AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 24, 1998
Registration Nos. 2-29033
811-1737
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.
Post-Effective Amendment No.38
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 23
(Check appropriate box or boxes.)
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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)
W. Kay Adam
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
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, 1998 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 A
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
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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.
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.
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The date of this prospectus is May 1, 1998.
This prospectus should be read carefully and retained for future
reference.
<PAGE>
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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, LLC, ("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.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
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...........................................................19
Portfolio Turnover Rate.....................................................................20
Voting Rights...............................................................................20
Management..................................................................................21
Distribution of Variable Annuity Contracts..................................................22
Regulation..................................................................................23
Trustee for Assets of Variable Annuity Account A............................................23
Preparing for Year 2000.....................................................................23
Legal Proceedings...........................................................................23
Legal Advice................................................................................23
Independent Auditors........................................................................24
Other Variable Annuity Contracts............................................................24
Table of Premium Taxes......................................................................24
Appendix....................................................................................25
</TABLE>
<PAGE>
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.
<PAGE>
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,
1997.)
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. GWL&A deducts the charges
described below to cover costs and expenses, services provided, and risks
assumed under the Contracts. The amount of a charge may not necessarily
correspond to the costs associated with providing the services or benefits
indicated by the designation of the charge or associated with the particular
Contract. For example, deductions for sales expense may not fully cover all of
the sales charges and distribution expenses actually incurred by GWL&A, and
proceeds from other charges, including the mortality risk and expense charges,
may be used in part to cover such expenses.
(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 1995, 1996,
and 1997 GWL&A's total deductions from purchase payments for sales expenses were
$0, $0 and $0, respectively.
During 1995, 1996, and 1997 GWL&A's total deductions from purchase payments
for administrative expenses were: $100.00, $100.00 and $100.00, respectively.
During 1995, 1996 and 1997 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 1995, 1996 and 1997
GWL&A's total deductions from the gross investment rate for investment advisory
services were $32,411, $33,525 and $37,297 respectively. During 1995, 1996 and
1997 GWL&A's total deductions from the gross investment rate for administrative
expenses were $19,886, $20,791 and $22,884 respectively. During 1995, 1996 and
1997 GWL&A's total deductions from the gross investment rate for mortality risks
under the Contract were $26,890, $27,814 and $30,944 respectively. During 1995,
1996 and 1997 GWL&A's total deductions from the gross investment rate for
expense risks were $4,780, $4,944 and $5,501 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.
<PAGE>
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 and penalties 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 April 1 of
the Calendar year following the Calendar year in which the employee (i) attains
the age of 70 1/2, or (ii) retires, 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.
Premature Withdrawals
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 or discontinued (other than because of
death or disability), before the Contract Owner reaches age 59 1/2 or, within
five years of the date of the first payment, whichever is later, the Contract
Owner is liable for the 10% penalty plus interest on all payments received
before age 59 1/2. This penalty is imposed in the year the modification or
discontinuance occurs.
<PAGE>
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 in full on or before December 31st of the calendar year
that contains the fifth anniversary of the date of the employee's 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
1995, 1996 and 1997 aggregate $14,413, $13,683 and $31,682 respectively. During
1997, 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 1995, 1996 and 1997 was: 62.2%, 64.4% and 151.4%,
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
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Name & Business Address Position Present Position and Principal
Occupation During The Last Five Years
James Motz Member Great-West Life & Annuity Insurance Company:
Executive Vice 8515 E. Orchard Road President, Employee Benefits (since 1997);
Senior Vice Englewood, CO 80111 President, Employee Benefits, (1991-1997);
Maxim Series Fund, Inc. Director (since 1994)
Rex Jennings Member President Emeritus, Denver Metro Chamber of Commerce
12510 E. Evans Circle #C (since 1987); Maxim Series Fund, Inc. Director
(since
Aurora, CO 80014 1988)
Douglas L Wooden Chairman Great-West Life & Annuity Insurance Company:
Executive Vice 8515 E. Orchard Road President, Financial Services (Since 1998);
Senior Vice, Englewood, CO 80111 President, Financial Services (1996-1998),
Senior Vice President, Chief Financial Officer (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
Beverly A. Byrne Secretary Assistant Vice President and Associate
Counsel, (U.S.)
8515 E. Orchard Road of GWL&A (since 1997)
Englewood, CO 80111
David G. McLeod Principal Great-West Life & Annuity Insurance Company:
Assistant Vice 8515 E. Orchard Road Accounting President, Investment Administration
(since 1994); Manager, Englewood, CO 80111 OfficerSecurities and Equities Administration
(1992-1994)
</TABLE>
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. Byrne 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. Byrne is Secretary
to the Variable Annuity Account Committee and is Assistant Vice President and
Associate 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.
<TABLE>
Position and Offices
<S> <C> <C> <C> <C> <C> <C>
Name Principal Business Address 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
Englewood, Colorado 80111 Major Accounts
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
Englewood, Colorado 80111 and Contracts
Glen R. Derback 8515 E. Orchard Road Treasurer
Englewood, Colorado 80111
Beverly A. Byrne 8515 E. Orchard Road Secretary
Englewood, Colorado 80111
</TABLE>
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.
<PAGE>
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.
PREPARING FOR YEAR 2000
Like all financial services providers, GWL&A utilizes systems that may be
affected by Year 2000 transition issues and it relies on third parties,
including banks, custodians, and investment managers, that also may be affected.
GWL&A and its affiliates have developed, and are in the process of implementing,
a Year 2000 transition plan, and are confirming that their service providers are
also so engaged. The resources that are being devoted to this effort are
substantial. It is difficult to predict with precision whether the amount of
resources ultimately devoted, or the outcome of these efforts, will have any
negative impact on GWL&A. However, as of April 30, 1998, it is not anticipated
that Participating Employees will experience negative effects on their
investment, or on the services provided in connection therewith, as a result of
Year 2000 transition implementation. GWL&A currently anticipates that its
systems will be Year 2000 compliant on or about the first quarter of 1999, but
there can be no assurance that GWL&A will be successful, or that interaction
with other service providers will not impair GWL&A's services at that time.
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, 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 W. Kay Adam, 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, 1997, 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,
1997, 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.
<PAGE>
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:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
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 None Mississippi None Tennessee None
Columbia
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
</TABLE>
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.
<PAGE>
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.
<PAGE>
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, 1997.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Date Value Date Value Date Value
- ---- ----- ---- ----- ---- -----
January 3, 1969 $1.00000000 September 30, 1978 $1.02175412 June 30, 1988 $3.14170371
March 28, 1969 $1.07468400 December 31, 1978 $ .94566769 September 30, 1988 $3.19555027
June 27, 1969 $1.07583259 March 31, 1979 $1.03700469 December 31, 1988 $3.24632490
September 30, 1969 $1.04319336 June 30, 1979 $1.03384794 March 31, 1989 $3.40048089
December 31, 1969 $1.05956294 September 30, 1979 $1.07966980 June 30, 1989 $3.66057985
March 31, 1970 $1.05322327 December 31, 1979 $1.09861144 September 30, 1989 $4.03595925
June 30, 1970 $ .86337212 March 31, 1980 $1.02778990 December 31, 1989 $4.16667314
September 30, 1970 $ .98057690 June 30, 1980 $1.15888482 March 31, 1990 $4.10420565
December 31, 1970 $1.08416020 September 30, 1980 $1.24125856 June 30, 1990 $4.40575331
March 31, 1971 $1.28783953 December 31, 1980 $1.34937658 September 30, 1990 $3.95067300
June 30, 1971 $1.31417688 March 31, 1981 $1.34420316 December 31, 1990 $4.09586804
September 30, 1971 $1.34600160 June 30, 1981 $1.31151501 March 31, 1991 $4.67731834
December 31, 1971 $1.40624309 September 30, 1981 $1.21957549 June 30, 1991 $4.46997251
March 31, 1972 $1.50937876 December 31, 1981 $1.34034823 September 30, 1991 $4.70629835
June 30, 1972 $1.46441659 March 31, 1982 $1.22060069 December 31, 1991 $5.17489662
September 29, 1972 $1.41141921 June 30, 1982 $1.21747890 March 31, 1992 $5.00089395
December 31, 1972 $1.43641768 September 30, 1982 $1.32107048 June 30, 1992 $4.90045709
March 30, 1973 $1.14518173 December 31, 1982 $1.54829628 September 30, 1992 $4.94334533
June 29, 1973 $ .94975920 March 31, 1983 $1.72492408 December 31, 1992 $5.39680799
September 28, 1973 $1.12752636 June 30, 1983 $1.88999803 March 31, 1993 $5.68645911
December 31, 1973 $ .98798465 September 30, 1983 $1.85391985 June 30, 1993 $5.89355715
March 29, 1974 $ .92504974 December 31, 1983 $1.86959830 September 30, 1993 $6.20352631
June 28, 1974 $ .84636772 March 31, 1984 $1.77987261 December 31, 1993 $6.22231381
September 30, 1974 $ .69582357 June 30, 1984 $1.74123169 March 31, 1994 $6.07099873
December 31, 1974 $ .76438983 September 30, 1984 $1.89436321 June 30, 1994 $5.98373289
March 31, 1975 $ .85484991 December 31, 1984 $1.94021457 September 30, 1994 $6.21184797
June 30, 1975 $ .94523691 March 31, 1985 $2.11639231 December 31, 1994 $6.07070336
September 30, 1975 $ .86720026 June 30, 1985 $2.31593116 March 31, 1995 $6.43386353
December 31, 1975 $ .89703274 September 30, 1985 $2.17502453 June 30, 1995 $6.93539739
March 31, 1976 $1.02654318 December 31, 1985 $2.50415588 September 30, 1995 $7.34349110
June 30, 1976 $1.04254066 March 31, 1986 $2.92575544 December 31, 1995 $7.50058268
September 30, 1976 $1.02175714 June 30, 1986 $3.12894373 March 31, 1996 $7.97167430
December 31, 1976 $1.06312535 September 30, 1986 $2.79849885 June 30, 1996 $8.16277408
March 31, 1977 $ .96668709 December 31, 1986 $2.50415588 September 30, 1996 $8.36088935
June 30, 1977 $ .97779837 March 31, 1987 $3.45357315 December 31, 1996 $8.76699327
September 30, 1977 $ .91543186 June 30, 1987 $3.47692861 March 31, 1997 $9.10319430
December 31, 1977 $ .91330430 September 30, 1987 $3.58107036 June 30, $9.87479147
1997
March 31, 1978 $ .88025820 December 31, 1987 $2.90927633 September 30, 1997 $10.11055595
June 30, 1978 $ .94981303 March 31, 1988 $3.03211290 December 31, 1997 $10.66148379
These historical accumulation
units are unaudited
</TABLE>
<PAGE>
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, 1997, the results of operations for
the year ended December 31, 1997, and the changes in net assets for each of the
years ended December 31, 1996, and 1997 and financial highlights for each of the
five years in the period ended December 31, 1997.
<PAGE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
===============================================================================
FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 1997 AND 1996 AND
FINANCIAL HIGHLIGHTS FOR EACH OF THE
FIVE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
<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, 1997, 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, 1997. 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, 1997 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, 1997, 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 30, 1998
<PAGE>
<TABLE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
- ----------------------------------------------------------------------------------------------
Assets:
Investments, at value:
<S> <C>
Common stock (cost - $6,748,353) $ 7,869,812
Short-term investment (cost - $298,788) 298,788
Investment income due and accrued 18,803
Cash 165,450
Receivable for securities sold 441,022
----------------
Total Assets 8,793,875
Liabilities:
Payable for securities purchased 258,870
Due to Great-West Life & Annuity Insurance Company 3,490
Contract benefits payable 58,356
----------------
Total Liabilities 320,716
----------------
Net Assets $ 8,473,159
================
Net Assets Represented By (Units at 10.661)
Accumulation units - 746,562 $ 7,959,464
Reserves for annuities in course of payment - 2,811 units 513,695
----------------
Net Assets $ 8,473,159
================
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
- ----------------------------------------------------------------------------------------------
Investment Income:
<S> <C>
Dividends $ 185,039
Interest 43,323
---------------
228,362
Expenses:
Administration 22,884
Mortality risks 30,944
Investment management and advisory services 37,297
Expense risks 5,501
---------------
96,626
---------------
Net Investment Income 131,736
---------------
Realized and Unrealized Gain on Investments:
Net realized gain on investments 1,823,734
Net change in unrealized (depreciation) on investments (476,166)
---------------
Net Realized and Unrealized Gain on Investments 1,347,568
---------------
Net Increase in Net Assets Resulting from Operations $ 1,479,304
===============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997 AND 1996
- ----------------------------------------------------------------------------------------------
From Operations: 1997 1996
------------- --------------
<S> <C> <C>
Net investment income $ 131,736 $ 45,078
Net realized gains 1,823,734 754,021
Net change in unrealized appreciation (476,166) 289,358
------------- --------------
Increase in net assets resulting
from operations 1,479,304 1,088,457
From Unit Share Transactions:
Surrenders (460,010) (199,158)
Annuity payments (120,602) (107,722)
Death payments (215,036) (41,699)
Transfer in respect of mortality guarantees 49,642 9,843
------------- --------------
Decrease in net assets derived from unit
share transactions (746,006) (338,736)
------------- --------------
Net increase in net assets 733,298 749,721
Net Assets:
Beginning of period 7,739,861 6,990,140
------------- --------------
=============
End of period $ 8,473,159 $ 7,739,861
============= ==============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------
Selected data for an accumulation unit for years ended December 31, 1997, 1996,
1995 1994, and 1993 were as follows:
Years Ended December 31,
-----------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Unit Value, Beginning of Period $ 8.767 $ 7.501 $ 6.070 $ 6.245 $ 5.397
Income From Investment Operations:
Net investment income .167 .053 .089 .073 .048
Net gains (losses) on investments
(realized and unrealized) 1.727 1.213 1.342 (.248) .800
---------- ---------- ---------- ---------- ---------
Total From Investment
Operations (Note A) 1.894 1.266 1.431 (.175) .848
---------- ---------- ---------- ---------- ---------
Unit Value, End of Period $ 10.661 $ 8.767 $ 7.501 $ 6.070 $ 6.245
========== ========== ========== ========== =========
Total Return 20.27% 15.90% 23.56% (2.80)% 15.71%
Net Assets, End of Period $ 8,473,159 $ 7,739,861 $ 6,990,140 $ 6,076,943 $ 7,235,935
Average broker commission paid
per share bought or sold $ 0.0600 $ 0.0692
Ratio of Expenses to Average
Net Assets 1.27% 1.25% 1.18% 1.24% 1.19%
Ratio of Net Investment Income
to Average Net Assets 1.74% 1.89% 2.49% 2.42% 2.02%
Portfolio Turnover Rate 151.4% 64.4% 62.2% 30.2% 23.4%
</TABLE>
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, 1997 AND 1996
- --------------------------------------------------------------------------------
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.
<PAGE>
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, LLC, serves as investment advisor.
NOTE 4 - INVESTMENTS
The aggregate purchases of investments and the aggregate proceeds from sales of
investments were (excluding short-term securities) as follows:
<TABLE>
1997 1996
-------------- -------------
Common Stock
<S> <C> <C>
Purchases $ 11,046,651 $ 4,215,625
Proceeds from sales 11,673,390 4,398,958
</TABLE>
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:
1997 1996
---------- ----------
Outstanding - January 1 819,044 848,519
Redeemed during the year
Surrender (49,689) (24,386)
Death (22,793) (5,089)
---------- ----------
---------- ----------
(72,482) (29,475)
---------- ----------
========== ==========
Outstanding - December 31 746,562 819,044
========== ==========
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>
<TABLE>
NOTES TO FINANCIAL STATEMENTS - Continued
- ----------------------------------------------------------------------------------------------
NOTE 7 - ACCUMULATION UNIT VALUES - (Unaudited)
ACCUMULATION ACCUMULATION
VALUATION DATE UNIT VALUE VALUATION DATE UNIT VALUE
- ------------------------ ------------------------ ---------------------- --------------------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
<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
March 31, 1997 $ 9.10319430
June 30, 1997 $ 9.87479147
September 30, 1997 $ 10.11055595
December 31, 1997 $ 10.66148379
<PAGE>
II-8
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 1,2,4,6,8, and 10 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 5: Investment Adviser Agreement is filed herewith.
Exhibit Number 11(a): Written Consent of Sutherland Asbill & Brennan
Exhibit Number 11(b): Written Consent of Deloitte & Touche, LLP
Exhibit Number 11(c): Written Consent of W. Kay Adam
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, LLC a Colorado limited
liability company, is the investment adviser of the Registrant. GW Capital
Management, LLC 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 December 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 159
Vested Participants 40
Total Participants 199
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:
<PAGE>
Colorado General Corporation Code
Article 109 - INDEMNIFICATION
Section 7-109-101. Definitions.
As used in this Article:
(1) "Corporation" includes any domestic or foreign entity that is
a predecessor of the corporation by reason of a merger or other
transaction in which the predecessor's existence ceased upon
consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a
corporation, is or was serving at the corporation's request as a
director, an officer, a partner, a trustee of, an employee, a
fiduciary or an agent of another domestic or foreign corporation
or other person or of an employee benefit plan. A director is
considered to be serving an employee benefit plan at the
corporation's request if his or her duties to the corporation
also impose duties on or otherwise involve services by, the
director to the plan or to participants in or beneficiaries of
the plan. "Director" includes, unless the context requires
otherwise, the estate or personal representative of a director.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty, fine,
including an excise tax assessed with respect to an employee
benefit plan, or reasonable expenses.
(5) "Official capacity" means, when used with respect to a
director, the office of director in the corporation and, when
used with respect to a person other than a director as
contemplated in Section 7-109-107, means the office in the
corporation held by the officer or the employment, fiduciary, or
agency relationship undertaken by the employee, fiduciary, or
agent on behalf of the corporation. "Official capacity" does not
include service for any other domestic or foreign corporation or
other person or employee benefit plan.
(6) "Party" includes a person who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal.
Section 7-109-102. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this section, a
corporation may indemnify a person made a party to the proceeding
because the person is or was a director against liability
incurred in any proceeding if:
(a) The person conducted himself or herself in good faith;
(b) The person reasonably believed:
(I) In the case of conduct in an official capacity
with the corporation, that his or her conduct was
in the corporation's best interests; or
(II) In all other cases, that his or her conduct
was at least not opposed to the corporation's best
interests; and
(c) In the case of any criminal proceeding, the person had
no reasonable cause to believe his or her conduct was
unlawful.
(2) A director's conduct with respect to an employee benefit plan
for a purpose the director reasonably believed to be in the
interests of the participants in or beneficiaries of the plan is
conduct that satisfies the requirements of subparagraph (II) of
paragraph (b) of subsection (1) of this section. A director's
conduct with respect to an employee benefit plan for a purpose
that the director 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
(a) of subsection (1) of this section.
(3) 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
director did not meet the standard of conduct described in this
section.
(4) A corporation may not indemnify a director under this
section:
(a) In connection with a proceeding by or in the right of
the corporation in which the director was adjudged liable
to the corporation; or
(b) In connection with any proceeding charging that the
director derived an improper personal benefit, whether or
not involving action in his official capacity, in which
proceeding the director was adjudged liable on the basis
that he or she derived an improper personal benefit.
(5) Indemnification permitted under this section in connection
with a proceeding by or in the right of a corporation is limited
to reasonable expenses incurred in connection with the
proceeding.
Section 7-109-103. Mandatory Indemnification of Directors.
Unless limited by its articles of incorporation, a corporation
shall 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.
Section 7-109-104. Advance of Expenses to Directors.
(1) 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:
(a) The director furnishes the corporation a written
affirmation of his good-faith belief that he has met the
standard of conduct described in Section 7-109-102;
(b) The director furnishes the corporation a written
undertaking, executed personally or on the director's
behalf, to repay the advance if it is ultimately
determined that he or she did not meet such standard of
conduct; and
(c) A determination is made that the facts then known to
those making the determination would not preclude
indemnification under this article.
(2) The undertaking required by paragraph (b) of subsection (1)
of this section 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.
(3) Determinations and authorizations of payments under this
section shall be made in the manner specified in Section
7-109-106.
Section 7-109-105. Court-Ordered Indemnification of Directors.
(1) Unless otherwise provided in 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 section 7-109-103, 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, whether or not the director met
the standard of conduct set forth in section 7-109-102 (1)
or was adjudged liable in the circumstances described in
Section 7-109-102 (4), 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 Section 7-109-102 (4) is limited to reasonable
expenses incurred in connection with the proceeding and
reasonable expenses incurred to obtain court-ordered
indemnification.
Section 7-109-106. Determination and Authorization of Indemnification of
Directors.
(1) A corporation may not indemnify a director under Section
7-109-102 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 Section 7-109-102. A corporation
shall not advance expenses to a director under Section 7-109-104
unless authorized in the specific case after the written
affirmation and undertaking required by Section 7-109-104(1)(a)
and (1)(b) are received and the determination required by Section
7-109-104(1)(c) has been made.
(2) The determinations required to be made subsection (1) of this
section shall be made:
(a) By the board of directors by a majority vote of those
present at a meeting at which a quorum is present, and
only those directors not parties to the proceeding shall
be counted in satisfying the quorum; or
(b) If a quorum cannot be obtained, by a majority vote of
a committee of the board of directors designated by the
board of directors, 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.
(3) If a quorum cannot be obtained as contemplated in paragraph
(a) of subsection (2) of this section, and the committee cannot
be established under paragraph (b) of subsection (2) of this
section, or even if a quorum is obtained or a committee
designated, if a majority of the directors constituting such
quorum or such committee so directs, the determination required
to be made by subsection (1) of this section shall be made:
(a) By independent legal counsel selected by a vote of the
board of directors or the committee in the manner
specified in paragraph (a) or (b) of subsection (2) of
this section 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 of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as
the determination that indemnification or advance of expenses
is permissible; except that, if the determination that
indemnification or advance of expenses is permissible is made
by independent legal counsel, authorization of indemnification
and advance of expenses shall be made by the body that
selected such counsel.
Section 7-109-107. Indemnification of Officers, Employees, Fiduciaries, and
Agents.
(1) Unless otherwise provided in the articles of incorporation:
(a) An officer is entitled to mandatory indemnification
under section 7-109-103, and is entitled to apply for
court-ordered indemnification under section 7-109-105, in
each case to the same extent as a director;
(b) A corporation may indemnify and advance expenses to an
officer, employee, fiduciary, or agent of the corporation
to the same extent as a director; and
(c) A corporation may also indemnify and advance expenses
to an officer, employee, fiduciary, or agent who is not a
director to a greater extent, if not inconsistent with
public policy, and if provided for by its bylaws, general
or specific action of its board of directors or
shareholders, or contract.
Section 7-109-108. Insurance.
A corporation may purchase and maintain insurance on behalf of a person
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
domestic or foreign corporation or other person or of an employee benefit plan
against any liability asserted against or incurred by the person in that
capacity or arising out of his or her status as a director, officer, employee,
fiduciary, or agent whether or not the corporation would have the power to
indemnify the person against such liability under the Section 7-109-102,
7-109-103 or 7-109-107. Any such insurance may be procured from any insurance
company designated by the board of directors, whether such insurance company is
formed under the laws of this state or any other jurisdiction of the United
States or elsewhere, including any insurance company in which the corporation
has an equity or any other interest through stock ownership or otherwise.
Section 7-109-109. Limitation of Indemnification of Directors.
(1) A provision concerning a corporation's indemnification of, or
advance of expenses to, directors that is contained in its
articles of incorporation or bylaws, in a resolution of its
shareholders or board of directors, or in a contract, except for
an insurance policy or otherwise, is valid only to the extent the
provision is not inconsistent with Sections 7-109-101 to
7-109-108. If the articles of incorporation limit indemnification
or advance of expenses, indemnification or advance of expenses
are valid only to the extent not inconsistent with the articles
of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a corporation's
power to pay or reimburse expenses incurred by a director in
connection with an appearance as a witness in a proceeding at a
time when he or she has not been made a named defendant or
respondent in the proceeding.
Section 7-109-110. Notice to Shareholders of Indemnification of Director.
If a corporation indemnifies or advances expenses to a director under
this article in connection with a proceeding by or in the right of the
corporation, the corporation shall give written notice of the indemnification or
advance to the shareholders with or before the notice of the next shareholders'
meeting. If the next shareholder action is taken without a meeting at the
instigation of the board of directors, such notice shall be given to the
shareholders at or before the time the first shareholder signs a writing
consenting to such action.
Bylaws of Great-West Life & Annuity Insurance Company
Article II, Section 11. Indemnification of Directors.
(1) In this section, the following terms shall have the following
meanings:
(a)"expenses" means reasonable expenses incurred in a legal
proceeding, including expenses of investigation and
preparation, expenses in connection with an appearance as a
witness, and fees and disbursement of counsel, accountants or
other experts;
(b) "liability" means an obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty or fine;
(c) "party" includes a person who was, is, or is threatened to
be made a named defendant or respondent in a proceeding;
(d)"proceeding" means any threatened, pending or completed
action, suit, or proceeding whether civil, criminal,
administrative or investigative, and whether formal or
informal.
(2)Subject to applicable law, if any person who is a director, officer
or employee of the corporation is made a party to a proceeding
because the person is or was a director, officer or employee of the
corporation, the corporation shall indemnify the person, or the
estate or personal representative of the person, from and against all
liability and expenses incurred by the person in the proceeding (and
advance to the person expenses incurred in the proceeding) if, with
respect to the matter(s) giving rise to the proceeding:
(a) the person conducted himself or herself in good faith; and
(b) the person reasonably believed that his or her conduct was in
the corporation's best interests; and
(c) in the case of any criminal proceeding, the person had no
reasonable cause to believe that his or her conduct was unlawful;
and
(d)if the person is or was an employee of the corporation, the
person acted in the ordinary course of the person's employment
with the corporation.
(3)Subject to applicable law, if any person who is or was serving as a
director, officer or employee of another company or entity at the
request of the corporation is made a party to a proceeding because
the person is or was serving as a director, officer or employee of
the other company or entity, the corporation shall indemnify the
person, or the estate or personal representative of the person, from
and against all liability and expenses incurred by the person in the
proceeding (and advance to the person expenses incurred in the
proceeding) if:
(i)the person is or was appointed to serve at the request of the
corporation as a director, officer or employee of the other
company or entity in accordance with Indemnification
Procedures approved by the Board of Directors of the
corporation; and
(ii) with respect to the matter(s) giving rise to the proceeding:
(a) the person conducted himself or herself in good faith;
and
(b) the person reasonably believed that his or her conduct
was at least not opposed to the corporation's best
interests; and
(c) in the case of any criminal proceeding, the person had
no reasonable cause to believe that his or her conduct was
unlawful; and
(d) if the person is or was an employee of the other
company or entity, the person acted in the ordinary
course of the person's employment with the other
company or entity.
Item 5. Business and Other Connections of Investment Adviser
GW Capital Management, LLC (the "Adviser") is a Colorado limited
liability company. 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
<PAGE>
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, Deloitte & Touche LLP,
and Ms. W. Kay Adam of Great-West Life & Annuity Insurance Company, to the
use of their names in the Prospectus to be filed herewith.
<PAGE>
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 24th day of April, 1998.
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
By: /s/ D.L. Wooden
D.L. Wooden
Chairman of the Committee
April 24, 1998
Great-West Life & Annuity
Insurance Company
8515 E. Orchard Road
Englewood, CO 80111
Re: Great-West Variable Annuity Account A
File Nos. 2-29033 and 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. 38 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
By: /s/ Kimberly J. Smith
Kimberly J. Smith
INDEPENDENT AUDITOR'S CONSENT
We consent to the use in this Amendment No. 38 to Registration Statement No.
2-29033 on Form N-1 of Great-West Variable Annuity Account A of our report on
Great-West Variable Annuity Account A dated January 30, 1998, 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 24, 1998
April 24, 1998
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 Amendments No. 38 and No. 23 to
the registration statement under the Securities Act of 1933 and Investment
Company Act of 1940 Form N-1 (File Nos. 2-29033 and 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/ W. Kay Adam
W. Kay Adam
Vice President, Counsel
and Associate Secretary
Exhibit (5)
Investment Adviser Agreement
<PAGE>
INVESTMENT MANAGEMENT AND ADVISORY SERVICES AGREEMENT
WHEREAS, The Investment Company Act of 1940 ("1940 Act"), as amended,
requires that any person acting as an investment adviser to a registered
investment company shall so act pursuant to a written contract; and
WHEREAS, Great-West Variable Annuity Account A ("Variable Annuity
Account A") is registered under the 1940 Act as an investment company and GW
Capital Management, LLC ("Capital Management") is registered as an investment
adviser under the Investment Advisers Act of 1940;
NOW THEREFORE:
Capital Management hereby agrees to provide investment management and
advisory services relative to variable annuity contracts issued by Great-West
Life & Annuity Insurance Company ("GWL&A") providing for payments or values
which vary depending on the investment experience of the assets of Variable
Annuity Account A ("Variable Annuity Contracts").
Such investment management and advisory services shall include
management of the investment of the assets of Variable Annuity Account A,
investment analysis and all other matters associate with the investment
management of a variable annuity account. Capital Management shall provide
current investment programs for the approval or rejection of the Variable
Annuity Account Committee of Variable Annuity Account A ("Committee"); if any
such current program be rejected, Capital Management shall thereupon prepare
another current program for consideration by the Committee. Upon approval of a
current investment program by the Committee, Capital Management shall cause the
same to be executed by placing orders for the purchase or sale of investments
conforming to the objectives of the approved current investment program. Capital
Management shall pay all expenses incidental to such services except brokerage
commissions, stamp or transfer taxes and other direct costs of acquisition or
disposition of assets of Variable Annuity Account A, which shall be borne by
Variable Annuity Account A.
For such services, Capital Management will receive compensation per
valuation period, as that period is defined in the Group Variable Annuity
Contracts, of .0088% of the value of Variable Annuity Account A, provided that,
in the event that under or pursuant to the terms of Variable Annuity Contracts,
the duration of valuation periods is established at less than seven days,
compensation to be received periodically by Capital Management hereunder will be
based on an effective annual rate of .4656% so as to provide compensation on an
annual basis equivalent to compensation of .0088% per valuation period as
aforesaid.
Capital Management also hereby agrees: (1) to maintain and preserve for
such period or periods as the Securities and Exchange Commission shall prescribe
by rules and regulations, such accounts, books, and other documents as are
necessary or appropriate to record Capital Management's transactions with
Variable Annuity Account A; (2) that such accounts, books and other records
maintained pursuant to (1) shall be subject at any time and from time to time
such reasonable periodic, special and other examinations by the Commission, or
any member or representative thereof, as the Commission may prescribe; and (3)
to furnish to the Commission, within such reasonable time as the Commission may
prescribe, copies of or extracts from such accounts, books and other records
which may be prepared without undue effort, expense, or delay, as the Commission
may by order require.
This agreement shall be effective as of and from December 5, 1997. This
agreement shall thereafter continue in full force and effect from year to year
until terminated by Capital Management or the Committee or by a majority of the
votes available to Participants, without the payment of any penalty, on sixty
days' written notice. It is provided, however, that this agreement shall
automatically terminate:
(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 of the agreement.
Additionally, each annual approval of this agreement must be approved by
the affirmative vote of the Committee, which affirmative vote shall include a
majority of the members of the Committee who are not parties to such contract or
agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
Notwithstanding the foregoing paragraphs, Capital Management may not
terminate this agreement in any way which would be contrary to, or in violation
of, any provisions of the Variable Annuity Contracts. If subsequent to
termination of this agreement by the Committee or Participants, Capital
Management must still render investment management and advisory services in
respect of Variable Annuity Account A, Capital Management will continue to be
compensated in accordance with the terms of the Variable Annuity Contracts.
This agreement is subject to the provisions of the Investment Company
Act of 1940, as amended, the Securities Act of 1933, as amended, and the rules
and regulations promulgated by the Securities and Exchange Commission pursuant
to the aforesaid Acts.
GW CAPITAL MANAGMENT, LLC
By: /s/ J.T. Hughes
President
Attest:
/s/ D.G. McLeod
Treasurer
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
By: /s/ J.D. Motz
Chairman
Variable Annuity Account Committee
Attest:
/s/ B.A. Byrne
Secretary
Variable Annuity Account Committee
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Exhibit (16)
Financial Data Schedule
</LEGEND>
<CIK> 0000043498
<NAME> GREAT-WEST VARIABLE ANNUITY ACCOUNT A
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollar
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 7047
<INVESTMENTS-AT-VALUE> 8169
<RECEIVABLES> 201
<ASSETS-OTHER> 165
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8535
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (62)
<TOTAL-LIABILITIES> (62)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5905
<SHARES-COMMON-STOCK> 747
<SHARES-COMMON-PRIOR> 819
<ACCUMULATED-NII-CURRENT> 177
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<ACCUMULATED-NET-GAINS> 2578
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (187)
<NET-ASSETS> 8473
<DIVIDEND-INCOME> 185
<INTEREST-INCOME> 43
<OTHER-INCOME> 0
<EXPENSES-NET> (97)
<NET-INVESTMENT-INCOME> 131
<REALIZED-GAINS-CURRENT> 1824
<APPREC-INCREASE-CURRENT> (476)
<NET-CHANGE-FROM-OPS> 1479
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 72
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (733)
<ACCUMULATED-NII-PRIOR> 45
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<PER-SHARE-NAV-BEGIN> 8.767
<PER-SHARE-NII> 0.167
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