As filed with the Securities and Exchange Commission on April 30, 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. 26 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 20 (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)
X Immediately upon filing pursuant to paragraph (b) of Rule 485. On
May 1, 1999 , pursuant to paragraph (b) of Rule 485. 60 days
after filing pursuant to paragraph (a) of Rule 485. On , pursuant
to paragraph (a)(i) of Rule 485. 75 days after filing pursuant to
paragraph (a)(ii) of Rule 485. On , pursuant to paragraph (a)(ii)
of Rule 485.
If appropriate, check the following:
Thispost-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of securities being registered: flexible premium deferred variable annuity
contracts
<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
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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
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL
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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
</TABLE>
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
........
<PAGE>
124
1
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:
o pension 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); o qualified 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 Insurance Products Fund
Fidelity Variable Insurance 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 April 30, 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 April 30, 1999.
<PAGE>
12
10
TABLE OF CONTENTS
Page
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Definitions.....................................................................3
Key Features of the Annuity.....................................................4
Fee Table.......................................................................5
Condensed Financial Information.................................................9
Great-West Life & Annuity Insurance Company.....................................9
FutureFunds Series Account......................................................9
Investments of the Series Account...............................................9
The Eligible Funds......................................................9
The Group Contracts.............................................................12
Accumulation Period.............................................................13
Application and Initial Contribution....................................13
Subsequent Contribtions.................................................13
Making Transfers................................................................13
Loans...........................................................................15
Total and Partial Withdrawals...................................................15
Cessation of Contributions......................................................16
Death Benefit...................................................................16
Charges and Deductions..........................................................17
Payment Options.................................................................20
Periodic Payments.......................................................20
Annuity Payment Options.................................................21
Federal Tax Consequences........................................................23
Performance Related Information.................................................29
Voting Rights...................................................................31
Distribution of the Group Contracts.............................................32
State Regulation................................................................32
Restrictions Under the Texas Optional Retirement Program........................32
Reports.........................................................................32
Year 2000.......................................................................32
Rights Reserved by Great-West...................................................32
Adding and Discontinuing Investment Options.............................33
Substitution of Investments.............................................33
Legal Matters...................................................................33
Available Information...........................................................33
Appendix A, Condensed Financial Information.....................................34
Appendix B, Net Investment Factor Calculation ..................................54
</TABLE>
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
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<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. 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 "your's" 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. The day after Thanksgiving is a valuation date.
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 withdrawals, 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>
45
42
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 Risk1
Charge
1.25%
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, 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 any 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.
<PAGE>
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
<TABLE>
<S> <C> <C> <C> <C>
Maxim Templeton International Equity1 1.00% .21% 1.21%
Maxim INVESCO ADR 1.00% .30% 1.30%
Janus Aspen Series Worldwide Growth2 .67% .07% .74%
Maxim INVESCO Small-Cap Growth .95% .15% 1.10%
Maxim Loomis-Sayles Small-Cap Value 1.00% .10% 1.10%
Maxim Small-Cap Index .60% 0% .60%
Maxim Ariel Small-Cap Value1 1.00% .27% 1.27%
Maxim T. Rowe Price MidCap Growth 1.00% .05% 1.05%
Maxim Ariel Mid-Cap Value .95% .07% 1.02%
American Century VP Capital 1.00% 0% 1.00%
Appreciation
Fidelity VIP Growth .59% .09% .68%
Maxim Founders 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% .08% .88%
Maxim Value Index .60% 0% .60%
Fidelity VIP II Contrafund .59% .11% .70%
Fidelity VIP II Asset Manager .54% .10% .64%
Maxim INVESCO Balanced 1.00% 0% 1.00%
Stein Roe Balanced .45% .20% .65%
Maxim Bond .60% 0% .60%
Maxim Loomis-Sayles Corporate Bond .90% 0% .90%
Maxim U.S. Government Securities .60% 0% .60%
Maxim Money Market .46% 0% .46%
Aggressive Profile+ .25% 0% .25%
Moderately Aggressive Profile+ .25% 0% .25%
Moderate Profile+ .25% 0% .25%
Moderately Conservative Profile+ .25% 0% .25%
Conservative Profile+ .25% 0% .25%
Minimum Total Maxim Series Maximum Total Maxim Series
Fund Annual Expenses* Fund Annual Expenses**
Aggressive Profile 1.13% 1.47%
Moderately Aggressive Profile 1.06% 1.41%
Moderate Profile 1.00% 1.32%
Moderately Conservative Profile .98% 1.23%
Conservative Profile .85% 1.11%
</TABLE>
+ Each Profile Portfolio will primarily invest in shares of other Maxim
Portfolios ("Underlying Portfolios"). Therefore, each Profile Portfolio will
bear 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.
1 When taking voluntary reimbursements and waivers into account the fees of the
Maxim Templeton International Equity Portfolio were 1.20% and the Maxim Ariel
Small Cap Value Portfolio were 1.26%.
2 Fee reductions for the Worldwide Growth Portfolio reduced the management fee
to the level of the corresponding Janus retail fund. Other waivers, if
applicable, are first applied against the Management Fee and then against Other
expenses. Janus Capital has agreed to continue the waivers and fee reductions
until at least the next annual meeting. After waivers and reductions the total
operating expenses were .72%.
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 .66% for Fidelity VIP Growth and .63% for Fidelity VIP II Asset Manager and
.66% for the Fidelity VIPII Contrafund.
<PAGE>
EXAMPLES
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:
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Investment Division 1 Year 3 Year 5 Year 10 Year
- --------------------------------------------------- ------------- ---------------- ------------ ---------------
Maxim Money Market $77.90 $118.21 $165.16 $257.37
Maxim Bond, Maxim Stock Index, Maxim U.S. $79.35 $122.82 $173.33 $276.44
Government Securities, Maxim Small-Cap Index,
Maxim
Maxim Value Index, Maxim Growth Index
Maxim Ariel Mid-Cap Value $83.67 $136.53 $197.50 $332.06
Maxim INVESCO Small-Cap Growth $84.49 $139.12 $202.04 $342.39
Maxim Templeton International Equity $85.51 $42.35 $207.70 $355.19
Maxim Loomis-Sayles Corporate Bond $82.43 $132.63 $190.64 $316.41
Maxim Ariel Small-Cap Value $86.13 $144.28 $211.08 $362.81
Maxim INVESCO ADR $86.54 $145.57 $213.33 $367.87
Maxim Loomis-Sayles Small-Cap Value $84.59 $139.44 $202.61 $343.68
Maxim INVESCO Balanced, $83.46 $135.88 $196.36 $329.47
American Century VP Capital Appreciation
Maxim T. Rowe Price Equity/Income $82.23 $13198 $189.50 $313.78
Fidelity VIP Growth $79.97 $124.79 $176.81 $284.53
Fidelity VIP II Asset Manager $79.66 $123.80 $175.07 $280.49
Fidelity VIP II Contrafund $79.97 $124.79 $176.81 $284.53
Janus Aspen Worldwide Growth $80.79 $127.41 $181.44 $295.24
Stein Roe Balanced Fund, Variable Series $79.86 $124.46 $176.23 $283.18
Maxim Founders Blue Chip $85.00 $140.73 $204.87 $348.81
Maxim T.Rowe Price MidCap Growth $83.97 $137.50 $199.20 $335.95
Aggressive Profile* $86.54 $145.57 $213.33 $367.87
Moderately Aggressive Profile* $85.82 $143.32 $209.39 $359.01
Moderate Profile* $85.10 $141.06 $205.44 $350.09
Moderately Conservative Profile* $84.59 $139.44 $202.61 $343.68
Conservative Profile* $83.26 $135.23 $195.22 $326.86
</TABLE>
<PAGE>
Examples (con't)
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>
<S> <C> <C> <C> <C>
Investment Division 1 Year 3 Year 5 Year 10 Year
- --------------------------------------------------- ------------- ---------------- ------------ ---------------
Maxim Money Market $17.90 $58.31 $105.16 $257.37
Maxim Bond, Maxim Stock Index, Maxim U.S. $19.35 $62.82 $113.33 $276.44
Government Securities, Maxim Small-Cap Index,
Maxim
Maxim Value Index, Maxim Growth Index
Maxim Ariel Mid-Cap Value $23.67 $76.53 $137.50 $332.06
Maxim INVESCO Small-Cap Growth $24.49 $79.12 $142.04 $342.39
Maxim Templeton International Equity $25.51 $82.35 $147.70 $355.19
Maxim Loomis-Sayles Corporate Bond $22.43 $72.63 $130.64 $316.41
Maxim Ariel Small-Cap Value $26.13 $84.28 $151.08 $362.81
Maxim INVESCO ADR $26.54 $85.57 $153.33 $367.87
Maxim Loomis-Sayles Small-Cap Value $24.59 $79.44 $142.61 $343.68
Maxim INVESCO Balanced, $23.46 $75.88 $136.36 $329.47
American Century VP Capital Appreciation
Maxim INVESCO ADR, Maxim Small-Cap Aggressive
Growth
Maxim T. Rowe Price Equity/Income $22.23 $71.98 $129.50 $313.78
Fidelity VIP Growth $19.97 $65.79 $116.81 $284.53
Fidelity VIP II Asset Manager $19.66 $63.80 $115.07 280.49
Fidelity VIP II Contrafund $19.97 $65.79 $116.81 $284.53
Janus Aspen Worldwide Growth $20.79 $67.41 $121.44 $295.24
Stein Roe Balanced Fund, Variable Series $19.86 $64.46 $116.23 $283.18
Maxim Founders Blue Chip $25.00 $80.73 $144.87 $348.81
Maxim T.Rowe Price MidCap Growth $23.97 $77.50 $139.20 $335.95
Aggressive Profile* $26.54 $85.57 $153.33 $367.87
Moderately Aggressive Profile* $25.82 $83.32 $149.39 $359.01
Moderate Profile* $25.10 $81.06 $145.44 $350.09
Moderately Conservative Profile* $24.59 $79.44 $142.61 $343.68
Conservative Profile* $23.26 $75.23 $135.22 $326.86
</TABLE>
*The average of the minimum and maxim total eligible fund expenses are used in
calculating these examples for the Profile Portfolios
The above Examples, including the performance rate assumed, should not be
considered a representation of past or future performance or expenses. Actual
performance achieved or expenses paid 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 and 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.
Some of the Funds have been established by investment advisers which manage
publicly traded mutual funds having similar names and investment objectives.
While some of the Eligible Funds may be similar to, and may in fact be modeled
after publicly traded mutual funds, you should understand that the Eligible
Funds are not otherwise directly related to any publicly traded mutual fund.
Consequently, the investment performance of publicly traded mutual funds and any
corresponding Eligible Funds may differ substantially.
The following sets forth the investment objective of each Eligible Fund and
summarizes its principal 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 Ariel Mid-Cap Value Portfolio seeks long-term capital 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 Templeton International Equity Portfolio seeks long-term capital growth.
This portfolio invests primarily in commons stocks of foreign companies.
Maxim Loomis-Sayles 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 Ariel Small-Cap Value Portfolio seeks long term capital appreciation by
investing primarily in small-cap common stocks. This portfolio will emphasize
small companies that are believed to be undervalued.
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 Loomis-Sayles Small-Cap Value 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 Founders 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 T. Rowe Price 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.
Profile Portfolios
Each of the following five Profile Portfolios seeks to provide an asset
allocation program designed to meet certain investment goals based on an
investor's risk tolerance.
Aggressive Profile Portfolio seeks long-term
capital appreciation primarily through
investments in other Maxim Series Fund, Inc.
portfolios that emphasize equity investments.
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.
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.
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.
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 Portfolio 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 Fund and
Variable Insurance Products II Fund
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 Fund and Variable Insurance Products II
Fund 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 is 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 Ariel Mid-Cap Value
Portfolio and the Maxim Ariel Small-Cap 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 Founders 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 Funds Group, Inc. 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 Loomis
Sayles Corporate Bond Portfolio and the Maxim
Loomis Sayles Small-Cap Value Portfolio. Loomis
Sayles is located at One Financial Center,
Boston, Massachusetts 02111.
Templeton Investment Counsel, Inc. serves as the
sub-adviser of the Maxim Templeton 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 T. Rowe
Price 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-annually or annually. 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. There will
be no additional cost for using dollar cost averaging.
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. There will
be no additional cost for using Rebalancer.
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 (or 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 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 during the accumulation period 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.
After the Annuity Commencement Date, however, all Contracts are assessed the
mortality and expense risk charge an equivalent daily rate. (See the discussion
on the Daily M&E Deduction above.)
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.
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 3.25%% 3.35%
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, 1998. 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
The following table illustrates Average Annual Total Return assuming a Level 1
Contingent Deferred Sales Charge, a $30 Contract Maintenance Charge and a 1.25%
Mortality and Expense Charge
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT After Before After Before After
DIVISION Before After Before CDSC CDSC CDSC CDSC CDSC
CDSC CDSC 5 10 10 Years 10 10
CDSC 1 5 Years Years or orif Years or if Years or
1 Year Years if Less, Less, Less, Life if Less,
Year Life of Life of of Life of
Investment
Investment Underlying Underlying
Division Fund Fund
Division Portfolio Portfolio
Maxim Templeton International Equity -12.20% 3.66% 4.68 3.66% 4.82% 3.83%
-6.20% 4.68%
Maxim INVESCO ADR 3.25% N/A N/A 12.40% 11.39% 12.40% 11.39%
9.25%
Janus Aspen Series Worldwide Growth 21.31% 19.21% 3.26% -2.74% 22.51% 22.03%
27.31% 19.80%
Maxim INVESCO Small-Cap Growth 10.15% N/A N/A 21.24% 20.45% 21.24% 20.45%
16.15%
Maxim Loomis-Sayles Small-CapValue -9.51% N/A N/A -.83% -6.83% 16.71% 15.82%
-3.51%
Maxim Small-Cap Index -8.83% N.A N/A 9.17% 8.31% 9.21% 8.38%
-2.83%
Maxim Ariel Small-Cap Value .93% 14.83% 13.89% 12.00% 11.25%
6.93% 11.49% 10.70%
Maxim T. Rowe Price MidCap Growth 14.70% N/A N/A 20.36% 14.36% 20.85% 17.20%
20.70%
Maxim Ariel Mid-Cap Value 26.09% 15.45% 16.13% 15.46% 16.10% 15.44%
32.09% 16.11%
American Century VP Capital Appreciation -9.40% .82% 3.90% 3.90% 7.34% 7.34%
-3.40 1.95%
5
Fidelity VIP Growth 31.75% 20.45% 19.48% 17.82% 17.82%
37.75% 20.02% 19.44%
Maxim Founders Blue Chip 10.38% N/A N/A 17.13% 11.13% 12.45% 8.66%
16.38%
Maxim Growth Index 29.57% 31.89% 25.89% 22.68% 22.16%
35.57% 22.94% 22.41%
Maxim Stock Index 20.54% 14.93% 14.93% 14.93%
25.21% 21.10% 20.54% 14.93%
Maxim T. Rowe Price Equity-Income 1.56% N/A N/A 19.40% 18.57% 19.40% 18.57%
7.56%
Maxim Value Index 7.04% 18.28% 12.28% 18.27% 17.67%
13.04% 18.32% 17.70%
Fidelity VIP II Contrafund N/A N/A 19.37% 13.37% 27.01% 26.27%
28.35% 22.35%
Fidelity VIP II Asset Manager 9.51% 10.77% 9.92% 11.53% 11.53%
13.61% 7.61% 10.33%
Maxim INVESCO Balanced N/A N/A 19.65% 17.38% 18.87% 16.69%
16.95% 10.95%
Stein Roe Balanced, Variable Series 6.11% .11% 11.54% 11.54%
11.15% 5.15% 11.65% 10.87%
Maxim Bond 3.67% 6.70% 6.70% 6.70% 6.70%
5.32% -.68% 4.69%
Maxim Loomis-Sayles Corporate Bond M/A N/A 11.37% 10.33% 11.37% 10.33%
2.14% -3.86%
Maxim U.S. Government Securities -.10% 3.99% 5.49% 5.49% 7.31% 7.31%
5.90% 5.00%
MaximAggressive Profile 7.54% N/A N/A 16.76% 10.76% 12.61% 8.15%
13.45%
MaximModerately Aggressive Profile 5.16% N/A N/A 14.80% 8.80% 11.16% 6.68%
11.16%
MaximModerate Profile 4.04% N/A N/A 12.49% 6.49% 9.44% 4.94%
10.04%
MaximModerately Conservative Profile 2.41% N/A N/A 10.47% 4.47% 7.93% 3.41%
8.41%
MaximConservative Profile .95% N/A N./A 10.12% 4.12% 7.67% 3.14%
6.95%
</TABLE>
<PAGE>
The following table sets forth the inception date of each Investment Division
and the inception date of the corresponding Eligible Fund.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT DIVISION Eligible Fund Inception Date Investment Division
Inception In Series Account
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 Ariel Mid-Cap Value December 31, 1993 January 3, 1994
Maxim Templeton International Equity December 1, 1993 January 3, 1994
Maxim Loomis-Sayles Corporate Bond November 1, 1994 November 1, 1994
Maxim Ariel Small-Cap 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 1, 1994
Maxim Value Index December 1, 1993 September 11, 1997
Maxim Growth Index December 1, 1993 September 11, 1997
Maxim Loomis-Sayles Small-Cap Value November 1, 1994 September 11, 1997
Maxim Founders Blue Chip June 30, 1997 September 11, 1997
Maxim T. Rowe Price MidCap Growth June 30, 1997 September 11, 1997
MaximAggressive Profile September 11, 1997 September 11, 1997
Moderately Aggressive Profile September 11, 1997 September 11, 1997
Moderate Profile September 11, 1997 September 11, 1997
M September 11, 1997 September 11, 1997
aximoderately Conservative Profile
Conservative Profile September 11, 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 January 3, 1995
Janus Aspen Series, Worldwide Growth September 13, 1993 June 1, 1998
Stein Roe Balanced, Variable Series January 1, 1989 June 1, 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. 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 through the year 2000. 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. We
completed this process during the first quarter of 1999 and will conduct system
testing with third parties throughout 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. Should this occur, we will follow
the procedures as set forth under the heading Cessation of 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.
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>
Condensed Financial
InformationAPENDIX A
CONDENSED FINANCIAL INFORMATION
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the YearPeriods Ended December
31,
Condensed Financial
InformationAPENDIX A
CONDENSED FINANCIAL INFORMATION
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the YearPeriods Ended December
31,
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------ ---------- --------- ----------- ------------ ---------- -------- --------------- -------
INVESTMENT DIVISION (1.25) 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- ------------------------------- --------- ------------ -------- ---------
-------- ---------- ----------- ---------- --------- --------
MAXIM MONEY
MARKET
1
Value at beginning of period $18.30 $17.60 $16.96 $16.25 $15.84 $15.60 $15.26 $14.59 $13.71 $12.72
Value at end of period $19.01 $18.30 $17.60 $16.96 $16.25 $15.84 $15.60 $15.26 $14.59 $13.71
Increase (decrease) in value of $0.71 $0.70 $0.64 $0.71 $0.41 $0.24 $0.34 $0.67 $0.88 $0.99
accumulation units
Number of accumulation units 3,758,054.923,877,164.13,129,281.2,880,571.672,277,816.08 684,668.93 787,941 901,603 846,538 723,266
outstanding at end of period
- --------------------------------------- ---------- --------- ----------- ------------ ---------- -------- --------- --------- ------
MAXIM
BOND
1
Value at beginning of period $28.36 $26.82 $26.05 $22.89 $23.74 $22.14 $21.10 $18.63 17.43 $15.60
Value at end of period $29.87 $28.36 $26.82 $26.05 $22.89 $23.74 $22.14 $21.10 $18.63 $17.43
Increase (decrease) in value of $1.51 $1.54 $0.77 $3.16 $(0.85) $1.60 $1.04 $2.47 $1.20 $1.83
accumulation units
Number of accumulation 1,478,126.621,688,345.61,890,635.2,010,468.992,102,049.13 2,301,785.21,995,2912,067,966 1,765,573 1,524,813
unitsoutstanding at end of period
- --------------------------------------- ---------- --------- ----------- ------------ ---------- -------- --------- ----------------
MAXIM STOCK
INDEX
1-2
Value at beginning of period $57.44 $44.00 $36.57 $27.30 $27.61 $25.44 $24.33 $19.97 $20.34 $17.88
Value at end of period $71.93 $57.44 $44.00 $36.57 $27.30 $27.61 $25.44 $24.33 $19.97 $20.34
Increase (decrease) in value of $14.49 $13.44 $7.43 $9.27 $(0.31) $2.17 $1.11 $4.36 $(0.37) $2.46
accumulation units
Number of accumulation 7,484,324.118,215,445.97,884,581.7,636,165.407,589,448.89 9,325,064.18,106,0118,262,908 6,501,628 5,369,016
units outstanding at end of period
--------
- -------------------------------------------- ---------- --------- ----------- ------------ ---------- -------- --------- ---------
MAXIM U.S. GOVERNMENT
SECURITIES 3
Value at beginning of period $13.51 $12.61 $12.29 $10.71 $11.21 $10.38 $10.00
Value at end of period $14.31 $13.51 $12.61 $12.29 $10.71 $11.21 $10.38
Increase (decrease) in value of $0.80 $0.90 $0.32 $1.58 $(0.50) $0.83 $0.38
accumulation units
Number of accumulation units 3,217,525.643,225,407.43,234,023.3,165,425.832,756,894.60 1,892,295.3251,644
outstanding at end of period
- -------------------------------------------- ---------- --------- ----------- ------------ ---------- --------
AMERICAN CENTURY VP CAPITAL
APPRECIATION
3
Value at beginning of period $13.48 $14.11 $14.93 $11.53 $11.82 $10.85 $10.00
Value at end of period $13.02 $13.48 $14.11 $14.93 $11.53 $11.82 $10.85
Increase (decrease) in value of ($0.46) $(0.63) $(0.82) $3.40 $(0.29) $0.97 $0.85
accumulation units
Number of accumulation units 2,088,303.723,207,248.84,560,706.4,954,474.124,420,493.64 2,607,850.2647,466
outstanding at end of period
- -------------------------------------------- ---------- --------- ----------- ------------ ---------- --------
AMERICAN CENTURY VP BALANCED
Value at beginning of period $16.41 $14.36 $12.96 $10.83 $10.90 $10.25 $10.00
Value at end of period $18.77 $16.41 $14.36 $12.96 $10.83 $10.90 $10.25
Increase (decrease) in value of $2.36 $2.05 $1.40 $2.13 $(0.07) $0.65 $0.25
accumulation units
Number of accumulation units 1,510.32 1,890.46 3,238,207.3,153,172.392,877,738.22 1,752,731 473,968
outstanding at end of period
---------- --------
- -------------------------------------------- ---------- --------- ----------- ------------
MAXIM SMALL-CAP
INDEX
4
Value at beginning of period $16.08 $13.46 $11.82 $9.48 $10.00
Value at end of period $15.63 $16.08 $13.46 $11.82 $9.48
Increase (decrease) in value of ($0.45) $2.62 $1.64 $2.34 $(0.52)
accumulation units
Number of accumulation units 654,733.49 711,865.97 477,902.35296,281.36 152,895.00
outstanding at end of period
- -------------------------------------------- ---------- --------- ----------- ------------
MAXIM TEMPLETON INTERNATIONAL
EQUITY
4, 10
Value at beginning of period $13.43 $13.33 $11.29 $10.49 $10.00
Value at end of period $12.59 $13.43 $13.33 $11.29 $10.49
Increase (decrease) in value of ($0.84) $0.10 $2.04 $0.80 $0.49
accumulation units
Number of accumulation units 2,333,665.812,831,592.92,249,181.1,645,237.341,075,821.94
outstanding at end of period
- -------------------------------------------- ---------- --------- ----------- ------------
- -------------------------------------------- ---------- --------- ---------- -------------
INVESTMENT DIVISION (1.25) 1998 1997 1996 1995 1994
- -------------------------------------------- ---------- --------- ---------- -------------
- -------------------------------------------- ---------- --------- ----------- ------------
MAXIM ARIEL MID-CAP VALUE
4, 10, 11
Value at beginning of period $15.99 $14.34 $13.70 $10.96 $10.00
Value at end of period $21.12 $15.99 $14.34 $13.70 $10.96
Increase (decrease) in value of $5.13 $1.65 $0.64 $2.74 $0.96
accumulation units
Value at end of period $17.77 $14.57 $12.86 $9.62
Number of accumulation units 2,277,248.952,495,810.82,440,068.1,715,174.42 788,758.55
outstanding at end of period
----------- ---------- --------- ----------- ------------
- ---------------------------------
FIDELITY VIP
GROWTH
5
Value at beginning of period $17.77 $14.57 $12.86 $9.62 $10.00
Value at end of period $24.48 $17.77 $14.57 $12.86 $9.62
Increase (decrease) in value of $6.71 $3.20 $1.71 $3.24 $(0.38)
accumulation units
Number of accumulation units 3,681,235.623,352,899.82,500,808.1,502,634.51 559,313.44
outstanding at end of period
- ------------------------------------- ----------- ---------- --------- ----------- ------------
FIDELITY VIP II ASSET
MANAGER 5
Value at beginning of period $14.50 $12.17 $10.76 $9.31 $10.00
Value at end of period $16.47 $14.50 $12.17 $10.76 $9.31
Increase (decrease) in value of $1.97 $2.33 $1.41 $1.45 $(0.69)
accumulation units
Number of accumulation units 2,065,741.392,104,778.41,593,034.1,202,943.32 768,426.17
outstanding at end of period
- ------------------------------------- ----------- ---------- --------- ----------- ------------
- ------------------------------------- ----------- ---------- --------- ----------- ------------
MAXIM T. ROWE PRICE EQUITY/INCOME
6
Value at beginning of period $19.47 $15.30 $12.98 $9.85 $10.00
Value at end of period $20.94 $19.47 $15.30 $12.98 $9.85
Increase (decrease) in value of $1.47 $4.17 $2.32 $3.13 $(0.15)
accumulation units
Number of accumulation units 3,756,224.783,595,375.01,702,863.550,610.66 16,574.29
outstanding at end of period
- ------------------------------------- ----------- ---------- --------- ----------- ------------
- ------------------------------------- ----------- ---------- --------- ----------- ------------
MAXIM ARIEL SMALL-CAP VALUE 6, 10
Value at beginning of period $17.03 $13.48 $11.58 $10.15 $10.00
Value at end of period $17.03 $13.48 $11.58 $10.15
Value at end of period $18.21 $17.03 $13.48 $11.58 $10.15
Increase (decrease) in value of $1.18 $3.55 $1.90 $1.43 $0.15
accumulation units
Number of accumulation units 162,035.10 113,566.69 39,184.70 30,919.44 .01
outstanding at end of period
- ------------------------------------- ----------- ---------- --------- ----------- ------------
- ------------------------------------- ----------- ---------- --------- ----------- ------------
MAXIM LOOMIS-SAYLES CORPORATE BOND
6
6, 10
- ------------------------------------ ---------- ---------- ---------- ---------- ---------
Value at beginning of period $15.09 $13.55 $12.44 $10.00
Value at end of period $15.41 $15.09 $13.55 $12.44
Increase (decrease) in value of $0.32 $1.54 $1.11 $2.44
accumulation units
Number of accumulation units 1,134,813.38986,392.61 478,757.71220,637.10
outstanding at end of period
- ------------------------------------- ----------- ---------- --------- -----------
- ------------------------------------- ----------- ---------- --------- -----------
MAXIM INVESCO
ADR
6
Value at beginning of period $14.90 $13.46 $11.25 $10.00
Value at end of period $16.28 $14.90 $13.46 $11.25
Increase (decrease) in value of $1.38 $1.44 $2.21 $1.25
accumulation units
Number of accumulation units 347,745.34 314,943.72 126,363.18 23,104.73
outstanding at end of period
- ------------------------------------- ----------- ---------- ---------
- ------------------------------------- ----------- ---------- --------- -----------
MAXIM INVESCO SMALL-CAP GROWTH
6
Value at beginning of period $19.21 $16.38 $13.09 $10.00
Value at end of period $22.31 $19.21 $16.38 $13.09
Increase (decrease) in value of $3.10 $2.83 $3.29 $3.09
accumulation units
Number of accumulation units 1,277,401.421,340,084.3776,719.68210,982.04
outstanding at end of period
- ------------------------------------- ----------- ---------- --------- -----------
</TABLE>
<PAGE>
- ----------------------------------------- ---------- ---------- ----------
INVESTMENT DIVISION (1.25) 1998 1997 1996
- ----------------------------------------- ---------- ---------- ----------
- ----------------------------------------- ---------- ---------- ----------
MAXIM INVESCO
BALANCED 7
Value at beginning of period $12.62 $10.13 $10.00
Value at end of period $14.76 $12.62 $10.13
Increase (decrease) in value of $2.14 $2.49 $0.13
accumulation units
Number of accumulation units 5,029,978.14,925,017.322,568.19
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ---------- ----------
MAXIM VALUE
INDEX
8
Value at beginning of period $10.82 $10.00
Value at end of period $12.23 $10.82
Increase (decrease) in value of $1.41 $0.82
accumulation units
Number of accumulation units 362,062.57 55,506.37
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM GROWTH
INDEX
8
Value at beginning of period $10.44 $10.00
Value at end of period $14.16 $10.44
Increase (decrease) in value of $3.72 $0.44
accumulation units
Number of accumulation units 566,409.87 47,353.03
outstanding at end of period
- ----------------------------------------- ---------- ----------
MAXIM LOOMIS-SAYLES SMALL-CAP VALUE
8, 10
Value at beginning of period $10.01 $10.00
Value at end of period $9.66 $10.01
Increase (decrease) in value of ($0.35) $0.01
accumulation units
Number of accumulation units 188,314.26 70,399.46
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM FOUNDERS BLUE
CHIP 8, 10
Value at beginning of period $10.45 $10.00
Value at end of period $12.17 $10.45
Increase (decrease) in value of $1.72 $0.45
accumulation units
Number of accumulation units 209,618.75 81,095.13
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM T. ROWE PRICEMID-CAP GROWTH
8, 10
Value at beginning of period $10.31 $10.00
Value at end of period $12.45 $10.31
Increase (decrease) in value of $2.14 $0.31
accumulation units
Number of accumulation units 384,828.79 128,683.86
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIMAGGRESSIVE
PROFILE
8
Value at beginning of period $10.29 $10.00
Value at end of period $11.68 $10.29
Increase (decrease) in value of $1.39 $0.29
accumulation units
Number of accumulation units 192,086.65 58,762.77
outstanding at end of period
- ----------------------------------------- --------- -----------
<PAGE>
- ---------------------------------------- ---------- ----------
INVESTMENT DIVISION (1.25) 1998 1997
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
MODERATELY AGGRESSIVE
PROFILE
8
Value at beginning of period $10.33 $10.00
Value at end of period $11.48 $10.33
Increase (decrease) in value of $1.15 $0.33
accumulation units
Number of accumulation units 446,496.19 141,839.79
outstanding at end of period
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
MODERATE Current Accumulation Unit Values ca be obtained by calling GWL&A
toll-free at
PROFILE 1-800-523-4106
8
Value at beginning of period $10.22 $10.00 Value at end of period $11.25
$10.22 1. Inception date for the Maxim Money Market, Maxim Bond and Maxim Stock
Index Investment Divisions was October 5, 1984. Increase (decrease) in value of
$1.03 $0.22 2. Prior to December 1, 1992, the Growth Investment Division.
accumulation units Number of accumulation units 418,487.19 110,105.33 3.
Inception date for the Maxim U.S. Government Securities and American Century VP
Capital outstanding at end of period Appreciation Investment Divisions was
August 1, 1992.
- ---------------------------------------- ---------- ----------
sions is August 1,
- ---------------------------------------- ---------- ----------
<TABLE>
<S> <C>
MAXIM MODERATELY AGGRESSIVE 4. Inception date for Ariel Maxim Mid-Cap
PROFILE (Growth Fund I), MaximValue, Maxim Templeton International Equity and Maxim Small-Cap Index
MODERATELY CONSERVATIVE PROFILE Investment Divisions is
8 Investment Divisions was January 3, 1994.
Value at beginning of period $10.19 $10.00 5. Inception date for Fidelity VIP Growth, Fidelity VIP II Asset Manager Investment
Divisions was
March 1, 1994.
Value at end of period $11.05 $10.19 6. Inception date for Maxim Ariel Small-Cap Value (Ariel Value), Maxim Loomis-Sayles
Corporate Bond, Maxim INVESCO ADR,
Maxim INVESCO Small-Cap Growth, and Maxim T. Rowe Price Equity/Income Investment
Divisions was November 1, 1994.
Increase (decrease) in value o$0.86 $0.19 7. Inception date for Maxim INVESCO Balanced Investment Division was October 31, 1996.
accumulation units
Number of accumulation units 354,140.45 53,608.55 8. Inception date for Maxim Value Index, Maxim Growth Index, Maxim Loomis-Sayles
outstanding at end of period Small-CapValue, Maxim Founders Blue Chip,
Maxim T.Rowe Price MidCap Growth, Aggressive Profile, Moderately Aggressive Profile,
Moderate Profile,
Moderately Conservative Profile, and Conservative Profile Investment Divisions was
September 11, 1997.
</TABLE>
- ---------------------------------------- ---------- ----------
Number of accumulation units 72,034.42
outstanding at end of period
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
CONSERVATIVE 9. Inception date of the Fidelity VIPII Contrafund Investment
Division was November 5, 1998 PROFILE 8 Value at beginning of period $10.32
$10.00 10. On April 7, 1999 the Maxim Series Fund Board of Directors
authorized the name changes of the indicated portfolios to indicate Value
at end of period $11.04 $10.32 the name of the sub-adviser managing these
funds. The portfolio names which existed prior to this time were Maxim
MidCap Value Increase (decrease) in value of $0.72 $0.32 Maxim
International, Maxim Small-Cap Value, Maxim Corporate Bond, Maxim Small-Cap
accumulation units Aggressive Growth, Maxim Blue Chip and Number of
accumulation units 436,225.06 72,034.42 Maxim MidCap Growth respectively.
outstanding at end of period 11. Prior to February 5, 1999 the Maxim MidCap
(Growth Fund I).
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ----------
FIDELITY VIP II
CONTRAFUND 9
Value at beginning of period $10.00
Value at end of period $11.69
Increase (decrease) in value of $1.69
accumulation units
Number of accumulation units 79,502.22
outstanding at end of period
- ---------------------------------------- ----------
- ---------------------------------------- ----------
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------- ---------- ---------- ---------- ----------
INVESTMENT DIVISION (0.95) 1998 1997 1996 1995
- ---------------------------------------- ---------- ----------
---------- ----------
MAXIM MONEY
MARKET
1
Value at beginning of period $10.89 $10.44 $10.04 $10.00
Value at end of period 11.34 $10.89 $10.44 $10.04
Increase (decrease) in value of $0.45 $0.45 $0.40 $0.04
accumulation units
Number of accumulation units 352,052.98 1,402,319.6343,499.44 169,096.04
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
MAXIM
BOND
1
Value at beginning of period $11.08 $10.44 $10.11 $10.00
Value at end of period $11.70 $11.08 $10.44 $10.11
Increase (decrease) in value of $0.62 $0.64 $0.33 $0.11
accumulation units
Number of accumulation units 271,537.15 251,460.22 287,152.67 197,590.07
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
MAXIM STOCK
INDEX
1-2
Value at beginning of period $16.27 $12.43 $10.30 $10.00
Value at end of period $20.44 $16.27 $12.43 $10.30
Increase (decrease) in value of $4.17 $3.84 $2.13 $0.30
accumulation units
Number of accumulation units 1,470,364.92,328,852.12,057,207.6937,180.75
outstanding at end of period
----------
- ---------------------------------------- ---------- ---------- ---------- ----------
MAXIM U.S. GOVERNMENT
SECURITIES 1
Value at beginning of period $11.23 $10.45 $10.15 $10.00
Value at end of period $11.93 $11.23 $10.45 $10.15
Increase (decrease) in value of $0.70 $0.78 $0.30 $0.15
accumulation units
Number of accumulation units 151,304.43 112,314.59 119,989.13 39,695.16
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
AMERICAN CENTURY VP CAPITAL
APPRECIATION
1
Value at beginning of period $9.01 $9.40 $9.92 $10.00
Value at end of period $8.73 $9.01 $9.40 $9.92
Increase (decrease) in value of ($0.28) ($0.39) ($0.52) ($0.08)
accumulation units
Number of accumulation units 304,341.17 331,874.62 585,432.85 292,581.15
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
MAXIM ARIEL MID-CAP
VALUE 1, 7, 8
Value at beginning of period $12.14 $10.85 $10.34 $10.00
Value at end of period $16.08 $12.14 $10.85 $10.34
Increase (decrease) in value of $3.94 $1.29 $0.51 $0.34
accumulation units
Number of accumulation units 470,211.38 422,167.92 528,556.23 194,687.27
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
MAXIM SMALL-CAP
INDEX
1
Value at beginning of period $14.28 $11.92 $10.43 $10.00
Value at end of period $13.92 $14.28 $11.92 $10.43
Increase (decrease) in value of ($0.36) $2.36 $1.49 $0.43
accumulation units
Number of accumulation units 72,881.82 147,236.05 132,987.33 72,120.51
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
MAXIM TEMPLETON INTERNATIONAL
EQUITY
1, 7
Value at beginning of period $12.39 $12.27 $10.36 $10.00
Value at end of period $11.66 $12.39 $12.27 $10.36
Increase (decrease) in value of ($0.73) $0.12 $1.91 $0.36
accumulation units
Number of accumulation units 498,703.59 557,569.31 $548,157.84290,190.44
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
- ---------------------------------------- ---------- ---------- ---------- ----------
INVESTMENT DIVISION (0.95) 1998 1997 1996 1995
- ---------------------------------------- ---------- ---------- ---------- ----------
- ---------------------------------------- ---------- ---------- ---------- ----------
FIDELITY VIP
GROWTH
1
Value at beginning of period $13.36 $10.93 $9.62 $10.00
Value at end of period $18.46 $13.36 $10.93 $9.62
Increase (decrease) in value of $5.10 $2.43 $1.31 ($0.38)
accumulation units
Number of accumulation units 503,651.35 588,801.03 463,651.69 164,201.34
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
- ----------------------------------------
FIDELITY VIP II ASSET
MANAGER 1
Value at beginning of period $14.27 $11.91 $10.49 $10.00
Value at end of period $16.26 $14.27 $11.91 $10.49
Increase (decrease) in value of $1.99 $2.36 $1.42 $0.49
accumulation units
Number of accumulation units 163,995.76 243,166.13 220,279.35 118,138.13
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
- ---------------------------------------- ---------- ---------- ---------- ----------
MAXIM T. ROWE PRICE
EQUITY/INCOME 1
Value at beginning of period $15.74 $12.34 $10.43 $10.00
Value at end of period $16.99 $15.74 $12.34 $10.43
Increase (decrease) in value of $1.25 $3.40 $1.91 $0.43
accumulation units
Number of accumulation units 379,091.37 561,621.67 276,648.63 1,324.94
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
- ---------------------------------------- ---------- ---------- ---------- ----------
MAXIM ARIEL SMALL-CAP
VALUE 1, 7
Value at beginning of period $15.50 $12.24 $10.48 $10.00
Value at end of period $16.63 $15.50 $12.24 $10.48
Increase (decrease) in value of $1.13 $3.26 $1.76 $0.48
accumulation units
Number of accumulation units 21,916.39 4,787.54 1,652.65 164.60
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
- ---------------------------------------- ---------- ---------- ---------- ----------
MAXIM LOOMIS-SAYLES CORPORATE BOND
1, 7
Value at beginning of period $12.57 $11.26 $10.30 $10.00
Value at end of period $12.88 $12.57 $11.26 $10.30
Increase (decrease) in value of $0.31 $1.31 $0.96 $0.30
accumulation units
Number of accumulation units 107,193.71 84,830.69 38,958.69 269.42
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
- ---------------------------------------- ---------- ---------- ---------- ----------
MAXIM INVESCO
ADR
1
Value at beginning of period $13.88 $12.50 $10.41 $10.00
Value at end of period $15.21 $13.88 $12.50 $10.41
Increase (decrease) in value of $1.33 $1.38 $2.09 $0.41
accumulation units
Number of accumulation units 51,071.84 149,143.92 74,310.25 1,130.83
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
AMERICAN CENTURY VP BALANCED
Value at beginning of period $12.98 $11.31 $10.18 $10.00
Value at end of period $14.88 $12.98 $11.31 $10.18
Increase (decrease) in value of $1.90 $1.67 $1.13 $0.18
accumulation units
Number of accumulation units 1,003.91 3,607.78 237,929.35 84,634.10
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
MAXIM INVESCO SMALL-CAP
GROWTH 1
Value at beginning of period $15.90 $13.52 $10.77 $10.00
Value at end of period $18.52 $15.90 $13.52 $10.77
Increase (decrease) in value of $2.62 $2.38 $2.75 $0.77
accumulation units
Number of accumulation units 251,992.27 296,221.15 159,393.34 24,147.18
outstanding at end of period
- ---------------------------------------- ---------- ---------- ---------- ----------
</TABLE>
<PAGE>
- ----------------------------------------- ---------- --------- -----------
INVESTMENT DIVISION (0.95) 1998 1997 1996
- ----------------------------------------- ---------- --------- -----------
- ----------------------------------------- ---------- ---------- ----------
MAXIM INVESCO
BALANCED 3
Value at beginning of period $12.66 $10.14 $10.00
Value at end of period $14.85 $12.66 $10.14
Increase (decrease) in value of $2.19 $2.52 $0.14
accumulation units
Number of accumulation units 342,274.21 340,421.00 4,262.66
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ---------- ----------
MAXIM VALUE
INDEX
4
Value at beginning of period $10.83 $10.00
Value at end of period $12.28 $10.83
Increase (decrease) in value of $1.45 $0.83
accumulation units
Number of accumulation units 23,951.01 12,307.01
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM GROWTH
INDEX
4
Value at beginning of period $10.45 $10.00
Value at end of period $14.21 $10.45
Increase (decrease) in value of $3.76 $0.45
accumulation units
Number of accumulation units 66,115.58 1,779.77
outstanding at end of period
- ----------------------------------------- ---------- ----------
MAXIM LOOMIS-SAYLES SMALL-CAP VALUE
4, 7
Value at beginning of period $10.01 $10.00
Value at end of period $9.69 $10.01
Increase (decrease) in value of ($0.32) $0.01
accumulation units
Number of accumulation units 22,333.17 9,792.14
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM FOUNDERS BLUE
CHIP 4, 7
Value at beginning of period $10.46 $10.00
Value at end of period $12.22 $10.46
Increase (decrease) in value of $1.76 $0.46
accumulation units
Number of accumulation units 18,073.50 7,818.57
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM T. ROWE PRICE MID-CAP GROWTH 4, 7
Value at beginning of period $10.32 $10.00
Value at end of period $12.49 $10.32
Increase (decrease) in value of $2.17 $0.32
accumulation units
Number of accumulation units 55,481.56 12,739.10
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ---------
AGGRESSIVE
PROFILE
4
Value at beginning of period $10.30 $10.00
Value at end of period $11.72 $10.30
Increase (decrease) in value of $1.42 $0.30
accumulation units
Number of accumulation units 39,090.58 9,576.11
outstanding at end of period
- ----------------------------------------- ---------- ---------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------- ---------- ----------
INVESTMENT DIVISION (0.95) 1998 1997
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
MODERATELY AGGRESSIVE PROFILE
4
Value at beginning of period $10.34 $10.00
Value at end of period $11.52 $10.34
Increase (decrease) in value of $1.18 $0.34
accumulation units
Number of accumulation units 36,452.19 53,828.37
outstanding at end of period
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
MODERATE Current Accumulation Unit Values ca be obtained by calling GWL&A
toll-free at PROFILE 1-800-523-4106 4 Value at beginning of period $10.23 $10.00
Value at end of period $11.28 $10.23 1. Inception dates for the Maxim Money
Market, Maxim Bond, Maxim Stock Index, Maxim U.S. Government Securities,
Increase (decrease) in $1.05 $0.23 American Century VP Capital Appreciation,
Maxim Ariel Mid-Cap Value, Maxim value of accumulation units Templeton
International Equity, Number of accumulation units 16,878.33 44,770.91 Maxim
Small-Cap Index, Fidelity VIP Growth, Fidelity VIP II Asset Manager,Maxim
outstanding at end of period Ariel Small-Cap Value, Maxim Loomis-Sayles
Corporate Bond, Maxim INVESCO ADR, Maxim INVESCO Small-Cap Growth, and
</TABLE>
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
<TABLE>
<S> <C>
MODERATELY CONSERVATIVE PROFILE Maxim T. Rowe Price Equity/Income
Investment Divisions was December 4, 1995 4 Value at beginning of period $10.20
$10.00 2. Prior to December 1, 1992, the Growth Investment Division. Value at
end of period $11.04 $10.20 3. Inception date for Maxim INVESCO Balanced
Investment Division was October 31, 1996. Increase (decrease) in value of $0.84
$0.20 accumulation units Number of accumulation units 4,110.80 53,438.52 4.
Inception date for Maxim Value Index, Maxim Growth Index, Maxim Loomis-Sayles
Small-Cap outstanding at end of period Value, Maxim Founders Blue Chip, Maxim T.
Rowe Price MidCap Growth, Aggressive Profile, Moderately Aggressive Profile,
Moderate Profile, Moderately Conservative Profile, and Conservative Profile
Investment Divisions was September 11, 1997.
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
CONSERVATIVE 5. Inception date for Janus Aspen Worldwide Growth Investment
Division was PROFILE October 12, 1998 4 Value at beginning of period $10.33
$10.00 6. Inception date for Fidelity Investments VIP II Contrafund Investment
Division was November 12, 1998. Value at end of period $11.15 $10.33 7 On April
7, 1999 the Maxim Series Fund Board of Directors authorized the name changes of
the indicated portfolios to indicate Increase (decrease) in value of $0.82 $0.33
the name of the sub-adviser managing these funds. The portfolio names which
accumulation units existed prior to this time were Maxim MidCap Number of
accumulation units 3,968.60 94,228.09 Value, Maxim International, Maxim
Small-Cap Value, Maxim Corporate Bond, Maxim outstanding at end of period
Small-Cap Aggressive Growth, Maxim Blue Chip and Maxim MidCap Growth
respectively.
- ---------------------------------------- ----------
- ---------------------------------------- ----------
JANUS ASPEN WORLDWIDE 8.Prior to February 5, 1999 the Maxim MidCap (Growth Fund
I). GROWTH 5
Value at beginning of period $10.00
Value at end of period $12.59
Increase (decrease) in value of $2.59
accumulation units
Number of accumulation units 48,118.83
outstanding at end of period
- ---------------------------------------- ----------
FIDELITY VIP II
CONTRAFUND 6
Value at beginning of period $10.00
Value at end of period $11.70
Increase (decrease) in value of $1.70
accumulation units
Number of accumulation units 1,792.37
outstanding at end of period
- ---------------------------------------- ----------
</TABLE>
<PAGE>
- ---------------------------------------- ---------- ----------
INVESTMENT DIVISION (0.75) 1998 1997
- ---------------------------------------- ---------- ----------
MAXIM MONEY
MARKET
1
Value at beginning of period $10.25 $10.00
Value at end of period $10.70 $10.25
Increase (decrease) in value of $0.45 $0.25
accumulation units
Number of accumulation units 1,613,050.211,698.04
outstanding at end of period
- ---------------------------------------- ---------- ----------
MAXIM
BOND
1
Value at beginning of period $10.38 $10.00
Value at end of period $10.99 $10.38
Increase (decrease) in value of $0.61 $0.38
accumulation units
Number of accumulation units 302,285.65 19,087.44
outstanding at end of period
- ---------------------------------------- ---------- ----------
MAXIM STOCK
INDEX
1-2
Value at beginning of period $10.95 $10.00
Value at end of period $13.78 $10.95
Increase (decrease) in value of $2.83 $0.95
accumulation units
Number of accumulation units 3,382,583.0167,748.34
outstanding at end of period
- ---------------------------------------- ---------- ----------
MAXIM U.S. GOVERNMENT
SECURITIES 1
Value at beginning of period $10.47 $10.00
Value at end of period $11.14 $10.47
Increase (decrease) in value of $0.67 $0.47
accumulation units
Number of accumulation units 341,859.87 739.30
outstanding at end of period
- ---------------------------------------- ---------- ----------
AMERICAN CENTURY VP CAPITAL
APPRECIATION
1
Value at beginning of period $10.09 $10.00
Value at end of period $9.80 $10.09
Increase (decrease) in value of ($0.29) $0.09
accumulation units
Number of accumulation units 164,721.68 449.77
outstanding at end of period
- ---------------------------------------- ---------- ----------
MAXIM ARIEL MID-CAP
VALUE 1, 6, 7
Value at beginning of period $11.00 $10.00
Value at end of period $14.60 $11.00
Increase (decrease) in value of $3.60 $1.00
accumulation units
Number of accumulation units 256,925.44 2,545.66
outstanding at end of period
- ---------------------------------------- ---------- ----------
MAXIM SMALL-CAP
INDEX
1
Value at beginning of period $11.14 $10.00
Value at end of period $10.88 $11.14
Increase (decrease) in value of ($0.26) $1.14
accumulation units
Number of accumulation units 183,674.90 1,923.32
outstanding at end of period
- ---------------------------------------- ---------- ----------
MAXIM TEMPLETON INTERNATIONAL
EQUITY
1, 6
Value at beginning of period $9.42 $10.00
Value at end of period $8.88 $9.42
Increase (decrease) in value of ($0.54) ($0.58)
accumulation units
Number of accumulation units 122,570.24 2,087.94
outstanding at end of period
- ---------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ---------
INVESTMENT DIVISION (0.75) 1998 1997
- ----------------------------------------- ---------- ---------
FIDELITY VIP
GROWTH
1
Value at beginning of period $10.82 $10.00
Value at end of period $14.98 $10.82
Increase (decrease) in value of $4.16 $0.82
accumulation units
Number of accumulation units 593,071.00 3,446.98
outstanding at end of period
- ----------------------------------------- ---------- ----------
- -----------------------------------------
FIDELITY VIP II ASSET
MANAGER 1
Value at beginning of period $10.74 $10.00
Value at end of period $12.27 $10.74
Increase (decrease) in value of $1.53 $0.74
accumulation units
Number of accumulation units 287,339.45 1,232.17
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM T. ROWE PRICE EQUITY/INCOME
1
Value at beginning of period $11.14 $10.00
Value at end of period $12.04 $11.14
Increase (decrease) in value of $0.90 $1.14
accumulation units
Number of accumulation units 614,261.17 1,715.12
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM ARIEL SMALL-CAP
VALUE 1,6
Value at beginning of period $11.81 $10.00
Value at end of period $12.69 $11.81
Increase (decrease) in value of $0.88 $1.81
accumulation units
Number of accumulation units 24,665.53 395.12
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM LOOMIS-SAYLES CORPORATE BOND
1, 6
Value at beginning of period $10.55 $10.00
Value at end of period $10.83 $10.55
Increase (decrease) in value of $0.28 $0.55
accumulation units
Number of accumulation units 178,619.57 140.06
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM INVESCO
ADR
1
Value at beginning of period $10.01 $10.00
Value at end of period $10.99 $10.01
Increase (decrease) in value of $0.98 $0.01
accumulation units
Number of accumulation units 292,162.25 7.11
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM INVESCO SMALL-CAP GROWTH
1
Value at beginning of period $11.11 $10.00
Value at end of period $12.97 $11.11
Increase (decrease) in value of $1.86 $1.11
accumulation units
Number of accumulation units 334,433.76 754.64
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ---------
INVESTMENT DIVISION (0.75) 1998 1997
- ----------------------------------------- ---------- ---------
- ----------------------------------------- ---------- ----------
MAXIM INVESCO
BALANCED 1
Value at beginning of period $10.63 $10.00
Value at end of period $12.50 $10.63
Increase (decrease) in value of $1.87 $0.63
accumulation units
Number of accumulation units 530,510.93 1,275.72
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM VALUE
INDEX
3
Value at beginning of period $10.84 $10.00
Value at end of period $12.31 $10.84
Increase (decrease) in value of $1.47 $0.84
accumulation units
Number of accumulation units 41,993.96
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM GROWTH
INDEX
3
Value at beginning of period $10.46 $10.00
Value at end of period $14.25 $10.46
Increase (decrease) in value of $3.79 $0.46
accumulation units
Number of accumulation units 24,247.29
outstanding at end of period
- ----------------------------------------- ---------- ----------
MAXIM LOOMIS-SAYLES SMALL-CAP VALUE
3, 6
Value at beginning of period $10.02 $10.00
Value at end of period $9.72 $10.02
Increase (decrease) in value of ($0.30) $0.02
accumulation units
Number of accumulation units 14,660.30
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM FOUNDERS BLUE
CHIP 3, 6
Value at beginning of period $10.47 $10.00
Value at end of period $12.25 $10.47
Increase (decrease) in value of $1.78 $0.47
accumulation units
Number of accumulation units 26,637.10
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM T. ROWE PRICE MID-CAP GROWTH 3, 6
Value at beginning of period $10.33 $10.00
Value at end of period $12.53 $10.33
Increase (decrease) in value of $2.20 $0.33
accumulation units
Number of accumulation units 36,548.42
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
AGGRESSIVE
PROFILE
3
Value at beginning of period $10.31 $10.00
Value at end of period $11.75 $10.31
Increase (decrease) in value of $1.44 $0.31
accumulation units
Number of accumulation units 15,150.39
outstanding at end of period
- ----------------------------------------- ---------- ----------
<PAGE>
- ---------------------------------------- ---------- ----------
INVESTMENT DIVISION (0.75) 1998 1997
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
MODERATELY AGGRESSIVE
PROFILE 3
Value at beginning of period $10.34 $10.00
Value at end of period $11.55 $10.34
Increase (decrease) in value of $1.21 $0.34
accumulation units
Number of accumulation units 140,358.02
outstanding at end of period
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
MODERATE
PROFILE
3
Value at beginning of period $10.24 $10.00 Current Accumulation Unit Values ca be obtained by calling GWL&A toll-free at
-----------------------------------------------------------------------------
1-800-523-4106
Value at end of period $11.32 $10.24
Increase (decrease) in value of $1.08 $0.24 1. Inception date for the Maxim Money Market, Maxim Bond, Maxim Stock Index,
accumulation units Maxim U.S. Government Securities
Number of accumulation units 258,990.96 American Century VP Capital Appreciation, Maxim Ariel Mid-Cap Value,Maxim
outstanding at end of period Small-Cap Index, Maxim Templeton
International Equity, Fidelity VIP Growth, Fidelity VIP II AssetManager,
</TABLE>
Maxim Ariel Small-Cap Value,
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
MODERATELY CONSERVATIVE PROFILE Maxim Loomi-Sayles Corporate Bond, Maxim INVESCO ADR, Maxim INVESCO
3 Small-Cap Growth, Maxim T. Rowe
Price Equity/Income, and Maxim INVESCO Balanced Investment Division was June
13, 1997
Value at beginning of period $10.21 $10.00 2. Prior to December 1, 1992, the Growth Investment Division.
Value at end of period $11.12 $10.21 3. Inception date for Maxim Value Index, Maxim Growth Index, Maxim Loomis-Sayles
Small-CapValue, Maxim Founders
Increase (decrease) in value of $0.91 $0.21 Blue Chip, Maxim T.Rowe Price MidCap Growth, Aggressive Profile, Moderately
accumulation units Aggressive Profile,
Number of accumulation units 338,437.20 Moderate Profile, Moderately Conservative Profile, and Conservative Profile
outstanding at end of period Investment Divisions
was September 11, 1997.
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
CONSERVATIVE 4. Inception date for Janus Aspen Worldwide Growth and SteinRoe Balanced,
PROFILE Variable Series Investment Divisions was June 2, 1998
3
Value at beginning of period $10.34 $10.00 5. Inception date for Fidelity Investments VIP II Contrafund Investment
Division was November 12, 1998
Value at end of period $11.11 $10.34 6 On April 7, 1999 the Maxim Series Fund Board of Directors authorized the
name changes of the indicated portfolios to
Increase (decrease) in value of $0.77 $0.34 indicate the name of the sub-adviser managing these funds. The portfolio
accumulation units names which existed prior to this time were
Number of accumulation units 426,692.38 Maxim MidCap Value, Maxim International, Maxim Small-Cap Value, Maxim
outstanding at end of period Corporate Bond, Maxim Small-Cap Aggressive
Growth, Maxim Blue Chip and Maxim MidCap Growth respectively.
</TABLE>
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ----------
JANUS ASPEN WORLDWIDE 7. Prior to February 5, 1999 the Maxim MidCap (Growth Fund
I). GROWTH 4 Value at beginning of period $10.00 Value at end of period $10.65
Increase (decrease) in value of $0.65 accumulation units Number of accumulation
units 17,591.36 outstanding at end of period
- ---------------------------------------- ----------
STEIN ROE BALANCED, VARIABLE
SERIES 4
Value at beginning of period $10.00
Value at end of period $10.72
Increase (decrease) in value of $0.72
accumulation units
Number of accumulation units 4,142.27
outstanding at end of period
- ---------------------------------------- ----------
FIDELITY VIP II
CONTRAFUND 5
Value at beginning of period $10.00
Value at end of period $11.70
Increase (decrease) in value of $1.70
accumulation units
Number of accumulation units 545.53
outstanding at end of period
- ---------------------------------------- ----------
<PAGE>
- ---------------------------------------- ---------- ----------
INVESTMENT DIVISION (0.55) 1998 1997
- ----------------------------------------
---------- ----------
MAXIM MONEY
MARKET
1
Value at beginning of period $10.47 $10.00
Value at end of period $10.95 $10.47
Increase (decrease) in value of $0.48 $0.47
accumulation units
Number of accumulation units 719,236.73 875,612.10
outstanding at end of period
- ---------------------------------------- ---------- ----------
MAXIM
BOND
1
Value at beginning of period $10.48 $10.00
Value at end of period $11.12 $10.48
Increase (decrease) in value of $0.64 $0.48
accumulation units
Number of accumulation units 7,489.11 3,958.65
outstanding at end of period
- ---------------------------------------- ---------- ----------
MAXIM STOCK
INDEX
1-2
Value at beginning of period $13.15 $10.00
Value at end of period $16.58 $13.15
Increase (decrease) in value of $3.43 $3.15
accumulation units
Number of accumulation units 106,369.29 94,900.40
outstanding at end of period
- ---------------------------------------- ---------- ----------
MAXIM U.S. GOVERNMENT
SECURITIES 1
Value at beginning of period $10.62 $10.00
Value at end of period $11.33 $10.62
Increase (decrease) in value of $0.71 $0.62)
accumulation units
Number of accumulation units 13,389.95 3,531.32
outstanding at end of period
- ---------------------------------------- ---------- ----------
AMERICAN CENTURY VP CAPITAL
APPRECIATION
1
Value at beginning of period $9.62 $10.00
Value at end of period $9.36 $9.62
Increase (decrease) in value of ($0.26) ($0.38)
accumulation units
Number of accumulation units 10,882.95 14,859.84
outstanding at end of period
- ---------------------------------------- ---------- ----------
MAXIM ARIEL MID-CAP
VALUE 1, 5, 6
Value at beginning of period $11.23 $10.00
Value at end of period $14.94 $11.23
Increase (decrease) in value of $3.71 $1.23
accumulation units
Number of accumulation units 39,615.48 34,374.34
outstanding at end of period
- ---------------------------------------- ---------- ----------
MAXIM SMALL-CAP
INDEX
1
Value at beginning of period $12.03 $10.00
Value at end of period $11.78 $12.03
Increase (decrease) in value of ($0.25) $2.03
accumulation units
Number of accumulation units 22,273.21 20,427.36
outstanding at end of period
- ---------------------------------------- ---------- ----------
MAXIMTEMPLETON INTERNATIONAL
EQUITY
1, 5
Value at beginning of period $10.14 $10.00
Value at end of period $9.58 $10.14
Increase (decrease) in value of ($0.56) $0.14
accumulation units
Number of accumulation units 32,162.34 39,222.20
outstanding at end of period
- ---------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ---------
INVESTMENT DIVISION (0.55) 1998 1997
- -----------------------------------------
- ----------------------------------------- ---------- ----------
FIDELITY VIP
GROWTH
1
Value at beginning of period $12.28 $10.00
Value at end of period $17.04 $12.28
Increase (decrease) in value of $4.76 $2.28
accumulation units
Number of accumulation units 157,481.96 157,223.90
outstanding at end of period
- ----------------------------------------- ---------- ----------
- -----------------------------------------
FIDELITY VIP II ASSET
MANAGER 1
Value at beginning of period $12.00 $10.00
Value at end of period $13.73 $12.00
Increase (decrease) in value of $1.73 $1.00
accumulation units
Number of accumulation units 38,527.01 41,233.13
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM T. ROWE PRICE EQUITY/INCOME
1
Value at beginning of period $12.81 $10.00
Value at end of period $13.88 $12.81
Increase (decrease) in value of $1.07 $2.81
accumulation units
Number of accumulation units 119,756.04 136.599.23
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM ARIEL SMALL-CAP
VALUE 1, 5
Value at beginning of period $12.72 $10.00
Value at end of period $13.69 $12.72
Increase (decrease) in value of $0.97 $2.72
accumulation units
Number of accumulation units 4,136.54 5,933.43
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM LOOMIS-SAYLES CORPORATE BOND
1, 5
Value at beginning of period $11.21 $10.00
Value at end of period $11.53 $11.21
Increase (decrease) in value of $0.32 $1.21
accumulation units
Number of accumulation units 10,107.63 10,505.76
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM INVESCO
ADR
1
Value at beginning of period $11.15 $10.00
Value at end of period $12.26 $11.15
Increase (decrease) in value of $1.11 $1.15
accumulation units
Number of accumulation units 29,294.88 34,886.43
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM INVESCO SMALL-CAP GROWTH
1
Value at beginning of period $11.80 $10.00
Value at end of period $13.81 $11.80
Increase (decrease) in value of $2.01 $1.80
accumulation units
Number of accumulation units 85,293.71 110,005.54
outstanding at end of period
- ----------------------------------------- ---------- ----------
<PAGE>
- ----------------------------------------- ---------- ---------
INVESTMENT DIVISION (0.55) 1998 1997
- -----------------------------------------
- ----------------------------------------- ---------- ----------
MAXIM INVESCO
BALANCED 1
Value at beginning of period $12.53 $10.00
Value at end of period $14.76 $12.53
Increase (decrease) in value of $2.23 $2.53
accumulation units
Number of accumulation units 13,049.81 14,831.94
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM VALUE
INDEX
3
Value at beginning of period $10.84 $10.00
Value at end of period $12.34 $10.84
Increase (decrease) in value of $1.50 $0.84
accumulation units
Number of accumulation units 8,915.02
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM GROWTH
INDEX
3
Value at beginning of period $10.46 $10.00
Value at end of period $14.29 $10.46
Increase (decrease) in value of $3.83 $0.46
accumulation units
Number of accumulation units 6,496.27 1,592.27
outstanding at end of period
- ----------------------------------------- ---------- ----------
MAXIM LOOMIS-SAYLES SMALL-CAP VALUE
3, 5
Value at beginning of period $10.03 $10.00
Value at end of period $9.74 $10.03
Increase (decrease) in value of ($0.29) $0.03
accumulation units
Number of accumulation units 5,260.61 1,448.50
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM FOUNDERS BLUE
CHIP 3, 5
Value at beginning of period $10.48 $10.00
Value at end of period $12.28 $10.48
Increase (decrease) in value of $1.80 $0.48
accumulation units
Number of accumulation units 5,053.76 1,908.53
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
MAXIM T. ROWE PRICE MID-CAP GROWTH 3, 5
Value at beginning of period $10.33 $10.00
Value at end of period $12.56 $10.33
Increase (decrease) in value of $2.23 $0.33
accumulation units
Number of accumulation units 3,908.23 1,741.25
outstanding at end of period
- ----------------------------------------- ---------- ----------
- ----------------------------------------- ---------- ----------
AGGRESSIVE
PROFILE
3
Value at beginning of period $10.31 $10.00
Value at end of period $11.79 $10.31
Increase (decrease) in value of $1.48 $0.31
accumulation units
Number of accumulation units 3,713.98 594.16
outstanding at end of period
- ----------------------------------------- ---------- ----------
<PAGE>
- ---------------------------------------- ---------- ----------
INVESTMENT DIVISION (0.55) 1998 1997
- ----------------------------------------
- ---------------------------------------- ---------- ----------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
MODERATELY AGGRESSIVE
PROFILE 3
Value at beginning of period $10.35 $10.00
Value at end of period $11.58 $10.35
Increase (decrease) in value of $1.23 $0.35
accumulation units
Number of accumulation units 4,302.17 2,109.96
outstanding at end of period
</TABLE>
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, Maxim Stock Index, .
Maxim U.S. Government Securities, American Century VP Capital Appreciation,
Maxim Ariel Mid-Cap Value, Maxim Templeton International Equity, Fidelity VIP
Growth, Fidelity VIP II Asset Manager, Maxim Ariel Small-Cap Value, Maxim
Loomis-Sayles Corporate Bond,
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
MODERATE
PROFILE
3
Value at beginning of period $10.24 $10.00
Value at end of period $11.35 $10.24
Increase (decrease) in value of $1.11 $0.24
accumulation units
Number of accumulation units 2,619.56 2,249.51
outstanding at end of period
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Maxim INVESCO ADR, Maxim INVESCO Small-Cap Growth, and Maxim T. Rowe Price
Equity/Income,
Maxim INVESCO Balanced Investment Division was January 1, 1997
2. Prior to December 1, 1992, the Growth Investment Division.
3. Inception date for Maxim Value Index, Maxim Growth Index, Maxim Loomis-Sayles
Small-Cap Value, Maxim Founders
Blue Chip, Maxim MidCap Growth, Aggressive Profile, Moderately Aggressive
Profile, Moderate Profile, Moderately Conservative Profile, and Conservative
Profile Investment Divisions was September 11, 1997.
</TABLE>
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
MODERATELY CONSERVATIVE PROFILE
3
Value at beginning of period $10.21 $10.00
Value at end of period $11.15 $10.21
Increase (decrease) in value of $0.94 $0.21
accumulation units
Number of accumulation units
outstanding at end of period
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
4. Inception fate for Fidelity Investments VIP II Contrafund Investment Division was
November 12, 1998
5 On April 7, 1999 the Maxim Series Fund Board of Directors authorized the name changes of the indicated portfolios to
indicate the name of the sub-adviser managing these funds. The portfolio
names which existed prior to this time were
Maxim MidCap Value, Maxim International, Maxim Small-Cap Value, Maxim Corporate
Bond, Maxim Small-Cap Aggressive
Growth, Maxim Blue Chip and Maxim MidCap Growth respectively
6. Prior to February 5, 1999 the Maxim MidCap (Growth Fund I).
</TABLE>
- ---------------------------------------- ---------- ----------
- ---------------------------------------- ---------- ----------
CONSERVATIVE .
PROFILE
3
Value at beginning of period $10.34 $10.00
Value at end of period $11.14 $10.34
Increase (decrease) in value of $0.80 $0.34
accumulation units
Number of accumulation units 104.91
outstanding at end of period
- ---------------------------------------- ----------
- ---------------------------------------- ----------
FIDELITY VIP II
CONTRAFUND 4
Value at beginning of period $10.00
Value at end of period $11.70
Increase (decrease) in value of $1.70
accumulation units
Number of accumulation units
outstanding at end of period
- ---------------------------------------- ----------
<PAGE>
- ---------------------------------------- ----------
INVESTMENT DIVISION (0.00) 1998
- ----------------------------------------
----------
MAXIM MONEY
MARKET
1
Value at beginning of period $10.00
Value at end of period $10.28
Increase (decrease) in value of $0.28
accumulation units
Number of accumulation units 80,123.80
outstanding at end of period
- ---------------------------------------- ----------
MAXIM
BOND
1
Value at beginning of period $10.00
Value at end of period $10.34
Increase (decrease) in value of $0.34
accumulation units
Number of accumulation units 19,021.64
outstanding at end of period
- ---------------------------------------- ----------
MAXIM STOCK
INDEX
1-2
Value at beginning of period $10.00
Value at end of period $11.09
Increase (decrease) in value of $1.09
accumulation units
Number of accumulation units 444,254.02
outstanding at end of period
- ---------------------------------------- ----------
MAXIM U.S. GOVERNMENT
SECURITIES 1
Value at beginning of period $10.00
Value at end of period $10.43
Increase (decrease) in value of $0.43
accumulation units
Number of accumulation units 6,374.10
outstanding at end of period
- ---------------------------------------- ----------
AMERICAN CENTURY VP CAPITAL
APPRECIATION
1
Value at beginning of period $10.00
Value at end of period $9.72
Increase (decrease) in value of ($0.28)
accumulation units
Number of accumulation units 25,906.23
outstanding at end of period
- ---------------------------------------- ----------
MAXIM ARIEL MID-CAP
VALUE 1, 5, 6
Value at beginning of period $10.00
Value at end of period $12.06
Increase (decrease) in value of $2.06
accumulation units
Number of accumulation units 39,226.80
outstanding at end of period
- ---------------------------------------- ----------
MAXIM SMALL-CAP
INDEX
1
Value at beginning of period $10.00
Value at end of period $9.48
Increase (decrease) in value of ($0.52)
accumulation units
Number of accumulation units 11,591.13
outstanding at end of period
- ---------------------------------------- ----------
MAXIM TEMPLETON INTERNATIONAL
EQUITY
1, 5
Value at beginning of period $10.00
Value at end of period $8.73
Increase (decrease) in value of ($1.27)
accumulation units
Number of accumulation units 28,867.69
outstanding at end of period
- ---------------------------------------- ----------
- ----------------------------------------- ---------
INVESTMENT DIVISION (0.00) 1998
- -----------------------------------------
- ----------------------------------------- ----------
FIDELITY VIP
GROWTH
1
Value at beginning of period $10.00
Value at end of period $12.18
Increase (decrease) in value of $2.18
accumulation units
Number of accumulation units 56,691.14
outstanding at end of period
- ----------------------------------------- ----------
- -----------------------------------------
FIDELITY VIP II ASSET
MANAGER 1
Value at beginning of period $10.00
Value at end of period $10.58
Increase (decrease) in value of $0.58
accumulation units
Number of accumulation units 32,619.73
outstanding at end of period
- ----------------------------------------- ----------
- ----------------------------------------- ----------
MAXIM T. ROWE PRICE EQUITY/INCOME
1
Value at beginning of period $10.00
Value at end of period $10.17
Increase (decrease) in value of $0.17
accumulation units
Number of accumulation units 114,503.07
outstanding at end of period
- ----------------------------------------- ----------
- ----------------------------------------- ----------
MAXIM ARIEL SMALL-CAP VALUE 1, 5
Value at beginning of period $10.00
Value at end of period $10.87
Increase (decrease) in value of $0.87
accumulation units
Number of accumulation units 117,016.71
outstanding at end of period
- ----------------------------------------- ----------
- ----------------------------------------- ----------
MAXIM LOOMIS-SAYLES CORPORATE BOND
1, 5
Value at beginning of period $10.00
Value at end of period $10.29
Increase (decrease) in value of $0.29
accumulation units
Number of accumulation units 49,103.31
outstanding at end of period
- ----------------------------------------- ----------
- ----------------------------------------- ----------
MAXIM INVESCO
ADR
1
Value at beginning of period $10.00
Value at end of period $9.75
Increase (decrease) in value of ($0.25)
accumulation units
Number of accumulation units 5,065.09
outstanding at end of period
- ----------------------------------------- ----------
- ----------------------------------------- ----------
MAXIM INVESCO SMALL-CAP
GROWTH 1
Value at beginning of period $10.00
Value at end of period $11.04
Increase (decrease) in value of $1.04
accumulation units
Number of accumulation units 31,102.91
outstanding at end of period
- ----------------------------------------- ----------
<PAGE>
- ----------------------------------------- ---------
INVESTMENT DIVISION (0.00) 1998
- -----------------------------------------
- ----------------------------------------- ----------
MAXIM INVESCO
BALANCED 1
Value at beginning of period $10.00
Value at end of period $11.84
Increase (decrease) in value of $1.84
accumulation units
Number of accumulation units 206,749.57
outstanding at end of period
- ----------------------------------------- ----------
- ----------------------------------------- ----------
MAXIM VALUE
INDEX
3
Value at beginning of period $10.00
Value at end of period $10.26
Increase (decrease) in value of $0.26
accumulation units
Number of accumulation units 2,711.68
outstanding at end of period
- ----------------------------------------- ----------
- ----------------------------------------- ----------
MAXIM GROWTH
INDEX
3
Value at beginning of period $10.00
Value at end of period $11.87
Increase (decrease) in value of $1.87
accumulation units
Number of accumulation units 602.66
outstanding at end of period
- ----------------------------------------- ----------
MAXIM LOOMIS-SAYLES SMALL-CAP VALUE
3, 5
Value at beginning of period $10.00
Value at end of period $9.58
Increase (decrease) in value of ($0.42)
accumulation units
Number of accumulation units 9,120.17
outstanding at end of period
- ----------------------------------------- ----------
- ----------------------------------------- ----------
MAXIM FOUNDERS BLUE
CHIP 3, 5
Value at beginning of period $10.00
Value at end of period $10.50
Increase (decrease) in value of $0.50
accumulation units
Number of accumulation units 1,779.20
outstanding at end of period
- ----------------------------------------- ----------
- ----------------------------------------- ----------
MAXIM T. ROWE PRICE MID-CAP GROWTH 3, 5
Value at beginning of period $10.00
Value at end of period $12.28
Increase (decrease) in value of $2.28
accumulation units
Number of accumulation units 176,746.72
outstanding at end of period
- ----------------------------------------- ----------
- ----------------------------------------- ----------
AGGRESSIVE
PROFILE
3
Value at beginning of period $10.00
Value at end of period $11.50
Increase (decrease) in value of $1.50
accumulation units
Number of accumulation units 411,766.69
outstanding at end of period
- ----------------------------------------- ----------
<PAGE>
- ------------------------------------------ -------------
INVESTMENT DIVISION (0.00) 1998
- ------------------------------------------
- ------------------------------------------ --------------
MODERATELY AGGRESSIVE
PROFILE 3
Value at beginning of period $10.00
Value at end of period $11.25
Increase (decrease) in value of $1.25
accumulation units
Number of accumulation units outstanding 697,144.75
at end of period
- ------------------------------------------ --------------
- ------------------------------------------ -------------
MODERATE
PROFILE
3
Value at beginning of period $10.00
Value at end of period $11.13
Increase (decrease) in value of $1.13
accumulation units
Number of accumulation units outstanding 419,765.72
at end of period was June 10, 1998
<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, Maxim Stock Index,
Maxim U.S. Government Securities,
American Century VP Capital Appreciation, Maxim Ariel Mid-Cap Value, Maxim
Templeton International Equity,
Maxim Small-Cap Index, Fidelity VIP Growth, Fidelity VIP II Asset
Manager, Maxim Ariel Small-Cap Value, ,
Maxim Loomis-Sayles Corporate Bond, Maxim INVESCO ADR, Maxim INVESCO
Small-Cap Growth, and Maxim
T. Rowe Price Equity/Income, Maxim INVESCO Balanced Investment Division
</TABLE>
- ------------------------------------------ -------------
- ------------------------------------------ -------------
MODERATELY CONSERVATIVE
PROFILE 3
Value at beginning of period $10.00
Value at end of period $10.95
Increase (decrease) in value of $0.95
accumulation units
Number of accumulation units outstanding 177,087.47
at end of period
<TABLE>
<S> <C> <C>
2. Prior to December 1, 1992, the Growth Investment Division.
3. Inception date for Maxim Value Index, Maxim Growth Index, Maxim
Loomis-Sayles Small-Cap Value,
Maxim Founders Blue Chip, Maxim T. Rowe Price MidCap Growth, Aggressive
Profile,
Moderately Aggressive Profile, Moderate Profile, Moderately Conservative
Profile,
and Conservative Profile Investment Divisions was January 2, 1998.
4. Inception date for Fidelity Investments VIP II Contrafund Investment
Division was November 12, 1998.
</TABLE>
- ------------------------------------------ -------------
- ------------------------------------------ -------------
CONSERVATIVE
PROFILE
3
Value at beginning of period $10.00
Value at end of period $10.80
Increase (decrease) in value of $0.80
accumulation units
Number of accumulation units outstanding 542,021.82
at end of period
<TABLE>
<S> <C> <C>
5 On April 7, 1999 the Maxim Series Fund Board of Directors authorized the
name changes of the indicated portfolios to
indicate the name of the sub-adviser managing these funds. The
portfolio names which existed prior to this time
were Maxim MidCap Value, Maxim International, Maxim Small-Cap Value,
Maxim Corporate Bond, Maxim Small-
Cap Aggressive Growth, Maxim Blue Chip and Maxim MidCap Growth
respectively
6. Prior to February 5, 1999 the Maxim MidCap (Growth Fund I).
</TABLE>
- ------------------------------------------ --------------
- ------------------------------------------ --------------
FIDELITY VIP II
CONTRAFUND 4
Value at beginning of period $10.00
Value at end of period $11.71
Increase (decrease) in value of $1.71
accumulation units
Number of accumulation units outstanding -
at end of period
- ------------------------------------------ --------------
<PAGE>
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.
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
B-6
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 April 30, 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.
April 30, 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 Funds. 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 consolidated financial statements of GWL&A as of December 31, 1998
and 1997 and each of the three years in the period ended December 31, 1998, as
well as the financial statements of the Series Account for the years ended
December 31, 1998 and 1997, which are included in this Statement of Additional
Information have been audited by Deloitte & Touche LLP, independent auditors, as
set forth in their reports appearing herein and are included in reliance upon
such reports given upon 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. BCE received
commissions paid by GWL&A in the amount of $159,850 for 1998, $134,805 for1997
and $61,111 for 1996.
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>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Contract Owners of
FutureFunds Series Account of
Great-West Life & Annuity Insurance Company
We have audited the accompanying statement of assets and liabilities of
FutureFunds Series Account of Great-West Life & Annuity Insurance Company (the
"Series Account") as of December 31, 1998, and the related statements of
operations for the year then ended, by investment division, and the statements
of changes in net assets for each of the two years in the period then ended, by
investment division. These financial statements are the responsibility of the
Series Account's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1998, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FutureFunds Series Account of
Great-West Life & Annuity Insurance Company as of December 31, 1998, the results
of its operations for the year then ended, by investment division, and the
changes in its net assets for each of the two years in the period then ended, by
investment division, in conformity with generally accepted accounting
principles.
March 25, 1999
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Shares Cost Value
Investments in underlying affiliated funds:
Maxim Series Fund, Inc. Aggressive Profile Portfolio $ $
7,026,435 7,144,603 7,584,595
Maxim Series Fund, Inc. Blue Chip Portfolio
2,664,814 2,940,303 3,050,797
Maxim Series Fund, Inc. Bond Portfolio
41,501,815 48,971,758 50,502,262
Maxim Series Fund, Inc. Conservative Profile Portfolio
14,904,997 15,646,185 15,353,119
Maxim Series Fund, Inc. Corporate Bond Portfolio
18,955,091 22,768,836 21,074,866
Maxim Series Fund, Inc. Growth Index Portfolio
3,745,036 8,283,730 9,091,288
Maxim Series Fund, Inc. International Equity Portfolio
30,729,869 39,899,655 36,489,037
Maxim Series Fund, Inc. INVESCO ADR Portfolio
6,113,978 9,670,796 9,936,625
Maxim Series Fund, Inc. INVESCO Balanced Portfolio
59,720,922 78,149,600 87,239,533
Maxim Series Fund, Inc. INVESCO Small-Cap Growth
Portfolio 20,894,689 33,635,435 38,668,450
Maxim Series Fund, Inc. Mid-Cap Portfolio (Growth Fund
I) 32,531,786 49,014,947 59,915,138
Maxim Series Fund, Inc. MidCap Growth Portfolio
5,893,294 7,073,878 7,939,198
Maxim Series Fund, Inc. Moderate Profile Portfolio
11,773,811 12,031,355 12,365,795
Maxim Series Fund, Inc. Moderately Aggressive Profile
Portfolio 13,987,259 14,404,871 14,921,976
Maxim Series Fund, Inc. Moderately Conservative Profile
Portfolio 9,084,389 9,506,056 9,511,100
Maxim Series Fund, Inc. Money Market Portfolio
97,174,518 97,238,800 97,223,874
Maxim Series Fund, Inc. Small-Cap Aggressive Growth
Portfolio 1,586,012 2,345,155 2,296,822
Maxim Series Fund, Inc. Small-Cap Index Portfolio
16,603,760 18,050,611 13,151,584
Maxim Series Fund, Inc. Small-Cap Value Portfolio
(Ariel Value) 5,141,614 4,793,586 4,904,057
Maxim Series Fund, Inc. Stock Index Portfolio
172,610,340 367,059,234 618,307,355
Maxim Series Fund, Inc. T. Rowe Price Equity/Income
Portfolio 52,289,998 86,821,649 93,095,188
Maxim Series Fund, Inc. U.S. Government Securities
Portfolio 46,381,404 50,078,915 51,246,591
Maxim Series Fund, Inc. Value Index Portfolio
2,709,831 5,255,182 5,136,073
Investments in underlying funds:
American Century VP Funds VP Balanced Fund
5,118 40,750 42,681
American Century VP Funds VP Capital Appreciation Fund
3,506,268 35,906,396 31,626,542
Fidelity Investments VIP Growth Portfolio
2,457,757 82,239,934 110,279,554
Fidelity Investments VIP II Asset Manager Portfolio
2,241,359 36,567,810 40,703,085
Fidelity Investments VIP II Contrafund Portfolio
36,233 820,849 885,542
Janus Aspen Funds Worldwide Growth Portfolio
27,313 695,678 794,535
SteinRoe Funds Balanced Fund
2,592 39,567 44,423
------- ------
Total Investments
$1,147,096,1241,453,381,685
Other assets and liabilities:
Net Premiums (Redemptions) Due and Accrued
19,354,705
Due to Great-West Life & Annuity Insurance Company
(1,289,236)
NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF CAPITAL (Note 5)
$1,471,447,154
</TABLE>
See notes to financial statements.
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Maxim Maxim Maxim Maxim
Aggressive Conservative Corporate Maxim International
Profile Maxim Blue Maxim Bond Profile Bond Growth Index Equity
Portfolio Chip Portfolio Portfolio Portfolio Portfolio Portfolio
Portfolio
Investment Investment Investment Investment Investment Investment Investment
Division Division Division Division Division Division Division
INVESTMENT INCOME $ 74,398 $143,945 $3,019,920 $878,712 $2,210,788 $ 355,828 $ 815,133
EXPENSES - mortality and expense risks 21,787 23,874 612,734 77,913 232,574
----------- ----------- ------------------------ --------------------
42,021 495,195
NET INVESTMENT INCOME (LOSS) 52,611 120,071 2,407,186 800,799 1,978,214 313,807
----------- ---------- ----------- ----------- -------------------------
319,938
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (22,012) 61,434 834,136 65,524 95,464 75,215 2,109,836
Net change in unrealized appreciation
(depreciation) on investments 488,808 110,950 (288,715) (1,789,060) 819,159 (5,130,005)
--------- ---------- ----- ---------- ----------- ------------- ------------
(615,158)
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 466,796 172,384 (223,191) (1,693,596) 894,374 (3,020,169)
--------- ---------- ------ ---------- ----------- ------------- ------------
218,978
NET INCREASE (DECREASE) IN ASSETS
RESULTING FROM OPERATIONS $519,407 $292,455 $2,626,164 $577,608 $284,618 $1,208,181 (2,700,231)
========= ========= ========== ========= ========= =========== ===========
</TABLE>
(1) The Investment Division
commenced operations on June 2,
1998 (2) The Investment Division
commenced operations on November
12, 1998 (3) The Investment
Division ceased operations on June
22, 1998
See notes to financial statements. (Continued)
<PAGE>
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Maxim Maxim
Maxim INVESCO Maxim Maxim Moderately
Maxim INVESCO Small-Cap Maxim Mid-Cap MidCap Moderate Aggressive
INVESCO ADR Balanced Growth Portfolio Growth Profile Profile
Portfolio Portfolio Portfolio (Growth Fund Portfolio Portfolio Portfolio
I)
Investment Investment Investment Investment Investment Investment Investment
Division Division Division Division Division Division Division
INVESTMENT INCOME 77,678 $1,660,123 $482,543 $ 6,092,307 $ 11,056 $270,618 $265,218
EXPENSES - mortality and expense risks 93,707 899,918 383,436 580,560 46,046 59,214 58,399
-------- ------------ ---------- -------------- ----------- ----------- ----------
NET INVESTMENT INCOME (LOSS) (16,029) 760,205 99,107 5,511,747 (34,990) 211,404 206,819
-------- ------------ ------------ -------------- ---------- ---------- ---------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 726,167 948,565 609,616 3,934,050 95,505 (52,683) 29,935
Net change in unrealized appreciation
(depreciation) on investments (41,002) 10,317,562 4,679,689 5,233,724 839,486 390,402 604,177
-------- ------------------------- ------------ ----------- ---------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS: 685,165 11,266,127 5,289,305 9,167,774 934,991 337,719 634,112
-------- ------------ ------------ ------------- ----------- ---------- --------
NET INCREASE (DECREASE) IN ASSETS RESULTING
FROM OPERATIONS 669,136 $12,026,332 $5,388,412 $14,679,521 $900,001 $549,123 $840,931
======== ============ =========== ============ ========= ========= ========
</TABLE>
(1) The Investment
Division commenced
operations on June
2, 1998 (2) The
Investment Division
commenced operations
on November 12, 1998
(3) The Investment
Division ceased
operations on June
22, 1998
See notes to financial statements. (Continued)
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Maxim Maxim Maxim
Moderately Small-Cap Maxim Small-Cap Maxim T.
Conservative Maxim Money Aggressive Small-Cap Value Maxim Stock Rowe Price
Profile Market Growth Index Portfolio Index Equity/Income
Portfolio Portfolio Portfolio Portfolio (Ariel Portfolio Portfolio
Value)
Investment Investment Investment Investment Investment Investment
Division Division Division Division Investment Division Division
Division
INVESTMENT INCOME 338,432 $4,711,889 $4,528,907 $149,311 $24,817,789 $6,711,984
$63,144
EXPENSES - mortality and expense risks 55,102 1,039,023 20,277 155,788 34,393 6,743,739 1,081,066
------- ----------- --------- ------------- ------------------------- ----------
NET INVESTMENT INCOME (LOSS) 283,330 3,672,866 42,867 4,373,119 18,074,050 5,630,918
------- ----------- --------- ------------ ----- ------------- ----------
114,918
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 568 (2,301) (99,789) (4,719) (489,488) 54,225,527 5,920,060
Net change in unrealized appreciation
(depreciation) on investments 21,454 17,855 (4,832,396) 643,071 53,732,608 (5,370,937)
------- ------- ----------- ------------- ----------- ------------ -----------
(14,920)
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 22,022 (81,934) (4,837,115) 107,958,135 549,123
------- ------- ----------- ------------- ---- ------------ ----------
(17,221) 153,583
-------- -------
NET INCREASE (DECREASE) IN
ASSETS RESULTING FROM OPERATIONS 305,352 $3,655,645 $(39,067) $(463,996) $268,501 $126,032,185 $6,180,041
======= =========== ========= ========== ========= ============ ==========
</TABLE>
(1) The Investment
Division commenced
operations on June
2, 1998 (2) The
Investment Division
commenced operations
on November 12, 1998
(3) The Investment
Division ceased
operations on June
22, 1998
See notes to financial statements. (Continued)
<PAGE>
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
American Fidelity
Maxim U.S. American Century VP Fidelity Investments
Maxim Total Government Century VP Capital Investments VIP II Asset
Return Securities Maxim Value Balanced Appreciation VIP Growth Manager
Portfolio Portfolio Index Fund Fund Portfolio Portfolio
Portfolio
Investment Investment Investment Investment Investment Investment Investment
Division Division Division Division Division Division Division
(3)
INVESTMENT INCOME $65 2,749,305 $419,426 $8,727 $2,095,950 $9,784,419 $4,475,354
EXPENSES - mortality and expense risks 28 575,901 38,166 713 1,011,364 458,061
----- ------------ ---------- --------- ----- ------------- ------------
443,592
NET INVESTMENT INCOME (LOSS) 37 2,173,404 381,260 8,014 1,652,358 8,773,055 4,017,293
----- ---------- ----------- -------- ------------ ------------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments 689 816,425 48,903 (537) (1,049,432) 4,996,488 1,540,688
Net change in unrealized appreciation
(depreciation) on investments 6 (279,353) (107,249) 930 (2,116,166) 14,901,879 (606,966)
---- ---------- ---------- ------- ----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS: 695 537,072 (58,346) 393 (3,165,598) 19,898,367 933,722
---- ---------- ----------- -------- ----------- ------------ -----------
NET INCREASE (DECREASE) IN ASSETS RESULTING
FROM OPERATIONS 732 2,710,476 $322,914 $8,407 $(1,513,240) $28,671,422 $4,951,015
==== ========== ========= ======= ============ ============ ==========
</TABLE>
(1) The Investment Division commenced operations on June 2, 1998 (2) The
Investment Division commenced operations on November 12, 1998 (3) The Investment
Division ceased operations on June 22, 1998
See notes to financial statements. (Continued)
<PAGE>
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Janus Aspen
VIP II Contrafund Worldwide Growth SteinRoe Balanced Total FutureFunds
Portfolio Portfolio Fund Series Account
Investment Division Investment Division Investment Division
(2) (1) (1)
INVESTMENT INCOME - $ 1,091 $ - $ 77,214,060
--------
EXPENSES - mortality and expense risks 649 997 65 15,286,302
------- --------- ----- -------------
NET INVESTMENT INCOME (LOSS) (649) 94 (65) 61,927,758
-------- ---------- ------- -------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments 8 (1,685) 1 75,778,239
Net change in unrealized appreciation
(depreciation) on investments 64,693 98,857 4,856 71,778,239
------ -------- ------- -------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS: 64,701 97,172 4,857 147,190,397
------ -------- ------- --------------
NET INCREASE (DECREASE) IN ASSETS RESULTING
FROM OPERATIONS $64,052 $97,266 $4,792 $209,118,155
======= ======= ====== ============
</TABLE>
(1) The Investment Division
commenced operations on
June 2, 1998 (2) The
Investment Division
commenced operations on
November 12, 1998 (3) The
Investment Division ceased
operations on June 22, 1998
See notes to financial statements. (Concluded)
<PAGE>
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Maxim Aggressive Profile Maxim Conservative
Portfolio Maxim Blue Chip Maxim Bond Portfolio Profile Portfolio
Portfolio
Investment Division Investment Division Investment Division Investment Division
1998 1997 1998 1997 1998 1997 1998 1997
FROM OPERATIONS:
Net investment income (loss) 52,611 $ 54,072 $ 4,010 $ $ $ 800,799
120,071 2,407,186 2,570,135 6,546
Net realized gain (loss) on investments
(22,012) (6,820) 61,434 (68) 834,136 543,500 65,524 (18)
Net change in unrealized appreciation
(depreciation) in investments
-------- ------------ ----------- ------------------- ---------- ----------
488,808 (48,816) 110,950 (456) (615,158) (238,829) (288,715) (4,351)
-------- -------- -------- ----- --------- --------- --------- -------
Increase (decrease) in net assets
resulting
-------- ------------------------ ----------------- -------- -----------
from operations 519,407 (1,564) 292,455 3,486 2,626,164 2,874,806 577,608 2,177
-------- ------- -------- ------ ---------- ---------- -------- -----
FROM UNIT TRANSACTIONS (by category):
Purchase payments:
4,362,020 40,423 224,940 7,683 2,775,074 3,152,617 7,858,366 1,668
Redemptions:
(162,930) (202) (81,692) - (5,147,966) (5,425,698) (1,533,749) -
Net transfers:
-------- ----------- -------- ------- ---------- ------- --------
2,228,699 670,918 1,793,128 938,430 (224,619) (3,401,636) 6,838,541 1,712,976
---------- -------- ---------- -------- --------- ----------- ---------- ---------
Increase (decrease) in net assets
resulting
-------- ----------- -------- ------- ------- ------- ------
from unit transactions 6,427,789 711,139 1,936,376 946,113 (2,597,511) (5,674,717) 13,163,158 1,714,644
---------- -------- ---------- -------- ----------- ----------- ----------- ---------
INCREASE (DECREASE) IN NET ASSETS
6,947,196 709,575 2,228,831 949,599 28,653 (2,799,911) 13,740,766 1,716,821
NET ASSETS:
Beginning of period
----------- ------------------------ ------------------- ------ --------
709,575 - 949,599 - 50,899,288 53,699,199 1,716,821 -
-------- -- -------- -- ----------- ----------- ---------- -
End of period $ $ 709,575 $ 949,599 $ $ $ $
= == ============ === ======== === = == = == =
7,656,771 3,178,430 50,927,941 50,899,288 15,457,587 1,716,821
========== ========== =========== =========== =========== =========
</TABLE>
(1) The Investment Division commenced operations on June 2,
1998
(2) The Investment Division commenced
operations on November 12, 1998
(3) The Investment Division ceased
operations on June 22, 1998
See notes to financial statements. (Continued)
<PAGE>
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Maxim Corporate Bond Maxim International
Portfolio Maxim Growth Index Equity Portfolio Maxim INVESCO ADR
Portfolio Portfolio
Investment Division Investment Division Investment Division Investment Division
1998 1997 1998 1997 1998 1997 1997 1998
FROM OPERATIONS:
Net investment income (loss) $ $ 985,525 $ 11,757 $ $ $ 93,035
1,978,214 313,807 319,938 1,799,264 (16,029)
Net realized gain (loss) on investments
95,464 77,462 75,215 (306) 2,109,836 1,153,675 726,167 313,123
Net change in unrealized appreciation
(depreciation) in investments
------ ---------------------- --------- ------- ------ ------------
(1,789,060) 29,024 819,159 (11,601) (5,130,005) (3,013,852) (41,002) 74,489
----------- ------- -------- -------- ----------- ----------- -------- ------
Increase (decrease) in net assets
resulting
---------- ------ -------- ----------------- ----------- -----------
from operations 284,618 1,092,011 1,208,181 (150) (2,700,231) (60,913) 669,136 480,647
-------- ---------- ---------- ----- ----------- -------- -------- -------
FROM UNIT TRANSACTIONS (by category):
Purchase payments: 1,632,958
2,234,741 1,485,428 575,690 7,588 5,129,535 5,941,068 1,727,622
Redemptions: (173,778)
(1,983,322) (509,605) (198,430) - (3,956,272) (2,365,736) (686,421)
Net transfers:
------- ------ -------- -------- ------- ------- --------
4,821,862 7,071,757 7,289,219 522,299 (6,962,389) 5,122,865 1,195,751 2,580,523
---------- ---------- ---------- -------- ----------- ---------- -------------------
Increase (decrease) in net assets
resulting
------- ------ -------- -------- ------- ------- --------
from unit transactions 5,073,281 8,047,580 7,666,479 529,887 (5,789,126) 8,698,197 2,236,952 4,039,702
---------- ---------- ---------- ------- ----------- ---------- -------------------
INCREASE (DECREASE) IN NET ASSETS 4,520,349
5,357,899 9,139,591 8,874,660 529,737 (8,489,357) 8,637,284 2,906,088
NET ASSETS:
Beginning of period
----- ------ ----------- -------------------- ----- --------
16,066,094 6,926,503 529,737 - 45,342,795 36,705,511 7,149,686 2,629,337
----------- ---------- -------- -- ----------- ----------- -------------------
End of period $ $ $ 529,737 $ $ $ 7,149,686
== == === ========= === = == = == ========
21,423,993 16,066,094 9,404,397 36,853,438 45,342,795 10,055,774
=========== =========== ========== =========== =========== ==========
</TABLE>
(1) The Investment Division commenced
operations on June 2, 1998 (2) The
Investment Division commenced
operations on November 12, 1998 (3)
The Investment Division ceased
operations on June 22, 1998
See notes to financial statements. (Continued)
<PAGE>
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
Maxim INVESCO Balanced Maxim INVESCO Small-Cap
Portfolio Growth Portfolio
Investment Division Investment Division
1998 1997 1998 1997
FROM OPERATIONS:
Net investment income (loss) $ 760,205 $ $ $
2,076,528 99,107 1,495,589
Net realized gain (loss) on investments
948,565 167,728 609,616 351,389
Net change in unrealized appreciation
(depreciation) in investments
------ ------- -------- --------
10,317,562 (1,227,107) 4,679,689 1,481,761
----------- ----------- ---------- ----------
Increase (decrease) in net assets
------ -------- -------- --------
resulting 12,026,332 1,017,149 5,388,412 3,328,739
----------- ---------- ---------- ----------
from operations
FROM UNIT TRANSACTIONS (by category):
Purchase payments:
6,348,246 1,430,828 5,630,667 5,419,032
Redemptions:
(6,377,853) (843,729) (3,093,943) (1,118,152)
Net transfers:
-------- ------ ---------- --------
9,936,300 64,764,877 (652,912) 9,243,069
---------- ----------- --------- ----------
Increase (decrease) in net assets
resulting
-------- ------ -------- ------
from unit transactions 9,906,693 65,351,976 1,883,812 13,543,949
---------- ----------- ---------- -----------
INCREASE (DECREASE) IN NET ASSETS
21,933,025 66,369,125 7,272,224 16,872,688
NET ASSETS:
Beginning of period
------ ----------- ------ ------
66,641,021 271,896 31,753,239 14,880,551
----------- -------- ----------- -----------
End of period $ $ $ $ 31,753,239
= == = == === ============
88,574,046 66,641,021 39,025,463
=========== =========== ===========
- -----------------------------------------------------------------------------------------------------------
Maxim Mid-Cap Portfolio
(Growth Fund I) Maxim MidCap Growth
Portfolio
Investment Division Investment Division
1998 1997 1998 1997
FROM OPERATIONS:
Net investment income (loss) $ $ $ $ (434)
5,511,747 1,225,348 (34,990)
Net realized gain (loss) on investments
3,934,050 1,298,546 95,505 (184)
Net change in unrealized appreciation
(depreciation) in investments
-------- -------- -----------
5,233,724 1,803,470 839,486 25,834
---------- ---------- -------- ------
Increase (decrease) in net assets
------ -------- -----------
resulting 14,679,521 4,327,364 900,001 25,216
----------- ---------- -------- ------
from operations
FROM UNIT TRANSACTIONS (by category):
Purchase payments:
6,059,511 7,766,948 2,604,203 31,496
Redemptions:
(5,297,459) (2,735,646) (442,280) (565)
Net transfers:
---------- ------- --------
(406,348) (4,622,846) 3,621,382 1,420,042
--------- ----------- ---------- ---------
Increase (decrease) in net assets
resulting
----------- ----------- --------
from unit transactions 355,704 408,456 5,783,305 1,450,973
-------- -------- ---------- ---------
INCREASE (DECREASE) IN NET ASSETS
15,035,225 4,735,820 6,683,306 1,476,189
NET ASSETS:
Beginning of period
------ ------ --------
45,448,223 40,712,403 1,476,189 -
----------- ----------- ---------- -
End of period $ $ 45,448,223 $ 8,159,495 $
== ============ =========== =
60,483,448 1,476,189
========== =========
</TABLE>
(1) The Investment Division
commenced operations on June 2,
1998 (2) The Investment Division
commenced operations on November
12, 1998 (3) The Investment
Division ceased operations on June
22, 1998
See notes to financial statements. (Continued)
<PAGE>
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Maxim Moderate Profile Maxim Moderately
Portfolio Aggressive Profile
Portfolio
Investment Division Investment Division
1998 1997 1998 1997
FROM OPERATIONS:
Net investment income (loss) $ 211,404 $ 59,248 $ $ 105,442
206,819
Net realized gain (loss) on investments
(52,683) (481) 29,935 769
Net change in unrealized appreciation
(depreciation) in investments
----------- ------------ ----------- ------------
390,402 (55,962) 604,177 (87,072)
-------- -------- -------- --------
Increase (decrease) in net assets
resulting
----------- ------------------------ -------------
from operations 549,123 2,805 840,931 19,139
-------- ------ -------- -------
FROM UNIT TRANSACTIONS (by category):
Purchase payments:
5,102,491 26,810 7,433,638 72,232
Redemptions:
(451,666) (1,113) (170,535) (202)
Net transfers:
-------- -------- -------- --------
5,725,742 1,578,156 4,914,352 1,951,790
---------- ---------- ---------- ----------
Increase (decrease) in net assets
resulting
------ -------- ------ --------
from unit transactions 10,376,567 1,603,853 12,177,455 2,023,820
----------- ---------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS
10,925,690 1,606,658 13,018,386 2,042,959
NET ASSETS:
Beginning of period
-------- ----------------------- -------------
1,606,658 - 2,042,959 -
---------- -- ---------- --
End of period $ $ $ $
= == = == === = ==
12,532,348 1,606,658 15,061,345 2,042,959
=========== ========== =========== ==========
- ---------------------------------------------------------------------------------------------------------------------
Maxim Moderately Maxim Money Market
Conservative Profile Portfolio
Portfolio
Investment Division Investment Division
1998 1997 1998 1997
FROM OPERATIONS:
Net investment income (loss) $ $ 15,534 $ $
283,330 3,672,866 2,788,020
Net realized gain (loss) on investment
568 244 (2,301) -
Net change in unrealized appreciation
(depreciation) in investments
------------------------ ------------
21,454 (16,410) (14,920) (1)
------- -------- -------- ---
Increase (decrease) in net assets
resulting
----------- ---------------------
from operations 305,352 (632) 3,655,645 2,788,019
-------- ----- ---------- ---------
FROM UNIT TRANSACTIONS (by category)
Purchase payments:
1,859,334 8,189 5,846,204 24,232,447
Redemptions:
(239,090) - (29,789,302) (17,093,180)
Net transfers:
-------- -------- ------
6,643,670 1,083,778 26,149,478 26,911,832
---------- ---------- ----------- ----------
Increase (decrease) in net assets
resulting
-------- -------- --------
from unit transactions 8,263,914 1,091,967 2,206,380 34,051,099
---------- ---------- ---------- ----------
INCREASE (DECREASE) IN NET ASSETS
8,569,266 1,091,335 5,862,025 36,839,118
NET ASSETS:
Beginning of period
---------- -----------------------
1,091,335 - 95,515,953 58,676,835
---------- -- ----------- ----------
End of period $ $ $ $
=== = == = == ==
9,660,601 1,091,335 101,377,978 95,515,953
========== ========== ============ ==========
</TABLE>
(1) The Investment Division
commenced operations on June 2,
1998 (2) The Investment Division
commenced operations on November
12, 1998 (3) The Investment
Division ceased operations on June
22, 1998
See notes to financial statements. (Continued)
<PAGE>
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
Maxim Small-Cap Maxim Small-Cap Index
Aggressive Growth Portfolio
Portfolio
Investment Division Investment Division
1998 1997 1998 1997
FROM OPERATIONS:
Net investment income (loss) $ 42,867 $ 59,820 $ $
4,373,119 1,926,722
Net realized gain (loss) on investments
(99,789) (2,079) (4,719) 294,158
Net change in unrealized appreciation
(depreciation) in investments
------------------------- ------- ----------
17,855 (66,188) (4,832,396) (443,226)
------- -------- ----------- ---------
Increase (decrease) in net assets
resulting
------------ ----------------------- --------
from operations (39,067) (8,447) (463,996) 1,777,654
-------- ------- --------- ----------
FROM UNIT TRANSACTIONS (by category):
Purchase payments:
407,995 9,497 1,608,870 1,512,470
Redemptions:
(165,644) - (1,017,579) (438,631)
Net transfers:
-------- ----------- ---------- --------
1,295,632 815,952 (328,120) 2,951,203
---------- -------- --------- ----------
Increase (decrease) in net assets
resulting
-------- ----------- ----------- --------
from unit transactions 1,537,983 825,449 263,171 4,025,042
---------- -------- -------- ----------
INCREASE (DECREASE) IN NET ASSETS
1,498,916 817,002 (200,825) 5,802,696
NET ASSETS:
Beginning of period
----------- ----------------------- --------
817,002 - 13,820,555 8,017,859
-------- -- ----------- ----------
End of period $ $ 817,002 $ $
= == ============ === = ==
2,315,918 13,619,730 13,820,555
========== =========== ===========
- ---------------------------------------------------------------------------------------------------
Maxim Small-Cap Value
Portfolio (Ariel Value) Maxim Stock Index
Portfolio
Investment Division Investment Division
1998 1997 1998 1997
FROM OPERATIONS:
Net investment income (loss) $ $ 833,818 $ $
114,918 18,074,050 22,810,142
Net realized gain (loss) on investments
(489,488) 84,918 54,225,527 11,610,075
Net change in unrealized appreciation
(depreciation) in investments
----------- ---------- ------
643,071 (593,634) 53,732,608 82,037,335
-------- --------- ----------- ----------
Increase (decrease) in net assets
resulting
----------- ----------- ----
from operations 268,501 325,102 126,032,185 116,457,552
-------- -------- ------------ -----------
FROM UNIT TRANSACTIONS (by category):
Purchase payments:
1,734,615 334,841 24,928,517 23,102,201
Redemptions:
(209,242) (68,093) (41,986,982) (25,831,619)
Net transfers:
-------- ----------- ----------
1,075,431 947,862 (186,139) 26,724,267
---------- -------- --------- ----------
Increase (decrease) in net assets
resulting
-------- -------- -----
from unit transactions 2,600,804 1,214,610 (17,244,604) 23,994,849
---------- ---------- ------------ ----------
INCREASE (DECREASE) IN NET ASSETS
2,869,305 1,539,712 108,787,581 140,452,401
NET ASSETS:
Beginning of period
-------- ----------- ----
2,088,335 548,623 512,900,317 372,447,916
---------- -------- ------------ -----------
End of period $ $ $ $
=== = == = == ==
4,957,640 2,088,335 621,687,898 512,900,317
========== ========== ============ ===========
</TABLE>
(1) The Investment Division
commenced operations on June 2,
1998 (2) The Investment Division
commenced operations on November
12, 1998 (3) The Investment
Division ceased operations on June
22, 1998
See notes to financial statements. (Continued)
<PAGE>
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Maxim T. Rowe Price Maxim U.S. Government
Equity/Income Portfolio Maxim Total Return Securities Portfolio Maxim Value Index
Portfolio Portfolio
Investment Division Investment Division Investment Division Investment Division
1998 1997 1998 1997 1998 1997 1998 1997
(3)
FROM OPERATIONS:
Net investment income (loss) $ $ $ 37 $ 88,637 $ $ $ 381,260
5,630,918 3,448,285 2,173,404 2,161,374 30,670
Net realized gain (loss) on investments
5,920,060 613,679 689 1,389,798 816,425 467,148 48,903 (6)
Net change in unrealized appreciation
(depreciation) in investments
------- -------- -------------------- ---------- ----------- ---------
(5,370,937) 8,955,548 6 (167,923) (279,353) 254,146 (107,249)(11,860)
----------- ---------- -- --------- --------- -------- --------- -------
Increase (decrease) in net assets
resulting
-------- ------ ------------------ -------- -------- ----------
from operations 6,180,041 13,017,512 732 1,310,512 2,710,476 2,882,668 322,914 18,804
---------- ----------- ---- ---------- ---------- ---------- -------- ------
FROM UNIT TRANSACTIONS (by category):
Purchase payments:
10,348,790 9,364,442 1,783 715,896 2,772,504 3,348,800 604,764 13,893
Redemptions:
(8,532,144) (2,565,576) - (216,102)(4,961,327) (3,815,328) (206,103)
Net transfers:
-------- ------ ----------------- -------- ----------- -------
6,727,954 31,327,375 (6,997) (7,018,863) 6,466,185 443,396 3,922,044 701,091
---------- ----------- ------- ----------- ---------- -------- ---------- -------
Increase (decrease) in net assets
resulting
-------- ------ ----------------- -------- ------------ -------
from unit transactions 8,544,600 38,126,241 (5,214) (6,519,069) 4,277,362 (23,132) 4,320,705 714,984
---------- ----------- ------- ----------- ---------- -------- ---------- -------
INCREASE (DECREASE) IN NET ASSETS
14,724,641 51,143,753 (4,482) (5,208,557) 6,987,838 2,859,536 4,643,619 733,788
NET ASSETS:
Beginning of period
------ ------ ------------------ ------ ------ ----------
80,613,921 29,470,168 4,482 5,213,039 44,889,776 42,030,240 733,788 -
----------- ----------- ------ --------------------- ----------- -------- -
End of period $ $ $ - $ 4,482 $ $ $
= == = == ========= =============== = == = ==
95,338,562 80,613,921 51,877,614 44,889,776 5,377,407 733,788
=========== =========== =========== =========== ========== =======
</TABLE>
(1) The Investment Division
commenced operations on June 2,
1998 (2) The Investment Division
commenced operations on November
12, 1998 (3) The Investment
Division ceased operations on June
22, 1998
See notes to financial statements. (Continued)
<PAGE>
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
American Century VP American Century VP Fidelity Investments
Balanced Fund Capital Appreciation VIP Growth Portfolio
Fund
Investment Division Investment Division Investment Division
1998 1997 1998 1997 1998 1997
FROM OPERATIONS:
Net investment income (loss) $ 8,014 $ $ $ 527,140 $ $ 929,792
2,210,748 1,652,358 8,773,055
Net realized gain (loss) on investments
(537) 13,000,609 (1,049,432) 330,567 4,996,488 671,214
Net change in unrealized appreciation
(depreciation) in investments
-------------------- ------- ------- ------ --------
930 (7,901,556) (2,116,166) (3,873,790) 14,901,879 8,849,437
---- ----------- ----------- ----------- ----------- ----------
Increase (decrease) in net assets
resulting
--------------------- ------- ------- ------ ------
from operations 8,407 7,309,801 (1,513,240) (3,016,083) 28,671,422 10,450,443
------ ---------- ----------- ----------- ----------- -----------
FROM UNIT TRANSACTIONS (by category):
Purchase payments:
10,644 2,965,175 3,473,775 5,573,302 11,466,969 10,349,917
Redemptions:
(8,567) (3,627,452) (5,022,488) (6,859,781) (6,785,858) (3,298,180)
Net transfers:
------------ ----- ----- ----- -------- ------
(45,046) (55,753,025) (11,487,040)(19,185,690) 8,906,537 10,413,827
-------- ------------ ------------------------ ---------- -----------
Increase (decrease) in net assets
resulting
------------ ----- ----- ----- ------ ------
from unit transactions (42,969) (56,415,302) (13,035,753)(20,472,169) 13,587,648 17,465,564
-------- ------------ ------------------------ ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
(34,562) (49,105,501) (14,548,993)(23,488,252) 42,259,070 27,916,007
NET ASSETS:
Beginning of period
------------------- ------ ------ ------ ------
77,840 49,183,341 46,371,197 69,859,449 69,423,269 41,507,262
------- ----------- ----------- ----------- ----------- -----------
End of period $ 43,278 $ 77,840 $ $ $ $
============ ============ === = == === = ==
31,822,204 46,371,197 111,682,339 69,423,269
=========== =========== ============ ===========
- ----------------------------------------------------------------------------------------------------
Fidelity Investments
VIP II Asset Manager
Portfolio
Investment Division
1998 1997
FROM OPERATIONS:
Net investment income (loss) $ $
4,017,293 2,417,257
Net realized gain (loss) on investments
1,540,688 316,406
Net change in unrealized appreciation
(depreciation) in investments
----------
(606,966) 2,054,831
--------- ---------
Increase (decrease) in net assets
resulting
--------
from operations 4,951,015 4,788,494
---------- ---------
FROM UNIT TRANSACTIONS (by category):
Purchase payments:
4,455,735 4,006,827
Redemptions:
(2,988,300) (1,642,098)
Net transfers:
-----------
184,852 5,323,698
-------- ---------
Increase (decrease) in net assets
resulting
--------
from unit transactions 1,652,287 7,688,427
---------- ---------
INCREASE (DECREASE) IN NET ASSETS
6,603,302 12,476,921
NET ASSETS:
Beginning of period
------
34,493,656 22,016,735
----------- ----------
End of period $ $
= == ==
41,096,958 34,493,656
=========== ==========
</TABLE>
(1) The Investment Division
commenced operations on June 2,
1998 (2) The Investment Division
commenced operations on November
12, 1998 (3) The Investment
Division ceased operations on June
22, 1998
See notes to financial statements. (Continued)
<PAGE>
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Fidelity Investments VIP Janus Aspen Worldwide
II Contrafund Portfolio Growth Portfolio
Investment Division Investment Division
1998 1997 1998 1997
(2) (1)
FROM OPERATIONS:
Net investment income (loss) $ (649) $ - $ 94 $ -
Net realized gain (loss) on investments
8 - (1,685) -
Net change in unrealized appreciation
(depreciation) in investments
---------------------------------------------------
64,693 - 98,857 -
------- -- ------- --
Increase (decrease) in net assets
resulting
---------------------------------------------------
from operations 64,052 - 97,266 -
------- -- ------- --
FROM UNIT TRANSACTIONS (by category):
Purchase payments:
- - 86,998 -
Redemptions:
(6,865) - (47) -
Net transfers:
----------- ------------------------ -------------
899,661 - 609,086 -
-------- -- -------- --
Increase (decrease) in net assets
resulting
---------- ------------------------ -------------
from unit transactions 892,796 - 696,037 -
-------- -- -------- --
INCREASE (DECREASE) IN NET ASSETS
956,848 - 793,303 -
NET ASSETS:
Beginning of period
- - - -
-- -- -- --
End of period $ 956,848 $ - $ $ -
============ = ========= ==== = =========
793,303
========
- ----------------------------------------------------------------------------------------------------------------
SteinRoe Special Total FutureFunds
Venture Series Account
Fund
Investment Division Investment Division
1998 1997 1998 1997
(1)
FROM OPERATIONS:
Net investment income (loss) $ (65) $ - $ $
61,927,758 50,734,024
Net realized gain (loss) on investment
1 - 75,412,158 32,675,046
Net change in unrealized appreciation
(depreciation) in investments
-----------------------------------
4,856 - 71,778,239 87,803,241
----- -- ---------- ----------
Increase (decrease) in net assets
resulting
-----------------------------------
from operations 4,792 - 209,118,155 171,212,311
----- -- ----------- -----------
FROM UNIT TRANSACTIONS (by category):
Purchase payments:
9,879 - 127,684,120 112,554,675
Redemptions: (
- (131,504,056)78,630,466)
Net transfers:
-----------------------------------
29,729 - 90,975,625 115,239,923
------ -- ---------- -----------
Increase (decrease) in net assets
resulting
-----------------------------------
from unit transactions 39,608 - 87,155,689 149,164,132
------ -- ---------- -----------
INCREASE (DECREASE) IN NET ASSETS
44,400 - 296,273,844 320,376,443
NET ASSETS:
Beginning of period
- - 1,175,173,310854,796,867
-- -- ------------------------
End of period $ - $1,471,447,15$1,175,173,310
========== = ========= ===========================
$44,400
=======
</TABLE>
(1) The Investment Division
commenced operations on June 2,
1998 (2) The Investment Division
commenced operations on November
12, 1998 (3) The Investment
Division ceased operations on June
22, 1998
See notes to financial statements. (Continued)
<PAGE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
1. HISTORY OF THE SERIES ACCOUNT
The FutureFunds Series Account of Great-West Life & Annuity Insurance
Company (the Series Account) is a separate account of Great-West Life &
Annuity Insurance Company (the Company) and was established under Kansas
law on November 15, 1983. In 1990, the Series Account was amended to
conform to and comply with Colorado law in connection with the Company's
redomestication to the State of Colorado. The Series Account is registered
with the Securities and Exchange Commission as a unit investment trust
under the provisions of the Investment Company Act of 1940, as amended.
2. Significant Accounting Policies
The following is a summary of significant accounting policies of the Series
Account, which are in accordance with the accounting principles generally
accepted in the investment company industry.
Security Transactions - Security transactions are recorded on the trade
date. Cost of investments sold is determined on the basis of identified
cost.
Dividend income is accrued as of the ex-dividend date and expenses are
accrued on a daily basis.
Security Valuation - The investments in shares of the underlying funds are
valued at the closing net asset value per share as determined by the
appropriate portfolio at year-end.
The cost of investments represents shares of the underlying funds that were
purchased by the Series Account. Purchases are made at the net asset value
from net purchase payments or through reinvestment of all distributions
from the underlying fund.
Federal Income Taxes - The Series Account income is automatically applied
to increase contract reserves. Under the existing federal income tax law,
this income is not taxed to the extent that it is applied to increase
reserves under a contract. The Company reserves the right to charge the
Series Account for federal income taxes attributable to the Series Account
if such taxes are imposed in the future.
Net Transfers - Net transfers include transfers between investment
divisions of the Series Account as well as transfers between other
investment options of the Company.
3. CHARGES UNDER THE CONTRACT
Contact Maintenance Charge - To compensate the Company for administrative
services, a contract maintenance charge of not more than $60 is deducted
from each participant's account on the first day of each calendar year. If
the account is established after the beginning of the year, the charge is
deducted on the first day of the next calendar quarter and is prorated for
the portion of the year remaining.
Charges Incurred for Total or Partial Surrenders - Pursuant to the
contract, charges will be made for total or partial surrenders of a
contract in excess of the "free amount" before the retirement date by a
deduction from a participant's account. The "free amount" is an amount
equal to 10% of the participant account value at December 31 of the
calendar year prior to the partial or total surrender.
Premium Taxes - The Company presently intends to pay any premium tax levied
by any governmental entity as a result of the existence of the participant
accounts or the Series Account.
Deductions for Assumption of Mortality and Expense Risk - The Company
deducts an amount, computed daily, from the net asset value of the Series
Account investments, equal to an annual rate from .00% to 1.25% depending
on the size of the contract. This charge is designed to compensate the
Company for its assumption of certain mortality, death benefit and expense
risks. The level of this charge is guaranteed and will not change.
4. RELATED PARTY SERVICES
The Company's parent, The Great-West Life Assurance Company, served as
investment advisor to Maxim Series Fund, Inc. (an affiliate) through
October 31, 1996. Effective November 1, 1996, a wholly owned subsidiary of
the Company, GW Capital Management, Inc., serves as investment advisor.
Fees are assessed against the average daily net asset value of the
affiliated funds to compensate GW Capital Management, Inc. for investment
advisory services.
<PAGE>
5. SELECTED DATA
The following is a summary of selected data for a
unit of capital and net assets for the Series Account.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
Maxim Aggressive Profile Portfolio Maxim Blue Chip Portfolio
--------------------------------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.00 0.55 0.75 0.95 1.25
--------------------------------------------------------------------------------------------------------
Date Commenced Operations 01/02/98 09/11/97 09/11/97 09/11/97 09/11/97
06/10/98 09/11/97 09/11/97 09/11/97 09/11/97
1998
Beginning Unit Value $ 10.00 $10.31 $ 10.31 $ 10.30 $ 10.29 $ 10.00 $ 10.48 $ 10.47 $ 10.46 $ 10.45
===========================================-----------========================================----------
===========================================-----------========================================----------
Ending Unit Value $ 11.50 $ 11.79 $ 11.75 $ 11.72 $ 11.68 $ 10.50 $ 12.28 $ 12.25 $ 12.22 $ 12.17
===========================================-----------========================================----------
-----------================================-------------------================================----------
Number of Units 411,766.69 3,713.98 15,150.39 39,090.58192,086.65 1,779.20 5,053.76 26,637.10 18,073.50 209,618.75
Outstanding
===========================================-----------========================================----------
Net Assets (000's) $ 4,734 $ 44 $ 178 $ 458 $ 2,243 $ 19 $ 62 $ 326 $ 221 $ 2,551
===========================================-----------========================================----------
1997
Beginning Unit Value $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
===========================================-----------========================================----------
===========================================-----------========================================----------
Ending Unit Value $ 10.31 $ 10.31 $ 10.30 $ 10.29 $ 10.48 $ 10.47 $ 10.46 $ 10.45
===========================================-----------========================================----------
-----------================================-------------------================================----------
Number of Units 594.16 9,576.11 58,762.77 1,908.53 7,818.57 81,095.13
Outstanding - -
===========================================-----------========================================----------
Net Assets (000's) $6 $ $ 99 $605 $ 20 $ - $ 82 $ 847
-
===========================================-----------========================================----------
1996
Beginning Unit Value
==============================================================================================----------
-----------===========================================--------================================----------
Ending Unit Value
-----------===========================================--------================================----------
Number of Units
Outstanding
==============================================================================================----------
Net Assets (000's)
==============================================================================================----------
1995
Beginning Unit Value
==============================================================================================----------
==============================================================================================---------
Ending Unit Value
==============================================================================================----------
==============================================================================================----------
Number of Units
Outstanding
==============================================================================================----------
-----------===========================================--------================================----------
Net Assets (000's)
1994
Beginning Unit Value
===========================================-----------========================================----------
===========================================-----------========================================----------
Ending Unit Value
===========================================-----------========================================----------
===========================================-----------========================================----------
Number of Units
Outstanding
===========================================-----------========================================----------
===========================================-----------========================================----------
Net Assets (000's)
===========================================-----------========================================----------
</TABLE>
(Continued)
5. SELECTED DATA
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
Maxim Bond Portfolio Maxim Conservative Profile Portfolio
-------------------------------------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.00 0.55 0.75 0.95 1.25
-------------------------------------------------------------------------------------------------------
Date Commenced Operations 06/10/98 01/01/97 06/13/97 12/04/95 11/15/83
01/02/98 09/11/97 09/11/97 09/11/97 09/11/97
1998
Beginning Unit Value $ 10.00 $ 10.48 $ 10.38 $ 11.08 $ 28.36 $ 10.00 $ 10.34 $ 10.34 $ 10.33 $ 10.32
===========================================------------===========================================-----------
===========================================------------===========================================-----------
Ending Unit Value $ 10.34 $ 11.12 $ 10.99 $ 11.70 $ 29.87 $ 10.80 $ 11.14 $ 11.11 $ 11.15 $ 11.04
===========================================------------===========================================-----------
-----------================================----------------------=================================-----------
Number of Units 19,021.64 7,489.11 302,285.65 271,537.15 542,021.82 104.91426,692.38 3,968.60 436,225.06
Outstanding 1,478,126.62
===========================================------------===========================================-----------
Net Assets (000's) $ 197 $ 83 $ 3,322 $ 3,178 $ 44,148 $ 5,856 $ 1 $ 4,741 $ 44 $ 4,816
===========================================------------===========================================-----------
1997
Beginning Unit Value $ 10.00 $ 10.00 $ 10.44 $ 26.82 $ 10.00 $ 10.00 $ 10.00 $ 10.00
===========================================------------===========================================-----------
===========================================------------===========================================-----------
Ending Unit Value $ 10.48 $ 10.38 $ 11.08 $ 28.36 $ 10.34 $ 10.34 $ 10.33 $ 10.32
===========================================------------===========================================-----------
-----------================================----------------------=================================-----------
Number of Units 3,958.65 19,087.44 251,460.22 94,228.09 72,034.42
Outstanding 1,688,345.67 - -
===========================================------------===========================================-----------
Net Assets (000's) $ 41 $ 198 $ 2,786 $ 47,881 $ - $ 973 $ 743
$ -
===========================================------------===========================================-----------
1996
Beginning Unit Value $ 10.11 $ 26.05
-----------============================================----------=================================-----------
Ending Unit Value $ 10.44 $ 26.82
-----------============================================----------=================================-----------
Number of Units 1,890,635.84
Outstanding 287,152.67
==================================================================================================-----------
Net Assets (000's) $ 2,999 $ 50,700
==================================================================================================-----------
1995
Beginning Unit Value $ 10.00 $ 22.89
==================================================================================================-----------
==================================================================================================-----------
Ending Unit Value $ 10.11 $ 26.05
==================================================================================================-----------
-----------============================================----------=================================-----------
Number of Units 197,590.07
Outstanding 2,010,468.99
==================================================================================================-----------
Net Assets (000's) $ 1,998 $ 52,363
==================================================================================================-----------
1994
Beginning Unit Value $ 23.74
===========================================------------===========================================-----------
===========================================------------===========================================-----------
Ending Unit Value $ 22.89
===========================================------------===========================================-----------
===========================================------------===========================================-----------
Number of Units
Outstanding 2,102,049.13
===========================================------------===========================================-----------
===========================================------------===========================================-----------
Net Assets (000's) $ 48,114
===========================================------------===========================================-----------
(Continued)
</TABLE>
<PAGE>
5. SELECTED DATA
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
Maxim Corporate Bond Portfolio Maxim Growth Index Portfolio
-------------------------------------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.00 0.55 0.75 0.95 1.25
-------------------------------------------------------------------------------------------------------------
Date Commenced Operations 01/02/98 01/01/97 06/13/97 12/04/95 02/02/95
06/10/98 09/11/97 09/11/97 09/11/97 09/11/97
1998
Beginning Unit Value $ 10.00 $ 11.21 $ 10.55 $ 12.57 $ 15.09 $ 10.00 $ 10.46 $ 10.46 $ 10.45 $ 10.44
===========================================------------===========================================-----------
===========================================------------===========================================-----------
Ending Unit Value $ 10.29 $ 11.53 $ 10.83 $ 12.88 $ 15.41 $ 11.87 $ 14.29 $ 14.25 $ 14.21 $ 14.16
===========================================------------===========================================-----------
-----------================================----------------------=================================-----------
Number of Units 49,103.31 10,107.63 178,619.5107,193.71 1,134,813.38 602.66 6,496.27 24,247.29 66,115.58 566,409.87
Outstanding
===========================================------------===========================================-----------
Net Assets (000's) $ 505 $ 117 $ 1,934 $ 1,381 $ 17,487 $ 7 $ 93 $ 346 $ 940 $ 8,019
===========================================------------===========================================-----------
1997
Beginning Unit Value $ 10.00 $ 10.00 $ 11.26 $ 13.55 $ 10.00 $ 10.00 $ 10.00 $ 10.00
===========================================------------===========================================-----------
===========================================------------===========================================-----------
Ending Unit Value $ 11.21 $ 10.55 $ 12.57 $ 15.09 $ 10.46 $ 10.46 $ 10.45 $ 10.44
===========================================------------===========================================-----------
-----------================================----------------------=================================-----------
Number of Units 10,505.76 140.0684,830.69 986,392.61 1,592.27 1,779.77 47,353.03
Outstanding -
===========================================------------===========================================-----------
Net Assets (000's) $ 118 $ 1 $ 1,066 $ 14,885 $ 17 $ - $ 19 $ 494
===========================================------------===========================================-----------
1996
Beginning Unit Value $ 10.30 $ 12.44
-----------============================================----------=================================-----------
Ending Unit Value $ 11.26 $ 13.55
==================================================================================================-----------
Number of Units 38,958.69 478,757.71
Outstanding
==================================================================================================-----------
Net Assets (000's) $ 439 $ 6,488
==================================================================================================-----------
1995
Beginning Unit Value $ 10.00 $ 10.00
==================================================================================================-----------
==================================================================================================-----------
Ending Unit Value $ 10.30 $ 12.44
==================================================================================================-----------
-----------============================================----------=================================-----------
Number of Units 269.42 220,637.10
Outstanding
==================================================================================================-----------
Net Assets (000's) $ 3 $ 2,744
==================================================================================================-----------
1994
Beginning Unit Value
===========================================------------===========================================-----------
===========================================------------===========================================-----------
Ending Unit Value
===========================================------------===========================================-----------
===========================================------------===========================================-----------
Number of Units
Outstanding
===========================================------------===========================================-----------
===========================================------------===========================================-----------
Net Assets (000's)
===========================================------------===========================================-----------
(Continued)
</TABLE>
<PAGE>
5. SELECTED DATA
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Maxim International Equity Portfolio Maxim INVESCO ADR Portfolio
--------------------------------------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.00 0.55 0.75 0.95 1.25
--------------------------------------------------------------------------------------------------------------
Date Commenced Operations 06/10/98 01/01/97 06/13/97 12/04/95 04/13/94
06/10/98 01/01/97 06/13/97 12/04/95 01/05/95
1998
Beginning Unit Value $ 10.00 $ 10.14 $ 9.42 $ 12.39 $ 13.43 $ 10.00 $ 11.15 $ 10.01 $ 13.88 $ 14.90
===========================================------------===========================================------------
===========================================------------===========================================------------
Ending Unit Value $ 8.73 $ 9.58 $ 8.88 $ 11.66 $ 12.59 $ 9.75 $ 12.26 $ 10.99 $ 15.21 $ 16.28
===========================================------------===========================================------------
-----------================================----------------------=================================------------
Number of Units 28,867.69 32,162.34122,570.24 498,703.59 2,333,665.81 5,065.09 29,294.88 292,162.25 51,071.84 347,745.34
Outstanding
===========================================------------===========================================------------
Net Assets (000's) $ 252 $ 308 $ 1,089 $ 5,815 $ 29,389 $ 49 $ 359 $ $
$3,211 777 5,660
===========================================------------===========================================------------
1997
Beginning Unit Value $ 10.00 $ 10.00 $ 12.27 $ 13.33 $ 10.00 $ 10.00 $ 12.50 $ 13.46
===========================================------------===========================================------------
===========================================------------===========================================------------
Ending Unit Value $ 10.14 $ 9.42 $ 12.39 $ 13.43 $ 11.15 $ 10.01 $ 13.88 $ 14.90
===========================================------------===========================================------------
-----------================================----------------------=================================------------
Number of Units 39,222.20 2,087.94 557,569.31 2,831,592.94 34,886.43 7.11 149,143.92 314,943.72
Outstanding
===========================================------------===========================================------------
Net Assets (000's) $ 398 $ 20 $ 6,908 $ 38,028 $ 389 $ 0 $ $
2,070 4,693
===========================================------------===========================================------------
1996
Beginning Unit Value $ 10.36 $ 11.29 $ 10.41 $ 11.25
-----------============================================----------=================================------------
Ending Unit Value $ 12.27 $ 13.33 $ 12.50 $ 13.46
-----------============================================----------=================================------------
Number of Units 548,157.84 2,249,181.67 74,310.25 126,363.18
Outstanding
==================================================================================================------------
Net Assets (000's) $ 6,725 $ 29,981 $ $
929 1,701
==================================================================================================------------
1995
Beginning Unit Value $ 10.00 $ 10.49 $ 10.00 $ 10.00
==================================================================================================------------
==================================================================================================------------
Ending Unit Value $ 10.36 $ 11.29 $ 10.41 $ 11.25
==================================================================================================------------
-----------============================================----------=================================------------
Number of Units 290,190.44 1,130.83 23,104.73
Outstanding 1,645,237.34
==================================================================================================------------
Net Assets (000's) $ 3,006 $18,570 $
$12 260
==================================================================================================------------
1994
Beginning Unit Value $ 10.00
===========================================------------===========================================------------
===========================================------------===========================================------------
Ending Unit Value $ 10.49
===========================================------------===========================================------------
===========================================------------===========================================------------
Number of Units 1,075,821.94
Outstanding
===========================================------------===========================================------------
===========================================------------===========================================------------
Net Assets (000's) $ 11,286
===========================================------------===========================================------------
(Continued)
</TABLE>
<PAGE>
5. SELECTED DATA
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Maxim INVESCO Balanced Portfolio Maxim INVESCO Small-Cap Growth Portfolio
--------------------------------------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.00 0.55 0.75 0.95 1.25
--------------------------------------------------------------------------------------------------------------
Date Commenced 01/02/98 01/01/97 06/13/97 10/31/96 10/31/96 06/10/98 01/01/97 06/13/97 12/04/95 01/09/95
Operations
1998
Beginning Unit Value $ 10.00 $ 12.53 $ 10.63 $ 12.66 $ 12.62 $ 10.00 $ 11.80 $ 11.11 $ 15.90 $ 19.21
==========================================-------------===========================================------------
==========================================-------------===========================================------------
Ending Unit Value $ 11.84 $ 14.76 $ 12.50 $ 14.85 $ 14.76 $ 11.04 $ 13.81 $ 12.97 $ 18.52 $ 22.31
==========================================-------------===========================================------------
-----------===============================-----------------------=================================------------
Number of Units 206,749.57 13,049.81530,510.93 342,274.215,029,978.19 31,102.91 85,293.71334,433.76 251,992.27 1,277,401.42
Outstanding =========================================-------------===========================================------------
Net Assets (000's) $ $ $ $ $ $ $ $ $ $
2,448 193 6,632 5,082 74,219 343 1,178 4,339 4,667 28,498
==========================================-------------===========================================------------
1997
Beginning Unit Value $ 10.00 $ 10.00 $ 10.14 $ 10.13 $ 10.00 $ 10.00 $ 13.52 $ 16.38
==========================================-------------===========================================------------
==========================================-------------===========================================------------
Ending Unit Value $ 12.53 $ 10.63 $ 12.66 $ 12.62 $ 11.80 $ 11.11 $ 15.90 $ 19.21
==========================================-------------===========================================------------
-----------===============================-----------------------=================================------------
Number of Units 14,831.94 1,275.72 340,421.004,925,017.36 110,005.54 754.64 296,221.15 1,340,084.31
Outstanding ==========================================-------------===========================================------------
Net Assets (000's) $ 186 $ $ $ $ $
$ 14 4,310 62,154 1,298 $ 8 4,710 25,743
==========================================-------------===========================================------------
1996
Beginning Unit Value $ 10.00 $ 10.00 $ 10.77 $ 13.09
-----------============================================----------=================================------------
Ending Unit Value $ 10.14 $ 10.13 $ 13.52 $ 16.38
-----------============================================----------=================================------------
Number of Units 4,262.66 22,568.19 159,393.34 776,719.68
Outstanding ==================================================================================================------------
Net Assets (000's) $ $
$ 43 $ 229 2,155 12,726
==================================================================================================------------
1995
Beginning Unit Value $ 10.00 $ 10.00
==================================================================================================------------
==================================================================================================------------
Ending Unit Value $ 10.77 $ 13.09
==================================================================================================------------
-----------============================================----------=================================------------
Number of Units 24,147.18 210,982.04
Outstanding ==================================================================================================------------
Net Assets (000's) $ $
260 2,762
==================================================================================================------------
1994
Beginning Unit Value
==========================================-------------===========================================------------
==========================================-------------===========================================------------
Ending Unit Value
==========================================-------------===========================================------------
==========================================-------------===========================================------------
Number of Units
Outstanding ==========================================-------------===========================================------------
==========================================-------------===========================================------------
Net Assets (000's)
==========================================-------------===========================================------------
</TABLE>
(Continued)
<PAGE>
5. SELECTED DATA
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
Maxim Mid-Cap Portfolio (Growth Fund I) Maxim MidCap Growth Portfolio
--------------------------------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.00 0.55 0.75 0.95 1.25
--------------------------------------------------------------------------------------------------------
Date Commenced Operations 06/10/98 01/01/97 06/13/97 12/04/95 04/13/94 01/02/98 09/11/97 09/11/97 09/11/97 09/11/97
1998
Beginning Unit Value $ 10.00 $ 11.23 $ 11.00 $ 12.14 $ 15.99 $ 10.00 $ 10.33 $ 10.33 $ 10.32 10.31
==========================================-------------===========================================------
==========================================-------------===========================================------
Ending Unit Value $ 12.06 $ 14.94 $ 14.60 $ 16.08 $ 21.12 $ 12.28 $ 12.56 $ 12.53 $ 12.49 12.45
==========================================-------------===========================================------
-----------===============================------------------------================================------
Number of Units Outstanding39,226.80 39,615.48256,925.44 470,211.382,277,248.95 176,746.72 3,908.23 36,548.42 55,481.56 384,828.79
==========================================-------------===========================================------
Net Assets (000's) $ $ $ $ $ $ $ $ $ 4,789
473 592 3,752 7,561 48,105 2,170 49 458 693
==========================================-------------===========================================-----
1997
Beginning Unit Value $ 10.00 $ 10.00 $ 10.85 $ 14.34 $ 10.00 $ 10.00 $ 10.00 10.00
==========================================-------------===========================================------
==========================================-------------===========================================------
Ending Unit Value $ 11.23 $ 11.00 $ 12.14 $ 15.99 $ 10.33 $ 10.33 $ 10.32 10.31
==========================================-------------===========================================------
-----------===============================------------------------================================------
Number of Units Outstanding 34,374.34 2,545.66 422,167.922,495,810.84 1,741.25 12,739.10 128,683.86
==========================================-------------===========================================------
Net Assets (000's) $ $ $ $ - $ 1,327
386 $ 28 5,125 39,908 $ 18 131
==========================================-------------===========================================------
1996
Beginning Unit Value $ 10.34 $ 13.70
-----------============================================-----------================================------
Ending Unit Value $ 10.85 $ 14.34
-----------============================================-----------================================------
Number of Units Outstanding 528,556.232,440,068.07
==================================================================================================------
Net Assets (000's) $ $
5,733 34,979
==================================================================================================------
1995
Beginning Unit Value $ 10.00 $ 10.96
==================================================================================================------
==================================================================================================------
Ending Unit Value $ 10.34 $ 13.70
==================================================================================================-----
-----------============================================-----------================================------
Number of Units Outstanding 194,687.271,715,174.42
==================================================================================================-----
Net Assets (000's) $ $
2,012 23,498
==================================================================================================------
1994
Beginning Unit Value $ 10.00
==========================================-------------===========================================-----
==========================================-------------===========================================-----
Ending Unit Value $ 10.96
==========================================-------------===========================================-----
==========================================-------------===========================================-----
Number of Units Outstanding 788,758.55
==========================================-------------===========================================-----
==========================================-------------===========================================-----
Net Assets (000's) $
8,648
==========================================-------------===========================================-----
</TABLE>
(Continued)
5. SELECTED DATA
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
Maxim Moderate Profile Portfolio Maxim Moderately Aggressive Profile Portfolio
---------------------------------------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.00 0.55 0.75 0.95 1.25
---------------------------------------------------------------------------------------------------------------
Date Commenced Operations 01/02/98 09/11/97 09/11/97 09/11/97 09/11/97
01/02/98 09/11/97 09/11/97 09/11/97 09/11/97
1998
Beginning Unit Value $ 10.00 $ 10.24 $ 10.24 $ 10.23 $ 10.22 $ 10.00 $ 10.35 $ 10.34 $ 10.34 $ 10.33
========================================-------------===========================================------------
========================================-------------===========================================------------
Ending Unit Value $ 11.13 $ 11.35 $ 11.32 $ 11.28 $ 11.25 $ 11.25 $ 11.58 $ 11.55 $ 11.52 $ 11.48
========================================-------------===========================================------------
---------===============================------------------------================================------------
Number of Units 419,765.72 2,619.56258,990.96 16,878.33 418,487.19 697,144.75 4,302.17 140,358.02 36,452.19 446,496.19
Outstanding =======================================-------------===========================================------------
Net Assets (000's) $ $ $ $ $ $ $ $ $ 5,126
4,672 30 2,932 190 4,708 7,844 $ 50 1,622 420
========================================-------------===========================================------------
1997
Beginning Unit Value $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
========================================-------------===========================================------------
========================================-------------===========================================------------
Ending Unit Value $ 10.24 $ 10.24 $ 10.23 $ 10.22 $ 10.35 $ 10.34 $ 10.34 $ 10.33
========================================-------------===========================================------------
---------===============================------------------------================================------------
Number of Units 2,249.51 - 44,770.91 110,105.33 2,109.96 53,828.37 141,839.79
Outstanding -
========================================-------------===========================================------------
Net Assets (000's) $ $ - $ $ - $ $ 1,465
23 $ 458 1,125 $ 22 557
========================================-------------===========================================------------
1996
Beginning Unit Value
---------============================================-----------================================------------
Ending Unit Value
---------============================================-----------================================------------
Number of Units
Outstanding ================================================================================================------------
Net Assets (000's)
================================================================================================------------
1995
Beginning Unit Value
================================================================================================------------
================================================================================================------------
Ending Unit Value
================================================================================================------------
---------============================================-----------================================------------
Number of Units
Outstanding ================================================================================================------------
Net Assets (000's)
================================================================================================------------
1994
Beginning Unit Value
========================================-------------===========================================------------
========================================-------------===========================================------------
Ending Unit Value
========================================-------------===========================================------------
========================================-------------===========================================------------
Number of Units
Outstanding ========================================-------------===========================================------------
========================================-------------===========================================------------
Net Assets (000's)
========================================-------------===========================================------------
</TABLE>
(Continued)
<PAGE>
5. SELECTED DATA
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------
Maxim Moderately Conservative Profile Portfolio Maxim Money Market Portfolio
----------------------------------------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.00 0.55 0.75 0.95 1.25
----------------------------------------------------------------------------------------------------------------
Date Commenced Operations 01/02/98 09/11/97 09/11/97 09/11/97 09/11/97
06/10/98 01/01/97 06/13/97 12/04/95 11/15/83
1998
Beginning Unit Value $ 10.00 $ 10.21 $ 10.21 $ 10.20 $ 10.19 $ 10.00 $ 10.47 $ 10.25 $ 10.89 $ 18.30
===========================================-------------===========================================------------
===========================================-------------===========================================------------
Ending Unit Value $ 10.95 $ 11.15 $ 11.12 $ 11.04 $ 11.05 $ 10.28 $ 10.95 $ 10.70 $ 11.34 $ 19.01
===========================================-------------===========================================------------
------------===============================-----------------------=================================------------
Number of Units 177,087.47 338,437.20 4,110.80 354,140.45 80,123.80 719,236.731,613,050.25 352,052.983,758,054.92
Outstanding -
===========================================-------------===========================================------------
Net Assets (000's) $ 1,940 $ - $ $ 3,913 $ $ $ $ $
3,763 $ 45 824 7,874 17,260 3,992 71,428
===========================================-------------===========================================------------
1997
Beginning Unit Value $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.44 $ 17.60
===========================================-------------===========================================------------
===========================================-------------===========================================------------
Ending Unit Value $ 10.21 $ 10.21 $ 10.20 $ 10.19 $ 10.47 $ 10.25 $ 10.89 $ 18.30
===========================================-------------===========================================-----------
------------===============================-----------------------=================================------------
Number of Units 53,438.52 53,608.55 875,612.10 11,698.04 1,402,319.63,877,164.14
Outstanding - -
===========================================-------------===========================================------------
Net Assets (000's) $ - $ - $ $ $ $
$ 545 546 9,168 $ 120 15,271 70,952
===========================================-------------===========================================------------
1996
Beginning Unit Value $ 10.04 $ 16.96
------------============================================----------=================================------------
Ending Unit Value $ 10.44 $ 17.60
------------============================================----------=================================------------
Number of Units 343,499.443,129,281.92
Outstanding ===================================================================================================------------
Net Assets (000's) $ $
3,588 55,089
===================================================================================================------------
1995
Beginning Unit Value $ 10.00 $ 16.25
===================================================================================================------------
===================================================================================================------------
Ending Unit Value $ 10.04 $ 16.96
===================================================================================================------------
------------============================================----------=================================------------
Number of Units 169,096.042,880,571.67
Outstanding ===================================================================================================------------
Net Assets (000's) $ $
1,697 48,860
===================================================================================================------------
1994
Beginning Unit Value $ 15.84
===========================================-------------===========================================------------
===========================================-------------===========================================------------
Ending Unit Value $ 16.25
===========================================-------------===========================================------------
===========================================-------------===========================================------------
Number of Units
Outstanding 2,277,816.08
===========================================-------------===========================================------------
===========================================-------------===========================================------------
Net Assets (000's) $ 37,019
===========================================-------------===========================================------------
</TABLE>
(Continued)
5. SELECTED DATA
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------
Maxim Small-Cap Aggressive Growth Portfolio Maxim Small-Cap Index Portfolio
----------------------------------------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.00 0.55 0.75 0.95 1.25
----------------------------------------------------------------------------------------------------------------
Date Commenced Operations 06/10/98 09/11/97 09/11/97 09/11/97 09/11/97
06/10/98 01/01/97 06/13/97 12/04/95 03/15/94
1998
Beginning Unit Value $ 10.00 $ 10.03 $ 10.02 $ 10.01 $ 10.01 $ 10.00 $ 12.03 $ 11.14 $ 14.28 $ 16.08
==========================================-----------=============================================-------------
==========================================-----------=============================================-------------
Ending Unit Value $ 9.58 $ 9.74 $ 9.72 $ 9.69 $ 9.66 $ 9.48 $ 11.78 $ 10.88 $ 13.92 $ 15.63
==========================================-----------=============================================-------------
-----------===============================-----------------------=================================-------------
Number of Units 9,120.17 5,260.61 14,660.30 22,333.17188,314.26 11,591.13 22,273.21 183,674.90 72,881.82 654,733.49
Outstanding ==========================================-----------=============================================-------------
Net Assets (000's) $ $ $ $ $ $ $ 1,015 $ 10,235
87 $ 51 $ 142 216 1,818 110 262 1,998
==========================================-----------=============================================-------------
1997
Beginning Unit Value $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 11.92 $ 13.46
==========================================-----------=============================================-------------
==========================================-----------=============================================-------------
Ending Unit Value $ 10.03 $ 10.02 $ 10.01 $ 10.01 $ 12.03 $ 11.14 $ 14.28 $ 16.08
==========================================-----------=============================================-------------
-----------===============================-----------------------=================================-------------
Number of Units 1,448.50 9,792.14 70,399.46 20,427.36 1,923.32 147,236.05 711,865.97
Outstanding -
==========================================-----------=============================================-------------
Net Assets (000's) $ - $ $ $ 2,103 $ 11,447
$ 15 $ 98 705 246 $ 21
==========================================-----------=============================================-------------
1996
Beginning Unit Value $ 10.43 $ 11.82
==================================================================================================-------------
-----------==========================================------------=================================-------------
Ending Unit Value $ 11.92 $ 13.46
==================================================================================================-------------
Number of Units 132,987.33 477,902.35
Outstanding ==================================================================================================-------------
==================================================================================================-------------
Net Assets (000's) $ 1,585 $
6,433
==================================================================================================-------------
1995
Beginning Unit Value $ 10.00 $ 9.48
==================================================================================================-------------
==================================================================================================-------------
Ending Unit Value $ 10.43 $11.82
==================================================================================================-------------
-----------==========================================------------=================================-------------
Number of Units 72,120.51 296,281.36
Outstanding ==================================================================================================-------------
Net Assets (000's) $ 753 $
3,502
==================================================================================================-------------
1994
Beginning Unit Value $ 10.00
==========================================-----------=============================================-------------
==========================================-----------=============================================-------------
Ending Unit Value $ 9.48
==========================================-----------=============================================-------------
==========================================-----------=============================================-------------
Number of Units 152,895.00
Outstanding ==========================================-----------=============================================-------------
==========================================-----------=============================================-------------
Net Assets (000's)
$ 1,449
==========================================-----------=============================================-------------
</TABLE>
(Continued)
5. SELECTED DATA
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
Maxim Small-Cap Value Portfolio Maxim Stock Index Portfolio
-----------------------------------------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.00 0.55 0.75 0.95 1.25
-----------------------------------------------------------------------------------------------------------------
Date Commenced 01/02/98 01/01/97 06/13/97 12/04/95 11/04/94 06/10/98 01/01/97 06/13/97 12/04/95 11/15/83
Operations
1998
Beginning Unit $ 10.00 $ 12.72 $ 11.81 $ 15.50 $ 17.03 $ 10.00 $ 13.15 $ 10.95 $ 16.27 $ 57.44
Value ===========================================-----------==============================================-------------
===========================================-----------==============================================-------------
Ending Unit $ 10.87 $ 13.69 $ 12.69 $ 16.63 $ 18.21 $ 11.09 $ 16.58 $ 13.78 $ 20.44 $ 71.93
Value ===========================================-----------==============================================-------------
------------===============================----------------------===================================-------------
Number of Units 117,016.71 4,136.54 24,665.53 21,916.39162,035.10 444,254.02 106,369.29 3,382,583.061,470,364.977,484,324.11
Outstanding ===========================================-----------==============================================-------------
Net Assets $ $ $ 4,929 $ $ $ $
(000's) 1,273 $ 57 $ 313 $ 364 2,951 1,763 46,606 30,053 538,337
===========================================-----------==============================================-------------
1997
Beginning Unit $ 10.00 $ 10.00 $ 12.24 $ 13.48 $ 10.00 $ 10.00 $ 12.43 $ 44.00
Value ===========================================-----------==============================================-------------
===========================================-----------==============================================-------------
Ending Unit $ 12.72 $ 11.81 $ 15.50 $ 17.03 $ 13.15 $ 10.95 $ 16.27 $ 57.44
Value ===========================================-----------==============================================-------------
------------===============================----------------------===================================-------------
Number of Units 5,933.43 395.12 4,787.54113,566.69 94,900.40 167,748.34 2,328,852.188,215,445.99
Outstanding ===========================================-----------==============================================-------------
Net Assets $ $ $ $
(000's) $ 75 $ 5 $ 74 1,934 1,248 $1,837 37,890 471,895
===========================================-----------==============================================-------------
1996
Beginning Unit $ 10.48 $ 11.58 $ 10.30 $ 36.57
Value ====================================================================================================-------------
Ending Unit $ 12.24 $ 13.48 $ 12.43 $ 44.00
Value ====================================================================================================-------------
Number of Units 1,652.65 39,184.70 2,057,207.667,884,581.79
Outstanding ====================================================================================================-------------
Net Assets $ $
(000's) $ 20 $ 528 25,565 346,883
====================================================================================================-------------
1995
Beginning Unit $ 10.00 $ 10.15 $ 10.00 $ 27.30
Value ====================================================================================================-------------
====================================================================================================-------------
Ending Unit $ 10.48 $ 11.58 $ 10.30 $ 36.57
Value ====================================================================================================-------------
------------==========================================-----------===================================-------------
Number of Units 164.60 30,919.44 937,180.757,636,165.40
Outstanding ====================================================================================================-------------
Net Assets $
(000's) $ 2 $ 358 $ 9,653 279,234
====================================================================================================-------------
1994
Beginning Unit $ 10.00 $ 27.61
Value ===========================================-----------==============================================-------------
===========================================-----------==============================================-------------
Ending Unit $ 10.15 $ 27.30
Value ===========================================-----------==============================================-------------
===========================================-----------==============================================-------------
Number of Units 0.01 7,589,448.89
Outstanding ===========================================-----------==============================================-------------
===========================================-----------==============================================-------------
Net Assets $
(000's) $ 0 207,183
===========================================-----------==============================================-------------
(Continued)
</TABLE>
5. SELECTED DATA
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
Maxim T. Rowe Price Equity/Income Portfolio Maxim Total Return Portfolio
--------------------------------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.95 1.25
------------ ----------------
---------------------------------------------- ------------------------------
Date Commenced Operations 06/10/98 01/01/97 06/13/97 12/04/95 11/09/94 12/04/95 04/20/94
1998
Beginning Unit Value $ 10.00 $ 12.81 $ 11.14 $ 15.74 $ 19.47 $ 13.79 $ 15.69
==========================================================----------------===============---------------
==========================================================----------------===============---------------
Ending Unit Value $ 10.17 $ 13.88 $ 12.04 $ 16.99 $ 20.94 $ - $ -
==========================================================----------------===============---------------
------------==============================================----------------------------------------------
Number of Units Outstanding 114,503.07 119,756.04 614,261.17 379,091.37 3,756,224.78 - -
==========================================================----------------===============---------------
Net Assets (000's) $ 1,164 $ 1,662 $ 7,398 $ 6,440 $ 78,674 $ - $ -
==========================================================----------------===============---------------
1997
Beginning Unit Value $ 10.00 $ 10.00 $ 12.34 $ 15.30 $ 11.27 $ 12.87
==========================================================----------------===============---------------
==========================================================----------------===============---------------
Ending Unit Value $ 12.81 $ 11.14 $ 15.74 $ 19.47 $ 13.79 $ 15.69
==========================================================----------------===============---------------
------------==============================================----------------------------------------------
Number of Units Outstanding 136,599.23 1,715.12 561,621.67 3,595,375.07 - 285.72
==========================================================----------------===============---------------
Net Assets (000's) $ $ 19 $ 8,840 $ $ -
1,750 70,002 $ 4
==========================================================----------------===============---------------
1996
Beginning Unit Value $ 10.43 $ 12.98 $ 10.18 $ 11.66
------------==============================================================------------------------------
Ending Unit Value $ 12.34 $ 15.30 $ 11.27 $ 12.87
------------==============================================================------------------------------
Number of Units Outstanding 276,648.63 1,702,863.67 26,145.88 382,179.84
=========================================================================================---------------
Net Assets (000's) $ 3,413 $
26,057 $ 295 $ 4,918
=========================================================================================---------------
1995
Beginning Unit Value $ 10.00 $ 9.85 $ 10.00 $ 9.62
=========================================================================================---------------
=========================================================================================---------------
Ending Unit Value $ 10.43 $ 12.98 $ 10.18 $ 11.66
=========================================================================================---------------
------------==============================================================------------------------------
Number of Unit Outstanding 1,324.94 550,610.66 4,862.59 214,442.71
=========================================================================================---------------
Net Assets (000's) $ 14 $
7,146 $ 50 $ 2,501
=========================================================================================---------------
1994
Beginning Unit Value $ 10.00 $ 10.00
==========================================================----------------===============---------------
==========================================================----------------===============---------------
Ending Unit Value $ 9.85 $ 9.62
==========================================================----------------===============---------------
==========================================================----------------===============---------------
Number of Units Outstanding 16,574.29 58,473.26
==========================================================----------------===============---------------
==========================================================----------------===============---------------
Net Assets (000's)
$ 163 $ 563
==========================================================----------------===============---------------
(Continued)
</TABLE>
5. SELECTED DATA
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------
Maxim U.S. Government Securities Portfolio Maxim Value Index Portfolio
-----------------------------------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.00 0.55 0.75 0.95 1.25
-----------------------------------------------------------------------------------------------------------
06/10/98 01/01/97 06/13/97 12/04/95 04/01/85
06/10/98 09/11/97 09/11/97 09/11/97 09/11/97
Date Commenced Operations
1998
Beginning Unit Value $ 10.00 $ 10.62 $ 10.47 $ 11.23 $13.51 $ 10.00 $10.84 $ 10.84 $ 10.83 $ 10.82
================================================================================================----------
Ending Unit Value $ 10.43 $ 11.33 $ 11.14 $ 11.93 $ 14.31 $ 10.26 $ 12.34 $ 12.31 $ 12.28 $ 12.23
================================================================================================----------
Number of Units 341,859.87
Outstanding 6,374.10 13,389.95 151,304.43 3,217,525.64 2,711.68 8,915.02 41,993.96 23,951.01 362,062.57
================================================================================================----------
Net Assets (000's) $ 66 $152 $ 3,809 $ 1,805 $ 46,046 $ 28 $ 110 $ 517 $ 294 $ 4,428
================================================================================================----------
1997
Beginning Unit Value $ 10.00 $ 10.00 $ 10.45 $ 12.61 $ 10.00 $ 10.00 $ 10.00 $ 10.00
================================================================================================----------
Ending Unit Value $ 10.62 $ 10.47 $ 11.23 $ 13.51 $ 10.84 $ 10.84 $ 10.83 $ 10.82
================================================================================================----------
Number of Units 3,531.32 739.30 112,314.59 3,225,407.45 -
Outstanding - 12,307.01 55,506.37
================================================================================================----------
Net Assets (000's) $ 38 $ 8 $ 1,261 $ 43,575 $- $- $ 13 $ 601
================================================================================================----------
1996
Beginning Unit Value $ 10.15 $ 12.29
================================================================================================----------
Ending Unit Value $ 10.45 $ 12.61
================================================================================================----------
Number of Units
Outstanding 119,989.13 3,234,023.68
================================================================================================----------
Net Assets (000's) $ 1,254 $ 40,777
================================================================================================----------
1995
Beginning Unit Value $ 10.00 $ 10.71
================================================================================================----------
Ending Unit Value $ 10.15 $ 12.29
================================================================================================----------
Number of Unit 39,695.16 3,165,425.83
Outstanding ================================================================================================----------
Net Assets (000's) $ 403 $ 38,890
================================================================================================----------
1994
Beginning Unit Value $ 11.21
================================================================================================----------
Ending Unit Value $ 10.71
================================================================================================----------
Number of Units 2,756,894.60
Outstanding ================================================================================================----------
Net Assets (000's) $ 29,539
================================================================================================----------
</TABLE>
<PAGE>
5. SELECTED DATA
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------
American Century VP Balanced American Century VP Capital Appreciation Fund
Fund
------------------------------------------------------------------------------------------------------
<PAGE>
0.95 1.25 0.00 0.55 0.75 0.95 1.25
---------------------------------------------------------------------------------------------------
Date Commenced 12/04/95 08/03/92 06/10/98 01/01/97 06/13/97 12/04/95 08/07/92
Operations
1998
Beginning Unit Value $ 12.98 $ 16.41 $ 10.00 $ 9.62 $ 10.09 $ 9.01 $ 13.48
===============-----------------====================================================---------------
===============-----------------====================================================---------------
Ending Unit Value $ 14.88 $ 18.77 $ 9.72 $ 9.36 $ 9.80 $ 8.73 $ 13.02
===============-----------------====================================================---------------
--------------------------------====================================================---------------
Number of Units 1,003.91 1,510.32 25,906.23 10,882.95 164,721.68 304,341.17 2,088,303.72
Outstanding ===============-----------------====================================================---------------
Net Assets (000's) $ 252 $ $ $
$ 15 $ 28 $ 102 1,615 2,656 27,197
===============-----------------====================================================---------------
1997
Beginning Unit Value $ 11.31 $ 14.36 $ 10.00 $ 10.00 $ 9.40 $ 14.11
===============-----------------====================================================---------------
===============-----------------====================================================---------------
Ending Unit Value $ 12.98 $ 16.41 $ 9.62 $ 10.09 $ 9.01 $ 13.48
===============-----------------====================================================---------------
--------------------------------====================================================---------------
Number of Units 3,607.78 1,890.46 14,859.84 449.77 331,874.62 3,207,248.87
Outstanding ===============-----------------====================================================---------------
Net Assets (000's) $ 143 $ $
$ 47 $ 31 $ 5 2,990 43,234
===============-----------------====================================================---------------
1996
Beginning Unit Value $ 10.18 $ 12.96 $ 9.92 $ 14.93
--------------------------------====================================================---------------
Ending Unit Value $ 11.31 $ 14.36 $ 9.40 $ 14.11
--------------------------------====================================================---------------
Number of Units 237,929.35 3,238,207.89 585,432.85 4,560,706.32
Outstanding ===============-----------------====================================================---------------
Net Assets (000's) $ $ $ $
2,692 46,492 5,503 64,356
===============-----------------====================================================---------------
1995
Beginning Unit Value $ 10.00 $ 10.83 $ 10.00 $ 11.53
===============-----------------====================================================---------------
===============-----------------====================================================---------------
Ending Unit Value $ 10.18 $ 12.96 $ 9.92 $ 14.93
===============-----------------====================================================---------------
--------------------------------====================================================---------------
Number of Units 84,634.10 3,153,172.39 292,581.15 4,954,474.12
Outstanding ===============-----------------====================================================---------------
Net Assets (000's)
861 40,853 2,902 73,995
===============-----------------====================================================---------------
1994
Beginning Unit Value $ 10.90 $ 11.82
===============-----------------====================================================---------------
===============-----------------====================================================---------------
Ending Unit Value $ 10.83 $ 11.53
===============-----------------====================================================---------------
===============-----------------====================================================---------------
Number of Units 2,877,738.22 4,420,493.64
Outstanding ===============-----------------====================================================---------------
===============-----------------====================================================---------------
Net Assets (000's) $ $
31,166 50,985
===============-----------------====================================================---------------
</TABLE>
(Continued)
5. SELECTED DATA
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
Fidelity Investments VIP II Asset Manager Portfolio Fidelity Investments VIP II Contrafund Porfolio
---------------------------------------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.00 0.55 0.75 0.95 1.25
---------------------------------------------------------------------------------------------------------------
Date Commenced 06/10/98 01/01/97 06/13/97 12/04/95 04/21/94 11/12/98 11/12/98 11/12/98 11/12/98 11/12/98
Operations
1998
Beginning Unit Value $ 10.00 $ 12.00 $ 10.74 $ 14.27 $ 14.50 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
==========================================------------==============================================-----------
==========================================------------==============================================-----------
Ending Unit Value $ 10.58 $ 13.73 $ 12.27 $ 16.26 $ 16.47 $ 11.71 $ 11.70 $ 11.70 $ 11.70 $ 11.69
==========================================------------==============================================-----------
-----------===============================-----------------------===================================-----------
Number of Units 32,619.73 38,527.01 287,339.45163,995.76 2,065,741.39 - 545.53 1,792.37 79,502.22
Outstanding -
==========================================------------==============================================-----------
Net Assets (000's) $ $ $ $ $ - $ $
345 $ 529 3,526 2,667 34,030 - $ 6 $ 21 930
==========================================------------==============================================-----------
1997
Beginning Unit Value $ 10.00 $ 10.00 $ 11.91 $ 12.17
==========================================------------==============================================-----------
==========================================------------==============================================-----------
Ending Unit Value $ 12.00 $ 10.74 $ 14.27 $ 14.50
==========================================------------==============================================-----------
-----------===============================-----------------------===================================-----------
Number of Units 41,233.13 1,232.17243,166.13 2,104,778.43
Outstanding ==========================================------------==============================================-----------
Net Assets (000's) $ $ $
495 $ 13 3,470 30,519
==========================================------------==============================================-----------
1996
Beginning Unit Value $ 10.49 $ 10.76
-----------===========================================-----------===================================-----------
Ending Unit Value $ 11.91 $ 12.17
====================================================================================================-----------
Number of Units 220,279.35 1,593,034.53
Outstanding ====================================================================================================-----------
Net Assets (000's) $ $
- ------------------
2,623 19,393
-----------===========================================-----------===================================-----------
1995
Beginning Unit Value $ 10.00 $ 9.31
-----------===========================================-----------===================================-----------
Ending Unit Value $ 10.49 $ 10.76
-----------===========================================-----------===================================-----------
Number of Units 118,138.13 1,202,943.32
Outstanding -----------===========================================-----------===================================-----------
Net Assets (000's) $ 1,239 $
12,939
-----------===============================-----------------------===================================-----------
1994
Beginning Unit Value $ 10.00
==========================================------------==============================================-----------
==========================================------------==============================================-----------
Ending Unit Value $ 9.31
==========================================------------==============================================-----------
==========================================------------==============================================-----------
Number of Units 768,426.17
Outstanding ==========================================------------==============================================-----------
==========================================------------==============================================-----------
Net Assets (000's) $
7,154
==========================================------------==============================================-----------
</TABLE>
(Continued)
5. SELECTED DATA
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------
Fidelity Investments VIP Growth Portfolio Janus Aspen Worldwide Growth SteinRoe
Portfolio Balanced Fund
-----------------------------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.75 0.95 0.75
------------------------------------------------------------------------------------------------------
Date Commenced Operations 06/10/98 01/01/97 06/13/97 12/04/95 04/21/94 06/02/98 10/12/98 06/02/98
1998
Beginning Unit Value $ 10.00 $ 12.28 $ 10.82 $ 13.36 $ 17.77 $ 10.00 $ 10.00 $ 10.00
===================================================-------------=============================---------
===================================================-------------=============================---------
Ending Unit Value $ 12.18 $ 17.04 $ 14.98 $ 18.46 $ 24.48 $ 10.65 $ 12.59 $ 10.72
===================================================-------------=============================---------
-------------======================================-----------------------------=============---------
Number of Units Outstanding 56,691.14 157,481.96 593,071.00 503,651.353,681,235.62 17,591.36 48,118.83 4,142.27
===================================================-------------=============================---------
Net Assets (000's) $ $ $ $ $ 187 $ $ 44
$ 691 2,683 8,882 9,300 90,127 606
===================================================-------------=============================---------
1997
Beginning Unit Value $ 10.00 $ 10.00 $ 10.93 $ 14.57
===================================================-------------=============================---------
===================================================-------------=============================---------
Ending Unit Value $ 12.28 $ 10.82 $ 13.36 $ 17.77
===================================================-------------=============================---------
-------------======================================-----------------------------=============---------
Number of Units Outstanding 157,223.90 3,446.98 588,801.033,352,899.82
===================================================-------------=============================---------
Net Assets (000's) $ $ $
1,931 $ 37 7,866 59,581
===================================================-------------=============================---------
1996
Beginning Unit Value $ 9.62 $ 12.86
-------------===================================================----------------=============---------
Ending Unit Value $ 10.93 $ 14.57
=============================================================================================---------
Number of Units Outstanding 463,651.692,500,808.02
=============================================================================================---------
Net Assets (000's) $ $
- ------------------
5,068 36,439
-------------===================================================----------------=============---------
1995
Beginning Unit Value $ 10.00 $ 9.62
-------------===================================================----------------=============---------
Ending Unit Value $ 9.62 $ 12.86
-------------===================================================----------------=============---------
Number of Units Outstanding 164,201.341,502,634.51
-------------===================================================----------------=============---------
Net Assets (000's) $ $
1,580 19,328
-------------======================================-----------------------------=============---------
1994
Beginning Unit Value $ 10.00
===================================================-------------=============================---------
===================================================-------------=============================---------
Ending Unit Value $ 9.62
===================================================-------------=============================---------
===================================================-------------=============================---------
Number of Units Outstanding 559,313.44
===================================================-------------=============================---------
===================================================-------------=============================---------
Net Assets (000's)
$ 5,380
===================================================-------------=============================---------
</TABLE>
(Concluded)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 1998, 1997 AND 1996
AND INDEPENDENT AUDITORS' REPORT
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY (An indirect
wholly-owned subsidiary of The Great-West Life Assurance Company)
Consolidated Financial Statements for the Years Ended December 31,
1998, 1997, and 1996 and Independent Auditors' Report
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder
of Great-West Life & Annuity Insurance Company:
We have audited the accompanying consolidated balance sheets of Great-West Life
& Annuity Insurance Company (an indirect wholly-owned subsidiary of The
Great-West Life Assurance Company) and subsidiaries as of December 31, 1998 and
1997, and the related consolidated statements of income, stockholder's equity,
and cash flows for each of the three years in the period ended December 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Great-West Life & Annuity Insurance
Company and subsidiaries as of December 31, 1998 and 1997, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1998 in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
January 25, 1999
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(Dollars in Thousands)
<TABLE>
<S> <C> <C>
1998 1997
-------------------- ------------------
ASSETS
INVESTMENTS:
Fixed Maturities:
Held-to-maturity, at amortized cost (fair value
$2,298,936 and $2,151,476) $ 2,199,818 $ 2,082,716
Available-for-sale, at fair value (amortized
cost
$6,752,532 and $6,541,422) 6,936,726 6,698,629
Common stock, at fair value (cost $41,932 and 48,640 39,021
$34,414)
Mortgage loans on real estate, net 1,133,468 1,235,594
Real estate, net 73,042 93,775
Policy loans 2,858,673 2,657,116
Short-term investments, available-for-sale (cost
approximates fair value) 420,169 399,131
-------------------- ------------------
Total Investments 13,670,536 13,205,982
Cash 176,119 126,278
Reinsurance receivable
Related party 5,006 1,950
Other 187,952 82,414
Deferred policy acquisition costs 238,901 255,442
Investment income due and accrued 157,587 165,827
Other assets 311,078 121,543
Premiums in course of collection 84,940 77,008
Deferred income taxes 191,483 193,820
Separate account assets 10,099,543 7,847,451
-------------------- ------------------
TOTAL ASSETS $ 25,123,145 $ 22,077,715
==================== ==================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
1998 1997
------------- ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
POLICY BENEFIT LIABILITIES:
Policy reserves
Related party 555,300 17,774
Other 11,284,414 11,084,945
Policy and contract claims 491,932 375,499
Policyholders' funds 181,779 165,106
Provision for policyholders' dividends 69,530 62,937
GENERAL LIABILITIES:
Due to Parent Corporation 52,877 126,656
Repurchase agreements 244,258 325,538
Commercial paper 39,731 54,058
Other liabilities 761,505 689,967
Undistributed earnings on participating business 143,717 141,865
Separate account liabilities 10,099,543 7,847,451
------------- ------------
Total Liabilities 23,924,586 20,891,796
------------- ------------
COMMITMENTS AND CONTINGENCIES
<TABLE>
<S> <C> <C>
1998 1997
STOCKHOLDER'S EQUITY: ------------- ------------
Preferred stock, $1 par value, 50,000,000 shares authorized
Series A, cumulative, 1,500 shares authorized,
liquidation value of $100,000 per share,
0 and 600 shares issued and outstanding 60,000
Series B, cumulative, 1,500 shares authorized,
liquidation value of $100,000 per share,
0 and 200 shares issued and outstanding 20,000
Series C, cumulative, 1,500 shares authorized,
none outstanding
Series D, cumulative, 1,500 shares authorized,
none outstanding
Series E, non-cumulative, 2,000,000 shares
authorized, liquidation value of $20.90 per share,
0 and 2,000,000 shares issued and outstanding 41,800
Common stock, $1 par value; 50,000,000 shares
authorized; 7,032,000 shares issued and outstanding 7,032 7,032
Additional paid-in capital 699,556 690,748
Accumulated other comprehensive income 61,560 52,807
Retained earnings 430,411 313,532
------------- --------------
Total Stockholder's Equity 1,198,559 1,185,919
------------- --------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY 25,123,145 $ 22,077,715
============= ==============
</TABLE>
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
------------- ------------- -------------
REVENUES:
Premiums
Related party (net of premiums
recaptured totaling $0,
$155,798, and $164,839) $ 46,191 $ 155,798 $ 164,839
Other (net of premiums ceded
totaling $86,409, $61,152, and $60,589) 948,672 677,381 664,610
Fee income 516,052 420,730 347,519
Net investment income
Related party (9,416) (8,957) (26,082)
Other 906,776 890,630 860,719
Net realized gains (losses) on investments 38,173 9,800 (21,078)
------------- ------------- -------------
2,446,448 2,145,382 1,990,527
------------- ------------- -------------
BENEFITS AND EXPENSES:
Life and other policy benefits (net of
reinsurance recoveries totaling $81,205,
$44,871 and $52,675) 768,474 543,903 515,750
Increase in reserves
Related party 46,191 155,798 164,839
Other 78,851 90,013 64,359
Interest paid or credited to contractholders 491,616 527,784 561,786
Provision for policyholders' share of earnings
(losses) on participating business 5,908 3,753 (7)
Dividends to policyholders 71,429 63,799 49,237
------------- ------------- -------------
1,462,469 1,385,050 1,355,964
Commissions 144,246 102,150 106,561
Operating expenses (income):
Related party (4,542) (6,292) 304,599
Other 517,676 431,714 33,435
Premium taxes 30,848 24,153 25,021
------------- ------------- -------------
2,150,697 1,936,775 1,825,580
INCOME BEFORE INCOME TAXES 295,751 208,607 164,947
------------- ------------- -------------
PROVISION FOR INCOME TAXES:
Current 81,770 61,644 45,934
Deferred 17,066 (11,797) (15,562)
------------- ------------- -------------
98,836 49,847 30,372
------------- ------------- -------------
NET INCOME $ 196,915 $ 158,760 $ 134,575
============= ============= =============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Accumulated
Additional Other
Preferred Stock Common Stock Paid-in Comprehensive Retained
-------------------------- -----------------------
Shares Amount Shares Amount Capital Income Earnings Total
------------ ----------- ----------- --------- ------------- ------------- ---------- ------------
BALANCE, JANUARY 1, 1996 2,000,800 121,800 7,032,000 7,032 657,265 58,763 148,261 993,121
Net income 134,575 134,575
Other comprehensive loss (43,812) (43,812)
------------
Total comprehensive income 90,763
------------
Capital contributions 7,000 7,000
Dividends (56,670) (56,670)
------------ ----------- ----------- --------- -------------------------------------- ------------
BALANCE, DECEMBER 31, 1996 2,000,800 121,800 7,032,000 7,032 664,265 14,951 226,166 1,034,214
Net income 158,760 158,760
Other comprehensive income 37,856 37,856
------------
Total comprehensive income 196,616
------------
Capital contributions 26,483 26,483
Dividends (71,394) (71,394)
------------ ----------- ----------- --------- ------------- ------------- ---------- ------------
BALANCE, DECEMBER 31, 1997 2,000,800 121,800 7,032,000 7,032 690,748 52,807 313,532 1,185,919
Net income 196,915 196,915
Other comprehensive income 8,753 8,753
------------
Total comprehensive income 205,668
------------
Capital contributions 8,808 8,808
Dividends (80,036) (80,036)
Purchase of preferred shares (2,000,800) (121,800) (121,800)
------------ ----------- ----------- --------- ------------ -------------- ---------- ------------
BALANCE, DECEMBER 31, 1998 0 0 7,032,000 7,032 699,556 61,560 430,411 1,198,559
============ =========== =========== ========= =========== =============== ========== ============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
87
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
------------- ------------- ------------
OPERATING ACTIVITIES:
Net income $ 196,915 $ 158,760 $ 134,575
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain (loss) allocated to participating
policyholders 5,908 3,753 (7)
Amortization of investments (15,068) 409 15,518
Realized losses (gains) on disposal of
investments and provisions for mortgage
loans and real estate (38,173) (9,800) 21,078
Amortization 55,550 46,929 49,454
Deferred income taxes 17,066 (11,824) (14,658)
Changes in assets and liabilities:
Policy benefit liabilities 938,444 498,114 358,393
Reinsurance receivable (43,643) 112,594 136,966
Accrued interest and other receivables 28,467 30,299 24,778
Other, net (184,536) 64,465 (13,676)
------------- ------------- ------------
Net cash provided by operating activities 960,930 893,699 712,421
------------- ------------- ------------
INVESTING ACTIVITIES:
Proceeds from sales, maturities, and
redemptions of investments:
Fixed maturities
Held-to maturity
Sales 9,920
Maturities and redemptions 471,432 359,021 516,838
Available-for-sale
Sales 6,169,678 3,174,246 3,569,608
Maturities and redemptions 1,268,323 771,737 803,369
Mortgage loans 211,026 248,170 235,907
Real estate 16,456 36,624 2,607
Common stock 3,814 17,211 1,888
Purchases of investments:
Fixed maturities
Held-to-maturity (584,092) (439,269) (453,787)
Available-for-sale (7,410,485) (4,314,722) (4,753,154)
Mortgage loans (100,240) (2,532) (23,237)
Real estate (4,581) (64,205) (15,588)
Common stock (10,020) (29,608) (12,113)
------------- ------------- ------------
Net cash provided by (used in)
investing activities $ 41,231 $ (243,327) $ (127,662)
============= ============= ============
</TABLE>
(Continued)
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
-------------- -------------- -------------
FINANCING ACTIVITIES:
Contract withdrawals, net of deposits $ (507,237) $ (577,538) $ (413,568)
Due to Parent Corporation (73,779) (19,522) 1,457
Dividends paid (80,036) (71,394) (56,670)
Net commercial paper repayments (14,327) (30,624) (172)
Net repurchase agreements (repayments)
borrowings (81,280) 38,802 (88,563)
Capital contributions 8,808 11,000 7,000
Purchase of preferred shares (121,800)
Acquisition of subsidiary (82,669)
-------------- -------------- -------------
-------------- -------------- -------------
Net cash used in financing activities (952,320) (649,276) (550,516)
-------------- -------------- -------------
NET INCREASE IN CASH 49,841 1,096 34,243
CASH, BEGINNING OF YEAR 126,278 125,182 90,939
-------------- -------------- -------------
CASH, END OF YEAR $ 176,119 $ 126,278 $ 125,182
============== ============== =============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the year for:
Income taxes $ 111,493 $ 86,829 $ 103,700
Interest 13,849 15,124 15,414
</TABLE>
See notes to consolidated financial statements. (Concluded)
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1998, 1997,
AND 1996 (Amounts in Thousands, except Share Amounts)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization - Great-West Life & Annuity Insurance Company (the Company)
is an indirect wholly-owned subsidiary of The Great-West Life Assurance
Company (the Parent Corporation). The Company is an insurance company
domiciled in the State of Colorado. The Company offers a wide range of
life insurance, health insurance, and retirement and investment products
to individuals, businesses, and other private and public organizations
throughout the United States.
Basis of Presentation - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The consolidated financial
statements include the accounts of the Company and its subsidiaries. All
material intercompany transactions and balances have been eliminated in
consolidation.
Certain reclassifications, primarily related to the presentation of
related party transactions and the classification of the release of a
contingent liability (see Note 10) have been made to the 1997 and 1996
financial statements.
Investments - Investments are reported as follows:
1. Management determines the classification of fixed maturities at
the time of purchase. Fixed maturities are classified as
held-to-maturity when the Company has the positive intent and
ability to hold the securities to maturity. Held-to-maturity
securities are stated at amortized cost unless fair value is less
than cost and the decline is deemed to be other than temporary,
in which case they are written down to fair value and a new cost
basis is established.
Fixed maturities not classified as held-to-maturity are
classified as available-for-sale. Available-for-sale securities
are carried at fair value, with the net unrealized gains and
losses reported as accumulated other comprehensive income in
stockholder's equity. The net unrealized gains and losses on
derivative financial instruments used to hedge available-for-sale
securities are also included in other comprehensive income.
The amortized cost of fixed maturities classified as
held-to-maturity or available-for-sale is adjusted for
amortization of premiums and accretion of discounts using the
effective interest method over the estimated life of the related
bonds. Such amortization is included in net investment income.
Realized gains and losses, and declines in value judged to be
other-than-temporary are included in net realized gains (losses)
on investments.
2. Mortgage loans on real estate are carried at their unpaid
balances adjusted for any unamortized premiums or discounts and
any valuation reserves. Interest income is accrued on the unpaid
principal balance. Discounts and premiums are amortized to net
investment income using the effective interest method. Accrual of
interest is discontinued on any impaired loans where collection
of interest is doubtful.
The Company maintains an allowance for credit losses at a level
that, in management's opinion, is sufficient to absorb possible
credit losses on its impaired loans and to provide adequate
provision for any possible losses inherent in the loan portfolio.
Management's judgment is based on past loss experience, current
and projected economic conditions, and extensive situational
analysis of each individual loan. The measurement of impaired
loans is based on the fair value of the collateral.
3. Real estate is carried at cost. The carrying value of real estate
is subject to periodic evaluation of recoverability.
4. Investments in common stock are carried at fair value.
5. Policy loans are carried at their unpaid balances.
6. Short-term investments include securities purchased with initial
maturities of one year or less and are carried at amortized cost.
The Company considers short-term investments to be
available-for-sale and amortized cost approximates fair value.
7. Gains and losses realized on disposal of investments are
determined on a specific identification basis.
Cash - Cash includes only amounts in demand deposit accounts.
Deferred Policy Acquisition Costs - Policy acquisition costs, which
primarily consist of sales commissions related to the production of new
and renewal business, have been deferred to the extent recoverable.
Other costs capitalized include expenses associated with the Company's
group sales representatives. These costs are variable in nature and are
dependent upon sales volume. Deferred costs associated with the annuity
products are being amortized over the life of the contracts in
proportion to the emergence of gross profits. Retrospective adjustments
of these amounts are made when the Company revises its estimates of
current or future gross profits. Deferred costs associated with
traditional life insurance are amortized over the premium paying period
of the related policies in proportion to premium revenues recognized.
Amortization of deferred policy acquisition costs totaled $51,724,
$44,298, and $47,089 in 1998, 1997, and 1996, respectively.
Separate Accounts - Separate account assets and related liabilities are
carried at fair value. The Company's separate accounts invest in shares
of Maxim Series Fund, Inc. and Orchard Series Fund, Inc., both
diversified, open-end management investment companies which are
affiliates of the Company, shares of other external mutual funds, or
government or corporate bonds. Investment income and realized capital
gains and losses of the separate accounts accrue directly to the
contractholders and, therefore, are not included in the Company's
statements of income. Revenues to the Company from the separate accounts
consist of contract maintenance fees, administrative fees, and mortality
and expense risk charges.
Life Insurance and Annuity Reserves - Life insurance and annuity policy
reserves with life contingencies of $6,866,478 and $5,741,596 at
December 31, 1998 and 1997, respectively, are computed on the basis of
estimated mortality, investment yield, withdrawals, future maintenance
and settlement expenses, and retrospective experience rating premium
refunds. Annuity contract reserves without life contingencies of
$4,908,964 and $5,346,516 at December 31, 1998 and 1997, respectively,
are established at the contractholder's account value.
Reinsurance - Policy reserves ceded to other insurance companies are
carried as a reinsurance receivable on the balance sheet (see Note 3).
The cost of reinsurance related to long-duration contracts is accounted
for over the life of the underlying reinsured policies using assumptions
consistent with those used to account for the underlying policies.
Policy and Contract Claims - Policy and contract claims include
provisions for reported life and health claims in process of settlement,
valued in accordance with the terms of the related policies and
contracts, as well as provisions for claims incurred and unreported
based primarily on prior experience of the Company.
Participating Fund Account - Participating life and annuity policy
reserves are $4,108,314 and $3,901,297 at December 31, 1998 and 1997,
respectively. Participating business approximates 32.7% and 50.5% of the
Company's ordinary life insurance in force and 71.9% and 91.1% of
ordinary life insurance premium income at December 31, 1998 and 1997,
respectively.
The amount of dividends to be paid from undistributed earnings on
participating business is determined annually by the Board of Directors.
Amounts allocable to participating policyholders are consistent with
established Company practice.
The Company has established a Participating Policyholder Experience
Account (PPEA) for the benefit of all participating policyholders which
is included in the accompanying consolidated balance sheet. Earnings
associated with the operation of the PPEA are credited to the benefit of
all participating policyholders. In the event that the assets of the
PPEA are insufficient to provide contractually guaranteed benefits, the
Company must provide such benefits from its general assets.
The Company has also established a Participation Fund Account (PFA) for
the benefit of the participating policyholders previously transferred to
the Company from the Parent under an assumption reinsurance transaction.
The PFA is part of the PPEA. Earnings derived from the operation of the
PFA net of a management fee paid to the Company accrue solely for the
benefit of the acquired participating policyholders.
Recognition of Premium and Fee Income and Benefits and Expenses - Life
insurance premiums are recognized when due. Annuity premiums with life
contingencies are recognized as received. Accident and health premiums
are earned on a monthly pro rata basis. Revenues for annuity and other
contracts without significant life contingencies consist of contract
charges for the cost of insurance, contract administration, and
surrender fees that have been assessed against the contract account
balance during the period. Fee income is derived primarily from
contracts for claim processing or other administrative services and from
assets under management. Fees from contracts for claim processing or
other administrative services are recorded as the services are provided.
Fees from assets under management, which consist of contract maintenance
fees, administration fees and mortality and expense risk changes, are
recognized when due. Benefits and expenses on policies with life
contingencies impact premium income by means of the provision for future
policy benefit reserves, resulting in recognition of profits over the
life of the contracts. The average crediting rate on annuity products
was approximately 6.3%, 6.6%, and 6.8% in 1998, 1997, and 1996.
Income Taxes - Income taxes are recorded using the asset and liability
approach, which requires, among other provisions, the recognition of
deferred tax assets and liabilities for expected future tax consequences
of events that have been recognized in the Company's financial
statements or tax returns. In estimating future tax consequences, all
expected future events (other than the enactments or changes in the tax
laws or rules) are considered. Although realization is not assured,
management believes it is more likely than not that the deferred tax
asset, net of a valuation allowance, will be realized.
Repurchase Agreements and Securities Lending - The Company enters into
repurchase agreements with third-party broker/dealers in which the
Company sells securities and agrees to repurchase substantially similar
securities at a specified date and price. Such agreements are accounted
for as collateralized borrowings. Interest expense on repurchase
agreements is recorded at the coupon interest rate on the underlying
securities. The repurchase fee received or paid is amortized over the
term of the related agreement and recognized as an adjustment to
investment income.
The Company requires collateral in an amount greater than or equal to
102% of the borrowing for all securities lending transactions.
The Company implemented Statement of Financial Accounting Standards
(SFAS) No. 125 "Accounting for Transfer and Servicing of Financial
Assets and Extinguishments of Liabilities" in 1998 as it relates to
repurchase agreements and securities lending arrangements. The
implementation of this statement had no material effect on the Company's
financial statements.
Derivatives - The Company makes limited use of derivative financial
instruments to manage interest rate, market, and foreign exchange risk.
Such hedging activity consists of interest rate swap agreements,
interest rate floors and caps, foreign currency exchange contracts and
equity swaps. The differential paid or received under the terms of these
contracts is recognized as an adjustment to net investment income on the
accrual method. Gains and losses on foreign exchange contracts are
deferred and recognized in net investment income when the hedged
transactions are realized.
Interest rate swap agreements are used to convert the interest rate on
certain fixed maturities from a floating rate to a fixed rate. Interest
rate swap transactions generally involve the exchange of fixed and
floating rate interest payment obligations without the exchange of the
underlying principal amount. Interest rate floors and caps are interest
rate protection instruments that require the payment by a counter-party
to the Company of an interest rate differential. The differential
represents the difference between current interest rates and an
agreed-upon rate, the strike rate, applied to a notional principal
amount. Foreign currency exchange contracts are used to hedge the
foreign exchange rate risk associated with bonds denominated in other
than U.S. dollars. Equity swap transactions generally involve the
exchange of variable market performance of a basket of securities for a
fixed interest rate.
Although derivative financial instruments taken alone may expose the
Company to varying degrees of market and credit risk when used solely
for hedging purposes, these instruments typically reduce overall market
and interest rate risk. The Company controls the credit risk of its
financial contracts through credit approvals, limits, and monitoring
procedures. As the Company generally enters into transactions only with
high quality institutions, no losses associated with non-performance on
derivative financial instruments have occurred or are expected to occur.
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133 "Accounting
for Derivative Instruments and for Hedging Activities". This Statement
provides a comprehensive and consistent standard for the recognition and
measurement of derivatives and hedging activities. This Statement is
effective for the Company beginning January 1, 2000, and earlier
adoption is encouraged. The Company has not adopted this Statement as of
December 31, 1998. Management has not determined the impact of the
Statement on the Company's financial position or results of operations.
Stock Options - In October 1995, the FASB issued SFAS No. 123,
"Accounting for Stock-Based Compensation", which was effective for the
Company beginning January 1, 1996. This Statement requires expanded
disclosures of stock-based compensation arrangements with employees and
encourages (but does not require) compensation cost to be measured based
on the fair value of the equity instrument awarded. Companies are
permitted, however, to continue to apply APB Opinion No. 25, which
recognizes compensation cost based on the intrinsic value of the equity
instrument awarded. The Company has continued to apply APB Opinion No.
25 to stock-based compensation awards to employees and has disclosed the
required pro forma effect on net income (see Note 13).
2. ACQUISITION
On July 8, 1998, the Company paid $82,669 in cash to acquire all of the
outstanding shares of Anthem Health & Life Insurance Company (AH&L). The
purchase price was based on AH&L's adjusted book value, and is subject
to further minor adjustments. The results of AH&L's operations, which
had an insignificant effect on net income, have been combined with those
of the Company since the date of acquisition.
The acquisition was accounted for using the purchase method of
accounting and, accordingly, the purchase price was allocated to the net
assets acquired based on their estimated fair values. The fair value of
tangible assets acquired and liabilities assumed was $379,934 and
$317,440, respectively. The balance of the purchase price, $20,175, was
recorded as excess cost over net assets acquired (goodwill) and is being
amortized over 30 years on a straight-line basis. Management intends to
finalize its allocation of the purchase price within a year of the
transaction, which will likely result in a reallocation of the purchase
price, which is not expected to be material.
3. RELATED-PARTY TRANSACTIONS
On December 31, 1998, the Company and the Parent Corporation entered
into an Indemnity Reinsurance Agreement pursuant to which the Company
reinsured by coinsurance certain Parent Corporation individual
non-participating life insurance policies. The Company recorded $859 in
premium income and an increase in reserves, associated with certain
policies, as a result of this transaction. Of the $137,638 in reserves
that were recorded as a result of this transaction, $136,779 was
recorded under SFAS No. 97, "Accounting and Reporting by Insurance
Enterprises for Certain Long-Duration Contracts and for Realized Gains
and Losses from the Sale of Investments" ("SFAS No. 97"), accounting
principles. The Company recorded, at the Parent Corporation's carrying
amount, which approximates estimated fair value, the following at
December 31, 1998 as a result of this transaction:
Assets Liabilities and Stockholder's Equity
Cash 24,600 Policy reserves 137,638
Deferred income taxes 3,816
Policy loans 82,649
Due from Parent Corporation 19,753
Other 6,820
----------- -----------
137,638 137,638
In connection with this transaction, the Parent Corporation made a
capital contribution of $5,608 to the Company.
On September 30, 1998, the Company and the Parent Corporation entered
into an Indemnity Reinsurance Agreement pursuant to which the Company
reinsured by coinsurance certain Parent Corporation individual
non-participating life insurance policies. The Company recorded $45,332
in premium income and an increase in reserves as a result of this
transaction. Of the $428,152 in reserves that were recorded as a result
of this transaction, $382,820 was recorded under SFAS No. 97 accounting
principles. The Company recorded, at the Parent Corporation's carrying
amount, which approximates estimated fair value, the following at
September 30, 1998 as a result of this transaction:
Assets Liabilities and Stockholder's Equity
<TABLE>
<S> <C> <C>
Bonds $ 147,475 Policy reserves $ 428,152
Mortgages 82,637 Due to Parent Corporation 20,820
Cash 134,900
Deferred policy acquisition 9,724
costs
Deferred income taxes 15,762
Policy loans 56,209
Other 2,265
---------- -----------
$ 448,972 $ 448,972
</TABLE>
In connection with this transaction, the Parent Corporation made a
capital contribution of $3,200 to the Company.
On September 30, 1998, the Company purchased furniture, fixtures and
equipment from the Parent Corporation for $25,184. In February 1997, the
Company purchased the corporate headquarters properties from the Parent
Corporation for $63,700.
On June 30, 1997, the Company recaptured all remaining pieces of an
individual participating insurance block of business previously
reinsured to the Parent Corporation on December 31, 1992. The Company
recorded $155,798 in premium income and an increase in reserves as a
result of this transaction. The Company recorded, at the Parent
Corporation's carrying amount, which approximates estimated fair value,
the following at June 30, 1997 as a result of this transaction:
Assets Liabilities and Stockholder's Equity
Cash 160,000 Policy reserves 155,798
Bonds 17,975 Due to Parent Corporation 20,373
Other 60 Deferred income taxes 2,719
Undistributed earnings on
participating business (855)
----------- ---------------
178,035 178,035
In connection with this transaction, the Parent Corporation made a
capital contribution of $11,000 to the Company.
On October 31, 1996, the Company recaptured certain pieces of an
individual participating insurance block of business previously
reinsured to the Parent Corporation on December 31, 1992. The Company
recorded $164,839 in premium income and an increase in reserves as a
result of this transaction. The Company recorded, at the Parent
Corporation's carrying amount, which approximates estimated fair value,
the following at October 31, 1996 as a result of this transaction:
Assets Liabilities and Stockholder's Equity
Cash 162,000 Policy reserves 164,839
Mortgages 19,753 Due to Parent Corporation 16,180
Other 118 Deferred income taxes 1,283
Undistributed earnings on
participating business (431)
------------ --------------
181,871 181,871
In connection with this transaction, the Parent Corporation made a
capital contribution of $7,000 to the Company.
Effective January 1, 1997, all employees of the U.S. operations of the
Parent Corporation and the related benefit plans were transferred to the
Company. All related employee benefit plan assets and liabilities were
also transferred to the Company (see Note 9). The transfer did not have
a material effect on the Company's operating expenses as the actual
costs associated with the employees and the benefit plans were charged
previously to the Company under administrative service agreements
between the Company and the Parent Corporation.
Prior to January 1997, the Parent Corporation administered, distributed,
and underwrote business for the Company and administered the Company's
investment portfolio under various administrative agreements. Since
January 1, 1997, the Company has performed these services for the U.S.
operations of the Parent Corporation. The following represents revenue
from or payments made to the Parent Corporation for services provided
pursuant to these service agreements. The amounts recorded are based
upon management's best estimate of actual costs incurred and resources
expended based upon number of policies and/or certificates in force.
<TABLE>
Years Ended December 31,
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------
1998 1997 1996
------------ ------------ ------------
Investment management revenue (expense) $ 475 $ 801 $ (14,800)
Administrative and underwriting revenue
(payments) 4,542 6,292 (304,599)
</TABLE>
At December 31, 1998 and 1997, due to Parent Corporation includes
$17,930 and $8,957 due on demand and $34,947 and $117,699 of notes
payable which bear interest and mature at various dates through June 15,
2008. These notes may be prepaid in whole or in part at any time without
penalty; the issuer may not demand payment before the maturity date. The
amounts due on demand to the Parent Corporation bear interest at the
public bond rate (6.1% and 7.1% at December 31, 1998 and 1997,
respectively) while the remainder bear interest at various rates ranging
from 5.4% to 6.6%. Interest expense attributable to these payables was
$9,891, $9,758, and $11,282 for the years ended December 31, 1998, 1997
and 1996, respectively.
4. REINSURANCE
In the normal course of business, the Company seeks to limit its
exposure to loss on any single insured and to recover a portion of
benefits paid by ceding risks to other insurance enterprises under
excess coverage and co-insurance contracts. The Company retains a
maximum of $1.5 million of coverage per individual life.
Reinsurance contracts do not relieve the Company from its obligations to
policyholders. Failure of reinsurers to honor their obligations could
result in losses to the Company. The Company evaluates the financial
condition of its reinsurers and monitors concentrations of credit risk
arising from similar geographic regions, activities, or economic
characteristics of the reinsurers to minimize its exposure to
significant losses from reinsurer insolvencies. At December 31, 1998 and
1997, the reinsurance receivable had a carrying value of $192,958 and
$84,364, respectively.
The following schedule details life insurance in force and life and
accident/health premiums:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ceded Assumed Percentage
Primarily to Primarily of Amount
Gross the Parent from Other Net Assumed
Amount Corporation Companies Amount to Net
------------- ------------- ------------- ------------- ------------
December 31, 1998:
Life insurance in force:
Individual $ 34,017,379 $ 4,785,079 $ 8,948,442 $ 38,180,742 23.44%
Group 81,907,539 2,213,372 84,120,911 2.63%
============= ============= ============= =============
Total $ 115,924,918 $ 4,785,079 $ 11,161,814 $ 122,301,653
============= ============= ============= =============
Premium Income:
Life $ 352,710 $ 24,720 $ 65,452 $ 393,442 16.6%
insurance
571,992 61,689 74,284 584,587 12.7%
Accident/health
============= ============= ============= =============
Total $ 924,702 $ 86,409 $ 139,736 $ 978,029
============= ============= ============= =============
December 31, 1997:
Life insurance in force:
Individual $ 24,598,679 $ 4,040,398 $ 3,667,235 $ 24,225,516 15.1%
Group 51,179,343 2,031,477 53,210,820 3.8%
============= ============= ============= =============
Total $ 75,778,022 $ 4,040,398 $ 5,698,712 $ 77,436,336
============= ============= ============= =============
Premium Income:
Life $ 320,456 $ (127,388) $ 19,923 $ 467,767 4.1%
insurance
341,837 32,645 34,994 344,186 10.0%
Accident/health
============= ============= ============= =============
Total $ 662,293 $ (94,743) $ 54,917 $ 811,953
============= ============= ============= =============
December 31, 1996:
Life insurance in force:
Individual $ 23,409,823 $ 5,246,079 $ 3,482,118 $ 21,645,862 16.1%
Group 47,682,237 1,817,511 49,499,748 3.7%
============= ============= ============= =============
Total $ 71,092,060 $ 5,246,079 $ 5,299,629 $ 71,145,610
============= ============= ============= =============
Premium Income:
Life $ 307,516 $ (111,743) $ 19,633 $ 438,892 4.2%
insurance
339,284 7,493 34,242 366,033 9.4%
Accident/health
============= ============= ============= =============
Total $ 646,800 $ (104,250) $ 53,875 $ 804,925
============= ============= ============= =============
</TABLE>
<PAGE>
5. NET INVESTMENT INCOME AND NET REALIZED GAINS (LOSSES) ON INVESTMENTS
Net investment income is summarized as follows:
<TABLE>
Years Ended December 31,
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------
1998 1997 1996
------------- ------------- -------------
Investment income:
Fixed maturities and short-term $ 638,079 $ 633,975 $ 601,913
investments
Mortgage loans on real estate 110,170 118,274 140,823
Real estate 20,019 20,990 5,292
Policy loans 180,933 194,826 175,746
Other 285 18 1,316
------------- ------------- -------------
949,486 968,083 925,090
Investment expenses, including interest
on
amounts charged by the Parent 52,126 86,410 90,453
Corporation
of $9,891, $9,758, and $11,282
------------- ------------- -------------
Net investment income $ 897,360 $ 881,673 $ 834,637
============= ============= =============
Net realized gains (losses) on investments are as follows:
Years Ended December 31,
-------------------------------------------
1998 1997 1996
------------- ------------ --------------
Realized gains (losses):
Fixed maturities $ 38,391 $ 15,966 $ (11,624)
Mortgage loans on real estate 424 1,081 1,143
Real estate 363
Provisions (642) (7,610) (10,597)
============= ============ ==============
Net realized gains (losses) on investment $ 38,173 $ 9,800 $ (21,078)
============= ============ ==============
<PAGE>
6. SUMMARY OF INVESTMENTS
Fixed maturities owned at December 31, 1998 are summarized as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
----------- ------------ ----------- ----------- -----------
Held-to-Maturity:
U.S. Treasury
Securities
and obligations of $ 34,374 $ 1,822 $ $ 36,196 $ 34,374
U.S.
Government Agencies
Collateralized mortgage
obligations 194
10,135 9,941 10,135
Public utilities 213,256 12,999 460 225,795 213,256
Corporate bonds 1,809,957 78,854 3,983 1,884,828 1,809,957
Foreign governments 782
10,133 10,915 10,133
State and 121,963 9,298 131,261 121,963
municipalities
----------- ------------ ----------- ----------- -----------
$ 2,199,818 $ 103,755 $ 4,637 $ 2,298,936 $ 2,199,818
=========== ============ ========= =========== ===========
Available-for-Sale:
U.S. Treasury
Securities
and obligations of
U.S.
Government Agencies:
Collateralized
mortgage
obligations $ 863,479 $ 39,855 $ 1,704 $ 901,630 $ 901,630
Direct mortgage
pass-
through 467,100 4,344 692 470,752 470,752
certificates
Other 191,138 1,765 788 192,115 192,115
Collateralized mortgage
obligations 926,797 16,260 1,949 941,108 941,108
Public utilities 464,096 14,929 36 478,989 478,989
Corporate bonds 3,557,209 123,318 17,420 3,663,107 3,663,107
Foreign governments 2,732
56,505 59,237 59,237
State and 226,208 4,588 1,008 229,788 229,788
municipalities
----------- ------------ ----------- ----------- -----------
$ 6,752,532 $ 207,791 $ 23,597 $ 6,936,726 $ 6,936,726
=========== ============ =========== =========== ===========
Fixed maturities owned at December 31, 1997 are summarized as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
----------- ------------ ------------ ----------- -----------
Held-to-Maturity:
U.S. Treasury
Securities
and obligations of
U.S.
Government Agencies $ $ 1,186 $ 25 $ $
25,883 27,044 25,883
Collateralized
mortgage
obligations 174
5,006 5,180 5,006
Public utilities 11,214 3 256,605 245,394
245,394
Corporate bonds 1,668,710 57,036 3,069 1,722,677 1,668,710
Foreign governments 659
10,268 10,927 10,268
State and 1,588 129,043 127,455
municipalities 127,455
----------- ------------ ------------ ----------- -----------
$ 2,082,716 $ 71,857 $ 3,097 $ 2,151,476 $ 2,082,716
=========== ============ ============ =========== ===========
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
------------ ----------- ----------- ----------- -----------
Available-for-Sale:
U.S. Treasury Securities
and obligations of
U.S.
Government Agencies:
Collateralized
mortgage
obligations $ $ 17,339 $ 310 $ 670,004 $ 670,004
652,975
Direct mortgage
pass-
through 7,911 2,668 922,459 922,459
certificates 917,216
Other 1,794 244 298,887 298,887
297,337
Collateralized mortgage
obligations 19,494 1,453 700,199 700,199
682,158
Public utilities 8,716 1,320 556,831 556,831
549,435
Corporate bonds 3,265,039 107,740 4,350 3,368,429 3,368,429
Foreign governments 4,115 60 135,641 135,641
131,586
State and municipalities 503 46,179 46,179
45,676
------------ ----------- ----------- ----------- -----------
$ 6,541,422 $ 167,612 $ 10,405 $ 6,698,629 $ 6,698,629
============ =========== =========== =========== ===========
</TABLE>
The collateralized mortgage obligations consist primarily of sequential
and planned amortization classes with final stated maturities of two to
thirty years and average lives of less than one to fifteen years.
Prepayments on all mortgage-backed securities are monitored monthly and
amortization of the premium and/or the accretion of the discount
associated with the purchase of such securities is adjusted by such
prepayments.
See Note 8 for additional information on policies regarding estimated fair
value of fixed maturities.
The amortized cost and estimated fair value of fixed maturity investments
at December 31, 1998, by projected maturity, are shown below. Actual
maturities will likely differ from these projections because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.
Held-to-Maturity Available-for-Sale
------------------------------ --------- --------------
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
------------- -------------- ------------ --------------
Due in one year or less 316,174 321,228 235,842 252,067
Due after one year
through five years 925,016 961,592 1,279,123 1,309,202
Due after five years
through ten years 675,444 722,685 769,278 803,498
Due after ten years 130,480 138,119 449,273 457,785
Mortgage-backed
securities 10,135 9,941 2,257,376 2,313,490
Asset-backed securities 142,569 145,371 1,761,640 1,800,684
============= ============== ============= =============
2,199,818 2,298,936 6,752,532 6,936,726
============= ============== ============= =============
Proceeds from sales of securities available-for-sale were $6,169,678,
$3,174,246, and $3,569,608 during 1998, 1997, and 1996, respectively. The
realized gains on such sales totaled $41,136, $20,543, and $24,919 for
1998, 1997, and 1996, respectively. The realized losses totaled $8,643,
$10,643, and $40,748 for 1998, 1997, and 1996, respectively. During the
years 1998, 1997, and 1996 held-to-maturity securities with an amortized
cost of $9,920, $0, and $0 were sold due to credit deterioration with
insignificant gains and losses.
At December 31, 1998 and 1997, pursuant to fully collateralized securities
lending arrangements, the Company had loaned $115,168 and $162,817 of
fixed maturities, respectively.
The Company engages in hedging activities to manage interest rate and
exchange risk. The following table summarizes the 1998 financial hedge
instruments:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Notional Strike/Swap
December 31, 1998 Amount Rate Maturity
------------------------ -------------- ------------------------- ---------------------
Interest Rate Floor $ 100,000 4.50% (LIBOR) 11/99
Interest Rate Caps 1,070,000 6.75% - 11.82% (CMT) 12/99 - 10/03
Interest Rate Swaps 242,451 4.95% - 9.35% 08/99 - 02/03
Foreign Currency
Exchange Contracts 34,123 N/A 05/99 - 07/06
Equity Swap 95,652 4.00% 12/99
The following table summarizes the 1997 financial hedge instruments:
Notional Strike/Swap
December 31, 1997 Amount Rate Maturity
------------------------ -------------- -------------------------- ---------------------
Interest Rate Floor $ 100,000 4.5% (LIBOR) 1999
Interest Rate Caps 565,000 6.75% - 11.82% (CMT) 1999 - 2002
Interest Rate Swaps 212,139 6.20% - 9.35% 01/98 - 02/03
Foreign Currency
Exchange Contracts 57,168 N/A 09/98 - 07/06
Equity Swap 100,000 5.64% 12/98
</TABLE>
LIBOR - London Interbank Offered Rate
CMT - Constant Maturity Treasury Rate
The Company has established specific investment guidelines designed to
emphasize a diversified and geographically dispersed portfolio of
mortgages collateralized by commercial and industrial properties located
in the United States. The Company's policy is to obtain collateral
sufficient to provide loan-to-value ratios of not greater than 75% at the
inception of the mortgages. At December 31, 1998, approximately 33% of the
Company's mortgage loans were collateralized by real estate located in
California.
The following represents impairments and other information with respect to
impaired loans:
<TABLE>
<S> <C> <C>
1998 1997
--------------- -------------
Loans with related allowance for credit losses of
$2,492 and $2,493 $ 13,192 $ 13,193
Loans with no related allowance for credit losses 10,420 20,013
Average balance of impaired loans during the year 31,193 37,890
Interest income recognized (while impaired) 2,308 2,428
Interest income received and recorded (while impaired)
using the cash basis method of recognition 2,309 2,484
</TABLE>
As part of an active loan management policy and in the interest of
maximizing the future return of each individual loan, the Company may from
time to time modify the original terms of certain loans. These
restructured loans, all performing in accordance with their modified terms
that are not impaired, aggregated $52,913 and $64,406 at December 31, 1998
and 1997, respectively.
<PAGE>
The following table presents changes in allowance for credit losses:
1998 1997 1996
------------- ------------- --------------
Balance, beginning of year 67,242 65,242 63,994
Provision for loan losses 642 4,521 4,470
Chargeoffs (787) (2,521) (3,468)
Recoveries 145 246
============= ============= ==============
Balance, end of year 67,242 67,242 65,242
============= ============= ==============
7. COMMERCIAL PAPER
The Company has a commercial paper program that is partially supported by
a $50,000 standby letter-of-credit. At December 31, 1998, commercial paper
outstanding had maturities ranging from 69 to 118 days and interest rates
ranging from 5.10% to 5.22%. At December 31, 1997, maturities ranged from
41 to 99 days and interest rates ranged from 5.6% to 5.8%.
8. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
<TABLE>
December 31,
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------
1998 1997
---------------------------- ----------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
------------ ------------- ------------- -------------
ASSETS:
Fixed maturities and
short-term investments $ 9,556,713 $ 9,655,831 $ 9,180,476 $ 9,249,235
Mortgage loans on real
estate 1,133,468 1,160,568 1,235,594 1,261,949
Policy loans 2,858,673 2,858,673 2,657,116 2,657,116
Common stock 48,640 48,640 39,021 39,021
LIABILITIES:
Annuity contract reserves
without life contingencies 4,908,964 4,928,800 5,346,516 5,373,818
Policyholders' funds 181,779 181,779 165,106 165,106
Due to Parent Corporation 52,877 52,877 126,656 124,776
Repurchase agreements 244,258 244,258 325,538 325,538
Commercial paper 39,731 39,731 54,058 54,058
HEDGE CONTRACTS:
Interest rate floor 17 17 25 25
Interest rate caps 971 971 130 130
Interest rate swaps 6,125 6,125 4,265 4,265
Foreign currency exchange
contracts 689 689 3,381 3,381
Equity swap (8,150) (8,150) 856 856
</TABLE>
The estimated fair value of financial instruments have been determined
using available information and appropriate valuation methodologies.
However, considerable judgement is necessarily required to interpret
market data to develop estimates of fair value. Accordingly, the estimates
presented are not necessarily indicative of the amounts the Company could
realize in a current market exchange. The use of different market
assumptions and/or estimation methodologies may have a material effect on
the estimated fair value amounts.
The estimated fair value of fixed maturities that are publicly traded are
obtained from an independent pricing service. To determine fair value for
fixed maturities not actively traded, the Company utilized discounted cash
flows calculated at current market rates on investments of similar quality
and term.
Mortgage loans fair value estimates generally are based on a discounted
cash flow basis. A discount rate "matrix" is incorporated whereby the
discount rate used in valuing a specific mortgage generally corresponds to
that mortgage's remaining term. The rates selected for inclusion in the
discount rate "matrix" reflect rates that the Company would quote if
placing loans representative in size and quality to those currently in the
portfolio.
Policy loans accrue interest generally at variable rates with no fixed
maturity dates and, therefore, estimated fair value approximates carrying
value.
The fair value of annuity contract reserves without life contingencies is
estimated by discounting the cash flows to maturity of the contracts,
utilizing current crediting rates for similar products.
The estimated fair value of policyholders' funds is the same as the
carrying amount as the Company can change the crediting rates with 30 days
notice.
The estimated fair value of due to Parent Corporation is based on
discounted cash flows at current market spread rates on high quality
investments.
The carrying value of repurchase agreements and commercial paper is a
reasonable estimate of fair value due to the short-term nature of the
liabilities.
The estimated fair value of financial hedge instruments, all of which are
held for other than trading purposes, is the estimated amount the Company
would receive or pay to terminate the agreement at each year-end, taking
into consideration current interest rates and other relevant factors.
Included in the net gain position for interest rates swaps are $0 of
unrealized losses in 1998 and 1997. Included in the net gain position for
foreign currency exchange contracts are $932 and $0 of loss exposures in
1998 and 1997, respectively.
9. EMPLOYEE BENEFIT PLANS
Effective January 1, 1997, all employees of the U.S. operations of the
Parent Corporation and the related benefit plans were transferred to the
Company. See Note 3 for further discussion.
The Company's Parent had previously accounted for the pension plan under
the Canadian Institute of Chartered Accountants (CICA) guidelines and had
recorded a prepaid pension asset of $19,091. As U.S. generally accepted
accounting principles do not materially differ from these CICA guidelines
and the transfer was between related parties, the prepaid pension asset
was transferred at carrying value. As a result, the Company recorded the
following effective January 1, 1997:
Prepaid pension cost 19,091 Undistributed earnings on 3,608
participating business
Stockholder's equity 15,483
------------ -----------
19,091 19,091
The following table summarizes changes from 1997 to 1998 and from 1996 to
1997, in the benefit obligations and in plan assets for the Company's
defined benefit pension plan and post-retirement medical plan. There is no
additional minimum pension liability required to be recognized. There were
no amendments to the plans due to the acquisition of AH&L.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Post-Retirement
Pension Benefits Medical Plan
------------------------- ------------------------
1998 1997 1998 1997
----------- ------------ ----------- -----------
Change in benefit obligation
Benefit obligation at beginning of $ 115,057 $ 96,417 $ 19,454 $ 16,160
year
Service cost 6,834 5,491 1,365 1,158
Interest cost 7,927 7,103 1,341 1,191
Actuarial gain (loss) 5,117 9,470 (1,613) 1,500
Benefits paid (3,630) (3,424) (603) (555)
----------- ------------ ----------- -----------
Benefit obligation at end of year 131,305 115,057 19,944 19,454
----------- ------------ ----------- -----------
Change in plan assets
Fair value of plan assets at
beginning of year 162,879 138,221
Actual return on plan assets 23,887 28,082
Benefits paid (3,630) (3,424)
----------- ------------ ----------- -----------
Fair value of plan assets at end of
year 183,136 162,879
----------- ------------ ----------- -----------
Funded status 51,831 47,822 (19,944) (19,454)
Unrecognized net actuarial loss (11,405) (6,326) (113) 1,500
Unrecognized net obligation or
(asset)
at transition (19,684) (21,198) 14,544 15,352
=========== ============ =========== ===========
Prepaid (accrued) benefit cost $ 20,742 $ 20,298 $ (5,513) $ (2,602)
=========== ============ =========== ===========
Weighted-average assumptions as of
December 31
Discount rate 6.50% 7.00% 6.50% 7.00%
Expected return on plan assets 8.50% 8.50% 8.50% 8.50%
Rate of compensation increase 4.00% 4.50% 4.00% 4.50%
Components of net periodic
benefit cost
Service cost $ 6,834 $ 5,491 $ 1,365 $ 1,158
Interest cost 7,927 7,103 1,341 1,191
Expected return on plan assets (13,691) (12,286)
Amortization of transition (1,514) (1,514) 808 808
obligation
----------- ----------- ---------- ----------
=========== =========== ========== ==========
Net periodic (benefit) cost $ (444) $ (1,206) $ 3,514 $ 3,157
=========== =========== ========== ==========
</TABLE>
The Company-sponsored post-retirement medical plan (medical plan) provides
health benefits to employees. The medical plan is contributory and
contains other cost sharing features, which may be adjusted annually for
the expected general inflation rate. The Company's policy will be to fund
the cost of the medical plan benefits in amounts determined at the
discretion of management.
<PAGE>
Assumed health care cost trend rates have a significant effect on the amounts
reported for the medical plan. For measurement purposes, a 6.5% annual
rate of increase in the per capita cost of covered health care benefits
was assumed. A one-percentage-point change in assumed health care cost
trend rates would have the following effects:
1-Percentage 1-Percentage
Point Point
Increase Decrease
-------------- ----------------
Effect on total of service and interest cost
on components 649 1,140
Effect on post-retirement benefit obligation 4,129 3,098
The Company sponsors a defined contribution 401(k) retirement plan which
provides eligible participants with the opportunity to defer up to 15% of
base compensation. The Company matches 50% of the first 5% of participant
pre-tax contributions. Company contributions for the years ended December
31, 1998 and 1997 totaled $3,915 and $3,475, respectively.
The Company has a deferred compensation plan providing key executives with
the opportunity to participate in an unfunded, deferred compensation
program. Under the program, participants may defer base compensation and
bonuses, and earn interest on their deferred amounts. The program is not
qualified under Section 401 of the Internal Revenue Code. The total of
participant deferrals, which is reflected in other liabilities, was
$16,102 and $13,952 at December 31, 1998 and 1997, respectively. The
participant deferrals earn interest at a rate based on the average 10-year
composite government securities rate plus 1.5%. The interest expense
related to this plan was $1,185 and $1,019 in 1998 and 1997, respectively.
The Company also provides a supplemental executive retirement plan (SERP)
to certain key executives. This plan provides key executives with certain
benefits upon retirement, disability, or death based upon total
compensation. The Company has purchased individual life insurance policies
with respect to each employee covered by this plan. The Company is the
owner and beneficiary of the insurance contracts. The incremental expense
for this plan for 1998 and 1997 was $2,840 and $2,531, respectively. The
total liability of $9,349 and $6,509 as of December 31, 1998 and 1997 is
included in other liabilities.
10. FEDERAL INCOME TAXES
The following is a reconciliation between the federal income tax rate and
the Company's effective rate after giving effect to the reclassifications
discussed below:
1998 1997 1996
----------- ----------- ---------
Federal tax rate 35.0 % 35.0 % 35.0 %
Change in tax rate resulting from:
Settlement of Parent tax exposures (20.2) (18.9)
Provision for contingencies 7.7 3.4
Prior year tax adjustment (1.5) 0.5 (1.4)
Other, net (0.1) 0.9 0.3
=========== =========== =========
Total 33.4 % 23.9 % 18.4 %
=========== =========== =========
The Company's income tax provision was favorably impacted in 1997 and 1996
by releases of contingent liabilities relating to taxes of the Parent
Corporation's U.S. branch associated with blocks of business that were
transferred from the Parent Corporation's U.S. branch to the Company from
1989 to 1993; the Company had agreed to the transfer of these tax
liabilities as part of the transfer of this business. The releases
recorded in 1997 and 1996 reflected the resolution of certain tax issues
with the Internal Revenue Service (IRS) relating to the 1990-1991 and
1988-1989 audit years, respectively. The releases totaled $42,150 for 1997
and $31,200 for 1996; however, $15,100 of the release in 1997 was
attributable to participating policyholders and therefore had no effect on
the net income of the Company since that amount was credited to the
provision for policyholders' share of earnings (losses).
The 1997 and 1996 releases were recorded in revenues in the Company's
prior financial statements, but have been reclassified in the accompanying
consolidated financial statements as a component of the current income tax
provisions for those years.
In addition to these releases of contingent tax liabilities, the Company's
income tax provisions for 1997 and 1996 also reflect increases for other
contingent items relating to open tax years where the Company determined
it was probable that additional taxes could be owed based on changes in
facts and circumstances. The increase in 1997 was $16,000, of which
$10,100 was attributable to participating policyholders and therefore had
no effect on the net income of the Company. The increase in 1996 was
$5,600. These increases in contingent tax liabilities have been reflected
as a component of the deferred income tax provisions for 1997 and 1996 as
the Company does not expect near term resolution of these contingencies.
Excluding the effect of the 1997 and 1996 tax items discussed above, the
effective tax rates for 1997 and 1996 were 34.1% and 33.9%, respectively.
Temporary differences which give rise to the deferred tax assets and
liabilities as of December 31, 1998 and 1997 are as follows:
<TABLE>
<S> <C> <C>
1998 1997
--------------------------- -------------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Asset Liability Asset Liability
------------- ------------ ------------ -----------
Policyholder reserves 143,244 159,767
Deferred policy acquisition costs 39,933 47,463
Deferred acquisition cost proxy
tax 100,387 79,954
Investment assets 19,870 5,574
Net operating loss carryforwards 2,867 9,427
Other 6,566 1,279
------------- ------------ ------------ -----------
Subtotal 253,064 59,803 250,427 53,037
Valuation allowance (1,778) (3,570)
============= ============ ============ ===========
Total Deferred Taxes 251,286 59,803 246,857 53,037
============= ============ ============ ===========
</TABLE>
Amounts included in investment assets above include $34,556 and $30,085
related to the unrealized gains on the Company's fixed maturities
available-for-sale at December 31, 1998 and 1997, respectively.
The Company files a separate tax return and, therefore, losses incurred by
subsidiaries cannot be offset against operating income of the Company. At
December 31, 1998, the Company's subsidiaries had approximately $8,193 of
net operating loss carryforwards, expiring through the year 2011. The tax
benefit of subsidiaries' net operating loss carryforwards, net of a
valuation allowance of $0 and $1,809 are included in the deferred tax
assets at December 31, 1998 and 1997, respectively.
The Company's valuation allowance was increased (decreased) in 1998, 1997,
and 1996 by $(1,792), $34, and $1,463, respectively, as a result of the
re-evaluation by management of future estimated taxable income in its
subsidiaries.
Under pre-1984 life insurance company income tax laws, a portion of life
insurance company gain from operations was not subject to current income
taxation but was accumulated, for tax purposes, in a memorandum account
designated as "policyholders' surplus account." The aggregate accumulation
in the account is $7,742 and the Company does not anticipate any
transactions, which would cause any part of the amount to become taxable.
Accordingly, no provision has been made for possible future federal income
taxes on this accumulation.
11. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130 "Reporting Comprehensive Income". This
Statement establishes new rules for reporting and display of comprehensive
income and its components; however, the adoption of this Statement had no
impact on the Company's net income or stockholders' equity. This Statement
requires unrealized gains or losses on the Company's available-for-sale
securities and related offsets for reserves and deferred policy
acquisition costs, which prior to adoption were reported separately in
stockholder's equity, to be included in other comprehensive income. Prior
year financial statements have been reclassified to conform to the
requirements of Statement No. 130.
Other comprehensive income at December 31, 1998 is summarized as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Before-Tax Tax (Expense) Net-of-Tax
Amount or Benefit Amount
-------------- ------------------------------
Unrealized gains on available-for-sale securities:
Unrealized holding gains arising
during
the period $ 39,430 $ (13,800) $ 25,630
Less: reclassification adjustment
for
(gains) losses realized in net (14,350) 5,022 (9,328)
income
-------------- ---------------- ------------
Net unrealized gains 25,080 (8,778) 16,302
Reserve and DAC adjustment (11,614) 4,065 (7,549)
-------------- ---------------- ------------
============== ================ ============
Other comprehensive income $ 13,466 $ (4,713) $ 8,753
============== ================ ============
Other comprehensive income at December 31, 1997 is summarized as follows:
Before-Tax Tax (Expense) Net-of-Tax
Amount or Benefit Amount
-------------- ---------------- --------------
Unrealized gains on available-for-sale securities:
Unrealized holding gains arising
during
the period $ 80,821 $ (28,313) $ 52,508
Less: reclassification adjustment
for
(gains) losses realized in net 2,012 (704) 1,308
income
-------------- ---------------- --------------
Net unrealized gains 82,833 (29,017) 53,816
Reserve and DAC adjustment (24,554) 8,594 (15,960)
============== ================ ==============
Other comprehensive income $ 58,279 $ (20,423) $ 37,856
============== ================ ==============
Other comprehensive loss at December 31, 1996 is summarized as follows:
Before-Tax Tax (Expense) Net-of-Tax
Amount or Benefit Amount
-------------- ---------------- --------------
Unrealized gains on available-for-sale securities:
Unrealized holding gains (losses)
arising during the period $ (125,559) $ 43,971 $ (81,588)
Less: reclassification adjustment
for
(gains) losses realized in net 19,381 (6,783) 12,598
income
-------------- ---------------- --------------
Net unrealized gains (losses) (106,178) 37,188 (68,990)
--------------
Reserve and DAC adjustment 38,736 (13,558) 25,178
============== ================ ==============
Other comprehensive loss $ (67,442) $ 23,630 $ (43,812)
============== ================ ==============
</TABLE>
12. STOCKHOLDER'S EQUITY, DIVIDEND RESTRICTIONS, AND OTHER MATTERS
Effective September 30, 1998, the Company purchased all of its outstanding
series of preferred stock, which were owned by the Parent Corporation, for
$121,800.
The Company's net income and capital and surplus, as determined in
accordance with statutory accounting principles and practices for December
31 are as follows:
1998 1997 1996
--------------- ------------- -------------
(Unaudited)
Net income 225,863 $ 181,312 $ 180,634
Capital and surplus 727,124 759,429 713,324
The maximum amount of dividends which can be paid to stockholders by
insurance companies domiciled in the State of Colorado are subject to
restrictions relating to statutory surplus and statutory net gain from
operations. Statutory surplus and net gains from operations at December
31, 1998 were $727,124 and $225,586 (unaudited), respectively. The Company
should be able to pay up to $225,586 (unaudited) of dividends in 1999.
Dividends of $6,692, $8,854, and $8,587 were paid on preferred stock in
1998, 1997, and 1996, respectively. In addition, dividends of $73,344,
$62,540, and $48,083 were paid on common stock in 1998, 1997, and 1996,
respectively. Dividends are paid as determined by the Board of Directors.
The Company is involved in various legal proceedings, which arise in the
ordinary course of its business. In the opinion of management, after
consultation with counsel, the resolution of these proceedings should not
have a material adverse effect on its financial position or results of
operations.
13. STOCK OPTIONS
The Company is an indirect subsidiary of Great-West Lifeco Inc. (Lifeco).
Lifeco has a stock option plan (the Lifeco plan) that provides for the
granting of options for common shares of Lifeco to certain officers and
employees of Lifeco and its subsidiaries, including the Company. Options
may be awarded at no less than the market price on the date of the grant.
Termination of employment prior to vesting results in forfeiture of the
options, unless otherwise determined by a committee that administers the
Lifeco plan. As of December 31, 1998, 1997 and 1996, stock available for
award under the Lifeco plan aggregated 1,424,400, 3,440,000 and 6,244,000
shares.
The plan provides for the granting of options with varying terms and
vesting requirements. The basic options under the plan become exercisable
twenty percent per year commencing on the first anniversary of the grant
and expire ten years from the date of grant. Options granted in 1997 and
1998 totaling 1,832,000 and 278,000, respectively, become exercisable if
certain long-term cumulative financial targets are attained. If
exercisable, the exercise period runs from April 1, 2002 to June 26, 2007.
Additional options granted in 1998 totaling 380,000 become exercisable if
certain sales or financial targets are attained. During 1998, 30,000 of
these options vested and accordingly, the Company recognized compensation
expense of $116. If exercisable, the exercise period runs from the date
that the particular options become exercisable until January 27, 2008.
The following table summarizes the status of, and changes in, Lifeco
options outstanding and the weighted-average exercise price (WAEP) for the
years ended December 31. As the options granted relate to Canadian stock,
the values, which are presented in U.S. dollars, will fluctuate as a
result of exchange rate fluctuations:
<PAGE>
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
---------------------- ---------------------- ----------------------
Options WAEP Options WAEP Options WAEP
------------ -------- ----------- -------- ----------- ---------
Outstanding, Jan. 1, 5,736,000 $ 7.71 4,104,000 $ 6.22 0 $ .00
Granted 988,000 13.90 1,932,000 10.82 4,104,000 6.62
Exercised 99,176 6.33 16,000 5.95 0 .00
Expired or canceled 80,000 13.05 284,000 6.12 0 .00
============ ======== =========== ======== =========== =========
Outstanding, Dec. 31, 6,544,824 8.07 5,736,000 7.71 4,104,000 6.22
============ ======== =========== ======== =========== =========
Options exercisable
at year-end 1,652,424 $ 5.72 760,800 $ 5.96 0 $ .00
============ ======== =========== ======== =========== =========
Weighted average fair
value of options
granted during year $ 1.18 $ 2.65 $ 4.46
============ =========== ===========
The following table summarizes the range of exercise prices for
outstanding Lifeco common stock options at December 31, 1998:
Outstanding Exercisable
---------------------------------------- ----------------------------
Average Average
Exercise Average Exercise Exercise
Price Range Options Life Price Options Price
------------------- -------------- ---------- ----------- ------------- ------------
$ 5.54 - $ 7.36 3,804,824 7.62 $ 5.61 1,622,424 $ 5.58
$10.61 - $13.23 2,740,000 8.70 $ 11.48 30,000 $ 13.23
</TABLE>
Of the exercisable Lifeco options, 1,622,424 relate to basic option grants
and 30,000 relate to variable grants.
Power Financial Corporation (PFC), which is the parent corporation of
Lifeco, has a stock option plan (the PFC plan) that provides for the
granting of options for common shares of PFC to key employees of PFC and
its affiliates. Prior to the creation of the Lifeco plan in April 1996,
certain officers of the Company participated in the PFC plan. Under the
PFC plan, options may be awarded at no less than the market price on the
date of the grant. Termination of employment prior to vesting results in
forfeiture of the options, unless otherwise determined by a committee that
administers the PFC plan. As of December 31, 1998, 1997 and 1996, stock
available for award under the PFC plan aggregated 4,400,800, 4,400,800 and
5,440,800 shares.
Options granted to officers of the Company under the PFC plan become
exercisable twenty percent per year commencing on the date of the grant
and expire ten years from the date of grant.
The following table summarizes the status of, and changes in, PFC options
outstanding and the weighted-average exercise price (WAEP) for the years
ended December 31. As the options granted relate to Canadian stock, the
values, which are presented in U.S. dollars, will fluctuate as a result of
exchange rate fluctuations:
<TABLE>
<S> <C> <C> <C>
1998 1997 1996
---------------------- ---------------------- ---------------------
Options WAEP Options WAEP Options WAEP
----------- --------- ----------- -------- ----------- --------
Outstanding, Jan. 1, 1,076,000 $ 3.05 1,329,200 $ 3.14 1,436,000 $ 3.17
Exercised 720,946 3.60 253,200 2.68 106,800 2.95
=========== ========= =========== ======== =========== ========
Outstanding, Dec. 31, 355,054 2.89 1,076,000 3.05 1,329,200 3.14
=========== ========= =========== ======== =========== ========
Options exercisable
at year-end 355,054 $ 2.89 1,076,000 $ 3.05 1,301,200 $ 3.15
=========== ========= =========== ======== =========== ========
</TABLE>
As of December 31, 1998, the PFC options outstanding have exercise prices
between $2.25 and $3.44 and a weighted-average remaining contractual life
of 2.99 years.
The Company accounts for stock-based compensation using the intrinsic
value method prescribed by APB No. 25, "Accounting for Stock Issued to
Employees", under which compensation expenses for stock options are
generally not recognized for stock option awards granted at or above fair
market value. Had compensation expense for the Company's stock option plan
been determined based upon fair values at the grant dates for awards under
the plan in accordance with SFAS No. 123, "Accounting for Stock-Based
Compensation", the Company's net income, would have been reduced by $727,
$608, and $257, in 1998, 1997, and 1996, respectively. The fair value of
each option grant was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumption used for those options granted in 1998, 1997, and 1996,
respectively: dividend yield of 3.00%, expected volatility of 34.05%,
24.04%, and 15.61%, risk-free interest rates of 4.79%, 4.72%, and 4.67%,
and expected lives of 7.5 years.
14. SEGMENT INFORMATION
The Company has two reportable segments: Employee Benefits and Financial
Services. The Employee Benefits segment markets group life and health and
401(k) products to small and mid-sized corporate employers. The Financial
Services segment markets and administers savings products to public and
not-for-profit employers and individuals and offers life insurance
products to individuals and businesses.
The accounting policies of the segments are the same as those described in
Note 1. The Company evaluates performance based on profit or loss from
operations after income taxes.
The Company's reportable segments are strategic business units that offer
different products and services. They are managed separately as each
segment has unique distribution channels.
The Company's operations are not materially dependent on one or a few
customers, brokers or agents.
Summarized segment financial information for the year ended and as of
December 31 was as follows:
Year ended December 31, 1998
Operations:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Employee Financial Total
Benefits Services U.S.
-------------- -------------- -------------
Revenue:
Premium income $ 746,898 $ 247,965 $ 994,863
Fee income 444,649 71,403 516,052
Net investment income 95,118 802,242 897,360
Realized investment gains (losses) 8,145 30,028 38,173
-------------- -------------- -------------
Total revenue 1,294,810 1,151,638 2,446,448
Benefits and Expenses:
Benefits 590,058 872,411 1,462,469
Operating expenses 546,959 141,269 688,228
-------------- -------------- -------------
Total benefits and expenses 1,137,017 1,013,680 2,150,697
Net operating income before income
taxes 157,793 137,958 295,751
Income taxes 50,678 48,158 98,836
============== ============== =============
Net income $ 107,115 $ 89,800 $ 196,915
============== ============== =============
</TABLE>
<PAGE>
Assets:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Employee Financial Total
Benefits Services U.S.
--------------- -------------- --------------
Investment assets $ 1,434,691 $ 12,235,845 $ 13,670,536
Separate account assets 5,704,313 4,395,230 10,099,543
Other assets 567,126 785,940 1,353,066
=============== ============== ==============
Total assets $ 7,706,130 $ 17,417,015 $ 25,123,145
=============== ============== ==============
Year ended December 31, 1997
Operations:
Employee Financial Total
Benefits Services U.S.
-------------- ------------- -------------
Revenue:
Premium income $ 465,143 $ 368,036 $ 833,179
Fee income 358,005 62,725 420,730
Net investment income 100,067 781,606 881,673
Realized investment gains (losses) 3,059 6,741 9,800
-------------- ------------- -------------
Total revenue 926,274 1,219,108 2,145,382
Benefits and Expenses:
Benefits 371,333 1,013,717 1,385,050
Operating expenses 427,969 123,756 551,725
-------------- ------------- -------------
Total benefits and expenses 799,302 1,137,473 1,936,775
Net operating income before income
taxes 126,972 81,635 208,607
Income taxes 28,726 21,121 49,847
-------------
============== =============
Net income $ 98,246 $ 60,514 $ 158,760
============== =============
===============================================================================================================
Assets:
Employee Financial Total
Benefits Services U.S.
--------------- -------------- --------------
Investment assets $ 1,346,944 $ 11,859,038 $ 13,205,982
Separate account assets 4,533,516 3,313,935 7,847,451
Other assets 355,764 668,518 1,024,282
=============== ============== ==============
Total assets $ 6,236,224 $ 15,841,491 $ 22,077,715
=============== ============== ==============
</TABLE>
<PAGE>
Year ended December 31, 1996
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Operations:
Employee Financial Total
Benefits Services U.S.
--------------- -------------- -------------
Revenue:
Premium income $ 486,565 $ 342,884 $ 829,449
Fee income 321,074 26,445 347,519
Net investment income 87,511 747,126 834,637
Realized investment gains (losses) (2,661) (18,417) (21,078)
--------------- -------------- -------------
Total revenue 892,489 1,098,038 1,990,527
Benefits and Expenses:
Benefits 406,143 949,821 1,355,964
Operating expenses 368,258 101,358 469,616
--------------- -------------- -------------
Total benefits and expenses 774,401 1,051,179 1,825,580
Net operating income before income
taxes 118,088 46,859 164,947
Income taxes 22,874 7,498 30,372
=============== ============== =============
Net income $ 95,214 $ 39,361 $ 134,575
=============== ============== =============
The following table, which summarizes premium and fee income by segment,
represents supplemental information:
1998 1997 1996
------------- ------------- -------------
Premium Income
Employee Benefits
Group Life & Health $ 746,898 $ 465,143 $ 486,565
------------- ------------- -------------
Total Employee Benefits 746,898 465,143 486,565
------------- ------------- -------------
Financial Services
Savings 16,765 22,634 26,655
Individual Insurance 231,200 345,402 316,229
------------- ------------- -------------
Total Financial Services 247,965 368,036 342,884
------------- ------------- -------------
Premium income $ 994,863 $ 833,179 $ 829,449
============= ============= =============
Fee Income
Employee Benefits
Group Life & Health $ 366,805 $ 305,302 $ 276,688
401(k) 77,844 52,703 44,386
------------- ------------- -------------
------------- ------------- -------------
Total Employee Benefits 444,649 358,005 321,074
------------- ------------- -------------
------------- ------------- -------------
Financial Services
Savings 71,403 62,725 26,445
------------- ------------- -------------
Total Financial Services 71,403 62,725 26,445
------------- ------------- -------------
============= ============= =============
Fee income $ 516,052 $ 420,730 $ 347,519
============= ============= =============
</TABLE>
<PAGE>
C-11
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The consolidated financial statements of GWL&A as of December
31, 1998 and 1997 and each of the three years in the period
ended December 31, 1998, as well as the financial statements
of the Series Account for the years ended December 31, 1998
and 1997, are included in Part B.
(b) Exhibits
Items (1), (2), (6) and (8) are incorporated by reference to
registrant's Form S-6 Registration Statement filed February
21, 1984 and Pre-Effective Amendment No. 1 thereto
filed June 29, 1984.
Item (9) is incorporated by reference to registrant's
Post-Effective Amendment No. 7 to Form N-4 registration
statement filed on April 30, 1987.
Items (4), (5) and (13) are incorporated by reference to
registrant's Post-Effective Amendment No. 11 to Form N-4
registration statement filed on May 1, 1989.
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 Boros
Cicchetti Berenson & Johnson, LLP is filed
herewith.
(b) Written Consent of Deloitte & Touche LLP is filed
herewith.
(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>
<S> <C> <C> <C> <C> <C> <C>
Position and Offices
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
--------------------------------------
(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 26, 1998, there were 25 owners of non-qualified contracts and 52,692 of qualified
contracts offered by Registrant.
</TABLE>
<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.
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.
92% - Orchard Series Fund**
* New England Life Insurance Company - 5%
** New England Life Insurance Company - 8%
</TABLE>
<PAGE>
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>
<S> <C> <C> <C> <C> <C> <C>
Position and Offices
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
- ------------
(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-
</TABLE>
Item 30. Location of Accounts and Records
All accounts, books, or other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules promulgated thereunder
are maintained by the registrant through GWL&A, 8515 E.
Orchard Road, Englewood, Colorado 80111.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Registrant undertakes to file a post-effective amendment to
this Registration Statement as frequently as is necessary to
ensure that the audited financial statements in the
Registration Statement are never more than 16 months old for
so long as payments under the variable annuity contracts may
be accepted.
(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 hereby certifies that it meets
the requirements for effectiveness under Rule 485(b) and has duly caused this
Registration Statement on Form N-4 to be signed on its behalf, in the City of
Englewood, State of Colorado, on this __29th_____ day of April, 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:
Signature and Title Date
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
/s/ Robert Gratton* April 29, 1999
Director and Chairman of the Board
(Robert Gratton)
/s/ William T. McCallum April 29, 1999
- ------------------------------------------- ----------------
Director, President and Chief Executive
Officer (William T. McCallum)
/s/ Mitchell T. G. Graye April 29, 1999
- ----------------------------------------------- ---------------
Executive Vice President and
Chief Financial Officer
(Mitchell T.G. Graye)
/s/ James Balog* April 29, 1999
Director, (James Balog)
<PAGE>
Signature and Title Date
/s/ James W. Burns* April 29, 1999
Director, (James W. Burns)
/s/ Orest T. Dackow* April 29, 1999
Director (Orest T. Dackow)
April
29, 1999
Director Andre Desmarais
/s/ Paul Desmarais, Jr*. April 29, 1999
Director (Paul Desmarais, Jr.)
, 1999
Director (Robert G. Graham)
/s/ N. Berne Hart * April 29, 1999
- -------------------------------- ---------------
Director (N. Berne Hart)
/s/ Kevin P. Kavanagh* April 29, 1999
Director (Kevin P. Kavanagh)
, 1999
Director (William Mackness)
/s/ Jerry E.A. Nickerson* April 29, 1999
Director (Jerry E.A. Nickerson)
/s/ P. Michael Pitfield * April 29, 1999
- ------------------------------------ ----------------
Director (P. Michael Pitfield)
/s/ Michel Plessis-Belair* April 29, 1999
Director (Michel Plessis-Belair)
/s/ Brian E. Walsh * April 29, 1999
- ------------------------------------------------------ ---------------
Director (Brian E. Walsh)
*By: /s/ Lennox April 29, 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>
EXHIBIT 10 (a)
WRITTEN CONSENT OF JORDEN BURT BOROS CICCHETTI BERENSON & JOHNSON, LLP
<PAGE>
Jorden Burt Boros Cicchetti Berenson & Johnson LLP
Suite 400E
1025 Thomas Jefferson Street, N.W.
Washington, DC 20007
(202) 965-8100
April 29, 1999
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Englewood, Colorado 80111
Re: FutureFunds Series Account
Post-Effective Amendment No. 26 to the Registration Statement on Form N-4
File Nos. 2-89550; 811-3972
Ladies and Gentlemen:
We have acted as counsel to Great-West Life & Annuity Insurance Company,
a Colorado corporation, regarding the federal securities laws applicable to the
issuance and sale of the Contracts described in the above-referenced
registration statement. We hereby consent to the reference to us under the
heading "Legal Matters" in the prospectus filed today with the Securities and
Exchange Commission. In giving this consent, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933.
Very truly yours,
/s/ Jorden Burt Boros Cicchetti Berenson & Johnson LLP
Jorden Burt Boros Cicchetti Berenson & Johnson LLP
EXHIBIT 10 (b)
WRITTEN CONSENT OF DELOITTE & TOUCHE LLP
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No.26 to Registration
Statement No. 2-89550 of FutureFunds Series Account of Great-West Life & Annuity
Insurance Company of our report dated March 25, 1999 on the financial statements
of FutureFunds Series Account of Great-West Life & Annuity Insurance Company and
our report dated January 25, 1999 on the consolidated financial statements of
Great-West Life & Annuity Insurance Company appearing in the Statement of
Additional Information, which is a part of such Registration Statement, and to
the references to us under the headings "Condensed Financial Information"
appearing in the Prospectus, which is also a part of such Registration
Statement, and "Independent Auditors" appearing in the Statement of Additional
Information.
/s/ DELOITTE & TOUCH LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
April 28, 1999
