As filed with the Securities and Exchange Commission on March 1, 1999
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. 25 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 19 (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
8515 East Orchard 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
It is proposed that this filing will become effective (check appropriate space)
Immediately upon filing pursuant to paragraph (b) of Rule 485. On May
1, 1999 , pursuant to paragraph (b) of Rule 485.
X 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.
If appropriate, check the following:
Thispost-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<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.......................................Definitions
3. Synopsis..........................................Fee Table; Key Features of
the Annuity
4. Condensed Financial Information...................Appendix A
Information Condensed Financial
Information
5. General Description of Registrant,................Great-West Life & Annuity
Depositor and Portfolio Companies Insurance Company;
FutureFunds Series Account;
Investments of the Series
Account; Voting Rights
6. Deductions........................................Charges; and Deductions;;
Distribution of the
Contracts
7. General Description of............................The Group Contracts;
Variable Annuity Contracts Investments of the Series
Account; Statement of Additional Information
8. Annuity Period....................................Annuity Payment Options
9. Death Benefit Death Benefit; Annuity
Payment Options
FORM N-4 ITEM PROSPECTUS CAPTION
10. Purchases and Contract Value....................The Group Contracts
Distribution of the
Contracts; Cover Page;
Great-West Life & Annuity
Insurance Company
11. Redemptions.....................................The Group Contracts- Loans
& Distributions Free look
12. Taxes...........................................Federal Tax Consequences
13. Legal Proceedings...............................Legal Proceedings
14. Table of Contents of............................Statement of Additional
Statement of Additional Information Information
<PAGE>
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 History................Not Applicable
18. Services.......................................Custodian and Accountants
19. Purchase of Securities Being Offered...........Not Applicable
20. Underwriters...................................Underwriter
21. Calculation of Performance Data................Calculation of
Performance Data
22. Annuity Payments...............................Not Applicable
23. Financial Statements...........................Financial Statements
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
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) 701-8255
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<PAGE>
Overview
This prospectus describes a group flexible premium deferred variable annuity
contract designed to provide a retirement program that qualifies for special
federal income tax treatment. The Contract provides an annuity insurance
contract whose value is based on the investment performance of the Investment
Divisions you select. BenefitsCorp Equities, Inc. ("BCE") is the principal
underwriter and distributor of the Group Contracts. Great-West Life & Annuity
Insurance Company (we, us, Great-West or GWL&A) issues the Group Contracts in
connection with:
opension or profit-sharing plans described in Section 401(a) of the
Internal Revenue Code of 1986 (Code) (401(a) Plans);
o cash or deferred profit sharing plans described in Code Section
401(k) (401(k) Plans);
o tax sheltered annuities described in Code Section 403(b) (403(b)
Plans); o deferred compensation plans described in Code Section 457(b)
or (f) (457(b) or (f)
Plans);
oqualified governmental excess benefit plans described in Code Section
415(m) (415(m) Plans);
o nonqualified deferred compensation plans (NQDC Plans)
Participation in the Group Contracts
You may be eligible to participate in the Group Contract if you participate in
one of the Plans described above. The owner of a Group Contract will be an
employer, plan trustee, certain employer or employee associations, as applicable
("Group Policyholder"). As a participant, you will receive a Certificate
describing your interest under the Group Contract and we will establish a
participant annuity account ("Participant Annuity Account") in your name. This
Participant Annuity Account will reflect the dollar value of the Contributions
made on your behalf.
Allocating your money
You can allocate your Contributions among 27 Investment Divisions of the
FUTUREFUNDS Series Account (the "Series Account"). Each Investment Division
invests all of its assets in one of 29 corresponding mutual funds (Eligible
Funds). Each Eligible Fund is offered by one of the following fund families:
Maxim Series Fund, Inc.
Fidelity Variable Investment Products Fund
Fidelity Variable Investment Products II Fund
Janus Aspen Series
Stein Roe Variable Series
You can also allocate your money to certain options where you can earn a fixed
rate of return on your investment. Your interest in a fixed option is not
considered a security and is not subject to review by the Securities and
Exchange Commission.
The Investment Divisions and the Fixed Options available to you will depend on
the terms of the Group Contract. Please consult with the Group Policyholder for
more information.
Payment options
The Group Contract offers you a variety of payment options. You can select from
options that provide for fixed or variable payments or a combination of both. If
you select a variable payment option, your payments will reflect the investment
experience of the Investment Divisions you select. Income can be guaranteed for
your lifetime and/or your spouse's lifetime or for a specified period of time,
depending on your needs and circumstances.
This Prospectus presents important information you should read before
participating in the Group Contract. Please read it carefully and retain it for
future reference. You can find more detailed information pertaining to the Group
Contract in the Statement of Additional Information dated MONTH X, 1999 which
has been filed with the Securities and Exchange Commission. The Statement of
Additional Information is incorporated by reference into this prospectus, which
means that it is legally a part of this prospectus. It may be obtained without
charge by contacting Great-West at its Administrative Offices or by calling
(800) 701-8255 or, you can obtain it by visiting the Securities and Exchange
Commission's web site at www.sec.gov
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of the prospectus.
Any representation to the contrary is a criminal offense.
The date of this prospectus is MONTH X, 1999.
<PAGE>
TABLE OF CONTENTS
Page
Definitions...............................................................3
Key Features of the Annuity...............................................4
Fee Table.................................................................5
Condensed Financial Information...........................................8
Great-West Life & Annuity Insurance Company...............................8
FutureFunds Series Account................................................8
Investments of the Series Account.........................................8
The Eligible Funds................................................8
The Group Contracts.......................................................11
Accumulation Period.......................................................11
Application and Initial Contribution..............................11
Subsequent Contribtions...........................................12
Making Transfers..........................................................12
Loans.....................................................................14
Total and Partial Withdrawals.............................................14
Cessation of Contributions................................................14
Death Benefit.............................................................15
Charges and Deductions....................................................16
Payment Options...........................................................19
Periodic Payments.................................................19
Annuity Payment Options...........................................20
Federal Tax Consequences..................................................22
Performance Related Information...........................................27
Voting Rights.............................................................29
Distribution of the Group Contracts.......................................29
State Regulation..........................................................30
Restrictions Under the Texas Optional Retirement Program..................30
Reports...................................................................30
Year 2000.................................................................30
Rights Reserved by Great-West.............................................30
Adding and Discontinuing Investment Options.......................31
Substitution of Investments.......................................31
Legal Matters.............................................................31
Available Information.....................................................31
Appendix A, Condensed Financial Information...............................32
Appendix B, Net Investment Factor Calculation ............................36
This prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made. No dealer, salesperson or other person
is authorized to give any information or make any representations in connection
with this offering other than those contained in this prospectus, and, if given
or made, such other information or representations must not be relied on.
The Group Contract is not available in all states.
<PAGE>
Definitions
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Accumulation Period: The period between the effective date of your participation in the
Group Contract and the Annuity Commencement Date. During this period, you are making
Contributions to the Group Contract.
Accumulation Unit: An accounting measure we use to determine your Variable Account Value
during the Accumulation Period.
Administrative Offices: The Administrative Offices of GWL&A are located at 8515 E. Orchard
Rd., Englewood, Colorado 80111.
Annuity Commencement Date: The date payments begin under an annuity payment option.
Annuity Unit: An accounting measure we use to determine the dollar value of each variable
annuity payment after the first payment.
Contribution(s): Amount(s) paid to us under the Group Contract on your behalf.
Certificate: The document you receive when you enroll as a participant under the Group
Contract. This document describes all of your rights under the Group Contract.
Eligible Fund: A mutual fund in which an Investment Division invests all of its assets.
Fixed Annuity: An annuity with payments that remain fixed throughout the payment period and
which do not reflect the investment experience of an Investment Division.
Fixed Options: Investment options that provide a fixed rate of return to which you can
allocate Contributions or make Transfers. There are currently three types of Fixed Options
they are the Daily Interest Guaranteed Sub-Account, the Guaranteed Certificate Funds and the
Guaranteed Fixed Fund. Please see your Certificate for more information concerning the Fixed
Options. Your interest in the Fixed Options are not securities and are not subject to review
by the Securities and Exchange Commission. Please see your Certificate for more information
about the Fixed Options.
Group Contract: An agreement between GWL&A and the Group Policyholder providing a fixed
and/or variable deferred annuity issued in connection with certain retirement plans.
Group Policyholder: Depending on the type of plan and the employer's involvement, the Group
Policyholder will be an employer, plan trustee, certain employer associations or employee
associations.
Guaranteed Account Value: The sum of the value of each of your Guaranteed Sub-Accounts.
Guaranteed Sub-Accounts: The subdivisions of your Participant Annuity Account reflecting the
value credited to you from the Fixed Options.
Investment Division: The Series Account is divided into Investment Divisions, one for each
Eligible Fund. You select one or more Investment Divisions to which you allocate your
Contributions. Your Variable Account Value will reflect the investment performance of the
corresponding Eligible Funds.
Participant: The person to whom a Certificate under the Group Contract is issued; sometimes
referred to as "you," "your" or "yours" in this Prospectus.
Participant Annuity Account: A separate record we establish in your name that reflects all
transactions you make under the Group Contract.
Participant Annuity Account Value: The total value of your interest under the Group
Contract. It is the total of your Guaranteed and Variable Account Values.
Premium Tax: The amount of tax, if any, charged by a state or other government authority.
Request: Any Request, either written, by telephone or computerized, which is in a form
satisfactory to GWL&A and received by GWL&A at its Administrative Offices.
Series Account: The segregated investment account established by GWL&A to provide variable
funding options for the Group Contracts. It is registered as a unit investment trust under
the Investment Company Act of 1940 and consists of the individual Investment Divisions.
Transfer: When you move your Participant Annuity Account Value between and among the
Investment Divisions and Fixed Options.
Transfer to Other Companies: The Transfer of all or a portion of your Participant Annuity
Account Value to another company.
Valuation Date: The date on which we calculate the accumulation unit value of each
Investment Division. This calculation is made as of the close of business of the New York
Stock Exchange (generally 4:00 p.m. ET). It is also the date on which we will process any
Contribution or Request received. Contributions and Requests received after the close of
trading on the New York Stock Exchange (generally 4:00 p.m. ET) will be deemed to have been
received on the next Valuation Date. Your Participant Annuity Account Value will be
determined on each day that the New York Stock Exchange is open for trading. On the day
after Thanksgiving, however, you can only submit transaction Requests by automated voice
response unit, via the Internet or by an automated computer link.
Valuation Period: The period between the ending of two successive Valuation Dates.
Variable Account Value: The total of your Variable Sub-Accounts.
Variable Sub-Account: A subdivision of your Participant Annuity Account reflecting the value
credited to you from an Investment Division.
</TABLE>
<PAGE>
Key Features
Following are some of the key features of the Group Contract. These topics are
discussed in more detail throughout the prospectus so please be sure to read it
carefully. Purpose of the Group Contract The Group Contract is designed to
provide a tax deferred annuity retirement program and is
issued in connection with:
o401(a) Plans o403(b) Plans
o401(k) Plans o457(b) or (f) Plans
o415(m) Plans oNQDC Plans.
Participation in the Group Contract
You must complete an application to participate under the Group Contract. After
we approve your application, we will issue you a Certificate. The Certificate
describes all of your rights under the Group Contract. Once you become a
participant, you may make unlimited Contributions, subject to the terms of your
plan. There is no minimum amount for your Contributions. Please consult your
employer or the Group Policyholder, as the case may be, for information
concerning eligibility. Allocation of Contributions You may allocate your
Contributions to the Investment Divisions and/or the Fixed Options. In your
application, you instruct us how you would like your Contributions allocated.
For some plans, if you do not provide complete allocation instructions in your
application, we will allocate your Contributions to an investment option
specified by the Group Policyholder. Thereafter, you may change your allocation
instructions as often as you like by Request. You may allocate your
Contributions to the Investment Divisions where your investment returns will
reflect the investment performance of the corresponding Eligible Funds or to the
Fixed Options where your Contributions will earn a fixed rate of return. The
Eligible Funds are described more fully in their accompanying prospectuses. Free
Look Period The free look period applies only to Group Contracts issued under
403(b) Plans. Within ten (10) days (or longer where required by law) after you
receive your Certificate, you may cancel your interest in the Group Contract for
any reason by delivering or mailing the Certificate, along with your Request to
cancel, to our Administrative Offices or to an authorized agent of GWL&A. We
must receive it in person or postmarked prior to the expiration of the free look
period. Upon cancellation, GWL&A will refund the greater of all Contributions
made, less partial distributions or your Participant Annuity Account Value. Your
Participant Annuity Account When we issue you a Certificate, we will establish a
Participant Annuity Account in your name that will reflect all transactions you
make under the Group Contract, including the amount of Contributions made on
your behalf. We will send you a statement of your Participant Annuity Account
Value at least annually. You may also check your Participant Annuity Account
Value by using KeyTalk(R), or through the Internet. Charges and Deductions Under
the Group Contracts You will pay certain charges under the Group Contract. These
charges vary by Group Contract and may include:
An annual contract maintenance charge
A contingent deferred sales charge
A mortality and expense risk charge
A Premium Tax
In addition, you indirectly pay the management fees and other expenses of an
Eligible Fund when you allocate your money to the corresponding Investment
Division. Total and Partial Withdrawals You may withdraw all or part of your
Participant Annuity Account Value at any time before the Annuity Commencement
Date. Amounts you withdraw may be subject to a Contingent Deferred Sales Charge.
In addition, there may be certain tax consequences when you make a withdrawal.
Making Transfers You can Transfer your Participant Annuity Account Value among
the Investment Divisions as often as you like before the Annuity Commencement
Date. After the Annuity Commencement Date, you may continue to Transfer among
the Investment Divisions if you have selected a variable annuity payment option.
You can also transfer between the Investment Divisions and the Fixed Options.
Transfers before the Annuity Commencement Date involving certain of the Fixed
Options are subject to restrictions that are more fully described in your
Certificate. Annuity Payment Options We provide you with a wide range of annuity
options, giving you the flexibility to choose an annuity payment schedule that
meets your needs. Payments may be made on a variable, fixed, or combination
basis. Under a variable annuity payment option your payments will continue to
reflect the performance of the Investment Divisions you select. Death Benefit We
will pay a death benefit to your beneficiary if you die before the Annuity
Commencement Date.
o If you die before age 70, the death benefit is the greater of (1) your
Participant Annuity Account Value, less any Premium Taxes, or (2) the sum
of all Contributions, less any withdrawals and Premium Taxes.
o If you die at or after age 70 the death benefit is your Participant
Annuity Account Value, less any Premium Taxes.
<PAGE>
FEE TABLE
The purpose of this table and the examples that follow is to assist you in
understanding the various costs and expenses that you will bear directly or
indirectly when investing in the Group Contract. The table and examples reflect
the maximum amount of each type of charge shown. The actual charges you may pay
under your Group Contract may be lower. Please contact your employer or your BCE
representative for more information about the charges that are applicable to
your Certificate. In addition to the expenses listed below, Premium Tax may be
applicable.
PARTICIPANT TRANSACTION EXPENSES
Sales Load Imposed on Purchases (as a percentage of purchase
payments)..None Contingent Deferred Sales Load (as a percentage of
amount distributed)..6%
Transfer Fee.......................................................None
Maximum Periodic Mortality and Expense Risk Charge1 ......................1.00%
Annual Contract Fee.....................................................$30
Investment Division Annual Expenses (as a percentage of average Series Account
value)(Expenses vary by Group Contract)
Maximum Daily Mortality and Expense Risk
Charge
1.25%
<PAGE>
<TABLE>
ELIGIBLE FUND ANNUAL EXPENSES
(as a percentage of Eligible Fund net assets, before any applicable fee waivers or expense
reimbursements)
Eligible Fund Management Fees Other Expenses Total
Eligible Fund
Expenses
<S> <C> <C> <C>
Maxim International Equity 1.00% .20% 1.20%
Maxim INVESCO ADR 1.00% .30% 1.30%
Janus Aspen Series Worldwide Growth .66% .08% .74%
Maxim INVESCO Small-Cap Growth .95% .15% 1.10%
Maxim Small-Cap Aggressive Growth 1.00% .11% 1.11%
Maxim Small-Cap Index .60% 0% .60%
Maxim Small-Cap Value 1.00% .28% 1.28%
Maxim MidCap Growth 1.00% .05% 1.05%
Maxim Mid-Cap (managed by Ariel) .95% .11% 1.06%
American Century VP Capital 1.00% 0% 1.00%
Appreciation
Fidelity VIP Growth .60% .09% .69%
Maxim Blue Chip 1.00% .15% 1.15%
Maxim Growth Index .60% 0% .60%
Maxim Stock Index .60% 0% .60%
Maxim T. Rowe Price Equity-Income .80% .11% .91%
Maxim Value Index .60% 0% .60%
Fidelity VIP II Contrafund .61% .10% .71%
Fidelity VIP II Asset Manager .55% .10% .65%
Maxim INVESCO Balanced 1.00% 0% 1.00%
Stein Roe Balanced .45% .15% .60%
Maxim Bond .60% 0% .60%
Maxim Corporate Bond .90% 0% .90%
Maxim U.S. Government Securities .60% 0% .60%
Maxim Money Market .46% 0% .46%
Maxim Aggressive Profile+ .25% 0% .25%
Maxim Moderately Aggressive Profile+ .25% 0% .25%
Maxim Moderate Profile+ .25% 0% .25%
Maxim Moderately Conservative Profile+ .25% 0% .25%
Maxim Conservative Profile+ .25% 0% .25%
Minimum Total Maxim Series Maximum Total Maxim Series
Fund Annual Expenses* Fund Annual Expenses**
Aggressive Profile 1.16% 1.51%
Moderately Aggressive Profile 1.08% 1.44%
Moderate Profile 1.02% 1.35%
Moderately Conservative Profile 1.00% 1.26%
Conservative Profile 0.85% 1.11%
</TABLE>
+ Each Profile Portfolio will primarily invest in shares of other Maxim
Portfolios ("Underlying Portfolios"). Therefore, each Profile Portfolio willbear
its pro rata share of the fees and expenses incurred by the Underlying
Portfolios, in addition to its own expenses.
* The Minimum Fees are determined by assuming the allocation of each Profile
Portfolio's assets to those Underlying Portfolios (please see the Maxim Series
Fund prospectus for the Profile Portfolios for further information on the
Profile Portfolios) with the lowest Total Annual Expenses.
** The Maximum Fees are determined by assuming the allocation of each Profile
Portfolio's assets to those Underlying Portfolios (please see the Maxim Series
Fund prospectus for the Profile Portfolios for further information on the
Profile Portfolios) with the highest Total Annual Expenses.
A portion of the brokerage commissions that these Eligible Funds pay was
used to reduce their expenses. In addition, the Eligible Funds have entered into
arrangements with their custodian whereby credits realized, as a result of
uninvested cash balances were used to reduce custodian expenses. Including these
reductions, the Total Eligible Fund Expenses presented in the table would have
been .67% for Fidelity VIP Growth and .65% for Fidelity VIP II Asset Manager.
<PAGE>
EXAMPLES
If you continue your interest under the Group Contract, or if you elect to take
annuity payments, 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 that is
assessed as a daily deduction from the Investment Divisions:
<TABLE>
Investment Division 1 Year 3 Year 5 Year 10 Year
- ------------------------------------------------------ ---------------- ---------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Maxim Money Market
Maxim Bond, Maxim Stock Index, Maxim U.S. Government Securities, Maxim Small-Cap
Index, Maxim Total ReturnValue Index, Maxim Growth Incdex Maxim Mid-Cap (Growth
Fund I), Maxim INVESCO Small-Cap Growth Maxim International Equity Maxim
Corporate Bond Maxim Small-Cap Value (Ariel Value) Maxim INVESCO ADR, Maxim
Small-Cap Aggressive Growth Maxim INVESCO Balanced, American Century VP Capital
Appreciation Maxim T. Rowe Price Equity/Income Fidelity VIP Growth Fidelity VIP
II Asset Manager Fidelity VIP II Contrafund Janus Aspen Worldwide Growth Stein
Roe Balanced Fund, Variable Series Maxim Blue Chip Maxim MidCap Growth Maxim
Aggressive Profile Maxim Moderately Aggressive Profile Maxim Moderate Profile
Maxim Moderately Conservative Profile Maxim Conservative Profile
Examples (con't)
If you make a total withdrawal 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 that is assessed as a daily deduction from the Investment Divisions and
Contingent Deferred Sales Charge under any Group Contract:
Investment Division 1 Year 3 Year 5 Year 10 Year
- --------------------------------------------------- ------------- ---------------- ------------ ---------------
Maxim Money Market
Maxim Bond, Maxim Stock Index, Maxim U.S. Government Securities, Maxim Small-Cap
Index, Maxim
Total ReturnValue Index, Maxim Growth Index
Maxim Mid-Cap (Growth Fund I), Maxim INVESCO Small-Cap Growth Maxim
International Equity Maxim Corporate Bond Maxim Small-Cap Value (Ariel Value)
Maxim INVESCO ADR, Maxim Small-Cap Aggressive Growth Maxim INVESCO Balanced,
American Century VP Capital Appreciation Maxim T. Rowe Price Equity/Income
Fidelity VIP Growth Fidelity VIP II Asset Manager Fidelity VIP II Contrafund
Janus Aspen Worldwide Growth Stein Roe Balanced Fund, Variable Series Maxim Blue
Chip Maxim MidCap Growth Maxim Aggressive Profile Maxim Moderately Aggressive
Profile Maxim Moderate Profile Maxim Moderately Conservative Profile Maxim
Conservative Profile
</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.
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.
<PAGE>
CONDENSED FINANCIAL INFORMATION
Attached as Appendix A is a table showing selected information concerning
Accumulation Units for each Investment Division. The Accumulation Unit values do
not reflect the deduction of certain charges that are subtracted from your
Participant Annuity Account Value, such as the Contract Maintenance Charge or
the Periodic Mortality and Expense Risk Charge. The information in the table is
included in the Series Account's financial statements, which have been audited
by Deloitte & Touche LLP, independent auditors. To obtain a fuller picture of
each Investment Division's finances and performance, you should also review the
Series Account's financial statements, which are contained in the SAI.
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, the U.S. Virgin Islands, Guam 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
We originally established the Series Account under Kansas law on November 15,
1983. The Series Account now exists pursuant to Colorado law as a result of our
redomestication. The Series Account consists of Investment Divisions and is
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940, as a unit investment trust. This registration does not
involve supervision of the management of the Series Account or GWL&A by the
Securities and Exchange Commission.
We do not guarantee the investment performance of the Investment Divisions. The
portion of your Participant Annuity Account Value allocated to the Investment
Divisions and the amount of variable annuity payments depend on the investment
performance of the Eligible Funds. Thus, you bear the full investment risk for
all Contributions allocated to the Investment Divisions.
The Series Account and its Investment Divisions are administered and accounted
for as part of our general business. However, the income, gains, or losses of
each Investment Division are credited to or charged against the assets held in
that Investment Division, without regard to other income, gains or losses of any
other Investment Division and without regard to 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 Series Account currently has twenty-seven Investment Divisions available for
allocation of Contributions. Each Investment Division invests in shares of an
Eligible Fund each having a specific investment objective. If we decide to make
additional Investment Divisions available to Group Policyholders, we may or may
not make them available to you based on our assessment of marketing needs and
investment conditions.
INVESTMENTS OF THE SERIES ACCOUNT
The Eligible Funds
Some Eligible Funds may not be available under your Group Contract because the
Group Policyholder may decide to offer only a select number of Eligible Funds
under its plan. Please consult with your Group Policyholder or employer, as the
case may be, or one of our authorized representatives for more information
concerning the availability of Eligible Funds under your Group Contract. Each
Eligible Fund is a separate mutual fund having its own investment objectives and
policies.
Each Eligible Fund is registered with the Securities and Exchange Commission as
an open-end management investment company or portfolio thereof. The Securities
and Exchange Commission does not supervise the management or the investment
practices and policies of any of the Eligible Funds.
The following sets forth the investment objective of each Eligible Fund and
summarizes its principle investment strategy. There is no assurance that any of
the Eligible Funds will achieve their respective objectives.
Maxim Series Fund, Inc.
Maxim Money Market Portfolio seeks as high a level of current income as is
consistent with the preservation of capital and liquidity. Investment in the
Maxim Money Market Portfolio is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the portfolio
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in this portfolio.
Maxim Bond Portfolio seeks maximum total return consistent with the preservation
of capital. This portfolio invests primarily in bonds issued by the U.S.
Government and its agencies and by domestic or foreign corporations.
Maxim Stock Index Portfolio seeks investment results that track the total return
of the common stocks that comprise Standard & Poor's (S&P) 500 Composite Stock
Price Index and the S&P Mid-Cap Index, weighted according to their respective
pro-rata shares of the market.1
Maxim U.S. Government Securities Portfolio seeks the highest level of return
consistent with preservation of capital and substantial credit protection. This
portfolio invests at least 65% of its total assets in securities issued or
guaranteed by the U.S. Government or one of its agencies or instrumentalities.
Maxim Small-Cap Index Portfolio seeks investment results that track the total
return of the common stocks that comprise the S&P Small-Cap 600 Stock Index.1
Maxim Mid-Cap Portfolio (sub-advised by Ariel) seeks long-term appreciation.
This portfolio will invest primarily in equity securities of mid-cap companies
which are believed to be undervalued but demonstrate a strong potential for
growth.
Maxim International Equity Portfolio seeks long-term capital growth. This
portfolio invests primarily in commons stocks of foreign companies.
Maxim Corporate Bond Portfolio seeks high total investment return through a
combination of current income and capital preservation. This portfolio will
invest at least 65% of its total assets in corporate debt securities of any
maturity. It may also invest up to 20% of its total assets in preferred stocks
or foreign securities and up to 35% in below investment grade quality
securities.
Maxim Small-Cap Value Portfolio (Ariel Value Investment Division) seeks long
term appreciation by investing primarily in small-cap common stocks. This
portfolio will emphasize small companies that are believed to be undervalued and
may invest in mid-sized companies with similar characteristics.
Maxim INVESCO Small-Cap Growth Portfolio seeks to achieve long-term capital
growth. This portfolio will invest primarily 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.
Maxim INVESCO ADR Portfolio seeks a high total return through capital
appreciation and current income, while reducing risk through diversification.
This portfolio invests primarily 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.
Maxim INVESCO Balanced Portfolio seeks high total return on investment through
capital appreciation and current income. This portfolio invests 50% to 70% in
common stocks and at least 25% in fixed income securities.
Maxim T. Rowe Price Equity/Income Portfolio seeks substantial dividend income
and also capital appreciation. This portfolio invests primarily in
dividend-paying common stocks of established companies.
Maxim Value Index Portfolio seeks investment results that track the total return
of the common stocks that comprise the Russell 1000 Value Index.2
Maxim Growth Index Portfolio seeks investment results that track the total
return of the common stocks that comprise the Russell 1000 Growth Index.2
Maxim Small-Cap Aggressive Growth Portfolio seeks long-term capital growth. This
portfolio seeks to build a core small-cap portfolio of solid growth companies'
stock with a small emphasis on companies that have experienced significant
business problems but which are believed to have favorable prospects for
recovery.
Maxim Blue Chip Portfolio seeks long-term growth of capital and income. This
portfolio invests primarily in common stocks of large, well established, stable
and mature companies, commonly known as "Blue Chip" companies.
Maxim MidCap Growth Portfolio seeks long-term appreciation. This portfolio will
invest primarily in a diversified portfolio of mid-cap companies emphasizing
companies whose earnings are expected to grow at a faster rate than the average
mid-cap company.
Maxim Profile Portfolios
Each of the following five Maxim Profile Portfolios seeks to provide an asset
allocation program designed to meet certain investment goals based on an
investor's risk tolerance.
Maxim Aggressive Profile Portfolio seeks long-term capital appreciation
primarily through investments in other Maxim Series Fund, Inc. portfolios that
emphasize equity investments.
Maxim Moderately Aggressive Profile Portfolio seeks long-term capital
appreciation primarily through investments in other Maxim Series Fund, Inc.
portfolios that emphasize equity investments, though income is a secondary
consideration.
Maxim Moderate Profile Portfolio seeks long-term capital appreciation primarily
through investments in other Maxim Series Fund, Inc. portfolios with a
relatively equal emphasis on equity and fixed income investments.
Maxim Moderately Conservative Profile Portfolio seeks capital appreciation
primarily through investments in other Maxim Series Fund, Inc. portfolios that
emphasize fixed income investments, and to a lesser degree equity investments.
Maxim Conservative Profile Portfolio seeks capital preservation primarily
through investments in other Maxim Series Fund, Inc. portfolios that emphasize
fixed income investments.
American Century Variable Portfolios, Inc.
American Century VP Capital Appreciation Fund seeks capital growth. The fund
will seek to achieve its investment objective by investing primarily in common
stocks that are considered by management to have better-than-average prospects
for appreciation.. This portfolio is closed to new investments.
Fidelity Variable Insurance Products and Variable Insurance Products II
Fidelity VIP Growth Portfolio seeks capital appreciation primarily by investing
in common stocks.
Fidelity VIP II Asset Manager Portfolio seeks high total return with reduced
risk over the long-term by allocating its assets among stocks, bonds and
short-term instruments. This portfolio is closed to new investments. Fidelity
VIP II Contrafund Portfolio seeks long-term capital appreciation by investing
primarily in common stocks. The fund invests its assets in securities of
companies whose value its investment advisor believes is not fully recognized by
the public.
Janus Aspen Series
Janus Aspen Worldwide Growth Portfolio seeks long-term growth of capital in a
manner consistent with the preservation of capital. The Portfolio invests in
common stocks of companies of any size throughout the world.
SteinRoe Variable Investment Trust
Stein Roe Balanced Fund, Variable Series seeks high total investment return
through investment in a changing mix of securities. The Portfolio's assets are
allocated among equities, debt securities and cash.
Eligible Fund Investment Advisers
Maxim Series Fund, Inc. is advised by GW Capital Management, LLC. 8515 E.
Orchard Road, Englewood, Colorado 80111, a wholly owned subsidiary of
Great-West.
American Century Variable Portfolios, Inc. is advised by American Century
Investment Management, Inc. American Century Tower, 4500 Main Street, Kansas
City, Missouri, 64111.
Fidelity Variable Insurance Products and Variable Insurance Products II are
advised by Fidelity Management & Research Company, 2 Devonshire Street, Boston
Massachusetts 02109.
The Janus Aspen Series is advised by Janus Capital Corporation, 100 Fillmore
Street, Suite 300, Denver, Colorado 80206.
The SteinRoe Variable Investment Trust are advised by Stein Roe & Farnham
Incorporated, One South Wacker Drive, Chicago, Illinois 60606.
Maxim Series Fund Sub-Advisers
GW Capital Management, LLC hires sub-advisers to manage the investment and
reinvestment of assets of a number of the Maxim Series Fund, Inc. portfolios.
These sub-advisers are subject to the review and supervision of GW Capital
Management, LLC. and the board of directors of Maxim Series Fund, Inc.
Ariel Capital Corporation serves as the sub-adviser to the Maxim Mid-Cap
Portfolio and the Maxim Small-Cap Value (Ariel Value) Portfolio. Ariel is
located at 307 N. Michigan Avenue, Chicago, Illinois 60601.
Founders Asset Management, Inc. serves as the sub-adviser of the Maxim Blue Chip
Portfolio. Founders is located at 2930 East Third Avenue, Denver, CO 80206.
INVESCO Capital Management, Inc. serves as the sub-adviser to the Maxim INVESCO
ADR Portfolio. INVESCO Capital Management, Inc. is located at 1315 Peachtree
Street, Atlanta, Georgia 30309.
INVESCO Trust Company serves as the sub-adviser of the Maxim INVESCO Small-Cap
Growth Portfolio and the Maxim INVESCO Balanced Portfolio. INVESCO Trust Company
is located at 7800 E. Union Avenue, Denver, Colorado 80237.
Loomis, Sayles & Company, LP ("Loomis Sayles") serves as the sub-adviser to the
Maxim Corporate Bond Portfolio and the Maxim Small-Cap Aggressive Growth
Portfolio. Loomis Sayles is located at One Financial Center, Boston,
Massachusetts 02111.
Templeton Investment Counsel, Inc. serves as the sub-adviser of the Maxim
International Equity Portfolio. Templeton is located at Broward Financial
Centre, 500 East Broward Blvd, Suite 2100, Fort Lauderdale, Florida 33394.
T. Rowe Price Associates, Inc. serves as the sub-adviser to the Maxim T. Rowe
Price Equity/Income Portfolio and the Maxim MidCap Growth Portfolio. T. Rowe
Price is located at 100 East Pratt Street, Baltimore, Maryland 21202.
Reinvestment and Redemption
All dividend distributions and capital gains made by an Eligible Fund will be
automatically reinvested in shares of that Eligible Fund on the date of
distribution. We will redeem Eligible Fund shares to the extent necessary to
make annuity or other payments under the Group Contracts.
Meeting Investment Objectives
Meeting investment objectives depends on various factors, including, but not
limited to, how well the Eligible Fund managers anticipate changing economic and
market conditions. There is no guarantee that any of these Eligible Funds will
achieve their stated objectives.
Where to Find More Information About the Eligible Funds
Additional information about the Eligible Funds can be found in the current
prospectuses for the Eligible Funds, which can be obtained by calling Great-West
at 800-701-8255, or by writing to Great-West at D790 - Savings Communications,
P.O. Box 1700, Denver, Colorado 80201-9952. The Eligible Funds' prospectuses
should be read carefully before you make a decision to invest in an the
Investment Division.
THE GROUP CONTRACTS
Group Contract Availability
The Group Contract is generally purchased by employers or certain associations
or organizations to fund their retirement plans. We issue the Group Contract in
connection with: o 401(a) Plans; o 401(k) Plans; o 403(b) Plans; o 457 (b) or
(f) Plans o 415(m) Plans; and o NQDC Plans The Group Contract is generally owned
by the employer, association or organization. For Group Contracts issued in
connection with certain 403(b) Plans, the Group Policyholder has no right, title
or interest in the amounts held under the Group Contract and the Participants
make all elections under the Group Contract. For all other Plans, Participants
have only those rights that are specified in the Plan.
Purchasing an Interest in the Group Contract
Eligible organizations may acquire a Group Contract by completing and sending to
us the appropriate forms. Once we approve the forms, we issue a Group Contract
to the Group Policyholder. If you are eligible to participate in the plan, you
may purchase an interest in a Group Contract by completing an enrollment form
and giving it to your employer or Group Policyholder, as applicable or a BCE
representative. Your application will be forwarded to us for processing. Please
consult with your employer or the Group Policyholder, as the case may be, for
information concerning your eligibility to participate in the plan and the Group
Contract.
Contributions
Your employer will send us contributions on your behalf. There is no minimum
amount or number of Contributions. You can make Contributions at any time before
your Annuity Commencement Date.
Certificate and Participant Annuity Account
When we approve your application we will issue you a certificate and establish a
Participant Annuity Account in your name to reflect all of your transactions
under the Group Contract. You will receive a statement of your Participant
Annuity Account Value no less frequently than annually. You may also review your
Participant Annuity Account Value through KeyTalk(R) or via the Internet.
ACCUMULATION PERIOD
Application and Initial Contribution
For 403(b) Plans (other than employer-sponsored plans):
If your application is complete, we will allocate your initial Contributions to
the Investment Divisions according to the instructions in your application,
within two business days of our receipt at our Administrative Offices. If your
application is incomplete, we will immediately place your initial Contributions
in the Maxim Money Market Investment Division while we try to complete the
application. Upon completion of your application, the initial Contribution will
be allocated to the Investment Divisions according to your instructions in the
application. If your application remains incomplete after 105 days we will
return your Contribution along with investment earnings (if any).
For all other plans:
If your application is complete we will allocate your initial Contributions to
the Investment Divisions pursuant to instructions in your application, within
two business days of receipt at our Administrative Offices. If your application
is incomplete, we will contact you or the Group Policyholder to obtain the
missing information. If your application remains incomplete for five business
days, we will immediately return your Contributions. If we complete an
application within five business days of our receipt of the incomplete
application, we will allocate your initial Contribution within two business days
of the application's completion in accordance with your allocation instructions.
However, if your application is incomplete solely because you have not provided
complete allocation instructions, we will consider the application to be
complete if the Group Policyholder has directed us to allocate your initial
Contribution to a specified Investment Division or Fixed Option as authorized by
the specific retirement plan.
Free Look Return Privilege
If we issue you a Certificate in connection with a 403(b) Plan, you may cancel
your interest in the Group Contract for any reason by delivering or mailing your
Certificate together with a Request to cancel, to our Administrative Offices or
to an authorized agent of GWL&A within 10 days after your receive it (or longer
where required by law). We must receive it in person or postmarked prior to the
expiration of the free look period. Upon cancellation, we will refund the
greater of (1) Contributions less withdrawals or (2) your Participant Annuity
Account Value.
Subsequent Contributions
We will allocate subsequent Contributions according to the allocation
instructions you provided in the application. We will allocate Contributions on
the Valuation Date we receive them.
You may change your allocation instructions at any time by Request. Such change
will be effective the later of (1) the date you specify in your Request or (2)
the Valuation Date we receive your request at our Administrative Offices. Once
you change your allocation instructions, those instructions will be effective
for all subsequent Contributions until changed.
Participant Annuity Account Value
Before the Annuity Commencement Date, your Participant Annuity Account Value is
the total value of your Variable and Guaranteed Sub-Accounts.
Before the Annuity Commencement Date, the Variable Account Value is the total
dollar amount of all Accumulation Units credited to you. When you allocate
Contributions to an Investment Division we credit you with Accumulation Units.
We determine the number of Accumulation Units credited to you by dividing your
Contribution to an Investment Division by that Investment Division's
Accumulation Unit value. We determine the Accumulation Unit value on each
Valuation Date.
We calculate each Investment Division's Accumulation Unit value at the end of
each Valuation Period by multiplying the value of that unit at the end of the
prior Valuation Period by the Investment Division's Net Investment Factor for
the Valuation Period. The formula used to calculate the Net Investment Factor is
set forth in Appendix B. Your Variable Account Value reflects the value of the
Accumulation Units credited to you in each Investment Division.
The value of an Investment Division's assets is determined at the end of each
Valuation Date. A Valuation Period is the period between two successive
Valuation Dates. On the day after Thanksgiving, you can only submit transaction
Requests by KeyTalk(R), or through the Internet.
Your Variable Account Value will reflect the investment performance of the
selected Investment Division(s) which in turn reflect the investment performance
of the corresponding Eligible Funds, which we factor in by using the Net
Investment Factor referred to above. Making Transfers
Prior to your Annuity Commencement Date, you can Transfer your Participant
Annuity Account Value among the Investment Divisions and the Fixed Options
subject to the following limitations:
You may Transfer all or a portion of your Participant Annuity
Account Value held in any of the Investment Divisions and/or the Daily
Interest Guaranteed Fixed Option at any time by Request.
You may Transfer all or a portion of your Participant Annuity
Account Value held in any of the Guaranteed Certificate Funds Fixed
Options only at Certificate maturity by Request. (See your Certificate
for more information).
You may Transfer all or a portion of your Participant Annuity
Account 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. (See your
Certificate for more information).
Your Request must specify:
o the amounts being Transferred,
o the Investment Division(s) or Fixed Options from which the Transfer is
to be made, and
o the Investment Division(s) or Fixed Options that will receive the Transfer.
Currently, there is no limit on the number of Transfers you can make among the
Investment Divisions each calendar year. However, we reserve the right to limit
the number of Transfers you make. There is no charge for Transfers
You may make Transfers by telephone or through the Internet. We will use
reasonable procedures in monitoring and accepting telephonic and Internet
Transfer Requests designed to ensure that those Requests are genuine such as
requiring certain identifying information, tape recording telephone
instructions, and providing written confirmation of a transaction. We will not
be liable for losses resulting from telephone or Internet instructions we
reasonably believe to be genuine.
We reserve the right to suspend telephone or Internet transaction privileges at
any time, for some or all Group Contracts, and for any reason. Withdrawals are
not permitted by telephone.
A Transfer will take effect on the later of the date designated in the Request
or the Valuation Date that we receive the Transfer Request at our Administrative
Offices. If we receive a Transfer Request within 30 days of the Annuity
Commencement Date, we may delay the Annuity Commencement Date by not more than
30 days. Additional Transfer conditions apply to Transfers to or from the Fixed
Options. Please see your Certificate for more information..
Possible Restrictions
We reserve the right without prior notice to modify, restrict, suspend or
eliminate the Transfer privileges at any time. Transfer restrictions may be
necessary to protect investors from the negative effect large and/or numerous
Transfers can have on portfolio management. Moving large amounts of money may
also cause a substantial increase in Eligible Fund transaction costs which must
be borne by you.
Although you are permitted to make transfers by telephone or through the
Internet, we reserve the right to require that each Transfer Request be made by
a separate communication to us. We also reserve the right to require that each
Transfer Request be submitted in writing and be signed by you. Transfer Requests
by fax will not be accepted. Transfers among the Investment Divisions may also
be subject to terms and conditions imposed by the Eligible Funds.
Automatic Custom Transfers
Dollar Cost Averaging
Dollar cost averaging allows you to make systematic Transfers from one
Investment Division to another Investment Division. It does not assure a greater
profit, or any profit, and will not prevent or necessarily alleviate losses in a
declining market. It does, however, allow you to buy more units when the price
is low and fewer units when the price is high. Over time, your average cost per
unit may be more or less than if you invested all your money at one time.
You can set up automatic dollar cost averaging on the following frequency
periods: monthly, quarterly, semi-annual or annual basis. Your Transfer will be
initiated on the Valuation Date you select one frequency period following the
date of the Request. For example, if we receive a Request for quarterly
Transfers on January 9, your first Transfer will be made on April 9 (or the
following business day, as applicable) and every three months on the 9th
thereafter. Transfers will continue on that same day each interval unless
terminated by you or for other reasons as set forth in the Contract.
If there are insufficient funds in the applicable Variable Sub-Account on the
date your Transfer is scheduled, your Transfer will not be made. However, your
dollar cost averaging Transfers will resume once there are sufficient funds in
the applicable Variable Sub-Account. Dollar cost averaging will terminate
automatically when you start taking payments from the annuity.
Dollar cost averaging Transfers must meet the following conditions:
The minimum amount that can be Transferred out of an Investment Division is $100
per month.
You must: (1) specify the dollar amount to be Transferred, (2) designate
the Investment Division(s) to which the Transfer will be made, and (3) the
percent of the dollar amount to be allocated to each Investment Division into
which you are transferring money. The Accumulation Unit values will be
determined on the Transfer date.
Great-West reserves the right to modify, suspend or terminate dollar cost
averaging at any time for any reason.
Rebalancer
Because the value of your Variable Sub-Accounts will fluctuate with the
investment performance of the Investment Division, your asset allocation plan
percentages may become out of balance over time. Rebalancer allows you to
automatically reallocate your Variable Account Value to maintain your desired
asset allocation. Participation in Rebalancer does not assure a greater profit,
nor will it prevent or necessarily alleviate losses in a declining market.
You can set up Rebalancer as a one-time Transfer or on a quarterly, semi-annual
or annual basis. If you select to rebalance only once, the Transfer will take
place on the Valuation Date.
If you select to rebalance on a quarterly, semi-annual or annual basis, the
first Transfer will be initiated on the transaction date one frequency period
following the date of the Request. For example, if we receive a Request for
quarterly Transfers on January 9, your first Transfer will be made on April 9
(or the following business day, as applicable) and every three months on the 9th
thereafter. Transfers will continue on that same day each interval unless
terminated by you or for other reasons as set forth in the Contract.
On a Rebalancing Valuation Date your money will be automatically reallocated
among the Investment Divisions based on your allocation instructions. You can
change your allocation instructions at any time by Request. The Rebalancer
option will terminate automatically when you start taking payments from the
annuity.
Rebalancer Transfers must meet the following conditions:
Your entire Variable Account Value must be included.
You must specify the percentage of your Variable Account Value you'd like
allocated to each Investment Division and the frequency of rebalancing. You
may modify the allocations or stop the Rebalancer option at any time, by
Request.
You may not participate in dollar cost averaging and Rebalancer at the same
time.
Great-West reserves the right to modify, suspend, or terminate the Rebalancer
option at any time and for any reason.
Loans
Loans are not available under Section 415(m), NQDC 457(b) or 457(f) Plans.
Under Section 401(a), 401(k) or 403(b) Plans, loans may be available under your
Group Contract.
Consult your employer or Group Policyholder, as the case may be, for complete
details.
Total and Partial Withdrawals
You may Request to make a total or partial withdrawal at any time before your
Annuity Commencement Date.
The right to a total or partial withdrawal is subject to any limitations
or restrictions contained in the underlying retirement plan.
When we receive a Request for a partial withdrawal 30 days prior to the
Annuity Commencement Date, we may delay the Annuity Commencement Date by up to
30 days.
A Request for partial withdrawal must specify the Investment Division(s)
or Fixed Option(s)) from which the partial withdrawal is to be made.
The amount available for any withdrawal is your Participant Annuity Account
Value as determined on the Valuation Date you Request the withdrawal to be made.
We will process your withdrawal Request on the later of the date selected in the
Request or the Valuation Date on which we receive the Request at out
Administrative Offices.
Withdrawal proceeds attributable to the Investment Divisions will generally be
paid by us within seven days of the Valuation Date on which we process your
Request, though payment may be postponed for a period in excess of seven days as
permitted by the Investment Company Act of 1940. You may apply the amount
payable upon a total withdrawal to an Annuity Payment Option instead of
receiving a lump-sum payment.
After a total withdrawal of your Participant Annuity Account Value or at any
time such value is zero, all of your rights under the Group Contract will
terminate.
Withdrawal Requests must be in writing. If your instructions are not clear, your
Request will be denied and will not be processed.
There are additional conditions that apply to a partial or total withdrawals of
your Guaranteed Account Value. Certain restrictions apply to partial or total
withdrawal under a Group Contract issued in connection with a 403(b) Plan (See
"Federal Tax Consequences:
403(b) Plans.")
You may have to pay a Contingent Deferred Sales Charge upon a partial or total
withdrawal. (See " Charges and Deductions"). In addition, there may be certain
tax consequences to you when you make withdrawals. (See "Federal Tax
Consequences.")
Cessation of Contributions
In the future, either GWL&A or the Group Policyholder may determine that the
investment options under the Group Contract are inappropriate. Should this
occur, then GWL&A or the Group Policyholder, as applicable, shall provide the
other party 60 days' written notice that no future Contributions or Transfers
will be made (this is referred to as a Date of Cessation).
In the event that a Date of Cessation is declared and the Group Contract is
terminated the Group Policyholder must, by Request, elect one of the following
Cessation Options:
Cessation Option (1):
GWL&A will maintain each Participant Annuity Account 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, 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 Group Policyholder or a person designated in
writing by the Group Policyholder as the successor provider of the Group
Policyholder's plan. GWL&A will pay the sum of the Guaranteed Account
Values of the Participant Annuity Accounts as of the Date of Cessation
to either the Group Policyholder or a person designated in writing by
the Group Policyholder as the successor provider of the Group
Policyholder's 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.
If the Group Policyholder 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.
Death Benefit
Payment of Death Benefit
We will pay a death benefit to your beneficiary if you die before the Annuity
Commencement Date.
If you die prior to age 70, the death benefitwill be the greater
of:(1) your Participant Annuity Account Value less any Premium Taxes,
or (2) the sum of all Contributions paid less any withdrawals and any
applicable Premium Tax.
If you die on or after your 70th birthday, the death benefit will
be your Participant Annuity Account Value, less any Premium Taxes.
You designate the beneficiary to whom the death benefit will be paid.
Your beneficiary may elect to receive the death benefit:
under any of the Annuity Payment Options,
as a lump-sum payment, or
as a partial lump-sum payment with the balance applied toward an Annuity
Payment Option.
Your beneficiary must make this election within 60 days after we receive
adequate proof of your death. If no election is made within the 60 day period, a
lump-sum payment to your beneficiary will be made.
Your Participant Annuity Account Value, for purposes of determination of the
death benefit, will be calculated at the end of the Valuation Period during
which we receive both proof of death and an election by the person receiving
payment are received at GWL&A's Administrative Offices. If no election is made,
your Participant Annuity Account Value will be determined 60 days after the date
on which proof of death is received.
Distribution of the Proceeds
If the beneficiary Requests a lump-sum or partial lump-sum payment,, the
proceeds will be paid within seven (7) days of GWL&A's receipt of such
election and adequate proof of death.
If the beneficiary Requests any Annuity Payment Option, the annuity
payment shall commence thirty (30) days after the receipt of both such
election and adequate proof of death.
We will pay the death benefit 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.
You may designate or change a beneficiary by sending us a Request. 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:
if there is more than one primary surviving beneficiary, the
Participant Annuity Account Value will be shared equally among them;
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;
if there is no surviving primary beneficiary, the Participant
Annuity Account Value will pass to any surviving contingent beneficiary
and, if more than one contingent beneficiary survives the Participant,
it will be shared equally among them;
if no beneficiary survives the Participant, or if the designation
of beneficiary was not adequately made, the Participant Annuity Account
Value will pass to the Participant's estate.
CHARGES AND DEDUCTIONS
The charges and deductions we assess will vary by Group Contract. Please contact
your employer or the Group Policyholder, as the case may be, or your BCE
representative to determine the actual charges and deductions which are
applicable to your Group Contract. Contract Maintenance Charge
We may deduct a Contract Maintenance Charge from your Participant Annuity
Account of not more than $30 on the first Valuation Date of each calendar
year.
If your 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 your Variable and Guaranteed Account.
No refund of this charge will be made.
The Contract Maintenance Charge on Section 403(b) Plan Group Contracts
will be waived for an initial period of no less than 12 months and up to 15
months, depending on the date you began participating under the Group
Contract.
This Charge is assessed to reimburse us for some of our administrative
expenses relating to the establishment and maintenance of Participant Annuity
Accounts.
Contingent Deferred Sales Charge
Withdrawals of all or a portion of your Participant Annuity Account Value,
payments made under a periodic payment option that are not to be made for more
than 36 months ("Certain Periodic Payments"), or Transfers to Other Companies
may be subject to a Contingent Deferred Sales Charge ("CDSC"). The amount of the
CDSC depends on the type of Plan, and the Group Contract, in which you
participate. The CDSC is a percentage of the amounts you withdraw or Transfer to
Other Companies.
Depending upon the Group Contract in which you participate, the CDSC will be
based on one of the four levels described below. In addition, if your Group
Contract was issued in exchange for a previously issued Great-West fixed annuity
contract and you were a participant under that contract, we will assess an
additional CDSC on amounts withdrawn or Transferred to Other Companies as
described below.
While the CDSC under any level will be a percentage of the amount withdrawn or
Transferred to Other Companies, in no event will the amount of a CDSC exceed
8.5% of the Contributions made to your Participant Annuity Account. For the CDSC
that applies under your Group Contract, please contact your employer or the
Group Policyholder, as the case may be, or your BCE representative.
Level 1: 6% Capped Contingent Deferred Sales Charge
The contingent deferred sales charge for Level 1 Group Contracts will be an
amount equal to 6% of:
the amount of the total or partial withdrawal
the amount Transferred to Other Companies; or
the amount of Certain Periodic Payments
The cumulative total of all contingent deferred sales charges you pay will not
exceed 6% of all Contributions made within 72 months of the total or partial
withdrawals, Transfer to Other Companies or Certain Periodic Payments.
Level 2: 5% Level Charge for 5 Years
The contingent deferred sales charge for Level 2 Group Contracts will be an
amount equal to 5% of the total or partial withdrawal, amounts Transferred to
Other Companies or amount of Certain Periodic Payments, if such distribution
occurs during the first five years of your participation in the Group Contract.
If the distribution occurs in the your sixth year of participation or later, you
will incur no contingent deferred sales charge.
Level 3: 5% Decreasing Charge
The contingent deferred sales charge for Level 3 Group Contracts will be an
amount equal to the percentage of the amount withdrawn, Transferred to Other
Companies or amount of Certain Periodic Payments based on the table below: Years
of The applicable participation in percentage shall be this Group Contract 0-4
years 5% 5-9 years 4% 10-14 years 3% 15 or more years 0%
Level 4: No Contingent Deferred Sales Charges
Under Level 4 Group Contracts we do not assess any contingent deferred sales
charge.
Additional Contingent Deferred Sales Charges:
If the Group Contract was issued in exchange for a previously issued Great-West
fixed annuity contract, the charges applicable to your Group Contract (as
described in Levels 1-4 above) will apply in addition to the following charges:
an amount equal to a percentage of the amount of the total or
partial withdrawal , Transferred to Other Companies, or the amount of
Certain Periodic Payments, based on the number of years of
participation in the both the exchanged annuity contract and the Group
Contract as illustrated below:
Number of Years of Applicable
Participation in Both the Percentage
Exchanged Annuity Contract
and this Group Contract
---------------------
- ----------------------------
Less than 5 Years 6%
More than 5Years but less 5%
than 10 Years
More than 10 Years 4%
The additional contingent deferred sales charge applies only to amounts
attributable to your fixed annuity contract on the date you exchanged that
contract for an interest in the Group Contract (the "Exchanged Amount"). Thus
the additional contingent deferred sales charge does not apply to Contributions
made under the Group Contract (other than the Exchanged Amount), earnings on
those Contributions or earnings on the Exchanged Amount. To determine whether
this charge applies, we first consider amounts you withdraw to be withdrawn from
Contributions (other than the Exchanged Amount), earnings on those Contributions
and earnings on the Exchanged Amount. The charge will not be assessed unless and
until the foregoing have been depleted.
The contingent deferred sales charges applicable to Participant Annuity Account
Values derived from a previously exchanged Great-West annuity contract do not
ever decrease below 4%.
Contingent Deferred Sales Charge Free Amount
You may be eligible for a Contingent Deferred Sales Charge "Free Amount."
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." General Provisions Applicable to the
Contingent Deferred Sales Charge.
The contingent deferred sales charge is deducted from your payment. Thus, for
example (assuming a 6% contingent deferred sales charge):
If you Request a withdrawal of $100, (and assuming that the entire
withdrawal is subject to a 6% contingent deferred sales charge) you
would receive a payment of $94.
The Contingent Deferred Sales Charge will not exceed 8.5% of Contributions made
by the Participant under the Group Contract.
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:
size of the prospective group,
projected annual Contributions for all Participants in the group, and
frequency of projected withdrawals .
We 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.
Mortality and Expense Risk Deductions
We deduct a mortality and expense risk charge to compensate us for bearing
certain mortality and expense risks under the Group Contracts. The level of this
charge is guaranteed and will not increase above 1.25%. However, the amount
charged and the methodology we use to calculate that amount may vary by
Contract.
Depending on the terms of your Group Contract, we may assess this charge as:
1) a daily deduction from the assets of each Investment Division (the
"Daily M&E Deduction"); or
2)a periodic deduction from your Participant Annuity Account Value (the
"Periodic M&E Deduction")
You will never pay both a Daily M&E Deduction and a Periodic M&E Deduction.
Please consult with your employer, or Group Policyholder, as the case may be, or
your BCE representative for more information on how we calculate the mortality
and expense risk charge under your Group Contract.
The Daily M&E Deduction
The Daily M&E Deduction is a charge we deduct from each Investment Division's
Accumulation Unit Value on each Valuation Date in accordance with the Net
Investment Factor formula described in Appendix B. The amount of the Daily M&E
Deduction that you will pay depends on the terms of your Group Contract. It will
be assessed at a rate between 0% and 1.25%. Currently there are six annual rates
as set forth in Appendix B. Additional rates may be created in the future. Only
one rate will apply to your Group Contract.
We determine the daily rate of this mortality and expense risk charge by
dividing the applicable annual rate under your Group Contract by 365. You will
continue to pay the Daily M&E Deduction after the Annuity Commencement Date if
you have selected a variable annuity payment option.
Periodic M&E Deduction
Unlike the Daily M&E Deduction, which is deducted from each Investment
Division's Accumulation Unit Value on each Valuation Date, the Periodic M&E
Deduction is assessed as a percentage of your Participant Annuity Account Value
as of the end of the period for which we are making the deduction. Therefore,
the Periodic M&E Deduction is assessed against both your Guaranteed Sub-Account
and Variable Sub-Account Values whereas the Daily M&E Deduction is assessed only
against your Variable Sub-Account Value.
Depending on the terms of your Group Contract, we may assess this charge
monthly, quarterly, semi-annually or annually. The level of this charge varies
by Group Contract. It will be assessed at an annual rate ranging from 0% to
1.00% of Participant Annuity Account Value depending on your Group Contract.
For example, if the annual rate of the Periodic M&E Deduction under your Group
Contract is 1.00% and the terms of your Group Contract require us to deduct the
charge quarterly, we will deduct, at the end of each quarter, 0.25% of your
Participant Annuity Account Value.
The Periodic M&E Deduction will appear on your Participant statements as a
dollar amount charged against your Participant Annuity Account Value. We will
deduct this charge on a pro rata basis from the value of your Variable and
Guaranteed Sub-Accounts. However, we reserve the right to deduct this charge
from your Variable Account Value only.
You should know that the two methods of deducting the mortality and expense risk
charge may give rise to different investment results even where the charge is
assessed at identical rates.
Participant Annuity Account Values and annuity payments are not affected by
changes in actual mortality experience incurred by us. The mortality risks
assumed by us arise from our contractual obligations to make annuity payments
determined in accordance with the Group Contract. This means that you can be
sure that neither the person receiving payment's longevity nor an unanticipated
improvement in general life expectancy will adversely affect the annuity
payments under the Contract.
We bear substantial risk in connection with the death benefit before the Annuity
Commencement Date, since we bear the risk of unfavorable experience in your
Variable Sub-Accounts, see "Death Benefit" for additional information.
The expense risk assumed is the risk that our actual expenses in administering
the Group Contracts and the Series Account will be greater than anticipated, or
exceed the amount recovered through the Contract Maintenance Charge, or the
Administrative Charge.
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:
size of the prospective group,
projected annual Contributions for all Participants in the group,
frequency of projected distributions, type and frequency of
administrative and sales services provided, and level of contract
maintenance charge, administrative 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 Mortality and Expense Risk Charge is insufficient to cover actual costs
and risks assumed, the loss will fall on us. If this charge is more than
sufficient, any excess will be profit to us. Currently, we expect a profit from
this charge.
Premium Tax Deductions
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 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.
Expenses of the Eligible Funds
The net asset value of the Eligible Funds reflect the deduction of the Eligible
Funds' fees and deductions. You bear these costs indirectly when you allocate to
an Investment Division.
PAYMENT OPTIONS
Periodic Payments
You may Request that all or part of your Participant Annuity Account Value be
applied to a periodic payment option. The amount applied to a periodic payment
option is your Participant Annuity Account Value, less Premium Tax, if any.
A periodic payment option may not be used to effect Transfers
under Revenue Ruling 90-24 for 403(b) Plan Participants.
All outstanding loan balances must be paid in full or treated as a
distribution before you are eligible for a periodic payment option.
In Requesting periodic payments, you must elect:
The payment frequency of either 12-, 6-, 3- or 1-month intervals
A payment amount--a minimum of $50 is required The calendar
day of the month on which payments will be made One payment option
To allocate your payments from your Variable and/or Guaranteed
Sub-Account(s)
as follows:
prorate the amount to be paid across all Variable and Guaranteed
Sub-Accounts in proportion to the assets in each sub-account, or
select the Variable and/or Guaranteed Sub-Account(s) from
which payments will be made.
Once the Variable and/or Guaranteed Sub-Accounts have been depleted, we
will automatically prorate the remaining payments against all remaining
available Variable and/or Guaranteed Sub-Accounts unless you Request
the selection of another Variable and/or Guaranteed Sub-Account.
You may change the withdrawal option and/or the frequency once each calendar
year.
While periodic withdrawals are being received:
You may continue to exercise all contractual rights that are
available prior to electing an annuity payment option, except that no
Contributions may be made.
You may keep the same investment options as were in force before
periodic payments began.
Charges and fees under the Group Contract, if applicable, continue
to apply, except as noted below:
we will not deduct a Contingent Deferred Sales Charge to
periodic payments lasting a minimum of 36 months.
we will deduct a Contingent Deferred Sales Charge and/or a
loss of interest charge on amounts partially withdrawn from a
Guaranteed Sub-Account.
Periodic payments will cease on the earlier of the date:
the amount elected to be paid under the option selected has been
reduced to zero.
the Participant Annuity Account Value is zero.
You Request that withdrawals stop.
You die.
Periodic Payment Options
If you choose to receive payments from the Group Contract through periodic
payments, you may select from the following payment options.
Option 1--Income for a specified period (at least 36 months)
You elect the length of time over which payments will be made. The amount paid
will vary based on the duration you choose.
Option 2--Income of a specified amount (at least 36 months)
You elect the dollar amount of the payments. Based on the amount elected, the
duration may vary.
Option 3 - Interest Only
Your payments will be based on the amount of interest credited to your
Guaranteed Sub-Account(s) between each period. This payment option is only
available if 100% of your Participant Annuity Account is invested in the
Guaranteed Sub-Account and you are less than 70 1/2 years of age.
Option 4 - Minimum Distribution.
You may Request to receive your minimum distribution from the Group Contract as
specified under Internal Revenue Code Section 401(a)(9).
If you die while receiving periodic payments, your beneficiary must elect a
payment option which complies with the distribution requirements of Internal
Revenue Code Section 401(a)(9).
If periodic payments stop, the you may resume making Contributions. However, the
selection of another periodic payment may not commence again for at least 36
months. We may limit the number of times you may restart a periodic payment
program.
Periodic payments made for any purpose may be taxable, subject to withholding
and to the 10% penalty tax. Retirement plans are subject to complex rules with
respect to restrictions on and taxation of distributions, including penalty
taxes. A competent tax adviser should be consulted before a periodic payment
option is Requested.
ANNUITY PAYMENT OPTIONS
An Annuity Commencement Date and the form of annuity payments may be elected at
any time during the Accumulation Period.
Under 403(b), 401(a), 401(k) and 457(b) Plans, 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
the calendar year in which the Participant attains age 70 1/2; or
the calendar year in which the Participant retires.
Under all of the above-noted retirement programs, it is your responsibility to
file the necessary Request with GWL&A.
Under 457(f), 415(m) and NQDC retirement programs, there is no required Annuity
Commencement Date.
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 received, GWL&A may delay the date elected by not
more than 30 days.
You can choose from the Annuity Payment Options described below, as well as any
other Annuity Payment Options which GWL&A may choose to make available in the
future. Except as otherwise noted, the Annuity Payment 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 your
Participant Annuity Account) and/or a fixed life annuity (with respect to the
Guaranteed portion of your 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 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.
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), 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 for more information).
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 investment performance of
the underlying Eligible Fund. The Participant receives the value of a fixed
number of Annuity Units each month.
Annuity Units
We determine the number of Annuity Units to be credited by dividing the amount
of the first monthly payment by its Accumulation Unit value 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
Eligible Fund.
Amount of First Payment
The first payment under a variable annuity payment option will be based on the
value of the amounts held in each Variable Sub-Account on the fifth Valuation
Date preceding the Annuity Commencement Date. It will be determined by applying
the appropriate rate to the amount applied under the payment option.
For annuity options involving life income, the actual age and/or sex of the
Annuitant will affect the amount of each payment. We reserve the right to ask
for satisfactory proof of the Annuitant's age. We may delay annuity payments
until satisfactory proof is received. Since payments to older Annuitants are
expected to be fewer in number, the amount of each annuity payment under a
selected annuity form will be greater for older Annuitants than for younger
Annuitants.
Amount of Payment after the First Payment
Payments after the first will vary depending upon the investment experience of
the Investment Divisions. The subsequent amount paid from each sub-account is
determined by multiplying (a) by (b) where (a) is the number of sub-account
Annuity Units to be paid and (b) is the sub-account Annuity Unit value on the
fifth Valuation Date preceding the date the annuity payment is due. The total
amount of each variable annuity payment will be the sum of the variable annuity
payments for each Variable Sub-Account. We guarantee that the dollar amount of
each payment after the first will not be affected by variations in expenses or
mortality experience.
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 you wish to apply all or part of the Guaranteed Account Value of your
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 your 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 the 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 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 will be that 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. If the age of the Participant, or beneficiary, as
applicable has been misstated, the payments established will be made on the
basis of the correct age. If payments were too large because of misstatement,
the difference with interest may be deducted by us from the next payment or
payments. If payments were too small, the difference with interest may be added
by us to the next payment. This interest is at an annual effective rate which
will not be less than the interest rate guaranteed by the Group Contract.
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.
Other Restrictions
Once payments start under the annuity form you select:
no changes can be made in the annuity form,
no additional Contributions will be accepted under the Contract
and no further withdrawals, other than withdrawals made to provide
annuity
benefits, will be allowed.
FEDERAL TAX CONSEQUENCES
Introduction
The following discussion is a general description of federal income tax
considerations relating to the Group Contracts and is not intended as tax
advice. This discussion assumes that the Group Contract qualifies as an annuity
contract for federal income tax purposes. This discussion is not intended to
address the tax consequences resulting from all of the situations in which a
person may be entitled to or may receive a distribution under the Group
Contract. If you're concerned about these tax implications you should consult a
competent tax adviser before initiating any transaction.
This discussion is based upon our understanding of the present federal income
tax laws as they are currently interpreted by the Internal Revenue Service. No
representation is made as to the likelihood of the continuation of the present
federal income tax laws or of the current interpretation by the Internal Revenue
Service. Moreover, no attempt has been made to consider any applicable state or
other tax laws.
The Group Contracts are designed for use by groups under retirement programs
which may qualify for special tax treatment under a 401(a), 401(k), 403(b)
457(b) or (f), 415(m) or NQDC Plan.
Taxation of Annuities in General
Section 72 of the Internal Revenue Code governs taxation of annuities in
general. A Participant is not generally taxed on increases (if any) in the value
of a Participant Annuity Account until a distribution occurs by withdrawing all
or part of the Participant Annuity Account Value (for example, withdrawals or
annuity payments under the annuity payment option elected). However, under
certain circumstances, a Participant may be subject to taxation currently. The
taxable portion of a distribution (in the form of a single sum payment or an
annuity) is taxable as ordinary income.
Currently, none of the amounts contributed to a 457(b) or (f), 415(m) or NQDC
Plan constitute cost basis in the contract. Thus, all amounts distributed to
Participants from a 457(b) or (f), 415(m) or NQDC Plan are taxable at ordinary
income rates. No special averaging rules apply to distributions from 403(b),
457(b) or (f) or 415(m) Plans.
If a Group Contract is held by a non-natural person (e.g., a corporation), the
investment gain on the Group Contract is included in the entity's income each
year unless certain exceptions apply. This rule does not apply where the Group
Contract is held under a 401(a), a 401(k), or a 403(b) Plan. If the employer
maintaining a 457(b) or (f) or 415(m) Plan is either a state or local government
or a tax-exempt organization, the employer may not be subject to tax on the gain
in the Group Contract. If this Group Contract is intended to be held by a
non-natural person that entity may wish to discuss these matters with a
competent tax adviser.
401(a) Plans
Section 401(a) of the Internal Revenue Code 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 401(a) Plans. Employer
Contributions and any earnings thereon are currently excluded from the
Participant's gross income. 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 of the Internal Revenue Code. Distributions from the plan
are subject to the restrictions contained in the plan document and the Internal
Revenue Code. Participants should consult with their employer or employee
organization as to the applicability of the above limitations and restrictions
to their plan.
401(k) Plans
Section 401(k) of the Internal Revenue Code allows employers or employee
organizations, rural cooperatives, Indian tribal governments and rural
irrigation and water conservation entities 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 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 401(k) Plans is
limited to $7,000 per year (adjusted for cost-of-living increases). Elective
deferrals to a 401(k) Plan must also be aggregated with elective deferrals made
by the Participant to a 403(b) Plan, to a simplified employee pension or to a
SIMPLE retirement account. For 1999, the total amount of elective deferrals
which can be contributed to all such plans is $10,000. The contribution limits
in Section 415 of the Internal Revenue Code 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
401(k) Plan are subject to FICA and FUTA tax when contributed.
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
included 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 Internal Revenue
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.
403(b) Plans
Tax-exempt organizations described in Section 501(c)(3) of the Internal Revenue
Code and public educational organizations are permitted to purchase 403(b) Plans
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.
the exclusion allowance described in Section 403(b)(2) of the Internal Revenue
Code;
the contribution limit in Section 415 of the Internal Revenue Code; and
the elective deferral limitation in Section 402(g) of the Internal Revenue Code.
Elective deferrals to a 403(b) Plan must also be aggregated with elective
deferrals made by the Participant to a 401(k) Plan, a simplified employee
pension or a SIMPLE retirement account. For 1999, the total amount of elective
deferrals which can be contributed to all such plans is $10,000. Amounts
contributed to a 403(b) Plan 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.
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 403(b) Plan 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) of the
Code.
Post-1988 Contributions and earnings, and the earnings on the
December 31, 1988 account balance as well as all amounts Transferred
from a 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 Internal Revenue Code. Restrictions apply
to the amount which may be distributed for financial hardship.
457(b) Plans
Section 457(b) of the Internal Revenue Code 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 457(b) Plan to the extent
that the aggregate amount contributed per year for a Participant does not exceed
the lesser of $7,500 (as adjusted for cost-of-living increases) or 33 1/3% of a
Participant's includable compensation. For 1999, the maximum amount that maybe
contributed is $8,000. Any elective deferral amount excluded from gross income
by a Participant under 401(k) Plan, 403(b) Plan, a simplified employee pension,
or to a SIMPLE retirement account for the taxable year must be treated as an
amount deferred under the 457(b) 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.
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.
457(f) Plans
Section 457(f) of the Internal Revenue Code allows state and local governmental
employers to establish and maintain a nonqualified deferred compensation plan,
and allows tax-exempt organizations to establish and maintain a nonqualified
deferred compensation plan for a select group of management or highly
compensated employees under Internal Revenue Code Section 457(f).
A Participant in a 457(f) Plan is not subject to federal income tax on
Contributions to the nonqualified plan until the tax year in which the
Contributions are made available to the Participant or his beneficiary as
provided in the underlying plan document.
The net investment gain, if any, reflected in a Participant Annuity Account
Value is not taxable to the Participant until made available to the Participant
or his beneficiary as provided in the underlying plan document.
Distributions from the 457(f) Plan are subject to the provisions of the
underlying plan.
415(m) Plans
Section 415(m) of the Internal Revenue Code allows state and local governmental
employers to establish and maintain an excess benefit plan for employees whose
benefits are limited by the qualified plan contribution and benefit limits under
either Section 415 or Section 457 of the Internal Revenue Code.
A Participant in a 415(m) Plan is not subject to federal income tax on
Contributions to the excess benefit plan until the tax year in which the
Contributions are made available to the Participant or his beneficiary as
provided in the underlying excess benefit plan document.
The net investment gain, if any, reflected in a Participant Annuity Account
Value is not taxable to the Participant until made available to the Participant
or his beneficiary as provided in the underlying excess benefit plan document.
Distributions from the 415(m) Plan are subject to the provisions of the
underlying plan.
NQDC Plans
Any employer other than a governmental or tax-exempt employer may establish and
maintain a nonqualified deferred compensation plan (NQDC) plan for a select
group of management or highly compensated employees under a NQDC Plan.
A Participant in a NQDC Plan is not subject to federal income tax on
Contributions to the NQDC Plan until the tax year in which the Contributions are
made available to the Participant or his beneficiary as provided in the
underlying nonqualified deferred compensation plan document.
The net investment gain, if any, reflected in a Participant Annuity Account
Value is not taxable to the Participant until made available to the Participant
or his beneficiary as provided in the underlying nonqualified deferred
compensation plan document.
Distributions from the NQDC Plan are subject to the provisions of the underlying
plan.
Under 457(f), 415(m), and NQDC Plans, if the employer is subject to taxation,
the employer may not take a deduction for a Contribution until the year in which
Contribution is included in the gross income of the employee.
Portability
When the Participant is eligible to take a distribution from a 401(a), 401(k) or
403(b) Plan, eligible rollover distributions may be rolled over to an IRA or
another qualified plan or 403(b) annuity contract or custodial account as
provided in the Internal Revenue Code. Amounts properly rolled over will not be
included in gross income until a subsequent distribution is made.
For 403(b) Plans only, Revenue Ruling 90-24 allows participants to Transfer
funds from one 403(b) annuity or custodial account to another 403(b) annuity
contract or custodial account with the same or more stringent restrictions
without incurring current taxation. If the 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 NQDC, 457(b) or (f) or 415(m) Plan cannot be rolled
over to an IRA or a qualified plan or 403(b) Plan.
Required Beginning Date/Required Minimum Distributions
Distributions from a 401(a), 401(k), 403(b) and 457(b) Plan must begin no later
than April 1 of the calendar year following the later of:
the calendar year in which the Participant attains age 70 1/2; or
the calendar year in which the Participant retires.
All amounts in a 401(a), 401(k) and 457(b) Plan and amounts accruing after
December 31, 1986 under a 403(b) Plan 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 which was required to be, but was
not, distributed may be imposed upon the employee by the IRS under Section 4974
of the Internal Revenue Code. 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 401(a), 401(k) or 403(b) Plan 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 his Participant Annuity Account 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 401(a) and 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
adviser 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, under Section 72(e)(8) of the Internal Revenue Code. 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 of the Internal Revenue Code. 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 457(b) or (f), 415(m) or NQDC 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 401(a), 401(k) and 403(b)
Plans. 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 included in gross income in the tax year.
However, under Internal Revenue Code Section 72(t), the penalty tax may not
apply to 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
Internal
Revenue 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 (substantially equal payments) was selected at the time
of the distribution but the series of payments is later modified or discontinued
(other than because of death or disability) before the later of:
the Participant reaching age 59 1/2 or,
within five years of the date of the first payment,
Then the Participant is liable for the 10% penalty plus interest on all payments
received before age 59 1/2. This penalty is imposed in the year the modification
or discontinuance occurs. The premature distribution penalty tax does not apply
to distributions from a 457(b) or (f), 415(m) or NQDC Plans.
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, as set forth in Section 4974 of the Internal Revenue Code.
Distributions on Death of Participant
Distributions made to a beneficiary from a 401(a), 401(k), 457(b) or 403(b) Plan
upon the Participant's death must be made pursuant to the rules contained in
Section 401(a)(9) of the Internal Revenue Code and the regulations thereunder.
Distributions from a 457(b) Plan must also meet the requirements under Section
457(d) of the Internal Revenue Code. 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 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 401(a), 401(k) and 403(b)
Plans 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 457, 415(m) or NQDC 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-R. 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.
Seek Tax Advice
The above discussion of the federal income tax consequences is only a brief
summary and is not intended as tax advice. The federal income tax consequences
discussed here reflect our understanding of current law and the law may change.
Federal estate tax consequences and state and local estate, inheritance, and
other tax consequences of ownership or receipt of distributions under a Group
Contract depend on your individual circumstances or the circumstances of the
recipient of the distribution. A competent tax adviser should be consulted for
further information.
PERFORMANCE RELATED INFORMATION
>From time to time, we may advertise yields and average annual total returns for
the Investment Divisions. In addition, we may advertise the effective yield of
the Maxim Money Market Investment Division. We may advertise both standardized
and non-standardized performance data for the Investment Divisions. All
performance information will be based on historical information and is not
intended to indicate future performance.
The yield of the Maxim Money Market Investment Division refers to the annualized
income generated by an investment in that Investment Division over a specified
7-day period. It is calculated by assuming that the income generated for that
seven-day period is generated each 7-day period over a period of 52 weeks and is
shown as a percentage of the investment.
The effective yield is calculated similarly but, when annualized, the income
earned by an investment in that Investment Division is assumed to be reinvested.
The effective yield will be slightly higher than the yield because of the
compounding effect of the assumed reinvestment.
The yield calculations do not reflect the effect of any Contingent Deferred
Sales Charge or any Premium Tax that may be applicable to the Group Contract. To
the extent that any Contingent Deferred Sales Charge or Premium Taxes are
applicable to the Group Contract, the yield of that Investment Division will be
reduced. For a description of the methods used to determine yield and total
returns, see the Statement of Additional Information.
Investment Division Yield Effective
Yield
Maxim Money Market x.xx% x.xx%
Average annual total return quotations represent the average annual compounded
rate of return that would equate to an initial investment of $1,000 to the
redemption value of that investment (excluding Premium Taxes, if any) on the
last day of each period for which total return quotations are provided.
The following table illustrates standardized and non-standardized average annual
total return for the one, five and ten year periods (or the period since
inception, as appropriate) ended December 31, 19987. The standardized data
reflect the deduction of the Level 1 Contingent Deferred Sales Charge and the
highest level of all other fees and charges under the Group Contract that would
be imposed upon a total withdrawal, and are calculated from the inception date
of the Investment Division. The non-standardized data reflect the deductions of
all fees and charges under the Group Contract, and are:
shown without the effect of any Contingent Deferred Sales Charges
imposed upon a total withdrawal of your interest in the Group
Contract, and are calculated from the inception date of the Investment
Division;
shown with the effect of the Level 1 Contingent Deferred Sales
Charges imposed upon a total withdrawal of your interest in the Group
Contract, and are calculated from the inception date of the Eligible
Fund and includes periods preceding the inception date of the
corresponding Investment Division; and
shown without the effect of any Contingent Deferred Sales Charges
imposed upon a total withdrawal of your interest in the Group
Contract, and are calculated from the inception date of the Eligible
Fund and includes periods preceding the inception date of the
corresponding Investment Division.
Following the tables is a chart, which lists the inception dates of the
Investment Divisions and their corresponding Eligible Funds.
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
The following table illustrates Average Annual Total Return assuming a Level 1 Contingent
Deferred Sales Charge
INVESTMENT After Before After Before After
<S> <C> <C> <C> <C> <C> <C>
DIVISION Before After Before CDSC CDSC CDSC CDSC CDSC
CDSC CDSC 5 10 10 10 10
CDSC 1 5 Years Years or Years or Years or Years or
1 Year Years Life Life Life Life of
Year of of of
Underlying
Investment Investment Underlying Fund
Fund Portfolio
Division Division Portfolio
</TABLE>
Maxim International Equity
Maxim INVESCO ADR
Janus Aspen Series Worldwide Growth Maxim INVESCO Small-Cap Growth Maxim
Small-Cap Aggressive Growth Maxim Small-Cap Index Maxim Small-Cap Value
(Ariel Value) Maxim MidCap Growth Maxim Mid-Cap (managed by Ariel) American
Century VP Capital Appreciation Fidelity VIP Growth Maxim Blue Chip Maxim
Growth Index Maxim Stock Index Maxim T. Rowe Price Equity-Income Maxim Value
Index Fidelity VIP II Contrafund Fidelity VIP II Asset Manager Maxim INVESCO
Balanced Stein Roe Balanced, Variable Series Maxim Bond Maxim Corporate Bond
Maxim U.S. Government Securities Maxim Aggressive Profile Maxim Moderately
Aggressive Profile Maxim Moderate Profile Maxim Moderately Conservative
Profile Maxim Conservative Profile
<PAGE>
The following table sets forth the inception date of each Investment Division
and the inception date of the corresponding Eligible Fund.
<TABLE>
INVESTMENT DIVISION Eligible Fund Inception Date Investment Division
Inception In Series Account
<S> <C> <C> <C>
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 Securities April 4, 1985 August 1, 1992
Maxim Small-Cap Index December 1, 1993 January 3, 1994
Maxim Mid-Cap (Growth Fund I) December 31, 1993 January 3, 1994
Maxim International Equity December 1, 1993 January 3, 1994
Maxim Corporate Bond November 1, 1994 November 1, 1994
Maxim Small-Cap Value (Ariel Value) December 1, 1993 November 1, 1994
Maxim INVESCO ADR November 1, 1994 November 1, 1994
Maxim INVESCO Small-Cap Growth November 1, 1994 November 1, 1994
Maxim INVESCO Balanced October 1, 1996 October 31, 1996
Maxim T. Rowe Price Equity/Income November 1, 1994 November 31, 1994
Maxim Value Index December 1, 1993 September 11, 1997
Maxim Growth Index December 1, 1993 September 11, 1997
Maxim Small-Cap Aggressive Growth November 1, 1994 September 11, 1997
Maxim Blue Chip July 1, 1997 September 11, 1997
Maxim MidCap Growth July 1, 1997 September 11, 1997
Maxim Aggressive Profile September 8, 1997 September 11, 1997
Maxim Moderately Aggressive Profile September 8, 1997 September 11, 1997
Maxim Moderate Profile September 8, 1997 September 11, 1997
Maxim Moderately Conservative Profile September 8, 1997 September 11, 1997
Maxim Conservative Profile September 8, 1997 September 11, 1997
American Century VP Capital November 20, 1987 August 1, 1992
Appreciation
Fidelity VIP Growth October 9, 1986 March 1, 1994
Fidelity VIP II Asset Manager September 8, 1989 March 1, 1994
Fidelity VIP II Contrafund November 5, 1998
</TABLE>
<PAGE>
VOTING RIGHTS
To the extent required by applicable law, all Eligible Fund shares held in the
Series Account will be voted by Great-West at regular and special shareholder
meetings of the respective Eligible Funds in accordance with instructions
received from persons having voting interests in the corresponding Investment
Division. If, however, the 1940 Act or any regulation should be amended, or if
the present interpretation thereof should change, or if we determine that we are
allowed to vote all Eligible Fund shares in our own right, we may elect to do
so.
Before the Annuity Commencement Date, the Participant under a 403(b) Plan or the
Group Policyholder under all other plans has the voting interest. After annuity
payments begin under a variable annuity option, the person receiving payments
will have the voting interest.
The number of votes which are available will be calculated separately for each
Variable Sub-Account. That number will be determined by applying the
Participant's percentage interest, if any, in a particular Investment Division
to the total number of votes attributable to that Investment Division. The
Participant or Group Policyholder, as applicable, hold a voting interest in each
Investment Division to which a Participant's Annuity Account Value is allocated.
If a Participant selects a variable annuity payment option, the votes
attributable to the Participant will decrease as annuity payments are made.
Voting instructions will be solicited by written communication prior to such
meeting in accordance with procedures established by the respective Eligible
Funds.
Shares for which we do not receive timely instructions and shares held by us as
to which Participants and Group Policyholders have no beneficial interest will
be voted in proportion to the voting instructions which are received with
respect to all Group Contracts participating in the Investment Division. 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.
DISTRIBUTION OF THE GROUP CONTRACTS
BCE is the principal underwriter and the distributor of the Group Contracts, and
a wholly owned indirect subsidiary of Great-West. BCE is registered with the
Securities and Exchange Commission as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. (NASD). Its principal offices
are located at 8515 East Orchard Road, Englewood, Colorado 80111, telephone
1-800-701-8255.
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, a
maximum of 1% of Contributions may also be paid as a persistency bonus to
qualifying brokers.
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, if you are a Participant in the ORP you will be required to
obtain a certificate of termination from your employer before you can redeem
your Participant Annuity Account.
REPORTS
We will send all Participants, at least semi-annually, reports concerning the
operations of the Series Account. In addition, all Participants will receive
from us not less frequently than annually a statement of the Participant Annuity
Account Value established in his/her name.
Year 2000
We have a number of existing computer programs that use only two digits to
identify a year in the date field, which creates a problem with the upcoming
change in the century. We have developed detailed plans that we expect to
rectify the year 2000 problem. These plans include modifying programs where
necessary, replacing certain programs with year 2000 compliant software, and
working with vendors and business partners, including banks, custodians and
investment managers, who need to become year 2000 compliant. The resources that
are being devoted to this effort are substantial. Management estimates that the
total cost to implement these plans will not be material, and has budgeted the
expense as part of its computer systems operating costs in 1998 and early 1999.
We anticipate that our systems will be year 2000 compliant on or about first
quarter 1999, but there can be no assurance that we will be successful, or that
interaction with other service providers will not impair our services at that
time.
RIGHTS RESERVED BY GREAT-WEST
We reserve the right to make certain changes if, in our judgment, they would
best serve the interests of Group Policyholders or Participants or would be
appropriate in carrying out the purposes of the Group Contracts. Any changes
will be made only to the extent and in the manner permitted by applicable laws.
Also, when required by law, we will obtain the Participant's or Group
Policyholder's, as applicable, approval of the changes and approval from any
appropriate regulatory authority. Approval may not be required in all cases,
however. Examples of the changes we may make include:
To operate the Series Account in any form permitted under the
Investment Company Act of 1940 or in any other form permitted by law.
To Transfer any assets in any Investment Division to another
Investment Division, or to one or more separate accounts, or to a
Guaranteed Sub-Account; or to add, combine or remove Investment
Divisions of the Series Account.
To substitute, for the Eligible Fund shares in any Investment
Division, the shares of another Eligible Fund or shares of another
investment company or any other investment permitted by law.
To make any changes required by the Internal Revenue Code or by
any other applicable law in order to continue treatment of the
Contract as an annuity.
To change the time or time of day at which a Valuation Date is
deemed to have ended.
To make any other necessary technical changes in the Contract in
order to conform with any action the above provisions permit us to
take, including to change the way we assess charges, but without
increasing as to any then outstanding Contract the aggregate amount of
the types of charges which we have guaranteed.
To reject any application for any reason.
Since some of the Eligible Funds are available to registered separate accounts
of other insurance companies offering variable annuity and variable life
products, there is a possibility that a material conflict may arise between the
interests of the Series Account and one or more other separate accounts
investing in the Eligible Funds. If a material conflict arises, the affected
insurance companies are required to take any necessary steps to resolve the
matter, including stopping their separate accounts from investing in the
Eligible Funds.
Adding and Discontinuing Investment Options
We may, upon 30 days written notice to you, direct that you may not make any
future Contributions or Transfers to a particular Investment Division or Fixed
Option.
When we inform you that we are discontinuing an Investment Division or Fixed
Option to which you are allocating money, we will ask that you promptly submit
alternative allocation instructions. If we do not receive your changed
allocation instructions, we may return all affected Contributions or allocate
those Contributions as indicated in the written notice provided to you.
Contributions and Transfers you make to a discontinued Investment Division or
Fixed Option before the effective date of the notice may be kept in those
Investment Divisions or Fixed Options, unless we substitute shares of one mutual
fund for shares of the corresponding Eligible Fund.
In addition, we may discontinue all investment options under the Group Contracts
and refuse to accept any new Contributions.
If we determine to make new Investment Divisions or Fixed Options available
under the Group Contracts, in our sole discretion we may or may not make those
new Investment Divisions or Fixed Options available to you.
Substitution of Investments
When we determine to discontinue an Investment Division, in our sole discretion,
we may substitute shares of another mutual fund for the shares of the
corresponding Eligible Fund. No substitution may take place without prior
approval of the Securities and Exchange Commission, and prior notice to you and
the Group Policyholders.
LEGAL MATTERS
Advice regarding certain legal matters concerning the federal securities laws
applicable to the issue and sale of the Group Contract has been provided by
Jorden Burt Boros Cicchetti Berenson & Johnson LLP. The organization of
Great-West, Great-West's authority to issue the Group Contract, and the validity
of the form of the Group Contract have been passed upon by Ruth B. Lurie, Vice
President, Counsel and Associate Secretary of Great-West.
AVAILABLE INFORMATION
We have filed a registration statement ("Registration Statement") with the
Securities and Exchange Commission ("SEC") under the 1933 Act relating to the
Group Contracts offered by this Prospectus. This Prospectus has been filed as a
part of the Registration Statement and does not contain all of the information
set forth in the Registration Statement and exhibits thereto. Reference is made
to the Registration Statement and exhibits for further information relating to
us and the Contracts. Statements contained in this Prospectus, regarding the
content of the Group Contracts and other legal instruments, are summaries. For a
complete statement of the terms thereof, reference is made to the instruments as
filed as exhibits to the Registration Statement. The Registration Statement and
its exhibits may be inspected and copied at the offices of the SEC located at
450 Fifth Street, N.W., Washington, D.C.
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
<PAGE>
<TABLE>
Condensed Financial Information
Selected Data for Accumulation Units Outstanding Throughout Each Period
For the Years Ended December 31,
Condensed Financial Information
Selected Data for Accumulation Units Outstanding Throughout Each Period
For the Years Ended December 31,
- -------------------------------- ------ ---------- ---------- ---------- ---------- --------- ---------- ---------- ---------- -----
INVESTMENT DIVISION 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- -------------------------------- ------- ---------- --------- ---------- ---------
MAXIM MONEY
MARKET
1
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Value at beginning of period $17.60 $16.96 $16.25 $15.84 $15.60 $15.26 $14.59 $13.71 $12.72
Value at end of period Value $18.30 $17.60 $16.96 $16.25 $15.84 $15.60 $15.26 $14.59 $13.71
Increase (decrease) in value of $0.70 $0.64 $0.71 $0.41 $0.24 $0.34 $0.67 $0.88 $0.99
accumulation units
Number of accumulation units 3,877,164.14
3,129,281.92 2,880,571.67
2,277,816.08 684,668.93 787,941 901,603 846,538 723,266
outstanding at end of period
- ------------------------------- ------ ---------- ---------- ---------- --------- -- ---------
MAXIM
BOND
1
Value at beginning of period $26.82 $26.05 $22.89 $23.74 $22.14 $21.10 $18.63 17.43 $15.60
Value at end of period $28.36 $26.82 $26.05 $22.89 $23.74 $22.14 $21.10 $18.63 $17.43
Increase (decrease) in value of $1.54 $0.77 $3.16 $(0.85) $1.60 $1.04 $2.47 $1.20 $1.83
accumulation units
Number of accumulation units 1,688,345.67 1,890,635.84
2,010,468.99 2,102,049.13
2,301,785.20 1,995,291 2,067,966 1,765,573
1,524,813
outstanding at end of period
- ----------------------------- ------- ---------- ---------- ---------- --------- --
MAXIM STOCK
INDEX
1-2
Value at beginning of period $44.00 $36.57 $27.30 $27.61 $25.44 $24.33 $19.97 $20.34 $17.88
Value at end of period $57.44 $44.00 $36.57 $27.30 $27.61 $25.44 $24.33 $19.97 $20.34
Increase (decrease) in value of $13.44 $7.43 $9.27 $(0.31) $2.17 $1.11 $4.36 $(0.37) $2.46
accumulation units
Number of accumulation units 8,215,445.99 7,884,581.79
7,636,165.40 7,589,448.89
9,325,064.15 8,106,011 8,262,908 6,501,628
5,369,016
outstanding at end of period
------
- ------------------------------ ------- ---------- ---------- ---------- --------- ---------- ---------- ---------- ----------
MAXIM U.S. GOVERNMENT
SECURITIES 3
Value at beginning of period $12.61 $12.29 $10.71 $11.21 $10.38 $10.00
Value at end of period $13.51 $12.61 $12.29 $10.71 $11.21 $10.38
Increase (decrease) in value of $0.90 $0.32 $1.58 $(0.50) $0.83 $0.38
accumulation units
Number of accumulation units 3,225,407.45 3,234,023.68
3,165,425.83 2,756,894.60
1,892,295.35 251,644
outstanding at end of period
- ----------------------------- -------- ---------- ---------- ---------- --------- ---------- ----------
AMERICAN CENTURY VP CAPITAL
APPRECIATION
3
Value at beginning of period $14.11 $14.93 $11.53 $11.82 $10.85 $10.00
Value at end of period $13.48 $14.11 $14.93 $11.53 $11.82 $10.85
Increase (decrease) in value of $(0.63) $(0.82) $3.40 $(0.29) $0.97 $0.85
accumulation units
Number of accumulation units 3,207,248.87 4,560,706.32
4,954,474.12 4,420,493.64
2,607,850.29 647,466
outstanding at end of period
- ------------------------------ ------- ---------- ---------- ---------- --------- ---------- ----------
MAXIM MID-CAP (GROWTH FUND
I) 4
Value at beginning of period $14.34 $13.70 $10.96 $10.00
Value at end of period $15.99 $14.34 $13.70 $10.96
Increase (decrease) in value of $1.65 $0.64 $2.74 $0.96
accumulation units
Number of accumulation units 2,495,810.84 2,440,068.07
1,715,174.42 788,758.55
outstanding at end of period
- ------------------------------ ------- ---------- ---------- ---------- ---------
MAXIM SMALL-CAP
INDEX
4
Value at beginning of period $13.46 $11.82 $9.48 $10.00
Value at end of period $16.08 $13.46 $11.82 $9.48
Increase (decrease) in value of $2.62 $1.64 $2.34 $(0.52)
accumulation units
Number of accumulation units 711,865.97 477,902.35 296,281.36 152,895.00
outstanding at end of period
- ------------------------------ ------- ---------- ---------- ---------- ---------
MAXIM INTERNATIONAL
EQUITY 4
Value at beginning of period $13.33 $11.29 $10.49 $10.00
Value at end of period $13.43 $13.33 $11.29 $10.49
Increase (decrease) in value of $0.10 $2.04 $0.80 $0.49
accumulation units
Number of accumulation units 2,831,592.94 2,249,181.67
1,645,237.34 1,075,821.94
outstanding at end of period
- ----------------------------- ------- ---------- ---------- ---------- ---------
FIDELITY VIP
GROWTH
5
Value at beginning of period $14.57 $12.86 $9.62 $10.00
Value at end of period $17.77 $14.57 $12.86 $9.62
Increase (decrease) in value of $3.20 $1.71 $3.24 $(0.38)
accumulation units
Number of accumulation units 3,352,899.82 2,500,808.02
1,502,634.51 559,313.44
outstanding at end of period
- ------------------------------ ------- ---------- ---------- ---------- ---------
<PAGE>
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------
INVESTMENT DIVISION 1998 1997 1996 1995 1994
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------
- ----------------------------------------
FIDELITY VIP II ASSET
MANAGER 5
Value at beginning of period $12.17 $10.76 $9.31 $10.00
Value at end of period $14.50 $12.17 $10.76 $9.31
Increase (decrease) in value of $2.33 $1.41 $1.45 $(0.69)
accumulation units
Number of accumulation units 2,104,778.43 1,593,034.53 1,202,943.32 768,426.17
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------
MAXIM T. ROWE PRICE
EQUITY/INCOME 6
Value at beginning of period $15.30 $12.98 $9.85 $10.90
Value at end of period $19.47 $15.30 $12.98 $9.85
Increase (decrease) in value of $4.17 $2.32 $3.13 $(0.15)
accumulation units
Number of accumulation units 3,595,375.07 1,702,863.67 550,610.66 16,574.29
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------
MAXIM SMALL-CAP VALUE (ARIEL VALUE) 6
Value at beginning of period $13.48 $11.58 $10.15 $10.00
Value at end of period $17.03 $13.48 $11.58 $10.15
Increase (decrease) in value of $3.55 $1.90 $1.43 $0.15
accumulation units
Number of accumulation units 113,566.69 39,184.70 30,919.44 .01
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------
MAXIM CORPORATE
BOND 6
Value at beginning of period $13.55 $12.44 $10.00
Value at end of period $15.09 $13.55 $12.44
Increase (decrease) in value of $1.54 $1.11 $2.44
accumulation units
Number of accumulation units 986,392.61 478,757.71 220,637.10
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
- ---------------------------------------- ---------- ---------- ---------- ----------
MAXIM INVESCO
ADR
6
Value at beginning of period $13.46 $11.25 $10.00
Value at end of period $14.90 $13.46 $11.25
Increase (decrease) in value of $1.44 $2.21 $1.25
accumulation units
Number of accumulation units 314,943.72 126,363.18 23,104.73
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
- ---------------------------------------- ---------- ---------- ---------- ----------
MAXIM INVESCO SMALL-CAP
GROWTH 6
Value at beginning of period $16.38 $13.09 $10.00
Value at end of period $19.21 $16.38 $13.09
Increase (decrease) in value of $2.83 $3.29 $3.09
accumulation units
Number of accumulation units 1,340,084.31 776,719.68 210,982.04
outstanding at end of period
- ---------------------------------------- ---------- ---------- ----------
- ---------------------------------------- ---------- ---------- ---------- ----------
MAXIM INVESCO
BALANCED
7
Value at beginning of period $10.13 $10.00
Value at end of period $12.62 $10.13
Increase (decrease) in value of $2.49 $0.13
accumulation units
Number of accumulation units 4,925,017.36 22,568.19
outstanding at end of period
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ---------- ----------
MAXIM VALUE
INDEX
8
Value at beginning of period $10.00
Value at end of period $10.82
Increase (decrease) in value of $0.82
accumulation units
Number of accumulation units 55,506.37
outstanding at end of period
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
MAXIM GROWTH
INDEX
8
Value at beginning of period $10.00
Value at end of period $10.44
Increase (decrease) in value of $0.44
accumulation units
Number of accumulation units 47,353.03
outstanding at end of period
- ---------------------------------------- ---------- ----------
</TABLE>
<PAGE>
- ---------------------------------------- ---------- ----------
INVESTMENT DIVISION 1998 1997
- ---------------------------------------- ---------- ----------
MAXIM SMALL-CAP AGGRESSIVE GROWTH 8
Value at beginning of period $10.00
Value at end of period $10.01
Increase (decrease) in value of $0.01
accumulation units
Number of accumulation units 70,399.46
outstanding at end of period
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
MAXIM BLUE
CHIP
8
Value at beginning of period $10.00
Value at end of period $10.45
Increase (decrease) in value of $0.45
accumulation units
Number of accumulation units 81,095.13
outstanding at end of period
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
MAXIM MID-CAP
GROWTH
8
Value at beginning of period $10.00
Value at end of period $10.31
Increase (decrease) in value of $0.31
accumulation units
Number of accumulation units 128,683.86
outstanding at end of period
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
MAXIM AGGRESSIVE
PROFILE 8
Value at beginning of period $10.00
Value at end of period $10.29
Divisions is October 5, 1984.
Increase (decrease) in value of $0.29
accumulation units
Number of accumulation units 58,762.77
outstanding at end of period
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
MAXIM MODERATELY AGGRESSIVE PROFILE
8
Value at beginning of period $10.00
Value at end of period $10.33
ADR, Maxim INVESCO Small-Cap
Increase (decrease) in value of $0.33
accumulation units
Number of accumulation units 141,839.79
outstanding at end of period
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
MAXIM MODERATE
PROFILE 8
Value at beginning of period $10.00
Value at end of period $10.22
Increase (decrease) in value of $0.22
accumulation units
Number of accumulation units 110,105.33
outstanding at end of period
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
MAXIM MODERATELY CONSERVATIVE
PROFILE
8
Value at beginning of period $10.00
Value at end of period $10.19
Increase (decrease) in value of $0.19
accumulation units
Number of accumulation units 53,608.55
outstanding at end of period
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
MAXIM CONSERVATIVE
PROFILE 8
Value at beginning of period $10.00
Value at end of period $10.32
Increase (decrease) in value of $0.32
accumulation units
Number of accumulation units 72,034.42
outstanding at end of period
- ---------------------------------------- ---------- ----------
<PAGE>
- ---------------------------------------- ---------- ----------
JANUS ASPEN WORLDWIDE GROWTH
- ---------------------------------------- ---------- ----------
STEIN ROE BALANCED, VARIABLE SERIES
- ---------------------------------------- ---------- ----------
FIDELITY VIP II CONTRAFUND
- ---------------------------------------- ---------- ----------
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Current Accumulation Unit Values ca be obtained by calling GWL&A toll-free at 1-800-523-4106
- --------------------------------------------------------------------------------------------
1. Inception date for the Maxim Money Market, Maxim Bond and Maxim Stock Index Investment
2. Prior to December 1, 1992, the Grown Investment Division.
3. Inception date for the Maxim U.S. Government Securities and American Century VP Capital
Appreciation Investment Divisions is August 1,
1992.
4. Inception date for Maxim Mid-Cap (Growth Fund I), Maxim International Equity and Maxim
Small-Cap Index Investment Divisions is
January 3, 1994.
5. Inception date for Fidelity VIP Growth, Fidelity VIP II Asset Manager Investment Divisions
is March 1, 1994.
6. Inception date for Maxim Small-Cap Value (Ariel Value), Maxim Corporate Bond, Maxim INVESCO
Growth, and Maxim T. Rowe Price Equity/Income Investment Divisions is November 1, 1994.
7. Inception date for Maxim INVESCO Balanced Investment Division is October 31, 1996.
8. Inception date for Maxim Value Index, Maxim Growth Index, Maxim Small-Cap Aggressive Growth,
Maxim Blue Chip, Maxim MidCap
Growth, Maxim Aggressive Profile, Maxim Moderately Aggressive Profile, Maxim Moderate
Profile, Maxim Moderately Conservative Profile,
and Maxim Conservative Profile Investment Divisions is September 11, 1997.
</TABLE>
APPENDIX B - CALCULATION OF THE NET INVESTMENT FACTOR
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 Eligible Fund shares 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 Eligible Fund on shares 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 asset value per share of the Eligible Fund shares determined as
of the end of the immediately preceding Valuation Period, minus or plus
(c) is an amount representing the Mortality and Expense 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.
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)
above, reflect the investment performance of the Eligible Fund as well as the
payment of Eligible Fund expenses.
- --------
1 Although the Mortality and Expense Risk Charge appears twice in this Fee
Table, you will pay only one of these charges. Depending on the terms of your
Group Contract, you will pay this charge either as a periodic deduction from
your Participant Annuity Account Value or as a daily deduction from the
Accumulation Unit Value of each Investment Division to which you allocate your
Participant Annuity Account Value. Please see "Charges and Deductions:
Mortality and Expense Risk Deductions" for more information.
1Standard & Poor, S&P 500 Composite Index, S&P Mid-Cap Index and S&P Small-Cap
600 Stock Index are trademarks of The McGraw-Hill Companies, Inc. and have been
licensed for use by Maxim Series Fund, Inc. and Great-West Life & Annuity
Insurance Company. The Portfolios are not sponsored, endorsed, sold or promoted
by Standard & Poor's and Standard & Poor's makes no representation regarding the
advisability of using this index.
2 The Frank Russell Company is not a sponsor of , or in any other way affiliated
with the Growth Index and Value Index Portfolios or the Maxim Series Fund, Inc.
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
B-5
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 March 1, 1999, 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.
March 1, 1999
<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>
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 Eligible 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 $50 million
(Canadian) per occurrence, 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, 1998, the related statement of operation 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, 1998
and 1997 and for each of the three years in the period ended December 31, 1998,
included in this Statement of Additional Information have been audited by
Deloitte & Touche LLP, independent auditors, as set forth in their report
appearing herein and are included in reliance upon such report 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. The payments
made between 1996 and 1998 will be filed by amendment.
CALCULATION OF PERFORMANCE DATA
A.......Yield and Effective Yield Quotations for the Money Market Investment
Division
........The yield quotation for the Money Market Investment Division set forth
in the Prospectus is for the seven-day period ended December 31, 1998 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, 1998
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 quotations for the one, five and
ten year periods ended December 31, 1998, 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 variable interest of
Contract Owners under the Contracts are affected solely by the investment
results of the Series Account.
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
- ----------------------------------------------------------------------------
FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997
AND INDEPENDENT AUDITORS' REPORT
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
- ----------------------------------------------------------------------------
CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 1998, 1997 AND 1996
AND INDEPENDENT AUDITORS' REPORT
<PAGE>
C-13
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, 1998, 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, 1998, 1997 and the related
consolidated statements of income, stockholders equity and
cash flows for each of the three years in the period ended
December 31, 1998, are included in Part B. To be filed by
amendment.
(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.
Item (3) is incorporated by reference to registrant's Post
Effective Amendment No. 23 to Form N-4 registration statement
filed on May 1 1997.
(7) Not Applicable
(10) (a) Written Consent of Jorden Burt Berenson &
Johnson, LLP to be filed by amendment.
(b) Written Consent of Deloitte & Touche LLP to be
filed by amendment.
(c) Written Consent of Ruth B. Lurie
(11) Not Applicable
(12) Not Applicable
Item (13) is incorporated by reference to registrant's Post Effective Amendment
No. 23 to Form N-4 registration statement filed on May 1 1997
(14) N/A
<PAGE>
Item 25. Directors and Officers of the Depositor
<TABLE>
Position and Offices
<S> <C> <C> <C> <C> <C> <C>
Name Principal Business Address with Depositor
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
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
John A. Brown (3) Senior Vice-President,
Financial Services
<PAGE>
Donna A. Goldin (2) Executive Vice President
Chief Operating Officer,
One Corporation
Mitchell T. Graye (3) Executive Vice
President,
Chief Financial Officer
John T. Hughes (3) Senior Vice-President,
Chief Investment Officer
D. Craig Lennox (3) Senior Vice-President,
General Counsel and
Secretary
Steve H. Miller (2) Senior Vice-President,
Employee Benefits, Sales
James D. Motz (2) Executive Vice-President,
Employee Benefits
Operations
Charles P. Nelson (3) Senior Vice President,
Public Non-Profit Markets
Marty Rosenbaum (2) Senior Vice-President,
Employee Benefits
Operations
Gregg E. Seller, (3) Senior Vice President,
Major Accounts
Douglas L. Wooden (3) Executive 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.
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>
ORGANIZATIONAL CHART
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Power Corporation of Canada
100% - 2795957 Canada Inc.
100% - 171263 Canada Inc.
67.7% - Power Financial Corporation
81.2% - Great-West Lifeco Inc.
99.5% - The Great-West Life Assurance Company 100% - GWL&A Financial
(Nova Scotia) Inc.
100% - GWL&A Financial Inc.
100% - Great-West Life & Annuity Insurance Company
100% - First Great-West Life & Annuity Insurance
Company
100% - GW Capital Management, LLC 100%
- Orchard Capital Management, LLC
100% - Greenwood Investments,
Inc.
100% - Financial Administrative Services Corporation
100% - One Corporation
100% - One Health Plan of Arizona, Inc.
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 South Carolina, Inc.
100% - One Health Plan of Washington, Inc.
100% - One Health Plan of Ohio, Inc.
100% - One Health Plan of Tennessee, Inc.
100% - One Health Plan of Oregon, Inc.
100% - One Health Plan of Florida, Inc.
100% - One Health Plan of Indiana, Inc.
100% - One Health Plan of Massachusetts, Inc.
100% - One Health Plan of Maine, Inc.
100% - One Health Plan of New Jersey, Inc.
100% - One Health Plan of New Hampshire, Inc.
100% - One Health Plan of Pennsylvania, Inc.
100% - One Health Plan, Inc. (Vermont)
100% - One Orchard Equities, Inc.
100% - Great-West Benefit Services, Inc.
13% - Private Healthcare Systems, Inc.
100% - Benefits Communication
Corporation 100% - BenefitsCorp
Equities, Inc.
95% - 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.
92% - Orchard Series Fund**
</TABLE>
* New England Life Insurance Company - 5%
** New England Life Insurance Company - 8%
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 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.
Section 7-109-102. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this section, a
corporation may indemnify a person made a party to the
proceeding because the person is or was a director against
liability incurred in any proceeding if:
(a) The person conducted himself or herself in good faith;
(b) The person reasonably believed:
(I) In the case of conduct in an official
capacity with the corporation, that his or her
conduct was in the corporation's best interests;
or
(II) In all other cases, that his or her conduct
was at least not opposed to the corporation's
best interests; and
(c) In the case of any criminal proceeding, the person
had no reasonable cause to believe his or her conduct
was unlawful.
(2) A director's conduct with respect to an employee benefit
plan for a purpose the director reasonably believed to be in
the interests of the participants in or beneficiaries of the
plan is conduct that satisfies the requirements of
subparagraph (II) of paragraph (b) of subsection (1) of this
section. A director's conduct with respect to an employee
benefit plan for a purpose that the director did not
reasonably believe to be in the interests of the participants
in or beneficiaries of the plan shall be deemed not to satisfy
the requirements of subparagraph (a) of subsection (1) of this
section.
(3) The termination of any proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere
or its equivalent, is not, of itself, determinative that the
director did not meet the standard of conduct described in
this section.
(4) A corporation may not indemnify a director under this
section:
(a) In connection with a proceeding by or in the right
of the corporation in which the director was adjudged
liable to the corporation; or
(b) In connection with any proceeding charging that the
director derived an improper personal benefit, whether
or not involving action in his official capacity, in
which proceeding the director was adjudged liable on
the basis that he or she derived an improper personal
benefit.
(5) Indemnification permitted under this section in connection
with a proceeding by or in the right of a corporation is
limited to reasonable expenses incurred in connection with the
proceeding.
Section 7-109-103. Mandatory Indemnification of Directors.
Unless limited by 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 need not be secured and may be accepted
without reference to financial ability to make repayment.
(3) Determinations and authorizations of payments under this
section shall be made in the manner specified in Section
7-109-106.
Section 7-109-105. Court-Ordered Indemnification of Directors.
(1) Unless otherwise provided in the articles of
incorporation, a director who is or was a party to a
proceeding may apply for indemnification to the court
conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court, after
giving any notice the court considers necessary, may order
indemnification in the following manner:
(a) If it determines the director is entitled to
mandatory indemnification under section 7-109-103, the
court shall order indemnification, in which case the
court shall also order the corporation to pay the
director's reasonable expenses incurred to obtain
court-ordered indemnification.
(b) If it determines that the director is fairly and
reasonably entitled to indemnification in view of all
the relevant circumstances, whether or not the director
met the standard of conduct set forth in section
7-109-102 (1) or was adjudged liable in the
circumstances described in Section 7-109-102 (4), the
court may order such indemnification as the court deems
proper; except that the indemnification with respect to
any proceeding in which liability shall have been
adjudged in the circumstances described Section
7-109-102 (4) is limited to reasonable expenses
incurred in connection with the proceeding and
reasonable expenses incurred to obtain court-ordered
indemnification.
Section 7-109-106. Determination and Authorization of Indemnification of
Directors.
(1) A corporation may not indemnify a director under Section
7-109-102 unless authorized in the specific case after a
determination has been made that indemnification of the
director is permissible in the circumstances because he has
met the standard of conduct set forth in Section 7-109-102. A
corporation shall not advance expenses to a director under
Section 7-109-104 unless authorized in the specific case after
the written affirmation and undertaking required by Section
7-109-104(1)(a) and (1)(b) are received and the determination
required by Section 7-109-104(1)(c) has been made.
(2) The determinations required to be made subsection (1) of
this section shall be made:
(a) By the board of directors by a majority vote of
those present at a meeting at which a quorum is
present, and only those directors not parties to the
proceeding shall be counted in satisfying the quorum.
(b) If a quorum cannot be obtained, by a majority vote
of a committee of the board of directors designated by
the board of directors, which committee shall consist
of two or more directors not parties to the proceeding;
except that directors who are parties to the proceeding
may participate in the designation of directors for the
committee.
(3) If a quorum cannot be obtained as contemplated in
paragraph (a) of subsection (2) of this section, and the
committee cannot be established under paragraph (b) of
subsection (2) of this section, or even if a quorum is
obtained or a committee designated, if a majority of the
directors constituting such quorum or such committee so
directs, the determination required to be made by subsection
(1) of this section shall be made:
(a) By independent legal counsel selected by a vote of
the board of directors or the committee in the manner
specified in paragraph (a) or (b) of subsection (2) of
this section or, if a quorum of the full board cannot
be obtained and a committee cannot be established, by
independent legal counsel selected by a majority vote
of the full board of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as
the determination that indemnification 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
directors, whether such insurance company is formed under the
laws of this state or any other jurisdiction of the United
States or elsewhere, including any insurance company in which
the corporation has an equity or any other interest through
stock ownership or otherwise.
Section 7-109-109. Limitation of Indemnification of Directors.
(1) A provision concerning a corporation's indemnification of,
or advance of expenses to, directors that is contained in its
articles of incorporation or bylaws, in a resolution of its
shareholders or board of directors, or in a contract, except
for an insurance policy or otherwise, is valid only to the
extent the provision is not inconsistent with Sections
7-109-101 to 7-109-108. If the articles of incorporation limit
indemnification or advance of expenses, indemnification or
advance of expenses are valid only to the extent not
inconsistent with the articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a
corporation's power to pay or reimburse expenses incurred by a
director in connection with an appearance as a witness in a
proceeding at a time when he or she has not been made a named
defendant or respondent in the proceeding.
Section 7-109-110. Notice to Shareholders of Indemnification of Director.
If a corporation indemnifies or advances expenses to a
director under this article in connection with a proceeding by
or in the right of the corporation, the corporation shall give
written notice of the indemnification or advance to the
shareholders with or before the notice of the next
shareholders' meeting. If the next shareholder action is taken
without a meeting at the instigation of the board of
directors, such notice shall be given to the shareholders at
or before the time the first shareholder signs a writing
consenting to such action.
Bylaws of 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
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>
Position and Offices
<S> <C> <C> <C> <C> <C> <C>
Name Principal Business Address with
Underwriter
Charles P. Nelson (1) Chairman and President
Robert K. Shaw (1) Director
Dennis Low (1) Director
Gregg E. Seller 18101 Von Karman Ave. Director and Vice
President
Suite 1460 Major Accounts
Irvine, CA 92715
John Brown (1) Director
Doug L. Wooden (1) Director
Jack Baker (1) Vice President, Licensing
and Contracts
Glen R. Derback (1) Treasurer
Beverly A. Byrne (1) Secretary
Teresa L. Buckley (1) Compliance Officer
- ------------
</TABLE>
(1) 8515 E. Orchard Road, Englewood, Colorado 80111
(c) Commissions and other compensation received by Principal Underwriter
during registrant's last fiscal year:
Net
Name of Underwriting Compensation
Principal Discounts and on Brokerage
Underwriter Commissions Redemption Commissions
Compensation
BCE -0- -0- -0-
-0-
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.
(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..
<PAGE>
S-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 25 to its Registration Statement on Form N-4 to be
signed on its behalf, in the City of Englewood, State of Colorado, on this 26
day of ___February_____, 1999.
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>
<S> <C> <C> <C> <C> <C> <C>
Signature and Title Date
/s/ Robert Gratton*
February 26, 1999
Director and Chairman of the Board
(Robert Gratton)
/s/ William T. McCallum February 26,
1999
Director, President and Chief Executive
Officer (William T. McCallum)
/s/ Mitchell T. G. Graye
February 26, 1999
Executive Vice President and
Chief Financial Officer
(Mitchell T.G. Graye)
/s/ James Balog*
February 26, 1999
Director, (James Balog)
<PAGE>
Signature and Title Date
/s/ James W. Burns*
February 26, 1999
Director, (James W. Burns)
/s/ Orest T. Dackow*
February 26, 1999
Director (Orest T. Dackow)
February 26, 1999
Director Andre Desmarais
/s/ Paul Desmarais, Jr*.
February 26, 1999
Director (Paul Desmarais, Jr.)
February 26, 1999
Director (Robert G. Graham)
/s/ N. Berne Hart * February 26, 1999
- -------------------------------- ------------------
Director (N. Berne Hart)
/s/ Kevin P. Kavanagh* February 26,
- ------------------------------------ -------------------
1999
Director (Kevin P. Kavanagh)
February 26, 1999
Director (William Mackness)
/s/ Jerry E.A. Nickerson* February 26, 1999
Director (Jerry E.A. Nickerson)
/s/ P. Michael Pitfield * February 26,
- ------------------------------------ -------------------
1999
Director (P. Michael Pitfield)
/s/ Michel Plessis-Belair*
February 26, 1999
Director (Michel Plessis-Belair)
/s/ Brian E. Walsh *
February 26, 1999
Director (Brian E. Walsh)
*By: /s/ Lennox
February 26, 1999
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.
</TABLE>
<PAGE>
