<PAGE>
<PAGE>
As filed with the Securities and Exchange Commission
on May 1, 1997
Registration No. 2-89550
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. ( )
POST-EFFECTIVE AMENDMENT NO. 23 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 17 (X)
(Check appropriate box or boxes)
FUTUREFUNDS SERIES ACCOUNT
(Exact name of Registrant)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(Name of Depositor)
8515 East Orchard Road
Englewood, Colorado 80111
(Address of Depositor's Principal Executive Officers)
(Zip Code)
Depositor's Telephone Number, including Area Code:
(800) 537-2033
William T. McCallum
President and Chief Executive Officer
Great-West Life & Annuity Insurance Company
hard Road
Englewood, Colorado 80111
(Name and Address of Agent for Service)
Copy to:
James F. Jorden, Esq.
Jorden Burt Berenson & Johnson, LLP
1025 Thomas Jefferson Street, N.W., Suite 400 East
Washington, D.C. 20007-0805
<PAGE>
<PAGE>
It is proposed that this filing will become effective
(check appropriate space)
X Immediately upon filing pursuant to paragraph
(b) of Rule 485.
_____ On May 1, 1997 , pursuant to paragraph (b) of
Rule 485.
_____ 60 days after filing pursuant to paragraph (a)
of Rule 485.
_____ On , pursuant to paragraph
(a)(i) of Rule 485.
_____ 75 days after filing pursuant to paragraph
(a)(ii) of Rule 485.
_____ On , pursuant to paragraph
(a)(ii) of Rule 485.
The Registrant has chosen to register an indefinite number of
securities in accordance with Rule 24f-2. The Rule 24f-2
Notice for Registrant's most recent fiscal year was filed on
February 27, 1997.
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT
Cross Reference Sheet
Showing Location in Prospectus
and Statement of Additional Information
As Required by Form N-4
FORM N-4 ITEM PROSPECTUS CAPTION
1. Cover Page Cover Page
2. Definitions Glossary of Special Terms
3. Synopsis Fee Table; Questions and
Answers about the Series
Account Variable Annuity
4. Condensed Financial Condensed Financial
Information Information
5. General Description of Great-West Life & Annuity
Registrant, Depositor Insurance Company;
and Portfolio Companies FutureFunds Series Account;
Investment of the Series
Account; Voting Rights
6. Deductions Administrative Charges;
Risk Charges, Premium Taxes
and Other Deductions;
Appendix A; Distribution of
the Contracts
7. General Description of The Contracts; Investments
Variable Annuity Contracts of the Series Account;
Statement of Additional
Information
8. Annuity Period Annuity Options
9. Death Benefit The Contracts-Accumulation
Period - Death Benefit;
Prior to Retirement Date;
Annuity Payments
<PAGE>
<PAGE>
FORM N-4 ITEM PROSPECTUS CAPTION
10. Purchases and Contract Value The Contracts-General; The
Contracts-Accumulation
Period; Distribution of the
Contracts; Cover Page;
Great-West Life & Annuity
Insurance Company
11. Redemptions The Contracts-Accumulation
Period - Total and Partial
Surrenders; Return
Privilege
12. Taxes Federal Tax Consequences
13. Legal Proceedings Legal Proceedings
14. Table Contents of Statement of Additional
Statement of Additional Information
Information
STATEMENT OF ADDITIONAL
FORM N-4 ITEM INFORMATION CAPTION
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and Not Applicable
History
18. Services Custodian and Accountants
19. Purchase of Securities Not Applicable
Being Offered
20. Underwriters Underwriter
21. Calculation of Performance Calculation of Performance
Data Data
22. Annuity Payments Not Applicable
23. Financial Statements Financial Statements
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT
Of
Great-West Life & Annuity Insurance Company
GROUP VARIABLE ANNUITY CONTRACTS
Distributed by
BenefitsCorp Equities, Inc.
8515 East Orchard Road, Englewood, Colorado 80111
(800) 468-8661 (U.S.) (303) 689-3360 (Englewood)
The group variable annuity contracts described in this
prospectus ("Group Contracts") are designed and offered to
provide retirement programs that qualify for special federal
income tax treatment for employees of certain organizations.
The Group Contracts may be issued in connection with
Contributions made by:
. employers or employee organizations (such as non-profit
entities defined in Section 501(c) of the Internal Revenue
Code of 1986, as amended ("Code"), and governmental entities
defined in Code Section 414(d)) to purchase annuities for
their employees under pension or profit-sharing plans
described in Section 401(a) of the Code,
. employers or employee organizations to purchase annuities
for their employees under cash or deferred profit sharing
plans described in Section 401(k) of the Code, state
educational organizations and certain tax-exempt organizations
to purchase annuities for their employees under Section 403(b)
of the Code, and
. certain state and local governmental entities and, for years
beginning after 1986, other non-governmental tax-exempt
organizations to purchase annuities for a select group of
management or highly compensated employees under a deferred
compensation plan described in Section 457 of the Code.
The Group Contracts are issued by Great-West Life &
Annuity Insurance Company ("GWL&A"). BenefitsCorp Equities,
Inc. ("BCE") is the principal underwriter and distributor of
the Group Contracts. The owner of a Group Contract will be the
employer, or plan trustee, or may also be certain employer
associations or employee associations for contracts issued
under Section 401(a), Section 401(k), Section 403(b) or
Section 457 retirement programs. Contributions are made by the
employer for employees desiring coverage under a Group
Contract. The amount of the Contributions will be determined
by the employer. A separate record (a "Participant Annuity
Account") will be established in the name of each
participating employee (a "Participant") to reflect the dollar
values of Contributions made in each Participant's name. The
Group Contracts provide for a deferred annuity to begin at a
<PAGE>
<PAGE>
future pre-selected date (the "Annuity Commencement Date").
The Group Contracts also provide for a death benefit. An
initial Contribution under a Section 403(b) retirement program
may be canceled and returned at the employee's request within
fifteen days of the date of the Contribution.
Prior to the Annuity Commencement Date, the Contributions
can accumulate on a variable basis, guaranteed basis, or a
combination of both. To accumulate on a variable basis,
Contributions will be allocated to the FUTUREFUNDS SERIES
ACCOUNT (the "Series Account"), a segregated investment
account of GWL&A. The value of the Contributions prior to the
Annuity Commencement Date and thus the amount accumulated to
provide annuity payments will depend upon the investment
performance of the Series Account.
The amount of annuity payments may also be variable based
upon the investment experience of the Series Account, or may
be fixed without regard to such experience, or may be a
combination of both. The Series Account currently has eighteen
Investment Divisions available for allocation of
Contributions. Fourteen of the Investment Divisions invest in
shares of the portfolios of Maxim Series Fund Inc. ("Maxim"),
an open-end management investment company of the series type
described beginning on page 3.
<PAGE>
<PAGE>
THIS PROSPECTUS IS ACCOMPANIED BY CURRENT PROSPECTUSES FOR
MAXIM SERIES FUND, INC., AMERICAN CENTURY VP CAPITAL
APPRECIATION AND AMERICAN CENTURY VP BALANCED, FIDELITY VIP
GROWTH AND FIDELITY VIP II ASSET MANAGER PORTFOLIOS. THESE
PROSPECTUSES PROVIDE INFORMATION A PROSPECTIVE INVESTOR SHOULD
KNOW BEFORE INVESTING AND SHOULD BE KEPT FOR FUTURE REFERENCE.
ADDITIONAL INFORMATION ABOUT THE GROUP CONTRACTS HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN A
STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 1997, WHICH
IS INCORPORATED HEREIN BY REFERENCE. THE STATEMENT OF
ADDITIONAL INFORMATION, THE TABLE OF CONTENTS OF WHICH IS SET
FORTH ON THE LAST PAGE OF THIS PROSPECTUS, IS AVAILABLE
WITHOUT CHARGE UPON REQUEST BY WRITING OR TELEPHONING GWL&A AT
THE ADDRESS OR TELEPHONE NUMBER SET FORTH ABOVE. THESE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is May 1, 1997
<PAGE>
<PAGE>
. the Maxim Money Market Portfolio seeks preservation of
capital, liquidity and the highest possible current income
consistent with the foregoing objectives through investments
in short-term money market securities. Shares of the Maxim
Money Market Portfolio are neither insured nor guaranteed by
the U.S. Government. Further, there is no assurance that the
Portfolio will be able to maintain a stable net asset value of
$1.00 per share.
. the Maxim Bond Portfolio seeks to achieve maximum total
return consistent with the preservation of capital, through
investment in an actively managed portfolio of debt
securities.
. the Maxim Stock Index Portfolio seeks to provide investment
results, before fees, that correspond to the total return of
the S&P 500 Index and the S&P Mid-Cap Index, weighted
according to their respective pro-rata shares of the market;
. the Maxim U.S. Government Securities Portfolio seeks the
highest level of return consistent with preservation of
capital and substantial credit protection and seeks to achieve
this objective by investing in mortgage-related securities
issued or guaranteed by an agency or instrumentality of the
U.S. Government, other U.S. agency and instrumentality
obligations, and in U.S. Treasury obligations;
. the Maxim Small-Cap Index Portfolio seeks to provide
investment results, before fees, that correspond to the total
return of the Russell 2000 Index. The Russell 2000 Index was
developed in 1979 by the Frank Russell Company to track the
stock market performance of a broadly diversified group of
small capitalization domestic stocks (currently those stocks
with capitalization of below $440 million);
. the Maxim Mid-Cap Portfolio (Growth Fund I Investment
Division) seeks to provide long-term growth of capital through
investment of at least 65% of the Portfolio's assets in medium
sized companies.
. the Maxim Total Return Portfolio seeks to obtain the highest
possible total return, a combination of income and capital
appreciation, consistent with reasonable risk;
. the Maxim International Equity Portfolio seeks to achieve
long-term capital growth through a flexible policy of
investing in stocks and debt obligations of companies and
9
<PAGE>
governments outside the United States. Any income realized
will be incidental.
. the Maxim Corporate Bond Portfolio seeks high total
investment return by investing primarily in debt securities
(including convertibles), although up to 20% of its assets, at
the time of acquisition, may be invested in preferred stocks.
. the Maxim Small-Cap Value Portfolio (Ariel Value Investment
Division) seeks to achieve long-term capital appreciation by
investing primarily in common stocks, although the Portfolio
may also invest in other securities, including restricted and
preferred stocks.
. the Maxim INVESCO Small-Cap Growth Portfolio seeks to
achieve long-term capital growth by investing its assets
principally in a diversified group of equity securities of
emerging growth companies with market capitalizations of $1
billion or less at the time of initial purchase.
. the Maxim INVESCO ADR Portfolio seeks to achieve a high
total return on investment through capital appreciation and
current income, while reducing risk through diversification by
investing substantially all its assets in foreign securities
that are issued in the form of American Depositary Receipts
("ADRs") or foreign stocks that are registered with the
Securities and Exchange Commission and traded in the U.S.
. the Maxim INVESCO Balanced Portfolio seeks to achieve a high
total return on investment through capital appreciation and
current income. The Portfolio invests in a combination of
common stocks (normally 50% to 70% of total assets) and fixed
income securities (normally 25% or more).
. the Maxim T. Rowe Price Equity/Income Portfolio seeks to
provide substantial dividend income and also capital
appreciation by investing primarily in dividend-paying common
stocks of established companies.
The Series Account also has two Investment Divisions which
invest in shares of American Century Variable Portfolios, Inc.
("American Century"), a diversified, series, open-end
management investment company which is a member of the
American Centurysm Investments group of mutual funds. These
Investment Divisions invest in shares of one of the following
portfolios of American Century:
10
<PAGE>
<PAGE>
. the American Century VP Capital Appreciation Fund seeks
capital growth by investment in common stocks (including
securities convertible to common stocks) and other securities
that meet certain fundamental and technical standards and, in
the opinion of American Century s management, have better than
average potential for appreciation; and
. the American Century VP Balanced Fund seeks capital growth
and current income by investment of approximately 60% of its
assets in common stocks (including securities convertible to
common stocks) and the remaining assets in bonds and other
fixed income securities which, in the opinion of American
Century s management, have better-than-average prospects for
appreciation.
The Series Account has two Investment Divisions which invest
in shares of Fidelity Variable Insurance Products Fund
("Fidelity VIP"), a diversified management investment company
offering insurance companies a selection of investment
vehicles for variable annuity insurance contracts. These
Investment Divisions invest in shares of one of the following
portfolios of Fidelity VIP:
. the Fidelity VIP Growth Portfolio seeks capital
appreciation. The Portfolio 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; and
. the Fidelity VIP II 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 instruments.
If the underlying plan document or program of any other
Group Policyholder does not permit investments in any
Investment Division of the Series Account, GWL&A shall
restrict the availability of such Investment Division in
compliance with the Group Policyholder's Request.
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . 6
Examples . . . . . . . . . . . . . . . . . . . . . . . . . 7
Glossary of Special Terms . . . . . . . . . . . . . . . . . 9
Questions and Answers About the Series Account Variable
Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Financial Highlights . . . . . . . . . . . . . . . . . . . 14
Performance Related Information . . . . . . . . . . . . . . 16
Great-West Life & Annuity Insurance Company . . . . . . . . 19
FutureFunds Series Account . . . . . . . . . . . . . . . . 19
The Group Contracts . . . . . . . . . . . . . . . . . . . . 20
Accumulation Period . . . . . . . . . . . . . . . . . . . . 22
Investments of the Series Account . . . . . . . . . . . . . 28
Administrative Charges, Risk Premiums
and Other Deductions . . . . . . . . . . . . . . . . . . . 31
Annuity Options . . . . . . . . . . . . . . . . . . . . . . 35
Federal Tax Consequences . . . . . . . . . . . . . . . . . 38
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . 43
Distribution of the Group Contracts . . . . . . . . . . . . 43
Return Privilege . . . . . . . . . . . . . . . . . . . . . 44
State Regulation . . . . . . . . . . . . . . . . . . . . . 44
Restrictions Under the Texas Optional
Retirement Program . . . . . . . . . . . . . . . . . . . 44
Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 44
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . 44
Registration Statement . . . . . . . . . . . . . . . . . . 44
Statement of Additional Information . . . . . . . . . . . . 45
<PAGE>
<PAGE>
FEE TABLE
CONTRACT OWNER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
<S> <C>
Sales Load Imposed on Purchases
(as a percentage of purchase payments) . . . . . . . . . . . . None
Deferred Sales Load (as a percentage of
amount distributed) . . . . . . . . . . . . . . . . . . 6% maximum
See footnote (1), page 7
Distribution Fees (as a percentage of purchase payments) . . . . None
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . . . None
TOTAL Contract Owner Transaction Expenses
(as a percentage of purchase payments) . . . . . . . . . . . . . . . 6%
Annual Contract Fee . . . . . . . . . . . . . . . . . . . . . $30 maximum
See footnote (2), page 7
</TABLE>
Separate Account Annual Expenses (as a percentage of average
account value)(Expenses vary by Contract)1
<TABLE>
<CAPTION>
Mortality Risk Expense Risk Total Separate
<S> <C> Account Annual
Expenses
<C>
1.00% 0.25% 1.25%
0.76% 0.19% 0.95%
0.60% 0.15% 0.75%
0.52% 0.13% 0.65%
0.44% 0.11% 0.55%
0.00% 0.00% 0.00%
</TABLE>
1 The table of separate account expenses illustrates
the
possible mortality and expense risks available under separate
contracts offered by this prospectus. Please contact your
registered representative to determine which charges apply to
your contract.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Maxim Series Fund, Inc. Annual Expenses (as a percentage of
Maxim Series Fund, Inc. average net assets)
Maxim Maxim Maxim
Money Bond Stock
Market Index
<S> <C> <C> <C>
Management Fees .46% .60% .60%
Other Expenses None None None
Total Maxim Series
Fund, Inc. Annual .46% .60% .60%
Expenses
</TABLE>
<TABLE>
<CAPTION>
Maxim Maxim
U.S. Gov't. Small-Cap
Securities Index
<S> <C> <C>
Management Fees .60% .60%
Other Expenses None None
Total Maxim Series
Fund, Inc. Annual .60% .60%
Expenses
</TABLE>
<TABLE>
<CAPTION>
Maxim Maxim
International Total
Equity Return
<S> <C> <C>
Management Fees 1.00% .60%
Other Expenses .50% None
Total Maxim Series
Fund, Inc. Annual 1.50% .60%
Expenses
</TABLE>
<TABLE>
<CAPTION>
Maxim Maxim
Corporate Mid-Cap
Bond (Growth Fund I)
<S> <C> <C>
Management Fees .90% .95%
Other Expenses None .15%
Total Maxim Series
Fund, Inc. Annual .90% 1.10%
Expenses
<PAGE>
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Maxim Maxim
Maxim Small-Cap INVESCO
T. Rowe Price Value ADR
Equity/Income (Ariel Value)
<S> <C> <C> <C>
Management Fees .80% 1.00% 1.00%
Other Expenses .15% .35% .30%
Total Maxim
Series Fund,
Inc. Annual
Expenses .95% 1.35% 1.30%
</TABLE>
<TABLE>
<CAPTION>
Maxim INVESCO Maxim INVESCO
Small-Cap Growth Balanced
<S> <C> <C>
Management Fees .95% 1.00%
Other Expenses .15% None
Total Maxim Series
Fund, Inc. Annual
Expenses 1.10% 1.00%
</TABLE>
<PAGE>
<PAGE>
FEE TABLE (cont'd)
American Century Variable Portfolios, Inc. Annual Expenses
(as a percentage the American Century VP s average net assets)
<TABLE>
<CAPTION>
American Century VP American Century
Capital VP Balanced
Appreciation
<S> <C> <C>
Management Fees 1.00% 1.00%
Other Expenses None None
TOTAL American Century
Variable Portfolio
Annual Expenses 1.00% 1.00%
</TABLE>
Fidelity VIP Portfolios Annual Expenses (as a percentage of
Fidelity VIP Portfolios average net assets)
<TABLE>
<CAPTION>
Fidelity VIP Growth Fidelity VIP II
Asset Manager
<S> <C> <C>
Management Fees .61% .64%
Other Expenses .08% .10%
TOTAL Fidelity VIP
Portfolio
Annual Expenses .69% .74%
</TABLE>
EXAMPLES
Example 1:
If you do not take a distribution from your contract, or if
you annuitize at the end of the applicable time period, you
would pay the following expenses on a $1,000 investment,
assuming a 5% annual return on assets and an assessment of the
maximum mortality and expense risk charge under any contract:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Investment Division 1 Year 3 Year 5 Year 10 Year
<S> <C> <C> <C> <C>
Maxim Money Market $18.21 $59.20 $106.92 $261.48
Maxim Bond, Maxim Stock
Index, Maxim U.S.
Government Securities,
Maxim Small-Cap Index,
Maxim Total Return $19.66 $63.80 $115.07 $280.49
Maxim Mid-Cap (Growth
Fund I), Maxim INVESCO
Small-Cap Growth $24.80 $80.09 $143.74 $346.25
Maxim International
Equity $28.89 $92.94 $166.17 $396.54
Maxim Corporate Bond $22.74 $73.60 $132.36 $320.34
Maxim Small-Cap Value
(Ariel Value) $27.35 $88.14 $157.81 $377.91
Maxim INVESCO ADR $26.84 $86.53 $155.01 $371.64
Maxim INVESCO Balanced,
American Century VP
Capital Appreciation,
American Century VP
Balanced $23.77 $76.85 $138.07 $333.36
Maxim T. Rowe Price
Equity/Income $23.26 $75.23 $135.22 $326.86
Fidelity VIP Growth $20.58 $66.75 $102.29 $292.57
Fidelity VIP II Asset
Manager $21.10 $68.39 $123.17 $299.23
</TABLE>
<PAGE>
<PAGE>
<PAGE>
Examples (con t)
Example 2:
If you take a distribution, in whole, from your contract at
the end of the applicable time period, you would pay the
following expenses on a $1,000 investment, assuming a 5%
annual return on assets and an assessment of the maximum
mortality and expense risk charge under any contract:
<TABLE>
<CAPTION>
Investment Division 1 Year 3 Year 5 Year 10 Year
<S> <C> <C> <C> <C>
Maxim Money Market $78.21 $119.20 $166.92 $261.48
Maxim Bond, Maxim Stock
Index, Maxim U.S.
Government Securities,
Maxim Small-Cap Index,
Maxim Total Return $73.93 $105.47 $142.46 $203.69
Maxim Mid-Cap (Growth
Fund I), Maxim INVESCO
Small-Cap Growth $84.80 $140.09 $203.74 $346.25
Maxim International
Equity $88.89 $152.94 $226.17 $396.54
Maxim Corporate Bond $82.74 $133.60 $192.36 $320.34
Maxim Small-Cap Value
(Ariel Value) $87.35 $148.14 $217.81 $377.91
Maxim INVESCO ADR $86.84 $146.53 $215.01 $371.64
Maxim INVESCO Balanced,
American Century VP
Capital Appreciation,
American Century VP
Balanced $83.77 $136.85 $198.07 $333.36
Maxim T. Rowe Price
Equity/Income $83.26 $135.23 $195.22 $326.86
Fidelity VIP Growth $80.58 $126.75 $180.29 $292.57
Fidelity VIP II Asset
Manager $81.10 $128.39 $183.17 $299.23
</TABLE>
The above Examples should not be considered a representation
of past or future expenses. Actual expenses may be greater or
less than those shown, subject to the guarantees in the Group
Contracts.
The purpose of the table shown above is to assist the Group
Policyholder in understanding the various costs and expenses
that a Group Policyholder will bear directly or indirectly.
(See "Administrative Charges, Risk Premiums and Other
<PAGE>
<PAGE>
Deductions" for more information pertaining to these costs and
expenses.)
Please note that while GWL&A currently intends to pay any
Premium Tax levied by any governmental entity, GWL&A reserves
the right to, in the future and with prior notice to
Participants, deduct the Premium Tax, if any, from Participant
Annuity Account Values. (See "Administrative Charges, Risk
Premiums and Other Deductions" for more information.)
The Examples illustrate the charges which would be incurred if
the maximum mortality and expense risk charge of 1.25% were
applied. This charge is assumed to remain the same in each
period listed but does vary by contract. Please consult with
your employer or BCE representative for the fee that applies
to your contract and a copy of Examples which represent those
charges. (See Administrative Charges, Risk Premiums and
Other Deductions for more information.)
(1) The Securities and Exchange Commission requires that the
deferred sales load shown in the fee table and the examples be
the maximum contingent deferred sales load assessed. This
charge does, however, vary by contract. Please consult with
your employer or BCE representative for the charge that
applies to your contract and a copy of the Examples that
represents those charges. (See "Administrative Charges, Risk
Premiums and Other Deductions: Contingent Deferred Sales
Charge" for more information.)
(2) The Securities and Exchange Commission requires that the
annual contract fee shown in the fee table be reflective of
the contract fees collected during the year. This charge is
assumed to remain the same in each period listed but does vary
by contract. Please consult with your employer or BCE
representative for the fee that applies to your contract. (See
"Administrative Charges, Risk Premiums and Other Deductions:
Contract Maintenance Charge.")
GLOSSARY OF SPECIAL TERMS
As used in this prospectus, the terms have the indicated
meanings:
Accumulation Period: The period during which the Participant
is covered under this Group Contract prior to the
Participant's Annuity Commencement Date.
Accumulation Unit: An accounting measure used to determine the
Variable Account Value before the Annuity Commencement Date.
<PAGE>
<PAGE>
Administrative Offices: The Administrative Offices of GWL&A
are located at 8515 E. Orchard Rd., Englewood, Colorado 80111.
Annuity Commencement Date: The date on which annuity payments
commence under an Annuity Option.
Annuity Unit: An accounting measure used to determine the
dollar value of any variable dollar annuity payment after the
first payment.
Contribution(s): The total dollar amount(s) paid to purchase
an annuity for a Participant.
Fidelity VIP: Fidelity Variable Insurance Products Fund, a
registered management investment company in which assets of
the Series Account may be invested.
Fixed Annuity: An annuity with payments which remain fixed
throughout the payment period and which do not reflect the
investment experience of a separate account.
Group Contract: An agreement between GWL&A and the Group
Policyholder providing a fixed and/or variable deferred
annuity.
Investment Division: The Series Account is divided into
investment divisions, one for each designated Investment
Portfolio maintained by Maxim, American Century or Fidelity
VIP and made available to the Series Account.
Investment Portfolio: The securities held in a portfolio of
Maxim, American Century or Fidelity VIP.
Maxim: Maxim Series Fund, Inc., a registered management
investment company in which assets of the Series Account may
be invested.
Participant: An employee who is covered under a Group
Contract.
Participant Annuity Account: A separate record established in
the name of each Participant which reflects the total of the
Participant's Guaranteed and Variable Account Values.
Participant Annuity Account Value: The sum of the
Participant's Guaranteed and Variable Account Values.
Premium Tax: The amount of tax, if any, charged by a state or
other government authority on premiums.
Request: Any request in a form satisfactory to GWL&A and
received by GWL&A at its Administrative Office, as required by
<PAGE>
<PAGE>
any provision of the Group Contract, and at other times as
required by GWL&A.
Series Account: The segregated investment account of Great-
West Life & Annuity Insurance Company called "FUTUREFUNDS
Series Account" existing under Colorado law and registered as
a unit investment trust under the Investment Company Act of
1940, as amended.
American Century: American Century Variable Portfolios, Inc.,
a registered management investment company in which assets of
the Series Account may be invested.
Transfer: The transfers of all or a portion of a Participant
Annuity Account Value between and among the Variable and/or
Guaranteed Sub-Accounts.
Transfer to Other Companies: The transfer of all or a portion
of a Participant Annuity Account Value to another company.
Valuation Date: The date on which the net asset value of
Maxim, American Century, or Fidelity VIP is determined, and
the date on which any Contribution or Request from the
Participant/Group Policyholder will be processed by GWL&A. A
unit value is calculated once daily Monday through Friday
except on holidays on which the New York Stock Exchange is
closed. Contributions and Requests received after 4:00 p.m.
EST/EDT will be deemed to have been received on the next
business day. On the day after Thanksgiving, however,
transactions submitted other than by automated voice response
unit or by fully automated computer link will not be
processed.
Valuation Period: The period between the ending of two
successive Valuation Dates.
Variable Account: The account established under this Group
Contract providing for Variable Sub-Accounts.
Variable Account Value: The sum of the values of the Variable
Sub-Accounts credited to a Participant Annuity Account.
Variable Annuity: An annuity providing for payments, the
amount of which will vary in accordance with the changing
values of securities held in the Series Account.
Variable Sub-Account: A subdivision of the Variable Account
containing the value credited to a Participant from an
Investment Division.
<PAGE>
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE SERIES ACCOUNT VARIABLE
ANNUITY
What is the objective of the Group Contracts offered in this
Prospectus?
The objective of the Group Contracts is to provide
annuity retirement programs that qualify for special federal
income tax treatment for employees. Under Section 401(a) plans
(including plans sponsored by non-profit and governmental
entities) and under Section 401(k) plans, any employer and
certain employee organizations, such as labor unions, may
purchase a Group Contract. Employers eligible to purchase a
Group Contract under Section 403(b) retirement programs
include state educational institutions and certain tax-exempt
organizations that meet the requirements of Section 501(c)(3)
of the Code. In addition, under Section 403(b) programs, (i)
certain associations of state educational employees and
associations of employees of tax-exempt organizations may
enter into a Group Contract for the benefit of their members;
and (ii) certain associations of state educational employers
and associations of tax-exempt employers may also enter into a
Group Contract for the benefit of employees or their employer
members. Under Code Section 457 retirement programs, certain
state and local governmental entities and, for years beginning
after 1986, other tax-exempt organizations described in
Section 457 are also eligible. (See "The Group Contracts:
Eligible Purchasers.")
How can an employee obtain coverage under a Group Contract?
After purchasing a Group Contract, the employer will
submit to GWL&A an application for any employee who desires
coverage under the contract and is eligible to participate in
the employer's retirement program. An employee should consult
his/her employer for information concerning eligibility.
How is the amount of Contributions determined?
For Group Contracts issued under a Section 401(a)
retirement program, the employer or employee organization will
make Contributions pursuant to its underlying federal or state
qualified plan.
For Group Contracts issued under a Section 401(k)
retirement program, the employer will make Contributions
pursuant to an underlying Section 401(k) plan and either a
salary reduction agreement with its employees or a cash or
deferred agreement.
For Group Contracts issued under an employer's Section
403(b) retirement program, the employer will make
<PAGE>
<PAGE>
Contributions for its employees pursuant to either a salary
reduction agreement with those employees or an agreement to
forego a salary increase. In each case, the employee will
decide his/her own level and number of Contributions to be
made under a Group Contract, except with respect to employer-
sponsored plans, under which the employer may make
Contributions pursuant to an underlying retirement plan.
For Group Contracts issued under a Section 457 retirement
program, the employer will make Contributions pursuant to an
underlying deferred compensation plan.
The employer will report the amount paid as Contributions
to GWL&A. There is no minimum amount or number of
Contributions.
How are Contributions allocated?
Contributions are allocated to the Series Account to
accumulate on a variable basis, to the Guaranteed Account to
accumulate at a guaranteed rate of return, or combination of
both. The assets of the Series Account are invested at net
asset value (no sales charge) in shares of Maxim, American
Century or Fidelity VIP. (See "Investments of the Series
Account" for the investment objectives and policies of those
portfolios of Maxim, American Century and Fidelity VIP which
are available for Allocation of Contributions to the Series
Account.) They are also described in full in the accompanying
prospectus for Maxim, American Century and Fidelity VIP.
<PAGE>
<PAGE>
How will a covered employee know the value of the Contribution
made in his/her name?
A Participant Annuity Account will be established in the
name of each Participant to reflect the dollar value of
Contributions made in each Participant's name. Participants
will be furnished not less frequently than annually a
statement of the Participant Annuity Account Value established
in his/her name.
What elections are permitted under the Group Contracts?
Under the Group Contracts issued pursuant to Section
401(a) or Section 401(k) retirement programs, all
Contributions are held for the exclusive benefit of the
Participants to the extent vested. All elections permitted
under the Group Contracts are made directly by the employer to
GWL&A. The underlying pension or profit sharing plan may,
however, permit the Participants to make certain of those
elections indirectly through the employer.
Under the Group Contracts issued pursuant to Section
403(b) retirement programs, all Contributions are vested in
the Participant when made, subject to any limitations in the
underlying retirement plan, and the Participant makes all the
elections permitted under the contract, except with respect to
employer-sponsored plans, under which elections are made
directly by the employer to GWL&A. The underlying retirement
plan may, however, permit the Participants to make certain of
these elections indirectly through the employer.
Under the Group Contracts issued pursuant to Section 457
retirement programs, all Contributions remain property of the
employer until made available to a Participant by the
employer's underlying deferred compensation plan until
December 31, 1998, or such earlier date as may be established
by plan amendment. However, amounts deferred under a plan
created on or after August 20, 1996 and amounts deferred under
any 457 plan after December 31, 1998, must be held in trust,
custodial account or annuity contract for the exclusive
benefit of plan participants and their beneficiaries. All
elections permitted under these Group Contracts are made
directly by the employer to GWL&A. An underlying deferred
compensation plan may, however, permit the Participants to
make certain of those elections indirectly through the
employer.
What are the charges to Participants under the Group
Contracts?
For administrative expenses, GWL&A deducts a "Contract
Maintenance Charge" of not more than $30.00 annually from each
<PAGE>
<PAGE>
Participant Annuity Account Value. The Contract Maintenance
Charge on Section 403(b) Group Contracts will be waived for an
initial period of no less than 12 months and up to 15 months,
depending on the Participant's effective date. There may also
be a charge associated with the total or partial distribution
from a Participant Annuity Account prior to the Annuity
Commencement Date.
The cumulative total of all Contingent Deferred Sales Charges
applied to any Participant Annuity Account will not exceed 6%
of all Contributions made within 72 months prior to the date
of any distribution in whole or in part, or, with respect to
certain Sections 401(a) or 401(k) and 457 retirement programs,
5% of the amount distributed. Participants in some programs
will not be assessed a Contingent Deferred Sales Charge. (See
"Administrative Charges, Risk Premiums and Other Deductions.")
Certain redeemability restrictions apply to Group Contracts
issued under the Texas Optional Retirement Program. (See
"Restrictions Under the Texas Optional Retirement Program.")
There may also be redeemability restrictions applied to
Participants in Section 403(b) Group Contracts. (See "Federal
Tax Consequences: Section 403(b) Retirement Programs.") Upon a
total or partial distribution, a penalty tax may be imposed
pursuant to Section 72(t) of the Code. (See "Federal Tax
Consequences.")
GWL&A also deducts from the net asset value of the Series
Account an amount, computed daily, equal to a maximum annual
rate of 1.25% for mortality and expense risk guarantees. This
rate may vary by contract. Applicable mortality and expense
risk charges range from 0 to 1.25%. (See Administrative
Charges, Risk Premium and Other Deductions. )
GWL&A presently intends to pay any applicable state premium
taxes as a result of the existence of the Participant Annuity
Accounts. Applicable state premium taxes range from 0 to 3.50%
of the Contributions or the Participant Annuity Account Value.
Maxim, American Century, and Fidelity VIP incur a charge
against the net asset value for Investment Advisory Services
and may incur other expenses.
What are the distribution rights under the Group Contracts?
A distribution in whole or in part may be taken from the
Participant Annuity Account up to 30 days prior to the Annuity
Commencement Date, subject to any limitations in the
underlying retirement plan and subject to a Contingent
Deferred Sales Charge. (See "Accumulation Period: Total and
Partial Distribution" for a description of distribution
procedures.) Under certain circumstances, a Contingent
Deferred Sales Charge will not be charged to Participants who
<PAGE>
<PAGE>
have participated for 15 or more years in the FutureFunds
Group Annuity Contract. (See "Administrative Charges, Risk
Premiums and Other Deductions.")
Can Contributions be Transferred between the Variable and
Fixed Sub-Accounts?
Yes. Prior to the Annuity Commencement Date transfers
can be made between the Variable and Fixed Sub-Accounts
subject to the following limitations. All or a portion of a
Participant Annuity Account Value held in any of the Variable
Sub-Accounts or Daily Interest Guarantee Sub-Account may be
Transferred at any time prior to the Annuity Commencement Date
by written or telephone Request. Transfers of all or a portion
of a Participant Annuity Account Value held in any of the
Guaranteed Certificate Funds may be made only at Certificate
maturity. Transfers may be made into the Guaranteed Fixed Fund
at any time. However the percentage available for
transferring out of the Guaranteed Fixed Fund ranges from 20%
to 100% of the previous December 31 account balance. (See
"Accumulation Period: Transfers Between Variable and
Guaranteed Sub-Accounts.") However, after the Annuity
Commencement Date, no transfers may be made from a fixed
annuity payment option to a variable annuity payment option
and vice, versa. (See Annuity Options: Transfers After the
Annuity Commencement Date. )
What Annuity Options are available?
The Group Contracts provide for several annuity options
payable on a variable, fixed, or combination basis. An
election of any annuity option(s) must be made at least 30
days prior to the Participant's Annuity Commencement Date. If
no election is made, annuity payments will begin automatically
on the Annuity Commencement Date under an option providing for
a life annuity with 120 monthly payments certain. (See
"Annuity Options.")
What are the voting rights under the Group Contracts?
Participants under Section 403(b) retirement programs and
the employer under Section 401(a), Section 401(k) and Section
457 retirement programs will be entitled to instruct GWL&A to
vote shares of Maxim, American Century or Fidelity VIP held
for their Participant Annuity Accounts. (See "Voting Rights.")
Is there a short-term cancellation right?
Yes. Within fifteen (15) days after a Participant
Certificate is first mailed, it may be canceled by the
Participant for any reason by delivering or mailing it, along
with a Request to cancel, to GWL&A's Administrative Offices or
<PAGE>
<PAGE>
to an authorized agent of GWL&A. This cancellation right only
applies to Group Contracts issued under Section 403(b)
retirement programs. (See "Return Privilege.")
How will the Group Contracts be distributed?
The Group Contracts will be distributed through BCE and
will be sold by duly licensed insurance agents of Benefits
Communication Corporation and GWL&A, independent insurance
brokers, and various other registered broker-dealers. (See
"Distribution of the Group Contracts.")
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
INVESTMENT DIVISION 1996 1995 1994
<S> <C> <C> <C>
MAXIM MONEY MARKET
1
Value at beginning of
period $ 16.96 $ 16.25 $
15.84
Value at end of period $ 17.60 $ 16.96 $
16.25
Increase (decrease) in
value of accumulation
units $ 0.64 $ 0.71 $
0.41
Number of accumulation
units outstanding at end
of period 3,129,281.92 2,880,571.67
2,277,816.08
</TABLE>
<TABLE>
<CAPTION>
MAXIM BOND 1996 1995 1994
1
<S> <C> <C> <C>
Value at beginning of
period $ 26.05 $ 22.89 $
23.74
Value at end of period $ 26.82 $ 28.05 $
22.89
Increase (decrease) in
value of accumulation
units $ 0.77 $ 3.16 $
(0.85)
Number of accumulation
units outstanding at end
of period 1,890,635.84 2,010,468.99
2,102,049.13
</TABLE>
<PAGE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
MAXIM STOCK INDEX 1- 1996 1995 1994
2
<S> <C> <C> <C>
Value at beginning of
period $ 36.57 $ 27.30 $
27.61
Value at end of period $ 44.00 $ 36.57 $
27.30
Increase (decrease) in
value of accumulation
units $ 7.43 $ 9.27 $
(0.31)
Number of accumulation
units outstanding at end
of period 7,884,581.79 7,636,165.40
7,589,448.49
</TABLE>
<TABLE>
<CAPTION>
MAXIM U.S. GOVERNMENT 1996 1995 1994
SECURITIES
3 <C> <C> <C>
<S>
Value at beginnig of
period $ 12.29 $ 10.71 $
11.21
Value at end of period $ 12.61 $ 12.29
10.71
Increase (decrease) in
value of accumulation
units $ 0.32 $ 1.58 $
(0.50)
Number of accumulation
units outstanding at end
of period 3,234,023.68 3,165,425.83
2,756,894.60
<PAGE>
</TABLE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
AMERICAN CENTURY VP 3 1996 1995 1994
CAPITAL APPRECIATION
<S> <C> <C> <C>
Value at beginning of
period $ 14.93 $ 11.53 $
11.82
Value at end of period $ 14.11 $ 14.93
11.53
Increase (decrease) in
value of accumulation
units $ (0.82) $ 3.40
(0.29)
Number of accumulation
units outstanding at end
of period 4,560,706.32 4,954,474.12
4,420,493.64
</TABLE>
<TABLE>
<CAPTION>
AMERICAN CENTURY VP 1996 1995 1994
BALANCED
3
<S> <C> <C> <C>
Value at beginning of
period $ 12.96 $ 10.83
10.90
Value at end of period $ 14.36 $ 12.96
10.83
Increase (decrease) in
value of accumulation
units $ 1.40 $ 2.13 $
(0.07)
Number of accumulation
units outstanding at end
of period 3,238,207.89 3,153,172.39
2,877,738.22
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MAXIM MID-CAP 1996 1995 1994
(GROWTH FUND I)
4
<S> <C> <C> <C>
Value at beginning of
period $ 13.70 $ 10.96 $ 10.00
Value at end of period $ 14.34 $ 13.70 $
10.96
Increase (decrease) in
value of accumulation
units $ 0.64 $ 2.74 $
0.96
Number of accumulation
units outstanding at end
of period 2,440,068.07 1,715,174.42
788,758.55
</TABLE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
MAXIM SMALL-CAP INDEX 1996 1995 1994
10
<S> <C> <C> <C>
Value at beginning of
period $ 11.82 $ 9.48 $
10.00
Value at end of period $ 13.46 $ 11.82 $
9.48
Increase (decrease) in
value of accumulation
units $ 1.64 $ 2.34 $
(0.52)
Number of accumulation
units outstanding at end
of period 477,902.35 296,281.36
152,895.00
</TABLE>
<TABLE>
<CAPTION>
MAXIM TOTAL RETURN 1996 1995 1994
9
<S> <C> <C> <C>
Value at beginning of
period $ 11.66 $ 9.62 $
10.00
Value at end of period $ 12.87 $ 11.66 $
9.62
Increase (decrease) in
value of accumulation
units $ 1.21 $ 2.04 $
(0.38)
Number of accumulation
units outstanding at end
of period 382,179.84 214,442.71
58,473.26
</TABLE>
<PAGE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
INVESTMENT DIVISION 1993 1992 1991
<S> <C> <C> <C>
MAXIM MONEY MARKET
1
Value at beginning of
period $ 15.60 $ 15.26 $ 14.59
Value at end of period $ 15.84 $ 15.60 $ 15.26
Increase (decrease) in
value of accumulation
units $ 0.24 $ 0.34 $ 0.67
Number of accumulation
units outstanding at end
of period 684,669 787,941 901,603
</TABLE>
<TABLE>
<CAPTION>
MAXIM BOND 1993 1992 1991
1
<S> <C> <C> <C>
Value at beginning of
period $ 22.14 $ 21.10 $ 18.63
Value at end of period $ 23.74 $ 22.14 $ 21.10
Increase (decrease) in
value of accumulation
units $ 1.60 $ 1.04 $ 2.47
Number of accumulation
units outstanding at end
of period 2,301,785 1,995,291 2,067,966
</TABLE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
MAXIM STOCK INDEX 1- 1993 1992 1991
2
<S> <C> <C> <C>
Value at beginning of
period $ 25.44 $ 24.33 $ 19.97
Value at end of period $ 27.61 $ 25.44 $ 24.33
Increase (decrease) in
value of accumulation
units $ 2.17 $ 1.11 $ 4.36
Number of accumulation
units outstanding at end
of period 9,325,064 8,106,011 8,262,908
</TABLE>
<TABLE>
<CAPTION>
MAXIM U.S. GOVERNMENT
SECURITIES 1993 1992
3
<S> <C> <C>
Value at beginnign of $ 10.38 $ 10.00
period
Value at end of period $ 11.21 $ 10.38
Increase (decrease) in
value of accumulation
units $ 0.83 $ 0.38
Number of accumulation
units outstanding at end
of period 1,892,295 251,644
</TABLE>
<TABLE>
<CAPTION>
AMERICAN CENTURY VP
3
CAPITAL APPRECIATION 1993 1992
<S> <C> <C>
Value at beginning of $ 10.85 $ 10.00
period
Value at end of period $ 11.82 $ 10.85
Increase (decrease) in
<PAGE>
value of accumulation
units $ 0.97 $ 0.85
Number of accumulation
units outstanding at end
of period 2,607,850 647,466
</TABLE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
AMERICAN CENTURY VP
BALANCED 1993 1992
3
<S> <C> <C>
Value at beginning of
period $ 10.25 $ 10.00
Value at end of period $ 10.90 $ 10.25
Increase (decrease) in
value of accumulation
units $ 0.65 $ 0.25
Number of accumulation
units outstanding at end
of period 1,752,731 473,968
</TABLE>
<TABLE>
<CAPTION>
MAXIM MONEY MARKET 1990 1989
1
<S> <C> <C>
Value at beginning of $ 13.71 $ 12.72
period
Value at end of period $ 14.59 $ 13.71
Increase (decrease) in
value of accumulation
units $ 0.88 $ 0.99
Number of accumulation
units outstanding at end
of period 846,538 723,266
</TABLE>
<PAGE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
MAXIM BOND 1990 1989
1
<S> <C> <C>
Value at beginning of $ 17.43 $ 15.60
period
Value at end of period $ 18.63 $ 17.43
Increase (decrease) in
value of accumulation
units $ 1.20 $ 1.83
Number of accumulation
units outstanding at end
of period 1,765,573 1,524,813
</TABLE>
<TABLE>
<CAPTION>
MAXIM STOCK INDEX 1- 1990 1989
2
<S> <C> <C>
Value at beginning of $ 20.34 $ 17.88
period
Value at end of period $ 19.97 $ 20.34
Increase (decrease) in
value of accumulation
units $ (0.37) $ 2.46
Number of accumulation
units outstanding at end
of period 6,501,628 5,369,016
</TABLE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
MAXIM MONEY MARKET 1988 1987
1
<S> <C> <C>
Value at beginning of$ 11.98 $ 11.40
period
Value at end of period $ 12.72 $ 11.98
Increase (decrease) in
value of accumulation
units $ 0.74 $ 0.58
Number of accumulation
units outstanding at end
of period 755,640 572,824
</TABLE>
<TABLE>
<CAPTION>
MAXIM BOND 1988 1987
1
<S> <C> <C>
Value at beginning of$ 14.98 $ 14.75
period
Value at end of period $ 15.60 $ 14.98
Increase (decrease) in
value of accumulation
units $ 0.62 $ 0.23
Number of accumulation
units outstanding at end
of period 1,269,165 983,061
</TABLE>
<TABLE>
<CAPTION>
MAXIM STOCK INDEX 1-2 1988 1987
<S> <C> <C>
Value at beginning of$ 15.35 $ 14.70
period
Value at end of period $ 17.88 $ 15.35
Increase (decrease) in
value of accumulation
units $ 2.53 $ 0.65
Number of accumulation
<PAGE>
units outstanding at end
of period 4,400,397 3,749,307
</TABLE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
INVESTMENT DIVISION 1996 1995 1994
<S> <C> <C> <C>
MAXIM INTERNATIONAL
EQUITY 4
Value at beginning of $ 11.29 $ 10.49 $ 10.00
period
Value at end of period $ 13.33 $ 11.29 $ 10.49
Increase(decrease) in
value of accumulation
units $ 2.04 $ 0.80 $ 0.49
Number of accumulation
units outstanding at
end of period 2,249,181.67 1,645,237.34 1,075,821.94
</TABLE>
<PAGE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
FIDELITY VIP GROWTH 5 1996 1995 1994
<S> <C> <C> <C>
Value at beginning of
period $ 12.86 $ 9.62 $ 10.00
Value at end of period
$ 14.57 $ 12.86 $ 9.62
Increase (decrease) in
value of accumulation
units $ 1.71 $ 3.24 $ (0.38)
Number of accumulation
units outstanding at
end of period $ 2,500,808.02 $ 164,201.34 $ 559,313.44
</TABLE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
1996 1995 1994
FIDELITY VIP II ASSET
MANAGER 5
<S> <C> <C> <C>
Value at beginning of $ 10.76 $ 9.31 $ 10.00
period
Value at end of period $ 12.17 $ 10.76 $ 9.31
Increase (decrease) in
value of accumulation
units $ 1.41 $ 1.45 $ (0.69)
Number of accumulation
units outstanding at
end of period 1,593,034.53 1,202,943.32
768,426.17
</TABLE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
MAXIM T. ROWE PRICE
EQUITY/INCOME 8 1996 1995 1994
<S> <C> <C> <C>
Value at beginning of
period $ 12.98 $ 9.85 $ 10.90
Value at end of period $ 15.30 $ 12.98 $ 9.85
Increase (decrease) in
value of accumulation
units $ 2.32 $ 3.13 $ (0.15)
Number of accumulation
units outstanding at
end of period 1,702,863.67 550,610.66
15,574.29
</TABLE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
MAXIM SMALL-CAP
VALUE/(ARIEL VALUE) 1996 1995 1994
6
<S> <C> <C> <C>
Value at beginning of
period $ 11.58 $ 10.15 $ 10.00
Value at end of period $ 13.48 $ 11.58 $ 10.15
Increase (decrease) in
value of accumulation
units $ 1.90 $ 1.43 $ 0.15
Number of accumulation
units outstanding at
end of period 39,184.70 30,919.44 .01
</TABLE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
MAXIM CORPORATE BOND 1996 1995
7
<S> <C> <C>
Value at beginning of
period $ 12.44 $ 10.00
Value at end of period $ 13.55 $ 12.44
Increase (decrease) in
value of accumulation
units $ 1.11 $ 2.44
Number of accumulation
units outstanding at
end of period 478,757.71 220,637.10
</TABLE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
1996 1995
<TABLE>
<CAPTION>
MAXIM INVESCO ADR
11
<S> <C> <C>
Value at beginning of
period $ 11.25 $ 10.00
Value at end of period $ 13.46 $ 11.25
Increase (decrease) in
value of accumulation
units $ 2.21 $ 1.25
Number of accumulation
units outstanding at
end of period 126,363.18 23,104.73
</TABLE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
MAXIM INVESCO
SMALL-CAP GROWTH
12 1996 1995
<S> <C> <C>
Value at beginning of
period $ 13.09 $ 10.00
Value at end of period $ 16.38 $ 13.09
Increase (decrease) in
value of accumulation
units $ 3.29 $ 3.09
Number of accumulation
units outstanding at
end of period 776,719.68 210,982.04
</TABLE>
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
<TABLE>
<CAPTION>
MAXIM INVESCO
13
BALANCED 1996
<S> <C>
Value at beginning of
period $ 10.00
Value at end of period $ 10.13
Increase (decrease) in
value of accumulation
units $ 0.13
Number of accumulation
units outstanding at
end of period 22,568.19
</TABLE>
<PAGE>
<PAGE>
Current accumulation Unit Values can be obtained by calling
GWL&A toll-free at 1-800-523-4106
1. The inception date for the Maxim Money Market, Maxim Bond
and Maxim Stock Index Investment Divisions is October 5,
1984
2. Prior to December 1, 1992, the Growth Investment Division
3. The inception date for the Maxim U.S. Government
Securities, American Century VP Capital Appreciation and
American Century VP Balanced Investment Divisions is
August 1, 1992 through Dec
4. Inception date for Maxim Mid-Cap (Growth Fund I) and
Maxim International Equity Investment Divisions were
April 13, 1994
5. Inception date for Fidelity VIP Growth, Fidelity VIP II
Asset Manager Investment Divisions were April 21, 1994
6. Inception date for Maxim Small-Cap Value (Ariel Value)
Investment Division was November 4, 1994
7. Inception date for Maxim Corporate Bond Investment
Division was February 2, 1995
8. Inception date for Maxim T. Rowe Price Equity/Income
Investment Division was November 9, 1994.
9. Inception date for Maxim Total Return Investment Division
was April 20, 1994.
10. Inception date for Maxim Small Cap Index Investment
Division was March 15, 1994.
11. Inception date for Maxim INVESCO ADR Investment Division
was January 5, 1995.
12. Inception date for Maxim INVESCO Small-Cap Growth
Investment Division was January 9, 1995.
13. Inception date for Maxim INVESCO Balanced Investment
Division was October 31, 1996.
<PAGE>
<PAGE>
<PAGE>
PERFORMANCE RELATED INFORMATION
From time to time, the Series Account may advertise certain
performance related information concerning its Investment
Divisions. Performance information about an Investment
Division is based on the Investment Division's historical
performance only and is not intended to indicate future
performance. The inception dates for each Investment Division
and the corresponding Maxim, American Century, and Fidelity
VIP Portfolios are set forth below, following the total return
information.
Below is a table of performance related information for the
Maxim Money Market Investment Division for the period ended
December 31, 1996:
<TABLE>
<CAPTION>
INVESTMENT DIVISION Yield Effective Yield
<S> <C> <C>
Maxim Money Market 3.65% 3.77%
</TABLE>
Yield and effective yield for the Maxim Money Market
Investment Division is for the 7-day period ended December 31,
1996. The yield calculation above takes into account recurring
charges against the Series Account and the Maxim Money Market
Portfolio (but does not take into account the Contingent
Deferred Sales Charge). The yield and effective yield
information is annualized.
AVERAGE ANNUAL TOTAL RETURNS**
The following table illustrates Average Annual Total Return
assuming an assessment of a 6% Contingent Deferred Sales
Charge (*) for Section 401(k) and certain 401(a) and 457
retirement programs.
<PAGE>
<TABLE>
<CAPTION>
Before After Before
INVESTMENT CDSC CDSC CDSC
DIVISION 1 Year 1 Year 5 Year
<S> <C> <C> <C>
Maxim Bond 2.93% -3.06% 4.86%
Maxim Stock Index (1) 20.20% 14.22% 12.51%
Maxim U.S. Government Securities 2.58% -3.41% 5.45%
Maxim Small-Cap Index 13.79% 7.81% N/A
Maxim Total Return 10.30% 4.31% 8.15%
Maxim Mid-Cap (Growth Fund I) 4.58% 1.40% N/A
Maxim International Equity 18.05% 12.05% N/A
Maxim Corporate Bond 8.91% 2.92% N/A
Maxim Small-Cap Value (Ariel 16.39% 10.41% N/A
Maxim INVESCO ADR 19.57% 13.58% N/A
Maxim INVESCO Small-Cap Growth 25.04% 19.06% N/A
Maxim INVESCO Balanced N/A N/A N/A
Maxim T. Rowe Price Equity/Income 17.80% 11.82% N/A
American Century VP Capital
Appreciation -5.54% 11.52% 4.81%
American Century VP Balanced 10.74% 4.76% 5.34
Fidelity VIP Growth 13.20% 7.22% 13.48
Fidelity VIP II Asset Manager 13.10% 7.12% 9.75%
</TABLE>
<TABLE>
<CAPTION>
Before
CDSC
After 10 Year
INVESTMENT CDSC or Since
DIVISION 5 Year Inception
<S> <C> <C>
Maxim Bond 3.85% 6.10%
Maxim Stock Index (1) 11.75% 11.52%
Maxim U.S. Government Securities 4.46% 6.76%
Maxim Small-Cap Index N/A 10.15%
Maxim Total Return 7.26% 7.98%
Maxim Mid-Cap (Growth Fund I) N/A 12.70%
Maxim International Equity N/A 10.06%
Maxim Corporate Bond N/A 15.92%
Maxim Small-Cap Value (Ariel) N/A 9.34%
Maxim INVESCO ADR N/A 14.69%
Maxim INVESCO Small-Cap Growth N/A 25.60%
Maxim INVESCO Balanced N/A 1.33
Maxim T. Rowe Price Equity/Income N/A 21.66%
American Century VP Capital
Appreciation 3.79% 9.39%
American Century VP Balanced 4.35% 8.82%
Fidelity VIP Growth 12.75% 13.57%
Fidelity VIP II Asset 8.91% 10.23%
</TABLE>
<PAGE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
After CDSC
10 Year or
INVESTMENT Since
DIVISION Inception
<S> <C>
Maxim Bond 6.10
Maxim Stock Index (1) 11.52%
Maxim U.S. Government Securities 6.76%
Maxim Small-Cap Index 8.53%
Maxim Total Return 7.98%
Maxim Mid-Cap (Growth Fund I) 11.10%
Maxim International Equity 8.44%
Maxim Corporate Bond 13.56%
Maxim Small-Cap Value (Ariel 7.70%
Maxim INVESCO ADR 12.30%
Maxim INVESCO Small-Cap Growth 23.46%
Maxim INVESCO Balanced -4.67%
Maxim T. Rowe Price Equity/Income 19.43%
American Century VP Capital
Appreciation 9.39%
American Century VP Balanced 8.10%
Fidelity VIP Growth 13.57%
Fidelity VIP II Asset 10.23%
</TABLE>
(1) Prior to December 1, 1992, the Growth Investment Division.
* The CDSC or Contingent Deferred Sales Charge is deducted
only when money is withdrawn from the Group Contract, and not
when the money is Transferred between Investment Divisions.
Therefore, the Series Account provides total returns both
before and after considering the CDSC. (See Administrative
Charges Risk Premiums and Other Deductions to determine which
CDSC applies to your contract).
The following table illustrates Average Annual Total Return
assuming an assessment of a 5% Contingent Deferred Sales
Charge (*) for certain Section 403(b) and 457 retirement
programs.
<TABLE>
<CAPTION>
INVESTMENT Before After Before
DIVISION CDSC CDSC CDSC
1 Year 1 Year 5 Year
<S> <C> <C> <C>
Maxim Bond 2.93% -2.21% 4.86%
Maxim Stock Index (1) 20.20% 14.21% 12.51%
Maxim U.S. Government Securities 2.58% -2.54% 5.45%
Maxim Small-Cap Index 13.79% 8.12% N/A
Maxim Total Return 10.30% 4.80% 8.15%
<PAGE>
Maxim Mid-Cap (Growth Fund I) 4.58% -0.63% N/A
<PAGE>
<PAGE>
Maxim International Equity 18.05% 12.11% N/A
Maxim Corporate Bond 8.91% 3.47% N/A
Maxim Small-Cap Value
(Ariel Value) 16.39% 10.59% N/A
Maxim INVESCO ADR 19.57% 13.60% N/A
Maxim INVESCO Small-Cap Growth 25.04% 18.81% N/A
Maxim INVESCO Balanced N/A N/A N/A
Maxim T. Rowe Price Equity/Income 17.80% 11.93% N/A
American Century VP Capital
Appreciation -5.54% -10.25% 4.81%
American Century VP Balanced 10.74% 5.22% 5.34
Fidelity VIP Growth 13.20% 7.55% 13.48%
Fidelity VIP II Asset Manager 13.10% 7.46% 9.75%
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT After Before After
DIVISION CDSC CDSC 10 CDSC 10
5 Year Year or Year or
Since Since
Inception Inception
<S> <C> <C> <C>
Maxim Bond 4.01% 6.10% 5.78%
Maxim Stock Index (1) 11.59% 11.52% 11.25%
Maxim U.S. Government Securities 4.59% 6.76% 6.43%
Maxim Small-Cap Index N/A 10.15% 8.33%
Maxim Total Return 7.27% 7.98% 7.51%
Maxim Mid-Cap (Growth Fund I) N/A 12.70% 10.79%
Maxim International Equity N/A 10.06% 8.25%
Maxim Corporate Bond N/A 15.92% 13.21%
Maxim Small-Cap Value (Ariel Value) N/A 9.34% 7.54%
Maxim INVESCO ADR N/A 14.69% 12.01%
Maxim INVESCO Small-Cap Growth N/A 25.60% 22.67%
Maxim INVESCO Balanced N/A 1.33% -3.47&
Maxim T. Rowe Price Equity/Income N/A 21.66% 18.81%
American Century VP Capital
Appreciation 3.96% 9.39% 8.90%
American Century VP Balanced 4.49% 8.82% 8.04%
Fidelity VIP Growth 12.56% 13.57% 13.22
Fidelity VIP II Asset Manager 8.86% 10.23% 9.61%
</TABLE>
(1) Prior to December 1, 1992, the Growth Investment Division.
*The CDSC or Contingent Deferred Sales Charge is deducted only
when money is withdrawn from the Group Contract, and not when
the money is Transferred between Investment Divisions.
Therefore, the Series Account provides total returns both
before and after considering the CDSC. The CDSC for Section
457 retirement programs diminishes over time. These factors
are taken into consideration in calculating the above returns.
(See Administrative Charges Risk Premiums and Other
Deductions to determine which CDSC applies to your contract).
<PAGE>
<PAGE>
<PAGE>
The following table illustrates Average Annual Total Return
assuming no Contingent Deferred Sales Charge for certain
Section 403(b) and 457 retirement programs.
<TABLE>
<CAPTION>
INVESTMENT DIVISION 1 Year 5 Year 10 Year or
Since
Inception
<S> <C> <C> <C>
Maxim Bond 2.93% 4.86% 6.10%
Maxim Stock Index (1) 20.20% 12.51% 11.52%
Maxim U.S. Government Securities 2.58% 5.45% 6.76%
Maxim Small-Cap Index 13.79% N/A 10.15%
Maxim Total Return 10.30% 8.15% 7.98%
Maxim Mid-Cap (Growth Fund I) 4.58% N/A 12.70%
Maxim International Equity 18.05% N/A 10.06%
Maxim Corporate Bond 8.91% N/A 15.92%
Maxim Small-Cap Value (Ariel Value) 16.39% N/A 9.34%
Maxim INVESCO ADR 19.57% N/A 14.69%
Maxim INVESCO Small-Cap Growth 25.04% N/A 25.60%
Maxim INVESCO Balanced N/A N/A 1.33
Maxim T. Rowe Price Equity/Income 17.80% N/A 21.66%
American Century VP Capital
Appreciation -5.54% 4.81% 9.39%
American Century VP Balanced 10.74% 5.34 8.82%
Fidelity VIP Growth 13.20% 13.48% 13.57%
Fidelity VIP II Asset Manager 13.10% 9.75% 10.23%
</TABLE>
(1) Prior to December 1, 1992, the Growth Investment Division.
** These returns are illustrated for investments made through
contracts which incur the maximum mortality and expense risk
charge of 1.25% This charge is assumed to remain the same in
each period listed but does vary by contract. Applicable
mortality and expense risk charges range from 0 to 1.25%.
Please consult with your employer or BCE representative to
obtain average annual total return information that reflects
the charges under your contract. (See Administrative Charges
Risk Premiums and Other Deductions for more information.)
The previous tables show total return for each Investment
Division of the Series Account calculated on the basis of the
historical performance of the corresponding Maxim, American
Century, and Fidelity VIP Portfolios available under the
Contracts (calculated from inception for each corresponding
Portfolio or ten years, as applicable) and assume that the
Portfolios were available under the Contract for all of the
periods shown (which they were not). Actual total return is
shown for periods after which the respective Portfolios became
available under the Contract. The returns shown reflect
deductions for all Series Account expenses assuming a maximum
mortality and expense risk charge of 1.25% and Portfolio
<PAGE>
<PAGE>
<PAGE>
expenses. Charges and Portfolio inception date will vary by
Group Policyholder. Please contact your BCE representative
for current total return figures that apply for the Portfolios
in your contract.
The following table sets forth the inception date of each
Investment Division and the inception date of the
corresponding Maxim, American Century, and Fidelity VIP
Portfolio.
<TABLE>
<CAPTION>
INVESTMENT DIVISION Portfolio Inception Investment Division
Date Inception In
Contract(1)
<S> <C> <S>
Maxim Money Market February 25, 1982 October 5, 1984
Maxim Bond July 1, 1982 October 5, 1984
Maxim Stock Index July 1, 1982 October 5, 1984
Maxim U.S. Government April 4, 1985 August 1, 1992
Securities
Maxim Small-Cap Index December 1, 1993 March 15, 1994
Maxim Total Return August 6, 1987 April 20, 1994
Maxim Mid-Cap (Growth December 31, 1993 April 13, 1994
Fund I)
Maxim International December 1, 1993 April 13, 1994
Equity
Maxim Corporate Bond November 1, 1994 February 2, 1995
Maxim Small-Cap Value December 1, 1993 November 4, 1994
(Ariel Value)
Maxim INVESCO ADR November 1, 1994 January 5, 1995
Maxim INVESCO Small-Cap November 1, 1994 January 9, 1995
Growth
Maxim INVESCO Balanced October 1, 1996 October 31, 1996
Maxim T. Rowe Price November 1, 1994 November 9, 1994
Equity/Income
American Century VP November 20, 1987 August 1, 1992
Capital Appreciation
American Century VP May 1, 1991 August 1, 1992
Balanced
Fidelity VIP Growth October 9, 1986 April 21, 1994
Fidelity VIP II Asset September 8, 1989 April 21, 1994
Manager
</TABLE>
(1) The Investment Division inception dates correspond to the
date the Portfolios were available under contracts with the
maximum mortality and expense risk charge of 1.25%. Such
charge may vary by contract. The inception dates for
Investment Divisions under other contracts may differ. Please
<PAGE>
<PAGE>
contact your BCE representative for the performance data and
inception dates that are relevant to your contract.
The Series Account may include total return in
advertisements or other sales material regarding the Maxim
Bond, Maxim Stock Index, Maxim U.S. Government Securities,
American Century VP Capital Appreciation, American Century VP
Balanced, Maxim Small-Cap Index, Maxim Mid-Cap (Growth Fund
I), Maxim International Equity, Maxim Total Return, Maxim
Corporate Bond, Maxim Small-Cap Value (Ariel Value), Maxim T.
Rowe Price Equity/Income, Maxim INVESCO ADR, Maxim INVESCO
Small-Cap Growth, Maxim INVESCO Balanced, Fidelity VIP Growth
and the Fidelity VIP II Asset Manager Investment Divisions.
When the Series Account advertises the total return of one of
these portfolios, it will be calculated for one year, five
years, and ten years or some other relevant period if the
portfolio has not been in existence for at least ten years.
Total return is measured by comparing the value of an
investment in the portfolio at the beginning of the relevant
period to the value of the investment at the end of the period
(assuming immediate reinvestment of any dividends or capital
gains distributions). Average annual total return for the
Investment Divisions includes all charges under the Group
Contracts, including any Contingent Deferred Sales Charge and,
likewise, is lower than total return at the Maxim, American
Century or Fidelity VIP level, which has no comparable
charges.
For the Maxim Money Market Investment Division, "yield"
refers to the income generated by an investment in the Maxim
Money Market Investment Division over a stated seven-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"
of the Maxim Money Market Investment Division is calculated
similarly but, when annualized, the income earned by an
investment in the Maxim Money Market Investment Division 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 yield and effective yield
calculations for the Maxim Money Market Investment Division
include all recurring charges under the Group Contracts (but
does not include the Contingent Deferred Sales Charge), and is
lower than yield and effective yield for Maxim which does not
have comparable charges.
For more complete information on the methods used to
calculate yield, effective yield, and total return of the
<PAGE>
<PAGE>
respective Investment Divisions, see the "Statement of
Additional Information."
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
GWL&A is a stock life insurance company originally
organized under the laws of the state of Kansas as the
National Interment Association. Its name was changed to Ranger
National Life Insurance Company in 1963 and to Insuramerica
Corporation prior to changing to its current name in February
of 1982. In September of 1990, GWL&A redomesticated and is now
organized under the laws of the state of Colorado.
GWL&A is authorized to engage in the sale of life
insurance, accident and health insurance and annuities. It is
qualified to do business in Puerto Rico, the District of
Columbia and 49 states in the United States.
GWL&A is a wholly-owned subsidiary of The Great-West Life
Assurance Company. The Great-West Life Assurance Company is a
subsidiary of Great-West Lifeco Inc., a holding company.
Great-West Lifeco Inc. is in turn a subsidiary of Power
Financial Corporation, a financial services company. Power
Corporation of Canada, a holding and management company, has
voting control of Power Financial Corporation. Mr. Paul
Desmarais, through a group of private holding companies, which
he controls, has voting control of Power Corporation of
Canada.
GWL&A has primary responsibility for administration of
the Group Contracts and the Series Account. Its Administrative
Offices are located at 8515 E. Orchard Road, Englewood,
Colorado 80111.
FUTUREFUNDS SERIES ACCOUNT
The Series Account was originally established by GWL&A
under Kansas law on November 15, 1983. The Series Account now
exists pursuant to Colorado law as a result of the
redomestication of GWL&A. The Series Account has been
registered with the Securities and Exchange Commission as a
unit investment trust pursuant to the provisions of the
Investment Company Act of 1940, as amended, and meets the
definition of a "separate account" under the federal
securities laws. Such registration does not involve
supervision of the management of the Series Account or GWL&A
by the Securities and Exchange Commission.
The Series Account currently has eighteen Investment
Divisions available for allocation of Contributions. If, in
the future, GWL&A determines that marketing needs and
investment conditions warrant, it may establish additional
<PAGE>
<PAGE>
Investment Divisions which will be made available to existing
Group Contract owners to the extent and on a basis to be
determined by GWL&A. Each Investment Division invests in
shares of Maxim, American Century or Fidelity VIP allocable to
one of eighteen Portfolios, each having a specific investment
objective. Maxim, American Century and Fidelity VIP also have
other portfolios which are not generally available for
investment by the Series Account.
GWL&A does not guarantee the investment performance of
the Series Account. The portion of the Participant Annuity
Account Value attributable to the Series Account and the
amount of variable annuity payments depend on the investment
performance of Maxim, American Century and Fidelity VIP. Thus,
the Participant bears the full investment risk for all
Contributions allocated to the Series Account.
The Series Account is administered and accounted for as
part of the general business of GWL&A; but the income, capital
gains, or capital losses of each Variable Sub-Account are
credited to or charged against the assets held in that
Variable Sub-Account in accordance with the terms of the Group
Contracts, without regard to other income, capital gains or
capital losses of any other Variable Sub-Account or arising
out of any other business GWL&A may conduct. Under Colorado
law, the assets of the Series Account are not chargeable with
liabilities arising out of any other business GWL&A may
conduct. Nevertheless, all obligations arising under the Group
Contracts are generally corporate obligations of GWL&A.
THE GROUP CONTRACTS
Eligible Purchasers
Section 401(a) Retirement Programs.
Employers, including non-profit entities defined in Code
Section 501(c) and governmental entities defined in Code
Section 414(d) and Sections 3(32) and 4 of the Employment
Retirement Income Security Act of 1974 ("ERISA"), and certain
employee organizations defined in Sections 3(4) and 3(5) of
ERISA, such as labor organizations, may purchase a Group
Contract.
Section 401(k) Retirement Programs.
Any employer, other than a state or local governmental
employer, and certain employee organizations defined in
Sections 3(4) and 3(5) of ERISA, such as labor organizations,
may purchase a Group Contract.
<PAGE>
<PAGE>
Section 403(b) Retirement Programs.
State educational institutions and tax-exempt organizations
under Section 501(c)(3) of the Code may purchase a Group
Contract. In addition, associations of state educational
employees, associations of state educational employers,
associations of employees of organizations that are tax-exempt
under Section 501(c)(3) of the Code, and associations of tax-
exempt employers under Section 501(c)(3), may also purchase
Group Contracts. In order to be eligible, however, the
association must also meet the requirements of Sections
501(c)(3).
Section 457 Retirement Program.
State governments, local governments, rural electric
cooperatives, political subdivisions, and agencies,
instrumentalities and certain affiliates of such entities may
purchase a Group Contract. For years beginning after 1986,
organizations (other than a governmental unit) which are
exempt from tax under the Code, and which maintain a Section
457 Retirement Program for a select group of management or
highly compensated employees, may also purchase a Group
Contract.
Any of the organizations mentioned above wishing to
purchase a Group Contract must complete application forms
which selling agents will forward to GWL&A's Administrative
Offices for acceptance. Where the purchaser is an employee
association, any employer of an association member employee
can obtain coverage by completing application forms and
agreeing in writing to be bound by the terms of the Group
Contract. Likewise, where the purchaser is an association of
tax-exempt employers, any employer member can obtain coverage
by following the same procedures. GWL&A reserves the right to
reject any application.
Employee Coverage
The employer will submit to selling agents an application
for any employee who desires coverage under the Group Contract
and is eligible to participate in the employer's retirement
program. GWL&A reserves the right to reject any application.
An employee should consult his/her employer for information
concerning eligibility.
Contributions
Section 401(a) Retirement Programs.
Contributions will be made by the employer or employee
organization pursuant to the employer's or employee
organization's underlying pension or profit-sharing plan.
<PAGE>
<PAGE>
<PAGE>
Section 401(k) Retirement Programs.
Contributions will be made by the employer pursuant to the
employer's underlying profit sharing plan and the
Participant's election to execute a salary reduction agreement
or a cash or deferred agreement.
Section 403(b) Retirement Programs.
The employer will make Contributions in accordance with a
salary reduction agreement with its employees or an agreement
to forego a salary increase, except with respect to employer-
sponsored plans under which the employer will make
Contributions pursuant to an underlying retirement plan.
Section 457 Retirement Programs.
Contributions will be made by the employer pursuant to the
employer's underlying deferred compensation plan.
Under all retirement programs, the employer will report
the amount paid as Contributions on forms provided by GWL&A.
Checks for Contributions should be made payable to the Great-
West Life & Annuity Insurance Company. There is no minimum
amount or number of Contributions and, for any Participant
Annuity Account, Contributions can be made until the
Participant's Annuity Commencement Date.
Participant Annuity Account
A Participant Annuity Account will be established in the
name of each Participant to reflect the dollar values of
Contributions made in each Participant's name. Participants
will be furnished no less frequently than annually with a
statement of the Participant Annuity Account Value established
in his/her name.
Ownership
Section 401(a) Retirement Programs.
The employer, plan trustee, or employee organization
purchasing a Group Contract is the owner of the Contract.
Employer Contributions vest in accordance with the terms of
the employer's or employee organization's underlying plan. Any
employee Contributions are immediately vested in the
Participant. Neither the employer, plan trustee employee
organization nor the Participants can assign any interest in
the Group Contract or the Participant Annuity Account. All
assets in the Group Contract must be held for the exclusive
benefit of Participants and their beneficiaries.
Section 401(k) Retirement Programs.
The employer, plan trustee or employee organization purchasing
a Group Contract is the owner of the contract. All employer
Contributions credited to a Participant Annuity Account
pursuant to the Participant's election to execute a salary
<PAGE>
<PAGE>
<PAGE>
reduction agreement or a cash or deferred agreement are vested
in the Participant. Any matching employer Contributions vest
in accordance with the terms of the employer's underlying
plan. Neither the employer, plan trustee, employee
organization nor the Participants can assign any interest in
the Group Contract or the Participant Annuity Account. All
assets in the Group Contract must be held for the exclusive
benefit of Participants and their beneficiaries.
Section 403(b) Retirement Programs.
The employer or association purchasing a Group Contract is the
owner of the contract for the benefit of the Participants.
Each Participant receives a Participant Certificate to
evidence his/her coverage under the Group Contract. All
Contributions credited to a Participant Annuity Account are
vested in the Participant, subject to any limitations in the
underlying retirement plan. Interests in the Group Contract or
the Participant Annuity Accounts cannot be assigned by the
employer, association or the Participants.
Section 457 Retirement Programs.
The employer is the owner of the Group Contract. All
Contributions made in the name of the Participants remain the
property of the employer and subject to the claims of the
employer's general creditors until made available to the
Participant in accordance with the terms of the employer's
underlying deferred compensation plan, until December 31,
1998, or such earlier date as may be established by plan
amendment. However, amounts deferred under a plan created on
or after August 20, 1996 and amounts deferred under any 457
plan after December 31, 1998 must be held in trust, custodial
account or annuity contract for the exclusive benefit of plan
Participants and their beneficiaries. The trustee or
employer, as deemed trustee, is the owner of the Group
Contract. The employer may assign or transfer a Group
Contract to another person as permitted by applicable law and
only with the prior written consent of GWL&A, which assumes no
responsibility for the validity or effect of any assignment.
PAYMENTS OF ANY BENEFITS UNDER THE GROUP CONTRACT WILL ONLY BE
MADE IF THEN PERMITTED UNDER THE EMPLOYER'S DEFERRED
COMPENSATION PLAN AS DETERMINED BY THE EMPLOYER.
Elections Under the Group Contracts
The Group Contracts permit the election of the Annuity
Commencement Date, allocation of Contributions, Transfers,
distributions in whole or in part, and the election of annuity
payment options. Under Section 403(b) retirement programs
(other than employer-sponsored plans), the Participants make
all the elections permitted under the Group Contracts. Under
Section 401(a), Section 401(k), Section 457 and employer-
<PAGE>
<PAGE>
sponsored 403(b) retirement plans, all elections are made by
the employer, or the employee organization. The employer's
underlying pension, profit sharing or deferred compensation
plan or Section 403(b) retirement plan may, however, permit
the Participants to make certain of those elections indirectly
through the employer. A Participant should consult his/her
employer for information concerning elections permitted under
its profit sharing or deferred compensation plan.
Amendment of Group Contracts
Section 401(a), Section 401(k) and Section 457 Retirement
Programs.
The Group Contracts may be modified at any time by written
agreement between GWL&A and the employer, or the employee
organization, subject to approval of the state insurance
department, if applicable.
Section 403(b) Retirement Programs.
The Group Contracts may be modified at any time by written
agreement between GWL&A and either the employer, if it is the
owner of a Group Contract, or the association, subject to
approval of the state insurance department, if applicable. No
modification will, however, affect the terms of the contract
which are applicable to Contributions paid prior to such
modification without the written consent of the Participants.
In addition, GWL&A reserves the right to amend the Group
Contracts without the consent of any person to meet the
requirements of the Investment Company Act of 1940 or other
applicable federal or state laws or regulations, or to modify
the annuity rates for future Contributions. GWL&A will notify
the Participants of any such changes.
ACCUMULATION PERIOD
Allocation of Contributions
Initial Contributions will be applied after receipt at
GWL&A's Administrative Offices within two business days if the
application form is complete, or within five business days if
the application form is incomplete. If an incomplete
application form is completed within five business days of
GWL&A's receipt, the initial Contribution will be applied
within two business days of the application's completion. If
the initial Contribution cannot be so applied, it will be
returned at once unless the prospective purchaser specifically
consents to GWL&A retaining the purchase payment until the
<PAGE>
<PAGE>
application is made complete. Subsequent Contributions will be
applied pursuant to the allocation instructions in the
completed application and will be allocated upon receipt by
GWL&A at its Administrative Offices on the day received. There
is no minimum amount or number of Contributions. Contributions
for a Participant are allocated to the Series Account to
accumulate on a variable basis, to the Guaranteed Account to
accumulate on a guaranteed rate of return, or a combination of
both, according to the instructions of the Participant under a
Section 403(b) retirement programs (other than employer
sponsored plans). The Participants make all the elections
permitted under the Group Contracts under Section 401(a),
Section 401(k), Section 457, or employer-sponsored Section
403(b) retirement programs ("Allocation Instructions.")
Allocation Instructions may be changed at any time and will be
effective the later of (1) the date specified on the form and
(2) the date the completed form is received and recorded by
GWL&A at its Administrative Offices. GWL&A will allocate the
Contributions based upon the instructions in the application
form. A change of Allocation Instructions will be effective
for Contributions which are received after GWL&A's receipt and
recording of the change.
Upon allocation to the appropriate Variable Sub-Account,
the Contributions are converted into Accumulation Units. The
number of Accumulation Units credited with respect to the
initial Contribution under a Participant Annuity Account is
determined by dividing the amount allocated to each Variable
Sub-Account by the value of an Accumulation Unit for that
Variable Sub-Account on the day following GWL&A's receipt of
the initial Contribution and GWL&A's affirmative determination
to establish that Participant Annuity Account. The number of
Accumulation Units with respect to any additional Contribution
to a Participant Annuity Account is determined by dividing the
amount allocated to the appropriate Variable Sub-Account by
the value of an Accumulation Unit for that Sub-Account on the
day the Contribution is accepted. Contributions received after
4:00 p.m., EST/EDT, shall be deemed to have been received on
the next Valuation Date. The number of Accumulation Units so
determined shall not be changed by any subsequent change in
the value of an Accumulation Unit, but the dollar value of an
Accumulation Unit will vary in amount depending upon the
investment experience of the applicable underlying mutual
fund.
Custom Transfer: Dollar Cost Averaging
A Participant may, by Request, automatically Transfer
amounts from one Investment Division selected from among those
being allowed under this option to any of the other Investment
Divisions at regular intervals. The intervals between
Transfers may be monthly, quarterly, semi-annually or
<PAGE>
<PAGE>
annually. The Transfer will be initiated one frequency period
following the date of the Request, and thereafter Transfers
will continue on the same day each interval unless terminated
by the Participant, or for other reasons as set forth in the
Contract. Transfers can only occur on dates the New York Stock
Exchange ("NYSE") is open. If there are insufficient funds in
the applicable Investment Division on the date of Transfer, no
Transfer will be made; however, Custom Transfer: Dollar Cost
Averaging will resume once there are sufficient funds in the
applicable Investment Division.
Automatic Transfers must meet the following conditions:
1. The minimum amount that can be Transferred out of
the selected Investment Division is $100 per month.
2. The Participant must specify the percentage or
dollar amount to be Transferred. The Accumulation
Unit Values will be determined on each Transfer
date.
Custom Transfer: Dollar Cost Averaging may be used to
purchase Accumulation Units of the Investment Divisions over a
period of time so fewer Accumulation Units are purchased when
prices are greater and more Accumulation Units when prices are
lower. Participation in Custom Transfer: Dollar Cost
Averaging does not, however, assure a greater profit, nor will
it prevent or necessarily alleviate losses in a declining
market. The Participant, by Request, may cease Custom
Transfer: Dollar Cost Averaging at any time. The Company
reserves the right to modify, suspend or terminate Custom
Transfer: Dollar Cost Averaging at any time.
Custom Transfer: The Rebalancer Option
The Participant may, by Request, automatically Transfer
among the Investment Divisions on a periodic basis by electing
the Custom Transfer: Rebalancer Option. This option
automatically reallocates the Variable Account Value to
maintain a particular allocation among Investment Divisions
selected by the Participant. The amounts allocated in each
Investment Division will increase or decrease at different
rates depending on the investment experience of the Investment
Division.
The Participant may Request that the rebalancing occur
one time only, in which case the Transfer will take place
after it has been received and processed by the Company as
provided in the Contract. Rebalancing may also be set up on a
quarterly, semi-annual or annual basis, in which case the
<PAGE>
<PAGE>
first Transfer will be initiated one frequency period
following the date of the Request. On the Transfer date for
the specified Request, assets will be automatically
reallocated to the selected funds. Rebalancing will continue
on the same day each interval unless terminated by you, or for
other reasons as set forth in the Contract. Transfers can only
occur on dates the NYSE is open. In order to participate in
the Custom Transfer: Rebalancer Option, the Participant's
entire Variable Account Value must be included.
The Participant must specify the percentage of Variable
Account Value to be allocated to each Investment Division and
the frequency of rebalancing. The Participant, by Request, may
modify the allocations or cease the Custom Transfer:
Rebalancer Option at any time. Participation in the Custom
Transfer: Rebalancer Option and Custom Transfer: Dollar
Cost Averaging at the same time is not allowed. Participation
in the Custom Transfer: Rebalancer Option does not assure a
greater profit, nor will it prevent or necessarily alleviate
losses in a declining market. The Company reserves the right
to modify, suspend, or terminate the Custom Transfer:
Rebalancer Option at any time.
<PAGE>
<PAGE>
Valuation of Accumulation Units
Accumulation Units for each Variable Sub-Account are
valued separately, but the method used for valuing
Accumulation Units in each Variable Sub-Account is the same.
Initially, the value of each Accumulation Unit was set at
$10.00. Thereafter, the value of an Accumulation Unit in any
Variable Sub-Account on any Valuation Date equals the value of
an Accumulation Unit in that Sub-Account as of the immediately
preceding Valuation Date multiplied by the "Net Investment
Factor" of that Variable Sub-Account for the current Valuation
Period. Accumulation Unit values are valued once each day that
the underlying mutual fund shares are valued.
The Net Investment Factor for each Variable Sub-Account
for any Valuation Period is determined by dividing (a) by (b),
and subtracting (c) from the result where:
(a) is the net result of:
(i) the net asset value per share of the underlying
mutual fund shares held in the Variable Sub-Account
determined as of the end of the current Valuation Period,
plus
(ii) the per share amount of any dividend (or, if
applicable, capital gain distributions) made by the
underlying mutual fund on shares held in the Variable
Sub-Account if the "ex-dividend" date occurs during the
current Valuation Period, minus or plus
(iii) a per unit charge or credit for any taxes incurred
by or provided for in the Variable Sub-Account, which is
determined by GWL&A to have resulted from the investment
operations of the Variable Sub-Account; and
(b) is the net result of:
(i) the net asset value per share of the underlying
mutual fund shares held in the Variable Sub-Account
determined as of the end of the immediately preceding
Valuation Period, minus or plus
(ii) the per unit charge or credit for any taxes incurred
by or provided for in the Variable Sub-Account for the
immediately preceding Valuation Period; and
(c) is an amount representing the Risk Charge deducted from
each Variable Sub-Account on a daily basis. Such amount is
equal to 1.25%, 0.95%, 0.75%, 0.65%, 0.55%, or 0.00%,
depending upon the Group Policyholder s Contract and
<PAGE>
<PAGE>
determined on an annual basis of the daily net asset value of
each Variable Sub-Account.
The Net Investment Factor may be greater than, less than,
or equal to one. Therefore, the Accumulation Unit Value may
increase, decrease or remain unchanged.
The net asset value per share referred to in paragraphs
(a) (i) and (b) (i) above, reflect the investment performance
of the underlying mutual fund as well as the payment of
underlying mutual fund expenses. (See "Investments of the
Series Account.")
Transfers Between Variable and Guaranteed Sub-Accounts
Prior to the Annuity Commencement Date transfers can be
made between the Variable and Fixed Sub-Accounts subject to
the following limitations. All or a portion of a Participant
Annuity Account Value held in any of the Variable Sub-Accounts
and/or the Daily Interest Guaranteed Sub-Account may be
transferred at any time prior to the Participant's Annuity
Commencement Date by written or telephone Request to GWL&A's
Administrative Offices. Prior to Participant's Annuity
Commencement Date, transfers of all or a portion of a
Participant Annuity Account Value held in any of the
Guaranteed Certificate Funds may be made only at Certificate
maturity by written or telephone Request to GWL&A's
Administrative Offices. Transfers may be made into the
Guaranteed Fixed Fund (GFF) at any time. However, the
percentage available for transferring out of the GFF will
range from 20% to 100% of the previous December 31 account
balance. However, after the Annuity Commencement Date, no
transfers may be made from a fixed annuity payment option to a
variable annuity payment option and vice, versa. (See
Annuity Options: Transfers After the Annuity Commencement
Date. )
In order for telephone transfers to be accommodated, a
Telephone Transfer Form, signed by both the Contract Owner and
the Participant, must be on file with GWL&A. This form can be
obtained at the time the contract is signed, or at any time
thereafter from the Administrative Offices of GWL&A. The
Transfer Request shall be made by the Participant under a
Section 403(b) retirement program (other than an employer-
sponsored program) or by the employer or the employee
organization under a Section 401(a), Section 401(k), Section
457 or employer-sponsored Section 403(b) retirement program. A
Transfer will take effect on the later of the date designated
in the Request or the date that the Transfer Request is
received by GWL&A at its Administrative Offices. Transfer
Requests received after 4:00 p.m., EST/EDT, shall be deemed to
have been received on the next following Valuation Date. If a
<PAGE>
<PAGE>
Transfer Request is received by GWL&A within 30 days of the
Annuity Commencement Date, GWL&A may delay the Annuity
Commencement Date by not more than 30 days. Additional
Transfer conditions apply to Transfers to or from the
Guaranteed Sub-Accounts.
<PAGE>
<PAGE>
Loans
Loans may be available under your contract. Consult your
Plan Administrator for complete details.
Total and Partial Distribution
A distribution in whole or in part may be taken from a
Participant Annuity Account under certain Section 403(b)
retirement programs (other than employer-sponsored plans)
prior to the Participant's Annuity Commencement Date by
Request of the Participant. Certain Group Contracts issued
pursuant to Section 457 retirement programs will require the
signature of both the Participant and the owner for a total or
partial distribution. Under Group Contracts issued pursuant to
Section 401(a), Section 401(k), Section 457, or employer-
sponsored Section 403(b) retirement programs, the right to a
total or partial distribution is subject to any limitations or
restrictions contained in the underlying retirement plan. A
Request must be received by GWL&A's Administrative Offices at
least 30 days prior to the Annuity Commencement Date. A
Request for partial distribution must also specify the
Variable and/or Guaranteed Sub-Account(s) from which the
partial distribution is to be made. The Participant Annuity
Account Value available for a distribution in whole or in part
is the current value of the Participant Annuity Account at the
end of the Valuation Period for the "effective date" of the
Request. The effective date is the later of the date selected
in the Request or the date on which the Request is received by
GWL&A's Administrative Offices. Requests received after 4:00
p.m., EST/EDT, shall be deemed to have been received on the
next following Valuation Date. The partial or total
distribution will be made within seven days after GWL&A
receives the Request. The payment may be postponed as
permitted by the Investment Company Act of 1940. The amount
payable upon a total distribution may be applied to an Annuity
Option (See "Annuity Options") instead of a lump-sum payment.
There are additional conditions that apply to a partial or
total distribution of a Participant Annuity Account's
Guaranteed Account Value. Restrictions on a partial or total
distribution of a Participant Annuity Account apply to Section
403(b) retirement programs (See "Federal Tax Consequences:
Section 403(b) Retirement Programs.") There are certain
charges imposed upon a partial or total distribution prior to
the Annuity Commencement Date (See "Administrative Charges,
Risk Premiums and Other Deductions: Contingent Deferred Sales
Charge") and there may be certain tax consequences (See
"Federal Tax Consequences: Taxation of Annuities in General.")
<PAGE>
<PAGE>
Cessation of Contributions
If, in the judgment of either GWL&A or the employer,
further Contributions or Transfers to certain or all of the
Variable and Guaranteed Sub-Accounts should become
inappropriate, either party may, upon 60 days written notice
to the other, direct that no future Contributions or Transfers
to such Sub-Account(s) be made. Where the owner of the Group
Contract is an association, the association may provide such
notice with respect to all Participants while the
participating employers may also provide such notice for their
employee Participants only.
In the event that such written notice is given for any or
all of the Sub-Accounts, Contributions and Transfers made to
such Sub-Account(s) prior to the effective date of the notice
(that date being called the "Date of Cessation") may be
maintained in such Sub-Account(s). Allocation instructions
must be changed to delete the affected Sub-Account(s). If no
change of allocation instructions is received, GWL&A may
return all affected Contributions or allocate such
Contributions to a currently offered Guaranteed Sub-Account.
In the event that a Date of Cessation is declared for all
Sub-Accounts, no new Participant Annuity Accounts will be
established or Contributions accepted by GWL&A. In addition,
under Section 401(a), Section 401(k), Section 457, or Section
403(b) retirement programs, an employer or employee
organization must, by Request, elect one of the following
Cessation Options:
Cessation Option (1): GWL&A will maintain each
Participant Annuity Account Value until the value of an
account is applied to a payment option.
Cessation Option (2): GWL&A will pay, within seven (7)
days of the Date of Cessation of Deposits, the Variable
Account Values of the Participant Annuity Accounts as of the
date the Request is received (at such later date as may be
specified in the Request) to either the Employer, the employee
organization or a person designated in writing by the employer
or employee organization as the successor insurer of the
employer's deferred compensation plan. GWL&A will pay the sum
of the Guaranteed Contract Values of the Participant Annuity
Accounts as of the Date of Cessation to either the employer,
the employee organization or a person designated in writing by
the employer or the employee organization as the successor
insurer of the employer's or employee organization's deferred
compensation plan, in 20 equal quarterly installments. The
amount of the installment will be the amount determined by
GWL&A on the date of the first such payment, but will not be
less than $514.80 for each $10,000 of Guaranteed Contract
Value. The first payment will be made thirty (30) days after
the date this Cessation Option is elected.
<PAGE>
<PAGE>
<PAGE>
If the employer or the employee organization has not
elected a cessation option within thirty (30) days of the Date
of Cessation, Cessation Option (1) will be deemed to have been
elected.
CESSATION OPTION (2) MAY NOT BE AVAILABLE IN ALL GROUP
CONTRACTS.
Contract Termination
Section 401(a) Group Contracts contain a contract
termination provision. Under this provision, either GWL&A or
the contract holder may terminate the Group Contract on at
least sixty (60) days prior written notice (the effective date
of which shall be the "Contract Termination Date"). After the
Contract Termination Date, no Transfer shall be made, no
payment option shall be elected and no Contributions shall be
accepted by GWL&A under the terms of the Group Contract.
GWL&A will pay, within seven (7) days of the Contract
Termination Date, the value of all monies held in the Variable
Sub-Account as of the Contract Termination Date to either the
employer, the employee organization or to a person or entity
designated in writing by the employer or employee
organization.
Death Benefit
In the event of the death of the Participant prior to
his/her Annuity Commencement Date, and prior to age 70, a
death benefit will be paid upon receipt of proof of the death
of the Participant. The death benefit is the greater of the
Participant Annuity Account Value or the sum of all
Contributions paid less any partial distributions. Where death
occurs on or after the Participant's 70th birthday, but prior
to the Annuity Commencement Date, a death benefit equal to the
Participant Annuity Account Value will be paid.
Under a Section 403(b) retirement program (other than an
employer-sponsored plan), the death benefit will be paid to
the beneficiary designated by the Participant. Under a Section
401(a), a Section 401(k), a Section 457, or employer-sponsored
Section 403(b) retirement program, the employer or the
employee organization will designate to whom the death benefit
will be paid pursuant to the terms of the employer's
underlying plan. The Participant should consult with his/her
employer or employee organization concerning the payment of
the death benefit under the employer's or employee's
organization deferred compensation plan.
The payee may elect to receive the death benefit under
any of the Annuity Options, in the form of a lump-sum payment,
<PAGE>
<PAGE>
or in the form of a partial lump-sum payment with the balance
applied toward any of the Annuity Options. This election must
be made within 60 days after GWL&A receives adequate proof of
the Participant's death. If no election is made within the 60
day period, a lump-sum settlement will be made.
The Participant Annuity Account Value, for purposes of
determination of the death benefit, will be calculated as of
the end of the Valuation Period during which proof of death
and an election by the Payee are received at GWL&A's
Administrative Offices. If no election is made, the
Participant Annuity Account Value will be determined as of 60
days after the date on which proof of death is received.
If a lump-sum or partial lump-sum settlement is
Requested, the proceeds will be paid within seven (7) days of
GWL&A's receipt of such election and adequate proof of death.
If any of the Annuity Options are elected, the annuity payment
shall commence thirty (30) days after the receipt of such
election and adequate proof of death. Annuity payments shall
commence by the later of fifteen (15) days or the first day of
the month after receipt of such election and adequate proof of
death. The payment of the death benefit will be made in
accordance with any applicable laws and regulations governing
payment of death benefits, subject to postponement in certain
circumstances as permitted by the Investment Company Act of
1940. (See "Federal Tax Consequences: Taxation of Annuities in
General" for certain distribution-on-death rules that may be
applicable to the payment of death benefits.)
The Participant under a Section 403(b) retirement program
(other than an employer-sponsored plan) may designate or
change a beneficiary by filing a Request with GWL&A at its
Administrative Offices. Each change of beneficiary revokes any
previous designation. Unless otherwise provided in the
beneficiary designation, one of the following procedures will
take place on the death of a beneficiary: (1) if there is more
than one primary surviving beneficiary, the Participant
Annuity Account Value will be shared equally among them; (2)
if any primary beneficiary dies before the Participant, that
beneficiary's interest will pass to any other named surviving
primary beneficiary or Beneficiaries, to be shared equally;
(3) if there is no surviving primary beneficiary, the
Participant Annuity Account Value shall pass to any surviving
contingent beneficiary and, if more than one contingent
beneficiary, shall be shared equally among them; (4) if no
beneficiary survives the Participant, the Participant Annuity
Account Value shall pass to the Participant's estate; or (5)
if the designation of beneficiary was not adequately made, the
Participant Annuity Account Value shall pass to the
Participant's estate.
<PAGE>
<PAGE>
INVESTMENTS OF THE SERIES ACCOUNT
Participating Mutual Funds
The Series Account invests in shares of Maxim, American
Century, and Fidelity VIP open-end management investment
companies, each of which are registered with the Securities
and Exchange Commission. Such registration does not involve
supervision of the management of Maxim, American Century or
Fidelity by the Securities and Exchange Commission. Shares of
Maxim are also sold to the Pinnacle Series Account, the Maxim
Series Account, and the Retirement Plan Series Account which
are separate accounts established by GWL&A to receive and
invest premiums paid under variable life and variable annuity
contracts issued by GWL&A. Shares of Maxim may be sold to
other separate accounts of GWL&A or its affiliates. Shares of
American Century and Fidelity VIP are also sold to other
insurance companies to fund the benefits of variable annuity
or variable life insurance contracts.
It is conceivable that, in the future, it may be
disadvantageous for variable life insurance separate accounts
and variable annuity separate accounts to invest in Maxim,
American Century, and Fidelity VIP simultaneously. Although
GWL&A, Maxim, American Century or Fidelity VIP currently do
not foresee any such disadvantages either to variable life
insurance policyowners or to variable annuity contract owners,
the Boards of Directors of Maxim, American Century, and
Fidelity VIP intend to monitor events in order to identify any
material conflicts between such policyowners and contract
owners and to determine what action, if any, should be taken
in response thereto. Such action could include the sale of
Maxim shares by one or more of GWL&A's separate accounts or
the sale of American Century or Fidelity VIP shares by other
insurance companies, which could have adverse consequences.
Material conflicts could result from, for example, (1) changes
in state insurance laws, (2) changes in federal income tax
laws, (3) changes in the investment management of any
portfolio of Maxim, American Century, or Fidelity VIP, or (4)
differences in voting instructions between those given by
policyowners and those given by contract owners.
Investment Advisers
The investment adviser for Maxim is GW Capital
Management, Inc. (the "Investment Adviser"), which is
registered with the Securities and Exchange Commission as an
investment adviser. The Investment Adviser provides portfolio
management and investment advice to Maxim and administers its
other affairs subject to the supervision of Maxim's Board of
Directors.
<PAGE>
<PAGE>
The Investment Advisory Agreement obligates the
Investment Adviser to provide investment advisory services and
to pay all compensation of, and furnish office space for,
officers and employees of the Investment Adviser connected
with investment and economic research, trading and investment
management of Maxim. The Investment Advisory Agreement also
obligates the Investment Adviser to pay all other expenses
incurred in its operation and all of Maxim's general
administrative expenses, except extraordinary expenses. As
compensation for its services to Maxim, the Investment Adviser
receives monthly compensation at the annual rate of 0.46% of
the average daily net assets of the Maxim Money Market
Portfolio; 0.60% of the average daily assets of the Maxim Bond
Portfolio, the Maxim Stock Index Portfolio, the Maxim U.S.
Government Securities Portfolio, the Maxim Small Cap-Index
Portfolio and the Maxim Total Return Portfolio; 0.80% of the
average daily net assets of the Maxim T. Rowe Price
Equity/Income Portfolio; 0.90% of the average daily net assets
of the Maxim Corporate Bond Portfolio; 0.95% of the average
daily net assets of the Maxim Mid-Cap Portfolio and the Maxim
INVESCO Small-Cap Growth Portfolio; 1.00% of the average daily
net assets of the Maxim International Equity Portfolio, the
Maxim Small-Cap Value Portfolio, the Maxim INVESCO ADR
Portfolio, and the Maxim INVESCO Balanced Portfolio.
With respect to the Maxim Mid-Cap Portfolio, Maxim
International Equity, Maxim Small-Cap Value Portfolio, Maxim
INVESCO Small-Cap Growth, Maxim INVESCO ADR and Maxim T. Rowe
Price Equity/Income Portfolios, the Investment Adviser shall
be responsible for all expenses incurred in performing
investment advisory services. Each of the Portfolios shall pay
all expenses incurred in its operation with respect to that
portfolio. However, the Investment Adviser shall pay any
expenses of the Portfolios which exceed an annual rate of
0.95% of the average daily net assets of the Maxim T. Rowe
Price Equity/Income Portfolio; 1.10% of the average daily net
assets of the Maxim Mid-Cap Portfolio and the Maxim INVESCO
Small-Cap Growth Portfolio; 1.35% of the average daily net
assets of the Maxim Small-Cap Value Portfolio; and, 1.30% of
the average daily net assets of the Maxim International Equity
Portfolio and Maxim INVESCO ADR Portfolio.
American Century Investment Management, Inc. ( ACIMI ) is
the investment adviser for American Century. ACIMI has been
the investment adviser of American Centurysm Investments, a
group of registered investment companies, since 1958.
Additionally, ACIMI acts as the investment adviser for
employee benefit plans and endowment funds.
ACIMI supervises and manages the investment portfolios of
American Century and directs the purchase and sale of its
investment securities, subject only to any directions of
<PAGE>
<PAGE>
American Century s Board of Directors. ACIMI pays all the
expenses of American Century except brokerage, taxes,
interest, fees and expenses of non-interested directors
(including counsel fees) and extraordinary expenses. American
Century Services, Corporation., American Century Tower, 4500
Main Street, Kansas City, Missouri 64111, is transfer agent of
American Century. It provides facilities, equipment and
personnel to American Century, and is paid for such services
by ACIMI. Certain administrative services that would otherwise
be performed by American Century Services Corporation may be
performed by the insurance company that purchases American
Century shares, and ACIMI may pay it for such services.
For the foregoing services, ACIMI is paid a fee of 1% of
the average net assets of each series of American Century
during the year. The fee is paid and computed each month by
multiplying 1% of the average daily closing net asset values
of the shares of each series of American Century during the
previous month by a fraction, the numerator of which is the
number of days in the previous month and the denominator of
which is 365 (366 in leap years). Many investment companies
pay smaller investment management fees. However, most if not
all companies also pay in addition certain of their own
expenses, while American Century s expenses specified above
are paid by ACIMI.
ACIMI and American Century Services Corporation are both
wholly owned by American Centurysm Investments. James E.
Stowers, Jr., President of American Century, controls American
Centurysm Investments by virtue of his ownership of a majority
of its common stock.
Fidelity Management & Research Company ("FMR") is the
investment adviser to Fidelity Variable Insurance Products
Fund ("VIP"): VIP Growth Portfolio and to Fidelity Variable
Insurance Products Fund II ("VIP II"): VIP II Asset Manager
Portfolio. For its investment advisory services, FMR receives
a monthly fee from each of these Portfolios. As of December
31, 1996, the VIP Growth and the VIP II Asset Manager
Portfolios paid FMR the annual fee rate of .61% and .64%,
respectively, of each Portfolio's average daily net assets.
FMR may, from time to time, agree to reimburse a
Portfolio for management fees and other expenses above a
specified percentage of average daily net assets.
Reimbursement arrangements, which may be terminated at any
time without notice, will increase a Portfolio's yield. If FMR
discontinues a reimbursement arrangement, the affected
Portfolio's expenses will go up and its yield will be reduced.
FMR retains the ability to be repaid by a Portfolio for
expense reimbursements if expenses fall below the limit prior
<PAGE>
<PAGE>
to the end of the fiscal year. Repayment by a Portfolio will
lower its yield. FMR has voluntarily agreed to temporarily
limit the total expenses (including the management fee, but
generally excluding taxes, interest and extraordinary
expenses) of the Asset Manager Portfolio to 1.25% of the
Portfolio's average daily net assets. FMR has voluntarily
agreed to reimburse the management fees and all other expenses
(excluding taxes, interest and extraordinary expenses) of the
VIP Growth Portfolio in excess of 1.50% of average daily net
assets.
Sub-advisers
Janus Capital Corporation ("Janus") serves as the sub-
adviser to the Maxim Mid-Cap (Growth Fund I) Portfolio. As
such, Janus is responsible for managing the investment and
reinvestment of assets of the Maxim Mid-Cap (Growth Fund I)
Portfolio, subject to review and supervision of the Investment
Adviser and the Board of Directors. Janus bears all expenses
in connection with the performance of its services, such as
compensating and furnishing office space for its officers and
employees connected with investment and economic research,
trading and investment management of the Maxim Mid-Cap (Growth
Fund I) Portfolio.
Janus is a Colorado corporation, registered as an
investment adviser with the Securities and Exchange
Commission. Its principal address is 100 Fillmore Street,
Suite 300, Denver, Colorado 80206. The Investment Adviser is
responsible for compensating Janus, which receives monthly
compensation from the Investment Adviser at the annual rate of
0.60% on the first $100 million and 0.55% on all amounts over
$100 million of the Mid-Cap (Growth Fund I) Portfolio assets.
Templeton Investment Counsel, Inc. ("Templeton") serves
as the sub-adviser of the Maxim International Equity
Portfolio. As such, Templeton is responsible for managing the
investment and reinvestment of assets of the Maxim
International Equity Portfolio, subject to review and
supervision of the Investment Adviser and the Board of
Directors. Templeton bears all expenses in connection with the
performance of its services, such as compensating and
furnishing office space for its officers and employees
connected with investment management of the Maxim
International Equity Portfolio.
Templeton is an indirect subsidiary of Templeton
Worldwide, Inc., which in turn is a direct, wholly-owned
subsidiary of Franklin Resources, Inc. Templeton is a Florida
corporation with its principal business address at Broward
<PAGE>
<PAGE>
Financial Centre, 500 East Broward Boulevard, Suite 2100, Fort
Lauderdale, Florida 33394. The Investment Adviser is
responsible for compensating Templeton, which receives monthly
compensation from the Investment Adviser at the annual rate of
0.70% on the first $25 million, 0.55% on the next $25 million,
0.50% on the next $50 million, and 0.40% all amounts over $100
million of the Maxim International Equity Portfolio assets.
T. Rowe Price Associated, Inc. ("T. Rowe Price") serves
as the sub-adviser to the Maxim T. Rowe Price Equity/Income
Portfolio. T. Rowe Price is a Maryland corporation, registered
as an investment adviser with the Securities and Exchange
Commission. Its principal business address is 100 East Pratt
Street, Baltimore, Maryland 21202. T. Rowe Price receives
monthly compensation from the Investment Adviser at the annual
rate of 0.50% on the first $20 million of the average daily
net assets, 0.40% on the next $30 million of average daily net
assets and 0.40% on all assets once total average daily net
assets exceed $50 million.
INVESCO Trust Company ("ITC") serves as the sub-adviser
of the Maxim INVESCO Small-Cap Growth Portfolio and the Maxim
INVESCO Balanced Portfolio. ITC is a Colorado Trust Company
and an indirect wholly-owned subsidiary of INVESCO PLC. ITC is
registered as an investment trust company. Its principal
business address is 7800 E. Union Avenue, Denver, Colorado
80237. ITC receives monthly compensation from the Investment
Adviser, for its services with respect to the Maxim INVESCO
Small-Cap Growth Portfolio, at the rate of 0.55% on the first
$25 million of average daily net assets, 0.50% on the next $50
million of average daily net assets, 0.40% on the next $25
million of average daily net assets, and 0.35% on all amounts
over $100 million of average daily net assets. ITC receives
monthly compensation from the Investment Adviser, for its
services with respect to the Maxim INVESCO Balanced Portfolio
at the rate of 0.50% of the average daily net assets of the
Portfolio up to $25 million; 0.45% on the next $50 million;
0.40% on the next $25 million; and 0.35% of such value in
excess of $100 million.
INVESCO Capital Management, Inc. ("ICMI") serves as the
sub-adviser to the Maxim INVESCO ADR Portfolio. ICMI is a
Delaware corporation and an indirect wholly-owned subsidiary
of INVESCO PLC. ICMI is registered as an investment adviser
with the Securities and Exchange Commission. Its principal
business address is 1315 Peachtree Street, Atlanta, Georgia
30309. ICMI receives monthly compensation from the Investment
Adviser at the annual rate of 0.55% on the first $50 million
of average daily net assets, 0.50% on the next $50 million of
average daily net assets, and 0.40% on assets over $100
million of average daily net assets.
<PAGE>
<PAGE>
Loomis, Sayles & Company, LP ("Loomis Sayles") serves as
the sub-adviser to the Maxim Corporate Bond Portfolio. Loomis
Sayles is a Delaware limited partnership and is an indirect,
majority-owned subsidiary company of Metropolitan Life
Insurance Company. Loomis Sayles is registered as an
investment adviser with the Securities and Exchange
Commission. Its principal business address is One Financial
Center, Boston, Massachusetts 02111. Loomis Sayles receives
monthly compensation from the Investment Adviser at the annual
rate of 0.30% on all assets of the Maxim Corporate Bond
Portfolio.
Ariel Capital Management , Inc. ("Ariel") serves as the
sub-adviser to the Maxim Small-Cap Value (Ariel Value)
Portfolio. Ariel is a privately held minority-owned money
manager registered with the Securities and Exchange Commission
as an investment adviser. Its principal business address is
307 North Michigan Avenue, Chicago, Illinois 60601. Ariel
receives monthly compensation from the Investment Adviser at
the annual rate of 0.40% on assets up to $5 million of average
daily net assets, 0.35% on the next $10 million of average
daily net assets, 0.30% on the next $10 million of average
daily net assets, and 0.25% on assets over $25 million of
average daily net assets of the Maxim Small-Cap Value (Ariel
Value) Portfolio.
Reinvestment and Redemption
All dividend distributions of Maxim, American Century or
Fidelity VIP will be automatically reinvested in shares of
Maxim, American Century or Fidelity VIP at their net asset
value on the date of distribution; all capital gains
distributions of Maxim, American Century or Fidelity VIP, if
any, will likewise be reinvested at the net asset value on the
record date. GWL&A will redeem Maxim, American Century and
Fidelity VIP shares at their net asset values to the extent
necessary to make annuity or other payments under the Group
Contracts.
Substitution of Investments
GWL&A reserves the right, subject to compliance with the
law as currently applicable or subsequently changed, to make
additions to, deletions from or substitutions for the
investments held by the Series Account. In the future, GWL&A
may establish additional Investment Divisions within the
Series Account. These Investment Divisions will be established
if, and when, in the sole discretion of GWL&A, marketing needs
and investment conditions warrant, and will be made available
under existing Group Contracts to the extent and on a basis to
be determined by GWL&A.
<PAGE>
<PAGE>
If shares of any of the Investment Portfolios of Maxim,
American Century or Fidelity VIP should no longer be available
for investment, or if in the judgment of GWL&A's management
further investment in any of the Investment Portfolios' shares
should become inappropriate in view of the objectives of the
Group Contracts, then GWL&A may substitute shares of another
mutual fund for shares already purchased, or to be purchased
in the future under the Group Contracts. No substitution of
securities held by the Series Account may take place without
prior approval of the Securities and Exchange Commission, and
prior notice to the employers and association owners of Group
Contracts, and, in addition, to the Participants under Section
403(b) retirement programs (other than an employer-sponsored
plan). In the event of a substitution, the Participants under
Section 403(b) retirement programs (other than an employer-
sponsored plan) or the employees or the employee organization
under Section 401(a), Section 401(k), Section 457, or
employer-sponsored Section 403(b) retirement programs will be
given the option of taking a distribution of that portion of
the Participant Annuity Account allocated to an Investment
Division in which the substitution is to occur without
imposition of the Contingent Deferred Sales Charge.
<PAGE>
<PAGE>
ADMINISTRATIVE CHARGES, RISK PREMIUMS AND OTHER DEDUCTIONS
Contract Maintenance Charge
GWL&A has primary responsibility for the administration
of all Group Contracts and the Series Account. To compensate
GWL&A for the cost it incurs in providing administrative
services, GWL&A may deduct a Contract Maintenance Charge of
not more than $30 annually on the first day of each calendar
year from each Participant Annuity Account. If a Participant
Annuity Account is established after that date, the Contract
Maintenance Charge will be deducted on the first day of the
next quarter and will be pro-rated for the year remaining. The
deduction will be pro-rated between the Variable and
Guaranteed Contract Values of each Participant Annuity
Account. No refund of this charge will be made. The Contract
Maintenance Charge on Section 403(b) Group Contracts will be
waived for an initial period of no less than 12 months and up
to 15 months, depending on the Participant's effective date.
Contingent Deferred Sales Charge
In the circumstances described below, a Contingent
Deferred Sales Charge will be deducted on any total or partial
distribution, Transfer to Other Companies or a lump sum
payment. The amount deducted will depend on the type of
retirement program for which the Group Contract was issued.
However, a Contingent Deferred Sales Charge "Free Amount" may
be applied in some circumstances. The Contingent Deferred
Sales Charge "Free Amount" is an amount against which the
Contingent Deferred Sales Charge will not be assessed. The
"Free Amount" shall not exceed 10% of the Participant Annuity
Account Value at December 31 of the previous calendar year and
will be applied on the first distribution, payment or Transfer
to Another Company made in that year. All additional
distributions, payments or Transfers to Another Company during
that calendar year will be subject to a Contingent Deferred
Sales Charge without application of any "Free Amount."
1. For Section 401(a) and 401(k) Retirement Programs.
(a) For Group Contracts issued pursuant to a Section 401(k)
retirement program where the employer does not also maintain a
Section 403(b) or Section 457 Group Contract with GWL&A, a
Contingent Deferred Sales Charge will be in an amount equal to
6% of the amount Transferred to Another Company, distributed
or paid in excess of the "Free Amount." The cumulative total
of all Contingent Deferred Sales Charges applied to a
Participant Annuity Account will not exceed 6% of all
Contributions made within 72 months prior to the date of that
partial or total distribution, Transfer or payment.
<PAGE>
<PAGE>
(b) For Group Contracts issued pursuant to a Section 401(a)
profit-sharing plan where the employer also maintains a
Section 457 Group Contract with GWL&A, the Contingent Deferred
Sales Charge applicable is as described in paragraph 3 (a)
below.
(c) The Contingent Deferred Sales Charge applicable to Group
Contracts issued pursuant to a Section 401(a) profit-sharing
plan where the employer also maintains a Section 403(b) Group
Contract with GWL&A is as described in paragraph 2(a) below.
2. For Section 403(b) Retirement Programs.
(a) Under all Group Contracts issued prior to May 1, 1992
pursuant to Section 403(b) and for Group Contracts issued on
or after May 1, 1992 to Section 403(b) retirement programs
other than employer-sponsored plans, the Contingent Deferred
Sales Charge applicable will be in an amount equal to 6% of
the amount distributed, Transferred to Another Company or paid
in excess of the "Free Amount." The cumulative total of all
Contingent Deferred Sales Charges applied to a Participant
Annuity Account will not exceed 6% of all Contributions made
within 72 months prior to the date of that partial or total
distribution, Transfer to Another Company or payment.
(b) For Group Contracts that were issued in exchange for Group
Tax-Sheltered Annuity or Group Deferred Compensation Annuity
Contracts of the Great-West Life Assurance Company, with
respect to any partial or total distribution, Transfer to
Another Company or payment, the cumulative total of all
Contingent Deferred Sales Charges applied to a Participant
Annuity Account will not exceed an amount equal to:
(i) 6% of all Contributions (excluding the amount
initially applied to a Participant Annuity Account from
an exchanged contract) made within 72 months prior to the
date of that partial or total distribution, Transfer to
Another Company or payment, plus
(ii) an amount which is the result of multiplying the
amount initially applied to a Participant Annuity Account
from the exchanged contract by the appropriate percentage
as chosen from the following chart:
<PAGE>
<PAGE>
If number of years of coverage
of Participant under Exchanged Contract
and this Contract is: The percentage shall be:
Less than 5 years 6%
At least 5 years but less than 10 years 5%
At least 10 years 4%
(c) For Group Contracts issued pursuant to an employer-
sponsored Section 403(b) retirement program on or after May 1,
1992, the Contingent Deferred Sales Charge applicable is as
described in paragraph 3 (a) below.
3. For Section 457 Retirement Programs.
(a) For Section 457 Group Contracts issued May 1, 1988 or
thereafter and for Section 457 Group Contracts issued prior to
May 1, 1988 but amended to incorporate the provision of this
paragraph, the Contingent Deferred Sales Charge will be in an
amount equal to a percentage of the amount distributed,
Transferred to Another Company or paid in excess of the "Free
Amount," if any, based on the table below:
Years of Participation
in FutureFunds The percentage shall be:
0-4 5%
5-9 4%
10 -14 3%
15 or more 0%
(b) For Section 457 Group Contracts issued prior to May 1,
1988 which have not been amended to incorporate the provisions
of this paragraph, the Contingent Deferred Sales Charge will
not exceed an amount equal to:
(i) 6% of all Contributions (excluding the amount
initially applied to a Participant Annuity Account from
an exchanged contract) made within 72 months prior to the
withdrawal, plus
(ii) an amount equal to a percentage of the amount
distributed, Transferred to Another Company or paid in
excess of the "Free Amount," if any, based on the table
below:
If number of years of Coverage
of Participant under Exchanged Contract
and this Contract is: The percentage shall be:
Less than 5 years 6%
<PAGE>
<PAGE>
At least 5 years but less than 10 years 5%
At least 10 years 4%
4. General provisions applicable to the Contingent Deferred
Sales Charge.
Regardless of which of the above-noted Contingent Deferred
Sales Charge schedules is in effect, the Contingent Deferred
Sales Charge applied against distributions, payments or
Transfers to Another Company is deducted from the withdrawal
payment to the Participant. Thus, for example, if a
Participant Requests a withdrawal of $100, and assuming that
the entire withdrawal is subject to a 6% Contingent Deferred
Sales Charge, the Participant would receive a payment of $94.
The Contingent Deferred Sales Charge shall not exceed 8.5% of
Contributions deposited by the Participant into the Group
Contracts. Additionally, the Code imposes (with certain
exceptions) a penalty tax on distributions prior to age 59
1/2. (See "Federal Tax Consequences.")
The Contingent Deferred Sales Charge is paid to GWL&A to cover
expenses relating to the sale and distribution of the Group
Contracts, including commissions, the cost of preparing sales
literature, and other promotional activities. In certain
circumstances, sales expenses associated with the sale and
distribution of a Group Contract may be reduced or eliminated
and, in such event, the Contingent Deferred Sales Charge
applicable to that Group Contract may likewise be reduced.
Whether such a reduction is available will be determined by
GWL&A based upon consideration of the following factors: (1)
size of the prospective group, (2) projected annual
Contributions for all Participants in the group, and (3)
frequency of projected distributions. GWL&A will notify a
prospective purchaser of its eligibility for a reduction of
the Contingent Deferred Sales Charge prior to the acceptance
of an application for coverage.
It is possible that the Contingent Deferred Sales Charge will
not be sufficient to enable GWL&A to recover all of its
distribution expenses. In such case, the loss will be borne by
GWL&A out of its general account assets, which will include
the profit, if any, derived by GWL&A from the mortality and
expense risk charges described herein.
Deductions for Premium Taxes
GWL&A presently intends to pay any Premium Tax levied by
any governmental entity as a result of the existence of the
Participant Annuity Account or the Series Account. GWL&A
reserves the right to deduct the Premium Tax from Participant
Annuity Account Values instead of GWL&A making the Premium Tax
payments. Notice will be given to all Participants prior to
<PAGE>
<PAGE>
the imposition of any such deductions from the Participant
Annuity Account Values. The applicable Premium Tax rates that
states and other governmental entities impose currently range
from 0% to 3.5% and are subject to change by the respective
state legislatures, by administrative interpretations or by
judicial act. Such Premium Taxes will depend, among other
things, on the state of residence of a Participant and the
insurance tax laws and status of GWL&A in these states when
the Premium Taxes are incurred.
Deductions for Assumption of Mortality and Expense Risks
GWL&A deducts from the daily net asset value of the
Series Account an amount, computed daily, for mortality and
expense risk. This charge is designed to compensate GWL&A for
its assumption of certain mortality, death benefit and expense
risks described below. The level of this charge is guaranteed
and will not change. However, the amount charged may vary by
Contract. Currently, GWL&A issues contracts with the
following mortality and expense risk charges:
<TABLE>
<CAPTION>
Mortality Risk Expense Risk Total Mortality and
Expense Risk Charges
<S> <C> <C>
1.00% 0.25% 1.25%
0.76% 0.19% 0.95%
0.60% 0.15% 0.75%
0.52% 0.13% 0.65%
0.44% 0.11% 0.55%
0.00% 0.00% 0.00%
</TABLE>
GWL&A's assumption of mortality risk guarantees that the
annuity payments made to the Beneficiary or other payee will
not be affected by the mortality experience (life span) of
persons receiving such payment or of the general population.
GWL&A assumes this "mortality risk" by virtue of the fact that
annuity rates in effect at the time that any Contributions are
made cannot be changed. In addition, if a Participant should
die prior to his/her Annuity Commencement Date and 70th
birthday, GWL&A is at risk to the extent that the amount of
all Contributions made, less any partial distributions, exceed
the Participant Annuity Account Value. (See "Accumulation
Period: Death Benefit.")
GWL&A's assumption of expense risks arises when GWL&A
guarantees that if the charges for administrative expenses,
<PAGE>
<PAGE>
which cannot be increased by GWL&A, will be insufficient to
cover administrative and sales expenses, GWL&A bears that
loss.
In certain circumstances, the risk of adverse mortality
and expense experience associated with a Group Contract may be
reduced. In such event, the mortality and expense risk charge
applicable to that Group Contract may likewise be reduced.
Whether such a reduction is available will be determined by
GWL&A based upon consideration of the following factors: (1)
size of the prospective group, (2) projected annual
Contributions for all Participants in the group, (3) frequency
of projected distributions, (4) type and frequency of
administrative and sales services provided, and (5) level of
Contract Maintenance Charge and Contingent Deferred Sales
Charge. GWL&A will notify a prospective purchaser of its
eligibility for a reduction of the mortality and expense risk
charge prior to the acceptance of an application for coverage.
If the respective mortality and expense risk charge
proves insufficient to cover administrative costs in excess of
the Contract Maintenance Charge made for administrative
expenses, plus any losses from the mortality risk, the loss
will be borne by GWL&A; conversely, if the amount deducted
proves more than sufficient, the excess will be a profit to
GWL&A.
ANNUITY OPTIONS
An Annuity Commencement Date and the form of annuity
payments ("Annuity Options") may be elected at any time during
the Accumulation Period. The elections are made by the
Participant under a Section 403(b) retirement program (other
than an employer-sponsored plan) or the employer or the
employee organization under a Section 401(a), a Section
401(k), Section 457 or employer-sponsored 403(b) retirement
program. Under Section 403(b), 401(a), 401(k) and 457
retirement programs, the Annuity Commencement Date elected
generally must, to avoid the imposition of an excise tax, not
be later than April 1 of the calendar year following the later
of either (i) the calendar year in which the Participant
attains age 70 1/2; or (ii) the calendar year in which the
Participant retires. Under all of the above-noted retirement
programs, it is the responsibility of the Participant to file
the necessary Request with GWL&A.
The Annuity Commencement Date may be postponed or
accelerated, or the election of any of the Annuity Options
changed, upon Request received by GWL&A at its Administrative
Offices up to 30 days prior to the existing Annuity
Commencement Date. If any Annuity Commencement Date elected
would be less than 30 days from the date that the Request is
<PAGE>
<PAGE>
received, GWL&A may delay the date elected by not more than 30
days.
The Group Contracts provide the Annuity Options described
below, as well as such other Annuity Options as GWL&A may
choose to make available in the future. Except as otherwise
noted, the Annuity Options are payable on a variable, fixed or
combination basis. More than one Annuity Option may be
elected. If no Annuity Option is elected, the Group Contracts
automatically provide for variable life annuity (with respect
to the variable portion of a Participant Annuity Account)
and/or a fixed life annuity (with respect to the fixed portion
of a Participant Annuity Account) with 120 monthly payments
guaranteed.
The level of annuity payments under the following options
is based upon the option selected and, depending on the option
chosen, such factors as the age at which payments begin and
the frequency and duration of payments.
Option No. 1: Life Annuity
This option provides an annuity payable monthly during
the lifetime of the payee. It would be possible under this
option for the Annuitant to receive no annuity payment if
he/she died prior to the date of the first annuity payment,
one annuity payment if the Annuitant died before the second
annuity payment, etc.
Option No. 2: Life Annuity with Payments Guaranteed for
Designated Periods
This option provides an annuity payable monthly
throughout the lifetime of the payee with the guarantee that
if, at the death of the payee, payments have been made for
less than the designated period, the Beneficiary will receive
payments for the remainder of the period. The designated
period may be 5, 10, 15, or 20 years. The period generally
referred to as "Installment Refund" is available only on a
fixed-dollar payment basis.
Option No. 3: Joint and One-Half Survivor
This option provides an annuity payable during the joint
lifetime of the payee and a designated second person, and
thereafter during the remaining lifetime of the survivor.
After the death of the payee, and while only the designated
second person is alive, the amount payable will be one-half
the amount paid while both were living. It would be possible
under this option for the payee and the Beneficiary to receive
no annuity payment if both persons died prior to the date of
<PAGE>
<PAGE>
the first annuity payment, one annuity payment if both persons
died before the second annuity payment, etc.
Option No. 4: Income of Specified Payment (available only as
fixed-dollar payments)
Under this option, the amount of the periodic benefit is
selected. This amount will be paid to the payee in equal
annual, semiannual, quarterly, or monthly installments as
elected; provided that the annuity payment period is not less
than 36 months nor more than 240 months.
Option No. 5: Income for Specified Period (available only as
fixed-dollar payments)
Under this Option, the duration of the periodic benefit
is selected (which may not be less than 36 months nor more
than 240 months), and a resulting annuity payment amount will
be paid to the payee in equal annual, semiannual, quarterly,
or monthly installments, as elected.
Option No. 6: Systematic Withdrawal Payment Option (available
only as fixed-dollar payments)
Under this payment option, the amount, timing and method
of payment will be as elected by the payee and agreed to by
GWL&A. Payments may be elected on a monthly, quarterly, semi-
annual or annual basis. The minimum amount initially applied
to this option must be $20,000. There are charges and
restrictions which apply. (See the "Systematic Withdrawal
Payment Option Rider") to the Group Contract.
Option No. 7: Access Annuity
Under this payment option, a single premium of $20,000
minimum, the amount, timing and method of payment will be as
elected by the payee and agreed to by GWL&A. Payments may be
elected on a monthly, quarterly, semi-annual or annual basis.
There are charges and restrictions which apply. (See the
"Access Annuity Rider" to the Group Contract for additional
information.)
Variable Annuity Payments
Variable annuity payments will be determined on the basis
of: (i) the Variable Account Value prior to the Annuity
Commencement Date; (ii) the annuity tables contained in the
Group Contracts which reflect the age of the Participant;
(iii) the type of annuity option(s) selected; and (iv) the
<PAGE>
<PAGE>
investment performance of the underlying mutual fund. The
Participant receives the value of a fixed number of Annuity
Units each month.
At a Participant's Annuity Commencement Date, the
Participant Annuity Account is credited with Annuity Units for
each Variable Sub-Account on which variable annuity payments
are based. The number of Annuity Units to be credited is
determined by dividing the amount of the first monthly payment
by the value of an Annuity Unit as of the fifth Valuation
Period prior to the Annuity Commencement Date in each Variable
Sub-Account selected. Although the number of Annuity Units is
fixed by this process, the value of such units will vary with
the value of the underlying mutual fund.
The dollar amount of the first monthly variable annuity
payment is determined by applying the total value of the
Accumulation Units credited to a Participant Annuity Account
valued as of the fifth Valuation Period prior to the Annuity
Commencement Date to the annuity tables contained in the Group
Contracts. Amounts shown in the tables are based on a modified
1971 Group Annuity Mortality Table (set back five years) with
an assumed investment return at the rate of 3.5% per annum.
The first annuity payment is determined by multiplying the
benefit per $1,000 of value shown in the Group Contract tables
by the number of thousands of dollars of value accumulated
under the Variable Account Value of a Participant Annuity
Account. These annuity tables vary according to the form of
annuity selected and according to the age of the Participant
and his/her Annuity Commencement Date.
The 3.5% interest rate stated above is the measuring
point for subsequent annuity payments. If the actual Net
Investment Factor (annualized) exceeds 3.5%, the payment will
increase at a rate equal to the amount of such excess.
Conversely, if the actual rate is less than 3.5%, annuity
payments will decrease. If the assumed rate of interest were
to be increased, annuity payments would start at a higher
level but would increase more slowly or decrease more rapidly.
The amount of the second and subsequent payment is
determined by multiplying the credited fixed number of Annuity
Units by the appropriate Annuity Unit value for the fifth
Valuation Period preceding the date that payment is due. The
Annuity Unit value at the end of any Valuation Period is
determined by multiplying the Annuity Unit value for the
immediately preceding Valuation Period by the product of:
(a) the Net Investment Factor of the Variable Sub-Account for
the Valuation Period for which the Annuity Unit is being
determined, and
<PAGE>
<PAGE>
(b) a factor of .999905 to neutralize the assumed investment
return of 3.5% per year used in the annuity table.
The value of each Variable Sub-Account's Annuity Unit is set
initially at $10.00. The value of the Annuity Units is
determined as of a Valuation Period five (5) days prior to the
payment in order to permit calculation of amounts of annuity
payments and mailing of checks in advance of their due date.
Fixed Annuity Payments
The guaranteed level of fixed annuity payments will be
determined on the basis of: (i) the Guaranteed Account Value
prior to the Annuity Commencement Date; (ii) the annuity
tables contained in the Group Contracts which reflect the age
of the Participant; and (iii) the type of annuity option(s)
elected. The payment amount may be greater, however, if GWL&A
is using a more favorable table as of a Participant's Annuity
Commencement Date.
Combination Variable and Fixed Annuity Payments
If an election is made to receive annuity payments on a
combination variable and fixed basis, the Variable Account
Value of a Participant Annuity Account will be applied to the
variable annuity option elected and the Guaranteed Account
Value to the fixed annuity option.
Transfer to Effect Annuity Option Elected
If the Participant under a Section 403(b) retirement
program (other than an employer-sponsored plan) or the
employer or the employee organization under a Section 401(a),
Section 401(k), Section 457 or employer-sponsored 403(b)
retirement program wishes to apply all or part of the
Guaranteed Account Value of the Participant Annuity Account to
a variable annuity option, or all or a part of the Variable
Account Value to a fixed annuity option, a Request to Transfer
must be received at GWL&A's Administrative Office prior to the
Participant's Annuity Commencement Date. This also applies to
a Beneficiary or payee who elects to receive a death benefit
under any of the annuity options, and one such Request to
Transfer can be submitted by the Beneficiary or payee after
the death of the Participant.
Transfer After the Annuity Commencement Date
Once annuity payments have begun, no Transfers may be
made from a fixed annuity payment option to a variable annuity
payment option, or vice versa. However, for variable annuity
payment options, Transfers may be made among Investment
Divisions. Transfers after the Annuity Commencement Date will
<PAGE>
<PAGE>
be made by converting the number of Annuity Units being
Transferred to the number of Annuity Units of the variable
Sub-Account to which the Transfer is made. The result is the
next annuity payment, if it were made at that time, would be
the same amount that it would have been without the Transfer.
Thereafter, annuity payments will reflect changes in the value
of the new Annuity Units.
Proof of Age and Survival
GWL&A may require proof of age or survival of any payee
upon whose age or survival payments depend.
<PAGE>
<PAGE>
Frequency and Amount of Annuity Payments
Variable annuity payments will be paid as monthly
installments; fixed annuity payments will be paid annually,
semiannually, quarterly or monthly, as Requested. However, if
any payment to be made under any annuity option will be less
than $50, GWL&A may make the payments in the most frequent
interval which produces a payment of at least $50. If the net
amount available to apply under any Annuity Option is less
than $2,000, GWL&A may pay it in one lump sum. The maximum
amount that may be applied under any Annuity Option without
the prior written consent of GWL&A is $1,000,000.
FEDERAL TAX CONSEQUENCES
Introduction
The Group Contracts are designed for use by employee
groups under retirement programs which may qualify for special
tax treatment under Section 401(a), Section 401(k), Section
403(b) or Section 457 of the Code.
The ultimate effect of federal income taxes on the
Participant Annuity Account Value, on annuity payments and on
the economic benefit to the Participant or Beneficiary depends
upon GWL&A's tax status, on the type of retirement program for
which the Group Contract is purchased, and upon the tax and
employment status of the individual concerned.
It should be understood that the following discussion is
not exhaustive, and is not intended as tax advice. Special
rules may apply to certain situations not discussed here.
GWL&A intends to comply with the diversification requirements
of Code Section 817(h) to assure that the Group Contracts will
continue to be treated as annuity contracts for federal income
tax purposes. The discussion is based upon GWL&A's
understanding of current federal income tax law and no
representation is made regarding the likelihood of
continuation of current law or of the current interpretations
by the Internal Revenue Service. No attempt is made to
consider state or other tax laws. The Group Contractholder,
Participants and beneficiaries are responsible for determining
that contributions, distributions and other transactions with
respect to the contract comply with applicable laws. For
further information, consult a qualified tax adviser.
Taxation of GWL&A
The Series Account is taxed as a part of GWL&A; not as a
"regulated investment company" under Part I of Subchapter M of
the Code. GWL&A is taxed on its insurance business in the
United States as a life insurance company in accordance with
<PAGE>
<PAGE>
Part I of Subchapter L of the Code. Investment income and
realized capital gains on the assets of Series Account are
reinvested and are taken into account in determining the
Series Account Value. Under existing federal income tax law,
such amounts do not result in any tax on GWL&A which will be
chargeable to the Participant Annuity Account or the Series
Account. GWL&A reserves the right to make a deduction from the
Participant Annuity Account for taxes, if any, imposed with
respect to such items in the future.
Taxation of Annuities in General
Code Section 72 governs taxation of annuities in general.
A Participant is not taxed on increases (if any) in the value
of a Participant Annuity Account until some form of
distribution is made. Under Section 72, a total or partial
distribution from a Participant Annuity Account will be
treated as ordinary income taxable to the extent the amounts
held in the Participant Annuity Account immediately before the
distribution exceed the "investment in the contract." The
investment in the contract is that portion of the
Contributions to the Participant Annuity Account which was
included in the Participant's gross income in the year
contributed, if any. If the Participant begins receiving
annuity payments, the Participant is taxed on the portion of
the payment that exceeds the investment in the contract.
However, because the Participant generally excludes
Contributions from gross income under these retirement
programs, there generally will be no cost basis (investment in
the contract) in the Participant Annuity Account within the
meaning of Section 72 of the Code. Thus, the total amount of
all payments received will generally be taxable to the
Participant. Ordinarily, such taxable portion is taxed at
ordinary income tax rates, subject to any income averaging
rules applicable to Participants receiving distributions from
a Section 401(a) or Section 401(k) plan.
Currently, none of the amounts contributed to a Section
457 plan constitute cost basis in the contract. Thus, all
amounts distributed to Participants from a Section 457 plan
are taxable at ordinary income rates. No special averaging
rules apply to distributions from Section 403(b) plans or
Section 457 plans.
If a Group Contract is held by a non-natural person
(e.g., a corporation), the investment gain on the contract is
includable in the entity's income each year unless certain
exceptions apply. This rule does not apply, where the Group
Contract is held under a Section 401(a) plan, a Section 401(k)
plan, or a Section 403(b) plan. Since the employer maintaining
a Section 457 plan is either a state or local government or a
<PAGE>
<PAGE>
tax-exempt organization, the employer will not be subject to
tax on the gain in the contract.
Section 401(a) Qualified Retirement Plans
Section 401(a) provides special tax treatment for
pension, profit-sharing and stock bonus plans established by
employers or employee organizations for their employees. All
types of employers, including for-profit organizations, tax-
exempt organizations and state and local governments, are
allowed to establish and maintain Section 401(a) qualified
plans. Employer Contributions and any earnings thereon are
currently excluded from the Participant's gross income.
Section 401(a) plans must satisfy numerous qualification
requirements, including limitations on contributions.
Generally, the total amount of employer and employee
contributions which can be contributed to all of the
employer's qualified plans is limited to the lesser of $30,000
or 25% of a Participant's compensation as defined in Section
415. Distributions from the plan are subject to the
restrictions contained in the plan document and the Code.
Participants should consult with their employer or employee
organization as to the applicability of the above limitations
and restrictions to their plan.
Section 401(k) Cash or Deferred Arrangements
Section 401(k) allows for-profit employers or employee
organizations to offer a cash or deferred arrangement to
employees under a profit-sharing or stock bonus plan.
Generally, state and local governments are not permitted to
establish Section 401(k) plans. However, under a grandfather
rule, certain plans adopted before certain dates in 1986 may
continue to be offered by governmental entities. Pre-tax
salary reduction Contributions and any income thereon are
currently excluded from the Participant's gross income.
Generally, the maximum elective deferral amount that an
individual may defer on a pre-tax basis to one or more Section
401(k) plans is limited to $7,000 per year (adjusted for cost-
of-living increases) under Section 402(g). Elective deferrals
to a Section 401(k) plan must also be aggregated with elective
deferrals made by the Participant to a Section 403(b) plan, to
a simplified employee pension or to a SIMPLE retirement
account. For 1997, the total amount of elective deferrals
which can be contributed to all such plans is $9,500. The
contribution limits in Section 415 also apply. The amount
which a highly compensated employee may contribute may be
further reduced to enable the plan to meet the discrimination
testing requirements. Amounts contributed to a Section 401(k)
plan are subject to FICA and FUTA tax when contributed.
<PAGE>
<PAGE>
Pre-tax amounts deferred into the plan within the
applicable limits, and the net investment gain, if any,
reflected in the Participant Annuity Account Value are
includable in a Participant's gross income only for the
taxable year when such amounts are paid to the Participant
under the terms of the plan. Employee contributions and
earnings may not be distributed prior to age 59 1/2, unless
the Participant dies, becomes disabled, separates from service
or suffers a genuine financial hardship meeting the
requirements of the Code. Restrictions apply to the amount
which may be distributed for financial hardship. Participants
should consult with their employer as to the availability of
benefits under the employer's plan.
Amounts contributed in excess of the above described
limits, and the earnings thereon, must be distributed from the
plan and included in the Participant's gross income in
accordance with IRS rules and regulations. Excess amounts
which are not properly corrected can have severe adverse
consequences to the plan and may result in additional taxes to
the Participant.
Section 403(b) Tax Sheltered Annuities
Tax-exempt organizations described in Section 501(c)(3)
and public educational organizations are permitted to purchase
Section 403(b) tax-sheltered annuities for employees. Amounts
contributed toward the purchase of such annuities are excluded
from the gross income of the Participant in the year
contributed to the extent that the contributions do not exceed
three separate, yet interrelated contribution limitations.
Federal income tax is deferred on contributions to the
extent that the aggregate amount contributed to a Section
403(b) plan per year for a Participant does not exceed: (1)
the exclusion allowance described in Section 403(b)(2); (2)
the contribution limit in Section 415; and (3) the elective
deferral limitation in Section 402(g) of the Code. Elective
deferrals to a Section 403(b) plan must also be aggregated
with elective deferrals made by the Participant to a Section
401(k) plan or to a simplified employee pension or to a SIMPLE
retirement account. For 1997, the total amount of elective
deferrals which can be contributed to all such plans is
$9,500. Amounts contributed to a Section 403(b) annuity
contract are subject to FICA and FUTA tax when contributed.
The net investment gain, if any, reflected in a
Participant Annuity Account Value is not taxable until
received by the Participant or his beneficiary.
<PAGE>
<PAGE>
Amounts contributed in excess of the above described
limits, and the earnings thereon, must be distributed from the
plan and included in the Participant's gross income in
accordance with IRS rules and regulations. Excess amounts
which are not properly corrected can have severe adverse
consequences to the plan and may result in additional taxes to
the Participant.
Pre-1989 contributions to a Section 403(b) annuity
contract may be distributed to an employee at any time,
subject to a 10% penalty on withdrawals prior to age 59 1/2,
unless an exception applies under Section 72(t). Post-1988
contributions and earnings, and the earnings on the December
31, 1988 account balance as well as all amounts transferred
from a Section 403(b)(7) custodial account, may not be
distributed prior to age 59 1/2, unless the Participant dies,
becomes disabled, separates from service or suffers a genuine
financial hardship meeting the requirements of the Code.
Restrictions apply to the amount which may be distributed for
financial hardship.
Section 457 Deferred Compensation Plans
Section 457 allows state and local governmental employers
and certain tax-exempt organizations to establish and maintain
an eligible deferred compensation plan for its employees and
independent contractors. Non-governmental tax-exempt
organizations may establish eligible deferred compensation
plans only for a select group of management or highly
compensated employees without violating the funding
requirements of ERISA.
Federal income tax is deferred on contributions to a
Section 457 plan to the extent that the aggregate amount
contributed per year for a Participant does not exceed the
lesser of $7,500 or 33 1/3% of a Participant's includable
compensation. Any elective deferral amount excluded from gross
income by a Participant under Section 401(k), Section 403(b),
a simplified employee pension, or to a SIMPLE retirement
account for the taxable year must be treated as an amount
deferred under the Section 457 plan. Amounts contributed are
subject to FICA and FUTA tax when contributed.
The net investment gain, if any, reflected in a
Participant Annuity Account Value is not taxable until
received by or made available to the Participant or his
beneficiary.
<PAGE>
<PAGE>
Amounts contributed in excess of the above described
limits, and the earnings thereon, must be distributed from the
plan and included in the Participant's gross income. Excess
amounts which are not properly corrected can have severe
adverse consequences to the plan and may result in additional
taxes to the Participant.
Contributions and earnings may not be distributed prior
to the calendar year in which the Participant attains age 70
1/2, unless the Participant, separates from service or suffers
a genuine unforeseeable emergency meeting the requirements of
the Code and plan document. Restrictions apply to the amount
which may be distributed for unforeseeable emergency.
Portability
When the Participant is eligible to take a distribution
from a Section 401(a) plan, Section 401(k) plan or Section
403(b) annuity, eligible rollover distributions may be rolled
over to an IRA or another qualified plan or Section 403(b)
annuity contract or custodial account as provided in the Code.
Amounts properly rolled over will not be included in gross
income until a subsequent distribution is made.
For Section 403(b) plans only, Revenue Ruling 90-24
allows participants to transfer funds from one Section 403(b)
annuity or custodial account to another Section 403(b) annuity
contract or custodial account with the same or more stringent
restrictions without incurring current taxation. If the
Section 403(b) plan is employer-sponsored, transfers under
Revenue Ruling 90-24 may be restricted to 403(b) providers
approved by the plan sponsor.
Amounts distributed from a Section 457 plan cannot be
rolled over to an IRA.
Required Beginning Date/Required Minimum Distributions
Distributions from each of these retirement programs must
begin no later than April 1 of the calendar year following the
later of (i) the calendar year in which the Participant
attains age 70 1/2; or (ii) the calendar year in which the
Participant retires.
All amounts in a Section 401(a), Section 401(k) and
Section 457 plan and amounts accruing after December 31, 1986
under Section 403(b) annuities must be distributed in
compliance with the minimum distribution requirements. All
distributions, regardless of when the amounts accrued, must
satisfy the "incidental benefit" or "minimum distribution
incidental benefit" rule. If the amount distributed does not
meet the minimum requirements, a 50% penalty tax on the amount
<PAGE>
<PAGE>
which was required to be, but was not, distributed may be
imposed upon the employee by the IRS under Section 4974. These
rules are extremely complex, and the Participant should seek
the advice of a competent tax adviser.
Federal Taxation of Distributions
All payments received from a Section 401(a), Section
401(k) or Section 403(b) annuity contract are normally taxable
in full as ordinary income to the Participant. Since premiums
derived from salary reduction have not been previously taxed
to the Participant, they cannot be treated as a cost basis for
the contract. The Participant will have a cost basis for the
contract only when after-tax contributions have been made.
If the Participant takes the entire value in the contract
in a single sum cash payment, the full amount received will be
ordinary income in the year of receipt unless after-tax
contributions were made. If the distribution includes after-
tax contributions, the amount in excess of the cost basis will
be ordinary income. Special averaging treatment is currently
available for lump sum distributions from only Section 401(a)
and Section 401(k) plans. for tax years beginning before
December 31, 1999. A 10-year averaging procedure may also
be available to individuals who attained age 50 before January
1, 1986. For further information regarding lump sum
distributions, a competent tax advisor should be consulted.
Amounts received before the annuity starting date by a
Participant who has made after-tax contributions are taxed
under a rule that provides for pro rata recovery of cost.
Section 72(e)(8). If an employee who has a cost basis for his
contract receives life annuity or installment payments, the
cost basis will be recovered from the payments under the
annuity rules of Section 72. Typically, however, there is no
cost basis and the full amount received is taxed as ordinary
income in the year distributed.
All amounts received from a Section 457 plan, whether in
the form of total or partial withdrawals or annuity payments
are taxed in full as wages to the Participant in the year
distributed.
Penalty Taxes
Penalty taxes may apply to certain distributions from
Section 401(a) plans, Section 401(k) plans and Section 403(b)
annuities. Distributions made before the Participant attains
age 59 1/2 are premature distributions and subject to an
additional tax equal to 10% of the amount of the distributions
which is includable in gross income in the tax year. However,
under Code Section 72(t), the penalty tax may not apply to
<PAGE>
<PAGE>
distributions: (1) made to a beneficiary on or after the
death of the Participant; (2) attributable to the
Participant s being disabled within the meaning of Code
Section 72(m)(7); (3) made as a part of a series of
substantially equal periodic payments (at least annually) for
the life or life expectancy of the Participant or the joint
lives or life expectancies of the Participant and his
designated beneficiary; (4) made to a Participant on account
of separation from service after attaining age 55; (5)
properly made to an alternate payee under a qualified domestic
relations order; (6) made to an Participant for medical care,
but not in excess of the amount allowable as a medical expense
deduction to the Participant for amounts paid during the
taxable year for medical care; (7) timely made to correct an
excess aggregate contribution; or (8) timely made to reduce an
excess elective deferral.
If exception (3) above is applicable at the time of the
distribution but the series of payments is later modified
(other than because of death or disability) before the
Participant reaches age 59 1/2 or, if after he reaches age 59
1/2, within five years of the date of the first payment, the
Participant's tax for the year the modification occurs is
increased by an amount equal to the tax which, but for the
exception, would have been imposed plus interest for the
deferral period.
If the amount distributed during a tax year is less than
the minimum required distribution, there is an additional tax
imposed on the Participant equal to 50% of the amount that the
distribution made in the year falls short of the required
amount.
The premature distribution penalty tax does not apply to
distributions from a Section 457 plan.
Distributions on Death of Participant
Distributions made to a beneficiary from any of these
retirement programs upon the Participant's death must be made
pursuant to the rules contained in Section 401(a)(9) of the
Code and the regulations thereunder. Generally, if the
Participant dies while receiving annuity payments or other
required minimum distributions under the plan and before the
entire interest in the account has been distributed, the
remainder of his interest must be distributed to the
beneficiary at least as rapidly as under the method in effect
as of the Participant's date of death.
If the Participant dies before payments have begun, his
entire interest must generally be distributed within five (5)
years after the date of death. This five year rule applies to
<PAGE>
<PAGE>
all non-individual beneficiaries. However, if an individual
other than the surviving spouse has been designated as
beneficiary, payments may be made over the life of that
individual or over a period not extending beyond the life
expectancy of the beneficiary so long as payments begin on or
before December 31 of the year following the year of death. If
the beneficiary is the Participant's spouse, distributions are
not required to begin until the date the employee would have
attained age 70 1/2. If the spouse dies before distributions
begin, the rules discussed above will apply as if the spouse
were the employee. Participants and beneficiaries should seek
competent tax or legal advice about the tax consequences of
distributions.
Federal Income Tax Withholding
Effective January 1, 1993, certain distributions from
Section 401(a) plans, Section 401(k) plans and Section 403(b)
annuities are defined as "eligible rollover distributions."
Generally, any eligible rollover distribution is subject to
mandatory income tax withholding at the rate of 20% unless the
employee elects to have the distribution paid as a direct
rollover to an IRA or to another qualified plan or Section
403(b) annuity contract or custodial account, as applicable.
With respect to distributions other than eligible rollover
distributions, amounts will be withheld from annuity
(periodic) payments at the rates applicable to wage payments
and from other distributions at a flat 10% rate, unless the
Participant elects not to have federal income tax withheld.
All amounts distributed are tax reported on Form 1099-R.
Distributions to a Participant from a Section 457 plan
retain their character as wages and are tax reported on Form
W-2. Federal income taxes must be withheld under the wage
withholding rules. Participants cannot elect not to have
federal income tax withheld. Payments to beneficiaries are not
treated as wages and are tax reported on Form 1099-MISC.
Federal income tax on payments to beneficiaries will be
withheld from annuity (periodic) payments at the rates
applicable to wage withholding, and from other distributions
at a flat 10% rate, unless the beneficiary elects not to have
federal income tax withheld.
VOTING RIGHTS
GWL&A will vote the shares held by the Investment
Divisions of the Series Account at regular and special
meetings of shareholders of Maxim, American Century, and
Fidelity VIP. The Investment Company Act of 1940 (the "1940
Act") and the regulations thereunder, as presently
interpreted, require that the shares of the applicable
underlying mutual fund be voted in accordance with
<PAGE>
<PAGE>
instructions received from persons having voting interests in
the Variable Sub-Accounts and, accordingly, GWL&A will do so.
However, if the 1940 Act or any regulation thereunder should
be amended, or if the present interpretation thereof should
change, and as a result GWL&A determined that it is permitted
to vote the shares at its own discretion, GWL&A may elect to
do so.
Prior to the Annuity Commencement Date, the Participant
under a Section 403(b) retirement program or the employer
under a Section 401(k) or Section 457 retirement program has
the voting interest in the Variable Sub-Accounts. After
annuity payments begin under a variable annuity option, the
payee will have the voting interest.
The number of votes which a person has the right to cast
will be determined by applying his/her percentage interest in
a Variable Sub-Account to the total number of votes
attributable to the Sub-Account. In determining the number of
votes, fractional shares will be recognized. During the
annuity payment period, the number of votes attributable to a
Participant Annuity Account will decrease as the assets held
to fund the annuity payments decrease.
Voting rights held in respect of a Variable Sub-Account
of this Series Account as to which no timely instructions are
received, and shares that are not otherwise attributable to
persons having voting interests in the Variable Sub-Accounts
of this Series Account, will be voted by GWL&A in proportion
to the voting instructions which are received with respect to
all Participant Annuity Accounts participating in that Sub-
Account of this Series Account. Voting instructions to abstain
on any item to be voted upon will be applied on a pro rata
basis to reduce the votes eligible to be cast. Each person
having a voting interest will receive proxy materials, reports
and other materials relating to the applicable underlying
mutual fund.
DISTRIBUTION OF THE GROUP CONTRACTS
BCE is the principal underwriter and the distributor of
the Group Contracts. BCE is registered with the Securities and
Exchange Commission under the Securities and Exchange Act of
1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. ("NASD"). Applications
for the Group Contracts will be solicited by duly-licensed
insurance agents of Benefits Communication Corporation and/or
GWL&A, as well as by independent registered insurance brokers
who must also be NASD-registered broker-dealers or
representatives thereof.
<PAGE>
<PAGE>
The maximum commission as a percentage of the
Contributions made under a Group Contract payable to BCE
agents, independent registered insurance brokers and other
registered broker-dealers is 8.0%. An expense allowance that
will not exceed 40% of the maximum commission paid may also be
paid. Additionally, effective August 1, 1987, a maximum of 1%
of Contributions may also be paid as a persistency bonus to
qualifying brokers.
RETURN PRIVILEGE
Within 15 days after a Participant Certificate under a
Section 403(b) retirement program is first mailed, it may be
canceled for any reason by delivering or mailing it together
with a Request to cancel to GWL&A's Administrative Offices or
to an authorized agent of GWL&A. Upon cancellation, GWL&A will
refund all Contributions. No Contingent Deferred Sales Charge
or other charge will be deducted.
STATE REGULATION
As a life insurance company organized and operated under
Colorado law, GWL&A is subject to provisions governing such
companies and to regulation by the Colorado Commissioner of
Insurance. GWL&A's books and accounts are subject to review
and examination by the Colorado Insurance Department at all
times and a full examination of its operations is conducted by
the National Association of Insurance Commissioners ("NAIC")
at least once every three years.
RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM
Section 36.105 of the Teacher Retirement System of Texas
permits Participants in the Texas Optional Retirement Program
("ORP") to redeem their interest in a variable annuity
contract issued under the ORP only upon termination of
employment in the Texas public institutions of higher
education, retirement or death. Accordingly, a Participant in
the ORP will be required to obtain a certificate of
termination from his/her employer before he/she can redeem
his/her Participant Annuity Account.
REPORTS
As presently required by the 1940 Act and regulations
promulgated thereunder, all Participants will be furnished, at
least semi-annually, with reports containing such information
as may be required under the 1940 Act or by any other
applicable law or regulation. In addition, all Participants
will be furnished not less frequently than annually with a
statement of the Participant Annuity Account Value established
in his/her name.
<PAGE>
<PAGE>
LEGAL PROCEEDINGS
The Series Account is not engaged in any litigation.
GWL&A is not involved in any litigation which would have
material adverse effect on the ability of GWL&A to perform its
contract with the Series Account.
LEGAL MATTERS
The organization of GWL&A, its authority to issue
variable annuity contracts and the validity of the Group
Contract have been passed upon by R. B. Lurie, Vice-President,
Counsel and Associate Secretary. Certain legal matters
relating to the federal securities laws have been passed upon
for GWL&A by Jorden Burt Berenson & Johnson LLP.
REGISTRATION STATEMENT
A Registration Statement has been filed with the
Securities and Exchange Commission, under the Securities Act
of 1933 as amended, with respect to the Group Contracts
offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement and
amendments thereto and exhibits filed as a part thereof, to
all of which reference is hereby made for further information
concerning the Series Account, GWL&A and the Group Contracts.
Statements contained in this Prospectus as to the content of
Group Contracts and other legal instruments are summaries. For
a complete statement of the terms thereof reference is made to
such instruments as filed.
STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more
specific information and financial statements relating to the
Series Account and GWL&A. The Table of Contents of the
Statement of Additional Information is set forth below:
1. Custodian and Independent Auditors
2. Underwriter
3. Calculation of Performance Data
4. Financial Statements
Inquiries and Requests for a Statement of Additional
Information should be directed to GWL&A in writing at 8515 E.
Orchard Road, Englewood, Colorado 80111, or by telephoning
GWL&A at (800) 468-8661 (U.S.) or (303) 689-3360 (Englewood).
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT
Group Flexible Premium Variable Annuity Contracts
issued by
Great-West Life & Annuity Insurance Company
8515 E. Orchard Road
Englewood, Colorado 80111
Telephone: (800) 468-8661 (U.S.)
(303) 689-3360 (Englewood)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a
Prospectus and should be read in conjunction with the
Prospectus, dated May 1, 1997, which is available without
charge by contacting Great-West Life & Annuity Insurance
Company ("GWL&A") at the above address or at the above
telephone number.
May 1, 1997
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
CUSTODIAN AND INDEPENDENT AUDITORS . . . . . . . . . B-3
UNDERWRITER . . . . . . . . . . . . . . . . . . . . . B-3
CALCULATION OF PERFORMANCE DATA . . . . . . . . . . . B-3
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . B-5
<PAGE>
<PAGE>
CUSTODIAN AND INDEPENDENT AUDITORS
A. Custodian
The assets of FutureFunds Series Account (the "Series
Account") are held by Great-West Life & Annuity Insurance
Company ("GWL&A"). The assets of the Series Account are kept
physically segregated and held separate and apart from the
general account of GWL&A. GWL&A maintains records of all
purchases and redemptions of shares of the Fund. Additional
protection for the assets of the Series Account is afforded by
blanket fidelity bonds issued to The Great-West Life Assurance
Company ("Great-West") in the amount of $25 million, which
covers all officers and employees of GWL&A.
B. Independent Auditors
The accounting firm of Deloitte & Touche LLP performs
certain accounting and auditing services for GWL&A and the
Series Account. The principal business address of Deloitte &
Touche LLP is 555 Seventeenth Street, Suite 3600, Denver,
Colorado 80202-3942.
The statement of assets and liabilities of FutureFunds
Series Account as of December 31, 1996, the related statement
of operations for the year then ended, the statements of
changes in net asset for each of the two years in the period
then ended and the consolidated financial statements of GWL&A
at December 31, 1996 and 1995 and for each of the three years
in the period ended December 31, 1996, included in this
Statement of Additional Information have been audited by
Deloitte & Touche LLP, independent auditors, as set forth in
their reports appearing herein and are included in reliance
upon such reports given upon the authority of such firm as
experts in accounting and auditing.
UNDERWRITER
The offering of the Contracts is made on a continuous
basis by BenefitsCorp Equities, Inc., a wholly owned
subsidiary of GWL&A. Previously, the Contracts were offered
through Great-West, an affiliate of GWL&A. No payments were
made to Great-West for the years 1993 through 1996 and no
payments were made to BCE in 1996.
CALCULATION OF PERFORMANCE DATA
A. Yield and Effective Yield Quotations for the Money Market
Investment Division
<PAGE>
<PAGE>
The yield quotation for the Money Market Investment
Division set forth in the Prospectus is for the seven-day
period ended December 31, 1996 and is computed by determining
the net change, exclusive of capital changes, in the value of
a hypothetical pre-existing account having a balance of one
Accumulation Unit in the Money Market Investment Division at
the beginning of the period, subtracting a hypothetical charge
reflecting deductions from Participant 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 yield figure carried to the nearest hundredth of one
percent.
The effective yield quotation for the Money Market
Investment Division set forth in the Prospectus is for the
seven-day period ended December 31, 1996 and is carried to the
nearest hundredth of one percent, computed by determining the
net change, exclusive of capital changes, in the value of a
hypothetical pre-existing account having a balance of one
Accumulation Unit in the Money Market Investment Division at
the beginning of the period, subtracting a hypothetical charge
reflecting deductions from Participant 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
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.
For purposes of the yield and effective yield
computations, the hypothetical charge reflects all deductions
that are charged to all Participant accounts in proportion to
the length of the base period, and for any fees that vary with
the size of the account, the account size is assumed to be the
Money Market Investment Division's mean account size. The
specific percentage applicable to a particular withdrawal
would depend on a number of factors including the length of
time the Contract Owner has participated under the Contracts.
(See Administrative Charges, Risk Charges and Other Deductions
in the prospectus.) No deductions or sales loads are assessed
upon annuitization under the Contracts. Realized gains and
losses from the sale of securities and unrealized appreciation
and depreciation of the Money Market Investment Division and
the Fund are excluded from the calculation of yield.
B. Total Return Quotations for All Investment Divisions
The total return quotations for all Investment Divisions
set forth in the Prospectus are average annual total return
<PAGE>
<PAGE>
quotations for the one, five and ten year periods ended
December 31, 1996, or since inception if the portfolio has not
been in existence for at least the above listed period of
time. The quotations are computed by finding the average
annual compounded rates of return over the relevant periods
that would equate the initial amount invested to the ending
redeemable value, according to the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of
$1,000
T = average annual total return
N = number of years
ERV = ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the
particular period at the end of the particular period
For purposes of the total return quotations for these
Investment Divisions, the calculations take into effect all
fees that are charged to the Contract Value , and for any fees
that vary with the size of the account, the account size is
assumed to be the respective Investment Divisions' mean
account size. The calculations also assume a complete
redemption as of the end of the particular period.
FINANCIAL STATEMENTS
The consolidated financial statements of GWL&A as
contained herein should be considered only as bearing upon
GWL&A's ability to meet its obligations under the Contracts,
and they should not be considered as bearing on the investment
performance of the Series Account. The interest of Contract
Owners under the Contracts are affected solely by the
investment results of the Series Account.
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Financial Statements for the Years
Ended December 31, 1996 and 1995
and Independent Auditors' Report
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Contract Owners of
FutureFunds Series Account of
Great-West Life & Annuity Insurance Company:
We have audited the accompanying statement of assets and
liabilities of FutureFunds Series Account of Great-West Life &
Annuity Insurance Company as of December 31, 1996, the related
statement of operations for the year then ended and the
statements of changes in net assets for each of the two years
in the period then ended, including each of the investment
divisions. These financial statements are the responsibility
of the Series Account'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, such financial statements present fairly, in
all material respects, the financial position of FutureFunds
Series Account of Great-West Life & Annuity Insurance Company
at December 31, 1996, the results of its operations for the
year then ended and the changes in its net assets for each of
the two years in the period then ended in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
February 7, 1997
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
ASSETS: Shares Cost
<S> <C> <C>
Investments in the
underlying funds:
Fidelity Investments - Variable 1,255,876 $ 18,574,574
Insurance Products Fund/Asset
Manager
Fidelity Investments - Variable 1,289,397 35,863,518
Insurance Products Fund/Growth
Maxim Series Fund, Inc. -
Affiliated
Bond 44,203,796 50,920,454
Corporate Bond 5,716,122 6,574,831
International Equity 27,207,608 31,260,163
INVESCO ADR 1,859,777 2,279,913
INVESCO Balanced 200,662 209,366
INVESCO Small-Cap Growth 10,042,050 15,518,835
Mid-Cap 27,749,856 35,892,845
Money Market 55,297,861 55,335,287
Small-Cap Index 6,337,383 7,462,581
Small-Cap Value 421,778 465,361
Stock Index 156,197,734 253,925,598
T. Rowe Price Equity/Income 19,418,225 25,451,033
Total Return 3,703,913 4,799,659
U.S. Government Securities 37,698,692 39,288,399
TCI Portfolios, Inc. - TCI 6,435,160 40,618,552
Balanced
<PAGE>
<PAGE>
TCI Portfolios, Inc. - TCI 6,731,404 67,219,477
Growth
Total investments $ 691,660,446
Other assets and liabilities:
Premiums due and accrued
Due to Great-West Life & Annuity
Insurance Company
NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF
CAPITAL (Note 5)
See notes to financial statements.
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996 (CONTINUED ...)
ASSETS: Value
Investments in the
underlying funds:
Fidelity Investments - Variable $21,261,984
Insurance Products Fund/Asset
Manager
Fidelity Investments - Variable 40,151,821
Insurance Products Fund/Growth
Maxim Series Fund, Inc. -
Affiliated
Bond 53,304,943
Corporate Bond 6,640,878
International Equity 35,993,404
INVESCO ADR 2,512,255
INVESCO Balanced 208,844
INVESCO Small-Cap Growth 14,390,399
Mid-Cap 39,755,842
Money Market 55,335,282
Small-Cap Index 7,839,175
Small-Cap Value 526,387
Stock Index 369,403,785
T. Rowe Price Equity/Income 28,139,961
Total Return 4,967,575
U.S. Government Securities 40,481,280
TCI Portfolios, Inc. - TCI 48,521,109
Balanced
TCI Portfolios, Inc. - TCI 68,929,579
Growth
Total investments 838,364,503
Other assets and liabilities:
Premiums due and accrued
17,331,251
<PAGE>
<PAGE>
Due to Great-West Life & Annuity
Insurance Company (898,887)
NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF $854,796,867
CAPITAL (Note 5)
See notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
VIP VIP
Asset Growth Bond
Manager
Investment Investment Investment
Division Division Division
<S> <C> <C> <C>
INVESTMENT INCOME $969,821 $ 1,592,804 $ 3,254,348
EXPENSES-mortality and
expense risks by category
(Note 3)
1.25 191,928 346,724 636,469
0.95 21,010 35,255 25,413
NET INVESTMENT INCOME (LOSS) 756,883 1,210,825 2,592,466
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on 167,595 943,820 (3,117,287)
investments
Net change in unrealized
appreciation (depreciation)
on investments 1,319,288 1,412,489 2,070,859
NET REALIZED AND UNREALIZED
GAIN (LOSS)
ON INVESTMENTS 1,486,883 2,356,309 (1,046,428)
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM $2,243,766 $ 3,567,134 $ 1,546,038
OPERATIONS
See notes to financial
<PAGE>
statements.
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 (CONTINUED . . .)
Corporate International
Bond Equity
Investment Investment
Division Division
INVESTMENT INCOME $492,337 $ 1,022,123
EXPENSES-mortality and
expense risks by category
(Note 3)
56,912 296,711
1,956 52,480
NET INVESTMENT INCOME (LOSS) 433,469 672,932
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on 43,335 612,767
investments
Net change in unrealized
appreciation (depreciation)
on investments 8,927 3,632,539
NET REALIZED AND UNREALIZED
GAIN (LOSS)
ON INVESTMENTS
52,262 4,245,306
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM $485,731 $ 4,918,238
OPERATIONS
See notes to financial (Continued)
statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
INVESCO
INVESCO INVESCO Small-Cap
ADR Balanced Growth
Investment Investment Investment
Division Division Division
<S> <C> <C> <C>
INVESTMENT INCOME $19,062 $ 1,222 $ 1,611,782
EXPENSES-mortality and
expense risks by category
(Note 3)
1.25 11,002 71 93,489
0.95 3,851 15 11,084
NET INVESTMENT INCOME (LOSS) 4,209 1,136 1,507,209
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on 51,074 13 869,697
investments
Net change in unrealized
appreciation (depreciation)
on investments 217,175 (522) (1,294,678)
NET REALIZED AND UNREALIZED
GAIN (LOSS)
ON INVESTMENTS 268,249 (509) (424,981)
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM $272,458 $ 627 $ 1,082,228
OPERATIONS
See notes to financial statements.
<PAGE>
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 (CONTINUED . . .)
Money
Mid-Cap Market
Investment Investment
Division Division
INVESTMENT INCOME $51,651 $ 2,600,562
EXPENSES-mortality and
expense risks by category (Note
3)
376,937 620,210
43,964 28,708
NET INVESTMENT INCOME (LOSS) (369,250) 1,951,644
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on 1,545,637 4,993
investments
Net change in unrealized
appreciation (depreciation)
on investments (232,275) (5,000)
NET REALIZED AND UNREALIZED GAIN
(LOSS)
ON INVESTMENTS 1,313,362 (7)
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $944,112 $ 1,951,637
See notes to financial (Continued)
statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
Small-Cap Small-Cap Stock
Index Value Index
Investment Investment Investment
Division Division Division
<S> <C> <C> <C>
INVESTMENT INCOME $632,544 $ 3,401 $ 6,730,925
EXPENSES-mortality and
expense risks by category
(Note 3)
1.25 63,887 4,437 3,859,027
0.95 11,777 115 180,808
NET INVESTMENT INCOME (LOSS) 556,880 (1,151) 2,691,090
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on 369,918 8,216 26,200,811
investments
Net change in unrealized
appreciation (depreciation)
on investments (128,525) 56,898 32,068,655
NET REALIZED AND UNREALIZED
GAIN (LOSS)
ON INVESTMENTS 241,393 65,114 58,269,466
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM $798,273 $ 63,963 $ 60,960,556
OPERATIONS
See notes to financial
statements.
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 (CONTINUED . . .)
T. Rowe Price Total
Equity/Income Return
Investment Investment
Division Division
INVESTMENT INCOME $ 929,245 $ 360,942
EXPENSES-mortality and
expense risks by category
(Note 3)
188,178 48,491
14,877 1,936
NET INVESTMENT INCOME (LOSS) 726,190 310,515
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on 208,029 88,556
investments
Net change in unrealized
appreciation (depreciation)
on investments 2,026,715 17,098
NET REALIZED AND UNREALIZED
GAIN (LOSS)
ON INVESTMENTS 2,234,744 105,654
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS $ 2,960,934 $ 416,169
See notes to financial (Continued)
statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
U.S.
Government TCI
Securities Balanced
Investment Investment
Division Division
<S> <C> <C>
INVESTMENT INCOME $ 2,497,586 $ 2,054,988
EXPENSES-mortality and expense
risks by category (Note 3)
1.25 493,922 543,771
0.95 9,129 19,636
NET INVESTMENT INCOME (LOSS) 1,994,535 1,491,581
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on (2,998,214 1,338,172)
investments
Net change in unrealized appreciation
(depreciation) on investments 2,046,926 1,868,291
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (951,288) 3,206,463
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ 1,043,247 $ 4,698,044
See notes to financial statements.
<PAGE>
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 (CONTINUED . . .)
TCI
Growth
Investment Total
Division FutureFunds
INVESTMENT INCOME $ 8,797,105 $33,622,448
EXPENSES-mortality and expense
risks by category (Note 3)
883,520 8,715,686
54,574 516,588
NET INVESTMENT INCOME (LOSS) 7,859,011 24,390,174
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on 4,172,683 30,509,815
investments
Net change in unrealized
appreciation (depreciation)
on investments (16,089,361) 28,995,499
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (11,916,678) 59,505,314
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ (4,057,667) $83,895,488
See notes to financial (Concluded)
statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995
VIP Asset Manager
Investment Division
<S> <C> <C>
1996 1995
FROM OPERATIONS:
Net investment income $756,883 $ 34,549
(loss)
Net realized gain 167,595 30,077
(loss) on investments
Net change in
unrealized apprecia-
tion (depreciation) on 1,319,288 1,529,002
investments
Increase (decrease) in
net asset resulting 2,243,766 1,593,628
from operations
FROM UNIT TRANSACTIONS (by category):
Variable annuity
contract:
Purchase payments
1.25 3,762,974 3,467,691
0.95 315,113 19,845
Redemptions
1.25 (482,689) (288,498)
0.95 (200,926)
Net transfers from
(to) other annuity
contracts
1.25 1,213,953 1,036,346
0.95 986,254 1,195,697
Increase (decrease) in
net assets resulting
<PAGE>
<PAGE>
from unit transactions 5,594,679 5,431,081
INCREASE (DECREASE) IN
NET ASSETS 7,838,445 7,024,709
NET ASSETS:
Beginning of period 14,178,290 7,153,581
End of period $22,016,735 14,178,290
See notes to financial statements. Continued
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995 (CONTINUED . . .)
VIP Growth
Investment
Division
1996 1995
FROM OPERATIONS:
Net investment income $1,210,825 $(113,186)
(loss)
Net realized gain 943,820 (25,163)
(loss) on investments
Net change in
unrealized appreciation
(depreciation) on 1,412,489 2,682,819
investments
Increase (decrease) in
net assets resulting
from operations 3,567,134 2,544,470
FROM UNIT TRANSACTIONS (by category):
Variable annuity
contract:
Purchase payments
8,049,985 4,140,551
926,051 19,742
Redemptions
(1,159,369) (482,399)
(169,985)
Net transfers from
(to) other
annuity contracts
7,036,571 7,706,489
2,349,470 1,598,527
Increase (decrease) in
net assets resulting
from unit transactions 17,032,723 12,982,910
INCREASE (DECREASE) IN
<PAGE>
<PAGE>
NET ASSETS 20,599,857 15,527,380
NET ASSETS:
Beginning of period 20,907,405 5,380,025
End of period $41,507,262 $20,907,405
See notes to financial statements.
(Continued)
<PAGE>
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995 (CONTINUED . . .)
Bond
Investment
Division
1996 1995
FROM OPERATIONS:
Net investment income $ 2,592,466 $ 2,483,629
(loss)
Net realized gain (3,117,287 (15,151)
(loss) on investments
Net change in
unrealized appreciation
(depreciation) on 2,070,859 4,009,103
investments
Increase (decrease) in
net assets resulting
from operations 1,546,038 6,477,581
FROM UNIT TRANSACTIONS (by category):
Variable annuity
contract:
Purchase payments
4,050,582 6,004,310
171,050 8,564
Redemptions
(3,614,353) (5,121,131)
(230,805) (44,000)
Net transfers from
(to) other annuity
contracts
(3,538,754) (3,096,529)
954,068 2,018,422
Increase (decrease) in
net assets resulting
from unit transactions (2,208,212) (230,364)
<PAGE>
<PAGE>
INCREASE (DECREASE) IN
NET ASSETS (662,174) 6,247,217
NET ASSETS:
Beginning of period 54,361,373 48,114,156
End of period $53,699,199 $54,361,373
See notes to financial (Continued)
statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995
Corporate Bond
Investment Division
(I)
<S> <C> <C>
1996 1995
FROM OPERATIONS:
Net investment income $ 433,469 $ 85,439
(loss)
Net realized gain 43,335 (2,675)
(loss) on investments
Net change in
unrealized appreciation
(depreciation) on 8,927 57,120
investments
Increase (decrease) in
net assets resulting
from operations 485,731 139,884
FROM UNIT TRANSACTIONS (by category):
Variable annuity
contract:
Purchase payments
1.25 1,054,079 286,506
0.95 85,430 382
Redemptions
1.25 (275,907) (130,103)
0.95 (10,087)
Net transfers from
(to) other annuity
contracts
1.25 2,504,821 2,447,415
0.95 335,996 2,356
Increase (decrease) in
net assets resulting
<PAGE>
<PAGE>
from unit transactions 3,694,332 2,606,556
INCREASE (DECREASE) IN 4,180,063 2,746,440
NET ASSETS
NET ASSETS:
Beginning of period 2,746,440
End of period $ 2,746,440 6,926,503
(G) The Investment Division commenced operations on January
5, 1995.
(I) The Investment Division commenced operations on
February 2, 1995.
See notes to financial statements. (Continued)
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995 (CONTINUED . . .)
International Equity
Investment Division
1996 1995
FROM OPERATIONS:
Net investment income $ 672,932 $ 135,859
(loss)
Net realized gain 612,767 (24,131)
(loss) on investments
Net change in
unrealized appreciation
(depreciation) on 3,632,539 1,130,221
investments
Increase (decrease) in
net assets resulting
from operations 4,918,238 1,241,949
FROM UNIT TRANSACTIONS (by category):
Variable annuity
contract:
Purchase payments
5,166,924 5,781,016
688,928 42,885
Redemptions
(937,886) (589,919)
(173,765) (2,000)
Net transfers from
(to) other annuity
contracts
3,172,831 899,778
2,295,108 2,915,034
Increase (decrease) in
net assets resulting
from unit transactions 10,212,140 9,046,794
<PAGE>
<PAGE>
INCREASE (DECREASE) IN 15,130,378 10,288,743
NET ASSETS
NET ASSETS:
Beginning of period 21,575,133 11,286,390
End of period $ 36,705,511 $ 21,575,133
(G) The Investment Division commenced operations on January
5, 1995.
(I) The Investment Division commenced operations on
February 2, 1995.
See notes to financial statements. (continued)
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995 (CONTINUED . . .)
INVESCO ADR
Investment Division (G)
1996 1995
FROM OPERATIONS:
Net investment income $ 4,209 $ 81
(loss)
Net realized gain
(loss) on investments 51,074 656
Net change in
unrealized appreciation
(depreciation) on
investments 217,175 15,167
Increase (decrease) in
net assets resulting
from operations 272,458 15,904
FROM UNIT TRANSACTIONS (by category):
Variable annuity
contract:
Purchase payments
309,810 75,172
356,285 237
Redemptions
(7,556) (4,719)
(351)
Net transfers from (to)
other annuity contracts
959,824 173,776
467,272 11,225
Increase (decrease) in
net assets resulting
from unit transactions 2,085,284 255,691
<PAGE>
<PAGE>
INCREASE (DECREASE) IN 2,357,742 271,595
NET ASSETS
NET ASSETS:
Beginning of period 271,595
End of period $ 2,629,337 $ 271,595
(G) The Investment Division commenced operations on January
5, 1995.
(I) The Investment Division commenced operations on
February 2, 1995.
See notes to financial statements. (continued)
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995
INVESCO INVESCO Small-Cap Growth
Balanced
Investment Investment Division (H)
Division (J)
<S> <C> <C> <C>
1996 1996 1995
FROM OPERATIONS:
Net investment income $ 1,136 $ 1,507,209 $84,867
(loss)
Net realized gain (loss) 13 869,697 5,225
on investments
Net change in unrealized
appreciation (deprecia-
tion) on investments (522) (1,294,678) 166,242
Increase (decrease) in
net assets resulting
resulting from operations 627 1,082,228 256,334
FROM UNIT TRANSACTIONS (by category):
Variable annuity
contract:
Purchase payments
1,253 2,352,783 652,960
422 461,780 6,746
Redemptions
(206,098) (81,754)
(24,167)
Net transfers from (to)
other annuity contracts
226,833 6,836,995 1,945,259
42,761 1,355,405 242,080
Increase (decrease) in
net assets resulting
from unit transactions 271,269 10,776,698 2,765,291
<PAGE>
<PAGE>
INCREASE (DECREASE) IN NET 271,896 11,858,926 3,021,625
ASSETS
NET ASSETS:
Beginning of period 3,021,625
End of period $271,89 $614,880,551 $3,021,625
(H) The investment division commenced
operations on December 4, 1995.
(J) The investment division commenced
operations on October 31, 1996.
See notes to financial
statements. (Continued)
<PAGE>
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995 (CONTINUED . . .)
Mid-Cap
Investment Division
1996 1995
FROM OPERATIONS:
Net investment income $ (369,250) $ 441,199
(loss)
Net realized gain (loss) 1,545,637 36,835
on investments
Net change in unrealized
appreciation (deprecia-
tion) on investments (232,275) 3,559,183
Increase (decrease) in
net assets resulting
from operations 944,112 4,037,217
FROM UNIT TRANSACTIONS (by category):
Variable annuity
contract:
Purchase payments
7,335,055 6,167,319
1,012,396 34,500
Redemptions
(1,639,464) (470,569)
(125,009)
Net transfers from (to)
other annuity contracts
4,960,718 5,186,537
2,714,802 1,906,503
Increase (decrease) in
net assets resulting
from unit transactions 14,258,498 12,824,290
INCREASE (DECREASE) IN NET 15,202,610 16,861,507
ASSETS
NET ASSETS:
Beginning of period 25,509,793 8,648,286
<PAGE>
<PAGE>
End of period $40,712,403 $25,509,793
(H) The investment division commenced
operations on December 4, 1995.
(J) The investment division commenced
operations on October 31, 1996.
See notes to financial
statements. (Continued)
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995
Money Market
Investment Division
<S> <C> <C>
1996 1995
FROM OPERATIONS:
Net investment income $ 1,951,644 $ 1,661,349
(loss)
Net realized gain 4,993
(loss) on investments
Net change in
unrealized appreciation
(depreciation) on (5,000)
investments
Increase (decrease) in
net assets resulting
from operations 1,951,637 1,661,349
FROM UNIT TRANSACTIONS (by
category):
Variable annuity
contract:
Purchase payments
1.25 6,792,919 9,733,808
0.95 477,308 54,828
Redemptions
1.25 (11,581,496) (8,569,592)
0.95 (938,770)
Net transfers from (to)
other annuity contracts
1.25 9,186,279 9,017,657
0.95 2,231,941 1,640,292
<PAGE>
<PAGE>
Increase (decrease) in
net assets resulting
from unit transactions 6,168,181 11,876,993
INCREASE (DECREASE) IN
NET ASSETS 8,119,818 13,538,342
NET ASSETS:
Beginning of period 50,557,017 37,018,675
End of period $58,676,835 $50,557,017
See notes to financial (Continued)
statements.
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995 (CONTINUED . . .)
Small-Cap Index
Investment Division
1996 1995
FROM OPERATIONS:
Net investment income $ 556,880 $ 79,147
(loss)
Net realized gain 369,918 13,032
(loss) on investments
Net change in
unrealized appreciation
(depreciation) on (128,525) 508,944
investments
Increase (decrease) in
net assets resulting
from operations 798,273 601,123
FROM UNIT TRANSACTIONS (by
category):
Variable annuity
contract:
Purchase payments
1,101,199 859,915
295,598 12,222
Redemptions
(164,979) (69,840)
(4,532)
Net transfers from (to)
other annuity contracts
1,347,582 676,471
389,964 725,484
Increase (decrease)
in net assets
resulting from 2,964,832 2,204,252
unit transactions
<PAGE>
<PAGE>
INCREASE (DECREASE) IN
NET ASSETS 3,763,105 2,805,375
NET ASSETS:
Beginning of period 4,254,754 1,449,379
End of period $8,017,859 $4,254,754
See notes to financial (Continued)
statements.
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995 (CONTINUED . . .)
Small-Cap Value
Investment Division
1996 1995
FROM OPERATIONS:
Net investment $ (1,151) $ 17,527
income (loss)
Net realized gain 8,216 981
(loss) on investments
Net change in
unrealized appreciation
(depreciation) 56,898 3,915
on investments
Increase (decrease)
in net assets
resulting from 63,963 22,423
operations
FROM UNIT TRANSACTIONS (by
category):
Variable annuity
contract:
Purchase
payments
167,149 44,436
6,769
Redemptions
(10,398) (155)
(1,835)
Net transfers from
(to) other
annuity contracts
(47,949) 291,267
11,271 1,682
Increase (decrease)
in net assets
<PAGE>
<PAGE>
resulting from 125,007 337,230
unit transactions
INCREASE (DECREASE) IN
NET ASSETS 188,970 359,653
NET ASSETS:
Beginning of period 359,653
End of period $ 548,623 $359,653
See notes to financial (Continued)
statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995
Stock Index
Investment
Division
<S> <C> <C>
1996 1995
FROM OPERATIONS:
Net investment income $2,691,090 $ 3,639,020
(loss)
Net realized gain 26,200,811 939,850
(loss) on investments
Net change in
unrealized appreciation
(depreciation) on 32,068,655 65,708,126
investments
Increase (decrease)
in net assets
resulting from 60,960,556 70,286,996
operations
FROM UNIT TRANSACTIONS (by category):
Variable annuity
contract:
Purchase payments
1.25 20,179,723 21,090,186
0.95 1,160,454 37,063
Redemptions
1.25 (15,974,860) (13,550,775)
0.95 (815,701) (64,815)
Net transfers from
(to) other
annuity contracts
1.25 6,075,912 (5,650,367)
0.95 11,975,501 9,554,596
Increase (decrease)
in net assets resulting
<PAGE>
<PAGE>
from unit 22,601,029 11,415,888
transactions
INCREASE (DECREASE) IN 83,561,585 81,702,884
NET ASSETS
NET ASSETS:
Beginning of period 288,886,331 207,183,447
End of period $372,447,916 $288,886,331
See notes to financial statements.
(Continued)
<PAGE>
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995 (CONTINUED . . .)
T. Rowe Price
Equity/Income
Investment Division
1996 1995
FROM OPERATIONS:
Net investment income $ 726,190 $ 98,329
(loss)
Net realized gain 208,029 (919)
(loss) on investments
Net change in
unrealized appreciation
(depreciation) on 2,026,715 662,891
investments
Increase (decrease) in
net assets
resulting from 2,960,934 760,301
operations
FROM UNIT TRANSACTIONS (by category):
Variable annuity
contract:
Purchase payments
4,332,217 1,224,629
545,683 2,724
Redemptions
(377,042) (167,053)
(35,297)
Net transfers from
(to) other
annuity contracts
12,285,188 5,165,135
2,598,762 10,767
Increase (decrease) in
net assets resulting
from unit 19,349,511 6,236,202
transactions
<PAGE>
<PAGE>
INCREASE (DECREASE) IN NET 22,310,445 6,996,503
ASSETS
NET ASSETS:
Beginning of period 7,159,723 163,220
End of period $29,470,168 $7,159,723
See notes to financial statements. (Continued)
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995 (CONTINUED . . .)
Total Return
Investment Division
1996 1995
FROM OPERATIONS:
Net investment income $ 310,515 $ 98,044
(loss)
Net realized gain 88,556 610
(loss) on investments
Net change in
unrealized appreciation
(depreciation) on 17,098 168,092
investments
Increase (decrease) in
net assets
resulting from 416,169 266,746
operations
FROM UNIT TRANSACTIONS (by category):
Variable annuity
contract:
Purchase payments
811,035 450,232
69,934 2,569
Redemptions
(62,676) (13,622)
(21,847)
Net transfers from
(to) other
annuity contracts
1,274,846 1,234,959
175,566 46,541
Increase (decrease) in
net assets resulting
from unit 2,246,858 1,720,679
transactions
<PAGE>
<PAGE>
INCREASE (DECREASE) IN NET 2,663,027 1,987,425
ASSETS
NET ASSETS:
Beginning of period 2,550,012 562,587
End of period $ 5,213,039 $ 2,550,012
See notes to financial (continued)
statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995
U.S. Government Securities
Investment Division
<S> <C> <C>
1996 1995
FROM OPERATIONS:
Net investment income $1,994,535 $ 1,799,538
(loss)
Net realized gain (2,998,214) 16,105
(loss) on investments
Net change in
unrealized appreciation
(depreciation) on 2,046,926 2,562,425
investments
Increase (decrease) in
net assets
resulting from 1,043,247 4,378,068
operations
FROM UNIT TRANSACTIONS (by category):
Variable annuity
contract:
Purchase payments
1.25 4,307,256 5,318,730
0.95 118,343 4,443
Redemptions
1.25 (2,952,145) (2,106,664)
0.95 (54,935)
Net transfers from
(to) other
annuity contracts
1.25 (463,788) 1,765,151
0.95 739,238 394,083
Increase (decrease) in
net assets resulting
<PAGE>
<PAGE>
from unit 1,693,969 5,375,743
transactions
INCREASE (DECREASE) IN NET 2,737,216 9,753,811
ASSETS
NET ASSETS:
Beginning of period 39,293,024 29,539,213
End of period $42,030,240 $ 39,293,024
See notes to financial
statements.
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995 (CONTINUED . . .)
TCI Balanced
Investment Division
1996 1995
FROM OPERATIONS:
Net investment income $ 1,491,581 $ 464,131
(loss)
Net realized gain 1,338,172 36,664
(loss) on investments
Net change in
unrealized appreciation
(depreciation) on 1,868,291 5,751,111
investments
Increase (decrease) in
net assets
resulting from 4,698,044 6,251,906
operations
FROM UNIT TRANSACTIONS (by category):
Variable annuity
contract:
Purchase payments
4,601,128 5,757,119
278,305 12,547
Redemptions
(2,842,798) (2,015,728)
(85,956) (4,000)
Net transfers from
(to) other
annuity contracts
(574,846) (298,270)
1,395,005 845,265
Increase (decrease) in
net assets resulting
from unit 2,770,838 4,296,933
transactions
<PAGE>
<PAGE>
INCREASE (DECREASE) IN NET 7,468,882 10,548,839
ASSETS
NET ASSETS:
Beginning of period 41,714,459 31,165,620
End of period $49,183,341 41,714,459
See notes to financial
statements.
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995 (CONTINUED . . .)
TCI Growth
Investment Division
1996 1995
FROM OPERATIONS:
Net investment income $7,859,011 $ (730,971)
(loss)
Net realized gain 4,172,683 (42,295)
(loss) on investments
Net change in
unrealized appreciation
(depreciation) on (16,089,361) 16,202,614
investments
Increase (decrease) in
net assets
resulting from (4,057,667) 15,429,348
operations
FROM UNIT TRANSACTIONS (by category):
Variable annuity
contract:
Purchase payments
8,861,006 11,572,719
757,115 30,220
Redemptions
(4,506,609) (2,926,025)
(343,302) (2,000)
Net transfers from
(to) other
annuity contracts
(10,278,006) (1,083,104)
2,530,046 2,891,180
Increase (decrease) in
net assets resulting
from unit (2,979,750) 10,482,990
transactions
<PAGE>
<PAGE>
INCREASE (DECREASE) IN NET (7,037,417) 25,912,338
ASSETS
NET ASSETS:
Beginning of period 76,896,866 50,984,528
End of period $69,859,449 $76,896,866
See notes to financial (Continued)
statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 and 1995
Total
FutureFunds
<S> <C> <C>
1996 1995
FROM OPERATIONS:
Net investment income $24,390,174 $ 10,278,551
(loss)
Net realized gain 30,509,815 969,701
(loss) on investments
Net change in
unrealized appreciation
(depreciation) on 28,995,499 104,716,975
investments
Increase (decrease) in
net assets
resulting from 83,895,488 115,965,227
operations
FROM UNIT TRANSACTIONS (by category):
Variable annuity
contract:
Purchase payments
1.25 83,237,077 82,627,299
0.95 7,726,964 289,517
Redemptions
1.25 (46,796,325) (36,588,546)
0.95 (3,237,270) (116,815)
Net transfers from
(to) other
annuity contracts
1.25 42,179,010 27,417,970
0.95 33,548,430 25,999,734
Increase (decrease) in
net assets resulting
from unit 116,657,886 99,629,159
transactions
<PAGE>
<PAGE>
INCREASE (DECREASE) IN NET 200,553,374 215,594,386
ASSETS
NET ASSETS:
Beginning of period 654,243,493 438,649,107
End of period $854,796,867 $ 654,243,493
See notes to financial
statements.
</TABLE>
<PAGE>
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
1.HISTORY OF THE SERIES ACCOUNT
The FutureFunds Series Account of Great-West Life &
Annuity Insurance Company (the Series Account) is a
separate account of Great-West Life & Annuity Insurance
Company (the Company) and was established under Kansas
law on November 15, 1983. In 1990, the Series Account
was amended to conform to and comply with Colorado law in
connection with the Company's redomestication to the
State of Colorado. The Series Account is registered with
the Securities and Exchange Commission as a unit
investment trust under the provisions of the Investment
Company Act of 1940, as amended.
The Series Account has various investment divisions
which invest in shares of open-end management investment
companies as follows:
FutureFunds Series
Account
Investment Division Underlying Fund Investment
VIP Asset Manager Fidelity Investments - Variable Insurance
Products Fund/Asset Manager
VIP Growth Fidelity Investments - Variable Insurance
Products Fund/Growth
Bond Maxim Series Fund, Inc. - Bond
Corporate Bond Maxim Series Fund, Inc. - Corporate Bond
International Equity Maxim Series Fund, Inc. - International
Equity
INVESCO ADR Maxim Series Fund, Inc. - INVESCO ADR
INVESCO Balanced Maxim Series Fund, Inc. - INVESCO
Balanced
INVESCO Small-Cap Maxim Series Fund, Inc. - INVESCO Small-
Growth Cap Growth
Mid-Cap Maxim Series Fund, Inc. - Mid-Cap
Money Market Maxim Series Fund, Inc. - Money Market
Small-Cap Index Maxim Series Fund, Inc. - Small-Cap Index
Small-Cap Value Maxim Series Fund, Inc. - Small-Cap Value
Stock Index Maxim Series Fund, Inc. - Stock Index
T. Rowe Price Maxim Series Fund, Inc. - T. Rowe Price
Equity/Income Equity/Income
<PAGE>
<PAGE>
Total Return Maxim Series Fund, Inc. - Total Return
U.S. Government Maxim Series Fund, Inc. - U.S. Government
Securities Securities
TCI Balanced TCI Portfolios, Inc. - TCI Balanced
TCI Growth TCI Portfolios, Inc. - TCI Growth
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting
policies of the Series Account which are in accordance
with the accounting principles generally accepted in the
investment company industry:
a.Security Transactions - Security transactions are
recorded on the trade date. Cost of investments
sold is determined on the basis of identified cost.
Dividend income is accrued as of the ex-dividend
date and expenses are accrued on a daily basis.
b.Security Valuation - The investments in shares of
the underlying funds are valued at the closing net
asset value per share as determined by each
portfolio at year end.
The cost of investments represents shares of the
underlying funds which were purchased by the Series
Account. Purchases are made at the net asset value
from net purchase payments or through reinvestment
of all distributions from the underlying funds.
c.Federal Income Taxes - The Series Account income is
automatically applied to increase contract reserves.
Under the existing federal income tax law, this
income is not taxed to the extent that it is applied
to increase reserves under a contract. The Company
reserves the right to charge the Series Account for
federal income taxes attributed to the Series
Account if such taxes are imposed in the future.
3.CHARGES UNDER THE CONTRACTS
a.Contract Maintenance Charge - To compensate the
Company for administrative services, a contract
maintenance charge of not more than $60 is deducted
from each participant's account on the first day of
each calendar year. If the account is established
after the beginning of the year, the charge is
deducted on the first day of the next calendar
<PAGE>
<PAGE>
quarter and is prorated for the portion of the year
remaining.
b.Charges Incurred for Total or Partial Surrenders -
Pursuant to the contract, charges will be made for
total or partial surrenders of a contract in excess
of the "free amount" before the retirement date by a
deduction from a participant's account. The "free
amount" is an amount equal to 10% of the participant
account value at December 31 of the calendar year
prior to the partial or total surrender.
c.Deductions for Premium Taxes-The Company presently
intends to pay any premium tax levied by any
governmental entity as a result of the existence of
the participant accounts or the Series Account.
d.Deductions for Assumption of Mortality and Expense
Risk - The Company deducts an amount, computed
daily, from the net asset value of the Series
Account investments, equal to an annual rate of
1.25% or .95% depending on the size of the contract.
This charge is designed to compensate the Company
for its assumption of certain mortality, death
benefit and expense risks. The level of this charge
is guaranteed and will not change.
4.RELATED PARTY SERVICES
The Company's parent, The Great-West Life Assurance
Company, served as investment advisor to Maxim Series
Fund, Inc. through October 31, 1996. Effective November
1, 1996 a wholly-owned subsidiary of the Company, GW
Capital Management, Inc., serves as investment advisor.
Fees are assessed against the average daily net asset
value of the Funds to compensate GW Capital Management,
Inc. for investment advisory services.
5.COMPONENTS OF NET ASSETS APPLICABLE TO OUTSTANDING UNITS
OF CAPITAL
The following is a summary of the net assets applicable
to outstanding units of capital at December 31, 1995, for
each investment division.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Units Unit Value
<S> <C> <C>
NET ASSETS APPLICABLE TO
OUTSTANDING
UNITS OF CAPITAL:
Investment Division:
VIP - Asset Manager 1.25 1,593,034.532048 $ 12.173807
VIP - Asset Manager 0.95 220,279.353412 11.909808
VIP - Growth 1.25 2,500,808.024237 14.570949
VIP - Growth 0.95 463,651.691749 10.930866
Bond 1.25 1,890,635.840426 26.816459
Bond 0.95 287,152.674053 10.444063
Corporate Bond 1.25 478,757.712305 13.551196
Corporate Bond 0.95 38,958.690064 11.262265
International Equity 1.25 2,249,181.670111 13.329544
International Equity 0.95 548,157.843590 12.268266
INVESCO ADR 1.25 126,363.180616 13.457520
INVESCO ADR 0.95 74,310.251149 12.498977
INVESCO Balanced 1.25 22,568.188503 10.133022
INVESCO Balanced 0.95 4,262.656063 10.137158
INVESCO Small-Cap 776,719.678282 16.383676
Growth 1.25
INVESCO Small-Cap 159,393.336731 13.520190
Growth 0.95
Mid-Cap 1.25 2,440,068.068815 14.335311
Mid-Cap 0.95 528,556.228345 10.847035
Money Market 1.25 3,129,281.921431 17.604422
Money Market 0.95 343,499.435115 10.444371
Small-Cap Index 1.25 477,902.349582 13.460724
Small-Cap Index 0.95 132,987.331390 11.918033
Small-Cap Value 1.25 39,184.703146 13.484673
Small-Cap Value 0.95 1,652.649767 12.241160
Stock Index 1.25 7,884,581.786997 43.995045
Stock Index 0.95 2,057,207.664451 12.427225
T. Rowe Price Equity/ 1,702,863.668617 15.301880
Income 1.25
T. Rowe Price Equity/ 276,648.631356 12.337499
Income 0.95
<PAGE>
<PAGE>
Total Return 1.25 382,179.837700 12.869282
Total Return 0.95 26,145.881017 11.269814
U.S. Government 3,234,023.683292 12.608651
Securities 1.25
U.S. Government 119,989.126585 10.447315
Securities 0.95
TCI Balanced 1.25 3,238,207.892718 14.357172
TCI Balanced 0.95 237,929.348328 11.313106
TCI Growth 1.25 4,560,706.323270 14.111067
TCI Growth 0.95 585,432.854709 9.399910
TOTAL
<PAGE>
<PAGE>
<PAGE>
Total Variable
Annuity
Contract
Liabilities
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL:
Investment Division:
VIP - Asset Manager 1.25 $ 19,393,294
VIP - Asset Manager 0.95 2,623,441
VIP - Growth 1.25 36,439,147
VIP - Growth 0.95 5,068,115
Bond 1.25 50,700,158
Bond 0.95 2,999,041
Corporate Bond 1.25 6,487,740
Corporate Bond 0.95 438,763
International Equity 1.25 29,980,565
International Equity 0.95 6,724,946
INVESCO ADR 1.25 1,700,535
INVESCO ADR 0.95 928,802
INVESCO Balanced 1.25 228,685
INVESCO Balanced 0.95 43,211
INVESCO Small-Cap 12,725,523
Growth 1.25
INVESCO Small-Cap 2,155,028
Growth 0.95
Mid-Cap 1.25 34,979,135
Mid-Cap 0.95 5,733,268
Money Market 1.25 55,089,200
Money Market 0.95 3,587,635
Small-Cap Index 1.25 6,432,912
Small-Cap Index 0.95 1,584,947
Small-Cap Value 1.25 528,393
Small-Cap Value 0.95 20,230
Stock Index 1.25 346,882,534
Stock Index 0.95 25,565,382
T. Rowe Price Equity/ 26,057,016
Income 1.25
T. Rowe Price Equity/ 3,413,152
Income 0.95
Total Return 1.25 4,918,380
Total Return 0.95 294,659
U.S. Government 40,776,676
Securities 1.25
<PAGE>
<PAGE>
U.S. Government 1,253,564
Securities 0.95
TCI Balanced 1.25 46,491,508
TCI Balanced 0.95 2,691,833
TCI Growth 1.25 64,356,433
TCI Growth 0.95 5,503,016
TOTAL $ 854,796,867
</TABLE>
<PAGE>
<PAGE>
6. SELECTED DATA
The following is a summary of selected data for a unit of
capital of the Series Account at the beginning and end of
the year and the number of units outstanding at December
31, 1996, 1995, 1994, 1993, and 1992:
<TABLE>
<CAPTION>
VIP VIP
Asset Manager Asset Manager
<S> <C> <C>
1.25 0.95
1996 (D) (J)
Beginning Unit Value $ 10.76 $ 10.49
Ending Unit Value $ 12.17 $ 11.91
Number of Units 1,593,034.53 220,279.35
Outstanding
1995
Beginning Unit Value $ 9.31 $ 10.00
Ending Unit Value $ 10.76 $ 10.49
Number of Units 1,202,943.32 118,138.13
Outstanding
1994
Beginning Unit Value $ 10.00
Ending Unit Value $ 9.31
Number of Units 768,426.17
Outstanding
1993
Beginning Unit Value
<PAGE>
<PAGE>
Ending Unit Value
Number of Units
Outstanding
1992
Beginning Unit Value
Ending Unit Value
Number of Units
Outstanding
(D) The Investment Division commenced operations on April
21, 1994, at a unit value of $10.00.
(J) The Investment Division commenced operations on
December 4, 1995, at a unit value of $10.00.
(Continued)
<PAGE>
<PAGE>
VIP VIP
Growth Growth
1.25 0.95
1996 (D) (J)
Beginning Unit Value $ 12.86 $ 9.62
Ending Unit Value $ 14.57 $ 10.93
Number of Units 2,500,808.02 463,651.69
Outstanding
1995
Beginning Unit Value $ 9.62 $ 10.00
Ending Unit Value $ 12.86 $ 9.62
Number of Units 1,502,634.51 164,201.34
Outstanding
1994
Beginning Unit Value $ 10.00
Ending Unit Value $ 9.62
Number of Units 559,313.44
Outstanding
1993
Beginning Unit Value
Ending Unit Value
Number of Units
Outstanding
1992
Beginning Unit Value
Ending Unit Value
<PAGE>
<PAGE>
Number of Units
Outstanding
(D) The Investment Division commenced operations on April
21, 1994, at a unit value of $10.00.
(J) The Investment Division commenced operations on
December 4, 1995, at a unit value of $10.00.
(Continued)
<PAGE>
<PAGE>
Bond Bond
1.25 0.95
1996 (J)
Beginning Unit Value $ 26.05 $ 10.11
Ending Unit Value $ 26.82 $ 10.44
Number of Units Outstanding1,890,635.84 287,152.67
1995
Beginning Unit Value $ 22.89 $ 10.00
Ending Unit Value $ 26.05 $ 10.11
Number of Units Outstanding2,010,468.99 197,590.07
1994
Beginning Unit Value $ 23.74
Ending Unit Value $ 22.89
Number of Units Outstanding2,102,049.13
1993
Beginning Unit Value $ 22.14
Ending Unit Value $ 23.74
Number of Units Outstanding2,301,785.20
1992
Beginning Unit Value $ 21.10
Ending Unit Value $ 22.14
Number of Units Outstanding1,995,291.18
(D) The Investment Division commenced operations on April
21, 1994, at a unit value of $10.00.
<PAGE>
<PAGE>
(J) The Investment Division commenced operations on
December 4, 1995, at a unit value of $10.00.
(Continued)
<PAGE>
<PAGE>
6. SELECTED DATA (continued)
Corporate Corporate International
Bond Bond Equity
1.25 0.95 1.25
1996 (I) (J) (B)
Beginning Unit Value $ 12.44 $ 10.30 $ 11.29
Ending Unit Value $ 13.55 $ 11.26 $ 13.33
Number of Units Outstanding 478,757.71 38,958.69 2,249,181.67
1995
Beginning Unit Value $ 10.00 $ 10.00 $ 10.49
Ending Unit Value $ 12.44 $ 10.30 $ 11.29
Number Units Outstanding 220,637.10 269.42 1,645,237.34
1994
Beginning Unit Value $ 10.00
Ending Unit Value $ 10.49
Number of Units Outstanding 1,075,821.94
1993
Beginning Unit Value
Ending Unit Value
Number of Units Outstanding
1992
Beginning Unit Value
Ending Unit Value
<PAGE>
<PAGE>
Number of Units Outstanding
(B) The Investment Division commenced operations on April
13, 1994, at a unit value of $10.00.
(G) The Investment Division commenced operations on
January 5, 1995, at a unit value of $10.00.
(I) The Investment Division commenced operations on
February 2, 1995, at a unit value of $10.00.
(J) The Investment Division commenced operations on
December 4, 1995, at a unit value of $10.00.
continued
<PAGE>
<PAGE>
<PAGE>
6.SELECTED DATA (continued)
International INVESCO INVESCO
Equity ADR ADR
0.95 1.25 0.95
1996 (J) (G) (J)
Beginning Unit Value $ 10.36 $ 11.25 $ 10.41
Ending Unit Value $ 12.27 $ 13.46 $ 12.50
Number of Units Outstanding 548,157.84 126,363.18 74,310.25
1995
Beginning Unit Value $ 10.00 $ 10.00 $ 10.00
Ending Unit Value $ 10.36 $ 11.25 $ 10.41
Number of Units Outstanding 290,190.44 23,104.73 1,130.83
1994
Beginning Unit Value
Ending Unit Value
Number of Units Outstanding
1993
Beginning Unit Value
Ending Unit Value
Number of Units Outstanding
1992
Beginning Unit Value
Ending Unit Value
<PAGE>
<PAGE>
Number of Units Outstanding
(B) The Investment Division commenced operations on April
13, 1994, at a unit value of $10.00.
(G) The Investment Division commenced operations on
January 5, 1995, at a unit value of $10.00.
(I) The Investment Division commenced operations on
February 2, 1995, at a unit value of $10.00.
(J) The Investment Division commenced operations on
December 4, 1995, at a unit value of $10.00.
Continued
<PAGE>
<PAGE>
<PAGE>
6. SELECTED DATA (continued)
</TABLE>
<TABLE>
<CAPTION>
INVESCO
INVESCO INVESCO Small-Cap
Balanced Balanced Growth
1.25 0.95 1.25
1996 (K) (K) (H)
<S> <C> <C> <C>
Beginning Unit Value 10.00 10.00 $13.09
Ending Unit Value 10.13 10.14 $16.38
Number of Units Outstanding 22,568.19 4,262.66 776,719.68
1995
Beginning Unit Value $ 10.00
Ending Unit Value $13.09
Number of Units Outstanding 210,982.04
1994
Beginning Unit Value
Ending Unit Value
Number of Units Outstanding
1993
Beginning Unit Value
Ending Unit Value
Number of Units Outstanding
1992
Beginning Unit Value
Ending Unit Value
Number of Units Outstanding
</TABLE>
(B) The Investment Division operation on April
13, 1994, at a unit value of $10.00.
(H) The Investment Division commenced
operations on January 9, 1995, at a unit
value of $10.00.
<PAGE>
<PAGE>
(J) The Investment Division commenced
operations on December 4, 1995, at a unit
value of $10.00.
(K) The Investment Division commenced
operations on October 31, 1996, at a unit
value of $10.00.
(CONTINUED . . .)
<PAGE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO
Small-Cap
Growth Mid-Cap Mid-Cap
0.95 1.25 0.95
1996 (J) (B) (J)
<S> <C> <C> <C>
Beginning Unit Value $ 10.77 $ 13.70 $ 10.34
Ending Unit Value $ 13.52 $ 14.34 $ 10.85
Number of Units Outstanding 159,393.34 2,440,068.07 528,556.23
1995
Beginning Unit Value $ 10.00 $ 10.96 $ 10.00
Ending Unit Value $ 10.77 $ 13.70 $ 10.34
Number of Units Outstanding 24,147.18 1,715,174.42 194,687.27
1994
Beginning Unit Value $ 10.00
Ending Unit Value $ 10.96
Number of Units Outstanding 788,758.55
1993
Beginning Unit Value
Ending Unit Value
Number of Units Outstanding
1992
Beginning Unit Value
Ending Unit Value
Number of Units Outstanding
</TABLE>
(B) The Investment Division operation on
April 13, 1994, at a unit value of
$10.00.
(H) The Investment Division commenced
operations on January 9, 1995, at a
unit value of $10.00.
(J) The Investment Division commenced
operations on December 4, 1995, at a
unit value of $10.00.
<PAGE>
<PAGE>
(K) The Investment Division commenced
operations on October 31, 1996, at a
unit value of $10.00.
<PAGE>
<PAGE>
6. SELECTED DATA (continued)
<TABLE>
<CAPTION>
Money Money Small-Cap
Market Market Index
1.25 0.95 1.25
1996 (J) (A)
<S> <C> <C> <C>
Beginning Unit Value $ 16.96 $ 10.04 $ 11.82
Ending Unit Value $ 17.60 $ 10.44 $ 13.46
Number of Units Outstanding 3,129,281.92 334,499.44 477,902.35
1995
Beginning Unit Value $ 16.25 $ 10.00 $ 9.48
Ending Unit Value $ 16.96 $ 10.04 $ 11.82
Number of Units Outstanding 2,880,571.67 169,096.04 296,281.36
1994
Beginning Unit Value $ 15.84 $ 10.00
Ending Unit Value $ 16.25 $ 9.48
Number of Units Outstanding 2,277,816.08 152,895.00
1993
Beginning Unit Value $ 15.60
Ending Unit Value $ 15.84
Number of Units Outstanding 684,668.93
1992
Beginning Unit Value $ 15.26
Ending Unit Value $ 15.60
Number of Units Outstanding 787,941.29
</TABLE>
(A) The Investment Division commenced
operations on March 15, 1994, at a unit
value of $10.00.
(E) The Investment Division commenced
operations on November 4, 1994, at a unit
value of $10.00.
<PAGE>
<PAGE>
(J) The Investment Division commenced
operations on December 4, 1995, at a unit
value of $10.00.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Small-Cap Small-Cap Small-Cap
Index Value Value
0.95 1.25 1.25
1996 (J) (E) (J)
<S> <C> <C> <C>
Beginning Unit Value $ 10.43 $ 11.58 $ 10.48
Ending Unit Value $ 11.92 $ 13.48 $ 12.24
Number of Units Outstanding 132,987.33 39,184.70 1,652.65
1995
Beginning Unit Value $ 10.00 $ 10.15 $ 10.00
Ending Unit Value $ 10.43 $ 11.58 $ 10.48
Number of Units Outstanding 72,120.51 30,919.44 164.60
1994
Beginning Unit Value $ 10.00
Ending Unit Value $ 10.15
Number of Units Outstanding 0.01
1993
Beginning Unit Value
Ending Unit Value
Number of Units Outstanding
1992
Beginning Unit Value
Ending Unit Value
Number of Units Outstanding
</TABLE>
(A) The Investment Division commenced
operations on March 15, 1994, at a unit
value of $10.00.
(E) The Investment Division commenced
operations on November 4, 1994, at a unit
value of $10.00.
<PAGE>
<PAGE>
(J) The Investment Division commenced
operations on December 4, 1995, at a unit
value of $10.00.
<PAGE>
<PAGE>
6. SELECTED DATA (continued)
<TABLE>
<CAPTION>
Stock Stock T. Rowe
Price
Index Index
Equity/Income
1.25 0.95 1.25
1996 (J) (F)
<S> <C> <C> <C>
Beginning Unit Value $ 36.57 $ 10.30 $ 12.98
Ending Unit Value $ 44.00 $ 12.43 $ 15.30
Number of Units Outstanding 7,884,581.79 2,057,207.66 1,702,863.67
1995
Beginning Unit Value $ 27.30 $ 10.00 $ 9.85
Ending Unit Value $ 36.57 $ 10.30 $ 12.98
Number of Units Outstanding 7,636,165.40 937,180.75 550,610.66
1994
Beginning Unit Value $ 27.61 $ 10.00
Ending Unit Value $ 27.30 $ 9.85
Number of Units Outstanding 7,589,448.89 16,574.29
1993
Beginning Unit Value $ 25.44
Ending Unit Value $ 27.61
Number of Units Outstanding 9,325,064.15
1992
Beginning Unit Value $ 24.33
Ending Unit Value $ 25.44
Number of Units Outstanding 8,106,010.86
</TABLE>
(C) The Investment Division commenced
operations on April 20, 1994, at a unit
value of $10.00.
(F) The Investment Division commenced
operations on November 9, 1994, at a unit
value of $10.00.
<PAGE>
<PAGE>
<PAGE>
(J) The Investment Division commenced
operations on December 4, 1995, at a unit
value of $10.00.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
T. Rowe Price Total Total
Equity/Income Return Return
0.95 1.25 0.95
1996 (J) (C) (J)
<S> <C> <C> <C>
Beginning Unit Value $ 10.43 $ 11.66 $
10.18
Ending Unit Value $ 12.34 $ 12.87 $
11.27
Number of Units Outstanding 276,648.63 382,179.84
26,145.88
1995
Beginning Unit Value $ 10.00 $ 9.62 $
10.00
Ending Unit Value $ 10.43 $ 11.66 $
10.18
Number of Units Outstanding 1,324.94 214,442.71
4,862.59
1994
Beginning Unit Value $ 10.00
Ending Unit Value $ 9.62
Number of Units Outstanding 58,473.26
1993
Beginning Unit Value
Ending Unit Value
Number of Units Outstanding
1992
Beginning Unit Value
Ending Unit Value
Number of Units Outstanding
</TABLE>
(C) The Investment Division commenced
operations on April 20, 1994, at a unit
value of $10.00.
(F) The Investment Division commenced
operations on November 9, 1994, at a unit
<PAGE>
value of $10.00.
<PAGE>
<PAGE>
(J) The Investment Division commenced
operations on December 4, 1995, at a unit
value of $10.00.
<PAGE>
<PAGE>
6. SELECTED DATA (continued)
<TABLE>
<CAPTION>
U.S. U.S.
Government Government
TCI
Securities Securities
Balanced
1.25 0.95 1.25
1996 (J)
<S> <C> <C> <C>
Beginning Unit Value $ 12.29 $ 10.15 $ 12.96
Ending Unit Value $ 12.61 $ 10.45 $ 14.36
Number of Units Outstanding 3,234,023.68 119,989.13 3,238,207.89
1995
Beginning Unit Value $ 10.71 $ 10.00 $ 10.83
Ending Unit Value $ 12.29 $ 10.15 $ 12.96
Number of Units Outstanding 3,165,425.83 39,695.16 3,153,172.39
1994
Beginning Unit Value $ 11.21 $ 10.90
Ending Unit Value $ 10.71 $ 10.83
Number of Units Outstanding 2,756,894.60 2,877,738.22
1993
Beginning Unit Value $ 10.38 $ 10.25
Ending Unit Value $ 11.21 $ 10.90
Number of Units Outstanding 1,892,295.35 1,752,730.91
1992
Beginning Unit Value $ 10.00 $ 10.00
Ending Unit Value $ 10.38 $ 10.25
Number of Units Outstanding 251,644.29 473,967.51
</TABLE>
(J) The Investment Division commenced
operations on December 4, 1995, at a unit
value of $10.00.
<PAGE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
TCI TCI TCI
Balanced Growth Growth
0.95 1.25 0.95
1996 (J) (J)
<S> <C> <C> <C>
Beginning Unit Value $ 10.18 $ 14.93 $
9.92
Ending Unit Value $ 11.31 $ 14.11 $
9.40
Number of Units Outstanding 237,929.35 4,560,706.32
585,432.85
1995
Beginning Unit Value $ 10.00 $ 11.53 $
10.00
Ending Unit Value $ 10.18 $ 14.93 $
9.92
Number of Units Outstanding 84,634.10 4,954,474.12
292,581.15
1994
Beginning Unit Value $ 11.82
Ending Unit Value $ 11.53
Number of Units Outstanding 4,420,493.64
1993
Beginning Unit Value 10.85
Ending Unit Value 11.82
Number of Units Outstanding 2,607,850.29
1992
Beginning Unit Value $10.00
Ending Unit Value $ 10.85
Number of Units Outstanding $647,465.54
</TABLE>
(J) The Investment Division commenced
operations on December 4, 1995, at a unit
value of $10.00.
(CONCLUDED . . .)
<PAGE>
<PAGE>
<PAGE>
7. CHANGE IN SHARES
The following is a summary of the net change in total
investment shares held in each of the respective underlying
funds:
<TABLE>
<CAPTION>
For the year ended
December 31,
<S> <C>
1996
Fidelity Investments - VIP Asset Manager 400,002
Fidelity Investments - VIP Growth 623,502
Maxim Series Fund, - Bond 723,506
Inc.
Maxim Series Fund, - Corporate Bond 3,811,747
Inc.
Maxim Series Fund, - International Equity 9,049,497
Inc.
Maxim Series Fund, - INVESCO ADR 1,652,269
Inc.
Maxim Series Fund, - INVESCO Balanced 200,662
Inc.
Maxim Series Fund, - INVESCO Small-Cap 7,884,395
Inc. Growth
Maxim Series Fund, - Mid-Cap 9,949,156
Inc.
Maxim Series Fund, - Money Market 13,156,91
Inc. 8
Maxim Series Fund, - Small-Cap Index 2,894,941
Inc.
Maxim Series Fund, - Small-Cap Value 93,128
Inc.
Maxim Series Fund, - Stock Index 12,694,53
Inc. 1
Maxim Series Fund, - T. Rowe Price 14,243,96
Inc. Equity/Income 9
Maxim Series Fund, - Total Return 1,927,590
Inc.
Maxim Series Fund, - U.S. Government 4,400,340
Inc. Securities
TCI Portfolios, Inc. - TCI Balanced 774,557
TCI Portfolios, Inc. - TCI Growth 556,746
</TABLE>
<PAGE>
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(A wholly-owned subsidiary of
The Great-West Life Assurance Company)
Consolidated Financial Statements for the
Years Ended December 31, 1996, 1995, and 1994
and Independent Auditors' Report
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder
of Great-West Life & Annuity Insurance Company:
We have audited the accompanying consolidated balance sheets
of Great-West Life & Annuity Insurance Company (a wholly-owned
subsidiary of The Great-West Life Assurance Company) and
subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of income, stockholder's equity, and
cash flows for each of the three years in the period ended
December 31, 1996. These financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits 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, such consolidated financial statements present
fairly, in all material respects, the financial position of
Great-West Life & Annuity Insurance Company and subsidiaries
as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
January 25, 1997
<PAGE>
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(Dollars in Thousands)
<TABLE>
<CAPTION>
ASSETS 1996 1995
<S> <C> <C>
INVESTMENTS:
Fixed Maturities:
Held-to-maturity, at amortized cost (fair $ 1,992,681 $2,054,204
value $2,041,064 and $2,158,043)
Available-for-sale, at fair value 6,206,478 6,263,187
(amortized
cost $6,151,519 and $6,087,969)
Common stock 19,715 9,440
Mortgage loans on real estate, net 1,487,575 1,713,195
Real estate, net 67,967 60,454
Policy loans 2,523,477 2,237,745
Short-term investments, available-for-sale 419,008 134,835
(cost approximates fair value)
Total Investments 12,716,901 12,473,060
Cash 125,182 90,939
Reinsurance receivable 196,958 333,924
Deferred policy acquisition costs 282,780 278,526
Investment income due and accrued 198,441 211,922
Other assets 57,244 40,038
Premiums in course of collection 74,693 85,990
Deferred income taxes 214,404 168,941
Separate account assets 5,484,631 3,998,878
TOTAL ASSETS $ 19,351,234 $17,682,218
See notes to consolidated financial
statements.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
<PAGE>
LIABILITIES AND STOCKHOLDER'S EQUITY 1996 1995
<S> <C> <C>
POLICY BENEFIT LIABILITIES:
Policy reserves $11,022,595 $10,845,935
Policy and contract claims 372,327 359,791
Policyholders' funds 153,867 154,872
Experience refunds 87,399 83,562
Provision for policyholders' dividends 51,279 47,760
GENERAL LIABILITIES:
Due to Parent Corporation 151,431 149,974
Repurchase agreements 286,736 375,299
Commercial paper 84,682 84,854
Other liabilities 488,818 451,555
Undistributed earnings on
participating business 133,255 136,617
Separate account liabilities 5,484,631 3,998,878
Total Liabilities 18,317,020 16,689,097
STOCKHOLDER'S EQUITY:
Preferred stock, $1 par value,
50,000,000 shares authorized:
Series A, cumulative, 1500 shares
authorized, liquidation value of
$100,000 per share, 600 shares
issued and outstanding 60,000 60,000
Series B, cumulative, 1500 shares
authorized, liquidation value of
$100,000 per share, 200 shares
issued and outstanding 20,000 20,000
Series C, cumulative, 1500 shares
authorized, none outstanding
Series D, cumulative, 1500 shares
authorized, none outstanding
Series E, non-cumulative, 2,000,000
shares authorized, liquidation
value of $20.90 per share, issued,
and outstanding 41,800 41,800
Common stock, $1 par value; 50,000,000
shares authorized;
7,032,000 shares issued and
outstanding 7,032 7,032
Additional paid-in capital 664,265 657,265
<PAGE>
<PAGE>
Net unrealized gains on securities 14,951 58,763
available-for-sale, net
Retained earnings 226,166 148,261
Total Stockholder's Equity 1,034,214 993,121
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $19,351,234 $ 17,682,218
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996,
1995, AND 1994
(Dollars in Thousands)
1996 1995 1994
<S> <C> <C> <C>
REVENUES:
Annuity contract charges and $91,881 $ 79,816 $ 61,122
premiums
Life, accident, and health
premiums earned (net of
premiums ceded totaling
$(104,250) , $60,880
and $48,115) 1,107,367 987,611 938,947
Net investment income 836,642 835,046 767,646
Net realized gains (losses) on (21,078) 7,465 (71,939)
investments
2,014,812 1,909,938 1,695,776
BENEFITS AND EXPENSES:
Life and other policy benefits
(net of reinsurance
recoveries totaling $52,675,
$43,574, and $18,937) 515,750 557,469 548,950
Increase in reserves 229,198 98,797 64,834
Interest paid or credited to
contractholders 561,786 562,263 529,118
Provision for policyholders'
share of earnings (losses)
on participating business (7) 2,027 (725)
Dividends to policyholders 49,237 48,150 42,094
1,355,964 1,268,706 1,184,271
Commissions 106,561 122,926 120,058
Operating expenses 336,719 314,810 261,311
Premium taxes 25,021 26,884 27,402
1,733,326 1,593,042 1,824,265
<PAGE>
<PAGE>
INCOME BEFORE INCOME TAXES 190,547 176,612 102,734
PROVISION FOR INCOME TAXES:
Current 77,134 88,366 65,070
Deferred (21,162) (39,434) (36,614)
55,972 48,932 28,456
NET INCOME $134,575 $ 127,680 $ 74,278
See notes to consolidated
financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(Dollars in Thousands)
Preferred Stock
Shares Amount
<S> <C> <C>
BALANCE, JANUARY 1, 1994 2,000,800 $121,800
Adjustment to beginning balance for
change in accounting method
for investment securities
Change in net unrealized gains
(losses)
Capital contributions
Dividends
Net income
BALANCE, DECEMBER 31, 1994 2,000,800 121,800
Change in net realized gains
(losses)
Dividends
Net income
BALANCE, DECEMBER 31, 1995 2,000,800 121,800
Change in net unrealized gains
(losses)
<PAGE>
<PAGE>
Capital contributions
Dividends
Net income
BALANCE, DECEMBER 31, 1996 2,000,800 $121,800
See notes to consolidated financial
statements.
<PAGE>
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(Dollars in Thousands) (continued)
Common Stock
Shares Amount
<S> <C> <C>
BALANCE, JANUARY 1, 1994 7,032,000 $7,032
Adjustment to beginning balance for
change in accounting method
for investment securities
Change in net unrealized gains
(losses)
Capital contributions
Dividends
Net income
BALANCE, DECEMBER 31, 1994 7,032,000 7,032
Change in net realized gains
(losses)
Dividends
Net income
BALANCE, DECEMBER 31, 1995 7,032,000 7,032
Change in net unrealized gains
(losses)
Capital contributions
Dividends
Net income
<PAGE>
BALANCE, DECEMBER 31, 1996 7,032,000 $7,032
See notes to consolidated financial
statements.
<PAGE>
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(Dollars in Thousands) (Continued)
Net
Additional Unrealized
Paid-In Gains
Capital (Losses)
<S> <C> <C>
BALANCE, JANUARY 1, 1994 $ 656,793 $ 0
Adjustment to beginning balance for
change in accounting method
for investment securities 6,515
Change in net unrealized gains
(losses) (84,942)
Capital contributions 472
Dividends
Net income
BALANCE, DECEMBER 31, 1994 657,265 (78,427)
Change in net realized gains
(losses) 137,190
Dividends
Net income
BALANCE, DECEMBER 31, 1995 657,265 58,763
Change in net unrealized gains
(losses) (43,812)
Capital contributions 7,000
Dividends
Net income
BALANCE, DECEMBER 31, 1996 664,265 $14,951
<PAGE>
See notes to consolidated financial
statements.
<PAGE>
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(Dollars in Thousands) (Continued)
Retained
Earnings
(Deficit) Total
<S> <C> <C>
BALANCE, JANUARY 1, 1994 $ 35,721 $821,346
Adjustment to beginning balance for
change in accounting method
for investment securities 6,515
Change in net unrealized gains
(losses) (84,942)
Capital contributions 472
Dividends (40,438) (40,438)
Net income 74,278 74,278
BALANCE, DECEMBER 31, 1994 69,561 777,231
Change in net realized gains
(losses) 137,190
Dividends (48,980) (48,980)
Net income 127,680 127,680
BALANCE, DECEMBER 31, 1995 148,261 993,121
Change in net unrealized gains
(losses) (43,812)
Capital contributions 7,000
Dividends (56,670) (56,670)
<PAGE>
Net income 134,575 134,575
BALANCE, DECEMBER 31, 1996 $226,166 $1,034,214
See notes to consolidated financial
statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995, AND
1994
(Dollars in Thousands)
1996 1995 1994
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 134,575 $127,680 $ 74,278
Adjustments to reconcile net
income to net cash provided by
operating activities:
Gain (loss) allocated to
participating policyholders (7) 2,027 (725)
Amortization of investments 15,518 26,725 36,978
Realized losses (gains) on
disposal of investments
and write-downs of mortgage
loans and real estate 21,078 (7,465) 71,939
Amortization 49,454 49,464 29,197
Deferred income taxes (20,258) (39,763) (38,631)
Changes in assets and
liabilities:
Policy benefit liabilities 358,393 346,975 93,998
Reinsurance receivable 136,966 (38,776) (25,868)
Accrued interest and other
receivables 24,778 (17,617) (26,032)
Other, net (8,076) 8,834 96,950
Net cash provided by
operating activities 712,421 458,084 312,084
INVESTING ACTIVITIES:
Proceeds from sales,
maturities, and redemption of
investments:
Fixed maturities
Held-to-maturity
Sales 18,821 16,014
<PAGE>
<PAGE>
Maturities and
redemptions 516,838 655,993 1,034,324
Available-for-sale
Sales 3,569,608 4,211,649 1,753,445
Maturities and
redemptions 803,369 253,747 141,299
Mortgage loans 235,907 260,960 291,102
Real estate 2,607 4,401 29,868
Common stock 1,888 178
Purchases of investments:
Fixed maturities
Held-to-maturity (453,787) (490,228) (673,567)
Available-for-sale (4,753,154) (4,932,566) (2,606,028)
Mortgage loans (23,237) (683) (9)
Real estate (15,588) (5,302) (9,253)
Common stock (12,113) (4,218) (2,063)
Net cash used in
investing activities (127,662) (27,426) (24,690)
(Continued)
<PAGE>
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(Dollars in Thousands)
1996 1995 1994
FINANCING ACTIVITIES:
Contract withdrawals, net of $(413,568) $ (217,190) $(238,166)
deposits
Due to Parent Corporation 1,457 (9,143) (13,078)
Dividends paid (56,670) (48,980) (40,438)
Net commercial paper (172) (4,832) 89,686
(repayments) borrowings
Net repurchase agreements (88,563) (191,195) (39,244)
repayments
Capital contributions 7,000
Net cash used in financing (550,516) (471,340) (241,240)
activities
NET INCREASE (DECREASE) IN CASH 34,243 (40,682) 46,154
CASH, BEGINNING OF YEAR 90,939 131,621 85,467
CASH, END OF YEAR $125,182 $ 90,939 $131,621
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash paid during the year for:
Income taxes $103,700 $ 83,841 $68,892
Interest 15,414 17,016 12,229
See notes to consolidated financial statements. (Concluded)
</TABLE>
<PAGE>
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(Amounts in Thousands, except Share Amounts)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization - Great-West Life & Annuity Insurance
Company (the Company) is a wholly-owned subsidiary of The
Great-West Life Assurance Company (the Parent
Corporation). The Company is an insurance company
domiciled in the State of Colorado. The Company offers a
wide range of life insurance, health insurance, and
retirement and investment products to individuals,
businesses, and other private and public organizations
throughout the United States.
Basis of Presentation - The preparation of financial
statements in conformity with generally accepted
accounting principles requires management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates. The consolidated
financial statements include the accounts of the Company
and its subsidiaries. All material intercompany
transactions and balances have been eliminated in
consolidation.
Certain reclassifications have been made to the 1995 and
1994 financial statements to conform with the basis of
presentation used in 1996.
Investments - Investments are reported as follows:
1. Management determines the classification of fixed
maturities at the time of purchase. Fixed
maturities are classified as held-to-maturity when
the Company has the positive intent and ability to
hold the securities to maturity. Held-to-maturity
securities are stated at amortized cost unless fair
value is less than cost and the decline is deemed to
be other than temporary, in which case they are
written down to fair value and a new cost basis is
established.
Fixed maturities not classified as held-to-maturity
are classified as available-for-sale. Available-
for-sale securities are carried at fair value, with
<PAGE>
<PAGE>
the net unrealized gains and losses reported as a
separate component of stockholder's equity. The net
unrealized gains and losses in derivative financial
instruments used to hedge available-for-sale
securities are included in the separate component of
stockholder s equity.
The amortized cost of fixed maturities classified as
held-to-maturity or available-for-sale is adjusted
for amortization of premiums and accretion of
discounts using the effective interest method over
the estimated life of the related bonds. Such
amortization is included in net investment income.
Realized gains and losses, and declines in value
judged to be other-than-temporary are included in
net realized gains (losses) on investments.
2. Mortgage loans on real estate are carried at their
unpaid balances adjusted for any unamortized
premiums or discounts and any valuation reserves.
Interest income is accrued on the unpaid principal
balance. Discounts and premiums are amortized to
net investment income using the effective interest
method. Accrual of interest is discontinued on any
impaired loans where collection of interest is
doubtful.
The Company maintains an allowance for credit losses
at a level that, in management s opinion, is
sufficient to absorb possible credit losses on its
impaired loans and to provide adequate provision for
any possible future losses in the portfolio.
Management s judgement is based on past loss
experience, current and projected economic
conditions, and extensive situational analysis of
each individual loan.
Effective January 1, 1995, the Company adopted
Statement of Financial Accounting Standards (SFAS)
No. 114 "Accounting by Creditors for Impairment of a
Loan" and SFAS No. 118 "Accounting by Creditors for
Impairment of a Loan-Income Recognition and
Disclosures". In accordance with these standards, a
mortgage loan is considered to be impaired when it
is probable that the Company will be unable to
collect all amounts due according to the contractual
terms of the loan agreement. The measurement of
impaired loans is based on the fair value of the
collateral. As the Company was already providing
for impairment of loans through an allowance for
credit losses, the implementation of these
<PAGE>
<PAGE>
statements had no material effect on the Company's
financial statements.
3. Real estate is carried at the lower of cost or fair
value, net of costs of disposal. Effective January
1, 1996, the Company adopted SFAS No. 121
"Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of". The
implementation of this statement had no material
effect on the Company s financial statements.
4. Investments in common stock are carried at fair
value.
5. Policy loans are carried at their unpaid balances.
6. Short-term investments include securities purchased
with initial maturities of one year or less and are
carried at amortized cost. The Company considers
short-term investments to be available-for-sale and
amortized cost approximates fair value.
Gains and losses realized on disposal of investments are
determined on a specific identification basis.
Cash - Cash includes only amounts in demand deposit
accounts.
Deferred Policy Acquisition Costs - Policy acquisition
costs, which consist of sales commissions and other costs
that vary with and are primarily related to the
production of new and renewal business, have been
deferred to the extent recoverable. Deferred costs
associated with the annuity products are being amortized
over the life of the contracts in proportion to the
emergence of gross profits. Retrospective adjustments of
these amounts are made when the Company revises its
estimates of current or future gross profits. Deferred
costs associated with traditional life insurance are
amortized over the premium paying period of the related
policies in proportion to premium revenues recognized.
Amortization of deferred policy acquisition costs totaled
$47,089, $48,054, and $28,199 in 1996, 1995, and 1994,
respectively.
Separate Account - Separate account assets and related
liabilities are carried at fair value. The Company s
separate accounts invest in shares of Maxim Series Fund,
Inc., a diversified, open-end management investment
company which is an affiliate of the Company, shares of
other external mutual funds, or government or corporate
bonds.
<PAGE>
<PAGE>
Life Insurance and Annuity Reserves - Life insurance and
annuity policy reserves with life contingencies of
$5,242,753, and $4,675,175 at December 31, 1996 and 1995,
respectively, are computed on the basis of estimated
mortality, investment yield, withdrawals, future
maintenance and settlement expenses, and retrospective
experience rating premium refunds. Annuity contract
reserves without life contingencies of $5,779,842 and
$6,170,760, at December 31, 1996 and 1995, respectively,
are established at the contractholder's account value.
Reinsurance - Policy reserves ceded to other insurance
companies are carried as reinsurance receivable on the
balance sheet (See Note 3). The cost of reinsurance
related to long-duration contracts is accounted for over
the life of the underlying reinsured policies using
assumptions consistent with those used to account for the
underlying policies.
Policy and Contract Claims - Policy and contract claims
include provisions for reported claims in process of
settlement, valued in accordance with the terms of the
related policies and contracts, as well as provisions for
claims incurred and unreported based primarily on prior
experience of the Company.
Participating Fund Account - Participating life and
annuity policy reserves are $3,591,077 and $3,339,316 at
December 31, 1996 and 1995, respectively. Participating
business approximates 50.3% of the Company's ordinary
life insurance in force and 92.2% of ordinary life
insurance premium income at December 31, 1996.
The liability for undistributed earnings on participating
business was decreased by $3,362 in 1996, which
represented $7 of losses on participating business, a
reduction of $2,924 to reflect the net change in
unrealized gains on securities classified as available-
for-sale, net of certain adjustments to policy reserves
and income taxes, and a decrease of $431 due to
reinsurance transactions (See Note 2).
The amount of dividends to be paid from undistributed
earnings on participating business is determined annually
by the Board of Directors. Amounts allocable to
participating policyholders are consistent with
established Company practice.
The Company has established a Participating Policyholder
Experience Account (PPEA) for the benefit of all
participating policyholders which is included in the
accompanying consolidated balance sheet. Earnings
<PAGE>
<PAGE>
associated with the operation of the PPEA are credited to
the benefit of all participating policyholders. In the
event that the assets of the PPEA are insufficient to
provide contractually guaranteed benefits, the Company
must provide such benefits from its general assets.
The Company has also established a Participation Fund
Account (PFA) for the benefit of the participating
policyholders previously transferred to the Company from
the Parent under an assumption reinsurance transaction.
The PFA is part of the PPEA. The assets and liabilities
associated with these policies are segregated in the
accounting records of the Company. Earnings derived from
the operation of the PFA accrue solely for the benefit of
the acquired participating policyholders.
Recognition of Premium Income and Benefits and Expenses -
Life insurance premiums are recognized as earned.
Annuity premiums with life contingencies are recognized
as received. Accident and health premiums are earned on
a monthly pro rata basis. Revenues for annuity and other
contracts without significant life contingencies consist
of contract charges for the cost of insurance, contract
administration, and surrender fees that have been
assessed against the contract account balance during the
period. Benefits and expenses on policies with life
contingencies are associated with premium income by means
of the provision for future policy benefit reserves,
resulting in recognition of profits over the life of the
contracts. The average crediting rate on annuity
products was approximately 6.8% in 1996.
Income Taxes - Income taxes are recorded using the asset
and liability approach which requires, among other
provisions, the recognition of deferred tax assets and
liabilities for expected future tax consequences of
events that have been recognized in the Company's
financial statements or tax returns. In estimating
future tax consequences, all expected future events
(other than the enactments or changes in the tax laws or
rules) are considered. Although realization is not
assured, management believes it is more likely than not
that the deferred tax asset, net of a valuation
allowance, will be realized.
Repurchase Agreements and Securities Lending - The
Company enters into repurchase agreements with third-
party broker-dealers in which the Company sells
securities and agrees to repurchase substantially similar
securities at a specified date and price. Such
agreements are accounted for as collateralized
borrowings. Interest expense on repurchase agreements is
<PAGE>
<PAGE>
recorded at the coupon interest rate on the underlying
securities. The repurchase fee received or paid is
amortized over the term of the related agreement and
recognized as an adjustment to investment income.
The Company will implement Statement of Financial
Accounting Standards (SFAS) No. 125 Accounting for
Transfer and Servicing of Financial Assets and
Extinguishments of Liabilities in 1998 as it relates to
repurchase agreements and securities lending
arrangements. Management estimates the effect of the
change will not be material.
Derivatives - The Company engages in hedging activities
to manage interest rate and foreign exchange risk (See
Note 6).
2. RELATED-PARTY TRANSACTIONS
On October 31, 1996 the Company recaptured certain pieces
of an individual participating insurance block of
business previously reinsured to the Parent Corporation
on December 31, 1992. The Company recorded, at estimated
fair value, the following at October 31, 1996 as a result
of this transaction:
<TABLE>
<CAPTION>
Assets Liabilities and
Stockholder s Equity
<S> <C> <C> <C>
Cash $ 162,000 Policy reserves $ 164,839
Mortgages 19,753 Due to parent 9,180
corporation
Other 118 Deferred income taxes 1,283
Undistributed Stockholder s equity 7,000
earnings
on participating 431
business
$182,302 $182,302
</TABLE>
The Company and the Parent Corporation have a number of
service agreements whereby the Parent Corporation
administers, distributes, and underwrites business for
the Company and administers the Company's investment
portfolio. Certain operating expenses represent
allocations made by the Parent Corporation to the
Company for services provided pursuant to these service
agreements. These transactions are summarized as
follows:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Investment management expense
(included in net investment
income) $ 14,800 $ 15,182 $ 13,841
Administrative and
underwriting payments
(included in operating
expenses) 304,599 301,529 269,020
</TABLE>
Effective January 1, 1997 all employees of the U.S.
operations of the Parent Corporation and the related
benefit plans were transferred to the Company. All
related employee benefit plan assets and liabilities were
transferred from the Parent Corporation to the Company
with no material impact on the Company s financial
position. There will not be any material effect on the
Company s operating expenses as the costs associated with
the employees and these benefit plans are reflected in
the present service agreements.
At December 31, 1996 and 1995, due to Parent Corporation
includes $31,639 and $27,814 due on demand and $119,792
and $122,160 of notes payable which bear interest and
mature at various dates. These notes may be prepaid in
whole or in part at any time without penalty; the issuer
may not demand payment before the maturity date. The
Company also has available an arrangement to obtain
advances from the Parent Corporation to fund short-term
liquidity needs. The due on demand to the Parent
Corporation bears interest at the public bond rate (7.0%
and 6.4% at December 31, 1996 and 1995, respectively)
while the remainder bear interest at various rates.
3. 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 risks to
other insurance enterprises under excess coverage and co-
insurance contracts. The Company retains a maximum of
$1.5 million of coverage per individual life.
<PAGE>
<PAGE>
Reinsurance contracts do not relieve the Company from its
obligations to policyholders. Failure of reinsurers to
honor their obligations could result in losses to the
Company; consequently, allowances are established for
amounts deemed uncollectible. The Company evaluates the
financial condition of its reinsurers and monitors
concentrations of credit risk arising from similar
geographic regions, activities, or economic
characteristics of the reinsurers to minimize its
exposure to significant losses from reinsurer
insolvencies. At December 31, 1996 and 1995, reinsurance
receivables with a carrying value of $196,958 and
$333,924, respectively, were due primarily from the
Parent Corporation.
Total reinsurance premiums assumed from the Parent
Corporation were $1,693, $1,606 and $2,438, in 1996,
1995, and 1994, respectively.
The Company considers all accident and health policies to
be short-duration contracts. The following schedule
details life insurance in force and life and
accident/health premiums:
<TABLE>
<CAPTION>
Ceded
Primarily
to
Gross the Parent
Amount Corporation
<S> <C> <C>
December 31, 1996:
Life insurance in force:
Individual $23,409,823 $5,246,079
Group 47,682,237
Total $71,092,060 $5,246,079
Premiums:
Life insurance $334,127 $(111,743)
Accident/health 592,577 7,493
Total $926,704 $(104,250)
December 31, 1995:
<PAGE>
<PAGE>
Life insurance in force:
Individual $22,388,520 $7,200,882
Group 48,415,592
Total $ $
70,804,112 7,200,882
Premiums:
Life insurance $339,342 $51,688
Accident/health 623,626 9,192
Total $962,968 $60,880
December 31, 1994:
Life insurance in force:
Individual $21,461,590 $7,411,811
Group 48,948,669
Total $70,410,259 $7,411,811
Premiums:
Life insurance $322,263 $42,946
Accident/health 579,650 5,169
Total $901,913 $48,115
<PAGE>
<PAGE>
(Continued)
Assumed
Primarily Percentage
From of Amount
Other Net Assumed to
Companies Amount Net
<S> <C> <C> <C>
December 31, 1996:
Life insurance in force:
Individual $3,482,118 $21,645,862 16.1%
Group 1,817,511 49,499,748 3.7%
Total $5,299,629 $71,145,610
Premiums:
Life insurance $19,633 $465,503 4.2%
Accident/health 56,780 641,864 8.8%
Total $76,413 $1,107,367
December 31, 1995:
Life insurance in force:
Individual $3,476,784 $18,664,422 18.6%
Group 1,954,313 50,369,905 3.9%
Total $5,431,097 $69,034,327
Premiums:
Life insurance $21,028 $308,682 6.8%
Accident/health 64,495 678,929 9.5%
Total $85,523 $987,611
December 31, 1994:
Life insurance in force:
Individual $3,415,596 $17,465,375 19.6%
Group 2,102,228 51,050,897 4.1%
Total $5,517,824 $68,516,272
Premiums:
Life insurance $22,009 $301,326 7.3%
Accident/health 63,140 637,621 9.9%
Total $85,149 $938,947
<PAGE>
</TABLE>
<PAGE>
<PAGE>
4. NET INVESTMENT INCOME
Net investment income is summarized as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Investment income:
Fixed maturities and short-term
investments $ 601,913 $ 591,561 $555,103
Mortgage loans on real estate 140,823 171,008 182,544
Real estate 5,292 3,936 5,700
Policy loans 175,746 163,547 116,060
Other 3,319
927,095 930,052 859,407
Investment expenses, including
interest on amounts charged
by the Parent Corporation
of $11,282, $10,778, and $11,145 90,453 95,006 91,761
Net investment income $ 836,642 $ 835,046 $767,646
</TABLE>
<PAGE>
<PAGE>
5. NET REALIZED GAINS (LOSSES) ON INVESTMENTS
<TABLE>
<CAPTION>
Net realized gains (losses) on investments are as follows:
Years Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Realized gains (losses):
Fixed Maturities $ (11,624) $28,166 $(39,775)
Mortgage loans on real 1,143 1,309 2,120
estate
Real estate (10) (102)
Provisions (10,597) (22,000) (34,182)
Net realized gains
(losses) on investments $ (21,078) $7,465 $(71,939)
</TABLE>
<PAGE>
<PAGE>
6. SUMMARY OF INVESTMENTS
<TABLE>
<CAPTION>
Fixed maturities owned at December 31, 1996 are summarized as follows:
Gross
Amortized Unrealized
Cost Gains
<S> <C> <C>
Held-to-Maturity:
U.S. Treasury Securities
and obligations
of U.S. Government
Agencies:
Collateralized mortgage $ $
obligations
Direct mortgage pass-
through certificates
Other 10,935 630
Collateralized mortgage
obligations
Public utilities 284,954 12,755
Corporate bonds 1,634,745 41,195
Foreign governments 12,577 556
State and municipalities 49,470 1,051
$1,992,681 $56,187
<PAGE>
<PAGE>
Available-for-Sale:
U.S. Treasury Securities
and obligations
of U.S. Government
Agencies:
Collateralized mortgage
obligations $658,612 $8,058
Direct mortgage pass-
through certificates 844,291 5,093
Other 359,220 596
Collateralized mortgage
obligations 614,773 13,619
Public utilities 628,382 6,523
Corporate bonds 2,907,875 56,551
Foreign governments 110,013 1,762
State and municipalities 28,353 21
$6,151,519 $92,223
<PAGE>
<PAGE>
SUMMARY OF INVESTMENTS (continued)
Gross Estimated
Unrealized Fair Carrying
Losses Value Value
<S> <C> <C> <C>
Held-to-Maturity:
U.S. Treasury Securities
and obligations
of U.S. Government
Agencies:
Collateralized mortgage $ $ $
obligations
Direct mortgage pass-through
certificates
Other 106 11,459 10,935
Collateralized mortgage
obligations
Public utilities 320 297,389 284,954
Corporate bonds 7,360 1,668,580 1,634,745
Foreign governments 3 13,130 12,577
State and municipalities 15 50,506 49,470
7,804 $ 2,041,064 $1,992,681
Available-for-Sale:
U.S. Treasury Securities and
obligations
of U.S. Government Agencies:
Collateralized mortgage
obligations 3,700 $ 662,970 $662,970
Direct mortgage pass-
through certificates 10,908 838,476 838,476
Other 2,686 357,130 357,130
Collateralized mortgage
obligations 3,553 624,839 624,839
Public utilities 5,375 629,530 629,530
Corporate bonds 5,250 2,959,176 2,959,176
Foreign governments 5,673 106,102 106,102
State and municipalities 119 28,255 28,255
37,264 $ 6,206,478 $6,206,478
</TABLE>
<PAGE>
<PAGE>
6. SUMMARY OF INVESTMENTS [Continued]
<TABLE>
<CAPTION>
Fixed maturities owned at December 31, 1995 are summarized as follows:
Gross
Amortized Unrealized
Cost Gains
<S> <C> <C>
Held-to-Maturity:
U.S. Treasury Securities and
obligations
of U.S. Government Agencies:
Collateralized mortgage obligations $ $
Direct mortgage pass-through
certificates
Other 11,107 1,093
Collateralized mortgage obligations
Public utilities 269,671 22,084
Corporate bonds 1,732,046 83,583
Foreign governments 18,596 1,087
State and municipalities 22,784 1,966
$2,054,204 $109,813
Available-for-Sale:
U.S. Treasury Securities and
obligations of U.S. Government
Agencies:
Collateralized mortgage obligations $561,475 $9,983
Direct mortgage pass-through
certificates 794,056 11,980
Other 561,736 7,703
Collateralized mortgage obligations 490,074 18,044
Public utilities 581,482 16,607
Corporate bonds 2,943,918 121,537
Foreign governments 141,362 5,021
State and municipalities 13,866 22
$6,087,969 $190,897
<PAGE>
<PAGE>
6. SUMMARY OF INVESTMENTS (Continued)
Gross Estimated
Unrealized Fair Carrying
Losses Value Value
<S> <C> <C> <C>
Held-to-Maturity:
U.S. Treasury Securities
and obligations
of U.S. Government
Agencies:
Collateralized mortgage $ $ $
obligations
Direct mortgage pass-through
certificates
Other 12,200 11,107
Collateralized mortgage
obligations
Public utilities 95 291,660 269,671
Corporate bonds 5,867 1,809,762 1,732,046
Foreign governments 12 19,671 18,596
State and municipalities 24,750 22,784
$5,974 $2,158,043 $2,054,204
<PAGE>
<PAGE>
Available-for-Sale:
U.S. Treasury Securities
and obligations
of U.S. Government
Agencies:
Collateralized mortgage $1,948 $569,510 $569,510
obligations
Direct mortgage pass-through
certificates 2,233 803,803 803,803
Other 39 569,400 569,400
Collateralized mortgage
obligations 3,304 504,814 504,814
Public utilities 2,425 595,664 595,664
Corporate bonds 26 3,065,429 3,065,429
Foreign governments 5,644 140,739 140,739
State and municipalities 60 13,828 13,828
$15,679 $6,263,187 $6,263,187
</TABLE>
Most of the collateralized mortgage obligations
consist of planned amortization classes with final
stated maturities of two to thirty years and average
lives of less than one to fourteen years.
Prepayments on all mortgage-backed securities are
monitored monthly and amortization of the premium
and/or the accretion of the discount associated with
the purchase of such securities is adjusted by such
prepayments.
The cumulative effect as of January 1, 1994 of adopting
SFAS No. 115 "Accounting for Certain Investments in Debt
and Equity Securities," increased the opening balance of
stockholders' equity by $6,515 to reflect the net
unrealized gains on securities classified as available-
for-sale (previously carried at the lower of aggregate
amortized cost or fair value) and the corresponding
adjustments to deferred policy acquisition costs, policy
reserves, and amounts allocable to the liability for
undistributed earnings on participating business, all net
of income taxes.
In November 1995, the Financial Accounting Standards
Board issued a special report entitled A Guide to
Implementation of SFAS 115 on Accounting for Certain
Investments in Debt and Equity Securities . In
accordance with the adoption of this guidance, the
Company reassessed the classification of its investment
<PAGE>
<PAGE>
portfolio in December 1995 and reclassed securities
totalling $2,119,814 from held-to-maturity to available-
for-sale. In connection with this reclassification, an
unrealized gain, net of related adjustments (see above),
of $23,449 was recognized in stockholder s equity at the
date of transfer.
The estimated fair value of fixed maturities that are
publicly traded are obtained from an independent pricing
service. To determine fair value for fixed maturities
not actively traded, the Company utilized discounted cash
flows calculated at current market rates on investments
of similar quality and term.
The amortized cost and estimated fair value of fixed
maturity investments at December 31, 1996, by projected
maturity, are shown below. Actual maturities will likely
differ from these projections because borrowers may have
the right to call or prepay obligations with or without
call or prepayment penalties.
<TABLE>
<CAPTION>
Held-to-Maturity
Amortized Estimated
Cost Fair Value
<S> <C> <C>
Due in one year or less $197,135 $ 200,356
Due after one year through five
years 840,192 860,192
Due after five years through ten
years 621,900 641,103
Due after ten years 140,061 145,287
Mortgage-backed securities
Asset-backed securities 193,393 194,126
$1,992,681 $ 2,041,064
Available-for-Sale
Amortized Estimated
Cost Fair Value
<S> <C> <C>
Due in one year or less $294,236 $308,805
Due after one year through five
years 1,294,892 1,300,473
<PAGE>
<PAGE>
Due after five years through ten
years 934,312 940,880
Due after ten years 422,179 432,721
Mortgage-backed securities 2,117,676 2,126,285
Asset-backed securities 1,088,224 1,097,314
$6,151,519 $6,206,478
</TABLE>
Proceeds from sales of securities available-for-sale were
$3,569,608, $4,211,649, and $1,753,445 during 1996, 1995,
and 1994, respectively. The realized gains on such sales
totaled $24,919, $39,755, and $7,030 for 1996, 1995, and
1994, respectively. The realized losses totaled $40,748,
$15,516, and $50,612 for 1996, 1995, and 1994,
respectively. During 1996, 1995, and 1994 held-to-
maturity securities with an amortized cost of $0,
$18,087, and $15,300 were sold due to credit
deterioration with insignificant realized gains and
losses.
At December 31, 1996 and 1995, pursuant to fully
collateralized securities lending arrangements, the
Company had loaned $230,419 and $343,351 of fixed
maturities, respectively.
The Company makes limited use of derivative financial
instruments to manage interest rate and foreign exchange
risk. Such hedging activity consists of interest rate
swap agreements, interest rate floors and caps, and
foreign currency exchange contracts. Interest rate
floors and caps are interest rate protection instruments
that require the payment by a counter-party to the
Company of an interest differential. This differential
represents the difference between current interest rates
and an agreed-upon rate, the strike rate, applied to a
notional principal amount. Interest rate swap agreements
are used to convert the interest rate on certain fixed
maturities from a floating rate to a fixed rate.
Interest rate swap transactions generally involve the
exchange of fixed and floating rate interest payment
obligations without the exchange of the underlying
principal amounts. Foreign currency exchange contracts
are used to hedge the foreign exchange rate risk
associated with bonds denominated in other than U.S.
dollars. The differential paid or received on interest
rate and amounts received under interest rate floor and
cap agreements are recognized as an adjustment to net
investment income on the accrual method. Gains and
losses on foreign exchange contracts are deferred and
<PAGE>
<PAGE>
recognized in net investment income when the hedged
transactions are realized.
Although derivative financial instruments taken alone may
expose the Company to varying degrees of market and
credit risk when used solely for hedging purposes, these
instruments typically reduce overall market and interest
rate risk. The Company controls the credit risk of its
financial contracts through credit approvals, limits, and
monitoring procedures. As the Company generally enters
into transactions only with high quality institutions, no
losses associated with non-performance on derivative
financial instruments have occurred or are expected to
occur.
<PAGE>
<PAGE>
The following table summarizes the financial hedge
instruments:
<TABLE>
<CAPTION>
Notional Strike/Swap
December 31, 1996 Amount Rate Maturity
<S> <C> <C> <C>
Interest Rate Floor 100,000 4.5% [LIBOR] 1999
Interest Rate Caps 260,000 11.0% to 11.82% 2000 to 2001
[CMT]
Interest Rate Swaps 187,847 6.203% to 9.35%01/98 to 02/2003
Foreign Currency 61,012 N/A 09/98 to 03/2003
Exchange Contracts
Notional Strike/Swap
December 31, 1995 Amount Rate Maturity
<S> <C> <C> <C>
Interest Rate Floor 100,000 4.5% [LIBOR] 1999
Interest Rate Cap 100,000 11.0% [CMT] 2000
Interest Rate Swaps 165,000 6.203% to 9.35% 01/98 to 2/2002
Foreign Currency 66,650 N/A 10/96 to
Exchange Contracts 09/98
</TABLE>
LIBOR - London Interbank Offered Rate
CMT - Constant Maturity Treasury Rate
The Company has established specific investment guidelines
designed to emphasize a diversified and geographically
dispersed portfolio of mortgages collateralized by commercial
and industrial properties located in the United States. The
Company's policy is to obtain collateral sufficient to provide
loan-to-value ratios of not greater than 75% at the inception
of the mortgages. At December 31, 1996 approximately 32% and
10% of the Company's mortgage loans were collateralized by
real estate located in California and Michigan, respectively.
The following represents impairments and other information
under SFAS No. 114:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Impaired Loans
Loans with related allowance for
credit losses of $2,793 and $654 $16,443 $3,254
Loans with no related allowance for
credit losses 31,709 20,424
Average balance of impaired loans
during 39,064 29,150
the year
Interest income recognized [while 923 675
impaired]
Interest income received and recorded
[while impaired] using the cash
basis method of recognition 1,130 857
</TABLE>
As part of an active loan management policy and in the
interest of maximizing the future return of each
individual loan, the Company may from time to time alter
the original terms of certain loans. These restructured
loans, all performing in accordance with their modified
terms that are not impaired, aggregated $68,254, and
$89,160 at December 31, 1996, and 1995, respectively.
The following table presents changes in the allowance for
credit losses since January 1, 1995 (date of the adoption
of SFAS No. 114):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Balance, beginning of year $63,994 $57,987
Provision for loan losses 4,470 15,877
Chargeoffs (3,468) (10,480)
Recoveries 246 610
Balance, end of year $65,242 $63,994
</TABLE>
7. COMMERCIAL PAPER
The Company has a commercial paper program which is
partially supported by a $50,000 standby letter-of-
credit. At December 31, 1996, commercial paper
<PAGE>
<PAGE>
outstanding has maturities ranging from 49 to 123 days
and interest rates ranging from 5.4% to 5.6%. At
December 31, 1995, maturities ranged from 25 to 160 days
and interest rates ranged from 5.7% to 5.9%.
8. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table provides estimated fair value
for all assets and liabilities and hedge contracts
considered to be financial instruments:
<TABLE>
<CAPTION>
December 31,
1996
Carrying Estimated
Amount Fair Value
<S> <C> <C>
ASSETS:
Fixed maturities and short-term
investments $8,618,167 $8,666,550
Mortgage loans on real estate 1,487,575 1,506,162
Policy loans 2,523,477 2,523,477
Common stock 19,715 19,715
LIABILITIES:
Annuity contract reserves
without life contingencies 5,779,842 5,821,404
Policyholders' funds 153,867 153,867
Due to Parent Corporation 151,431 154,479
Repurchase agreements 286,736 286,736
Commercial paper 84,682 84,682
HEDGE CONTRACTS:
Interest rate floor 62 124
Interest rate cap 173 173
Interest rate swaps 4,746 4,746
Foreign currency exchange (8,954) (8,954)
contracts
<PAGE>
<PAGE>
December 31,
1995
Carrying
Estimated
Amount Fair
Value
<S> <C> <C>
ASSETS:
Fixed maturities and short-term
investments $8,452,226
8,556,065
Mortgage loans on real estate 1,713,195
1,749,514
Policy loans 2,237,745
2,237,745
Common stock 9,440 9,440
LIABILITIES:
Annuity contract reserves
without life contingencies 6,170,760
6,268,749
Policyholders' funds 154,872
154,872
Due to Parent Corporation 149,974
152,347
Repurchase agreements 375,299
375,299
Commercial paper 84,854
84,854
HEDGE CONTRACTS:
Interest rate floor 84 1,320
Interest rate cap 90 90
Interest rate swaps 10,052
10,052
Foreign currency exchange contracts (4,604)
(4,604)
</TABLE>
<PAGE>
<PAGE>
<PAGE>
The estimated fair value of financial instruments
has been determined using available market information
and appropriate valuation methodologies. However,
considerable judgment is necessarily required to
interpret market data to develop the estimates of fair
value. Accordingly, the estimates presented are not
necessarily indicative of the amounts the Company could
realize in a current market exchange. The use of
different market assumptions and/or estimation
methodologies may have a material effect on the estimated
fair value amounts.
Mortgage loans fair value estimates generally are based
on a discounted cash flow basis. A discount rate
"matrix" is incorporated whereby the discount rate used
in valuing a specific mortgage generally corresponds to
that mortgage's remaining term. The rates selected for
inclusion in the discount rate "matrix" reflect rates
that the Company would quote if placing loans
representative in size and quality to those currently in
the portfolio.
Policy loans accrue interest generally at variable rates
with no fixed maturity dates and, therefore, estimated
fair value approximates carrying value.
The fair value of annuity contract reserves without life
contingencies is estimated by discounting the cash flows
to maturity of the contracts, utilizing current credited
rates for similar products.
The estimated fair value of policyholders funds is the
same as the carrying amount as the Company can change the
crediting rates with 30 days notice.
The estimated fair value of due to Parent Corporation is
based on discounted cash flows at current market spread
rates on high quality investments.
The carrying value of repurchase agreements and
commercial paper is a reasonable estimate of fair value
due to the short-term nature of the liabilities.
The estimated fair value of financial hedge instruments,
all of which are held for other than trading purposes, is
the estimated amount the Company would receive or pay to
terminate the agreement at each year-end, taking into
consideration current interest rates and other relevant
factors. Included in the net gain position for interest
<PAGE>
<PAGE>
rates swaps are $160 and $0 of unrealized losses in 1996
and 1995, respectively. Included in the net loss
position for foreign currencies exchange contracts are
$8,954 and $5,497 loss exposures in 1996 and 1995,
respectively.
See note 6 for additional information on policies
regarding estimated fair value of fixed maturities.
9.FEDERAL INCOME TAXES
The following is a reconciliation between the federal
income tax rate and the Company s effective rate:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Federal tax rate 35.0% 35.0% 35.0%
Change in tax rate resulting from:
Investment income not subject to (1.0) (0.5) (1.0)
federal tax
Release of contingent liability (4.7)
Change in valuation allowance 0.8 (7.8) (6.9)
State and environmental taxes 0.7 0.7 0.9
Other, net (1.4) 0.3 (0.3)
Total 29.42 7.72 7.7
</TABLE>
Temporary differences which give rise to the deferred tax
assets and liabilities as of December 31, 1996 and 1995
are as follows:
<TABLE>
<CAPTION>
1996
Deferred Deferred Tax
Tax Asset Liability
<S> <C> <C>
Policyholder reserves $ 151,239 $
Deferred policy acquisition costs 57,031
Deferred acquisition cost proxy tax 70,413
Investment assets 35,658
Net operating loss carryforwards 12,295
<PAGE>
<PAGE>
Tax credits and other 5,366
Subtotal
274,971 57,031
Valuation allowance (3,536)
Total Deferred Taxes $271,435 $57,031
1995
Deferred Deferred Tax
Tax Asset Liability
<S> <C> <C>
Policyholder reserves $ 162,073 $
Deferred policy acquisition costs 55,542
Deferred acquisition cost proxy tax 58,481
Investment assets 16,372
Net operating loss carryforwards 17,588
Tax credits and other 4,786
Subtotal 242,928 71,914
Valuation allowance (2,073)
Total Deferred Taxes $240,855 71,914
</TABLE>
Amounts related to investment assets above include $8,530 and
$33,735 related to the unrealized gains on the Company's fixed
maturities available-for-sale at December 31, 1996 and 1995,
respectively.
The Company files a separate tax return and, therefore, losses
incurred by subsidiaries cannot be offset against operating income
of the Company. At December 31, 1996, the Company s subsidiaries
have approximately $35,128 of net operating loss carryforwards,
expiring through the year 2011. The tax benefit of subsidiaries
net operating loss carryforwards, net of a valuation allowance of
$1,612 are included in the deferred tax assets.
The Company's valuation allowance was increased/(decreased) in 1996,
1995, and 1994 by $1,463, $(13,145), and $(6,278), respectively,
primarily as a result of taxable income in subsidiaries which was
greater than expected and the resulting re-evaluation by management
of future estimated taxable income in the subsidiaries.
Under pre-1984 life insurance company income tax laws, a portion of
life insurance company gain from operations was not subject to
current income taxation but was accumulated, for tax purposes, in a
memorandum account designated as "policyholders' surplus account."
The aggregate accumulation in the account is $7,742 and the Company
does not anticipate any transactions which would cause any part of
<PAGE>
<PAGE>
the amount to become taxable. Accordingly, no provision has been
made for possible future federal income taxes on this accumulation.
Pursuant to a December 31, 1993 agreement between the Company and its
Parent whereby the Company assumed responsibility for the Parent
Corporation s income tax liability for fiscal years prior to 1994,
the Company had previously recorded a contingent liability provision.
The Company s 1996 results of operations include a release of $25,600
from the provision, to reflect the resolution of 1988 and l989 tax
issues with the Internal Revenue Service (IRS). Audits of tax years
1990 and 1991 are in the process of being finalized. The IRS is
currently auditing tax years 1992 and 1993. In the opinion of
Company management, the amounts paid or accrued are adequate;
however, it is possible that the Company s accrued amounts may change
as a result of the completion of the IRS audits.
10.STOCKHOLDER'S EQUITY, DIVIDEND RESTRICTIONS, AND OTHER MATTERS
All of the Company's outstanding series of preferred stock are owned
by the Parent Corporation. The dividend rate on the Series A Stated
Rate Auction Preferred Stock (STRAPS) is 7.3% through December 30,
2002. The Series A STRAPS are redeemable at the option of the
Company on or after December 29, 2002 at a price of $100,000 per
share, plus accumulated and unpaid dividends.
The dividend rate on the Series B Straps is 5.8% through December 30,
1997. The Series B STRAPS are redeemable at the option of the
Company on or after December 29, 1997 at a price of $100,000 per
share, plus accumulated and unpaid dividends.
The Company's Series E 7.5% non-cumulative, non-redeemable preferred
shares are redeemable by the Company after April 1, 1999. The shares
are convertible into common shares at the option of the holder on or
after September 30, 1999, at a conversion price negotiated between
the holder and the Company or at a formula determined conversion
price in accordance with the share conditions.
The Company received $472 of contributed capital in the form of
deferred tax assets from the Parent Corporation during 1994 in
connection with reinsurance transactions with the Parent.
The Company's net income and capital and surplus, as determined in
accordance with statutory accounting principles and practices for
December 31 are as follows:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
1996 1995 1994
(Unaudited)
<S> <C> <C> <C>
Net Income $ 180,635 $ 114,931 $ 70,091
Capital and Surplus 713,324 653,479 621,589
</TABLE>
The maximum amount of dividends which can be paid to
stockholders by insurance companies domiciled in the
State of Colorado is subject to restrictions relating to
statutory surplus and statutory net gain from operations.
Statutory surplus and net gains from operations at
December 31, 1996 were $584,492 and $182,044 (unaudited),
respectively. The Company should be able to pay up to
$182,044 (unaudited) of dividends without regulatory
approval in 1997.
Dividends of $8,587, $9,217, and $7,475, were paid on
preferred stock in 1996, 1995, and 1994, respectively.
In addition, dividends of $48,083, $39,763, and $32,963,
were paid on common stock in 1996, 1995 and 1994,
respectively. Dividends are paid as determined by the
Board of Directors.
The Company is involved in various legal proceedings
which arise in the ordinary course of its business. In
the opinion of management, after consultation with
counsel, the resolution of these proceedings should not
have a material adverse effect on its financial position
or results of operations.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The statements of assets and liabilities of
FutureFunds Series Account as of December 31, 1996,
the related statements of operations for the year
then ended, the statements of changes in net assets
for each of the two years then ended and the
consolidated balance sheets for Great-West Life &
Annuity Insurance Company at December 31, 1996,
1995 and the related consolidated statements of
income, stockholders equity and cash flows for each
of the three years in the period ended December 31,
1996, are included in Part B.
(b) Exhibits
Items (1), (2), (6) and (8) are incorporated by
reference to registrant's Form S-6 Registration
Statement filed February 21, 1984 and Pre-Effective
Amendment No. 1 thereto filed June 29, 1984.
Item (9) is incorporated by reference to
registrant's Post-Effective Amendment No. 7 to Form
N-4 registration statement filed on April 30, 1987.
Items (4), (5) and (13) are incorporated by
reference to registrant's Post-Effective Amendment
No. 11 to Form N-4 registration statement filed on
May 1, 1989.
(3) Copy of Underwriting Agreement is attached hereto
as Exhibit (3)
(7) Not Applicable
(10) (a) Written Consent of Jorden Burt Berenson &
Johnson, LLP
(b) Written Consent of Deloitte & Touche LLP
(c) Written Consent of Ruth B. Lurie
(11) Not Applicable
(12) Not Applicable
<PAGE> C-1
<PAGE>
(13) Example Calculations of Performance Data is
attached hereto as Exhibit (13)
(14) Financial Data Schedule is attached hereto as
Exhibit (14)
<PAGE> C-2
<PAGE>
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Position and Offices
Name Principal Business Address with Depositor
<S> <C> <C>
James Balog 2205 North Southwinds Boulevard Director
Vero Beach, Florida 39263
James W. Burns, O.C. (4) Director
Orest T. Dackow (3) Director
Paul Desmarais, Jr. (4) Director
Robert G. Graham 574 Spoonbill Drive Director
Sarasota, FL 34236
Robert Gratton (5) Chairman
N. Berne Hart 2552 East Alameda Avenue Director
Denver, Colorado 80209
Kevin P. Kavanagh (1) Director
William Mackness 61 Waterloo Street Director
Winnipeg, Manitoba R3N 0S3
William T. McCallum (3) Director,
President and
Chief
Executive
Officer
Jerry E.A. Nickerson H.B. Nickerson & Sons Limited Director
P.O. Box 130
275 Commercial Street
North Sydney, Nova Scotia B2A 3M2
P. Michael Pitfield, P.C., Q.C. (4) Director
Michel Plessis-Belair, F.C.A. (4) Director
<PAGE> C-3
<PAGE>
Ross J. Turner Genstar Investment Corporation Director
950 Tower Lane
Metro Tower, Suite 1170
Foster City, California 94404
Brian E. Walsh Trinity L.P. Director
115 Putnam Ave.
Greenwich, Connecticut
Robert D. Bond (3) Senior
Vice-President,
Financial Services
John A. Brown (3) Senior
Vice-President,
Financial Services
John T. Hughes (3) Senior
Vice-President,
Chief Investment
Officer
Robert E. Kavanagh (2) Senior Vice-
President,
Employee Benefits,
Sales
D. Craig Lennox (3) Senior
Vice-President,
General Counsel and
Secretary
Dennis Low (3) Executive
Vice-President,
Financial Services
Alan D. MacLennan (2) Executive
Vice-President,
Employee Benefits
<PAGE>
C-4
<PAGE>
Steve H. Miller (2) Senior
Vice-President,
Employee Benefits,
Sales
James D. Motz (2) Senior
Vice-President,
Employee Benefits
Operations
Marty Rosenbaum (2) Senior
Vice-President,
Employee Benefits
Operations
Douglas L. Wooden (3) Senior
Vice-President,
Financial Services
______________________________________
</TABLE>
(1) 100 Osborne Street North, Winnipeg, Manitoba, Canada
R3C 3A5
(2) 8505 East Orchard Road, Englewood, Colorado 80111.
(3) 8515 East Orchard Road, Englewood, Colorado 80111.
(4) Power Corporation of Canada, 751 Victoria Square,
Montreal, Quebec, Canada H2Y 2J3.
(5) Power Financial Corporation, 751 Victoria Square,
Montreal, Quebec, Canada H2Y 2J3.
<PAGE> C-5
<PAGE>
Item 26. Persons controlled by or under common control with
the Depositor or Registrant
See attached organizational chart.
Item 27. Number of Contractowners
On February 28, 1997, there were 24 owners of non-
qualified contracts and 44,156 of qualified contracts
offered by Registrant.
<PAGE> C-6
<PAGE>
ORGANIZATIONAL CHART
Power Corporation of Canada
100% Marquette Communications Corporation
100% - 171263 Canada Inc.
68.1% - Power Financial Corporation
86.4% - Great-West Lifeco Inc.
99.5% - The Great-West Life Assurance Company
100% - Great-West Life & Annuity Insurance Company
100% - GW Capital Management, Inc.
100% - Financial Administrative Services Corporation
100% - One Corporation
100% - One Health Plan of Illinois, Inc.
100% - One Health Plan of Texas, Inc.
100% - One Health Plan of California, Inc.
100% - One Health Plan of Colorado, Inc.
100% - One Health Plan of Georgia, Inc.
100% - One Health Plan of North Carolina, Inc.
100% - One Health Plan of Washington, Inc.
100% - One Orchard Equities, Inc.
100% - Great-West Benefit Services, Inc.
13% - Private Healthcare Systems, Inc.
100% - Benefits Communication Corporation
100% - BenefitsCorp Equities, Inc.
94% - Maxim Series Fund, Inc.
100% - Greenwood Property Corporation
100% - GWL Properties Inc.
100% - Great-West Realty Investments Inc.
50% - Westkin Properties Ltd.
100% - Confed Admin Services, Inc.
100% - Orchard Series Fund
Item 28. Indemnification
Provisions exist under the Colorado General Corporation
Code and the Bylaws of GWL&A whereby GWL&A may indemnify
a director, officer, or controlling person of GWL&A
against liabilities arising under the Securities Act of
1933. The following excerpts contain the substance of
these provisions:
Colorado Business Corporation Act
Article 109 - INDEMNIFICATION
Section 7-109-101. Definitions.
As used in this Article:
(1) "Corporation" includes any domestic or foreign
entity that is a predecessor of the corporation by
<PAGE> C-7
<PAGE>
<PAGE>
reason of a merger, consolidation, or other
transaction in which the predecessor's existence
ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a
director of a corporation or an individual who,
while a director of a corporation, is or was
serving at the corporation's request as a director,
officer, partner, trustee, employee, fiduciary or
agent of another domestic or foreign corporation or
other person or employee benefit plan. A director
is considered to be serving an employee benefit
plan at the corporation's request if his or her
duties to the corporation also impose duties on or
otherwise involve services by, the director to the
plan or to participants in or beneficiaries of the
plan.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with
respect to a proceeding to pay a judgment,
settlement, penalty, fine, including an excise tax
assessed with respect to an employee benefit plan,
or reasonable expenses.
(5) "Official capacity" means, when used with
respect to a director, the office of director in
the corporation and, when used with respect to a
person other than a director as contemplated in
Section 7-109-107, means the office in the
corporation held by the officer or the employment,
fiduciary, or agency relationship undertaken by the
employee, fiduciary, or agent on behalf of the
corporation. "Official capacity" does not include
service for any other domestic or foreign
corporation or other person or employee benefit
plan.
(6) "Party" includes a person who was, is, or is
threatened to be made a named defendant or
respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative
and whether formal or informal.
C-8
<PAGE>
Section 7-109-102. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this
section, a corporation may indemnify a person made
a party to the proceeding because the person is or
was a director against liability incurred in any
proceeding if:
(a) The person conducted himself or herself
in good faith;
(b) The person reasonably believed:
(I) In the case of conduct in an
official capacity with the corporation,
that his or her conduct was in the
corporation's best interests; or
(II) In all other cases, that his or her
conduct was at least not opposed to the
corporation's best interests; and
(c) In the case of any criminal proceeding,
the person had no reasonable cause to believe
his or her conduct was unlawful.
(2) A director's conduct with respect to an
employee benefit plan for a purpose the director
reasonably believed to be in the interests of the
participants in or beneficiaries of the plan is
conduct that satisfies the requirements of
subparagraph (II) of paragraph (b) of subsection
(1) of this section. A director's conduct with
respect to an employee benefit plan for a purpose
that the director did not reasonably believe to be
in the interests of the participants in or
beneficiaries of the plan shall be deemed not to
satisfy the requirements of subparagraph (a) of
subsection (1) of this section.
(3) The termination of any proceeding by judgment,
order, settlement, or conviction, or upon a plea of
nolo contendere or its equivalent, is not, of
itself, determinative that the director did not
meet the standard of conduct described in this
section.
(4) A corporation may not indemnify a director
under this section:
(a) In connection with a proceeding by or in
the right of the corporation in which the
director was adjudged liable to the
corporation; or
<PAGE>
<PAGE> C-9
<PAGE>
(b) In connection with any proceeding
charging that the director derived an improper
personal benefit, whether or not involving
action in his official capacity, in which
proceeding the director was adjudged liable on
the basis that he or she derived an improper
personal benefit.
(5) Indemnification permitted under this section
in connection with a proceeding by or in the right
of a corporation is limited to reasonable expenses
incurred in connection with the proceeding.
Section 7-109-103. Mandatory Indemnification of
Directors.
Unless limited by the articles of
incorporation, a corporation shall be required to
indemnify a person who is or was a director of the
corporation and who was wholly successful, on the
merits or otherwise, in defense of any proceeding
to which he was a party, against reasonable
expenses incurred by him in connection with the
proceeding.
Section 7-109-104. Advance of Expenses to Directors.
(1) A corporation may pay for or reimburse the
reasonable expenses incurred by a director who is a
party to a proceeding in advance of the final
disposition of the proceeding if:
(a) The director furnishes the corporation a
written affirmation of his good-faith belief
that he has met the standard of conduct
described in Section 7-109-102;
(b) The director furnishes the corporation a
written undertaking, executed personally or on
the director's behalf, to repay the advance if
it is ultimately determined that he or she did
not meet such standard of conduct; and
(c) A determination is made that the facts
then know to those making the determination
would not preclude indemnification under this
article.
(2) The undertaking required by paragraph (b) of
subsection (1) of this section shall be an
unlimited general obligation of the director, but
C-10
<PAGE>
need not be secured and may be accepted without
reference to financial ability to make repayment.
(3) Determinations and authorizations of payments
under this section shall be made in the manner
specified in Section 7-109-106.
Section 7-109-105. Court-Ordered Indemnification of
Directors.
(1) Unless otherwise provided in the articles of
incorporation, a director who is or was a party to
a proceeding may apply for indemnification to the
court conducting the proceeding or to another court
of competent jurisdiction. On receipt of an
application, the court, after giving any notice the
court considers necessary, may order
indemnification in the following manner:
(a) If it determines the director is entitled
to mandatory indemnification under section 7-
109-103, the court shall order
indemnification, in which case the court shall
also order the corporation to pay the
director's reasonable expenses incurred to
obtain court-ordered indemnification.
(b) If it determines that the director is
fairly and reasonably entitled to
indemnification in view of all the relevant
circumstances, whether or not the director met
the standard of conduct set forth in section
7-109-102 (1) or was adjudged liable in the
circumstances described in Section 7-109-102
(4), the court may order such indemnification
as the court deems proper; except that the
indemnification with respect to any proceeding
in which liability shall have been adjudged in
the circumstances described Section 7-109-102
(4) is limited to reasonable expenses incurred
in connection with the proceeding and
reasonable expenses incurred to obtain court-
ordered indemnification.
Section 7-109-106. Determination and Authorization of
Indemnification of Directors.
(1) A corporation may not indemnify a director
under Section 7-109-102 unless authorized in the
specific case after a determination has been made
that indemnification of the director is permissible
in the circumstances because he has met the
C-11
<PAGE>
standard of conduct set forth in Section 7-109-
102. A corporation shall not advance expenses to a
director under Section 7-109-104 unless authorized
in the specific case after the written affirmation
and undertaking required by Section 7-109-104(1)(a)
and (1)(b) are received and the determination
required by Section 7-109-104(1)(c) has been made.
(2) The determinations required to be made
subsection (1) of this section shall be made:
(a) By the board of directors by a majority
vote of those present at a meeting at which a
quorum is present, and only those directors
not parties to the proceeding shall be counted
in satisfying the quorum.
(b) If a quorum cannot be obtained, by a
majority vote of a committee of the board of
directors designated by the board of
directors, which committee shall consist of
two or more directors not parties to the
proceeding; except that directors who are
parties to the proceeding may participate in
the designation of directors for the
committee.
(3) If a quorum cannot be obtained as contemplated
in paragraph (a) of subsection (2) of this section,
and the committee cannot be established under
paragraph (b) of subsection (2) of this section, or
even if a quorum is obtained or a committee
designated, if a majority of the directors
constituting such quorum or such committee so
directs, the determination required to be made by
subsection (1) of this section shall be made:
(a) By independent legal counsel selected by
a vote of the board of directors or the
committee in the manner specified in paragraph
(a) or (b) of subsection (2) of this section
or, if a quorum of the full board cannot be
obtained and a committee cannot be
established, by independent legal counsel
selected by a majority vote of the full board
of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and
evaluation as to reasonableness of expenses shall
be made in the same manner as the determination
C-12
<PAGE>
that indemnification is permissible; except that,
if the determination that indemnification is
permissible is made by independent legal counsel,
authorization of indemnification and advance of
expenses shall be made by the body that selected
such counsel.
Section 7-109-107. Indemnification of Officers,
Employees, Fiduciaries, and Agents.
(1) Unless otherwise provided in the articles of
incorporation:
(a) An officer is entitled to mandatory
indemnification under section 7-109-103, and
is entitled to apply for court-ordered
indemnification under section 7-109-105, in
each case to the same extent as a director;
(b) A corporation may indemnify and advance
expenses to an officer, employee, fiduciary,
or agent of the corporation to the same extent
as a director; and
(c) A corporation may indemnify and advance
expenses to an officer, employee, fiduciary,
or agent who is not a director to a greater
extent, if not inconsistent with public
policy, and if provided for by its bylaws,
general or specific action of its board of
directors or shareholders, or contract.
Section 7-109-108. Insurance.
A corporation may purchase and maintain
insurance on behalf of a person who is or was a
director, officer, employee, fiduciary, or agent of
the corporation and who, while a director, officer,
employee, fiduciary, or agent of the corporation,
is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee,
fiduciary, or agent of any other domestic or
foreign corporation or other person or of an
employee benefit plan against any liability
asserted against or incurred by the person in that
capacity or arising out of his or her status as a
director, officer, employee, fiduciary, or agent
whether or not the corporation would have the power
to indemnify the person against such liability
under the Section 7-109-102, 7-109-103 or 7-109-
107. Any such insurance may be procured from any
insurance company designated by the board of
C-13
<PAGE>
<PAGE>
directors, whether such insurance company is formed
under the laws of this state or any other
jurisdiction of the United States or elsewhere,
including any insurance company in which the
corporation has an equity or any other interest
through stock ownership or otherwise.
Section 7-109-109. Limitation of Indemnification of
Directors.
(1) A provision concerning a corporation's
indemnification of, or advance of expenses to,
directors that is contained in its articles of
incorporation or bylaws, in a resolution of its
shareholders or board of directors, or in a
contract, except for an insurance policy or
otherwise, is valid only to the extent the
provision is not inconsistent with Sections 7-109-
101 to 7-109-108. If the articles of incorporation
limit indemnification or advance of expenses,
indemnification or advance of expenses are valid
only to the extent not inconsistent with the
articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a
corporation's power to pay or reimburse expenses
incurred by a director in connection with an
appearance as a witness in a proceeding at a time
when he or she has not been made a named defendant
or respondent in the proceeding.
Section 7-109-110. Notice to Shareholders of
Indemnification of Director.
If a corporation indemnifies or advances
expenses to a director under this article in
connection with a proceeding by or in the right of
the corporation, the corporation shall give written
notice of the indemnification or advance to the
shareholders with or before the notice of the next
shareholders' meeting. If the next shareholder
action is taken without a meeting at the
instigation of the board of directors, such notice
shall be given to the shareholders at or before the
time the first shareholder signs a writing
consenting to such action.
C-14
<PAGE>
Bylaws of GWL&A
Article II, Section 11. Indemnification of Directors.
The Company may, by resolution of the Board of
Directors, indemnify and save harmless out of the funds
of the Company to the extent permitted by applicable
law, any director, officer, or employee of the Company
or any member or officer of any committee, and his
heirs, executors and administrators, from and against
all claims, liabilities, costs, charges and expenses
whatsoever that any such director, officer, employee or
any such member or officer sustains or incurs in or
about any action, suit, or proceeding that is brought,
commenced, or prosecuted against him for or in respect
of any act, deed, matter or thing whatsoever made, done,
or permitted by him in or about the execution of his
duties of his office or employment with the Company, in
or about the execution of his duties as a director or
officer of another company which he so serves at the
request and on behalf of the Company, or in or about the
execution of his duties as a member or officer of any
such Committee, and all other claims, liabilities,
costs, charges and expenses that he sustains or incurs,
in or about or in relation to any such duties or the
affairs of the Company, the affairs of such Committee,
except such claims, liabilities, costs, charges or
expenses as are occasioned by his own wilful neglect or
default. The Company may, by resolution of the Board of
Directors, indemnify and save harmless out of the funds
of the Company to the extent permitted by applicable
law, any director, officer, or employee of any
subsidiary corporation of the Company on the same basis,
and within the same constraints as, described in the
preceding sentence.
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
C-15
<PAGE>
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 Underwriter
(a) BenefitsCorp Equities, Inc. (BCE ) currently
distributes securities of Great-West Variable Annuity
Account A, Maxim Series Account and Pinnacle Series
Account in addition to those of the Registrant.
(b) Directors and Officers of BCE
<TABLE>
<CAPTION> Position and Offices
Name Principal Business Address with Underwriter
<S> <C> <C>
Charles P. Nelson (1) Director and President
Robert K. Shaw (1) Director
Dennis Low (1) Director
Gregg E. Seller 18101 Von Karman Ave. Director and Vice
Suite 1460 President
Irvine, CA 92715 Major Accounts
John Brown (1) Director
Robert D. Bond (1) Director
Doug L. Wooden (1) Director
Jack Baker (1) Vice President, Licensing
and Contracts
Glen R. Derback (1) Treasurer
C-16
<PAGE>
Ruth B. Lurie (1) Secretary
Beverly A. Byrne (1) Assistant Secretary
</TABLE>
____________
(1) 8515 E. Orchard Road, Englewood, Colorado 80111
(c) Commissions and other compensation received by Principal
Underwriter during registrant's last fiscal year:
<TABLE>
<CAPTION>
Net
Name of Underwriting Compensation
Principal Discounts and on Brokerage
Underwriter Commissions Redemption Commissions Compensation
<S> <C> <C> <C> <C>
BCE -0- -0- -0- -0-
</TABLE>
Item 30. Location of Accounts and Records
All accounts, books, or other documents required to be
maintained by Section 31(a) of the 1940 Act and the
rules promulgated thereunder are maintained by the
registrant through GWL&A, 8515 E. Orchard Road,
Englewood, Colorado 80111.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Registrant undertakes 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.
C-17
<PAGE>
(b) Registrant undertakes to include either (1) as part
of any application to purchase a contract offered
by the Prospectus, a space that an applicant can
check to request a Statement of Additional
Information, or (2) a postcard 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) Registrant undertakes to deliver any Statement of
Additional Information and any financial statements
required to be made available under this form
promptly upon written or oral request.
(d) Registrant represents that in connection with its
offering of Group Contracts as funding vehicles for
retirement plans meeting the requirement of Section
403(b) of the Internal Revenue Code of 1986, as
amended, Registrant is relying on the no-action
letter issued by the Office of Insurance Products
and legal Compliance, Division of Investment
Management, to the American Council of Life
Insurance dated November 28, 1988 (Ref. No. IP-6-
88), and that the provisions of paragraphs (1) -
(4) thereof have been complied with.
(e) Registrant represents that in connection with its
offering of Group Contracts as funding vehicles
under the Texas Optional Retirement Program,
Registrant is relying on the exceptions provided in
Rule 6c-7 of the Investment Company Act of 1940 and
that the provisions of paragraphs (a) -(d) thereof
have been complied with.
(f) GWL&A represents the fees and charges deducted
under the Contracts, in the aggregate, are reasonable in
relation to the services rendered, the expenses to be
incurred and the risks assumed by GWL&A.
C-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant certifies
that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this Registration Statement to be
signed on its behalf, in the City of Denver, State of Colorado, on
this 28th day of April, 1997.
FUTUREFUNDS SERIES ACCOUNT
(Registrant)
By: /s/ William T. McCallum
William T. McCallum, President
and Chief Executive Officer of
Great-West Life & Annuity
Insurance Company
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
(Depositor)
By: /s/ William T. McCallum
William T. McCallum, President
and Chief Executive Officer
As required by the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the
capacities with Great-West Life & Annuity Insurance Company and
on the dates indicated:
<TABLE>
<CAPTION>
Signature and Title Date
<S> <C>
/s/ Robert Gratton * April 28, 1997
Director and Chairman
of theBoard (Robert Gratton)
/s/ William T. McCallum April 28, 1997
Director, President and Chief Executive
Officer (William T. McCallum)
<PAGE>
Signature and Title Date
/s/ Glen R. Derback April 28, 1997
Vice President and Comptroller
(Glen R. Derback)
/s/ James Balog * April 28, 1997
Director, (James Balog)
/s/ James W. Burns * April 28, 1997
Director, (James W. Burns)
/s/ Orest T. Dackow * April 28, 1997
Director (Orest T. Dackow)
/s/ Paul Desmarais, Jr. * April 28, 1997
Director (Paul Desmarais, Jr.)
April 28, 1997
Director (Robert G. Graham)
/s/ N. Berne Hart * April 28, 1997
Director (N. Berne Hart)
/s/ Kevin P. Kavanagh * April 28, 1997
Director (Kevin P. Kavanagh)
April 28, 1997
Director (William Mackness)
/s/ Jerry E. A. Nickerson * April 28, 1997
Director (Jerry E.A. Nickerson)
/s/ P. Michael Pitfield * April 28, 1997
Director (P. Michael Pitfield)
/s/ Michel Plessis Belair * April 28, 1997
Director (Michel Plessis-Belair)
<PAGE>
Signature and Title Date
Director (Ross J. Turner) April 28, 1997
/s/ Brian E. Walsh * April 28, 1997
Director (Brian E. Walsh)
*By: /s/ D.C. Lennox April 28, 1997
D. C. Lennox
Attorney-in-fact pursuant to Powers of Attorney filed under Post-
Effective Amendment Nos. 14, 20 and 22 to this Registration Statement.
<PAGE>
</TABLE>
EXHIBIT (3)
COPY OF UNDERWRITING AGREEMENT
<PAGE>
<PAGE>
<PAGE>
UNDERWRITING AGREEMENT
THIS UNDERWRITING AGREEMENT made this 1st day of December 1996,
by
and between BenefitsCorp Equities, Inc. (the Underwriter ) and
Great-West
Life & Annuity Insurance Company (the Insurance Company ), on its
own
behalf and on behalf of the FutureFunds Series Account of Great-West
Life &
Annuity Insurance Company (the Series Account ), as follows:
WHEREAS, the Insurance Company has registered the Series Account
as a
unit investment trust under the Investment Company Act of 1940, as
amended
(the 1940 Act ) and has registered the Contracts under the Securities
Act
of 1933;
WHEREAS, the Underwriter is registered as a broker dealer with
the
Securities and Exchange Commission (the SEC ) under the
Securities
Exchange Act of 1934, as amended (the 1934 Act ), and is a member of
the
National Association of Securities Dealers, Inc. (the NASD ); and
WHEREAS, the Insurance Company and the Series Account desire to
have
the Contracts sold and distributed through the Underwriter, and
the
Underwriter is willing to sell and distribute such Contracts under
the
terms stated herein;
NOW THEREFORE, the parties hereto agree as follows:
1. Representations, Responsibilities and Warranties of Insurance
Company
1.01 The Insurance Company represents that it has the authority,
and
hereby agrees to, grant the Underwriter the right to serve as
the
distributor and principal underwriter of the Contracts during the term
of
this Agreement.
1.02 The Insurance Company represents and warrants that it is
duly
licensed as an insurance company under the laws of the State of
<PAGE>
Colorado
and that it has taken all appropriate actions to establish the
Series
Account in accordance with state and federal laws.
1.03 The Insurance Company agrees to update and maintain a
current
prospectus for the Contracts as required by law.
1.04 The Insurance Company represents that it reserves the right
to
appoint or refuse to appoint, any proposed associated person of
the
Underwriter as an agent or broker of the Insurance Company. The
Insurance
Company also retains the right to terminate such agents or brokers
once
appointed.
1.05 On behalf of the Series Account, the Insurance Company
shall
furnish the Underwriter with copies of all financial statements and
other
documents which the Underwriter reasonably requests for use in
connection
with the distribution of the contracts.
2
<PAGE>
2. Representations, Responsibilities and Warranties of Underwriter
2.01 Underwriter represents that it has the authority and
hereby
agrees to serve as distributor and principal underwriter of the
Contracts
during the term of this Agreement.
2.02 The Underwriter represents that it is duly registered
as a
broker-dealer under the 1934 Act and is a member in good standing of
the
NASD and to the extent necessary to offer the Contracts, shall be
duly
registered or otherwise qualified under the securities laws of any state
or
other jurisdiction.
2.03 The Underwriter agrees to use its best efforts to
solicit
applications for the Contracts, and to undertake, at its own expense,
to
provide all sales services relative to the Contracts and otherwise
to
perform all duties and functions which are necessary and proper for
the
distribution of the Contracts.
2.04 The Underwriter agrees to offer the Contracts for sale
in
accordance with the prospectus therefor, then in effect. The
Underwriter
represents and agrees that it is not authorized to give any information
or
make any representations concerning the Contracts other than
those
contained in the current prospectus as filed with the SEC or in such
sales
literature as may be authorized by the Insurance Company.
2.05. The Underwriter shall be fully responsible for carrying out
its
sales, underwriting and compliance supervisory obligations hereunder
in
compliance with the NASD Conduct Rules and all other relevant federal
and
state securities laws and regulations. Without limiting the generality
of
t h e f oregoing, the Underwriter agrees that it shall have
full
responsibility for:
<PAGE>
(a) ensuring that no person shall offer or sell the
Contracts
o n i ts behalf until such person is duly registered as
a
representative of the Underwriter, and duly licensed and appointed
by
the Insurance Company;
(b) ensuring that no person shall offer or sell the
Contracts
on its behalf until the Underwriter has confirmed that the
Insurance
Company is appropriately licensed, or otherwise qualified to
offer
and sell such Contracts under the federal securities laws and
any
applicable state or jurisdictional securities and/or insurance
laws
in each state or jurisdiction in which such Contracts may be
lawfully
sold;
(c) continually training, supervising, and controlling
all
registered representatives and other agents of the Underwriter
for
purposes of complying with the NASD Conduct Rules and with
federal
and state securities laws which may be applicable to the offering
and
sale of the Contracts. In this respect, the Underwriter shall:
3
<PAGE>
(1) conduct training programs (including the
preparation
and utilization of training materials) as is necessary, in
the
Underwriter s opinion, to comply with applicable laws
and
regulations;
( 2 ) establish and implement reasonable
written
procedures for the supervision of the sales practices
of
agents, representatives or brokers who sell the Contracts;
and
(3) take reasonable steps to ensure that its
associated
persons shall not make recommendations to an applicant
to
purchase a Contract in the absence of reasonable grounds
to
believe that the purchase of the Contract is suitable for
such
applicants; and
(d) supervising and ensuring compliance with NASD rules of
all
administrative functions performed by the Underwriter with respect
to
the offering and sale of the Contracts and representations
with
respect to the Series Account.
2.06 The Underwriter, or its affiliates, on behalf of the
Insurance
Company, shall apply for the proper insurance licenses in the
appropriate
states or jurisdictions for the designated persons associated with
the
Underwriter or with independent broker-dealers which have entered
into
agreements with the Underwriter for the sale of the Contracts.
The
Underwriter agrees to pay all licensing or other fees necessary to
properly
authorize such persons for the sale of the Contracts.
2.07 The Underwriter shall have the responsibility for paying
(i)
all commissions or other fees to its associated persons which are due
for
the sale of the Contracts and (ii) any compensation to independent
<PAGE>
broker-
dealers and their associated persons due under the terms of any
sales
agreements between the Underwriter and such broker-dealers.
Provided,
however, the Insurance Company retains the ultimate right to reject
any
commission rate allowed by the Underwriter. Furthermore, no
associated
person or independent broker-dealer shall have an interest in the
surrender
charges, deductions or other fees payable to Underwriter as set
forth
herein. The Underwriter shall have the responsibility for calculating
and
furnishing periodic reports to the Insurance Company as to the sale of
the
Contracts, and as to the commissions and service fees payable to
persons
selling the Contracts.
3. Records and Confidentiality
3.01 The Insurance Company and the Underwriter shall cause to
be
maintained and preserved for the periods prescribed, such accounts,
books,
records, files and other documents and materials ( Records ) as
are
required of it by the 1940 Act and any other applicable laws
and
regulations. The Records of the Insurance Company, the Series Account
and
the Underwriter as to all transactions hereunder shall be maintained so
as
4
<PAGE>
to disclose clearly and accurately the nature and details of
the
transactions.
3.02 The Underwriter shall cause the Insurance Company to
be
furnished with such Records, or copies thereof, as the Insurance
Company
may reasonably request for the purpose of meeting its reporting
and
recordkeeping requirements under the insurance laws of the State
of
Colorado and any other applicable states or jurisdictions.
3.03 The Insurance Company shall cause the Underwriter to
be
furnished with any Records, or copies thereof, as the Underwriter
may
r e a sonably request for the purpose of meeting its reporting
and
recordkeeping requirements under the federal securities laws or
the
securities laws of any inquiring jurisdiction.
3.04 The Underwriter agrees and understands that all Records
shall
be the sole property of the Insurance Company and that such property
shall
be held by the Underwriter, or its agents during the term of
this
agreement. Upon termination, all Records shall be returned to
the
Insurance Company.
3.05 Insurance Company agrees and understands that the
Underwriter
may maintain copies of the Records as is required by any
relevant
securities law, the SEC, the NASD or any other self regulatory agency.
3.06 Underwriter shall establish and maintain facilities
and
procedures for the safekeeping of all Records relative to this
Agreement.
3.07 The parties hereto agree that all Records pertaining to
the
business of the other party which are exchanged or received pursuant
to
this Agreement, shall remain confidential and shall not be
voluntarily
disclosed to any other person, except to the extent disclosure thereof
<PAGE>
may
be required by law. All such confidential information in the possession
of
each of the parties hereto shall be returned to the party from whom it
was
obtained upon the termination or expiration of this Agreement.
4. Relationship of the Parties
4.01 Notwithstanding anything in this Agreement to the contrary,
the
Underwriter or the Insurance Company may enter into sales agreements
with
independent broker-dealers for the sale of the Contracts.
4.02 All such sales agreements as described in 4.01, above,
which
are entered into by the Insurance Company or the Underwriter shall
provide
that each independent broker-dealer will assume full responsibility
for
continued compliance by itself and its associated persons with NASD
Conduct
Rules and applicable federal and state securities laws. All
associated
persons of such independent broker-dealers soliciting applications for
the
Contracts shall be duly and appropriately licensed and/or appointed for
the
sale of the Contracts under the insurance laws of the applicable state
or
jurisdiction in which the Contracts may be lawfully sold.
5
<PAGE>
4.03 The services of the Underwriter to the Series Account
hereunder
are not to be deemed exclusive and the Underwriter shall be free to
render
similar services to others so long as the services rendered hereunder
are
not interfered with or impaired.
5. Term and Termination
5.01 Subject to termination, the Agreement shall remain in
full
force and effect for one year, and shall continue in full force and
effect
from year to year until terminated as provided below. Each additional
year
shall be an additional term of this Agreement.
5.02 This Agreement may be terminated:
(a) by either party upon sixty (60) days written notice to
the
other party;
(b) immediately, upon written notice in the event
of
bankruptcy or insolvency of one party;
(c) at any time upon mutual written consent of the parties;
(d) immediately in the event of its assignment;
provided
however, assigned shall not include any transaction
exempted
from section 15(b)(2) of the 1940 Act;
(e) immediately in the event that the Underwriter no
longer
qualifies as a broker-dealer under applicable federal law;
and
(f) immediately in the event of fraud,
misrepresentation,
conversion or unlawful withholding of funds by a party.
5.03 Upon termination of this Agreement, all authorization,
rights,
and obligations shall cease except the obligations to settle
accounts
hereunder, including payments or premiums or contributions
subsequently
<PAGE>
received for Contracts in effect at the time of termination or
issued
pursuant to applications received by the Insurance Company prior
to
termination.
5.04 After notice of termination, the parties agree to cooperate
to
effectuate an orderly transition of all accounts, payments and Records.
6. Miscellaneous
6
<PAGE>
6.01 This Agreement shall be subject to the provisions of the
1940
Act, the 1934 Act and the rules, regulations and rulings thereunder.
In
addition it shall be subject to the rulings of the NASD, as issued
from
time to time, and any exemptions from the 1940 Act the SEC may grant.
All
terms of this Agreement will be interpreted and construed in
accordance
with compliance of this section 6.01.
6.02 Except as otherwise provided, Underwriter acknowledges
that
Insurance Company retains the overall right and responsibility to
direct
and control the activities of the Underwriter.
6.03 If any provisions of this Agreement shall be held or
made
invalid by a court decision, statute, rule or otherwise, the remainder
of
this Agreement shall remain in full force and effect.
6.04 This Agreement constitutes the entire Agreement between
the
parties hereto and may not be modified except in a written
instrument
executed by all the parties hereto.
6.05 This Agreement shall be governed by the internal laws of
the
State of Colorado.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be
signed by their respective duly authorized officers and have caused
their
respective seals to be affixed hereto, as of the day and year first
written
above.
Great-West Life & Annuity Insurance
Company
/s/ Joan Preyer By: /s/ William T. McCallum
Witness: William T. McCallum
President and Chief Executive
Officer
<PAGE>
BenefitsCorp Equities, Inc.
/s/ Shelley R. Fredrick By: /s/ Charles P. Nelson
Witness: Charles P. Nelson
President
8
<PAGE>
EXHIBIT
10(a)
JORDEN BURT BERENSON & JOHNSON LLP
Suite 400 East
1025 Thomas Jefferson Street, N.W.
Washington, D.C. 20007
(202) 965-8100
April 25, 1997
Great-West Life & Annuity Insurance Company
FutureFunds Series Account
8515 East Orchard Road
Englewood, Colorado 80111
Ladies and Gentlemen:
We hereby consent to the use of our name under the caption Legal
Matters in the Prospectus contained in Post-Effective Amendment No. 23
to
the Registration Statement on Form N-4 (File No. 2-89550) filed by the
FutureFunds Series Account of Great-West Life & Annuity Insurance
Company
with the Securities and Exchange Commission under the Securities Act of
1933.
Very truly yours,
/s/Jorden Burt Berenson & Johnson LLP
JORDEN BURT BERENSON & JOHNSON LLP
<PAGE>
EXHIBIT 10(b)
INDEPENDENT AUDITORS CONSENT
We consent to the use in this Post-Effective Amendment No. 23 to
Registration Statement No. 2-89550 of FutureFunds Series Account of
Great-
West Life & Annuity Insurance Company of our reports on FutureFunds
Series
Account dated February 7, 1997 and on Great-West Life & Annuity
Insurance
Company dated January 25, 1997, and to the reference to us under the
heading Independent Auditors appearing in the Statement of Additional
Information, which is a part of such Registration Statement.
/S/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
April 29, 1997
<PAGE>
EXHIBIT 10(c)
April 28, 1997
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Englewood, Colorado 80111
Re: FutureFunds Series Account
Gentlemen:
I hereby consent to the use of my name under the caption "Legal
Matters" in the Prospectus for FutureFunds Series Account contained in
Post-Effective Amendment No. 23 to the Registration Statement on Form
N-4
(File No. 2-89550) filed by Great-West Life & Annuity Insurance Company
and
FutureFunds Series Account with the Securities and Exchange Commission
under the Securities Act of 1933, the Investment Company Act of 1940 and
the amendments thereto.
Sincerely,
/s/ Ruth B. Lurie
Ruth B. Lurie
Vice President, Counsel
and Associate Secretary
<PAGE>
YIELD AND EFFECTIVE YIELD CALCULATIONS
Money Market Investment Division
Yield for the Money Market Investment Division is calculated on a seven
day
period.
The current yield formula = base period return x (365/7)
The effective yield formula = [(1 + base period return)365/7] - 1
Base period return is calculated as follows:
Ending account value
-Beginning account value
-Expenses accrued for the period
Net change in account value
Net change in account value/Beginning account value = base period
return.
Following is an example of these calculations based on the following
assumed expenses: 1.25% mortality and expense risk charge; $27 contract
maintenance charge and a contingent deferred sales charge of 6% of the
Contributions made within the last 72 months.
a= Value of one accumulation unit at beginning of period = 17.59196
b= Value of one accumulation unit at end of period = 17.60442
c= Annual maintenance charges accrued in period = $3.14
d= Average number of units outstanding in period = 1000.00
e= Base period return
Yield if contingent deferred sales charge does not apply:
Yield = (b-a-c/d)
a
= $17.60442 - 17.59196 - $3.14/ 1000.00
17.59196
e= 0.00053
f= Annualized yield - e x (365/7) = 2.76%
g= Effective yield - {[1 + (e)]365/7} - 1 = 2.80%
<PAGE>
<PAGE>
TOTAL RETURN CALCULATION
FORMULA: P(1+T)N = ERV
Where: T= Average annual total return
N= The number of years including portions of years
where applicable for which the performance is
being
measured
ERV= Ending redeemable value of a hypothetical $1,000
payment made at the beginning of the applicable period
<PAGE>
P= A hypothetical $1,000 initial payment made at the
inception of the Investment Division
Assumed expenses = 1.25% mortality and expense risk charge; $27
contract maintenance charge and a contingent deferred sales charge
of
6% of the Contributions made within the last 72 months.
The above formula can be restated to solve for T as follows:
T = [(ERV/P)1/N] - 1
Following are examples of this calculation on a 1 year, 5 year, 10
year and since inception basis if contingent deferred sales charge
applies
1 year total return:
ERV = 1,142.20
N= 1.00
P= 1,000.00
Therefore, 1 year total return is 14.22% .
<PAGE>
5 year total return:
ERV = 1,742.76
N= 5.00
P= 1,000.00
Therefore, 5 year total return is 11.75% .
10 year total return:
ERV = 2,975.28
N= 10.00
P= 1,000.00
Therefore, 10 year total return is 11.52% .
Since inception total return:
ERV = 5,383.53
N= 14.50
P= 1,000.00
Therefore, since inception total return is 12.31% .
Following are examples of this calculation on a 1 year, 5 year, 10
year and since inception basis if contingent deferred sales charge
does not apply:
1 year total return:
ERV = 1,202.00
N= 1.00
P= 1,000.00
Therefore, 1 year total return is 20.20% .
5 year total return:
ERV = 1,802.83
N= 5.00
P= 1,000.00
Therefore, 5 year total return is 12.51% .
10 year total return:
ERV = 2,975.28
N= 10.00
P= 1,000.00
Therefore, 10 year total return is 11.52% .
Since inception total return:
ERV = 5,383.53
N= 14.50
P= 1,000.00
Therefore, since inception total return is 12.31% .
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000740858
<NAME> FUTUREFUNDS, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 691,660,446
<INVESTMENTS-AT-VALUE> 838,364,503
<RECEIVABLES> 17,331,251
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 898,887
<TOTAL-LIABILITIES> 898,887
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 146,704,057
<NET-ASSETS> 854,796,867
<DIVIDEND-INCOME> 33,622,448
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 9,232,274
<NET-INVESTMENT-INCOME> 24,390,174
<REALIZED-GAINS-CURRENT> 30,509,815
<APPREC-INCREASE-CURRENT> 28,995,499
<NET-CHANGE-FROM-OPS> 83,895,488
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 200,553,374
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<PAGE>
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
