. Government Money Market Fund Standard .................................................... 46,024.560 10.229263 470,797 GMDB ........................................................ 7,241.171 10.026395 72,603 GMDB & GMIB ................................................. 878.241 9.827713 8,631 552,031 ----------- Utilities Fund Standard .................................................... 20,730.770 16.686641 345,927 GMDB & GMIB ................................................. 5,500.752 16.323253 89,790 435,717 ----------- Weakening Dollar 2X Strategy Fund Standard .................................................... 6,327.974 12.947994 81,935 81,935 ----------- Seligman Portfolios, Inc.: Communications and Information Portfolio Standard .................................................... 34,195.504 8.118445 277,614 GMDB ........................................................ 6,517.189 7.933394 51,703 GMDB & GMIB ................................................. 886.976 7.752715 6,876 336,193 ----------- Global Technology Portfolio Standard .................................................... 20,372.723 6.698421 136,465 GMDB ........................................................ 5,305.989 6.545756 34,732 GMDB & GMIB ................................................. 1,613.252 6.396667 10,319 181,516 ----------- Third Avenue Variable Series Trust: Value Portfolio Standard .................................................... 40,559.950 19.684481 798,402 GMDB ........................................................ 1,434.340 19.410525 27,841 GMDB & GMIB ................................................. 1,422.909 19.140686 27,235 853,478 ----------- Van Eck Worldwide Insurance Trust: Absolute Return Fund Standard .................................................... 2,430.170 10.601003 25,762 GMDB ........................................................ 6,147.604 10.453387 64,263 GMDB & GMIB ................................................. 1,462.134 10.307976 15,072 105,097 ----------- Bond Fund Standard .................................................... 11,930.067 15.376486 183,443 GMDB ........................................................ 1,797.531 15.003887 26,970 GMDB & GMIB ................................................. 136.721 14.640510 2,002 212,415 ----------- Emerging Markets Fund Standard .................................................... 46,021.656 32.413361 1,491,717 GMDB ........................................................ 2,459.065 31.627648 77,774 GMDB & GMIB ................................................. 1,796.815 30.861563 55,453 1,624,944 -----------
11 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF ASSETS AND LIABILITIES - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== UNIT SUB-ACCOUNT UNITS VALUE VALUE TOTAL ------------------------------------------------------------------------------------------------------------------------------------ Net assets attributable to: (continued) Contract owners' deferred annuity reserves: (continued) Van Eck Worldwide Insurance Trust: (continued) Hard Assets Fund Standard .......................................................... 52,020.936 $ 36.025255 $ 1,874,067 GMDB .............................................................. 7,496.624 35.152395 263,524 GMDB & GMIB ....................................................... 2,832.134 34.301285 97,146 $ 2,234,737 ------------ Real Estate Fund Standard .......................................................... 6,768.019 26.099608 176,643 GMDB .............................................................. 1,998.193 25.467171 50,888 GMDB & GMIB ....................................................... 1,141.020 24.850472 28,355 255,886 ------------ Wells Fargo Advantage VT Funds: Discovery Fund Standard .......................................................... 58,073.268 15.483971 899,205 GMDB .............................................................. 292.186 15.357507 4,487 GMDB & GMIB ....................................................... 1,509.492 15.232252 22,993 926,685 ------------ Opportunity Fund Standard .......................................................... 27,106.284 20.335997 551,233 GMDB .............................................................. 1,916.526 19.843087 38,030 GMDB & GMIB ....................................................... 3,278.467 19.362435 63,479 652,742 ------------------------------------------------------------------------------------------------------------------------------------ Net assets attributable to contract owners' deferred annuity reserves .................................................................................................. $ 56,421,620 ------------------------------------------------------------------------------------------------------------------------------------ Contract owners' annuity payment reserves: (standard contracts only) AIM Variable Insurance Funds: Basic Value Fund .............................................................................................. $ 7,854 Alger American Fund: Small Capitalization Portfolio ................................................................................ 7,243 Lazard Retirement Series, Inc: International Equity Portfolio ................................................................................ 13,208 Legg Mason Partners Variable Equity Trust: Fundamental Value Portfolio ................................................................................... 5,343 Neuberger Berman Advisers Management Trust: Partners Portfolio ............................................................................................ 9,422 PIMCO Variable Insurance Trust: Money Market Portfolio ........................................................................................ 9,791 Real Return Portfolio ......................................................................................... 4,908 Pioneer Variable Contracts Trust: Fund Portfolio ................................................................................................ 8,337 Van Eck Worldwide Insurance Trust: Absolute Return Fund .......................................................................................... 2,356 ------------------------------------------------------------------------------------------------------------------------------------ Net assets attributable to contract owners' annuity payment reserves .................................................................................................. $ 68,462 ------------------------------------------------------------------------------------------------------------------------------------ Net assets attributable to contract owners' reserves ........................................................ $ 56,490,082 ====================================================================================================================================
12 ================================================================================ THIS PAGE INTENTIONALLY LEFT BLANK. 13 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2007
=================================================================================================================================== 40|86 SERIES TRUST ----------------------------------------------------------------------- FIXED GOVERNMENT MONEY BALANCED (i)* EQUITY (i)* INCOME (a)* SECURITIES (a)* MARKET (a)* ----------------------------------------------------------------------------------------------------------------------------------- Investment income: Income dividends from investments in portfolio shares ................................... $ 12,422 $ 203 $ 9,102 $ 9,790 $ 35,060 Expenses: Mortality and expense risk fees ....................... 10,833 12,218 2,759 3,501 10,565 ----------------------------------------------------------------------------------------------------------------------------------- Net investment income (expense) ................. 1,589 (12,015) 6,343 6,289 24,495 ----------------------------------------------------------------------------------------------------------------------------------- Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ................................ 355,860 (137,858) (9,708) (25,626) -- Net realized short-term capital gain distributions from investments in portfolio shares ............... -- -- -- -- -- Net realized long-term capital gain distributions from investments in portfolio shares ............... 35,049 271,425 -- -- -- ----------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments in portfolio shares ............................. 390,909 133,567 (9,708) (25,626) -- ----------------------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) of investments in portfolio shares .................... (308,525) 36,611 10,506 23,483 -- ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ................................ $ 83,973 $ 158,163 $ 7,141 $ 4,146 $ 24,495 ===================================================================================================================================
STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== 40|86 SERIES TRUST ------------------------------------------------------------------------ FIXED GOVERNMENT MONEY BALANCED (i)* EQUITY (i)* INCOME (a)* SECURITIES (a)* MARKET (a)* ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) ....................... $ 1,589 $ (12,015) $ 6,343 $ 6,289 $ 24,495 Net realized gain (loss) on investments in portfolio shares ............................................. 390,909 133,567 (9,708) (25,626) -- Net change in unrealized appreciation (depreciation) of investments in portfolio shares .................... (308,525) 36,611 10,506 23,483 -- ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ................................... 83,973 158,163 7,141 4,146 24,495 ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) ... 4,311 38,325 41 16 215 Contract redemptions .................................. (27,248) (72,241) (60,575) (51,195) (45,648) Net transfers (including mortality transfers) ......... (2,166,537) (2,516,059) (782,000) (1,010,870) (3,056,078) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions ................ (2,189,474) (2,549,975) (842,534) (1,062,049) (3,101,511) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets ........ (2,105,501) (2,391,812) (835,393) (1,057,903) (3,077,016) ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period .......................... 2,105,501 2,391,812 835,393 1,057,903 3,077,016 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ................. $ -- $ -- $ -- $ -- $ -- ====================================================================================================================================
* See Footnote 7 for details. The accompanying notes are an integral part of these financial statements. 14
========================================================================================================================= THE ALGER AMERICAN AIM VARIABLE INSURANCE FUNDS FUND ---------------------------------------------------------------------------------------------------------- ------------ GLOBAL GLOBAL BASIC CORE FINANCIAL HEALTH REAL HIGH MID CAP VALUE EQUITY SERVICES CARE ESTATE YIELD CORE EQUITY TECHNOLOGY GROWTH ------------------------------------------------------------------------------------------------------------------------- $ 281 $ 2,192 $ 2,407 $ -- $ 31,235 $ 21,271 $ 101 $ -- $ 5,010 1,361 2,874 2,482 1,890 10,978 6,637 2,581 721 20,961 ------------------------------------------------------------------------------------------------------------------------- (1,080) (682) (75) (1,890) 20,257 14,634 (2,480) (721) (15,951) ------------------------------------------------------------------------------------------------------------------------- 6,039 15,231 10,556 2,977 137,452 13,148 12,246 5,690 139,428 48 -- 307 -- 7,981 -- -- -- -- 4,682 -- 8,780 -- 66,569 -- 3,033 -- -- ------------------------------------------------------------------------------------------------------------------------- 10,769 15,231 19,643 2,977 212,002 13,148 15,279 5,690 139,428 ------------------------------------------------------------------------------------------------------------------------- (17,625) (2,287) (57,357) 9,648 (258,236) (19,994) (1,314) (4,576) 110,592 ------------------------------------------------------------------------------------------------------------------------- $ (7,936) $ 12,262 $ (37,789) $ 10,735 $ (25,977) $ 7,788 $ 11,485 $ 393 $ 234,069 =========================================================================================================================
========================================================================================================================= THE ALGER AMERICAN AIM VARIABLE INSURANCE FUNDS FUND ---------------------------------------------------------------------------------------------------------- ------------ GLOBAL GLOBAL BASIC CORE FINANCIAL HEALTH REAL HIGH MID CAP VALUE EQUITY SERVICES CARE ESTATE YIELD CORE EQUITY TECHNOLOGY GROWTH ------------------------------------------------------------------------------------------------------------------------- $ (1,080) $ (682) $ (75) $ (1,890) $ 20,257 $ 14,634 $ (2,480) $ (721) $ (15,951) 10,769 15,231 19,643 2,977 212,002 13,148 15,279 5,690 139,428 (17,625) (2,287) (57,357) 9,648 (258,236) (19,994) (1,314) (4,576) 110,592 ------------------------------------------------------------------------------------------------------------------------- (7,936) 12,262 (37,789) 10,735 (25,977) 7,788 11,485 393 234,069 ------------------------------------------------------------------------------------------------------------------------- 641 249 1,921 2,235 23,989 35,187 1,099 103 65,946 (3,421) (106,557) (82,025) (9,520) (196,443) (79,526) (3,919) (13,244) (233,806) 10,880 70,566 1,621 88,193 (305,630) (78,999) 57,080 (20,953) 29,871 ------------------------------------------------------------------------------------------------------------------------- 8,100 (35,742) (78,483) 80,908 (478,084) (123,338) 54,260 (34,094) (137,989) ------------------------------------------------------------------------------------------------------------------------- 164 (23,480) (116,272) 91,643 (504,061) (115,550) 65,745 (33,701) 96,080 ------------------------------------------------------------------------------------------------------------------------- 81,350 240,374 230,946 121,754 1,005,380 400,716 140,926 67,849 1,373,836 ------------------------------------------------------------------------------------------------------------------------- $ 81,514 $ 216,894 $ 114,674 $ 213,397 $ 501,319 $ 285,166 $ 206,671 $ 34,148 $ 1,469,916 =========================================================================================================================
15 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENTS OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== ALLIANCEBERNSTEIN AMERICAN VARIABLE CENTURY PRODUCTS VARIABLE THE ALGER AMERICAN FUND (CONTINUED) SERIES PORTFOLIOS ------------------------------------------- ----------------- ----------- LEVERAGED MIDCAP SMALL GROWTH AND ALLCAP GROWTH CAPITALIZATION INCOME BALANCED ------------------------------------------------------------------------------------------------------------------------------------ Investment income: Income dividends from investments in portfolio shares .......................................... $ -- $ -- $ -- $ 2,197 $ 189 Expenses: Mortality and expense risk fees .................... 22,336 27,582 10,099 2,667 481 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) .............. (22,336) (27,582) (10,099) (470) (292) ------------------------------------------------------------------------------------------------------------------------------------ Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ............................. 187,271 62,264 79,373 5,478 (1,935) Net realized short-term capital gain distributions from investments in portfolio shares ............ -- 172,780 -- 476 75 Net realized long-term capital gain distributions from investments in portfolio shares ............ -- 53,882 -- 6,980 386 ------------------------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments in portfolio shares .......................... 187,271 288,926 79,373 12,934 (1,474) ------------------------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) of investments in portfolio shares ................. 250,132 218,117 37,309 (5,370) (534) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ........................ $ 415,067 $ 479,461 $ 106,583 $ 7,094 $ (2,300) ====================================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== ALLIANCEBERNSTEIN AMERICAN VARIABLE CENTURY PRODUCTS VARIABLE THE ALGER AMERICAN FUND (CONTINUED) SERIES PORTFOLIOS ------------------------------------------- ----------------- ----------- LEVERAGED MIDCAP SMALL GROWTH AND ALLCAP GROWTH CAPITALIZATION INCOME BALANCED ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) .................... $ (22,336) $ (27,582) $ (10,099) $ (470) $ (292) Net realized gain (loss) on investments in portfolio shares .......................................... 187,271 288,926 79,373 12,934 (1,474) Net change in unrealized appreciation (depreciation) of investments in portfolio shares ............................ 250,132 218,117 37,309 (5,370) (534) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ................... 415,067 479,461 106,583 7,094 (2,300) ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) ............................ 39,101 55,060 2,588 -- 272 Contract redemptions ............................... (287,566) (219,267) (232,967) (17,010) (4,231) Net transfers (including mortality transfers) ...... 163,600 227,048 (199,116) 172,314 95,744 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions ............. (84,865) 62,841 (429,495) 155,304 91,785 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets ..... 330,202 542,302 (322,912) 162,398 89,485 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period ....................... 1,340,731 1,570,916 916,796 93,131 9,015 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period .............. $ 1,670,933 $ 2,113,218 $ 593,884 $ 255,529 $ 98,500 ====================================================================================================================================
* See Footnote 7 for details. The accompanying notes are an integral part of these financial statements. 16
============================================================================================================================ DREYFUS DIREXION DREYFUS VARIABLE AMERICAN CENTURY INSURANCE INVESTMENT INVESTMENT VARIABLE PORTFOLIOS (CONTINUED) TRUST PORTFOLIOS FUND ----------------------------------------------------- ---------- ----------- ------------ DREYFUS SOCIALLY DREYFUS INCOME & INFLATION DYNAMIC VP SMALL CAP RESPONSIBLE STOCK DISCIPLINED GROWTH PROTECTION INTERNATIONAL VALUE HY BOND STOCK INDEX GROWTH INDEX STOCK (h)* --------------------------------------------------------------------------------------------------------------------------- $ 12,597 $ 2,235 $ 3,983 $ 33,099 $ 460 $ 169 $ 956 $ 42,654 $ -- 9,515 714 10,025 28,696 175 387 2,857 38,313 648 --------------------------------------------------------------------------------------------------------------------------- 3,082 1,521 (6,042) 4,403 285 (218) (1,901) 4,341 (648) --------------------------------------------------------------------------------------------------------------------------- 60,524 (77) 118,779 26,317 24 5,033 8,878 223,892 6,228 -- -- -- 109,294 -- 68 -- -- -- -- -- -- 62,348 -- 1,748 -- -- 23,917 --------------------------------------------------------------------------------------------------------------------------- 60,524 (77) 118,779 197,959 24 6,849 8,878 223,892 30,145 --------------------------------------------------------------------------------------------------------------------------- (76,130) 2,318 (14,413) (304,336) (612) (4,966) 3,986 (125,318) (22,442) --------------------------------------------------------------------------------------------------------------------------- $ (12,524) $ 3,762 $ 98,324 $ (101,974) $ (303) $ 1,665 $ 10,963 $ 102,915 $ 7,055 ===========================================================================================================================
=========================================================================================================================== DREYFUS DIREXION DREYFUS VARIABLE AMERICAN CENTURY INSURANCE INVESTMENT INVESTMENT VARIABLE PORTFOLIOS (CONTINUED) TRUST PORTFOLIOS FUND ----------------------------------------------------- ---------- ----------- ----------- DREYFUS SOCIALLY DREYFUS INCOME & INFLATION DYNAMIC VP SMALL CAP RESPONSIBLE STOCK DISCIPLINED GROWTH PROTECTION INTERNATIONAL VALUE HY BOND STOCK INDEX GROWTH INDEX STOCK (h)* --------------------------------------------------------------------------------------------------------------------------- $ 3,082 $ 1,521 $ (6,042) $ 4,403 $ 285 $ (218) $ (1,901) $ 4,341 $ (648) 60,524 (77) 118,779 197,959 24 6,849 8,878 223,892 30,145 (76,130) 2,318 (14,413) (304,336) (612) (4,966) 3,986 (125,318) (22,442) --------------------------------------------------------------------------------------------------------------------------- (12,524) 3,762 98,324 (101,974) (303) 1,665 10,963 102,915 7,055 --------------------------------------------------------------------------------------------------------------------------- 2,290 (1) 36,338 49,133 -- -- 389 150,281 31 (109,703) (2,754) (229,691) (417,348) (14,775) (1,265) (30,072) (338,484) (1,526) (25,026) 26,896 357,333 (60,955) 14,950 (30,673) (31,678) (462,520) (142,235) --------------------------------------------------------------------------------------------------------------------------- (132,439) 24,141 163,980 (429,170) 175 (31,938) (61,361) (650,723) (143,730) --------------------------------------------------------------------------------------------------------------------------- (144,963) 27,903 262,304 (531,144) (128) (30,273) (50,398) (547,808) (136,675) --------------------------------------------------------------------------------------------------------------------------- 710,464 37,862 630,284 2,052,150 10,774 43,497 224,776 2,914,844 136,675 --------------------------------------------------------------------------------------------------------------------------- $ 565,501 $ 65,765 $ 892,588 $ 1,521,006 $ 10,646 $ 13,224 $ 174,378 $ 2,367,036 $ -- ===========================================================================================================================
17 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENTS OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== DREYFUS VARIABLE JANUS INVESTMENT ASPEN FUND (CONTINUED) FEDERATED INSURANCE SERIES SERIES ---------------- -------------------------------------- ------------- HIGH INTERNATIONAL CAPITAL INCOME INTERNATIONAL GROWTH AND VALUE INCOME II BOND II EQUITY II INCOME ------------------------------------------------------------------------------------------------------------------------------------ Investment income: Income dividends from investments in portfolio shares .. $ 13,302 $ 24,847 $ 68,131 $ 808 $ 12,198 Expenses: Mortality and expense risk fees ........................ 11,795 5,676 12,264 5,913 10,711 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) ...................... 1,507 19,171 55,867 (5,105) 1,487 ------------------------------------------------------------------------------------------------------------------------------------ Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ................................. 6,267 8,401 33,162 28,361 125,539 Net realized short-term capital gain distributions from investments in portfolio shares ................. 20,820 -- -- -- -- Net realized long-term capital gain distributions from investments in portfolio shares ................. 86,024 -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments in portfolio shares ............................................... 113,111 8,401 33,162 28,361 125,539 ------------------------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) of investments in portfolio shares ........................ (86,918) (19,144) (66,716) 4,244 (71,648) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ........................................ $ 27,700 $ 8,428 $ 22,313 $ 27,500 $ 55,378 ====================================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== DREYFUS VARIABLE JANUS INVESTMENT ASPEN FUND (CONTINUED) FEDERATED INSURANCE SERIES SERIES ---------------- -------------------------------------- ------------- HIGH INTERNATIONAL CAPITAL INCOME INTERNATIONAL GROWTH AND VALUE INCOME II BOND II EQUITY II INCOME ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) ........................ $ 1,507 $ 19,171 $ 55,867 $ (5,105) $ 1,487 Net realized gain (loss) on investments in portfolio shares ............................................... 113,111 8,401 33,162 28,361 125,539 Net change in unrealized appreciation (depreciation) of investments in portfolio shares .................. (86,918) (19,144) (66,716) 4,244 (71,648) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ..................................... 27,700 8,428 22,313 27,500 55,378 ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) .... 27,184 1 1,516 836 14,190 Contract redemptions ................................... (212,482) (179,638) (126,816) (155,955) (150,877) Net transfers (including mortality transfers) .......... (232,480) 191,910 (209,071) 79,023 (257,425) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions .................. (417,778) 12,273 (334,371) (76,096) (394,112) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets .......... (390,078) 20,701 (312,058) (48,596) (338,734) ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period ........................... 1,003,387 343,797 1,035,039 436,837 870,748 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ................... $ 613,309 $ 364,498 $ 722,981 $ 388,241 $ 532,014 ====================================================================================================================================
* See Footnote 7 for details. The accompanying notes are an integral part of these financial statements. 18
============================================================================================================================== LEGG MASON PARTNERS VARIABLE JANUS ASPEN SERIES (CONTINUED) LAZARD RETIREMENT SERIES EQUITY TRUST ------------------------------------------------------- ------------------------------------------------------ ------------- US INTERNATIONAL LARGE CAP MID CAP WORLDWIDE EMERGING INTERNATIONAL STRATEGIC AGGRESSIVE GROWTH GROWTH GROWTH GROWTH MARKETS EQUITY SMALL CAP EQUITY (k)* GROWTH (b)* ------------------------------------------------------------------------------------------------------------------------------ $ 9,288 $ 10,863 $ 2,672 $ 9,735 $ 8,535 $ 3,040 $ -- $ 2,947 $ -- 20,804 22,976 18,820 19,294 9,689 2,049 8,207 3,450 101 ------------------------------------------------------------------------------------------------------------------------------ (11,516) (12,113) (16,148) (9,559) (1,154) 991 (8,207) (503) (101) ------------------------------------------------------------------------------------------------------------------------------ 181,687 99,611 106,954 73,849 104,573 1,910 4,885 11,817 (163) -- -- -- -- 36,207 4,248 83,759 12,860 -- -- -- 6,742 -- 77,514 16,714 119,106 33,437 30 ------------------------------------------------------------------------------------------------------------------------------ 181,687 99,611 113,696 73,849 218,294 22,872 207,750 58,114 (133) ------------------------------------------------------------------------------------------------------------------------------ 164,864 111,490 137,498 34,460 (39,582) (10,847) (242,630) (63,747) (206) ------------------------------------------------------------------------------------------------------------------------------ $ 335,035 $ 198,988 $ 235,046 $ 98,750 $ 177,558 $ 13,016 $ (43,087) $ (6,136) $ (440) ==============================================================================================================================
=============================================================================================================================== LEGG MASON PARTNERS VARIABLE JANUS ASPEN SERIES (CONTINUED) LAZARD RETIREMENT SERIES EQUITY TRUST ------------------------------------------------------- ------------------------------------------------------ -------------- US INTERNATIONAL LARGE CAP MID CAP WORLDWIDE EMERGING INTERNATIONAL STRATEGIC AGGRESSIVE GROWTH GROWTH GROWTH GROWTH MARKETS EQUITY SMALL CAP EQUITY (k)* GROWTH (b)* ------------------------------------------------------------------------------------------------------------------------------- $ (11,516) $ (12,113) $ (16,148) $ (9,559) $ (1,154) $ 991 $ (8,207) $ (503) $ (101) 181,687 99,611 113,696 73,849 218,294 22,872 207,750 58,114 (133) 164,864 111,490 137,498 34,460 (39,582) (10,847) (242,630) (63,747) (206) ------------------------------------------------------------------------------------------------------------------------------- 335,035 198,988 235,046 98,750 177,558 13,016 (43,087) (6,136) (440) ------------------------------------------------------------------------------------------------------------------------------- 110,246 21,621 25,776 51,520 25,702 3,214 3,488 7,668 895 (365,052) (234,100) (199,421) (89,031) (55,221) (8,921) (72,607) (66,961) (494) 227,522 (48,970) (20,626) (66,159) 103,161 (13,011) (123,463) 63,817 5,297 ------------------------------------------------------------------------------------------------------------------------------- (27,284) (261,449) (194,271) (103,670) 73,642 (18,718) (192,582) 4,524 5,698 ------------------------------------------------------------------------------------------------------------------------------- 307,751 (62,461) 40,775 (4,920) 251,200 (5,702) (235,669) (1,612) 5,258 ------------------------------------------------------------------------------------------------------------------------------- 1,320,223 1,531,567 1,232,334 1,259,443 646,532 125,212 680,853 205,734 -- ------------------------------------------------------------------------------------------------------------------------------- $ 1,627,974 $ 1,469,106 $1,273,109 $1,254,523 $ 897,732 $ 119,510 $ 445,184 $ 204,122 $ 5,258 ===============================================================================================================================
19 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENTS OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
================================================================================================================================== LEGG MASON PARTNERS LEGG MASON PARTNERS VARIABLE EQUITY TRUST (CONTINUED) VARIABLE INCOME TRUST ------------------------------------------ ---------------------------- CAPITAL GLOBAL AND FUNDAMENTAL LARGE CAP HIGH YIELD INCOME (b)* VALUE (b)* GROWTH (b)* BOND (c)* GOVERNMENT (d)* ---------------------------------------------------------------------------------------------------------------------------------- Investment income: Income dividends from investments in portfolio shares ........................................... $ 45 $ 144 $ 2 $ 13,082 $ 2,499 Expenses: Mortality and expense risk fees ..................... 31 299 106 2,414 1,271 ---------------------------------------------------------------------------------------------------------------------------------- Net investment income (expense) ................. 14 (155) (104) 10,668 1,228 ---------------------------------------------------------------------------------------------------------------------------------- Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares .............................. (1) 513 599 (354) (12,338) Net realized short-term capital gain distributions from investments in portfolio shares ............. 103 112 -- 580 -- Net realized long-term capital gain distributions from investments in portfolio shares ............ 413 612 -- 252 -- ---------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments in portfolio shares ............................. 515 1,237 599 478 (12,338) ---------------------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) of investments in portfolio shares ..................... (536) (1,067) (364) (13,933) (1,918) ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ............................ $ (7) $ 15 $ 131 $ (2,787) $ (13,028) ==================================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
================================================================================================================================== LEGG MASON PARTNERS LEGG MASON PARTNERS VARIABLE EQUITY TRUST (CONTINUED) VARIABLE INCOME TRUST ------------------------------------------ ---------------------------- CAPITAL GLOBAL AND FUNDAMENTAL LARGE CAP HIGH YIELD INCOME (b)* VALUE (b)* GROWTH (b)* BOND (c)* GOVERNMENT (d)* ---------------------------------------------------------------------------------------------------------------------------------- Changes from operations: Net investment income (expense) ..................... $ 14 $ (155) $ (104) $ 10,668 $ 1,228 Net realized gain (loss) on investments in portfolio shares ................................. 515 1,237 599 478 (12,338) Net change in unrealized appreciation (depreciation) of investments in portfolio shares ............................................ (536) (1,067) (364) (13,933) (1,918) ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ................................ (7) 15 131 (2,787) (13,028) ---------------------------------------------------------------------------------------------------------------------------------- Changes from contract owners' transactions: Net contract purchase payments (including breakage) ........................................ 1,418 5 -- -- -- Contract redemptions ................................ (772) (857) (10,537) (2,605) (17,576) Net transfers (including mortality transfers) ....... 2,577 11,153 15,713 57,196 77,032 ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from contract owners' transactions .............. 3,223 10,301 5,176 54,591 59,456 ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets ........... 3,216 10,316 5,307 51,804 46,428 ---------------------------------------------------------------------------------------------------------------------------------- Net assets, beginning of period ........................ -- -- -- 124,988 -- ---------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period ..................... $ 3,216 $ 10,316 $ 5,307 $ 176,792 $ 46,428 ==================================================================================================================================
* See Footnote 7 for details. The accompanying notes are an integral part of these financial statements. 20
==================================================================================================================================== LEGG MASON PARTNERS VARIABLE INCOME TRUST NEUBERGER BERMAN (CONTINUED) LEGG MASON PARTNERS VARIABLE PORTFOLIOS LORD ABBETT SERIES FUND ADVISERS MANAGEMENT TRUST --------------------- ----------------------------------------- ------------------------ ---------------------------------------- LEHMAN LEHMAN BROTHERS BROTHERS STRATEGIC LARGE CAP TOTAL AMERICA'S GROWTH AND HIGH INCOME SHORT DURATION BOND (c)* ALL CAP (e)* GROWTH (f)* RETURN (g)* VALUE INCOME BOND (l)* BOND (m)* FASCIANO ------------------------------------------------------------------------------------------------------------------------------------ $ 7,992 $ 219 $ -- $ 21 $ 9,830 $ 16,958 $ 1,049 $ 17,759 $ -- 2,490 275 40 13 4,193 20,663 191 8,431 53 ------------------------------------------------------------------------------------------------------------------------------------ 5,502 (56) (40) 8 5,637 (3,705) 858 9,328 (53) ------------------------------------------------------------------------------------------------------------------------------------ (448) 1,030 393 191 3,225 58,350 234 2,990 (1,026) -- 3,671 -- 13 1,312 6,360 -- -- -- -- 125 -- 3 9,060 87,156 -- -- 22 ------------------------------------------------------------------------------------------------------------------------------------ (448) 4,826 393 207 13,597 151,866 234 2,990 (1,004) ------------------------------------------------------------------------------------------------------------------------------------ (4,871) (1,262) (178) (126) (23,482) (113,667) (1,052) 6,877 (37) ------------------------------------------------------------------------------------------------------------------------------------ $ 183 $ 3,508 $ 175 $ 89 $ (4,248) $ 34,494 $ 40 $ 19,195 $ (1,094) ====================================================================================================================================
==================================================================================================================================== LEGG MASON PARTNERS VARIABLE INCOME TRUST NEUBERGER BERMAN (CONTINUED) LEGG MASON PARTNERS VARIABLE PORTFOLIOS LORD ABBETT SERIES FUND ADVISERS MANAGEMENT TRUST --------------------- ----------------------------------------- ------------------------ ---------------------------------------= LEHMAN LEHMAN BROTHERS BROTHERS STRATEGIC LARGE CAP TOTAL AMERICA'S GROWTH AND HIGH INCOME SHORT DURATION BOND (c)* ALL CAP (e)* GROWTH (f)* RETURN (g)* VALUE INCOME BOND (l)* BOND (m)* FASCIANO ------------------------------------------------------------------------------------------------------------------------------------ $ 5,502 $ (56) $ (40) $ 8 $ 5,637 $ (3,705) $ 858 $ 9,328 $ (53) (448) 4,826 393 207 13,597 151,866 234 2,990 (1,004) (4,871) (1,262) (178) (126) (23,482) (113,667) (1,052) 6,877 (37) ------------------------------------------------------------------------------------------------------------------------------------ 183 3,508 175 89 (4,248) 34,494 40 19,195 (1,094) ------------------------------------------------------------------------------------------------------------------------------------ -- 17 -- 2 2,787 4,734 -- 3,533 -- (5,029) (468) (298) (86) (9,752) (190,707) (105) (110,050) (37) (11,761) (13,631) (17,588) (2,595) 261,656 (103,028) 1,081 146,009 (2,237) ------------------------------------------------------------------------------------------------------------------------------------ (16,790) (14,082) (17,886) (2,679) 254,691 (289,001) 976 39,492 (2,274) ------------------------------------------------------------------------------------------------------------------------------------ (16,607) (10,574) (17,711) (2,590) 250,443 (254,507) 1,016 58,687 (3,368) ------------------------------------------------------------------------------------------------------------------------------------ 179,706 10,574 17,711 2,590 73,548 1,617,457 12,811 565,336 4,346 ------------------------------------------------------------------------------------------------------------------------------------ $ 163,099 $ -- $ -- $ -- $ 323,991 $ 1,362,950 $ 13,827 $ 624,023 $ 978 ====================================================================================================================================
21 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENTS OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
=================================================================================================================================== NEUBERGER BERMAN NORTHERN LIGHTS ADVISERS MANAGEMENT TRUST (CONTINUED) VARIABLE TRUST --------------------------------------- ---------------- MID-CAP SOCIALLY JNF GROWTH PARTNERS REGENCY RESPONSIVE BALANCED (j)* ----------------------------------------------------------------------------------------------------------------------------------- Investment income: Income dividends from investments in portfolio shares .............. $ -- $ 6,259 $ 457 $ 37 $ 24,979 Expenses: Mortality and expense risk fees .................................... 9,167 13,744 1,605 890 21,561 ----------------------------------------------------------------------------------------------------------------------------------- Net investment income (expense) .............................. (9,167) (7,485) (1,148) (853) 3,418 ----------------------------------------------------------------------------------------------------------------------------------- Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ............................................. 64,075 22,690 6,299 14,494 (8,417) Net realized short-term capital gain distributions from investments in portfolio shares ............................................. -- 3,248 474 138 -- Net realized long-term capital gain distributions from investments in portfolio shares ............................................. -- 94,700 2,275 -- -- ----------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments in portfolio shares .. 64,075 120,638 9,048 14,632 (8,417) ----------------------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) of investments in portfolio shares ................................. 55,963 (42,872) (5,223) (8,414) (53,255) ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ..... $110,871 $ 70,281 $ 2,677 $ 5,365 $ (58,254) ===================================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== NEUBERGER BERMAN NORTHERN LIGHTS ADVISERS MANAGEMENT TRUST (CONTINUED) VARIABLE TRUST ------------------------------------------- ---------------- MID-CAP SOCIALLY JNF GROWTH PARTNERS REGENCY RESPONSIVE BALANCED (j)* ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) ................................. $ (9,167) $ (7,485) $ (1,148) $ (853) $ 3,418 Net realized gain (loss) on investments in portfolio shares ..... 64,075 120,638 9,048 14,632 (8,417) Net change in unrealized appreciation (depreciation) of investments in portfolio shares ........................... 55,963 (42,872) (5,223) (8,414) (53,255) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ..... 110,871 70,281 2,677 5,365 (58,254) ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) ............. 108 1,106 -- 181 8,770 Contract redemptions ............................................ (40,728) (61,612) (5,063) (5,898) (157,217) Net transfers (including mortality transfers) ................... 19,632 40,596 (84,763) (63,184) 2,193,462 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions .......................... (20,988) (19,910) (89,826) (68,901) 2,045,015 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets .................. 89,883 50,371 (87,149) (63,536) 1,986,761 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period .................................... 574,752 988,141 176,340 97,455 -- ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ............................ $664,635 $1,038,512 $ 89,191 $ 33,919 $ 1,986,761 ====================================================================================================================================
* See Footnote 7 for details. The accompanying notes are an integral part of these financial statements. 22
======================================================================================================================= NORTHERN LIGHTS VARIABLE TRUST (CONTINUED) PIMCO VARIABLE INSURANCE TRUST PIONEER VARIABLE CONTRACTS TRUST --------------- ------------------------------------------------ -------------------------------------------------- JNF MONEY REAL SHORT TOTAL CORE EQUITY HIGH EQUITY (j)* MARKET RETURN TERM RETURN BOND (ae)* INCOME FUND YIELD ----------------------------------------------------------------------------------------------------------------------- $ -- $ 201,234 $ 15,960 $ 22,969 $ 38,624 $ 119 $ 18,277 $ 3,238 $ 14,997 23,084 62,244 4,863 6,998 11,529 38 12,174 4,637 4,238 ----------------------------------------------------------------------------------------------------------------------- (23,084) 138,990 11,097 15,971 27,095 81 6,103 (1,399) 10,759 ----------------------------------------------------------------------------------------------------------------------- (24,408) -- (5,971) 9 (3,657) (31) 79,746 45,957 9,963 -- -- 926 -- -- -- 1,419 -- 23 -- -- 4 -- -- -- 31,383 -- 195 ----------------------------------------------------------------------------------------------------------------------- (24,408) -- (5,041) 9 (3,657) (31) 112,548 45,957 10,181 ----------------------------------------------------------------------------------------------------------------------- (219,356) -- 26,392 (859) 29,920 57 (105,680) (29,414) (7,226) ----------------------------------------------------------------------------------------------------------------------- $ (266,848) $ 138,990 $ 32,448 $ 15,121 $ 53,358 $ 107 $ 12,971 $ 15,144 $ 13,714 =======================================================================================================================
========================================================================================================================= NORTHERN LIGHTS VARIABLE TRUST (CONTINUED) PIMCO VARIABLE INSURANCE TRUST PIONEER VARIABLE CONTRACTS TRUST --------------- --------------------------------------------------- ------------------------------------------------- JNF MONEY REAL SHORT TOTAL CORE EQUITY HIGH EQUITY (j)* MARKET RETURN TERM RETURN BOND (ae)* INCOME FUND YIELD ------------------------------------------------------------------------------------------------------------------------- $ (23,084) $ 138,990 $ 11,097 $ 15,971 $ 27,095 $ 81 $ 6,103 $ (1,399) $ 10,759 (24,408) -- (5,041) 9 (3,657) (31) 112,548 45,957 10,181 (219,356) -- 26,392 (859) 29,920 57 (105,680) (29,414) (7,226) ------------------------------------------------------------------------------------------------------------------------- (266,848) 138,990 32,448 15,121 53,358 107 12,971 15,144 13,714 ------------------------------------------------------------------------------------------------------------------------- 82,219 1,000,736 46,024 115,944 20,196 (1) 36,703 11,228 73 (103,697) (816,853) (24,590) (13,789) (119,864) -- (121,870) (28,636) (64,566) 2,364,890 4,365,688 38,277 248,665 148,426 (4,724) (434,930) (5,723) 263,043 ------------------------------------------------------------------------------------------------------------------------- 2,343,412 4,549,571 59,711 350,820 48,758 (4,725) (520,097) (23,131) 198,550 ------------------------------------------------------------------------------------------------------------------------- 2,076,564 4,688,561 92,159 365,941 102,116 (4,618) (507,126) (7,987) 212,264 ------------------------------------------------------------------------------------------------------------------------- -- 639,102 314,032 326,568 719,029 4,618 985,233 373,032 207,594 ------------------------------------------------------------------------------------------------------------------------- $ 2,076,564 $ 5,327,663 $ 406,191 $ 692,509 $ 821,145 $ -- $ 478,107 $ 365,045 $ 419,858 =========================================================================================================================
23 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENTS OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== PIONEER VARIABLE RYDEX CONTRACTS TRUST (CONTINUED) ROYCE CAPITAL FUND VARIABLE TRUST --------------------------- -------------------- -------------- INTERNATIONAL MID CAP CLS ADVISORONE VALUE VALUE MICRO-CAP SMALL-CAP AMERIGO ------------------------------------------------------------------------------------------------------------------------------------ Investment income: Income dividends from investments in portfolio shares ........ $ 495 $ 277 $ 4,372 $ 278 $ 176 Expenses: Mortality and expense risk fees .............................. 2,418 607 5,513 8,965 590 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) ........................ (1,923) (330) (1,141) (8,687) (414) ------------------------------------------------------------------------------------------------------------------------------------ Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ....................................... 10,106 1,991 34,207 58,847 14 Net realized short-term capital gain distributions from investments in portfolio shares ........................... -- 780 7,163 7,964 1,180 Net realized long-term capital gain distributions from investments in portfolio shares ........................... 1,709 4,164 17,747 16,262 604 ------------------------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments in portfolio shares .................................... 11,815 6,935 59,117 83,073 1,798 ------------------------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) of investments in portfolio shares ........................... 5,305 (4,286) (36,478) (85,746) 3,194 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations .................................. $ 15,197 $ 2,319 $ 21,498 $ (11,360) $ 4,578 ====================================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== PIONEER VARIABLE RYDEX CONTRACTS TRUST (CONTINUED) ROYCE CAPITAL FUND VARIABLE TRUST --------------------------- -------------------- -------------- INTERNATIONAL MID CAP CLS ADVISORONE VALUE VALUE MICRO-CAP SMALL-CAP AMERIGO ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) .............................. $ (1,923) $ (330) $ (1,141) $ (8,687) $ (414) Net realized gain (loss) on investments in portfolio shares .. 11,815 6,935 59,117 83,073 1,798 Net change in unrealized appreciation (depreciation) of investments in portfolio shares ........................ 5,305 (4,286) (36,478) (85,746) 3,194 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations .. 15,197 2,319 21,498 (11,360) 4,578 ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) .......... -- -- 22,268 15,752 -- Contract redemptions ......................................... (118,274) (1,407) (119,495) (78,464) (516) Net transfers (including mortality transfers) ................ 185,860 2,951 55,248 (168,230) 4,934 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions ....................... 67,586 1,544 (41,979) (230,942) 4,418 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets ............... 82,783 3,863 (20,481) (242,302) 8,996 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period ................................. 142,745 33,400 312,882 755,465 38,924 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ........................ $ 225,528 $37,263 $ 292,401 $ 513,163 $ 47,920 ====================================================================================================================================
* See Footnote 7 for details. The accompanying notes are an integral part of these financial statements. 24
============================================================================================================================ RYDEX VARIABLE TRUST (CONTINUED) ---------------------------------------------------------------------------------------------------------------------------- CLS ADVISORONE BASIC COMMODITIES CONSUMER DOW 2X CLERMONT BANKING MATERIALS BIOTECHNOLOGY STRATEGY (n)* PRODUCTS STRATEGY (o)* ELECTRONICS ENERGY ---------------------------------------------------------------------------------------------------------------------------- $ 296 $ 184 $ 662 $ -- $ -- $ 183 $ 834 $ -- $ -- 153 190 6,428 440 93 371 1,785 292 8,944 ---------------------------------------------------------------------------------------------------------------------------- 143 (6) (5,766) (440) (93) (188) (951) (292) (8,944) ---------------------------------------------------------------------------------------------------------------------------- (100) (12,348) 86,173 (3,852) (324) 2,539 (9,213) (3,736) (35,599) 863 -- 21,784 -- -- 491 8,346 -- 1,528 1,232 -- 14,344 -- -- 298 539 -- 64,369 ---------------------------------------------------------------------------------------------------------------------------- 1,995 (12,348) 122,301 (3,852) (324) 3,328 (328) (3,736) 30,298 ---------------------------------------------------------------------------------------------------------------------------- (1,684) (34) (11,198) (740) 2,164 (1,821) (5,365) (820) 140,018 ---------------------------------------------------------------------------------------------------------------------------- $ 454 $ (12,388) $ 105,337 $ (5,032) $ 1,747 $ 1,319 $ (6,644) $ (4,848) $ 161,372 ============================================================================================================================
============================================================================================================================ RYDEX VARIABLE TRUST (CONTINUED) ---------------------------------------------------------------------------------------------------------------------------- CLS ADVISORONE BASIC COMMODITIES CONSUMER DOW 2X CLERMONT BANKING MATERIALS BIOTECHNOLOGY STRATEGY (n)* PRODUCTS STRATEGY (o)* ELECTRONICS ENERGY ---------------------------------------------------------------------------------------------------------------------------- $ 143 $ (6) $ (5,766) $ (440) $ (93) $ (188) $ (951) $ (292) $ (8,944) 1,995 (12,348) 122,301 (3,852) (324) 3,328 (328) (3,736) 30,298 (1,684) (34) (11,198) (740) 2,164 (1,821) (5,365) (820) 140,018 ---------------------------------------------------------------------------------------------------------------------------- 454 (12,388) 105,337 (5,032) 1,747 1,319 (6,644) (4,848) 161,372 ---------------------------------------------------------------------------------------------------------------------------- -- 448 27,906 381 -- -- 488 -- 14,875 -- (15) (103,004) (1,169) -- (62,650) (12,376) (958) (76,528) 4,825 22,227 174,093 37,734 11,816 2,630 35,710 (10,222) 140,084 ---------------------------------------------------------------------------------------------------------------------------- 4,825 22,660 98,995 36,946 11,816 (60,020) 23,822 (11,180) 78,431 ---------------------------------------------------------------------------------------------------------------------------- 5,279 10,272 204,332 31,914 13,563 (58,701) 17,178 (16,028) 239,803 ---------------------------------------------------------------------------------------------------------------------------- 9,778 5,986 260,765 -- 6,856 68,246 71,161 28,358 598,331 ---------------------------------------------------------------------------------------------------------------------------- $ 15,057 $ 16,258 $ 465,097 $ 31,914 $ 20,419 $ 9,545 $ 88,339 $ 12,330 $ 838,134 ============================================================================================================================
25 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENTS OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) ------------------------------------------------------------------- GOVERNMENT ENERGY EUROPE 1.25X FINANCIAL LONG BOND HEALTH SERVICES STRATEGY (p)* SERVICES 1.2X STRATEGY (q)* CARE ------------------------------------------------------------------------------------------------------------------------------------ Investment income: Income dividends from investments in portfolio shares ..... $ -- $ 4,148 $ 2,194 $ 8,621 $ -- Expenses: Mortality and expense risk fees ............................ 7,980 3,348 769 3,526 1,151 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) ...................... (7,980) 800 1,425 5,095 (1,151) ------------------------------------------------------------------------------------------------------------------------------------ Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ........................................ 46,076 39,563 (24,768) 11,564 11,955 Net realized short-term capital gain distributions from investments in portfolio shares ......................... 1,062 14,747 6,236 -- 612 Net realized long-term capital gain distributions from investments in portfolio shares ......................... 41,499 2,070 5,854 -- 32 ------------------------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments in portfolio shares .................................. 88,637 56,380 (12,678) 11,564 12,599 ------------------------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) of investments in portfolio shares ......................... 60,255 (32,217) 1,873 9,769 181 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ..................................... $ 140,912 $ 24,963 $ (9,380) $ 26,428 $ 11,629 ====================================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) ------------------------------------------------------------------- GOVERNMENT ENERGY EUROPE 1.25X FINANCIAL LONG BOND HEALTH SERVICES STRATEGY (p)* SERVICES 1.2X STRATEGY (q)* CARE ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) ............................ $ (7,980) $ 800 $ 1,425 $ 5,095 $ (1,151) Net realized gain (loss) on investments in portfolio shares .................................................. 88,637 56,380 (12,678) 11,564 12,599 Net change in unrealized appreciation (depreciation) of investments in portfolio shares ......................... 60,255 (32,217) 1,873 9,769 181 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ........................................ 140,912 24,963 (9,380) 26,428 11,629 ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) ........ 9,607 782 11,143 409 801 Contract redemptions ....................................... (76,720) (202,932) (67,625) (8,293) (5,171) Net transfers (including mortality transfers) .............. 393,132 (5,441) (60,775) 146,261 (127,653) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions ..................... 326,019 (207,591) (117,257) 138,377 (132,023) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets ............. 466,931 (182,628) (126,637) 164,805 (120,394) ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period ............................... 345,468 375,721 139,434 178,705 156,364 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ...................... $ 812,399 $ 193,093 $ 12,797 $ 343,510 $ 35,970 ====================================================================================================================================
* See Footnote 7 for details. The accompanying notes are an integral part of these financial statements. 26
==================================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) ------------------------------------------------------------------------------------------------------------------------------------ INVERSE INVERSE GOVERNMENT INVERSE INVERSE INVERSE INVERSE DOW 2X LONG BOND MID-CAP OTC RUSSELL 2000 S&P 500 JAPAN 1.25X LARGE CAP INTERNET STRATEGY (r)* STRATEGY (s)* STRATEGY (t)* STRATEGY (u)* STRATEGY (v)* STRATEGY (w)* STRATEGY (x)* GROWTH ------------------------------------------------------------------------------------------------------------------------------------ $ -- $ 90 $ 19,726 $ -- $ 207 $ 1,696 $ 386 $ 4,287 $ -- 716 211 6,518 45 224 694 258 1,529 1,275 ------------------------------------------------------------------------------------------------------------------------------------ (716) (121) 13,208 (45) (17) 1,002 128 2,758 (1,275) ------------------------------------------------------------------------------------------------------------------------------------ (1,317) (18,147) 2,471 650 (16,504) (8,659) (3,523) (18,583) 5,966 -- -- -- -- -- -- -- -- 1,692 -- -- -- -- -- -- -- -- 615 ------------------------------------------------------------------------------------------------------------------------------------ (1,317) (18,147) 2,471 650 (16,504) (8,659) (3,523) (18,583) 8,273 ------------------------------------------------------------------------------------------------------------------------------------ (2,463) 5,927 (41,026) 468 824 4,142 751 3,460 (3,071) ------------------------------------------------------------------------------------------------------------------------------------ $ (4,496) $ (12,341) $ (25,347) $ 1,073 $ (15,697) $ (3,515) $ (2,644) $ (12,365) $ 3,927 ====================================================================================================================================
==================================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) ------------------------------------------------------------------------------------------------------------------------------------ INVERSE INVERSE GOVERNMENT INVERSE INVERSE INVERSE INVERSE DOW 2X LONG BOND MID-CAP OTC RUSSELL 2000 S&P 500 JAPAN 1.25X LARGE CAP INTERNET STRATEGY (r)* STRATEGY (s)* STRATEGY (t)* STRATEGY (u)* STRATEGY (v)* STRATEGY (w)* STRATEGY (x)* GROWTH ------------------------------------------------------------------------------------------------------------------------------------ $ (716) $ (121) $ 13,208 $ (45) $ (17) $ 1,002 $ 128 $ 2,758 $ (1,275) (1,317) (18,147) 2,471 650 (16,504) (8,659) (3,523) (18,583) 8,273 (2,463) 5,927 (41,026) 468 824 4,142 751 3,460 (3,071) ------------------------------------------------------------------------------------------------------------------------------------ (4,496) (12,341) (25,347) 1,073 (15,697) (3,515) (2,644) (12,365) 3,927 ------------------------------------------------------------------------------------------------------------------------------------ -- -- -- -- 2 -- -- (20) -- (3,212) (1,260) (25,733) (54) (228) (2,182) (197) (45,563) (32,344) (10,476) (15,470) 33,456 (8,243) 9,201 (5,687) 4,072 (17,476) (7,369) ------------------------------------------------------------------------------------------------------------------------------------ (13,688) (16,730) 7,723 (8,297) 8,975 (7,869) 3,875 (63,059) (39,713) ------------------------------------------------------------------------------------------------------------------------------------ (18,184) (29,071) (17,624) (7,224) (6,722) (11,384) 1,231 (75,424) (35,786) ------------------------------------------------------------------------------------------------------------------------------------ 48,568 30,823 423,714 7,224 14,426 41,921 8,433 144,316 138,222 ------------------------------------------------------------------------------------------------------------------------------------ $ 30,384 $ 1,752 $ 406,090 $ -- $ 7,704 $ 30,537 $ 9,664 $ 68,892 $ 102,436 ====================================================================================================================================
27 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENTS OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) ------------------------------------------------------------ LARGE CAP MID CAP 1.5X MID-CAP MID-CAP VALUE LEISURE STRATEGY (y)* GROWTH VALUE ------------------------------------------------------------------------------------------------------------------------------------ Investment income: Income dividends from investments in portfolio shares ............. $ 1,419 $ -- $ 2,213 $ -- $ 2,013 Expenses: Mortality and expense risk fees ................................... 3,407 485 2,184 923 3,451 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) ............................. (1,988) (485) 29 (923) (1,438) ------------------------------------------------------------------------------------------------------------------------------------ Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ............................................ 3,745 2,388 (19,569) 6,387 30,806 Net realized short-term capital gain distributions from investments in portfolio shares ............................................ 6,658 1,817 4,772 1,347 -- Net realized long-term capital gain distributions from investments in portfolio shares ............................................ 3,848 536 11,950 1,162 98 ------------------------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments in portfolio shares ......................................... 14,251 4,741 (2,847) 8,896 30,904 ------------------------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) of investments in portfolio shares ................................ (18,399) (5,336) 7,881 1,033 (25,567) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations .... $ (6,136) $ (1,080) $ 5,063 $ 9,006 $ 3,899 ====================================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) ------------------------------------------------------------ LARGE CAP MID CAP 1.5X MID-CAP MID-CAP VALUE LEISURE STRATEGY (y)* GROWTH VALUE ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) ................................... $ (1,988) $ (485) $ 29 $ (923) $ (1,438) Net realized gain (loss) on investments in portfolio shares ....... 14,251 4,741 (2,847) 8,896 30,904 Net change in unrealized appreciation (depreciation) of investments in portfolio shares ............................................ (18,399) (5,336) 7,881 1,033 (25,567) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ....... (6,136) (1,080) 5,063 9,006 3,899 ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) ............... 10,879 171 35,727 (65) 11,032 Contract redemptions .............................................. (200,999) (63,714) (10,081) (11,628) (31,754) Net transfers (including mortality transfers) ..................... (229,894) (14,852) (21,706) (7,643) (189,777) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions ............................ (420,014) (78,395) 3,940 (19,336) (210,499) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets .................... (426,150) (79,475) 9,003 (10,330) (206,600) ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period ...................................... 499,910 93,054 57,364 60,701 303,324 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ............................. $ 73,760 $ 13,579 $ 66,367 $ 50,371 $ 96,724 ====================================================================================================================================
* See Footnote 7 for details. The accompanying notes are an integral part of these financial statements. 28
=========================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) --------------------------------------------------------------------------------------------------------------------------- OTC 2X PRECIOUS REAL RUSSELL 2000 S&P 500 2X SECTOR NOVA STRATEGY (z)* OTC METALS ESTATE RETAILING 1.5X STRATEGY (aa)* STRATEGY (ab)* ROTATION --------------------------------------------------------------------------------------------------------------------------- $ 7,592 $ 393 $ 427 $ -- $ 3,309 $ -- $ 331 $ 656 $ -- 7,028 1,632 7,695 6,631 1,901 94 742 1,874 1,132 --------------------------------------------------------------------------------------------------------------------------- 564 (1,239) (7,268) (6,631) 1,408 (94) (411) (1,218) (1,132) --------------------------------------------------------------------------------------------------------------------------- 50,785 17,498 79,157 56,378 (42,439) (32) (5,815) 5,629 1,798 -- -- -- -- 8,254 621 -- 5,634 3,836 -- -- -- -- 8,254 1,189 1,113 1,378 1,591 --------------------------------------------------------------------------------------------------------------------------- 50,785 17,498 79,157 56,378 (25,931) 1,778 (4,702) 12,641 7,225 --------------------------------------------------------------------------------------------------------------------------- (43,126) 9,480 9,276 (4,228) 2,874 20 (10,353) (7,671) 7,565 --------------------------------------------------------------------------------------------------------------------------- $ 8,223 $ 25,739 $ 81,165 $ 45,519 $ (21,649) $ 1,704 $ (15,466) $ 3,752 $ 13,658 ===========================================================================================================================
=========================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) --------------------------------------------------------------------------------------------------------------------------- OTC 2X PRECIOUS REAL RUSSELL 2000 S&P 500 2X SECTOR NOVA STRATEGY (z)* OTC METALS ESTATE RETAILING 1.5X STRATEGY (aa)* STRATEGY (ab)* ROTATION --------------------------------------------------------------------------------------------------------------------------- $ 564 $ (1,239) $ (7,268) $ (6,631) $ 1,408 $ (94) $ (411) $ (1,218) $ (1,132) 50,785 17,498 79,157 56,378 (25,931) 1,778 (4,702) 12,641 7,225 (43,126) 9,480 9,276 (4,228) 2,874 20 (10,353) (7,671) 7,565 --------------------------------------------------------------------------------------------------------------------------- 8,223 25,739 81,165 45,519 (21,649) 1,704 (15,466) 3,752 13,658 --------------------------------------------------------------------------------------------------------------------------- 2,612 292 3,401 605 16,169 -- 4 11,476 -- (154,065) (4,763) (154,472) (36,760) (110,660) (111) (158,554) (110,160) (20,444) 106,203 (15,668) 144,097 104,889 (34,805) (3,745) 207,111 (110,032) 32,862 --------------------------------------------------------------------------------------------------------------------------- (45,250) (20,139) (6,974) 68,734 (129,296) (3,856) 48,561 (208,716) 12,418 --------------------------------------------------------------------------------------------------------------------------- (37,027) 5,600 74,191 114,253 (150,945) (2,152) 33,095 (204,964) 26,076 --------------------------------------------------------------------------------------------------------------------------- 525,561 114,754 480,908 585,240 201,431 5,224 160,090 289,495 60,777 --------------------------------------------------------------------------------------------------------------------------- $ 488,534 $ 120,354 $ 555,099 $699,493 $ 50,486 $ 3,072 $ 193,185 $ 84,531 $ 86,853 ===========================================================================================================================
29 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENTS OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) ----------------------------------------------------------------- STRENGTHENING SMALL-CAP SMALL-CAP DOLLAR 2X TELE- GROWTH VALUE STRATEGY (ac)* TECHNOLOGY COMMUNICATIONS ------------------------------------------------------------------------------------------------------------------------------------ Investment income: Income dividends from investments in portfolio shares ........ $ -- $ 120 $ -- $ -- $ 31 Expenses: Mortality and expense risk fees .............................. 2,426 899 45 376 654 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) ........................ (2,426) (779) (45) (376) (623) ------------------------------------------------------------------------------------------------------------------------------------ Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ....................................... 6,621 (1,114) (889) (4,139) 12,106 Net realized short-term capital gain distributions from investments in portfolio shares ........................... 8,298 5,064 -- -- -- Net realized long-term capital gain distributions from investments in portfolio shares ........................... 5,875 3,526 -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments in portfolio shares .............................................. 20,794 7,476 (889) (4,139) 12,106 ------------------------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) of investments in portfolio shares ........................... (20,398) (16,316) 164 (800) (571) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations .................................. $ (2,030) $ (9,619) $ (770) $ (5,315) $ 10,912 ====================================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) ----------------------------------------------------------------- STRENGTHENING SMALL-CAP SMALL-CAP DOLLAR 2X TELE- GROWTH VALUE STRATEGY (ac)* TECHNOLOGY COMMUNICATIONS ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) .............................. $ (2,426) $ (779) $ (45) $ (376) $ (623) Net realized gain (loss) on investments in portfolio shares .. 20,794 7,476 (889) (4,139) 12,106 Net change in unrealized appreciation (depreciation) of investments in portfolio shares ........................... (20,398) (16,316) 164 (800) (571) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations .. (2,030) (9,619) (770) (5,315) 10,912 ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) .......... 8 -- -- 352 -- Contract redemptions ......................................... (32,326) (42,582) -- (3,862) (4,255) Net transfers (including mortality transfers) ................ 14,171 (14,879) 6,122 1,516 (11,770) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions ....................... (18,147) (57,461) 6,122 (1,994) (16,025) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets ............... (20,177) (67,080) 5,352 (7,309) (5,113) ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period ................................. 164,833 132,835 -- 37,615 22,897 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ........................ $ 144,656 $ 65,755 $ 5,352 $ 30,306 $ 17,784 ====================================================================================================================================
* See Footnote 7 for details. The accompanying notes are an integral part of these financial statements. 30
=============================================================================================================================== THIRD AVENUE VAN ECK VARIABLE WORLDWIDE RYDEX VARIABLE TRUST (CONTINUED) SELIGMAN PORTFOLIOS SERIES TRUST INSURANCE TRUST ---------------------------------------------------------- --------------------------- ------------ --------------------- U.S. WEAKENING COMMUNICATIONS GOVERNMENT DOLLAR 2X AND GLOBAL ABSOLUTE TRANSPORTATION MONEY MARKET UTILITIES STRATEGY (ad)* INFORMATION TECHNOLOGY VALUE RETURN BOND ------------------------------------------------------------------------------------------------------------------------------- $ -- $ 33,820 $ 6,686 $ 10,016 $ -- $ -- $ 21,397 $ 236 $ 16,162 457 13,091 6,363 357 5,531 2,537 13,879 779 3,738 ------------------------------------------------------------------------------------------------------------------------------- (457) 20,729 323 9,659 (5,531) (2,537) 7,518 (543) 12,424 ------------------------------------------------------------------------------------------------------------------------------- 8,661 -- 29,611 1,572 44,641 10,537 74,913 757 1,807 -- -- 21,127 -- -- -- 912 383 -- 2,802 -- 23,978 -- -- -- 60,757 427 -- ------------------------------------------------------------------------------------------------------------------------------- 11,463 -- 74,716 1,572 44,641 10,537 136,582 1,567 1,807 ------------------------------------------------------------------------------------------------------------------------------- (4,124) -- (46,149) (5,780) 9,500 12,732 (207,089) (939) 5,526 ------------------------------------------------------------------------------------------------------------------------------- $ 6,882 $ 20,729 $ 28,890 $ 5,451 $ 48,610 $ 20,732 $ (62,989) $ 85 $ 19,757 ===============================================================================================================================
=============================================================================================================================== THIRD AVENUE VAN ECK VARIABLE WORLDWIDE RYDEX VARIABLE TRUST (CONTINUED) SELIGMAN PORTFOLIOS SERIES TRUST INSURANCE TRUST ---------------------------------------------------------- --------------------------- ------------ --------------------- U.S. WEAKENING COMMUNICATIONS GOVERNMENT DOLLAR 2X AND GLOBAL ABSOLUTE TRANSPORTATION MONEY MARKET UTILITIES STRATEGY (ad)* INFORMATION TECHNOLOGY VALUE RETURN BOND ------------------------------------------------------------------------------------------------------------------------------- $ (457) $ 20,729 $ 323 $ 9,659 $ (5,531) $ (2,537) $ 7,518 $ (543) $ 12,424 11,463 -- 74,716 1,572 44,641 10,537 136,582 1,567 1,807 (4,124) -- (46,149) (5,780) 9,500 12,732 (207,089) (939) 5,526 ------------------------------------------------------------------------------------------------------------------------------- 6,882 20,729 28,890 5,451 48,610 20,732 (62,989) 85 19,757 ------------------------------------------------------------------------------------------------------------------------------- 831 543,683 31,158 8 28,599 79 141,501 5,621 841 (13,553) (76,681) (25,955) (998) (71,194) (7,392) (354,480) (2,296) (47,565) (46,235) (692,140) (35,926) 70,180 (59,824) 2,809 70,515 72,613 (21,846) ------------------------------------------------------------------------------------------------------------------------------- (58,957) (225,138) (30,723) 69,190 (102,419) (4,504) (142,464) 75,938 (68,570) ------------------------------------------------------------------------------------------------------------------------------- (52,075) (204,409) (1,833) 74,641 (53,809) 16,228 (205,453) 76,023 (48,813) ------------------------------------------------------------------------------------------------------------------------------- 57,073 756,440 437,550 7,294 390,002 165,288 1,058,931 31,430 261,228 ------------------------------------------------------------------------------------------------------------------------------- $ 4,998 $ 552,031 $ 435,717 $ 81,935 $ 336,193 $ 181,516 $ 853,478 $107,453 $ 212,415 ===============================================================================================================================
31 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENTS OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== VAN ECK WORLDWIDE WELLS FARGO INSURANCE TRUST (CONTINUED) ADVANTAGE VT FUNDS --------------------------------- ----------------------- EMERGING HARD REAL MARKETS ASSETS ESTATE DISCOVERY OPPORTUNITY ------------------------------------------------------------------------------------------------------------------------------------ Investment income: Income dividends from investments in portfolio shares ............... $ 7,535 $ 1,596 $ 5,793 $ -- $ 4,641 Expenses: Mortality and expense risk fees ..................................... 23,522 23,165 6,556 13,798 11,770 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) ............................... (15,987) (21,569) (763) (13,798) (7,129) ------------------------------------------------------------------------------------------------------------------------------------ Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares .............................................. 276,784 189,179 25,097 98,043 63,972 Net realized short-term capital gain distributions from investments in portfolio shares .............................................. 117,423 46,220 141 -- 14,165 Net realized long-term capital gain distributions from investments in portfolio shares .............................................. 180,216 109,502 55,667 -- 94,603 ------------------------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments in portfolio shares ... 574,423 344,901 80,905 98,043 172,740 ------------------------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) of investments in portfolio shares .................................. (91,871) 227,098 (79,064) 99,904 (116,449) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ...... $ 466,565 $ 550,430 $ 1,078 $ 184,149 $ 49,162 ====================================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007
==================================================================================================================================== VAN ECK WORLDWIDE WELLS FARGO INSURANCE TRUST (CONTINUED) ADVANTAGE VT FUNDS --------------------------------- ----------------------- EMERGING HARD REAL MARKETS ASSETS ESTATE DISCOVERY OPPORTUNITY ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) ..................................... $ (15,987) $ (21,569) $ (763) $ (13,798) $ (7,129) Net realized gain (loss) on investments in portfolio shares ......... 574,423 344,901 80,905 98,043 172,740 Net change in unrealized appreciation (depreciation) of investments in portfolio shares .............................................. (91,871) 227,098 (79,064) 99,904 (116,449) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ......... 466,565 550,430 1,078 184,149 49,162 ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) ................. 61,262 41,130 19,081 4,731 12,415 Contract redemptions ................................................ (532,035) (161,679) (142,575) (153,465) (145,150) Net transfers (including mortality transfers) ....................... 20,390 635,769 (128,359) 64,563 (218,185) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions .............................. (450,383) 515,220 (251,853) (84,171) (350,920) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets ...................... 16,182 1,065,650 (250,775) 99,978 (301,758) ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period ........................................ 1,608,762 1,169,087 506,661 826,707 954,500 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ............................... $1,624,944 $2,234,737 $ 255,886 $ 926,685 $ 652,742 ====================================================================================================================================
* See Footnote 7 for details. The accompanying notes are an integral part of these financial statements. 32 ================================================================================ ------------ COMBINED TOTAL ------------ $ 986,227 848,002 ------------ 138,225 ------------ 3,528,768 788,422 1,844,376 ------------ 6,161,566 ------------ (1,485,593) ------------ $ 4,814,198 ============ ============ ------------- COMBINED TOTAL ------------- $ 138,225 6,161,566 (1,485,593) ------------ 4,814,198 ------------ 3,227,845 (10,655,443) 160,940 ------------ (7,266,658) ------------ (2,452,460) ------------ 58,942,542 ------------ $ 56,490,082 ============ 33 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006
==================================================================================================================================== 40|86 SERIES TRUST ----------------------------------------------------------------- FIXED GOVERNMENT HIGH BALANCED EQUITY INCOME SECURITIES YIELD (a) ------------------------------------------------------------------------------------------------------------------------------------ Investment income: Income dividends from investments in portfolio shares ........ $ 38,981 $ 13,167 $ 46,989 $ 41,355 $ 34,841 Expenses: Mortality and expense risk fees .............................. 30,730 35,929 14,173 15,314 7,982 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) .......................... 8,251 (22,762) 32,816 26,041 26,859 ------------------------------------------------------------------------------------------------------------------------------------ Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ........................................ 115,447 175,190 (9,037) (12,457) (96,266) Net realized short-term capital gain distributions from investments in portfolio shares ............................ -- -- -- -- -- Net realized long-term capital gain distributions from investments in portfolio shares ............................ -- 285,769 -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments in portfolio shares ................................................ 115,447 460,959 (9,037) (12,457) (96,266) ------------------------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) of investments in portfolio shares ........................... 100,829 (144,834) 6,430 5,358 75,831 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations .. $ 224,527 $ 293,363 $ 30,209 $ 18,942 $ 6,424 ====================================================================================================================================
STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2006
==================================================================================================================================== 40|86 SERIES TRUST ----------------------------------------------------------------- FIXED GOVERNMENT HIGH BALANCED EQUITY INCOME SECURITIES YIELD (a) ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) .............................. $ 8,251 $ (22,762) $ 32,816 $ 26,041 $ 26,859 Net realized gain (loss) on investments in portfolio shares .. 115,447 460,959 (9,037) (12,457) (96,266) Net change in unrealized appreciation (depreciation) of investments in portfolio shares ............................ 100,829 (144,834) 6,430 5,358 75,831 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations .... 224,527 293,363 30,209 18,942 6,424 ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) .......... 176,648 306,854 32,914 61,504 7,929 Contract redemptions ......................................... (217,050) (241,502) (161,901) (94,678) (52,376) Net transfers (including mortality transfers) ................ (196,102) (366,840) (177,852) (119,604) (976,533) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions .......................... (236,504) (301,488) (306,839) (152,778) (1,020,980) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets .................. (11,977) (8,125) (276,630) (133,836) (1,014,556) ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period ................................. 2,117,478 2,399,937 1,112,023 1,191,739 1,014,556 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ............................ $ 2,105,501 $ 2,391,812 $ 835,393 $ 1,057,903 $ -- ====================================================================================================================================
a) For the period January 1, 2006 through August 31, 2006 (liquidation of fund). b) For the period April 28, 2006 (inception of fund) through December 31, 2006. c) For the period January 1, 2006 through April 27, 2006 (fund merged into AIM VI Core Equity). d) Formerly AIM VI Real Estate prior to its name change on July 3, 2006. The accompanying notes are an integral part of these financial statements. 34
========================================================================================================================= 40|86 SERIES TRUST (CONTINUED) AIM VARIABLE INSURANCE FUNDS -------------- -------------------------------------------------------------------------------------------------------- GLOBAL MONEY CORE CORE FINANCIAL GLOBAL REAL HIGH MID CAP MARKET BASIC VALUE EQUITY (b) STOCK (c) SERVICES HEALTH CARE ESTATE (d) YIELD CORE EQUITY ------------------------------------------------------------------------------------------------------------------------- $ 146,208 $ 102 $ 1,282 $ 1,587 $ 3,416 $ -- $ 9,545 $ 32,299 $ 1,049 46,452 1,200 1,560 672 2,691 1,861 9,033 5,062 1,943 ------------------------------------------------------------------------------------------------------------------------- 99,756 (1,098) (278) 915 725 (1,861) 512 27,237 (894) ------------------------------------------------------------------------------------------------------------------------- -- 2,051 135 22,174 13,200 6,608 96,072 (3,321) 1,008 -- 223 -- -- -- -- 4,693 -- 1,866 -- 3,314 -- -- 1,319 -- 28,270 -- 13,117 ------------------------------------------------------------------------------------------------------------------------- -- 5,588 135 22,174 14,519 6,608 129,035 (3,321) 15,991 ------------------------------------------------------------------------------------------------------------------------- -- 3,587 14,000 (14,833) 9,234 (1,862) 99,146 8,014 (2,685) ------------------------------------------------------------------------------------------------------------------------- $ 99,756 $ 8,077 $ 13,857 $ 8,256 $ 24,478 $ 2,885 $ 228,693 $ 31,930 $ 12,412 =========================================================================================================================
========================================================================================================================= 40|86 SERIES TRUST (CONTINUED) AIM VARIABLE INSURANCE FUNDS -------------- -------------------------------------------------------------------------------------------------------- GLOBAL MONEY CORE CORE FINANCIAL GLOBAL REAL HIGH MID CAP MARKET BASIC VALUE EQUITY (b) STOCK (c) SERVICES HEALTH CARE ESTATE (d) YIELD CORE EQUITY ------------------------------------------------------------------------------------------------------------------------- $ 99,756 $ (1,098) $ (278) $ 915 $ 725 $ (1,861) $ 512 $ 27,237 $ (894) -- 5,588 135 22,174 14,519 6,608 129,035 (3,321) 15,991 -- 3,587 14,000 (14,833) 9,234 (1,862) 99,146 8,014 (2,685) ------------------------------------------------------------------------------------------------------------------------- 99,756 8,077 13,857 8,256 24,478 2,885 228,693 31,930 12,412 ------------------------------------------------------------------------------------------------------------------------- 309,796 1,261 164 83 395 546 33,735 1,747 886 (423,846) (3,915) (6,954) (441) (4,680) (923) (123,268) (19,642) (6,674) (407,493) (6,464) 233,307 (143,891) 43,238 (1,671) 417,461 67,500 4,980 ------------------------------------------------------------------------------------------------------------------------- (521,543) (9,118) 226,517 (144,249) 38,953 (2,048) 327,928 49,605 (808) ------------------------------------------------------------------------------------------------------------------------- (421,787) (1,041) 240,374 (135,993) 63,431 837 556,621 81,535 11,604 ------------------------------------------------------------------------------------------------------------------------- 3,498,803 82,391 -- 135,993 167,515 120,917 448,759 319,181 129,322 ------------------------------------------------------------------------------------------------------------------------- $ 3,077,016 $ 81,350 $ 240,374 $ -- $ 230,946 $ 121,754 $ 1,005,380 $ 400,716 $ 140,926 =========================================================================================================================
35 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENTS OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
==================================================================================================================================== AIM VARIABLE INSURANCE FUNDS (CONTINUED) THE ALGER AMERICAN FUNDS --------------- ------------------------------------------------------ LEVERAGED MIDCAP SMALL TECHNOLOGY GROWTH ALLCAP GROWTH CAPITALIZATION ------------------------------------------------------------------------------------------------------------------------------------ Investment income: Income dividends from investments in portfolio shares .. $ -- $ 2,079 $ -- $ -- $ -- Expenses: Mortality and expense risk fees ........................ 733 21,702 17,424 25,629 11,628 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) .................... (733) (19,623) (17,424) (25,629) (11,628) ------------------------------------------------------------------------------------------------------------------------------------ Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares .................................. 3,176 79,835 118,498 82,345 105,383 Net realized short-term capital gain distributions from investments in portfolio shares ...................... -- -- -- 187,843 -- Net realized long-term capital gain distributions from investments in portfolio shares ...................... -- -- -- 70,063 -- ------------------------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments in portfolio shares .......................................... 3,176 79,835 118,498 340,251 105,383 ------------------------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) of investments in portfolio shares ..................... 2,787 (28,195) 96,242 (183,325) 34,946 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations .................................... $ 5,230 $ 32,017 $ 197,316 $ 131,297 $ 128,701 ====================================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
==================================================================================================================================== AIM VARIABLE INSURANCE FUNDS (CONTINUED) THE ALGER AMERICAN FUNDS --------------- ------------------------------------------------------ LEVERAGED MIDCAP SMALL TECHNOLOGY GROWTH ALLCAP GROWTH CAPITALIZATION ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) ........................ $ (733) $ (19,623) $ (17,424) $ (25,629) $ (11,628) Net realized gain (loss) on investments in portfolio shares ............................................... 3,176 79,835 118,498 340,251 105,383 Net change in unrealized appreciation (depreciation) of investments in portfolio shares ................... 2,787 (28,195) 96,242 (183,325) 34,946 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ...................................... 5,230 32,017 197,316 131,297 128,701 ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) .... 62 105,649 6,343 61,301 2,657 Contract redemptions ................................... (4,793) (58,855) (120,364) (206,725) (69,866) Net transfers (including mortality transfers) .......... 22,226 (289,754) (38,123) (402,264) 126,251 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions .................... 17,495 (242,960) (152,144) (547,688) 59,042 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets ............ 22,725 (210,943) 45,172 (416,391) 187,743 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period ........................... 45,124 1,584,779 1,295,559 1,987,307 729,053 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ...................... $ 67,849 $ 1,373,836 $ 1,340,731 $ 1,570,916 $ 916,796 ====================================================================================================================================
a) Formerly Potomac Insurance Trust and Potomac Dynamic VP HY Bond Fund prior to their name change on April 28, 2006. The accompanying notes are an integral part of these financial statements. 36
================================================================================================================================== ALLIANCE VARIABLE DREYFUS PRODUCTS AMERICAN CENTURY DIREXION INVESTMENT SERIES VARIABLE PORTFOLIOS INSURANCE TRUST (a) PORTFOLIOS ------------- ---------------------------------------------------------------- ------------------- ----------- DREYFUS SOCIALLY GROWTH AND INCOME & INFLATION DYNAMIC VP SMALL CAP RESPONSIBLE INCOME BALANCED GROWTH PROTECTION INTERNATIONAL VALUE HY BOND (a) STOCK INDEX GROWTH ---------------------------------------------------------------------------------------------------------------------------------- $ 1,056 $ -- $ 11,214 $ 2,409 $ 6,918 $ 24,263 $ 488 $ 295 $ 345 1,226 398 9,369 836 6,826 27,191 185 476 3,800 ---------------------------------------------------------------------------------------------------------------------------------- (170) (398) 1,845 1,573 92 (2,928) 303 (181) (3,455) ---------------------------------------------------------------------------------------------------------------------------------- 884 3,624 35,149 (2,429) 68,071 22,811 164 1,020 6,723 -- -- -- -- -- 80,078 -- 286 -- 3,838 -- -- -- -- 72,976 -- 1,386 -- ---------------------------------------------------------------------------------------------------------------------------------- 4,722 3,624 35,149 (2,429) 68,071 175,865 164 2,692 6,723 ---------------------------------------------------------------------------------------------------------------------------------- 7,808 690 62,839 895 39,182 127,835 238 3,207 12,346 ---------------------------------------------------------------------------------------------------------------------------------- $ 12,360 $ 3,916 $ 99,833 $ 39 $ 107,345 $ 300,772 $ 705 $ 5,718 $ 15,614 ==================================================================================================================================
================================================================================================================================== ALLIANCE VARIABLE DREYFUS PRODUCTS AMERICAN CENTURY DIREXION INVESTMENT SERIES VARIABLE PORTFOLIOS INSURANCE TRUST (a) PORTFOLIOS ------------- ---------------------------------------------------------------- ------------------- ----------- DREYFUS SOCIALLY GROWTH AND INCOME & INFLATION DYNAMIC VP SMALL CAP RESPONSIBLE INCOME BALANCED GROWTH PROTECTION INTERNATIONAL VALUE HY BOND (a) STOCK INDEX GROWTH ---------------------------------------------------------------------------------------------------------------------------------- $ (170) $ (398) $ 1,845 $ 1,573 $ 92 $ (2,928) $ 303 $ (181) $ (3,455) 4,722 3,624 35,149 (2,429) 68,071 175,865 164 2,692 6,723 7,808 690 62,839 895 39,182 127,835 238 3,207 12,346 ---------------------------------------------------------------------------------------------------------------------------------- 12,360 3,916 99,833 39 107,345 300,772 705 5,718 15,614 ---------------------------------------------------------------------------------------------------------------------------------- -- 42 4,136 -- 2,354 41,865 -- -- 399 (2,642) (657) (21,920) (4,801) (72,980) (246,711) (45) (9,993) (14,216) 9,014 5,714 28,422 (1,982) 175,124 190,605 (1,386) 32,958 (46,698) ---------------------------------------------------------------------------------------------------------------------------------- 6,372 5,099 10,638 (6,783) 104,498 (14,241) (1,431) 22,965 (60,515) ---------------------------------------------------------------------------------------------------------------------------------- 18,732 9,015 110,471 (6,744) 211,843 286,531 (726) 28,683 (44,901) ---------------------------------------------------------------------------------------------------------------------------------- 74,399 -- 599,993 44,606 418,441 1,765,619 11,500 14,814 269,677 ---------------------------------------------------------------------------------------------------------------------------------- $ 93,131 $ 9,015 $ 710,464 $ 37,862 $ 630,284 $ 2,052,150 $ 10,774 $ 43,497 $ 224,776 ==================================================================================================================================
37 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENTS OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
==================================================================================================================================== DREYFUS VARIABLE FEDERATED INVESTMENT FUNDS INSURANCE TRUST -------------------------- ----------------------- DREYFUS HIGH STOCK DISCIPLINED INTERNATIONAL CAPITAL INCOME INDEX STOCK VALUE INCOME II BOND II ------------------------------------------------------------------------------------------------------------------------------------ Investment income: Income dividends from investments in portfolio shares ......... $ 44,808 $ 1,249 $ 15,558 $ 8,354 $ 59,930 Expenses: Mortality and expense risk fees ............................... 40,127 1,982 14,993 2,913 12,870 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) ........................... 4,681 (733) 565 5,441 47,060 ------------------------------------------------------------------------------------------------------------------------------------ Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ......................................... 76,659 3,729 72,307 18,108 6,199 Net realized short-term capital gain distributions from investments in portfolio shares ........................ -- -- 22,501 -- -- Net realized long-term capital gain distributions from investments in portfolio shares ........................ -- -- 65,404 -- -- ------------------------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments in portfolio shares ................................................. 76,659 3,729 160,212 18,108 6,199 ------------------------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) of investments in portfolio shares ............................ 267,327 14,594 25,863 5,649 34,353 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations .. $ 348,667 $ 17,590 $ 186,640 $ 29,198 $ 87,612 ====================================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
==================================================================================================================================== DREYFUS VARIABLE FEDERATED INVESTMENT FUNDS INSURANCE TRUST -------------------------- ----------------------- DREYFUS HIGH STOCK DISCIPLINED INTERNATIONAL CAPITAL INCOME INDEX STOCK VALUE INCOME II BOND II ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) ............................... $ 4,681 $ (733) $ 565 $ 5,441 $ 47,060 Net realized gain (loss) on investments in portfolio shares ... 76,659 3,729 160,212 18,108 6,199 Net change in unrealized appreciation (depreciation) of investments in portfolio shares .......................... 267,327 14,594 25,863 5,649 34,353 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ..... 348,667 17,590 186,640 29,198 87,612 ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) ........... 128,904 131 9,998 144 1,270 Contract redemptions .......................................... (96,716) (13,737) (114,557) (5,719) (122,014) Net transfers (including mortality transfers) ................. (172,900) (19,758) 281,457 181,496 426,925 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions ...................................... (140,712) (33,364) 176,898 175,921 306,181 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets ..................... 207,955 (15,774) 363,538 205,119 393,793 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period .................................. 2,706,889 152,449 639,849 138,678 641,246 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ............................... $ 2,914,844 $ 136,675 $ 1,003,387 $ 343,797 $ 1,035,039 ====================================================================================================================================
a) Formerly Equity prior to its name change effective May 1, 2007. The accompanying notes are an integral part of these financial statements. 38
=============================================================================================================================== FEDERATED INSURANCE LAZARD RETIREMENT TRUST (CONTINUED) JANUS ASPEN SERIES SERIES PORTFOLIOS -------------------- ---------------------------------------------------------------- --------------------------------------- INTERNATIONAL GROWTH AND INTERNATIONAL LARGE CAP MID CAP WORLDWIDE EMERGING US STRATEGIC INTERNATIONAL EQUITY II INCOME GROWTH GROWTH GROWTH GROWTH MARKETS EQUITY (a) EQUITY ------------------------------------------------------------------------------------------------------------------------------- $ 627 $ 15,418 $ 19,783 $ 7,194 $ -- $ 21,314 $ 2,451 $ 1,107 $ 1,060 5,788 13,511 12,054 21,665 18,804 17,990 7,478 3,114 1,747 ------------------------------------------------------------------------------------------------------------------------------- (5,161) 1,907 7,729 (14,471) (18,804) 3,324 (5,027) (2,007) (687) ------------------------------------------------------------------------------------------------------------------------------- 44,767 86,805 133,581 47,057 132,330 52,435 108,860 21,809 5,513 -- -- -- -- -- -- 12,999 -- 1,278 -- -- -- -- -- -- 19,159 -- 3,134 ------------------------------------------------------------------------------------------------------------------------------- 44,767 86,805 133,581 47,057 132,330 52,435 141,018 21,809 9,925 ------------------------------------------------------------------------------------------------------------------------------- 21,302 (25,446) 145,188 108,714 30,130 132,460 (14,382) 7,226 (354) ------------------------------------------------------------------------------------------------------------------------------- $ 60,908 $ 63,266 $ 286,498 $ 141,300 $ 143,656 $ 188,219 $ 121,609 $ 27,028 $ 8,884 ===============================================================================================================================
=============================================================================================================================== FEDERATED INSURANCE LAZARD RETIREMENT TRUST (CONTINUED) JANUS ASPEN SERIES SERIES PORTFOLIOS -------------------- ---------------------------------------------------------------- --------------------------------------- INTERNATIONAL GROWTH AND INTERNATIONAL LARGE CAP MID CAP WORLDWIDE EMERGING US STRATEGIC INTERNATIONAL EQUITY II INCOME GROWTH GROWTH GROWTH GROWTH MARKETS EQUITY (a) EQUITY ------------------------------------------------------------------------------------------------------------------------------- $ (5,161) $ 1,907 $ 7,729 $ (14,471) $ (18,804) $ 3,324 $ (5,027) $ (2,007) $ (687) 44,767 86,805 133,581 47,057 132,330 52,435 141,018 21,809 9,925 21,302 (25,446) 145,188 108,714 30,130 132,460 (14,382) 7,226 (354) ------------------------------------------------------------------------------------------------------------------------------- 60,908 63,266 286,498 141,300 143,656 188,219 121,609 27,028 8,884 ------------------------------------------------------------------------------------------------------------------------------- (2,975) 6,795 135,444 18,740 8,617 23,759 33,056 10,507 2,771 (15,352) (77,142) (107,850) (127,579) (119,837) (164,314) (36,355) (8,848) (20,963) 25,852 (79,751) 672,327 (51,447) (173,341) (46,064) (45,123) 26,221 27,927 ------------------------------------------------------------------------------------------------------------------------------- 7,525 (150,098) 699,921 (160,286) (284,561) (186,619) (48,422) 27,880 9,735 ------------------------------------------------------------------------------------------------------------------------------- 68,433 (86,832) 986,419 (18,986) (140,905) 1,600 73,187 54,908 18,619 ------------------------------------------------------------------------------------------------------------------------------- 368,404 957,580 333,804 1,550,553 1,373,239 1,257,843 573,345 150,826 106,593 ------------------------------------------------------------------------------------------------------------------------------- $ 436,837 $ 870,748 $ 1,320,223 $ 1,531,567 $ 1,232,334 $ 1,259,443 $ 646,532 $ 205,734 $ 125,212 ===============================================================================================================================
39 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENTS OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
==================================================================================================================================== LAZARD RETIREMENT SERIES PORTFOLIOS (CONTINUED) LEGG MASON PARTNERS VARIABLE PORTFOLIOS (a) ----------- ----------------------------------------------- GLOBAL AGGRESSIVE HIGH YIELD LARGE CAP SMALL CAP GROWTH ALL CAP BOND (b) GROWTH ------------------------------------------------------------------------------------------------------------------------------------ Investment income: Income dividends from investments in portfolio shares ............ $ -- $ -- $ 137 $ 7,131 $ -- Expenses: Mortality and expense risk fees .................................. 10,873 2 186 3,056 118 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) .............................. (10,873) (2) (49) 4,075 (118) ------------------------------------------------------------------------------------------------------------------------------------ Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ............................................ 28,310 531 992 (5,888) 1,573 Net realized short-term capital gain distributions from investments in portfolio shares ........................... 28,794 -- 27 -- -- Net realized long-term capital gain distributions from investments in portfolio shares ........................... 30,616 -- 346 713 -- ------------------------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments in portfolio shares .. 87,720 531 1,365 (5,175) 1,573 ------------------------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) of investments in portfolio shares ............................... 20,613 (399) 722 21,185 178 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ...... $ 97,460 $ 130 $ 2,038 $ 20,085 $ 1,633 ====================================================================================================================================
STATEMENT OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
==================================================================================================================================== LAZARD RETIREMENT SERIES PORTFOLIOS (CONTINUED) LEGG MASON PARTNERS VARIABLE PORTFOLIOS (a) ----------- ----------------------------------------------- GLOBAL AGGRESSIVE HIGH YIELD LARGE CAP SMALL CAP GROWTH ALL CAP BOND (b) GROWTH ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) .................................. $ (10,873) $ (2) $ (49) $ 4,075 $ (118) Net realized gain (loss) on investments in portfolio shares ...... 87,720 531 1,365 (5,175) 1,573 Net change in unrealized appreciation (depreciation) of investments in portfolio shares ............................. 20,613 (399) 722 21,185 178 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations .......... 97,460 130 2,038 20,085 1,633 ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) .............. 19,606 -- 528 -- -- Contract redemptions ............................................. (140,491) -- (2,262) (23,845) (1,230) Net transfers (including mortality transfers) .................... (45,318) (7,524) (4,433) (232,308) 17,308 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions ........................... (166,203) (7,524) (6,167) (256,153) 16,078 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets ........................ (68,743) (7,394) (4,129) (236,068) 17,711 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period ..................................... 749,596 7,394 14,703 361,056 -- ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period .................................. $ 680,853 $ -- $ 10,574 $ 124,988 $ 17,711 ====================================================================================================================================
a) Formerly Salomon Brothers Variable Series Funds prior to the name change effective May 1, 2006. b) Formerly High Yield Bond prior to its name change effective September 1, 2006. c) Formerly SB Government prior to its name change effective May 1, 2006. d) Formerly High Income Bond prior to its name change effective May 1, 2007. e) Formerly Limited Maturity Bond prior to its name change effective May 1, 2007. The accompanying notes are an integral part of these financial statements. 40
================================================================================================================================ LEGG MASON LEGG MASON PARTNERS PARTNERS VARIABLE INVESTMENT NEUBERGER BERMAN PORTFOLIOS (CONTINUED) (a) SERIES (a) LORD ABBETT SERIES FUNDS ADVISERS MANAGEMENT TRUST ----------------------------- -------------- ------------------------- ------------------------------------------------------ LEHMAN BROTHERS LEHMAN BROTHERS STRATEGIC TOTAL AMERICA'S GROWTH AND HIGH INCOME SHORT DURATION MIDCAP BOND RETURN GOVERNMENT (c) VALUE INCOME FASCIANO BOND (d) BOND (e) GROWTH -------------------------------------------------------------------------------------------------------------------------------- $ 9,612 $ 53 $ -- $ 1,552 $ 21,319 $ -- $ 691 $ 36,291 $ -- 3,049 127 126 1,631 24,014 85 104 13,621 7,043 -------------------------------------------------------------------------------------------------------------------------------- 6,563 (74) (126) (79) (2,695) (85) 587 22,670 (7,043) -------------------------------------------------------------------------------------------------------------------------------- (7,155) 661 60 15,166 97,104 (380) 2 (20,362) 48,937 -- -- -- 421 2,147 -- -- -- -- 250 47 -- 872 54,980 78 -- -- -- -------------------------------------------------------------------------------------------------------------------------------- (6,905) 708 60 16,459 154,231 (302) 2 (20,362) 48,937 -------------------------------------------------------------------------------------------------------------------------------- 7,727 65 -- 1,247 91,489 (156) 126 24,776 8,296 -------------------------------------------------------------------------------------------------------------------------------- $ 7,385 $ 699 $ (66) $ 17,627 $ 243,025 $ (543) $ 715 $ 27,084 $ 50,190 ================================================================================================================================
================================================================================================================================ LEGG MASON LEGG MASON PARTNERS PARTNERS VARIABLE INVESTMENT NEUBERGER BERMAN PORTFOLIOS (CONTINUED) (a) SERIES (a) LORD ABBETT SERIES FUNDS ADVISERS MANAGEMENT TRUST ----------------------------- -------------- ------------------------- ------------------------------------------------------ LEHMAN BROTHERS LEHMAN BROTHERS STRATEGIC TOTAL AMERICA'S GROWTH AND HIGH INCOME SHORT DURATION MIDCAP BOND RETURN GOVERNMENT (c) VALUE INCOME FASCIANO BOND (d) BOND (e) GROWTH -------------------------------------------------------------------------------------------------------------------------------- $ 6,563 $ (74) $ (126) $ (79) $ (2,695) $ (85) $ 587 $ 22,670 $ (7,043) (6,905) 708 60 16,459 154,231 (302) 2 (20,362) 48,937 7,727 65 -- 1,247 91,489 (156) 126 24,776 8,296 -------------------------------------------------------------------------------------------------------------------------------- 7,385 699 (66) 17,627 243,025 (543) 715 27,084 50,190 -------------------------------------------------------------------------------------------------------------------------------- 1,788 -- -- 125 1,928 -- -- 3,141 5,299 (22,405) (808) (430) (45,309) (147,495) (27) -- (151,638) (5,889) 34,438 (3,851) (66,719) 2,808 (692) 2,060 12,096 30,004 99,025 -------------------------------------------------------------------------------------------------------------------------------- 13,821 (4,659) (67,149) (42,376) (146,259) 2,033 12,096 (118,493) 98,435 -------------------------------------------------------------------------------------------------------------------------------- 21,206 (3,960) (67,215) (24,749) 96,766 1,490 12,811 (91,409) 148,625 -------------------------------------------------------------------------------------------------------------------------------- 158,500 6,550 67,215 98,297 1,520,691 2,856 -- 656,745 426,127 -------------------------------------------------------------------------------------------------------------------------------- $ 179,706 $ 2,590 $ -- $ 73,548 $ 1,617,457 $ 4,346 $ 12,811 $ 565,336 $ 574,752 ================================================================================================================================
41 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENTS OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
=================================================================================================================================== NEUBERGER BERMAN ADVISERS PIMCO VARIABLE MANAGEMENT TRUST (CONTINUED) INSURANCE TRUST ---------------------------------- --------------------- SOCIALLY MONEY REAL PARTNERS REGENCY RESPONSIVE MARKET RETURN ----------------------------------------------------------------------------------------------------------------------------------- Investment income: Income dividends from investments in portfolio shares ............... $ 6,818 $ 742 $ 214 $ 22,955 $ 14,741 Expenses: Mortality and expense risk fees ..................................... 14,198 2,636 1,644 6,832 4,907 ----------------------------------------------------------------------------------------------------------------------------------- Net investment income (expense) ................................. (7,380) (1,894) (1,430) 16,123 9,834 ----------------------------------------------------------------------------------------------------------------------------------- Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ................................ 67,222 (141) 6,471 -- (10,336) Net realized short-term capital gain distributions from investments in portfolio shares .............................. 11,238 1,213 55 -- 8,760 Net realized long-term capital gain distributions from investments in portfolio shares .............................. 93,775 9,074 1,467 -- -- ----------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments in portfolio shares ..... 172,235 10,146 7,993 -- (1,576) ----------------------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) of investments in portfolio shares .................................. (63,420) 7,755 3,877 -- (9,859) ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ......... $ 101,435 $ 16,007 $ 10,440 $ 16,123 $ (1,601) ===================================================================================================================================
STATEMENT OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
=================================================================================================================================== NEUBERGER BERMAN ADVISERS PIMCO VARIABLE MANAGEMENT TRUST (CONTINUED) INSURANCE TRUST ---------------------------------- --------------------- SOCIALLY MONEY REAL PARTNERS REGENCY RESPONSIVE MARKET RETURN ----------------------------------------------------------------------------------------------------------------------------------- Changes from operations: Net investment income (expense) ..................................... $ (7,380) $ (1,894) $ (1,430) $ 16,123 $ 9,834 Net realized gain (loss) on investments in portfolio shares ......... 172,235 10,146 7,993 -- (1,576) Net change in unrealized appreciation (depreciation) of investments in portfolio shares ................................ (63,420) 7,755 3,877 -- (9,859) ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........... 101,435 16,007 10,440 16,123 (1,601) ----------------------------------------------------------------------------------------------------------------------------------- Changes from contract owners' transactions: Net contract purchase payments (including breakage) ................. 5,716 105 -- 124,814 50,382 Contract redemptions ................................................ (128,386) (15,439) (10,534) (76,642) (17,242) Net transfers (including mortality transfers) ....................... (95,844) (9,426) (5,973) 380,891 (16,429) ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from contract owners' transactions ................................. (218,514) (24,760) (16,507) 429,063 16,711 ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets ......................... (117,079) (8,753) (6,067) 445,186 15,110 ----------------------------------------------------------------------------------------------------------------------------------- Net assets, beginning of period ........................................ 1,105,220 185,093 103,522 193,916 298,922 ----------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period ................................... $ 988,141 $ 176,340 $ 97,455 $ 639,102 $ 314,032 ===================================================================================================================================
a) For the period January 1, 2006 through December 15, 2006 (fund merged into International Value). b) For the period December 15, 2006 (inception of fund) through December 31, 2006. The accompanying notes are an integral part of these financial statements. 42
=============================================================================================================== PIMCO VARIABLE INSURANCE TRUST (CONTINUED) PIONEER VARIABLE CONTRACTS TRUST ------------------------ ------------------------------------------------------------------------------------ SHORT TOTAL CORE EQUITY HIGH INTERNATIONAL MID CAP TERM RETURN BOND INCOME EUROPE (a) FUND YIELD VALUE (b) VALUE --------------------------------------------------------------------------------------------------------------- $ 33,817 $ 31,043 $ 64 $ 15,218 $ 1,769 $ 4,179 $ 4,690 $ -- $ -- 10,911 9,825 21 9,175 621 5,273 1,280 76 993 --------------------------------------------------------------------------------------------------------------- 22,906 21,218 43 6,043 1,148 (1,094) 3,410 (76) (993) --------------------------------------------------------------------------------------------------------------- (1,166) (30,960) -- 49,666 14,195 27,854 63 -- (3,567) -- 4,059 -- -- -- -- 241 -- 3,890 -- -- -- 6,712 -- -- 264 -- 9,643 --------------------------------------------------------------------------------------------------------------- (1,166) (26,901) -- 56,378 14,195 27,854 568 -- 9,966 --------------------------------------------------------------------------------------------------------------- 621 13,093 (36) 80,731 (380) 24,108 6,103 1,028 (941) --------------------------------------------------------------------------------------------------------------- $ 22,361 $ 7,410 $ 7 $ 143,152 $ 14,963 $ 50,868 $ 10,081 $ 952 $ 8,032 ===============================================================================================================
=============================================================================================================== PIMCO VARIABLE INSURANCE TRUST (CONTINUED) PIONEER VARIABLE CONTRACTS TRUST ------------------------ ------------------------------------------------------------------------------------ SHORT TOTAL CORE EQUITY HIGH INTERNATIONAL MID CAP TERM RETURN BOND INCOME EUROPE (a) FUND YIELD VALUE (b) VALUE --------------------------------------------------------------------------------------------------------------- $ 22,906 $ 21,218 $ 43 $ 6,043 $ 1,148 $ (1,094) $ 3,410 $ (76) $ (993) (1,166) (26,901) -- 56,378 14,195 27,854 568 -- 9,966 621 13,093 (36) 80,731 (380) 24,108 6,103 1,028 (941) --------------------------------------------------------------------------------------------------------------- 22,361 7,410 7 143,152 14,963 50,868 10,081 952 8,032 --------------------------------------------------------------------------------------------------------------- 108,303 41,932 -- 1,243 -- 2,263 4 -- -- (5,907) (51,950) -- (54,956) (1,108) (14,462) (18,134) -- (37,970) 74,609 189,127 3,375 398,119 (17,647) (53,248) 180,310 141,793 (31,643) --------------------------------------------------------------------------------------------------------------- 177,005 179,109 3,375 344,406 (18,755) (65,447) 162,180 141,793 (69,613) --------------------------------------------------------------------------------------------------------------- 199,366 186,519 3,382 487,558 (3,792) (14,579) 172,261 142,745 (61,581) --------------------------------------------------------------------------------------------------------------- 127,202 532,510 1,236 497,675 3,792 387,611 35,333 -- 94,981 --------------------------------------------------------------------------------------------------------------- $ 326,568 $ 719,029 $ 4,618 $ 985,233 $ -- $ 373,032 $ 207,594 $ 142,745 $ 33,400 ===============================================================================================================
43 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
==================================================================================================================================== PIONEER VARIABLE CONTRACTS TRUST ROYCE (CONTINUED) CAPITAL FUND RYDEX VARIABLE TRUST ----------- --------------------- ------------------------------- MONEY CLS ADVISORONE CLS ADVISORONE MARKET MICRO-CAP SMALL-CAP AMERIGO CLERMONT ------------------------------------------------------------------------------------------------------------------------------------ Investment income: Income dividends from investments in portfolio shares ...... $ -- $ 561 $ 443 $ 34 $ 197 Expenses: Mortality and expense risk fees ............................ -- 4,532 11,196 33 8 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) ............................ -- (3,971) (10,753) 1 189 ------------------------------------------------------------------------------------------------------------------------------------ Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ......................................... -- 38,880 31,418 (19) (1) Net realized short-term capital gain distributions from investments in portfolio shares .......................... -- 2,553 10,870 481 119 Net realized long-term capital gain distributions from investments in portfolio shares .......................... -- 14,521 22,083 2,713 284 ------------------------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments in portfolio shares ............................................... -- 55,954 64,371 3,175 402 ------------------------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) of investments in portfolio shares ............................ -- (9,968) 43,091 (3,068) (569) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ......................................... $ -- $ 42,015 $ 96,709 $ 108 $ 22 ====================================================================================================================================
STATEMENT OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
==================================================================================================================================== PIONEER VARIABLE CONTRACTS TRUST ROYCE (CONTINUED) CAPITAL FUND RYDEX VARIABLE TRUST ----------- --------------------- ------------------------------- MONEY CLS ADVISORONE CLS ADVISORONE MARKET MICRO-CAP SMALL-CAP AMERIGO CLERMONT ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) ............................ $ -- $ (3,971) $ (10,753) $ 1 $ 189 Net realized gain (loss) on investments in portfolio shares ................................................... -- 55,954 64,371 3,175 402 Net change in unrealized appreciation (depreciation) of investments in portfolio shares .......................... -- (9,968) 43,091 (3,068) (569) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations .. -- 42,015 96,709 108 22 ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) ........ -- 5,398 13,683 -- -- Contract redemptions ....................................... (3,632) (41,465) (69,761) (205) -- Net transfers (including mortality transfers) .............. 3,632 81,065 (82,282) 39,021 9,756 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions ........................ -- 44,998 (138,360) 38,816 9,756 ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets ................ -- 87,013 (41,651) 38,924 9,778 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period ............................... -- 225,869 797,116 -- -- ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ............................ $ -- $ 312,882 $ 755,465 $ 38,924 $ 9,778 ====================================================================================================================================
a) Formerly Dynamic Dow prior to its name change effective July 3, 2007 and Long Dynamic Dow 30 prior to its name change effective May 1, 2006. b) Formerly Dynamic OTC prior to its name change effective July 3, 2007 and Velocity 100 prior to its name change effective May 1, 2006. c) Formerly Dynamic S&P 500 prior to its name change effective July 3, 2007 and Titan 500 prior to its name change effective May 1, 2006. d) Formerly Dynamic Weakening Dollar prior to its name change effective July 3, 2007 and Weakening Dollar prior to its name change effective May 1, 2006. e) Formerly Commodities prior to its name change effective May 1, 2007. The accompanying notes are an integral part of these financial statements. 44
========================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) -------------------------------------------------------------------------------------------------------------------------- WEAKENING BASIC COMMODITIES CONSUMER DOW 2X OTC 2X S&P 500 DOLLAR 2X BANKING MATERIALS BIOTECHNOLOGY STRATEGY (e) PRODUCTS STRATEGY (a) STRATEGY (b) 2X STRATEGY (c) STRATEGY (d) -------------------------------------------------------------------------------------------------------------------------- $ 104 $ 2,384 $ -- $ -- $ 494 $ 389 $ 257 $ 2,874 $ 220 135 2,340 328 90 512 766 1,233 1,610 91 -------------------------------------------------------------------------------------------------------------------------- (31) 44 (328) (90) (18) (377) (976) 1,264 129 -------------------------------------------------------------------------------------------------------------------------- 1,280 25,143 (7,728) (5) 3,637 21,374 10,964 9,726 71 -- 975 -- -- 342 6,569 -- 11,320 1 -- 2,477 -- -- 247 1,446 -- -- 2 -------------------------------------------------------------------------------------------------------------------------- 1,280 28,595 (7,728) (5) 4,226 29,389 10,964 21,046 74 -------------------------------------------------------------------------------------------------------------------------- 469 8,514 (69) (1,183) 932 1,907 (1,228) 3,572 (5) -------------------------------------------------------------------------------------------------------------------------- $ 1,718 $ 37,153 $ (8,125) $ (1,278) $ 5,140 $ 30,919 $ 8,760 $ 25,882 $ 198 ==========================================================================================================================
========================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) -------------------------------------------------------------------------------------------------------------------------- WEAKENING BASIC COMMODITIES CONSUMER DOW 2X OTC 2X S&P 500 DOLLAR 2X BANKING MATERIALS BIOTECHNOLOGY STRATEGY (e) PRODUCTS STRATEGY (a) STRATEGY (b) 2X STRATEGY (c) STRATEGY (d) -------------------------------------------------------------------------------------------------------------------------- $ (31) $ 44 $ (328) $ (90) $ (18) $ (377) $ (976) $ 1,264 $ 129 1,280 28,595 (7,728) (5) 4,226 29,389 10,964 21,046 74 469 8,514 (69) (1,183) 932 1,907 (1,228) 3,572 (5) -------------------------------------------------------------------------------------------------------------------------- 1,718 37,153 (8,125) (1,278) 5,140 30,919 8,760 25,882 198 -------------------------------------------------------------------------------------------------------------------------- 497 -- -- -- -- 434 408 581 -- (157) (16,726) (2,195) -- (1,934) (1,664) (1,632) (6,213) (6) (54,236) 60,393 (21,725) 1,651 50,711 26,926 39,734 133,614 7,102 -------------------------------------------------------------------------------------------------------------------------- (53,896) 43,667 (23,920) 1,651 48,777 25,696 38,510 127,982 7,096 -------------------------------------------------------------------------------------------------------------------------- (52,178) 80,820 (32,045) 373 53,917 56,615 47,270 153,864 7,294 -------------------------------------------------------------------------------------------------------------------------- 58,164 179,945 32,045 6,483 14,329 14,546 67,484 135,631 -- -------------------------------------------------------------------------------------------------------------------------- $ 5,986 $ 260,765 $ -- $ 6,856 $ 68,246 $ 71,161 $ 114,754 $ 289,495 $ 7,294 ==========================================================================================================================
45 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
=================================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) --------------------------------------------------------------- EUROPE ENERGY 1.25X FINANCIAL ELECTRONICS ENERGY SERVICES STRATEGY (a) SERVICES ----------------------------------------------------------------------------------------------------------------------------------- Investment income: Income dividends from investments in portfolio shares ......... $ -- $ -- $ -- $ 6,055 $ 1,516 Expenses: Mortality and expense risk fees ............................... 625 10,551 9,078 2,268 413 ----------------------------------------------------------------------------------------------------------------------------------- Net investment income (expense) ........................... (625) (10,551) (9,078) 3,787 1,103 ----------------------------------------------------------------------------------------------------------------------------------- Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ............................................ (8,068) 98,371 88,182 1,756 7,185 Net realized short-term capital gain distributions from investments in portfolio shares ............................. -- 68,533 2,778 9,424 4,872 Net realized long-term capital gain distributions from investments in portfolio shares ............................. -- 84,473 48,939 430 535 ----------------------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments in portfolio shares .................................................... (8,068) 251,377 139,899 11,610 12,592 ----------------------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) of investments in portfolio shares ............................... 434 (194,653) (103,116) 5,032 (7,299) ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ... $ (8,259) $ 46,173 $ 27,705 $ 20,429 $ 6,396 ===================================================================================================================================
STATEMENT OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
=================================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) --------------------------------------------------------------- EUROPE ENERGY 1.25X FINANCIAL ELECTRONICS ENERGY SERVICES STRATEGY (a) SERVICES ----------------------------------------------------------------------------------------------------------------------------------- Changes from operations: Net investment income (expense) ............................... $ (625) $ (10,551) $ (9,078) $ 3,787 $ 1,103 Net realized gain (loss) on investments in portfolio shares ... (8,068) 251,377 139,899 11,610 12,592 Net change in unrealized appreciation (depreciation) of investments in portfolio shares ............................. 434 (194,653) (103,116) 5,032 (7,299) ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ..... (8,259) 46,173 27,705 20,429 6,396 ----------------------------------------------------------------------------------------------------------------------------------- Changes from contract owners' transactions: Net contract purchase payments (including breakage) ........... -- 90,705 88,979 9,104 10 Contract redemptions .......................................... (5,932) (62,224) (122,223) (89,343) (2,997) Net transfers (including mortality transfers) ................. 27,511 (316,607) (124,025) 435,531 57,537 ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from contract owners' transactions ............................. 21,579 (288,126) (157,269) 355,292 54,550 ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets ..................... 13,320 (241,953) (129,564) 375,721 60,946 ----------------------------------------------------------------------------------------------------------------------------------- Net assets, beginning of period .................................. 15,038 840,284 475,032 -- 78,488 ----------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period ............................... $ 28,358 $ 598,331 $ 345,468 $ 375,721 $ 139,434 ===================================================================================================================================
a) Formerly Europe Advantage prior to its name change effective July 3, 2007 and Large-Cap Europe prior to its name change effective May 1, 2006. b) Formerly Government Long Bond Advantage prior to its name change effective July 3, 2007 and U.S. Government Bond prior to its name change effective May 1, 2006. c) Formerly Inverse Dynamic Dow prior to its name change effective July 3, 2007 and Inverse Dynamic Dow 30 prior to its name change effective May 1, 2006. d) Formerly Inverse Government Long Bond prior to its name change effective July 3, 2007 and Juno prior to its name change effective May 1, 2006. e) Formerly Inverse OTC prior to its name change effective July 3, 2007 and Arktos prior to its name change effective May 1, 2006. f) Formerly Inverse Russell 2000 prior to its name change effective July 3, 2007 and Inverse Small-Cap prior to its name change effective May 1, 2006. g) Formerly Inverse S&P 500 prior to its name change effective July 3, 2007 and Ursa prior to its name change effective May 1, 2006. h) Formerly Inverse Mid-Cap prior to its name change effective July 3, 2007. 46
================================================================================================================================= RYDEX VARIABLE TRUST (CONTINUED) --------------------------------------------------------------------------------------------------------------------------------- INVERSE GOVERNMENT INVERSE GOVERNMENT INVERSE INVERSE INVERSE INVERSE LONG BOND HEALTH DOW 2X LONG BOND MID-CAP OTC RUSSELL 2000 S&P 500 1.25X STRATEGY (b) CARE INTERNET STRATEGY (c) STRATEGY (d) STRATEGY (h) STRATEGY (e) STRATEGY (f) STRATEGY (g) --------------------------------------------------------------------------------------------------------------------------------- $ 7,768 $ -- $ -- $ 406 $ 16,863 $ 130 $ 946 $ 1,348 $ 662 3,028 1,618 432 361 6,571 173 346 439 127 --------------------------------------------------------------------------------------------------------------------------------- 4,740 (1,618) (432) 45 10,292 (43) 600 909 535 --------------------------------------------------------------------------------------------------------------------------------- (12,588) 18,815 7 596 31,745 (425) (3,370) (2,006) (1,032) -- 5,978 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --------------------------------------------------------------------------------------------------------------------------------- (12,588) 24,793 7 596 31,745 (425) (3,370) (2,006) (1,032) --------------------------------------------------------------------------------------------------------------------------------- (3,771) (12,425) 2,653 (5,852) (12,405) 107 (626) (5,291) (687) --------------------------------------------------------------------------------------------------------------------------------- $ (11,619) $ 10,750 $ 2,228 $ (5,211) $ 29,632 $ (361) $ (3,396) $ (6,388) $ (1,184) =================================================================================================================================
================================================================================================================================= RYDEX VARIABLE TRUST (CONTINUED) --------------------------------------------------------------------------------------------------------------------------------- INVERSE GOVERNMENT INVERSE GOVERNMENT INVERSE INVERSE INVERSE INVERSE LONG BOND HEALTH DOW 2X LONG BOND MID-CAP OTC RUSSELL 2000 S&P 500 1.25X STRATEGY (b) CARE INTERNET STRATEGY (c) STRATEGY (d) STRATEGY (h) STRATEGY (e) STRATEGY (f) STRATEGY (g) --------------------------------------------------------------------------------------------------------------------------------- $ 4,740 $ (1,618) $ (432) $ 45 $ 10,292 $ (43) $ 600 $ 909 $ 535 (12,588) 24,793 7 596 31,745 (425) (3,370) (2,006) (1,032) (3,771) (12,425) 2,653 (5,852) (12,405) 107 (626) (5,291) (687) --------------------------------------------------------------------------------------------------------------------------------- (11,619) 10,750 2,228 (5,211) 29,632 (361) (3,396) (6,388) (1,184) --------------------------------------------------------------------------------------------------------------------------------- 368 454 -- -- 7,769 -- 52 -- -- (26,027) (22,372) (52) (835) (15,685) (73) (832) (921) (504) 17,832 (154,726) 33,177 25,973 (51,519) (2,144) 12,549 35,697 3,116 --------------------------------------------------------------------------------------------------------------------------------- (7,827) (176,644) 33,125 25,138 (59,435) (2,217) 11,769 34,776 2,612 --------------------------------------------------------------------------------------------------------------------------------- (19,446) (165,894) 35,353 19,927 (29,803) (2,578) 8,373 28,388 1,428 --------------------------------------------------------------------------------------------------------------------------------- 198,151 322,258 13,215 10,896 453,517 9,802 6,053 13,533 7,005 --------------------------------------------------------------------------------------------------------------------------------- $ 178,705 $ 156,364 $ 48,568 $ 30,823 $ 423,714 $ 7,224 $ 14,426 $ 41,921 $ 8,433 =================================================================================================================================
47 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
==================================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) ------------------------------------------------------------ JAPAN 1.25X LARGE CAP LARGE CAP MID CAP 1.5X STRATEGY (a) GROWTH VALUE LEISURE STRATEGY (b) ------------------------------------------------------------------------------------------------------------------------------------ Investment income: Income dividends from investments in portfolio shares ............. $ 3,967 $ -- $ 2,540 $ -- $ 373 Expenses: Mortality and expense risk fees ................................... 1,698 824 1,428 305 1,668 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) ............................... 2,269 (824) 1,112 (305) (1,295) ------------------------------------------------------------------------------------------------------------------------------------ Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ................................................ 30,510 1,452 7,884 11 (3,199) Net realized short-term capital gain distributions from investments in portfolio shares ................................. 17,991 1,701 3,090 2,025 21,557 Net realized long-term capital gain distributions from investments in portfolio shares ................................. 2,109 354 5,037 1,109 4,787 ------------------------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments in portfolio shares ... 50,610 3,507 16,011 3,145 23,145 ------------------------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) of investments in portfolio shares ................................... (34,030) (159) (893) 4,156 (12,764) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ....... $ 18,849 $ 2,524 $ 16,230 $ 6,996 $ 9,086 ====================================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
==================================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) ------------------------------------------------------------ JAPAN 1.25X LARGE CAP LARGE CAP MID CAP 1.5X STRATEGY (a) GROWTH VALUE LEISURE STRATEGY (b) ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) ................................... $ 2,269 $ (824) $ 1,112 $ (305) $ (1,295) Net realized gain (loss) on investments in portfolio shares ....... 50,610 3,507 16,011 3,145 23,145 Net change in unrealized appreciation (depreciation) of investments in portfolio shares ................................. (34,030) (159) (893) 4,156 (12,764) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ......... 18,849 2,524 16,230 6,996 9,086 ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) ............... 3,317 193 -- 187 (1,693) Contract redemptions .............................................. (15,451) (22,871) (20,702) (126) (9,278) Net transfers (including mortality transfers) ..................... (179,197) 126,132 503,127 83,243 (14,959) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions ............................... (191,331) 103,454 482,425 83,304 (25,930) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets ....................... (172,482) 105,978 498,655 90,300 (16,844) ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period ...................................... 316,798 32,244 1,255 2,754 74,208 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ................................. $ 144,316 $ 138,222 $ 499,910 $ 93,054 $ 57,364 ====================================================================================================================================
a) Formerly Japan Advantage prior to its name change effective July 3, 2007 and Large Cap Japan prior to its name change effective May 1, 2006. b) Formerly Mid Cap Advantage prior to its name change effective July 3, 2007 and Medius prior to its name change effective May 1, 2006. c) Formerly Russell 2000 Advantage prior to its name change effective July 3, 2007 and Mekros prior to its name change effective May 1, 2006. 48
===================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) --------------------------------------------------------------------------------------------------------------------- MID-CAP MID-CAP PRECIOUS REAL RUSSELL 2000 SECTOR GROWTH VALUE NOVA OTC METALS ESTATE RETAILING 1.5X STRATEGY (c) ROTATION --------------------------------------------------------------------------------------------------------------------- $ -- $ 1,829 $ 7,512 $ -- $ -- $ 3,543 $ -- $ 1,059 $ -- 446 2,134 7,336 6,595 5,247 1,247 124 1,394 1,401 --------------------------------------------------------------------------------------------------------------------- (446) (305) 176 (6,595) (5,247) 2,296 (124) (335) (1,401) --------------------------------------------------------------------------------------------------------------------- 3,644 3,232 62,235 (1,906) 3,911 1,628 934 (528) 4,883 2,436 -- -- -- -- 2,595 42 -- 283 1,246 -- -- -- -- 4,290 145 -- 2,585 --------------------------------------------------------------------------------------------------------------------- 7,326 3,232 62,235 (1,906) 3,911 8,513 1,121 (528) 7,751 --------------------------------------------------------------------------------------------------------------------- (3,828) 11,756 19,836 14,440 12,773 (4,208) (463) -- (3,899) --------------------------------------------------------------------------------------------------------------------- $ 3,052 $ 14,683 $ 82,247 $ 5,939 $ 11,437 $ 6,601 $ 534 $ (863) $ 2,451 =====================================================================================================================
===================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) --------------------------------------------------------------------------------------------------------------------- MID-CAP MID-CAP PRECIOUS REAL RUSSELL 2000 SECTOR GROWTH VALUE NOVA OTC METALS ESTATE RETAILING 1.5X STRATEGY (c) ROTATION --------------------------------------------------------------------------------------------------------------------- $ (446) $ (305) $ 176 $ (6,595) $ (5,247) $ 2,296 $ (124) $ (335) $ (1,401) 7,326 3,232 62,235 (1,906) 3,911 8,513 1,121 (528) 7,751 (3,828) 11,756 19,836 14,440 12,773 (4,208) (463) -- (3,899) --------------------------------------------------------------------------------------------------------------------- 3,052 14,683 82,247 5,939 11,437 6,601 534 (863) 2,451 --------------------------------------------------------------------------------------------------------------------- 83 -- 843 1,344 9,384 5,459 -- (3,392) 1,788 (11,808) (10,583) (68,193) (46,710) (16,795) (19,077) (38) (2,009) (2,163) (51,042) 297,990 78,045 59,157 379,102 146,525 (513) 160,914 (44,677) --------------------------------------------------------------------------------------------------------------------- (62,767) 287,407 10,695 13,791 371,691 132,907 (551) 155,513 (45,052) --------------------------------------------------------------------------------------------------------------------- (59,715) 302,090 92,942 19,730 383,128 139,508 (17) 154,650 (42,601) --------------------------------------------------------------------------------------------------------------------- 120,416 1,234 432,619 461,178 202,112 61,923 5,241 5,440 103,378 --------------------------------------------------------------------------------------------------------------------- $ 60,701 $ 303,324 $ 525,561 $ 480,908 $ 585,240 $ 201,431 $ 5,224 $ 160,090 $ 60,777 =====================================================================================================================
49 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
==================================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) ----------------------------------------------------------------- SMALL-CAP SMALL-CAP TELE- GROWTH VALUE TECHNOLOGY COMMUNICATIONS TRANSPORTATION ------------------------------------------------------------------------------------------------------------------------------------ Investment income: Income dividends from investments in portfolio shares ........ $ -- $ 1,193 $ -- $ 291 $ -- Expenses: Mortality and expense risk fees .............................. 541 1,416 320 244 871 ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (expense) .......................... (541) (223) (320) 47 (871) ------------------------------------------------------------------------------------------------------------------------------------ Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ........................................... (264) 2,046 3,962 2,318 4,418 Net realized short-term capital gain distributions from investments in portfolio shares ............................ 735 5,368 -- 285 -- Net realized long-term capital gain distributions from investments in portfolio shares ............................ 2,182 7,119 -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments in portfolio shares ................................................. 2,653 14,533 3,962 2,603 4,418 ------------------------------------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) of investments in portfolio shares .............................. (375) (4,080) (1,039) 340 (7,080) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations .. $ 1,737 $ 10,230 $ 2,603 $ 2,990 $ (3,533) ====================================================================================================================================
STATEMENT OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
==================================================================================================================================== RYDEX VARIABLE TRUST (CONTINUED) ----------------------------------------------------------------- SMALL-CAP SMALL-CAP TELE- GROWTH VALUE TECHNOLOGY COMMUNICATIONS TRANSPORTATION ------------------------------------------------------------------------------------------------------------------------------------ Changes from operations: Net investment income (expense) .............................. $ (541) $ (223) $ (320) $ 47 $ (871) Net realized gain (loss) on investments in portfolio shares .. 2,653 14,533 3,962 2,603 4,418 Net change in unrealized appreciation (depreciation) of investments in portfolio shares ............................ (375) (4,080) (1,039) 340 (7,080) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ........ 1,737 10,230 2,603 2,990 (3,533) ------------------------------------------------------------------------------------------------------------------------------------ Changes from contract owners' transactions: Net contract purchase payments (including breakage) .......... -- -- 166 -- -- Contract redemptions ......................................... (12,318) (20,516) (500) (208) (4,578) Net transfers (including mortality transfers) ................ 136,159 132,143 22,953 4,998 (51,616) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contract owners' transactions .......................... 123,841 111,627 22,619 4,790 (56,194) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets .................. 125,578 121,857 25,222 7,780 (59,727) ------------------------------------------------------------------------------------------------------------------------------------ Net assets, beginning of period ................................. 39,255 10,978 12,393 15,117 116,800 ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period ............................ $ 164,833 $ 132,835 $ 37,615 $ 22,897 $ 57,073 ====================================================================================================================================
50
============================================================================================================================ THIRD AVENUE RYDEX VARIABLE VARIABLE TRUST (CONTINUED) SELIGMAN PORTFOLIOS SERIES TRUST VAN ECK WORLDWIDE INSURANCE TRUST FUNDS --------------------------- -------------------------- ------------ -------------------------------------------------- U.S. GOVERNMENT COMMUNICATION MONEY AND GLOBAL ABSOLUTE EMERGING HARD MARKET UTILITIES INFORMATION TECHNOLOGY VALUE RETURN BOND MARKETS ASSETS ---------------------------------------------------------------------------------------------------------------------------- $ 41,417 $ 9,199 $ -- $ -- $ 9,883 $ -- $ 20,289 $ 6,070 $ 735 17,429 4,318 4,246 2,286 11,193 1,083 9,092 15,651 15,945 ---------------------------------------------------------------------------------------------------------------------------- 23,988 4,881 (4,246) (2,286) (1,310) (1,083) 11,197 (9,581) (15,210) ---------------------------------------------------------------------------------------------------------------------------- -- 12,898 33,835 4,867 47,872 3,630 12,009 186,522 235,884 -- -- -- -- 461 -- -- 11,090 20,878 -- 4,078 -- -- 33,201 193 -- 84,479 41,683 ---------------------------------------------------------------------------------------------------------------------------- -- 16,976 33,835 4,867 81,534 3,823 12,009 282,091 298,445 ---------------------------------------------------------------------------------------------------------------------------- -- 21,285 25,864 20,488 26,779 1,828 14,988 69,202 (77,492) ---------------------------------------------------------------------------------------------------------------------------- $ 23,988 $ 43,142 $ 55,453 $ 23,069 $ 107,003 $ 4,568 $ 38,194 $ 341,712 $ 205,743 ============================================================================================================================
============================================================================================================================ THIRD AVENUE RYDEX VARIABLE VARIABLE TRUST (CONTINUED) SELIGMAN PORTFOLIOS SERIES TRUST VAN ECK WORLDWIDE INSURANCE TRUST FUNDS --------------------------- -------------------------- ------------ -------------------------------------------------- U.S. GOVERNMENT COMMUNICATION MONEY AND GLOBAL ABSOLUTE EMERGING HARD MARKET UTILITIES INFORMATION TECHNOLOGY VALUE RETURN BOND MARKETS ASSETS ---------------------------------------------------------------------------------------------------------------------------- $ 23,988 $ 4,881 $ (4,246) $ (2,286) $ (1,310) $ (1,083) $ 11,197 $ (9,581) $ (15,210) -- 16,976 33,835 4,867 81,534 3,823 12,009 282,091 298,445 -- 21,285 25,864 20,488 26,779 1,828 14,988 69,202 (77,492) ---------------------------------------------------------------------------------------------------------------------------- 23,988 43,142 55,453 23,069 107,003 4,568 38,194 341,712 205,743 ---------------------------------------------------------------------------------------------------------------------------- 116,861 51,540 46,017 649 95,468 13,173 (2,609) 36,947 57,793 (9,339) (35,733) (31,217) (3,111) (85,741) (2,317) (52,155) (87,034) (165,553) (2,722,645) 146,855 66,660 2,177 245,665 (11,953) 26,249 388,468 87,080 ---------------------------------------------------------------------------------------------------------------------------- (2,615,123) 162,662 81,460 (285) 255,392 (1,097) (28,515) 338,381 (20,680) ---------------------------------------------------------------------------------------------------------------------------- (2,591,135) 205,804 136,913 22,784 362,395 3,471 9,679 680,093 185,063 ---------------------------------------------------------------------------------------------------------------------------- 3,347,575 231,746 253,089 142,504 696,536 27,959 251,549 928,669 984,024 ---------------------------------------------------------------------------------------------------------------------------- $ 756,440 $ 437,550 $ 390,002 $ 165,288 $ 1,058,931 $ 31,430 $ 261,228 $ 1,608,762 $ 1,169,087 ============================================================================================================================
51 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H STATEMENT OF OPERATIONS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
================================================================================================================================== VAN ECK WORLDWIDE INSURANCE TRUST FUNDS WELLS FARGO (CONTINUED) ADVANTAGE VT FUND ----------- ------------------------- REAL COMBINED ESTATE DISCOVERY OPPORTUNITY TOTAL ------------------------------------------------------------------------------------------------------------------- ------------- Investment income: Income dividends from investments in portfolio shares ................ $ 5,064 $ -- $ -- $ 990,392 Expenses: Mortality and expense risk fees ...................................... 6,192 11,727 15,781 818,574 ------------------------------------------------------------------------------------------------------------------- ------------- Net investment income (expense) .................................. (1,128) (11,727) (15,781) 171,818 ------------------------------------------------------------------------------------------------------------------- ------------- Net realized gains (losses) on investments in portfolio shares: Net realized gains (losses) on sales of investments in portfolio shares ................................................... 2,676 32,542 57,490 3,036,373 Net realized short-term capital gain distributions from investments in portfolio shares ................................................ 7,342 -- -- 595,306 Net realized long-term capital gain distributions from investments in portfolio shares ................................................ 86,971 -- 120,051 1,356,355 ------------------------------------------------------------------------------------------------------------------- ------------- Net realized gain (loss) on investments in portfolio shares ...... 96,989 32,542 177,541 4,988,034 ------------------------------------------------------------------------------------------------------------------- ------------- Net change in unrealized appreciation (depreciation) of investments in portfolio shares .................................................. 10,073 83,290 (56,943) 1,161,224 ------------------------------------------------------------------------------------------------------------------- ------------- Net increase (decrease) in net assets from operations .......... $ 105,934 $ 104,105 $ 104,817 $ 6,321,076 =================================================================================================================== =============
STATEMENT OF CHANGES IN NET ASSETS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2006
================================================================================================================================== VAN ECK WORLDWIDE INSURANCE TRUST FUNDS WELLS FARGO (CONTINUED) ADVANTAGE VT FUND ----------- ------------------------ REAL COMBINED ESTATE DISCOVERY OPPORTUNITY TOTAL ------------------------------------------------------------------------------------------------------------------- ------------- Changes from operations: Net investment income (expense) ...................................... $ (1,128) $ (11,727) $ (15,781) $ 171,818 Net realized gain (loss) on investments in portfolio shares .......... 96,989 32,542 177,541 4,988,034 Net change in unrealized appreciation (depreciation) of investments in portfolio shares ................................................ 10,073 83,290 (56,943) 1,161,224 ------------------------------------------------------------------------------------------------------------------- ------------- Net increase (decrease) in net assets from operations ............ 105,934 104,105 104,817 6,321,076 ------------------------------------------------------------------------------------------------------------------- ------------- Changes from contract owners' transactions: Net contract purchase payments (including breakage) .................. 12,368 9,722 13,018 2,590,676 Contract redemptions ................................................. (52,379) (78,983) (165,190) (5,746,246) Net transfers (including mortality transfers) ........................ 130,541 (70,100) (161,973) 419,644 ------------------------------------------------------------------------------------------------------------------- ------------- Net increase (decrease) in net assets from contract owners' transactions .................................. 90,530 (139,361) (314,145) (2,735,926) ------------------------------------------------------------------------------------------------------------------- ------------- Net increase (decrease) in net assets .......................... 196,464 (35,256) (209,328) 3,585,150 ------------------------------------------------------------------------------------------------------------------- ------------- Net assets, beginning of period ......................................... 310,197 861,963 1,163,828 55,357,392 ------------------------------------------------------------------------------------------------------------------- ------------- Net assets, end of period .................................... $ 506,661 $ 826,707 $ 954,500 $ 58,942,542 =================================================================================================================== =============
The accompanying notes are an integral part of these financial statements. 52 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2007 AND 2006 ================================================================================ (1) GENERAL Jefferson National Life Annuity Account H ("Account H) is registered under the Investment Company Act of 1940, as amended, as a unit investment trust. Account H was established on November 1, 1999, and commenced operations on February 11, 2000, as a segregated investment account for individual variable annuity contracts, which are registered under the Securities Act of 1933. The operations of Account H are included in the operations of Jefferson National Variable Insurance Company (the "Company") pursuant to the provisions of the Texas Insurance Code. Effective October 23, 2002, the Company was acquired from Conseco Life Insurance of Texas, a life insurance company domiciled in the state of Texas and an indirect wholly-owned subsidiary of Conseco, Inc., a publicly-held specialized financial services holding company, by JNF Holding Company, Inc. ("JNF Holdings"), a wholly-owned subsidiary of Inviva, Inc., a New York based insurance holding company. As of June 30, 2006, all outstanding shares of the Company were owned by JNF Holdings, an insurance holding company. Effective July 1, 2006, by way of the "Reorganization and Contribution Agreement" adopted by the Board of Directors of Inviva, Inc. ("ultimate parent") and accepted by the Board of Directors of JNF Holdings, all of the outstanding common stock of the Company was contributed from JNF Holdings to a new holding company, Jefferson National Financial Corp. ("JNFC"). This transaction was accounted for using the pooling-of-interest method in accordance with Statement of Financial Accounting Standards No. 141, "Business Combinations". From then forward the Company is wholly-owned by JNFC. JNFC is a wholly owned subsidiary of Inviva, Inc. and JNF Holdings, collectively. JNF Advisors, Inc. ("JNF") was established in January 2007 as a registered investment adviser and is 100% owned by JNFC. JNF serves as adviser to the JNF Balanced and Equity portfolios, but sub-advises the investment management of these portfolios to an unaffiliated registered investment adviser. Various lawsuits against the Company may arise in the ordinary course of the Company's business. Contingent liabilities arising from ordinary course litigation, income taxes and other matters are not expected to be material in relation to the financial position of the Company. The purchase agreement between Inviva and Conseco contained a provision that the Company would be indemnified by Conseco Life of Texas for all cases known as of the acquisition and for certain other matters. Currently, however, there are no legal proceedings to which Account H is a party or to which the assets of Account H are subject. Neither the Company nor Jefferson National Financial Securities Corporation (formerly Inviva Securities Corporation prior to its name change effective July 1, 2006), the distributor of the Account H's contracts, is involved in any litigation that is of material importance in relation to their total assets or that relates to Account H. The following investment options are available to new investors as of December 31, 2007: AIM VARIABLE INSURANCE FUNDS Basic Value Fund Series II Core Equity Fund Series I Financial Services Fund Series I Global Health Care Fund Series I Global Real Estate Fund Series I High Yield Fund Series I Mid Cap Core Equity Fund Series II Technology Fund Series I THE ALGER AMERICAN FUND Growth Portfolio Leveraged AllCap Portfolio MidCap Growth Portfolio ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. Growth and Income Portfolio AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. Balanced Fund Income & Growth Fund Inflation Protection Fund International Fund Value Fund DIREXION INSURANCE TRUST Dynamic VP HY Bond Fund THE DREYFUS INVESTMENT PORTFOLIOS Dreyfus Small Cap Stock Index Portfolio THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. DREYFUS STOCK INDEX FUND DREYFUS VARIABLE INVESTMENT FUND International Value Portfolio FEDERATED INSURANCE SERIES Capital Income Fund II High Income Bond Fund II International Equity Fund II JANUS ASPEN SERIES Growth and Income Portfolio Large Cap Growth Portfolio Mid Cap Growth Portfolio Worldwide Growth Portfolio LAZARD RETIREMENT SERIES, INC. Emerging Markets Portfolio International Equity Portfolio Small Cap Portfolio US Strategic Equity Portfolio LEGG MASON PARTNERS VARIABLE EQUITY TRUST Aggressive Growth Portfolio Capital and Income Portfolio Fundamental Value Portfolio Large Cap Growth Portfolio LEGG MASON PARTNERS VARIABLE INCOME TRUST Global High Yield Bond Portfolio Government Portfolio Strategic Bond Portfolio LORD ABBETT SERIES FUND, INC. America's Value Portfolio Growth and Income Portfolio NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST Lehman Brothers High Income Bond Portfolio Lehman Brothers Short Duration Bond Portfolio Fasciano Portfolio Mid-Cap Growth Portfolio 53 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007 AND 2006 ================================================================================ Partners Portfolio Regency Portfolio Socially Responsive Portfolio NORTHERN LIGHTS VARIABLE TRUST JNF Balanced Portfolio JNF Equity Portfolio PIMCO VARIABLE INSURANCE TRUST Money Market Portfolio Real Return Bond Portfolio Short-Term Portfolio Total Return Bond PIONEER VARIABLE CONTRACTS TRUST Equity Income Portfolio Fund Portfolio High Yield Portfolio International Value Portfolio Mid Cap Value Portfolio ROYCE CAPITAL FUND Micro-Cap Portfolio Small-Cap Portfolio RYDEX VARIABLE TRUST CLS AdvisorOne Amerigo Fund CLS AdvisorOne Clermont Fund Banking Fund Basic Materials Fund Biotechnology Fund Commodities Strategy Fund Consumer Products Fund Dow 2X Strategy Fund Electronics Fund Energy Fund Energy Services Fund Europe 1.25X Strategy Fund Financial Services Fund Government Long Bond 1.2X Strategy Fund Health Care Fund Internet Fund Inverse Dow 2X Strategy Fund Inverse Government Long Bond Strategy Fund Inverse Mid-Cap Strategy Fund Inverse OTC Strategy Fund Inverse S&P 500 Strategy Fund Japan 1.25X Strategy Fund Large-Cap Growth Fund Large-Cap Value Fund Leisure Fund Mid Cap 1.5X Strategy Fund Mid-Cap Growth Fund Mid-Cap Value Fund Nova Fund OTC 2X Strategy Fund OTC Fund Precious Metals Fund Real Estate Fund Retailing Fund Russell 2000 1.5X Strategy Fund Russell 2000 2X Strategy Fund S&P 500 2X Strategy Fund Sector Rotation Fund Small-Cap Growth Fund Small-Cap Value Fund Strengthening Dollar 2X Strategy Fund Technology Fund Telecommunications Fund Transportation Fund U.S. Government Money Market Fund Utilities Fund Weakening Dollar 2X Strategy Fund SELIGMAN PORTFOLIOS, INC., (CLASS 2) Communications and Information Portfolio Global Technology Portfolio THIRD AVENUE VARIABLE SERIES TRUST Value Portfolio VAN ECK WORLDWIDE INSURANCE TRUST Absolute Return Fund Bond Fund Emerging Markets Fund Hard Assets Fund Real Estate Fund WELLS FARGO ADVANTAGE VT FUNDS Discovery Fund Opportunity Fund 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 increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVESTMENT VALUATION, TRANSACTIONS AND INCOME Investments in portfolio shares are valued using the net asset value of the respective portfolios at the end of each New York Stock Exchange business day, as determined by the investment fund managers. Investment share transactions are accounted for on a trade date basis (the date the order to purchase or redeem shares is executed) and dividend income is recorded on the ex-dividend date. The cost of investments in portfolio shares sold is determined on a first-in first-out basis. Account H does not hold any investments that are restricted as to resale. Net investment income and net capital realized gains (losses) and unrealized appreciation (depreciation) on investments are allocated to the contracts on each valuation period based on each contract's pro rata share of the assets of Account H as of the beginning of the valuation period. FEDERAL INCOME TAXES No provision for federal income taxes has been made in the accompanying financial statements because the operations of Account H are included in the total operations of the Company, which is treated as a life insurance company for federal income tax 54 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007 AND 2006 ================================================================================ purposes under the Internal Revenue Code. Net investment income and realized capital gains (losses) are retained in Account H and are not taxable until received by the contract owner or beneficiary in the form of annuity payments or other distributions. ANNUITY RESERVES Deferred annuity contract reserves are comprised of net contract purchase payments less redemptions and benefits. These reserves are adjusted daily for the net investment income (expense) and net realized gains (losses) and unrealized appreciation (depreciation) on investments. NET TRANSFERS The Net Transfers line of the accompanying Statement of Changes in Net Assets is comprised of the net of any transfers into or from the fund from any other funds within this product. (3) PURCHASES AND SALES OF INVESTMENTS IN PORTFOLIO SHARE The aggregate cost of purchases of investments in portfolio shares was $92,387,880 and $60,127,988 for the years ended December 31, 2007 and 2006, respectively. The aggregate proceeds from sales of investments in portfolio shares were $96,883,597 and $60,722,805 for the years ended December 31, 2007 and 2006 respectively. (4) DEDUCTIONS AND EXPENSES Although periodic retirement payments to contract owners vary according to the investment performance of the portfolios, such payments are not affected by mortality or expense experience because the Company assumes the mortality and expense risks under the contracts. The mortality risk assumed by the Company results from the life annuity payment option in the contracts in which the Company agrees to make annuity payments regardless of how long a particular annuitant or other payee lives. The annuity payments are determined in accordance with annuity purchase rate provisions established at the time the contracts are issued. Based on the actuarial determination of expected mortality, the Company is required to fund any deficiency in the annuity payment reserves from its general account assets. The expense risk assumed by the Company is the risk that the deductions for sales and administrative expenses may prove insufficient to cover the actual sales and administrative expenses. The Company deducts daily from Account H a fee, which is equal on an annual basis to 1.40 percent of the daily value of the total investments of Account H, for assuming the mortality and expense risks on standard contracts which do not contain the guaranteed minimum death benefit or the guaranteed minimum income benefit. For contracts with the guaranteed minimum death benefit, the fee is 1.70 percent. For contracts that include both the guaranteed minimum death benefit and the guaranteed minimum income benefit, the fee is 2.00 percent. The total fees for all contracts were $848,002 and $818,574 for the years ended December 31, 2007 and 2006, respectively. Pursuant to an agreement between Account H and the Company (which may be terminated by the Company at any time), the Company provides sales and administrative services to Account H. The Company may deduct a percentage of amounts surrendered to cover sales expenses. The percentage varies up to 8 percent based upon the number of years the contract has been held. In addition, the Company deducts units from individual contracts annually and upon full surrender to cover an administrative fee of $30 unless the value of the contract is $50,000 or greater. This fee is recorded as a redemption in the accompanying Statements of Changes in Net Assets. The sales and administrative charges for the years ended December 31, 2007 and 2006 were $492,855 and $323,340, respectively. 5) FINANCIAL HIGHLIGHTS The following table discloses total returns, investment income and expense ratios for each offered fund in Account H. The total return is presented using the minimum and maximum expense ratio unit values. It is defined as the percentage change of unit values from the beginning of the period represented to the end of the period represented. These ratios do not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the variable account. The total return is calculated for each period indicated from the effective date though the end of the reporting period. The investment income ratio is the ratio of income dividends to the average daily net assets. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccount invests. The expense ratio consists of the mortality and expense charge for each period indicated for the minimum and maximum ratios. This ratio includes only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund have been excluded. Details begin on the following page. 55 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== JEFFERSON NATIONAL LIFE ACCOUNT H ------------------------------------------------------------------------------------------------------------------------------------ STANDARD STD. WITH STANDARD STD. WITH STANDARD STD. WITH CONTRACT ALL RIDERS CONTRACT ALL RIDERS NET CONTRACT ALL RIDERS INVESTMENT UNITS ---------------------- -------------------- ASSETS -------------------- INCOME FUND DESCRIPTION (000S) UNIT VALUE EXPENSE RATIO (000S) TOTAL RETURN RATIO ------------------------------------------------------------------------------------------------------------------------------------ AIM VARIABLE INSURANCE FUNDS: Basic Value Fund December 31, 2007 ............ 5 $ 16.33 $ 15.88 1.40% 2.00% $ 82 -0.06% -0.69% 0.29% December 31, 2006 ............ 5 16.34 15.99 1.40% 2.00% 81 11.38% 10.73% 0.12% December 31, 2005 ............ 5 14.67 14.44 1.40% 2.00% 80 3.97% 3.36% 0.00% December 31, 2004 ............ 4 14.11 13.97 1.40% 2.00% 60 9.27% 8.63% 0.00% December 31, 2003 ............ 6 12.91 12.86 1.40% 2.00% 73 29.13% 28.62% 0.00% Inception May 1, 2003 ........ -- 10.00 10.00 N/A N/A -- N/A N/A N/A Core Equity Fund December 31, 2007 ............ 19 11.58 11.46 1.40% 2.00% 217 6.63% 5.91% 1.08% December 31, 2006 ............ 22 10.86 10.82 1.40% 2.00% 240 8.17% 7.77% 0.78% Inception April 28, 2006 ..... -- 10.04 10.04 N/A N/A -- N/A N/A N/A Financial Services Fund December 31, 2007 ............ 11 10.24 9.84 1.40% 2.00% 115 -23.30% -23.78% 1.45% December 31, 2006 ............ 17 13.35 12.91 1.40% 2.00% 231 14.79% 14.15% 1.86% December 31, 2005 ............ 14 11.63 11.31 1.40% 2.00% 168 4.40% 3.86% 1.25% December 31, 2004 ............ 18 11.14 10.89 1.40% 2.00% 203 7.21% 6.45% 0.63% December 31, 2003 ............ 17 10.39 10.23 1.40% 2.00% 178 27.78% 27.02% 0.39% Global Health Care Fund December 31, 2007 ............ 17 12.43 11.94 1.40% 2.00% 213 10.29% 9.64% 0.00% December 31, 2006 ............ 11 11.27 10.89 1.40% 2.00% 122 3.78% 3.13% 0.00% December 31, 2005 ............ 11 10.86 10.56 1.40% 2.00% 121 6.68% 6.02% 0.00% December 31, 2004 ............ 17 10.18 9.96 1.40% 2.00% 170 6.05% 5.40% 0.00% December 31, 2003 ............ 14 9.60 9.45 1.40% 2.00% 132 26.01% 25.25% 0.00% Global Real Estate Fund December 31, 2007 ............ 17 28.85 27.72 1.40% 2.00% 501 -6.85% -7.41% 4.10% December 31, 2006 ............ 32 30.97 29.94 1.40% 2.00% 1,005 40.64% 39.78% 1.52% December 31, 2005 ............ 20 22.02 21.42 1.40% 2.00% 449 12.63% 12.03% 1.17% December 31, 2004 ............ 17 19.55 19.12 1.40% 2.00% 328 34.67% 33.80% 0.88% December 31, 2003 ............ 14 14.52 14.29 1.40% 2.00% 206 36.89% 36.08% 1.39% High Yield Fund December 31, 2007 ............ 24 11.89 11.63 1.40% 2.00% 285 -0.17% -0.77% 4.54% December 31, 2006 ............ 34 11.91 11.72 1.40% 2.00% 401 9.17% 8.52% 8.93% December 31, 2005 ............ 29 10.91 10.80 1.40% 2.00% 319 1.30% 0.75% 8.22% December 31, 2004 ............ 39 10.77 10.72 1.40% 2.00% 417 8.02% 7.52% 2.74% Inception May 1, 2004 ........ -- 9.97 9.97 N/A N/A -- N/A N/A N/A Mid Cap Core Equity Fund December 31, 2007 ............ 12 17.33 16.85 1.40% 2.00% 207 7.77% 7.12% 0.06% December 31, 2006 ............ 9 16.08 15.73 1.40% 2.00% 141 9.46% 8.78% 0.76% December 31, 2005 ............ 9 14.69 14.46 1.40% 2.00% 129 5.76% 5.16% 0.28% December 31, 2004 ............ 10 13.89 13.75 1.40% 2.00% 141 11.98% 11.34% 0.02% December 31, 2003 ............ 8 12.40 12.35 1.40% 2.00% 100 24.56% 24.07% 0.04% Inception May 1, 2003 ........ -- 9.96 9.96 N/A N/A -- N/A N/A N/A Technology Fund December 31, 2007 ............ 5 6.54 6.28 1.40% 2.00% 34 6.34% 5.55% 0.00% December 31, 2006 ............ 11 6.15 5.95 1.40% 2.00% 68 8.85% 8.38% 0.00% December 31, 2005 ............ 8 5.65 5.49 1.40% 2.00% 45 0.71% 0.18% 0.00% December 31, 2004 ............ 14 5.61 5.48 1.40% 2.00% 80 3.24% 2.43% 0.00% December 31, 2003 ............ 16 5.43 5.35 1.40% 2.00% 85 43.27% 42.42% 0.00% THE ALGER AMERICAN FUND: Growth Portfolio December 31, 2007 ............ 89 16.64 15.85 1.40% 2.00% 1,470 18.27% 17.58% 0.35% December 31, 2006 ............ 98 14.07 13.48 1.40% 2.00% 1,374 3.68% 3.06% 0.14% December 31, 2005 ............ 117 13.57 13.08 1.40% 2.00% 1,585 10.50% 9.82% 0.23% December 31, 2004 ............ 109 12.28 11.91 1.40% 2.00% 1,337 3.99% 3.39% 0.00% December 31, 2003 ............ 86 11.81 11.52 1.40% 2.00% 1,010 33.28% 32.49% 0.00%
56 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== JEFFERSON NATIONAL LIFE ACCOUNT H ------------------------------------------------------------------------------------------------------------------------------------ STANDARD STD. WITH STANDARD STD. WITH STANDARD STD. WITH CONTRACT ALL RIDERS CONTRACT ALL RIDERS NET CONTRACT ALL RIDERS INVESTMENT UNITS -------------------- -------------------- ASSETS -------------------- INCOME FUND DESCRIPTION (000S) UNIT VALUE EXPENSE RATIO (000S) TOTAL RETURN RATIO ------------------------------------------------------------------------------------------------------------------------------------ THE ALGER AMERICAN FUND: (continued) Leveraged AllCap Portfolio December 31, 2007 ............ 65 $ 25.89 $ 24.65 1.40% 2.00% $ 1,671 31.62% 30.84% 0.00% December 31, 2006 ............ 68 19.67 18.84 1.40% 2.00% 1,341 17.64% 16.95% 0.00% December 31, 2005 ............ 78 16.72 16.11 1.40% 2.00% 1,295 12.82% 12.19% 0.00% December 31, 2004 ............ 105 14.82 14.36 1.40% 2.00% 1,557 6.71% 6.06% 0.00% December 31, 2003 ............ 160 13.89 13.54 1.40% 2.00% 2,223 32.85% 32.06% 0.00% MidCap Growth Portfolio December 31, 2007 ............ 77 27.53 26.21 1.40% 2.00% 2,113 29.74% 28.92% 0.00% December 31, 2006 ............ 74 21.22 20.33 1.40% 2.00% 1,571 8.60% 7.97% 0.00% December 31, 2005 ............ 102 19.54 18.83 1.40% 2.00% 1,987 8.31% 7.66% 0.00% December 31, 2004 ............ 129 18.04 17.49 1.40% 2.00% 2,322 11.45% 10.77% 0.00% December 31, 2003 ............ 137 16.19 15.79 1.40% 2.00% 2,221 45.74% 44.87% 0.00% Small Capitalization Portfolio December 31, 2007 ............ 40 14.62 13.92 1.40% 2.00% 594 15.57% 14.85% 0.00% December 31, 2006 ............ 72 12.65 12.12 1.40% 2.00% 917 18.33% 17.67% 0.00% December 31, 2005 ............ 68 10.69 10.30 1.40% 2.00% 727 15.32% 14.57% 0.00% December 31, 2004 ............ 90 9.27 8.99 1.40% 2.00% 833 14.90% 14.23% 0.00% December 31, 2003 ............ 151 8.07 7.87 1.40% 2.00% 1,217 40.37% 39.53% 0.00% ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC.: Growth and Income Portfolio December 31, 2007 ............ 18 14.05 13.54 1.40% 2.00% 256 3.69% 3.04% 1.24% December 31, 2006 ............ 7 13.55 13.14 1.40% 2.00% 93 15.61% 14.96% 1.33% December 31, 2005 ............ 6 11.72 11.43 1.40% 2.00% 74 3.44% 2.79% 1.77% December 31, 2004 ............ 11 11.33 11.12 1.40% 2.00% 125 9.89% 9.23% 0.88% December 31, 2003 ............ 13 10.31 10.18 1.40% 2.00% 131 30.66% 29.88% 0.00% AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.: Balanced Fund December 31, 2007 ............ 8 11.85 11.67 1.40% 2.00% 99 3.40% 2.91% 0.55% December 31, 2006 ............ 1 11.46 11.34 1.40% 2.00% 9 8.11% 7.39% 0.00% December 31, 2005 ............ -- 10.60 10.56 1.40% 2.00% -- 5.58% 5.18% 0.00% Inception May 1, 2005 ........ -- 10.04 10.04 N/A N/A -- N/A N/A N/A Income & Growth Fund December 31, 2007 ............ 38 14.83 14.12 1.40% 2.00% 566 -1.46% -2.08% 1.92% December 31, 2006 ............ 47 15.05 14.42 1.40% 2.00% 711 15.50% 14.81% 1.71% December 31, 2005 ............ 46 13.03 12.56 1.40% 2.00% 600 3.17% 2.53% 2.34% December 31, 2004 ............ 85 12.63 12.25 1.40% 2.00% 1,066 11.40% 10.76% 1.65% December 31, 2003 ............ 67 11.34 11.06 1.40% 2.00% 753 27.57% 26.82% 1.13% Inflation Protection Fund December 31, 2007 ............ 6 11.43 11.18 1.40% 2.00% 66 7.93% 7.29% 4.41% December 31, 2006 ............ 4 10.59 10.42 1.40% 2.00% 38 0.19% -0.38% 4.02% December 31, 2005 ............ 4 10.57 10.46 1.40% 2.00% 45 0.19% -0.48% 4.05% December 31, 2004 ............ 5 10.55 10.51 1.40% 2.00% 52 5.08% 4.68% 1.98% Inception May 1, 2004 ........ -- 10.04 10.04 N/A N/A -- N/A N/A N/A International Fund December 31, 2007 ............ 50 18.03 17.16 1.40% 2.00% 893 16.40% 15.71% 0.60% December 31, 2006 ............ 41 15.49 14.83 1.40% 2.00% 630 23.33% 22.56% 1.44% December 31, 2005 ............ 33 12.56 12.10 1.40% 2.00% 418 11.64% 11.01% 1.24% December 31, 2004 ............ 39 11.25 10.90 1.40% 2.00% 437 13.35% 12.60% 0.60% December 31, 2003 ............ 40 9.92 9.68 1.40% 2.00% 393 22.78% 22.05% 0.14% Value Fund December 31, 2007 ............ 84 18.13 17.26 1.40% 2.00% 1,521 -6.45% -7.05% 1.69% December 31, 2006 ............ 106 19.38 18.57 1.40% 2.00% 2,052 16.96% 16.35% 1.29% December 31, 2005 ............ 107 16.57 15.96 1.40% 2.00% 1,766 3.63% 2.97% 0.93% December 31, 2004 ............ 122 15.99 15.50 1.40% 2.00% 1,941 12.71% 11.99% 1.00% December 31, 2003 ............ 128 14.19 13.84 1.40% 2.00% 1,812 27.17% 26.41% 1.12%
57 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== JEFFERSON NATIONAL LIFE ACCOUNT H ------------------------------------------------------------------------------------------------------------------------------------ STANDARD STD. WITH STANDARD STD. WITH STANDARD STD. WITH CONTRACT ALL RIDERS CONTRACT ALL RIDERS NET CONTRACT ALL RIDERS INVESTMENT UNITS -------------------- -------------------- ASSETS -------------------- INCOME FUND DESCRIPTION (000S) UNIT VALUE EXPENSE RATIO (000S) TOTAL RETURN RATIO ------------------------------------------------------------------------------------------------------------------------------------ DIREXION INSURANCE TRUST: Dynamic VP HY Bond Fund December 31, 2007 ............ 1 $ 10.58 $ 10.41 1.40% 2.00% $ 11 -3.20% -3.79% 3.70% December 31, 2006 ............ 1 10.93 10.82 1.40% 2.00% 11 4.79% 4.14% 3.91% December 31, 2005 ............ 1 10.43 10.39 1.40% 2.00% 12 3.68% 3.28% 2.95% Inception May 1, 2005 ........ -- 10.06 10.06 N/A N/A -- N/A N/A N/A THE DREYFUS INVESTMENT PORTFOLIOS Small Cap Stock Index Portfolio December 31, 2007 ............ 1 12.70 12.50 1.40% 2.00% 13 -2.08% -2.65% 0.63% December 31, 2006 ............ 3 12.97 12.84 1.40% 2.00% 43 12.88% 12.14% 0.86% December 31, 2005 ............ 1 11.49 11.45 1.40% 2.00% 15 13.43% 13.03% 0.00% Inception May 1, 2005 ........ -- 10.13 10.13 N/A N/A -- N/A N/A N/A THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. December 31, 2007 ............ 16 11.23 10.69 1.40% 2.00% 174 6.24% 5.63% 0.52% December 31, 2006 ............ 21 10.57 10.12 1.40% 2.00% 225 7.75% 6.98% 0.14% December 31, 2005 ............ 28 9.81 9.46 1.40% 2.00% 270 2.19% 1.61% 0.00% December 31, 2004 ............ 74 9.60 9.31 1.40% 2.00% 713 4.69% 4.14% 0.72% December 31, 2003 ............ 38 9.17 8.94 1.40% 2.00% 351 24.25% 23.51% 0.11% DREYFUS STOCK INDEX FUND December 31, 2007 ............ 166 14.41 13.72 1.40% 2.00% 2,367 3.82% 3.16% 1.67% December 31, 2006 ............ 211 13.88 13.30 1.40% 2.00% 2,915 13.86% 13.29% 1.65% December 31, 2005 ............ 223 12.19 11.74 1.40% 2.00% 2,707 3.31% 2.62% 1.56% December 31, 2004 ............ 294 11.80 11.44 1.40% 2.00% 3,460 9.06% 8.41% 1.90% December 31, 2003 ............ 261 10.82 10.55 1.40% 2.00% 2,816 26.58% 25.82% 1.45% DREYFUS VARIABLE INVESTMENT FUND: International Value Portfolio December 31, 2007 ............ 34 18.22 17.35 1.40% 2.00% 613 2.71% 2.06% 1.63% December 31, 2006 ............ 57 17.74 17.00 1.40% 2.00% 1,003 20.84% 20.23% 1.45% December 31, 2005 ............ 44 14.68 14.14 1.40% 2.00% 640 10.38% 9.70% 0.00% December 31, 2004 ............ 60 13.30 12.89 1.40% 2.00% 801 18.35% 17.61% 1.09% December 31, 2003 ............ 105 11.24 10.96 1.40% 2.00% 1,176 34.46% 33.66% 0.74% FEDERATED INSURANCE SERIES: Capital Income Fund II December 31, 2007 ............ 35 10.35 9.85 1.40% 2.00% 364 2.68% 1.97% 6.28% December 31, 2006 ............ 34 10.08 9.66 1.40% 2.00% 344 14.03% 13.38% 4.13% December 31, 2005 ............ 16 8.84 8.52 1.40% 2.00% 139 4.74% 4.16% 6.39% December 31, 2004 ............ 22 8.44 8.18 1.40% 2.00% 184 8.48% 7.75% 4.93% December 31, 2003 ............ 31 7.78 7.59 1.40% 2.00% 241 18.99% 18.28% 6.43% High Income Bond Fund II December 31, 2007 ............ 55 13.27 12.63 1.40% 2.00% 723 2.00% 1.36% 8.03% December 31, 2006 ............ 80 13.01 12.46 1.40% 2.00% 1,035 9.24% 8.63% 6.68% December 31, 2005 ............ 54 11.91 11.47 1.40% 2.00% 641 1.28% 0.61% 7.51% December 31, 2004 ............ 73 11.76 11.40 1.40% 2.00% 854 8.89% 8.27% 8.73% December 31, 2003 ............ 121 10.80 10.53 1.40% 2.00% 1,301 20.52% 19.80% 6.78% International Equity Fund II December 31, 2007 ............ 23 16.83 16.03 1.40% 2.00% 388 8.02% 7.37% 0.20% December 31, 2006 ............ 28 15.58 14.93 1.40% 2.00% 437 17.23% 16.55% 0.16% December 31, 2005 ............ 28 13.29 12.81 1.40% 2.00% 368 7.52% 6.93% 0.00% December 31, 2004 ............ 39 12.36 11.98 1.40% 2.00% 479 12.47% 11.81% 0.00% December 31, 2003 ............ 52 10.99 10.71 1.40% 2.00% 567 30.02% 29.25% 0.00% JANUS ASPEN SERIES: Growth and Income Portfolio December 31, 2007 ............ 31 17.14 16.65 1.40% 2.00% 532 7.26% 6.59% 1.70% December 31, 2006 ............ 55 15.98 15.62 1.40% 2.00% 871 6.53% 5.90% 1.66% December 31, 2005 ............ 64 15.00 14.75 1.40% 2.00% 958 10.78% 10.16% 0.65% December 31, 2004 ............ 62 13.54 13.39 1.40% 2.00% 834 10.35% 9.66% 0.65% December 31, 2003 ............ 68 12.26 12.21 1.40% 2.00% 833 19.90% 19.34% 1.01% Inception March 21, 2003 ..... -- 10.23 10.23 N/A N/A -- N/A N/A N/A
58 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== JEFFERSON NATIONAL LIFE ACCOUNT H ------------------------------------------------------------------------------------------------------------------------------------ STANDARD STD. WITH STANDARD STD. WITH STANDARD STD. WITH CONTRACT ALL RIDERS CONTRACT ALL RIDERS NET CONTRACT ALL RIDERS INVESTMENT UNITS -------------------- -------------------- ASSETS -------------------- INCOME FUND DESCRIPTION (000S) UNIT VALUE EXPENSE RATIO (000S) TOTAL RETURN RATIO ------------------------------------------------------------------------------------------------------------------------------------ JANUS ASPEN SERIES: (continued) International Growth Portfolio December 31, 2007 ........... 40 $ 40.53 $ 39.38 1.40% 2.00% $ 1,628 26.54% 25.77% 0.64% December 31, 2006 ........... 41 32.03 31.31 1.40% 2.00% 1,320 45.00% 44.09% 2.30% December 31, 2005 ........... 15 22.09 21.73 1.40% 2.00% 334 30.48% 29.73% 1.70% December 31, 2004 ........... 5 16.93 16.75 1.40% 2.00% 77 17.24% 16.56% 0.95% December 31, 2003 ........... 2 14.44 14.37 1.40% 2.00% 31 42.38% 41.72% 0.03% Inception March 21, 2003 .... -- 10.14 10.14 N/A N/A -- N/A N/A N/A Large Cap Growth Portfolio December 31, 2007 ........... 106 13.98 13.31 1.40% 2.00% 1,469 13.47% 12.80% 0.70% December 31, 2006 ........... 125 12.32 11.80 1.40% 2.00% 1,532 9.80% 9.16% 0.48% December 31, 2005 ........... 139 11.22 10.81 1.40% 2.00% 1,550 2.84% 2.27% 0.32% December 31, 2004 ........... 195 10.91 10.57 1.40% 2.00% 2,117 3.12% 2.42% 0.15% December 31, 2003 ........... 220 10.58 10.32 1.40% 2.00% 2,321 29.90% 29.13% 0.09% Mid Cap Growth Portfolio December 31, 2007 ........... 66 19.32 18.39 1.40% 2.00% 1,273 20.37% 19.57% 0.21% December 31, 2006 ........... 77 16.05 15.38 1.40% 2.00% 1,232 12.00% 11.37% 0.00% December 31, 2005 ........... 96 14.33 13.81 1.40% 2.00% 1,373 10.74% 10.13% 0.00% December 31, 2004 ........... 124 12.94 12.54 1.40% 2.00% 1,600 19.04% 18.30% 0.00% December 31, 2003 ........... 125 10.86 10.60 1.40% 2.00% 1,356 33.23% 32.43% 0.00% Worldwide Growth Portfolio December 31, 2007 ........... 84 14.97 14.25 1.40% 2.00% 1,255 8.09% 7.47% 0.74% December 31, 2006 ........... 91 13.85 13.26 1.40% 2.00% 1,260 16.58% 15.81% 1.73% December 31, 2005 ........... 106 11.88 11.45 1.40% 2.00% 1,258 4.39% 3.81% 1.29% December 31, 2004 ........... 144 11.38 11.03 1.40% 2.00% 1,632 3.36% 2.70% 1.02% December 31, 2003 ........... 162 11.01 10.74 1.40% 2.00% 1,777 22.27% 21.54% 0.71% LAZARD RETIREMENT SERIES, INC.: Emerging Markets Portfolio December 31, 2007 ........... 31 29.59 28.94 1.40% 2.00% 898 31.45% 30.65% 1.28% December 31, 2006 ........... 29 22.51 22.15 1.40% 2.00% 647 28.12% 27.37% 0.46% December 31, 2005 ........... 33 17.57 17.39 1.40% 2.00% 573 38.89% 38.02% 0.38% December 31, 2004 ........... 6 12.65 12.60 1.40% 2.00% 79 28.82% 28.31% 0.00% Inception May 1, 2004 ....... -- 9.82 9.82 N/A N/A -- N/A N/A N/A International Equity Portfolio December 31, 2007 ........... 7 16.26 15.91 1.40% 2.00% 120 9.20% 8.60% 2.11% December 31, 2006 ........... 8 14.89 14.65 1.40% 2.00% 125 20.86% 20.08% 0.85% December 31, 2005 ........... 7 12.32 12.20 1.40% 2.00% 103 9.12% 8.44% 1.09% December 31, 2004 ........... 1 11.29 11.25 1.40% 2.00% 10 13.70% 13.29% 0.00% Inception May 1, 2004 ....... -- 9.93 9.93 N/A N/A -- N/A N/A N/A Small Cap Portfolio December 31, 2007 ........... 25 18.01 17.15 1.40% 2.00% 445 -8.53% -9.07% 0.00% December 31, 2006 ........... 35 19.69 18.86 1.40% 2.00% 681 14.48% 13.82% 0.00% December 31, 2005 ........... 44 17.20 16.57 1.40% 2.00% 750 2.56% 1.91% 0.00% December 31, 2004 ........... 80 16.77 16.26 1.40% 2.00% 1,344 13.31% 12.60% 0.00% December 31, 2003 ........... 111 14.80 14.44 1.40% 2.00% 1,633 35.32% 34.51% 0.00% US Strategic Equity Portfolio December 31, 2007 ........... 15 13.48 12.84 1.40% 2.00% 204 -2.32% -2.87% 1.25% December 31, 2006 ........... 15 13.80 13.22 1.40% 2.00% 206 15.87% 15.16% 0.52% December 31, 2005 ........... 13 11.91 11.48 1.40% 2.00% 151 1.88% 1.32% 0.68% December 31, 2004 ........... 15 11.69 11.33 1.40% 2.00% 179 10.26% 9.57% 0.61% December 31, 2003 ........... 19 10.60 10.34 1.40% 2.00% 204 22.29% 21.56% 0.66% LEGG MASON PARTNERS VARIABLE EQUITY TRUST: Aggressive Growth Portfolio December 31, 2007 ........... 1 9.56 9.52 1.40% 2.00% 5 -3.43% -3.84% 0.00% Inception April 30, 2007 .... -- 9.90 9.90 N/A N/A -- N/A N/A N/A Capital and Income Portfolio December 31, 2007 ........... -- 10.01 9.97 1.40% 2.00% 3 0.60% 0.20% 1.45% Inception April 30, 2007 .... -- 9.95 9.95 N/A N/A -- N/A N/A N/A
59 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== JEFFERSON NATIONAL LIFE ACCOUNT H ------------------------------------------------------------------------------------------------------------------------------------ STANDARD STD. WITH STANDARD STD. WITH STANDARD STD. WITH CONTRACT ALL RIDERS CONTRACT ALL RIDERS NET CONTRACT ALL RIDERS INVESTMENT UNITS -------------------- -------------------- ASSETS -------------------- INCOME FUND DESCRIPTION (000S) UNIT VALUE EXPENSE RATIO (000S) TOTAL RETURN RATIO ------------------------------------------------------------------------------------------------------------------------------------ LEGG MASON PARTNERS VARIABLE EQUITY TRUST: (continued) Fundamental Value Portfolio December 31, 2007 ........... 1 $ 9.50 $ 9.46 1.40% 2.00% $ 10 -4.04% -4.44% 0.46% Inception April 30, 2007 .... -- 9.90 9.90 N/A N/A -- N/A N/A N/A Large Cap Growth Portfolio December 31, 2007 ........... 1 9.92 9.88 1.40% 2.00% 5 0.20% -0.20% 0.02% Inception April 30, 2007 .... -- 9.90 9.90 N/A N/A -- N/A N/A N/A LEGG MASON PARTNERS VARIABLE INCOME TRUST: Global High Yield Bond Portfolio December 31, 2007 ........... 16 11.34 11.16 1.40% 2.00% 177 -1.48% -2.11% 7.71% December 31, 2006 ........... 11 11.51 11.40 1.40% 2.00% 125 9.10% 8.47% 3.29% December 31, 2005 ........... 34 10.55 10.51 1.40% 2.00% 361 5.39% 5.00% 26.19% Inception May 1, 2005 ....... -- 10.01 10.01 N/A N/A -- N/A N/A N/A Government Portfolio December 31, 2007 ........... 5 10.39 10.23 1.40% 2.00% 46 1.07% 0.49% 2.97% December 31, 2006 ........... -- 10.28 10.18 1.40% 2.00% -- 2.70% 2.11% 0.00% December 31, 2005 ........... 7 10.01 9.97 1.40% 2.00% 67 0.10% -0.30% 0.00% Inception May 1, 2005 ....... -- 10.00 10.00 N/A N/A -- N/A N/A N/A Strategic Bond Portfolio December 31, 2007 ........... 15 11.17 10.93 1.40% 2.00% 163 0.54% 0.00% 4.54% December 31, 2006 ........... 16 11.11 10.93 1.40% 2.00% 180 3.64% 2.92% 4.41% December 31, 2005 ........... 15 10.72 10.62 1.40% 2.00% 159 1.04% 0.47% 8.85% December 31, 2004 ........... 1 10.61 10.57 1.40% 2.00% 12 6.10% 5.70% 1.53% Inception May 1, 2004 ....... -- 10.00 10.00 N/A N/A -- N/A N/A N/A LORD ABBETT SERIES FUND, INC.: America's Value Portfolio December 31, 2007 ........... 20 16.50 16.04 1.40% 2.00% 324 1.73% 1.07% 3.40% December 31, 2006 ........... 5 16.22 15.87 1.40% 2.00% 74 12.95% 12.31% 1.35% December 31, 2005 ........... 7 14.36 14.13 1.40% 2.00% 98 2.35% 1.73% 1.76% December 31, 2004 ........... 5 14.03 13.89 1.40% 2.00% 76 14.85% 14.13% 2.73% December 31, 2003 ........... -- 12.22 12.17 1.40% 2.00% 5 22.16% 21.67% 0.00% Inception May 1, 2003 ....... -- 10.00 10.00 N/A N/A -- N/A N/A N/A Growth and Income Portfolio December 31, 2007 ........... 75 18.21 17.34 1.40% 2.00% 1,363 2.02% 1.40% 1.21% December 31, 2006 ........... 91 17.85 17.10 1.40% 2.00% 1,617 15.61% 14.92% 1.28% December 31, 2005 ........... 99 15.44 14.88 1.40% 2.00% 1,521 1.85% 1.22% 0.81% December 31, 2004 ........... 153 15.16 14.70 1.40% 2.00% 2,312 11.07% 10.44% 0.80% December 31, 2003 ........... 167 13.65 13.31 1.40% 2.00% 2,267 29.19% 28.42% 0.63% NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST: Lehman Brothers High Income Bond Portfolio December 31, 2007 ........... 1 10.90 10.73 1.40% 2.00% 14 -0.37% -0.92% 7.78% December 31, 2006 ........... 1 10.94 10.83 1.40% 2.00% 13 6.01% 5.35% 9.11% December 31, 2005 ........... -- 10.32 10.28 1.40% 2.00% -- 3.20% 2.80% 0.00% Inception May 1, 2005 ....... -- 10.00 10.00 N/A N/A -- N/A N/A N/A Lehman Brothers Short Duration Bond Portfolio December 31, 2007 ........... 49 12.80 12.19 1.40% 2.00% 624 3.31% 2.70% 3.03% December 31, 2006 ........... 46 12.39 11.87 1.40% 2.00% 565 2.74% 2.15% 3.76% December 31, 2005 ........... 55 12.06 11.62 1.40% 2.00% 657 0.08% -0.51% 2.47% December 31, 2004 ........... 83 12.05 11.68 1.40% 2.00% 994 -0.65% -1.27% 3.57% December 31, 2003 ........... 97 12.13 11.83 1.40% 2.00% 1,180 1.00% 0.40% 4.08% Fasciano Portfolio December 31, 2007 ........... -- 14.44 14.04 1.40% 2.00% 1 -0.89% -1.47% 0.00% December 31, 2006 ........... -- 14.57 14.25 1.40% 2.00% 4 3.77% 3.11% 0.00% December 31, 2005 ........... -- 14.04 13.82 1.40% 2.00% 3 1.52% 0.88% 0.00% December 31, 2004 ........... 2 13.83 13.70 1.40% 2.00% 27 10.28% 9.69% 0.00% December 31, 2003 ........... 6 12.54 12.49 1.40% 2.00% 73 24.90% 24.41% 0.07% Inception May 1, 2003 ....... -- 10.04 10.04 N/A N/A -- N/A N/A N/A
60 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== JEFFERSON NATIONAL LIFE ACCOUNT H ------------------------------------------------------------------------------------------------------------------------------------ STANDARD STD. WITH STANDARD STD. WITH STANDARD STD. WITH CONTRACT ALL RIDERS CONTRACT ALL RIDERS NET CONTRACT ALL RIDERS INVESTMENT UNITS -------------------- -------------------- ASSETS -------------------- INCOME FUND DESCRIPTION (000S) UNIT VALUE EXPENSE RATIO (000S) TOTAL RETURN RATIO ------------------------------------------------------------------------------------------------------------------------------------ NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST: (continued) Mid-Cap Growth Portfolio December 31, 2007 ........... 50 $ 13.32 $ 12.80 1.40% 2.00% $ 665 20.87% 20.19% 0.00% December 31, 2006 ........... 52 11.02 10.65 1.40% 2.00% 575 13.03% 12.34% 0.00% December 31, 2005 ........... 44 9.75 9.48 1.40% 2.00% 426 12.20% 11.53% 0.00% December 31, 2004 ........... 89 8.69 8.50 1.40% 2.00% 771 14.70% 13.94% 0.00% December 31, 2003 ........... 9 7.58 7.46 1.40% 2.00% 68 26.29% 25.54% 0.00% Partners Portfolio December 31, 2007 ........... 63 16.45 15.66 1.40% 2.00% 1,039 7.80% 7.11% 0.64% December 31, 2006 ........... 64 15.26 14.62 1.40% 2.00% 988 10.66% 10.09% 0.67% December 31, 2005 ........... 79 13.79 13.28 1.40% 2.00% 1,102 16.47% 15.68% 1.08% December 31, 2004 ........... 49 11.84 11.48 1.40% 2.00% 577 17.29% 16.67% 0.01% December 31, 2003 ........... 38 10.09 9.84 1.40% 2.00% 383 33.21% 32.42% 0.00% Regency Portfolio December 31, 2007 ........... 5 19.39 18.86 1.40% 2.00% 89 1.84% 1.23% 0.40% December 31, 2006 ........... 9 19.04 18.63 1.40% 2.00% 176 9.61% 9.01% 0.39% December 31, 2005 ........... 11 17.37 17.09 1.40% 2.00% 185 10.50% 9.76% 0.14% December 31, 2004 ........... 6 15.72 15.57 1.40% 2.00% 100 20.62% 19.95% 0.04% December 31, 2003 ........... -- 13.03 12.98 1.40% 2.00% -- 30.19% 29.67% N/A Inception May 1, 2003 ....... -- 10.01 10.01 N/A N/A -- N/A N/A N/A Socially Responsive Portfolio December 31, 2007 ........... 2 14.16 13.85 1.40% 2.00% 34 6.07% 5.48% 0.06% December 31, 2006 ........... 7 13.35 13.13 1.40% 2.00% 97 12.18% 11.46% 0.18% December 31, 2005 ........... 9 11.90 11.78 1.40% 2.00% 104 5.40% 4.71% 0.00% December 31, 2004 ........... -- 11.29 11.25 1.40% 2.00% -- 12.79% 12.39% 0.00% Inception May 1, 2004 ....... -- 10.01 10.01 N/A N/A -- N/A N/A N/A NORTHERN LIGHTS VARIABLE TRUST: JNF Balanced Portfolio December 31, 2007 ........... 203 9.79 9.75 1.40% 2.00% 1,987 -2.39% -2.79% 1.13% Inception May 1, 2007 ....... -- 10.03 10.03 N/A N/A -- N/A N/A N/A JNF Equity Portfolio December 31, 2007 ........... 232 8.96 8.93 1.40% 2.00% 2,076 -10.49% -10.79% 0.00% Inception May 1, 2007 ....... -- 10.01 10.01 N/A N/A -- N/A N/A N/A PIMCO VARIABLE INSURANCE TRUST: Money Market Portfolio December 31, 2007 ........... 495 10.78 10.55 1.40% 2.00% 5,327 3.36% 2.83% 4.72% December 31, 2006 ........... 57 10.43 10.26 1.40% 2.00% 639 3.17% 2.50% 4.69% December 31, 2005 ........... 12 10.11 10.01 1.40% 2.00% 194 1.30% 0.70% 3.19% December 31, 2004 ........... -- 9.98 9.94 1.40% 2.00% -- -0.20% -0.60% 0.55% Inception May 1, 2004 ....... -- 10.00 10.00 N/A N/A -- N/A N/A N/A Real Return Portfolio December 31, 2007 ........... 33 12.32 11.98 1.40% 2.00% 406 9.12% 8.42% 4.66% December 31, 2006 ........... 27 11.29 11.05 1.40% 2.00% 314 -0.70% -1.25% 4.24% December 31, 2005 ........... 26 11.37 11.19 1.40% 2.00% 297 0.71% 0.09% 2.85% December 31, 2004 ........... 16 11.29 11.18 1.40% 2.00% 185 7.32% 6.78% 1.02% December 31, 2003 ........... 8 10.52 10.47 1.40% 2.00% 86 4.79% 4.37% 0.30% Inception May 1, 2003 ....... -- 10.03 10.03 N/A N/A -- N/A N/A N/A Short-Term Portfolio December 31, 2007 ........... 65 10.72 10.49 1.40% 2.00% 693 2.98% 2.44% 4.69% December 31, 2006 ........... 31 10.41 10.24 1.40% 2.00% 327 2.87% 2.20% 4.31% December 31, 2005 ........... 13 10.12 10.02 1.40% 2.00% 127 1.10% 0.50% 3.00% December 31, 2004 ........... 4 10.01 9.97 1.40% 2.00% 39 0.10% -0.30% 1.30% Inception May 1, 2004 ....... -- 10.00 10.00 N/A N/A -- N/A N/A N/A
61 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== JEFFERSON NATIONAL LIFE ACCOUNT H ------------------------------------------------------------------------------------------------------------------------------------ STANDARD STD. WITH STANDARD STD. WITH STANDARD STD. WITH CONTRACT ALL RIDERS CONTRACT ALL RIDERS NET CONTRACT ALL RIDERS INVESTMENT UNITS -------------------- -------------------- ASSETS -------------------- INCOME FUND DESCRIPTION (000S) UNIT VALUE EXPENSE RATIO (000S) TOTAL RETURN RATIO ------------------------------------------------------------------------------------------------------------------------------------ PIMCO VARIABLE INSURANCE TRUST: (continued) Total Return Portfolio December 31, 2007 ........... 71 $ 11.60 $ 11.28 1.40% 2.00% $ 821 7.21% 6.62% 4.81% December 31, 2006 ........... 67 10.82 10.58 1.40% 2.00% 719 2.37% 1.73% 4.42% December 31, 2005 ........... 50 10.57 10.40 1.40% 2.00% 533 1.05% 0.48% 3.55% December 31, 2004 ........... 30 10.46 10.35 1.40% 2.00% 313 3.46% 2.78% 1.93% December 31, 2003 ........... 3 10.11 10.07 1.40% 2.00% 34 1.02% 0.61% 0.72% Inception May 1, 2003 ....... -- 10.01 10.01 N/A N/A -- N/A N/A N/A PIONEER VARIABLE CONTRACTS TRUST: Equity Income Portfolio December 31, 2007 ........... 37 12.99 12.46 1.40% 2.00% 478 -0.84% -1.42% 2.17% December 31, 2006 ........... 75 13.10 12.64 1.40% 2.00% 985 20.40% 19.70% 2.32% December 31, 2005 ........... 46 10.88 10.56 1.40% 2.00% 498 4.02% 3.43% 2.05% December 31, 2004 ........... 36 10.46 10.21 1.40% 2.00% 374 14.44% 13.82% 2.04% December 31, 2003 ........... 41 9.14 8.97 1.40% 2.00% 376 20.57% 19.85% 1.99% Fund Portfolio December 31, 2007 ........... 31 11.51 11.04 1.40% 2.00% 365 3.32% 2.70% 1.02% December 31, 2006 ........... 33 11.14 10.75 1.40% 2.00% 373 14.73% 14.12% 1.12% December 31, 2005 ........... 39 9.71 9.42 1.40% 2.00% 385 4.52% 3.86% 1.14% December 31, 2004 ........... 53 9.29 9.07 1.40% 2.00% 497 9.29% 8.75% 1.05% December 31, 2003 ........... 29 8.50 8.34 1.40% 2.00% 244 21.72% 21.00% 0.93% High Yield Portfolio December 31, 2007 ........... 36 11.61 11.42 1.40% 2.00% 420 4.13% 3.44% 5.14% December 31, 2006 ........... 19 11.15 11.04 1.40% 2.00% 208 6.80% 6.15% 5.15% December 31, 2005 ........... 3 10.44 10.40 1.40% 2.00% 35 4.40% 4.00% 3.47% Inception May 1, 2005 ....... -- 10.00 10.00 N/A N/A -- N/A N/A N/A International Value Portfolio December 31, 2007 ........... 20 11.22 11.15 1.40% 2.00% 226 11.64% 10.95% 0.29% December 31, 2006 ........... 14 10.05 10.05 1.40% 2.00% 143 0.70% 0.70% 0.00% Inception November 15, 2006 . -- 9.98 9.98 N/A N/A -- N/A N/A N/A Mid Cap Value Portfolio December 31, 2007 ........... 3 12.54 12.34 1.40% 2.00% 37 3.89% 3.26% 0.66% December 31, 2006 ........... 3 12.07 11.95 1.40% 2.00% 33 10.73% 10.04% 0.00% December 31, 2005 ........... 9 10.90 10.86 1.40% 2.00% 95 8.35% 7.95% 0.00% Inception May 1, 2005 ....... -- 10.06 10.06 N/A N/A -- N/A N/A N/A ROYCE CAPITAL FUND: Micro-Cap Portfolio December 31, 2007 ........... 13 22.32 21.70 1.40% 2.00% 292 2.53% 1.88% 1.19% December 31, 2006 ........... 14 21.77 21.30 1.40% 2.00% 313 19.42% 18.73% 0.18% December 31, 2005 ........... 12 18.23 17.94 1.40% 2.00% 226 10.02% 9.39% 0.51% December 31, 2004 ........... 31 16.57 16.40 1.40% 2.00% 517 12.26% 11.56% 0.00% December 31, 2003 ........... 11 14.76 14.70 1.40% 2.00% 164 46.81% 46.23% 0.00% Inception May 1, 2003 ....... -- 10.05 10.05 N/A N/A -- N/A N/A N/A Small-Cap Portfolio December 31, 2007 ........... 26 20.21 19.65 1.40% 2.00% 513 -3.49% -4.05% 0.05% December 31, 2006 ........... 36 20.94 20.48 1.40% 2.00% 755 13.99% 13.27% 0.06% December 31, 2005 ........... 43 18.37 18.08 1.40% 2.00% 797 7.05% 6.42% 0.00% December 31, 2004 ........... 38 17.16 16.99 1.40% 2.00% 659 23.19% 22.49% 0.00% December 31, 2003 ........... 12 13.93 13.87 1.40% 2.00% 165 39.54% 38.99% 0.00% Inception May 1, 2003 ....... -- 9.98 9.98 N/A N/A -- N/A N/A N/A RYDEX VARIABLE TRUST: CLS AdvisorOne Amerigo Fund December 31, 2007 ........... 3 14.00 13.78 1.40% 2.00% 48 12.18% 11.49% 0.42% December 31, 2006 ........... 3 12.48 12.36 1.40% 2.00% 39 10.74% 10.16% 1.37% December 31, 2005 ........... -- 11.27 11.22 1.40% 2.00% -- 12.25% 11.75% 0.00% Inception May 1, 2005 ....... -- 10.04 10.04 N/A N/A -- N/A N/A N/A
62 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== JEFFERSON NATIONAL LIFE ACCOUNT H ------------------------------------------------------------------------------------------------------------------------------------ STANDARD STD. WITH STANDARD STD. WITH STANDARD STD. WITH CONTRACT ALL RIDERS CONTRACT ALL RIDERS NET CONTRACT ALL RIDERS INVESTMENT UNITS -------------------- -------------------- ASSETS -------------------- INCOME FUND DESCRIPTION (000S) UNIT VALUE EXPENSE RATIO (000S) TOTAL RETURN RATIO ------------------------------------------------------------------------------------------------------------------------------------ RYDEX VARIABLE TRUST: (continued) CLS AdvisorOne Clermont Fund December 31, 2007 .............. 1 $ 11.78 $ 11.60 1.40% 2.00% $ 15 4.71% 4.13% 2.72% December 31, 2006 .............. 1 11.25 11.14 1.40% 2.00% 10 6.84% 6.30% 31.63% December 31, 2005 .............. -- 10.53 10.48 1.40% 2.00% -- 4.99% 4.49% 0.00% Inception May 1, 2005 .......... -- 10.03 10.03 N/A N/A -- N/A N/A N/A Banking Fund December 31, 2007 .............. 2 8.76 8.56 1.40% 2.00% 16 -28.08% -28.55% 1.36% December 31, 2006 .............. -- 12.18 11.98 1.40% 2.00% 6 9.73% 9.01% 1.14% December 31, 2005 .............. 5 11.10 10.99 1.40% 2.00% 58 -4.15% -4.68% 0.00% December 31, 2004 .............. 2 11.58 11.53 1.40% 2.00% 19 14.65% 14.27% 2.12% Inception May 1, 2004 .......... -- 10.10 10.09 N/A N/A -- N/A N/A N/A Basic Materials Fund December 31, 2007 .............. 23 20.21 19.77 1.40% 2.00% 465 32.09% 31.27% 0.15% December 31, 2006 .............. 17 15.30 15.06 1.40% 2.00% 261 20.57% 19.90% 1.49% December 31, 2005 .............. 14 12.69 12.56 1.40% 2.00% 180 2.59% 1.95% 0.39% December 31, 2004 .............. 2 12.37 12.32 1.40% 2.00% 30 24.07% 23.57% 0.22% Inception May 1, 2004 .......... -- 9.97 9.97 N/A N/A N/A N/A N/A Biotechnology Fund December 31, 2007 .............. 3 9.91 9.69 1.40% 2.00% 32 3.01% 2.32% 0.00% December 31, 2006 .............. -- 9.62 9.47 1.40% 2.00% -- -4.66% -5.21% 0.00% December 31, 2005 .............. 3 10.09 9.99 1.40% 2.00% 32 9.08% 8.47% 0.00% December 31, 2004 .............. -- 9.25 9.21 1.40% 2.00% -- -5.61% -5.92% 0.00% Inception May 1, 2004 .......... -- 9.80 9.79 N/A N/A -- N/A N/A N/A Commodities Strategy Fund December 31, 2007 .............. 2 10.08 9.95 1.40% 2.00% 20 29.23% 28.39% 0.00% December 31, 2006 .............. 1 7.80 7.75 1.40% 2.00% 7 -19.09% -19.44% 0.00% December 31, 2005 .............. 1 9.64 9.62 1.40% 2.00% 6 -4.08% -4.28% 0.87% Inception October 21, 2005 ..... -- 10.05 10.05 N/A N/A N/A N/A N/A N/A Consumer Products Fund December 31, 2007 .............. 1 12.96 12.68 1.40% 2.00% 10 9.55% 8.93% 0.72% December 31, 2006 .............. 6 11.83 11.64 1.40% 2.00% 68 15.75% 15.02% 1.33% December 31, 2005 .............. 1 10.22 10.12 1.40% 2.00% 14 -1.73% -2.32% 0.30% December 31, 2004 .............. -- 10.40 10.36 1.40% 2.00% -- 2.97% 2.57% 0.00% Inception May 1, 2004 .......... -- 10.10 10.10 N/A N/A N/A N/A N/A Dow 2x Strategy Fund December 31, 2007 .............. 6 14.37 14.08 1.40% 2.00% 88 6.60% 6.02% 0.68% December 31, 2006 .............. 5 13.48 13.28 1.40% 2.00% 71 28.75% 27.94% 0.72% December 31, 2005 .............. 1 10.47 10.38 1.40% 2.00% 15 -5.16% -5.72% 1.32% December 31, 2004 .............. 2 11.04 11.01 1.40% 2.00% 25 11.29% 10.99% 15.95% Inception July 15, 2004 ........ -- 9.92 9.92 N/A N/A -- N/A N/A N/A Electronics Fund December 31, 2007 .............. 1 9.05 8.86 1.40% 2.00% 12 -3.93% -4.42% 0.00% December 31, 2006 .............. 3 9.42 9.27 1.40% 2.00% 28 1.07% 0.43% 0.00% December 31, 2005 .............. 2 9.32 9.23 1.40% 2.00% 15 2.42% 1.88% 0.00% December 31, 2004 .............. -- 9.10 9.06 1.40% 2.00% -- -6.57% -6.98% 0.00% Inception May 1, 2004 .......... -- 9.74 9.74 N/A N/A -- N/A N/A N/A Energy Fund December 31, 2007 .............. 35 23.96 23.44 1.40% 2.00% 838 31.36% 30.58% 0.00% December 31, 2006 .............. 33 18.24 17.95 1.40% 2.00% 598 10.41% 9.72% 0.00% December 31, 2005 .............. 51 16.52 16.36 1.40% 2.00% 840 36.53% 35.77% 0.02% December 31, 2004 .............. 13 12.10 12.05 1.40% 2.00% 151 18.40% 17.91% 0.01% Inception May 1, 2004 .......... -- 10.22 10.22 N/A N/A -- N/A N/A N/A
63 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== JEFFERSON NATIONAL LIFE ACCOUNT H ------------------------------------------------------------------------------------------------------------------------------------ STANDARD STD. WITH STANDARD STD. WITH STANDARD STD. WITH CONTRACT ALL RIDERS CONTRACT ALL RIDERS NET CONTRACT ALL RIDERS INVESTMENT UNITS -------------------- -------------------- ASSETS -------------------- INCOME FUND DESCRIPTION (000S) UNIT VALUE EXPENSE RATIO (000S) TOTAL RETURN RATIO ------------------------------------------------------------------------------------------------------------------------------------ RYDEX VARIABLE TRUST: (continued) Energy Services Fund December 31, 2007 .............. 31 $ 26.15 $ 25.58 1.40% 2.00% $ 812 35.21% 34.35% 0.00% December 31, 2006 .............. 18 19.34 19.04 1.40% 2.00% 345 9.45% 8.80% 0.00% December 31, 2005 .............. 27 17.67 17.50 1.40% 2.00% 475 46.15% 45.35% 0.00% December 31, 2004 .............. 11 12.09 12.04 1.40% 2.00% 130 18.88% 18.39% 0.00% Inception May 1, 2004 .......... -- 10.17 10.17 N/A N/A -- N/A N/A N/A Europe 1.25X Strategy Fund December 31, 2007 .............. 11 17.98 17.58 1.40% 2.00% 193 11.54% 10.78% 1.79% December 31, 2006 .............. 23 16.12 15.87 1.40% 2.00% 376 27.63% 26.96% 3.88% December 31, 2005 .............. -- 12.63 12.50 1.40% 2.00% -- 4.90% 4.25% 0.20% December 31, 2004 .............. 3 12.04 11.99 1.40% 2.00% 33 19.09% 18.60% 68.15% Inception May 1, 2004 .......... -- 10.11 10.11 N/A N/A -- N/A N/A N/A Financial Services Fund December 31, 2007 .............. 1 10.78 10.54 1.40% 2.00% 13 -19.91% -20.45% 4.13% December 31, 2006 .............. 10 13.46 13.25 1.40% 2.00% 139 15.14% 14.42% 5.21% December 31, 2005 .............. 7 11.69 11.58 1.40% 2.00% 78 1.92% 1.40% 0.20% December 31, 2004 .............. -- 11.47 11.42 1.40% 2.00% 5 14.13% 13.63% 2.25% Inception May 1, 2004 .......... -- 10.05 10.05 N/A N/A -- N/A N/A N/A Government Long Bond 1.2X Strategy Fund December 31, 2007 .............. 30 11.35 11.04 1.40% 2.00% 344 8.20% 7.60% 3.52% December 31, 2006 .............. 17 10.49 10.26 1.40% 2.00% 179 -4.46% -5.00% 3.66% December 31, 2005 .............. 18 10.98 10.80 1.40% 2.00% 198 6.19% 5.57% 3.28% December 31, 2004 .............. 9 10.34 10.23 1.40% 2.00% 96 6.93% 6.23% 3.35% December 31, 2003 .............. 3 9.67 9.63 1.40% 2.00% 30 -3.18% -3.57% 1.02% Inception May 1, 2003 .......... -- 9.99 9.99 N/A N/A -- N/A N/A N/A Health Care Fund December 31, 2007 .............. 3 11.89 11.63 1.40% 2.00% 36 4.48% 3.84% 0.00% December 31, 2006 .............. 14 11.38 11.20 1.40% 2.00% 156 3.74% 3.04% 0.00% December 31, 2005 .............. 30 10.97 10.87 1.40% 2.00% 322 9.05% 8.48% 0.00% December 31, 2004 .............. -- 10.06 10.02 1.40% 2.00% -- -0.10% -0.40% 0.00% Inception May 1, 2004 .......... -- 10.07 10.06 N/A N/A -- N/A N/A N/A Internet Fund December 31, 2007 .............. 2 12.81 12.53 1.40% 2.00% 30 8.84% 8.11% 0.00% December 31, 2006 .............. 4 11.77 11.59 1.40% 2.00% 49 8.18% 7.61% 0.00% December 31, 2005 .............. 1 10.88 10.77 1.40% 2.00% 13 -2.77% -3.32% 0.00% December 31, 2004 .............. 1 11.19 11.14 1.40% 2.00% 7 14.30% 13.79% 0.00% Inception May 1, 2004 .......... -- 9.79 9.79 N/A N/A -- N/A N/A N/A Inverse Dow 2X Strategy Fund December 31, 2007 .............. -- 6.04 5.92 1.40% 2.00% 2 -10.25% -10.84% 0.73% December 31, 2006 .............. 5 6.73 6.64 1.40% 2.00% 31 -22.91% -23.33% 2.00% December 31, 2005 .............. 1 8.73 8.66 1.40% 2.00% 11 0.23% -0.35% 2.53% December 31, 2004 .............. -- 8.71 8.69 1.40% 2.00% -- -13.59% -13.79% 0.00% Inception July 15, 2004 ........ -- 10.08 10.08 N/A N/A -- N/A N/A N/A Inverse Government Long Bond Strategy Fund December 31, 2007 .............. 50 8.13 7.90 1.40% 2.00% 406 -5.79% -6.40% 4.26% December 31, 2006 .............. 49 8.63 8.44 1.40% 2.00% 424 6.54% 5.90% 3.59% December 31, 2005 .............. 56 8.10 7.97 1.40% 2.00% 454 -6.47% -7.11% 0.00% December 31, 2004 .............. 86 8.66 8.58 1.40% 2.00% 742 -11.90% -12.41% 0.00% December 31, 2003 .............. -- 9.83 9.80 1.40% 2.00% 2 -1.64% -2.04% 0.00% Inception May 1, 2003 .......... -- 10.00 10.00 N/A N/A -- N/A N/A N/A Inverse Mid-Cap Strategy Fund December 31, 2007 .............. -- 7.26 7.11 1.40% 2.00% -- -3.33% -3.92% 0.00% December 31, 2006 .............. 1 7.51 7.40 1.40% 2.00% 7 -5.18% -5.73% 1.21% December 31, 2005 .............. 1 7.92 7.85 1.40% 2.00% 10 -9.38% -9.98% 4.71% December 31, 2004 .............. -- 8.74 8.72 1.40% 2.00% -- -12.07% -12.27% 0.00% Inception July 15, 2004 ........ -- 9.94 9.94 N/A N/A -- N/A N/A N/A
64 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== JEFFERSON NATIONAL LIFE ACCOUNT H ------------------------------------------------------------------------------------------------------------------------------------ STANDARD STD. WITH STANDARD STD. WITH STANDARD STD. WITH CONTRACT ALL RIDERS CONTRACT ALL RIDERS NET CONTRACT ALL RIDERS INVESTMENT UNITS -------------------- -------------------- ASSETS -------------------- INCOME FUND DESCRIPTION (000S) UNIT VALUE EXPENSE RATIO (000S) TOTAL RETURN RATIO ------------------------------------------------------------------------------------------------------------------------------------ RYDEX VARIABLE TRUST: (continued) Inverse OTC Strategy Fund December 31, 2007 .............. 1 $ 7.33 $ 7.17 1.40% 2.00% $ 8 -12.53% -13.09% 1.32% December 31, 2006 .............. 2 8.38 8.25 1.40% 2.00% 14 -2.78% -3.40% 3.85% December 31, 2005 .............. 1 8.62 8.54 1.40% 2.00% 6 -0.12% -0.70% 0.00% December 31, 2004 .............. -- 8.63 8.60 1.40% 2.00% -- -14.64% -14.94% 0.00% Inception May 1, 2004 .......... -- 10.11 10.11 N/A N/A -- N/A N/A N/A Inverse Russell 2000 Strategy Fund December 31, 2007 .............. 4 7.29 7.15 1.40% 2.00% 31 3.85% 3.32% 3.92% December 31, 2006 .............. 6 7.02 6.92 1.40% 2.00% 42 -13.23% -13.72% 5.21% December 31, 2005 .............. 2 8.09 8.02 1.40% 2.00% 14 -4.37% -4.98% 3.50% December 31, 2004 .............. -- 8.46 8.44 1.40% 2.00% -- -15.06% -15.26% 0.00% Inception July 15, 2004 ........ -- 9.96 9.96 N/A N/A -- N/A N/A N/A Inverse S&P 500 Strategy Fund December 31, 2007 .............. 2 6.30 6.13 1.40% 2.00% 10 -0.63% -1.13% 2.09% December 31, 2006 .............. 1 6.34 6.20 1.40% 2.00% 8 -8.78% -9.36% 7.57% December 31, 2005 .............. 1 6.95 6.84 1.40% 2.00% 7 -2.11% -2.70% 0.00% December 31, 2004 .............. -- 7.10 7.03 1.40% 2.00% 2 -11.47% -12.02% 0.00% December 31, 2003 .............. -- 8.02 7.99 1.40% 2.00% 2 -19.69% -20.01% 0.00% Inception May 1, 2003 .......... -- 10.00 9.99 N/A N/A -- N/A N/A N/A Japan 1.25X Strategy Fund December 31, 2007 .............. 6 11.11 10.87 1.40% 2.00% 69 -12.52% -12.97% 4.04% December 31, 2006 .............. 11 12.70 12.49 1.40% 2.00% 144 3.67% 3.05% 3.33% December 31, 2005 .............. 26 12.25 12.12 1.40% 2.00% 317 18.70% 17.90% 0.00% December 31, 2004 .............. -- 10.32 10.28 1.40% 2.00% 1 4.56% 4.15% 0.00% Inception May 1, 2004 .......... -- 9.87 9.87 N/A N/A -- N/A N/A N/A Large-Cap Growth Fund December 31, 2007 .............. 9 11.32 11.09 1.40% 2.00% 102 3.47% 2.88% 0.00% December 31, 2006 .............. 13 10.94 10.78 1.40% 2.00% 138 3.89% 3.26% 0.00% December 31, 2005 .............. 3 10.53 10.44 1.40% 2.00% 32 0.38% -0.19% 0.10% December 31, 2004 .............. -- 10.49 10.46 1.40% 2.00% 1 5.32% 5.02% 1.67% Inception July 15, 2004 ........ -- 9.96 9.96 N/A N/A -- N/A N/A N/A Large-Cap Value Fund December 31, 2007 .............. 6 12.42 12.17 1.40% 2.00% 74 -6.69% -7.24% 0.61% December 31, 2006 .............. 38 13.31 13.12 1.40% 2.00% 500 16.04% 15.29% 2.44% December 31, 2005 .............. -- 11.47 11.38 1.40% 2.00% 1 2.69% 2.15% 0.02% December 31, 2004 .............. -- 11.17 11.14 1.40% 2.00% -- 12.15% 11.85% 0.00% Inception July 15, 2004 ........ -- 9.96 9.96 N/A N/A -- N/A N/A N/A Leisure Fund December 31, 2007 .............. 1 12.63 12.36 1.40% 2.00% 14 -3.88% -4.41% 0.00% December 31, 2006 .............. 7 13.14 12.93 1.40% 2.00% 93 21.78% 20.95% 0.00% December 31, 2005 .............. -- 10.79 10.69 1.40% 2.00% 3 -6.26% -6.72% 0.00% December 31, 2004 .............. 2 11.51 11.46 1.40% 2.00% 18 14.87% 14.37% 0.00% Inception May 1, 2004 .......... -- 10.02 10.02 N/A N/A -- N/A N/A N/A Mid Cap 1.5X Strategy Fund December 31, 2007 .............. 3 22.35 21.73 1.40% 2.00% 66 2.15% 1.54% 1.55% December 31, 2006 .............. 3 21.88 21.40 1.40% 2.00% 57 8.91% 8.24% 0.32% December 31, 2005 .............. 4 20.09 19.77 1.40% 2.00% 74 12.49% 11.82% 0.00% December 31, 2004 .............. 10 17.86 17.68 1.40% 2.00% 182 20.51% 19.70% 0.00% December 31, 2003 .............. 5 14.82 14.77 1.40% 2.00% 77 48.26% 47.67% 0.00% Inception May 1, 2003 .......... -- 10.00 10.00 N/A N/A -- N/A N/A N/A Mid-Cap Growth Fund December 31, 2007 .............. 4 13.22 12.95 1.40% 2.00% 50 6.96% 6.23% 0.00% December 31, 2006 .............. 5 12.36 12.19 1.40% 2.00% 61 1.64% 1.16% 0.00% December 31, 2005 .............. 10 12.16 12.05 1.40% 2.00% 120 9.95% 9.25% 0.00% December 31, 2004 .............. -- 11.06 11.03 1.40% 2.00% -- 9.94% 9.64% 0.00% Inception July 15, 2004 ........ -- 10.06 10.06 N/A N/A -- N/A N/A N/A
65 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== JEFFERSON NATIONAL LIFE ACCOUNT H ------------------------------------------------------------------------------------------------------------------------------------ STANDARD STD. WITH STANDARD STD. WITH STANDARD STD. WITH CONTRACT ALL RIDERS CONTRACT ALL RIDERS NET CONTRACT ALL RIDERS INVESTMENT UNITS -------------------- -------------------- ASSETS -------------------- INCOME FUND DESCRIPTION (000S) UNIT VALUE EXPENSE RATIO (000S) TOTAL RETURN RATIO ------------------------------------------------------------------------------------------------------------------------------------ RYDEX VARIABLE TRUST: (continued) Mid-Cap Value Fund December 31, 2007 .......... 7 $ 13.10 $ 12.83 1.40% 2.00% $ 97 -6.16% -6.76% 0.84% December 31, 2006 .......... 22 13.96 13.76 1.40% 2.00% 303 15.47% 14.76% 1.18% December 31, 2005 .......... -- 12.09 11.99 1.40% 2.00% 1 6.80% 6.20% 0.21% December 31, 2004 .......... -- 11.32 11.29 1.40% 2.00% -- 12.75% 12.45% 0.00% Inception July 15, 2004 .... -- 10.04 10.04 N/A N/A -- N/A N/A N/A Nova Fund December 31, 2007 .......... 36 13.48 12.88 1.40% 2.00% 489 -0.30% -0.85% 1.53% December 31, 2006 .......... 39 13.52 12.99 1.40% 2.00% 526 17.57% 16.92% 1.43% December 31, 2005 .......... 38 11.50 11.11 1.40% 2.00% 433 2.59% 1.93% 0.55% December 31, 2004 .......... 67 11.21 10.90 1.40% 2.00% 756 12.98% 12.26% 0.07% December 31, 2003 .......... 124 9.92 9.71 1.40% 2.00% 1,227 37.26% 36.45% 0.00% OTC 2X Strategy Fund December 31, 2007 .......... 8 15.14 14.81 1.40% 2.00% 120 26.38% 25.61% 0.36% December 31, 2006 .......... 10 11.98 11.79 1.40% 2.00% 115 3.45% 2.79% 0.29% December 31, 2005 .......... 6 11.58 11.47 1.40% 2.00% 67 -4.38% -4.89% 0.00% December 31, 2004 .......... 1 12.11 12.06 1.40% 2.00% 12 23.95% 23.44% 0.00% Inception May 1, 2004 ...... -- 9.77 9.77 N/A N/A -- N/A N/A N/A OTC Fund December 31, 2007 .......... 33 17.01 16.25 1.40% 2.00% 555 16.19% 15.49% 0.08% December 31, 2006 .......... 33 14.64 14.07 1.40% 2.00% 481 4.27% 3.68% 0.00% December 31, 2005 .......... 33 14.04 13.57 1.40% 2.00% 461 -0.28% -0.88% 0.00% December 31, 2004 .......... 72 14.08 13.69 1.40% 2.00% 1,014 7.83% 7.20% 0.00% December 31, 2003 .......... 85 13.06 12.77 1.40% 2.00% 1,106 43.40% 42.55% 0.00% Precious Metals Fund December 31, 2007 .......... 37 19.28 18.86 1.40% 2.00% 699 17.92% 17.22% 0.00% December 31, 2006 .......... 36 16.35 16.09 1.40% 2.00% 585 19.69% 19.01% 0.00% December 31, 2005 .......... 15 13.66 13.52 1.40% 2.00% 202 19.20% 18.49% 0.00% December 31, 2004 .......... -- 11.46 11.41 1.40% 2.00% 4 14.60% 14.10% 0.00% Inception May 1, 2004 ...... -- 10.00 10.00 N/A N/A -- N/A N/A N/A Real Estate Fund December 31, 2007 .......... 3 14.53 14.21 1.40% 2.00% 50 -20.21% -20.75% 2.48% December 31, 2006 .......... 11 18.21 17.93 1.40% 2.00% 201 28.87% 28.16% 4.01% December 31, 2005 .......... 4 14.13 13.99 1.40% 2.00% 62 5.68% 5.03% 5.35% December 31, 2004 .......... -- 13.37 13.32 1.40% 2.00% 5 32.51% 32.01% 0.76% Inception May 1, 2004 ...... -- 10.09 10.09 N/A N/A -- N/A N/A N/A Retailing Fund December 31, 2007 .......... -- 10.38 10.15 1.40% 2.00% 3 -13.79% -14.35% 0.00% December 31, 2006 .......... -- 12.04 11.85 1.40% 2.00% 5 8.57% 7.92% 0.00% December 31, 2005 .......... -- 11.09 10.98 1.40% 2.00% 5 4.03% 3.39% 0.00% December 31, 2004 .......... -- 10.66 10.62 1.40% 2.00% -- 6.71% 6.31% 0.00% Inception May 1, 2004 ...... -- 9.99 9.99 N/A N/A -- N/A N/A N/A Russell 2000 1.5X Strategy Fund December 31, 2007 .......... 9 21.93 21.32 1.40% 2.00% 193 -8.05% -8.62% 0.65% December 31, 2006 .......... 7 23.85 23.33 1.40% 2.00% 160 19.19% 18.49% 1.05% December 31, 2005 .......... -- 20.01 19.69 1.40% 2.00% 5 2.46% 1.86% 4.93% December 31, 2004 .......... 15 19.53 19.33 1.40% 2.00% 301 23.46% 22.65% 0.00% December 31, 2003 .......... 11 15.82 15.76 1.40% 2.00% 173 57.96% 57.33% 2.52% Inception May 1, 2003 ...... -- 10.01 10.01 N/A N/A N/A N/A N/A S&P 500 2X Strategy Fund December 31, 2007 .......... 6 14.26 13.95 1.40% 2.00% 85 -0.77% -1.41% 0.52% December 31, 2006 .......... 20 14.37 14.15 1.40% 2.00% 289 21.99% 21.25% 2.49% December 31, 2005 .......... 11 11.78 11.67 1.40% 2.00% 136 1.90% 1.39% 0.05% December 31, 2004 .......... -- 11.56 11.51 1.40% 2.00% 5 15.02% 14.53% 0.00% Inception May 1, 2004 ...... -- 10.05 10.05 N/A N/A -- N/A N/A N/A
66 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== JEFFERSON NATIONAL LIFE ACCOUNT H ------------------------------------------------------------------------------------------------------------------------------------ STANDARD STD. WITH STANDARD STD. WITH STANDARD STD. WITH CONTRACT ALL RIDERS CONTRACT ALL RIDERS NET CONTRACT ALL RIDERS INVESTMENT UNITS -------------------- -------------------- ASSETS -------------------- INCOME FUND DESCRIPTION (000S) UNIT VALUE EXPENSE RATIO (000S) TOTAL RETURN RATIO ------------------------------------------------------------------------------------------------------------------------------------ RYDEX VARIABLE TRUST: (continued) Sector Rotation Fund December 31, 2007 .......... 4 $ 20.34 $ 19.78 1.40% 2.00% $ 87 21.00% 20.32% 0.00% December 31, 2006 .......... 4 16.81 16.44 1.40% 2.00% 61 9.87% 9.16% 0.00% December 31, 2005 .......... 7 15.30 15.06 1.40% 2.00% 103 12.17% 11.47% 0.00% December 31, 2004 .......... 4 13.64 13.51 1.40% 2.00% 55 9.12% 8.51% 0.00% December 31, 2003 .......... 6 12.50 12.45 1.40% 2.00% 70 24.67% 24.18% 0.00% Inception May 1, 2003 ...... -- 10.02 10.02 N/A N/A -- N/A N/A N/A Small-Cap Growth Fund December 31, 2007 .......... 12 12.64 12.38 1.40% 2.00% 145 -1.48% -2.06% 0.00% December 31, 2006 .......... 13 12.83 12.64 1.40% 2.00% 165 6.21% 5.60% 0.00% December 31, 2005 .......... 3 12.08 11.97 1.40% 2.00% 39 4.77% 4.09% 0.00% December 31, 2004 .......... -- 11.53 11.50 1.40% 2.00% -- 14.61% 14.31% 0.00% Inception July 15, 2004 .... -- 10.06 10.06 N/A N/A -- N/A N/A N/A Small-Cap Value Fund December 31, 2007 .......... 6 10.85 10.63 1.40% 2.00% 66 -21.43% -21.90% 0.19% December 31, 2006 .......... 10 13.81 13.61 1.40% 2.00% 133 17.53% 16.82% 1.17% December 31, 2005 .......... 1 11.75 11.65 1.40% 2.00% 11 2.17% 1.57% 0.00% December 31, 2004 .......... -- 11.50 11.47 1.40% 2.00% -- 14.54% 14.24% 0.00% Inception July 15, 2004 .... -- 10.04 10.04 N/A N/A -- N/A N/A N/A Strengthening Dollar 2X Strategy Fund December 31, 2007 .......... 1 8.01 7.91 1.40% 2.00% 5 -12.17% -12.69% 0.00% December 31, 2006 .......... -- 9.12 9.06 1.40% 2.00% -- -11.88% -12.38% 0.00% December 31, 2005 .......... -- 10.35 10.34 1.40% 2.00% -- 2.27% 2.17% 0.00% Inception October 21, 2005.. -- 10.12 10.12 N/A N/A -- N/A N/A N/A Technology Fund December 31, 2007 .......... 3 12.09 11.83 1.40% 2.00% $ 30 8.82% 8.23% 0.00% December 31, 2006 .......... 3 11.11 10.93 1.40% 2.00% 38 4.42% 3.80% 0.00% December 31, 2005 .......... 1 10.64 10.53 1.40% 2.00% 12 1.72% 1.06% 0.00% December 31, 2004 .......... -- 10.46 10.42 1.40% 2.00% -- 6.30% 5.89% 0.00% Inception May 1, 2004 ...... -- 9.84 9.84 N/A N/A -- N/A N/A N/A Telecommunications Fund December 31, 2007 .......... 1 13.71 13.41 1.40% 2.00% 18 7.70% 7.02% 0.07% December 31, 2006 .......... 2 12.73 12.53 1.40% 2.00% 23 17.87% 17.10% 1.66% December 31, 2005 .......... 1 10.80 10.70 1.40% 2.00% 15 -0.28% -0.83% 0.00% December 31, 2004 .......... -- 10.83 10.79 1.40% 2.00% -- 9.50% 9.10% 0.00% Inception May 1, 2004 ...... -- 9.89 9.89 N/A N/A -- N/A N/A N/A Transportation Fund December 31, 2007 .......... -- 12.80 12.52 1.40% 2.00% 5 -10.05% -10.57% 0.00% December 31, 2006 .......... 4 14.23 14.00 1.40% 2.00% 57 5.88% 5.26% 0.00% December 31, 2005 .......... 9 13.44 13.30 1.40% 2.00% 117 7.01% 6.31% 0.00% December 31, 2004 .......... 1 12.56 12.51 1.40% 2.00% 11 25.35% 24.85% 0.00% Inception May 1, 2004 ...... -- 10.02 10.02 N/A N/A -- N/A N/A N/A U.S. Government Money Market Fund December 31, 2007 .......... 54 10.23 9.83 1.40% 2.00% 552 2.40% 1.87% 3.83% December 31, 2006 .......... 76 9.99 9.65 1.40% 2.00% 756 2.46% 1.79% 3.49% December 31, 2005 .......... 343 9.75 9.48 1.40% 2.00% 3,347 0.52% 0.00% 1.98% December 31, 2004 .......... 374 9.70 9.48 1.40% 2.00% 3,621 -1.12% -1.76% 0.27% December 31, 2003 .......... 44 9.81 9.65 1.40% 2.00% 435 -1.38% -1.96% 0.02% Utilities Fund December 31, 2007 .......... 26 16.69 16.32 1.40% 2.00% 436 11.34% 10.57% 1.53% December 31, 2006 .......... 29 14.99 14.76 1.40% 2.00% 438 19.25% 18.65% 2.98% December 31, 2005 .......... 18 12.57 12.44 1.40% 2.00% 232 9.02% 8.36% 0.49% December 31, 2004 .......... 12 11.53 11.48 1.40% 2.00% 133 14.61% 14.12% 2.04% Inception May 1, 2004 ...... -- 10.06 10.06 N/A N/A -- N/A N/A N/A
67 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== JEFFERSON NATIONAL LIFE ACCOUNT H ------------------------------------------------------------------------------------------------------------------------------------ STANDARD STD. WITH STANDARD STD. WITH STANDARD STD. WITH CONTRACT ALL RIDERS CONTRACT ALL RIDERS NET CONTRACT ALL RIDERS INVESTMENT UNITS -------------------- -------------------- ASSETS -------------------- INCOME FUND DESCRIPTION (000S) UNIT VALUE EXPENSE RATIO (000S) TOTAL RETURN RATIO ------------------------------------------------------------------------------------------------------------------------------------ RYDEX VARIABLE TRUST: (continued) Weakening Dollar 2X Strategy Fund December 31, 2007 ........... 6 $ 12.95 $ 12.78 1.40% 2.00% $ 82 16.46% 15.76% 38.93% December 31, 2006 ........... 1 11.12 11.04 1.40% 2.00% 7 15.11% 14.40% 4.47% December 31, 2005 ........... -- 9.66 9.65 1.40% 2.00% -- -2.23% -2.33% 0.00% Inception October 21, 2005 .. -- 9.88 9.88 N/A N/A -- N/A N/A N/A SELIGMAN PORTFOLIOS, INC.: Communications and Information Portfolio December 31, 2007 ........... 42 8.12 7.75 1.40% 2.00% 336 13.57% 12.81% 0.00% December 31, 2006 ........... 55 7.15 6.87 1.40% 2.00% 390 20.37% 19.48% 0.00% December 31, 2005 ........... 43 5.94 5.75 1.40% 2.00% 253 5.88% 5.50% 0.00% December 31, 2004 ........... 62 5.61 5.45 1.40% 2.00% 347 9.36% 8.57% 0.00% December 31, 2003 ........... 69 5.13 5.02 1.40% 2.00% 353 42.06% 41.21% 0.00% Global Technology Portfolio December 31, 2007 ........... 27 6.70 6.40 1.40% 2.00% 182 13.75% 13.07% 0.00% December 31, 2006 ........... 28 5.89 5.66 1.40% 2.00% 165 15.94% 15.27% 0.00% December 31, 2005 ........... 28 5.08 4.91 1.40% 2.00% 143 6.50% 5.82% 0.00% December 31, 2004 ........... 36 4.77 4.64 1.40% 2.00% 173 2.36% 1.75% 0.00% December 31, 2003 ........... 40 4.66 4.56 1.40% 2.00% 185 34.17% 33.37% 0.00% THIRD AVENUE VARIABLE SERIES TRUST: Value Portfolio December 31, 2007 ........... 44 19.68 19.14 1.40% 2.00% 853 -6.15% -6.73% 2.21% December 31, 2006 ........... 51 20.97 20.52 1.40% 2.00% 1,059 14.15% 13.50% 1.24% December 31, 2005 ........... 38 18.37 18.08 1.40% 2.00% 697 13.05% 12.37% 1.44% December 31, 2004 ........... 16 16.25 16.09 1.40% 2.00% 260 18.27% 17.53% 0.56% December 31, 2003 ........... 6 13.74 13.69 1.40% 2.00% 77 37.45% 36.90% 0.19% Inception May 1, 2003 ....... -- 9.99 9.99 N/A N/A -- N/A N/A N/A VAN ECK WORLDWIDE INSURANCE TRUST: Absolute Return Fund December 31, 2007 ........... 10 10.60 10.31 1.40% 2.00% 107 2.61% 1.98% 0.48% December 31, 2006 ........... 3 10.33 10.11 1.40% 2.00% 31 7.16% 6.53% 0.00% December 31, 2005 ........... 3 9.64 9.49 1.40% 2.00% 27 -1.23% -1.76% 0.00% December 31, 2004 ........... 2 9.76 9.66 1.40% 2.00% 15 -1.71% -2.33% 0.00% December 31, 2003 ........... 9.93 9.89 1.40% 2.00% -- -0.73% -1.13% 0.00% Inception May 1, 2003 ....... -- 10.00 10.00 N/A N/A -- N/A N/A N/A Bond Fund December 31, 2007 ........... 14 15.38 14.64 1.40% 2.00% 212 8.23% 7.49% 6.24% December 31, 2006 ........... 18 14.21 13.62 1.40% 2.00% 261 4.95% 4.45% 3.13% December 31, 2005 ........... 19 13.54 13.04 1.40% 2.00% 252 -4.38% -4.96% 6.43% December 31, 2004 ........... 15 14.16 13.72 1.40% 2.00% 214 7.68% 6.94% 9.94% December 31, 2003 ........... 19 13.15 12.83 1.40% 2.00% 244 16.52% 15.82% 1.72% Emerging Markets Fund December 31, 2007 ........... 50 32.41 30.86 1.40% 2.00% 1,625 35.66% 34.88% 0.46% December 31, 2006 ........... 67 23.89 22.88 1.40% 2.00% 1,609 37.54% 36.76% 0.55% December 31, 2005 ........... 54 17.37 16.73 1.40% 2.00% 929 30.21% 29.39% 0.89% December 31, 2004 ........... 62 13.34 12.93 1.40% 2.00% 820 24.09% 23.38% 0.63% December 31, 2003 ........... 72 10.75 10.48 1.40% 2.00% 776 52.05% 51.14% 0.21% Hard Assets Fund December 31, 2007 ........... 62 36.03 34.30 1.40% 2.00% 2,235 43.32% 42.44% 0.10% December 31, 2006 ........... 47 25.14 24.08 1.40% 2.00% 1,169 22.81% 22.05% 0.06% December 31, 2005 ........... 48 20.47 19.73 1.40% 2.00% 984 49.53% 48.68% 0.30% December 31, 2004 ........... 45 13.69 13.27 1.40% 2.00% 613 22.23% 21.52% 0.39% December 31, 2003 ........... 51 11.20 10.92 1.40% 2.00% 568 43.06% 42.21% 0.37%
68 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
==================================================================================================================================== JEFFERSON NATIONAL LIFE ACCOUNT H ------------------------------------------------------------------------------------------------------------------------------------ STANDARD STD. WITH STANDARD STD. WITH STANDARD STD. WITH CONTRACT ALL RIDERS CONTRACT ALL RIDERS NET CONTRACT ALL RIDERS INVESTMENT UNITS -------------------- -------------------- ASSETS -------------------- INCOME FUND DESCRIPTION (000S) UNIT VALUE EXPENSE RATIO (000S) TOTAL RETURN RATIO ------------------------------------------------------------------------------------------------------------------------------------ VAN ECK WORLDWIDE INSURANCE TRUST: (continued) Real Estate Fund December 31, 2007 .......... 10 $ 26.10 $ 24.85 1.40% 2.00% $ 256 -0.53% -1.11% 1.32% December 31, 2006 .......... 19 26.24 25.13 1.40% 2.00% 507 29.13% 28.35% 1.20% December 31, 2005 .......... 15 20.32 19.58 1.40% 2.00% 310 19.32% 18.59% 2.29% December 31, 2004 .......... 17 17.03 16.51 1.40% 2.00% 294 34.31% 33.47% 1.43% December 31, 2003 .......... 15 12.68 12.37 1.40% 2.00% 189 32.63% 31.84% 1.95% WELLS FARGO ADVANTAGE VT FUND: Discovery Fund December 31, 2007 .......... 60 15.48 15.23 1.40% 2.00% 927 20.56% 19.83% 0.00% December 31, 2006 .......... 64 12.84 12.71 1.40% 2.00% 827 13.03% 12.38% 0.00% December 31, 2005 .......... 76 11.36 11.31 1.40% 2.00% 862 14.75% 14.24% 0.00% Inception April 8, 2005 .... -- 9.90 9.90 N/A N/A -- N/A N/A N/A Opportunity Fund December 31, 2007 .......... 32 20.34 19.36 1.40% 2.00% 653 5.17% 4.48% 0.58% December 31, 2006 .......... 50 19.34 18.53 1.40% 2.00% 955 10.64% 10.04% 0.00% December 31, 2005 .......... 67 17.48 16.84 1.40% 2.00% 1,164 6.39% 5.71% 0.00% December 31, 2004 .......... 87 16.43 15.93 1.40% 2.00% 1,419 16.61% 15.94% 0.00% December 31, 2004 .......... 71 14.09 13.74 1.40% 2.00% 1,006 35.10% 34.30% 0.06%
69 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007 ================================================================================ (6) UNIT PROGRESSION The changes in units outstanding for the year ended December 31, 2007, were as follows:
NUMBER NUMBER OF UNITS OF UNITS BEGINNING UNITS UNITS END NOTES* OF THE YEAR PURCHASED REDEEMED OF THE YEAR ------------------------------------------------------------------------------------------------------------------ 40|86 SERIES TRUST: Balanced ....................................... i 120,753.9 11,760.3 (132,514.2) -- Equity ......................................... i 97,856.9 10,864.0 (108,720.9) -- Fixed Income ................................... a 59,105.5 502.6 (59,608.1) -- Government Securities .......................... a 81,989.0 1.1 (81,990.1) -- Money Market ................................... a 260,625.8 100,526.5 (361,152.3) -- AIM VARIABLE INSURANCE FUNDS: Basic Value .................................... 4,510.6 8,974.8 (8,974.2) 4,511.2 Core Equity .................................... 22,132.3 8,732.2 (12,131.5) 18,733.0 Financial Services ............................. 17,353.5 589.7 (6,666.7) 11,276.5 Global Health Care ............................. 10,806.8 7,574.8 (1,007.1) 17,374.5 Global Real Estate ............................. 32,512.3 8,023.0 (23,124.6) 17,410.7 High Yield ..................................... 33,646.2 44,267.3 (53,926.9) 23,986.6 Mid Cap Core Equity ............................ 8,763.1 8,041.3 (4,860.9) 11,943.5 Technology ..................................... 11,088.7 9,518.4 (15,348.5) 5,258.6 THE ALGER AMERICAN FUND: Growth ......................................... 97,968.1 26,900.2 (36,134.3) 88,734.0 Leveraged AllCap ............................... 68,376.1 19,153.2 (22,743.4) 64,785.9 MidCap Growth .................................. 74,407.0 22,746.1 (19,974.9) 77,178.2 Small Capitalization ........................... 72,137.2 4,096.9 (35,954.2) 40,279.9 ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES, INC: Growth and Income .............................. 6,921.9 12,678.4 (1,302.2) 18,298.1 AMERICAN CENTURY VARIABLE PORTFOLIOS, INC: Balanced ....................................... 786.9 16,759.1 (9,223.5) 8,322.5 Income & Growth ................................ 47,331.6 9,730.5 (18,787.8) 38,274.3 Inflation Protection ........................... 3,576.4 7,187.7 (4,990.8) 5,773.3 International .................................. 40,790.1 45,787.1 (36,497.2) 50,080.0 Value .......................................... 106,211.5 32,234.0 (54,155.1) 84,290.4 DIREXION INSURANCE TRUST: Dynamic VP HY Bond ............................. 986.1 2,122.5 (2,102.5) 1,006.1 DREYFUS INVESTMENT PORTFOLIOS: Dreyfus Small Cap Stock Index .................. 3,354.7 1,708.8 (4,020.9) 1,042.6 DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND: ......... 21,459.7 317.0 (6,042.9) 15,733.8 DREYFUS STOCK INDEX FUND: ......................... 211,247.8 28,387.5 (74,042.3) 165,593.0 DREYFUS VARIABLE INVESTMENT FUND: Disciplined Stock .............................. h 12,082.8 2.7 (12,085.5) -- International Value ............................ 56,609.7 11,845.2 (34,704.7) 33,750.2 FEDERATED INSURANCE SERIES: Capital Income II .............................. 34,173.1 25,985.6 (24,793.6) 35,365.1 High Income Bond II ............................ 79,751.0 24,747.2 (49,855.3) 54,642.9 International Equity II ........................ 28,132.0 8,145.8 (13,030.1) 23,247.7 JANUS ASPEN SERIES: Growth and Income .............................. 54,593.2 10,458.6 (33,863.4) 31,188.4 International Growth ........................... 41,231.1 23,888.6 (24,862.9) 40,256.8 Large Cap Growth ............................... 124,855.4 9,274.4 (28,431.0) 105,698.8 Mid Cap Growth ................................. 77,154.3 6,129.4 (16,966.2) 66,317.5 Worldwide Growth ............................... 91,389.6 9,578.3 (16,661.6) 84,306.3 LAZARD RETIREMENT SERIES: Emerging Markets ............................... 28,728.7 26,951.0 (25,214.3) 30,465.4 International Equity ........................... 7,626.9 10,777.1 (11,855.9) 6,548.1 Small Cap ...................................... 34,758.9 975.7 (10,870.1) 24,864.5 US Strategic Equity ............................ k 15,021.6 8,885.1 (8,677.9) 15,228.8
70 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
========================================================================================================================== NUMBER NUMBER OF UNITS OF UNITS BEGINNING UNITS UNITS END NOTES* OF THE YEAR PURCHASED REDEEMED OF THE YEAR -------------------------------------------------------------------------------------------------------------------------- LEGG MASON PARTNERS VARIABLE EQUITY TRUST: Aggressive Growth I .................................. b -- 4,776.0 (4,225.9) 550.1 Capital and Income I ................................. b -- 397.2 (75.8) 321.4 Fundamental Value I .................................. b -- 7,032.7 (6,509.0) 523.7 Large Cap Growth I ................................... b -- 4,455.6 (3,920.7) 534.9 LEGG MASON PARTNERS VARIABLE INCOME TRUST: Global High Yield Bond ............................... c 10,857.0 6,502.3 (1,753.5) 15,605.8 Government ........................................... d -- 49,821.9 (45,322.7) 4,499.2 LEGG MASON PARTNERS VARIABLE INCOME TRUST: (CONTINUED) Strategic Bond ....................................... c 16,181.6 8,800.2 (10,377.8) 14,604.0 LEGG MASON PARTNERS VARIABLE PORTFOLIOS I, INC: All Cap Value ........................................ e 416.6 4,854.1 (5,270.7) -- Large Cap Growth ..................................... f 1,673.6 111.9 (1,785.5) -- Total Return ......................................... g 216.1 46.2 (262.3) -- LORD ABBETT SERIES FUND: America's Value ...................................... 4,541.7 18,579.6 (3,424.1) 19,697.2 Growth and Income .................................... 90,917.6 21,312.4 (36,929.7) 75,300.3 NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST: Lehman Brothers High Income Bond ..................... l 1,171.1 1,407.5 (1,310.2) 1,268.4 Lehman Brothers Short Duration Bond .................. m 45,721.8 16,308.9 (13,097.5) 48,933.2 Fasciano ............................................. 298.2 1,141.6 (1,370.7) 69.1 Mid-Cap Growth ....................................... 52,272.9 15,926.8 (18,097.2) 50,102.5 Partners ............................................. 64,203.2 24,430.8 (26,076.8) 62,557.2 Regency .............................................. 9,262.0 1,892.3 (6,555.1) 4,599.2 Socially Responsive .................................. 7,302.7 8,952.7 (13,860.1) 2,395.3 NORTHERN LIGHTS VARIABLE TRUST: JNF Balanced ......................................... j -- 234,997.8 (31,924.0) 203,073.8 JNF Equity ........................................... j -- 274,582.0 (42,804.2) 231,777.8 PIMCO VARIABLE INSURANCE TRUST: Money Market ......................................... 57,045.0 1,149,913.5 (712,440.3) 494,518.2 Real Return .......................................... 27,444.6 17,953.4 (12,800.1) 32,597.9 Short-Term ........................................... 31,401.4 91,793.7 (58,331.1) 64,864.0 Total Return ......................................... 66,501.1 50,669.7 (46,288.3) 70,882.5 PIONEER VARIABLE CONTRACTS TRUST: Core Bond ............................................ ae 452.9 452.9 (905.8) -- Equity Income ........................................ 75,230.6 18,831.2 (57,122.7) 36,939.1 Fund ................................................. 32,828.0 20,788.5 (22,466.5) 31,150.0 High Yield ........................................... 18,623.5 90,333.8 (72,727.9) 36,229.4 International Value .................................. 14,205.6 28,821.9 (22,927.3) 20,100.2 Mid Cap Value ........................................ 2,768.6 2,643.0 (2,437.1) 2,974.5 ROYCE CAPITAL FUND: Micro-Cap ............................................ 14,392.6 21,881.3 (23,064.4) 13,209.5 Small-Cap ............................................ 36,131.0 6,112.9 (16,776.3) 25,467.6 RYDEX VARIABLE TRUST: CLS AdvisorOne Amerigo ............................... 3,118.6 340.8 (37.0) 3,422.4 CLS AdvisorOne Clermont .............................. 869.2 775.2 (366.6) 1,277.8 Banking .............................................. 491.6 83,849.8 (82,484.4) 1,857.0 Basic Materials ...................................... 17,041.1 169,381.4 (163,408.5) 23,014.0 Biotechnology ........................................ -- 100,666.0 (97,444.7) 3,221.3 Commodities Strategy ................................. n 878.6 2,384.2 (1,237.3) 2,025.5 Consumer Products .................................... 5,767.9 44,933.8 (49,965.2) 736.5 Dow 2X Strategy ...................................... o 5,285.5 89,551.5 (88,660.0) 6,177.0 Electronics .......................................... 3,011.0 69,092.2 (70,741.5) 1,361.7 Energy ............................................... 32,805.5 69,879.1 (67,693.0) 34,991.6 Energy Services ...................................... 17,860.2 119,826.5 (106,599.8) 31,086.9 Europe 1.25X Strategy ................................ p 23,304.4 93,480.0 (106,024.0) 10,760.4 Financial Services ................................... 10,360.7 49,614.4 (58,787.5) 1,187.6
71 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
============================================================================================================== NUMBER NUMBER OF UNITS OF UNITS BEGINNING UNITS UNITS END NOTES* OF THE YEAR PURCHASED REDEEMED OF THE YEAR -------------------------------------------------------------------------------------------------------------- RYDEX VARIABLE TRUST: (continued) Government Long Bond 1.2X Strategy ..... q 17,052.6 232,004.6 (218,718.5) 30,338.7 Health Care ............................ 13,753.6 71,340.8 (82,063.5) 3,030.9 Internet ............................... 4,125.7 61,168.0 (62,922.5) 2,371.2 Inverse Dow 2X Strategy ................ r 4,624.1 62,171.3 (66,505.6) 289.8 Inverse Government Long Bond Strategy .. s 49,092.7 136,142.3 (135,261.9) 49,973.1 Inverse Mid-Cap Strategy ............... t 965.8 49,686.0 (50,651.8) -- Inverse OTC Strategy ................... u 1,723.4 120,449.8 (121,122.7) 1,050.5 Inverse Russell 2000 Strategy .......... v 6,020.0 256,770.6 (258,604.2) 4,186.4 Inverse S&P 500 Strategy ............... w 1,330.7 170,900.3 (170,697.2) 1,533.8 Japan 1.25X Strategy ................... x 11,366.9 147,440.1 (152,607.6) 6,199.4 Large Cap Growth ....................... 12,631.8 18,343.5 (21,916.4) 9,058.9 Large Cap Value ........................ 37,551.0 62,200.2 (93,812.5) 5,938.7 Leisure ................................ 7,093.2 23,384.0 (29,391.1) 1,086.1 Mid Cap 1.5X Strategy .................. y 2,628.0 105,951.5 (105,606.2) 2,973.3 Mid-Cap Growth ......................... 4,909.4 65,543.5 (66,640.1) 3,812.8 Mid-Cap Value .......................... 21,729.5 31,033.3 (45,376.8) 7,386.0 Nova ................................... 38,895.1 132,193.1 (134,847.6) 36,240.6 OTC 2X Strategy ........................ z 9,591.7 172,530.8 (174,140.7) 7,981.8 OTC .................................... 32,959.2 178,627.4 (178,593.6) 32,993.0 Precious Metals ........................ 35,795.6 169,187.0 (168,472.6) 36,510.0 Real Estate ............................ 11,059.6 53,099.0 (60,683.1) 3,475.5 Retailing .............................. 433.8 29,468.7 (29,606.4) 296.1 Russell 2000 1.5X Strategy ............. aa 6,712.7 33,057.3 (30,959.4) 8,810.6 S&P 500 2X Strategy .................... ab 20,140.1 73,623.2 (87,795.6) 5,967.7 Sector Rotation ........................ 3,618.0 6,748.8 (6,077.4) 4,289.4 Small-Cap Growth ....................... 12,849.2 49,389.9 (50,778.3) 11,460.8 Small-Cap Value ........................ 9,616.7 16,992.3 (20,546.9) 6,062.1 Strengthening Dollar 2X Strategy ....... ac -- 1,624.7 (957.0) 667.7 Technology ............................. 3,385.8 58,399.0 (59,278.3) 2,506.5 Telecommunications ..................... 1,798.4 124,825.6 (125,315.4) 1,308.6 Transportation ......................... 4,010.9 34,362.5 (37,983.0) 390.4 U.S. Government Money Market ........... 75,962.0 497,730.0 (519,548.0) 54,144.0 Utilities .............................. 29,190.8 150,566.9 (153,526.1) 26,231.6 Weakening Dollar 2X Strategy ........... ad 657.0 9,144.7 (3,473.7) 6,328.0 SELIGMAN PORTFOLIOS, INC: Communications and Information ......... 54,741.9 4,639.7 (17,781.9) 41,599.7 Global Technology ...................... 28,215.8 3,574.8 (4,498.6) 27,292.0 THIRD AVENUE VARIABLE SERIES TRUST: Value .................................. 50,516.0 21,779.1 (28,878.0) 43,417.1 VAN ECK WORLDWIDE INSURANCE TRUST: Absolute Return ........................ 2,842.3 9,079.5 (1,881.9) 10,039.9 Bond ................................... 18,422.7 4,269.5 (8,827.9) 13,864.3 Emerging Markets ....................... 67,425.4 43,202.6 (60,350.4) 50,277.6 Hard Assets ............................ 46,573.4 45,358.5 (29,582.3) 62,349.6 Real Estate ............................ 19,381.6 10,127.7 (19,602.1) 9,907.2 WELLS FARGO ADVANTAGE VT FUNDS: Discovery .............................. 64,397.4 14,203.9 (18,726.3) 59,875.0 Opportunity ............................ 49,552.4 1,707.7 (18,958.8) 32,301.3 -------------------------------------------------------------------------------------------------------------- TOTALS 3,901,007.2 7,291,174.6 (7,458,131.2) 3,734,050.6 ==============================================================================================================
* See Footnote 7 for details. 72 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007 ================================================================================ (6) UNIT PROGRESSION The changes in units outstanding for the year ended December 31, 2006, were as follows:
NUMBER NUMBER OF UNITS OF UNITS BEGINNING UNITS UNITS END NOTES OF THE YEAR PURCHASED REDEEMED OF THE YEAR --------------------------------------------------------------------------------------------------------------------------------- 40|86 SERIES TRUST: Balanced .......................................... 135,304.9 23,837.7 (38,388.7) 120,753.9 Equity ............................................ 110,911.6 36,760.6 (49,815.3) 97,856.9 Fixed Income ...................................... 80,971.0 8,702.2 (30,567.7) 59,105.5 Government Securities ............................. 94,257.4 11,340.1 (23,608.5) 81,989.0 High Yield ........................................ a 68,637.8 1,622.3 (70,260.1) -- Money Market ...................................... 305,548.0 781,880.8 (826,803.0) 260,625.8 AIM VARIABLE INSURANCE FUNDS: Basic Value ....................................... 4,897.9 1,112.6 (1,499.9) 4,510.6 Core Equity ....................................... b -- 23,072.9 (940.6) 22,132.3 Core Stock ........................................ c 12,471.2 7.3 (12,478.5) -- Financial Services ................................ 14,454.4 10,439.5 (7,540.4) 17,353.5 Global Health Care ................................ 11,147.5 4,284.7 (4,625.4) 10,806.8 Global Real Estate ................................ d 20,419.8 33,372.2 (21,279.7) 32,512.3 High Yield ........................................ 29,266.7 40,162.9 (35,783.4) 33,646.2 Mid Cap Core Equity ............................... 8,801.0 1,096.7 (1,134.6) 8,763.1 Technology ........................................ 8,006.0 7,664.8 (4,582.1) 11,088.7 THE ALGER AMERICAN FUND: Growth ............................................ 117,091.5 22,828.6 (41,952.0) 97,968.1 Leveraged AllCap .................................. 77,704.8 14,657.0 (23,985.7) 68,376.1 Midcap Growth ..................................... 102,077.7 9,897.1 (37,567.8) 74,407.0 Small Capitalization .............................. 67,624.8 64,732.5 (60,220.1) 72,137.2 ALLIANCE VARIABLE PRODUCT SERIES, INC: Growth and Income ................................. 6,393.3 753.2 (224.6) 6,921.9 AMERICAN CENTURY VARIABLE PORTFOLIOS, INC: Inflation Protection .............................. 4,220.4 13,056.6 (13,700.6) 3,576.4 Balanced .......................................... -- 8,914.7 (8,127.8) 786.9 Income & Growth ................................... 46,148.6 12,474.8 (11,291.8) 47,331.6 International ..................................... 33,385.3 24,053.0 (16,648.2) 40,790.1 Value ............................................. 106,929.2 37,344.7 (38,062.4) 106,211.5 DIREXION INSURANCE TRUST: e Dynamic VP HY Bond ................................ e 1,103.0 575.2 (692.1) 986.1 DREYFUS INVESTMENT PORTFOLIO: Small Cap Stock Index ............................. 1,289.1 7,747.0 (5,681.4) 3,354.7 DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND: ............ 27,678.6 6,900.5 (13,119.4) 21,459.7 DREYFUS STOCK INDEX FUND: ............................ 223,223.2 38,778.3 (50,753.7) 211,247.8 DREYFUS VARIABLE INVESTMENT FUNDS: Disciplined Stock ................................. 15,369.7 1,012.8 (4,299.7) 12,082.8 International Value ............................... 43,643.1 60,662.6 (47,696.0) 56,609.7 FEDERATED INSURANCE SERIES: Capital Income II ................................. 15,752.2 35,785.9 (17,365.0) 34,173.1 High Income Bond II ............................... 54,057.8 51,369.3 (25,676.1) 79,751.0 International Equity II ........................... 27,805.2 34,859.6 (34,532.8) 28,132.0 JANUS ASPEN SERIES: Growth and Income ................................. 63,956.3 12,778.7 (22,141.8) 54,593.2 International Growth .............................. 15,111.5 54,299.4 (28,179.8) 41,231.1 Large Cap Growth .................................. 138,814.3 6,231.6 (20,190.5) 124,855.4 Mid Cap Growth .................................... 96,221.2 14,443.0 (33,509.9) 77,154.3 Worldwide Growth .................................. 106,339.4 6,292.1 (21,241.9) 91,389.6 LAZARD RETIREMENT SERIES: Emerging Markets .................................. 32,640.4 27,763.5 (31,675.2) 28,728.7 US Strategic Equity ............................... aa 12,737.9 22,723.8 (20,440.1) 15,021.6 International Equity .............................. 7,440.2 12,720.8 (12,534.1) 7,626.9 Small Cap ......................................... 43,740.1 6,239.1 (15,220.3) 34,758.9
73 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
================================================================================================================================= NUMBER NUMBER OF UNITS OF UNITS BEGINNING UNITS UNITS END NOTES OF THE YEAR PURCHASED REDEEMED OF THE YEAR --------------------------------------------------------------------------------------------------------------------------------- LEGG MASON PARTNERS VARIABLE PORTFOLIOS I, INC: Aggressive Growth ................................. f 628.9 65.9 (694.8) -- All Cap Value ..................................... f 710.5 40.9 (334.8) 416.6 Global High Yield Bond ............................ f, g 34,219.4 35,818.1 (59,180.5) 10,857.0 Large Cap Growth .................................. f -- 7,661.5 (5,987.9) 1,673.6 Strategic Bond .................................... f 14,781.0 21,906.9 (20,506.3) 16,181.6 Total Return ...................................... f 609.1 1,306.2 (1,699.2) 216.1 LEGG MASON PARTNERS INVESTMENT SERIES: f Government ........................................ f, x 6,713.0 -- (6,713.0) -- LORD ABBETT SERIES FUND: America's Value ................................... 6,851.9 7,206.9 (9,517.1) 4,541.7 Growth and Income ................................. 98,836.5 41,263.7 (49,182.6) 90,917.6 NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST: Fasciano .......................................... 204.9 741.2 (647.9) 298.2 Lehman Brothers High Income Bond .................. y -- 1,171.1 -- 1,171.1 Lehman Brothers Short Duration Bond ............... z 54,583.4 65,905.2 (74,766.8) 45,721.8 Mid Cap Growth .................................... 43,808.9 27,098.3 (18,634.3) 52,272.9 Partners .......................................... 79,323.5 20,958.8 (36,079.1) 64,203.2 Regency ........................................... 10,657.4 2,473.7 (3,869.1) 9,262.0 Socially Responsive ............................... 8,697.9 6,990.8 (8,386.0) 7,302.7 PIMCO VARIABLE INSURANCE TRUST: Money Market ...................................... 11,522.0 153,477.1 (107,954.1) 57,045.0 Real Return ....................................... 25,709.9 25,764.7 (24,030.0) 27,444.6 Short Term ........................................ 12,568.8 129,554.9 (110,722.3) 31,401.4 Total Return ...................................... 50,410.2 160,819.8 (144,728.9) 66,501.1 PIONEER VARIABLE CONTRACTS TRUST: Core Bond ......................................... 123.9 329.0 -- 452.9 Equity Income ..................................... 45,756.9 69,937.0 (40,463.3) 75,230.6 Europe ............................................ k 391.2 22,759.3 (23,150.5) -- Fund .............................................. 38,873.9 10,972.3 (17,018.2) 32,828.0 High Yield ........................................ 3,384.2 17,393.6 (2,154.3) 18,623.5 International Value ............................... w -- 14,205.6 -- 14,205.6 Mid Cap Value ..................................... 8,711.2 5,026.7 (10,969.3) 2,768.6 Money Market ...................................... -- 357.6 (357.6) -- ROYCE CAPITAL FUND: Micro Cap ......................................... 12,400.3 19,457.0 (17,464.7) 14,392.6 Small Cap ......................................... 43,422.4 5,052.4 (12,343.8) 36,131.0 RYDEX VARIABLE TRUST: Banking ........................................... 5,240.1 2,342.0 (7,090.5) 491.6 Basic Materials ................................... 14,240.0 39,791.2 (36,990.1) 17,041.1 Biotechnology ..................................... 3,193.1 16,503.1 (19,696.2) -- CLS AdvisorOne Amerigo ............................ -- 3,134.9 (16.3) 3,118.6 CLS AdvisorOne Clermont ........................... -- 869.2 -- 869.2 Commodities Strategy .............................. ab 672.9 205.7 -- 878.6 Consumer Products ................................. 1,402.4 31,713.4 (27,347.9) 5,767.9 Dow 2X Strategy ................................... h 1,389.3 96,522.6 (92,626.4) 5,285.5 OTC 2X Strategy ................................... i 5,827.4 122,016.1 (118,251.8) 9,591.7 S&P 500 2X Strategy ............................... j 11,509.5 22,177.6 (13,547.0) 20,140.1 Weakening Dollar 2X Strategy ...................... l -- 18,831.2 (18,174.2) 657.0 Electronics ....................................... 1,613.7 15,697.3 (14,300.0) 3,011.0 Energy ............................................ 50,857.0 46,793.7 (64,845.2) 32,805.5 Energy Services ................................... 26,883.5 43,347.2 (52,370.5) 17,860.2 Europe 1.25X Strategy ............................. m -- 57,812.2 (34,507.8) 23,304.4 Financial Services ................................ 6,712.7 14,589.7 (10,941.7) 10,360.7 Government Long Bond .............................. n 18,076.7 58,922.7 (59,946.8) 17,052.6 Health Care ....................................... 29,535.7 26,968.0 (42,750.1) 13,753.6 Internet .......................................... 1,214.4 3,536.8 (625.5) 4,125.7 Inverse Dow 2X Strategy ........................... o 1,253.0 23,323.6 (19,952.5) 4,624.1
74 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007
================================================================================================================================= NUMBER NUMBER OF UNITS OF UNITS BEGINNING UNITS UNITS END NOTES OF THE YEAR PURCHASED REDEEMED OF THE YEAR --------------------------------------------------------------------------------------------------------------------------------- RYDEX VARIABLE TRUST: (CONTINUED) Inverse Government Long Bond Strategy ............. p 56,017.4 69,106.3 (76,031.0) 49,092.7 Inverse Mid-Cap Strategy .......................... 1,243.4 9,804.0 (10,081.6) 965.8 Inverse OTC Strategy .............................. q 702.1 33,385.9 (32,364.6) 1,723.4 Inverse Russell 2000 Strategy ..................... r 1,678.9 26,071.4 (21,730.3) 6,020.0 Inverse S&P 500 Strategy .......................... s 1,014.1 21,550.8 (21,234.2) 1,330.7 Japan 1.25X Strategy .............................. t 25,878.0 53,404.9 (67,916.0) 11,366.9 Large Cap Growth .................................. 3,063.8 32,634.2 (23,066.2) 12,631.8 Large Cap Value ................................... 110.3 95,963.8 (58,523.1) 37,551.0 Leisure ........................................... 255.1 7,179.3 (341.2) 7,093.2 Mid Cap 1.5X Strategy ............................. u 3,699.1 50,942.9 (52,014.0) 2,628.0 Mid-Cap Growth .................................... 9,904.3 7,954.0 (12,948.9) 4,909.4 Mid-Cap Value ..................................... 102.9 34,731.3 (13,104.7) 21,729.5 Nova .............................................. 37,635.5 93,616.8 (92,357.2) 38,895.1 OTC ............................................... 32,962.3 56,969.4 (56,972.5) 32,959.2 Precious Metals ................................... 14,798.5 77,032.6 (56,035.5) 35,795.6 Real Estate ....................................... 4,383.5 36,761.4 (30,085.3) 11,059.6 Retailing ......................................... 472.4 2,803.4 (2,842.0) 433.8 Russell 2000 1.5X Strategy ........................ v 271.9 69,552.9 (63,112.1) 6,712.7 Sector Rotation ................................... 6,757.9 12,169.5 (15,309.4) 3,618.0 Small-Cap Growth .................................. 3,250.9 27,425.8 (17,827.5) 12,849.2 Small-Cap Value ................................... 935.2 35,081.7 (26,400.2) 9,616.7 Technology ........................................ 1,164.9 9,618.9 (7,398.0) 3,385.8 Telecommunications ................................ 1,399.3 17,504.8 (17,105.7) 1,798.4 Transportation .................................... 8,692.2 19,298.5 (23,979.8) 4,010.9 U.S. Government Money Market ...................... 343,323.9 242,311.2 (509,673.1) 75,962.0 Utilities ......................................... 18,442.5 66,705.7 (55,957.4) 29,190.8 SELIGMAN PORTFOLIOS, INC: Communications and Information .................... 42,632.7 32,141.0 (20,031.8) 54,741.9 Global Technology ................................. 28,209.8 3,267.1 (3,261.1) 28,215.8 THIRD AVENUE VARIABLE SERIES TRUST: Value ............................................. 37,937.0 24,172.4 (11,593.4) 50,516.0 VAN ECK WORLDWIDE INSURANCE TRUST: Absolute Return ................................... 2,579.7 17,164.6 (16,902.0) 2,842.3 Bond .............................................. 18,631.4 116,328.7 (116,537.4) 18,422.7 Emerging Markets .................................. 53,542.5 49,488.4 (35,605.5) 67,425.4 Hard Assets ....................................... 48,103.7 23,529.5 (25,059.8) 46,573.4 Real Estate ....................................... 15,330.0 20,919.1 (16,867.5) 19,381.6 WELLS FARGO ADVANTAGE VT FUNDS Discovery ......................................... 75,908.9 1,918.3 (13,429.8) 64,397.4 Opportunity ....................................... 66,847.3 2,172.5 (19,467.4) 49,552.4 ---------------------------------------------------------------------------------------------------------------------------------- TOTALS 4,154,999.9 4,616,750.1 (4,870,742.8) 3,901,007.2 ==================================================================================================================================
a) For the period January 1, 2006 through August 31, 2006 (liquidation of fund). b) For the period April 28, 2006 (inception of fund) through December 31, 2006. c) For the period January 1, 2006 through April 27, 2006 (fund merged into AIM VI Core Equity). d) Formerly AIM VI Real Estate prior to its name change effective July 3, 2006. e) Formerly Potomac Insurance Trust and Dynamic VP HY Bond prior to their name changes on April 28, 2006. f) Formerly Salomon Brothers Variable Series Funds prior to the name change effective May 1, 2006. g) Formerly LMP Variable High Yield prior to its name change effective September 1, 2006. h) Formerly Dynamic Dow prior to its name change effective July 3, 2007 and Long Dynamic Dow 30 prior to its name change effective May 1, 2006. i) Formerly Dynamic OTC prior to its name change effective July 3, 2007 and Velocity 100 prior to its name change effective May 1, 2006. j) Formerly Dynamic S&P 500 prior to its name change effective July 3, 2007 and Titan 500 prior to its name change effective May 1, 2006. k) For the period January 1, 2006 through December 15, 2006 (fund merged into International Value). l) Formerly Dynamic Weakening Dollar prior to its name change effective July 3, 2007 and Weakening Dollar prior to its name change effective May 1, 2006. m) Formerly Europe Advantage prior to its name change effective July 3, 2007 and Large-Cap Europe prior to its name change effective May 1, 2006. n) Formerly Government Long Bond Advantage prior to its name change effective July 3, 2007 and U.S. Government Bond prior to its name change effective May 1, 2006. o) Formerly Inverse Dynamic Dow prior to its name change effective July 3, 2007 and Inverse Dynamic Dow 30 prior to its name change effective May 1, 2006. 75 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007 ================================================================================ p) Formerly Inverse Government Long Bond prior to its name change effective July 3, 2007 and Juno prior to its name change effective May 1, 2006. q) Formerly Inverse OTC prior to its name change effective July 3, 2007 and Arktos prior to its name change effective May 1, 2006. r) Formerly Inverse Russell 2000 prior to its name change effective July 3, 2007 and Inverse Small-Cap prior to its name change effective May 1, 2006. s) Formerly Inverse S&P 500 prior to its name change effective July 3, 2007 and Ursa prior to its name change effective May 1, 2006. t) Formerly Japan Advantage prior to its name change effective July 3, 2007 and Large Cap Japan prior to its name change effective May 1, 2006. u) Formerly Mid Cap Advantage prior to its name change effective July 3, 2007 and Medius prior to its name change effective May 1, 2006. v) Formerly Russell 2000 Advantage prior to its name change effective July 3, 2007 and Mekros prior to its name change effective May 1, 2006. w) For the period December 15, 2006 (inception of fund) through December 31, 2006. x) Formerly SB Government prior to its name change effective May 1, 2006. x) Formerly Inverse Mid-Cap prior to its name change effective July 3, 2007. y) Formerly High Income Bond prior to its name change effective May 1, 2007. z) Formerly Limited Maturity Bond prior to its name change effective May 1, 2007. aa) Formerly Equity prior to its name change effective May 1, 2007. ab) Formerly Commodities prior to its name change effective May 1, 2007. 76 JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2007 ================================================================================ (7) DETAIL DESCRIPTIONS FOR STATEMENT OF OPERATIONS AND UNIT PROGRESSION FOOTNOTE REFERENCES a) For the period January 1, 2007 through March 29, 2007 (liquidation of fund). b) For the period April 27, 2007 (inception of fund) through December 31, 2007. c) Formerly in Legg Mason Partners Variable Portfolio I until restructure on April 27, 2007. d) Formerly in Legg Mason Partners Investment Series until restructure on April 27, 2007. e) For the period January 1, 2007 through April 27, 2007 (merged into LMPV Equity Trust - Fundamental Value). f) For the period January 1, 2007 through April 27, 2007 (merged into LMPV Equity Trust - Large Cap Growth). g) For the period January 1, 2007 through April 27, 2007 (merged into LMPV Equity Trust - Capital and Income). h) For the period January 1, 2007 through April 27, 2007 (liquidation of fund). i) For the period of January 1, 2007 through April 30, 2007 (liquidation of fund). j) For the period of May 1, 2007 (inception of the fund) through December 31, 2007. k) Lazard US Strategic Equity was formerly Lazard Equity prior to its name change effective May 1, 2007. l) Neuberger Lehman Brothers High Income Bond was formerly Neuberger High Income Bond prior to its name change effective May 1, 2007. m) Neuberger Lehman Brothers Short Duration Bond was formerly Neuberger Limited Maturity Bond prior to its name change effective May 1, 2007. n) Rydex Commodities Strategy was formerly Rydex Commodities prior to its name change effective May 1, 2007. o) Rydex Dow 2X Strategy was formerly Rydex Dynamic Dow prior to its name change effective July 3, 2007. p) Rydex Europe 1.25 X Strategy was formerly Rydex Europe Advantage prior to its name change effective July 3, 2007. q) Rydex Government Long Bond 1.2X Strategy was formerly Rydex Government Long Bond Advantage prior to its name change effective July 3, 2007. r) Rydex Inverse Dow 2X Strategy was formerly Rydex Inverse Dynamic Dow prior to its name change effective July 3, 2007. s) Rydex Inverse Government Long Bond Strategy was formerly Rydex Inverse Government Long Bond prior to its name change effective July 3, 2007. t) Rydex Inverse Mid-Cap Strategy was formerly Rydex Inverse Mid-Cap prior to its name change effective July 3, 2007. u) Rydex Inverse OTC Strategy was formerly Rydex Inverse OTC prior to its name change effective July 3, 2007. v) Rydex Inverse Russell 2000 Strategy was formerly Rydex Inverse Russell 2000 prior to its name change effective July 3, 2007. w) Rydex Inverse S&P 500 Strategy was formerly Rydex Inverse S&P 500 prior to its name change effective July 3, 2007. x) Rydex Japan 1.25X Strategy was formerly Rydex Japan Advantage prior to its name change effective July 3, 2007. y) Rydex Mid Cap 1.5X Strategy was formerly Rydex Mid Cap Advantage prior to its name change effective July 3, 2007. z) Rydex OTC 2X Strategy was formerly Rydex Dynamic OTC prior to its name change effective July 3, 2007. aa) Rydex Russell 2000 1.5X Strategy was formerly Rydex Russell 2000 Advantage prior to its name change effective July 3, 2007. ab) Rydex S&P 500 2X Strategy was formerly Rydex Dynamic S&P 500 prior to its name change effective July 3, 2007. ac) Rydex Strengthening Dollar 2X Strategy was formerly Rydex Dynamic Strengthening Dollar prior to its name change effective July 3, 2007. ad) Rydex Weakening Dollar 2X Strategy was formerly Rydex Dynamic Weakening Dollar prior to its name change effective July 3, 2007. ae) For the period January 1, 2007 through November 9, 2007 (liquidation of fund). (8) SUBSEQUENT EVENTS Effective January 3, 2008, Inviva, Inc., Jefferson National Life Insurance Company's (the "Company") ultimate parent, completed a restructuring transaction whereby it exchanged $111.5 million of debt ($91.5 million principal and $20 million accrued interest) for (a) cash and new debt of approximately $9 million and $7.6 million, including future interest payments, respectively; and (b) a portion of its equity interest in Jefferson National Financial Corp. (JNFC). The new debt resides at JNFC, but will ultimately be serviced by the Company at an annual cost of approximately $0.3 million to $0.5 million. On January 2, 2008, to facilitate the restructuring, the Company paid a $3.6 million extraordinary distribution, which was approved by the Texas Department of Insurance. On a pro forma basis, this dividend will reduce the Company's statutory capital and surplus from $41.1 million to $37.4 million and reduce risk-based capital from 690% to 633% authorized control level. 77 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ================================================================================ TO THE BOARD OF DIRECTORS JEFFERSON NATIONAL LIFE INSURANCE COMPANYAND CONTRACT OWNERS OF JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H We have audited the accompanying statement of assets and liabilities of Jefferson National Life Annuity Account H as of December 31, 2007, the related statements of operations and changes in net assets for the years ended December 31, 2007 and 2006, and the financial highlights for each of the three years for the period ended December 31, 2007. These financial statements and financial highlights are the responsibility of the Account's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits 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 and financial highlights are free of material misstatement. The Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Account's internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2007, by correspondence with the custodian and others. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Jefferson National Life Annuity Account H as of December 31, 2007, the results of its operations, changes in its net assets for the years ended December 31, 2007 and 2006, and financial highlights for each of the three years for the period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America. /s/ BDO Seidman, LLP New York, New York March 21, 2008 78 ================================================================================ JEFFERSON NATIONAL LIFE ANNUITY ACCOUNT H SPONSOR Jefferson National Life Insurance Company DISTRIBUTOR Jefferson National Financial Securities Corporation INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM BDO Seidman, LLP B-7