AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 22,
1997
Registration No.
811-1737
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No.
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 [X]
Amendment No. 22
(Check appropriate box or boxes.)
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
(Exact name of registrant)
8515 E. Orchard Road
Englewood, Colorado 80111
(303) 689-3000
(Address and telephone number of registrant's principal executive
office)
RUTH B. LURIE
Vice-President and Counsel
Great-West Life & Annuity Insurance Company
8515 E. Orchard Road
Englewood, Colorado 80111
(Name and address of agent for service)
Copy to:
PAUL J. MASON
Sutherland, Asbill & Brennan, L.L.P.
1275 Pennsylvania Ave., NW
Washington, DC 20004-2404
It is proposed that this filing will become effective (check
appropriate box)
( ) immediately upon filing pursuant to paragraph (b) of Rule
485
(X) on May 1, 1997 pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a) of Rule 485
( ) on ___________ pursuant to paragraph (a) of Rule 485
GREAT-WEST VARIABLE ANNUITY ACCOUNT
CROSS-REFERENCE SHEET
Showing Location in Prospectus of Information Required by Form N-1
Form N-1 Item Caption in Prospectus
1. Cover Page Cover Page
2. Synopsis Summary of Prospectus
3. Condensed Financials Not Applicable
4. General Information and History Description of GWL&A and
Variable Annuity Account A
5. Investment Objectives and Description of GWL&A and
Policies Variable Annuity Account A
6. Tax Status Federal Tax Status, Taxation of GWL&A and Section
403(b) Tax Sheltered Annuities
7. Brokerage Allocation Allocation of Portfolio Brokerage
8. Pending Legal Proceedings Legal Proceedings
9. Control Persons and Principal Management
Holders of Securities
10. Directors, Officers, and Advisory Management
Board Members
11. Compensation of Directors and Management
Others
12. Custodian, Transfer Agent and Trustee for Assets of Variable
Dividend-Paying Agent Annuity Account A
13. Investment Advisory and Other The Variable Annuity Contract-
Services Charges and Experience Rating, Description of GWL&A
and Variable Annuity Account A
14. Capital Stock and Other The Variable Annuity Contract,
Securities Voting Rights, Investment Objectives and
Policies
15. Pricing of Registrant's Not Applicable
Securities
16. General Information as to Plan The Variable Annuity Contract,
of Distribution Distribution of Variable Annuity Contracts
17. Yield Quotation for Money Market Funds Not Applicable
18. Financial Statements Financial Statement of Variable
Annuity Account A
<PAGE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Group Variable Annuity Contracts
Distributed by
BENEFITSCORP EQUITIES, INC.
8515 E. ORCHARD ROAD, ENGLEWOOD, COLORADO, 80111
TELEPHONE (303) 689-3000
The group variable annuity contract described by this
Prospectus ("Variable Annuity Contract") is no longer being
offered. Effective on May 1, 1989, no additional contributions
under any existing variable annuity contract are being accepted.
This Prospectus contains information necessary to amend Variable
Annuity Account A's registration statement under the Investment
Company Act of 1940.
The Variable Annuity Contract was designed for annuity
purchase plans adopted by public school systems and certain
tax-exempt organizations, whose Participating Employees may obtain
certain federal income tax benefits under Section 403(b) of the
Internal Revenue Code.
Under a variable annuity the variable annuitant assumes the
risk of investment gain or loss in that the value of his individual
account (before his Annuity Commencement Date) and his monthly
annuity payments (after his Annuity Commencement Date) vary with
the investment income and gains or losses on the assets in a
variable annuity account. In a variable annuity, the insurance
company assumes the mortality risk and expense risk under the
Contract.
The basic objective of the Variable Annuity Contract is to
provide the variable annuitant with lifetime variable annuity
payments under the selected annuity option (see "Annuity Period")
which will tend to reflect changes in the cost of living and the
size of the economy both during the years prior to his Annuity
Commencement Date and the years thereafter. Great-West Life &
Annuity Insurance Company ("GWL&A") seeks to accomplish this basic
objective through Variable Annuity Account A as a medium for
relating annuity payments to the net investment experience of a
selected portfolio of equity investments, which are deemed to
provide long-term growth of capital, primarily common stocks (see
"Investment Objectives and Policies"), accompanied by a contractual
obligation to make annuity payments for life.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is May 1, 1997.
This prospectus should be read carefully and retained for future
reference.
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Group Variable Annuity Contracts
Distributed by
BENEFITSCORP EQUITIES, INC.
SUMMARY OF PROSPECTUS
Description of the Securities
The group variable annuity contract described by this
Prospectus ("Variable Annuity Contract" or "Contract") is designed
for annuity purchase plans adopted by public school systems and
certain tax-exempt organizations. The Policyholder will have to
meet underwriting qualifications related to the number of
Participating Employees and the aggregate annual premiums for the
variable and fixed annuity contracts issued (see "Transfer From or
To Companion Contract" for a description of the fixed annuity).
Participating Employees may obtain certain federal income tax
benefits under Section 403(b) of the Internal Revenue Code ("Code")
if the plan is carried to completion.
Effective April 16, 1984, The Great-West Life Assurance
Company ("Great-West") ceased issuing new variable annuity
contracts. On May 1, 1987, Great-West announced that it would not
permit new participants to be enrolled under existing variable
annuity contracts and, with respect to any variable annuity
contracts for which there are fewer than 25 participants, would not
accept additional contributions. On May 1, 1989, Great-West
announced that it would not accept additional contributions on any
variable annuity contract. On December 31, 1991, Great-West
Variable Annuity Account A was transferred to and the Variable
Annuity Contracts were reinsured by Great-West Life & Annuity
Insurance Company ("GWL&A.") On December 31, 1996, Great-West
ceased operations as a broker-dealer and all of its distribution
related activities were transferred to BenefitsCorp Equities, Inc.
("BCE"), a wholly owned subsidiary of GWL&A.
Variable Annuity Account A is a separate and distinct fund
established for the purpose of funding the Variable Annuity
Contracts and is registered as an open-end diversified management
company under the Investment Company Act of 1940, as amended ("the
1940 Act".)
The significant difference between a regular or fixed annuity
and a variable annuity is that under a fixed annuity the insurance
company assumes the risk of investment gain or loss by undertaking
to credit a specified minimum interest rate and by undertaking to
pay a specified minimum monthly annuity payment, whereas under a
variable annuity the variable annuitant assumes the risk of
investment gain or loss in that the value of his individual account
(before his Annuity Commencement Date) and his monthly annuity
payments (after his Annuity Commencement Date) vary with the
investment income and gains or losses on the assets in a variable
annuity account. In both a fixed annuity and a variable annuity the
insurance company assumes the mortality risk and expense risk under
the Contract.
The Variable Annuity Contract includes a contractual
undertaking that, commencing on the selected annuity date, GWL&A
will make variable payments for the lifetime of the variable
annuitant based upon mortality assumption contained in the Contract
at the time the purchase payment to provide such annuity was
received, regardless of the actual mortality experience among its
annuitants. The Contract also provides that in the event of the
death of a Participating Employee prior to his Annuity Commencement
Date, the benefits payable will be the greater of (a) the value of
the employee's individual account or (b) the sum of 100% of
purchase payments made on behalf of the Participating Employee
prior to his 65th birthday and 75% of such purchase payments made
thereafter.
Investment Advisor and Underwriter
Effective November 1, 1996, GW Capital Management, Inc., ("GW
Capital") a wholly owned subsidiary of GWL&A, succeeded Great-West
as the investment advisor in connection with the Variable Annuity
Contracts, and Variable Annuity Account A. This succession
involved no change in control, as defined in the 1940 Act.
Great-West was also the distributor of the Contracts. Any further
reference to the underwriter is made with regard to BCE unless
otherwise specifically noted. As previously indicated these
Contracts are no longer sold and Contributions are no longer
accepted. GWL&A performs all administrative functions relative to
the Contracts, provides the minimum death benefit, and assumes the
mortality and expense risks under the Contract (see " Charges and
Experience Rating.")
Investment Required
The minimum amount of purchase payments which previously could
be made on behalf of any Participating Employee was $180 in any
contract year and the minimum amount of any one purchase payment
was $15.
The amount of each purchase payment authorized by a
Participating Employee less deductions for sales expenses,
administrative expenses, minimum death benefits, and applicable
premium taxes, if any, was credited to such employee's individual
account in the form of Accumulation Units (see Paragraph 2(i) under
"Charges and Experience Rating"). In determining the net investment
experience of Variable Annuity Account A for a valuation period,
certain deductions from the gross investment experience for the
valuation period are made (see Paragraph 2(ii) under "Charges and
Experience Rating.")
Purchase Payment Charges and Deductions
A deduction of 3.75% plus any applicable premium taxes (see
"Table of Premium Taxes"), was made from each purchase payment when
received for sales and administrative expenses, and for the minimum
death benefit. An additional deduction of $9 for sales expenses was
made from the first purchase payment in respect of a Participating
Employee in each contract year (see "Charges and Experience
Rating.")
A daily deduction of .003285% (an effective annual rate of
1.2064%) is made from the gross investment rate of Variable Annuity
Account A for administrative expenses, mortality risks, and for
investment, management, and advisory services (see "Charges and
Experience Rating.")
Investment Objectives
The basic objective of the Variable Annuity Contract is to
provide the variable annuitant with lifetime variable annuity
payments under the selected annuity option (see "Annuity Period")
which will tend to reflect changes in the cost of living and the
size of the economy both during the years prior to his Annuity
Commencement Date and the years thereafter. GWL&A seeks to
accomplish this basic objective through Variable Annuity Account A
as a medium for relating annuity payments to the net investment
experience of a selected portfolio of equity investments, primarily
common stocks (see "Investment Objectives and Policies"),
accompanied by a contractual obligation to make annuity payments
for life. Although there is no assurance that this objective will
be attained, historically the value of a diversified portfolio of
common stocks held for an extended period of time has tended to
rise during periods of inflation. There has, however, been no exact
correlation, and for some period the prices of securities have
declined while the cost of living was rising. The value of the
investments in Variable Annuity Account A fluctuates. There is no
assurance that the value of an employee's individual account during
the years prior to the Annuity Commencement Date or the total
amount of the variable annuity payments made thereafter, will equal
or exceed the purchase payments made on behalf of a Participating
Employee.
Withdrawal and Transfer Privileges
A Participating Employee has (a) certain withdrawal privileges
for 45 days after GWL&A gives the required notice of such right,
and (b) the right to receive within 18 months of acceptance of his
first purchase payment, the value of his account and, in some
cases, a portion of the sales charges paid prior to this withdrawal
(see "Accumulation Period: Surrender Rights-Redemption.")
The Variable Annuity Contract was issued as a supplement to a
fixed-dollar annuity contract (the "Companion Contract") and
provides for transfers from and to such Companion Contract under
specified circumstances and conditions (see "Transfer From or To
Companion Contract.")
Other Pertinent Information
The Variable Annuity Contract provides that GWL&A may modify
the charges, the tables used in determining the first monthly
annuity payment and the benefit payable in case of death prior to
the Annuity Commencement Date provided that such modification shall
apply only with respect to purchase payments received after the
effective date of the modification. Such modification may
materially affect the value of the Variable Annuity Contract to a
Participating Employee and the risk borne by said Participating
Employee (see "Modifications of the Variable Annuity Contract by
GWL&A.")
The foregoing Summary of information should be read in conjunction
with the detailed information appearing elsewhere in this
Prospectus.
TABLE OF CONTENTS
Summary of Prospectus 2
Special Terms 5
Description of GWL&A and Variable Annuity Account A 6
The Variable Annuity Contract 6
A. General 6
B. Accumulation Period 7
C. Annuity Period 10
D. Charges and Experience Rating 12
E. Modifications of the Variable Annuity Contract by GWL&A 14
F. Transfer From or To Companion Contract 14
Federal Tax Status 15
Taxation of GWL&A 15
Section 403(b) Tax Sheltered Annuities 15
Investment Objectives and Policies 18
Allocation of Portfolio Brokerage 20
Portfolio Turnover Rate 20
Voting Rights 20
Management 21
Distribution of Variable Annuity Contracts 23
Regulation 23
Trustee for Assets of Variable Annuity Account A 23
Legal Proceedings 23
Legal Advice 23
Independent Auditors 23
Other Variable Annuity Contracts 24
Table of Premium Taxes 24
Appendix 25
SPECIAL TERMS
Variable Annuity -- An annuity providing for payments varying in
amount in accordance with the investment experience of a variable
annuity account.
Fixed Dollar Annuity -- An annuity providing for payments which
remain fixed throughout the payment period and which do not vary
with investment experience.
Variable Annuitant -- Any person receiving or who will receive
annuity payments under the Variable Annuity Contract.
Annuity -- A series of payments for life or for a designated
period.
Annuity Commencement Date -- The date on which annuity payments are
to commence under the Variable Annuity Contract.
Accumulation Unit -- An accounting unit of measure used to
calculate the value of a contract before annuity payments begin.
Annuity Unit -- An accounting unit of measure used to calculate the
amount of annuity payments.
Contract Anniversary -- An anniversary of the date shown as the
register date in the Variable Annuity Contract.
Contract Year -- A twelve-month period from the date shown as the
register date in the Variable Annuity Contract.
Participating Employee -- An employee participating in the annuity
purchase plan pursuant to which the Variable Annuity Contract is
issued and in respect of whom purchase payments have been made
under the Variable Annuity Contract.
Employee's Individual Account -- The sum of the Accumulation Units
credited to a Participating Employee.
Participants -- Participating Employees and others credited with
Accumulation Units or Annuity Units under variable annuity
contracts funded by Variable Annuity Account A.
Policyholder -- The entity to which the Variable Annuity Contract
has been issued, which is normally an employer or a trust
established by an employer or an employee association.
Purchase Payment -- The total amount paid periodically to purchase
an annuity under the Variable Annuity Contract.
Net Purchase Payment -- The amount applied to the purchase of
Accumulation Units, which was equal to the purchase payment less
deductions for sales and administrative expenses, minimum death
benefits and applicable premium taxes.
Register Date -- The date shown as the register date in the
Variable Annuity Contract, which was generally a date selected by
the Policyholder to coincide with his administrative or accounting
year.
DESCRIPTION OF GWL&A
GWL&A is a stock life insurance company originally organized
under the laws of the State of Kansas as the National Interment
Association. Its name was changed to Ranger National Life Insurance
Company in 1963 and to Insuramerica Corporation prior to changing
to its current name in February of 1982. In September of 1990,
GWL&A redomesticated and is now organized under the laws of the
State of Colorado.
GWL&A is authorized to engage in the sale of life insurance,
accident and health insurance and annuities. It is qualified to do
business in Puerto Rico, the District of Columbia and 49 states in
the United States.
GWL&A is a wholly-owned subsidiary of The Great-West Life
Assurance Company. The Great-West Life Assurance Company is a
subsidiary of Great-West LifeCo Inc., a holding company. Great-West
LifeCo Inc. is in turn a subsidiary of Power Financial Corporation,
a financial services company. Power Corporation of Canada, a
holding and management company, has voting control of Power
Financial Corporation. Mr. Paul Desmarais, through a group of
private holding companies, which he controls, has voting control of
Power Corporation of Canada.
On January 17, 1968, by duly adopted resolution the Board of
Directors of Great-West established within Great-West, in
accordance with applicable law, a separate and distinct fund
designated Great-West Variable Annuity Account A. On December 17,
1991, by duly adopted resolution, the Board of Directors of GWL&A
established a separate account within GWL&A in accordance with
Colorado law to facilitate the transfer of Variable Annuity Account
A from Great-West to GWL&A. Variable Annuity Account A was
subsequently transferred on December 31, 1991. Under the provisions
of Colorado law, the assets of Variable Annuity Account A are not
chargeable with liabilities arising out of any other business GWL&A
may conduct. A Variable Annuity Account Committee for Variable
Annuity Account A ("Committee") is elected by Participants under
contracts funded by Variable Annuity Account A (see "Management.")
VARIABLE ANNUITY ACCOUNT A
Variable Annuity Account A, although an integral part of
GWL&A, is registered as an open-end diversified management company
under the 1940 Act. The Securities and Exchange Commission (the
"Commission") has issued an order under Section 7(d) of the 1940
Act permitting such registration and permitting the sale of
Variable Annuities funded by Variable Annuity Account A. The order
was issued on terms and conditions designed to provide adequate
means to enforce compliance with the 1940 Act.
Registration with the Commission does not involve supervision
of the management or investment practices or policies of Variable
Annuity Account A or GWL&A by the Commission. However, GWL&A, which
includes Variable Annuity Account A as an integral part thereof, is
subject to supervision and regulation by the Department of
Insurance of the State of Colorado, and the Departments of
Insurance of each state in which it is licensed to do business (see
"Regulation.")
THE VARIABLE ANNUITY CONTRACT
A. General
The Variable Annuity Contract, which has been issued to the
Policyholder who owns the Contract, is a master group Contract
which provides benefits for all Participating Employees, each of
whom received a certificate which summarized the provisions of the
master Contract and evidenced his participation in the annuity
purchase plan adopted by the Policyholder. Certain significant
provisions of the Variable Annuity Contract are discussed below.
1. ANNUITY PAYMENTS
Variable annuity payments are determined on the basis of (a)
a mortality table specified in the Variable Annuity Contract (see,
however, "Modifications of the Variable Annuity Contract by
GWL&A,") which reflects the age of the variable annuitant and the
type of annuity payment option selected, and (b) the net investment
experience of Variable Annuity Account A. The variable annuitant
will receive the value of a fixed number of Annuity Units each
month. The value of such units, and thus the amounts of the monthly
annuity payments, will reflect investment gains and losses and
investment income occurring both before and after retirement, and
thus the payments will vary with the net investment experience of
the assets of Variable Annuity Account A. Sex was a factor in the
determination of variable annuity payments prior to August 1, 1983.
For contracts issued before that date no such payments shall be
less than those guaranteed under those contracts.
2. ASSIGNMENT
Assignment of the Variable Annuity Contract or a Participating
Employee's individual account is prohibited by the terms of the
Contract.
3. PURCHASE LIMITS
The Variable Annuity Contract provides that the amount of any
purchase payments that previously could be made in respect of any
employee could not be less than $180 annually, and the amount of
any one monthly purchase payment in respect of an employee could
not be less than $15.
4. CESSATION OF PURCHASE PAYMENTS
GWL&A reserved the right to refuse to receive further purchase
payments under the Variable Annuity Contract as from the date
stated in written notice to the Policyholder if the Policyholder
failed to comply with any of the terms or conditions of the
Contract or if the number of employees covered under the Variable
Annuity Contract in a contract year was less than 25. The
Policyholder could give written notice to GWL&A that from the date
stated in the notice no further purchase payments would be made.
Upon cessation of purchase payments in respect of an employee for
any reason prior to his Annuity Commencement Date no further
purchase payments would be accepted by GWL&A, and each
Participating Employee could exercise one of the following options:
(a) If the Participating Employee was at least 50 years of
age, he could elect to have his individual account applied to
provide variable annuity payments commencing immediately under the
selected annuity option (see "Annuity Period.")
(b) He could surrender his individual account as explained
under the caption "Accumulation Period, " paragraph 7.
(c) He could elect to leave his individual account in force
under the Variable Annuity Contract, and the account would continue
to reflect the net investment experience of Variable Annuity
Account A. At the selected Annuity Commencement Date, the
Participating Employee will begin to receive annuity payments under
the selected option (see "Annuity Period.") At any time in the
interim, the Participating Employee could surrender his individual
account in accordance with (b) above.
B. Accumulation Period
1. CREDITING ACCUMULATION UNITS: DEDUCTION FOR SALES AND
ADMINISTRATIVE EXPENSES AND MINIMUM DEATH BENEFIT
During the accumulation period -- the period before the
commencement of annuity payments -- GWL&A deducted from purchase
payments the deductions described in Paragraph 2(i) under "Charges
and Experience Rating." The net purchase payment remaining after
such deductions was credited to the individual account of the
Participating Employee in the form of Accumulation Units. The
number of Accumulation Units credited to an employee's individual
account was determined as of the valuation period in which any
purchase payment, including the initial payment, was received. The
number of Accumulation Units so determined remains constant, but
the dollar value of an Accumulation Unit may vary depending upon
the net investment experience of Variable Annuity Account A.
2. VALUE OF AN EMPLOYEE'S INDIVIDUAL ACCOUNT
The value of an employee's individual account at any time
prior to his Annuity Commencement Date can be determined by
multiplying the total number of Accumulation Units credited to his
account by the current Accumulation Unit value. There is no
assurance that the value of an employee's individual account will
equal or exceed total purchase payments made on his behalf. Each
Participating Employee will be advised periodically of the number
of Accumulation Units credited to his individual account, the
current Accumulation Unit value, and the total value of his
account. A Participating Employee may at any time obtain, from the
Head Office of GWL&A, the current value of an Accumulation Unit.
3. VALUE OF AN ACCUMULATION UNIT
Accumulation units are valued each day during which the New
York Stock Exchange is open for trading ("valuation date.") A
valuation period is the period beginning immediately after the
close of business of the New York Stock Exchange on a valuation
date and ending at the close of business of the New York Stock
Exchange on the immediately succeeding valuation date. The value of
an Accumulation Unit was set at $1.00 for the valuation period
ending January 3, 1969. The value of an Accumulation Unit for any
subsequent valuation period is determined by multiplying the value
of an Accumulation Unit for the preceding period by the net
investment factor (described below) for the current valuation
period. (See "Appendix" for an historical record of the values of
an Accumulation Unit as of the last valuation date of each quarter
to December 31, 1996.)
4. NET INVESTMENT FACTOR FOR EACH VALUATION PERIOD
At the end of each valuation period a gross investment rate
for the valuation period is determined from the investment
experience of Variable Annuity Account A for the valuation period.
Such rate is (a) the investment income for the valuation period,
plus capital gains and minus capital losses for the period, whether
realized or unrealized, less a deduction for any taxes chargeable
to Participating Employees or Variable Annuity Account A (under
current tax laws there are no such federal income taxes) divided by
(b) the value of Variable Annuity Account A at the beginning of the
valuation period. The gross investment rate may be positive or
negative.
In order to determine the net investment rate, the gross
investment rate is reduced by a deduction of the product obtained
by multiplying a daily deduction of .003285% (an effective annual
rate of 1.2064%) by the number of days in a valuation period. This
deduction is made by GWL&A for administrative expenses, investment
management and advisory services, and mortality and expense risks
assumed under the Contract (see Paragraph 2(ii) under "Charges and
Experience Rating.")
The net investment rate is added to 1 to determine the net
investment factor. Since the net investment rate may be negative,
the net investment factor may be less than 1, and the value of an
Accumulation Unit for the valuation period may be less than the
value for the previous valuation period. (See "Appendix" for a
hypothetical illustration of the above computations.)
5. VALUE OF VARIABLE ANNUITY ACCOUNT A
The value of Variable Annuity Account A for purposes of the
preceding paragraph shall be the aggregate, in United States
dollars, of the following: (a) the face amount of cash; plus (b)
the total market value for securities listed on an organized
exchange determined (i) by the last board lot sale reported on the
valuation date on the primary trading market, or, (ii) if no such
sale is reported, by the mean between the closing bid and ask
prices on such day, or, (iii) if prices in neither (i) nor (ii) are
reported, then by either (A) the last board lot sale price, or (B)
the mean between the closing bid and ask prices on the last
preceding day on which both bid and ask prices were reported,
whichever is the later; plus (c) the fair market value of any other
asset as determined in good faith by the Committee, which, in the
case of securities actively traded over-the-counter is the closing
bid price; minus (d) an amount for taxes attributable to Variable
Annuity Account A; and minus (e) accrued and unpaid liabilities of
Variable Annuity Account A other than Variable Annuity Contract
liabilities.
6. BENEFITS PAYABLE ON DEATH PRIOR TO THE ANNUITY COMMENCEMENT DATE
The Variable Annuity Contracts provide that, upon receipt of
due proof of the death of a Participating Employee prior to his
Annuity Commencement Date, GWL&A will pay to the beneficiary a
death benefit equal in amount to the greater of (a) the value of
the Participating Employee's individual account determined for the
valuation period in which written notice of death is received by
GWL&A, or (b) the sum of 100% of the total purchase payments made
on behalf of the Participating Employee prior to his 65th birthday
and 75% of the total purchase payments made thereafter on his
behalf (see below, for the effect of partial withdrawals on
calculation of purchase payment.)
For providing the minimum death benefit described in (b) of
the preceding paragraph, GWL&A deducted .25% from each purchase
payment (see Paragraph 2(i) under "Charges and Experience Rating").
In lieu of payment of the death benefit in one sum, a beneficiary
over 50 years old may elect variable annuity payments under any of
the options available to a Participating Employee except the joint
and last survivor annuity, or a beneficiary regardless of his age
may elect to take variable annuity payments for a specified period
not exceeding 25 years. Where the beneficiary takes the payment in
one sum, payment will be made within seven days of receipt of proof
of death, unless subject to postponement for a reason described in
Paragraph 7 below.
7. SURRENDER RIGHTS-REDEMPTION
Within 60 days of acceptance by GWL&A of a Participating
Employee's first purchase payment, GWL&A mailed to such
Participating Employee a statement of charges to be deducted under
the Variable Annuity Contract and a notice of his right of
withdrawal and refund under such contract. A Participating Employee
could, within 45 days of the mailing of such notice, elect to
terminate his participation under the Variable Annuity Contract and
receive in cash the sum of (1) the value of his individual account
and (2) an amount equal to the difference between the gross
purchase payments made and the net purchase payments credited to
the individual account of the Participating Employee.
A Participating Employee, within 18 months of acceptance by
GWL&A of his first purchase payment, could elect to terminate his
participation under the Variable Annuity Contract and receive in
cash the sum of (1) the value of his individual account and (2) an
amount, if any, equal to that part of the sales charges which
exceeds 15% of the gross purchase payments which he has made.
Any Participating Employee who did not so elect to terminate
his participation within the above described periods, may at any
time after the expiration of 18 months of acceptance of his first
purchase payment, surrender a portion or all of his individual
account prior to his Annuity Commencement Date and receive the
value thereof (see "Federal Tax Status.") Without the consent of
GWL&A, purchase payments may not be made in respect of a
Participating Employee after he has surrendered all of his
individual account.
If a state or local premium tax was imposed at the time a
purchase payment was made, surrender of a portion or all of an
individual's account may result in a reduction of GWL&A's premium
tax liability to that jurisdiction. In such event, there will be
paid by GWL&A, in addition to any amounts described in the
preceding three paragraphs, an amount equal to the lesser of: (1)
the amount by which GWL&A's premium tax liability is reduced, or
(2) the amount previously deducted from purchase payments for
premium taxes. No representation can be made to any Participating
Employee that upon surrender of his individual account any such
payment would be made, inasmuch as the state or locality of
residence and their premium tax laws at the time of surrender would
be determinative.
The full amount of surrender benefits received by an employee
who elects to surrender a portion or all of his individual account
will be taxed as ordinary income over and above income otherwise
realized in that year. This could result in the imposition of a
higher rate of tax on amounts received from the Variable Annuity
Contract than would result if the amounts were to be taken in the
form of an annuity after retirement, when Participating Employees
will generally be in a lower tax bracket due to lower income and
larger deductions.
Payment of any surrender benefit will be made within seven
days after the date of surrender (the date the request for
surrender is received at the Head Office of GWL&A.) Payment may be
subject to postponement: (A) for any period during which the New
York Stock Exchange is closed other than customary weekend and
holiday closing or during which trading on such exchanges is
restricted; (B) for any period during which an emergency exists as
a result of which (i) disposal of securities in Variable Annuity
Account A is not reasonably practical or (ii) it is not reasonably
practical for the value of the assets of Variable Annuity Account
A to be fairly determined; or (C) for such periods as the
Securities and Exchange Commission may by order permit. The
conditions under which trading shall be deemed to be restricted or
an emergency shall be deemed to exist shall be determined by rules
and regulations of the Securities and Exchange Commission.
If a Participating Employee surrenders a portion or all of his
individual account, total purchase payments deemed made on his
behalf for purposes of his death benefit (see "Accumulation Period"
paragraph 6) shall be reduced in the proportion that the number of
surrendered Accumulation Units bear to the total number of
Accumulation Units in his individual account immediately prior to
such surrender.
C. Annuity Period
1. ELECTING THE ANNUITY COMMENCEMENT DATE AND FORM OF ANNUITY
A Participating Employee selects, in accordance with the
annuity purchase plan, an Annuity Commencement Date between ages 50
and 75 (or date of termination of employment, if later) and an
annuity option. Subsequent changes in either may be made up to 30
days prior to the date variable annuity payments are to commence.
Unless otherwise elected, the Annuity Commencement Date will be the
first day of the month on or immediately after the employee's 65th
birthday. The Contract provides various optional annuity forms
referred to below, which may be elected by a Participating
Employee. If the Participating Employee does not elect otherwise,
the option with 120 monthly payments guaranteed will be effective.
If, at any time an annuity payment is or becomes less than
$20, GWL&A has the right to make payments: quarterly,
semi-annually, or annually, as it may elect. If at the Annuity
Commencement Date the amount to be applied to provide an annuity is
less than $1,000, then an election of an annuity option is not
available; otherwise a Participating Employee may elect either an
annuity payable monthly during the joint lifetime of the variable
annuitant and a designated second person, and thereafter during the
remaining lifetime of the survivor or an annuity in the form of a
life annuity with 120 monthly payments guaranteed. Special
provisions relating to the form of annuity apply to employees of
certain tax-exempt organizations.
Once annuity payments have commenced, the variable annuitant
cannot surrender his annuity benefit and receive a lump sum
settlement in lieu thereof, except that GWL&A has undertaken, as an
administrative practice, to permit a beneficiary entitled to
variable annuity payments not involving a life contingencies
(annuity for a period certain) to elect to receive a commuted lump
sum payment in lieu of receiving further variable annuity payments.
2. SPECIAL PROVISIONS RELATING TO FORM OF ANNUITY
The following special provisions pertaining to the form of
annuity apply to employees of tax-exempt organizations described in
Section 501(c)(3) of the Code.
If variable annuity payments commence before the employee has
attained his 65th birthday, at any time at least 30 days prior to
his variable Annuity Commencement Date, the employee may elect a
qualified joint and survivor variable life annuity. A qualified
joint and survivor variable life annuity is a variable annuity for
the life of the employee with a survivor variable annuity for the
life of his spouse equal to one-half of the amount of the variable
annuity payable during the joint lives of the employee and his
spouse.
If payments commence after the employee has attained his 65th
birthday, the form of variable annuity will be the qualified joint
and survivor variable life annuity for an employee who has been
married throughout the one year period ending on the employee's
variable Annuity Commencement Date. The last payment under this
option will be made in respect of the annuity payment date
occurring immediately preceding the death of the surviving joint
annuitant. At any time 30 days prior to his variable Annuity
Commencement Date, such employee may elect not to take a qualified
joint and survivor variable life annuity and, in lieu thereof, may
elect any other form of annuity provided under the contract.
3. OPTIONAL ANNUITY FORMS
Life Annuity. An annuity payable monthly during the lifetime
of the variable annuitant and terminating with the last monthly
payment preceding the death of the variable annuitant. This option
offers the maximum level of monthly payments since there is no
assurance of minimum number of payments or provision for a death
benefit payable to a beneficiary.
Life Annuity with 60, 120, 180, or 240 Monthly Payments
Certain. An annuity payable monthly during the lifetime of the
variable annuitant with the promise that if, at the death of the
variable annuitant, payments have been made for less than 60, 120,
180, or 240 months as elected, annuity payments will be continued
during the remainder of such period to the beneficiary.
Joint and Last Survivor Annuity. An annuity payable monthly
during the joint lifetime of the variable annuitant and a
designated second person, and thereafter during the remaining
lifetime of the survivor.
Other forms of options which a Participating Employee may
elect are an installment unit refund life annuity, a cash unit
refund life annuity, or any other form of variable annuity which
involves life contingencies and is satisfactory to GWL&A.
Under the Life Annuity Option and the Joint and Last Survivor
Annuity Option it would be possible that only one annuity payment
would be made where the annuitant or, in the case of the Joint and
Last Survivor Annuity, the annuitant and the designated second
person died prior to the due date of the second annuity payment,
two (2) payments if he (they) died before the third annuity
payment, etc.
4. VALUE OF AN ANNUITY UNIT
The value of an Annuity Unit was set at $1.00 for the
valuation period ending January 31, 1969. All annuity payments are
made as of the first of the month and therefore Annuity Units are
valued only once a month. The value of an Annuity Unit is
determined by multiplying the value of an Annuity Unit for the
preceding month by the annuity change factor (described below) for
the current month.
5. ANNUITY CHANGE FACTOR
The annuity change factor for a month means the product
obtained by multiplying (a) the ratio of the value of an
Accumulation Unit on the first valuation date in the month
preceding such month to the value of an Accumulation Unit on the
first valuation date in the second month preceding such month by
(b) .99713732 (a factor to neutralize the assumed net investment
rate, discussed below, of 3.5% per annum which is built into the
annuity tables contained in the Contract and which is not
applicable because actual net investment experience is credited
instead.) The ratio of the value of an Accumulation Unit on the
first valuation date in the preceding month to the value of an
Accumulation Unit on the first valuation date in the second
preceding month is used in order that annuity payments reflect the
net investment experience of Variable Annuity Account A up to one
month prior to the due date of annuity payments. The net investment
experience of Variable Annuity Account A up to one month prior to
the due date is used in order to permit calculation of amounts of
annuity payments and mailing of checks in advance of their due
dates.
6. DETERMINATION OF AMOUNT OF FIRST MONTHLY ANNUITY PAYMENT
When annuity payments commence, the value of the employee's
individual account is determined by multiplying the value of an
Accumulation Unit on the first valuation date in the month
immediately preceding the variable Annuity Commencement Date by the
number of Accumulation Units credited to the employee's individual
account as of the Annuity Commencement Date.
The Contract contains tables indicating the dollar amount of
the first monthly payment under each form of variable annuity for
each $10,000 applied under the option (see, however, "Modifications
of the Variable Annuity Contract by GWL&A.") The amount of the
first monthly payment depends on the form of annuity and adjusted
age of the annuitant. A formula for determining the adjusted age is
contained in the Contract. The tables are determined from the
Progressive Annuity Table assuming births in the year 1900 and an
interest rate of 3.5% per annum. The total first monthly annuity
payment is determined by multiplying the benefits per $10,000 of
value shown in the tables in the Contract by the number of tens of
thousands of dollars of value of the employee's individual account
(less any applicable premium tax not deducted when the purchase
payment was received) (see "Table of Premium Taxes.")
A 3.5% interest rate is assumed in the tables and would
produce level annuity payments if the net investment rate remained
constant at 3.5%. In fact, as the net investment rate varies up or
down from 3.5%, annuity payments will vary up or down. A higher
interest rate assumption would mean a higher initial payment but a
more slowly rising series of subsequent payments in the event of
favorable investment results (or a more rapidly falling series of
subsequent payments in the event of unfavorable investment
results.) A lower assumption would have the opposite effect.
If a greater first monthly payment would result, GWL&A will
compute the first monthly payment on such mortality basis as GWL&A
may determine as being applicable to this class of annuitants.
7. AMOUNTS OF SECOND AND SUBSEQUENT MONTHLY ANNUITY PAYMENTS
The dollar amount of the first monthly annuity payment,
determined as described above, is translated into Annuity Units by
dividing that amount by the value of an Annuity Unit on the Annuity
Commencement Date. This number of Annuity Units remains fixed
during the annuity period, and in each subsequent month the dollar
amount of the annuity payment is determined by multiplying this
fixed number of Annuity Units by the then current value of an
Annuity Unit. (See "Appendix" for a hypothetical illustration of
the above computations.)
D. Charges and Experience Rating
1. SERVICES AND FUNCTIONS FOR WHICH CHARGES ARE MADE
GW Capital, 8515 E. Orchard Road, Englewood, Colorado 80111,
acts as investment advisor in connection with the Variable Annuity
Contracts and Variable Annuity Account A. GW Capital became the
investment advisor effective November 1, 1996 when it succeeded
Great-West in that capacity. This succession involved no change of
control, as defined in the 1940 Act. GWL&A performs all
administrative functions relative to the contracts and Variable
Annuity Account A, provides the minimum death benefit, and assumes
the mortality and expense risks under the Contract.
(i) In performing investment advisory services, GW Capital
continually provides the Committee with an investment program for
its consideration. Upon approval of such an investment program by
the Committee, GW Capital executes the program by placing orders
for the purchase or sale of investments. Direct costs of
acquisition or disposition of investments of Variable Annuity
Account A, including brokerage charges, will be borne by Variable
Annuity Account A.
(ii) In performing all administrative functions in connection
with the Variable Annuity Contract and Variable Annuity Account A,
GWL&A bears all administrative expenses involved therewith,
including, but not limited to, payment of expenses for salaries,
rent, postage, telephone, travel, legal, actuarial and accounting
services, office equipment and stationery, fees and expenses of
audit of Variable Annuity Account A and fees and expenses of the
Committee.
(iii) GWL&A provides a minimum death benefit by
undertaking to make a payment on the death of a Participating
Employee prior to his Annuity Commencement Date, which may be in an
amount exceeding the value of his individual account at the time of
his death (see Paragraph 6 under "Accumulation Period.")
(iv) GWL&A assumes an "expense risk" by undertaking never to
change the deductions provided for in the Variable Annuity Contract
for sales and administrative expenses and investment advisory
services with respect to purchase payments made prior to the
effective date of a modification of the Contract, even though such
deductions may be insufficient to cover the actual cost of such
items.
(v) GWL&A assumes a "mortality risk" by its contractual
undertaking, with respect to purchase payments made prior to the
effective date of a modification of the Contract, to continue to
make monthly life annuity payments, determined in accordance with
the annuity tables and other provisions contained in the Contract,
to each variable annuitant regardless of how long he lives and
regardless of how long annuitants as a group live. This undertaking
assures a variable annuitant that neither his own longevity nor an
improvement in life expectancy generally will have an adverse
effect on the monthly annuity payments he will receive under the
Contract and relieves the variable annuitant from the risk that he
will outlive the funds which he has accumulated for retirement.
For the extent to which the "expense risk" and the "mortality
risk" borne by GWL&A is limited by the modification provisions of
the Contract see, "Modifications of the Variable Annuity Contract
by GWL&A."
2. CHARGES
The charges for the services and functions described above are
assessed in two ways: as a deduction from purchase payments, and as
a deduction from the gross investment rate of Variable Annuity
Account A.
(i) Deduction from purchase payments
GWL&A deducted from each purchase payment in respect of a
Participating Employee 3.75% of such purchase payment, consisting
of 3.0% for sales expenses, .5% for administrative expenses, and
.25% for the minimum death benefit plus premium taxes if imposed at
the time payment was received by GWL&A (see "Table of Premium
Taxes.") In addition, GWL&A deducted a charge of $9 for sales
expenses from the first purchase payment in each contract year in
respect of a Participating Employee. In the case of a $180 minimum
purchase payment, the deduction for sales expenses, administrative
expenses and the minimum death benefit amounted to 8.75% (9.59% of
amount invested), consisting of 3%, .5% and .25%, respectively
(3.29%, .55% and .27% of the amount invested), plus the additional
deduction of $9 (which was the equivalent of 5% of the $180
minimum). As the amount of the purchase payment increased, the $9
additional deduction represented a smaller percentage of the
purchase payment, so the total deduction for sales expenses,
expressed as a percentage, would decrease to a minimum approaching
3%. Example: assuming a $1,000 annual purchase payment: 3% x $1,000
= $30.00; $30.00 + $9.00 = $39.00, which is 3.9% of $1,000. During
1994, 1995, and 1996 GWL&A's total deductions from purchase
payments for sales expenses were $0, $0 and $0, respectively.
During 1994, 1995, and 1996 GWL&A's total deductions from
purchase payments for administrative expenses were: $100.00,
$100.00 and $100.00, respectively. During 1994, 1995 and 1996
GWL&A's total deductions from purchase payments for the minimum
death benefit were $0, $0 and $0, respectively.
(ii) Deduction from the Gross Investment Rate of Variable
Annuity Account A.
For each day in a valuation period, GWL&A will make a
deduction of .003285% (an effective annual rate of 1.2064%) from
the gross investment rate of Variable Annuity Account A. This
deduction expressed on an annual basis, consists of .2857% for
administrative expenses, .3863% for mortality risks under the
Contract, .0688% for expense risks under the Contract, and .4656%
for investment advisory services. The advisory fees are paid to GW
Capital. The deductions for mortality risks and expense risks
represent GWL&A's present best judgment of the apportionment of the
total risk charges under the Contract between the mortality risks
and the expense risks and includes an anticipated profit element to
be retained by GWL&A. Such profit is available, if needed, to make
up for any deficiency in any other charges under the Contract.
During 1994, 1995 and 1996 GWL&A's total deductions from the gross
investment rate for investment advisory services were $32,727,
$32,411 and $33,525 respectively. During 1994, 1995 and 1996
GWL&A's total deductions from the gross investment rate for
administrative expenses were $20,080, $19,886 and $20,791
respectively. During 1994, 1995 and 1996 GWL&A's total deductions
from the gross investment rate for mortality risks under the
Contract were $27,152, $26,890 and $27,814 respectively. During
1994, 1995 and 1996 GWL&A's total deductions from the gross
investment rate for expense risks were$4,826, $4,780 and $4,944
respectively.
The deductions from purchase payments and the deductions from
the gross investment rate of Variable Annuity Account A were and
are made pursuant to the terms of the Variable Annuity Contract and
also, in the case of the deductions from purchase payments for
sales expenses and the deductions from the gross investment rate
for investment management and advisory services, were and are made
pursuant to written agreements approved by the Committee; the
agreement for investment advisory services has also been ratified
by a majority of the votes available to Participants. Each of these
agreements will continue in full force and effect from year to year
until terminated by GWL&A in accordance with the terms of the
Variable Annuity Contracts (see "Modifications of the Variable
Annuity Contract by GWL&A"), or by the Committee. The agreement for
investment advisory services may also be terminated by a majority
of the votes available to Participants. Any such termination may be
done on 60 days written notice without payment of any penalty.
Either agreement will terminate automatically:
(a) unless its continuance is specifically approved, at least
annually, either (i) by the affirmative vote of a majority of the
Committee, or (ii) by a majority of the votes available to
Participants; or
(b) upon any assignment thereof.
In addition, each annual renewal of these agreements must be
approved by the vote of a majority of the Members of the Committee
who are not parties to the agreements or interested persons of any
such party, cast in person at a meeting of the Committee called for
the purpose of voting on such approval.
3. EXPERIENCE RATING
Each Variable Annuity Contract provides for experience rating
at the discretion of GWL&A. If the charges made by GWL&A exceed the
expenses incurred, GWL&A in its discretion may allocate all, a
portion, or none of such excess as an experience rating credit. The
experience rating credit, if any, which accrues to any Variable
Annuity Contract will be determined annually upon each Contract
Anniversary by GWL&A. Application of the credit accruing to any
Variable Annuity Contract will be applied by the crediting of a
number of additional Accumulation Units or Annuity Units, as
applicable, equal in value to the amount of the credit due (such
additional units shall be credited without the deduction imposed on
purchase payments.) To date, there have been no experience rating
credits allocated by GWL&A pursuant to the provisions of any
Variable Annuity Contract.
E. Modifications of the Variable Annuity Contract by GWL&A
The Variable Annuity Contract provides that GWL&A could modify
the charges (see Paragraph 2 under "Charges and Experience
Rating"), the tables used in determining the first monthly annuity
payment, and the benefit payable in the case of death prior to the
Annuity Commencement Date (see Paragraph 6 under "Accumulation
Period") provided that such modification would apply only with
respect to purchase payments received after the effective date of
the modification. To exercise its modification rights, GWL&A was
required to notify the Policyholder of such modification in
writing. In the case of an employee covered under the Contract at
the time of the notice, or an employee whose coverage commenced on
a date no later than six months after such notice, such
modification would be effective five years after the Contract
Anniversary on or immediately following the day of such notice (or
at such earlier time as the amount of the purchase payments made
after such notice equaled ten times the purchase payments made on
behalf of such Participating Employee in the contract year ending
on or immediately before such notice.) In the case of an employer
whose coverage commenced more than six months after such notice,
such modification would be effective as of the date he commenced
participation. All of the charges, the annuity tables, and the
benefit payable in the case of death prior to the Annuity
Commencement Date which were provided in the Contract prior to the
notice of a modification would remain permanently in effect with
respect to purchase payments made prior to the effective date of
such modification. Thus, some purchase payments on behalf of a
Participating Employee may have been made long before an annuity is
effected for him. Since annuity payments may continue long after
that date, the provisions of the Contract in effect before a notice
of modification may extend many years into the future.
While the Variable Annuity Contract may be modified at any
time by agreement between GWL&A and the Policyholder, no such
change shall be applicable to benefits provided by purchase
payments made prior to the effective date of such change unless the
change is made to conform to the Contract, or to give the
Policyholder or Participating Employees the benefit of Section 403
of the Code or such section or sections as may from time to time
revise or replace said Section 403, or any rules or regulations
applicable thereto.
F. Transfer From or to Companion Contract
The Variable Annuity Contract was issued as a supplement to a
fixed-dollar annuity contract providing fixed annuity payments, and
containing investment, mortality and expense commitments as
specified therein (the "Companion Contract"). The Variable Annuity
Contract permitted the transfer, subject to the rules of GWL&A, to
the Variable Annuity Contract of sums accumulated under the
Companion Contract, without the imposition of any surrender charge
under the Companion Contract. The deductions described in Paragraph
2(i) under "Charges and Experience Rating," were made from any
amount so transferred and the net amount credited to the employee's
individual account. Under the Companion Contract, no charges were
deducted at the time a premium was paid, and accordingly the
imposition of such charges under the Variable Annuity Contract did
not result in the duplication of charges. Such a transfer could be
effected (1) during a 9 month period commencing with the register
date of the Variable Annuity Contract in which event the amount so
transferred in respect of the employee shall be limited to the
amount paid under the Companion Contract as premiums in respect of
such employee since the date 12 months immediately prior to such
register date, or (2) during the 30-day period commencing on any
anniversary of the register date of the Variable Annuity Contract
in which event the amount so transferred in respect of the employee
is limited to the amount paid under the Companion Contract as
premiums in respect of such employee since the date 12 months
immediately prior to such anniversary. In addition, in order to
purchase a variable annuity, sums accumulated under the Companion
Contract could be transferred to the Variable Annuity Contract, in
one sum or a series of semi-annual installments, during a period of
no longer than 3 years which could commence no earlier than the
employee's 50th birthday and end no later than the employee's
variable Annuity Commencement Date.
The Variable Annuity Contract also provides for the transfer,
subject to the rules of GWL&A, of sums accumulated under the
Variable Annuity Contract to the Companion Contract in order to
purchase a fixed annuity with the amounts accumulated under the
Variable Annuity Contract. Such a transfer could only be effected
in one sum or a series of semi-annual installments during a period
of no longer than 3 years which could commence no earlier than the
employee's 50th birthday and end no later than the employee's
variable Annuity Commencement Date.
Contributions under the Companion Contract (the fixed-dollar
annuity contract) and transfers to the Companion Contract become
part of GWL&A's general account which supports insurance and
annuity obligations. Because of exemptive and exclusionary
provisions, and other interpretations, interests in the general
account have not been registered under the Securities Act of 1933
("1933 Act") nor is the general account registered as an investment
company under the Investment Company Act of 1940 ("1940 Act.")
Accordingly, neither the general account nor any interests therein
are generally subject to the provisions of the 1933 or 1940 Acts
and GWL&A has been advised that the staff of the Securities and
Exchange Commission has not reviewed the disclosures in this
prospectus which relate to the Companion Contract. Disclosures
regarding the Companion Contract and the general account, however,
may be subject to certain generally applicable provisions of the
federal securities laws relating to the accuracy and completeness
of statements made in prospectuses.
FEDERAL TAX STATUS
Introduction
The ultimate effect of federal income taxes on the Annuity
Value, on annuity payments and on the economic benefit to the
employee or beneficiary depends upon GWL&A's tax status, on the
type of retirement program for which the Contract is purchased, and
upon the tax and employment status of the individual concerned.
Variable Annuity Account A is taxed as a part of GWL&A; not as a
"regulated investment company" under Part I of Subchapter M of the
Code. GWL&A is taxed as a life insurance company as described
below.
TAXATION OF GWL&A
GWL&A is taxed on its insurance business in the United States
as a life insurance company in accordance with Part I of Subchapter
L of the Code. Investment income and realized capital gains on the
assets of Variable Annuity Account A are reinvested and are taken
into account in determining the value of the Accumulation Unit and
the value of the Annuity Unit (see page 8 of the Variable Annuity
Contract.) Under existing federal income tax law, such amounts do
not result in any tax on GWL&A which will be chargeable to
Participating Employees or Variable Annuity Account A. GWL&A
reserves the right to make a deduction from the Participant Annuity
Account for taxes, if any, imposed with respect to such items in
the future.
SECTION 403(b) TAX-SHELTERED ANNUITIES
Set forth below are some general comments concerning
tax-sheltered annuities under Section 72 and Section 403(b) of the
Code. It should be understood that the following discussion is not
exhaustive, and that special rules may apply to certain situations
not discussed here. The discussion is based upon GWL&A's
understanding of current federal income tax law and no
representation is made regarding the likelihood of continuation of
current law or of the current interpretations by the Internal
Revenue Service. No attempt is made to consider state or other tax
laws. The policyholder, Participating Employees and beneficiaries
are responsible for determining that Contributions, distributions
and other transactions with respect to the Contract comply with
applicable laws. FOR FURTHER INFORMATION, CONSULT A QUALIFIED TAX
ADVISER.
Eligible Employers
Tax-exempt organizations described in Section 501(c)(3) and
public educational organizations are permitted to purchase Section
403(b) tax-sheltered annuities for employees. Amounts contributed
toward the purchase of such annuities are excluded from the gross
income of the employee in the year contributed to the extent that
the contributions do not exceed three separate, yet interrelated
contribution limitations.
Federal Tax Treatment of Contributions
Federal income tax is deferred on contributions to the extent
that the aggregate amount contributed to an annuity per year for an
employee does not exceed: (1) the exclusion allowance described in
Section 403(b)(2); (2) the contribution limit in Section 415; and
(3) the elective deferral limitation in Section 402(g) of the Code.
Additionally, the amount which a highly compensated employee may
contribute may be further reduced to enable the plan to meet the
discrimination testing requirements. Amounts contributed to a
Section 403(b) annuity contract may be subject to FICA and FUTA tax
when contributed.
The net investment gain, if any, reflected in the employee's
individual account is not taxable until received by the
Participating Employee or his beneficiary.
Amounts contributed in excess of the above described limits,
and the earnings thereon, must be distributed from the plan and
included in the participant's gross income in accordance with IRS
rules and regulations. Excess amounts which are not properly
corrected can have severe adverse consequences to the plan and may
result in additional taxes to the participant.
Portability
Revenue Ruling 90-24 allows participants to transfer funds
from one Section 403(b) annuity or custodial account to another
Section 403(b) annuity contract or custodial account with the same
or more stringent restrictions without incurring current taxation.
If the Section 403(b) plan is employer-sponsored, transfers under
Rev. Rul. 90-24 may be restricted to 403(b) providers approved by
the plan sponsor.
When the participant is eligible to take a distribution from
the plan, eligible rollover distributions may be rolled over to an
IRA or another Section 403(b) annuity contract or custodial account
as provided in the Code. Amounts properly rolled over will not be
included in gross income until a distribution is taken from the IRA
or new Section 403(b) vehicle.
Distribution Restrictions
Pre-1989 contributions to a Section 403(b) annuity contract
may be distributed to an employee at any time, subject to a 10%
penalty on withdrawals prior to age 59 1/2, unless an exception
applies under Section 72(t). Amounts transferred into the annuity
contract from a Section 403(b)(7) custodial account, as well as
post-1988 contributions and earnings, and the earnings on the
December 31, 1988, account balance, may not be distributed prior to
age 59 1/2, unless the employee dies, becomes disabled, separates
from service or suffers a genuine financial hardship meeting the
requirements of the Code. Restrictions apply to the amount which
may be distributed for financial hardship.
Required Beginning Date/Required Minimum Distributions
Distributions generally, must commence no later than the later
of (i) April 1 of the Calendar year following the Calendar year in
which the employee attains the age of 70 1/2, or (ii) retirement,
and must be made in a specified form and manner. If the employee
is a "5 percent owner", as defined in the Code, distributions
generally must begin no later than the date described in (i).
Amounts accruing after December 31, 1986, under tax sheltered
annuities must be distributed in compliance with minimum
distribution requirements. In addition, distributions, regardless
of when the amounts accrued, must satisfy the "incidental benefit"
or "minimum distribution incidental benefit" rule, IRC Section
403(b)(10). If the amount distributed does not meet the minimum
requirements, a 50% penalty tax on the amount which was required to
be, but was not, distributed may be imposed upon the employee by
the IRS under Section 4974. These rules are extremely complex, and
the employee should seek the advise of a competent tax adviser.
Federal Taxation of Distributions
All payments received from a Section 403(b) annuity contract
are normally taxable in full as ordinary income to the employee.
Since premiums derived from salary reduction previously have not
been taxed to the employee, they cannot be treated as a cost basis
for the contract, IRC Section 403(b)(1). The employee will have a
cost basis for the contract only when after-tax contributions have
been made.
If the employee takes the entire value in the contract in a
single sum cash payment, the full amount received will be ordinary
income in the year of receipt unless after-tax contributions were
made. If the distribution includes after-tax contributions, the
amount in excess of the cost basis will be ordinary income, Section
72(e)(5). No special averaging treatment is currently available for
lump sum distributions.
Amounts received before the annuity starting date by an
employee who has made after-tax contributions are taxed under a
rule that provides for pro rata recovery of cost, Section 72(e)(8).
If an employee who has a cost basis for his contract receives life
annuity or installment payments, the cost basis will be recovered
from the payments under the annuity rules of Section 72. Typically,
however, there is no cost basis and the full amount received is
taxed as ordinary income in the year distributed.
Penalty Taxes
Penalty taxes may apply to certain distributions from Section
403(b) annuities. Distributions made before the employee attains
age 59 1/2 are premature distributions and subject to an additional
tax equal to 10% of the amount of the distributions which is
includable in gross income in the tax year. However, under Code
Section 72(t), the penalty tax may not apply to distributions: (1)
made to a beneficiary on or after the death of the employee; (2)
attributable to the employee's being disabled within the meaning of
Code Section 72(m)(7); (3) made as a part of a series of
substantially equal periodic payments (at least annually) for the
life or life expectancy of the employee or the joint lives or life
expectancies of the employee and his designated beneficiary; (4)
made to an employee on account of separation from service after
attaining age 55; (5) properly made to an alternate payee under a
qualified domestic relations order; (6) made to an employee for
medical care, but not in excess of the amount allowable as a
medical expense deduction to the employee for amounts paid during
the taxable year for medical care; (7) timely made to correct an
excess aggregate contribution; or (8) timely made to reduce an
excess elective deferral.
If exception (3) above is applicable at the time of the
distribution but the series of payments is later modified (other
than because of death or disability) before the employee reaches
age 59 1/2 or, if after he reaches age 59 1/2, within five years of
the date of the first payment, the employee's tax for the year the
modification occurs is increased by an amount equal to the tax
which, but for the exception, would have been imposed plus interest
for the deferral period.
If the amount distributed during a tax year is less than the
minimum required distribution, there is an additional tax imposed
on the employee equal to 50% of the amount that the distribution
made in the year falls short of the required amount.
Distributions on Death of Employee
Distributions made to a beneficiary upon the employee's death
must be made pursuant to the rules contained in Section 401(a)(9)
of the Code and the regulations thereunder. Generally, if the
employee dies while receiving annuity payments or other required
minimum distributions under the plan and before the entire interest
in the account has been distributed, the remainder of his interest
must be distributed to the beneficiary at least as rapidly as under
the method in effect as of the employee's date of death.
If the employee dies before payments have begun, his entire
interest must generally be distributed within five (5) years after
the date of death. This five-year rule applies to all
non-individual beneficiaries. However, if an individual other than
the surviving spouse has been designated as beneficiary, payments
may be made over the life of that individual or over a period not
extending beyond the life expectancy of the beneficiary so long as
payments begin on or before December 31 of the year following the
year of death. If the beneficiary is the employee's spouse,
distributions are not required to begin until the date the employee
would have attained age 70 1/2. If the spouse dies before
distributions begin, the rules discussed above will apply as if the
spouse were the employee. Participants and beneficiaries should
seek competent tax or legal advice about the tax consequences of
distributions.
Federal Income Tax Withholding
Effective January 1, 1993, certain distributions are defined
as "eligible rollover distributions." Generally, any eligible
rollover distribution is subject to mandatory income tax
withholding at the rate of 20% unless the employee elects to have
the distribution paid as a direct rollover to an IRA or to another
Section 403(b) annuity contract or custodial account. With respect
to distributions other than eligible rollover distributions,
amounts will be withheld from annuity (periodic) payments at the
rates applicable to wage payments and from other distributions at
a flat 10% rate, unless the employee elects not to have federal
income tax withheld from these payments.
INVESTMENT OBJECTIVES AND POLICIES
The objectives and policies in making investments for Variable
Annuity Account A are set forth below:
1. The principal investment objective will be the selection
of investments which are deemed to provide long-term growth of
capital. However, occasional investments, up to a maximum of 15% of
the value of the assets of Variable Annuity Account A at the time
such an investment is made, may be made for the purpose of seeking
short-term profits. It is intended to seek the maximum growth of
capital which is not inconsistent with an investment policy
intended to be sufficiently conservative to achieve at least enough
long-term growth of capital to offset anticipated decreases in the
purchasing power of the dollar. There is no assurance that this
objective will be attained.
2. The assets of Variable Annuity Account A will be invested
primarily in common stocks. A relatively small percentage of such
assets may be invested in preferred stocks, bonds, debentures,
notes and other evidences of indebtedness of a character
customarily acquired by institutional investors, whether or not
publicly distributed. These may or may not be convertible into
common stock or accompanied by warrants to acquire common stock.
There may be times, however, when economic conditions or general
levels of common stock prices are such that, on the basis of
combined considerations of risk, income and capital gains, a larger
than usual portion of the assets of Variable Annuity Account A will
be held in such investments. It is contemplated that investments
will be primarily in securities issued in the United States, but
the right is reserved to invest in securities issued in Canada up
to a maximum of 25% of the value of the assets in Variable Annuity
Account A at the time an investment is made.
3. The assets of Variable Annuity Account A will be kept
fully invested, except that:
(a) sufficient cash will be kept on hand to meet variable
annuity contract payments, and
(b) reasonable amounts of cash and/or United States
government securities, or other short term securities may be held
for temporary periods pending investment.
4. No investment in the securities of any one issuer may
exceed 5% of the value of the assets of Variable Annuity Account A
at the time the investment is made except obligations of the United
States government and instrumentalities thereof.
5. No investment in the voting securities of any one issuer
may exceed 5% of its outstanding voting securities.
6. Borrowing is not contemplated, but the right is reserved
to borrow from banks for temporary purposes up to a maximum of 5%
of the value of the assets of Variable Annuity Account A at the
date of borrowing.
7. Securities of other issuers will not be underwritten.
8. Investments in Variable Annuity Account A will not be
concentrated in any particular industry, or groups of industries,
but the right is reserved to invest not more than 25% of the value
of the assets of Variable Annuity Account A at the time of the
investment in any one industry.
9. Investments in real estate will not be a principal
activity, but the right is reserved to invest in real estate or
interests in real estate up to 10% of the value of the assets of
Variable Annuity Account A at the time any such investment is made.
10. No purchases will be made of commodities or commodity
contracts.
11. Loans may be made through the acquisition of bonds,
debentures, notes, or other evidences of indebtedness, of a type
customarily purchased by institutional investors, whether publicly
distributed or not. Except for such acquisitions, loans will not be
made.
12. Investments in securities which cannot be sold to the
public without registration of such securities with the Securities
and Exchange Commission and which have not been so registered will
be limited to 10% of the value of the assets of Variable Annuity
Account A at the time any such investment is made.
13. Short sales, purchases on margin or purchases of put or
call options or combinations thereof, will not be made.
14. Income and realized capital gains derived from the assets
of Variable Annuity Account A will be reinvested.
15. In addition to conforming to the investment policies
described herein, all investments of the assets of Variable Annuity
Account A must be permissible investments under the Colorado
Insurance Code. Pertinent provisions of that Act, not otherwise
reflected in the specific statements of objectives and policies
include, in summary style:
(a) investment is permitted:
(i) in the common shares of a corporation which has, in each
of the five years immediately preceding the investment, paid a
dividend, or had earnings available for the payment of a dividend,
of at least 4% of the average value at which the shares were
carried in the capital account of the corporation during the year
in which the dividend was paid, or in which the earnings were
available for payment (the value at which the shares are carried in
the capital account of the corporation does not necessarily bear
any relationship to the market value of that stock);
(ii) in the preferred shares of a corporation which has, in
each of the five years immediately preceding the investment; paid
a dividend at least equal to the specified annual rate on all its
preferred shares, or in the preferred shares of a corporation whose
common shares are a permitted investment.
(b) Investment in specified bonds, debentures or other
evidences of indebtedness is permitted, including investment in
specified government securities, municipal securities, revenue
bonds, bonds secured by mortgage, and equipment trust certificates.
16. Variable Annuity Account A will not issue any senior
securities as that term is defined in the Investment Company Act of
1940.
17. No investments in the securities of a company will be
made for the purpose of exercising control or management over such
company.
18. Investments in securities of other investment companies
are not contemplated, but the right is reserved to purchase such
securities other than from the issuer, up to a maximum of 10% of
the value of the assets of Variable Annuity Account A at the time
any such investment is made, provided that not more than 3% of the
total outstanding voting stock of any one investment company may be
held.
The investment objectives and policies shown in Items 1
through 16 are fundamental, and may not be changed without approval
of a majority of the votes available to Participants.
ALLOCATION OF PORTFOLIO BROKERAGE
GW Capital continually provides the Variable Annuity Account
Committee with an investment program for its consideration. Upon
approval of such an investment program by the Committee, GW Capital
executes the program by placing orders for the purchase or sale of
investments, GW Capital is responsible for making Variable Annuity
Account A's portfolio decisions once approval of an investment
program by the Committee has been obtained, and assumes
responsibility for placing Variable Annuity Account A's brokerage
business and, where applicable, negotiating the amount of the
commission rate paid. If orders for the purchase or sale of
investments at any one time are made by GW Capital on its own
behalf and on behalf of Variable Annuity Account A, then the
over-all brokerage commissions are allocated between GW Capital and
Variable Annuity Account A on a basis directly proportionate to the
size of the respective orders of Variable Annuity Account A and GW
Capital.
GW Capital has no set formula for the distribution of
brokerage business in connection with the placing of orders for the
purchase and sale of approved investments; it being the intention
of GW Capital to place such orders with the objective of obtaining
the best price, execution and available data. Brokerage commissions
are negotiated as there are no standard rates. All brokerage firms
provide the service of execution of the order made; some brokerage
firms also provide research and statistical data which can be of
value. In negotiating commissions, GW Capital is permitted under
the Investment Advisory Services Agreement to give consideration to
the use and value of such data and to the quality of execution
supplied. In placing orders for the purchase or sale of approved
investments GW Capital has not placed portfolio transactions with
any particular brokers, it being GW Capital's intention to place
such orders with the objectives of obtaining the most favorable
prices, competent execution and pertinent research and statistical
data. To the extent that GW Capital uses research and statistical
data services so obtained, its expenses may be reduced and such
data has therefore been and is one of the factors considered by GW
Capital in determining its fee for investment advisory services.
When purchasing or selling securities trading on the
over-the-counter market, GW Capital will generally execute the
transaction with a broker engaged in making a market for such
securities. The amount of commission paid to brokers in connection
with the purchases and sales of investment assets for Variable
Annuity Account A during 1994, 1995 and 1996 aggregate $7,678,
$14,413 and $13,683 respectively. During 1996, 85% of the Variable
Annuity Account A's brokerage commissions were paid to brokers who
furnish statistical data and research.
PORTFOLIO TURNOVER RATE
During periods of relatively stable market and economic
conditions, it is anticipated that the annual portfolio turnover
rate of Variable Annuity Account A will not exceed 50%. However,
any particular security will be sold and the proceeds re-invested
whenever such action is deemed prudent from the viewpoint of
Variable Annuity Account A's investment objectives, regardless of
the holding period of such security. During any period when
changing economic or market conditions are anticipated, resulting
shifts in portfolio emphasis may significantly increase the rate of
portfolio turnover. High turnover involves correspondingly heavier
brokerage commission expenses which Variable Annuity Account A must
pay. The rate of portfolio turnover for Variable Annuity Account A
for the calendar years 1994, 1995 and 1996 was: 30.2%, 62.2% and
64.4%, respectively.
VOTING RIGHTS
Participants will be entitled to vote at the annual meetings
of the Participants as required by the 1940 Act. Under current
requirements Participants are entitled to vote on:
(1) Any change in the fundamental investment objectives or
policies of Variable Annuity Account A (see "Investment Objectives
and Policies" numbers 1 through 16.)
(2) Election of the Members of the Committee.
(3) Ratification of independent auditors for Variable Annuity
Account A.
(4) Any other business which may properly come before the
meeting.
A Participant who had Accumulation Units credited to his
account under a Variable Annuity Contract on the record date may
cast one vote for each such Accumulation Unit. A Participant
receiving annuity payments under a variable Annuity Contract on the
record date may cast a number of votes equal to the dollar amount
of the assets maintained in Variable Annuity Account A on the
record date to meet the annuity obligations relating to such
Participant divided by the value of an Accumulation Unit on the
record date. As a Participant receives annuity payments, the number
of votes to which he will be entitled will decrease.
The record date for determining the number of votes which a
Participant may cast at an annual meeting shall be the last
valuation date in February in each year. Each Participant shall be
sent a notice of the meeting of Participants.
MANAGEMENT
GWL&A is managed by its Board of Directors, at least one third
of whom are elected by its participating policyholders and the
remainder of whom are elected by its shareholders. The operation of
Variable Annuity Account A is subject to the direction and approval
of a Variable Annuity Account Committee, in accordance with Rules
and Regulations adopted by the Committee. Members of the Committee
are elected by Participants at annual meetings. Such Members are
elected for a one year term. A majority of the Members of the
Committee must be persons who are not otherwise "interested
persons" of GWL&A as that term is defined in the 1940 Act.
Furthermore, a majority of the Members of the Committee must be
citizens of the United States and a majority of such Members who
are United States citizens must be resident in the United States.
A. Members and Officers of the Variable Annuity Account Committee
Name & Business Address Position Present Position and Principal
Occupation During The Last Five Years
James Motz Member Senior Vice-President, Employee Benefits,
of GWL&A
8515 E. Orchard Road (since 1991); Maxim Series Fund, Inc.
Director (since 1994)
Englewood, CO 80111
Rex Jennings Member President Emeritus, Denver Metro Chamber
of Commerce
12510 E. Evans Circle #C (since 1987); Maxim Series Fund, Inc.
Director (since 1992)
Aurora, CO 80014
Douglas L Wooden Member Senior Vice-President, Financial
Services of GWL&A
8515 E. Orchard Road (since 1996); Senior Vice-President, Chief
Financial Officer
Englewood, CO 80111 of GWL&A (1991-1996); Maxim Series Fund,
Inc. Director
(since 1996)
Sanford Zisman Member Attorney, Zisman & Ingraham, P.C.;
Suite 250 Maxim Series Fund, Inc. Director (since 1982)
3773 Cherry Creek Dr. N
Denver, CO 80209
Richard P. Koeppe, Ph.D. Member Retired Superintendent, Denver
Public Schools;
8679 E. Kenyon Ave. Maxim Series Fund, Inc. Director (since 1987)
Englewood, CO 80017
Ruth B. Lurie Secretary Vice-President, Counsel and Associate
Secretary (U.S.)
8515 E. Orchard Road of GWL&A (since 1988)
Englewood, CO 80111
Glen Derback Principal Vice President, Financial Control of GWL&A
8515 E. Orchard Road Accounting (since 1984).
Englewood, CO 80111 Officer
Messrs. Motz and Wooden are considered to be "interested
persons" of Great-West Life & Annuity Insurance Company and
Variable Annuity Account A, as that term is defined in Section
2(a)(19) of the 1940 Act. Mr. Motz is Senior Vice-President
Employee Benefits (U.S.) of GWL&A. Mr. Wooden is Senior
Vice-President, Financial Services (U.S.) of GWL&A.
Ms. Lurie and Mr. G.R. Derback are considered to be
"affiliated persons" of Great-West Life & Annuity Insurance Company
and Variable Annuity Account A, as that term is defined in Section
2(a)(3) of the 1940 Act. Ms. Lurie is Secretary to the Variable
Annuity Account Committee and is Vice-President and Counsel of
Great-West Life & Annuity Insurance Company. Mr. Derback is
Principal Accounting Officer of Variable Annuity Account A and is
Vice-President, Financial Control of Great-West Life & Annuity
Insurance Company.
B. Directors and Officers of BenefitsCorp Equities, Inc.
Name Principal Business Address
Position and Offices with Underwriter
Charles P. Nelson 8515 E. Orchard Road
President and Director
Englewood, Colorado 80111
Robert K. Shaw 8515 E. Orchard Road
Director
Englewood, Colorado 80111
Dennis Low 8515 E. Orchard Road
Director
Englewood, Colorado 80111
Gregg E. Seller 8515 E. Orchard Road
Director and Vice President
Major Accounts Englewood, Colorado 80111
John Brown 8515 E. Orchard Road
Director
Englewood, Colorado 80111
Robert D. Bond 8515 E. Orchard Road
Director
Englewood, Colorado 80111
Doug L. Wooden 8515 E. Orchard Road
Director
Englewood, Colorado 80111
Jack Baker 8515 E. Orchard Road
Vice President Licensing
and Contracts Englewood, Colorado 80111
Glen R. Derback 8515 E. Orchard Road
Treasurer
Englewood, Colorado 80111
Ruth B. Lurie 8515 E. Orchard Road
Secretary
Englewood, Colorado 80111
Beverly A. Byrne 8515 E. Orchard Road
Assistant Secretary
Englewood, Colorado 80111
C. Compensation of Members of Variable Annuity Account Committee
No officer or Member of the Committee and no officer or
Director of GWL&A receives any compensation from Variable Annuity
Account A. GWL&A pays all expenses relative to Variable Annuity
Account A's operations, for which GWL&A deducts certain amounts.
(see Paragraph 2 under "Charges and Experience Rating.") The
Members of the Committee who are not active employees of GWL&A are
not paid for their services rendered to Variable Annuity Account A.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Variable Annuity Contracts were sold only in the United
States by life insurance salesmen who represented Great-West and
who were licensed by the state insurance departments, and by
certain employees of Great-West. Effective April 16, 1984, however,
Great-West ceased issuing new variable annuity contracts.
Furthermore, effective May 1, 1987, Great-West ceased permitting
new participants to be enrolled under existing variable annuity
contracts, and with respect to any variable annuity contracts for
which there were fewer than 25 participants, ceased accepting
additional contributions. Effective May 1, 1989, GWL&A announced
that it would not accept additional contributions on any variable
annuity.
Great-West was registered under the Securities Exchange Act of
1934 as a broker-dealer. It has been succeeded in its role as
underwriter by BCE which is registered under the Securities
Exchange Act of 1934 as a broker-dealer. All persons engaged in
selling Variable Annuity Contracts were required to successfully
complete a securities examination required by the Securities and
Exchange Commission. Where state law required, such persons were
also trained or registered as securities salesmen.
REGULATION
As a life insurance company organized and operated under the
laws of Colorado, GWL&A is subject to provisions governing such
companies and to supervision and regulation by the Department of
Insurance of Colorado. GWL&A must also comply with the laws of the
states in which it is licensed to transact business.
The laws of Colorado and of other states in which GWL&A is
licensed to transact business provide for regulation and
supervision of the variable annuity activities of life insurance
companies. Included in such regulation are requirements relating
to mandatory contract provisions, examination and approval of
contract forms and the administration and maintenance of variable
annuity accounts. Such state regulation does not involve any
supervision or control over the investment policy of Variable
Annuity Account A or the selection of investments thereof, except
for verification that any such investments are permissible under
applicable law.
An annual statement in the form prescribed by the National
Association of Insurance Commissioners ("N.A.I.C.") relating to
GWL&A's assets, transactions and affairs with respect to its
business for the preceding year must be filed by GWL&A with the
State of Colorado and with each of the other states in which it
does business on or before March 1 of each year. The books and
records of GWL&A's business are subject to review and examination
by the Colorado Insurance Department, and by the insurance
departments of the other states in which it does business, at all
times. At least once every three years, a full examination of
GWL&A's operations is conducted, under the auspices of the N.A.I.C.
TRUSTEE FOR ASSETS OF VARIABLE ANNUITY ACCOUNT A
The Bank of New York, 48 Wall Street, New York, NY 10015, is
the trustee of the assets of Variable Annuity Account A under a
written trust agreement complying with the requirements imposed by
the insurance laws of various states in which GWL&A conducts
business.
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which
Variable Annuity Account A or GWL&A is a party.
LEGAL ADVICE
Sutherland, Asbill & Brennan, L.L.P., 1275 Pennsylvania
Avenue., N.W., Washington, D.C. 20004 has provided advice on
certain matters relating to the federal securities laws. All
matters of applicable state law pertaining to the Variable Annuity
Contracts, including GWL&A's right to issue the Variable Annuity
Contracts thereunder, have been passed upon by Ruth B. Lurie,
Vice-President and Counsel.
INDEPENDENT AUDITORS
The statement of assets and liabilities of the Great-West
Variable Annuity Account A, including the statement of investments,
as of December 31, 1996, the related statement of operations for
the year then ended, the statements of changes in net assets for
each of the two years in the period then ended and the financial
highlights for each of the five years in the period ended December
31, 1996, and the consolidated financial statements of Great-West
Life & Annuity at December 31, 1996, and 1995, and for each of the
three years in the period ended December 31, 1996, included in this
prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report appearing herein, and are
included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
OTHER VARIABLE ANNUITY CONTRACTS
It is contemplated that other forms of group or individual
variable annuity contracts of GWL&A may be sold in the future,
providing benefits which vary in accordance with the net investment
experience of Variable Annuity Account A.
TABLE OF PREMIUM TAXES
State or local premium taxes, if any, may have been imposed at
the time a purchase payment was made or, as is generally the case,
at the Annuity Commencement Date. (see "Accumulation Period,"
paragraph 7, as to possible refunds of premium taxes.) For plans
qualifying under Section 403(b) of the Code, such premium taxes in
the states in which GWL&A does business are as follows:
Alabama
None
Kansas
None
North Carolina
None
Alaska
None
Kentucky
2.00%
North Dakota
None
Arizona
None
Louisiana
None
Ohio
None
Arkansas
None
Maine
None
Oklahoma
None
California
.50%
Maryland
None
Oregon
None
Colorado
None
Massachusetts
None
Pennsylvania
None
Connecticut
None
Michigan
None
South Carolina
None
Delaware
None
Minnesota
None
South Dakota
None
District of Columbia
None
Mississippi
None
Tennessee
None
Florida
1.00%
Missouri
None
Texas
None
Georgia
None
Montana
None
Utah
None
Hawaii
None
Nebraska
None
Vermont
None
Idaho
None
Nevada
None
Virginia
None
Illinois
None
New Hampshire
None
Washington
None
Indiana
None
New Jersey
None
West Virginia
1.00%
Iowa
None
New Mexico
None
Wisconsin
None
Wyoming
None
NOTE: The foregoing rates are subject to amendment by legislative
act and, in cases where the rates shown are different from those
applicable to non-tax benefited contracts, the applicability of the
stated rates may be subject to administrative interpretation.
APPENDIX
Computation of Accumulation Unit Value
The following hypothetical example illustrates the computation
of the Accumulation Unit value on each valuation date. (see
Paragraphs 3 and 4 under "Accumulation Period")
Assume that the value of the assets of Variable Annuity
Account A at the end of the valuation date of May 15th of some year
was $5,000,000; that the value of an Accumulation Unit for such
valuation date was $1.13500000; and that during the valuation
period terminating at the end of the valuation date of May 16th the
investment income was $1,000, the net realized capital gains were
$6,000 and the net unrealized capital losses were $5,000. The gross
investment rate for the valuation period would thus be equal to (a)
$2,000 ($1,000, plus $6,000, less $5,000) divided by (b) $5,000,000
which produces .0400% (.00040000.) The net investment rate for the
valuation period is determined by deducting .003285% (.00003285)
from the gross investment rate, which results in a net investment
rate of .036715% (.00036715.) The net investment factor for the
valuation period would be determined as the net investment rate
plus 1.00000000 or 1.00036715.
The value of the Accumulation Unit for the valuation date of
May 16th would be equal to the value for the preceding period
($1.13500000) multiplied by the net investments factor for the
current period (1.00036715) which produces $1.13541672.
Computation of Annuity Unit Value
The following hypothetical example illustrates the computation
of the Annuity Unit value and the amount of the first and
subsequent monthly annuity payments. (see Paragraphs 3 through 6
under "Annuity Period.")
Assume that an employee at the Annuity Commencement Date has
credited to his individual account 30,000 Accumulation Units, and
that the value of an Accumulation Unit on the first valuation date
in the month preceding the Annuity Commencement Date was
$1.15000000, producing a total value of his individual account of
$34,500. Assume also that the employee elects an option for which
the table in the Variable Annuity Contract indicates the first
monthly payment is $65.65 per $10,000 of value applied; the first
monthly annuity payment would thus be 3.4500 multiplied by $65.65
or $226.49.
Assume that the Annuity Unit value on the Annuity Commencement
Date was $1.10000000. When this is divided into the first monthly
payment, the number of Annuity Units represented by that payment is
determined to be 205.900000. The value of this same number of
Annuity Units will be paid in each subsequent month.
Assume further that the Accumulation Unit value on the first
valuation date in the month preceding the month in which the next
annuity payment is due was $1.15600000. The annuity change factor
for the month in which the next annuity payment is due will be the
product obtained by multiplying (a) the ratio of $1.15600000 to
$1.15000000 (the Accumulation Unit value on the first valuation
date of the second preceding month, which was the Accumulation Unit
value used to value the employee's individual account) by (b)
.99713732 (the factor to neutralize the assumed rate of 3.5% per
annum already taken into account in determining the number of
Annuity Units as described above), producing an annuity change
factor of 1.00233978. This is then multiplied by the Annuity Unit
value for the preceding month ($1.10000000) to produce an Annuity
Unit value of $1.10257376.
The current monthly payment is then determined by multiplying
the fixed number of Annuity Units by the current Annuity Unit
value, or 205.900000 times $1.10257376, which produces a current
monthly payment of $227.02.
Historical Record of Accumulation Units
The following is an historical record of the values of an
Accumulation Unit as of the last valuation date of each quarter to
December 31, 1996.
Date
Value
Date
Value
Date
Value
January 3, 1969
$1.00000000
March 31, 1981
$1.34420316
June 30, 1993
$5.89355715
March 28, 1969
$1.07468400
June 30, 1981
$1.31151501
September 30, 1993
$6.20352631
June 27, 1969
$1.07583259
September 30, 1981
$1.21957549
December 31, 1993
$6.22231381
September 30, 1969
$1.04319336
December 31, 1981
$1.34034823
March 31, 1994
$6.07099873
December 31, 1969
$1.05956294
March 31, 1982
$1.22060069
June 30, 1994
$5.98373289
March 31, 1970
$1.05322327
June 30, 1982
$1.21747890
September 30, 1994
$6.21184797
June 30, 1970
$ .86337212
September 30, 1982
$1.32107048
December 31, 1994
$6.07070336
September 30, 1970
$ .98057690
December 31, 1982
$1.54829628
March 31, 1995
$6.43386353
December 31, 1970
$1.08416020
March 31, 1983
$1.72492408
June 30, 1995
$6.93539739
March 31, 1971
$1.28783953
June 30, 1983
$1.88999803
September 30, 1995
$7.34349110
June 30, 1971
$1.31417688
September 30, 1983
$1.85391985
December 31, 1995
$7.50058268
September 30, 1971
$1.34600160
December 31, 1983
$1.86959830
March 31, 1996
$7.97167430
December 31, 1971
$1.40624309
March 31, 1984
$1.77987261
June 30, 1996
$8.16277408
March 31, 1972
$1.50937876
June 30, 1984
$1.74123169
September 30, 1996
$8.36088935
June 30, 1972
$1.46441659
September 30, 1984
$1.89436321
December 31, 1996
$8.76699327
September 29, 1972
$1.41141921
December 31, 1984
$1.94021457
December 31, 1972
$1.43641768
March 31, 1985
$2.11639231
These historical accumulation units
March 30, 1973
$1.14518173
June 30, 1985
$2.31593116
are unaudited
June 29, 1973
$ .94975920
September 30, 1985
$2.17502453
September 28, 1973
$1.12752636
December 31, 1985
$2.50415588
December 31, 1973
$ .98798465
March 31, 1986
$2.92575544
March 29, 1974
$ .92504974
June 30, 1986
$3.12894373
June 28, 1974
$ .84636772
September 30, 1986
$2.79849885
September 30, 1974
$ .69582357
December 31, 1986
$2.50415588
December 31, 1974
$ .76438983
March 31, 1987
$3.45357315
March 31, 1975
$ .85484991
June 30, 1987
$3.47692861
June 30, 1975
$ .94523691
September 30, 1987
$3.58107036
September 30, 1975
$ .86720026
December 31, 1987
$2.90927633
December 31, 1975
$ .89703274
March 31, 1988
$3.03211290
March 31, 1976
$1.02654318
June 30, 1988
$3.14170371
June 30, 1976
$1.04254066
September 30, 1988
$3.19555027
September 30, 1976
$1.02175714
December 31, 1988
$3.24632490
December 31, 1976
$1.06312535
March 31, 1989
$3.40048089
March 31, 1977
$ .96668709
June 30, 1989
$3.66057985
June 30, 1977
$ .97779837
September 30, 1989
$4.03595925
September 30, 1977
$ .91543186
December 31, 1989
$4.16667314
December 31, 1977
$ .91330430
March 31, 1990
$4.10420565
March 31, 1978
$ .88025820
June 30, 1990
$4.40575331
June 30, 1978
$ .94981303
September 30, 1990
$3.95067300
September 30, 1978
$1.02175412
December 31, 1990
$4.09586804
December 31, 1978
$ .94566769
March 31, 1991
$4.67731834
March 31, 1979
$1.03700469
June 30, 1991
$4.46997251
June 30, 1979
$1.03384794
September 30, 1991
$4.70629835
September 30, 1979
$1.07966980
December 31, 1991
$5.17489662
December 31, 1979
$1.09861144
March 31, 1992
$5.00089395
March 31, 1980
$1.02778990
June 30, 1992
$4.90045709
June 30, 1980
$1.15888482
September 30, 1992
$4.94334533
September 30, 1980
$1.24125856
December 31, 1992
$5.39680799
December 31, 1980
$1.34937658
March 31, 1993
$5.68645911
FINANCIAL STATEMENTS OF VARIABLE ANNUITY ACCOUNT A
The following audited financial statements of Variable Annuity
Account A cover the financial position as of December 31, 1996, the
results of operations for the year ended December 31, 1996, and the
changes in net assets for each of the years ended December 31,
1995, and 1996 and financial highlights for each of the five years
in the period ended December 31, 1996.
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
Financial Statements for the Years Ended
December 31,
1996 and 1995 and Independent Auditors'
Report
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Variable Annuity Account Committee
and the Participants of Great-West Variable Annuity Account A:
We have audited the accompanying statement of assets and
liabilities of the
Great-West Variable Annuity Account A, including the schedule of
investments, as
of December 31, 1996, the related statement of operations for
the year then
ended, the statements of changes in net assets for each of the two
years in the
period then ended and the financial highlights for each of the five
years in the
period ended December 31, 1996. These financial statements
and financial
highlights are the responsibility of Variable Annuity Account
A'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 generally
accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain
reasonable assurance about whether the financial statements and
the financial
highlights are free of material misstatement. An audit includes
examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial
statements. Our procedures included confirmation of securities
owned as of
December 31, 1996 by correspondence with the custodian. An audit
also includes
assessing the accounting principles used and significant
estimates made by
management, as well as evaluating the overall financial statement
presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial
highlights present
fairly, in all material respects, the financial position of
the Great-West
Variable Annuity Account A at December 31, 1996, and the
results of its
operations, the changes in its net assets and the financial
highlights for the
respective stated periods in conformity with generally
accepted accounting
principles.
January 31, 1997
<PAGE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- -----------------------------------------------------------------
- --------------------------------------------------
Assets:
Investments, at value:
Common stock (cost - $5,551,383) ..............................
$7,149,008
Short-term investment (cost - $497,866) .......................
497,866
Investment income due and accrued ...............................
6,921
Cash ............................................................
94,116
----------
Total Assets ...............................................
7,747,911
Liabilities:
Due to Great-West Life & Annuity Insurance Company ..............
2,793
Contract benefits payable ......................................
5,257
----------
Total Liabilities ..........................................
8,050
----------
Net Assets ......................................................
$7,739,861
==========
Net Assets Represented By (Units at 8.7670)
Accumulation units - 819,044 ....................................
$7,180,553
Reserves for annuities in course of payment - 2,850 units .......
559,308
----------
Net Assets ......................................................
$7,739,861
==========
See notes to financial statements.
<PAGE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------
- --------------------------------------------------
Investment Income:
Dividends ....................................................
$ 85,801
Interest .....................................................
46,351
----------
132,152
Expenses:
Administration ...............................................
20,791
Mortality risks ..............................................
27,814
Investment management and advisory services ..................
33,525
Expense risks ................................................
4,944
----------
87,074
----------
Net Investment Income ..........................................
45,078
----------
Realized and Unrealized Gain on Investments:
Net realized gain on investments ...............................
754,021
Net change in unrealized appreciation on investments ...........
289,358
----------
Net Realized and Unrealized Gain on Investments ................
1,043,379
----------
Net Increase in Net Assets Resulting from Operations ...........
$1,088,457
==========
See notes to financial statements.
<PAGE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 AND 1995
- -----------------------------------------------------------------
- --------------------------------------------------
From Operations: ............................... 1996
1995
-----------
-----------
Net investment income .......................... $ 45,078
$ 93,115
Net realized gains ............................. 754,021
855,627
Net change in unrealized appreciation .......... 289,358
568,994
-----------
-----------
Increase in net assets resulting
from operations ........................ 1,088,457
1,517,736
From Unit Share Transactions:
Surrenders ..................................... (199,158)
(299,498)
Annuity payments ............................... (107,722)
(107,786)
Death payments ................................. (41,699)
(204,673)
Transfer in respect of mortality guarantees .... 9,843
7,418
-----------
-----------
Decrease in net assets derived from unit
share transactions .......................... (338,736)
(604,539)
-----------
-----------
Net increase in net assets ..................... 749,721
913,197
Net Assets:
Beginning of period ............................ 6,990,140
6,076,943
-----------
-----------
===========
End of period .................................. $ 7,739,861
$ 6,990,140
===========
===========
See notes to financial statements.
<PAGE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------
- --------------------------------------------------
Selected data for an accumulation unit for years ended December
31, 1996, 1995 1994, 1993, and 1992, were as
follows:
Years Ended December 31,
- -----------------------------------------------------------------
- --------
1996
1995 1994 1993 1992
--------------
- ------------ ------------ ------------ ------------
Unit Value, Beginning of Period $ 7.501 $
6.070 $ 6.245 $ 5.397 $ 5.175
Income From Investment Operations:
Net investment income .053
.089 .073 .048 .052
Net gains (losses) on investments
(realized and unrealized) 1.213
1.342 (.248) .800 .170
--------------
- ------------ ------------ ------------ ------------
Total From Investment
Operations (Note A) 1.266
1.431 (.175) .848 .222
--------------
- ------------ ------------ ------------ ------------
Unit Value, End of Period $ 8.767 $
7.501 $ 6.070 $ 6.245 $ 5.397
==============
============ ============ ============ ============
Total Return 15.90%
23.56% (2.80)% 15.71% 4.29%
Net Assets, End of Period $ 7,739,861 $
6,990,140 $ 6,076,943 $ 7,235,935 $ 6,825,451
Average broker commission paid
per share bought or sold $ 0.0692
Ratio of Expenses to Average
Net Assets 1.25%
1.18% 1.24% 1.19% 1.21%
Ratio of Net Investment Income
to Average Net Assets 1.89%
2.49% 2.42% 2.02% 2.23%
Portfolio Turnover Rate 64.4%
62.2% 30.2% 23.4% 44.5%
Note A - Net investment income and realized and unrealized gains
(losses) are
reflected in the value of the accumulation units. Dividends are
not declared
from income and capital gains are not distributed.
<PAGE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
- -----------------------------------------------------------------
- --------------------------------------------------
NOTE 1 - HISTORY
Great-West Variable Annuity Account A (Variable Annuity Account A)
is a separate
and distinct investment fund established by The Great-West
Life Assurance
Company (Great-West Life). On December 31, 1991, Variable Annuity
Account A was
transferred to and the variable annuity contracts were reinsured
by Great-West
Life & Annuity Insurance Company (GWL&A), a wholly-owned
subsidiary of
Great-West Life. Variable Annuity Account A is registered as
an open-end
diversified management investment company under the Investment
Company Act of
1940, and the registration under the Securities Act of 1933
of the group
variable annuity contracts funded by Variable Annuity Account A
became effective
on November 27, 1968. Purchase payments were first placed in
Variable Annuity
Account A on January 3, 1969.
Effective April 16, 1984, Great-West Life ceased issuing new
variable annuity
contracts. Effective May 1, 1987, Great-West Life has not
allowed new
participants to be enrolled under existing variable annuity
contracts and,
effective May 1, 1989, no additional contributions under
existing variable
annuity contracts are being accepted.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with
generally accepted
accounting principles requires management to make estimates and
assumptions that
affect the reported amounts of assets and liabilities and
disclosure of
contingent assets and liabilities at the date of the financial
statements and
the reported amounts of revenue and expenses during the reporting
period. Actual
results could differ from those estimates.
The cost of securities sold is determined on the basis
of specific
identification.
Securities traded on national exchanges are valued daily at the
closing price of
the securities on these exchanges, and securities traded on
over-the-counter
markets are valued daily at the average between bid and asked
prices. Short-term
securities are valued at amortized cost which approximates
market value.
Security transactions are recorded at the earlier of trade date
or the date a
commitment is made to buy or sell the related investment.
Dividend income is accrued as of the ex-dividend date and
interest income is
recorded daily.
NOTE 3 - CHARGES UNDER THE CONTRACTS
GWL&A provides administrative, investment management, and
advisory services to
Variable Annuity Account A and has assumed mortality and expense
risks of the
contracts. A daily deduction of .003285% (an effective annual
rate of 1.2064%)
is made from the gross investment income of Variable Annuity
Account A. This
deduction, expressed on an annual basis, is broken down as
follows: .2857% for
administrative expenses, .3863% for mortality risks, .0688% for
expense risks,
and .4656% for investment management and advisory services.
Effective November
1, 1996 a wholly-owned subsidiary of Great-West Life &
Annuity Insurance
Company, GW Capital Management, Inc., serves as investment advisor.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - Continued
- -----------------------------------------------------------------
- --------------------------------------------------
NOTE 4 - INVESTMENTS
The aggregate purchases of investments and the aggregate proceeds
from sales of
investments were (excluding short-term securities) as follows:
1996 1995
-------------- ------------
Common Stock
Purchases $
4,215,625 $ 4,018,419
Proceeds from sales
4,398,958 4,643,628
NOTE 5 - FEDERAL INCOME TAXES
The Variable Annuity Account A investment income is applied
to increase
accumulation unit values. Under existing federal income tax
law, Variable
Annuity Account A investment income is not taxed to the
extent that it is
applied to increase accumulation unit values. GWL&A reserves the
right to charge
the Variable Annuity Account A if such taxes are imposed in the
future.
NOTE 6 - ACCUMULATION UNITS
A summary of the transactions in accumulation units follows:
1996 1995
------------ ------------
Outstanding - January 1
848,519 904,823
Redeemed during the year
Surrender
(24,386) (24,716)
Death
(5,089) (31,588)
------------ ------------
------------ ------------
(29,475) (56,304)
------------ ------------
============ ============
Outstanding - December 31
819,044 848,519
============ ============
Net investment income and realized and unrealized gains are
reflected in the
value of the accumulation units. Dividends are not declared
from income and
gains are not distributed.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - Continued
- -----------------------------------------------------------------
- --------------------------------------------------
NOTE 7 - ACCUMULATION UNIT VALUES - (Unaudited)
ACCUMULATION
ACCUMULATION
VALUATION DATE UNIT VALUE
VALUATION DATE UNIT VALUE
- ----------------------------- ---------------------------
- -------------------------- ----------------------
January 3, 1969 $ 1.00000000
September 30, 1980 $ 1.24125856
March 28, 1969 $ 1.07468400
December 31, 1980 $ 1.34937658
June 27, 1969 $ 1.07583259
March 31, 1981 $ 1.34420316
September 30, 1969 $ 1.04319336
June 30, 1981 $ 1.31151501
December 31, 1969 $ 1.05956294
September 30, 1981 $ 1.21957549
March 31, 1970 $ 1.05322327
December 31, 1981 $ 1.34034823
June 30, 1970 $ .86337212
March 31, 1982 $ 1.22060069
September 30, 1970 $ .98057690
June 30, 1982 $ 1.21747890
December 31, 1970 $ 1.08416020
September 30, 1982 $ 1.32107048
March 31, 1971 $ 1.28783953
December 31, 1982 $ 1.54829628
June 30, 1971 $ 1.31417688
March 31, 1983 $ 1.72492408
September 30, 1971 $ 1.34600160
June 30, 1983 $ 1.88999803
December 31, 1971 $ 1.40624309
September 30, 1983 $ 1.85391985
March 31, 1972 $ 1.50937876
December 31, 1983 $ 1.86959830
June 30, 1972 $ 1.46441659
March 31, 1984 $ 1.77987261
September 29, 1972 $ 1.41141921
June 30, 1984 $ 1.74123169
December 31, 1972 $ 1.43641768
September 30, 1984 $ 1.89436321
March 30, 1973 $ 1.14518173
December 31, 1984 $ 1.94021457
June 29, 1973 $ .94975920
March 31, 1985 $ 2.11639231
September 28, 1973 $ 1.12752636
June 30, 1985 $ 2.31593116
December 31, 1973 $ .98798465
September 30, 1985 $ 2.17502453
March 29, 1974 $ .92504974
December 31, 1985 $ 2.50415588
June 28, 1974 $ .84636772
March 31, 1986 $ 2.92575544
September 30, 1974 $ .69582357
June 30, 1986 $ 3.12894373
December 31, 1974 $ .76438983
September 30, 1986 $ 2.79849885
March 31, 1975 $ .85484991
December 31, 1986 $ 2.92996949
June 30, 1975 $ .94523691
March 31, 1987 $ 3.45357315
September 30, 1975 $ .86720026
June 30, 1987 $ 3.47692861
December 31, 1975 $ .89703274
September 30, 1987 $ 3.58107036
March 31, 1976 $ 1.02654318
December 31, 1987 $ 2.90927633
June 30, 1976 $ 1.04254066
March 31, 1988 $ 3.03211290
September 30, 1976 $ 1.02175714
June 30, 1988 $ 3.14170371
December 31, 1976 $ 1.06312535
September 30, 1988 $ 3.19555027
March 31, 1977 $ .96668709
December 31, 1988 $ 3.24632490
June 30, 1977 $ .97779837
March 31, 1989 $ 3.40048089
September 30, 1977 $ .91543186
June 30, 1989 $ 3.66057985
December 31, 1977 $ .91330430
September 30, 1989 $ 4.03595925
March 31, 1978 $ .88025820
December 31, 1989 $ 4.16667314
June 30, 1978 $ .94981303
March 31, 1990 $ 4.10420565
September 30, 1978 $ 1.02175412
June 30, 1990 $ 4.40575331
December 31, 1978 $ .94566769
September 30, 1990 $ 3.95067300
March 31, 1979 $ 1.03700469
December 31, 1990 $ 4.09586804
June 30, 1979 $ 1.03384794
March 31, 1991 $ 4.67731834
September 30, 1979 $ 1.07966980
June 30, 1991 $ 4.46997251
December 31, 1979 $ 1.09861144
September 30, 1991 $ 4.70629835
March 31, 1980 $ 1.02778990
December 31, 1991 $ 5.17489662
June 30, 1980 $ 1.15888482
<PAGE>
ACCUMULATION UNIT VALUES - (Unaudited) - Concluded
ACCUMULATION
VALUATION DATE UNIT VALUE
- ----------------------------- ---------------------------
March 31, 1992 $ 5.00089395
June 30, 1992 $ 4.90045709
September 30, 1992 $ 4.94334533
December 31, 1992 $ 5.39680799
March 31, 1993 $ 5.70268053
June 30, 1993 $ 5.91443136
September 30, 1993 $ 6.20352631
December 31, 1993 $ 6.24551098
March 31, 1994 $ 6.07099873
June 30, 1994 $ 5.98373289
September 30, 1994 $ 6.21184797
December 31, 1994 $ 6.07070336
March 31, 1995 $ 6.43386353
June 30, 1995 $ 6.93539739
September 30, 1995 $ 7.34349110
December 31, 1995 $ 7.50058268
March 31, 1996 $ 7.97167430
June 30, 1996 $ 8.16277408
September 30, 1996 $ 8.36088935
December 31, 1996 $ 8.76699327
<PAGE>
PART II
OTHER INFORMATION
Item 1. Financial Statements and Exhibits
(a) Financial Statements:
Financial Statements of Great-West Variable Annuity Account A are
contained in the prospectus.
(b) Exhibits:
Exhibit Numbers 1,2,4,5,6,8,10 and 11 are set forth in previous
Post-Effective Amendments filed with the Commission (Registration
No. 2-29033), in particular: Amendment No. 1 filed November 5,
1968; Amendment No. 2 filed June 3, 1969; and Amendment No. 3 filed
March 9, 1970; which are incorporated by reference herein.
Exhibit Numbers 3,7,9,12,13,14 and 15 are not applicable to the
Registrant.
Exhibit Number 16: Financial Data Schedule is filed herewith.
Item 2. Persons Controlled by or under Common Control by the
Registrant.
The Registrant is subject to the direction and approval of the
Variable Annuity Account A Committee. GW Capital Management, Inc.
a Colorado corporation, is the investment adviser of the
Registrant. GW Capital Management, Inc. is a wholly owned
subsidiary of Great-West Life & Annuity Insurance Company, a
Colorado life insurance corporation.
Item 3. Number of Holders of Securities
As of January 31, 1997, the Registrant had the following
number of record holders of each class of securities:
Title of Class Number of Record Holders
Active Participants 167
Vested Participants 42
Total Participants 209
Item 4. Indemnification
Provisions exist under the Colorado General Corporation Code
and the Bylaws of Great-West Life & Annuity Insurance Company
whereby Great-West Life & Annuity Insurance Company may indemnify
a director, officer, or controlling person of Great-West Life &
Annuity Insurance Company against liabilities arising under the
Securities Act of 1933. The following excerpts contain the
substance of these provisions:
Colorado General Corporation Code
Section 7-3-101.5 - INDEMNIFICATION OF CORPORATE OFFICERS,
EMPLOYEES AND AGENTS.
(1) As used in this section:
(a) "Corporation" includes any domestic or foreign predecessor
entity of the corporation in a merger, consolidation, or other
transaction in which the predecessor's existence ceased upon
consummation of the transaction.
(b) "Director" means an individual who is or was a director of a
corporation and an individual who, while a director of a
corporation, is or was serving at the corporations' request as a
director, officer, partner, trustee, employee, or agent of any
other foreign or domestic corporation or any partnership, joint
venture, trust, other enterprise, or employee benefit plan. A
director shall be considered to be serving an employee benefit plan
at the corporation's request if his duties to the corporation also
impose duties which otherwise involve services by him to the plan,
or to participants in, or to beneficiaries of the plan.
(c) "Expenses" include attorney fees.
(d) "Liability" means the obligation to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with
respect to an employee benefit plan, or reasonable expense incurred
with respect to a proceeding).
(e) "Official capacity", when used with respect to a director,
means the office of director in the corporation, and, when used
with respect to an individual other than a director, means the
office in the corporation held by the officer or the employment or
agency relationship undertaken by the employee or agent on behalf
of the corporation. "Official capacity" does not include service
for any other foreign or domestic corporation or for any
partnership, joint venture, trust, other enterprise, or employee
benefit plan.
(f) "Party" includes an individual who was, is, or is threatened
to be made a named defendant or respondent in a proceeding.
(g) "Proceeding means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal.
(2) (a) Except as provided in paragraph (d) of this subsection
(2), a corporation may indemnify against liability incurred in any
proceeding an individual made a party to the proceeding because he
is or was a director if:
(I) He conducted himself in good faith;
(II) He reasonably believed:
(A) In the case of conduct in his official capacity with the
corporation, that his conduct was in the corporation's best
interests; or
(B) In all other cases, that his conduct was at least not opposed
to the corporation's best interests; and
(III) In the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful.
(b) A director's conduct with respect to any employee benefit plan
for a purpose he reasonably believed to be in the interest of the
participants in or beneficiaries of the plan is conduct that
satisfies the requirements of sub-subparagraph (B) of subparagraph
(II) of paragraph (a) of this subsection (2). A director's conduct
with respect to an employee benefit plan for a purpose that he did
not reasonably believe to be in the interests of the participants
in or beneficiaries of the plan shall be deemed not to satisfy the
requirements of subparagraph (I) of paragraph (a) of this
subsection (2).
(c) The termination of any proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its
equivalent, is not of itself determinative that the individual did
not meet the standard of conduct set forth in paragraph (a) of this
subsection (2).
(d) A corporation may not indemnify a director under this
subsection (2) either:
(I) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
(II) In connection with any proceeding charging improper personal
benefit to the director, whether or not involving action in his
official capacity, in which he was adjudged liable on the basis
that person benefit was improperly received by him.
(e) Indemnification permitted under this subsection (2) in
connection with a proceeding by or in the right of a corporation is
limited to reasonable expenses incurred in connection with the
proceeding.
(3) Unless limited by the articles of incorporation, a corporation
shall be required to indemnify a person who is or was a director of
the corporation and who was wholly successful, on the merits or
otherwise, in defense of any proceeding to which he was a party,
against reasonable expenses incurred by him in connection with the
proceeding.
(4) Unless limited by the articles of incorporation, a director
who is or was a party to a proceeding may apply for indemnification
to the court conducting the proceeding or to another court of
competent jurisdiction. On receipt of an application, the court,
after giving any notice the court considers necessary, may order
indemnification in the following manner:
(a) If it determines the director is entitled to mandatory
indemnification under subsection (3) of this section, the court
shall order indemnification, in which case the court shall also
order the corporation to pay the director's reasonable expenses
incurred to obtain court-ordered indemnification.
(b) If it determines that the director is fairly and reasonably
entitled to indemnification in view of all the relevant
circumstances described in paragraph (d) of subsection (2) of this
section, the court may order such indemnification as the court
deems proper; except that the indemnification with respect to any
proceeding in which liability shall have been adjudged in the
circumstances described in paragraph (d) of subsection (2) of this
section is limited to reasonable expenses incurred.
(5) (a) A corporation may not indemnify a director under
subsection (2) of this section unless authorized in the specific
case after a determination has been made that indemnification of
the director is permissible in the circumstances because he has met
the standard of conduct set forth in paragraph (a) of said
subsection.
(b) The determination required to be made by paragraph (a) of this
subsection (5) shall be made:
(I) By the board of directors by a majority vote of a quorum,
which quorum shall consist of directors not parties to the
proceeding; or
(II) If a quorum cannot be obtained, by a majority vote of a
committee of the board designated by the board, which committee
shall consist of two or more directors not parties to the
proceeding; except that directors who are parties to the proceeding
may participate in the designation of directors for the committee.
(c) If the quorum cannot be obtained or the committee cannot be
established under paragraph (b) of this subsection (5), or even if
a quorum is obtained or a committee designated if such quorum or
committee so directs, the determination required to be made by
paragraph (a) of this subsection (5) shall be made:
(I) By independent legal counsel selected by a vote of the board
of directors or the committee in the manner specified in
subparagraph (I) or (II) of paragraph (b) of this subsection (5)
or, if a quorum of the full board cannot be obtained and a
committee cannot be established, by independent legal counsel
selected by a majority vote of the full board; or
(II) By the shareholders.
(d) Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as the
determination that indemnification is permissible; except that, if
the determination that indemnification is permissible is made by
independent legal counsel, authorization of indemnification and
evaluation as to reasonableness of expenses shall be made by the
body that selected said counsel.
(6) (a) A corporation may pay for or reimburse the reasonable
expenses incurred by a director who is a party to a proceeding in
advance of the final disposition of the proceeding if:
(I) The director furnishes the corporation a written affirmation
of his good-faith belief that he has met the standard of conduct
described in subparagraph (I) of paragraph (a) of subsection (2) of
this section;
(II) The director furnishes the corporation a written undertaking,
executed personally or on his behalf, to repay the advance if it is
determined that he did not meet such standard of conduct; and
(III) A determination is made that the facts then known to those
making the determination would not preclude indemnification under
this subsection (6).
(b) The undertaking required by subparagraph (II) of paragraph (a)
of this subsection (6) shall be an unlimited general obligation of
the director, but need not be secured and may be accepted without
reference to financial ability to make repayment.
(7) (a) A provision concerning a corporations' indemnification of
or advances for expenses to directors contained in its articles of
incorporation, bylaws, a resolution of its shareholders or
directors, or in a contract, except for insurance policies, shall
be valid only if and to the extent the provision is consistent with
this section and, if indemnification is limited by the articles of
incorporation, is consistent with said articles.
(b) This subsection (7) shall not limit a corporation's power to
pay or reimburse expenses incurred by a director in connection with
his appearance as a witness in a proceeding at a time when he has
not been made a named defendant or respondent in the proceeding.
(8) Unless limited by the articles of incorporation:
(a) An officer of the corporation who is not a director is
entitled to mandatory indemnification pursuant to subsection (3) of
this section and is entitled to apply for court-ordered
indemnification pursuant to subsection (4) in each case to the same
extent as a director;
(b) A corporation may indemnify and advance expenses pursuant to
subsection (6) of this section to an officer, employee, or agent of
the corporation who is not a director to the same extent as a
director; and
(c) A corporation may indemnify and advance expenses to an
officer, employee, or agent of the corporation who is not a
director to a greater extent if consistent with law and if provided
for by its articles of incorporation, bylaws, resolution of its
shareholders or directors, or in a contract.
(9) A corporation may purchase and maintain insurance on behalf of
an individual who is or was a director, officer, employee,
fiduciary, or agent of the corporation and who, while a director,
officer, employee, fiduciary, or agent of the corporation, is or
was serving at the request of the corporation as a director,
officer, partner, trustee, employee fiduciary, or agent of any
other foreign or domestic corporation or of any partnership, joint
venture, trust, other enterprise, or employee benefit plan against
any liability asserted against or incurred by him in any such
capacity or arising out of this status as such, whether or not the
corporation would have the power to indemnify him against such
liability under the provisions of this section.
(10) Any indemnification of or advance of expenses to a director in
accordance with this section, if arising out of a proceeding by or
on behalf of the corporation, shall be reported in writing to the
shareholders with or before the notice of the next shareholders'
meeting.
Bylaws of Great-West Life & Annuity Insurance Company
Article II, Section 11. Indemnification of Directors.
The corporation may, by resolution of the Board of Directors,
indemnify and save harmless out of the funds of the corporation to
the extent permitted by applicable, law, any Director, Officer, or
employee of the corporation of any member or officer of any
Committee, and his heirs, executors, and administrators, from and
against all claims, liabilities, costs, charges, and expenses
whatsoever that any such Director, Officer, employee, or any such
member or officer sustains or incurs in or about any action, suit,
or proceeding that is brought, commenced, or prosecuted against him
for or in respect of any act, deed, matter, or thing whatsoever,
made, done, or permitted by him in or about the execution of the
duties of this office or employment with the corporation, in or
about the execution of this duties as a Director, or Officer of
another company which he so serves at the request and on behalf of
the corporation, or in or about the execution of this duties as a
member or officer of any such Committee, and all other claims,
liabilities, costs, charges, and expenses that he sustains or
incurs, in or about or in relation to any such duties or the
affairs of the corporation, the affairs of such other company which
he so serves or the affairs of such Committee, except such claims,
liabilities, costs, charges, or expenses as are occasioned by his
own willful neglect or default. The corporation may, by resolution
of the Board of Directors, indemnify and save harmless out of the
funds of the corporation to the extent permitted by applicable law,
any Director, Officer, or employee of any subsidiary corporation of
the corporation on the same basis and within the same constraints
as described in the preceding sentence.
Item 5. Business and Other Connections of Investment Adviser
GW Capital Management Inc. (the "Adviser") is a Colorado
corporation. Its principal business is the provision of investment
advice to open-end management investment companies.
The Adviser serves as the Investment Adviser to the
Registrant. Reference is made to the Adviser's Form ADV
(particularly Schedule F), effective June 28, 1996 (as amended), on
file with the Commission (File No. 801-52309), for a fuller
description of the Adviser's business and other connections.
Substantial business and other connections of the Directors
and Officers of the Adviser other than with the Registrant are set
forth in the Adviser's Form ADV (particularly the Schedule D's)
effective June 28, 1996 (as amended), on file with the Commission
(File No. 801-52309), which is incorporated by reference herein.
Item 6. Principal Underwriters
(a) None
(b) See Part I
(c) None
Item 7. Location of Accounts and Records
Registrant maintains the records required to be maintained by
it under Section 31 (a), and the Rules promulgated thereunder, of
the Investment Company Act of 1940, at the principle office of
Great-West Life & Annuity Insurance Company, 8515 E. Orchard Road,
Englewood, Colorado 80111.
Item 8. Management Services
None
Item 9. Distribution Expenses
Not Applicable.
Item 10. Undertakings
Registrant represents that it is relying on a no-action letter
dated November 28, 1988, to the American Council of Life Insurance
(Ref. IP-6-88) regarding Sections 22(e), 27(c)(1), and 27(d) of the
Investment Company Act of 1940, in connection with redeemability
restrictions on Section 403(b) policies, and that paragraphs number
(1) through (4) of that letter will be complied with.
GWL&A represents that the fees and charges deducted under the
Contracts, in aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred, and the risks assumed by the
GWL&A.
Consents:
Consents of Messrs. Sutherland, Asbill & Brennan, L.L.P.,
Deloitte & Touche LLP, and Ms. Ruth B. Lurie of Great-West Life &
Annuity Insurance Company , to the use of their names in the
Prospectus to be filed herewith.
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940,
the Registrant certifies that it meets all of the requirements for
effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of Englewood,
Colorado on the 21stday of April, 1997.
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
By:_/s/ J.D. Motz
J.D. Motz
Chairman of the Committee
April 18, 1997
Great-West Life & Annuity Insurance Company and
The Variable Annuity Account Committee of
Great-West Variable Annuity Account A
8515 East Orchard Road
Englewood, Colorado 80111
Dear Gentlemen:
I hereby consent to the use of my name under the caption
"Legal Opinions" in the prospectus contained in Post-Effective
Amendment No. 22 to the registration statement under the Investment
Company Act of 1940 Form N-1 (Sec. File No. 811-1737) to be filed
by Great-West Variable Annuity Account A with the Securities and
Exchange Commission under the Securities Act of 1933 and the
Investment Company Act of 1940 and amendments thereto.
Sincerely,
/s/ Ruth B. Lurie
Ruth B. Lurie
Vice President, Counsel
and Associate Secretary
April 21, 1997
Great-West Life & Annuity
Insurance Company
8515 E. Orchard Road
Englewood, CO 80111
Re: Great-West Variable Annuity Account A
File No. 811-1737
Gentlemen:
We hereby consent to the reference to our name under the
caption "Legal Matters" in the Prospectus filed as part of Post
Effective Amendment No. 22 to the Form N-1 Registration Statement
for the Variable Annuity Account A. In giving this consent, we do
not admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN, L.L.P.
By:_/s/ Kimberly J. Smith
Kimberly J. Smith
INDEPENDENT AUDITOR'S CONSENT
We consent to the use in this Amendment No. 22 to Registration
Statement No. 811-1737 on Form N-1 of Great-West Variable Annuity
Account A of our report on Great-West Variable Annuity Account A
dated January 31, 1997, and to the reference to us under the
heading "Independent Auditors" appearing in the prospectus, which
is a part of such Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
April 16, 1997
Exhibit (16)
Financial Data Schedule
II-1
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 6,049,249
<INVESTMENTS-AT-VALUE> 7,646,874
<RECEIVABLES> 6,921
<ASSETS-OTHER> 94,116
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<PER-SHARE-NAV-BEGIN> 7,501
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