<PAGE>
As filed with the Securities and Exchange Commission on November 30, 1998
FILE NO. 333-62825
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM N-4
REGISTRATION STATEMENT UNDER SECURITIES ACT OF 1933 /_/
PRE-EFFECTIVE AMENDMENT NO. 1 /X/
-
POST-EFFECTIVE AMENDMENT NO. ___ /_/
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT of 1940 /_/
AMENDMENT NO. 24 /X/
-
-----------------------
PENN MUTUAL VARIABLE ANNUITY ACCOUNT III
(Exact Name of Registrant)
-----------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY
(Name of Depositor)
-----------------------
600 Dresher Road
Horsham, Pennsylvania 19044
(Address of Principal Executive Offices of Depositor)
Depositor's Telephone Number: 215-956-8000
------------------
Richard F. Plush
Vice President
The Penn Mutual Life Insurance Company
600 Dresher Road
Horsham, Pennsylvania 19044
(Name and Address of Agent for Service)
Copy to:
Richard W. Grant
C. Ronald Rubley
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103-6993
------------------
Approximate date of public offering: As soon as practicable after effectiveness
of the Registration Statement
Title of Securities Being Registered:
Individual Variable and Fixed Annuity Contract - Flexible Purchase Payments
<PAGE>
================================================================================
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Location in Statement of
Form N-4 Item Number Location in Prospectuses Additional Information
- - -------------------- -------------------------- ------------------------
<S> <C> <C> <C>
Item 1. Cover Page Cover Page N/A
Item 2. Definitions Special Terms N/A
Item 3. Synopsis Cover Page; Expenses N/A
or Highlights
Item 4. Condensed N/A N/A
Financial
Information
Item 5. General The Penn Mutual Life N/A
Description Insurance Company;
of Registrant, The Separate Account
Depositor and
Portfolio
Companies
Item 6. Deductions The Contract - Charges N/A
and Expenses
Item 7. General The Contract N/A
Description
of Variable
Annuity
Contracts
Item 8. Annuity Period The Contract - Annuity N/A
Options Payments
Item 9. Death Benefit The Contract - Death N/A
On Death Benefit
Item 10. Purchases and The Contract - Purchases; N/A
Contract The Contract - Accumulation
Value Units
Item 11. Redemptions The Contract - Withdrawals N/A
Item 12. Taxes Federal Income Tax N/A
Considerations
Item 13. Legal N/A N/A
Proceedings
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Location in Statement of
Form N-4 Item Number Location in Prospectuses Additional Information
- - -------------------- ------------------------- ------------------------
<S> <C> <C> <C>
Item 14. Table of Table of Contents of N/A
Contents of Statement of Additional
Statement of Information
Additional
Information
Item 15. Cover Page N/A Cover Page
Item 16. Table of N/A Cover Page
Contents
Item 17. General N/A N/A
Information
and History
Item 18. Services N/A Administrative and
Recordkeeping
Services; Custodian;
Independent Auditors
Item 19. Purchase of The Contract - Purchases; Distribution of
Securities The Contract - Transfers; Contracts
Being Offered The Contract - Charges
and Expenses
Item 20. Underwriters N/A Distribution of
Contracts
Item 21. Calculation of N/A Performance Data
Performance
Data
Item 22. Annuity N/A Variable Annuity
Payments Payments
Item 23. Financial N/A Financial Statements
Statements
</TABLE>
<PAGE>
PROSPECTUS -- JANUARY 1, 1999
INDIVIDUAL VARIABLE AND FIXED ANNUITY CONTRACT -- FLEXIBLE PURCHASE PAYMENTS
- - --------------------------------------------------------------------------------
LOGO
PENN MUTUAL VARIABLE ANNUITY ACCOUNT III
THE PENN MUTUAL LIFE INSURANCE COMPANY
PHILADELPHIA, PENNSYLVANIA 19172 . TELEPHONE (215) 956-8000
- - --------------------------------------------------------------------------------
This Prospectus describes a combination variable and fixed annuity contract
offered by The Penn Mutual Life Insurance Company (the "Company"). Through Penn
Mutual Variable Annuity Account III (the "Separate Account"), you may allocate
amounts invested under the Contract among one or more of the funds as set forth
below:
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PENN SERIES FUNDS, INC. MANAGER
<S> <C>
Growth Equity Fund Independence Capital Management, Inc. (a wholly owned
subsidiary of The Penn Mutual Life Insurance Company)
Value Equity Fund OpCap Advisors
Small Capitalization Fund OpCap Advisors
Emerging Growth Fund RS Investment Management, Inc.
Flexibly Managed Fund T. Rowe Price Associates, Inc.
International Equity Fund Vontobel USA, Inc.
Quality Bond Fund Independence Capital Management, Inc.
High Yield Bond Fund T. Rowe Price Associates, Inc.
Money Market Fund Independence Capital Management, Inc.
- - -----------------------------------------------------------------------------------------------------------------------------------
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST MANAGER
Balanced Portfolio Neuberger & Berman Management Incorporated
Limited Maturity Bond Portfolio Neuberger & Berman Management Incorporated
Partners Fund Portfolio Neuberger & Berman Management Incorporated
- - -----------------------------------------------------------------------------------------------------------------------------------
FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND MANAGER
Equity-Income Portfolio Fidelity Management and Research Company
Growth Portfolio Fidelity Management and Research Company
- - -----------------------------------------------------------------------------------------------------------------------------------
FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II MANAGER
Asset Manager Portfolio Fidelity Management and Research Company
Index 500 Portfolio Fidelity Management and Research Company
- - -----------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UNIVERSAL FUNDS, INC. MANAGER
Emerging Markets Equity (International) Portfolio Morgan Stanley Asset Management Inc.
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
In addition, you may also invest in a fixed account. The fixed account is
funded through and is backed by the Company's general asset account.
For many persons, a combination variable and fixed annuity contract may be
an attractive long-term investment vehicle. Its benefits include the manner in
which earnings on accumulated funds are taxed, the availability of multiple
investment options, and the provision of annuity and death benefit guarantees.
A Contract may be returned within ten days of receipt for a full refund of
the Contract Value (or purchase payments, if required under applicable law).
Longer free look periods apply in some states.
This prospectus sets forth concisely the information a prospective investor
should know before investing. It should be retained for future reference.
A statement of additional information dated the same as this Prospectus has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. It is available, at no charge by writing The Penn Mutual
Life Insurance Company, Customer Service Group, Philadelphia, PA 19172. Or, you
can call (215) 956-8000. In addition, the Securities and Exchange Commission
maintains a Web site (http://www.sec.gov) that contains the Statement of
Additional Information, material incorporated by reference, and other
information regarding registrants that file electronically with the Commission.
The table of contents of the statement of additional information is at the end
of this Prospectus.
THIS PROSPECTUS MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS FOR EACH
APPLICABLE FUND.
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.
<PAGE>
<TABLE>
<S> <C>
- - --------------------------------------------------------------------------------
PROSPECTUS CONTENTS
- - --------------------------------------------------------------------------------
SPECIAL TERMS...................................................................
- - --------------------------------------------------------------------------------
EXPENSES........................................................................
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EXAMPLES OF FEES AND EXPENSES...................................................
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY..........................................
- - --------------------------------------------------------------------------------
THE SEPARATE ACCOUNT............................................................
Penn Series Funds, Inc.....................................................
Neuberger & Berman Advisers Management Trust...............................
Fidelity Investments' Variable Insurance Products Fund.....................
Fidelity Investments' Variable Insurance Products Fund II..................
Morgan Stanley Universal Funds, Inc........................................
Year 2000..................................................................
- - --------------------------------------------------------------------------------
THE CONTRACT....................................................................
Purchases..................................................................
Accumulation Units.........................................................
Annuity Payments...........................................................
Death Benefit..............................................................
Transfers..................................................................
Dollar Cost Averaging.................................................
Automatic Rebalancing.................................................
Withdrawals................................................................
Systematic Withdrawals................................................
403(b) Withdrawals....................................................
Deferment of Payments and Transfers........................................
Charges....................................................................
Administration Charges................................................
Mortality and Expense Risk Charge.....................................
Contingent Deferred Sales Charge......................................
Free Withdrawals......................................................
Enhanced Variable Account Death Benefit...............................
Premium Taxes.........................................................
Performance Information....................................................
- - --------------------------------------------------------------------------------
THE FIXED ACCOUNT...............................................................
General Information........................................................
Loans Under Section 403(b) Contracts.......................................
- - --------------------------------------------------------------------------------
FEDERAL INCOME TAX CONSIDERATIONS...............................................
- - --------------------------------------------------------------------------------
FINANCIAL STATEMENTS............................................................
- - --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION CONTENTS....................................
- - --------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
- - --------------------------------------------------------------------------------
SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCUMULATION UNIT: A unit of measure used to compute the Variable Account
Value under the Contract prior to the Annuity Date.
ANNUITANT: The person during whose life annuity payments are made.
ANNUITY DATE: The date on which annuity payments start.
ANNUITY UNIT: A unit of measure used to calculate the amount of each
variable annuity payment.
BENEFICIARY: The person(s) named by the Contract Owner to receive the
death benefit payable upon the death of the Contract Owner or Annuitant.
CONTRACT: The combination variable and fixed annuity contract described in
this prospectus.
CONTRACT OWNER: The person specified in the Contract as the Contract
Owner.
CONTRACT VALUE: The sum of the Variable Account Value and the Fixed
Account Value.
FIXED ACCOUNT VALUE: The value of amounts held under the Contract in the
fixed account.
SEPARATE ACCOUNT: Penn Mutual Variable Annuity Account III, a separate
account of The Penn Mutual Life Insurance Company that is registered as a
unit investment trust under the Investment Company Act of 1940.
VARIABLE ACCOUNT VALUE: The value of amounts held under the Contract in
all subaccount of the Separate Account.
VALUATION PERIOD: The period from one valuation of Separate Account assets
to the next. Valuation is performed on each day the New York Stock Exchange
is open for trading.
WE OR US: A reference to "we" or "us" denotes The Penn Mutual Life
Insurance Company.
YOU: A reference to "you" denotes the Contract Owner or prospective
Contract Owner.
- - --------------------------------------------------------------------------------
EXPENSES
- - --------------------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchase Payments.......................................................................None
Maximum Contingent Deferred Sales Charge.........................................1% of purchase payments withdrawn (a)
Transfer Fee..................................................................................................None
MAXIMUM ANNUAL CONTRACT ADMINISTRATION CHARGE..................................................................$40 (b)
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF VARIABLE ACCOUNT VALUE)
Mortality and Expense Risk Charge.............................................................................1.25%
Contract Administration Charge................................................................................0.15%
-----
Total Separate Account Annual Expenses........................................................................1.40% (c)
</TABLE>
____________________
(a) The charge does not apply to withdrawals of purchase payments which were
made more than one year prior to withdrawal. See "Charges" in this
prospectus.
(b) The charge is 2% of the Variable Account Value if less than $40. There is
no charge under Contracts with a Variable Account Value of more than
$100,000. See "Charges" in this Prospectus for more information about this
charge.
(c) An enhanced Variable Account death benefit rider may be purchased with the
Contract. An annual charge for the Rider is made against the average
annual Variable Account Value at the Current Rate Of 0.20% with a maximum
possible rate of 0.25%. See "Charges" in this Prospectus.
- - --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC. (a)
UNDERLYING FUND ANNUAL EXPENSES (AS A % OF PORTFOLIO AVG. NET ASSETS)
2
<PAGE>
<TABLE>
<CAPTION>
MANAGEMENT TOTAL
FEES (AFTER OTHER FUND
WAIVER) EXPENSES EXPENSES
------------ ---------- ---------
<S> <C> <C> <C>
Growth Equity.................... 0.50% 0.27% 0.77%
Value Equity..................... 0.50% 0.26% 0.76%
Small Capitalization............. 0.50% 0.35% 0.85%
Emerging Growth.................. 0.80% 0.35% 1.15%
Flexibly Managed................. 0.50% 0.26% 0.76%
International Equity............. 0.75% 0.38% 1.13%
Quality Bond..................... 0.45% 0.30% 0.75%
High Yield Bond.................. 0.50% 0.31% 0.81%
Money Market..................... 0.40% 0.30% 0.70%
</TABLE>
____________________
(a) The expenses presented are for the last fiscal year. In the absence of
fee waivers by the investment adviser and administrator of the Fund, the
total expenses of the Emerging Growth Fund would have been 1.41%.
- - --------------------------------------------------------------------------------
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST (a)
UNDERLYING FUND ANNUAL EXPENSES (AS A % OF PORTFOLIO AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
MANAGEMENT,
ADVISORY AND
ADMINISTRATION OTHER TOTAL FUND
FEES EXPENSES EXPENSES
--------------- --------- -----------
<S> <C> <C> <C>
Limited Maturity Bond................ 0.65% 0.12% 0.77%
Balanced............................. 0.85% 0.19% 1.04%
Partners Fund........................ 0.80% 0.06% 0.86%
</TABLE>
(a) Neuberger & Berman Advisers Management Trust (the "Trust") is divided into
portfolios ("Portfolios"), each of which invests all of its net investable
assets in a corresponding series ("Series") of Advisers Managers Trust.
Expenses in the table reflect expenses of the Portfolios and include each
Portfolio's pro rata portion of the operating expenses of each Portfolio's
corresponding Series. The Portfolios pay Neuberger & Berman Management Inc.
("NBMI") an administration fee based on the Portfolio's net asset value.
Each Portfolio's corresponding Series pays NBMI a management fee based on
the Series' average daily net assets. Accordingly, this table combines
management fees at the Series level and administration fees at the
Portfolio's level in a unified fee rate. Total Annual Expenses for each
portfolio have been restated based upon current administration fees for the
Portfolio and management fees for its corresponding Series. See "Expenses"
in the Trust's Prospectus.
3
<PAGE>
- - --------------------------------------------------------------------------------
FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND (a)
UNDERLYING FUND ANNUAL EXPENSES (AS A % OF PORTFOLIO AVG. NET ASSETS)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL FUND
FEE EXPENSES EXPENSES
---------- -------- ----------
<S> <C> <C> <C>
Equity-Income............................ 0.50% 0.07% 0.57%
Growth................................... 0.60% 0.07% 0.67%
</TABLE>
___________
(a) The expenses presented are for the last fiscal year. A portion of the
brokerage commissions the fund paid was used to reduce its expenses.
Without this reduction, total expenses would have been 0.58% for the Equity
Income Portfolio and 0.69% for the Growth Portfolio.
- - --------------------------------------------------------------------------------
FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II
UNDERLYING FUND ANNUAL EXPENSES (AS A % OF PORTFOLIO AVG. NET ASSETS)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL FUND
FEE EXPENSES EXPENSES
----------- --------- -----------
<S> <C> <C> <C>
Asset Manager (a)....................... 0.55% 0.09% 0.64%
Index 500 (b)........................... 0.24% 0.04% 0.28%
</TABLE>
(a) The expenses presented are for the last fiscal year. A portion of the
brokerage commissions the fund paid was used to reduce its expenses.
Without this reduction, total expenses would have been 0.65% for the Asset
Manager Portfolio.
(b) The expenses presented are for the last fiscal year. In the absence of
voluntary fee waivers by the investment adviser, total expenses would have
been 0.40% for the Index 500 Portfolio.
- - --------------------------------------------------------------------------------
MORGAN STANLEY UNIVERSAL FUNDS, INC.
UNDERLYING FUND ANNUAL EXPENSES (AS A % OF PORTFOLIO AVG. NET ASSETS)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL FUND
FEE EXPENSES EXPENSES
----------- --------- -----------
<S> <C> <C> <C>
Emerging Markets Equity (International)..... 1.25% 0.50% 1.75%
</TABLE>
- - --------------------------------------------------------------------------------
The purpose of the foregoing table is to assist you in understanding the
various costs and expenses that you will bear directly and indirectly. The table
shows Contract expenses and underlying fund expenses. See the prospectuses of
Penn Series Funds, Inc., Neuberger & Berman Advisers Management Trust,
Fidelity Investments' Variable Insurance Products Fund, Fidelity Investments'
Variable Insurance Products Fund II and Morgan Stanley Universal Funds, Inc. for
additional information on fund expenses.
Premium taxes may be applicable, but are not reflected in the tables above
or the examples below. See "CHARGES" in this Prospectus.
4
<PAGE>
- - --------------------------------------------------------------------------------
EXAMPLES OF FEES AND EXPENSES
The following examples illustrate the cumulative dollar amount of all
the above expenses that would be incurred on each $1,000 invested.
If you surrender your Contract at the end of the applicable period,
you would pay the following expenses on a $1,000 investment, assuming 5% annual
return on assets:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Penn Series Growth Equity Fund..................................... $33 $70 $121 $259
Penn Series Value Equity Fund...................................... $33 $70 $120 $258
Penn Series Small Capitalization Fund.............................. $34 $73 $125 $267
Penn Series Emerging Growth Fund................................... $37 $82 $140 $297
Penn Series Flexibly Managed Fund.................................. $33 $70 $120 $258
Penn Series International Equity Fund.............................. $37 $81 $139 $295
Penn Series Quality Bond Fund...................................... $33 $70 $120 $257
Penn Series High Yield Bond Fund................................... $33 $72 $123 $263
Penn Series Money Market Fund...................................... $32 $68 $117 $252
Neuberger & Berman Limited Maturity Bond Portfolio................. $33 $70 $121 $259
Neuberger & Berman Balanced Portfolio.............................. $36 $79 $134 $286
Neuberger & Berman Partners Portfolio.............................. $34 $73 $125 $268
Fidelity's Equity Income Portfolio................................. $31 $64 $110 $238
Fidelity's Growth Portfolio........................................ $32 $67 $116 $249
Fidelity's Asset Manager Portfolio................................. $32 $66 $114 $246
Fidelity's Index 500............................................... $28 $55 $ 95 $207
Morgan Stanley Emerging Markets Equity (International) Portfolio... $43 $99 $169 $353
</TABLE>
If you do not surrender your Contract, or if you annuitize your
Contract, you would pay the following expenses on a $1,000 investment, assuming
5% annual return on investments:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Penn Series Growth Equity Fund..................................... $23 $70 $121 $259
Penn Series Value Equity Fund...................................... $23 $70 $120 $258
Penn Series Small Capitalization Fund.............................. $24 $73 $125 $267
Penn Series Emerging Growth Fund................................... $27 $82 $140 $297
Penn Series Flexibly Managed Fund.................................. $23 $70 $120 $258
Penn Series International Equity Fund.............................. $26 $81 $139 $295
Penn Series Quality Bond Fund...................................... $23 $70 $120 $257
Penn Series High Yield Bond Fund................................... $23 $72 $123 $263
Penn Series Money Market Fund...................................... $22 $68 $117 $252
Neuberger & Berman Limited Maturity Bond Portfolio................. $23 $70 $121 $259
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Neuberger & Berman Balanced Portfolio.............................. $26 $79 $134 $286
Neuberger & Berman Partners Portfolio.............................. $24 $73 $125 $268
Fidelity's Equity Income Portfolio................................. $21 $64 $110 $238
Fidelity's Growth Portfolio........................................ $22 $67 $116 $249
Fidelity's Asset Manager Portfolio................................. $22 $66 $114 $246
Fidelity's Index 500............................................... $18 $55 $ 95 $207
Morgan Stanley Emerging Markets Equity (International) Portfolio... $33 $99 $169 $353
</TABLE>
- - ----------------------------------------------
The examples are based upon fund data for the fiscal year ended
December 31, 1997.
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES UNDER YOUR CONTRACT; ACTUAL EXPENSES MAY BE GREATER OR LESSER
THAN THOSE SHOWN.
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY
The Penn Mutual Life Insurance Company ("Penn Mutual") is a
Pennsylvania mutual life insurance company. We were chartered in 1847 and have
been continuously engaged in the life insurance business since that date. Our
home offices are located at 600 Dresher Road, Horsham, PA 19044. Our mailing
address is Independence Square, Philadelphia, PA 19172.
- - --------------------------------------------------------------------------------
THE SEPARATE ACCOUNT
Penn Mutual Variable Annuity Account III was established as a separate
account of Penn Mutual on April 13, 1982. The Separate Account is registered
with the Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940 and qualifies as a "separate account" within the
meaning of the federal securities laws.
The Separate Account is divided into subaccounts for investment in
shares of different Funds of Penn Series Funds, Inc., Neuberger & Berman
Advisers Management Trust, Fidelity Investments' Variable Insurance Products
Fund and Variable Insurance Products Fund II and Morgan Stanley Universal Funds,
Inc. Income, gains and losses, realized or unrealized, of a subaccount are
credited to or charged against the subaccount without regard to any other
income, gains or losses of Penn Mutual. Assets equal to the reserves and other
contract liabilities with respect to each subaccount are not chargeable with
liabilities arising out of any other business of Penn Mutual. Penn Mutual is
obligated to pay all benefits and make all payments provided under the
Contracts.
Assets held in the Separate Account under the Contracts described in
this Prospectus are invested, at the direction of the Contract Owner, in one or
more Funds of Penn Series Funds, Inc., Neuberger & Berman Advisers Management
Trust, Fidelity Investments; Variable Insurance Products Fund and Variable
Insurance Products Fund II and Morgan Stanley Universal Funds, Inc.
Under the Investment Company Act of 1940, as currently interpreted,
Contract Owners and persons receiving annuity payments have the right to
instruct Penn Mutual as to the voting of the various Fund shares held in the
Separate Account pursuant to the Contracts. The number of shares of a Fund for
which voting instructions may be given by a Contract Owner is determined by
dividing the Contract Owner's interest in the applicable subaccount of the
Separate Account by the net asset value per share of the Fund. The number of
shares of a Fund for which
6
<PAGE>
voting instructions may be given by a person receiving annuity payments is
determined by dividing the reserve allocated to the applicable subaccount by the
net asset value per share of the Fund. Should the applicable law, or
interpretations thereof, change so as to permit us to vote shares of the mutual
funds in our own right, we may elect to do so. Further, we reserve the right to
modify the manner in which we calculate the weight to be given to pass through
voting instructions where such a change is necessary to comply with federal law
or interpretations thereof.
Shares of Penn Series are sold not only to the Separate Account, but
also to other separate accounts of Penn Mutual and its subsidiary, The Penn
Insurance and Annuity Company, that fund benefits under variable annuity and
variable life insurance contracts. Shares of Neuberger & Berman Advisers
Management Trust, Fidelity Investments' Variable Insurance Products Fund and
Variable Insurance Products Fund II and Morgan Stanley Universal Funds, Inc. are
offered not only to variable annuity and variable life separate accounts of Penn
Mutual, but also to such accounts of other insurance companies unaffiliated with
Penn Mutual and, in the case of Neuberger & Berman Advisers Management Trust and
Morgan Stanley Universal Funds, Inc., directly to qualified pension and
retirement plans. For information on possible conflicts involved in the
Separate Account investing in Funds that are so offered, see the accompanying
Fund prospectuses.
- - --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.:
GROWTH EQUITY FUND -- seeks long term growth of capital and increase
of future income by investing primarily in common stocks of well established
growth companies;
VALUE EQUITY FUND -- seeks to maximize total return (capital
appreciation and income) primarily by investing in equity securities of
companies believed to be undervalued considering such factors as assets,
earnings, growth potential and cash flows;
SMALL CAPITALIZATION FUND -- seeks capital appreciation through
investment in a diversified portfolio of securities consisting primarily of
equity securities of companies with market capitalizations under $1 billion;
EMERGING GROWTH FUND -- seeks capital appreciation by investing
primarily in common stocks of emerging growth companies with above-average
growth prospects;
FLEXIBLY MANAGED FUND -- seeks to maximize total return (capital
appreciation and income) by investing in common stocks, other equity securities,
corporate debt securities, and/or short term reserves, in proportions considered
appropriate in light of the availability of attractively valued individual
securities and current and expected economic and market conditions;
INTERNATIONAL EQUITY FUND -- seeks to maximize capital appreciation by
investing in a carefully selected diversified portfolio consisting primarily of
equity securities. The investments will consist principally of equity securities
of European and Pacific Basin countries;
QUALITY BOND FUND -- seeks the highest income over the long term
consistent with the preservation of principal through investment primarily in
marketable investment grade debt securities;
HIGH YIELD BOND FUND -- seeks high current income by investing
primarily in a diversified portfolio of long term high-yield/high-risk fixed
income securities in the medium to lower quality ranges; capital appreciation is
a secondary objective; such securities, which are commonly referred to as "junk"
bonds, generally involve greater risks of loss of income and principal than
higher rated securities (see accompanying Penn Series prospectuses);
7
<PAGE>
MONEY MARKET FUND -- seeks to preserve capital, maintain liquidity and
achieve the highest possible level of current income consistent therewith, by
investing in high quality money market instruments; an investment in the Fund is
neither insured nor guaranteed by the U.S. Government and there can be no
assurance that the fund will be able to maintain a stable net asset value of
$1.00 per share.
Independence Capital Management, Inc., Horsham, Pennsylvania is
investment adviser to each of the Funds. OpCap Advisors, New York, New York, is
investment sub-adviser to the Value Equity and Small Capitalization Funds. T.
Rowe Price Associates, Baltimore, Maryland, is investment sub-adviser to the
Flexibly Managed and High Yield Bond Funds. Vontobel USA, Inc., New York, New
York, is investment sub-adviser to the International Equity Fund. RS Investment
Management, Inc., San Francisco, California, is investment sub-adviser to the
Emerging Growth Fund.
- - --------------------------------------------------------------------------------
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:
LIMITED MATURITY BOND PORTFOLIO -- seeks highest current income
consistent with low risk to principal and liquidity, primarily by investing in a
diversified portfolio of limited maturity debt securities. A secondary objective
is capital appreciation.
BALANCED PORTFOLIO -- seeks long-term capital growth and reasonable
current income without undue risk to principal through investment of a portion
of its assets in common stock and a portion in debt securities.
PARTNERS PORTFOLIO -- seeks capital growth by investing primarily in
common stocks of established companies, using the value oriented investment
approach. Neuberger & Berman reserves the right to make changes in the
investment objective, but will notify shareholders thirty days in advance of any
proposed material change.
Neuberger & Berman Management Incorporated, New York, New York, is
investment adviser to the Limited Maturity Bond Portfolio, the Balanced
Portfolio and the Partners Portfolio.
- - --------------------------------------------------------------------------------
FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND:
EQUITY-INCOME PORTFOLIO -- seeks reasonable income by investing
primarily in income-producing equity securities. In choosing these securities,
the fund will also consider the potential for capital appreciation. The fund's
goal is to achieve a yield which exceeds the composite yield on the securities
comprising the Standard & Poor's 500 Composite Stock Price Index.
GROWTH PORTFOLIO -- seeks to achieve capital appreciation. The fund
normally purchases common stocks, although its investments are not restricted to
any one type of security. Capital appreciation may also be found in other types
of securities, including bonds and preferred stocks.
Fidelity Management & Research Company, Boston, Massachusetts, is
investment adviser to the Equity-Income Portfolio and the Growth Portfolio.
- - --------------------------------------------------------------------------------
FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II:
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ASSET MANAGER PORTFOLIO -- seeks high total return with reduced risk
over the long-term by allocating its assets among domestic and foreign stocks,
bonds and short-term fixed income investments.
INDEX 500 PORTFOLIO -- seeks to match the total return of the S&P 500
while keeping expenses low. The S&P 500 is an index of 500 common stocks, most
of which trade on the New York Stock Exchange.
Fidelity Management & Research Company, Boston, Massachusetts, is
investment adviser to the Asset Manager Portfolio and the Index 500 Portfolio.
- - --------------------------------------------------------------------------------
MORGAN STANLEY UNIVERSAL FUNDS, INC.:
EMERGING MARKETS EQUITY (INTERNATIONAL) PORTFOLIO -- seeks long term
capital appreciation by investing primarily in equity securities of emerging
market country issuers. The Portfolio will focus on economies which are
developing strongly and in which the markets are becoming more sophisticated.
Morgan Stanley Asset Management Inc. , New York, New York, is
investment adviser to the Emerging Markets Equity (International) Portfolio.
- - --------------------------------------------------------------------------------
FOR MORE INFORMATION ON THE MUTUAL FUNDS IN WHICH THE SUBACCOUNT INVEST, SEE THE
PROSPECTUSES FOR PENN SERIES FUNDS, INC., NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST, FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II, AND MORGAN STANLEY
UNIVERSAL FUNDS, INC. YOU SHOULD READ THE PROSPECTUSES FOR THE FUNDS IN WHICH
YOU ARE INTERESTED BEFORE INVESTING.
- - --------------------------------------------------------------------------------
Year 2000:
The services provided by Penn Mutual to the Separate Account depend on
the smooth functioning of its computer systems. Many computer systems in use
today cannot recognize the year 2000, but revert to 1900 or some other date, due
to the manner in which dates were encoded and calculated. That failure could
have a negative impact on the handling of securities trades, pricing and account
services. Penn Mutual has been actively working on necessary changes to its own
systems to prepare for the year 2000 and expects that its systems will be
adapted before that date, but there are no assurances that they will be
successful, or that interaction with other non-complying computer systems will
not impair its services at that time.
Penn Mutual, and the mutual funds that serve as investment options for
the Separate Account, have relationships with investment advisers, broker-
dealers transfer agents, custodians, or other service providers that are not
affiliated with Penn Mutual. PenN Mutual is contacting these vendors and
service providers to obtain assurances that such service providers have taken
appropriate measures to address the "Year 2000" problem. There can be no
assurances that the failure of these parties to complete adequate preparations
in a timely manner would not have an adverse affect directly or indirectly on
the Separate Account.
The foregoing statements are designated Year 2000 Readiness Disclosure
within The meaning of The Year 2000 Information and Readiness Disclosure Act
(P.L. 105-271, S. 2392).
- - --------------------------------------------------------------------------------
THE CONTRACT
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The Contract described in this prospectus is a combination variable
and fixed annuity contract. The Contract provides for investment, through
subaccount of the Separate Account, in one or more of the available funds of
Penn Series Funds, Inc., Neuberger & Berman Advisers Management Trust, Fidelity
Investments' Variable Insurance Products Fund, Fidelity Investments' Variable
Insurance Products Fund II and Morgan Stanley Universal Funds, Inc. It also
provides for investment in a fixed account. The Fixed Account is guaranteed and
funded by the Company through its general account. See THE FIXED ACCOUNT in this
Prospectus. Currently, over the life of the Contract, amounts may be allocated
or transferred to one or more of the 17 Funds and the fixed account.
As the Contract Owner, you determine, within Contract limits (1) the
amount and frequency of the purchase payments to be made to the Company, (2) the
investment options to which the purchase payments are to be allocated, (3)
transfers among investment options, (4) the form of annuity to be paid after the
accumulation period and the person to whom it is to be paid, (5) the beneficiary
to whom death benefits are to be paid, and (6) the amount and frequency of
withdrawals from the Contract Value.
During the variable annuity payout period, you (or the beneficiary in
the event of your death or the Annuitant's death) may transfer Annuity Unit
values among up to four subaccounts of the Separate Account that must be
selected at the time of annuitization.
Upon the earlier of the death of the Contract Owner or Annuitant prior
to the Annuity Date, the beneficiary may elect to receive a death benefit in a
lump sum or in the form of an annuity. A spousal beneficiary may elect to become
the Owner of the Contract.
The Contract may be amended at any time to conform to applicable laws
or governmental regulations. If, in our judgment, investment in any of the
mutual funds becomes inappropriate to the purposes of the Contract, we may, with
approval of the Securities and Exchange Commission and the governing state
insurance department, substitute another fund for existing and future
investments.
The Contracts are available to individuals and institutions for
retirement and other funding purposes. The Contracts may also be issued as
individual retirement annuities under Section 408(b) of the Internal Revenue
Code (the "Code") in connection with IRA rollovers and as tax-deferred annuities
under Section 403(b) of the Code (often referred to as qualified Contracts).
Contract Owner inquiries may be made by writing The Penn Mutual Life
Insurance Company, Customer Service Group, Philadelphia, PA 19172. Or, you may
call (215) 956-8000.
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PURCHASES
To purchase a Contract, your completed application, together with a
check for the first purchase payment, should be forwarded to our administrative
office in Horsham, Pennsylvania. Normally, a completed application form received
at our administrative office will be accepted within two business days. If an
incomplete application is not completed and acted upon within five business
days, the purchase payment will be returned to you unless you request that we
retain it while you complete the application. All subsequent purchase payments
are sent directly to our administrative office.
The minimum initial purchase payment is $25,000. The minimum
subsequent purchase payment that will be accepted is $25,000. We may, in our
discretion, reduce the minimum requirements for initial and subsequent
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purchase payments. We will accept total purchase payments under your Contract of
up to $1 million. Total purchase payments in excess of $1 million require our
prior approval.
Purchase payments allocated to the Separate Account are credited in
the form of Accumulation Units of the subaccount selected. The number of
Accumulation Units credited is determined by dividing the purchase payment
allocated to the Separate Account by the value of the Accumulation Unit at the
end of the valuation period in which the purchase payment is received at our
administrative office or, in a case of the first purchase payment, is accepted
by us.
The principal underwriter of the Contract (under federal securities
laws) is Hornor, Townsend & Kent, Inc., 600 Dresher Road, Horsham, PA 19044, a
wholly-owned subsidiary of Penn Mutual.
- - --------------------------------------------------------------------------------
ACCUMULATION UNITS
For each subaccount of the Separate Account available under the
Contract, the value of an Accumulation Unit will be $10 when the subaccount
commences operation. The value of an Accumulation Unit may increase or decrease
from one valuation period to the next.
The value of an Accumulation Unit for a valuation period is determined
by multiplying the value of an Accumulation Unit for the prior valuation period
by the net investment factor for the subaccount for the current valuation
period.
The net investment factor is a measure of (1) investment performance
of mutual fund shares held in the subaccount, (2) any taxes on income or gains
from investments held in the subaccount, if applicable, and (3) the mortality
and expense risk charge at an annual rate of 1.25% and the contract
administration charge at an annual rate of 0.15% assessed against the
subaccount. Under current law, no taxes are levied against income or gain from
investments held in a subaccount.
- - --------------------------------------------------------------------------------
ANNUITY PAYMENTS
You may choose one of the following forms of annuity: (1) an annuity
for a specified number of years, (2) a life annuity, (3) a life annuity with
payments guaranteed for 10 or 20 years, (4) a joint and survivor life annuity or
(5) such other form of annuity as we may agree upon. You may select any one of
these forms of annuity as a variable annuity (except for a specified number of
years), a fixed annuity, or a combination of both.
The level of the variable annuity payments is determined by various
factors, including the amount accumulated and applied under the Contract to the
variable annuity, the form of annuity chosen, the expected duration of the
annuity period, the performance of the applicable investment options, and the
annuity purchase rates and charges specified in the Contract.
You may choose annuity purchase rates based on an assumed interest
rate of 3% or based on an assumed interest rate of 5%. If the annual net
investment return during the annuity payout period is greater than the rate
chosen, the level of the annuity payment increases. If the annual net investment
return is less than the rate chosen, the level of the annuity payments
decreases. The choice of a higher assumed interest rate would mean a higher
first annuity payment but more slowly rising or more rapidly falling subsequent
payments. The choice of a lower assumed interest rate would have the opposite
effect.
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The level of fixed annuity payments under a Contract is determined by
various factors, including the amount accumulated and applied under the Contract
to the fixed annuity, the form of annuity chosen, the expected duration of the
annuity period, and a guaranteed 3% rate of return.
Unless you specify otherwise, you or such other person you designate
will receive a life annuity with payments guaranteed for 10 years except for tax
deferred annuities under Section 403(b) of the Code. Annuitants under those
Contracts will receive a joint and survivor annuity. Unless you specify
otherwise, the annuity will be split between fixed and variable in the same
proportions as the Contract Value on the Annuity Date with the variable portion
invested in up to four funds selected by the Company.
Unless you specify otherwise, the Annuity Date will be the later of
(1) the first day of the next month after the Annuitant's 95th birthday or (2)
10 years after the contract date, unless state law requires an earlier Annuity
Date. The Annuity Date under the Contract must be on the first day of a month.
You may change the Annuity Date or annuity option by giving written
notice at our administrative office at least 30 days prior to the current
Annuity Date. If the Contract Value of a Contract is less than $5,000, we may
elect to pay such amount in a lump sum in place of an annuity. Annuity payments
are generally monthly, starting with the Annuity Date, but may also be made
quarterly, semiannually or annually at your request. However, if any payment
would be less than $50, we may change the frequency of annuity payments so that
payments are at least $50 each.
For information on the tax treatment of annuity payments, see FEDERAL
INCOME TAX CONSIDERATIONS in this Prospectus.
- - --------------------------------------------------------------------------------
DEATH BENEFIT
Upon the earlier of death of the Contract Owner or the
Annuitant, prior to the Annuity Date, we will pay a death benefit to the
Beneficiary.
If the Contract Owner dies prior to the Annuity Date, we will pay the
Beneficiary the Contract Value for the valuation period in which proof of death
is received at our administrative office. If the Contract Owner is also the
Annuitant and dies before the Annuity Date, we will pay the beneficiary the
death benefit described in the next paragraph.
If the Annuitant dies before the Annuity Date, we will pay a death
benefit to the Beneficiary equal to the sum of the Variable Account death
benefit and the Fixed Account death benefit as of the date we receive proof of
death. The Variable Account death benefit is the greater of (1) the Variable
Account Value or (2) all purchase payments allocated and transfers made to the
Variable Account less withdrawals from the amounts so allocated and transferred.
The Fixed Account death benefit is the Fixed Account Value. The death benefit
generally will be paid within seven days after we receive proof of death and all
information necessary to make payment to the Beneficiary.
If the Annuitant is 75 years of age or less, you may purchase an
enhanced guaranteed minimum death benefit as part of your Contract. The
enhanced guaranteed minimum death benefit is paid in place of the Variable
Account death benefit, if it is greater, and if the Annuitant dies before the
Annuity Date and before age 90. We offer two different enhanced guaranteed
minimum death benefits - a guaranteed minimum death benefit step-up and a
guaranteed minimum death benefit rising floor. You may purchase one of them
only at the time you purchase your Contract.
The guaranteed minimum death benefit - step-up is the highest
Variable Account Value on the current and each of the prior Contract
anniversary dates, adjusted as follows. The death benefit on an
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<PAGE>
anniversary date will be increased by the amount of any purchase payments
allocated and transfers made to the Variable Account after the anniversary date
and before the anniversary date and decreased by an amount that is in the same
proportion that the Variable Account Value was decreased by transfers and
withdrawals (including any deferred sales charge) after the anniversary date and
before the next anniversary date.
The guaranteed minimum death benefit - rising floor is the sum of all
purchase payments allocated and transfers made to the Variable Account minus a
reduction (as described below) for any withdrawals or transfers made from the
Variable Account plus interest at 5%, calculated as follows. Interest is
reflected from the dates amounts are allocated to or withdrawn or transferred
from the Variable Account to the date the guaranteed death benefit is paid, or
the date the Annuitant attains 80 years of age, if earlier. If a withdrawal or
transfer is made from the Variable Account, the guaranteed minimum death benefit
will be reduced by an amount that is in the same proportion that the amount
withdrawn or transferred from the Variable Account (including any contingent
deferred sales charge) was to the Variable Account Value on the date of the
withdrawal or transfer.
The enhanced guaranteed minimum death benefit will terminate if you
withdraw or transfer the full Variable Account Value from your Contract. For
information on the cost of the enhanced guaranteed minimum death benefits, see
"CHARGES" in this Prospectus.
Within one year of the date of death of the Contract Owner, the
Beneficiary may elect to receive the death benefit in single sum or in the form
of an annuity. If the death benefit becomes payable upon death of the Annuitant
who is not the Contract Owner, an election to receive the death benefit in the
form of annuity must be made within 60 days of death of the Annuitant. If
payment is to be received in a single sum, it must be paid within five years of
the date of death (until paid out, the death benefit will be allocated to
subaccount of the Separate Account and/or Fixed Account as directed by the
Beneficiary). If an annuity is selected, payments must commence within one year
of the date of death and must be made over the Beneficiary's life or over a
period not longer than the Beneficiary's life expectancy. If an election is not
made within one year of the date of death of the Contract Owner, or within 60
days of death of the Annuitant (who is not the Contract Owner), the death
benefit will be paid to the Beneficiary in a single sum. If the Contract Owner
dies and the Beneficiary is the Contract Owner's surviving spouse, the surviving
spouse may become the Contract Owner rather than receive the death benefit. If
there is more than one surviving Beneficiary, the Beneficiaries must choose
their respective portions of the death benefit, in accordance with the above
options.
If the Annuitant dies on or after the Annuity Date, the death benefit
payable, if any, will be paid in accordance with the annuity option in
force.
You may designate a Beneficiary in your application. You may also
change the Beneficiary at any time before your death or the death of the
Annuitant, whichever occurs first.
For information on the tax treatment of death benefits, see FEDERAL
INCOME TAX CONSIDERATIONS in this Prospectus.
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________________________________________________________________________________
TRANSFERS
Prior to the Annuity Date, you may transfer amounts from one
subaccount of the Separate Account to another subaccount of the Separate
Account. You may also transfer amounts from the subaccount of the Separate
Account to the Fixed Account prior to the Annuity Date. You may make a transfer
from the Fixed Account to the Variable Account only at the completion of the
interest period or within 25 days thereafter.
After the Annuity Date and during an annuity payout period, you may
transfer amounts (upon which the annuity payments are based) from one subaccount
of the Separate Account to another. Transfers are limited to the four
subaccounts selected at the time of annuitization. Upon your death or the death
of the Annuitant, a beneficiary who is receiving annuity payments may transfer
amounts among the subaccount of the Separate Account.
Transfers will be based on values at the end of the valuation period
in which the transfer request is received at our service office.
The minimum amount that may be transferred is $250 or, if less, the
amount held in the subaccount or Fixed Account. In the case of partial
transfers, the amount remaining in the subaccount or Fixed Account must be at
least $250.
A request for transfer must be received at our service office and all
other administrative requirements for transfer must be met to make the transfer.
The Separate Account and the Company will not be liable for following
instructions communicated by telephone that we reasonably believe to be genuine.
We require certain personal identifying information to process a request for
transfer made over the telephone.
DOLLAR COST AVERAGING: If you have a Contract Value of at least
$10,000, you may elect to have a fixed percentage of your initial or subsequent
purchase payments transferred monthly or quarterly from one source account to
other accounts. These transfers may be made only from one of the following
accounts: Money Market Subaccount, Limited Maturity Bond Subaccount, Quality
Bond Subaccount and the Fixed Account. The dollar cost averaging term may run
up to 60 months, or until you give notice of a change in allocation or
cancellation of the feature.
AUTOMATIC REBALANCING: If you have a Contract Value of at least
$10,000 you may elect to have your investments in subaccount of the Separate
Account automatically rebalanced. We will transfer funds under your Contract on
a quarterly (calendar) basis among the subaccount to maintain a specified
percentage allocation among your selected variable investment options. Dollar
cost averaging and automatic rebalancing may not be in effect at the same time.
________________________________________________________________________________
WITHDRAWALS
Prior to the Annuity Date and prior to the earlier of the death of the
Contract Owner and Annuitant, you may withdraw all or part of your Contract
Value. Withdrawals will be based on values at the end of the valuation period in
which a proper written request for withdrawal (and the Contract, in case of a
full withdrawal) is received at our administrative office. Payment will normally
be made within seven days of receipt of the written request and the Contract, if
required. A withdrawal may result in certain tax consequences, including an
additional 10% tax under certain circumstances. For information on tax treatment
of withdrawals, see FEDERAL INCOME TAX CONSIDERATIONS in this Prospectus.
The minimum withdrawal is $500. A minimum balance of $250 must be in
each sub-account or the Fixed Account. A partial withdrawal may be made from a
subaccount of the Separate Account or the Fixed Account only if the amount
remaining in the contract is at least $5,000 and the balance remaining in each
subaccount or the Fixed Account is at least $250. If you request a partial
withdrawal without specifying allocation of the withdrawal among
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<PAGE>
investment options, it will be taken pro rata from the variable subaccount; if
the partial withdrawal exhausts your Variable Account Value, then any remaining
withdrawal will be taken from the Fixed Account.
SYSTEMATIC WITHDRAWALS: You may make a request for a systematic
withdrawal if there is no previous withdrawal in the current contract year. The
maximum value of a systematic withdrawal request is equal to 15% of total
purchase payments. A level systematic withdrawal will begin one modal period
after the date of receipt of the request. The systematic withdrawals may be made
on a monthly, quarterly, semiannual or annual basis. The minimum Contract Value
that is eligible for a systematic withdrawal is $25,000. The minimum amount of
each withdrawal payment is $100. This provides a convenient way to take
advantage of the ability to withdraw a limited percentage of purchase payments
without incurring a contingent deferred sales charge. For information on the tax
treatment of withdrawals, see FEDERAL INCOME TAX CONSIDERATIONS in this
Prospectus.
403(B) WITHDRAWALS: With respect to Contracts qualifying under Section
403(b) of the Code, there are certain restrictions on withdrawals. Withdrawals
may generally be made only if the Contract Owner is over the age of 59 1/2,
leaves the employment of the employer, dies, or becomes disabled as defined in
the Code. Withdrawals (other than withdrawals attributable to income earned on
purchase payments) may also be possible in the case of hardship as defined in
the Code. The restrictions do not apply to transfers among subaccount and may
also not apply to transfers to other investments qualifying under Section
403(b). For information on the tax treatment of withdrawals under Section 403(b)
Contracts, see FEDERAL INCOME TAX CONSIDERATIONS in this Prospectus.
________________________________________________________________________________
DEFERMENT OF PAYMENTS AND TRANSFERS
We reserve the right to defer a withdrawal, a transfer of values or
annuity payments funded by the Separate Account if (a) the New York Stock
Exchange is closed (other than customary weekend and holiday closings); (b)
trading on the Exchange is restricted; (c) an emergency exists such that it is
not reasonably practical to dispose of securities held in the Separate Account
or to determine the value of its assets; or (d) the Securities and Exchange
Commission by order so permits for the protection of investors. Conditions
described in (b) and (c) will be decided by, or in accordance with rules of, the
Commission.
________________________________________________________________________________
CHARGES
ADMINISTRATION CHARGES:
Charges are assessed to reimburse us for the expenses we incur in
administering the Contract and the Separate Account. First, on an annual basis,
we deduct from the Variable Account Value a contract administration charge which
will be no greater than the lesser of $40 or 2% of the Variable Account Value.
We will not, however, deduct this charge if the Variable Account Value is
greater than $100,000. The charge is made by canceling Accumulation Units
credited to the Contract, with the charge allocated pro rata among the
subaccount comprising the Variable Account Value. Second, we deduct from the
Separate Account a daily administration charge which will not exceed an
effective annual rate of 0.15% of the daily net asset value of the Separate
Account. These administration charges are guaranteed not to increase and are
intended to cover our average anticipated administration expenses over the
periods the Contracts are in force.
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MORTALITY AND EXPENSE RISK CHARGE:
We deduct a daily mortality and expense risk charge which will not
exceed an effective annual rate of 1.25% of the daily net asset value of the
Separate Account. This charge is to compensate us for the mortality-related
guarantees we make under the Contract (e.g., the death benefit and the guarantee
that the annuity factors will never be decreased even if mortality experience is
substantially different than originally assumed), and for the risk that our
administration charges will be insufficient to cover administration expenses
over the life of the Contracts. The mortality and expense risk charge is
assessed during both the accumulation and variable annuity pay-out phases of the
Contract.
CONTINGENT DEFERRED SALES CHARGE:
A contingent deferred sales charge may be deducted from withdrawals of
purchase payments prior to the Annuity Date. This charge is made to cover sales
expenses that we have incurred. Sales expenses which are not covered by the
deferred sales charge are paid from the surplus of the Company, which may
include proceeds from the mortality and expense risk charge.
A contingent deferred sales charge, if applicable, will be imposed
only on a withdrawal of a purchase payment in cases where the purchase payment
was made within one year of the date of the withdrawal. If applicable, the
charge is 1% of the amount withdrawn. Purchase payments will be treated as
withdrawn on a first-in, first-out basis.
The contingent deferred sales charge may be reduced on Contracts sold
to a trustee, employer or similar party pursuant to a retirement plan or to a
group of individuals, if such sales are expected to involve reduced sales
expenses. The amount of reduction will depend upon such factors as the size of
the group, any prior or existing relationship with the purchaser or group, the
total amount of purchase payments and other relevant factors that might tend to
reduce expenses incurred in connection with such sales. The reduction will not
be unfairly discriminatory to any Contract Owner.
FREE WITHDRAWALS:
One Year Old Purchase Payments. You may withdraw, without incurring a
-------------------------------
contingent deferred sales charge, all purchase payments which were made more
than one year prior to the withdrawal.
Systematic Withdrawals of 15% of Purchase Payments. Once (and if no
---------------------------------------------------
previous withdrawal has been made in the contract year), you may request
systematic withdrawals totaling 15% of purchase payments as of the date of the
request. The free systematic withdrawal amount will be applied to purchase
payments on a first-in, first-out basis. With respect to any withdrawal of
purchase payments made during the same year, which are in excess of the free
systematic withdrawal limit in a contract year, the contingent deferred sales
charge schedule set forth above will apply to the remainder of the purchase
payments so withdrawn on a first-in, first-out basis.
Other Withdrawals. There is no contingent deferred sales charge
------------------
imposed upon minimum distributions under qualified contracts which are required
by the Code.
ENHANCED VARIABLE ACCOUNT DEATH BENEFIT (OPTIONAL):
If you purchase an enhanced Variable Account death benefit as part of
your Contract, we will deduct a guaranteed minimum death benefit charge from the
Variable Account Value. The charge is currently 0.20% of the average annual
Variable Account Value but may be raised to a maximum rate of 0.25% at the
discretion of penn Mutual. The charge will be made on each Contract anniversary
and at any time the Variable Account Value is
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<PAGE>
withdrawn or transferred in full. This charge will be deducted by canceling
Accumulation Units credited to your Contract, with the charge allocated pro rata
among the subaccount comprising the Variable Account Value.
PREMIUM TAXES:
Some states and municipalities impose premium taxes on purchase
payments received by insurance companies. Generally, any premium taxes payable
will be deducted upon annuitization, although we reserve the right to deduct
such taxes when due in jurisdictions that impose such taxes on purchase
payments. Currently, state premium taxes on purchase payments range from 0% to
3 1/2%.
________________________________________________________________________________
PERFORMANCE INFORMATION
The Company may advertise total return performance and annual changes
in accumulation unit values. We may also provide information on "yields" and
"effective yields" on investments in the Money Market Fund subaccount.
Information on total return performance will include average annual
rates of total return for one, five and ten year periods, or lesser periods
depending on how long the underlying fund portfolio has been in existence. Such
figures are based on the hypothetical assumption that the Separate Account
invested in the underlying portfolios from the date those portfolios were first
available to other insurance company separate accounts. Average annual total
return figures will show the average annual rates of increase or decrease in
investments in the subaccount, assuming a hypothetical $1,000 investment at the
beginning of the period, withdrawal of the investment at the end of the period,
and the deduction of all applicable fund and Contract charges. We may also show
average annual rates of total return, assuming other amounts invested at the
beginning of the period and no withdrawal at the end of the period. Average
annual total return figures which assume no withdrawals at the end of the period
will reflect all recurring charges, but will not reflect the contingent deferred
sales charge (if applicable, the contingent deferred sales charge would reduce
the amount that may be withdrawn under the Contracts).
The "yield" on an investment in the Money Market Fund subaccount
refers to the income generated by the investment over a 7-day period. This
income is then annualized. That is, the amount of income generated by the
investment during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment. The "effective yield" is
calculated similarly, but, when annualized, the income earned by an investment
in the subaccount is assumed to be reinvested. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
________________________________________________________________________________
THE FIXED ACCOUNT
BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE
COMPANY'S GENERAL ACCOUNT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND THE GENERAL ACCOUNT HAS NOT BEEN REGISTERED AS AN INVESTMENT COMPANY
UNDER THE INVESTMENT COMPANY ACT OF 1940. THE GENERAL ACCOUNT AND ANY INTERESTS
HELD IN THE GENERAL ACCOUNT ARE THEREFORE NOT SUBJECT TO THE PROVISIONS OF THESE
ACTS. HENCE THIS PROSPECTUS GENERALLY DISCUSSES ONLY THE VARIABLE PORTION OF THE
CONTRACT. THE COMPANY HAS BEEN ADVISED THAT THE STAFF OF THE SECURITIES AND
EXCHANGE COMMISSION HAS NOT REVIEWED THE DISCLOSURE IN THIS PROSPECTUS RELATING
TO THE FIXED ACCOUNT. DISCLOSURE REGARDING THE FIXED ACCOUNT, HOWEVER, MAY BE
SUBJECT TO GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS
RELATING TO THE ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN THIS PROSPECTUS.
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________________________________________________________________________________
GENERAL INFORMATION
You may allocate or transfer all or part of the amount credited to
your Contract to the Fixed Account. We periodically declare an effective annual
interest rate applicable to allocations to the Fixed Account. For each amount
allocated to the Fixed Account, we credit interest at a rate declared by us in
the month in which the allocation is made. The declared rate of interest will
apply through the end of the 12-month period which begins on the first day of
the calendar month in which the allocation is made. We will not declare an
effective annual rate of interest of less than 3%.
You may transfer amounts in the Fixed Account to subaccount of the
Separate Account subject to the conditions and limitations in the Fixed Account
provisions of your Contract. Amounts in the Fixed Account not withdrawn or
reallocated within 25 days after the end of an interest period are rolled over
and treated as a new allocation to the Fixed Account. In accordance with state
law, we may defer a withdrawal or transfer from the Fixed Account for up to six
months if we reasonably determine that investment conditions are such that an
orderly sale of assets in the Company's general account is not feasible.
________________________________________________________________________________
LOANS UNDER SECTION 403 CONTRACTS
Subject to compliance with applicable state law, Contract Owners
qualifying under Section 403(b) of the Code may be able to borrow against a
portion of the amount credited to the Fixed Account under their Contract,
provided the loan privilege has been approved in the applicable state. The loan
will be made from the general account of the Company. Because this Prospectus
generally is limited to describing the variable portion of the Contract, you
should review the Contract loan endorsement or consult your Company
representative for a complete description of the terms of the loan privilege,
including minimum and maximum loan amounts, repayment terms, and restrictions on
prepayments. The following paragraphs describe how exercise of the loan
privilege may relate to the Variable Account Value.
First, at the time a Contract loan is made and in accordance with your
direction, an amount equal to the initial loan amount will be transferred from
the Contract's investment options to an account in the Company's general account
called the "Restricted Account." Amounts transferred from investment options to
the Restricted Account will not participate in the investment experience of
those investment options. Amounts transferred to the Restricted Account will
earn interest at a current rate of 1 1/2 percentage points less than the rate of
interest charged on the loan with a minimum possible rate of 2 1/2 percentage
points less then the interest rate charged on the loan.
Second, on your Contract Anniversary, the accrued interest in the
Restricted Account will be transferred to your investment options in accordance
with your current payment allocation instructions.
Third, loan repayments, which are due quarterly, will result in the
transfer of an amount equal to the principal portion of the repayment from the
Restricted Account to the Money Market subaccount. You may then transfer amounts
from the Money Market subaccount to the other investment options offered under
the Contract.
Fourth, if a payment or the entire loan is in default as defined in
the Contract, the Company will report the amount of the default to the Internal
Revenue Service as a taxable distribution and, if you are then under age 59 1/2,
as a premature distribution that may be subject to a 10% penalty. Subject to
restrictions in Section 403(b) of the Code, the amount of any missed payment,
plus interest, or the entire loan balance, plus interest, if the entire loan is
in default, plus any applicable contingent deferred sales charge, will be
withdrawn by us from your investment options in accordance with your direction
in the Loan Request and Agreement. We will use the net proceeds from the
withdrawal
18
<PAGE>
to repay the loan. If a withdrawal is restricted under the Code, the outstanding
loan balance will continue to accrue interest and the amount due will be
withdrawn when a withdrawal becomes permissible. Thus, when an event takes place
which makes withdrawal from the Contract permissible under the Code, such as
attainment of age 59 1/2, disability, or death, we will check the Contract to
determine if there is an outstanding loan balance for which one or more payments
have been missed. If so, we will withdraw from your investment options, in
accordance with your direction in the Loan Request and Agreement, funds
necessary to pay the overdue amount, plus any applicable contingent deferred
sales charge. While a loan balance is outstanding, any withdrawal or death
benefit proceeds must first be used to pay the loan.
Loans are subject to the terms of your Contract, your Section 403(b)
plan and the Code, and, in the case of plans subject to the Employee Retirement
Income Security Act of 1974, the ERISA regulations on plan loans, all of which
may impose restrictions. The Company reserves the right to suspend, modify or
terminate the availability of loans. Where there is a plan fiduciary, it is the
responsibility of the fiduciary to ensure that any Contract loans comply with
plan qualification requirements, including ERISA.
________________________________________________________________________________
FEDERAL INCOME TAX CONSIDERATIONS
The following brief discussion of federal income tax considerations is
based on the law in effect on the date of this Prospectus, which may be changed
by legislative, judicial or administration action. The summary is general in
nature and does not consider any applicable state or local tax laws. For further
information, you should consult qualified tax counsel.
Under current law, no federal income taxes are imposed on increases in
the value of a Contract until distribution occurs, either in the form of a
withdrawal or death benefit or as annuity payment under an annuity option.
For a withdrawal or death benefit, the taxable portion is generally
the amount in excess of the cost basis of the Contract. Amounts withdrawn by the
Contract owner or received as a death benefit by the designated beneficiary are
treated first as taxable income to the extent of the excess of the Contract
Value over the purchase payments made under the Contract. Such taxable portion
is taxed at ordinary income tax rates. Designation of a beneficiary who is
either 37 1/2 years younger than the Contract Owner or a grandchild of the
Contract Owner may have Generation Skipping Transfer Tax consequences under
Section 2601 of the Code.
In the case of a nonqualified Contract and death of an Annuitant who
was not the Contract Owner, an election to receive the death benefit in the form
of annuity payment must be made within 60 days. If such election is not made,
the gain from the Contract will generally be taxed as a lump sum payment, as
described in the preceding paragraph.
For annuity payments, the taxable portion is generally determined by a
formula that establishes the ratio of the cost basis of the Contract (as
adjusted for any refund feature) to the expected return under the Contract. The
taxable portion, which is the amount of the annuity payment in excess of the
cost basis, is taxed at ordinary income tax rates.
An additional income tax of 10% may be imposed on the taxable portion
of an early withdrawal or distribution unless one of several exceptions apply.
There will be no additional income tax on early withdrawals which are part of a
series of substantially equal periodic payments (not less frequently than
annually) made for life (or life expectancy) of the taxpayer or the joint lives
(or joint life expectancies) of the taxpayer and a beneficiary, or on
withdrawals made on or after age 59 1/2. There also will be no additional tax on
distributions made after death or on withdrawals attributable to total and
permanent disability. Further, there will be no additional tax on distributions
within certain other exceptions to the general rule.
19
<PAGE>
The transfer of a Contract may result in the transferor incurring tax.
If the transfer is for less than adequate consideration, the taxable portion
would be the Contract Value at the time of transfer over the investment in the
Contract at such time. This rule does not apply to transfers between spouses or
to transfers incident to a divorce.
Subject to certain exceptions, a Contract must be held by or on behalf
of a natural person in order to be treated as an annuity contract under federal
income tax law and to be accorded the tax treatment described in the preceding
paragraphs. If a contract is not treated as an annuity contract for federal
income tax purposes, the income on the Contract is treated as ordinary income
received or accrued by the Contract Owner during the taxable year.
Section 817(h) of the Code provides that the investments of a separate
account underlying a variable annuity contract which is not purchased under a
qualified retirement plan or certain other types of plans (or the investments of
a mutual fund, the shares of which are owned by the variable annuity separate
account) must be "adequately diversified" in order for the Contract to be
treated as an annuity contract for tax purposes. The Treasury Department has
issued regulations prescribing such diversification requirements. The Separate
Account, through each of the available funds of the Penn Series Funds, Inc.
Neuberger & Berman Advisers Management Trust, Variable Insurance Products Fund,
Variable Insurance Products Fund II, and Morgan Stanley Universal Funds, Inc.
intends to comply with those requirements. The requirements are briefly
discussed in the accompanying prospectuses for the underlying funds.
The Treasury Department has indicated that in regulations or revenue
rulings under Section 817(d) (relating to the definition of a variable
contract), it will provide guidance on the extent to which Contract Owners may
direct their investments to particular subaccount without being treated as
owners of the underlying shares. It is possible that when such regulations or
rulings are issued, the Contracts may need to be modified to comply with them.
The Contracts may be used in connection with certain retirement plans
that qualify for special tax treatment under the Code. The plans include
rollover individual retirement annuities qualified under Section 408(b) of the
Code (referred to as IRAs) and certain tax deferred annuities qualified under
Section 403(b) of the Code. Qualified Contracts have special provisions in
order to be treated as qualified under the Code.
For some types of qualified retirement plans, there may be no cost
basis in the Contract. In this case, the total payments received may be taxable.
Before purchasing a contract under a qualified retirement plan, the tax law
provisions applicable to the particular plan should be considered.
Distribution must generally commence from individual retirement
annuities and from contracts qualified under Section 403(b) no later than the
April 1 following the calendar year in which the Contract Owner attains age 70
1/2. Failure to make such required minimum distributions may result in a 50% tax
on the amount of the required distribution.
Generally, under a nonqualified annuity or rollover individual
retirement annuity qualified under Section 408(b), unless the Contract Owner
elects to the contrary, any amounts that are received under the Contract that
the Company believes are includable in gross income for tax purposes will be
subject to mandatory withholding to meet federal income tax obligations. The
same treatment will apply to distributions from a qualified plan or Section
403(b) annuity that are payable as an annuity for the life or life expectancy of
one or more individuals, or for a period of at least 10 years, or are required
minimum distributions. Other distributions from a Section 403(b) annuity are
subject to mandatory withholding, unless an election is made to receive the
distribution as a direct rollover to another eligible retirement plan.
It should be understood that the foregoing description of federal
income taxes is not exhaustive and that special rules and considerations may be
applicable. For further information, a prospective purchaser should consult
qualified tax counsel.
20
<PAGE>
________________________________________________________________________________
FINANCIAL STATEMENTS
The consolidated financial statements of The Penn Mutual Life
Insurance Company at December 31, 1997, and for the year then ended, which
appear in the Statement of Additional Information. The consolidated financial
statements of Penn Mutual should be considered only as bearing upon Penn
Mutual's ability to meet its obligations under the Contracts.
New subaccounts of the Separate Account have been established under
the Contracts. There are, therefore, no financial statements for the subaccounts
at this time.
21
<PAGE>
________________________________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION CONTENTS
________________________________________________________________________________
VARIABLE ANNUITY PAYMENTS................................................. B-
First Variable Annuity Payments...................................... B-
Subsequent Variable Annuity Payments................................. B-
Annuity Units........................................................ B-
Value of Annuity Units............................................... B-
Net Investment Factor................................................ B-
Assumed Interest Rate................................................ B-
Valuation Period..................................................... B-
________________________________________________________________________________
PERFORMANCE DATA.......................................................... B-
Average Annual Total Return.......................................... B-
Yields (Money Market Fund)........................................... B-
________________________________________________________________________________
ADMINISTRATION AND RECORDKEEPING SERVICES................................. B-
________________________________________________________________________________
DISTRIBUTION OF CONTRACTS................................................. B-
________________________________________________________________________________
CUSTODIAN................................................................. B-
________________________________________________________________________________
INDEPENDENT AUDITORS...................................................... B-
________________________________________________________________________________
LEGAL MATTERS............................................................. B-
________________________________________________________________________________
FINANCIAL STATEMENTS...................................................... B-
________________________________________________________________________________
22
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION -- JANUARY 1 , 1999
- - --------------------------------------------------------------------------------
LOGO
PENN MUTUAL VARIABLE ACCOUNT III
THE PENN MUTUAL LIFE INSURANCE COMPANY
PHILADELPHIA, PENNSYLVANIA 19172 . TELEPHONE (215) 956-8000
- - --------------------------------------------------------------------------------
This statement of additional information is not a prospectus. It should be read
in conjunction with the current Prospectus for the Commander Contract dated
January 1, 1999. The Contract is funded through Penn Mutual Variable Account III
(referred to as the "Separate Account"). To obtain a prospectus you may write to
The Penn Mutual Life Insurance Company, Customer Service Group, Philadelphia, PA
19172. Or you may call (215) 956-8000. Terms used in this statement of
additional information have the same meaning as the Prospectus.
- - --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
- - --------------------------------------------------------------------------------
VARIABLE ANNUITY PAYMENTS.................................................... B-
First Variable Annuity Payments......................................... B-
Subsequent Variable Annuity Payments.................................... B-
Annuity Units........................................................... B-
Value of Annuity Units.................................................. B-
Net Investment Factor................................................... B-
Assumed Interest Rate................................................... B-
Valuation Period........................................................ B-
- - --------------------------------------------------------------------------------
PERFORMANCE DATA............................................................. B-
Average Annual Total Return............................................. B-
Yields (Money Market Fund).............................................. B-
- - --------------------------------------------------------------------------------
ADMINISTRATIVE RECORDKEEPING SERVICES........................................ B-
- - --------------------------------------------------------------------------------
DISTRIBUTION OF CONTRACTS.................................................... B-
- - --------------------------------------------------------------------------------
CUSTODIAN.................................................................... B-
- - --------------------------------------------------------------------------------
INDEPENDENT AUDITORS......................................................... B-
- - --------------------------------------------------------------------------------
LEGAL MATTERS................................................................ B-
- - --------------------------------------------------------------------------------
FINANCIAL STATEMENTS......................................................... B-
- - --------------------------------------------------------------------------------
</TABLE>
<PAGE>
- - --------------------------------------------------------------------------------
VARIABLE ANNUITY PAYMENTS
- - --------------------------------------------------------------------------------
FIRST VARIABLE ANNUITY PAYMENT
When a variable annuity is effected, we will first deduct applicable
premium taxes, if any, from the Contract Value. The dollar amount of the first
monthly annuity payment will be determined by applying the net Contract Value to
the annuity table set forth in the contract for the annuity option chosen. The
annuity tables show the amount of the first monthly income payment under each
annuity option for each $1,000 of value applied, based on the Annuitant's age at
the Annuity Date. The annuity tables are based on the Annuity 2000 Basic Table
with interest rates at 3% or 5%.
- - --------------------------------------------------------------------------------
SUBSEQUENT VARIABLE ANNUITY PAYMENTS
The dollar amount of subsequent variable annuity payments will vary in
accordance with the investment experience of the subaccount(s) of the Separate
Account applicable to the annuity. Each subsequent variable annuity payment will
equal the number of annuity units credited, multiplied by the value of the
annuity unit for the valuation period. The Company guarantees that the amount of
each subsequent annuity payment will not be affected by variations in expense or
mortality experience.
- - --------------------------------------------------------------------------------
ANNUITY UNITS
For each subaccount selected, the number of annuity units is the amount of
the first annuity payment allocated to the subaccount divided by the value of an
annuity unit for the subaccount on the Annuity Date. The number of your annuity
units will not change as a result of investment experience.
- - --------------------------------------------------------------------------------
VALUE OF ANNUITY UNITS
The value of an annuity unit for each subaccount was arbitrarily set at $10
when the subaccount was established. The value may increase or decrease from one
valuation period to the next. For a valuation period, the value of an annuity
unit for a subaccount is the value of an annuity unit for the subaccount for the
last prior valuation period multiplied by the net investment factor for the
subaccount for the valuation period. The result is then multiplied by a factor
to neutralize an assumed interest rate of 3% or 5%, as applicable, built into
the annuity tables.
- - --------------------------------------------------------------------------------
NET INVESTMENT FACTOR
For any subaccount, the net investment factor for a valuation period is
determined by dividing (a) by (b) and subtracting (c):
WHERE (A) IS:
The net asset value per share of the mutual fund held in the subaccount, as
of the end of the valuation period
plus
----
The per share amount of any dividend or capital gain distributions by the
mutual fund if the "ex-dividend" date occurs in the valuation period
B-2
<PAGE>
plus or minus
-------------
A per share charge or credit, as we may determine as of the end of the
valuation period, for provision for taxes (if applicable).
WHERE (B) IS:
The net asset value per share of the mutual fund held in the subaccount as
of the end of the last prior valuation period
plus or minus
-------------
The per share charge or credit for provision for taxes as of the end of the
last prior valuation period (if applicable).
WHERE (C) IS:
The sum of the mortality and expense risk charge and the daily
administration charge. On an annual basis, the sum of such charges equals
1.40% of the daily net asset value of the subaccount.
- - --------------------------------------------------------------------------------
ASSUMED INTEREST RATE
Assumed annual interest rates of 3% and 5% are included in the annuity
tables in the contracts. A higher assumption would mean a higher first annuity
payment but more slowly rising or more rapidly falling subsequent payments. A
lower assumption would have the opposite effect. If the actual net investment
on an annual basis is equal to the interest rate you have selected, annuity
payments will be level.
- - --------------------------------------------------------------------------------
VALUATION PERIOD
Valuation period is the period from one valuation of underlying fund assets
to the next. Valuation is performed each day the New York Stock Exchange is open
for trading.
- - --------------------------------------------------------------------------------
PERFORMANCE DATA
- - --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
Although the subaccounts of the Separate Account were not available until
the effective date of this registration statement, the returns calculated below
reflect a hypothetical return as if the sub-accounts had invested in the
underlying funds for the indicated periods.
Table 1 shows the average annual rates of total return on hypothetical
investments of $1,000, through the Separate Account, in funds of Penn Series
Funds, Inc., Neuberger and Berman Advisers Management Trust, Fidelity
Investments' Variable Insurance Products Fund and Fidelity Investments' Variable
Insurance Products Fund II, and Morgan Stanley Universal Funds, Inc. for the
periods ended December 31, 1997 and assume withdrawal of the investments at the
end of the period.
B-3
<PAGE>
- - --------------------------------------------------------------------------------
TABLE 1
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
----------------------------------------------------------
FROM TEN FIVE ONE
INCEPTION YEARS YEARS YEAR
INCEPTION THROUGH ENDED ENDED ENDED
FUND (MANAGER) DATE* 12/31/97 12/31/97 12/31/97 12/31/97
- - ------------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Growth Equity (a)........................... 06/01/83 10.55% 11.28% 10.98% 19.12%
(Independence Capital)
Value Equity (a)............................ 03/17/87 11.62% 11.85% 15.49% 8.63%
(OpCap)
Small-Cap Fund.............................. 03/01/95 8.19% 0.00% 0.00% -15.82%
(OpCap)
Emerging Growth Fund (a)(f)................. 05/01/97 21.63% 0.00% 0.00% -6.77%
(RS Investment Management)
Flexibly Managed (a)........................ 07/31/84 12.46% 10.49% 9.79% 5.58%
(T. Rowe Price)
International Equity (a).................... 11/01/92 11.23% 0.00% 7.81% 7.75%
(Vontobel)
Quality Bond (a)............................ 03/17/87 6.71% 7.23% 5.41% 9.49%
(Independence Capital)
High Yield Bond (a)......................... 08/06/84 8.50% 7.84% 6.08% 0.80%
(T. Rowe Price)
Balanced Portfolio (b)...................... 02/28/89 7.15% 0.00% 4.58% -1.25%
(Neuberger & Berman)
Limited Maturity Bond Portfolio (b)......... 09/10/84 5.79% 4.31% 1.95% 2.99%
(Neuberger & Berman)
Partners Portfolio (b)...................... 03/22/94 17.01% 0.00% 0.00% -0.18%
(Neuberger & Berman)
Equity-Income Portfolio (c)................. 10/09/86 13.54% 14.58% 18.75% 1.47%
(Fidelity Investments)
Growth Portfolio (c)........................ 10/09/86 13.08% 14.25% 18.75% 5.66%
(Fidelity Investments)
Asset Manager Portfolio (d)................. 09/06/89 11.22% 0.00% 10.40% -4.70%
(Fidelity Investments)
Index 500 (d)............................... 08/27/92 4.41% 0.00% 2.71% 15.05%
(Fidelity Investments)
Emerging Markets Equity (International)(e).. 10/01/96 -18.44% 0.00% 0.00% -34.30%
(Morgan Stanley)
</TABLE>
- - ---------------------------------------------
* Represents the date the underlying fund was established.
(a) Penn Series Funds, Inc.
(b) Neuberger and Berman Advisers Management Trust
(c) Variable Insurance Products Fund
(d) Variable Insurance Products Fund II
(e) Morgan Stanley Universal Funds, Inc.
(f) Average Annual Total Return for period May 1, 1997 to December 31, 1997
B-4
<PAGE>
The average annual rates of total return shown in Table 1 are computed by
finding the average annual compounded rates of return over the periods shown
that would equate the initial amount invested to the withdrawal value, in
accordance with the following formula: P(1 + T) /n/ = ERV. In the formula, P is
a hypothetical investment payment of $1,000; T is the average annual total
return; n is the number of years; and ERV is the withdrawal value at the end of
the periods shown. The annual contract administration charge is reflected
assuming an anticipated average Contract Value and assuming that the Contract
Value is allocated equally across all available subaccounts by an average
contract owner. The performance information in Table 1 is calculated in
accordance with the standard formula prescribed by the Securities and Exchange
Commission.
- - --------------------------------------------------------------------------------
Table 2 below shows the average annual rates of return on hypothetical
initial investments of $1,000, through the Separate Account, in funds of the
Penn Series Funds, Inc., Neuberger and Berman Advisers Management Trust,
Fidelity Investments' Variable Insurance Products Fund, Fidelity Investments'
Variable Insurance Products Fund II, and Morgan Stanley Universal Funds, Inc.
for the periods ended December 31, 1997 and assumes the investments are not
withdrawn at the end of the period.
- - --------------------------------------------------------------------------------
TABLE 2
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
------------------------------------------------------------
FROM TEN FIVE ONE
INCEPTION YEARS YEARS YEAR
INCEPTION THROUGH ENDED ENDED ENDED
FUND (MANAGER) DATE* 12/31/97 12/31/97 12/31/97 12/31/97
- - -------------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Growth Equity (a)............................ 06/01/83 10.55% 11.28% 10.98% 19.12%
(Independence Capital)
Value Equity (a)............................. 03/17/87 11.62% 11.85% 15.49% 8.63%
(OpCap)
Small-Cap Fund............................... 03/01/95 8.19% 0.00% 0.00% -15.82%
(OpCap)
Emerging Growth Fund (a)(f).................. 05/01/97 21.63% 0.00% 0.00% -6.77%
(RS Investment Management)
Flexibly Managed (a)......................... 07/31/84 12.46% 10.49% 9.79% 5.58%
(T. Rowe Price)
International Equity (a)..................... 11/01/92 11.23% 0.00% 7.81% 7.75%
(Vontobel)
Quality Bond (a)............................. 03/17/87 6.71% 7.23% 5.41% 9.49%
(Independence Capital)
High Yield Bond (a).......................... 08/06/84 8.50% 7.84% 6.08% 0.80%
(T. Rowe Price)
Balanced Portfolio (b)....................... 02/28/89 7.15% 0.00% 4.58% -1.25%
(Neuberger & Berman)
Limited Maturity Bond Portfolio (b).......... 09/10/84 5.79% 4.31% 1.95% 2.99%
(Neuberger & Berman)
Partners Portfolio (b)....................... 03/22/94 17.01% 0.00% 0.00% -0.18%
(Neuberger & Berman)
Equity-Income Portfolio (c).................. 10/09/86 13.54% 14.58% 18.75% 1.47%
(Fidelity Investments)
Growth Portfolio (c)......................... 10/09/86 13.08% 14.25% 12.94% 5.66%
(Fidelity Investments)
Asset Manager Portfolio (d).................. 09/06/89 11.22% 0.00% 10.40% -4.70%
(Fidelity Investments)
Index 500 (d)................................ 08/27/92 4.41% 0.00% 2.71% 15.05%
(Fidelity Investments)
Emerging Markets Equity (International)(e)... 10/01/96 -18.44% 0.00% 0.00% -34.30%
(Morgan Stanley)
</TABLE>
- - ----------------------------------------------
* Represents the date the underlying fund was established.
(a) Penn Series Funds, Inc.
(b) Neuberger and Berman Advisers Management Trust
(c) Variable Insurance Products Fund
(d) Variable Insurance Products Fund II
(e) Morgan Stanley Universal Funds, Inc.
(f) Average Annual Total Return for period May 1, 1997 to December 31, 1997
B-5
<PAGE>
- - --------------------------------------------------------------------------------
Table 3 below shows the average annual rates of return on hypothetical
initial investments of $10,000, through the Separate Account, in funds of the
Penn Series Funds, Inc., Neuberger and Berman Advisers Management Trust,
Fidelity Investments' Variable Insurance Products Fund, Fidelity Investments'
Variable Insurance Products Fund II, and Morgan Stanley Universal Funds, Inc.
for the periods ended December 31, 1997 and assumes the investments are not
withdrawn at the end of the period.
- - --------------------------------------------------------------------------------
TABLE 3
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
----------------------------------------------------------
FROM TEN FIVE ONE
INCEPTION YEARS YEARS YEAR
INCEPTION THROUGH ENDED ENDED ENDED
FUND (MANAGER) DATE* 12/31/97 12/31/97 12/31/97 12/31/97
- - -------------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Growth Equity (a)............................ 06/01/83 10.68% 11.42% 11.17% 19.33%
(Independence Capital)
Value Equity (a)............................. 03/17/87 11.76% 12.01% 15.65% 8.84%
(OpCap)
Small-Cap Fund............................... 03/01/95 8.37% 0.00% 0.00% -15.61%
(OpCap)
Emerging Growth Fund (a)(f).................. 05/01/97 21.85% 0.00% 0.00% -6.56%
(RS Investment Management)
Flexibly Managed (a)......................... 07/31/84 12.56% 10.64% 9.97% 5.79%
(T. Rowe Price)
International Equity (a)..................... 11/01/92 11.39% 0.00% 8.00% 7.96%
(Vontobel)
Quality Bond (a)............................. 03/17/87 6.87% 7.38% 5.61% 9.70%
(Independence Capital)
High Yield Bond (a).......................... 08/06/84 8.63% 8.00% 6.28% 1.01%
(T. Rowe Price)
Balanced Portfolio (b)....................... 02/28/89 7.29% 0.00% 4.74% -1.04%
(Neuberger & Berman)
Limited Maturity Bond Portfolio (b).......... 09/10/84 5.93% 4.48% 2.15% 3.20%
(Neuberger & Berman)
Partners Portfolio (b)....................... 03/22/94 17.18% 0.00% 0.00% 0.03%
(Neuberger & Berman)
Equity-Income Portfolio (c).................. 10/09/86 13.69% 14.73% 18.91% 1.68%
(Fidelity Investments)
Growth Portfolio (c)......................... 10/09/86 13.21% 14.38% 13.12% 5.87%
(Fidelity Investments)
Asset Manager Portfolio (d).................. 09/06/89 11.37% 0.00% 10.59% -4.48%
(Fidelity Investments)
Index 500 (d)................................ 08/27/92 4.65% 0.00% 2.96% 15.26%
(Fidelity Investments)
Emerging Markets Equity (International)(e)... 10/01/96 -18.10% 0.00% 0.00% -34.09%
(Morgan Stanley)
</TABLE>
- - ----------------------------------------------
* Represents the date the underlying fund was established.
(a) Penn Series Funds, Inc.
(b) Neuberger and Berman Advisers Management Trust
(c) Variable Insurance Products Fund
(d) Variable Insurance Products Fund II
(e) Morgan Stanley Universal Funds, Inc.
(f) Average Annual Total Return for period May 1, 1997 to December 31, 1997
B-6
<PAGE>
<TABLE>
<S> <C>
Partners Portfolio (b).................................... 03/22/94
(Neuberger & Berman)
Equity-Income Portfolio (c)............................... 10/09/86
(Fidelity Investments)
Growth Portfolio (c)...................................... 10/09/86
(Fidelity Investments)
Asset Manager Portfolio (d)............................... 09/06/89
(Fidelity Investments)
Index 500 (d)............................................. 08/27/92
(Fidelity Investments)
Emerging Markets Equity (International)(e)................ 10/01/96
(Morgan Stanley)
</TABLE>
____________________
* Represents the date the underlying fund was established.
(a) Penn Series Funds, Inc.
(b) Neuberger and Berman Advisers Management Trust
(c) Variable Insurance Products Fund
(d) Variable Insurance Products Fund II
(e) Morgan Stanley Universal Funds, Inc.
(f) Average Annual Total Return for period May 1, 1997 to December 31,
1997
The average annual rates of total return shown in Tables 2 and 3 are
computed by finding the average annual compounded rates of return over the
periods shown that would equate the initial amount invested to the Contract
Value at the end of the periods shown, in accordance with the following formula:
P(1 + T) /n/ = FV. In the formula, P is a hypothetical investment of $1,000 in
Table 2 and $10,000 in Table 3; T is the average annual total return; n is the
number of years; and FV is the Contract Value at the end of the periods shown.
The annual contract administrative charge is reflected assuming an anticipated
average Contract Value and assuming that the average Contract Value is allocated
equally across all available subaccounts by an average contract owner. The
average annual rates of total returns reflect all recurring charges, but do not
reflect the contingent deferred sales charge of 1% which, if applicable, would
reduce the amount that may be withdrawn under the Contract. The performance
information in tables 2 and 3 is not calculated in accordance with the standard
formula prescribed by the securities and exchange commission.
- - --------------------------------------------------------------------------------
YIELDS (MONEY MARKET FUND)
From time to time, advertisements and sales literature may quote the
current or effective yield of the Money Market subaccount.
[Supply current yield]
The yield is computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical preexisting account having a balance of
one accumulation unit of the subaccount at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from contract owner
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7) with the resulting figure carried
to at least the nearest hundredth of 1%. The hypothetical charge reflects
deductions from contract owners' accounts in proportion to the length of the
base period. The annual contract administrative charge is reflected assuming an
anticipated average Contract Value and assuming that the average Contract Value
is allocated equally across all available subaccounts by an average contract
owner.
B-7
<PAGE>
The effective yield is obtained by taking the base period return as
computed above, and then compounding the base period return by adding 1, raising
the sum to a power equal to 365 divided by 7, and subtracting 1 from the result,
according to the following formula: Effective Yield = [(base period return + 1)
/365/7/] -1.
The yields do not reflect the contingent deferred sales charge of 1%. The
deferred sales charge may or may not be applicable to a withdrawal from a
Contract, depending on when the withdrawal is made.
THE YIELDS ON AMOUNTS HELD IN THE MONEY MARKET SUBACCOUNT NORMALLY WILL
FLUCTUATE ON A DAILY BASIS. THEREFORE, THE STATED YIELDS FOR ANY GIVEN PERIOD
ARE NOT AN INDICATION OR REPRESENTATION OF FUTURE YIELDS.
_____________________________________
THE PERFORMANCE INFORMATION SET FORTH ABOVE IS FOR PAST PERFORMANCE OF THE
FUNDS, ASSUMING THE SUBACCOUNTS SEPARATE ACCOUNT HAD INVESTED IN THE FUNDS FROM
THEIR INCEPTION, AND IS NOT AN INDICATION OR REPRESENTATION OF FUTURE
PERFORMANCE.
- - --------------------------------------------------------------------------------
ADMINISTRATIVE AND RECORDKEEPING SERVICES
The Company performs all data processing, recordkeeping and other related
services with respect to the Contracts and the Separate Accounts.
- - --------------------------------------------------------------------------------
DISTRIBUTION OF CONTRACTS
Hornor, Townsend & Kent, Inc., a wholly owned subsidiary of The Penn Mutual
Life Insurance Company ("Penn Mutual"), serves as principal underwriter of the
Contracts. The address of Hornor, Townsend & Kent, Inc. is 600 Dresher Road,
Horsham, PA 19044.
The Contracts will be distributed by Hornor, Townsend & Kent, Inc. through
broker-dealers. Total commissions on purchase payments made under the Contract
will not exceed 1% and trailer commissions based on a percentage of Contract
Value may be paid. The offering of the Contracts is continuous, and the Company
does not anticipate discontinuing the offering of the Contract, although we
reserve the right to do so.
- - --------------------------------------------------------------------------------
CUSTODIAN
The Company is custodian of the assets held in the Separate Account.
- - --------------------------------------------------------------------------------
INDEPENDENT AUDITORS
Ernst & Young serves as independent auditors of The Penn Mutual Life
Insurance Company and Penn Mutual Variable Annuity Account III. Their offices
are located at 2001 Market Street, Suite 4000, Philadelphia, PA.
The consolidated financial statements of The Penn Mutual Life Insurance Company
at December 31, 1997, and for the year then ended, appearing in this Prospectus
and Registration Statement have been audited by Ernst & Young, independent
auditors, and at December 31, 1996, and for each of the two year in the period
ended December 31, 1996, by PricewaterhouseCoopers LLP, independent auditors,
as set forth in their respective reports thereon appearing elsewhere herein, and
are included in reliance upon such reports given upon the authority of such
firms as experts in accounting and auditing.
- - --------------------------------------------------------------------------------
B-8
<PAGE>
LEGAL MATTERS
Morgan, Lewis & Bockius LLP has provided advice on certain matters relating
to the federal securities laws and the offering of the Contracts. Their offices
are located at 1701 Market Street, Philadelphia, PA.
- - --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
The consolidated financial statements of Penn Mutual are set forth on the
following pages. The consolidated financial statements of Penn Mutual should be
considered only as bearing upon Penn Mutual's ability to meet its obligations
under the Contracts.
- - --------------------------------------------------------------------------------
B-9
<PAGE>
- - --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
THE BOARD OF TRUSTEES
THE PENN MUTUAL LIFE INSURANCE COMPANY
PHILADELPHIA, PENNSYLVANIA
We have audited the accompanying consolidated balance sheet of The Penn Mutual
Life Insurance Company and subsidiaries as of December 31, 1997 and the related
consolidated income statement, statement of changes in equity and statement of
cash flows for the year then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit. The
financial statements of the Company as of December 31, 1996 and for each of the
two years in the period ended December 31, 1996 were audited by other auditors
whose report dated January 31, 1997 expressed an unqualified opinion on those
statements and included an explanatory paragraph that disclosed the Company's
adoption of several accounting principles which were not previously required to
be adopted. These changes are described in Note 1 to the financial statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the 1997 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of The Penn Mutual Life Insurance Company and subsidiaries as of December 31,
1997, and the results of their operations and their cash flows for the year
then ended, in conformity with generally accepted accounting principles.
/s/ Ernst & Young
Philadelphia, Pennsylvania
January 30, 1998
B-10
<PAGE>
- - --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
THE BOARD OF TRUSTEES OF
THE PENN MUTUAL LIFE INSURANCE COMPANY
PHILADELPHIA, PENNSYLVANIA
We have audited the accompanying consolidated balance sheet of The Penn Mutual
Life Insurance Company as of December 31, 1996 and the related consolidated
statements of income, changes in equity and statement of cash flows for the two
years in the period ended December 31, 1996. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial condition of The
Penn Mutual Life Insurance Company and subsidiaries as of December 31, 1996, and
the results of their operations and their cash flows for the two years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the consolidated financial statements, in 1996 the
Company adopted Financial Accounting Standards Board Interpretation No. 40 (FIN
40) and Statement of Financial Accounting Standards No. 120 (SFAS 120), which
required implementation of several accounting pronouncements not previously
adopted. The effects of adopting FIN 40 and SFAS 120 were retroactively applied
to the Company's previously issued financial statements, consistent with the
implementation guidance of those standards.
/s/ PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 31, 1997
B-11
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997 1996
- - --------------------------------------------------------------------------------
<S> <C> <C>
(in thousands)
ASSETS
Debt securities, at fair value........................... $5,427,652 $5,214,788
Equity securities, at fair value......................... 12,502 16,745
Mortgage loans on real estate............................ 52,996 124,914
Real estate, net of accumulated depreciation............. 22,358 97,805
Policy loans............................................. 642,989 656,073
Short-term investments................................... 43,470 37,515
Other invested assets.................................... 88,928 94,369
---------- ----------
TOTAL INVESTMENTS....................................... 6,290,895 6,242,209
Cash and cash equivalents................................ 37,064 37,314
Investment income due and accrued........................ 103,072 103,132
Deferred acquisition costs............................... 384,542 412,595
Amounts recoverable from reinsurers...................... 63,211 58,882
Broker/dealer receivables................................ 526,797 449,150
Other assets............................................. 92,203 85,382
Separate account assets.................................. 1,869,094 1,368,384
---------- ----------
TOTAL ASSETS............................................ $9,366,878 $8,757,048
========== ==========
LIABILITIES
Reserves for payment of future policy benefits........... $2,770,015 $2,782,621
Other policyholder funds................................. 2,973,434 3,053,412
Policyholders' dividends payable......................... 35,273 35,395
Broker/dealer payables................................... 333,104 303,089
Accrued income tax payable:
Current................................................. 17,476 25,487
Deferred................................................ 75,096 35,783
Other liabilities........................................ 283,666 282,501
Separate account liabilities............................. 1,869,094 1,368,384
---------- ----------
TOTAL LIABILITIES....................................... 8,357,158 7,886,672
---------- ----------
EQUITY
Unrealized gains/(losses) on investment securities, net
of taxes and amortization of deferred acquisition costs. 152,009 85,730
Retained earnings........................................ 857,711 784,646
---------- ----------
TOTAL EQUITY............................................ 1,009,720 870,376
---------- ----------
TOTAL LIABILITIES AND EQUITY........................... $9,366,878 $8,757,048
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
B-12
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1997 1996 1995
- - --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
REVENUES
Premium and annuity considerations.......... $ 195,220 $ 199,821 $ 187,907
Policy fee income........................... 102,398 89,349 80,652
Net investment income....................... 460,206 475,315 489,773
Net realized capital gains/(losses)......... 9,655 (10,078) 14,112
Broker/dealer fees and commissions.......... 290,005 241,068 200,223
Other income................................ 11,851 11,544 31,646
---------- ---------- ----------
TOTAL REVENUE.............................. 1,069,335 1,007,019 1,004,313
---------- ---------- ----------
BENEFITS AND EXPENSES
Benefits paid to policyholders and benefi-
ciaries.................................... 480,234 462,412 486,559
Policyholder dividends...................... 67,412 67,596 69,807
Increase/(decrease) in liability for future
policy benefits............................ (11,972) 42,652 38,038
General expenses............................ 202,731 178,554 186,204
Broker/dealer sales expense................. 160,730 132,724 109,492
Amortization of deferred acquisition costs.. 43,223 46,137 36,794
---------- ---------- ----------
TOTAL BENEFITS AND EXPENSES................ 942,358 930,075 926,894
---------- ---------- ----------
INCOME BEFORE INCOME TAXES................. 126,977 76,944 77,419
---------- ---------- ----------
Income taxes:
Current.................................... 50,061 37,944 11,740
Deferred................................... 3,851 (9,919) (33,179)
---------- ---------- ----------
NET INCOME................................. $ 73,065 $ 48,919 $ 98,858
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
B-13
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
(DEPRECIATION)
OF INVESTMENT RETAINED TOTAL
FOR THE YEARS ENDED DECEMBER 31, SECURITIES EARNINGS EQUITY
- - --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
BALANCE AT JANUARY 1, 1995.................. $(57,212) $636,869 $ 579,657
Net income for 1995........................ -- 98,858 98,858
Unrealized appreciation of securities...... 216,153 -- 216,153
-------- -------- ----------
BALANCE AT DECEMBER 31, 1995................ 158,941 735,727 894,668
Net income for 1996........................ -- 48,919 48,919
Unrealized depreciation of securities...... (73,211) -- (73,211)
-------- -------- ----------
BALANCE AT DECEMBER 31, 1996................ 85,730 784,646 870,376
Net income for 1997........................ -- 73,065 73,065
Unrealized appreciation of securities...... 66,279 -- 66,279
-------- -------- ----------
BALANCE AT DECEMBER 31, 1997................ $152,009 $857,711 $1,009,720
======== ======== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
B-14
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1997 1996 1995
- - ----------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................ $ 73,065 $ 48,919 $ 98,858
Adjustments to reconcile net income to net
cash provided by operations:
Capitalization of policy acquisition
costs................................... (64,427) (60,234) (52,147)
Amortization of deferred acquisition
costs................................... 43,223 46,137 36,794
Policy fees on universal life and invest-
ment contracts.......................... (104,342) (89,349) (80,652)
Interest credited on universal life and
investment contracts.................... 160,417 171,051 186,549
Depreciation and amortization............ 18,682 11,613 13,260
Premiums due and other receivables....... (7,291) (105) (2,219)
Realized capital (gains)/losses.......... (9,655) 10,078 (14,112)
(Increase)/decrease in accrued investment
income.................................. 60 6,474 7,880
(Increase)/decrease in amounts due from
reinsurers.............................. (4,329) (14,200) 9,994
(Increase)/decrease in net broker dealer
receivables............................. (47,632) 296 (37,142)
Increase/(decrease) in future policy ben-
efit reserves........................... (13,358) 58,697 9,276
Increase/(decrease) in claims payable.... -- -- (16,322)
Increase/(decrease) in income tax pay-
able.................................... (4,526) 7,798 (59,512)
Other, net............................... (6,693) 39,625 (5,232)
----------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVI-
TIES................................... 33,194 236,800 95,273
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of investments:
Debt securities available for sale....... 1,235,274 927,905 1,201,541
Equity securities........................ 20,374 25,413 153,985
Real estate.............................. 87,875 40,209 20,461
Other.................................... 14,355 15,284 10,834
Maturity and other principal repayments:
Debt securities available for sale....... 472,474 278,290 276,806
Equity securities........................ -- -- 1,992
Mortgage loans........................... 61,813 156,643 138,396
Cost of investments acquired:
Debt securities available for sale....... (1,772,007) (1,427,048) (1,448,184)
Equity securities........................ (15,268) (11,752) (80,999)
Mortgage loans........................... 0 (36,155) (115,047)
Real estate.............................. (15,600) (8,542) (15,428)
Other.................................... (15,503) (8,789) (8,420)
Change in policy loans, net............... 13,084 1,234 (18,708)
(Increase)/decrease in short-term invest-
ments, net............................... (5,955) 51,290 (80,740)
Purchases of furniture and equipment, net. (4,116) (6,449) (5,369)
----------- ----------- -----------
NET CASH (USED)/PROVIDED BY INVESTING
ACTIVITIES............................. 76,800 (2,467) 31,120
----------- ----------- -----------
</TABLE>
- CONTINUED -
The accompanying notes are an integral part of the consolidated financial
statements.
B-15
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1997 1996 1995
- - ----------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Deposits for universal life and investment con-
tracts......................................... $ 653,233 $ 625,816 $ 602,956
Withdrawals from universal life and investment
contracts...................................... (552,311) (567,697) (608,416)
Transfers to separate accounts.................. (236,008) (269,735) (114,332)
Issuance/(repayment) of debt.................... 24,842 (18,424) 1,354
--------- --------- ---------
NET CASH USED BY FINANCING ACTIVITIES......... (110,244) (230,040) (118,438)
--------- --------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS..... (250) 4,293 7,955
CASH AND CASH EQUIVALENTS
Beginning of the year.......................... 37,314 33,021 25,066
--------- --------- ---------
End of the year................................ $ 37,064 $ 37,314 $ 33,021
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income Taxes................................... $ 54,507 $ 20,228 $ 46,286
Interest Paid.................................. 1,384 939 5,239
</TABLE>
See Note 2 for information on unrealized gains and losses and a 1996 non-cash
transaction related to mortgage loans.
The accompanying notes are an integral part of the consolidated financial
statements.
B-16
<PAGE>
- - -------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS OF DOLLARS)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION AND BASIS OF PRESENTATION
The Penn Mutual Life Insurance Company (the "Company") was founded and
commenced business in 1847 as a mutual life insurance company. The Company
concentrates primarily on the sale of individual life insurance and annuity
products. The primary products that the Company currently markets are
traditional whole life, term life, universal life, variable life, immediate
annuities and deferred annuities, both fixed and variable. The Company markets
its products through a network of career agents, independent agents, and
independent marketing organizations. The Company is also involved in the
broker-dealer business which offers a variety of investment products and
services and is conducted through the Company's non-insurance subsidiaries.
The Company sells its products in all fifty states and the District of
Columbia.
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles and include the
accounts of The Penn Mutual Life Insurance Company, its wholly owned life
insurance subsidiary, The Penn Insurance and Annuity Company ("PIA"), and non-
insurance subsidiaries (principally broker/dealer, investment advisory and
real estate subsidiaries) (the "Company"). All significant intercompany
accounts and transactions have been eliminated in consolidation. The
preparation of financial statements requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and notes to the consolidated financial statements.
ACCOUNTING CHANGES
As of January 1, 1996, the Company adopted Financial Accounting Standards
Board Interpretation No. 40 (FIN 40), "Applicability of Generally Accepted
Accounting Principles to Mutual Life Insurance and Other Enterprises", as
amended by Statement of Financial Accounting Standards (SFAS) No. 120,
"Accounting and Reporting by Mutual Life Insurance Enterprises for Certain
Long-Duration Participating Contracts". The initial effect of applying these
pronouncements has been reported retroactively, as of January 1, 1993. SFAS
No. 120 requires financial statements referred to as prepared in accordance
with generally accepted accounting principles (GAAP) to apply all applicable
authoritative GAAP pronouncements. Prior to the adoption of SFAS No. 120,
statutory financial statements were permitted to be referred to as being
prepared in accordance with GAAP. The significant GAAP authoritative
pronouncements requiring initial application were as follows:
. SFAS No. 60, "Accounting and Reporting by Insurance Enterprises",
. SFAS No. 87, "Employers' Accounting for Pensions",
. SFAS No. 94, "Consolidation of All Majority-Owned Subsidiaries",
. SFAS No. 97, "Accounting and Reporting by Insurance Enterprises for Certain
Long Duration Contracts and for Realized Gains and Losses from the Sale of
Investments",
. SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" ,
. SFAS No. 109, "Accounting for Income Taxes",
. SFAS No. 113, "Accounting and Reporting for Reinsurance of Short-Duration
and Long-Duration Contracts",
. Statement of Position (SOP) 95-1, "Accounting for Certain Insurance
Activities of Mutual Life Insurance Enterprises".
The cumulative effect of applying SFAS No. 120 and FIN 40 primarily consists
of the initial deferral of acquisition costs, the establishment of deferred
taxes, the change in methodology for insurance reserves, and the elimination
of the statutory asset valuation reserve and interest maintenance reserve and
the establishment of investment valuation allowances. In connection with the
adoption of FIN 40, the Company also adopted SFAS No. 115, "Accounting for
Certain Debt and Equity Securities" as of January 1, 1994.
B-17
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
As a result of the change in accounting principles, net income as previously
reported, has been restated as follows:
<TABLE>
<CAPTION>
1995
---------
<S> <C>
Net income, as previously reported.............................. $ 729
Add adjustments for the cumulative effect on prior years
Deferred acquisition costs..................................... 15,353
Policy reserves................................................ (12,079)
Deferred taxes................................................. 32,341
Investment reserves............................................ 46,640
Other, net..................................................... 15,874
Total.......................................................... 98,129
---------
Net income, as adjusted......................................... $ 98,858
=========
As a result of the change in accounting principles, equity, as previously
reported has been restated as follows:
<CAPTION>
1995
---------
<S> <C>
Balance at beginning of year, as previously reported............ $ 315,321
---------
Add adjustments for the cumulative effect on prior years of ap-
plying retroactively the new basis of accounting
Deferred acquisition costs..................................... 466,446
Policy reserves................................................ (67,526)
Deferred taxes................................................. (527)
Investment reserves............................................ 13,651
Unrealized gains/(losses)...................................... (145,759)
Other, net..................................................... (1,949)
---------
Total.......................................................... 264,336
---------
Balance at beginning of year, as adjusted....................... 579,657
---------
Net income...................................................... 98,858
Net change in unrealized gains/(losses) on investment securi-
ties........................................................... 216,153
---------
315,011
---------
Balance at end of year.......................................... $ 894,668
=========
</TABLE>
INVESTMENTS
Debt securities (bonds, notes, redeemable preferred stocks and mortgage-backed
securities) which might be sold prior to maturity are classified as available
for sale. These securities are carried at fair value, with the change in
unrealized gains and losses reported through a separate component of equity.
Interest on debt securities is credited to income as it is earned.
Equity securities are classified as available for sale and carried at fair
value. Dividends on equity securities are credited to income on their ex-
dividend dates.
The Company regularly evaluates the carrying value of debt and equity
securities based on current economic conditions, past credit loss experience
and other circumstances of the investee. A decline in a security's fair value
that is deemed to be other than temporary is treated as a realized loss and a
reduction in the cost basis of the security.
Mortgage loans on real estate are stated at unpaid principal balances, net of
unamortized discounts and valuation allowances. Valuation allowances on
impaired loans are based on the present value of expected future cash flows
discounted at the loan's original effective interest rate or the collateral
value if the loan is collateral dependent. However, if foreclosure is or
becomes probable, the measurement method used is collateral value.
Investment real estate, which the Company has the intent to hold, is carried at
cost less accumulated depreciation and valuation reserves. The Company
establishes valuation reserves for investment real estate when declines in
value are deemed to be permanent based on an analysis of discounted future cash
flows. Properties held for sale are carried at the lower of
B-18
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
depreciated cost or fair value less selling costs. Valuation reserves are
established for properties held for sale when the fair value less estimated
selling costs is below depreciated cost. Real estate acquired through
foreclosure is recorded at the lower of cost or fair value less estimated
selling costs at the time of foreclosure. Depreciation is calculated using the
straight-line method over the estimated useful lives of the real estate.
Policy loans are carried at the unpaid principal balances.
Short-term investments include securities purchased with a maturity date of 90
days to less than one year. Short-term investments are valued at cost.
Other invested assets primarily include joint venture real estate partnerships,
which are valued on the equity basis, and venture capital limited partnerships,
which are carried at fair value.
Realized gains and losses are determined by specific identification and are
included in income on the trade date. Unrealized gains and losses, net of
appropriate taxes and amortization of deferred acquisition costs, are accounted
for as a separate component of equity.
The Company utilizes various financial instruments, such as interest rate swaps
and financial futures, to hedge against interest rate fluctuation. These
instruments are recorded using a valuation method consistent with the valuation
method of the assets hedged. Gains and losses on these instruments are deferred
and recognized in the Consolidated Income Statements over the remaining life of
the hedged security. Changes in the fair value of these instruments are
reported as unrealized gains or losses. Realized gains or losses are recognized
when the hedged securities are sold.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, money market instruments and
other debt securities with a maturity of 90 days or less when purchased.
OTHER ASSETS
Property and equipment and leasehold improvements are stated at cost, less
accumulated depreciation and amortization. Depreciation is calculated using the
straight-line method over the estimated useful lives of the related assets.
Amortization of leasehold improvements is calculated using the straight-line
method over the lesser of the term of the leases or the estimated useful life
of the improvements. Accumulated depreciation and amortization on property and
equipment and leasehold improvements was $44,329 and $40,671 at December 31,
1997 and 1996, respectively. Related depreciation and amortization expense was
$8,183, $7,510 and $6,914 for the years ended December 31, 1997, 1996 and 1995,
respectively.
Goodwill represents the excess of the cost of the businesses acquired over the
fair value of their net assets. These costs are amortized on a straight-line
basis over not more than 40 years and are included in other assets in the
Consolidated Balance Sheets. Unamortized goodwill amounted to $16,932 and
$17,740 at December 31, 1997 and 1996 respectively. Goodwill amortization was
$808, $909 and $907 for 1997, 1996 and 1995, respectively.
DEFERRED ACQUISITION COSTS
Costs of acquiring new insurance and annuity contracts, which vary with and are
primarily related to the production of new business, have been deferred to the
extent that such costs are deemed recoverable from future gross profits. Such
costs include commissions, certain costs of policy issuance and underwriting,
and certain variable agency expenses.
Deferred acquisition costs related to participating traditional and universal
life insurance policies and annuity products without mortality risk, that
include significant surrender charges, are being amortized over the lesser of
the estimated or actual contract life in proportion to estimated gross profits
arising principally from interest, mortality, expense margins and surrender
charges. The effects on amortization of deferred acquisition costs of revisions
to estimated gross profits are reflected in earnings in the period such
estimated gross profits are revised. Deferred acquisition costs are reviewed to
determine that the unamortized portion of such costs is recoverable from future
estimated gross profits. Certain costs and expenses reported in the
Consolidated Income Statements are net of amounts deferred.
B-19
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
SEPARATE ACCOUNTS
Separate Account assets and liabilities represent segregated funds administered
and invested by the Company primarily for the benefit of variable life
insurance policyholders and annuity and pension contractholders, including
certain of the Company's benefit plans. The value of the assets in the Separate
Accounts reflects the actual investment performance of the respective accounts
and is not guaranteed by the Company. The carrying value for Separate Account
assets and liabilities approximates the estimated fair value of the underlying
assets.
INSURANCE LIABILITIES AND REVENUE RECOGNITION
Participating Traditional Life and Life Contingent Annuity Products
Future policy benefits include reserves for participating traditional life
insurance and life contingent annuity products and are established in amounts
adequate to meet the estimated future obligations of the policies in force.
Liabilities for participating traditional life products are computed using the
net level premium method, using assumptions for investment yields, mortality,
morbidity and withdrawals, which are consistent with the dividend fund interest
rate and mortality rates used in calculating cash surrender values. Interest
rate assumptions used in the calculation of the liabilities for participating
traditional life products ranged from 2.25% to 4.5%. Premiums are recognized as
income when due. Death and surrender benefits are reported in expense as
incurred.
Liabilities for life contingent annuity products are computed by estimating
future benefits and expenses. Assumptions are based on Company experience
projected at the time of policy issue, with provision for adverse deviations.
Interest rate assumptions range from 2.25% to 13.25%. Premiums are recognized
as income as they are received. Death and surrender benefits are reported in
expense as incurred.
Universal Life Products and Other Annuity Products
Other policyholder funds represent liabilities for universal life and
investment-type annuity products. The liabilities for these products are based
on the contract account value which consists of deposits received from
customers and investment earnings on the account value, less administrative and
expense charges. The liability for universal life products is also reduced by
mortality charges. Liabilities for the non-life contingent annuity products are
computed by estimating future benefits and expenses. Assumptions are based on
Company experience projected at the time of policy issue. Interest rate
assumptions range from 2.0% to 11.25%.
Contract charges assessed against account value for universal life and
investment-type annuities are reflected as policy fee income in revenue.
Interest credited to account values and universal life benefit claims in excess
of fund values are reflected as benefit expense.
Policyholders' Dividends
The majority of the Company's insurance products have been issued on a
participating basis. As of December 31, 1997, participating insurance expressed
as a percentage of insurance in force is 91%, and as a percentage of premium
income is 80%. The amount of policyholders' dividends to be paid is approved
annually by the Board of Trustees. The aggregate amount of policyholders'
dividends is calculated based on actual interest, mortality, morbidity and
expense experience for the year and on management's judgment as to the
appropriate level of equity to be retained by the Company. The carrying value
of this liability approximates the earned amount and fair value at December 31,
1997.
BROKER/DEALER REVENUE RECOGNITION
Broker-dealer transactions in securities and listed options, including related
commission revenue and expense, are recorded on a settlement-date basis.
FEDERAL INCOME TAXES
The Company files a consolidated federal income tax return with its life and
non-life insurance subsidiaries. Federal income taxes are charged or credited
to operations based upon amounts estimated to be payable or recoverable as a
result of taxable operations for the current year. Deferred income tax assets
and liabilities are established to reflect the impact of temporary differences
between the amount of assets and liabilities recognized for financial reporting
purposes and such amounts recognized for tax purposes. These deferred tax
assets or liabilities are measured by using the enacted tax rates expected to
apply to taxable income in the period in which the deferred tax liabilities or
assets are expected to be settled or realized.
B-20
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
REINSURANCE
In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured and to recover a portion of benefits paid by ceding
reinsurance to other insurance enterprises or reinsurers under excess coverage
and coinsurance contracts. The Company has set its retention limit for
acceptance of risk on life insurance policies at various levels up to $1,250.
Insurance liabilities are reported before the effects of reinsurance.
Reinsurance receivables (including amounts related to insurance liabilities)
are reported as assets. Estimated reinsurance receivables are recognized in a
manner consistent with the liabilities related to the underlying reinsured
contracts.
RECLASSIFICATIONS
Certain 1996 and 1995 amounts have been reclassified to conform with 1997
presentation.
NOTE 2 - INVESTMENTS:
DEBT SECURITIES
The following tables summarize the Company's investment in debt securities,
including redeemable preferred stocks. All debt securities are classified as
available for sale and are carried at estimated fair value. Amortized cost is
net of cumulative writedowns for other than temporary declines in value of
$1,208 and $1,390 as of December 31, 1997 and 1996, respectively.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities and U.S.
Government and agency securities.. $ 107,539 $ 6,302 $ -- $ 113,841
States and political subdivisions.. 12,085 569 -- 12,654
Foreign governments................ 20,397 3,049 -- 23,446
Corporate securities............... 2,854,234 218,145 6,748 3,065,631
Mortgage and other asset-backed se-
curities.......................... 2,133,758 76,160 757 2,209,161
---------- -------- ------ ----------
Total bonds........................ 5,128,013 304,225 7,505 5,424,733
Redeemable preferred stocks........ 3,085 -- 166 2,919
---------- -------- ------ ----------
TOTAL............................. $5,131,098 $304,225 $7,671 $5,427,652
========== ======== ====== ==========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities and U.S.
Government and agency securities.. $ 42,928 $ 653 $ -- $ 43,581
States and political subdivisions.. 477 21 -- 498
Foreign governments................ 20,333 2,038 -- 22,371
Corporate securities............... 2,819,418 134,505 11,911 2,942,012
Mortgage and other asset-backed se-
curities.......................... 2,192,353 27,135 16,471 2,203,017
---------- -------- ------- ----------
Total bonds........................ 5,075,509 164,352 28,382 5,211,479
Redeemable preferred stocks........ 3,575 -- 266 3,309
---------- -------- ------- ----------
TOTAL............................. $5,079,084 $164,352 $28,648 $5,214,788
========== ======== ======= ==========
</TABLE>
B-21
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
The following tables summarize the amortized cost and estimated fair value of
debt securities, including redeemable preferred stocks, by contractual
maturity.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
---------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
---------- ----------
<S> <C> <C>
Maturity:
Within one year.......................................... $ 241,759 $ 240,871
After one year through five years........................ 606,900 620,792
After five years through ten years....................... 613,951 644,749
After ten years through twenty years..................... 428,492 495,854
After twenty years....................................... 1,103,153 1,213,305
Mortgage and other asset-backed securities............... 2,133,758 2,209,162
---------- ----------
Total bonds............................................. 5,128,013 5,424,733
Redeemable preferred stocks.............................. 3,085 2,919
---------- ----------
TOTAL.................................................. $5,131,098 $5,427,652
========== ==========
</TABLE>
Expected maturities may differ from contractual maturities because certain
borrowers have the right to call or prepay obligations with or without call or
prepayment penalties. Mortgage and other asset-backed securities are presented
separately in the maturity schedule due to the potential for prepayment. The
weighted average life of these securities is 7.8 years.
At December 31, 1997, the Company held $2,209,162 in mortgage and other asset-
backed securities. The structured securities portfolio consists of commercial
and residential mortgage pass-through holdings totaling $1,961,662 and
securities backed by credit card receivables, auto loans, home equity and
manufactured housing loans totaling $247,500. These securities follow a
structured principal repayment schedule and are of high credit quality.
Securities totaling $1,810,481 are rated AAA and include $27,854 of interest
only tranches that were retained from the securitization of the Company's
mortgage loan portfolio.
At December 31, 1997, the largest industry concentration of the Company's
portfolio was investments in the finance industry of $734,428, representing 14%
of the total debt portfolio.
Effective November 30, 1995, the Company adopted the implementation guidance
contained in the Financial Accounting Series Special Report, "A Guide to
Implementation of Statement 115 on Accounting for Certain Investments in Debt
and Equity Securities." As a result of adopting this guidance, the Company
reclassified all of its held-to-maturity securities to available-for-sale based
upon a reassessment of the appropriateness of the classifications of all
securities held at that time. The amortized cost and net unrealized gain of the
securities reclassified were $546,834 and $47,348 respectively, at November 30,
1995.
Proceeds during 1997, 1996 and 1995 from sales of available for sale securities
were $1,235,274, $927,905 and $1,201,541, respectively. Gross gains and gross
losses realized on those sales were $21,799 and $8,990, respectively during
1997, $15,932 and $6,899, respectively during 1996 and $62,216 and $10,201,
respectively during 1995. The change in net unrealized gains and losses on debt
securities classified as available for sale included as a separate component of
equity was $160,850, $(149,259) and $438,883 for 1997, 1996 and 1995,
respectively.
The Company's investment portfolio of debt securities is predominantly
comprised of investment grade securities. At December 31, 1997 and 1996, debt
securities with amortized cost totaling $198,943 and $184,719, respectively,
were less than investment grade. At December 31, 1997 and 1996, the Company did
not hold any securities which are either in default as to principal and/or
interest payments, are to be restructured pursuant to commenced negotiations or
are in situations where the borrowers went into bankruptcy subsequent to
acquisition (collectively, "problem debt securities"). The Company did not hold
any debt securities which were non-income producing for the preceding twelve
months as of December 31, 1997 and 1996.
EQUITY SECURITIES
During 1997, 1996 and 1995, the proceeds from sales of equity securities
amounted to $20,374, $25,413 and $153,985, respectively. The gross gains and
gross losses realized on those sales were $975 and $558, $1,369 and $247, and
$9,604 and $3,753, for 1997, 1996 and 1995, respectively.
B-22
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
MORTGAGE LOANS
On August 29, 1996, the Company securitized the majority of its mortgage loan
portfolio by transferring the loans to a trust which qualifies as a REMIC (Real
Estate Mortgage Investment Conduit) under the Internal Revenue Code. Prior to
transferring the loans with a principal value of $781,564 and a book value of
$780,942, the loans were written down to a fair market value of $755,559, and
the related reserve of $25,285 was released. The trust issued sixteen classes
of Commercial Mortgage Pass-Through Certificates with a total par value of
$781,564. The certificates evidence the entire beneficial ownership interest in
the trust. The cash flow from the mortgages will be used to repay the
certificates over an average life of 4.28 years. The actual date on which the
principal amount of the notes may be paid in full could be substantially
earlier or later based on performance of the mortgages. The cash flows of the
assets of the trust will be the sole source of payments on the notes. The
Company has not guaranteed these certificates or the mortgage loans held by the
trust. As a result of this transaction, the Company recognized a loss of $98
upon the transfer of the mortgages to the trust, representing the difference
between the fair market value of the certificates and the book value of the
mortgage loans transferred to the trust.
The Company retained the highest quality classes of certificates with a par
value of $715,126 and a fair market value of $734,326 at the time of the
securitization. As of December 31, 1997, the par value and fair value of these
securities was $570,130 and $597,248, respectively. The Company sold the lowest
rated classes of certificates with a par value of $66,438 and a fair market
value of $24,838.
The mortgage loans which were not included in the securitization and were
retained by the Company had a book value of $171,555 with a related reserve of
$21,907 and an estimated fair value of $153,405 on the date of the
securitization. Loans which the Company intended to dispose of within a period
of 6 to 24 months were written down to their estimated net realizable value.
These loans had a book value of $99,817 and an estimated net realizable value
of $81,310 at the time of the securitization. The writedown of $18,507 was
fully offset by a release in mortgage loss reserve. As of December 31, 1997,
the Company held $12,368 of these loans. The Company intended to hold mortgage
loans with a book value of $71,738 on the date of the securitization, through
their remaining terms. As of December 31, 1997, the Company continued to hold
$44,428 of these mortgages. The Company discontinued the origination of
commercial mortgage loans in 1996.
The following tables summarize the carrying value of mortgage loans, by
property type and geographic concentration, at December 31.
<TABLE>
<CAPTION>
1997 1996
------- --------
<S> <C> <C>
Property Type
Office buildings............................................. $20,012 $ 51,510
Retail....................................................... 7,862 39,090
Dwellings.................................................... 25,237 33,540
Other........................................................ 3,685 4,174
Valuation allowance.......................................... (3,800) (3,400)
------- --------
TOTAL....................................................... $52,996 $124,914
======= ========
</TABLE>
<TABLE>
<CAPTION>
1997 1996
------- --------
<S> <C> <C>
Geographic Concentration
Northeast.................................................... $23,313 $ 49,438
Midwest...................................................... 5,922 22,920
South........................................................ 12,502 20,717
West......................................................... 15,059 35,239
Valuation allowance.......................................... (3,800) (3,400)
------- --------
TOTAL....................................................... $52,996 $124,914
======= ========
</TABLE>
B-23
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
The following table presents changes in the mortgage loan valuation allowance
for the years presented:
<TABLE>
<CAPTION>
1997 1996
------ -------
<S> <C> <C>
Balance at January 1............................................ $3,400 $47,192
Provision....................................................... 400 --
Charge offs..................................................... -- (43,792)
------ -------
BALANCE AT DECEMBER 31......................................... $3,800 $ 3,400
====== =======
</TABLE>
As of December 31, 1997 and 1996, the Company's mortgage loan portfolio
contained $0 and $15,726, respectively, of loans delinquent over 60 days or in
foreclosure. As of December 31, 1997 and 1996, there were no non-income
producing mortgage loans for the preceding twelve months.
During 1997, the Company did not restructure the terms of any outstanding
mortgages. During 1996, the Company restructured the terms of outstanding
mortgages with a carrying value of $4,000. As of December 31, 1997 and 1996,
the mortgage loan portfolio included $2,834 and $7,110, respectively, of
restructured mortgage loans. Restructured mortgage loans include commercial
loans for which the basic terms, such as interest rate, maturity date,
collateral or guaranty have been changed as a result of actual or anticipated
delinquency. Restructures do not include mortgages refinanced upon maturity at
or above current market rates. Gross interest income on restructured mortgage
loans on real estate that would have been recorded in accordance with the
original terms of such loans amounted to $298 and $893 in 1997 and 1996,
respectively. Gross interest income from these loans included in net investment
income totaled $262 and $674 in 1997 and 1996, respectively.
At December 31, 1997, the recorded investment in loans that are considered to
be impaired was $12,368 that, as a result of write-downs, do not have a
valuation allowance. The average recorded investment in impaired loans during
the year ended December 31, 1997 was approximately $38,096. During 1997, $1,454
was received on these impaired loans which was applied to the outstanding
principal balance or will be applied to principal at the date of foreclosure.
REAL ESTATE
The following table summarizes the carrying value of the Company's real estate
holdings at December 31.
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Investment.................................................... $19,999 $33,386
Properties held for sale...................................... 7,828 73,260
Less: valuation allowance (5,469) (8,841)
------- -------
TOTAL........................................................ $22,358 $97,805
======= =======
</TABLE>
At December 31, 1997 and 1996, accumulated depreciation on real estate amounted
to $6,498 and $38,781, respectively. Depreciation expense on real estate
totaled $5,709, $6,488 and $10,091 for the years ended December 31, 1997, 1996
and 1995, respectively. During 1997, the Company sold its largest real estate
investment for $65,007 cash to an unrelated buyer. At the date of the sale,
this property had a carrying value of $61,914, net of related reserves,
resulting in a gain of $3,093. During 1996, the Company wrote down the
statement value of this property by $16,000 to its estimated fair value, based
on changes in future valuation assumptions.
OTHER
Investments on deposit with regulatory authorities as required by law were
$7,106 and $7,085 at December 31, 1997 and 1996, respectively.
As of December 31, 1997 and 1996, the Company's investments included $597,248
and $725,806, respectively, of the tranches retained from the 1996
securitization of the Company's commercial mortgage loan portfolio. These
investments represented 59% and 86% of equity at December 31, 1997 and 1996,
respectively.
B-24
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
NOTE 3 - INVESTMENT INCOME AND CAPITAL GAINS:
The following table summarizes the sources of investment income, excluding
investment gains/(losses), for the year ended December 31.
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Debt securities..................................... $390,852 $356,669 $331,644
Equity securities................................... 1,371 1,313 2,602
Mortgages........................................... 12,098 62,454 99,109
Real estate......................................... 17,519 24,143 31,661
Policy loans........................................ 40,921 40,580 41,762
Short-term investments.............................. 2,426 6,052 3,934
Other invested assets............................... 21,268 14,665 18,016
Cash and cash equivalents........................... 2 44 34
-------- -------- --------
Gross investment income............................. 486,457 505,920 528,762
Less: Investment expenses.......................... 26,251 30,605 38,989
-------- -------- --------
Investment income, net.............................. $460,206 $475,315 $489,773
======== ======== ========
</TABLE>
The following table summarizes net realized capital gains/(losses) on
investments for the year ended December 31. Net realized capital gains/(losses)
include decreases in valuation allowances of $3,154, $44,164 and $2,463 in
1997, 1996 and 1995, respectively.
<TABLE>
<CAPTION>
1997 1996 1995
------- -------- -------
<S> <C> <C> <C>
Debt securities..................................... $12,991 $ 10,412 $51,873
Equity securities................................... 417 1,122 6,652
Mortgage loans...................................... 280 (2,821) (2,799)
Real estate......................................... (684) (22,356) (41,617)
Other............................................... (811) 3,565 3
Amortization of deferred acquisition costs.......... (2,538) -- --
------- -------- -------
Realized gains/(losses)............................. $ 9,655 $(10,078) $14,112
======= ======== =======
</TABLE>
The following table summarizes the change in unrealized gains and losses for
investments carried at fair value for the year ended December 31.
<TABLE>
<CAPTION>
1997 1996 1995
-------- --------- --------
<S> <C> <C> <C>
Unrealized Gains/(Losses):
Debt securities.................................. $160,850 $(149,259) $438,883
Equity securities................................ 408 (582) 2,340
Other............................................ (14,581) (1,545) 11,190
-------- --------- --------
146,677 (151,386) 452,413
-------- --------- --------
Less:
Deferred policy acquisition costs................ (45,043) 38,324 (116,992)
Deferred income taxes............................ (35,355) 39,851 (119,268)
-------- --------- --------
Net change in unrealized gains/(losses).......... $ 66,279 $ (73,211) $216,153
======== ========= ========
</TABLE>
B-25
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
NOTE 4 - FAIR VALUE INFORMATION:
The following table summarizes the carrying value and estimated fair value of
the Company's financial instruments as of December 31, 1997 and 1996.
<TABLE>
<CAPTION>
1997 1996
------------------------- -------------------------
CARRYING VALUE FAIR VALUE CARRYING VALUE FAIR VALUE
-------------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
FINANCIAL ASSETS:
Debt securities
Available for sale........ $5,427,652 $5,427,652 $5,214,788 $5,214,788
Equity securities
Common stock.............. 3,051 3,051 660 660
Non-redeemable preferred
stocks................... 9,451 9,451 16,085 16,085
Mortgage loans............. 52,996 57,224 124,914 131,577
Policy loans............... 642,989 606,681 656,073 634,291
Cash & cash equivalents.... 37,064 37,064 37,314 37,314
Short-term investments..... 43,470 43,470 37,515 37,515
Separate account assets.... 1,869,094 1,869,094 1,368,384 1,368,384
Other invested assets...... 88,928 88,928 94,369 94,369
FINANCIAL LIABILITIES:
Investment-type contracts
Individual annuities...... $1,225,192 $1,260,639 $1,281,965 $1,317,257
Guaranteed investment con-
tracts................... 59,809 61,456 111,224 112,247
Other group annuities..... 147,061 148,257 161,889 163,524
Other policyholder funds.. 1,541,372 1,541,372 1,498,334 1,498,334
---------- ---------- ---------- ----------
Total policyholder funds. 2,973,434 3,011,724 3,053,412 3,091,362
Policyholders' dividends
payable................... 35,273 35,273 35,395 35,395
Separate account liabili-
ties...................... 1,869,094 1,869,094 1,368,384 1,368,384
</TABLE>
The estimated fair values for the Company's investments in debt and equity
securities are based on quoted market prices, where available. In situations
where market prices are not readily available, primarily private placements,
fair values are estimated using a formula pricing method based on fair values
of securities with similar characteristics. The estimated fair value of
currently performing mortgage loans is estimated by discounting the cash flows
associated with the investment, using an interest rate currently offered for
similar loans to borrowers with similar credit ratings. Loans with similar
credit quality, characteristics and time to maturity are aggregated for
purposes of discounted cash flow analysis. Assumptions regarding credit risk,
cash flows and discount rates are determined using the available market and
borrower-specific information. The estimated fair value for non-performing
loans is based on the estimated fair value of the underlying real estate, which
is based on recent appraisals or other estimation techniques. The estimated
fair value of policy loans is calculated by discounting estimated future cash
flows using interest rates currently being offered for similar loans. Loans
with similar characteristics are aggregated for purposes of the calculations.
The carrying values of cash, cash equivalents, short-term investments and
separate account assets approximate their fair values. The estimated fair value
for the venture capital limited partnerships are based on values determined by
the partnerships' managing general partners. The resulting estimated fair
values may not be indicative of the value negotiated in an actual sale.
The fair values of the Company's liabilities for individual annuities,
guaranteed investment contracts and certain group annuities are estimated by
discounting the cash flows associated with the contracts, using an interest
rate currently offered for similar contracts with maturities similar to those
remaining for the contracts being valued. The statement value for certain of
the other group annuities approximates their fair value due to the nature of
the contracts. The statement values of other policyholder funds, policyholders'
dividends payable and separate account liabilities approximate their fair
values.
Currently, disclosure of estimated fair values is not required for all the
Company's assets and liabilities. Therefore, presentation of the estimated fair
value of a significant portion of assets without a corresponding valuation of
liabilities associated with
B-26
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
insurance contracts can be misinterpreted. The estimated fair values of
liabilities under all of the Company's contracts are considered in the overall
management of interest rate risk. The continuing management of the relationship
between the maturities of the Company's investments and the amounts due under
insurance contracts reduces the Company's exposure to changing interest rates.
The Company is exposed to interest rate risk on its interest sensitive
products. The Company's investment strategy is designed to minimize interest
risk by managing the durations and anticipated cash flows of the Company's
assets and liabilities.
To minimize exposure and reduce risk from exchange and interest rate
fluctuations in the normal course of business, the Company enters into interest
rate swap programs for purposes other than trading. As of December 31, 1997 and
1996, the Company had interest rate swaps with aggregate notional amounts equal
to $105,000 and $115,000, respectively, with average unexpired terms of 19 and
29 months, respectively. Interest rate swap agreements involve the exchange of
fixed and floating rate interest payment obligations without an exchange of the
underlying notional principal amounts. During the term of the swap, the net
settlement amount is accrued as an adjustment to interest income. Gross
unrealized gains and losses, which represent fair value based on dealer-quoted
prices, were $5,164 and $0, respectively at December 31, 1997 and $7,605 and
$0, respectively, at December 31, 1996. These fair values represent the amount
at risk if the counterparties default and the amount that the Company would
receive to terminate the contracts, taking into account current interest rates
and, where appropriate, the current credit worthiness of the counterparties.
In the normal course of business, the Company loans securities under
arrangements in which collateral is obtained in amounts greater than the
current market value of loaned securities. This collateral is held in the form
of cash, cash equivalents or securities issued or guaranteed by the United
States Government. The Company is at risk to the extent the value of loaned
securities exceeds the value of the collateral obtained. The Company controls
this risk by requiring collateral of the highest quality and requiring that
additional collateral be deposited when the market value of loaned securities
increases in relation to the collateral held or the value of the collateral
held decreases in relation to the value of the loaned securities. The Company
had loaned securities outstanding of $155,356 and $0 as of December 31, 1997
and 1996, respectively.
NOTE 5 - INCOME TAXES:
The Company follows the asset and liability method of accounting for income
taxes whereby current and deferred tax assets and liabilities are recognized
utilizing currently enacted tax laws and rates. Deferred taxes are adjusted to
reflect tax rates at which future tax liabilities or assets are expected to be
settled or realized.
Deferred income taxes reflect the impact for financial statement reporting
purposes of temporary differences between the financial statement carrying
amounts and tax bases of assets and liabilities. The significant temporary
differences that give rise to the deferred tax assets and liabilities at
December 31 relate to the following:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
DEFERRED TAX ASSETS
Future policy benefits...................................... $ 88,172 $ 83,327
Dividend award.............................................. 11,970 12,005
Allowances for investment losses............................ 3,667 8,411
Employee benefit liabilities................................ 27,979 27,113
Other....................................................... 23,467 27,530
-------- --------
Total deferred tax asset................................... 155,255 158,386
-------- --------
DEFERRED TAX LIABILITIES
Deferred acquisition costs.................................. 127,495 124,660
Real estate................................................. (1,261) 299
Unrealized gains............................................ 81,553 48,233
Other....................................................... 22,564 20,977
-------- --------
Total deferred tax liability............................... 230,351 194,169
-------- --------
Net deferred tax liability.................................. $ 75,096 $ 35,783
======== ========
</TABLE>
B-27
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
The federal income taxes attributable to consolidated net income are different
from the amounts determined by multiplying consolidated net income before
federal income taxes by the expected federal income tax rate. The difference
between the amount of tax at the U.S. federal income tax rate of 35% and the
consolidated tax provision is summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- --------
<S> <C> <C> <C>
Tax expense at 35%................................ $44,442 $26,930 $ 27,096
Increase/(decrease) in income taxes resulting
from:
Differential earnings amount..................... 6,942 500 3,878
Resolution of tax issues......................... -- -- (57,000)
Other............................................ 2,528 595 4,587
------- ------- --------
Federal income tax expense/(benefit).............. $53,912 $28,025 $(21,439)
======= ======= ========
As a mutual life insurance company, the Company is subject to Internal Revenue
Code provisions which require mutual, but not stock, life insurance companies
to include the Differential Earnings Amount (DEA) in each year's taxable
income. This amount is computed by multiplying the Company's average taxable
equity base by a prescribed rate, which is intended to reflect the difference
between stock and mutual companies' earnings rates.
In 1995, the Company settled various tax issues with the IRS, including an
issue surrounding the tax treatment of certain traditional life insurance
policy updates. As a result of these settlements, the 1995 federal income tax
expense was decreased in the Income Statement by approximately $57,000, which
included $22,300 of interest, net of tax.
The Internal Revenue Service has examined the Company's income tax returns
through the year 1990 and is currently examining years 1991 through 1994.
Management believes that an adequate provision has been made for potential
assessments.
NOTE 6 - BENEFIT PLANS:
The Company maintains qualified and non-qualified defined benefit pension plans
covering substantially all of its employees. The plans are non-contributory and
provide pension benefits based on years of service and average annual
compensation (measured over 60 consecutive months of highest earnings in a 120-
month period). Contributions are determined by using the Projected Unit Credit
Method. The total pension expense related to these plans amounted to $5,917,
$5,963 and $5,054 in 1997, 1996 and 1995, respectively.
The Company's funding policy for its qualified defined benefit plans is to
contribute an amount between the minimum required contribution and the maximum
deductible amount in accordance with the Internal Revenue Code. The following
table summarizes the components of net periodic pension cost for the Company's
qualified defined benefit plans:
<CAPTION>
1997 1996 1995
------- ------- --------
<S> <C> <C> <C>
Service cost...................................... $ 2,161 $ 2,506 $ 1,827
Interest cost on projected benefit obligation..... 4,050 3,540 2,909
Actual return on assets........................... (4,925) (3,095) (5,515)
Net amortization and deferrals.................... 2,367 919 3,736
------- ------- --------
Net periodic pension cost......................... $ 3,653 $ 3,870 $ 2,957
======= ======= ========
</TABLE>
B-28
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
The following table summarizes the funded status of the Company's qualified
defined benefit plans:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Actuarial present value of benefit obligation:
Vested.......................................... $ 44,964 $ 32,572 $ 29,744
Non-vested...................................... 924 935 763
-------- -------- --------
Accumulated benefit obligation................... 45,888 33,507 30,507
Provision for future salary increases............ 16,769 15,162 17,147
-------- -------- --------
Projected benefit obligation..................... 62,657 48,669 47,654
Plan assets at fair value........................ (42,783) (37,938) (34,067)
-------- -------- --------
Projected benefit obligation in excess of plan
assets.......................................... 19,874 10,731 13,587
Unrecognized prior service cost.................. (178) (203) (228)
Unrecognized net (gain) loss from past experi-
ence............................................ (9,605) (2,430) (6,859)
Unrecognized net asset obligation at transition.. (1,288) (1,609) (1,931)
-------- -------- --------
Accrued pension cost at December 31.............. $ 8,803 $ 6,489 $ 4,569
======== ======== ========
The assumptions used to measure the actuarial present value of the projected
benefit obligation were:
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Discount rate.................................... 7.00% 7.50% 7.00%
Expected long-term rate of return on plan assets. 8.00% 8.00% 8.00%
Salary scale..................................... 5.50% 5.50% 5.50%
</TABLE>
The qualified defined benefit pension plan's assets are held in trust and
administered under a participatory group annuity contract issued by the Company
with assets invested in various separate accounts of the Company. A non-
participatory annuity contract issued by the Company funds benefits accrued
prior to 1986.
The Company maintains four defined contribution pension plans for substantially
all of its employees and full-time agents. For two plans, designated
contributions of up to 6% or 8% of annual compensation are eligible to be
matched by the Company. Contributions for the third plan are based on tiered
earnings of full time agents. The last plan, which covers employees of a
subsidiary, are determined on a discretionary basis by the Board of Directors
of that subsidiary. At December 31, 1997, 1996 and 1995, the expense recognized
for these plans was $8,345, $6,092 and $5,083, respectively. The estimated fair
value of the defined contribution plans' assets were $229,378, $201,679 and
$176,832, respectively.
The Company also provides certain medical, life insurance and other welfare
benefits (postretirement benefits) for retired employees and full-time agents.
Substantially all employees and full-time agents become eligible for these
benefits if they reach retirement age while working for the Company and have at
least 10 years of service. Employees retiring after January 1, 1993 receive a
defined dollar benefit under the medical plan. The Company continues to fund
postretirement benefit costs on a pay-as-you-go basis.
B-29
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
The following table sets forth the postretirement benefits plan's status,
reconciled to amounts recognized in the Company's Consolidated Balance Sheet
and Income Statements at December 31.
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Actuarial present value of accumulated
postretirement benefit obligation:
Retirees.......................................... $22,638 $21,301 $32,473
Fully eligible active plan participants........... 2,707 2,547 2,826
Other active plan participants.................... 6,068 5,710 5,672
------- ------- -------
Total............................................ 31,413 29,558 40,971
Plan assets at fair value.......................... -- -- --
------- ------- -------
Accumulated postretirement benefits obligation in
excess of plan assets............................. 31,413 29,558 40,971
Unrecognized prior service cost.................... -- -- --
Unrecognized net gain from past experience......... 13,730 16,261 5,129
------- ------- -------
Accrued postretirement benefits cost............... $45,143 $45,819 $46,100
======= ======= =======
Net periodic postretirement benefits cost includes
the following components:
Service cost...................................... 393 434 355
Interest cost on accumulated postretirement bene-
fits obligation.................................. 2,182 2,206 2,910
Actual return on assets........................... -- -- --
Net amortization and deferral..................... (1,060) (815) (573)
------- ------- -------
Net periodic postretirement benefits cost.......... $ 1,515 $ 1,825 $ 2,692
======= ======= =======
</TABLE>
At December 31, 1997, the assumed health care cost trend rate used in measuring
the accumulated postretirement benefit obligation was 8.5% in 1998, grading to
5.0% in the year 2004. The weighted-average discount rate used in determining
the accumulated postretirement benefit obligation was 7.00% at December 31,
1997. At December 31, 1996, the assumed health care cost trend rate used in
measuring the accumulated postretirement benefit obligation was 8.5% in 1997,
grading to 5.0% in the year 2004. The weighted-average discount rate used in
determining the accumulated postretirement benefit obligation was 7.5% at
December 31, 1996. At December 31, 1995, the assumed health care cost trend
rate used in measuring the accumulated postretirement benefit obligation was
9.0% in 1996, grading to 5.0% in the year 2004. The weighted-average discount
rate used in determining the accumulated postretirement benefit obligation was
7.0% at December 31, 1995.
If the health care cost trend rate was increased by one percentage point for
each future year, the accumulated postretirement benefit obligation as of
December 31, 1997 would increase by $1,948. The effect of this change on the
sum of the service cost and interest cost, before taxes, would be an increase
of $136.
B-30
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
NOTE 7 - REINSURANCE:
The Company has assumed and ceded reinsurance on certain life and annuity
contracts under various agreements. Reinsurance permits recovery of a portion
of losses from reinsurers, although the Company remains primarily liable as the
direct insurer on all risks reinsured. The Company evaluates the financial
strength of potential reinsurers and continually monitors the financial
condition of present reinsurers to ensure that amounts due from reinsurers are
collectable. The table below highlights the amounts shown in the accompanying
financial statements.
<TABLE>
<CAPTION>
ASSUMED CEDED TO
GROSS FROM OTHER OTHER NET
AMOUNT COMPANIES COMPANIES AMOUNT
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1997:
Life Insurance in Force.......... $31,027,764 $5,217,856 $4,620,599 $31,625,021
Premiums......................... 190,754 11,189 6,723 195,220
Benefits......................... 330,432 14,293 26,916 317,809
Reserves......................... 5,741,456 1,993 59,322 5,684,127
DECEMBER 31, 1996:
Life Insurance in Force.......... $30,057,996 $5,420,951 $3,186,567 $32,292,380
Premiums......................... 196,897 12,745 9,821 199,821
Benefits......................... 293,270 16,466 16,808 292,928
Reserves......................... 5,833,970 2,063 56,632 5,779,401
</TABLE>
During 1995, the Company had gross premiums of $184,362, assumed premiums of
$13,453 and ceded premiums of $9,908 and gross benefits of $303,911, assumed
benefits of $13,265 and ceded benefits of $14,700.
Reinsurance receivables with a carrying value of $50,617 and $50,522 were
associated with a single reinsurer at December 31, 1997 and 1996, respectively.
During 1995, the Company recaptured the portion of its disability income
business that was previously reinsured under a quota share and excess
reinsurance agreement with the Monarch Life Insurance Company ("Monarch"). As a
result of this recapture, approximately $21,200 of cash and policyholder
reserves were transferred to the Company from Monarch.
NOTE 8 - COMMITMENTS AND CONTINGENCIES:
The Company and its subsidiaries are respondents in a number of proceedings,
some of which involve extra-contractual damage in addition to other damages. In
addition, insurance companies are subject to assessments, up to statutory
limits, by state guaranty funds for losses of policyholders of insolvent
insurance companies. In the opinion of management, the outcome of the
proceedings and assessments are not likely to have a material adverse effect on
the financial position of the Company.
The Company, in the ordinary course of business, extends commitments relating
to its investment activities. As of December 31, 1997, the Company had
outstanding commitments totaling $38,326 relating to these investment
activities. The fair value of these commitments approximates the face amount.
NOTE 9 - STATUTORY INFORMATION:
State insurance regulatory authorities prescribe or permit statutory accounting
practices for calculating net income and capital and surplus which differ in
certain respects from generally accepted accounting principles (GAAP). The
significant differences relate to deferred acquisition costs, which are charged
to expenses as incurred; federal income taxes, which reflect amounts that are
currently taxable; and benefit reserves, which are determined using prescribed
mortality, morbidity and interest assumptions, and which, when considered in
light of the assets supporting these reserves, adequately provide for
obligations under policies and contracts. In addition, the recording of
impairments in the value of investments generally lags recognition under GAAP.
The combined insurance companies' statutory capital and surplus at December 31,
1997 and 1996 was $435,861 and $379,774, respectively. The combined insurance
companies' net income, determined in accordance with statutory accounting
practices, for the years ended December 31, 1997, 1996 and 1995, was $63,615,
$25,905 and $729, respectively.
B-31
<PAGE>
- - --------------------------------------------------------------------------------
THE PENN MUTUAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(IN THOUSANDS OF DOLLARS)
NOTE 10 - BUSINESS SEGMENT INFORMATION:
The operations of the Company are conducted principally through two business
units: Insurance and Broker-Dealer. The insurance operations offer a diverse
portfolio of life insurance products and both individual and group annuity
products. The Broker-Dealer operations provide broad financial and investment
services.
Assets are held directly by each business unit in amounts necessary to both
fund liabilities and to provide a margin to cover business risks.
The table below summarizes the information concerning the business units:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
REVENUES
Insurance...................................... $ 778,179 $ 765,210 $ 803,276
Broker-Dealer.................................. 291,156 241,809 201,037
---------- ---------- ----------
TOTAL......................................... $1,069,335 $1,007,019 $1,004,313
========== ========== ==========
PRETAX INCOME
Insurance...................................... $ 84,722 $ 43,765 $ 53,337
Broker-Dealer.................................. 42,255 33,178 24,082
---------- ---------- ----------
TOTAL......................................... $ 126,977 $ 76,943 $ 77,419
========== ========== ==========
<CAPTION>
DECEMBER 31,
---------------------
1997 1996
---------- ----------
<S> <C> <C>
IDENTIFIABLE ASSETS
Insurance...................................... $8,784,570 $8,259,309
Broker-Dealer.................................. 582,308 497,739
---------- ----------
TOTAL......................................... $9,366,878 $8,757,048
========== ==========
</TABLE>
B-32
<PAGE>
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) Financial Statements included in Part B:
Consolidated Financial Statements of The Penn Mutual Life
Insurance Company:
Report of Independent Accountants
Statements of Financial Condition at December 31, 1997 and 1996
Statements of Operations and Surplus for the years
ended December 31, 1997, 1996 and 1995
Statements of Cash Flows for the years ended December 31, 1997
1996 and 1995
Notes to Financial Statements
(b) Exhibits
1. (a) Resolutions of Executive Committee of Board of Trustees
of The Penn Mutual Life Insurance Company authorizing the
establishment of the Registrant. Incorporated herein by
reference to Exhibit 1(a) to the Registration Statement
on Form N-4 of Penn Mutual Variable Annuity Account III
(Accession No. 0001036050-98-001504) filed on September
3, 1998.
2. Not applicable
3. (a) Sales Support Agreement between The Penn Mutual Life
Insurance Company and Horner, Townsend & Kent, Inc., a
wholly-owned subsidiary of Penn Mutual. Incorporated
herein by reference to Exhibit 3(a) to Pre-effective
Amendment No. 1 to the Registration Statement on Form N-4
of the Penn Mutual Variable Annuity Account III
(File No. 333-62811) filed on November 30, 1998.
(b) Form of Distribution Agreement between The Penn Mutual
Life Insurance Company and Horner, Townsend & Kent, Inc.,
a wholly-owned subsidiary of Penn Mutual. Incorporated
herein by reference to Exhibit 3(b) to Pre-effective
Amendment No. 1 to the Registration Statement on Form N-4
of the Penn Mutual Variable Annuity Account III
(File No. 333-62811) filed on November 30, 1998.
(c) Form of Agent's Agreement relating to broker-dealer
supervision. Incorporated herein by reference to Exhibit
3(c) to the Registration Statement on Form N-4 of Penn
Mutual Variable Annuity Account III (Accession No.
0001036050-98-001504 filed on September 3, 1998.
C-1
<PAGE>
(d) Form of Broker-Dealer Selling Agreement (for broker-
dealers licensed to sell variable annuity contracts
and/or variable life insurance contracts under state
insurance laws). Incorporated herein by reference to
Exhibit 3(d) to the Pre-effective Amendment to the
Registration Statement on Form N-4 of Penn Mutual
Variable Annuity Account III (File No. 333-62811)
filed on November 30, 1998.
(e) Form of Broker-Dealer Selling Agreement (for broker-
dealers with affiliated corporations licensed to sell
variable annuity contracts and/or variable life insurance
contracts under state insurance laws). Incorporated
herein by reference to Exhibit 3(e) to the Registration
Statement on Form N-4 of Penn Mutual Variable Annuity
Account III (Accession No. 0001036050-98-001504) filed on
September 3, 1998 .
(f) Form of Addendum (Form 98-1) to Broker-Dealer Selling
Agreement. Incorporated herein by reference to Exhibit
3(f) to the Registration Statement on Form N-4 of Penn
Mutual Variable Annuity Account III (Accession No.
0001036050-98-001504) filed on September 3, 1998.
4. (a) Individual Variable and Fixed Annuity Contract (Form VAB-
98). Filed herewith.
(b) Rider -- Guaranteed Minimum Death Benefit -- Rising Floor
(GDBRF-98). Filed herewith.
(c) Rider -- Guaranteed Minimum Death Benefit -- Step Up
(GDBSU-98). Filed herewith.
(d) Endorsement No. 1534-96 to Individual Variable and Fixed
Annuity Contract. Incorporated herein by reference to
Exhibit 4(d) to the Registration Statement on Form N-4 of
Penn Mutual Variable Annuity Account III (Accession No.
0001036050-98-001504) filed on September 3, 1998.
C-2
<PAGE>
(e) Endorsement No. 1542-97 to Individual Variable and
Fixed Annuity Contract. Filed herewith. Incorporated
herein by reference to Exhibit 4(e) to the Registration
Statement on Form N-4 of Penn Mutual Variable Annuity
Account III (Accession No. 0001036050-98-001504) filed
on September 3, 1998.
(f) Endorsement No. 1536-90 to Individual Variable and
Fixed Annuity Contract. Incorporated herein by
reference to Exhibit 4(f) to the Registration Statement
on Form N-4 of Penn Mutual Variable Annuity Account III
(Accession No. 0001036050-98-001504) filed on September
3, 1998.
5. Application (Form 5798) for Individual Variable Annuity
Contract. Incorporated herein by reference to Exhibit 5
to the Registration Statement on Form N-4 of Penn
Mutual Variable Annuity Account III (Accession No.
0001036050-98-001508) filed on September 3, 1998.
6. (a) Charter of The Penn Mutual Life Insurance Company (May
1983). Incorporated herein by reference to Exhibit 6(a)
to the Registration Statement on Form N-4 of Penn
Mutual Variable Annuity Account III (Accession No.
0001036050-98-001504) filed on September 3, 1998.
(b) By-laws of The Penn Mutual Life Insurance Company, as
amended through February 21, 1997. Incorporated herein
by reference to Exhibit 6(b) to the Registration
Statement on Form N-4 of Penn Mutual Variable Annuity
Account III (Accession No. 0001036050-98-001504) filed
on September 3, 1998.
7. None
8. (a) Fund Participation Agreement among The Penn Mutual Life
Insurance Company, TCI Portfolios, Inc.(renamed
American Century Variable Portfolios, Inc.) and
Investors Research Corporation (renamed American
Century Investment Management, Inc.). Incorporated
herein by reference to Exhibit 8(a) to the Registration
Statement on Form N-4 of Penn Mutual Variable Annuity
Account III (Accession No. 0001036050-98-001504) filed
on September 3, 1998.
(b)(1) Form of Sales Agreement between The Penn Mutual Life
Insurance Company and Neuberger & Berman Advisers
Management Trust. Incorporated herein by reference to
Exhibit 8(b)(1) to the Registration Statement on Form
N-4 of Penn Mutual Variable Annuity Account III
(Accession No. 0001036050-98-001504) filed September 3,
1998.
C-3
<PAGE>
(b)(2) Form of Assignment and Modification Agreement between
Neuberger & Berman Management Incorporated, Neuberger &
Berman Advisers Management Trust, Advisers Managers
Trust and The Penn Mutual Life Insurance Company.
Incorporated herein by reference to Exhibit 8(b)(2) to
the Registration Statement on Form N-4 of Penn Mutual
Variable Annuity Account III (Accession No. 0001036050-
98-001504) filed on September 3, 1998.
(b)(3) Amendment to Fund Participation Agreement between The
Penn Mutual Life Insurance Company and Neuberger &
Berman Advisers Management Trust. Incorporated herein
by reference to Exhibit 8(b)(3) to Post-Effective
Amendment No.5 to the Registration Statement of Penn
Mutual Variable Life Account I (File No. 33-54662)
filed on April 30, 1997 (CIK No. 0000950109 & Accession
No. 0000950109-97-003328).
(c) Form of Sales Agreement between The Penn Mutual Life
Insurance Company and Penn Series Funds, Inc.
Incorporated herein by reference to Exhibit 8(c) to the
Registration Statement on Form N-4 of Penn Mutual
Variable Annuity Account III (Accession No. 0001036050-
98-001504) filed on September 3, 1998.
(d) Form of Participation Agreement between The Penn Mutual
Life Insurance Company, Variable Insurance Products
Fund and Fidelity Distributors Corporation.
Incorporated herein by reference to Exhibit 8(d) to the
Registration Statement on Form N-4 of Penn Mutual
Variable Annuity Account III (Accession No. 0001036050-
98-001504) filed on September 3, 1998.
(e) Form of Participation Agreement between The Penn Mutual
Life Insurance Company, Variable Insurance Products
Fund II and Fidelity Distributors Corporation.
Incorporated herein by reference to Exhibit 8(e) to the
Registration Statement on Form N-1A of Penn Mutual
Variable Annuity Account III (Accession No. 0001036050-
98-001504) filed on September 3, 1998.
(f) Participation Agreement between The Penn Mutual Life
Insurance Company, Morgan Stanley Universal Funds,
Inc., Morgan Stanley Asset Management Inc. and Miller
Andersen & Sherrerd LLP. Incorporated herein by
reference to Exhibit 8(f) to Post-Effective Amendment
No. 2 to the Registration Statement of PIA Variable
Annuity Account I (33-83120) filed on April 30, 1998
(CIK No. 0000928880 & Accession No. 0000950109-97-
003327).
C-4
<PAGE>
9. Opinion of Counsel. Filed herewith.
10. (a) Consent of Ernst & Young. Filed herewith
(b) Consent of PricewaterhouseCoopers LLP. Filed herewith.
(c) Consent of Morgan, Lewis & Bockius LLP. Filed herewith.
11. Not applicable.
12. Not applicable.
13. Schedule of Computation of Performance Quotations set
forth in this Registration Statement. Filed herewith.
14. (a) Powers of Attorney of Trustees (except Ms. Bloch and
Messrs. Notebaert and Rock). Incorporated herein by
reference to Exhibit 14 to Post-Effective Amendment No.
22 to the Registration Statement on Form N-4 of Penn
Mutual Variable Annuity Account III filed on April 29,
1997 (CIK No. 0000702184 & Accession No.
00001021408-97-000161).
(b) Powers of Attorney of Edmond F. Notebaert and Robert H.
Rock. Incorporated herein by reference to Exhibit 14(b)
to Post Effective Amendment No. 24 to the Registration
Statement on Form N-4 of Penn Mutual Variable Annuity
Account III filed on April 24, 1998 (CIK No. 0000702184
& Accession No. 000095109-98-002717).
(c) Power of Attorney of Ms. Julia Chang Bloch.
Incorporated herein by reference to Exhibit 14(c) to
the Registration Statement on Form N-4 of Penn Mutual
Variable Annuity Account III (Accession No. 0001036050-
98-001504) filed on September 3, 1998.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
---------------------------------------
The following table sets forth the names of the officers and trustees
of the Depositor who are engaged directly or indirectly in activities
relating to the Registrant or the variable annuity contracts offered
by the Registrant and the executive officers of the Depositor.
C-5
<PAGE>
ROBERT E. CHAPPELL NANCY S. BRODIE
Chairman of the Board and Chief Executive Vice President and Chief
Executive Officer and Member of Financial Officer
the Board of Trustees
DANIEL J. TORAN PETER M. SHERMAN
President and Chief Operating Senior Vice President and
Officer and Member of the Board of Chief Investment Officer
Trustees
LARRY L. MAST ANN M. STROOTMAN
Executive Vice President, Sales and Vice President and Controller
Marketing
HAROLD E. MAUDE, JR. STEVEN M. HERZBERG
Senior Vice President, Assistant Vice President
Independence Financial Network and Treasurer
RICHARD F. PLUSH JAMES MCELWAIN
Vice President and Senior Actuary Assistant Vice President,
Retirement and Investment Sales
Operations
JOHN M. ALBANESE
Senior Vice President, Customer
Service and Information Systems
ROBERT P. DAVIS
FREDERICK M. ROCKOVAN Vice President and Chief Actuary
Vice President, Insurance Service
The business address of the director and officers is The Penn Mutual Life
Insurance Company, Philadelphia, PA 19172.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
-------------------------------------------------------------------
REGISTRANT
----------
PENN MUTUAL WHOLLY-OWNED SUBSIDIARIES
-------------------------------------
Corporation Principal Business State of Incorporation
----------- ------------------ ----------------------
The Penn Insurance and Life Insurance and Annuities Delaware
Annuity Company
Independence Capital Investment Adviser Pennsylvania
Management, Inc.
Penn Janney Fund, Inc. Investments Pennsylvania
C-6
<PAGE>
Corporation Principal Business State of Incorporation
----------- ------------------ ----------------------
Independence Square Holding Company Pennsylvania
Properties, Inc.
The Pennsylvania Trust Trust Company Pennsylvania
Company
INDEPENDENCE SQUARE PROPERTIES, INC.
WHOLLY-OWNED SUBSIDIARIES
-------------------------
Corporation Principal Business State of Incorporation
----------- ------------------ ----------------------
Penn Glenside Corporation Real Estate Investment Pennsylvania
Penn Wayne Corporation Real Estate Investment Pennsylvania
St. James Realty Corporation Real Estate Investment Pennsylvania
Investors' Mortgage Real Estate Investment Pennsylvania
Corporation
Christie Street Properties, Real Estate Investment Pennsylvania
Inc.
INDEPRO CORPORATION Real Estate Investment Delaware
Economic Resources Real Estate Investment Delaware
Associates, Inc.
WPI Investment Company Real Estate Investment Delaware
Hornor, Townsend & Kent, Registered Broker-Dealer Pennsylvania
Inc. and Investment Adviser
Penn Tallahassee Real Estate Investment Florida
Corporation
JANNEY MONTGOMERY SCOTT Registered Broker-Dealer Delaware
INC. and Investment Adviser
INDEPRO CORPORATION
WHOLLY-OWNED SUBSIDIARIES
-------------------------
C-7
<PAGE>
Corporation Principal Business State of Incorporation
----------- ------------------ ----------------------
Indepro Property Fund I Real Estate Investment Delaware
Corporation
Indepro Property Fund II Real Estate Investment Delaware
Corporation
Commons One Corporation Real Estate Investment Delaware
West Hazleton, Inc. Real Estate Investment Delaware
JANNEY MONTGOMERY SCOTT, INC.
WHOLLY-OWNED SUBSIDIARIES
-------------------------
Corporation Principal Business State of Incorporation
----------- ------------------ ----------------------
Addison Capital Investment Adviser Pennsylvania
Management, Inc.
JMS Resources, Inc. Oil and Gas Development Pennsylvania
JMS Investor Services, Inc. Insurance Sales Delaware
ITEM 27. NUMBER OF CONTRACT OWNERS
-------------------------
As of August 1, 1998, there were no contracts being registered under
this Registration Statement outstanding.
ITEM 28. INDEMNIFICATION
---------------
Section 6.2 of the By-laws of The Penn Mutual Life Insurance Company
provides that, in accordance with the provisions of the Section, the
Company shall indemnify trustees and officers against expenses
(including attorneys' fees), judgments, fines, excise taxes and
amounts paid in settlement actually and reasonably incurred in
connection with actions, suits and proceedings, to the extent such
indemnification is not prohibited by law, and may provide other
indemnification to the extent not prohibited by law. The By-laws are
filed as Exhibit 6(b) to Post-Effective Amendment No. 12 to this
Registration Statement and are incorporated in this Post-Effective
Amendment by reference.
Pennsylvania law (15 Pa. C.S.A. (S)(S) 1741-1750) authorizes
Pennsylvania corporations to provide indemnification to directors,
officers and other persons.
C-8
<PAGE>
Penn Mutual owns a directors and officers liability insurance policy
covering liabilities directors and officers of Penn Mutual and its
subsidiaries may incur in acting as directors and officers.
Selling Agreements entered into by The Penn Mutual Life Insurance
Company ("Penn Mutual") and its subsidiary, Hornor, Townsend & Kent,
Inc. ("HTK") with securities brokers and insurance agents generally
provide for indemnification of Penn Mutual and HTK and their directors
and officers in the event of liability resulting from unauthorized
acts of the brokers and insurance agents.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
----------------------
Hornor Townsend & Kent, Inc. serves as principal underwriters of the
securities of the Registrant.
Hornor Townsend & Kent, Inc. serves as principal underwriter for
Addison Capital Shares, Inc., a registered investment company.
Hornor, Townsend & Kent, Inc. - Directors and Officers
------------------------------------------------------
John J. Gray, Director and Chairman of the Board
Harold E. Maude, Jr., Director
Nina M. Mulrooney, Director
Norman T. Wilde, Jr., Director
Daniel J. Toran, Director
Ronald C. Zimmerman, President and Chief Executive Officer
Michael D. Sweeney, Assistant Vice President, Director of Compliance
and Secretary
Edward G. Pecelli - Assistant Vice President, Director of Sales and
Marketing
Laura M. Ritzko, Assistant Secretary
Henry S. Buck, Assistant Vice President and Assistant Treasurer
Barbara S. Wood, Senior Vice President, Finance and Treasurer
Bruce Ohrenich, Vice President, Sales
C-9
<PAGE>
Joseph R. Englert, Assistant Vice President, Director of Operations
William H. Pentz, Counsel
Constance Flaville, Assistant Secretary
The principal business address of Messrs. Gray and Wilde is Janney,
Montgomery, Scott Inc., 1801 Market Street, Philadelphia,
Pennsylvania.
The principal business address of Mses. Mulrooney and Ritzko and
Messrs. Maude, Toran and Pentz is The Penn Mutual Life Insurance
Company, Philadelphia, Pennsylvania, 19172. The principal business
address of the other directors and officers is Hornor, Townsend &
Kent, Inc., 600 Dresher Road, Horsham, Pennsylvania.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
--------------------------------
The name and address of the person who maintains physical possession
of each account, book or other documents required by Section 31(a) of
the Investment Company Act of 1940 is as follows:
The Penn Mutual Life Insurance Company
600 Dresher Road
Horsham, Pennsylvania 19044
ITEM 31. MANAGEMENT SERVICES
-------------------
See "Administrative and Recordkeeping Services" in Part B of this
Registration Statement.
ITEM 32. UNDERTAKINGS
------------
The Penn Mutual Life Insurance Company hereby undertakes:
(a) to file a post-effective amendment to this Registration Statement
as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more
than 16 months old for so long as payments under the variable
annuity contracts may be accepted;
(b) to include either (1) as part of any application to purchase a
contract or account offered by the prospectus, a space that an
applicant can check to request a statement of additional
information, or (2) a post card or similar written communication
affixed to or included in the prospectus that the applicant can
remove to send for a statement of additional information;
(c) to deliver any statement of additional information and any
financial statements required to be made available under Form N-4
promptly upon written or oral request.
C-10
<PAGE>
Restrictions on withdrawals under Section 403(b) Contracts are imposed
in reliance upon, and in compliance with, a no-action letter issued by
the Chief of the Office of Insurance Products and Legal Compliance of
the Securities and Exchange Commission to the American Council of Life
Insurance on November 28, 1988.
The Penn Mutual Life Insurance Company represents that the fees and
charges deducted under the Individual Variable and Fixed Annuity
Contract, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed
by the Registrant.
C-11
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant has caused this Pre-Effective Amendment #1 to the
Registration Statement to be signed on its behalf, by the undesigned,
thereunto duly authorized, in the Township of Horsham and Commonwealth of
Pennsylvania on this 25th day of November, 1998.
PENN MUTUAL VARIABLE ANNUITY ACCOUNT III
(Registrant)
By: THE PENN MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By: /s/ ROBERT E. CHAPPELL
-----------------------------------------
Robert E. Chappell
Chairman of the Board of Trustees
and Chief Executive Officer
As required by the Securities Act of 1933, this Pre-Effective
Amendment #1 to the Registration Statement has been signed by the following
persons, in the capacities indicated, on the 25th day of November, 1998.
Signature Title
--------- -----
/s/ ROBERT E. CHAPPELL Chairman of the Board of Trustees
----------------------
Robert E. Chappell and Chief Executive Officer
/s/ NANCY S. BRODIE Executive Vice President and
--------------------
Nancy S. Brodie Chief Financial Officer
*JULIA CHANG BLOCH Trustee
*JAMES A. HAGEN Trustee
*PHILLIP E. LIPPINCOTT Trustee
*JOHN F. MCCAUGHAN Trustee
*ALAN B. MILLER Trustee
*EDMOND F. NOTEBAERT Trustee
*ROBERT H. ROCK Trustee
*DANIEL J. TORAN Trustee
*NORMAN T. WILDE, JR. Trustee
*WESLEY S. WILLIAMS, JR. Trustee
*By: /s/ ROBERT E. CHAPPELL
-----------------------------------------
Robert E. Chappell, attorney-in-fact
<PAGE>
EXHIBIT INDEX
EX.99 4(a) Individual Variable and Fixed Annuity Contract (Form
VAB-98).
EX.99 4(b) Rider - Guaranteed Minimum Death Benefit - Rising
Floor (GDBRF-98).
EX.99 4(c) Rider - Guaranteed Minimum Death Benefit - Step up
(GDBSU-98).
EX.99 B 9. Opinion of Counsel
EX.99 B 10. (a) Consent of Ernst & Young LLP.
EX.99 B 10. (b) Consent of PricewaterhouseCoopers LLP.
EX.99 B 10. (c) Consent of Morgan, Lewis & Bockius LLP.
EX.99 B 13. Schedule of Computation of Performance Quotations
C-13
<PAGE>
The Penn Mutual Life Insurance Company
Founded 1847
Contract Owner William Penn 9999999 Contract Number
Contract Date August 7, 1998 September 1, 2058 Annuity Date
Annuitant William Penn 35 Age of Annuitant
VALUES AND PAYMENTS UNDER THIS CONTRACT, WHEN BASED UPON THE INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE. THEY MAY DECREASE OR INCREASE
AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
RIGHT TO REVIEW CONTRACT: The Contract Owner may cancel this contract within
ten days after its receipt. Simply return or mail it to the Company or the
representative through whom it was purchased. The Company will refund the
Contract Value as of the time notification is received.
This is a legal contract between the Contract Owner and Penn Mutual. Please
read the contract carefully.
Executed on the Contract Date by The Penn Mutual Life Insurance Company.
/s/ Laura M. Ritzko /s/ Robert E. Chappell
Secretary Chairman and
Chief Executive Officer
Individual Variable and Fixed
Annuity Contract
Flexible Purchase Payments
. Annuity Payments payable on Annuity Date
. Flexible Purchase Payments payable until
. Annuity Date
. Participating
. The Company will make monthly annuity
payments and other payments as set
forth in this contract.
The Penn Mutual Life Insurance Company, Philadelphia, Pennsylvania 19172
VAB-98
<PAGE>
----------------------------------------------------
Guide to Contract Sections
1. Contract Specifications 10. Fixed Annuity Payments
2. Endorsements 11. Variable Annuity Payments
3. Definitions 12. Annuity Options
4. Purchase Payments 13. Death Benefit
5. The Separate Account 14. Transfers
6. The Fixed Account 15. Withdrawal
7. Charges and Deductions 16. General
8. Contract Value
9. Annuity Payments
Additional Contract Specifications
and a copy of any applications
follow Section 16.
<PAGE>
1. Contract Specifications
- - --------------------------------------------------------------------------------
Contract Owner: William Penn Contract Number: 9999999
Contract Date: August 7, 1998 Annuity Date: September 1, 2058
Annuitant: William Penn Age of Annuitant: 35
- - --------------------------------------------------------------------------------
Market Type: Non-Qualified
Separate Account: PML Variable Annuity Account III
Schedule of Purchase Payments
- - -----------------------------
Initial Purchase Payment of $30,000.00 was allocated to the contract on August
7, 1998 as follows:
Variable Account 70%
Fixed Account 30%
Subsequent Purchase Payments may be made subject to the provisions of the
contract.
Schedule of Annual Charges
- - --------------------------
Annual Contract Administration Charge*: $40
Asset Based Contract Administration Charge**: .15%
Mortality & Expense Risk Charge**: 1.25%
Date Annual Charges are deducted each year: August 6
*THE CONTRACT ADMINISTRATION CHARGE APPLIES EACH YEAR THERE IS A VARIABLE
ACCOUNT VALUE WHICH IS LESS THAN $100,000.
**THE MORTALITY AND EXPENSE RISK CHARGE AS WELL AS THE ASSET BASED CONTRACT
ADMINISTRATION CHARGE ARE MADE DAILY AGAINST THE ASSETS OF THE SEPARATE ACCOUNT.
Schedule of Contingent Deferred Sales Charge
- - --------------------------------------------
Number of contract years since Contingent Deferred
purchase payment Sales Charge
(% of purchase payment)
0 1.0 %
1+ 0.0
Refer to Section 7 of the contract for further information on the Contingent
Deferred Sales Charge.
Page 3
<PAGE>
2. Endorsements
To be made only by the Company
This page is intentionally
left blank.
Page 4
B004253E
<PAGE>
3. Definitions
Accumulation Unit: A unit of measure used to compute the Variable Account Value
under the contract prior to the Annuity Date. See Section 8.
Annuitant: The person during whose life annuity payments are made.
Annuity Date: The date on which annuity payments start.
Annuity Unit: A unit of measure used to calculate the amount of a variable
annuity payment. See Section 11.
Contract Owner: The person specified in the contract as the contract owner.
The Contract Owner has all rights to control all aspects of the contract,
including, after the Annuity Date and before the death of the Annuitant, the
right to transfer amounts among the subaccounts of the Separate Account and the
right to change the beneficiary.
Fixed Account: The account under which amounts are held for the Contract Owner
under all fixed interest options prior to the Annuity Date.
Interest Period: The period of time for which an interest rate declared by the
Company is guaranteed. The period begins on the first day of the calendar month
in which allocation or transfer is made.
Qualified Plan: A retirement arrangement that receives special tax treatment
under Section 403, 408, or any similar provisions of the Internal Revenue Code.
Variable Account: The account under which amounts are held for the Contract
Owner under all subaccounts of the Separate Account prior to the Annuity Date.
The Company: The Penn Mutual Life Insurance Company.
4. Purchase Payments
Purchase payments will be allocated to the subaccounts of the Separate Account
and to the fixed interest options of the Fixed Account as directed by the
Contract Owner in the application for this contract.
Subsequent purchase payments will be allocated, as specified in the allocation
section of the application, to the subaccounts of the Separate Account and to
the fixed interest options of the Fixed Account unless the Contract Owner
directs that the purchase payments be allocated otherwise.
Purchase payments applied to the contract after issue may be made at any time
without prior notice to the Company. The minimum subsequent purchase payment is
$25,000.
Total purchase payments may not exceed $1,000,000 at any time without the
consent of the Company.
5. The Separate Account
The Separate Account. The Separate Account named on Page 3 was established by
the Company for this and other variable contracts . The Separate Account is
divided into subaccounts for the investment of assets in shares of the mutual
funds which are listed in the Additional Contract Specifications Page. The
Company owns the assets held in the Separate Account. However, the portion of
the assets of each subaccount of the Separate Account equal to the reserves and
other contract liabilities with respect to the subaccount of the Separate
Account are not chargeable with the liabilities arising out of any other
business the
Page 5
A004359P
<PAGE>
Page 6
5. The Separate Account (continued)
Company may conduct. Income and realized and unrealized gains and losses from
the assets held in each subaccount are credited to or charged against the
subaccount without regard to the income, gains or losses in other investment
accounts of the Company. Shares of a mutual fund held in a subaccount will be
redeemed at current net asset value to make transfers, pay benefits and cover
applicable charges and deductions. Any dividend or capital gain distribution
from a mutual fund will be reinvested in shares of that mutual fund.
Substitution of Investment. If investment in a subaccount should no longer be
possible, or a subaccount's investment in a particular mutual fund should no
longer be possible, or, in the judgment of the Company, investment in a
subaccount or mutual fund becomes inappropriate to the purposes of the contract,
or, if in the judgment of the Company, investment in another subaccount, mutual
fund or insurance company separate account is in the interest of Contract Owners
of this class of contracts, the Company may substitute another subaccount,
mutual fund or insurance company separate account. Substitution may be made with
respect to existing investments and the investment of future purchase payments.
Substitution will be subject to all approvals required under applicable law.
6. The Fixed Account
The Fixed Account. The Fixed Account consists of the fixed interest options
which are listed in the Additional Contract Specifications Page.
Amounts allocated or transferred to the Fixed Account under this contract become
a part of the general account assets of the Company and do not fluctuate with
regard to investment experience.
One Year Fixed Interest Option. Amounts may be allocated or transferred to this
fixed interest option. Amounts held in this fixed interest option of the Fixed
Account will be credited with interest at effective annual rates declared by the
Company. The declared interest rate will apply from the date of the allocation
or transfer through the end of a one year interest period. At the expiration of
an interest period, the Company will renew the portion of the fixed interest
option that has expired at the new rate declared for the interest period at that
time. For the 25 days following the expiration of such period, the Contract
Owner may transfer all or a portion of the amount held in such fixed interest
option to subaccount(s) of the Separate Account.
The Company will not declare rates of interest for any fixed interest option of
less than 3%.
7. Charges and Deductions
Contract Administration Charges. These charges are assessed against contracts
with a Variable Account Value. The first charge is the Annual Contract
Administration Charge which will be no greater than the lesser of 2% of the
Variable Account Value or dollar amount specified on Page 3. This charge will
only be applied if the Variable Account Value at the time the charge is incurred
is less than $100,000. It will be deducted annually on the dates specified on
Page 3. It will also be deducted when the Variable Account Value is withdrawn or
transferred in full if withdrawal or transfer is not on the date specified on
Page 3. The charge will not be deducted after the Annuity Date.
A004360P
<PAGE>
7. Charges and Deductions(continued)
The second charge is an asset based contract administration charge. On annual
basis the charge will be a percentage of the daily net asset value of the
Variable Account which will not exceed the charge shown on Page 3.
Mortality and Expense Risk Charge. This charge is made to compensate the Company
for the mortality guarantees made under this contract and for guaranteeing that
the contract administration charges will not be increased by the Company over
the life of this contract or other contracts under the same class. On an annual
basis the charge will be a percentage of the daily net asset value of the
Variable Account. The charge will not exceed the value shown on Page 3.
Contingent Deferred Sales Charge. This charge, if applicable, will be deducted
upon withdrawal, in whole or in part, of the Contract Value. This charge will
not be applied on payment at time of annuitization or on a death benefit
payment. For further definition of the charge, see Section 15 - Withdrawal.
Premium Taxes. The Company may deduct from the Contract Value any premium or
other taxes payable to a state or other government entity. Should the Company
elect not to assess any amount so due, the Company does not waive the right to
collect such amounts at a later date.
Deductions. The asset based contract administration charge and the mortality and
expense risk charge will be computed and deducted from each subaccount of the
Separate Account in which the Contract Owner is invested. These deductions will
be made daily.
The Company will deduct other charges applicable to the Variable Account by
canceling Accumulation Units or Annuity Units. The value of the canceled units
will be equal to the amount of the charges. Cancellation of Accumulation Units
will be in the ratio of the Contract Owner's share in each subaccount of the
Separate Account to the Variable Account Value.
8. Contract Value
The Contract Value. The contract value is the sum of the Variable Account Value
and the Fixed Account Value.
The Fixed Account Value. The Fixed Account Value is the sum of all money
allocated or transferred to the fixed interest options of the Fixed Account plus
all interest credited to the Fixed Account. This amount shall be adjusted for
withdrawals, transfers and charges.
The Variable Account Value. The Variable Account Value is the sum of the values
of the Accumulation Units held in the subaccounts of the Separate Account for
this contract.
Number of Accumulation Units. For each subaccount of the Separate Account, the
number of Accumulation Units is the sum of (a) divided by (b), where:
(a) is each amount allocated to the subaccount; and
(b) is the value of the Accumulation Unit for that subaccount for the valuation
period in which the purchase payment was received.
The number of Accumulation Units will be adjusted for transfers, withdrawals and
charges. Adjustments will be made as of the valuation period in which all
requirements for the transaction are received.
Value of Each Accumulation Unit. For each subaccount of the Separate Account,
the value was arbitrarily set at $10 when the subaccount was established. The
value may increase or decrease from one valuation period to the next. For any
valuation period the value is (a) multiplied by (b),
where:
(a) is the value of an Accumulation Unit for the prior valuation period;
and
(b) is the net investment factor for that subaccount for the current
valuation period.
Net Investment Factor. As used in this contract, net investment factor is an
index used to measure the investment performance of a subaccount from one
valuation period to the next.
Page 7
A004361P
<PAGE>
Page 8
8. Contract Value (continued)
For any subaccount, the net investment factor for a valuation period is found
by dividing (a) by (b) and subtracting (c), where:
(a) is the net result of:
(1) net asset value per-share of the mutual fund held in the subaccount
as of the end of the valuation period; plus
(2) the per-share amount of any dividend or capital gain distributions by
the mutual fund if the "ex-dividend" date occurs in the valuation
period; plus or minus
(3) a per-share charge or credit as the Company may determine, as of the
end of the valuation period, for tax reserves.
(b) is the net result of:
(1) the net asset value per-share of the mutual fund held in the
subaccount as of the end of the last prior valuation period; plus or
minus
(2) the per-share charge or credit for tax reserves as of the end of the
last prior valuation period.
(c) is the sum of the daily asset based contract administration charge, the
daily mortality and expense risk charge. On an annual basis, the sum of
such charges will not exceed the values shown on Page 3.
Valuation Period. It is the interval of time from one valuation to the next.
Valuation is the time when shares of the applicable mutual funds are valued.
9. Annuity Payments
Annuity Date. Unless another Annuity Date was chosen in the application or later
written notification, the Annuity Date will be the later of the first day of the
next month after the Annuitant's 95th birthday or 10 years after the Contract
Date.
The Annuity Date must be on the first day of a month. The Contract Owner may
change the Annuity Date up to 30 days before the current Annuity Date.
Annuity Options. The Contract Owner may choose a fixed annuity option, a
variable annuity option, or a combination of both up to 30 days prior to the
Annuity Date.
On the Annuity Date, the Contract Value, net of premium taxes if applicable,
must be annuitized. If not otherwise specified by the Contract Owner, the
contract will be annuitized on the Annuity Date based on a life annuity with
payments guaranteed for a 10 year period. If not otherwise specified by the
Contract Owner, the Fixed Account Value will be annuitized under the fixed
annuity option and the Variable Account Value will be annuitized under the
variable annuity option.
Minimum Annuity Payments. If the Contract Value to be applied at the Annuity
Date is less than $5,000, the Company may pay such amount in a lump sum. Annuity
payments will be made monthly, quarterly, semi-annually or annually at the
Contract Owner's request. If any payment would be less than $50, the Company may
change the frequency so that payments are at least $50 each.
10. Fixed Annuity Payments
Amount of Fixed Annuity Payments. The portion of the Contract Value designated
by the Contract Owner for a fixed annuity option, will be applied to that
annuity option as of the Annuity Date. In no event will the monthly income under
Option 1, Option 2, Option 3 and Option 4 be less than the guaranteed monthly
income. The guaranteed monthly income will be equal to that portion of the
Contract Value, designated by the Contract Owner for a fixed annuity option,
applied to the Fixed Annuity Options Table in this section. The Fixed Annuity
Options Table shows the amount of the first payment for each $1,000 so applied,
according to the age at the Annuity Date. The tables are based on the Annuity
2000 Basic Table, without projections, 50% male/50% female with an effective
annual interest rate of 3%. Adjusted ages are used in applying those tables.
<PAGE>
10. Fixed Annuity Payments (continued)
Fixed Annuity Option Tables
The following tables show the amount of the first monthly income payment for
each $1,000 of value applied under an annuity option. "Age" as used in the
tables for Options 2,3, and 4 means an adjusted age determined in the following
manner from the actual age of the Annuitant on the birthday nearest the date of
the first payment:
Date of First Payment Adjusted Age
Before calendar year 2010 Actual Age
2010-2019 Actual age decreased by 1
2020-2029 Actual age decreased by 2
2030 and later Actual age decreased by 3
Option 1 - Annuity for Specified Number of Years
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Years 5 6 7 8 9 10 11 12 13 14 15 16 17
Monthly Income 17.91 15.14 13.16 11.68 10.53 9.61 8.86 8.24 7.71 7.26 6.87 6.53 6.23
- - ---------------------------------------------------------------------------------------------------------
Number of Years 18 19 20 21 22 23 24 25 26 27 28 29 30
Monthly Income 5.96 5.73 5.51 5.32 5.15 4.99 4.84 4.71 4.59 4.47 4.37 4.27 4.18
- - ---------------------------------------------------------------------------------------------------------
</TABLE>
Option 2 - Life Annuity and Option 3 - Life Annuity with Payments Guaranteed for
10 or 20 Years
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------
Life 10 Years 20 Years Life 10 Years 20 Years
Age Annuity Guaranteed Guaranteed Age Annuity Guaranteed Guaranteed
- - --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 3.95 3.93 3.86 75 7.61 6.88 5.34
51 4.02 3.99 3.91 76 7.93 7.06 5.37
52 4.08 4.06 3.96 77 8.27 7.25 5.40
53 4.16 4.12 4.02 78 8.64 7.44 5.42
54 4.23 4.20 4.08 79 9.03 7.62 5.44
55 4.31 4.27 4.14 80 9.46 7.81 5.46
56 4.39 4.35 4.20 81 9.91 7.99 5.47
57 4.48 4.43 4.26 82 10.41 8.16 5.48
58 4.58 4.52 4.33 83 10.93 8.32 5.49
59 4.68 4.61 4.39 84 11.50 8.48 5.50
60 4.78 4.71 4.46 85 12.11 8.62 5.50
61 4.90 4.81 4.53 86 12.76 8.76 5.51
62 5.02 4.92 4.60 87 13.46 8.88 5.51
63 5.15 5.03 4.66 88 14.20 8.99 5.51
64 5.28 5.15 4.73 89 14.98 9.09 5.51
65 5.43 5.28 4.80 90 15.81 9.17 5.51
66 5.59 5.41 4.87 91 16.68 9.25 5.51
67 5.76 5.55 4.93 92 17.59 9.32 5.51
68 5.94 5.70 4.99 93 18.55 9.38 5.51
69 6.13 5.85 5.05 94 19.55 9.44 5.51
70 6.33 6.01 5.11 95 20.62 9.48 5.51
71 6.56 6.17 5.17
72 6.79 6.34 5.21
73 7.05 6.51 5.26
74 7.32 6.69 5.30
</TABLE>
Option 4 - Joint and Survivor Life Annuity
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------
Age 50 55 60 65 70 75 80 85 90 95 Age
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 3.53 3.64 3.73 3.80 3.85 3.89 3.92 3.93 3.94 3.95 50
55 3.64 3.79 3.92 4.04 4.13 4.20 4.24 4.27 4.29 4.30 55
60 3.73 3.92 4.12 4.30 4.45 4.57 4.65 4.71 4.74 4.76 60
65 3.80 4.04 4.30 4.56 4.81 5.02 5.17 5.28 5.35 5.38 65
70 3.85 4.13 4.45 4.81 5.18 5.52 5.80 6.01 6.15 6.23 70
75 3.89 4.20 4.57 5.02 5.52 6.04 6.52 6.91 7.19 7.37 75
80 3.92 4.24 4.65 5.17 5.80 6.52 7.27 7.96 8.50 8.87 80
85 3.93 4.27 4.71 5.28 6.01 6.91 7.96 9.03 9.99 10.73 85
90 3.94 4.29 4.74 5.35 6.15 7.19 8.50 9.99 11.48 12.78 90
95 3.95 4.30 4.76 5.38 6.23 7.37 8.87 10.73 12.78 14.74 95
</TABLE>
Page 9
A004363P
<PAGE>
Page 10
11. Variable Annuity Payments
First Variable Annuity Payment. The portion of the Contract Value designated by
the Contract Owner for a variable annuity option will be applied to one of the
Variable Annuity Option Tables in this section for the variable annuity option
and the assumed interest rate chosen as of the Annuity Date. The tables are
based on the Annuity 2000 Basic Table, without projections, 50% male/50% female
with an effective annual interest rate stipulated on the table. Adjusted ages
are used in applying those tables.
Subsequent Variable Annuity Payments. Payments after the first will vary in
amount according to the investment performance of the subaccount(s). The
payment amount may change from month to month. The amount of each subsequent
payment is the sum of (a) multiplied by (b) for each applicable subaccount,
where:
(a) is the number of Annuity Units for the subaccount; and
(b) is the value of an Annuity Unit for that subaccount for the valuation period
in which payment is due.
The amount of each annuity payment after the first will not be affected by
variations in expense or mortality experience.
Number of Annuity Units. The number of units for the subaccount of each
investment account chosen is (a) divided by (b), where:
(a) is the amount of the first variable annuity payment attributable to that
subaccount; and
(b) is the value of an Annuity Unit for the subaccount as of the Annuity Date.
The number of Annuity Units is fixed except for adjustments for subaccount
transfers. Adjustments will be made as of the valuation period in which all
requirements for the transfer are received.
Value of Each Annuity Unit. For each subaccount, the value of an Annuity Unit
was arbitrarily set at $10 when the subaccount was established. The value may
increase or decrease from one valuation period to the next. For any valuation
period the value is (a) multiplied by (b) multiplied by (c), where:
(a) is the value of an Annuity Unit for the last prior valuation period
(b) is the net investment factor for that subaccount for the valuation period
(c) is an interest factor to neutralize the assumed interest rate built into the
annuity tables.
Net Investment Factor. The net investment factor is an index used to measure
the investment performance of a subaccount from one valuation period to the
next. For any subaccount, the net investment factor for a valuation period is
found by dividing (a) by (b) and subtracting (c), where:
(a) is the net result of:
(1) net asset value per-share of the mutual fund held in the subaccount as of
the end of the valuation period; plus
(2) the per-share amount of any dividend or capital gain distributions by the
mutual fund if the "ex-dividend" date occurs in the valuation period;
plus or minus
(3) a per-share charge or credit as the Company may determine, as of the end
of the valuation period, for tax reserves.
(b) is the net result of:
(1) the net asset value per-share of the mutual fund held in the subaccount
as of the end of the last prior valuation period; plus or minus
(2) the per-share charge or credit for tax reserves as of the end of the last
prior valuation period.
(c) is the sum of the daily asset based contract administration charge and the
daily mortality and expense risk charge. On an annual basis, this charge
will be a percentage of the daily net asset value of the Separate Account.
The sum of such charges will not exceed the values shown on Page 3.
A004364P
<PAGE>
11. Variable Annuity Payments(continued)
Variable Annuity Option Tables - 3% Interest Option
The following tables show the amount of the first monthly income payment for
each $1,000 of value applied under an annuity option. "Age" as used in the
tables for Options 2,3, and 4 means an adjusted age determined in the following
manner from the actual age of the Annuitant on the birthday nearest the date of
the first payment:
Date of First Payment Adjusted Age
Before calendar year 2010 Actual Age
2010-2019 Actual age decreased by 1
2020-2029 Actual age decreased by 2
2030 and later Actual age decreased by 3
<TABLE>
<CAPTION>
Option 2 - Life Annuity and Option 3 - Life Annuity with Payments Guaranteed for 10 or 20 Years
- - -------------------------------------------------------------------------------------------------
Life 10 Years 20 Years Life 10 Years 20 Years
Age Annuity Guaranteed Guaranteed Age Annuity Guaranteed Guaranteed
- - -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 3.95 3.93 3.86 75 7.61 6.88 5.34
51 4.02 3.99 3.91 76 7.93 7.06 5.37
52 4.08 4.06 3.96 77 8.27 7.25 5.40
53 4.16 4.12 4.02 78 8.64 7.44 5.42
54 4.23 4.20 4.08 79 9.03 7.62 5.44
55 4.31 4.27 4.14 80 9.46 7.81 5.46
56 4.39 4.35 4.20 81 9.91 7.99 5.47
57 4.48 4.43 4.26 82 10.41 8.16 5.48
58 4.58 4.52 4.33 83 10.93 8.32 5.49
59 4.68 4.61 4.39 84 11.50 8.48 5.50
60 4.78 4.71 4.46 85 12.11 8.62 5.50
61 4.90 4.81 4.53 86 12.76 8.76 5.51
62 5.02 4.92 4.60 87 13.46 8.88 5.51
63 5.15 5.03 4.66 88 14.20 8.99 5.51
64 5.28 5.15 4.73 89 14.98 9.09 5.51
65 5.43 5.28 4.80 90 15.81 9.17 5.51
66 5.59 5.41 4.87 91 16.68 9.25 5.51
67 5.76 5.55 4.93 92 17.59 9.32 5.51
68 5.94 5.70 4.99 93 18.55 9.38 5.51
69 6.13 5.85 5.05 94 19.55 9.44 5.51
70 6.33 6.01 5.11 95 20.62 9.48 5.51
71 6.56 6.17 5.17
72 6.79 6.34 5.21
73 7.05 6.51 5.26
74 7.32 6.69 5.30
</TABLE>
<TABLE>
<CAPTION>
Option 4 - Joint and Survivor Life Annuity
- - ------------------------------------------------------------------------------------
Age 50 55 60 65 70 75 80 85 90 95 Age
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 3.53 3.64 3.73 3.80 3.85 3.89 3.92 3.93 3.94 3.95 50
55 3.64 3.79 3.92 4.04 4.13 4.20 4.24 4.27 4.29 4.30 55
60 3.73 3.92 4.12 4.30 4.45 4.57 4.65 4.71 4.74 4.76 60
65 3.80 4.04 4.30 4.56 4.81 5.02 5.17 5.28 5.35 5.38 65
70 3.85 4.13 4.45 4.81 5.18 5.52 5.80 6.01 6.15 6.23 70
75 3.89 4.20 4.57 5.02 5.52 6.04 6.52 6.91 7.19 7.37 75
80 3.92 4.24 4.65 5.17 5.80 6.52 7.27 7.96 8.50 8.87 80
85 3.93 4.27 4.71 5.28 6.01 6.91 7.96 9.03 9.99 10.73 85
90 3.94 4.29 4.74 5.35 6.15 7.19 8.50 9.99 11.48 12.78 90
95 3.95 4.30 4.76 5.38 6.23 7.37 8.87 10.73 12.78 14.74 95
</TABLE>
Page 11
A004365P
<PAGE>
Page 12
11. Variable Annuity Payments(continued)
Variable Annuity Option Tables - 5% Interest Option
The following tables show the amount of the first monthly income payment for
each $1,000 of value applied under an annuity option. "Age" as used in the
tables for Options 2,3, and 4 means an adjusted age determined in the following
manner from the actual age of the Annuitant on the birthday nearest the date of
the first payment:
Date of First Payment Adjusted Age
Before calendar year 2010 Actual Age
2010-2019 Actual age decreased by 1
2020-2029 Actual age decreased by 2
2030 and later Actual age decreased by 3
<TABLE>
<CAPTION>
Option 2 - Life Annuity and Option 3 - Life Annuity with Payments Guaranteed for 10 or 20 Years
- - -----------------------------------------------------------------------------------------------
Life 10 Years 20 Years Life 10 Years 20 Years
Age Annuity Guaranteed Guaranteed Age Annuity Guaranteed Guaranteed
- - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 5.17 5.14 5.04 75 8.79 7.93 6.35
51 5.23 5.19 5.09 76 9.11 8.10 6.38
52 5.29 5.25 5.13 77 9.45 8.28 6.41
53 5.36 5.31 5.18 78 9.82 8.46 6.43
54 5.43 5.38 5.23 79 10.22 8.64 6.44
55 5.50 5.45 5.29 80 10.65 8.81 6.46
56 5.58 5.52 5.34 81 11.12 8.98 6.47
57 5.67 5.60 5.40 82 11.62 9.14 6.48
58 5.76 5.68 5.45 83 12.15 9.29 6.49
59 5.86 5.77 5.51 84 12.73 9.44 6.50
60 5.96 5.86 5.57 85 13.34 9.58 6.50
61 6.07 5.96 5.63 86 14.00 9.70 6.51
62 6.19 6.06 5.69 87 14.71 9.81 6.51
63 6.32 6.17 5.75 88 15.46 9.92 6.51
64 6.45 6.28 5.82 89 16.25 10.01 6.51
65 6.60 6.40 5.88 90 17.08 10.09 6.51
66 6.75 6.53 5.94 91 17.96 10.17 6.51
67 6.92 6.66 5.99 92 18.88 10.23 6.51
68 7.10 6.80 6.05 93 19.84 10.29 6.51
69 7.29 6.95 6.10 94 20.84 10.34 6.51
70 7.50 7.10 6.15 95 21.91 10.38 6.51
71 7.72 7.25 6.20
72 7.96 7.42 6.24
73 8.22 7.58 6.28
74 8.49 7.75 6.32
</TABLE>
<TABLE>
<CAPTION>
Option 4 - Joint and Survivor Life Annuity
- - -----------------------------------------------------------------------------------
Age 50 55 60 65 70 75 80 85 90 95 Age
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 4.74 4.83 4.92 4.99 5.04 5.09 5.12 5.14 5.15 5.16 50
55 4.83 4.96 5.09 5.20 5.29 5.36 5.42 5.45 5.47 5.49 55
60 4.92 5.09 5.26 5.43 5.58 5.71 5.80 5.86 5.90 5.93 60
65 4.99 5.20 5.43 5.68 5.92 6.13 6.29 6.41 6.49 6.54 65
70 5.04 5.29 5.58 5.92 6.27 6.61 6.90 7.12 7.27 7.37 70
75 5.09 5.36 5.71 6.13 6.61 7.12 7.60 8.01 8.30 8.50 75
80 5.12 5.42 5.80 6.29 6.90 7.60 8.34 9.03 9.59 9.99 80
85 5.14 5.45 5.86 6.41 7.12 8.01 9.03 10.11 11.07 11.84 85
90 5.15 5.47 5.90 6.49 7.27 8.30 9.59 11.07 12.57 13.87 90
95 5.16 5.49 5.93 6.54 7.37 8.50 9.99 11.84 13.87 15.83 95
</TABLE>
A004366P
<PAGE>
12. Annuity Options
Option 1 - Annuity for Specified Number of Years. Payments will be made for a
specified number of years, which may not be less than 5 nor more than 30. This
option is available for a fixed annuity only.
Option 2 - Life Annuity. Payments will be made for the life of the Annuitant.
Payments will cease with the last payment due prior to the Annuitant's death.
Option 3 - Life Annuity with Payments Guaranteed for 10 or 20 years. Payments
will be made for the life of the Annuitant. A guaranteed payment period of
either 10 or 20 years may be chosen.
Option 4 - Joint and Survivor Life Annuity. The initial payment will be made if
either the Annuitant or the designated second Annuitant are living. Subsequent
payments will continue during the joint lives of the Annuitants and thereafter
during the life of the surviving annuitant. Payments will end with the last
payment due before the death of the last Annuitant to die.
Other annuity forms may be available with the consent of the Company.
If the Annuitant dies prior to the end of the specified period under Option 1 or
the guaranteed period under Option 3, the beneficiary may choose either:
(1) To have the payments continue for the remainder of the specified or
guaranteed period, or
(2) To receive at any time in one sum the present value of the remaining
payments to be made over the specified or guaranteed period.
If the beneficiary dies while receiving annuity payments under Option 1 or the
guaranteed period of Option 3, the present value of remaining payments will be
paid in one sum to the beneficiary's estate unless otherwise specified. The
present value will be computed as of the valuation period in which due proof of
death and the necessary forms to make payment to a beneficiary are received at
our Administrative Office. At that time, the present value of the fixed annuity
option will be commuted at a rate set by the Company on the annuity date and the
present value of the variable annuity option will be commuted at the assumed
interest rate built into the annuity table chosen at annuitization.
Payments. Payments will be made on the first day of the month starting with the
Annuity Date. Payments under all options will be made to or at the direction of
the Contract Owner.
13. Death Benefit
Death Before the Annuity Date. A death benefit shall be payable upon the earlier
of the death of:
(1) the Contract Owner or
(2) the Annuitant.
Prior to the Annuity Date and upon receipt of due proof of death and the
necessary forms to make payment to a beneficiary, the Company will pay a death
benefit to the beneficiary.
Upon the Contract Owner's death, the death benefit is equal to the Contract
Value on the date of receipt of due proof of death.
Upon the Annuitant's death, the death benefit is equal to the Fixed Account
death benefit plus the Variable Account death benefit. The Fixed Account death
benefit is equal to the Fixed Account Value on the date of receipt of due proof
of death and the necessary forms to make payment to a beneficiary. The Variable
death benefit is the greater of:
(1) the Variable purchase payments, net of Variable Account transfers and
less the total amount of any partial withdrawals from the Variable Account;
or
(2) the Variable Account Value at the date of receipt of due proof of death
and the necessary forms to make payment to a beneficiary.
Within one year of the date of death, the beneficiary may elect one of the
following payout options if death occurs before the Annuity Date.
(1) The death benefit may be paid in a single sum. The payment will generally
be made within 7 days of receipt of the necessary forms to make payment.
Page 13
A004367P
<PAGE>
Page 14
13. Death Benefit (continued)
(2) The Contract Value may be paid out in a single sum within five years after
the date of death. At the time of this election, the beneficiary must
specify the allocation of the Contract Value to the subaccounts of the
Separate Account and the fixed interest options of the Fixed Account.
During this election and within five years after the date of death, the
beneficiary may transfer amounts among the subaccounts of the Separate
Account and the fixed interest options of the Fixed Account. Transfers from
the fixed interest options are subject to the limitations imposed on such
options prior to the end of the interest period.
(3) The death benefit may be paid in the form of one of the Annuity Options. If
the death benefit becomes payable upon the death of the Annuitant, election
to receive the death benefit in the form of an annuity must be made within
60 days of the death of the Annuitant. The payments must be made over the
life of the beneficiary or over a period not extending beyond the life
expectancy of the beneficiary. Payments under this option must commence
within one year after the date of death.
(4) If the beneficiary is the Contract Owner's surviving spouse, the surviving
spouse may elect to become the Contract Owner.
If no such election is made within one year of the date of death, the Company
will pay the Contract Value to the beneficiary at that time. If there is more
than one surviving beneficiary, the beneficiaries must choose to receive their
respective portions of the death benefit according to either (1) or (2) or (3)
in the preceding paragraph. If no beneficiary survives the first to die of the
Contract Owner or the Annuitant, the death benefit will be paid in a lump sum to
the Contract Owner's estate or the Contract Owner, respectively.
Death After the Annuity Date. This death benefit shall be payable upon the death
of the Annuitant. If death occurs after the Annuity Date, the death benefit
payable, if any, will be according to the annuity option in force.
Beneficiary. The beneficiary is the person(s) who is to receive:
(1) Payment on the earlier of the death of the Contract Owner or the Annuitant
prior to the Annuity Date, or
(2) Remaining payments under specified or guaranteed annuity payments, if any,
on death of the Annuitant on or after the Annuity Date.
The Contract Owner shall designate the beneficiary in the application. The
Contract Owner may change the
beneficiary at any time before the death of the Contract Owner or the Annuitant,
whichever occurs first.
The estate of a beneficiary who dies before the first to die of the Contract
Owner or the Annuitant shall have no rights under this contract.
14. Transfers
Transfers. Subject to and in accordance with the provisions of this contract and
prior to the Annuity Date, the Contract Owner may transfer amounts among the
subaccounts of the Separate Account and the one year fixed interest option of
the Fixed Account, provided that:
(a) the minimum amount which may be transferred is $250 or, if less, the full
amount held in the subaccount or fixed interest option;
(b) for partial transfers, the amount remaining in a subaccount or fixed
interest option must be at least $250;
(c) amounts may be transferred from the one year fixed interest option(s) to
other subaccounts only during the 25 day period immediately following the
end of the interest period for which an interest rate is declared on such
fixed interest option(s).
Subject to and in accordance with the provisions of this contract and after the
Annuity Date, the Contract Owner may transfer amounts among subaccounts of the
Separate Account. Upon death of the Contract Owner or the Annuitant and under
the election of a Variable Annuity option, the beneficiary shall have the right
to transfer amounts among the subaccounts of the Separate Account, provided
that:
(a) the minimum amount which may be transferred is $250 or, if less, the full
amount held in the subaccount;
(b) for partial transfers, the amount remaining in a subaccount must be at
least $250.
A004368P
<PAGE>
15. Withdrawal
Withdrawal. Prior to the earlier of the Annuity Date, the death of the Contract
Owner or the death of the Annuitant, the Contract Owner may withdraw all or part
of the Contract Value.
Withdrawal Payments. The Contract Owner may make a full or partial withdrawal.
The minimum withdrawal is $500.
At the time of a partial withdrawal, the amount remaining in the contract must
be at least $5,000 or such lower amount as the Company may require. A minimum
balance of $250 must be in each subaccount or a fixed interest option. If the
Contract Owner makes a full withdrawal, the contract must be returned to the
Company.
Unless otherwise specified by the Contract Owner, the withdrawal will be made
first prorata from the subaccounts of the Separate Account up to the Variable
Account Value, and then from the Fixed Account beginning with the fixed interest
option with the shortest interest period. Within a fixed interest option,
partial withdrawals will be made from amounts most recently allocated, renewed
or transferred.
Contingent Deferred Sales Charge. The Contingent Deferred Sales Charge will be
imposed upon withdrawals.
For purposes of calculating the Contingent Deferred Sales Charge, purchase
payments will be allocated to the amount withdrawn. The Company will allocate
the purchase payment with the earliest effective date first, then the next
earliest purchase payment until the allocation is equal to the withdrawal
amount. There will be no Contingent Deferred Sales Charge on amounts withdrawn
that exceed the total purchase payments of the contract.
The percentage charged will vary depending upon the number of full contract
years since the purchase payments were made to the time of the withdrawal in
accordance with the table shown on Page 3
The Contingent Deferred Sales Charge will be equal to the sum of charges applied
to the purchase payments associated with the withdrawal. The charge applied to
each purchase payment is equal to the product of (a) multiplied by (b) for each
purchase payment associated with the withdrawal, where :
(a) is the amount of the purchase payment associated with the withdrawal, and
(b) is the percentage that corresponds to the number of full contract years
since the purchase payment.
Systematic Withdrawals. After the contract is issued and prior to the Annuity
Date, the Contract Owner may request a withdraw systematically once each
contract year. The minimum Contract Value to be eligible for a withdrawal of
this type is $25,000 or such lower amount as the Company may require. The
maximum systematic withdrawal amount is set annually; it is equal to 15 % of
total purchase payments. The minimum systematic withdrawal amount is $100. The
withdrawals can be made on a monthly, quarterly, semiannual or annual basis.
A level systematic withdrawal payment will begin one modal period after the date
of receipt of the request. No Contingent Deferred Sales Charge will be applied
to systematic withdrawals under this provision.
The Contract Owner must send the Company written notice to either stop the
systematic withdrawals or to change the amount or the mode of the withdrawals.
The systematic withdrawals will terminate upon the earlier of the death of the
Contract Owner or the Annuitant.
16. General
Ownership of Contract. The Contract Owner must be named in the application. Upon
written notice to the Company, the Contract Owner may assign the contract to a
new Contract Owner.
Deferment of Transfers and Payments. Transfers and payments of withdrawals from
the Variable Account and payment of the Variable Account death benefit will be
made within seven days after receipt by the Company of all documents required
for such transfer, payment of withdrawal or payment of death benefits. However,
the Company may defer a transfer, a withdrawal, a death
Page 15
A004369P
<PAGE>
Page 16
16. General (continued)
benefit payment, the Annuity Date or annuity payments under the contract, if:
(1) The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
(2) Trading on the New York Stock Exchange is restricted;
(3) An emergency exists such that it is not reasonably practical to dispose of
securities held in the Separate Account or to fairly determine the value of
its assets; or
(4) The Securities and Exchange Commission by order so permits for the
protection of security holders.
Conditions in (2) and (3) will be decided by, or in accordance with rules of,
the Securities and Exchange Commission.
The Company may defer a transfer or payment of a withdrawal from the Fixed
Account or payment of the Fixed Account death benefit for a period not exceeding
six months, if it reasonably determines that investment conditions are such that
an orderly sale of assets held as part of general assets is not possible.
Incontestability. No material misstatement made by the applicant will void the
contract unless it is contained in the written application attached to the
contract. The contract will be incontestable after it has been in force for 2
years from the Contract Date.
Misstatement of Age. If the age of the Annuitant or a joint payee is misstated,
any amount payable under this contract will be that amount which the purchase
payments paid would have purchased on the basis of the correct age.
If the annuity payments have been overpaid because the age of the Annuitant or
joint payee has been misstated, the amount overpaid, with interest at the rate
of 6% per year or such higher rate as state law may require, compounded
annually, will be charged against the payments still to be made under this
contract.
If the annuity payments have been underpaid because the age of the Annuitant or
joint payee has been misstated, the amount underpaid, with interest at the rate
of 6% per year or such higher rate as state law may require, compounded
annually, will be paid in full with the next payment due under this contract.
Proof of Age and Survival. The Company may require satisfactory proof of
correct age at any time. If any payment under this contract depends on the
payee being alive, the Company may require satisfactory proof of survival.
The Contract. The contract, any endorsements, any riders and its attached
application are the entire contract. It is issued in consideration of the
application and purchase payments.
Only the President, a Vice President, an Associate Actuary, an Actuary or
Secretary of the Company may change the contract. Any change must be in
writing.
At any time, the Company may make such changes in this contract as are required
to make it conform with any law or regulation issued by any government agency to
which it is subject.
Participating Contract. The contract may participate in divisible surplus of
Penn Mutual. Divisible surplus, if any, to be apportioned to the contract shall
be apportioned annually and shall be paid in cash or credited to the Contract
Value at the end of the contract year. No divisible surplus is expected to be
apportioned to this contract in the foreseeable future.
Dates. Contract years and anniversaries are measured from the Contract Date.
Notices, Changes and Choices. To be effective, all notices, changes and choices
which the Contract Owner may make under the contract must be in writing.
Contract Owner should provide notification on a form provided or approved by
the Company, signed and received by the Company at its Administrative Office or
designated service office. If acceptable to the Company, notices, changes and
choices relating to beneficiaries and ownership will take effect as of the date
signed unless the Company has already acted in reliance on the prior status.
The Company is not responsible for their validity.
Contract Payments. All sums payable to or by the Company are payable at its
designated service office.
Protection of Proceeds. Annuity payments under this contract may not be
assigned by the payee prior to their due dates. To the extent allowed by law,
annuity payments are not subject to legal process for debts of a payee.
A004370P
<PAGE>
16. General (continued)
Compliance with Minimum Value Requirements. Annuity, death and withdrawal
benefits are not less than the minimum benefits required under applicable laws
and regulations of the jurisdiction in which this contract is delivered.
The benefits provided under the Fixed Account of this contract are increased by
interest credited in excess of the guaranteed minimums, if any.
Periodic Reports. As required by federal and state law and at least once each
year, the Company will furnish the Contract Owner with periodic reports. The
periodic reports will contain information on the Separate Account, the Variable
Account Value, the number of Accumulation Units, the value per Accumulation Unit
and the Fixed Account Value.
A004371P
<PAGE>
Page 17
Additional Contract Specifications
Eligible Mutual Funds
- - ---------------------
Penn Series Funds, Inc.
Independence Capital (ICMI) Vontobel USA
Money Market International Equity
Quality Bond
Growth Equity T. Rowe Price
High Yield Bond
OpCap Advisors Flexibly Managed
Value Equity
Small Capitalization
Neuberger & Berman Advisers Management Trust
Neuberger & Berman
Limited Maturity Bond Portfolio
Balanced Portfolio
Variable Insurance Product Funds Variable Insurance Product Funds II
Fidelity Management Fidelity Management
Equity Income Asset Manager
Growth
Eligible Fixed Interest Options
-------------------------------
One Year
EXCEPT WITH THE CONSENT OF PENN MUTUAL, THERE CAN BE NO ALLOCATION OF PURCHASE
PAYMENTS AND TRANSFERS TO MORE THAN 17 OF THE FUNDS AND THE FIXED INTEREST
ACCOUNTS PRIOR TO THE ANNUITY DATE. FOLLOWING THE ANNUITY DATE, THE INITIAL
ALLOCATION AND SUBSEQUENT TRANSFERS CAN BE TO NO MORE THAN 1 FIXED INTEREST
OPTION AND 3 FUNDS OVER THE PHASE OF THE CONTRACT.
A004385P
<PAGE>
Please notify the Company promptly of any change in address.
Annual Election - The Company is a mutual life insurance company. It has no
stockholders. The Contract Owner of this contract is a member of The Company
while this contract is in force during the life of the Annuitant before the
Annuity Date and before total withdrawal of the Contract Value. Members have the
right to vote in person or by proxy at the annual election of Trustees held at
the Home Office, on the first Tuesday of March. If more information is desired,
it may be obtained from the Secretary.
VALUES AND PAYMENTS UNDER THIS CONTRACT, WHEN BASED UPON THE INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT.
Individual Variable and Fixed
Annuity Contract
Flexible Purchase Payments
. Annuity Payments payable on Annuity Date
. Flexible Purchase Payments payable until Annuity Date
. Participating
. The Company will make monthly annuity payments and
other payments as set forth in this contract.
The Penn Mutual Life Insurance Company, Philadelphia, Pennsylvania 19172
VAB-98
A004374B
<PAGE>
Rider - Guaranteed Minimum Death Benefit - Rising Floor
The Penn Mutual Life Insurance Company agrees, subject to the provisions of this
supplemental agreement, to provide the Guaranteed Minimum Death Benefit as
applied for on the application. The Company also agrees to provide all of the
other benefits which are stated in this agreement.
This agreement is a part of the policy to which it is attached. It is subject
to all of the provisions of the policy unless stated otherwise in this
agreement. This agreement enhances the death benefit section in the contract
to which it is attached.
Death Before the Annuity Date - Prior to the Annuity Date and upon receipt of
due proof of the Annuitant's death and the necessary forms to make payment to a
beneficiary, the Company will pay to the beneficiary the Guaranteed Minimum
Death Benefit in place of the Variable Account Death Benefit if it is greater.
The Guaranteed Minimum Death Benefit will be the sum of the purchase payments
paid into the Variable Account less any reduction for a withdrawal from the
Variable Account as described below accumulated with interest at an effective
annual rate of 5%. The accumulation will be from the effective date of the
purchase payment or the withdrawal to the date of payment of the Guaranteed
Minimum Death Benefit or to age 80, if earlier. After age 80, the purchase
payments and withdrawals will be reflected in the Guaranteed Minimum Death
Benefit value but will not accumulate further interest.
When part of the Variable Account Value is withdrawn, the withdrawal will reduce
the Guaranteed Minimum Death Benefit in the same proportion that the Variable
Account Value was reduced on the date of withdrawal. For each withdrawal, the
Guaranteed Minimum Death Benefit reduction is calculated by multiplying the
Guaranteed Minimum Death Benefit on the date of withdrawal by a fraction, the
numerator of which is the amount of the withdrawal including any applicable
Contingent Deferred Sales Charge and the denominator of which is the Variable
Account Value immediately prior to the withdrawal.
Transfers into the Variable Account will be treated as purchase payments
allocated to the Variable Account for the Guaranteed Minimum Death Benefit
calculation described above. Similarly, transfers out of the Variable Account
will be treated as withdrawals from the Variable Account.
Charge - While this agreement is in force, an asset based charge will be
assessed. The charge will be a percentage of the average variable account
value. On an annual basis the percentage will not exceed the amount shown on
Page 3 of the contract. The charge will be deducted on the dates specified on
Page 3. It will also be deducted when the Variable Account Value is withdrawn
or transferred in full if withdrawal or transfer is not on the date specified on
Page 3. The charge will be deducted on the date of payment of the Death Benefit
and on the date of annuitization. If the charge is deducted on a date other
than that specified on Page 3, only a fraction of the charge will be deducted.
The fraction will be equal to the portion of the year that the contract was
inforce.
Average Variable Account Values - The average variable account value is equal to
the variable account value at the beginning of the contract year plus the
variable account value at the time the charge is assessed divided by two. At
the time of the first deduction, the beginning of the contract year value will
be equal to the initial purchase payment allocated to the variable account.
Termination of Agreement - This agreement will terminate upon :
(a) the Termination Date for this agreement shown on Page 3 of the Contract;
(b) surrender of this contract;
(c) full withdrawal of the variable account;
(d) annuitization; or
(e) receipt by the Company of a written request by the Owner to discontinue it.
Effective Date - The effective date of this agreement is the same as the Date of
Issue of this policy unless another effective date is shown below.
/s/ Robert E. Chappell
Chairman and
Chief Executive Offer
GDBRF-98
A004263R
<PAGE>
Rider - Guaranteed Minimum Death Benefit - Step Up
The Penn Mutual Life Insurance Company agrees, subject to the provisions of this
supplemental agreement, to provide the Guaranteed Minimum Death Benefit as
applied for on the application. The Company also agrees to provide all of the
other benefits which are stated in this agreement.
This agreement is a part of the policy to which it is attached. It is subject
to all of the provisions of the policy unless stated otherwise in this
agreement. This agreement enhances the death benefit section in the contract
to which it is attached.
Death Before the Annuity Date. Prior to the Annuity Date and upon receipt of
due proof of the Annuitant's death and the necessary forms to make payment to a
beneficiary, the Company will pay to the beneficiary the Guaranteed Minimum
Death Benefit in place of the Variable Account Death Benefit if it is greater.
On each Contract Anniversary, the Guaranteed Minimum Death Benefit will be equal
to the greater of:
(1) the Guaranteed Minimum Death Benefit currently in effect; or
(2) the Variable Account Value on the current Contract Anniversary.
The Guaranteed Minimum Death Benefit after the Contract Anniversary will be the
Guaranteed Minimum Death Benefit on the Contract Anniversary plus the sum of
purchase payments paid into the Variable Account after the Contract Anniversary
less any reduction for a withdrawal from the Variable Account as described
below.
When part of the Variable Account Value is withdrawn, the withdrawal will reduce
the Guaranteed Minimum Death Benefit in the same proportion that the Variable
Account Value was reduced on the date of withdrawal. For each withdrawal, the
Guaranteed Minimum Death Benefit reduction is calculated by multiplying the
Guaranteed Minimum Death Benefit on the date of withdrawal by a fraction, the
numerator of which is the amount of the withdrawal including any applicable
Contingent Deferred Sales Charge and the denominator of which is the Variable
Account Value immediately prior to the withdrawal.
Transfers into the Variable Account will be treated as purchase payments
allocated to the Variable Account for the Guaranteed Minimum Death Benefit
calculation described above. Similarly, transfers out of the Variable Account
will be treated as withdrawals from the Variable Account.
Charge--While this agreement is in force, an asset based charge will be
assessed. The charge will be a percentage of the average variable account
value. On an annual basis the percentage will not exceed the amount shown on
Page 3 of the contract. The charge will be deducted on the dates specified on
Page 3. It will also be deducted when the Variable Account Value is withdrawn
or transferred in full if withdrawal or transfer is not on the date specified on
Page 3. The charge will be deducted on the date of payment of the Death Benefit
and on the date of annuitization. If the charge is deducted on a date other
than that specified on Page 3, only a fraction of the charge will be deducted.
The fraction will be equal to the portion of the year that the contract was
inforce.
Average Variable Account Values-- The average variable account value is equal to
the variable account value at the beginning of the contract year plus the
variable account value at the time the charge is assessed divided by two. At
the time of the first deduction, the beginning of the contract year value will
be equal to the initial purchase payment allocated to the variable account.
Termination of Agreement--This agreement will terminate upon :
(a) the Termination Date for this agreement shown on Page 3 of the Contract;
(b) surrender of this contract;
(c) full withdrawal of the variable account;
(d) annuitization; or
(e) receipt by the Company of a written request by the Owner to discontinue it.
Effective Date--The effective date of this agreement is the same as the Date of
Issue of this policy unless another effective date is shown below.
/s/ Robert E. Chappell
Chairman and
Chief Executive Offer
GDBSU-98
A004264R
<PAGE>
Exhibit 5
APPLICATION FOR INDIVIDUAL
VARIABLE AND FIXED ANNUITY
THE PENN MUTUAL LIFE INSURANCE COMPANY
Philadelphia, Pa. 19172
<TABLE>
====================================================================================================================================
<S> <C>
1 MARKET TYPE: (Choose one) 2 DEATH BENEFIT OPTION: (Choose one)
[_] Non-Qualified
[_] IRA - (Select Type) [_] Standard If no option is elected, the contract
[_] Rollover [_] Transfer [_] Custodial [_] Rising Floor will be issued with a Standard
[_] 403(b) Transfer [_] Step Up Death Benefit.
====================================================================================================================================
3 CONTRACT OWNER: 4 ANNUITANT: (If different from Contract Owner)
- - ------------------------------------------------------ ----------------------------------------------------
Name (First, Middle, Last) (Please Print) Name (First, Middle, Last) (Please Print)
- - ------------------------------------------------------ ------------------------------------------------------
Address Address
- - ------------------------------------------------------- ------------------------------------------------------
City State Zip Code City State Zip Code
- - -------------------------------------------------------- ------------------------------------------------------
Date of Birth Sex Date of Birth Sex
- - -------------------------------------------------------- ------------------------------------------------------
Social Security No./Tax ID Social Security No./Tax ID
- - -------------------------------------------------------- --------------------------------------------------------
Daytime Telephone Number Daytime Telephone Number
- - -------------------------------------------------------- --------------------------------------------------------
Employer Name Employer Name
- - -------------------------------------------------------- --------------------------------------------------------
City State Zip Code City State Zip Code
====================================================================================================================================
5 BENEFICIARIES: 6 ANNUITY DATE:
PRIMARY BENEFICIARY: ______________________________________ SELECT ANNUITY DATE:
Social Security No.: _____________________________________ MO. DAY YR.
Relationship to Annuitant: ________________________________ 01
CONTINGENT BENEFICIARY: ___________________________________ If no date is selected, the Annuity Date will be the later of
the first day of the month following the Annuitant's 95th
Social Security No.: ______________________________________ birthday or 10 years after the issue date.
Relationship to Annuitant: ________________________________
====================================================================================================================================
7 PURCHASE PAYMENT: ($25,000 Minimum) MAKE CHECK PAYABLE TO:
PURCHASE PAYMENT $ _________________________ The Penn Mutual Life Insurance Company
====================================================================================================================================
8 DOLLAR COST AVERAGING:
Allocate ________ % of my initial purchase payment to the following Dollar Cost Averaging Source Account (select one):
[_] AMT Limited Maturity Bond Fund; [_] Quality Bond Fund; [_] Money Market Fund.
Over a _____ month period (maximum is 60 months) transfer the initial allocated purchase payment in equal monthly payments based
on the allocation listed in the Fund Allocation section below. The first monthly transfer will take place on the 15th of the
month following the date of issue and each month thereafter for the period indicated above. The Dollar Cost Averaging Program
will terminate on the earlier of the end of the period indicated above or after exhausting all amounts for the source account
indicated above.
====================================================================================================================================
9 FUND ALLOCATION: (Indicate whole percentages. Total allocations in this section must equal 100%.) Select the Variable Investment
Options and/or Fixed Interest Options that will be used to allocate the initial purchase payment (less the Dollar Cost Averaging
Amount); the subsequent purchase payments and the monthly dollar cost averaging transactions.
FIDELITY INVESTMENTS NEUBERGER & BERMAN VONTOBEL USA
---- % VIP Equity Income ---- % AMT Limited Maturity Bond ---- % International Equity
---- % VIP Growth ---- % AMT Balanced MORGAN STANLEY
---- % VIP II Asset Manager ---- % AMT Partners ---- % Emerging Markets Equity (Int'l)
---- % VIP II Index 500 THE PENN MUTUAL LIFE INSURANCE COMPANY
INDEPENDENCE CAPITAL (ICMI) OPCAP ADVISORS FIXED INTEREST OPTIONS
---- % Money Market ---- % Value Equity ---- % 1 Year Fixed Interest (not available
---- % Quality Bond ---- % Small Capitalization with Dollar Cost Averaging)
---- % Growth Equity T. ROWE PRICE
ICMI/ROBERTSON STEPHENS ---- % High Yield Bond
---- % Emerging Growth ---- % Flexibly Managed
- - ------------------------------------------------------------------------------------------------------------------------------------
PM 5798 Version 8/98
Page 1 of 2
</TABLE>
<PAGE>
<TABLE>
<S> <C>
- - ------------------------------------------------------------------------------------------------------------------------------------
VALUES AND PAYMENTS UNDER THIS CONRACT, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE. THEY MAY
DECREASE OR INCREASE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
- - ------------------------------------------------------------------------------------------------------------------------------------
PM5798
10 REPLACEMENT: IS THIS ANNUITY INTENDED TO REPLACE OR CHANGE EXISTING LIFE INSURANCE OR ANNUITIES? [_] Yes [_] No
If yes, list insurance company and policy number in the Remarks Section. If this is an exchange under IRC Section 1035, attach
necessary 1035 Exchange Forms.
====================================================================================================================================
11 NOTICES:
FRAUD - Any person, who knowingly and with intent to defraud any insurance company or other person, files an application for
-----
insurance or a statement of claim containing any materially false information or conceals for the purpose of misleading
information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person
to criminal and civil penalties.
====================================================================================================================================
12 ACKNOWLEDGEMENT:
I hereby represent that my answers to the above sections are correct and true to the best of my knowledge and belief. By
signing below, I understand that:
a) The contract value and annuity payments, when based on investment experience of a separate account, are variable and are not
guaranteed as to a fixed dollar amount;
b) This annuity is a long term commitment to meet insurance needs and financial goals; and I acknowledge receipt of the most
recent prospectus;
c) The annuity applied for is suitable for my investment objectives and my financial situation and needs; and
d) The owner has the privilege of Telephone Transfers.
VALUES AND PAYMENTS UNDER THIS CONTRACT, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE. THEY MAY
DECREASE OR INCREASE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
SIGNATURES:
Signed at: ____________________________ ______________________________ _____________________________________
City State Date Signed
____________________________ ________________________________________________________
Signature of Contract Owner Signature of Annuitant (if different from Contract Owner)
====================================================================================================================================
13 REGISTERED REPRESENTATIVE:
Do you have any reason to believe the contract applied for is to replace
existing insurance or annuities? [_] Yes [_] No
_________________________________________ ____________________________________________________________________________________
Signature of Registered Representative Printed Name of Registered Representative State License Number
(Resident agent if required by law)
________________________________________ ____________________________________________________________________________________
Telephone No. Office Code (3 digit) Representative Code (5 digit)
________________________________________ ____________________________________________________________________________________
Office/Firm Name Broker/Dealer Name
Commission Information Office 5-Digit
Representative Code Number Representative Code Percent (%)
____________________________ __________________________ ________________________________ __________________________
____________________________ __________________________ ________________________________ __________________________
____________________________ __________________________ ________________________________ __________________________
===================================================================================================================================
14 SEND APPLICATION, CHECK & OTHER REQUIRED FORMS TO:
The Penn Mutual Life Insurance Company
600 Dresher Road - C2L
Horsham, PA 19044
====================================================================================================================================
15 REMARKS:
- - ------------------------------------------------------------------------------------------------------------------------------------
PM 5798 Version 8/98
Page 2 of 2
</TABLE>
<PAGE>
[Penn Mutual Letter Head]
November 30, 1998
Board of Trustees
The Penn Mutual Life Insurance Company
Philadelphia, PA 19172
Ladies and Gentlemen:
Re: Individual Variable and Fixed Annuity Contracts
SEC Registration Statement - SEC File No. 333-62825
---------------------------------------------------
In my opinion the individual variable annuity contract, registered with
the U.S. Securities and Exchange Commission under the above-reference
registration statement, will, when issued, be legally issued and represent legal
obligations of the Company.
I hereby consent to the inclusion of this opinion in the above
referenced registration statement as an exhibit.
Sincerely,
/s/ Franklin L. Best, Jr.
Franklin L. Best, Jr
Associate General Counsel
<PAGE>
EXHIBIT B.10.A
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Financial
Statements" in the Prospectus and "Independent Auditors" in the Statement of
Additional Information, and to the inclusion in the Pre-Effective Amendment
Number 24 to the Registration Statement (Form N-4 No. 333-62825) and related
prospectus of the Penn Mutual Variable Annuity Account III of those references
and of our report dated January 30, 1998 on The Penn Mutual Life Insurance
Company.
Philadelphia, Pennsylvania
November 25, 1998
<PAGE>
EXHIBIT B.10.B
[LETTERHEAD OF PRICEWATERHOUSECOOPERS LLP]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in the Statement of Additional Information of this
Registration Statement on Form N-4, filed on behalf of the Penn Mutual Life
Insurance Company and Penn Mutual Variable Annuity Account III under the
Securities Act of 1933 and as Amendment No. 24 under the Investment Company Act
of 1940 (file No. 2-77283), of our report, which includes an explanatory
paragraph regarding the adoption of several accounting pronouncements, dated
January 31, 1997 on our audits of the consolidated financial statements of The
Penn Mutual Life Insurance Company as of December 31, 1996 and for the two year
period ended December 31, 1996.
/s/ PricewaterhouseCoopers LLP
November 25, 1998
<PAGE>
Exhibit 10(c)
1701 Market Street Morgan, Lewis
Philadelphia, PA 19103-2921 & Bockius LLP
215-963-5000 Counselors At Law
Fax: 215-963-5299
November 25, 1998
Board of Trustees
The Penn Mutual Life Insurance Company
Philadelphia, PA 19172
Re: Penn Mutual Variable Annuity Account III (the "Separate Account")
Registration Statement on Form N-4
File No. 333-62825
811-03457
---------------------------------------------------------------
Dear Ladies and Gentlemen:
We hereby consent to the reference of our name under the caption "Legal Matters"
in the Statement of Additional Information filed as part of Pre-Effective
Amendment No. 1 to the above referred Registration Statement on Form N-4 under
the Securities Act of 1933 on behalf of the Separate Account and as Amendment
No.24 to the Separate Account's Registration Statement under the Investment
Company Act of 1940. 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,
/s/ Morgan, Lewis & Bockius LLP
- - -------------------------------
Morgan, Lewis & Bockius LLP
<PAGE>
1yr cmdr 3 bkup
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Table 3 - Commander Variable/Fixed Annuity Contracts Commander - 1 YR - Tbl 3
- - ------------------------------------------------------------------------------------------------------------------------------------
Average
Q = qualified $40 Contract # of units Annual Total
N = nonqualified Beginning # of units fee & deferred at end of Ending return for
- - ------------------------------------------------------------------------------------------------------------------------------------
amethod system fund qnonq accdate unitval Value at $1000 sales load period Value 1yr
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 CMDR EMGGRO Q 10/31/97 10.698921 10000.000000 934.673693 0.000000 934.673693 10000.000000 -6.56%
3 CMDR EMGGRO Q 10/31/98 10.000000 9346.736928 934.673693 0.235290 934.438403 9344.384028 -6.56%
3 CMDR EMGMKT Q 10/31/97 15.167002 10000.000000 659.326082 0.000000 659.326082 10000.000000 -34.09%
3 CMDR EMGMKT Q 10/31/98 10.000000 6593.260817 659.326082 0.235290 659.090792 6590.907917 -34.09%
3 CMDR FIDASM Q 10/31/97 10.466969 10000.000000 955.386416 0.000000 955.386416 10000.000000 -4.48%
3 CMDR FIDASM Q 10/31/98 10.000000 9553.864161 955.386416 0.235290 955.151126 9551.511261 -4.48%
3 CMDR FIDEQI Q 10/31/97 9.832242 10000.000000 1017.062029 0.000000 1017.062029 10000.000000 1.68%
3 CMDR FIDEQI Q 10/31/98 10.000000 10170.620292 1017.062029 0.235290 1016.826739 10168.267392 1.68%
3 CMDR FIDGRO Q 10/31/97 9.443042 10000.000000 1058.980782 0.000000 1058.980782 10000.000000 5.87%
3 CMDR FIDGRO Q 10/31/98 10.000000 10589.807818 1058.980782 0.235290 1058.745492 10587.454918 5.87%
3 CMDR FIDIND Q 10/31/97 8.674156 10000.000000 1152.849914 0.000000 1152.849914 10000.000000 15.26%
3 CMDR FIDIND Q 10/31/98 10.000000 11528.499142 1152.849914 0.235290 1152.614624 11526.146242 15.26%
3 CMDR FLEXMN Q 10/31/97 9.450782 10000.000000 1058.113498 0.000000 1058.113498 10000.000000 5.79%
3 CMDR FLEXMN Q 10/31/98 10.000000 10581.134979 1058.113498 0.235290 1057.878208 10578.782079 5.79%
3 CMDR GROWEQ Q 10/31/97 8.378687 10000.000000 1193.504424 0.000000 1193.504424 10000.000000 19.33%
3 CMDR GROWEQ Q 10/31/98 10.000000 11935.044238 1193.504424 0.235290 1193.269134 11932.691338 19.33%
3 CMDR HIBOND Q 10/31/97 9.897609 10000.000000 1010.345024 0.000000 1010.345024 10000.000000 1.01%
3 CMDR HIBOND Q 10/31/98 10.000000 10103.450237 1010.345024 0.235290 1010.109734 10101.097337 1.01%
3 CMDR INTLEQ Q 10/31/97 9.260726 10000.000000 1079.828946 0.000000 1079.828946 10000.000000 7.96%
3 CMDR INTLEQ Q 10/31/98 10.000000 10798.289465 1079.828946 0.235290 1079.593656 10795.936565 7.96%
3 CMDR LIMMAT Q 10/31/97 9.687836 10000.000000 1032.222263 0.000000 1032.222263 10000.000000 3.20%
3 CMDR LIMMAT Q 10/31/98 10.000000 10322.222631 1032.222263 0.235290 1031.986973 10319.869731 3.20%
3 CMDR PARTNR Q 10/31/97 9.994281 10000.000000 1000.572227 0.000000 1000.572227 10000.000000 0.03%
3 CMDR PARTNR Q 10/31/98 10.000000 10005.722273 1000.572227 0.235290 1000.336937 10003.369373 0.03%
3 CMDR QUALBD Q 10/31/97 9.114059 10000.000000 1097.205976 0.000000 1097.205976 10000.000000 9.70%
3 CMDR QUALBD Q 10/31/98 10.000000 10972.059760 1097.205976 0.235290 1096.970686 10969.706860 9.70%
3 CMDR SMLCAP Q 10/31/97 11.846639 10000.000000 844.121274 0.000000 844.121274 10000.000000 -15.61%
3 CMDR SMLCAP Q 10/31/98 10.000000 8441.212736 844.121274 0.235290 843.885984 8438.859836 -15.61%
3 CMDR VALUEQ Q 10/31/97 9.185399 10000.000000 1088.684335 0.000000 1088.684335 10000.000000 8.84%
3 CMDR VALUEQ Q 10/31/98 10.000000 10886.843348 1088.684335 0.235290 1088.449045 10884.490448 8.84%
</TABLE>
Page 2
<PAGE>
1 yr cmdr 2 bkup
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Table 2 - Commander Variable/Fixed Annuity Contracts Commander - 1 YR - Tbl 2
- - ------------------------------------------------------------------------------------------------------------------------------------
Average
Q = qualified $40 Contract # of units Annual Total
N = nonqualified Beginning # of units fee & deferred at end of Ending return for
- - ------------------------------------------------------------------------------------------------------------------------------------
amethod system fund qnonq accdate unitval Value at $1000 sales load period Value 1yr
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 CMDR BALFND Q 10/31/97 10.102222 1000.000000 98.988124 0.000000 98.988124 1000.000000 -1.25%
2 CMDR BALFND Q 10/31/98 10.000000 989.881236 98.988124 0.235290 98.752834 987.528336 -1.25%
2 CMDR EMGGRO Q 10/31/97 10.698921 1000.000000 93.467369 0.000000 93.467369 1000.000000 -6.77%
2 CMDR EMGGRO Q 10/31/98 10.000000 934.673693 93.467369 0.235290 93.232079 932.320793 -6.77%
2 CMDR EMGMKT Q 10/31/97 15.167002 1000.000000 65.932608 0.000000 65.932608 1000.000000 -34.30%
2 CMDR EMGMKT Q 10/31/98 10.000000 659.326082 65.932608 0.235290 65.697318 656.973182 -34.30%
2 CMDR FIDASM Q 10/31/97 10.466969 1000.000000 95.538642 0.000000 95.538642 1000.000000 -4.70%
2 CMDR FIDASM Q 10/31/98 10.000000 955.386416 95.538642 0.235290 95.303352 953.033516 -4.70%
2 CMDR FIDEQI Q 10/31/97 9.832242 1000.000000 101.706203 0.000000 101.706203 1000.000000 1.47%
2 CMDR FIDEQI Q 10/31/98 10.000000 1017.062029 101.706203 0.235290 101.470913 1014.709129 1.47%
2 CMDR FIDGRO Q 10/31/97 9.443042 1000.000000 105.898078 0.000000 105.898078 1000.000000 5.66%
2 CMDR FIDGRO Q 10/31/98 10.000000 1058.980782 105.898078 0.235290 105.662788 1056.627882 5.66%
2 CMDR FIDIND Q 10/31/97 8.674156 1000.000000 115.284991 0.000000 115.284991 1000.000000 15.05%
2 CMDR FIDIND Q 10/31/98 10.000000 1152.849914 115.284991 0.235290 115.049701 1150.497014 15.05%
2 CMDR FLEXMN Q 10/31/97 9.450782 1000.000000 105.811350 0.000000 105.811350 1000.000000 5.58%
2 CMDR FLEXMN Q 10/31/98 10.000000 1058.113498 105.811350 0.235290 105.576060 1055.760598 5.58%
2 CMDR GROWEQ Q 10/31/97 8.378687 1000.000000 119.350442 0.000000 119.350442 1000.000000 19.12%
2 CMDR GROWEQ Q 10/31/98 10.000000 1193.504424 119.350442 0.235290 119.115152 1191.151524 19.12%
2 CMDR HIBOND Q 10/31/97 9.897609 1000.000000 101.034502 0.000000 101.034502 1000.000000 0.80%
2 CMDR HIBOND Q 10/31/98 10.000000 1010.345024 101.034502 0.235290 100.799212 1007.992124 0.80%
2 CMDR INTLEQ Q 10/31/97 9.260726 1000.000000 107.982895 0.000000 107.982895 1000.000000 7.75%
2 CMDR INTLEQ Q 10/31/98 10.000000 1079.828946 107.982895 0.235290 107.747605 1077.476046 7.75%
2 CMDR LIMMAT Q 10/31/97 9.687836 1000.000000 103.222226 0.000000 103.222226 1000.000000 2.99%
2 CMDR LIMMAT Q 10/31/98 10.000000 1032.222263 103.222226 0.235290 102.986936 1029.869363 2.99%
2 CMDR PARTNR Q 10/31/97 9.994281 1000.000000 100.057223 0.000000 100.057223 1000.000000 -0.18%
2 CMDR PARTNR Q 10/31/98 10.000000 1000.572227 100.057223 0.235290 99.821933 998.219327 -0.18%
2 CMDR QUALBD Q 10/31/97 9.114059 1000.000000 109.720598 0.000000 109.720598 1000.000000 9.49%
2 CMDR QUALBD Q 10/31/98 10.000000 1097.205976 109.720598 0.235290 109.485308 1094.853076 9.49%
2 CMDR SMLCAP Q 10/31/97 11.846639 1000.000000 84.412127 0.000000 84.412127 1000.000000 -15.82%
2 CMDR SMLCAP Q 10/31/98 10.000000 844.121274 84.412127 0.235290 84.176837 841.768374 -15.82%
2 CMDR VALUEQ Q 10/31/97 9.185399 1000.000000 108.868433 0.000000 108.868433 1000.000000 8.63%
2 CMDR VALUEQ Q 10/31/98 10.000000 1088.684335 108.868433 0.235290 108.633143 1086.331435 8.63%
</TABLE>
Page 1
<PAGE>
1 yr cmdr 1a bkup
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------------
Table 1A - Commander Variable/Fixed Annuity Contracts Commander - 1 YR - Tbl 1a
- - -----------------------------------------------------------------------------------------------------------------------------------
(assuming no purchase payments made after first contract year)
- - -----------------------------------------------------------------------------------------------------------------------------------
Average
Q = qualified $40 Contract # of units Annual Total
N = nonqualified Beginning # of units fee & deferred at end of Ending return for
- - -----------------------------------------------------------------------------------------------------------------------------------
amethod system fund qnonq accdate unitval Value at $1000 sales load period Value 1yr
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1a CMDR BALFND Q 10/31/97 10.102222 1000.000000 98.988124 0.000000 98.988124 1000.000000 -1.25%
1a CMDR BALFND Q 10/31/98 10.000000 989.881236 98.988124 0.235290 98.752834 987.528336 -1.25%
1a CMDR EMGGRO Q 10/31/97 10.698921 1000.000000 93.467369 0.000000 93.467369 1000.000000 -6.77%
1a CMDR EMGGRO Q 10/31/98 10.000000 934.673693 93.467369 0.235290 93.232079 932.320793 -6.77%
1a CMDR EMGMKT Q 10/31/97 15.167002 1000.000000 65.932608 0.000000 65.932608 1000.000000 -34.30%
1a CMDR EMGMKT Q 10/31/98 10.000000 659.326082 65.932608 0.235290 65.697318 656.973182 -34.30%
1a CMDR FIDASM Q 10/31/97 10.466969 1000.000000 95.538642 0.000000 95.538642 1000.000000 -4.70%
1a CMDR FIDASM Q 10/31/98 10.000000 955.386416 95.538642 0.235290 95.303352 953.033516 -4.70%
1a CMDR FIDEQI Q 10/31/97 9.832242 1000.000000 101.706203 0.000000 101.706203 1000.000000 1.47%
1a CMDR FIDEQI Q 10/31/98 10.000000 1017.062029 101.706203 0.235290 101.470913 1014.709129 1.47%
1a CMDR FIDGRO Q 10/31/97 9.443042 1000.000000 105.898078 0.000000 105.898078 1000.000000 5.66%
1a CMDR FIDGRO Q 10/31/98 10.000000 1058.980782 105.898078 0.235290 105.662788 1056.627882 5.66%
1a CMDR FIDIND Q 10/31/97 8.674156 1000.000000 115.284991 0.000000 115.284991 1000.000000 15.05%
1a CMDR FIDIND Q 10/31/98 10.000000 1152.849914 115.284991 0.235290 115.049701 1150.497014 15.05%
1a CMDR FLEXMN Q 10/31/97 9.450782 1000.000000 105.811350 0.000000 105.811350 1000.000000 5.58%
1a CMDR FLEXMN Q 10/31/98 10.000000 1058.113498 105.811350 0.235290 105.576060 1055.760598 5.58%
1a CMDR GROWEQ Q 10/31/97 8.378687 1000.000000 119.350442 0.000000 119.350442 1000.000000 19.12%
1a CMDR GROWEQ Q 10/31/98 10.000000 1193.504424 119.350442 0.235290 119.115152 1191.151524 19.12%
1a CMDR HIBOND Q 10/31/97 9.897609 1000.000000 101.034502 0.000000 101.034502 1000.000000 0.80%
1a CMDR HIBOND Q 10/31/98 10.000000 1010.345024 101.034502 0.235290 100.799212 1007.992124 0.80%
1a CMDR INTLEQ Q 10/31/97 9.260726 1000.000000 107.982895 0.000000 107.982895 1000.000000 7.75%
1a CMDR INTLEQ Q 10/31/98 10.000000 1079.828946 107.982895 0.235290 107.747605 1077.476046 7.75%
1a CMDR LIMMAT Q 10/31/97 9.687836 1000.000000 103.222226 0.000000 103.222226 1000.000000 2.99%
1a CMDR LIMMAT Q 10/31/98 10.000000 1032.222263 103.222226 0.235290 102.986936 1029.869363 2.99%
1a CMDR PARTNR Q 10/31/97 9.994281 1000.000000 100.057223 0.000000 100.057223 1000.000000 -0.18%
1a CMDR PARTNR Q 10/31/98 10.000000 1000.572227 100.057223 0.235290 99.821933 998.219327 -0.18%
1a CMDR QUALBD Q 10/31/97 9.114059 1000.000000 109.720598 0.000000 109.720598 1000.000000 9.49%
1a CMDR QUALBD Q 10/31/98 10.000000 1097.205976 109.720598 0.235290 109.485308 1094.853076 9.49%
1a CMDR SMLCAP Q 10/31/97 11.846639 1000.000000 84.412127 0.000000 84.412127 1000.000000 -15.82%
1a CMDR SMLCAP Q 10/31/98 10.000000 844.121274 84.412127 0.235290 84.176837 841.768374 -15.82%
1a CMDR VALUEQ Q 10/31/97 9.185399 1000.000000 108.868433 0.000000 108.868433 1000.000000 8.63%
1a CMDR VALUEQ Q 10/31/98 10.000000 1088.684335 108.868433 0.235290 108.633143 1086.331435 8.63%
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 1
<PAGE>
5yr cmdr 3 bkup
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------------
Table 3 - Commander Variable/Fixed Annuity Contracts Commander - 5 YR - Tbl 3
- - -----------------------------------------------------------------------------------------------------------------------------------
Average
Q = qualified $40 Contract # of units Annual Total
N = nonqualified Beginning # of units fee & deferred at end of Ending return for
- - ------------------------------------------------------------------------------------------------------------------------------------
amethod system fund qnonq accdate unitval bvalue bunits cunits rvalue eunits 5yr
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 CMDR EMGGRO Q 10/31/97 10.698921 10000.000000 934.673693 0.000000 10000.000000 934.673693 0.00%
3 CMDR EMGGRO Q 10/31/98 10.000000 9346.736928 934.673693 0.235290 9344.384028 934.438403 0.00%
3 CMDR EMGMKT Q 10/31/96 14.473381 10000.000000 690.923565 0.000000 10000.000000 690.923565 0.00%
3 CMDR EMGMKT Q 10/31/97 15.167002 10479.239094 690.923565 0.155133 10476.886194 690.768432 0.00%
3 CMDR EMGMKT Q 10/31/98 10.000000 6907.684323 690.768432 0.235290 6905.331423 690.533142 0.00%
3 CMDR FIDASM Q 10/31/93 6.038585 10000.000000 1656.017097 0.000000 10000.000000 1656.017097 10.59%
3 CMDR FIDASM Q 10/31/94 6.029620 9985.153807 1656.017097 0.390224 9982.800907 1655.626873 10.59%
3 CMDR FIDASM Q 10/31/95 6.370239 10546.738877 1655.626873 0.369358 10544.385977 1655.257515 10.59%
3 CMDR FIDASM Q 10/31/96 6.868746 11369.543435 1655.257515 0.342552 11367.190535 1654.914963 10.59%
3 CMDR FIDASM Q 10/31/97 10.466969 17321.943619 1654.914963 0.224793 17319.590719 1654.690170 10.59%
3 CMDR FIDASM Q 10/31/98 10.000000 16546.901704 1654.690170 0.235290 16544.548804 1654.454880 10.59%
3 CMDR FIDEQI Q 10/31/93 4.201307 10000.000000 2380.211682 0.000000 10000.000000 2380.211682 18.91%
3 CMDR FIDEQI Q 10/31/94 4.594567 10936.042046 2380.211682 0.512105 10933.689146 2379.699577 18.91%
3 CMDR FIDEQI Q 10/31/95 5.531637 13163.634228 2379.699577 0.425353 13161.281328 2379.274224 18.91%
3 CMDR FIDEQI Q 10/31/96 6.378591 15176.417149 2379.274224 0.368875 15174.064249 2378.905349 18.91%
3 CMDR FIDEQI Q 10/31/97 9.832242 23389.973087 2378.905349 0.239305 23387.620187 2378.666045 18.91%
3 CMDR FIDEQI Q 10/31/98 10.000000 23786.660445 2378.666045 0.235290 23784.307545 2378.430755 18.91%
3 CMDR FIDGRO Q 10/31/93 5.393156 10000.000000 1854.201881 0.000000 10000.000000 1854.201881 13.12%
3 CMDR FIDGRO Q 10/31/94 5.365612 9948.927863 1854.201881 0.438515 9946.574963 1853.763366 13.12%
3 CMDR FIDGRO Q 10/31/95 7.283556 13501.989289 1853.763366 0.323043 13499.636389 1853.440324 13.12%
3 CMDR FIDGRO Q 10/31/96 7.274787 13483.383571 1853.440324 0.323432 13481.030671 1853.116891 13.12%
3 CMDR FIDGRO Q 10/31/97 9.443042 17499.060636 1853.116891 0.249168 17496.707736 1852.867724 13.12%
3 CMDR FIDGRO Q 10/31/98 10.000000 18528.677238 1852.867724 0.235290 18526.324338 1852.632434 13.12%
3 CMDR FIDIND Q 10/31/93 8.632500 10000.000000 1158.412974 0.000000 10000.000000 1158.412974 2.96%
3 CMDR FIDIND Q 10/31/94 8.816852 10213.555749 1158.412974 0.266864 10211.202849 1158.146110 2.96%
3 CMDR FIDIND Q 10/31/95 5.487838 6355.718233 1158.146110 0.428748 6353.365333 1157.717362 2.96%
3 CMDR FIDIND Q 10/31/96 6.685608 7740.044458 1157.717362 0.351935 7737.691558 1157.365427 2.96%
3 CMDR FIDIND Q 10/31/97 8.674156 10039.168264 1157.365427 0.271254 10036.815364 1157.094173 2.96%
3 CMDR FIDIND Q 10/31/98 10.000000 11570.941731 1157.094173 0.235290 11568.588831 1156.858883 2.96%
3 CMDR FLEXMN Q 10/31/93 6.211483 10000.000000 1609.921495 0.000000 10000.000000 1609.921495 9.97%
3 CMDR FLEXMN Q 10/31/94 6.595798 10618.716980 1609.921495 0.356727 10616.364080 1609.564768 9.97%
3 CMDR FLEXMN Q 10/31/95 7.531872 12123.035810 1609.564768 0.312392 12120.682910 1609.252376 9.97%
</TABLE>
Page 1
<PAGE>
5yr cmdr 3 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 CMDR FLEXMN Q 10/31/96 8.152012 13118.644679 1609.252376 0.288628 13116.291779 1608.963748 9.97%
3 CMDR FLEXMN Q 10/31/97 9.450782 15205.965625 1608.963748 0.248964 15203.612725 1608.714784 9.97%
3 CMDR FLEXMN Q 10/31/98 10.000000 16087.147842 1608.714784 0.235290 16084.794942 1608.479494 9.97%
3 CMDR GROWEQ Q 10/31/93 5.881212 10000.000000 1700.329796 0.000000 10000.000000 1700.329796 11.17%
3 CMDR GROWEQ Q 10/31/94 5.400194 9182.110762 1700.329796 0.435707 9179.757862 1699.894089 11.17%
3 CMDR GROWEQ Q 10/31/95 6.534815 11108.493394 1699.894089 0.360056 11106.140494 1699.534033 11.17%
3 CMDR GROWEQ Q 10/31/96 6.669514 11335.066029 1699.534033 0.352784 11332.713129 1699.181249 11.17%
3 CMDR GROWEQ Q 10/31/97 8.378687 14236.907841 1699.181249 0.280820 14234.554941 1698.900429 11.17%
3 CMDR GROWEQ Q 10/31/98 10.000000 16989.004293 1698.900429 0.235290 16986.651393 1698.665139 11.17%
3 CMDR HIBOND Q 10/31/93 7.367218 10000.000000 1357.364476 0.000000 10000.000000 1357.364476 6.28%
3 CMDR HIBOND Q 10/31/94 7.132529 9681.441488 1357.364476 0.329883 9679.088588 1357.034593 6.28%
3 CMDR HIBOND Q 10/31/95 7.728454 10487.779428 1357.034593 0.304446 10485.426528 1356.730147 6.28%
3 CMDR HIBOND Q 10/31/96 8.604229 11673.616872 1356.730147 0.273459 11671.263972 1356.456688 6.28%
3 CMDR HIBOND Q 10/31/97 9.897609 13425.677924 1356.456688 0.237724 13423.325024 1356.218964 6.28%
3 CMDR HIBOND Q 10/31/98 10.000000 13562.189640 1356.218964 0.235290 13559.836740 1355.983674 6.28%
3 CMDR INTLEQ Q 10/31/93 6.797758 10000.000000 1471.073257 0.000000 10000.000000 1471.073257 8.00%
3 CMDR INTLEQ Q 10/31/94 7.199635 10591.190507 1471.073257 0.326808 10588.837607 1470.746449 8.00%
3 CMDR INTLEQ Q 10/31/95 7.122034 10474.706212 1470.746449 0.330369 10472.353312 1470.416079 8.00%
3 CMDR INTLEQ Q 10/31/96 8.196798 12052.703579 1470.416079 0.287051 12050.350679 1470.129028 8.00%
3 CMDR INTLEQ Q 10/31/97 9.260726 13614.462116 1470.129028 0.254073 13612.109216 1469.874955 8.00%
3 CMDR INTLEQ Q 10/31/98 10.000000 14698.749554 1469.874955 0.235290 14696.396654 1469.639665 8.00%
3 CMDR LIMMAT Q 10/31/93 8.978398 10000.000000 1113.784441 0.000000 10000.000000 1113.784441 2.15%
3 CMDR LIMMAT Q 10/31/94 8.858550 9866.515162 1113.784441 0.265608 9864.162262 1113.518833 2.15%
3 CMDR LIMMAT Q 10/31/95 9.492608 10570.197787 1113.518833 0.247867 10567.844887 1113.270967 2.15%
3 CMDR LIMMAT Q 10/31/96 9.183718 10223.966618 1113.270967 0.256203 10221.613718 1113.014764 2.15%
3 CMDR LIMMAT Q 10/31/97 9.687836 10782.704494 1113.014764 0.242872 10780.351594 1112.771892 2.15%
3 CMDR LIMMAT Q 10/31/98 10.000000 11127.718919 1112.771892 0.235290 11125.366019 1112.536602 2.15%
3 CMDR PARTNR Q 10/31/94 4.806269 10000.000000 2080.615962 0.000000 10000.000000 2080.615962 0.00%
3 CMDR PARTNR Q 10/31/95 5.904215 12284.403973 2080.615962 0.398512 12282.051073 2080.217450 0.00%
3 CMDR PARTNR Q 10/31/96 7.382714 15357.650493 2080.217450 0.318704 15355.297593 2079.898746 0.00%
3 CMDR PARTNR Q 10/31/97 9.994281 20787.092523 2079.898746 0.235425 20784.739623 2079.663322 0.00%
3 CMDR PARTNR Q 10/31/98 10.000000 20796.633217 2079.663322 0.235290 20794.280317 2079.428032 0.00%
3 CMDR QUALBD Q 10/31/93 7.603073 10000.000000 1315.257660 0.000000 10000.000000 1315.257660 5.61%
3 CMDR QUALBD Q 10/31/94 7.038953 9258.036849 1315.257660 0.334268 9255.683949 1314.923391 5.61%
3 CMDR QUALBD Q 10/31/95 8.178361 10753.918180 1314.923391 0.287698 10751.565280 1314.635693 5.61%
3 CMDR QUALBD Q 10/31/96 8.593857 11297.791152 1314.635693 0.273789 11295.438252 1314.361904 5.61%
3 CMDR QUALBD Q 10/31/97 9.114059 11979.171944 1314.361904 0.258162 11976.819044 1314.103743 5.61%
3 CMDR QUALBD Q 10/31/98 10.000000 13141.037428 1314.103743 0.235290 13138.684528 1313.868453 5.61%
3 CMDR SMLCAP Q 10/31/95 8.025482 10000.000000 1246.031080 0.000000 10000.000000 1246.031080 0.00%
</TABLE>
Page 2
<PAGE>
5yr cmdr 3 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 CMDR SMLCAP Q 10/31/96 9.225679 11495.482764 1246.031080 0.255038 11493.129864 1245.776041 0.00%
3 CMDR SMLCAP Q 10/31/97 11.846639 14758.259037 1245.776041 0.198613 14755.906137 1245.577428 0.00%
3 CMDR SMLCAP Q 10/31/98 10.000000 12455.774281 1245.577428 0.235290 12453.421381 1245.342138 0.00%
3 CMDR VALUEQ Q 10/31/93 4.827334 10000.000000 2071.536794 0.000000 10000.000000 2071.536794 15.65%
3 CMDR VALUEQ Q 10/31/94 5.102757 10570.548879 2071.536794 0.461104 10568.195979 2071.075691 15.65%
3 CMDR VALUEQ Q 10/31/95 6.245483 12934.868018 2071.075691 0.376736 12932.515118 2070.698954 15.65%
3 CMDR VALUEQ Q 10/31/96 7.468867 15465.775088 2070.698954 0.315028 15463.422188 2070.383927 15.65%
3 CMDR VALUEQ Q 10/31/97 9.185399 19017.302451 2070.383927 0.256157 19014.949551 2070.127770 15.65%
3 CMDR VALUEQ Q 10/31/98 10.000000 20701.277702 2070.127770 0.235290 20698.924802 2069.892480 15.65%
</TABLE>
Page 3
<PAGE>
5yr cmdr 2bkup
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------------
Table 2 - Commander Variable/Fixed Annuity Contracts Commander - 5 YR - Tbl 2
- - -----------------------------------------------------------------------------------------------------------------------------------
Average
Q = qualified $40 Contract # of units Annual Total
N = nonqualified Beginning # of units fee & deferred at end of Ending return for
- - ------------------------------------------------------------------------------------------------------------------------------------
amethod system fund qnonq accdate unitval bvalue bunits cunits rvalue eunits 5yr
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 CMDR BALFND Q 10/31/93 7.908353 1000.000000 126.448579 0.000000 1000.000000 126.448579 4.58%
2 CMDR BALFND Q 10/31/94 7.717765 975.900418 126.448579 0.304868 973.547518 126.143711 4.58%
2 CMDR BALFND Q 10/31/95 9.146177 1153.732709 126.143711 0.257255 1151.379809 125.886456 4.58%
2 CMDR BALFND Q 10/31/96 8.212922 1033.895644 125.886456 0.286488 1031.542744 125.599968 4.58%
2 CMDR BALFND Q 10/31/97 10.102222 1268.838765 125.599968 0.232909 1266.485865 125.367059 4.58%
2 CMDR BALFND Q 10/31/98 10.000000 1253.670593 125.367059 0.235290 1251.317693 125.131769 4.58%
2 CMDR EMGGRO Q 10/31/97 10.698921 1000.000000 93.467369 0.000000 1000.000000 93.467369 0.00%
2 CMDR EMGGRO Q 10/31/98 10.000000 934.673693 93.467369 0.235290 932.320793 93.232079 0.00%
2 CMDR EMGMKT Q 10/31/96 14.473381 1000.000000 69.092357 0.000000 1000.000000 69.092357 0.00%
2 CMDR EMGMKT Q 10/31/97 15.167002 1047.923909 69.092357 0.155133 1045.571009 68.937224 0.00%
2 CMDR EMGMKT Q 10/31/98 10.000000 689.372237 68.937224 0.235290 687.019337 68.701934 0.00%
2 CMDR FIDASM Q 10/31/93 6.038585 1000.000000 165.601710 0.000000 1000.000000 165.601710 10.40%
2 CMDR FIDASM Q 10/31/94 6.029620 998.515381 165.601710 0.390224 996.162481 165.211486 10.40%
2 CMDR FIDASM Q 10/31/95 6.370239 1052.436652 165.211486 0.369358 1050.083752 164.842128 10.40%
2 CMDR FIDASM Q 10/31/96 6.868746 1132.258706 164.842128 0.342552 1129.905806 164.499576 10.40%
2 CMDR FIDASM Q 10/31/97 10.466969 1721.811965 164.499576 0.224793 1719.459065 164.274783 10.40%
2 CMDR FIDASM Q 10/31/98 10.000000 1642.747834 164.274783 0.235290 1640.394934 164.039493 10.40%
2 CMDR FIDEQI Q 10/31/93 4.201307 1000.000000 238.021168 0.000000 1000.000000 238.021168 18.75%
2 CMDR FIDEQI Q 10/31/94 4.594567 1093.604205 238.021168 0.512105 1091.251305 237.509063 18.75%
2 CMDR FIDEQI Q 10/31/95 5.531637 1313.813923 237.509063 0.425353 1311.461023 237.083710 18.75%
2 CMDR FIDEQI Q 10/31/96 6.378591 1512.260019 237.083710 0.368875 1509.907119 236.714835 18.75%
2 CMDR FIDEQI Q 10/31/97 9.832242 2327.437547 236.714835 0.239305 2325.084647 236.475531 18.75%
2 CMDR FIDEQI Q 10/31/98 10.000000 2364.755310 236.475531 0.235290 2362.402410 236.240241 18.75%
2 CMDR FIDGRO Q 10/31/93 5.393156 1000.000000 185.420188 0.000000 1000.000000 185.420188 12.94%
2 CMDR FIDGRO Q 10/31/94 5.365612 994.892786 185.420188 0.438515 992.539886 184.981673 12.94%
2 CMDR FIDGRO Q 10/31/95 7.283556 1347.324377 184.981673 0.323043 1344.971477 184.658631 12.94%
2 CMDR FIDGRO Q 10/31/96 7.274787 1343.352205 184.658631 0.323432 1340.999305 184.335198 12.94%
2 CMDR FIDGRO Q 10/31/97 9.443042 1740.685021 184.335198 0.249168 1738.332121 184.086031 12.94%
2 CMDR FIDGRO Q 10/31/98 10.000000 1840.860309 184.086031 0.235290 1838.507409 183.850741 12.94%
2 CMDR FIDIND Q 10/31/93 8.632500 1000.000000 115.841297 0.000000 1000.000000 115.841297 2.71%
</TABLE>
Page 1
<PAGE>
5yr cmdr 2 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 CMDR FIDIND Q 10/31/94 8.816852 1021.355575 115.841297 0.266864 1019.002675 115.574433 2.71%
2 CMDR FIDIND Q 10/31/95 5.487838 634.253768 115.574433 0.428748 631.900868 115.145685 2.71%
2 CMDR FIDIND Q 10/31/96 6.685608 769.818915 115.145685 0.351935 767.466015 114.793750 2.71%
2 CMDR FIDIND Q 10/31/97 8.674156 995.738898 114.793750 0.271254 993.385998 114.522496 2.71%
2 CMDR FIDIND Q 10/31/98 10.000000 1145.224962 114.522496 0.235290 1142.872062 114.287206 2.71%
2 CMDR FLEXMN Q 10/31/93 6.211483 1000.000000 160.992150 0.000000 1000.000000 160.992150 9.79%
2 CMDR FLEXMN Q 10/31/94 6.595798 1061.871698 160.992150 0.356727 1059.518798 160.635422 9.79%
2 CMDR FLEXMN Q 10/31/95 7.531872 1209.885440 160.635422 0.312392 1207.532540 160.323030 9.79%
2 CMDR FLEXMN Q 10/31/96 8.152012 1306.955264 160.323030 0.288628 1304.602364 160.034402 9.79%
2 CMDR FLEXMN Q 10/31/97 9.450782 1512.450244 160.034402 0.248964 1510.097344 159.785438 9.79%
2 CMDR FLEXMN Q 10/31/98 10.000000 1597.854383 159.785438 0.235290 1595.501483 159.550148 9.79%
2 CMDR GROWEQ Q 10/31/93 5.881212 1000.000000 170.032980 0.000000 1000.000000 170.032980 10.98%
2 CMDR GROWEQ Q 10/31/94 5.400194 918.211076 170.032980 0.435707 915.858176 169.597273 10.98%
2 CMDR GROWEQ Q 10/31/95 6.534815 1108.286804 169.597273 0.360056 1105.933904 169.237217 10.98%
2 CMDR GROWEQ Q 10/31/96 6.669514 1128.729988 169.237217 0.352784 1126.377088 168.884433 10.98%
2 CMDR GROWEQ Q 10/31/97 8.378687 1415.029800 168.884433 0.280820 1412.676900 168.603613 10.98%
2 CMDR GROWEQ Q 10/31/98 10.000000 1686.036129 168.603613 0.235290 1683.683229 168.368323 10.98%
2 CMDR HIBOND Q 10/31/93 7.367218 1000.000000 135.736448 0.000000 1000.000000 135.736448 6.08%
2 CMDR HIBOND Q 10/31/94 7.132529 968.144149 135.736448 0.329883 965.791249 135.406565 6.08%
2 CMDR HIBOND Q 10/31/95 7.728454 1046.483406 135.406565 0.304446 1044.130506 135.102118 6.08%
2 CMDR HIBOND Q 10/31/96 8.604229 1162.449563 135.102118 0.273459 1160.096663 134.828660 6.08%
2 CMDR HIBOND Q 10/31/97 9.897609 1334.481355 134.828660 0.237724 1332.128455 134.590936 6.08%
2 CMDR HIBOND Q 10/31/98 10.000000 1345.909356 134.590936 0.235290 1343.556456 134.355646 6.08%
2 CMDR INTLEQ Q 10/31/93 6.797758 1000.000000 147.107326 0.000000 1000.000000 147.107326 7.81%
2 CMDR INTLEQ Q 10/31/94 7.199635 1059.119051 147.107326 0.326808 1056.766151 146.780517 7.81%
2 CMDR INTLEQ Q 10/31/95 7.122034 1045.375836 146.780517 0.330369 1043.022936 146.450148 7.81%
2 CMDR INTLEQ Q 10/31/96 8.196798 1200.422283 146.450148 0.287051 1198.069383 146.163097 7.81%
2 CMDR INTLEQ Q 10/31/97 9.260726 1353.576395 146.163097 0.254073 1351.223495 145.909024 7.81%
2 CMDR INTLEQ Q 10/31/98 10.000000 1459.090243 145.909024 0.235290 1456.737343 145.673734 7.81%
2 CMDR LIMMAT Q 10/31/93 8.978398 1000.000000 111.378444 0.000000 1000.000000 111.378444 1.95%
2 CMDR LIMMAT Q 10/31/94 8.858550 986.651516 111.378444 0.265608 984.298616 111.112836 1.95%
2 CMDR LIMMAT Q 10/31/95 9.492608 1054.750599 111.112836 0.247867 1052.397699 110.864970 1.95%
2 CMDR LIMMAT Q 10/31/96 9.183718 1018.152618 110.864970 0.256203 1015.799718 110.608766 1.95%
2 CMDR LIMMAT Q 10/31/97 9.687836 1071.559589 110.608766 0.242872 1069.206689 110.365895 1.95%
2 CMDR LIMMAT Q 10/31/98 10.000000 1103.658948 110.365895 0.235290 1101.306048 110.130605 1.95%
2 CMDR PARTNR Q 10/31/94 4.806269 1000.000000 208.061596 0.000000 1000.000000 208.061596 0.00%
2 CMDR PARTNR Q 10/31/95 5.904215 1228.440397 208.061596 0.398512 1226.087497 207.663084 0.00%
</TABLE>
Page 2
<PAGE>
5yr cmdr 2 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 CMDR PARTNR Q 10/31/96 7.382714 1533.117160 207.663084 0.318704 1530.764260 207.344380 0.00%
2 CMDR PARTNR Q 10/31/97 9.994281 2072.258001 207.344380 0.235425 2069.905101 207.108956 0.00%
2 CMDR PARTNR Q 10/31/98 10.000000 2071.089557 207.108956 0.235290 2068.736657 206.873666 0.00%
2 CMDR QUALBD Q 10/31/93 7.603073 1000.000000 131.525766 0.000000 1000.000000 131.525766 5.41%
2 CMDR QUALBD Q 10/31/94 7.038953 925.803685 131.525766 0.334268 923.450785 131.191498 5.41%
2 CMDR QUALBD Q 10/31/95 8.178361 1072.931427 131.191498 0.287698 1070.578527 130.903799 5.41%
2 CMDR QUALBD Q 10/31/96 8.593857 1124.968532 130.903799 0.273789 1122.615632 130.630011 5.41%
2 CMDR QUALBD Q 10/31/97 9.114059 1190.569624 130.630011 0.258162 1188.216724 130.371849 5.41%
2 CMDR QUALBD Q 10/31/98 10.000000 1303.718491 130.371849 0.235290 1301.365591 130.136559 5.41%
2 CMDR SMLCAP Q 10/31/95 8.025482 1000.000000 124.603108 0.000000 1000.000000 124.603108 0.00%
2 CMDR SMLCAP Q 10/31/96 9.225679 1149.548276 124.603108 0.255038 1147.195376 124.348070 0.00%
2 CMDR SMLCAP Q 10/31/97 11.846639 1473.106693 124.348070 0.198613 1470.753793 124.149457 0.00%
2 CMDR SMLCAP Q 10/31/98 10.000000 1241.494565 124.149457 0.235290 1239.141665 123.914167 0.00%
2 CMDR VALUEQ Q 10/31/93 4.827334 1000.000000 207.153679 0.000000 1000.000000 207.153679 15.49%
2 CMDR VALUEQ Q 10/31/94 5.102757 1057.054888 207.153679 0.461104 1054.701988 206.692576 15.49%
2 CMDR VALUEQ Q 10/31/95 6.245483 1290.894968 206.692576 0.376736 1288.542068 206.315839 15.49%
2 CMDR VALUEQ Q 10/31/96 7.468867 1540.945565 206.315839 0.315028 1538.592665 206.000812 15.49%
2 CMDR VALUEQ Q 10/31/97 9.185399 1892.199651 206.000812 0.256157 1889.846751 205.744655 15.49%
2 CMDR VALUEQ Q 10/31/98 10.000000 2057.446553 205.744655 0.235290 2055.093653 205.509365 15.49%
</TABLE>
Page 3
<PAGE>
5 yr cmdr 1a bkup
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------------
(assuming no purchase payments made after first contract year)
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1a CMDR BALFND Q 10/31/93 7.908353 1000.000000 126.448579 0.000000 1000.000000 126.448579 4.58%
1a CMDR BALFND Q 10/31/94 7.717765 975.900418 126.448579 0.304868 973.547518 126.143711 4.58%
1a CMDR BALFND Q 10/31/95 9.146177 1153.732709 126.143711 0.257255 1151.379809 125.886456 4.58%
1a CMDR BALFND Q 10/31/96 8.212922 1033.895644 125.886456 0.286488 1031.542744 125.599968 4.58%
1a CMDR BALFND Q 10/31/97 10.102222 1268.838765 125.599968 0.232909 1266.485865 125.367059 4.58%
1a CMDR BALFND Q 10/31/98 10.000000 1253.670593 125.367059 0.235290 1251.317693 125.131769 4.58%
1a CMDR EMGGRO Q 10/31/97 10.698921 1000.000000 93.467369 0.000000 1000.000000 93.467369 0.00%
1a CMDR EMGGRO Q 10/31/98 10.000000 934.673693 93.467369 0.235290 932.320793 93.232079 0.00%
1a CMDR EMGMKT Q 10/31/96 14.473381 1000.000000 69.092357 0.000000 1000.000000 69.092357 0.00%
1a CMDR EMGMKT Q 10/31/97 15.167002 1047.923909 69.092357 0.155133 1045.571009 68.937224 0.00%
1a CMDR EMGMKT Q 10/31/98 10.000000 689.372237 68.937224 0.235290 687.019337 68.701934 0.00%
1a CMDR FIDASM Q 10/31/93 6.038585 1000.000000 165.601710 0.000000 1000.000000 165.601710 10.40%
1a CMDR FIDASM Q 10/31/94 6.029620 998.515381 165.601710 0.390224 996.162481 165.211486 10.40%
1a CMDR FIDASM Q 10/31/95 6.370239 1052.436652 165.211486 0.369358 1050.083752 164.842128 10.40%
1a CMDR FIDASM Q 10/31/96 6.868746 1132.258706 164.842128 0.342552 1129.905806 164.499576 10.40%
1a CMDR FIDASM Q 10/31/97 10.466969 1721.811965 164.499576 0.224793 1719.459065 164.274783 10.40%
1a CMDR FIDASM Q 10/31/98 10.000000 1642.747834 164.274783 0.235290 1640.394934 164.039493 10.40%
1a CMDR FIDEQI Q 10/31/93 4.201307 1000.000000 238.021168 0.000000 1000.000000 238.021168 18.75%
1a CMDR FIDEQI Q 10/31/94 4.594567 1093.604205 238.021168 0.512105 1091.251305 237.509063 18.75%
1a CMDR FIDEQI Q 10/31/95 5.531637 1313.813923 237.509063 0.425353 1311.461023 237.083710 18.75%
1a CMDR FIDEQI Q 10/31/96 6.378591 1512.260019 237.083710 0.368875 1509.907119 236.714835 18.75%
1a CMDR FIDEQI Q 10/31/97 9.832242 2327.437547 236.714835 0.239305 2325.084647 236.475531 18.75%
1a CMDR FIDEQI Q 10/31/98 10.000000 2364.755310 236.475531 0.235290 2362.402410 236.240241 18.75%
1a CMDR FIDGRO Q 10/31/93 5.393156 1000.000000 185.420188 0.000000 1000.000000 185.420188 12.94%
1a CMDR FIDGRO Q 10/31/94 5.365612 994.892786 185.420188 0.438515 992.539886 184.981673 12.94%
1a CMDR FIDGRO Q 10/31/95 7.283556 1347.324377 184.981673 0.323043 1344.971477 184.658631 12.94%
1a CMDR FIDGRO Q 10/31/96 7.274787 1343.352205 184.658631 0.323432 1340.999305 184.335198 12.94%
1a CMDR FIDGRO Q 10/31/97 9.443042 1740.685021 184.335198 0.249168 1738.332121 184.086031 12.94%
1a CMDR FIDGRO Q 10/31/98 10.000000 1840.860309 184.086031 0.235290 1838.507409 183.850741 12.94%
1a CMDR FIDIND Q 10/31/93 8.632500 1000.000000 115.841297 0.000000 1000.000000 115.841297 2.71%
1a CMDR FIDIND Q 10/31/94 8.816852 1021.355575 115.841297 0.266864 1019.002675 115.574433 2.71%
1a CMDR FIDIND Q 10/31/95 5.487838 634.253768 115.574433 0.428748 631.900868 115.145685 2.71%
1a CMDR FIDIND Q 10/31/96 6.685608 769.818915 115.145685 0.351935 767.466015 114.793750 2.71%
1a CMDR FIDIND Q 10/31/97 8.674156 995.738898 114.793750 0.271254 993.385998 114.522496 2.71%
1a CMDR FIDIND Q 10/31/98 10.000000 1145.224962 114.522496 0.235290 1142.872062 114.287206 2.71%
1a CMDR FLEXMN Q 10/31/93 6.211483 1000.000000 160.992150 0.000000 1000.000000 160.992150 9.79%
</TABLE>
Page 1
<PAGE>
5 yr cmdr 1a bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1a CMDR FLEXMN Q 10/31/94 6.595798 1061.871698 160.992150 0.356727 1059.518798 160.635422 9.79%
1a CMDR FLEXMN Q 10/31/95 7.531872 1209.885440 160.635422 0.312392 1207.532540 160.323030 9.79%
1a CMDR FLEXMN Q 10/31/96 8.152012 1306.955264 160.323030 0.288628 1304.602364 160.034402 9.79%
1a CMDR FLEXMN Q 10/31/97 9.450782 1512.450244 160.034402 0.248964 1510.097344 159.785438 9.79%
1a CMDR FLEXMN Q 10/31/98 10.000000 1597.854383 159.785438 0.235290 1595.501483 159.550148 9.79%
1a CMDR GROWEQ Q 10/31/93 5.881212 1000.000000 170.032980 0.000000 1000.000000 170.032980 10.98%
1a CMDR GROWEQ Q 10/31/94 5.400194 918.211076 170.032980 0.435707 915.858176 169.597273 10.98%
1a CMDR GROWEQ Q 10/31/95 6.534815 1108.286804 169.597273 0.360056 1105.933904 169.237217 10.98%
1a CMDR GROWEQ Q 10/31/96 6.669514 1128.729988 169.237217 0.352784 1126.377088 168.884433 10.98%
1a CMDR GROWEQ Q 10/31/97 8.378687 1415.029800 168.884433 0.280820 1412.676900 168.603613 10.98%
1a CMDR GROWEQ Q 10/31/98 10.000000 1686.036129 168.603613 0.235290 1683.683229 168.368323 10.98%
1a CMDR HIBOND Q 10/31/93 7.367218 1000.000000 135.736448 0.000000 1000.000000 135.736448 6.08%
1a CMDR HIBOND Q 10/31/94 7.132529 968.144149 135.736448 0.329883 965.791249 135.406565 6.08%
1a CMDR HIBOND Q 10/31/95 7.728454 1046.483406 135.406565 0.304446 1044.130506 135.102118 6.08%
1a CMDR HIBOND Q 10/31/96 8.604229 1162.449563 135.102118 0.273459 1160.096663 134.828660 6.08%
1a CMDR HIBOND Q 10/31/97 9.897609 1334.481355 134.828660 0.237724 1332.128455 134.590936 6.08%
1a CMDR HIBOND Q 10/31/98 10.000000 1345.909356 134.590936 0.235290 1343.556456 134.355646 6.08%
1a CMDR INTLEQ Q 10/31/93 6.797758 1000.000000 147.107326 0.000000 1000.000000 147.107326 7.81%
1a CMDR INTLEQ Q 10/31/94 7.199635 1059.119051 147.107326 0.326808 1056.766151 146.780517 7.81%
1a CMDR INTLEQ Q 10/31/95 7.122034 1045.375836 146.780517 0.330369 1043.022936 146.450148 7.81%
1a CMDR INTLEQ Q 10/31/96 8.196798 1200.422283 146.450148 0.287051 1198.069383 146.163097 7.81%
1a CMDR INTLEQ Q 10/31/97 9.260726 1353.576395 146.163097 0.254073 1351.223495 145.909024 7.81%
1a CMDR INTLEQ Q 10/31/98 10.000000 1459.090243 145.909024 0.235290 1456.737343 145.673734 7.81%
1a CMDR LIMMAT Q 10/31/93 8.978398 1000.000000 111.378444 0.000000 1000.000000 111.378444 1.95%
1a CMDR LIMMAT Q 10/31/94 8.858550 986.651516 111.378444 0.265608 984.298616 111.112836 1.95%
1a CMDR LIMMAT Q 10/31/95 9.492608 1054.750599 111.112836 0.247867 1052.397699 110.864970 1.95%
1a CMDR LIMMAT Q 10/31/96 9.183718 1018.152618 110.864970 0.256203 1015.799718 110.608766 1.95%
1a CMDR LIMMAT Q 10/31/97 9.687836 1071.559589 110.608766 0.242872 1069.206689 110.365895 1.95%
1a CMDR LIMMAT Q 10/31/98 10.000000 1103.658948 110.365895 0.235290 1101.306048 110.130605 1.95%
1a CMDR PARTNR Q 10/31/94 4.806269 1000.000000 208.061596 0.000000 1000.000000 208.061596 0.00%
1a CMDR PARTNR Q 10/31/95 5.904215 1228.440397 208.061596 0.398512 1226.087497 207.663084 0.00%
1a CMDR PARTNR Q 10/31/96 7.382714 1533.117160 207.663084 0.318704 1530.764260 207.344380 0.00%
1a CMDR PARTNR Q 10/31/97 9.994281 2072.258001 207.344380 0.235425 2069.905101 207.108956 0.00%
1a CMDR PARTNR Q 10/31/98 10.000000 2071.089557 207.108956 0.235290 2068.736657 206.873666 0.00%
1a CMDR QUALBD Q 10/31/93 7.603073 1000.000000 131.525766 0.000000 1000.000000 131.525766 5.41%
1a CMDR QUALBD Q 10/31/94 7.038953 925.803685 131.525766 0.334268 923.450785 131.191498 5.41%
1a CMDR QUALBD Q 10/31/95 8.178361 1072.931427 131.191498 0.287698 1070.578527 130.903799 5.41%
</TABLE>
Page 2
<PAGE>
5 yr cmdr 1a bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1a CMDR QUALBD Q 10/31/96 8.593857 1124.968532 130.903799 0.273789 1122.615632 130.630011 5.41%
1a CMDR QUALBD Q 10/31/97 9.114059 1190.569624 130.630011 0.258162 1188.216724 130.371849 5.41%
1a CMDR QUALBD Q 10/31/98 10.000000 1303.718491 130.371849 0.235290 1301.365591 130.136559 5.41%
1a CMDR SMLCAP Q 10/31/95 8.025482 1000.000000 124.603108 0.000000 1000.000000 124.603108 0.00%
1a CMDR SMLCAP Q 10/31/96 9.225679 1149.548276 124.603108 0.255038 1147.195376 124.348070 0.00%
1a CMDR SMLCAP Q 10/31/97 11.846639 1473.106693 124.348070 0.198613 1470.753793 124.149457 0.00%
1a CMDR SMLCAP Q 10/31/98 10.000000 1241.494565 124.149457 0.235290 1239.141665 123.914167 0.00%
1a CMDR VALUEQ Q 10/31/93 4.827334 1000.000000 207.153679 0.000000 1000.000000 207.153679 15.49%
1a CMDR VALUEQ Q 10/31/94 5.102757 1057.054888 207.153679 0.461104 1054.701988 206.692576 15.49%
1a CMDR VALUEQ Q 10/31/95 6.245483 1290.894968 206.692576 0.376736 1288.542068 206.315839 15.49%
1a CMDR VALUEQ Q 10/31/96 7.468867 1540.945565 206.315839 0.315028 1538.592665 206.000812 15.49%
1a CMDR VALUEQ Q 10/31/97 9.185399 1892.199651 206.000812 0.256157 1889.846751 205.744655 15.49%
1a CMDR VALUEQ Q 10/31/98 10.000000 2057.446553 205.744655 0.235290 2055.093653 205.509365 15.49%
</TABLE>
Page 3
<PAGE>
10yr cmdr 3 bkup
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Table 3 - Commander Variable/Fixed Annuity Contracts Commander - 10 YR - Tbl 3
- - ------------------------------------------------------------------------------------------------------------------------------------
$40 Contract Average
Q = qualified fee & # of units Annual Total
N = nonqualified Beginning # of units deferred at end of Ending return for
- - ------------------------------------------------------------------------------------------------------------------------------------
amethod system fund qnonq accdate unitval bvalue bunits cunits rvalue eunits 10yr
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 CMDR EMGGRO Q 10/31/97 10.698921 10000.000000 934.673693 0.000000 10000.000000 934.673693 0.00%
3 CMDR EMGGRO Q 10/31/98 10.000000 9346.736928 934.673693 0.235290 9344.384028 934.438403 0.00%
3 CMDR EMGMKT Q 10/31/96 14.473381 10000.000000 690.923565 0.000000 10000.000000 690.923565 0.00%
3 CMDR EMGMKT Q 10/31/97 15.167002 10479.239094 690.923565 0.155133 10476.886194 690.768432 0.00%
3 CMDR EMGMKT Q 10/31/98 10.000000 6907.684323 690.768432 0.235290 6905.331423 690.533142 0.00%
3 CMDR FIDASM Q 10/31/89 3.719917 10000.000000 2688.232022 0.000000 10000.000000 2688.232022 0.00%
3 CMDR FIDASM Q 10/31/90 3.653465 9821.361606 2688.232022 0.644019 9819.008706 2687.588004 0.00%
3 CMDR FIDASM Q 10/31/91 4.643233 12479.097309 2687.588004 0.506737 12476.744409 2687.081266 0.00%
3 CMDR FIDASM Q 10/31/92 5.063413 13605.802215 2687.081266 0.464687 13603.449315 2686.616580 0.00%
3 CMDR FIDASM Q 10/31/93 6.038585 16223.362578 2686.616580 0.389644 16221.009678 2686.226935 0.00%
3 CMDR FIDASM Q 10/31/94 6.029620 16196.927654 2686.226935 0.390224 16194.574754 2685.836712 0.00%
3 CMDR FIDASM Q 10/31/95 6.370239 17109.421769 2685.836712 0.369358 17107.068869 2685.467354 0.00%
3 CMDR FIDASM Q 10/31/96 6.868746 18445.793143 2685.467354 0.342552 18443.440243 2685.124802 0.00%
3 CMDR FIDASM Q 10/31/97 10.466969 28105.118063 2685.124802 0.224793 28102.765163 2684.900009 0.00%
3 CMDR FIDASM Q 10/31/98 10.000000 26849.000091 2684.900009 0.235290 26846.647191 2684.664719 0.00%
3 CMDR FIDEQI Q 10/31/88 2.525220 10000.000000 3960.051005 0.000000 10000.000000 3960.051005 14.73%
3 CMDR FIDEQI Q 10/31/89 2.860949 11329.503964 3960.051005 0.822419 11327.151064 3959.228586 14.73%
3 CMDR FIDEQI Q 10/31/90 2.210017 8749.962482 3959.228586 1.064652 8747.609582 3958.163934 14.73%
3 CMDR FIDEQI Q 10/31/91 3.042270 12041.803390 3958.163934 0.773403 12039.450490 3957.390531 14.73%
3 CMDR FIDEQI Q 10/31/92 3.400367 13456.580167 3957.390531 0.691955 13454.227267 3956.698576 14.73%
3 CMDR FIDEQI Q 10/31/93 4.201307 16623.305425 3956.698576 0.560040 16620.952525 3956.138536 14.73%
3 CMDR FIDEQI Q 10/31/94 4.594567 18176.743565 3956.138536 0.512105 18174.390665 3955.626431 14.73%
3 CMDR FIDEQI Q 10/31/95 5.531637 21881.089525 3955.626431 0.425353 21878.736625 3955.201078 14.73%
3 CMDR FIDEQI Q 10/31/96 6.378591 25228.609999 3955.201078 0.368875 25226.257099 3954.832203 14.73%
3 CMDR FIDEQI Q 10/31/97 9.832242 38884.867293 3954.832203 0.239305 38882.514393 3954.592899 14.73%
3 CMDR FIDEQI Q 10/31/98 10.000000 39545.928989 3954.592899 0.235290 39543.576089 3954.357609 14.73%
3 CMDR FIDGRO Q 10/31/88 2.604960 10000.000000 3838.830539 0.000000 10000.000000 3838.830539 14.38%
3 CMDR FIDGRO Q 10/31/89 3.249750 12475.239543 3838.830539 0.724025 12472.886643 3838.106514 14.38%
3 CMDR FIDGRO Q 10/31/90 2.644272 10148.997587 3838.106514 0.889810 10146.644687 3837.216704 14.38%
3 CMDR FIDGRO Q 10/31/91 3.955927 15179.749163 3837.216704 0.594778 15177.396263 3836.621925 14.38%
</TABLE>
Page 1
<PAGE>
10yr cmdr 3 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 CMDR FIDGRO Q 10/31/92 4.139720 15882.540516 3836.621925 0.568372 15880.187616 3836.053553 14.38%
3 CMDR FIDGRO Q 10/31/93 5.393156 20688.435238 3836.053553 0.436275 20686.082338 3835.617278 14.38%
3 CMDR FIDGRO Q 10/31/94 5.365612 20580.434096 3835.617278 0.438515 20578.081196 3835.178764 14.38%
3 CMDR FIDGRO Q 10/31/95 7.283556 27933.739294 3835.178764 0.323043 27931.386394 3834.855721 14.38%
3 CMDR FIDGRO Q 10/31/96 7.274787 27897.758544 3834.855721 0.323432 27895.405644 3834.532289 14.38%
3 CMDR FIDGRO Q 10/31/97 9.443042 36209.649452 3834.532289 0.249168 36207.296552 3834.283121 14.38%
3 CMDR FIDGRO Q 10/31/98 10.000000 38342.831210 3834.283121 0.235290 38340.478310 3834.047831 14.38%
3 CMDR FIDIND Q 10/31/92 7.633828 10000.000000 1309.958778 0.000000 10000.000000 1309.958778 0.00%
3 CMDR FIDIND Q 10/31/93 8.632500 11308.219153 1309.958778 0.272563 11305.866253 1309.686215 0.00%
3 CMDR FIDIND Q 10/31/94 8.816852 11547.309526 1309.686215 0.266864 11544.956626 1309.419351 0.00%
3 CMDR FIDIND Q 10/31/95 5.487838 7185.881274 1309.419351 0.428748 7183.528374 1308.990603 0.00%
3 CMDR FIDIND Q 10/31/96 6.685608 8751.398049 1308.990603 0.351935 8749.045149 1308.638668 0.00%
3 CMDR FIDIND Q 10/31/97 8.674156 11351.335955 1308.638668 0.271254 11348.983055 1308.367414 0.00%
3 CMDR FIDIND Q 10/31/98 10.000000 13083.674141 1308.367414 0.235290 13081.321241 1308.132124 0.00%
3 CMDR FLEXMN Q 10/31/88 3.632215 10000.000000 2753.140990 0.000000 10000.000000 2753.140990 10.64%
3 CMDR FLEXMN Q 10/31/89 4.286372 11800.986450 2753.140990 0.548926 11798.633550 2752.592064 10.64%
3 CMDR FLEXMN Q 10/31/90 3.819932 10514.714508 2752.592064 0.615953 10512.361608 2751.976111 10.64%
3 CMDR FLEXMN Q 10/31/91 5.015166 13801.617023 2751.976111 0.469157 13799.264123 2751.506954 10.64%
3 CMDR FLEXMN Q 10/31/92 5.403019 14866.444349 2751.506954 0.435479 14864.091449 2751.071475 10.64%
3 CMDR FLEXMN Q 10/31/93 6.211483 17088.233698 2751.071475 0.378798 17085.880798 2750.692676 10.64%
3 CMDR FLEXMN Q 10/31/94 6.595798 18143.013254 2750.692676 0.356727 18140.660354 2750.335949 10.64%
3 CMDR FLEXMN Q 10/31/95 7.531872 20715.178327 2750.335949 0.312392 20712.825427 2750.023557 10.64%
3 CMDR FLEXMN Q 10/31/96 8.152012 22418.225036 2750.023557 0.288628 22415.872136 2749.734929 10.64%
3 CMDR FLEXMN Q 10/31/97 9.450782 25987.145369 2749.734929 0.248964 25984.792469 2749.485965 10.64%
3 CMDR FLEXMN Q 10/31/98 10.000000 27494.859652 2749.485965 0.235290 27492.506752 2749.250675 10.64%
3 CMDR GROWEQ Q 10/31/88 3.383505 10000.000000 2955.515065 0.000000 10000.000000 2955.515065 11.42%
3 CMDR GROWEQ Q 10/31/89 4.264711 12604.417608 2955.515065 0.551714 12602.064708 2954.963351 11.42%
3 CMDR GROWEQ Q 10/31/90 3.524637 10415.173161 2954.963351 0.667558 10412.820261 2954.295793 11.42%
3 CMDR GROWEQ Q 10/31/91 4.737321 13995.447501 2954.295793 0.496673 13993.094601 2953.799120 11.42%
3 CMDR GROWEQ Q 10/31/92 5.001741 14774.138164 2953.799120 0.470416 14771.785264 2953.328704 11.42%
3 CMDR GROWEQ Q 10/31/93 5.881212 17369.152212 2953.328704 0.400071 17366.799312 2952.928633 11.42%
3 CMDR GROWEQ Q 10/31/94 5.400194 15946.387487 2952.928633 0.435707 15944.034587 2952.492927 11.42%
3 CMDR GROWEQ Q 10/31/95 6.534815 19293.995064 2952.492927 0.360056 19291.642164 2952.132870 11.42%
3 CMDR GROWEQ Q 10/31/96 6.669514 19689.291510 2952.132870 0.352784 19686.938610 2951.780086 11.42%
3 CMDR GROWEQ Q 10/31/97 8.378687 24732.041435 2951.780086 0.280820 24729.688535 2951.499267 11.42%
3 CMDR GROWEQ Q 10/31/98 10.000000 29514.992665 2951.499267 0.235290 29512.639765 2951.263977 11.42%
3 CMDR HIBOND Q 10/31/88 4.620509 10000.000000 2164.263721 0.000000 10000.000000 2164.263721 8.00%
</TABLE>
Page 2
<PAGE>
10yr cmdr 3 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 CMDR HIBOND Q 10/31/89 4.719363 10213.946126 2164.263721 0.498563 10211.593226 2163.765158 8.00%
3 CMDR HIBOND Q 10/31/90 4.124318 8924.055588 2163.765158 0.570494 8921.702688 2163.194663 8.00%
3 CMDR HIBOND Q 10/31/91 5.439756 11767.251149 2163.194663 0.432538 11764.898249 2162.762126 8.00%
3 CMDR HIBOND Q 10/31/92 6.163625 13330.454706 2162.762126 0.381740 13328.101806 2162.380386 8.00%
3 CMDR HIBOND Q 10/31/93 7.367218 15930.727702 2162.380386 0.319374 15928.374802 2162.061012 8.00%
3 CMDR HIBOND Q 10/31/94 7.132529 15420.962865 2162.061012 0.329883 15418.609965 2161.731129 8.00%
3 CMDR HIBOND Q 10/31/95 7.728454 16706.839588 2161.731129 0.304446 16704.486688 2161.426682 8.00%
3 CMDR HIBOND Q 10/31/96 8.604229 18597.410141 2161.426682 0.273459 18595.057241 2161.153224 8.00%
3 CMDR HIBOND Q 10/31/97 9.897609 21390.249597 2161.153224 0.237724 21387.896697 2160.915500 8.00%
3 CMDR HIBOND Q 10/31/98 10.000000 21609.154996 2160.915500 0.235290 21606.802096 2160.680210 8.00%
3 CMDR INTLEQ Q 10/31/93 6.797758 10000.000000 1471.073257 0.000000 10000.000000 1471.073257 0.00%
3 CMDR INTLEQ Q 10/31/94 7.199635 10591.190507 1471.073257 0.326808 10588.837607 1470.746449 0.00%
3 CMDR INTLEQ Q 10/31/95 7.122034 10474.706212 1470.746449 0.330369 10472.353312 1470.416079 0.00%
3 CMDR INTLEQ Q 10/31/96 8.196798 12052.703579 1470.416079 0.287051 12050.350679 1470.129028 0.00%
3 CMDR INTLEQ Q 10/31/97 9.260726 13614.462116 1470.129028 0.254073 13612.109216 1469.874955 0.00%
3 CMDR INTLEQ Q 10/31/98 10.000000 14698.749554 1469.874955 0.235290 14696.396654 1469.639665 0.00%
3 CMDR LIMMAT Q 10/31/88 6.441184 10000.000000 1552.509601 0.000000 10000.000000 1552.509601 4.48%
3 CMDR LIMMAT Q 10/31/89 6.931303 10760.914453 1552.509601 0.339460 10758.561553 1552.170141 4.48%
3 CMDR LIMMAT Q 10/31/90 7.349843 11408.206844 1552.170141 0.320129 11405.853944 1551.850011 4.48%
3 CMDR LIMMAT Q 10/31/91 7.997531 12410.968574 1551.850011 0.294203 12408.615674 1551.555808 4.48%
3 CMDR LIMMAT Q 10/31/92 8.503192 13193.176935 1551.555808 0.276708 13190.824035 1551.279100 4.48%
3 CMDR LIMMAT Q 10/31/93 8.978398 13928.001172 1551.279100 0.262062 13925.648272 1551.017038 4.48%
3 CMDR LIMMAT Q 10/31/94 8.858550 13739.761982 1551.017038 0.265608 13737.409082 1550.751430 4.48%
3 CMDR LIMMAT Q 10/31/95 9.492608 14720.675432 1550.751430 0.247867 14718.322532 1550.503564 4.48%
3 CMDR LIMMAT Q 10/31/96 9.183718 14239.387486 1550.503564 0.256203 14237.034586 1550.247360 4.48%
3 CMDR LIMMAT Q 10/31/97 9.687836 15018.542185 1550.247360 0.242872 15016.189285 1550.004489 4.48%
3 CMDR LIMMAT Q 10/31/98 10.000000 15500.044886 1550.004489 0.235290 15497.691986 1549.769199 4.48%
3 CMDR PARTNR Q 10/31/94 4.806269 10000.000000 2080.615962 0.000000 10000.000000 2080.615962 0.00%
3 CMDR PARTNR Q 10/31/95 5.904215 12284.403973 2080.615962 0.398512 12282.051073 2080.217450 0.00%
3 CMDR PARTNR Q 10/31/96 7.382714 15357.650493 2080.217450 0.318704 15355.297593 2079.898746 0.00%
3 CMDR PARTNR Q 10/31/97 9.994281 20787.092523 2079.898746 0.235425 20784.739623 2079.663322 0.00%
3 CMDR PARTNR Q 10/31/98 10.000000 20796.633217 2079.663322 0.235290 20794.280317 2079.428032 0.00%
3 CMDR QUALBD Q 10/31/88 4.895973 10000.000000 2042.494924 0.000000 10000.000000 2042.494924 7.38%
3 CMDR QUALBD Q 10/31/89 5.361029 10949.874519 2042.494924 0.438890 10947.521619 2042.056034 7.38%
3 CMDR QUALBD Q 10/31/90 5.574682 11383.813017 2042.056034 0.422069 11381.460117 2041.633965 7.38%
3 CMDR QUALBD Q 10/31/91 6.307721 12878.057438 2041.633965 0.373019 12875.704538 2041.260946 7.38%
3 CMDR QUALBD Q 10/31/92 6.787438 13854.932115 2041.260946 0.346655 13852.579215 2040.914291 7.38%
</TABLE>
Page 3
<PAGE>
10yr cmdr 3 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 CMDR QUALBD Q 10/31/93 7.603073 15517.220343 2040.914291 0.309467 15514.867443 2040.604824 7.38%
3 CMDR QUALBD Q 10/31/94 7.038953 14363.721449 2040.604824 0.334268 14361.368549 2040.270556 7.38%
3 CMDR QUALBD Q 10/31/95 8.178361 16686.069143 2040.270556 0.287698 16683.716243 2039.982858 7.38%
3 CMDR QUALBD Q 10/31/96 8.593857 17531.320960 2039.982858 0.273789 17528.968060 2039.709069 7.38%
3 CMDR QUALBD Q 10/31/97 9.114059 18590.028797 2039.709069 0.258162 18587.675897 2039.450907 7.38%
3 CMDR QUALBD Q 10/31/98 10.000000 20394.509074 2039.450907 0.235290 20392.156174 2039.215617 7.38%
3 CMDR SMLCAP Q 10/31/95 8.025482 10000.000000 1246.031080 0.000000 10000.000000 1246.031080 0.00%
3 CMDR SMLCAP Q 10/31/96 9.225679 11495.482764 1246.031080 0.255038 11493.129864 1245.776041 0.00%
3 CMDR SMLCAP Q 10/31/97 11.846639 14758.259037 1245.776041 0.198613 14755.906137 1245.577428 0.00%
3 CMDR SMLCAP Q 10/31/98 10.000000 12455.774281 1245.577428 0.235290 12453.421381 1245.342138 0.00%
3 CMDR VALUEQ Q 10/31/88 3.210689 10000.000000 3114.596275 0.000000 10000.000000 3114.596275 12.01%
3 CMDR VALUEQ Q 10/31/89 3.554816 11071.816672 3114.596275 0.661891 11069.463772 3113.934384 12.01%
3 CMDR VALUEQ Q 10/31/90 2.924797 9107.625945 3113.934384 0.804466 9105.273045 3113.129918 12.01%
3 CMDR VALUEQ Q 10/31/91 3.930006 12234.619257 3113.129918 0.598701 12232.266357 3112.531217 12.01%
3 CMDR VALUEQ Q 10/31/92 4.418808 13753.677841 3112.531217 0.532474 13751.324941 3111.998743 12.01%
3 CMDR VALUEQ Q 10/31/93 4.827334 15022.657340 3111.998743 0.487412 15020.304440 3111.511331 12.01%
3 CMDR VALUEQ Q 10/31/94 5.102757 15877.286225 3111.511331 0.461104 15874.933325 3111.050227 12.01%
3 CMDR VALUEQ Q 10/31/95 6.245483 19430.011307 3111.050227 0.376736 19427.658407 3110.673491 12.01%
3 CMDR VALUEQ Q 10/31/96 7.468867 23233.206586 3110.673491 0.315028 23230.853686 3110.358463 12.01%
3 CMDR VALUEQ Q 10/31/97 9.185399 28569.883519 3110.358463 0.256157 28567.530619 3110.102307 12.01%
3 CMDR VALUEQ Q 10/31/98 10.000000 31101.023069 3110.102307 0.235290 31098.670169 3109.867017 12.01%
</TABLE>
Page 4
<PAGE>
10 yr cmdr 2 bkup
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------------
Table 2 - Commander Variable/Fixed Annuity Contracts Commander - 10 YR - Tbl 2
- - -----------------------------------------------------------------------------------------------------------------------------------
Average
Q = qualified $40 Contract # of units Annual Total
N = nonqualified Beginning # of units fee & deferred at end of Ending return for
- - -----------------------------------------------------------------------------------------------------------------------------------
amethod system fund qnonq accdate unitval bvalue bunits cunits rvalue eunits 10yr
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 CMDR BALFND Q 10/31/89 5.756152 1000.000000 173.727171 0.000000 1000.000000 173.727171 0.00%
2 CMDR BALFND Q 10/31/90 5.482625 952.480928 173.727171 0.429156 950.128028 173.298015 0.00%
2 CMDR BALFND Q 10/31/91 6.724544 1165.350125 173.298015 0.349897 1162.997225 172.948117 0.00%
2 CMDR BALFND Q 10/31/92 7.204016 1245.921005 172.948117 0.326609 1243.568105 172.621508 0.00%
2 CMDR BALFND Q 10/31/93 7.908353 1365.151820 172.621508 0.297521 1362.798920 172.323987 0.00%
2 CMDR BALFND Q 10/31/94 7.717765 1329.956036 172.323987 0.304868 1327.603136 172.019119 0.00%
2 CMDR BALFND Q 10/31/95 9.146177 1573.317310 172.019119 0.257255 1570.964410 171.761864 0.00%
2 CMDR BALFND Q 10/31/96 8.212922 1410.666792 171.761864 0.286488 1408.313892 171.475376 0.00%
2 CMDR BALFND Q 10/31/97 10.102222 1732.282320 171.475376 0.232909 1729.929420 171.242467 0.00%
2 CMDR BALFND Q 10/31/98 10.000000 1712.424673 171.242467 0.235290 1710.071773 171.007177 0.00%
2 CMDR EMGGRO Q 10/31/97 10.698921 1000.000000 93.467369 0.000000 1000.000000 93.467369 0.00%
2 CMDR EMGGRO Q 10/31/98 10.000000 934.673693 93.467369 0.235290 932.320793 93.232079 0.00%
2 CMDR EMGMKT Q 10/31/96 14.473381 1000.000000 69.092357 0.000000 1000.000000 69.092357 0.00%
2 CMDR EMGMKT Q 10/31/97 15.167002 1047.923909 69.092357 0.155133 1045.571009 68.937224 0.00%
2 CMDR EMGMKT Q 10/31/98 10.000000 689.372237 68.937224 0.235290 687.019337 68.701934 0.00%
2 CMDR FIDASM Q 10/31/89 3.719917 1000.000000 268.823202 0.000000 1000.000000 268.823202 0.00%
2 CMDR FIDASM Q 10/31/90 3.653465 982.136161 268.823202 0.644019 979.783261 268.179183 0.00%
2 CMDR FIDASM Q 10/31/91 4.643233 1245.218435 268.179183 0.506737 1242.865535 267.672446 0.00%
2 CMDR FIDASM Q 10/31/92 5.063413 1355.336143 267.672446 0.464687 1352.983243 267.207759 0.00%
2 CMDR FIDASM Q 10/31/93 6.038585 1613.556768 267.207759 0.389644 1611.203868 266.818115 0.00%
2 CMDR FIDASM Q 10/31/94 6.029620 1608.811844 266.818115 0.390224 1606.458944 266.427892 0.00%
2 CMDR FIDASM Q 10/31/95 6.370239 1697.209346 266.427892 0.369358 1694.856446 266.058533 0.00%
2 CMDR FIDASM Q 10/31/96 6.868746 1827.488487 266.058533 0.342552 1825.135587 265.715982 0.00%
2 CMDR FIDASM Q 10/31/97 10.466969 2781.240944 265.715982 0.224793 2778.888044 265.491189 0.00%
2 CMDR FIDASM Q 10/31/98 10.000000 2654.911889 265.491189 0.235290 2652.558989 265.255899 0.00%
2 CMDR FIDEQI Q 10/31/88 2.525220 1000.000000 396.005101 0.000000 1000.000000 396.005101 14.58%
2 CMDR FIDEQI Q 10/31/89 2.860949 1132.950396 396.005101 0.822419 1130.597496 395.182681 14.58%
2 CMDR FIDEQI Q 10/31/90 2.210017 873.360443 395.182681 1.064652 871.007543 394.118029 14.58%
2 CMDR FIDEQI Q 10/31/91 3.042270 1199.013455 394.118029 0.773403 1196.660555 393.344626 14.58%
2 CMDR FIDEQI Q 10/31/92 3.400367 1337.516086 393.344626 0.691955 1335.163186 392.652671 14.58%
</TABLE>
Page 1
<PAGE>
10yr cmdr 2 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 CMDR FIDEQI Q 10/31/93 4.201307 1649.654416 392.652671 0.560040 1647.301516 392.092631 14.58%
2 CMDR FIDEQI Q 10/31/94 4.594567 1801.495864 392.092631 0.512105 1799.142964 391.580526 14.58%
2 CMDR FIDEQI Q 10/31/95 5.531637 2166.081328 391.580526 0.425353 2163.728428 391.155173 14.58%
2 CMDR FIDEQI Q 10/31/96 6.378591 2495.018867 391.155173 0.368875 2492.665967 390.786299 14.58%
2 CMDR FIDEQI Q 10/31/97 9.832242 3842.305457 390.786299 0.239305 3839.952557 390.546994 14.58%
2 CMDR FIDEQI Q 10/31/98 10.000000 3905.469940 390.546994 0.235290 3903.117040 390.311704 14.58%
2 CMDR FIDGRO Q 10/31/88 2.604960 1000.000000 383.883054 0.000000 1000.000000 383.883054 14.25%
2 CMDR FIDGRO Q 10/31/89 3.249750 1247.523954 383.883054 0.724025 1245.171054 383.159029 14.25%
2 CMDR FIDGRO Q 10/31/90 2.644272 1013.176692 383.159029 0.889810 1010.823792 382.269219 14.25%
2 CMDR FIDGRO Q 10/31/91 3.955927 1512.229124 382.269219 0.594778 1509.876224 381.674440 14.25%
2 CMDR FIDGRO Q 10/31/92 4.139720 1580.025314 381.674440 0.568372 1577.672414 381.106069 14.25%
2 CMDR FIDGRO Q 10/31/93 5.393156 2055.364481 381.106069 0.436275 2053.011581 380.669793 14.25%
2 CMDR FIDGRO Q 10/31/94 5.365612 2042.526412 380.669793 0.438515 2040.173512 380.231279 14.25%
2 CMDR FIDGRO Q 10/31/95 7.283556 2769.435811 380.231279 0.323043 2767.082911 379.908236 14.25%
2 CMDR FIDGRO Q 10/31/96 7.274787 2763.751496 379.908236 0.323432 2761.398596 379.584804 14.25%
2 CMDR FIDGRO Q 10/31/97 9.443042 3584.435245 379.584804 0.249168 3582.082345 379.335636 14.25%
2 CMDR FIDGRO Q 10/31/98 10.000000 3793.356362 379.335636 0.235290 3791.003462 379.100346 14.25%
2 CMDR FIDIND Q 10/31/92 7.633828 1000.000000 130.995878 0.000000 1000.000000 130.995878 0.00%
2 CMDR FIDIND Q 10/31/93 8.632500 1130.821915 130.995878 0.272563 1128.469015 130.723315 0.00%
2 CMDR FIDIND Q 10/31/94 8.816852 1152.568120 130.723315 0.266864 1150.215220 130.456451 0.00%
2 CMDR FIDIND Q 10/31/95 5.487838 715.923868 130.456451 0.428748 713.570968 130.027703 0.00%
2 CMDR FIDIND Q 10/31/96 6.685608 869.314250 130.027703 0.351935 866.961350 129.675768 0.00%
2 CMDR FIDIND Q 10/31/97 8.674156 1124.827839 129.675768 0.271254 1122.474939 129.404514 0.00%
2 CMDR FIDIND Q 10/31/98 10.000000 1294.045137 129.404514 0.235290 1291.692237 129.169224 0.00%
2 CMDR FLEXMN Q 10/31/88 3.632215 1000.000000 275.314099 0.000000 1000.000000 275.314099 10.49%
2 CMDR FLEXMN Q 10/31/89 4.286372 1180.098645 275.314099 0.548926 1177.745745 274.765173 10.49%
2 CMDR FLEXMN Q 10/31/90 3.819932 1049.584278 274.765173 0.615953 1047.231378 274.149220 10.49%
2 CMDR FLEXMN Q 10/31/91 5.015166 1374.903846 274.149220 0.469157 1372.550946 273.680063 10.49%
2 CMDR FLEXMN Q 10/31/92 5.403019 1478.698580 273.680063 0.435479 1476.345680 273.244584 10.49%
2 CMDR FLEXMN Q 10/31/93 6.211483 1697.254089 273.244584 0.378798 1694.901189 272.865786 10.49%
2 CMDR FLEXMN Q 10/31/94 6.595798 1799.767604 272.865786 0.356727 1797.414704 272.509059 10.49%
2 CMDR FLEXMN Q 10/31/95 7.531872 2052.503348 272.509059 0.312392 2050.150448 272.196666 10.49%
2 CMDR FLEXMN Q 10/31/96 8.152012 2218.950489 272.196666 0.288628 2216.597589 271.908038 10.49%
2 CMDR FLEXMN Q 10/31/97 9.450782 2569.743591 271.908038 0.248964 2567.390691 271.659074 10.49%
2 CMDR FLEXMN Q 10/31/98 10.000000 2716.590745 271.659074 0.235290 2714.237845 271.423784 10.49%
2 CMDR GROWEQ Q 10/31/88 3.383505 1000.000000 295.551506 0.000000 1000.000000 295.551506 11.28%
2 CMDR GROWEQ Q 10/31/89 4.264711 1260.441761 295.551506 0.551714 1258.088861 294.999793 11.28%
</TABLE>
Page 2
<PAGE>
10yr cmdr 2 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 CMDR GROWEQ Q 10/31/90 3.524637 1039.767184 294.999793 0.667558 1037.414284 294.332235 11.28%
2 CMDR GROWEQ Q 10/31/91 4.737321 1394.346276 294.332235 0.496673 1391.993376 293.835561 11.28%
2 CMDR GROWEQ Q 10/31/92 5.001741 1469.689375 293.835561 0.470416 1467.336475 293.365145 11.28%
2 CMDR GROWEQ Q 10/31/93 5.881212 1725.342613 293.365145 0.400071 1722.989713 292.965075 11.28%
2 CMDR GROWEQ Q 10/31/94 5.400194 1582.068238 292.965075 0.435707 1579.715338 292.529368 11.28%
2 CMDR GROWEQ Q 10/31/95 6.534815 1911.625303 292.529368 0.360056 1909.272403 292.169312 11.28%
2 CMDR GROWEQ Q 10/31/96 6.669514 1948.627317 292.169312 0.352784 1946.274417 291.816528 11.28%
2 CMDR GROWEQ Q 10/31/97 8.378687 2445.039347 291.816528 0.280820 2442.686447 291.535708 11.28%
2 CMDR GROWEQ Q 10/31/98 10.000000 2915.357080 291.535708 0.235290 2913.004180 291.300418 11.28%
2 CMDR HIBOND Q 10/31/88 4.620509 1000.000000 216.426372 0.000000 1000.000000 216.426372 7.84%
2 CMDR HIBOND Q 10/31/89 4.719363 1021.394613 216.426372 0.498563 1019.041713 215.927809 7.84%
2 CMDR HIBOND Q 10/31/90 4.124318 890.554949 215.927809 0.570494 888.202049 215.357315 7.84%
2 CMDR HIBOND Q 10/31/91 5.439756 1171.491245 215.357315 0.432538 1169.138345 214.924777 7.84%
2 CMDR HIBOND Q 10/31/92 6.163625 1324.715728 214.924777 0.381740 1322.362828 214.543037 7.84%
2 CMDR HIBOND Q 10/31/93 7.367218 1580.585326 214.543037 0.319374 1578.232426 214.223663 7.84%
2 CMDR HIBOND Q 10/31/94 7.132529 1527.956489 214.223663 0.329883 1525.603589 213.893780 7.84%
2 CMDR HIBOND Q 10/31/95 7.728454 1653.068240 213.893780 0.304446 1650.715340 213.589334 7.84%
2 CMDR HIBOND Q 10/31/96 8.604229 1837.771538 213.589334 0.273459 1835.418638 213.315875 7.84%
2 CMDR HIBOND Q 10/31/97 9.897609 2111.317125 213.315875 0.237724 2108.964225 213.078151 7.84%
2 CMDR HIBOND Q 10/31/98 10.000000 2130.781510 213.078151 0.235290 2128.428610 212.842861 7.84%
2 CMDR INTLEQ Q 10/31/93 6.797758 1000.000000 147.107326 0.000000 1000.000000 147.107326 0.00%
2 CMDR INTLEQ Q 10/31/94 7.199635 1059.119051 147.107326 0.326808 1056.766151 146.780517 0.00%
2 CMDR INTLEQ Q 10/31/95 7.122034 1045.375836 146.780517 0.330369 1043.022936 146.450148 0.00%
2 CMDR INTLEQ Q 10/31/96 8.196798 1200.422283 146.450148 0.287051 1198.069383 146.163097 0.00%
2 CMDR INTLEQ Q 10/31/97 9.260726 1353.576395 146.163097 0.254073 1351.223495 145.909024 0.00%
2 CMDR INTLEQ Q 10/31/98 10.000000 1459.090243 145.909024 0.235290 1456.737343 145.673734 0.00%
2 CMDR LIMMAT Q 10/31/88 6.441184 1000.000000 155.250960 0.000000 1000.000000 155.250960 4.31%
2 CMDR LIMMAT Q 10/31/89 6.931303 1076.091445 155.250960 0.339460 1073.738545 154.911500 4.31%
2 CMDR LIMMAT Q 10/31/90 7.349843 1138.575205 154.911500 0.320129 1136.222305 154.591371 4.31%
2 CMDR LIMMAT Q 10/31/91 7.997531 1236.349280 154.591371 0.294203 1233.996380 154.297168 4.31%
2 CMDR LIMMAT Q 10/31/92 8.503192 1312.018440 154.297168 0.276708 1309.665540 154.020460 4.31%
2 CMDR LIMMAT Q 10/31/93 8.978398 1382.856987 154.020460 0.262062 1380.504087 153.758397 4.31%
2 CMDR LIMMAT Q 10/31/94 8.858550 1362.076450 153.758397 0.265608 1359.723550 153.492790 4.31%
2 CMDR LIMMAT Q 10/31/95 9.492608 1457.046882 153.492790 0.247867 1454.693982 153.244923 4.31%
2 CMDR LIMMAT Q 10/31/96 9.183718 1407.358157 153.244923 0.256203 1405.005257 152.988720 4.31%
2 CMDR LIMMAT Q 10/31/97 9.687836 1482.129625 152.988720 0.242872 1479.776725 152.745848 4.31%
2 CMDR LIMMAT Q 10/31/98 10.000000 1527.458480 152.745848 0.235290 1525.105580 152.510558 4.31%
</TABLE>
Page 3
<PAGE>
10yr cmdr 2 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 CMDR PARTNR Q 10/31/94 4.806269 1000.000000 208.061596 0.000000 1000.000000 208.061596 0.00%
2 CMDR PARTNR Q 10/31/95 5.904215 1228.440397 208.061596 0.398512 1226.087497 207.663084 0.00%
2 CMDR PARTNR Q 10/31/96 7.382714 1533.117160 207.663084 0.318704 1530.764260 207.344380 0.00%
2 CMDR PARTNR Q 10/31/97 9.994281 2072.258001 207.344380 0.235425 2069.905101 207.108956 0.00%
2 CMDR PARTNR Q 10/31/98 10.000000 2071.089557 207.108956 0.235290 2068.736657 206.873666 0.00%
2 CMDR QUALBD Q 10/31/88 4.895973 1000.000000 204.249492 0.000000 1000.000000 204.249492 7.23%
2 CMDR QUALBD Q 10/31/89 5.361029 1094.987452 204.249492 0.438890 1092.634552 203.810603 7.23%
2 CMDR QUALBD Q 10/31/90 5.574682 1136.179299 203.810603 0.422069 1133.826399 203.388534 7.23%
2 CMDR QUALBD Q 10/31/91 6.307721 1282.918126 203.388534 0.373019 1280.565226 203.015515 7.23%
2 CMDR QUALBD Q 10/31/92 6.787438 1377.955220 203.015515 0.346655 1375.602320 202.668860 7.23%
2 CMDR QUALBD Q 10/31/93 7.603073 1540.906135 202.668860 0.309467 1538.553235 202.359393 7.23%
2 CMDR QUALBD Q 10/31/94 7.038953 1424.398255 202.359393 0.334268 1422.045355 202.025124 7.23%
2 CMDR QUALBD Q 10/31/95 8.178361 1652.234397 202.025124 0.287698 1649.881497 201.737426 7.23%
2 CMDR QUALBD Q 10/31/96 8.593857 1733.702591 201.737426 0.273789 1731.349691 201.463637 7.23%
2 CMDR QUALBD Q 10/31/97 9.114059 1836.151478 201.463637 0.258162 1833.798578 201.205476 7.23%
2 CMDR QUALBD Q 10/31/98 10.000000 2012.054759 201.205476 0.235290 2009.701859 200.970186 7.23%
2 CMDR SMLCAP Q 10/31/95 8.025482 1000.000000 124.603108 0.000000 1000.000000 124.603108 0.00%
2 CMDR SMLCAP Q 10/31/96 9.225679 1149.548276 124.603108 0.255038 1147.195376 124.348070 0.00%
2 CMDR SMLCAP Q 10/31/97 11.846639 1473.106693 124.348070 0.198613 1470.753793 124.149457 0.00%
2 CMDR SMLCAP Q 10/31/98 10.000000 1241.494565 124.149457 0.235290 1239.141665 123.914167 0.00%
2 CMDR VALUEQ Q 10/31/88 3.210689 1000.000000 311.459628 0.000000 1000.000000 311.459628 11.85%
2 CMDR VALUEQ Q 10/31/89 3.554816 1107.181667 311.459628 0.661891 1104.828767 310.797737 11.85%
2 CMDR VALUEQ Q 10/31/90 2.924797 909.020288 310.797737 0.804466 906.667388 309.993271 11.85%
2 CMDR VALUEQ Q 10/31/91 3.930006 1218.275414 309.993271 0.598701 1215.922514 309.394569 11.85%
2 CMDR VALUEQ Q 10/31/92 4.418808 1367.155198 309.394569 0.532474 1364.802298 308.862095 11.85%
2 CMDR VALUEQ Q 10/31/93 4.827334 1490.980494 308.862095 0.487412 1488.627594 308.374683 11.85%
2 CMDR VALUEQ Q 10/31/94 5.102757 1573.561075 308.374683 0.461104 1571.208175 307.913580 11.85%
2 CMDR VALUEQ Q 10/31/95 6.245483 1923.069028 307.913580 0.376736 1920.716128 307.536843 11.85%
2 CMDR VALUEQ Q 10/31/96 7.468867 2296.951782 307.536843 0.315028 2294.598882 307.221816 11.85%
2 CMDR VALUEQ Q 10/31/97 9.185399 2821.954960 307.221816 0.256157 2819.602060 306.965659 11.85%
2 CMDR VALUEQ Q 10/31/98 10.000000 3069.656593 306.965659 0.235290 3067.303693 306.730369 11.85%
</TABLE>
Page 4
<PAGE>
10 yr cmdr 1a bkup
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Table 1A - Commander Variable/Fixed Annuity Contracts Commander - 10YR - Tbl 1a
- - ------------------------------------------------------------------------------------------------------------------------------------
(assuming no purchase payments made after first contract year)
- - ------------------------------------------------------------------------------------------------------------------------------------
Average
Q = qualified $40 Contract # of units Annual Total
N = nonqualified Beginning # of units fee & deferred at end of Ending return for
- - ------------------------------------------------------------------------------------------------------------------------------------
amethod system fund qnonq accdate unitval bvalue bunits cunits rvalue eunits 10yr
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1a CMDR BALFND Q 10/31/89 5.756152 1000.000000 173.727171 0.000000 1000.000000 173.727171 0.00%
1a CMDR BALFND Q 10/31/90 5.482625 952.480928 173.727171 0.429156 950.128028 173.298015 0.00%
1a CMDR BALFND Q 10/31/91 6.724544 1165.350125 173.298015 0.349897 1162.997225 172.948117 0.00%
1a CMDR BALFND Q 10/31/92 7.204016 1245.921005 172.948117 0.326609 1243.568105 172.621508 0.00%
1a CMDR BALFND Q 10/31/93 7.908353 1365.151820 172.621508 0.297521 1362.798920 172.323987 0.00%
1a CMDR BALFND Q 10/31/94 7.717765 1329.956036 172.323987 0.304868 1327.603136 172.019119 0.00%
1a CMDR BALFND Q 10/31/95 9.146177 1573.317310 172.019119 0.257255 1570.964410 171.761864 0.00%
1a CMDR BALFND Q 10/31/96 8.212922 1410.666792 171.761864 0.286488 1408.313892 171.475376 0.00%
1a CMDR BALFND Q 10/31/97 10.102222 1732.282320 171.475376 0.232909 1729.929420 171.242467 0.00%
1a CMDR BALFND Q 10/31/98 10.000000 1712.424673 171.242467 0.235290 1710.071773 171.007177 0.00%
1a CMDR EMGGRO Q 10/31/97 10.698921 1000.000000 93.467369 0.000000 1000.000000 93.467369 0.00%
1a CMDR EMGGRO Q 10/31/98 10.000000 934.673693 93.467369 0.235290 932.320793 93.232079 0.00%
1a CMDR EMGMKT Q 10/31/96 14.473381 1000.000000 69.092357 0.000000 1000.000000 69.092357 0.00%
1a CMDR EMGMKT Q 10/31/97 15.167002 1047.923909 69.092357 0.155133 1045.571009 68.937224 0.00%
1a CMDR EMGMKT Q 10/31/98 10.000000 689.372237 68.937224 0.235290 687.019337 68.701934 0.00%
1a CMDR FIDASM Q 10/31/89 3.719917 1000.000000 268.823202 0.000000 1000.000000 268.823202 0.00%
1a CMDR FIDASM Q 10/31/90 3.653465 982.136161 268.823202 0.644019 979.783261 268.179183 0.00%
1a CMDR FIDASM Q 10/31/91 4.643233 1245.218435 268.179183 0.506737 1242.865535 267.672446 0.00%
1a CMDR FIDASM Q 10/31/92 5.063413 1355.336143 267.672446 0.464687 1352.983243 267.207759 0.00%
1a CMDR FIDASM Q 10/31/93 6.038585 1613.556768 267.207759 0.389644 1611.203868 266.818115 0.00%
1a CMDR FIDASM Q 10/31/94 6.029620 1608.811844 266.818115 0.390224 1606.458944 266.427892 0.00%
1a CMDR FIDASM Q 10/31/95 6.370239 1697.209346 266.427892 0.369358 1694.856446 266.058533 0.00%
1a CMDR FIDASM Q 10/31/96 6.868746 1827.488487 266.058533 0.342552 1825.135587 265.715982 0.00%
1a CMDR FIDASM Q 10/31/97 10.466969 2781.240944 265.715982 0.224793 2778.888044 265.491189 0.00%
1a CMDR FIDASM Q 10/31/98 10.000000 2654.911889 265.491189 0.235290 2652.558989 265.255899 0.00%
1a CMDR FIDEQI Q 10/31/88 2.525220 1000.000000 396.005101 0.000000 1000.000000 396.005101 14.58%
1a CMDR FIDEQI Q 10/31/89 2.860949 1132.950396 396.005101 0.822419 1130.597496 395.182681 14.58%
1a CMDR FIDEQI Q 10/31/90 2.210017 873.360443 395.182681 1.064652 871.007543 394.118029 14.58%
1a CMDR FIDEQI Q 10/31/91 3.042270 1199.013455 394.118029 0.773403 1196.660555 393.344626 14.58%
1a CMDR FIDEQI Q 10/31/92 3.400367 1337.516086 393.344626 0.691955 1335.163186 392.652671 14.58%
</TABLE>
Page 1
<PAGE>
10 yr cmdr 1a bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1a CMDR FIDEQI Q 10/31/93 4.201307 1649.654416 392.652671 0.560040 1647.301516 392.092631 14.58%
1a CMDR FIDEQI Q 10/31/94 4.594567 1801.495864 392.092631 0.512105 1799.142964 391.580526 14.58%
1a CMDR FIDEQI Q 10/31/95 5.531637 2166.081328 391.580526 0.425353 2163.728428 391.155173 14.58%
1a CMDR FIDEQI Q 10/31/96 6.378591 2495.018867 391.155173 0.368875 2492.665967 390.786299 14.58%
1a CMDR FIDEQI Q 10/31/97 9.832242 3842.305457 390.786299 0.239305 3839.952557 390.546994 14.58%
1a CMDR FIDEQI Q 10/31/98 10.000000 3905.469940 390.546994 0.235290 3903.117040 390.311704 14.58%
1a CMDR FIDGRO Q 10/31/88 2.604960 1000.000000 383.883054 0.000000 1000.000000 383.883054 14.25%
1a CMDR FIDGRO Q 10/31/89 3.249750 1247.523954 383.883054 0.724025 1245.171054 383.159029 14.25%
1a CMDR FIDGRO Q 10/31/90 2.644272 1013.176692 383.159029 0.889810 1010.823792 382.269219 14.25%
1a CMDR FIDGRO Q 10/31/91 3.955927 1512.229124 382.269219 0.594778 1509.876224 381.674440 14.25%
1a CMDR FIDGRO Q 10/31/92 4.139720 1580.025314 381.674440 0.568372 1577.672414 381.106069 14.25%
1a CMDR FIDGRO Q 10/31/93 5.393156 2055.364481 381.106069 0.436275 2053.011581 380.669793 14.25%
1a CMDR FIDGRO Q 10/31/94 5.365612 2042.526412 380.669793 0.438515 2040.173512 380.231279 14.25%
1a CMDR FIDGRO Q 10/31/95 7.283556 2769.435811 380.231279 0.323043 2767.082911 379.908236 14.25%
1a CMDR FIDGRO Q 10/31/96 7.274787 2763.751496 379.908236 0.323432 2761.398596 379.584804 14.25%
1a CMDR FIDGRO Q 10/31/97 9.443042 3584.435245 379.584804 0.249168 3582.082345 379.335636 14.25%
1a CMDR FIDGRO Q 10/31/98 10.000000 3793.356362 379.335636 0.235290 3791.003462 379.100346 14.25%
1a CMDR FIDIND Q 10/31/92 7.633828 1000.000000 130.995878 0.000000 1000.000000 130.995878 0.00%
1a CMDR FIDIND Q 10/31/93 8.632500 1130.821915 130.995878 0.272563 1128.469015 130.723315 0.00%
1a CMDR FIDIND Q 10/31/94 8.816852 1152.568120 130.723315 0.266864 1150.215220 130.456451 0.00%
1a CMDR FIDIND Q 10/31/95 5.487838 715.923868 130.456451 0.428748 713.570968 130.027703 0.00%
1a CMDR FIDIND Q 10/31/96 6.685608 869.314250 130.027703 0.351935 866.961350 129.675768 0.00%
1a CMDR FIDIND Q 10/31/97 8.674156 1124.827839 129.675768 0.271254 1122.474939 129.404514 0.00%
1a CMDR FIDIND Q 10/31/98 10.000000 1294.045137 129.404514 0.235290 1291.692237 129.169224 0.00%
1a CMDR FLEXMN Q 10/31/88 3.632215 1000.000000 275.314099 0.000000 1000.000000 275.314099 10.49%
1a CMDR FLEXMN Q 10/31/89 4.286372 1180.098645 275.314099 0.548926 1177.745745 274.765173 10.49%
1a CMDR FLEXMN Q 10/31/90 3.819932 1049.584278 274.765173 0.615953 1047.231378 274.149220 10.49%
1a CMDR FLEXMN Q 10/31/91 5.015166 1374.903846 274.149220 0.469157 1372.550946 273.680063 10.49%
1a CMDR FLEXMN Q 10/31/92 5.403019 1478.698580 273.680063 0.435479 1476.345680 273.244584 10.49%
1a CMDR FLEXMN Q 10/31/93 6.211483 1697.254089 273.244584 0.378798 1694.901189 272.865786 10.49%
1a CMDR FLEXMN Q 10/31/94 6.595798 1799.767604 272.865786 0.356727 1797.414704 272.509059 10.49%
1a CMDR FLEXMN Q 10/31/95 7.531872 2052.503348 272.509059 0.312392 2050.150448 272.196666 10.49%
1a CMDR FLEXMN Q 10/31/96 8.152012 2218.950489 272.196666 0.288628 2216.597589 271.908038 10.49%
1a CMDR FLEXMN Q 10/31/97 9.450782 2569.743591 271.908038 0.248964 2567.390691 271.659074 10.49%
1a CMDR FLEXMN Q 10/31/98 10.000000 2716.590745 271.659074 0.235290 2714.237845 271.423784 10.49%
1a CMDR GROWEQ Q 10/31/88 3.383505 1000.000000 295.551506 0.000000 1000.000000 295.551506 11.28%
1a CMDR GROWEQ Q 10/31/89 4.264711 1260.441761 295.551506 0.551714 1258.088861 294.999793 11.28%
</TABLE>
Page 2
<PAGE>
10 yr cmdr 1a bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1a CMDR GROWEQ Q 10/31/90 3.524637 1039.767184 294.999793 0.667558 1037.414284 294.332235 11.28%
1a CMDR GROWEQ Q 10/31/91 4.737321 1394.346276 294.332235 0.496673 1391.993376 293.835561 11.28%
1a CMDR GROWEQ Q 10/31/92 5.001741 1469.689375 293.835561 0.470416 1467.336475 293.365145 11.28%
1a CMDR GROWEQ Q 10/31/93 5.881212 1725.342613 293.365145 0.400071 1722.989713 292.965075 11.28%
1a CMDR GROWEQ Q 10/31/94 5.400194 1582.068238 292.965075 0.435707 1579.715338 292.529368 11.28%
1a CMDR GROWEQ Q 10/31/95 6.534815 1911.625303 292.529368 0.360056 1909.272403 292.169312 11.28%
1a CMDR GROWEQ Q 10/31/96 6.669514 1948.627317 292.169312 0.352784 1946.274417 291.816528 11.28%
1a CMDR GROWEQ Q 10/31/97 8.378687 2445.039347 291.816528 0.280820 2442.686447 291.535708 11.28%
1a CMDR GROWEQ Q 10/31/98 10.000000 2915.357080 291.535708 0.235290 2913.004180 291.300418 11.28%
1a CMDR HIBOND Q 10/31/88 4.620509 1000.000000 216.426372 0.000000 1000.000000 216.426372 7.84%
1a CMDR HIBOND Q 10/31/89 4.719363 1021.394613 216.426372 0.498563 1019.041713 215.927809 7.84%
1a CMDR HIBOND Q 10/31/90 4.124318 890.554949 215.927809 0.570494 888.202049 215.357315 7.84%
1a CMDR HIBOND Q 10/31/91 5.439756 1171.491245 215.357315 0.432538 1169.138345 214.924777 7.84%
1a CMDR HIBOND Q 10/31/92 6.163625 1324.715728 214.924777 0.381740 1322.362828 214.543037 7.84%
1a CMDR HIBOND Q 10/31/93 7.367218 1580.585326 214.543037 0.319374 1578.232426 214.223663 7.84%
1a CMDR HIBOND Q 10/31/94 7.132529 1527.956489 214.223663 0.329883 1525.603589 213.893780 7.84%
1a CMDR HIBOND Q 10/31/95 7.728454 1653.068240 213.893780 0.304446 1650.715340 213.589334 7.84%
1a CMDR HIBOND Q 10/31/96 8.604229 1837.771538 213.589334 0.273459 1835.418638 213.315875 7.84%
1a CMDR HIBOND Q 10/31/97 9.897609 2111.317125 213.315875 0.237724 2108.964225 213.078151 7.84%
1a CMDR HIBOND Q 10/31/98 10.000000 2130.781510 213.078151 0.235290 2128.428610 212.842861 7.84%
1a CMDR INTLEQ Q 10/31/93 6.797758 1000.000000 147.107326 0.000000 1000.000000 147.107326 0.00%
1a CMDR INTLEQ Q 10/31/94 7.199635 1059.119051 147.107326 0.326808 1056.766151 146.780517 0.00%
1a CMDR INTLEQ Q 10/31/95 7.122034 1045.375836 146.780517 0.330369 1043.022936 146.450148 0.00%
1a CMDR INTLEQ Q 10/31/96 8.196798 1200.422283 146.450148 0.287051 1198.069383 146.163097 0.00%
1a CMDR INTLEQ Q 10/31/97 9.260726 1353.576395 146.163097 0.254073 1351.223495 145.909024 0.00%
1a CMDR INTLEQ Q 10/31/98 10.000000 1459.090243 145.909024 0.235290 1456.737343 145.673734 0.00%
1a CMDR LIMMAT Q 10/31/88 6.441184 1000.000000 155.250960 0.000000 1000.000000 155.250960 4.31%
1a CMDR LIMMAT Q 10/31/89 6.931303 1076.091445 155.250960 0.339460 1073.738545 154.911500 4.31%
1a CMDR LIMMAT Q 10/31/90 7.349843 1138.575205 154.911500 0.320129 1136.222305 154.591371 4.31%
1a CMDR LIMMAT Q 10/31/91 7.997531 1236.349280 154.591371 0.294203 1233.996380 154.297168 4.31%
1a CMDR LIMMAT Q 10/31/92 8.503192 1312.018440 154.297168 0.276708 1309.665540 154.020460 4.31%
1a CMDR LIMMAT Q 10/31/93 8.978398 1382.856987 154.020460 0.262062 1380.504087 153.758397 4.31%
1a CMDR LIMMAT Q 10/31/94 8.858550 1362.076450 153.758397 0.265608 1359.723550 153.492790 4.31%
1a CMDR LIMMAT Q 10/31/95 9.492608 1457.046882 153.492790 0.247867 1454.693982 153.244923 4.31%
1a CMDR LIMMAT Q 10/31/96 9.183718 1407.358157 153.244923 0.256203 1405.005257 152.988720 4.31%
1a CMDR LIMMAT Q 10/31/97 9.687836 1482.129625 152.988720 0.242872 1479.776725 152.745848 4.31%
1a CMDR LIMMAT Q 10/31/98 10.000000 1527.458480 152.745848 0.235290 1525.105580 152.510558 4.31%
</TABLE>
Page 3
<PAGE>
10 yr cmdr 1a bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1a CMDR PARTNR Q 10/31/94 4.806269 1000.000000 208.061596 0.000000 1000.000000 208.061596 0.00%
1a CMDR PARTNR Q 10/31/95 5.904215 1228.440397 208.061596 0.398512 1226.087497 207.663084 0.00%
1a CMDR PARTNR Q 10/31/96 7.382714 1533.117160 207.663084 0.318704 1530.764260 207.344380 0.00%
1a CMDR PARTNR Q 10/31/97 9.994281 2072.258001 207.344380 0.235425 2069.905101 207.108956 0.00%
1a CMDR PARTNR Q 10/31/98 10.000000 2071.089557 207.108956 0.235290 2068.736657 206.873666 0.00%
1a CMDR QUALBD Q 10/31/88 4.895973 1000.000000 204.249492 0.000000 1000.000000 204.249492 7.23%
1a CMDR QUALBD Q 10/31/89 5.361029 1094.987452 204.249492 0.438890 1092.634552 203.810603 7.23%
1a CMDR QUALBD Q 10/31/90 5.574682 1136.179299 203.810603 0.422069 1133.826399 203.388534 7.23%
1a CMDR QUALBD Q 10/31/91 6.307721 1282.918126 203.388534 0.373019 1280.565226 203.015515 7.23%
1a CMDR QUALBD Q 10/31/92 6.787438 1377.955220 203.015515 0.346655 1375.602320 202.668860 7.23%
1a CMDR QUALBD Q 10/31/93 7.603073 1540.906135 202.668860 0.309467 1538.553235 202.359393 7.23%
1a CMDR QUALBD Q 10/31/94 7.038953 1424.398255 202.359393 0.334268 1422.045355 202.025124 7.23%
1a CMDR QUALBD Q 10/31/95 8.178361 1652.234397 202.025124 0.287698 1649.881497 201.737426 7.23%
1a CMDR QUALBD Q 10/31/96 8.593857 1733.702591 201.737426 0.273789 1731.349691 201.463637 7.23%
1a CMDR QUALBD Q 10/31/97 9.114059 1836.151478 201.463637 0.258162 1833.798578 201.205476 7.23%
1a CMDR QUALBD Q 10/31/98 10.000000 2012.054759 201.205476 0.235290 2009.701859 200.970186 7.23%
1a CMDR SMLCAP Q 10/31/95 8.025482 1000.000000 124.603108 0.000000 1000.000000 124.603108 0.00%
1a CMDR SMLCAP Q 10/31/96 9.225679 1149.548276 124.603108 0.255038 1147.195376 124.348070 0.00%
1a CMDR SMLCAP Q 10/31/97 11.846639 1473.106693 124.348070 0.198613 1470.753793 124.149457 0.00%
1a CMDR SMLCAP Q 10/31/98 10.000000 1241.494565 124.149457 0.235290 1239.141665 123.914167 0.00%
1a CMDR VALUEQ Q 10/31/88 3.210689 1000.000000 311.459628 0.000000 1000.000000 311.459628 11.85%
1a CMDR VALUEQ Q 10/31/89 3.554816 1107.181667 311.459628 0.661891 1104.828767 310.797737 11.85%
1a CMDR VALUEQ Q 10/31/90 2.924797 909.020288 310.797737 0.804466 906.667388 309.993271 11.85%
1a CMDR VALUEQ Q 10/31/91 3.930006 1218.275414 309.993271 0.598701 1215.922514 309.394569 11.85%
1a CMDR VALUEQ Q 10/31/92 4.418808 1367.155198 309.394569 0.532474 1364.802298 308.862095 11.85%
1a CMDR VALUEQ Q 10/31/93 4.827334 1490.980494 308.862095 0.487412 1488.627594 308.374683 11.85%
1a CMDR VALUEQ Q 10/31/94 5.102757 1573.561075 308.374683 0.461104 1571.208175 307.913580 11.85%
1a CMDR VALUEQ Q 10/31/95 6.245483 1923.069028 307.913580 0.376736 1920.716128 307.536843 11.85%
1a CMDR VALUEQ Q 10/31/96 7.468867 2296.951782 307.536843 0.315028 2294.598882 307.221816 11.85%
1a CMDR VALUEQ Q 10/31/97 9.185399 2821.954960 307.221816 0.256157 2819.602060 306.965659 11.85%
1a CMDR VALUEQ Q 10/31/98 10.000000 3069.656593 306.965659 0.235290 3067.303693 306.730369 11.85%
</TABLE>
Page 4
<PAGE>
SI cmdr 3 bkup
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Table 3 - Commander Variable/Fixed Annuity Contracts Commander - SI Tbl 3
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
$40 Contract Average
Q = qualified fee & # of units Annual Total
N = nonqualified Beginning # of units deferred at end of Ending return for
- - ------------------------------------------------------------------------------------------------------------------------------------
amethod system fund qnonq accdate unitval bvalue bunits cunits eunits rvalue Since Inception
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 CMDR EMGGRO Q 5/1/97 7.430438 10000.000000 1345.815684 0.000000 1345.815684 10000.000000 21.85%
3 CMDR EMGGRO Q 5/1/98 13.302989 17903.371241 1345.815684 0.176870 1345.638814 17901.018341 21.85%
3 CMDR EMGGRO Q 10/31/98 10.000000 13456.388141 1345.638814 0.235290 1345.403524 13454.035241 21.85%
3 CMDR EMGMKT Q 10/1/96 15.141139 10000.000000 660.452295 0.000000 660.452295 10000.000000 -18.10%
3 CMDR EMGMKT Q 10/1/97 18.036340 11912.142145 660.452295 0.130453 660.321842 11909.789245 -18.10%
3 CMDR EMGMKT Q 10/1/98 8.818924 5823.328137 660.321842 0.266801 660.055040 5820.975237 -18.10%
3 CMDR EMGMKT Q 10/31/98 10.000000 6600.550404 660.055040 0.235290 659.819750 6598.197504 -18.10%
3 CMDR FIDASM Q 9/6/89 3.724052 10000.000000 2685.247145 0.000000 2685.247145 10000.000000 11.37%
3 CMDR FIDASM Q 9/6/90 3.716879 9980.738722 2685.247145 0.633031 2684.614114 9978.385822 11.37%
3 CMDR FIDASM Q 9/6/91 4.580750 12297.546101 2684.614114 0.513650 2684.100464 12295.193201 11.37%
3 CMDR FIDASM Q 9/6/92 5.066208 13598.211244 2684.100464 0.464430 2683.636034 13595.858344 11.37%
3 CMDR FIDASM Q 9/6/93 5.863757 15736.189580 2683.636034 0.401262 2683.234772 15733.836680 11.37%
3 CMDR FIDASM Q 9/6/94 6.059242 16258.368829 2683.234772 0.388316 2682.846457 16256.015929 11.37%
3 CMDR FIDASM Q 9/6/95 6.447490 17297.625700 2682.846457 0.364933 2682.481524 17295.272800 11.37%
3 CMDR FIDASM Q 9/6/96 6.504803 17449.013864 2682.481524 0.361717 2682.119807 17446.660964 11.37%
3 CMDR FIDASM Q 9/6/97 10.549565 28295.197237 2682.119807 0.223033 2681.896774 28292.844337 11.37%
3 CMDR FIDASM Q 9/6/98 9.317230 24987.849076 2681.896774 0.252532 2681.644241 24985.496176 11.37%
3 CMDR FIDASM Q 10/31/98 10.000000 26816.442415 2681.644241 0.235290 2681.408951 26814.089515 11.37%
3 CMDR FIDEQI Q 10/9/86 2.123001 10000.000000 4710.313372 0.000000 4710.313372 10000.000000 13.69%
3 CMDR FIDEQI Q 10/9/87 2.510393 11824.737718 4710.313372 0.937264 4709.376109 11822.384818 13.69%
3 CMDR FIDEQI Q 10/9/88 2.520584 11870.378070 4709.376109 0.933474 4708.442635 11868.025170 13.69%
3 CMDR FIDEQI Q 10/9/89 3.080755 14505.558189 4708.442635 0.763741 4707.678893 14503.205289 13.69%
3 CMDR FIDEQI Q 10/9/90 2.262211 10649.762977 4707.678893 1.040089 4706.638805 10647.410077 13.69%
3 CMDR FIDEQI Q 10/9/91 2.924090 13762.635462 4706.638805 0.804661 4705.834144 13760.282562 13.69%
3 CMDR FIDEQI Q 10/9/92 3.271719 15396.166980 4705.834144 0.719163 4705.114981 15393.814080 13.69%
3 CMDR FIDEQI Q 10/9/93 4.196690 19745.908989 4705.114981 0.560656 4704.554325 19743.556089 13.69%
3 CMDR FIDEQI Q 10/9/94 4.451038 20940.150072 4704.554325 0.528618 4704.025706 20937.797172 13.69%
3 CMDR FIDEQI Q 10/9/95 5.542446 26071.808461 4704.025706 0.424524 4703.601183 26069.455561 13.69%
3 CMDR FIDEQI Q 10/9/96 6.348933 29862.848768 4703.601183 0.370598 4703.230585 29860.495868 13.69%
3 CMDR FIDEQI Q 10/9/97 10.351258 48684.353219 4703.230585 0.227306 4703.003279 48682.000319 13.69%
</TABLE>
Page 1
<PAGE>
SI cmdr 3 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 CMDR FIDEQI Q 10/9/98 9.085853 42730.796454 4703.003279 0.258963 4702.744316 42728.443554 13.69%
3 CMDR FIDEQI Q 10/31/98 10.000000 47027.443162 4702.744316 0.235290 4702.509026 47025.090262 13.69%
3 CMDR FIDGRO Q 10/9/86 2.233032 10000.000000 4478.216165 0.000000 4478.216165 10000.000000 13.21%
3 CMDR FIDGRO Q 10/9/87 2.810082 12584.154638 4478.216165 0.837307 4477.378859 12581.801738 13.21%
3 CMDR FIDGRO Q 10/9/88 2.640556 11822.769610 4477.378859 0.891062 4476.487796 11820.416710 13.21%
3 CMDR FIDGRO Q 10/9/89 3.468741 15527.776755 4476.487796 0.678315 4475.809481 15525.423855 13.21%
3 CMDR FIDGRO Q 10/9/90 2.728641 12212.877258 4475.809481 0.862297 4474.947184 12210.524358 13.21%
3 CMDR FIDGRO Q 10/9/91 3.717229 16634.403445 4474.947184 0.632971 4474.314212 16632.050545 13.21%
3 CMDR FIDGRO Q 10/9/92 3.917252 17527.016297 4474.314212 0.600651 4473.713562 17524.663397 13.21%
3 CMDR FIDGRO Q 10/9/93 5.332649 23856.744151 4473.713562 0.441225 4473.272336 23854.391251 13.21%
3 CMDR FIDGRO Q 10/9/94 5.050797 22593.590496 4473.272336 0.465847 4472.806489 22591.237596 13.21%
3 CMDR FIDGRO Q 10/9/95 6.864294 30702.658745 4472.806489 0.342774 4472.463715 30700.305845 13.21%
3 CMDR FIDGRO Q 10/9/96 7.393352 33066.498554 4472.463715 0.318245 4472.145470 33064.145654 13.21%
3 CMDR FIDGRO Q 10/9/97 10.047144 44932.289524 4472.145470 0.234186 4471.911284 44929.936624 13.21%
3 CMDR FIDGRO Q 10/9/98 8.635956 38619.229083 4471.911284 0.272454 4471.638830 38616.876183 13.21%
3 CMDR FIDGRO Q 10/31/98 10.000000 44716.388300 4471.638830 0.235290 4471.403540 44714.035400 13.21%
3 CMDR FIDIND Q 8/27/92 7.538303 10000.000000 1326.558511 0.000000 1326.558511 10000.000000 4.65%
3 CMDR FIDIND Q 8/27/93 8.491329 11264.244751 1326.558511 0.277094 1326.281416 11261.891851 4.65%
3 CMDR FIDIND Q 8/27/94 8.832717 11714.668411 1326.281416 0.266385 1326.015032 11712.315511 4.65%
3 CMDR FIDIND Q 8/27/95 5.280700 7002.287577 1326.015032 0.445566 1325.569466 6999.934677 4.65%
3 CMDR FIDIND Q 8/27/96 6.310826 8365.438248 1325.569466 0.372836 1325.196630 8363.085348 4.65%
3 CMDR FIDIND Q 8/27/97 8.662687 11479.763620 1325.196630 0.271613 1324.925017 11477.410720 4.65%
3 CMDR FIDIND Q 8/27/98 9.487170 12569.788873 1324.925017 0.248009 1324.677008 12567.435973 4.65%
3 CMDR FIDIND Q 10/31/98 10.000000 13246.770083 1324.677008 0.235290 1324.441718 13244.417183 4.65%
3 CMDR FLEXMN Q 7/31/84 1.847498 10000.000000 5412.725751 0.000000 5412.725751 10000.000000 12.56%
3 CMDR FLEXMN Q 7/31/85 2.113909 11442.009680 5412.725751 1.113056 5411.612695 11439.656780 12.56%
3 CMDR FLEXMN Q 7/31/86 2.562388 13866.651430 5411.612695 0.918245 5410.694450 13864.298530 12.56%
3 CMDR FLEXMN Q 7/31/87 3.189415 17256.950039 5410.694450 0.737721 5409.956728 17254.597139 12.56%
3 CMDR FLEXMN Q 7/31/88 3.496273 18914.685640 5409.956728 0.672974 5409.283755 18912.332740 12.56%
3 CMDR FLEXMN Q 7/31/89 4.344429 23500.249213 5409.283755 0.541590 5408.742164 23497.896313 12.56%
3 CMDR FLEXMN Q 7/31/90 4.394451 23768.452413 5408.742164 0.535425 5408.206739 23766.099513 12.56%
3 CMDR FLEXMN Q 7/31/91 4.950387 26772.716335 5408.206739 0.475296 5407.731443 26770.363435 12.56%
3 CMDR FLEXMN Q 7/31/92 5.407339 29241.437133 5407.731443 0.435131 5407.296312 29239.084233 12.56%
3 CMDR FLEXMN Q 7/31/93 5.907964 31946.111949 5407.296312 0.398259 5406.898053 31943.759049 12.56%
3 CMDR FLEXMN Q 7/31/94 6.344134 34302.085773 5406.898053 0.370878 5406.527175 34299.732873 12.56%
3 CMDR FLEXMN Q 7/31/95 7.423140 40133.408134 5406.527175 0.316968 5406.210207 40131.055234 12.56%
3 CMDR FLEXMN Q 7/31/96 7.692153 41585.396061 5406.210207 0.305883 5405.904324 41583.043161 12.56%
</TABLE>
Page 2
<PAGE>
SI cmdr 3 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 CMDR FLEXMN Q 7/31/97 9.385442 50736.801487 5405.904324 0.250697 5405.653627 50734.448587 12.56%
3 CMDR FLEXMN Q 7/31/98 9.928897 53672.178079 5405.653627 0.236975 5405.416652 53669.825179 12.56%
3 CMDR FLEXMN Q 10/31/98 10.000000 54054.166519 5405.416652 0.235290 5405.181362 54051.813619 12.56%
3 CMDR GROWEQ Q 6/1/83 2.087280 10000.000000 4790.924073 0.000000 4790.924073 10000.000000 10.68%
3 CMDR GROWEQ Q 6/1/84 1.916656 9182.553371 4790.924073 1.227607 4789.696467 9180.200471 10.68%
3 CMDR GROWEQ Q 6/1/85 2.348801 11250.043850 4789.696467 1.001745 4788.694721 11247.690950 10.68%
3 CMDR GROWEQ Q 6/1/86 3.021389 14468.509556 4788.694721 0.778748 4787.915974 14466.156656 10.68%
3 CMDR GROWEQ Q 6/1/87 3.421339 16381.083649 4787.915974 0.687713 4787.228260 16378.730749 10.68%
3 CMDR GROWEQ Q 6/1/88 3.291571 15757.501713 4787.228260 0.714826 4786.513435 15755.148813 10.68%
3 CMDR GROWEQ Q 6/1/89 3.964243 18974.902378 4786.513435 0.593531 4785.919904 18972.549478 10.68%
3 CMDR GROWEQ Q 6/1/90 4.501912 21545.790246 4785.919904 0.522645 4785.397259 21543.437346 10.68%
3 CMDR GROWEQ Q 6/1/91 4.601913 22021.981858 4785.397259 0.511287 4784.885972 22019.628958 10.68%
3 CMDR GROWEQ Q 6/1/92 4.974399 23801.931994 4784.885972 0.473002 4784.412970 23799.579094 10.68%
3 CMDR GROWEQ Q 6/1/93 5.437851 26016.924854 4784.412970 0.432689 4783.980281 26014.571954 10.68%
3 CMDR GROWEQ Q 6/1/94 5.357357 25629.490245 4783.980281 0.439190 4783.541090 25627.137345 10.68%
3 CMDR GROWEQ Q 6/1/95 5.806536 27775.803548 4783.541090 0.405216 4783.135875 27773.450648 10.68%
3 CMDR GROWEQ Q 6/1/96 6.411558 30667.353082 4783.135875 0.366978 4782.768897 30665.000182 10.68%
3 CMDR GROWEQ Q 6/1/97 7.520153 35967.153866 4782.768897 0.312879 4782.456017 35964.800966 10.68%
3 CMDR GROWEQ Q 6/1/98 9.498885 45427.999727 4782.456017 0.247703 4782.208315 45425.646827 10.68%
3 CMDR GROWEQ Q 10/31/98 10.000000 47822.083146 4782.208315 0.235290 4781.973025 47819.730246 10.68%
3 CMDR HIBOND Q 8/6/84 3.069469 10000.000000 3257.892489 0.000000 3257.892489 10000.000000 8.63%
3 CMDR HIBOND Q 8/6/85 3.554298 11579.520757 3257.892489 0.661987 3257.230502 11577.167857 8.63%
3 CMDR HIBOND Q 8/6/86 3.959277 12896.277809 3257.230502 0.594275 3256.636226 12893.924909 8.63%
3 CMDR HIBOND Q 8/6/87 4.178232 13606.981694 3256.636226 0.563133 3256.073094 13604.628794 8.63%
3 CMDR HIBOND Q 8/6/88 4.500296 14653.292719 3256.073094 0.522832 3255.550261 14650.939819 8.63%
3 CMDR HIBOND Q 8/6/89 4.943455 16093.666217 3255.550261 0.475963 3255.074299 16091.313317 8.63%
3 CMDR HIBOND Q 8/6/90 4.702708 15307.663945 3255.074299 0.500329 3254.573970 15305.311045 8.63%
3 CMDR HIBOND Q 8/6/91 5.171106 16829.746983 3254.573970 0.455009 3254.118961 16827.394083 8.63%
3 CMDR HIBOND Q 8/6/92 6.150450 20014.295963 3254.118961 0.382557 3253.736403 20011.943063 8.63%
3 CMDR HIBOND Q 8/6/93 7.121311 23170.868841 3253.736403 0.330403 3253.406001 23168.515941 8.63%
3 CMDR HIBOND Q 8/6/94 7.140506 23230.965069 3253.406001 0.329514 3253.076486 23228.612169 8.63%
3 CMDR HIBOND Q 8/6/95 7.574056 24638.983480 3253.076486 0.310653 3252.765834 24636.630580 8.63%
3 CMDR HIBOND Q 8/6/96 8.299550 26996.492676 3252.765834 0.283497 3252.482336 26994.139776 8.63%
3 CMDR HIBOND Q 8/6/97 9.674417 31465.870408 3252.482336 0.243208 3252.239128 31463.517508 8.63%
3 CMDR HIBOND Q 8/6/98 10.611491 34511.106237 3252.239128 0.221731 3252.017397 34508.753337 8.63%
3 CMDR HIBOND Q 10/31/98 10.000000 32520.173967 3252.017397 0.235290 3251.782107 32517.821067 8.63%
3 CMDR INTLEQ Q 11/1/92 5.230799 10000.000000 1911.753826 0.000000 1911.753826 10000.000000 11.39%
</TABLE>
Page 3
<PAGE>
SI cmdr 3 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 CMDR INTLEQ Q 11/1/93 6.802694 13005.076280 1911.753826 0.345878 1911.407948 13002.723380 11.39%
3 CMDR INTLEQ Q 11/1/94 7.189081 13741.266563 1911.407948 0.327288 1911.080660 13738.913663 11.39%
3 CMDR INTLEQ Q 11/1/95 7.116674 13600.538045 1911.080660 0.330618 1910.750042 13598.185145 11.39%
3 CMDR INTLEQ Q 11/1/96 8.227279 15720.273696 1910.750042 0.285988 1910.464055 15717.920796 11.39%
3 CMDR INTLEQ Q 11/1/97 9.260371 17691.605927 1910.464055 0.254083 1910.209972 17689.253027 11.39%
3 CMDR INTLEQ Q 10/31/98 10.000000 19102.099718 1910.209972 0.235290 1909.974682 19099.746818 11.39%
3 CMDR LIMMAT Q 9/10/84 4.418579 10000.000000 2263.171033 0.000000 2263.171033 10000.000000 5.93%
3 CMDR LIMMAT Q 9/10/85 5.121386 11590.572444 2263.171033 0.459426 2262.711607 11588.219544 5.93%
3 CMDR LIMMAT Q 9/10/86 5.886607 13319.693983 2262.711607 0.399704 2262.311903 13317.341083 5.93%
3 CMDR LIMMAT Q 9/10/87 6.070266 13732.835024 2262.311903 0.387611 2261.924292 13730.482124 5.93%
3 CMDR LIMMAT Q 9/10/88 6.359685 14385.125991 2261.924292 0.369971 2261.554321 14382.773091 5.93%
3 CMDR LIMMAT Q 9/10/89 6.835213 15458.205494 2261.554321 0.344232 2261.210089 15455.852594 5.93%
3 CMDR LIMMAT Q 9/10/90 7.270386 16439.870172 2261.210089 0.323628 2260.886461 16437.517272 5.93%
3 CMDR LIMMAT Q 9/10/91 7.863302 17778.033029 2260.886461 0.299225 2260.587235 17775.680129 5.93%
3 CMDR LIMMAT Q 9/10/92 8.561670 19354.401915 2260.587235 0.274818 2260.312417 19352.049015 5.93%
3 CMDR LIMMAT Q 9/10/93 8.989837 20319.840202 2260.312417 0.261729 2260.050689 20317.487302 5.93%
3 CMDR LIMMAT Q 9/10/94 8.856932 20017.115265 2260.050689 0.265656 2259.785032 20014.762365 5.93%
3 CMDR LIMMAT Q 9/10/95 9.392549 21225.141645 2259.785032 0.250507 2259.534525 21222.788745 5.93%
3 CMDR LIMMAT Q 9/10/96 9.009856 20358.080699 2259.534525 0.261147 2259.273378 20355.727799 5.93%
3 CMDR LIMMAT Q 9/10/97 9.595948 21679.869851 2259.273378 0.245197 2259.028181 21677.516951 5.93%
3 CMDR LIMMAT Q 9/10/98 10.005010 22601.599537 2259.028181 0.235172 2258.793008 22599.246637 5.93%
3 CMDR LIMMAT Q 10/31/98 10.000000 22587.930084 2258.793008 0.235290 2258.557718 22585.577184 5.93%
3 CMDR PARTNR Q 3/22/94 4.809085 10000.000000 2079.397640 0.000000 2079.397640 10000.000000 17.18%
3 CMDR PARTNR Q 3/22/95 4.951257 10295.632121 2079.397640 0.475213 2078.922427 10293.279221 17.18%
3 CMDR PARTNR Q 3/22/96 6.769643 14073.562658 2078.922427 0.347566 2078.574861 14071.209758 17.18%
3 CMDR PARTNR Q 3/22/97 8.283321 17217.502797 2078.574861 0.284053 2078.290808 17215.149897 17.18%
3 CMDR PARTNR Q 3/22/98 11.470875 23839.814076 2078.290808 0.205119 2078.085689 23837.461176 17.18%
3 CMDR PARTNR Q 10/31/98 10.000000 20780.856889 2078.085689 0.235290 2077.850399 20778.503989 17.18%
3 CMDR QUALBD Q 3/17/87 4.607189 10000.000000 2170.520897 0.000000 2170.520897 10000.000000 6.87%
3 CMDR QUALBD Q 3/17/88 4.744610 10298.275152 2170.520897 0.495910 2170.024987 10295.922252 6.87%
3 CMDR QUALBD Q 3/17/89 4.850996 10526.782530 2170.024987 0.485034 2169.539952 10524.429630 6.87%
3 CMDR QUALBD Q 3/17/90 5.339387 11584.013417 2169.539952 0.440669 2169.099284 11581.660517 6.87%
3 CMDR QUALBD Q 3/17/91 5.849576 12688.311112 2169.099284 0.402234 2168.697049 12685.958212 6.87%
3 CMDR QUALBD Q 3/17/92 6.373536 13822.268718 2168.697049 0.369167 2168.327882 13819.915818 6.87%
3 CMDR QUALBD Q 3/17/93 7.217055 15648.941585 2168.327882 0.326019 2168.001863 15646.588685 6.87%
3 CMDR QUALBD Q 3/17/94 7.398212 16039.337398 2168.001863 0.318036 2167.683827 16036.984498 6.87%
3 CMDR QUALBD Q 3/17/95 7.522216 16305.785963 2167.683827 0.312793 2167.371033 16303.433063 6.87%
</TABLE>
Page 4
<PAGE>
SI cmdr 3 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 CMDR QUALBD Q 3/17/96 8.251826 17884.768643 2167.371033 0.285137 2167.085896 17882.415743 6.87%
3 CMDR QUALBD Q 3/17/97 8.582873 18599.823028 2167.085896 0.274139 2166.811757 18597.470128 6.87%
3 CMDR QUALBD Q 3/17/98 9.395517 20358.316701 2166.811757 0.250428 2166.561329 20355.963801 6.87%
3 CMDR QUALBD Q 10/31/98 10.000000 21665.613293 2166.561329 0.235290 2166.326039 21663.260393 6.87%
3 CMDR SMLCAP Q 3/1/95 7.438871 10000.000000 1344.290014 0.000000 1344.290014 10000.000000 8.37%
3 CMDR SMLCAP Q 3/1/96 8.595615 11554.999408 1344.290014 0.273733 1344.016281 11552.646508 8.37%
3 CMDR SMLCAP Q 3/1/97 9.899993 13305.751777 1344.016281 0.237667 1343.778614 13303.398877 8.37%
3 CMDR SMLCAP Q 3/1/98 12.508818 16809.082121 1343.778614 0.188099 1343.590515 16806.729221 8.37%
3 CMDR SMLCAP Q 10/31/98 10.000000 13435.905152 1343.590515 0.235290 1343.355225 13433.552252 8.37%
3 CMDR VALUEQ Q 3/17/87 2.739582 10000.000000 3650.191891 0.000000 3650.191891 10000.000000 11.76%
3 CMDR VALUEQ Q 3/17/88 2.865151 10458.350946 3650.191891 0.821213 3649.370677 10455.998046 11.76%
3 CMDR VALUEQ Q 3/17/89 3.332436 12161.294222 3649.370677 0.706060 3648.664617 12158.941322 11.76%
3 CMDR VALUEQ Q 3/17/90 3.485528 12717.522686 3648.664617 0.675048 3647.989569 12715.169786 11.76%
3 CMDR VALUEQ Q 3/17/91 3.673059 13399.280918 3647.989569 0.640583 3647.348986 13396.928018 11.76%
3 CMDR VALUEQ Q 3/17/92 4.240347 15466.025329 3647.348986 0.554884 3646.794102 15463.672429 11.76%
3 CMDR VALUEQ Q 3/17/93 4.621154 16852.397151 3646.794102 0.509159 3646.284943 16850.044251 11.76%
3 CMDR VALUEQ Q 3/17/94 4.919131 17936.553299 3646.284943 0.478316 3645.806627 17934.200399 11.76%
3 CMDR VALUEQ Q 3/17/95 5.348870 19500.945693 3645.806627 0.439887 3645.366740 19498.592793 11.76%
3 CMDR VALUEQ Q 3/17/96 6.661384 24283.187675 3645.366740 0.353215 3645.013525 24280.834775 11.76%
3 CMDR VALUEQ Q 3/17/97 8.029760 29268.583802 3645.013525 0.293022 3644.720502 29266.230902 11.76%
3 CMDR VALUEQ Q 3/17/98 10.560992 38491.864069 3644.720502 0.222792 3644.497711 38489.511169 11.76%
3 CMDR VALUEQ Q 10/31/98 10.000000 36444.977109 3644.497711 0.235290 3644.262421 36442.624209 11.76%
</TABLE>
Page 5
<PAGE>
SI cmdr 2 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 CMDR FIDEQI Q 10/9/87 2.510393 1182.473772 471.031337 0.937264 470.094074 1180.120872 13.54%
2 CMDR FIDEQI Q 10/9/88 2.520584 1184.911601 470.094074 0.933474 469.160599 1182.558701 13.54%
2 CMDR FIDEQI Q 10/9/89 3.080755 1445.368863 469.160599 0.763741 468.396858 1443.015963 13.54%
2 CMDR FIDEQI Q 10/9/90 2.262211 1059.612525 468.396858 1.040089 467.356769 1057.259625 13.54%
2 CMDR FIDEQI Q 10/9/91 2.924090 1366.593256 467.356769 0.804661 466.552109 1364.240356 13.54%
2 CMDR FIDEQI Q 10/9/92 3.271719 1526.427399 466.552109 0.719163 465.832946 1524.074499 13.54%
2 CMDR FIDEQI Q 10/9/93 4.196690 1954.956465 465.832946 0.560656 465.272290 1952.603565 13.54%
2 CMDR FIDEQI Q 10/9/94 4.451038 2070.944641 465.272290 0.528618 464.743671 2068.591741 13.54%
2 CMDR FIDEQI Q 10/9/95 5.542446 2575.816702 464.743671 0.424524 464.319147 2573.463802 13.54%
2 CMDR FIDEQI Q 10/9/96 6.348933 2947.931158 464.319147 0.370598 463.948550 2945.578258 13.54%
2 CMDR FIDEQI Q 10/9/97 10.351258 4802.451138 463.948550 0.227306 463.721244 4800.098238 13.54%
2 CMDR FIDEQI Q 10/9/98 9.085853 4213.303057 463.721244 0.258963 463.462281 4210.950157 13.54%
2 CMDR FIDEQI Q 10/31/98 10.000000 4634.622811 463.462281 0.235290 463.226991 4632.269911 13.54%
2 CMDR FIDGRO Q 10/9/86 2.233032 1000.000000 447.821617 0.000000 447.821617 1000.000000 13.08%
2 CMDR FIDGRO Q 10/9/87 2.810082 1258.415464 447.821617 0.837307 446.984310 1256.062564 13.08%
2 CMDR FIDGRO Q 10/9/88 2.640556 1180.287102 446.984310 0.891062 446.093248 1177.934202 13.08%
2 CMDR FIDGRO Q 10/9/89 3.468741 1547.381938 446.093248 0.678315 445.414932 1545.029038 13.08%
2 CMDR FIDGRO Q 10/9/90 2.728641 1215.377447 445.414932 0.862297 444.552635 1213.024547 13.08%
2 CMDR FIDGRO Q 10/9/91 3.717229 1652.503947 444.552635 0.632971 443.919664 1650.151047 13.08%
2 CMDR FIDGRO Q 10/9/92 3.917252 1738.945190 443.919664 0.600651 443.319013 1736.592290 13.08%
2 CMDR FIDGRO Q 10/9/93 5.332649 2364.064691 443.319013 0.441225 442.877787 2361.711791 13.08%
2 CMDR FIDGRO Q 10/9/94 5.050797 2236.885800 442.877787 0.465847 442.411940 2234.532900 13.08%
2 CMDR FIDGRO Q 10/9/95 6.864294 3036.845627 442.411940 0.342774 442.069166 3034.492727 13.08%
2 CMDR FIDGRO Q 10/9/96 7.393352 3268.372956 442.069166 0.318245 441.750921 3266.020056 13.08%
2 CMDR FIDGRO Q 10/9/97 10.047144 4438.335116 441.750921 0.234186 441.516735 4435.982216 13.08%
2 CMDR FIDGRO Q 10/9/98 8.635956 3812.919098 441.516735 0.272454 441.244281 3810.566198 13.08%
2 CMDR FIDGRO Q 10/31/98 10.000000 4412.442812 441.244281 0.235290 441.008991 4410.089912 13.08%
2 CMDR FIDIND Q 8/27/92 7.538303 1000.000000 132.655851 0.000000 132.655851 1000.000000 4.41%
2 CMDR FIDIND Q 8/27/93 8.491329 1126.424475 132.655851 0.277094 132.378757 1124.071575 4.41%
2 CMDR FIDIND Q 8/27/94 8.832717 1169.264094 132.378757 0.266385 132.112372 1166.911194 4.41%
2 CMDR FIDIND Q 8/27/95 5.280700 697.645803 132.112372 0.445566 131.666806 695.292903 4.41%
2 CMDR FIDIND Q 8/27/96 6.310826 830.926303 131.666806 0.372836 131.293971 828.573403 4.41%
2 CMDR FIDIND Q 8/27/97 8.662687 1137.358572 131.293971 0.271613 131.022357 1135.005672 4.41%
2 CMDR FIDIND Q 8/27/98 9.487170 1243.031378 131.022357 0.248009 130.774349 1240.678478 4.41%
2 CMDR FIDIND Q 10/31/98 10.000000 1307.743488 130.774349 0.235290 130.539059 1305.390588 4.41%
2 CMDR FLEXMN Q 7/31/84 1.847498 1000.000000 541.272575 0.000000 541.272575 1000.000000 12.46%
2 CMDR FLEXMN Q 7/31/85 2.113909 1144.200968 541.272575 1.113056 540.159519 1141.848068 12.46%
</TABLE>
Page 2
<PAGE>
SI cmdr 2 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 CMDR FLEXMN Q 7/31/86 2.562388 1384.098269 540.159519 0.918245 539.241274 1381.745369 12.46%
2 CMDR FLEXMN Q 7/31/87 3.189415 1719.864207 539.241274 0.737721 538.503552 1717.511307 12.46%
2 CMDR FLEXMN Q 7/31/88 3.496273 1882.755430 538.503552 0.672974 537.830578 1880.402530 12.46%
2 CMDR FLEXMN Q 7/31/89 4.344429 2336.566762 537.830578 0.541590 537.288988 2334.213862 12.46%
2 CMDR FLEXMN Q 7/31/90 4.394451 2361.090132 537.288988 0.535425 536.753563 2358.737232 12.46%
2 CMDR FLEXMN Q 7/31/91 4.950387 2657.137861 536.753563 0.475296 536.278267 2654.784961 12.46%
2 CMDR FLEXMN Q 7/31/92 5.407339 2899.838387 536.278267 0.435131 535.843136 2897.485487 12.46%
2 CMDR FLEXMN Q 7/31/93 5.907964 3165.741957 535.843136 0.398259 535.444877 3163.389057 12.46%
2 CMDR FLEXMN Q 7/31/94 6.344134 3396.934049 535.444877 0.370878 535.073999 3394.581149 12.46%
2 CMDR FLEXMN Q 7/31/95 7.423140 3971.929204 535.073999 0.316968 534.757031 3969.576304 12.46%
2 CMDR FLEXMN Q 7/31/96 7.692153 4113.432898 534.757031 0.305883 534.451147 4111.079998 12.46%
2 CMDR FLEXMN Q 7/31/97 9.385442 5016.060247 534.451147 0.250697 534.200451 5013.707347 12.46%
2 CMDR FLEXMN Q 7/31/98 9.928897 5304.021253 534.200451 0.236975 533.963476 5301.668353 12.46%
2 CMDR FLEXMN Q 10/31/98 10.000000 5339.634758 533.963476 0.235290 533.728186 5337.281858 12.46%
2 CMDR GROWEQ Q 6/1/83 2.087280 1000.000000 479.092407 0.000000 479.092407 1000.000000 10.55%
2 CMDR GROWEQ Q 6/1/84 1.916656 918.255337 479.092407 1.227607 477.864801 915.902437 10.55%
2 CMDR GROWEQ Q 6/1/85 2.348801 1122.409321 477.864801 1.001745 476.863055 1120.056421 10.55%
2 CMDR GROWEQ Q 6/1/86 3.021389 1440.788790 476.863055 0.778748 476.084308 1438.435890 10.55%
2 CMDR GROWEQ Q 6/1/87 3.421339 1628.845809 476.084308 0.687713 475.396594 1626.492909 10.55%
2 CMDR GROWEQ Q 6/1/88 3.291571 1564.801644 475.396594 0.714826 474.681769 1562.448744 10.55%
2 CMDR GROWEQ Q 6/1/89 3.964243 1881.753878 474.681769 0.593531 474.088238 1879.400978 10.55%
2 CMDR GROWEQ Q 6/1/90 4.501912 2134.303527 474.088238 0.522645 473.565593 2131.950627 10.55%
2 CMDR GROWEQ Q 6/1/91 4.601913 2179.307660 473.565593 0.511287 473.054306 2176.954760 10.55%
2 CMDR GROWEQ Q 6/1/92 4.974399 2353.160866 473.054306 0.473002 472.581304 2350.807966 10.55%
2 CMDR GROWEQ Q 6/1/93 5.437851 2569.826716 472.581304 0.432689 472.148615 2567.473816 10.55%
2 CMDR GROWEQ Q 6/1/94 5.357357 2529.468686 472.148615 0.439190 471.709424 2527.115786 10.55%
2 CMDR GROWEQ Q 6/1/95 5.806536 2738.997753 471.709424 0.405216 471.304208 2736.644853 10.55%
2 CMDR GROWEQ Q 6/1/96 6.411558 3021.794268 471.304208 0.366978 470.937231 3019.441368 10.55%
2 CMDR GROWEQ Q 6/1/97 7.520153 3541.520027 470.937231 0.312879 470.624351 3539.167127 10.55%
2 CMDR GROWEQ Q 6/1/98 9.498885 4470.406591 470.624351 0.247703 470.376649 4468.053691 10.55%
2 CMDR GROWEQ Q 10/31/98 10.000000 4703.766485 470.376649 0.235290 470.141359 4701.413585 10.55%
2 CMDR HIBOND Q 8/6/84 3.069469 1000.000000 325.789249 0.000000 325.789249 1000.000000 8.50%
2 CMDR HIBOND Q 8/6/85 3.554298 1157.952076 325.789249 0.661987 325.127262 1155.599176 8.50%
2 CMDR HIBOND Q 8/6/86 3.959277 1287.268889 325.127262 0.594275 324.532986 1284.915989 8.50%
2 CMDR HIBOND Q 8/6/87 4.178232 1355.974109 324.532986 0.563133 323.969854 1353.621209 8.50%
2 CMDR HIBOND Q 8/6/88 4.500296 1457.960236 323.969854 0.522832 323.447021 1455.607336 8.50%
2 CMDR HIBOND Q 8/6/89 4.943455 1598.945794 323.447021 0.475963 322.971059 1596.592894 8.50%
</TABLE>
Page 3
<PAGE>
SI cmdr 2 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 CMDR HIBOND Q 8/6/90 4.702708 1518.838581 322.971059 0.500329 322.470730 1516.485681 8.50%
2 CMDR HIBOND Q 8/6/91 5.171106 1667.530326 322.470730 0.455009 322.015721 1665.177426 8.50%
2 CMDR HIBOND Q 8/6/92 6.150450 1980.541590 322.015721 0.382557 321.633163 1978.188690 8.50%
2 CMDR HIBOND Q 8/6/93 7.121311 2290.449785 321.633163 0.330403 321.302761 2288.096885 8.50%
2 CMDR HIBOND Q 8/6/94 7.140506 2294.264291 321.302761 0.329514 320.973246 2291.911391 8.50%
2 CMDR HIBOND Q 8/6/95 7.574056 2431.069342 320.973246 0.310653 320.662594 2428.716442 8.50%
2 CMDR HIBOND Q 8/6/96 8.299550 2661.355230 320.662594 0.283497 320.379096 2659.002330 8.50%
2 CMDR HIBOND Q 8/6/97 9.674417 3099.480977 320.379096 0.243208 320.135888 3097.128077 8.50%
2 CMDR HIBOND Q 8/6/98 10.611491 3397.119094 320.135888 0.221731 319.914157 3394.766194 8.50%
2 CMDR HIBOND Q 10/31/98 10.000000 3199.141567 319.914157 0.235290 319.678867 3196.788667 8.50%
2 CMDR INTLEQ Q 11/1/92 5.230799 1000.000000 191.175383 0.000000 191.175383 1000.000000 11.23%
2 CMDR INTLEQ Q 11/1/93 6.802694 1300.507628 191.175383 0.345878 190.829505 1298.154728 11.23%
2 CMDR INTLEQ Q 11/1/94 7.189081 1371.888768 190.829505 0.327288 190.502217 1369.535868 11.23%
2 CMDR INTLEQ Q 11/1/95 7.116674 1355.742174 190.502217 0.330618 190.171599 1353.389274 11.23%
2 CMDR INTLEQ Q 11/1/96 8.227279 1564.594803 190.171599 0.285988 189.885611 1562.241903 11.23%
2 CMDR INTLEQ Q 11/1/97 9.260371 1758.411209 189.885611 0.254083 189.631529 1756.058309 11.23%
2 CMDR INTLEQ Q 10/31/98 10.000000 1896.315286 189.631529 0.235290 189.396239 1893.962386 11.23%
2 CMDR LIMMAT Q 9/10/84 4.418579 1000.000000 226.317103 0.000000 226.317103 1000.000000 5.79%
2 CMDR LIMMAT Q 9/10/85 5.121386 1159.057244 226.317103 0.459426 225.857677 1156.704344 5.79%
2 CMDR LIMMAT Q 9/10/86 5.886607 1329.535382 225.857677 0.399704 225.457973 1327.182482 5.79%
2 CMDR LIMMAT Q 9/10/87 6.070266 1368.589868 225.457973 0.387611 225.070362 1366.236968 5.79%
2 CMDR LIMMAT Q 9/10/88 6.359685 1431.376607 225.070362 0.369971 224.700391 1429.023707 5.79%
2 CMDR LIMMAT Q 9/10/89 6.835213 1535.875034 224.700391 0.344232 224.356159 1533.522134 5.79%
2 CMDR LIMMAT Q 9/10/90 7.270386 1631.155877 224.356159 0.323628 224.032531 1628.802977 5.79%
2 CMDR LIMMAT Q 9/10/91 7.863302 1761.635449 224.032531 0.299225 223.733306 1759.282549 5.79%
2 CMDR LIMMAT Q 9/10/92 8.561670 1915.530730 223.733306 0.274818 223.458488 1913.177830 5.79%
2 CMDR LIMMAT Q 9/10/93 8.989837 2008.855381 223.458488 0.261729 223.196759 2006.502481 5.79%
2 CMDR LIMMAT Q 9/10/94 8.856932 1976.838516 223.196759 0.265656 222.931103 1974.485616 5.79%
2 CMDR LIMMAT Q 9/10/95 9.392549 2093.891304 222.931103 0.250507 222.680595 2091.538404 5.79%
2 CMDR LIMMAT Q 9/10/96 9.009856 2006.320099 222.680595 0.261147 222.419448 2003.967199 5.79%
2 CMDR LIMMAT Q 9/10/97 9.595948 2134.325458 222.419448 0.245197 222.174251 2131.972558 5.79%
2 CMDR LIMMAT Q 9/10/98 10.005010 2222.855601 222.174251 0.235172 221.939079 2220.502701 5.79%
2 CMDR LIMMAT Q 10/31/98 10.000000 2219.390787 221.939079 0.235290 221.703789 2217.037887 5.79%
2 CMDR PARTNR Q 3/22/94 4.809085 1000.000000 207.939764 0.000000 207.939764 1000.000000 17.01%
2 CMDR PARTNR Q 3/22/95 4.951257 1029.563212 207.939764 0.475213 207.464551 1027.210312 17.01%
2 CMDR PARTNR Q 3/22/96 6.769643 1404.460948 207.464551 0.347566 207.116985 1402.108048 17.01%
2 CMDR PARTNR Q 3/22/97 8.283321 1715.616471 207.116985 0.284053 206.832932 1713.263571 17.01%
</TABLE>
Page 4
<PAGE>
SI cmdr 2 bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 CMDR PARTNR Q 3/22/98 11.470875 2372.554712 206.832932 0.205119 206.627813 2370.201812 17.01%
2 CMDR PARTNR Q 10/31/98 10.000000 2066.278128 206.627813 0.235290 206.392523 2063.925228 17.01%
2 CMDR QUALBD Q 3/17/87 4.607189 1000.000000 217.052090 0.000000 217.052090 1000.000000 6.71%
2 CMDR QUALBD Q 3/17/88 4.744610 1029.827515 217.052090 0.495910 216.556180 1027.474615 6.71%
2 CMDR QUALBD Q 3/17/89 4.850996 1050.513161 216.556180 0.485034 216.071145 1048.160261 6.71%
2 CMDR QUALBD Q 3/17/90 5.339387 1153.687464 216.071145 0.440669 215.630477 1151.334564 6.71%
2 CMDR QUALBD Q 3/17/91 5.849576 1261.346861 215.630477 0.402234 215.228242 1258.993961 6.71%
2 CMDR QUALBD Q 3/17/92 6.373536 1371.764951 215.228242 0.369167 214.859075 1369.412051 6.71%
2 CMDR QUALBD Q 3/17/93 7.217055 1550.649763 214.859075 0.326019 214.533056 1548.296863 6.71%
2 CMDR QUALBD Q 3/17/94 7.398212 1587.161028 214.533056 0.318036 214.215019 1584.808128 6.71%
2 CMDR QUALBD Q 3/17/95 7.522216 1611.371647 214.215019 0.312793 213.902226 1609.018747 6.71%
2 CMDR QUALBD Q 3/17/96 8.251826 1765.083950 213.902226 0.285137 213.617089 1762.731050 6.71%
2 CMDR QUALBD Q 3/17/97 8.582873 1833.448347 213.617089 0.274139 213.342950 1831.095447 6.71%
2 CMDR QUALBD Q 3/17/98 9.395517 2004.467315 213.342950 0.250428 213.092522 2002.114415 6.71%
2 CMDR QUALBD Q 10/31/98 10.000000 2130.925222 213.092522 0.235290 212.857232 2128.572322 6.71%
2 CMDR SMLCAP Q 3/1/95 7.438871 1000.000000 134.429001 0.000000 134.429001 1000.000000 8.19%
2 CMDR SMLCAP Q 3/1/96 8.595615 1155.499941 134.429001 0.273733 134.155269 1153.147041 8.19%
2 CMDR SMLCAP Q 3/1/97 9.899993 1328.136222 134.155269 0.237667 133.917602 1325.783322 8.19%
2 CMDR SMLCAP Q 3/1/98 12.508818 1675.150910 133.917602 0.188099 133.729503 1672.798010 8.19%
2 CMDR SMLCAP Q 10/31/98 10.000000 1337.295027 133.729503 0.235290 133.494213 1334.942127 8.19%
2 CMDR VALUEQ Q 3/17/87 2.739582 1000.000000 365.019189 0.000000 365.019189 1000.000000 11.62%
2 CMDR VALUEQ Q 3/17/88 2.865151 1045.835095 365.019189 0.821213 364.197976 1043.482195 11.62%
2 CMDR VALUEQ Q 3/17/89 3.332436 1213.666446 364.197976 0.706060 363.491916 1211.313546 11.62%
2 CMDR VALUEQ Q 3/17/90 3.485528 1266.961250 363.491916 0.675048 362.816867 1264.608350 11.62%
2 CMDR VALUEQ Q 3/17/91 3.673059 1332.647760 362.816867 0.640583 362.176284 1330.294860 11.62%
2 CMDR VALUEQ Q 3/17/92 4.240347 1535.753120 362.176284 0.554884 361.621400 1533.400220 11.62%
2 CMDR VALUEQ Q 3/17/93 4.621154 1671.108180 361.621400 0.509159 361.112242 1668.755280 11.62%
2 CMDR VALUEQ Q 3/17/94 4.919131 1776.358423 361.112242 0.478316 360.633926 1774.005523 11.62%
2 CMDR VALUEQ Q 3/17/95 5.348870 1928.983985 360.633926 0.439887 360.194038 1926.631085 11.62%
2 CMDR VALUEQ Q 3/17/96 6.661384 2399.390803 360.194038 0.353215 359.840823 2397.037903 11.62%
2 CMDR VALUEQ Q 3/17/97 8.029760 2889.435450 359.840823 0.293022 359.547801 2887.082550 11.62%
2 CMDR VALUEQ Q 3/17/98 10.560992 3797.181449 359.547801 0.222792 359.325009 3794.828549 11.62%
2 CMDR VALUEQ Q 10/31/98 10.000000 3593.250093 359.325009 0.235290 359.089719 3590.897193 11.62%
</TABLE>
Page 5
<PAGE>
SI cmdr 1a bkup
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Table 1A - Commander Variable/Fixed Annuity Contracts Commander - SI - Tbl 1a
- - ------------------------------------------------------------------------------------------------------------------------------------
(assuming no purchase payments made after first contract year)
- - ------------------------------------------------------------------------------------------------------------------------------------
Average
Q = qualified $40 Contract # of units Annual Total
N = nonqualified Beginning # of units fee & deferred at end of Ending return for
- - ------------------------------------------------------------------------------------------------------------------------------------
amethod system fund qnonq accdate unitval bvalue bunits cunits eunits rvalue Since Inception
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1a CMDR BALFND Q 10/31/89 5.756152 1000.000000 173.727171 0.000000 173.727171 1000.000000 7.15%
1a CMDR BALFND Q 10/31/90 5.482625 952.480928 173.727171 0.429156 173.298015 950.128028 7.15%
1a CMDR BALFND Q 10/31/91 6.724544 1165.350125 173.298015 0.349897 172.948117 1162.997225 7.15%
1a CMDR BALFND Q 10/31/92 7.204016 1245.921005 172.948117 0.326609 172.621508 1243.568105 7.15%
1a CMDR BALFND Q 10/31/93 7.908353 1365.151820 172.621508 0.297521 172.323987 1362.798920 7.15%
1a CMDR BALFND Q 10/31/94 7.717765 1329.956036 172.323987 0.304868 172.019119 1327.603136 7.15%
1a CMDR BALFND Q 10/31/95 9.146177 1573.317310 172.019119 0.257255 171.761864 1570.964410 7.15%
1a CMDR BALFND Q 10/31/96 8.212922 1410.666792 171.761864 0.286488 171.475376 1408.313892 7.15%
1a CMDR BALFND Q 10/31/97 10.102222 1732.282320 171.475376 0.232909 171.242467 1729.929420 7.15%
1a CMDR BALFND Q 10/31/98 10.000000 1712.424673 171.242467 0.235290 171.007177 1710.071773 7.15%
1a CMDR EMGGRO Q 10/31/97 10.698921 1000.000000 93.467369 0.000000 93.467369 1000.000000 21.63%
1a CMDR EMGGRO Q 10/31/98 10.000000 934.673693 93.467369 0.235290 93.232079 932.320793 21.63%
1a CMDR EMGMKT Q 10/31/96 14.473381 1000.000000 69.092357 0.000000 69.092357 1000.000000 -18.44%
1a CMDR EMGMKT Q 10/31/97 15.167002 1047.923909 69.092357 0.155133 68.937224 1045.571009 -18.44%
1a CMDR EMGMKT Q 10/31/98 10.000000 689.372237 68.937224 0.235290 68.701934 687.019337 -18.44%
1a CMDR FIDASM Q 10/31/89 3.719917 1000.000000 268.823202 0.000000 268.823202 1000.000000 11.22%
1a CMDR FIDASM Q 10/31/90 3.653465 982.136161 268.823202 0.644019 268.179183 979.783261 11.22%
1a CMDR FIDASM Q 10/31/91 4.643233 1245.218435 268.179183 0.506737 267.672446 1242.865535 11.22%
1a CMDR FIDASM Q 10/31/92 5.063413 1355.336143 267.672446 0.464687 267.207759 1352.983243 11.22%
1a CMDR FIDASM Q 10/31/93 6.038585 1613.556768 267.207759 0.389644 266.818115 1611.203868 11.22%
1a CMDR FIDASM Q 10/31/94 6.029620 1608.811844 266.818115 0.390224 266.427892 1606.458944 11.22%
1a CMDR FIDASM Q 10/31/95 6.370239 1697.209346 266.427892 0.369358 266.058533 1694.856446 11.22%
1a CMDR FIDASM Q 10/31/96 6.868746 1827.488487 266.058533 0.342552 265.715982 1825.135587 11.22%
1a CMDR FIDASM Q 10/31/97 10.466969 2781.240944 265.715982 0.224793 265.491189 2778.888044 11.22%
1a CMDR FIDASM Q 10/31/98 10.000000 2654.911889 265.491189 0.235290 265.255899 2652.558989 11.22%
1a CMDR FIDEQI Q 10/31/88 2.525220 1000.000000 396.005101 0.000000 396.005101 1000.000000 13.54%
1a CMDR FIDEQI Q 10/31/89 2.860949 1132.950396 396.005101 0.822419 395.182681 1130.597496 13.54%
1a CMDR FIDEQI Q 10/31/90 2.210017 873.360443 395.182681 1.064652 394.118029 871.007543 13.54%
1a CMDR FIDEQI Q 10/31/91 3.042270 1199.013455 394.118029 0.773403 393.344626 1196.660555 13.54%
1a CMDR FIDEQI Q 10/31/92 3.400367 1337.516086 393.344626 0.691955 392.652671 1335.163186 13.54%
</TABLE>
Page 1
<PAGE>
SI cmdr 1a bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1a CMDR FIDEQI Q 10/31/93 4.201307 1649.654416 392.652671 0.560040 392.092631 1647.301516 13.54%
1a CMDR FIDEQI Q 10/31/94 4.594567 1801.495864 392.092631 0.512105 391.580526 1799.142964 13.54%
1a CMDR FIDEQI Q 10/31/95 5.531637 2166.081328 391.580526 0.425353 391.155173 2163.728428 13.54%
1a CMDR FIDEQI Q 10/31/96 6.378591 2495.018867 391.155173 0.368875 390.786299 2492.665967 13.54%
1a CMDR FIDEQI Q 10/31/97 9.832242 3842.305457 390.786299 0.239305 390.546994 3839.952557 13.54%
1a CMDR FIDEQI Q 10/31/98 10.000000 3905.469940 390.546994 0.235290 390.311704 3903.117040 13.54%
1a CMDR FIDGRO Q 10/31/88 2.604960 1000.000000 383.883054 0.000000 383.883054 1000.000000 13.08%
1a CMDR FIDGRO Q 10/31/89 3.249750 1247.523954 383.883054 0.724025 383.159029 1245.171054 13.08%
1a CMDR FIDGRO Q 10/31/90 2.644272 1013.176692 383.159029 0.889810 382.269219 1010.823792 13.08%
1a CMDR FIDGRO Q 10/31/91 3.955927 1512.229124 382.269219 0.594778 381.674440 1509.876224 13.08%
1a CMDR FIDGRO Q 10/31/92 4.139720 1580.025314 381.674440 0.568372 381.106069 1577.672414 13.08%
1a CMDR FIDGRO Q 10/31/93 5.393156 2055.364481 381.106069 0.436275 380.669793 2053.011581 13.08%
1a CMDR FIDGRO Q 10/31/94 5.365612 2042.526412 380.669793 0.438515 380.231279 2040.173512 13.08%
1a CMDR FIDGRO Q 10/31/95 7.283556 2769.435811 380.231279 0.323043 379.908236 2767.082911 13.08%
1a CMDR FIDGRO Q 10/31/96 7.274787 2763.751496 379.908236 0.323432 379.584804 2761.398596 13.08%
1a CMDR FIDGRO Q 10/31/97 9.443042 3584.435245 379.584804 0.249168 379.335636 3582.082345 13.08%
1a CMDR FIDGRO Q 10/31/98 10.000000 3793.356362 379.335636 0.235290 379.100346 3791.003462 13.08%
1a CMDR FIDIND Q 10/31/92 7.633828 1000.000000 130.995878 0.000000 130.995878 1000.000000 4.41%
1a CMDR FIDIND Q 10/31/93 8.632500 1130.821915 130.995878 0.272563 130.723315 1128.469015 4.41%
1a CMDR FIDIND Q 10/31/94 8.816852 1152.568120 130.723315 0.266864 130.456451 1150.215220 4.41%
1a CMDR FIDIND Q 10/31/95 5.487838 715.923868 130.456451 0.428748 130.027703 713.570968 4.41%
1a CMDR FIDIND Q 10/31/96 6.685608 869.314250 130.027703 0.351935 129.675768 866.961350 4.41%
1a CMDR FIDIND Q 10/31/97 8.674156 1124.827839 129.675768 0.271254 129.404514 1122.474939 4.41%
1a CMDR FIDIND Q 10/31/98 10.000000 1294.045137 129.404514 0.235290 129.169224 1291.692237 4.41%
1a CMDR FLEXMN Q 10/31/88 3.632215 1000.000000 275.314099 0.000000 275.314099 1000.000000 12.46%
1a CMDR FLEXMN Q 10/31/89 4.286372 1180.098645 275.314099 0.548926 274.765173 1177.745745 12.46%
1a CMDR FLEXMN Q 10/31/90 3.819932 1049.584278 274.765173 0.615953 274.149220 1047.231378 12.46%
1a CMDR FLEXMN Q 10/31/91 5.015166 1374.903846 274.149220 0.469157 273.680063 1372.550946 12.46%
1a CMDR FLEXMN Q 10/31/92 5.403019 1478.698580 273.680063 0.435479 273.244584 1476.345680 12.46%
1a CMDR FLEXMN Q 10/31/93 6.211483 1697.254089 273.244584 0.378798 272.865786 1694.901189 12.46%
1a CMDR FLEXMN Q 10/31/94 6.595798 1799.767604 272.865786 0.356727 272.509059 1797.414704 12.46%
1a CMDR FLEXMN Q 10/31/95 7.531872 2052.503348 272.509059 0.312392 272.196666 2050.150448 12.46%
1a CMDR FLEXMN Q 10/31/96 8.152012 2218.950489 272.196666 0.288628 271.908038 2216.597589 12.46%
1a CMDR FLEXMN Q 10/31/97 9.450782 2569.743591 271.908038 0.248964 271.659074 2567.390691 12.46%
1a CMDR FLEXMN Q 10/31/98 10.000000 2716.590745 271.659074 0.235290 271.423784 2714.237845 12.46%
1a CMDR GROWEQ Q 10/31/88 3.383505 1000.000000 295.551506 0.000000 295.551506 1000.000000 10.55%
1a CMDR GROWEQ Q 10/31/89 4.264711 1260.441761 295.551506 0.551714 294.999793 1258.088861 10.55%
</TABLE>
Page 2
<PAGE>
SI cmdr 1a bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1a CMDR GROWEQ Q 10/31/90 3.524637 1039.767184 294.999793 0.667558 294.332235 1037.414284 10.55%
1a CMDR GROWEQ Q 10/31/91 4.737321 1394.346276 294.332235 0.496673 293.835561 1391.993376 10.55%
1a CMDR GROWEQ Q 10/31/92 5.001741 1469.689375 293.835561 0.470416 293.365145 1467.336475 10.55%
1a CMDR GROWEQ Q 10/31/93 5.881212 1725.342613 293.365145 0.400071 292.965075 1722.989713 10.55%
1a CMDR GROWEQ Q 10/31/94 5.400194 1582.068238 292.965075 0.435707 292.529368 1579.715338 10.55%
1a CMDR GROWEQ Q 10/31/95 6.534815 1911.625303 292.529368 0.360056 292.169312 1909.272403 10.55%
1a CMDR GROWEQ Q 10/31/96 6.669514 1948.627317 292.169312 0.352784 291.816528 1946.274417 10.55%
1a CMDR GROWEQ Q 10/31/97 8.378687 2445.039347 291.816528 0.280820 291.535708 2442.686447 10.55%
1a CMDR GROWEQ Q 10/31/98 10.000000 2915.357080 291.535708 0.235290 291.300418 2913.004180 10.55%
1a CMDR HIBOND Q 10/31/88 4.620509 1000.000000 216.426372 0.000000 216.426372 1000.000000 8.50%
1a CMDR HIBOND Q 10/31/89 4.719363 1021.394613 216.426372 0.498563 215.927809 1019.041713 8.50%
1a CMDR HIBOND Q 10/31/90 4.124318 890.554949 215.927809 0.570494 215.357315 888.202049 8.50%
1a CMDR HIBOND Q 10/31/91 5.439756 1171.491245 215.357315 0.432538 214.924777 1169.138345 8.50%
1a CMDR HIBOND Q 10/31/92 6.163625 1324.715728 214.924777 0.381740 214.543037 1322.362828 8.50%
1a CMDR HIBOND Q 10/31/93 7.367218 1580.585326 214.543037 0.319374 214.223663 1578.232426 8.50%
1a CMDR HIBOND Q 10/31/94 7.132529 1527.956489 214.223663 0.329883 213.893780 1525.603589 8.50%
1a CMDR HIBOND Q 10/31/95 7.728454 1653.068240 213.893780 0.304446 213.589334 1650.715340 8.50%
1a CMDR HIBOND Q 10/31/96 8.604229 1837.771538 213.589334 0.273459 213.315875 1835.418638 8.50%
1a CMDR HIBOND Q 10/31/97 9.897609 2111.317125 213.315875 0.237724 213.078151 2108.964225 8.50%
1a CMDR HIBOND Q 10/31/98 10.000000 2130.781510 213.078151 0.235290 212.842861 2128.428610 8.50%
1a CMDR INTLEQ Q 10/31/93 6.797758 1000.000000 147.107326 0.000000 147.107326 1000.000000 11.23%
1a CMDR INTLEQ Q 10/31/94 7.199635 1059.119051 147.107326 0.326808 146.780517 1056.766151 11.23%
1a CMDR INTLEQ Q 10/31/95 7.122034 1045.375836 146.780517 0.330369 146.450148 1043.022936 11.23%
1a CMDR INTLEQ Q 10/31/96 8.196798 1200.422283 146.450148 0.287051 146.163097 1198.069383 11.23%
1a CMDR INTLEQ Q 10/31/97 9.260726 1353.576395 146.163097 0.254073 145.909024 1351.223495 11.23%
1a CMDR INTLEQ Q 10/31/98 10.000000 1459.090243 145.909024 0.235290 145.673734 1456.737343 11.23%
1a CMDR LIMMAT Q 10/31/88 6.441184 1000.000000 155.250960 0.000000 155.250960 1000.000000 5.79%
1a CMDR LIMMAT Q 10/31/89 6.931303 1076.091445 155.250960 0.339460 154.911500 1073.738545 5.79%
1a CMDR LIMMAT Q 10/31/90 7.349843 1138.575205 154.911500 0.320129 154.591371 1136.222305 5.79%
1a CMDR LIMMAT Q 10/31/91 7.997531 1236.349280 154.591371 0.294203 154.297168 1233.996380 5.79%
1a CMDR LIMMAT Q 10/31/92 8.503192 1312.018440 154.297168 0.276708 154.020460 1309.665540 5.79%
1a CMDR LIMMAT Q 10/31/93 8.978398 1382.856987 154.020460 0.262062 153.758397 1380.504087 5.79%
1a CMDR LIMMAT Q 10/31/94 8.858550 1362.076450 153.758397 0.265608 153.492790 1359.723550 5.79%
1a CMDR LIMMAT Q 10/31/95 9.492608 1457.046882 153.492790 0.247867 153.244923 1454.693982 5.79%
1a CMDR LIMMAT Q 10/31/96 9.183718 1407.358157 153.244923 0.256203 152.988720 1405.005257 5.79%
1a CMDR LIMMAT Q 10/31/97 9.687836 1482.129625 152.988720 0.242872 152.745848 1479.776725 5.79%
1a CMDR LIMMAT Q 10/31/98 10.000000 1527.458480 152.745848 0.235290 152.510558 1525.105580 5.79%
</TABLE>
Page 3
<PAGE>
SI cmdr 1a bkup
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1a CMDR PARTNR Q 10/31/94 4.806269 1000.000000 208.061596 0.000000 208.061596 1000.000000 17.01%
1a CMDR PARTNR Q 10/31/95 5.904215 1228.440397 208.061596 0.398512 207.663084 1226.087497 17.01%
1a CMDR PARTNR Q 10/31/96 7.382714 1533.117160 207.663084 0.318704 207.344380 1530.764260 17.01%
1a CMDR PARTNR Q 10/31/97 9.994281 2072.258001 207.344380 0.235425 207.108956 2069.905101 17.01%
1a CMDR PARTNR Q 10/31/98 10.000000 2071.089557 207.108956 0.235290 206.873666 2068.736657 17.01%
1a CMDR QUALBD Q 10/31/88 4.895973 1000.000000 204.249492 0.000000 204.249492 1000.000000 6.71%
1a CMDR QUALBD Q 10/31/89 5.361029 1094.987452 204.249492 0.438890 203.810603 1092.634552 6.71%
1a CMDR QUALBD Q 10/31/90 5.574682 1136.179299 203.810603 0.422069 203.388534 1133.826399 6.71%
1a CMDR QUALBD Q 10/31/91 6.307721 1282.918126 203.388534 0.373019 203.015515 1280.565226 6.71%
1a CMDR QUALBD Q 10/31/92 6.787438 1377.955220 203.015515 0.346655 202.668860 1375.602320 6.71%
1a CMDR QUALBD Q 10/31/93 7.603073 1540.906135 202.668860 0.309467 202.359393 1538.553235 6.71%
1a CMDR QUALBD Q 10/31/94 7.038953 1424.398255 202.359393 0.334268 202.025124 1422.045355 6.71%
1a CMDR QUALBD Q 10/31/95 8.178361 1652.234397 202.025124 0.287698 201.737426 1649.881497 6.71%
1a CMDR QUALBD Q 10/31/96 8.593857 1733.702591 201.737426 0.273789 201.463637 1731.349691 6.71%
1a CMDR QUALBD Q 10/31/97 9.114059 1836.151478 201.463637 0.258162 201.205476 1833.798578 6.71%
1a CMDR QUALBD Q 10/31/98 10.000000 2012.054759 201.205476 0.235290 200.970186 2009.701859 6.71%
1a CMDR SMLCAP Q 10/31/95 8.025482 1000.000000 124.603108 0.000000 124.603108 1000.000000 8.19%
1a CMDR SMLCAP Q 10/31/96 9.225679 1149.548276 124.603108 0.255038 124.348070 1147.195376 8.19%
1a CMDR SMLCAP Q 10/31/97 11.846639 1473.106693 124.348070 0.198613 124.149457 1470.753793 8.19%
1a CMDR SMLCAP Q 10/31/98 10.000000 1241.494565 124.149457 0.235290 123.914167 1239.141665 8.19%
1a CMDR VALUEQ Q 10/31/88 3.210689 1000.000000 311.459628 0.000000 311.459628 1000.000000 11.62%
1a CMDR VALUEQ Q 10/31/89 3.554816 1107.181667 311.459628 0.661891 310.797737 1104.828767 11.62%
1a CMDR VALUEQ Q 10/31/90 2.924797 909.020288 310.797737 0.804466 309.993271 906.667388 11.62%
1a CMDR VALUEQ Q 10/31/91 3.930006 1218.275414 309.993271 0.598701 309.394569 1215.922514 11.62%
1a CMDR VALUEQ Q 10/31/92 4.418808 1367.155198 309.394569 0.532474 308.862095 1364.802298 11.62%
1a CMDR VALUEQ Q 10/31/93 4.827334 1490.980494 308.862095 0.487412 308.374683 1488.627594 11.62%
1a CMDR VALUEQ Q 10/31/94 5.102757 1573.561075 308.374683 0.461104 307.913580 1571.208175 11.62%
1a CMDR VALUEQ Q 10/31/95 6.245483 1923.069028 307.913580 0.376736 307.536843 1920.716128 11.62%
1a CMDR VALUEQ Q 10/31/96 7.468867 2296.951782 307.536843 0.315028 307.221816 2294.598882 11.62%
1a CMDR VALUEQ Q 10/31/97 9.185399 2821.954960 307.221816 0.256157 306.965659 2819.602060 11.62%
1a CMDR VALUEQ Q 10/31/98 10.000000 3069.656593 306.965659 0.235290 306.730369 3067.303693 11.62%
</TABLE>
Page 4
