As filed with the Securities and Exchange Commission on April 26, 2000
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. 28 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 22 (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 Boros Cicchetti Berenson & Johnson, LLP
1025 Thomas Jefferson Street, N.W., Suite 400 East
Washington, D.C. 20007-0805
It is proposed that this filing will become effective (check appropriate space)
Immediately upon filing pursuant to paragraph (b) of Rule 485.
X On May 1, 2000 , 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:
This post-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
PART A
INFORMATION REQUIRED IN A PROSPECTUS
FUTUREFUNDS SERIES ACCOUNT
Of
Great-West Life & Annuity Insurance Company
GROUP VARIABLE ANNUITY CONTRACTS
Distributed by
BenefitsCorp Equities, Inc.
8515 East Orchard Road, Englewood, Colorado 80111
(800) 701-8255
- --------------------------------------------------------------------------------
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 under various sections of the Internal Revenue Code
of 1986 (the "Code"). 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 Code Section 401(a)
("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"). 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 31 Investment Divisions of the
FutureFunds Series Account (the "Series Account"). Each Investment Division
invests all of its assets in one of 31 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 Investment Trust
Pioneer Variable Contracts Trust
The Alger American Fund
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 May 1, 2000 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. Its table of contents may be
ofund on the last page of this Porspectus. The Statement of Additional
Information may be obtained without charge by contacting Great-West at its
Administrative Offices or by calling (800) 701-8255 or, you can also obtain it
by visiting the Securities and Exchange Commission's web site at www.sec.gov.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
The date of this Prospectus is May 1, 2000.
TABLE OF CONTENTS
Page
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Definitions......................................................................................3
Key Features.....................................................................................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
Free-Look Period........................................................................13
Subsequent Contributions................................................................13
Making Transfers..................................................................13
Loans.............................................................................15
Automatic Custom Transfers........................................................15
Total and Partial Withdrawals.....................................................15
Cessation of Contributions........................................................16
Death Benefit.....................................................................16
Charges and Deductions...........................................................................17
Periodic Payment Options.........................................................................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
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 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. 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 Group Contract
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 who is eligible to and elects to participate in the
Group Contract; sometimes referred to as "you," "your" or "yours" in this
Prospectus.
Participant Annuity Account: A separate record we establish in your name that
reflects all transactions you make under the Group Contract.
Participant Annuity Account Value: The total value of your interest under the
Group Contract. It is the total of your Guaranteed and Variable Account Values.
Premium Tax: The amount of tax, if any, charged by a state or other government
authority.
Request: Any Request, either written, by telephone or computerized, which is in
a form satisfactory to GWL&A and received by GWL&A at its Administrative
Offices. Series Account: FutureFunds Series Account, a 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.
<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 be
issued in connection with:
o401(a) Planso403(b) Plans
o401(k) Planso457(b) or (f) Plans
o415(m) Plans oNQDC Plans.
Tax deferral for participants in and sponsors of qualified plans arises as a
result of the plan. Tax deferral for participants in non-qualified plans also
arises as a result of the plan. Sponsors of non-qualified plans will not enjoy
tax deferral under the Group contract and thus will incur tax on the investment
gain on the Group Contract unless they are tax exempt entities. Participation in
the Group Contract You must complete an application to participate 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 your application is
received by GWL&A, you may cancel your interest in the Group Contract for any
reason by delivering 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 your application is approved, 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 Group Contract. Annuity Payment Options We provide you with a wide
range of annuity options, giving you the flexibility to choose an annuity
payment schedule that meets your needs. Payments may be made on a variable,
fixed, or combination basis. Under a variable annuity payment option your
payments will continue to reflect the performance of the Investment Divisions
you select. Death Benefit We will pay a death benefit to your beneficiary if you
die before the Annuity Commencement Date.
o If you die before age 70, the death benefit is the greater of (1) your
Participant Annuity Account Value, less any Premium Taxes, or (2) the sum
of all Contributions, less any withdrawals and Premium Taxes.
o If you die at or after age 70, the death benefit is your Participant
Annuity Account Value, less any Premium Taxes.
<PAGE>
FEE TABLE
The purpose of this table and the examples that follow is to assist you in
understanding the various costs and expenses that you will bear directly or
indirectly when investing in the Group Contract. The table and examples reflect
the maximum amount of each type of charge shown. The actual charges you may pay
under your Group Contract may be lower. Please contact your employer or your BCE
representative for more information about the charges that are applicable to
your Group Contract. In addition to the expenses listed below, Premium Tax may
be applicable.
PARTICIPANT TRANSACTION EXPENSES
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Sales Load Imposed on Purchases (as a percentage of purchase payments)...........................None
Contingent Deferred Sales Charge (as a percentage of amount distributed).........................6%
Transfer Fee.....................................................................................None
SEPARATE ACCOUNT EXPENSES
Maximum Periodic Mortality and Expense Risk Charge1, 2 .........................................1.00%
Maximum Daily Mortality and Expense Risk Charge1, 2.............................................1.25%
Annual Contract Maintenance Charge..........................................................................$30
</TABLE>
<PAGE>
ELIGIBLE FUND ANNUAL EXPENSES
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
(as a percentage of Eligible Fund average net assets, before any applicable
fee waivers or expense reimbursements, as of December 31, 1999)
Eligible Fund Management Fees Other Expenses Total Eligible
Fund Expenses
Maxim Templeton International Equity 1.00% 0.23% 1.23%
Maxim INVESCO ADR 1.00% 0.14% 1.14%
Janus Aspen Series Worldwide Growth 0.67% 0.07% 0.74%
Maxim INVESCO Small-Cap Growth 0.95% 0.12% 1.07%
Maxim Loomis-Sayles Small-Cap Value 1.00% 0.14% 1.14%
Maxim Index 600 0.60% None 0.60%
Maxim Ariel Small-Cap Value 1.00% 0.23% 1.23%
Maxim T. Rowe Price MidCap Growth 1.00% 0.05% 1.05%
Alger American MidCap Growth 0.80% 0.05% 0.85%
Maxim Ariel Mid-Cap Value 0.95% 0.09% 1.04%
Fidelity VIP Growth 0.58% 0.08% 0.66%
Maxim Founders Growth & Income 1.00% 0.11% 1.11%
Maxim Growth Index 0.60% None 0.60%
Maxim Stock Index 0.60% None 0.60%
Maxim T. Rowe Price Equity-Income 0.80% 0.08% 0.88%
Maxim Value Index 0.60% None 0.60%
Fidelity VIP II Contrafund 0.58% 0.09% 0.67%
Maxim INVESCO Balanced 1.00% None 1.00%
Stein Roe Balanced 0.70% 0.44% 1.14%
Alger American Balanced 0.75% 0.18% 0.93%
Pioneer VCT Equity Income 0.65% 0.31% 0.96%
Maxim Bond Index1 0.50% None 0.50%
Maxim Bond 0.60% None 0.60%
Maxim Loomis-Sayles Corporate Bond 0.90% None 0.90%
Maxim U.S. Government Securities 0.60% None 0.60%
Maxim Money Market 0.46% None 0.46%
Maxim Aggressive Profile I2 0.25% None 0.25%
Maxim Moderately Aggressive Profile I2 0.25% None 0.25%
Maxim Moderate Profile I2 0.25% None 0.25%
Maxim Moderately Conservative Profile I2 0.25% None 0.25%
Maxim Conservative Profile I2 0.25% None 0.25%
</TABLE>
1. Formerly, the Maxim Investment Grade Corporate Bond Portfolio. On July 26,
1999, pursuant to a vote of the majority of the shareholders, the Portfolio
changed its name and investment objective so that it now seeks investment
results that track the total return of the debt securities that comprise the
Lehman Aggregate Bond Index.
2. 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, as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Minimum Total Maxim Series Fund Maximum Total Maxim Series Fund
Annual Expenses* Annual Expenses**
Maxim Aggressive Profile I 1.07% 1.40%
Maxim Moderately Aggressive Profile I 1.00% 1.36%
Maxim Moderate Profile I 0.97% 1.31%
Maxim Moderately Conservative Profile I 0.91% 1.27%
Maxim Conservative Profile I 0.87% 1.21%
</TABLE>
* 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.
<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:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Investment Division 1 Year 3 Year 5 Year 10 Year
- -------------------------------------------------------------- ------------ --------------------------------------- ---------------
Maxim Money Market $77.90 $118.21 $165.16 $317.37
Maxim Bond Index $78.32 $119.53 $167.50 $322.85
Maxim Bond, Maxim Stock Index, Maxim U.S. Government
Securities, Maxim Index 600, $79.35 $122.82 $173.33 $336.44
Maxim Value Index, Maxim Growth Index
Alger American MidCap Growth $81.92 $131.00 $187.78 $369.83
Maxim Ariel Mid-Cap Value $83.87 $137.18 $198.63 $394.65
Maxim INVESCO Small-Cap Growth $84.18 $138.15 $200.34 $398.53
Maxim Templeton International Equity $85.82 $143.32 $209.39 $419.01
Maxim Loomis-Sayles Corporate Bond $82.43 $132.63 $190.64 $376.41
Alger American Balanced $82.74 $133.60 $192.36 $380.34
Pioneer VCT Equity Income $83.05 $134.58 $194.07 $384.26
Maxim Ariel Small-Cap Value $85.82 $143.32 $209.39 $419.01
Maxim INVESCO ADR $84.90 $140.41 $204.31 $407.53
Maxim Loomis-Sayles Small-Cap Value $84.90 $140.41 $204.31 $407.53
Maxim INVESCO Balanced, $83.46 $135.88 $196.36 $289.47
Maxim T. Rowe Price Equity/Income $82.23 $131.98 $189.50 $373.78
Fidelity VIP Growth $79.97 $124.79 $176.81 $344.53
Fidelity VIP II Contrafund $80.07 $125.12 $177.39 $345.87
Janus Aspen Worldwide Growth $80.79 $127.41 $181.44 $355.24
Stein Roe Balanced Fund, Variable Series $84.90 $140.41 $204.31 $407.53
Maxim Founders Growth & Income $84.69 $139.76 $203.18 $404.96
Maxim T. Rowe Price MidCap Growth $83.97 $137.50 $199.20 $395.95
Maxim Aggressive Profile I* $85.82 $143.32 $209.39 $419.01
Maxim Moderately Aggressive Profile I* $85.31 $141.70 $206.57 $412.64
Maxim Moderate Profile I* $84.90 $140.41 $204.31 $407.53
Maxim Moderately Conservative Profile I* $84.38 $138.79 $201.47 $401.11
Maxim Conservative Profile I* $83.87 $137.18 $198.63 $394.65
</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> <C> <C>
Investment Division 1 Year 3 Year 5 Year 10 Year
- -------------------------------------------------------------- ---------------- ------------------- --------------- --------------
Maxim Money Market $17.90 $58.21 $105.16 $257.37
Maxim Bond Index $18.32 $59.53 $107.50 $262.85
Maxim Bond, Maxim Stock Index, Maxim U.S. Government
Securities, Maxim Index 600, $19.35 $62.82 $113.33 $276.44
Maxim Value Index, Maxim Growth Index
Alger American MidCap Growth $21.92 $71.00 $127.78 $309.83
Maxim Ariel Mid-Cap Value $23.87 $77.18 $138.63 $334.65
Maxim INVESCO Small-Cap Growth $24.18 $78.15 $140.34 $338.53
Maxim Templeton International Equity $25.82 $83.32 $149.39 $359.01
Alger American Balanced $22.74 $73.60 $132.36 $320.34
Maxim Loomis-Sayles Corporate Bond $22.43 $72.63 $130.64 $316.41
Pioneer VCT Equity Income $23.05 $74.58 $134.07 $324.26
Maxim Ariel Small-Cap Value $25.82 $83.32 $149.39 $359.01
Maxim INVESCO ADR $24.90 $80.41 $144.31 $347.53
Maxim Loomis-Sayles Small-Cap Value $24.90 $80.41 $144.31 $347.53
Maxim INVESCO Balanced $23.46 $75.88 $136.36 $329.47
Maxim T. Rowe Price Equity/Income $22.23 $71.98 $129.50 $313.78
Fidelity VIP Growth $19.97 $64.79 $116.81 $284.53
Fidelity VIP II Contrafund $20.07 $65.12 $117.39 $285.87
Janus Aspen Worldwide Growth $20.79 $67.41 $121.44 $295.24
Stein Roe Balanced Fund, Variable Series $24.90 $80.41 $144.31 $347.53
Maxim Founders Growth & Income $24.69 $79.76 $143.18 $344.96
Maxim T. Rowe Price MidCap Growth $23.97 $77.50 $139.20 $335.95
Aggressive Profile* $25.82 $83.32 $149.39 $359.01
Moderately Aggressive Profile* $25.31 $81.70 $146.57 $352.64
Moderate Profile* $24.90 $80.41 $144.31 $347.53
Moderately Conservative Profile* $24.38 $78.79 $141.47 $341.11
Conservative Profile* $23.87 $77.18 $138.63 $334.65
</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 thirty-one 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.
Some of the Eligible Funds' investment advisers may compensate us for providing
administrative services in connection with the Eligible Funds. Such compensation
is paid for from the investment adviser's assets.
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 Bond Index Portfolio seeks investment results, before fees, that track the
total return of the debt securities in that comprise the Lehman Aggregate Bond
Index.
Maxim Stock Index Portfolio seeks investment results, before fees, 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 Index 600 Portfolio seeks investment results, before fees. 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, before fees, that track
the total return of the common stocks that comprise the S&P/BARRA Value Index.1
Maxim Growth Index Portfolio seeks investment results, before fees, that track
the total return of the common stocks that comprise the S&P/BARRA Growth Index.1
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 Growth & Income 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.
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 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.
The Alger American Fund
Alger American Balanced Portfolio seeks current income and long-term capital
appreciation. This portfolio focuses on stocks of companies with growth
potential and fixed-income securities, with emphasis on income-producing
securities which appear to have some potential for capital appreciation.
Alger American MidCap Growth Portfolio seeks long-term capital appreciation.
This portfolio focuses on midsize companies with promising growth potential.
Pioneer Variable Contracts Trust
Pioneer VCT Equity-Income Portfolio seeks current income and long-term growth of
capital from a portfolio consisting primarily of income producing equity
securities of U.S. corporations.
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.
The Alger American Fund is advised by Fred Alger Management, Inc. 1 World Trade
Center, New York, New York 10048.
Fidelity Variable Insurance Products Fund and Fidelity 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.
Pioneer Variable Contracts Trust is advised by Pioneer Investment Management,
Inc., 60 State Street, Boston, Massachusetts 02109.
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
Growth & Income 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 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.
Participant Annuity Account
When we approve your application we will 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 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 Period
Under certain Group Contracts issued in connection with a 403(b) Plan, you may
have the ability to cancel your interest in the Group Contract for any reason by
delivering or mailing a Request to cancel to our Administrative Offices or to an
authorized agent of GWL&A within 10 days after GWL&A receives your completed
application form (or longer where required by law). We must receive your
cancellation Request in person or postmarked prior to the expiration of the free
look period. Upon cancellation, we will refund the greater of (1) Contributions,
less partial 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 DateOn 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 Group Contract 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
Group Contract 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 Group Contract for more information.
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 would
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 415(m), NQDC 457(b) or 457(f) Plans.
Under 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 our
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 no
further Contributions will be made under the Group Contract. 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). After cessation of
Contributions, GWL&A shall continue to administer all Participant Annuity
Accounts in accordance with the provisions of the Group Contract until the Group
Contract is terminated.
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 it is
applied to a payment option. A contingent deferred sales charge, if
applicable, will apply to Transfers to Other Companies.
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 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.
o Cessation Option (3):
In the event of an early termination under certain Group Contracts
with a Guaranteed Fixed Fund option, GWL&A will pay the Variable
Account Values in accordance with the procedure described in Cessation
Option (2). GWL&A will pay the Guaranteed Fixed Fund Values within 30
days of the Date of Cessation in accordance with the terms of the
Guaranteed Fixed Fund rider to the Group Contract.
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 for Group Contracts without a Guaranteed Fixed Fund rider.
CESSATION OPTIONS (2) AND (3) 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 benefit will 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 maximum 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 participation in The applicable this Group Contract percentage shall be 0-4
years 5% 5-9 years 4% 10-14 years 3% 15 or more years 0%
Level 4: 6% Contract Termination Decreasing Charge
The contingent deferred sales charge for Level 4 Group Contracts will be an
amount equal to the percentage of the amount withdrawn or Transferred to Other
Companies at the termination of the Group Contract, based on the table below:
Years since Issuance The applicable percentage
of the Group Contract shall be
- -----------------------------------
0-1 Year 6%
2 Years 5%
3 Years 4%
4 Years 3%
5 Years 2%
6 Years 1%
7 Years 1%
More than 7 Years 0%
There is no Contingent Deferred Sales Charge Free Amount for Level 4 Group
Contracts.
Level 5: No Contingent Deferred Sales Charges
Under Level 5 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 1-5 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 Participation Applicable Percentage
in Both the Exchanged Annuity
Contract and this Group Contract
--------------------------
- ----------------------------------
Less than 5 Years 6%
More than 5Years but less than 5%
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,
i projected annual Contributions for all Participants in the group,
frequency of projected withdrawals,
o type and frequency of administrative and sales services provided,
o level of contract maintenance charge, administrative charge and mortality and
expense risk charge,
o type and level of communication services provided, and
o number and type of plans.
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 at 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.
PERIODIC PAYMENT OPTIONS
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 unless you are a participant in a 457 plan in which case you may not elect
to change the withdrawal option and/or the frequency of payments.
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 (457 plan
participants may not elect to cease
withdrawals).
You die.
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. This option is
not available to 457 participants.
Option 4 - Minimum Distribution.
Minimum distributions are not available for 457 participants. For all other
plans, you may Request to receive your minimum distribution from the Group
Contract as specified under 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 Code Section
401(a)(9).
If periodic payments stop, 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 Amount (available only as fixed-dollar
payments)
Under this option, the amount of the periodic benefit is selected. This amount
will be paid to the payee in equal annual, semiannual, quarterly, or monthly
installments as elected; provided that the annuity payment period is not less
than 36 months.
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).
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 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 will be held by a taxable employer (e.g., a sole
proprietorship, partnership or corporation), the investment gain on the Group
Contract is included in the entity's income each year. This rule does not apply
where the Group Contract is held under a 401(a), 401(k), or 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 taxable employer that entity may wish to discuss these matters with a
competent tax adviser.
401(a) Plans
Section 401(a) of the 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
Code. Distributions from the plan are subject to the restrictions contained in
the plan document and the Code. Participants should consult with their employer
or employee organization as to the applicability of the above limitations and
restrictions to their plan.
401(k) Plans
Section 401(k) of the Internal Revenue Code allows non-governmental 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 2000, the total amount of elective deferrals
which can be contributed to all such plans is $10,500. 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 2000, the total amount of elective
deferrals which can be contributed to all such plans is $10,500. 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 Code. Restrictions apply to the amount
which may be distributed for financial hardship.
457(b) Plans
Section 457(b) of the 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 2000, 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 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 no longer subject to a substantial risk of forfeiture 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 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 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 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 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 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 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 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
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; (8) timely
made to reduce an excess elective deferral; or
(9) made subject to an IRS levy imposed on the plan.
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 591/2or,
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 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 Code and the regulations thereunder. Distributions from
a 457(b) Plan must also meet the requirements under Section 457(d) of the 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.
<PAGE>
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 4.01% 4.15%
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, 1999. 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 After Before Before After
DIVISION Before CDSC Before CDSC CDSC After CDSC CDSC
1 CDSC 5 10 CDSC 10 Years or 10 Years
CDSC Year 5 Years Years or if 10 Years if Less, Life of or if Less,
1 Years Less, Life of or if Underlying Life of
Year Less, Fund
Investment Life of Portfolio Underlying
Division Investment Fund
Portfolio
Division
Maxim Templeton
International
Equity 22.29% 9.01% 8.15% 8.28% 8.25% 8.36% 8.36%
8.29%
Maxim INVESCO ADR 15.14% 14.16% 14.51% 13.82% 14.04% 13.36%
1.14% 14.86%
Janus Aspen Series
Worldwide Growth 56.39% 31.53% 42.70% 39.61% 28.09% 28.09%
2.39% 31.96%
Maxim INVESCO
Small-Cap Growth 72.52% 31.28% 30.65% 30.27% 30.67% 30.29%
8.52% 31.68%
Maxim Loomis-Sayles
Small-Cap Value -7.71% 13.25% -1.19% -3.85% 12.90% 12.19%
1.71% 13.97%
Maxim Index 600 4.45% 11.98% 9.36% 9.36% 9.41% 9.41%
10.45% 12.73%
Maxim Ariel
Small-Cap Value -12.98% 9.97% 10.54% 9.76% 8.63% 8.63%
6.98% 10.78%
Maxim T. Rowe
Price MidCap Growth 17.05% N/A N/A 21.21% 19.20% 21.73% 19.92%
3.05%
Alger American
MidCap Growth 24.26% 24.07% 25.33% 19.33% 21.79% 21.79%
30.26% 24.57%
Maxim Ariel
Mid-Cap Value -7.00% 13.05% 13.06% 13.06% 13.06% 13.06%
-1.00% 13.78%
Fidelity VIP Growth 29.73% 27.68% 18.34% 18.34% 18.34% 18.34%
35.73% 28.13%
Maxim Founders
Growth & Income 7.58% N/A N/A 15.36% 13.21% 12.90% 10.88%
13.58%
Maxim Growth Index 19.29% 28.00% 28.56% 26.70% 23.10% 23.10%
25.29% 28.44%
Maxim Stock Index 12.24% 25.02% 15.37% 15.37% 15.37%
18.24% 25.51% 15.37%
Maxim T. Rowe Price
Equity-Income -3.91% 16.11% 16.66% 16.03% 15.83% 15.20%
2.09% 16.76%
Pioneer VCT
Equity-Income -6.28% N/A N/A -2.11% -8.11% 17.14% 16.46%
-0.28%
Maxim Value Index 3.99% 20.96% 14.41% 12.24% 16.87% 16.87%
9.99% 21.51%
Fidelity VIP II
Contrafund N/A N/A 26.96% 26.48% 26.14% 25.66%
22.71% 16.71%
Maxim INVESCO
Balanced 9.28% N/A N/A 18.25% 16.92% 17.75% 16.46%
15.28%
Stein Roe Balanced,
Variable Series 5.23% 14.38% 11.55% 11.32% 11.55% 11.32%
11.23% 15.07%
Alger American Balanced 21.51% 12.35% 12.35% 12.35% 12.35%
27.60% 21.60% 22.06%
Maxim Bond Index 5.20% 4.21% 0.44% -5.56% 4.06% 4.06%
-1.58% -7.58%
Maxim Bond 5.14% 4.13% 5.36% 5.36% 5.36% 5.36%
-1.52% -7.52%
Maxim Loomis-
Sayles Corporate Bond 9.71% 10.31% 9.51% 9.81% 9.01%
3.56% -2.44% 10.53%
Maxim U.S. Government
Securities -6.95% 5.75% 4.77% 6.03% 6.03% 6.03%
-0.95% 6.03%
Maxim Aggressive
Profile 14.69% N/A N/A 14.26% 11.98% 15.73% 13.55%
20.69%
Maxim Moderately
Aggressive Profile I 14.91% N/A N/A 13.78% 11.48% 14.75% 12.54%
20.91%
Maxim Moderate
Profile I 9.34% N/A N/A 10.74% 8.36% 11.90% 9.62%
15.34%
Maxim Moderately
Conservative Profile I 1.32% N/A N/A 6.55% 4.06% 7.70% 5.30%
7.32%
Maxim Conservative
Profile I -2.12% N/A N/A 5.38% 2.85% 5.45% 2.98%
3.88%
</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 Index 600 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 Growth & Income June 30, 1997 September 11, 1997
Maxim T. Rowe Price MidCap Growth June 30, 1997 September 11, 1997
Maxim Aggressive Profile September 11, 1997 September 11, 1997
Moderately Aggressive Profile September 11, 1997 September 11, 1997
Moderate Profile September 11, 1997 September 11, 1997
Maxim Moderately Conservative Profile September 11, 1997 September 11, 1997
Maxim Conservative Profile September 11, 1997 September 11, 1997
Fidelity VIP Growth October 9, 1986 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
Pioneer VCT Equity-Income March 1, 1995 September 13, 1999
Alger American Balanced September 5, 1989 September 13, 1999
Alger American MidCap Growth May 3, 1993 September 13, 1999
Maxim Bond Index December 1, 1992 September 13, 1999
</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.
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 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 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 Group 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 Securities and
Exchange Commission 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>
- --------
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. After the Annuity Commencement Date, however,
all Contracts are assessed the mortality and expense risk charge an equivalent
daily rate. Please see "Charges and Deductions: Mortality and Expense Risk
Deductions" for more information.
2 After the Annuity Commencement Date, all Contracts are assessed the mortality
and expense risk charge at an equivalent daily rate.
1 Standard & Poor's, S&P 500 Composite Index, S&P Mid-Cap Index, S&P Small-Cap
600 Stock Index, S&P/BARRA Value Index and S&P/BARRA Growth 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 Eligible
Funds that track on of those indices 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.
<PAGE>
Appendix A
Condensed Financial Information Selected Data for Accumulation Units
Outstanding Throughout Each Period For The Periods Ended December 31,
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------
Maxim Aggressive Profile Portfolio Maxim Ariel MidCap Value 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 04/13/94
1999
Beginning Unit
Value $ 11.50 $ $ $ 11.72 $ $ 12.06 $ 14.94 $ 14.60 $ 16.08 $
11.79 11.75 11.68 21.12
================================================================================================================
Ending Unit
Value $ 14.01 $ 14.28 $ $ 14.15 $ $ 12.09 $ 14.90 $ 14.53 $ 15.97 $
4.21 14.04 20.92
================================================================================================================
Number of Units
Outstanding
980,948.29 25,571.23 63,448.45 68,648.89 223,144.49 58,732.02 58,898.13 328,339.05 529,521.61 2,033,465.79
===============================================================================================================
Net Assets
(000's) $ 13,739 $ 365 $ 901 $ 971 $ $ 710 $ 878 $ 4,771 $ 8,456 $
3,134 42,532
================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 10.31 $ $ 10.30 $ $ 10.00 $ 11.23 $ 11.00 $ 12.14 $
10.31 10.29 15.99
================================================================================================================
Ending Unit
Value $ 11.50 $ 11.79 $ $ 11.72 $ $ 12.06 $ 14.94 $ 14.60 $ 16.08 $
11.75 11.68 21.12
================================================================================================================
Number of
Units Outstanding
411,766.69 3,713.98 15,150.39 39,090.58 192,086.65 39,226.80 39,615.48 256,925.44 470,211.38 2,277,248.95
================================================================================================================
Net Assets
(000's) $ 4,734 $ 44 $ 178 $ 458 $ $ 473 $ 592 $ 3,752 $ 7,561 $
2,243 48,105
================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ $ 10.00 $ $ 10.00 $ 10.00 $ 10.85 $
10.00 10.00 14.34
===========
============================================ ================================================
Ending Unit
Value $ 10.31 $ $ 10.30 $ $ 11.23 $ 11.00 $ 12.14 $
10.31 10.29 15.99
==============================================
============================================ ==============================================
Number of
Units Outstanding
594.16 - 9,576.11 58,762.77 34,374.34 2,545.66 422,167.92 2,495,810.84
============================================ ==============================================
Net Assets (000's) $ 6 $ - $ 99 $ 605 $ 386 $ 28 $ 5 ,125 $
39,908
============================================ ==============================================
1996
Beginning Unit
Value $ 10.34 $
13.70
=========================
Ending Unit
Value $ 10.85 $
14.34
=========================
Number of
Units Outstanding
528,556.23 2,440,068.07
=========================
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
194,687.27 1,715,174.42
=========================
Net Assets (000's) $ $
2,012 23,498
===============================================================================================================
---------------------------------------------------------------------------------------------------------------
Maxim Ariel Small-Cap Value Portfolio Maxim Bond 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 11/04/94 06/10/98 01/01/97 06/13/97 12/04/95 11/15/83
1999
Beginning Unit
Value $ $ 13.69 $ 12.69 $ 16.63 $ $ 10.34 $ 11.12 $ 10.99 $ 11.70 $ 29.87
10.87 18.21
===============================================================================================================
Ending Unit
Value $ 10.24 $ 12.83 $ 11.87 $ 15.52 $ $ 10.31 $ 11.03 $ 10.88 $ 11.56 $ 29.42
16.94
===============================================================================================================
Number of
Units Outstanding 257,904.70 7,616.79 26,816.01 141,840.01 32,935.95
37,219.61 88,672.41 288,557.62 485,260.78 1,202,989.21
===============================================================================================================
Net Assets (000's) $ 2,642 $ 98 $ 318 $ 578 $ 2,403 $ 340 $ 978 $ 3,139 $ 5,610 $ 35,389
===============================================================================================================
1998
Beginning Unit
Value $ $ 12.72 $ 11.81 $ 15.50 $ 17.03 $ 10.00 $ 10.48 $ 10.38 $ 11.08 $ 28.36
10.00
===============================================================================================================
Ending Unit
Value $ 10.87 $ 13.69 $ 12.69 $ 16.63 $ 18.21 $ 10.34 $ 11.12 $ 10.99 $ 11.70 $ 29.87
===============================================================================================================
Number of
Units Outstanding
117,016.71 4,136.54 24,665.53 21,916.39 162,035.10 19,021.64 7,489.11 302,285.65 271,537.15 1,478,126.62
===============================================================================================================
Net Assets (000's) $ 1,273 $ 57 $ 313 $ 364 $ 2,951 $ 197 $ 83 $ 3,322 $ 3,178 $ 44,148
===============================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ 12.24 $ 13.48 $ 10.00 $ 10.00 $ 10.44 $ 26.82
============================================ =============================================
Ending Unit Value $ 12.72 $ 11.81 $ 15.50 $ 17.03 $ 10.48 $ 10.38 $ 11.08 $ 28.36
=============================================
============================================ =============================================
Number of Units
Outstanding 5,933.43 395.12
4,787.54 113,566.69 3,958.65 19,087.44 251,460.22 1,688,345.67
============================================ =============================================
Net Assets (000's) $ 75 $ 5 $ 74 $ 1,934 $ 41 $ 198 $ 2,786 $ 47,881
============================================ =============================================
1996
Beginning Unit
Value $ $ $ 10.11 $
10.48 11.58 26.05
======================= ==================
Ending Unit Value $ $ $ 10.44 $
12.24 13.48 26.82
======================= ======================
Number of Units
Outstanding
1,652.65 39,184.70 287,152.67 1,890,635.84
======================= =====================
Net Assets (000's) $ 20 $ $ 2,999 $
528 50,700
======================= ======================
1995
Beginning Unit
Value $ $ $ 10.00 $
10.00 10.15 22.89
======================= ======================
Ending Unit Value $ $ $ 10.11 $
10.48 11.58 26.05
======================= ======================
Number of Units
Outstanding
164.60 30,919.44 197,590.07 2,010,468.99
======================= ======================
Net Assets (000's) $ 2 $ 358 $ $
1,998 52,363
================================================================================================================
----------------------------------------------------------------------------------------------------------------
Maxim Bond Index 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 09/13/99 09/13/99 09/13/99 09/13/99 09/13/99 01/02/98 09/11/97 09/11/97 09/11/97 09/11/97
1999
Beginning Unit
Value $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.80 $ 11.14 $ 11.11 $ 11.15 $ 11.04
================================================================================================================
Ending Unit
Value $ 10.03 $ 10.01 $ 10.00 $ 10.00 $ 9.99 $ 11.33 $ 11.61 $ 11.56 $ 11.58 $ 11.42
================================================================================================================
Number of
Units Outstanding
- 0.50 249.52 79.29 12,077.38 704,508.34 1,880.81 342,028.29 12,170.50 431,714.66
================================================================================================================
Net Assets(000's) $ - $ 0 $ 2 $ 1 $ 121 $ 7,981 $ 22 $ 3,955 $ 141 $ 4,932
================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 10.34 $ 10.34 $ 10.33 $ 10.32
=========================================================
Ending Unit
Value $ 10.80 $ 11.14 $ 11.11 $ 11.15 $ 11.04
=========================================================
Number of Units
Outstanding
542,021.82 104.91 426,692.38 3,968.60 436,225.06
=========================================================
Net Assets(000's) $ 5,856 $ 1 $ 4,741 $ 44 $ 4,816
=========================================================
1997
Beginning Unit
Value $ 10.00 $ $ 10.00 $
10.00 10.00
==============================================
Ending Unit
Value $ 10.34 $ $ 10.33 $
10.34 10.32
==============================================
==============================================
Number of Units
Outstanding
- - 94,228.09 72,034.42
==============================================
Net Assets
(000's) $ - $ - $ 973 $ 743
===============================
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)
==============================================================================================================
--------------------------------------------------------------------------------------------------------------
Maxim Founders Growth & Income 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 06/10/98 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
1999
Beginning Unit
Value $ 10.50 $ 12.28 $ 12.25 $ $ 12.17 $ 11.87 $ 14.29 $ 14.25 $ 14.21 $
12.22 14.16
=============================================================================================================
Ending Unit Value $ 12.08 $ 14.05 $ 13.98 $ $ 13.82 $ 15.06 $ 18.03 $ 17.94 $ 17.86 $
13.92 17.74
==============================================================================================================
Number of Units
Outstanding 3,248.53 21,762.04 38,384.92 7,108.09
25,804.74 225,791.18 43,961.50 102,466.53 126,500.02 1,021,201.64
==============================================================================================================
Net Assets
(000's) $ 39 $ 306 $ 537 $ 359 $ 3,121 $ 107 $ 792 $ 1,839 $ 2,259 $
18,117
==============================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 10.48 $ 10.47 $ $ 10.45 $ 10.00 $ 10.46 $ 10.46 $ 10.45 $
10.46 10.44
==============================================================================================================
Ending Unit
Value $ 10.50 $ 12.28 $ 12.25 $ $ 12.17 $ 11.87 $ 14.29 $ 14.25 $ 14.21 $
12.22 14.16
==============================================================================================================
Number of Units
Outstanding 1,779.20 5,053.76 26,637.10 602.66
18,073.50 209,618.75 6,496.27 24,247.29 66,115.58 566,409.87
=======================================================
=======================================================
Net Assets (000's) $ 19 $ 62 $ 326 $ 221 $ 2,551 $ 7 $ 93 $ 346 $ 940 $
8,019
==============================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ $ 10.00 $ 10.00 $ 10.00 $ 10.00 $
10.00 10.00
============================================ ============================================
Ending Unit Value $ 10.48 $ 10.47 $ $ 10.45 $ 10.46 $ 10.46 $ 10.45 $
10.46 10.44
===========================================
============================================ ============================================
Number of Units
Outstanding 1,908.53 -
7,818.57 81,095.13 1,592.27 - 1,779.77 47,353.03
============================================ ============================================
Net Assets (000's) $ 20 $ - $ 82 $ 847 $ 17 $ - $ 19 $ 494
============================================ ============================================
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)
=================================================================================================================
-----------------------------------------------------------------------------------------------------------------
Maxim Index 600 Portfolio Maxim INVESCO Balanced 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 03/15/94 01/02/98 01/01/97 06/13/97 10/31/96 10/31/96
1999
Beginning Unit
Value $ 9.48 $ 11.78 $ 10.88 $ $ 15.63 $ 11.84 $ 14.76 $ 12.50 $ 14.85 $ 14.76
13.92
=================================================================================================================
Ending Unit Value $ 10.61 $ 13.10 $ 12.08 $ $ 17.27 $ 13.82 $ 17.13 $ 14.48 $ 17.17 $ 17.01
15.43
=================================================================================================================
Number of Units
Outstanding 14,500.50 22,323.57 175,765.02 173,995.43 457,632.00
524,935.92 90,591.72 684,805.52 478,348.00 5,105,248.56
=================================================================================================================
Net Assets(000's) $ 154 $ 292 $ $ $ 9,064 $ 6,327 $ 1,552 $ 9,919 $ 8,213 $ 86,852
2,123 2,684
=================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 12.03 $ 11.14 $ $ 16.08 $ 10.00 $ 12.53 $ 10.63 $ 12.66 $ 12.62
14.28
=================================================================================================================
Ending Unit Value $ 9.48 $ 11.78 $ 10.88 $ $ 15.63 $ 11.84 $ 14.76 $ 12.50 $ 14.85 $ 14.76
13.92
=================================================================================================================
Number of Units
Outstanding 22,273.21 183,674.90 5,029,978.19
11,591.13 72,881.82 654,733.49 206,749.57 13,049.81 530,510.93 342,274.21
==========================================================
=======================================================
Net Assets (000's) $ 110 $ 262 $ 1,998 $ $ 2,448 $ 193 $ 6,632 $ 5,082 $ 74,219
1,015 10,235
=================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ $ 13.46 $ 10.00 $ 10.00 $ 10.14 $ 10.13
11.92
============================================ ===============================================
Ending Unit Value $ 12.03 $ 11.14 $ $ 16.08 $ 12.53 $ 10.63 $ 12.66 $ 12.62
14.28
===============================================
============================================ ===============================================
Number of Units
Outstanding 20,427.36 1,923.32 147,236.05
711,865.97 14,831.94 1,275.72 340,421.00 4,925,017.36
============================================ ===============================================
Net Assets(000's) $ 246 $ 21 $ $ 11,447 $ 186 $ 14 $ 4,310 $ 62,154
2,103
============================================ ===============================================
1996
Beginning Unit
Value $ $ 11.82 $ 10.00 $ 10.00
10.43
======================= ========================
Ending Unit Value $ $ 13.46 $ 10.14 $ 10.13
11.92
======================= ========================
Number of Units
Outstanding 132,987.33
477,902.35 4,262.66 22,568.19
======================= ========================
Net Assets (000's $ $ 6,433 $ 43 $ 229
1,585
======================= ========================
1995
Beginning Unit
Value $ $ 9.48
10.00
=======================
Ending Unit Value $ $ 11.82
10.43
=======================
Number of Units
Outstanding 72,120.51
296,281.36
=======================
Net Assets(000's) $ 753 $
3,502
================================================================================================================
----------------------------------------------------------------------------------------------------------------
Maxim INVESCO International Growth Portfolio (ADR) 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
Operations 06/10/98 01/01/97 06/13/97 12/04/95 01/05/95 06/10/98 01/01/97 06/13/97 12/04/95 01/09/95
1999
Beginning Unit
Value $ 9.75 $ 12.26 $ 10.99 $ $ 16.28 $ 11.04 $ 13.81 $ 12.97 $ 18.52 $
15.21 22.31
================================================================================================================
Ending Unit Value $ 11.96 $ 14.96 $ 13.38 $ $ 19.72 $ 19.96 $ 24.83 $ 23.28 $ 33.17 $
18.48 39.83
================================================================================================================
Number of Units
Outstanding 280,188.56
10,506.29 29,709.85 70,783.74 343,437.29 41,361.84 117,175.80 396,589.37 335,181.31 1,279,850.46
================================================================================================================
Net Assets (000's) $ 126 $ 445 $ 3,749 $ 1,308 $ 6,772 $ 826 $ 2,909 $ 9,232 $ 11,117 $
50,978
================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 11.15 $ 10.01 $ 13.88 $ 14.90 $ 10.00 $ 11.80 $ 11.11 $ 15.90 $
19.21
===============================================================================================================
Ending Unit Value $ 9.75 $ 12.26 $ 10.99 $ 15.21 $ 16.28 $ 11.04 $ 13.81 $ 12.97 $ 18.52 $
22.31
================================================================================================================
Number of Units
Outstanding 5,065.09 29,294.88 292,162.25 51,071.84 31,102.91
347,745.34 85,293.71 334,433.76 251,992.27 1,277,401.42
================================================================================================================
Net Assets (000's) $ 49 $ 359 $ 3,211 $ 777 $ 5,660 $ 343 $ 1,178 $ 4,339 $ 4,667 $
28,498
================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ 12.50 $ 13.46 $ 10.00 $ 10.00 $ 13.52 $
16.38
============================================ ==============================================
Ending Unit Value $ 11.15 $ 10.01 $ 13.88 $ 14.90 $ 11.80 $ 11.11 $ 15.90 $
19.21
============================================ ==============================================
Number of Units
Outstanding 34,886.43 7.11 149,143.92
314,943.72 110,005.54 754.64 296,221.15 1,340,084.31
============================================ ==============================================
Net Assets (000's) $ 389 $ 0 $ 2,070 $ 4,693 $ 1,298 $ 8 $ 4,710 $
25,743
============================================ ==============================================
1996
Beginning Unit
Value $ 10.41 $ 11.25 $ 10.77 $
13.09
=======================
=======================
Ending Unit Value $ 12.50 $ 13.46 $ 13.52 $
16.38
======================= =======================
Number of Units
Outstanding 74,310.25
126,363.18 159,393.34 776,719.68
======================= =======================
Net Assets (000's) $ 929 $ 1,701 $ 2,155 $
12,726
======================= =======================
1995
Beginning Unit
Value $ 10.00 $ 10.00 $ 10.00 $
10.00
======================= =======================
Ending Unit Value $ 10.41 $ 11.25 $ 10.77 $
13.09
======================= =======================
Number of Units
Outstanding 1,130.83
23,104.73 24,147.18 210,982.04
======================= =======================
Net Assets (000's) $ 12 $ 260 $ 260 $ 2,762
================================================================================================================
----------------------------------------------------------------------------------------------------------------
Maxim Loomis Sayles Corporate Bond Portfolio Maxim Loomis Sayles Small-Cap Value 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
1999
Beginning Unit
Value $ 10.29 $ 11.53 $ 10.83 $ $ 15.41 $ 9.58 $ 9.74 $ 9.72 $ 9.69 $ 9.66
12.88
================================================================================================================
Ending Unit Value $ 10.79 $ 12.03 $ 11.27 $ $ 15.96 $ 9.53 $ 9.65 $ 9.61 $ 9.56 $ 9.49
13.38
================================================================================================================
Number of Units
Outstanding 69,826.06 11,524.60 189,311.10 132,735.46 2,176.29
1,005,368.97 8,763.18 19,064.83 32,492.98 163,845.38
================================================================================================================
Net Assets (000's) $ 753 $ 139 $ 2,133 $ $ $ 21 $ 85 $ 183 $ 311 $ 1,555
1,777 16,046
================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 11.21 $ 10.55 $ $ 15.09 $ 10.00 $ 10.03 $ 10.02 $ 10.01 $ 10.01
12.57
================================================================================================================
Ending Unit Value $ 10.29 $ 11.53 $ 10.83 $ $ 15.41 $ 9.58 $ 9.74 $ 9.72 $ 9.69 $ 9.66
12.88
================================================================================================================
Number of Units
Outstanding
49,103.31 10,107.63 178,619.57 107,193.71 1,134,813.38 9,120.17 5,260.61 14,660.30 22,333.17 188,314.26
================================================================================================================
Net Assets(000's) $ 505 $ 117 $ 1,934 $ $ 17,487 $ 87 $ 51 $ 142 $ 216 $ 1,818
1,381
================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ $ 13.55 $ 10.00 $ 10.00 $ 10.00 $ 10.00
11.26
============================================ ==============================================
Ending Unit Value $ 11.21 $ 10.55 $ $ 15.09 $ 10.03 $ 10.02 $ 10.01 $ 10.01
12.57
============================================ ==============================================
Number of Units
Outstanding
10,505.76 140.06 84,830.69 986,392.61 1,448.50 - 9,792.14 70,399.46
============================================ ==============================================
Net Assets(000's) $ 118 $ 1 $ $ 14,885 $ 15 $ - $ 98 $ 705
1,066
============================================ ==============================================
1996
Beginning Unit
Value $ $ 12.44
10.30
=======================
Ending Unit Value $ $
11.26 13.55
=======================
Number of Units
Outstanding
38,958.69 478,757.71
=======================
Net Assets(000's) $ 439 $ 6,488
=======================
1995
Beginning Unit
Value $ $ 10.00
10.00
=======================
Ending Unit Value $ $ 12.44
10.30
=======================
Number of Units
Outstanding
269.42 220,637.10
=======================
Net Assets (000's) $ 3 $ 2,744
=================================================================================================================
-----------------------------------------------------------------------------------------------------------------
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
1999
Beginning Unit
Value $ 11.13 $ 11.35 $ 11.32 $ 11.28 $ 11.25 $ 11.25 $ 11.58 $ 11.55 $ 11.52 $ 11.48
=================================================================================================================
Ending Unit Value $ 12.96 $ 13.14 $ 13.08 $ 13.00 $ 12.93 $ 13.73 $ 14.06 $ 14.00 $ 13.93 $ 13.83
=================================================================================================================
Number of Units
Outstanding 1,804,051.78
1,219,880.72 6,109.16 347,108.62 91,118.94 479,827.82 9,781.57 207,585.59 163,856.44 478,876.63
=================================================================================================================
Net Assets(000's) $ 15,809 $ 80 $ 4,541 $ 1,185 $ 6,202 $ 24,775 $ 138 $ 2,905 $ 2,282 $ 6,625
=================================================================================================================
1998
Beginning Unit
Value 10.00 $ 10.24 $ 10.24 $ 10.23 $ 10.22 $ 10.00 $ 0.35 $ 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
Outstanding
419,765.72 2,619.56 258,990.96 16,878.33 418,487.19 697,144.75 4,302.17 140,358.02 36,452.19 446,496.19
=================================================================================================================
Net Assets(000's) $ 4,672 $ 30 $ 2,932 $ 190 $ 4,708 $ 7,844 $ 50 $ 1,622 $ 420 $ 5,126
=================================================================================================================
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
Outstanding
2,249.51 - 44,770.91 110,105.33 2,109.96 - 53,828.37 141,839.79
============================================ ==============================================
Net Assets(000's) $ 23 $ - $ 458 $ 1,125 $ 22 $ - $ 557 $ 1,465
============================================ ==============================================
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)
=================================================================================================================
-----------------------------------------------------------------------------------------------------------------
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
1999
Beginning Unit
Value $ 10.95 $ 11.15 $ 11.12 $ 11.04 $ $ 10.28 $ 10.95 $ $ 11.34 $ 19.01
11.05 10.70
=================================================================================================================
Ending Unit Value $ 11.87 $ 12.01 $ 11.96 $ 11.85 $ $ 10.78 $ 11.41 $ $ 11.77 $ 19.68
11.82 11.13
=================================================================================================================
Number of Units
Outstanding 443,954.25 2,199.42 383,124.12 14,657.02 708,987.52
309,247.32 64,181.93 2,059,542.36430,080.54 3,701,304.91
=================================================================================================================
Net Assets (000's) $ 5,268 $ 26 $ 4,581 $ 174 $ $ 692 $ 8,091 $ $ 5,064 $ 72,827
3,655 22,928
=================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 10.21 $ 10.21 $ 10.20 $ $ 10.00 $ 10.47 $ $ 10.89 $ 18.30
10.19 10.25
=================================================================================================================
Ending Unit Value $ 10.95 $ 11.15 $ 11.12 $ 11.04 $ $ 10.28 $ 10.95 $ $ 11.34 $ 19.01
11.05 10.70
=================================================================================================================
Number of Units
Outstanding 177,087.47 - 338,437.20 4,110.80
354,140.45 80,123.80 719,236.73 1,613,050.25352,052.98 3,758,054.92
=================================================================================================================
Net Assets(000's) 1,940 $ - $ 3,763 $ 45 $ $ 824 $ 7,874 $ $ 3,992 $ 71,428
3,913 17,260
=================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ $ $ 10.00 $ $ 10.44 $ 17.60
10.00 10.00 10.00
============================================ ===============================================
Ending Unit Value $ 10.21 $ 10.21 $ $ $ 10.47 $ $ 10.89 $ 18.30
10.20 10.19 10.25
============================================ ===============================================
Number of Units
Outstanding - 53,438.52
- 53,608.55 875,612.10 11,698.04 1,402,319.603,877,164.14
============================================ ===============================================
Net Assets(000's) $ - $ - $ 545 $ $ 9,168 $ $ 15,271 $ 70,952
546 120
============================================ ===============================================
1996
Beginning Unit
Value $ 10.04 $
16.96
=========================
Ending Unit Value $ 10.44 $
17.60
=========================
Number of Units Outstanding
343,499.44 3,129,281.92
=========================
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 Outstanding
169,096.04 2,880,571.67
=========================
Net Assets (000's) $ 1,697 $
48,860
==============================================================================================================
----------------------------------------------------------------------------------------------------------------
Maxim Stock Index Portfolio Maxim T. Rowe Price Equity/Income 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 06/10/98 01/01/97 06/13/97 12/04/95 11/09/94
1999
Beginning Unit
Value $ 11.09 $ 16.58 $ 13.78 $ 20.44 $ $ 10.17 $ 13.88 $ 12.04 $ 16.99 $ 20.94
71.93
================================================================================================================
Ending Unit Value $ 13.28 $ 19.74 $ 16.37 $ 24.24 $ $ 10.51 $ 14.27 $ 12.36 $ 17.40 $ 21.39
85.06
================================================================================================================
Number of Units 560,272.75 610,676.95 3,812,823.61 ,877,727.40 6,767,826.02 104,951.02
Outstanding 132,978.09 625,382.39 427,608.57 3,377,050.02
================================================================================================================
Net Assets(000's) $ 7,443 $ $ 62,432 $ 45,520 $ $ 1,103 $ 1,898 $ 7,729 $ 7,439 $ 72,219
12,056 575,651
===============================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 13.15 $ 10.95 $ 16.27 $ $ 10.00 $ 12.81 $ 11.14 $ 15.74 $ 19.47
57.44
================================================================================================================
Ending Unit Value $ 11.09 $ 16.58 $ 13.78 $ 20.44 $ $ 10.17 $ 13.88 $ 12.04 $ 16.99 $ 20.94
71.93
================================================================================================================
Number of Units 444,254.02 106,369.293,382,583.01,470,364.97 114,503.07
Outstanding 7,484,324.11 119,756.04 614,261.17 379,091.37 3,756,224.78
================================================================================================================
Net Assets(000's) $ 4,929 $ 1,763 $ 46,606 $ 30,053 $ $ 1,164 $ 1,662 $ 7,398 $ 6,440 $ 78,674
538,337
================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ 12.43 $ $ 10.00 $ 10.00 $ 12.34 $ 15.30
44.00
============================================== =========================================
Ending Unit Value $ 13.15 $ 10.95 $ 16.27 $ $ 12.81 $ 11.14 $ 15.74 19.47
57.44
============================================== ============================================
Number of Units 94,900.40 167,748.34 2,328,852.188,215,445.99
Outstanding 136,599.23 1,715.12 561,621.67 3,595,375.07
============================================== ================================================
Net Assets(000's) $ 1,248 $ 1,837 $ 37,890 $ $ 1,750 $ 19 $ 8,840 $ 70,002
471,895
============================================== ================================================
1996
Beginning Unit
Value $ 10.30 $ $ 10.43 $ 12.98
36.57
========================= =========================
Ending Unit Value $ 12.43 $ $ 12.34 $ 15.30
44.00
========================= =========================
Number of Units 2,057,207.66
Outstanding 7,884,581.79 276,648.63 1,702,863.67
========================= =========================
Net Assets (000's) $ 25,565 $ $ 3,413 $ 26,057
346,883
========================= =========================
1995
Beginning Unit
Value $ 10.00 $ $ 10.00 $ 9.85
27.30
========================= =========================
Ending Unit Value $ 10.30 $ $ 10.43 $ 12.98
36.57
========================= =========================
Number of Units 937,180.75
Outstanding 7,636,165.40 1,324.94 550,610.66
========================= =========================
Net Assets (000's) $ 9,653 $ $ 14 $ 7,146
279,234
================================================================================================================
----------------------------------------------------------------------------------------------------------------
Maxim T. Rowe Price Mid-Cap Growth Portfolio Maxim Templeton International Equity 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 04/13/94
1999
Beginning Unit
Value $ 12.28 $ 12 56 $ 12.53 $ 12.49 $ 12.45 $ 8.73 $ 9.58 $ 8.88 $ 11.66 $ 12.59
================================================================================================================
Ending Unit Value $ 15.30 $ 15.56 $ 15.49 $ 15.42 $ 15.32 $ 11.35 $ 12.38 $ 11.45 $ 15.01 $ 16.16
================================================================================================================
Number of Units 450,551.56 13,098.81 51,474.65 31,627.04
Outstanding 93,445.15 470,150.71 57,822.77 180,091.70 492,141.77 2,107,351.45
================================================================================================================
Net Assets(000's) 6,892 $ 204 $ 797 $ 1,441 $ 7,201 $ 359 $ 716 $ 2,062 $ 7,385 $ 34,051
================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 10.33 $ 10.33 $ 10.32 $ 10.31 $ 10.00 $ 10.14 $ 9.42 $ 12.39 $ 13.43
================================================================================================================
Ending Unit Value $ 2.28 $ 12.56 $ 12.53 $ 12.49 $ 12.45 $ 8.73 $ 9.58 $ 8.88 $ 11.66 $ 12.59
================================================================================================================
Number of Units
Outstanding 176,746.72 3,908.23 36,548.42 55,481.56 384,828.79 28,867.69 32,162.34 122,570.24 498,703.59 2,333,665.81
================================================================================================================
Net Assets(000's) 2,170 $ 49 $ 458 $ 693 $ 4,789 $ 252 $ 308 $ 1,089 $ 5,815 $ 29,389
================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 12.27 $ 13.33
============================================== ============================================
Ending Unit Value $ 10.33 $ 10.33 $ 10.32 $ 10.31 $ 10.14 $ 9.42 $ 12.39 $ 13.43
============================================== ============================================
Number of Units
Outstanding 1,741.25 - 12,739.10 128,683.86 39,222.20 2,087.94 557,569.31 2,831,592.94
============================================== ============================================
Net Assets(000's) $ 18 $ - $ 131 $ 1,327 $ 398 $ 20 $ 6,908 $ 38,028
============================================== ============================================
1996
Beginning Unit
Value $ 10.36 $
11.29
=====================
Ending Unit Value $ 12.27 $
13.33
=====================
Number of Units
Outstanding 548,157.84 2,249,181.67
=========================
Net Assets (000's) $ 6,725 $
29,981
=========================
1995
Beginning Unit
Value $ 10.00 $
10.49
=========================
Ending Unit Value $ 10.36 $
11.29
=========================
Number of Units
Outstanding 290,190.44 1,645,237.34
=========================
Net Assets (000's) $ $
3,006 18,570
======================================================================================================
------------------------------------------------------------------------------------
Maxim Total
Return Portfolio Maxim U.S. Government Securities Portfolio
------------------------------------------------------------------------------------
0.95 1.25 0.00 0.55 0.75 0.95 1.25
Date Commenced Operations 12/04/95 04/20/94 06/10/98 01/01/97 06/13/97 12/04/95 04/01/85
1999
Beginning Unit Value $ - $ $ 10.43 $ 11.33 $ 11.14 $ 11.93 $ 14.31
-
====================================================================================
Ending Unit Value $ $ $ $ 11.85 $ 14.18
10.46 11.30 11.09
====================================================================================
Number of Units 55,109.13
Outstanding 19,724.89 350,532.03 217,847.85 2,599,233.40
====================================================================================
Net Assets (000's) $ - $ - $ 576 $ 223 $ 3,888 $ 2,582 $ 36,846
====================================================================================
1998
Beginning Unit Value $ 13.79 $ 15.69 $ 10.00 $ 10.62 $ 10.47 $ 11.23 $ 13.51
====================================================================================
Ending Unit Value $ $ - $ 10.43 $ 11.33 $ 11.14 $ 11.93 $ 14.31
-
====================================================================================
Number of Units
Outstanding - - 6,374.10 13,389.95 341,859.87 151,304.43 3,217,525.64
====================================================================================
Net Assets (000's) $ - $ - $ 66 $ 152 $ 3,809 $ 1,805 $ 46,046
====================================================================================
1997
Beginning Unit Value $ 11.27 $ 12.87 $ 10.00 $ 10.00 $ 10.45 $ 12.61
====================== ===================================================
Ending Unit Value $ 13.79 $ 15.69 $ 10.62 $ 10.47 $ 11.23 $ 13.51
====================== ===================================================
Number of Units 285.72 112,314.59
Outstanding - 3,531.32 739.30 3,225,407.45
====================== ===================================================
Net Assets (000's) $ $ $ 38 $ 8 $ 1,261 $ 43,575
- 4
====================== ======================== =============
==============
1996
Beginning Unit Value $ 10.18 $ 11.66 $ 10.15 $ 12.29
===========
=========== ===========================
Ending Unit Value $ 11.27 $ 12.87 $ 10.45 $ 12.61
===========
=========== ===========================
Number of Units 26,145.88 382,179.84 119,989.13
Outstanding 3,234,023.68
===========
=========== ===========================
Net Assets (000's) $ 295 $ 4,918 $ 1,254 $ 40,777
====================== ===========================
1995
Beginning Unit Value $ 10.00 $ 9.62 $ 10.00 $ 10.71
===========
=========== ===========================
Ending Unit Value $ 10.18 $ 11.66 $ 10.15 $ 12.29
===========
=========== ===========================
Number of Units 39,695.16
Outstanding 4,862.59 214,442.71 3,165,425.83
====================== =============
==============
Net Assets (000's) $ 50 $ 2,501 $ $
403 38,890
====================================================================================
-----------------------------------------------------------------------------------------------------------------
Maxim Value Index Portfolio Alger American Balanced Fund
-----------------------------------------------------------------------------------------------------------------
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 09/13/99 09/13/99 09/13/99 09/13/99 09/13/99
1999
Beginning Unit
Value $ 10.26 $ $ $ $ $ 10.00 $ 10.00 $ $ 10.00 $ 10.00
12.34 12.31 12.28 12.23 10.00
=================================================================================================================
Ending Unit Value $ 11.42 $ $ $ $ $ 11.41 $ 11.39 $ $ 11.37 $ 11.36
13.67 13.61 13.55 13.46 11.38
=================================================================================================================
Number of Units 7,980.97 13,235.05 69,752.97 40,924.99
Outstanding 424,659.62 - 3,334.40 3,327.96 15,039.58 94,918.42
=================================================================================================================
Net Assets(000's) $ 91 $ 181 $ 949 $ 554 $ $ - $ 38 $ 38 $ 171 $ 1,079
5,714
=================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ $ $ $
10.84 10.84 10.83 10.82
=========================================================
Ending Unit Value $ 10.26 $ $ $ $
12.34 12.31 12.28 12.23
=========================================================
Number of Units 2,711.68 8,915.02 23,951.01
Outstanding 41,993.96 362,062.57
=========================================================
Net Assets(000's) $ 28 $ 110 $ 517 $ 294 $
4,428
=========================================================
1997
Beginning Unit
Value $ $ $ $
10.00 10.00 10.00 10.00
==============================================
Ending Unit Value $ $ $ $
10.84 10.84 10.83 10.82
==============================================
Number of Units 12,307.01
Outstanding - - 55,506.37
==============================================
Net Assets(000's) $ - $ - $ 133 $
601
==============================================
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)
===========================================================================================================================
--------------------------------------------------------------------------------
American Century VP
Alger American MidCap Growth Fund Balanced Fund
--------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.95 1.25
Date Commenced Operations 09/13/99 09/13/99 09/13/99 09/13/99 09/13/99 12/04/95 08/03/92
1999
Beginning Unit Value $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 14.88 $
18.77
================================================================================
Ending Unit Value $ 12.24 $ 12.21 $ 12.21 $ 12.20 $ 12.19 $ 16.15 $
20.36
================================================================================
Number of Units
Outstanding 4,468.96 2,819.93 4,173.07 13,680.57 126,221.16 588.23 1,841.07
================================================================================
Net Assets (000's) $ 55 $ 34 $ 51 $ 167 $ 1,539 $ 10 $ 37
================================================================================
1998
Beginning Unit Value $ 12.98 $
16.41
=======================
Ending Unit Value $ 14.88
$
18.77
=======================
Number of Units 1,003.91
Outstanding 1,510.32
=======================
Net Assets (000's) $ 15 $ 28
=======================
1997
Beginning Unit Value $ 11.31 $
14.36
=======================
Ending Unit Value $ 12.98 $
16.41
=======================
Number of Units
Outstanding 3,607.78 1,890.46
=======================
Net Assets (000's) $ 47 $ 31
=======================
1996
Beginning Unit Value $ 10.18 $
12.96
=======================
Ending Unit Value $ 11.31 $
14.36
=======================
Number of Units
Outstanding 237,929.35 3,238,207.89
=======================
Net Assets (000's) $ 2,692 $
46,492
=======================
1995
Beginning Unit Value $ 10.00 $
10.83
=======================
Ending Unit Value $ 10.18 $
12.96
=======================
Number of Units
Outstanding 84,634.10 3,153,172.39
=======================
Net Assets (000's) $ 861 $
40,853
=============================================================================================================
-----------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation Fund Fidelity Investments VIP 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 08/07/92 06/10/98 01/01/97 06/13/97 12/04/95 04/21/94
1999
Beginning Unit
Value $ 9.72 $ $ $ $ $ $
$ $ $ 13.02 12.18 17.04 14.98 18.46 24.48
9.36 9.80 8.73
=================================================================================================================
Ending Unit
Value $ 15.99 $ $ $ $ $ 16.74 $ $ $ $
15.32 16.01 14.23 21.16 23.29 20.43 25.14 33.23
=================================================================================================================
Number of Units 83,735.91 166,119.99 275,889.98 755,950.03
Outstanding 41,010.46 1,402,602.44 82,726.28 279,463.28 727,652.01 3,970,113.12
=================================================================================================================
Net Assets(000's) $ 656 $ $ $ $ $ 1,385 $ $ $ $
1,283 2,659 3,925 29,684 6,508 15,444 18,292 131,938
=================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 9.62 $ $ $ $ 10.00 $ $ $ $
10.09 9.01 13.48 12.28 10.82 13.36 17.77
=================================================================================================================
Ending Unit Value $ 9.72 $ 9.36 $ $ $ $ 12.18 $ $ $ $
9.80 8.73 13.02 17.04 14.98 18.46 24.48
=================================================================================================================
Number of Units 25,906.23 10,882.95 164,721.68 304,341.17 593,071.00
Outstanding 2,088,303.72 56,691.14 157,481.96 503,651.35 3,681,235.62
=================================================================================================================
Net Assets(000's) $ 252 $ 102 $ $ $ $ 691 $ $ $ $
1,615 2,656 27,197 2,683 8,882 9,300 90,127
=================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ $ $ $ $ $
10.00 9.40 14.11 10.00 10.00 10.93 14.57
==============================================
============================================
Ending Unit Value $ 9.62 $ $ $ $ $ $ $
10.09 9.01 13.48 12.28 10.82 13.36 17.77
==============================================
============================================
Number of Units 14,859.84 449.77 331,874.62 3,446.98
Outstanding 3,207,248.87 157,223.90 588,801.03 3,352,899.82
============================================== ============================================
Net Assets(000's) $ 143 $ $ $ $ 37 $ $
$ 2,990 43,234 1,931 7,866 59,581
5
============================================== ============================================
1996
Beginning Unit
Value $ $ $ 9.62 $
9.92 14.93 12.86
======================== ======================
Ending Unit Value $ $ $ $
9.40 14.11 10.93 14.57
======================== ======================
Number of Units 585,432.85
Outstanding 4,560,706.32 463,651.69 2,500,808.02
======================== ======================
Net Assets(000's) $ $ $ $
5,503 64,356 5,068 36,439
======================== ======================
1995
Beginning Unit
Value $ $ $ $
10.00 11.53 10.00 9.62
======================== ======================
Ending Unit Value $ $ $ 9.62 $
9.92 14.93 12.86
======================== ======================
Number of Units
Outstanding 292,581.15 4,954,474.12 164,201.34 1,502,634.51
======================== ======================
Net Assets(000's) $ 2,902 $ $ 1,580 $
73,995 19,328
====================================================================================================================================
-------------------------------------------------------------------------------------------------------
Fidelity Investments VIP II Asset Manager Portfolio Fidelity Investments VIP II Contrafund 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 04/21/94 11/12/98 11/12/98 11/12/98 11/12/98 11/12/98
1999
Beginning Unit
Value $ $ $ $ $ $ 11.71 $ $ 11.70 $ 11.70 $
10.58 13.73 12.27 16.26 16.47 11.70 11.69
================================================================================================================
Ending Unit Value $ $ $ $ $ $ 14.55 $ $ 14.43 $ 14.40 $
11.75 15.17 13.53 17.89 18.07 14.46 14.35
================================================================================================================
Number of Units 39,365.73 44,428.26 289,063.48 166,809.69 19,034.82
Outstanding 1,383,474.11 1,704.69 24,132.61 84,529.68 490,770.66
================================================================================================================
Net Assets(000's) $ 463 $ 674 $ $ $ $ 25 $ 349 $ 275 $ 1,217 $
3,911 2,985 25,005 7,041
================================================================================================================
1998
Beginning Unit
Value $ $ 12.00 $ $ $ $ 10.00 $ $ 10.00 $ 10.00 $
10.00 10.74 14.27 14.50 10.00 10.00
================================================================================================================
Ending Unit Value $ $ $ $ $ $ 11.71 $ $ 11.70 $ 11.70 $
10.58 13.73 12.27 16.26 16.47 11.70 11.69
================================================================================================================
Number of Units 32,619.73 38,527.01 287,339.45 163,995.76 545.53
Outstanding 2,065,741.39 - - 1,792.37 79,502.22
================================================================================================================
Net Assets(000's) $ 345 $ 529 $ $ $ $ - $ - $ 6 $ 21 $ 930
3,526 2,667 34,030
================================================================================================================
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 1,232.17 243,166.13
Outstanding 2,104,778.43
==============================================
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
Outstanding 1,593,034.53
========================
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
Outstanding 1,202,943.32
========================
Net Assets(000's) 1,239
12,939
=============================================================================================================
-------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Pioneer VCT Equity Income Fund - Class II SteinRoe
Growth Portfolio Balanced
Fund
-------------------------------------------------------------------------------------------------------------
0.75 0.95 0.00 0.55 0.75 0.95 1.25 0.75
Date Commenced
Operations 06/02/98 10/12/98 09/13/99 09/13/99 09/13/99 09/13/99 09/13/99 06/02/98
1999
Beginning Unit Value $
$ $ 10.00 $ $ $ $ $
10.65 12.59 10.00 10.00 10.00 10.00 10.72
=============================================================================================================
Ending Unit Value
$ $ $ $ $ $ $ $
17.31 20.54 9.76 9.74 9.74 9.73 9.72 11.98
=============================================================================================================
Number of Units
Outstanding 123,401.32 105,742.62 - 270.05 1,471.60 1,756.46 17,679.99 8,242.99
=============================================================================================================
Net Assets (000's)
$ $ $ $ $ $ $ $
2,136 2,172 - 3 14 17 172 99
=============================================================================================================
1998
Beginning Unit Value
$ $ $
10.00 10.00 10.00
=============
=========================== ============
Ending Unit Value
$ $ $
10.65 12.59 10.72
=============
=========================== ============
Number of Units
Outstanding 17,591.36 48,118.83 4,142.27
=============
=========================== ============
Net Assets (000's)
$ $ $
187 606 44
=========================== ============
=============
1997
Beginning Unit Value
Ending Unit Value
Number of Units
Outstanding
Net Assets (000's)
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)
===========================================================================================
</TABLE>
APPENDIX B - CALCULATION OF THE NET INVESTMENT FACTOR
The Net Investment Factor for each Variable Sub-Account for any Valuation
Period is determined by dividing (a) by (b), and subtracting (c) from the result
where:
(a) is the net result of:
(i) the net asset value per share of the Eligible Fund shares determined
as of the end of the current Valuation Period, plus
(ii)the per share amount of any dividend (or, if applicable, capital gain
distributions) made by the Eligible Fund on shares if the "ex-dividend"
date occurs during the current Valuation Period, minus or plus
(iii) a per unit charge or credit for any taxes incurred by or provided for
in the Variable Sub-Account, which is determined by GWL&A to have
resulted from the investment operations of the Variable Sub-Account; and
(b) is the net asset value per share of the Eligible Fund shares determined as
of the end of the immediately preceding Valuation Period, minus or plus
(c) is an amount representing the Mortality and Expense Risk Charge deducted
from each Variable Sub-Account on a daily basis. Such amount is equal to
1.25%, 0.95%, 0.75%, 0.65%, 0.55%, or 0.00%, depending upon the Group
Policyholder's Contract.
The Net Investment Factor may be greater than, less than, or equal to
one. Therefore, the Accumulation Unit Value may increase, decrease or remain
unchanged.
The net asset value per share referred to in paragraphs (a) (i) and (b)
above, reflect the investment performance of the Eligible Fund as well as the
payment of Eligible Fund expenses.
<PAGE>
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
FUTUREFUNDS SERIES ACCOUNT
Group Flexible Premium Variable Annuity Contracts
issued by
Great-West Life & Annuity Insurance Company
8515 E. Orchard Road
Englewood, Colorado 80111
Telephone: (800) 468-8661 (U.S.)
(303) 689-3360 (Englewood)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a Prospectus and should
be read in conjunction with the Prospectus, dated May 1, 2000, which is
available without charge by contacting Great-West Life & Annuity Insurance
Company ("GWL&A") at the address or at the telephone number above.
May 1, 2000
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
TABLE OF CONTENTS
Page
CUSTODIAN AND INDEPENDENT AUDITORS...............................................................B-3
UNDERWRITER......................................................................................B-3
CALCULATION OF PERFORMANCE DATA..................................................................B-3
FINANCIAL STATEMENTS.............................................................................B-5
</TABLE>
<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, 1999
and 1998 and each of the three years in the period ended December 31, 1999, as
well as the financial statements of the Series Account for the years ended
December 31, 1999 and 1998, 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. BCE received commissions paid by GWL&A in the amount of
$207,833 for 1999, $159,850 for 1998 and $134,805 for1997.
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, 1999 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, 1999
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 Participant has participated under the Group
Contract. (See "Charges and Deductions" in the Prospectus.) No deductions or
sales loads are assessed upon annuitization under the Group 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, 1999, 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 Participant
Annuity Account 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 Group Contracts, and they should not be considered as
bearing on the investment performance of the Series Account. The variable
interest of Participants under the Group 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, 1999 AND 1998
AND INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
ASSETS
<TABLE>
Shares Cost Value
Investments in underlying affiliated funds:
<S> <C> <C>
Maxim Series Fund, Inc. Aggressive Profile Portfolio 15,340,663 $ $
16,793,887 18,926,617
Maxim Series Fund, Inc. Ariel MidCap Value Portfolio 37,001,809
59,318,321 57,029,035
Maxim Series Fund, Inc. Ariel Small-Cap Value Portfolio
7,641,846 6,810,061 5,991,287
Maxim Series Fund, Inc. Bond Portfolio 39,677,565
47,181,428 45,314,481
Maxim Series Fund, Inc. Bond Index Portfolio
98,377 123,418 120,767
Maxim Series Fund, Inc. Conservative Profile Portfolio 16,753,826
17,483,086 16,944,745
Maxim Series Fund, Inc. Founders Growth & Income Portfolio
3,496,786 3,935,678 4,341,515
Maxim Series Fund, Inc. Growth Index Portfolio
7,958,852 20,050,636 22,789,366
Maxim Series Fund, Inc. Index 600 Portfolio 17,738,065
15,304,751 14,188,239
Maxim Series Fund, Inc. INVESCO Balanced Portfolio 78,817,828
111,027,439 111,587,194
Maxim Series Fund, Inc. INVESCO International Growth
Portfolio (ADR) 6,230,633 10,060,863 12,317,096
Maxim Series Fund, Inc. INVESCO Small-Cap Growth Portfolio 26,217,914
50,261,772 74,314,388
Maxim Series Fund, Inc. Loomis Sayles Corporate Bond 19,323,126
Portfolio 22,696,760 20,564,762
Maxim Series Fund, Inc. Loomis Sayles Small-Cap Value
Portfolio 1,608,430 2,141,344 2,147,069
Maxim Series Fund, Inc. Moderate Profile Portfolio 24,521,184
26,057,348 27,588,730
Maxim Series Fund, Inc. Moderately Aggressive Profile 29,588,667
Portfolio 32,247,725 36,045,085
Maxim Series Fund, Inc. Moderately Conservative Profile 12,833,233
Portfolio 13,489,801 13,600,495
Maxim Series Fund, Inc. Money Market Portfolio 108,839,296
108,902,149 108,894,577
Maxim Series Fund, Inc. Stock Index Portfolio 173,186,029
433,055,937 700,436,030
Maxim Series Fund, Inc. T. Rowe Price Equity/Income 54,055,232
Portfolio 92,686,082 89,483,900
Maxim Series Fund, Inc. T. Rowe Price MidCap Growth 10,358,653
Portfolio 13,878,117 16,399,107
Maxim Series Fund, Inc. Templeton International Equity 29,147,247
Portfolio 38,409,858 44,272,579
Maxim Series Fund, Inc. U.S. Government Securities 41,605,003
Portfolio 45,200,047 43,515,161
Maxim Series Fund, Inc. Value Index Portfolio
4,088,537 7,849,110 7,376,666
Investments in underlying funds:
Alger American Fund Balanced Fund
80,426 1,155,892 1,252,232
Alger American Fund Midcap Growth Fund
54,703 1,519,165 1,763,067
American Century VP Funds VP Balanced Fund
6,036 46,101 47,020
American Century VP Funds VP Capital Appreciation Fund
2,581,808 22,572,818 38,314,029
Fidelity Investments VIP Growth Portfolio
3,136,344 117,913,499 172,279,363
Fidelity Investments VIP II Asset Manager Portfolio
1,770,304 29,672,108 33,051,579
Fidelity Investments VIP II Contrafund Portfolio
299,304 7,592,961 8,724,713
Janus Aspen Funds Worldwide Growth Portfolio
88,845 2,945,289 4,242,371
Pioneering Services VCT Equity Income - Class II
Corporation 8,552 180,238 178,058
SteinRoe Funds Balanced Fund
5,525 88,910 98,399
------- ------
Total Investments
$1,378,652,599 1,754,139,722
===============
Other assets and liabilities:
Net Premiums (Redemptions) Due and Accrued
12,576,924
Investment Income Due and Accrued
13,824
Due to Great-West Life & Annuity Insurance Company
(908,396)
NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF CAPITAL (Note 5)
$1,765,822,074
See notes to financial statements.
</TABLE>
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
Maxim
Maxim Maxim Ariel Maxim Founders
Aggressive \Maxim Small-Cap Maxim Bond Conservative Growth & Maxim
Profile Ariel Value Maxim Bond Index Profile Income Growth
Portfolio MidCap Portfolio Portfolio Portfolio Portfolio Portfolio Index
Value Portfolio
Portfolio
Investment Investment Investment Investment Investment Investment Investment Investment
Division Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- -------- --------
(1)
<S> <C>
INVESTMENT INCOME $ $ $ $ $ $ $
1,157,505 10,176,479 716,476 2,904,510 $ 1,082,707 221,362 1,448,372
2,120
EXPENSES - mortality
and expense
risks 42,397 715,003 40,408 570,121 234 94,910 44,513 194,493
------- -------- ------- -------- ---- ------- ------- -------
NET INVESTMENT INCOME
(LOSS)
1,115,108 9,461,476 676,068 2,334,389 1,886 987,797 176,849 1,253,879
---------- ---------- -------- ---------- ------ -------- -------- ---------
NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain
(loss) on 822,087
investments 162,340 3,165,933 (106,399) 335,495 (139) (65,879) 68,789
Net change in
unrealized
appreciation
(depreciation) on
investments 1,692,738 (13,189,477) (929,245) (3,397,451) (2,651) (245,275) 295,343 1,931,172
---------- ------------ --------- ----------- ------- --------- -------- ---------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS:
1,855,078 (10,023,544) (1,035,644) (3,061,956) (2,790) (311,154) 364,132 2,753,259
---------- ------------ ----------- ----------- ------- --------- -------- ---------
NET INCREASE
(DECREASE) IN
ASSETS
RESULTING
FROM OPERATIONS $ $ $ $ $ $ $
====== ======== ======== ======== = ========= ========= ==
2,970,186 (562,068) (359,576) (727,567)$ 676,643 540,981 4,007,138
========== ========= ========= ====================== ======== ======== =========
(904)
(1) The Investment Division commenced operations on September 13,
1999
See Notes to financial statements. (Continued)
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- ----------------------------------------------------------------------------------------------------------------------------------
Maxim
INVESCO Maxim Maxim Maxim
Maxim International INVESCO Maxim Loomis Maxim Moderately
INVESCO Growth Small-Cap Loomis Sayles Moderate Aggressive
Maxim Index Balanced Portfolio Growth Sayles Small-Cap Profile Profile
600 Portfolio (ADR) Portfolio Corporate Value Portfolio Portfolio
Portfolio Bond Portfolio
Portfolio
Investment Investment Investment Investment Investment Investment Investment Investment
Division Division Division Division Division Division Division Division
-------- -------- -------- -------- -------- -------- -------- --------
INVESTMENT INCOME $ $ $ $ $ $ $ $
1,293,600 18,863,149 97,839 9,696,340 1,871,706 150,876 2,143,753 2,253,723
EXPENSES - mortality
and expense
risks 144,986 1,142,103 106,170 480,980 239,608 23,716 98,909 96,109
-------- ---------- -------- -------- -------- ------- ------- ------
NET INVESTMENT
INCOME (LOSS)
1,148,614 17,721,046 (8,331) 9,215,360 1,632,098 127,160 2,044,844 2,157,614
---------- ----------- ------- ---------- ---------- -------- ---------- ---------
NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain
(loss) on
investments (3,530,744) 5,418,555 176,589 2,616,982 (443,563) (229,894) 112,653 212,675
Net change in
unrealized
appreciation
(depreciation)
on 3,782,515 (8,530,178) 1,990,404 19,019,601 (438,028) 54,058 1,196,942 3,280,255
---------- ----------- ---------- ----------- --------- ------- ---------- ---------
investments
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS: 251,771 (3,111,623) 2,166,993 21,636,583 (881,591) (175,836) 1,309,595 3,492,930
-------- ----------- ---------- ----------- --------- --------- ---------- ---------
NET INCREASE
(DECREASE) IN
ASSETS $ $ $ $ $ $ $ $
====== ===== ====== ===== ========= ========== ====== ==
RESULTING FROM
OPERATIONS 1,400,385 14,609,423 2,158,662 30,851,943 750,507 (48,676) 3,354,439 5,650,544
========== =========== ========== =========== ======== ======== ========== =========
(1) The Investment Division commenced operations on
September 13, 1999.
See Notes to financial statements. (Continued)
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Investment Investment Investment Investment Investment
Division Investment Division Division Division Division Division Investment
-------- -------- -------- -------- -------- --------
Division Division
INVESTMENT INCOME $ $ $ $ $ $ $ $
888,646 4,812,227 38,844,144 9,272,193 840,170 664,571 2,681,416 1,026,479
EXPENSES - mortality
and expense risks
83,068 1,112,411 7,663,632 1,103,763 86,310 449,184 567,517 77,762
------- ---------- ---------- ---------- ------- -------- -------- ------
NET INVESTMENT
INCOME (LOSS)
805,578 3,699,816 31,180,512 8,168,430 753,860 215,387 2,113,899 948,717
-------- ---------- ----------- ---------- -------- -------- ---------- -------
NET REALIZED
AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain
(loss) on
investments 21,951 (7,353) 63,972,777 3,418,143 422,777 457,260 260,856 8,285
Net change in
unrealized a
ppreciation
(depreciation)
on investments 105,650 7,354 16,131,973 (9,475,721) 1,655,670 9,273,339 (2,852,562) (353,335)
-------- ------ ----------- ----------- ---------- ---------- ----------- ---------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS:
127,601 1 80,104,750 (6,057,578) 2,078,447 9,730,599 (2,591,706) (345,050)
-------- -- ----------- ----------- ---------- ---------- ----------- ---------
NET INCREASE
(DECREASE) IN ASSETS $ $ $ $ $ $ $ $
====== ==== === ==== ==== ==== ===== ==
RESULTING FROM
OPERATIONS 933,179 3,699,817 111,285,262 2,110,852 2,832,307 9,945,986 (477,807) 603,667
======== ====================== ========== ========== ========== ========= =======
(1) The Investment Division commenced operations on
September 13, 1999
See Notes to financial statements. (Continued)
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
American Fidelity Fidelity
Alger Alger American Century VP Fidelity Investments Investments Janus
American American Century VP Capital Investments VIP II VIP II Aspen
Balanced Midcap Balanced Appreciation VIP Growth Asset Contrafund Worldwide
Fund Growth Fund Fund Fund Portfolio Manager Portfolio Growth
Portfolio Portfolio
Investment Investment Investment Investment Investment Investment Investment
Investment Division Division Division Division Division Division Division
Division
--------
(1) (1)
INVESTMENT INCOME $ $ 13,041,472 $ $ $
$ $ 6,200 $ 2,895,223 79,921 2,956
- - -
EXPENSES - mortality
and expense risks 1,563,350
-------- -------- ----------- -------- -------------
2,378 3,196 545 345,032 402,201 59,023 16,040
------ ------ ---- -------- -------- ------- ------
NET INVESTMENT INCOME
(LOSS) (2,378) 11,478,122 20,898
-------- ------- -------- ------ ------------- ---- -----------
(3,196) 5,655 (345,032) 2,493,022 (13,084)
------- ------ --------- ---------- --------
NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain
(loss) on
investments 13,234 20,165 (818) (4,265,915) 6,059,384 1,465,055 97,909 90,171
Net change in
unrealized
appreciation
(depreciation) on
investments 96,340 26,326,245 1,067,059
------- ----- ------- ---- ------------- ------ -----------
243,902 (1,012) 20,021,065 (755,804) 1,198,225
-------- ------- ----------- --------- ---------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 109,574 32,385,629 1,164,968
-------- ----- ------- ---- ------------- ------- -----------
264,067 (1,830) 15,755,150 709,251 1,288,396
-------- ------- ----------- -------- ---------
NET INCREASE (DECREASE)
IN ASSETS
RESULTING FROM OPERATION $ $ 260,871 $ $ $ $ $ $
==== ==================== ==== ==== ==== === ==
107,196 3,825 15,410,118 43,863,751 3,202,273 1,185,866 1,275,312
======== ====== =========== =========== ========== ========== =========
(1) The Investment Division commenced operations on
September 13, 1999
See Notes to financial statements. (Continued)
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
Pioneer
Services SteinRoe
Corporation Balanced
VCT Equity Fund Total
Income - FutureFunds
Class II Series
Account
Investment Investment
Division Division
(1)
INVESTMENT INCOME $ 1,074 $ $
4,122 129,141,331
EXPENSES - mortality and expense risks 489
-------------
515 17,571,076
NET INVESTMENT INCOME (LOSS) 585 111,570,255
-------------- ------------- -------------
3,607
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (414) 97
-------------- -----------
80,749,044
Net change in unrealized appreciation 2,180 4,633
------------- ---------
(depreciation) on investments 69,201,564
----------
NET REALIZED AND UNREALIZED GAIN 2,594 4,730
------------- ---------
(LOSS) ON INVESTMENTS: 149,950,608
-----------
NET INCREASE (DECREASE) IN ASSETS $ 2,009 $ 8,377 $
============ ========== =
RESULTING FROM OPERATIONS 261,520,863
===========
(1) The Investment Division commenced operations on September 13,
1999
See Notes to financial statements. (Continued)
FUTUREFUNDS SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ------------------------------------------------------------------------------------------------------------------------------
Maxim Aggressive Profile Maxim Ariel MidCap Maxim Ariel Small-Cap Maxim Bond
Portfolio Portfolio Value Portfolio Portfolio
Investment Division Investment Division Investment Division Investment Division
------------------- ------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998 1999 1998
----- ----- ----- ----- ----- ----- ----- ----
FROM OPERATIONS:
Net investment
income (loss) $ $ $ $ $ $ $ $
1,115,108 52,611 9,461,476 5,511,747 676,068 114,918 2,334,389 2,407,186
Net realized gain
(loss) on investments
162,340 (22,012) 3,165,933 3,934,050 (106,399) (489,488) 335,495 834,136
Net change in unrealized
appreciation
(depreciation) in
investments
1,692,738 488,808 (13,189,477) 5,233,724 (929,245) 643,071 (3,397,451) (615,158)
---------- -------- ------------ ---------- --------- -------- ----------- ---------
Increase (decrease)
in net assets
resulting from operation
2,970,186 519,407 (562,068) 14,679,521 (359,576) 268,501 (727,567) 2,626,164
---------- -------- --------- ----------- --------- -------- --------- ---------
FROM UNIT TRANSACTIONS
(by category):
Purchase payments:
8,790,577 4,362,020 4,910,945 6,059,511 2,216,496 1,734,615 2,576,711 2,775,074
Redemptions:
(680,431) (162,930) (5,125,379) (5,297,459) (445,088) (209,242) (5,729,346) (5,147,966)
Net transfers:
373,647 2,228,699 (2,360,395) (406,348) (331,018) 1,075,431 (1,592,126) (224,619)
-------- ---------- ----------- --------- --------- ---------- ----------- ---------
Increase (decrease)
in net assets
resulting from unit
transactions
8,483,793 6,427,789 (2,574,829) 355,704 1,440,390 2,600,804 (4,744,761) (2,597,511)
---------- ---------- ----------- -------- ---------- ---------- ----------- -----------
Due to/from GWLA:
- - - - - - - -
INCREASE (DECREASE)
IN NET ASETS 2,869,305
11,453,979 6,947,196 (3,136,897) 15,035,225 1,080,814 (5,472,328) 28,653
NET ASSETS:
Beginning of period
7,656,771 709,575 60,483,448 45,448,223 4,957,640 2,088,335 50,927,941 50,899,288
---------- -------- ----------- ----------- ---------- ---------- ----------- ----------
End of period $ 19,110,750 $ $ 57,346,551 $ $ 6,038,454 $ 4,957,640 $ $ 50,927,941
============= === ============= == ============= ============ == ============
7,656,771 60,483,448 45,455,613
========== =========== ==========
(1) The Investment Division commenced operations on September
13, 1999
(2) 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 CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ----------------------------------------------------------------------------------------------------------------------------------
Maxim Bond Index Maxim Conservative Profile Maxim Founders Growth & Maxim Growth
Portfolio Portfolio Income Portfolio Index Portfolio
Investment Division Investment Division Investment Division Investment Division
------------------- ------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998 1999 1998
----- ----- ----- ----- ----- ----- ----- ----
(1)
FROM OPERATIONS:
Net investment
income (loss) $ $ $ $ $ $
1,886 $ 987,797 800,799 176,849 120,071 1,253,879 313,807
-
Net realized gain
(loss) on investments (139)
- (65,879) 65,524 68,789 61,434 822,087 75,215
Net change in unrealized
appreciation
(depreciation) in
investments
(2,651) - (245,275) (288,715) 295,343 110,950 1,931,172 819,159
------- -- --------- --------- -------- -------- ---------- -------
Increase (decrease) in
net assets
resulting from operations
(904) - 676,643 577,608 540,981 292,455 4,007,138 1,208,181
----- -- -------- -------- -------- -------- ---------- ---------
FROM UNIT TRANSACTIONS
(by category):
Purchase payments:
2,337 - 3,043,454 7,858,366 494,460 224,940 2,313,632 575,690
Redemptions: (1,529,521) (1,533,749)
- - (394,314) (81,692) (1,090,071) (198,430)
Net transfers: 6,838,541
------- ---------------- -------------
122,487 - (617,893) 542,148 1,793,128 8,479,439 7,289,219
-------- -- --------- -------- ---------- ---------- ---------
Increase (decrease)
in net assets
resulting from unit
transactions - 13,163,158
------- -- ------- ------------
124,824 896,040 642,294 1,936,376 9,703,000 7,666,479
-------- -------- -------- ---------- ---------- ---------
Due to/from GWLA:
- - - - - - - -
INCREASE (DECREASE)
IN NET ASETS 13,740,766
123,920 - 1,572,683 1,183,275 2,228,831 13,710,138 8,874,660
NET ASSETS:
Beginning of period 1,716,821
--------------------------- -------------
- - 15,457,587 3,178,430 949,599 9,404,397 529,737
-- -- ----------- ---------- -------- ---------- -------
End of period $ 123,920 $ $ 15,457,587 $ $ 3,178,430 $ 23,114,535 $ 9,404,397
============= = === ============= ==== ============= =========================
$ 17,030,270 4,361,705
=========== =========== =========
-
(1) The Investment Division commenced operations on September
13, 1999
(2) 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 CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- -------------------------------------------------------------------------------------------------------------------
Maxim Index Maxim INVESCO Balanced Maxim INVESCO International Maxim INVESCO Small-Cap
600 Portfolio Portfolio Growth Portfolio (ADR) Growth Portfolio
Investment Division Investment Division Investment Division Investment Division
------------------- ------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998 1999 1998
----- ----- ----- ----- ----- ----- ----- ----
FROM OPERATIONS:
Net investment
income (loss) $ 1,148,614 $ $ $ $ $ $ $
4,373,119 17,721,046 760,205 (8,331) (16,029) 9,215,360 99,107
Net realized gain
(loss) on investments (4,719) 2,616,982
(3,530,744) 5,418,555 948,565 176,589 726,167 609,616
Net change in
unrealized appreciation
(depreciation) in
investments
3,782,515 (4,832,396) (8,530,178) 10,317,562 1,990,404 (41,002) 19,019,601 4,679,689
---------- ----------- ----------- ----------- ---------- -------- ----------- ---------
Increase (decrease)
in net assets
resulting from operations
1,400,385 (463,996) 14,609,423 12,026,332 2,158,662 669,136 30,851,943 5,388,412
---------- --------- ----------- ----------- ---------- -------- ----------- ---------
FROM UNIT TRANSACTIONS
(by category):
Purchase payments:
1,416,166 1,608,870 10,904,162 6,348,246 1,460,680 1,727,622 4,494,205 5,630,667
Redemptions: (1,017,579) (8,776,469)
(1,199,372) (6,377,853) (936,193) (686,421) (3,125,846)(3,093,943)
Net transfers:
(919,893) (328,120) 7,551,395 9,936,300 (340,095) 1,195,751 3,814,787 (652,912)
--------- --------- ---------- ---------- --------- ---------- ---------- ---------
Increase (decrease)
in net assets
resulting from unit
transactions
(703,099) 263,171 9,679,088 9,906,693 184,392 2,236,952 5,183,146 1,883,812
--------- -------- ---------- ---------- -------- ---------- ---------- ---------
Due to/from GWLA:
- - - - - - - -
INCREASE (DECREASE)
IN NET ASETS (200,825) 24,288,511
697,286 21,933,025 2,343,054 2,906,088 36,035,089 7,272,224
NET ASSETS:
Beginning of period
13,619,730 13,820,555 88,574,046 66,641,021 10,055,774 7,149,686 39,025,463 31,753,239
----------- ----------- ----------- ----------- ----------- ---------- ---------------------
End of period $ 14,317,016 $ $ $ $ 12,398,828 $ 10,055,774 $ 75,060,552 $39,025,463
============= == == == ============= ============= ========================
13,619,730 112,862,557 88,574,046
======================= ==========
(1) The Investment Division commenced operations on September
13, 1999
(2) 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 CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ----------------------------------------------------------------------------------------------------------------------------------
Maxim Loomis Sayles Maxim Loomis Sayles Maxim Moderate Profile Maxim Moderately
Corporate Bond Portfolio Small-Cap Value Portfolio Portfolio Aggressive Profile
Portfolio
Investment Division Investment Division Investment Division Investment Division
------------------- ------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998 1999 1998
----- ----- ----- ----- ----- ----- ----- ----
FROM OPERATIONS:
Net investment
income (loss) $ $ $ $ $ $ $ $
1,632,098 1,978,214 127,160 42,867 2,044,844 211,404 2,157,614 206,819
Net realized gain
(loss) on investments
(443,563) 95,464 (229,894) (99,789) 112,653 (52,683) 212,675 29,935
Net change in
unrealized appreciation
(depreciation) in
investments (438,028) (1,789,060) 54,058 17,855 1,196,942 390,402 3,280,255 604,177
--------- ----------- ------- ------- ---------- -------- ---------- -------
Increase (decrease)
in net assets
resulting from
operations 750,507 284,618 (48,676) (39,067) 3,354,439 549,123 5,650,544 840,931
-------- -------- -------- -------- ---------- -------- ---------- -------
FROM UNIT TRANSACTIONS
(by category):
Purchase payments: 11,447,952
1,903,631 2,234,741 522,187 407,995 5,102,491 15,976,919 7,433,638
Redemptions:
(1,974,449) (1,983,322) (212,260) (165,644) (891,412) (451,666) (1,411,116) (170,535)
Net transfers:
(1,255,770) 4,821,862 (422,877) 1,295,632 1,374,839 5,725,742 1,447,230 4,914,352
----------- ---------- --------- ---------- ---------- ---------- ---------- ---------
Increase (decrease)
in net assets
resulting from unit
transactions (1,326,588) 5,073,281 (112,950) 1,537,983 11,931,379 10,376,567 16,013,033 12,177,455
----------- ---------- --------- ---------- ----------- ----------- ----------- ----------
Due to/from GWLA:
- - - - - - -
INCREASE (DECREASE)
IN NET ASETS
(576,081) 5,357,899 (161,626) 1,498,916 15,285,818 10,925,690 21,663,577 13,018,386
NET ASSETS:
Beginning of period 2,315,918
---- -- ------------
21,423,993 16,066,094 817,002 12,532,348 1,606,658 15,061,345 2,042,959
----------- ----------- -------- ----------- ---------- ----------- ---------
End of period $ $ $ 2,154,292 $ 2,315,918 $ 27,818,166 $ 12,532,348 $ 36,724,922 $15,061,345
=== == ============ ============ ============= ============= ========================
20,847,912 21,423,993
(1) The Investment Division commenced operations on September
13, 1999
(2) 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 CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Maxim Moderately
Conservative Profile Maxim Money Maxim Stock Maxim T. Rowe Price
Portfolio Market Portfolio Index Portfolio Equity/Income Portfolio
Investment Division Investment Division Investment Division Investment Division
------------------- ------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998 1999 1998
----- ----- ----- ----- ----- ----- ----- ----
FROM OPERATIONS:
Net investment
income (loss) $ $ $ $ $ $ $ $
805,578 283,330 3,699,816 3,672,866 31,180,512 18,074,050 8,168,430 5,630,918
Net realized gain
(loss) on investments
21,951 568 (7,353) (2,301) 63,972,777 54,225,527 3,418,143 5,920,060
Net change in
unrealized appreciation
(depreciation) in
investments
105,650 21,454 7,354 (14,920) 16,131,973 53,732,608 (9,475,721) (5,370,937)
-------- ------- ------ -------- ----------- ----------- ----------- -----------
Increase (decrease)
in net assets
resulting from
operations
933,179 305,352 3,699,817 3,655,645 111,285,262 126,032,185 2,110,852 6,180,041
-------- -------- ---------- ---------- ------------ ------------ ---------- ---------
FROM UNIT TRANSACTIONS
(by category):
Purchase payments:
4,138,130 1,859,334 5,634,174 5,846,204 25,039,154 24,928,517 7,614,787 10,348,790
Redemptions: (239,090) 8,491,487
(827,270) (18,814,495) (29,789,302) (54,086,945) (41,986,982) (8,532,144)
Net transfers: (
------ ---- ------ ----- -------
(201,468) 6,643,670 17,704,125 26,149,478 823,664) (186,139) (6,184,286) 6,727,954
--------- ---------- ----------- ----------- -------- --------- ----------- ---------
Increase (decrease)
in net assets
resulting from unit
transactions
3,109,392 8,263,914 4,523,804 2,206,380 (29,871,455) (17,244,604) (7,060,986) 8,544,600
---------- ---------- ---------- ---------- ------------ ------------ ----------- ---------
Due to/from GWLA:
- - - - - - - -
INCREASE (DECREASE)
IN NET ASETS 108,787,581
4,042,571 8,569,266 8,223,621 5,862,025 81,413,807 (4,950,134) 14,724,641
NET ASSETS:
Beginning of period
9,660,601 1,091,335 101,377,978 95,515,953 621,687,898 512,900,317 95,338,562 80,613,921
---------- ---------- ------------ ----------- ------------ ------------ ----------- ----------
End of period 13,703,172 $ $ 109,601,599 $ $ $ $ $ 95,338,562
============ == ================ == == == ============
9,660,601 101,377,978 703,101,705 621,687,898 90,388,428
========== ============ ============ ============ ==========
(1) The Investment Division commenced operations on September
13, 1999
(2) 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 CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Maxim T. Rowe Price Maxim Templeton Maxim Total Maxim U.S. Government
Mid-Cap Growth Portfolio International Equity Return Portfolio Securities Portfolio
Portfolio
Investment Division Investment Division Investment Division Investment Division
------------------- ------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998 1999 1998
----- ----- ----- ----- ----- ----- ----- ----
(2)
FROM OPERATIONS:
Net investment
income (loss) $ $ $ $ $ 2,113,899 $
753,860 (34,990) 215,387 319,938 $ $ 2,173,404
- 37
Net realized gain
(loss) on investments
422,777 95,505 457,260 2,109,836 - 689 260,856 816,425
Net change in
unrealized
appreciation
(depreciation) in
investments
1,655,670 839,486 9,273,339 (5,130,005) - 6 (2,852,562) (279,353)
---------- -------- ---------- ----------- -- -- ----------- ---------
Increase (decrease)
in net assets
resulting from
operations
2,832,307 900,001 9,945,986 (2,700,231) - 732 (477,807) 2,710,476
---------- -------- ---------- ----------- -- ---- --------- ---------
FROM UNIT TRANSACTIONS
(by category):
Purchase payments:
4,545,636 2,604,203 3,377,668 5,129,535 - 1,783 2,462,742 2,772,504
Redemptions:
(610,921) (442,280) (3,531,231) (3,956,272) - - (6,014,775)(4,961,327)
Net transfers:
1,608,936 3,621,382 (2,072,048) (6,962,389) - (6,997) (3,732,724) 6,466,185
---------- ---------- ----------- ----------- -- ------- ----------- ---------
Increase (decrease)
in net assets
resulting from unit
transactions
5,543,651 5,783,305 (2,225,611) (5,789,126) - (5,214) (7,284,757) 4,277,362
---------- ---------- ----------- ----------- -- ------- ----------- ---------
Due to/from GWLA:
- - - - - - - -
INCREASE (DECREASE)
IN NET ASETS (7,762,564)
8,375,958 6,683,306 7,720,375 (8,489,357) - (4,482) 6,987,838
NET ASSETS:
Beginning of period 36,853,438 51,877,614
----- ---- ----------------- ---------------------- ------------
8,159,495 1,476,189 45,342,795 - 4,482 44,889,776
---------- ---------- ----------- -- ------ ----------
End of period $ 16,535,453 $ $ 44,573,813 $ 36,853,438 $ $ $ 44,115,050 $51,877,614
============= === ========================== ===================================================
8,159,495 - -
========== == =
(1) The Investment Division commenced operations on September
13, 1999
(2) 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 CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------------------------------------------------------
Maxim Value Alger American Alger American MidCap American Century
Index Portfolio Balanced Fund Growth Fund VP Balanced Fund
Investment Division Investment Division Investment Division Investment Division
------------------- ------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998 1999 1998
----- ----- ----- ----- ----- ----- ----- ----
(1) (1)
FROM OPERATIONS:
Net investment
income (loss) $ $ $ $ $ $ $ 8,014
948,717 381,260 (2,378) $ (3,196) - 5,655
-
Net realized gain
(loss) on investments
8,285 48,903 13,234 - 20,165 - (818) (537)
Net change in
unrealized appreciation
(depreciation)
in investments
(353,335) (107,249) 96,340 - 243,902 - (1,012) 930
--------- --------- ------- -- -------- -- ------- ---
Increase (decrease)
in net assets
resulting from
operations
603,667 322,914 107,196 - 260,871 - 3,825 8,407
-------- -------- -------- -- -------- -- ------ -----
FROM UNIT TRANSACTIONS
(by category):
Purchase payments: 1,129,919
604,764 23,789 - 32,715 - 7,789 10,644
Redemptions:
(730,371) (206,103) (3,830) - (32,238) - (1,525) (8,567)
Net transfers: 1,109,153
------------
3,922,044 1,198,452 - 1,584,407 - (6,374) (45,046)
---------- ---------- -- ---------- -- ------- --------
Increase (decrease)
in net assets
resulting from unit
transactions 1,508,701
------------
4,320,705 1,218,411 - 1,584,884 - (110) (42,969)
---------- ---------- -- ---------- -- ----- --------
Due to/from GWLA:
- - - - - - - -
INCREASE (DECREASE)
IN NET ASETS
2,112,368 4,643,619 1,325,607 - 1,845,755 - 3,715 (34,562)
NET ASSETS:
Beginning of period 5,377,407 43,278 77,840
------------- ------ ------------------------------------------------------------------- --------
733,788 - - - -
-------- -- -- -- -
End of period $ 7,489,775 $ $ 1,325,607 $ $ 1,845,755 $ $ 46,993 43,278
============ == ============ ==================================================== ========
5,377,407 - -
========== == =
(1) The Investment Division commenced operations on September
13, 1999
(2) 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 CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ------------------------------------------------------------------------------------------------------------------------------------
American Century VP Fidelity Investments VIP Fidelity Investments VIP Fidelity Investments
Capital Appreciation Fund Growth Portfolio II Asset Manager VIP II Contrafund
Portfolio Portfolio
Investment Division Investment Division Investment Division Investment Division
------------------- ------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998 1999 1998
----- ----- ----- ----- ----- ----- ----- ----
FROM OPERATIONS:
Net investment
income (loss) $ $ $ $ $ $ $ $
(345,032) 1,652,358 11,478,122 8,773,055 2,493,022 4,017,293 20,898 (649)
Net realized gain
(loss) on investments
(4,265,915) (1,049,432) 6,059,384 4,996,488 1,465,055 1,540,688 97,909 8
Net change in
unrealized appreciation
(depreciation) in
investments
20,021,065 (2,116,166) 26,326,245 14,901,879 (755,804) (606,966) 1,067,059 64,693
----------- ----------- ----------- ----------- --------- --------- ---------- ------
Increase (decrease)
in net assets
resulting from
operations
15,410,118 (1,513,240) 43,863,751 28,671,422 3,202,273 4,951,015 1,185,866 64,052
----------- ----------- ----------- ----------- ---------- ---------- ---------- ------
FROM UNIT TRANSACTIONS
(by category):
Purchase payments: 4,455,735
210,251 3,473,775 12,561,248 11,466,969 673,810 852,141 -
Redemptions: (2,988,300)
(4,164,724) (5,022,488) (9,392,922) (6,785,858) (2,997,371) (287,143) (6,865)
Net transfers:
(5,071,511) (11,487,040) 14,852,013 8,906,537 (8,938,413) 184,852 6,198,914 899,661
----------- ------------ ----------- ---------- ----------- -------- ---------- -------
Increase (decrease)
in net assets
resulting from unit
transactions
(9,025,984) (13,035,753) 18,020,339 13,587,648 (11,261,974) 1,652,287 6,763,912 892,796
----------- ------------ ----------- ----------- ------------ ---------- ---------- -------
Due to/from GWLA:
- - - - - - - -
INCREASE (DECREASE)
IN NET ASETS 6,603,302
6,384,134 (14,548,993) 61,884,090 42,259,070 (8,059,701) 7,949,778 956,848
NET ASSETS:
Beginning of period
31,822,204 46,371,197 111,682,339 69,423,269 41,096,958 4,493,656 956,848 -
----------- ----------- ------------ ----------- ----------- ---------- -------- -
End of period $ 38,206,338 $ $ 173,566,429 $ $ $ $ 8,906,626 $ 956,848
============= == ================ == == ============ =========
31,822,204 111,682,339 33,037,257 41,096,958
=========== ============ =========== ==========
(1) The Investment Division commenced operations on September
13, 1999
(2) 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 CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneering Services
Janus Aspen Worldwide Corporation VCT Equity SteinRoe Balanced Total FutureFunds
Growth Portfolio Income - Class II Fund Series Account
--------------
Investment Division Investment Division Investment Division
1999 1998 1999 1998 1999 1998 1999 1998
----- ----- ----- ----- ----- ----- ----- ----
(1)
FROM OPERATIONS:
Net investment
income (loss) $ $ $ $ $ $ 111,570,255 $
(13,084) 94 585 $ 3,607 (65) 61,927,758
-
Net realized gain
(loss) on investments 75,412,158
90,171 (1,685) (414) - 97 1 80,749,044
Net change in
unrealized appreciation
(depreciation)
in investments
1,198,225 98,857 (2,180) - 4,633 4,856 69,201,564 71,778,239
---------- ------- ------- -- ------ ------ ----------- ----------
Increase (decrease)
in net assets
resulting from
operations
1,275,312 97,266 (2,009) - 8,337 4,792 261,520,863 209,118,155
---------- ------- ------- -- ------ ------ ------------ -----------
FROM UNIT TRANSACTIONS
(by category):
Purchase payments: 141,459,600 127,684,120
628,428 86,998 6,705 - 46,000 9,879
Redemptions: (143,563,124) (131,504,056)
(54,609) (47) - - - -
Net transfers: 201,217 29,729
---- ----- ------------ -----------------------------------
1,658,414 09,086 - - 34,951,048 90,975,625
---------- ------- -- -- ----------- ----------
Increase (decrease)
in net assets
resulting from unit
transactions 207,922 39,608
---- ------ ------------ ------------------ -----------
2,232,233 96,037 - 46,000 32,847,524 87,155,689
---------- ------- -- ------- ----------- ----------
Due to/from GWLA:
6,515 - 18 - - - 6,533 -
INCREASE (DECREASE)
IN NET ASETS 296,273,844
3,514,060 93,303 205,931 - 54,337 44,400 294,374,920
NET ASSETS:
Beginning of period
793,303 - - - 44,400 - 1,471,447,154 1,175,173,310
-------- -- -- -- ------- -- -------------- -------------
End of period $ 4,307,363 $ 793,303 $ 205,931 $ $ $ 44,400 $1,765,822,074 $1,471,447,154
============ ========== ============================ ========== =============================
- 98,737
(1) The Investment Division commenced operations on September
13, 1999
(2) The Investment Division ceased operations on June 22, 1998
See Notes to financial statements. (Continued)
</TABLE>
FUTUREFUNDS SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
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
A wholly owned subsidiary of the Company, GW Capital Management, Inc., serves as
investment advisor to Maxim Series Fund, Inc.. Fees are assessed against the
average daily net asset value of the affiliated funds to compensate GW Capital
Management, Inc. for investment advisory services.
5. SELECTED DATA
<TABLE>
The following is a summary of selected data for a unit of
capital and net assets for the Series Account.
-----------------------------------------------------------------------------------------------------
Maxim Aggressive Profile Portfolio Maxim Ariel MidCap Value Portfolio
-----------------------------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.00 0.55 0.75 0.95 1.25
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 04/13/94
1999
Beginning Unit
Value $ 11.50 $ $ $ 11.72 $ $ 12.06 $ 14.94 $ 14.60 $ 16.08 $
11.79 11.75 11.68 21.12
===============================================================================================================
Ending Unit Value $ 14.01 $ 14.28 $ $ 14.15 $ $ 12.09 $ 14.90 $ 14.53 $ 15.97 $
4.21 14.04 20.92
===============================================================================================================
Number of Units
Outstanding
980,948.29 25,571.23 63,448.45 68,648.89 223,144.49 58,732.02 58,898.13 328,339.05 529,521.61 2,033,465.79
===============================================================================================================
Net Assets (000's) $ 13,739 $ 365 $ 901 $ 971 $ $ 710 $ 878 $ 4,771 $ 8,456 $
3,134 42,532
===============================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 10.31 $ $ 10.30 $ $ 10.00 $ 11.23 $ 11.00 $ 12.14 $
10.31 10.29 15.99
===============================================================================================================
Ending Unit Value $ 11.50 $ 11.79 $ $ 11.72 $ $ 12.06 $ 14.94 $ 14.60 $ 16.08 $
11.75 11.68 21.12
===============================================================================================================
Number of Units
Outstanding
411,766.69 3,713.98 15,150.39 39,090.58 192,086.65 39,226.80 39,615.48 256,925.44 470,211.38 2,277,248.95
===============================================================================================================
Net Assets (000's) $ 4,734 $ 44 $ 178 $ 458 $ $ 473 $ 592 $ 3,752 $ 7,561 $
2,243 48,105
===============================================================================================================
1997
Beginning Unit
Value $ 10.00 $ $ 10.00 $ $ 10.00 $ 10.00 $ 10.85 $
10.00 10.00 14.34
===========
============================================ =============================================
Ending Unit Value $ 10.31 $ $ 10.30 $ $ 11.23 $ 11.00 $ 12.14 $
10.31 10.29 15.99
=============================================
============================================ =============================================
Number of Units
Outstanding
594.16 - 9,576.11 58,762.77 4,374.34 2,545.66 422,167.92 2,495,810.84
============================================ =============================================
Net Assets (000's) $ 6 $ - $ 99 $ 605 $ 386 $ 28 $ 5 ,125 $
39,908
============================================ ============================================
1996
Beginning Unit Value $ 10.34 $
13.70
=========================
Ending Unit Value $ 10.85 $
14.34
=========================
Number of Units Outstanding
528,556.23 2,440,068.07
=========================
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
194,687.27 1,715,174.42
=========================
Net Assets (000's) $ $
2,012 23,498
===================================================================================================
(Continued)
5. SELECTED DATA
-----------------------------------------------------------------------------------------------------------------
Maxim Ariel Small-Cap Value Portfolio Maxim Bond 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 11/04/94 06/10/98 01/01/97 06/13/97 12/04/95 11/15/83
1999
Beginning Unit
Value $ 13.69 $ 12.69 $ 16.63 $ $ 10.34 $ 11.12 $ 10.99 $ 11.70 $ 29.87
10.87 18.21
=================================================================================================================
Ending Unit Value$ 10.24 $ 12.83 $ 11.87 $ 15.52 $ $ 10.31 $ 11.03 $ 10.88 $ 11.56 $ 29.42
16.94
=================================================================================================================
Number of Units
Outstanding 257,904.70 7,616.79 26,816.01 141,840.01 32,935.95
37,219.61 88,672.41 288,557.62 485,260.78 1,202,989.21
=================================================================================================================
Net Assets(000's) 2,642 $ 98 $ 318 $ 578 $ 2,403 $ 340 $ 978 $ 3,139 $ 5,610 $ 35,389
=================================================================================================================
1998
Beginning Unit
Value $ $ 12.72 $ 11.81 $ 15.50 $ 17.03 $ 10.00 $ 10.48 $ 10.38 $ 11.08 $ 28.36
10.00
=================================================================================================================
Ending Unit Value 10.87 $ 13.69 $ 12.69 $ 16.63 $ 18.21 $ 10.34 $ 11.12 $ 10.99 $ 11.70 $ 29.87
=================================================================================================================
Number of Units
Outstanding
17,016.71 4,136.54 24,665.53 21,916.39 162,035.10 19,021.64 7,489.11 302,285.65 271,537.15 1,478,126.62
=================================================================================================================
Net Assets(000's) 1,273 $ 57 $ 313 $ 364 $ 2,951 $ 197 $ 83 $ 3,322 $ 3,178 $ 44,148
=================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ 12.24 $ 13.48 $ 10.00 $ 10.00 $ 10.44 $ 26.82
============================================ ================================================
Ending Unit Value $ 12.72 $ 11.81 $ 15.50 $ 17.03 $ 10.48 $ 10.38 $ 11.08 $ 28.36
================================================
============================================ ================================================
Number of Units
Outstanding 5,933.43 395.12
4,787.54 113,566.69 3,958.65 19,087.44 251,460.22 1,688,345.67
============================================ ================================================
Net Assets(000's) $ 75 $ 5 $ 74 $ 1,934 $ 41 $ 198 $ 2,786 $ 47,881
============================================ ================================================
1996
Beginning Unit
Value $ $ $ 10.11 $
10.48 11.58 26.05
======================= =========================
Ending Unit Value $ $ $ 10.44 $
12.24 13.48 26.82
======================= =========================
Number of Units
Outstanding
1,652.65 39,184.70 287,152.67 1,890,635.84
======================= =========================
Net Assets(000's) $ 20 $ $ 2,999 $
528 50,700
======================= =========================
1995
Beginning Unit
Value $ $ $ 10.00 $
10.00 10.15 22.89
======================= =========================
Ending Unit Value $ $ $ 10.11 $
10.48 11.58 26.05
======================= =========================
Number of Units
Outstanding
164.60 30,919.44 197,590.07 2,010,468.99
======================= =========================
Net Assets(000's) $ 2 $ 358 $ $
1,998 52,363
=====================================================================================================
(Continued)
5. SELECTED DATA
----------------------------------------------------------------------------------------------------
Maxim Bond Index 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 09/13/99 09/13/99 09/13/99 09/13/99 09/13/99 01/02/98 09/11/97 09/11/97 09/11/97 09/11/97
1999
Beginning Unit
Value $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.80 $ 11.14 $ 11.11 $ 11.15 $ 11.04
=================================================================================================================
Ending Unit Value $ 10.03 $ 10.01 $ 10.00 $ 10.00 $ 9.99 $ 11.33 $ 11.61 $ 11.56 $ 11.58 $ 11.42
=================================================================================================================
Number of Units
Outstanding
- 0.50 249.52 79.29 12,077.38 704,508.34 1,880.81 342,028.29 12,170.50 431,714.66
=================================================================================================================
Net Assets(000's) $ - $ 0 $ 2 $ 1 $ 121 $ 7,981 $ 22 $ 3,955 $ 141 $ 4,932
=================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 10.34 $ 10.34 $ 10.33 $ 10.32
===========================================================
Ending Unit Value $ 10.80 $ 11.14 $ 11.11 $ 11.15 $ 11.04
===========================================================
Number of Units
Outstanding
542,021.82 104.91 426,692.38 3,968.60 436,225.06
===========================================================
Net Assets(000's) $ 5,856 $ 1 $ 4,741 $ 44 $ 4,816
===========================================================
1997
Beginning Unit
Value $ 10.00 $ $ 10.00 $
10.00 10.00
================================================
Ending Unit Value $ 10.34 $ $ 10.33 $
10.34 10.32
================================================
================================================
Number of Units
Outstanding
- - 94,228.09 72,034.42
================================================
Net Assets (000's) $ - $ - $ 973 $ 743
================================================
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)
=============================================================================================
(Continued)
5. SELECTED DATA
The following is a summary of selected data for a unit of
capital and net assets for the Series Account.
-----------------------------------------------------------------------------------------------------------------
Maxim Founders Growth & Income 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 06/10/98 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
1999
Beginning Unit
Value $ 10.50 $ 12.28 $ 12.25 $ $ 12.17 $ 11.87 $ 14.29 $ 14.25 $ 14.21 $
12.22 14.16
=================================================================================================================
Ending Unit Value $ 12.08 $ 14.05 $ 13.98 $ $ 13.82 $ 15.06 $ 18.03 $ 17.94 $ 17.86 $
13.92 17.74
=================================================================================================================
Number of Units
Outstanding 3,248.53 21,762.04 38,384.92 7,108.09
25,804.74 225,791.18 43,961.50 102,466.53 126,500.02 1,021,201.64
=================================================================================================================
Net Assets(000's) $ 39 $ 306 $ 537 $ 359 $ 3,121 $ 107 $ 792 $ 1,839 $ 2,259 $
18,117
=================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 10.48 $ 10.47 $ $ 10.45 $ 10.00 $ 10.46 $ 10.46 $ 10.45 $
10.46 10.44
=================================================================================================================
Ending Unit Value $ 10.50 $ 12.28 $ 12.25 $ $ 12.17 $ 11.87 $ 14.29 $ 14.25 $ 14.21 $
12.22 14.16
=================================================================================================================
Number of Units
Outstanding 1,779.20 5,053.76 26,637.10 602.66
18,073.50 209,618.75 6,496.27 24,247.29 66,115.58 566,409.87
==========================================================
=======================================================
Net Assets(000's) $ 19 $ 62 $ 326 $ 221 $ 2,551 $ 7 $ 93 $ 346 $ 940 $
8,019
=================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ $ 10.00 $ 10.00 $ 10.00 $ 10.00 $
10.00 10.00
============================================ ===============================================
Ending Unit Value $ 10.48 $ 10.47 $ $ 10.45 $ 10.46 $ 10.46 $ 10.45 $
10.46 10.44
===============================================
============================================ ===============================================
Number of Units
Outstanding 1,908.53 -
7,818.57 81,095.13 1,592.27 - 1,779.77 47,353.03
============================================ ===============================================
Net Assets(000's) $ 20 $ - $ 82 $ 847 $ 17 $ - $ 19 $ 494
============================================ ===============================================
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)
=================================================================================================
(Continued)
5. SELECTED DATA
-----------------------------------------------------------------------------------------------------------------
Maxim Index 600 Portfolio Maxim INVESCO Balanced 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 03/15/94 01/02/98 01/01/97 06/13/97 10/31/96 10/31/96
1999
Beginning Unit
Value 9.48 $ 11.78 $ 10.88 $ $ 15.63 $ 11.84 $ 14.76 $ 12.50 $ 14.85 $ 14.76
13.92
=================================================================================================================
Ending Unit Value $ 10.61 $ 13.10 $ 12.08 $ $ 17.27 $ 13.82 $ 17.13 $ 14.48 $ 17.17 $ 17.01
15.43
=================================================================================================================
Number of Units
Outstanding 14,500.50 22,323.57 175,765.02173,995.43 457,632.00
524,935.92 90,591.72 684,805.52 478,348.00 5,105,248.56
=================================================================================================================
Net Assets (000's) $ 154 $ 292 $ $ $ 9,064 $ 6,327 $ 1,552 $ 9,919 $ 8,213 $ 86,852
2,123 2,684
=================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 12.03 $ 11.14 $ $ 16.08 $ 10.00 $ 12.53 $ 10.63 $ 12.66 $ 12.62
14.28
=================================================================================================================
Ending Unit Value $ 9.48 $ 11.78 $ 10.88 $ $ 15.63 $ 11.84 $ 14.76 $ 12.50 $ 14.85 $ 14.76
13.92
=================================================================================================================
Number of Units
Outstanding 22,273.21 183,674.90 5,029,978.19
11,591.13 72,881.82 654,733.49 206,749.57 13,049.81 530,510.93 342,274.21
==========================================================
=======================================================
Net Assets(000's) $ 110 $ 262 $ 1,998 $ $ 2,448 $ 193 $ 6,632 $ 5,082 $ 74,219
1,015 10,235
=================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ $ 13.46 $ 10.00 $ 10.00 $ 10.14 $ 10.13
11.92
============================================ ===============================================
Ending Unit Value $ 12.03 $ 11.14 $ $ 16.08 $ 12.53 $ 10.63 $ 12.66 $ 12.62
14.28
===============================================
============================================ ===============================================
Number of Units
Outstanding 20,427.36 1,923.32 147,236.05
711,865.97 14,831.94 1,275.72 340,421.00 4,925,017.36
============================================ ===============================================
Net Assets (000's) $ 246 $ 21 $ $ 11,447 $ 186 $ 14 $ 4,310 $ 62,154
2,103
============================================ ===============================================
1996
Beginning Unit
Value $ $ 11.82 $ 10.00 $ 10.00
10.43
======================= ========================
Ending Unit Value $ $ 13.46 $ 10.14 $ 10.13
11.92
======================= ========================
Number of Units
Outstanding 132,987.33
477,902.35 4,262.66 22,568.19
======================= ========================
Net Assets (000's) $ $ 6,433 $ 43 $ 229
1,585
======================= ========================
1995
Beginning Unit
Value $ $ 9.48
10.00
=======================
Ending Unit Value $ $ 11.82
10.43
=======================
Number of Units
Outstanding 72,120.51
296,281.36
=======================
Net Assets (000's) $ 753 $
3,502
===================================================================================================
(Continued)
5. SELECTED DATA
----------------------------------------------------------------------------------------------
Maxim INVESCO International Growth Portfolio (ADR) 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
Operations 06/10/98 01/01/97 06/13/97 12/04/95 01/05/95 06/10/98 01/01/97 06/13/97 12/04/95 01/09/95
1999
Beginning Unit
Value $ 9.75 $ 12.26 $ 10.99 $ $ 16.28 $ 11.04 $ 13.81 $ 12.97 $ 18.52 $
15.21 22.31
=================================================================================================================
Ending Unit Value $ 11.96 $ 14.96 $ 13.38 $ $ 19.72 $ 19.96 $ 24.83 $ 23.28 $ 33.17 $
18.48 39.83
=================================================================================================================
Number of Units
Outstanding 280,188.56
10,506.29 29,709.85 70,783.74 343,437.29 41,361.84 117,175.80 396,589.37 335,181.31 1,279,850.46
=================================================================================================================
Net Assets(000's) $ 126 $ 445 $ 3,749 $ 1,308 $ 6,772 $ 826 $ 2,909 $ 9,232 $ 11,117 $
50,978
=================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 11.15 $ 10.01 $ 13.88 $ 14.90 $ 10.00 $ 11.80 $ 11.11 $ 15.90 $
19.21
=================================================================================================================
Ending Unit Value $ 9.75 $ 12.26 $ 10.99 $ 15.21 $ 16.28 $ 11.04 $ 13.81 $ 12.97 $ 18.52 $
22.31
=================================================================================================================
Number of Units
Outstanding 5,065.09 29,294.88 292,162.25 51,071.84 31,102.91
347,745.34 85,293.71 334,433.76 251,992.27 1,277,401.42
=================================================================================================================
Net Assets(000's) $ 49 $ 359 $ 3,211 $ 777 $ 5,660 $ 343 $ 1,178 $ 4,339 $ 4,667 $
28,498
=================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ 12.50 $ 13.46 $ 10.00 $ 10.00 $ 13.52 $
16.38
============================================ ===============================================
Ending Unit Value $ 11.15 $ 10.01 $ 13.88 $ 14.90 $ 11.80 $ 11.11 $ 15.90 $
19.21
============================================ ===============================================
Number of Units
Outstanding 34,886.43 7.11 149,143.92
314,943.72 110,005.54 754.64 296,221.15 1,340,084.31
============================================ ===============================================
Net Assets (000's) $ 389 $ 0 $ 2,070 $ 4,693 $ 1,298 $ 8 $ 4,710 $
25,743
============================================ ===============================================
1996
Beginning Unit
Value $ 10.41 $ 11.25 $ 10.77 $
13.09
========================
=======================
Ending Unit Value $ 12.50 $ 13.46 $ 13.52 $
16.38
======================= ========================
Number of Units
Outstanding 74,310.25
126,363.18 159,393.34 776,719.68
======================= ========================
Net Assets(000's) $ 929 $ 1,701 $ 2,155 $
12,726
======================= ========================
1995
Beginning Unit
Value $ 10.00 $ 10.00 $ 10.00 $
10.00
======================= ========================
Ending Unit Value $ 10.41 $ 11.25 $ 10.77 $
13.09
======================= ========================
Number of Units
Outstanding 1,130.83
23,104.73 24,147.18 210,982.04
======================= ========================
Net Assets (000's) $ 12 $ 260 $ 260 $ 2,762
=====================================================================================================
(Continued)
5. SELECTED DATA
The following is a summary of selected data for a
unit of capital and net assets for the Series
Account.
-----------------------------------------------------------------------------------------------------------------
Maxim Loomis Sayles Corporate Bond Portfolio Maxim Loomis Sayles Small-Cap Value 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
1999
Beginning Unit
Value $ 10.29 $ 11.53 $ 10.83 $ $ 15.41 $ 9.58 $ 9.74 $ 9.72 $ 9.69 $ 9.66
12.88
=================================================================================================================
Ending Unit Value $ 10.79 $ 12.03 $ 11.27 $ $ 15.96 $ 9.53 $ 9.65 $ 9.61 $ 9.56 $ 9.49
13.38
=================================================================================================================
Number of Units
Outstanding 69,826.06 11,524.60 189,311.10 132,735.46 2,176.29
1,005,368.97 8,763.18 19,064.83 32,492.98 163,845.38
=================================================================================================================
Net Assets(000's) $ 753 $ 139 $ 2,133 $ $ $ 21 $ 85 $ 183 $ 311 $ 1,555
1,777 16,046
=================================================================================================================
1998
Beginning Unit
Value 10.00 $ 11.21 $ 10.55 $ $ 15.09 $ 10.00 $ 10.03 $ 10.02 $ 10.01 $ 10.01
12.57
=================================================================================================================
Ending Unit Value $ 10.29 $ 11.53 $ 10.83 $ $ 15.41 $ 9.58 $ 9.74 $ 9.72 $ 9.69 $ 9.66
12.88
=================================================================================================================
Number of Units
Outstanding
49,103.31 10,107.63 178,619.57 107,193.711,134,813.38 9,120.17 5,260.61 14,660.30 22,333.17 188,314.26
=================================================================================================================
Net Assets(000's) $ 505 $ 117 $ 1,934 $ $ 17,487 $ 87 $ 51 $ 142 $ 216 $ 1,818
1,381
=================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ $ 13.55 $ 10.00 $ 10.00 $ 10.00 $ 10.00
11.26
============================================ ===============================================
Ending Unit Value $ 11.21 $ 10.55 $ $ 15.09 $ 10.03 $ 10.02 $ 10.01 $ 10.01
12.57
============================================ ===============================================
Number of Units
Outstanding
10,505.76 140.06 84,830.69 986,392.61 1,448.50 - 9,792.14 70,399.46
============================================ ===============================================
Net Assets(000's) $ 118 $ 1 $ $ 14,885 $ 15 $ - $ 98 $ 705
1,066
============================================ ===============================================
1996
Beginning Unit
Value $ $ 12.44
10.30
=======================
Ending Unit Value $ $
11.26 13.55
=======================
Number of Units
Outstanding
38,958.69 478,757.71
=======================
Net Assets (000's) $ 439 $ 6,488
=======================
1995
Beginning Unit
Value $ $ 10.00
10.00
=======================
Ending Unit Value $ $ 12.44
10.30
=======================
Number of Units
Outstanding
269.42 220,637.10
=======================
Net Assets (000's) $ 3 $ 2,744
=============================================================================================
(Continued)
5. SELECTED DATA
-----------------------------------------------------------------------------------------------------------------
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
1999
Beginning Unit
Value $ 11.13 $ 11.35 $ 11.32 $ 11.28 $ 11.25 $ 11.25 $ 11.58 $ 11.55 $ 11.52 $ 11.48
=================================================================================================================
Ending Unit Value $ 12.96 $ 13.14 $ 13.08 $ 13.00 $ 12.93 $ 13.73 $ 14.06 $ 14.00 $ 13.93 $ 13.83
=================================================================================================================
Number of Units
Outstanding 1,804,051.78
1,219,880.726,109.16 347,108.62 91,118.94 479,827.82 9,781.57 207,585.59 163,856.44 478,876.63
=================================================================================================================
Net Assets (000's) $ 15,809 $ 80 $ 4,541 $ 1,185 $ 6,202 $ 24,775 $ 138 $ 2,905 $ 2,282 $ 6,625
=================================================================================================================
1998
Beginning Unit
Value 10.00 $ 10.24 $ 10.24 $ 10.23 $ 10.22 $ 10.00 $ 0.35 $ 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
Outstanding
419,765.72 2,619.56 258,990.96 16,878.33 418,487.19 697,144.75 4,302.17 140,358.02 36,452.19 446,496.19
=================================================================================================================
Net Assets (000's) $ 4,672 $ 30 $ 2,932 $ 190 $ 4,708 $ 7,844 $ 50 $ 1,622 $ 420 $ 5,126
=================================================================================================================
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
Outstanding
2,249.51 - 44,770.91 110,105.33 2,109.96 - 53,828.37 141,839.79
============================================ ==============================================
Net Assets (000's) $ 23 $ - $ 458 $ 1,125 $ 22 $ - $ 557 $ 1,465
============================================ ==============================================
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)
====================================================================================================
(Continued)
5. SELECTED DATA
----------------------------------------------------------------------------------------------------
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
1999
Beginning Unit
Value 10.95 $ 11.15 $ 11.12 $ 11.04 $ $ 10.28 $ 10.95 $ $ 11.34 $ 19.01
11.05 10.70
=================================================================================================================
Ending Unit Value $ 11.87 $ 12.01 $ 11.96 $ 11.85 $ $ 10.78 $ 11.41 $ $ 11.77 $ 19.68
11.82 11.13
=================================================================================================================
Number of Units
Outstanding 443,954.25 2,199.42 383,124.12 14,657.02 708,987.52
309,247.32 64,181.93 2,059,542.36 430,080.54 3,701,304.91
=================================================================================================================
Net Assets (000's)$ 5,268 $ 26 $ 4,581 $ 174 $ $ 692 $ 8,091 $ $ 5,064 $ 72,827
3,655 22,928
=================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 10.21 $ 10.21 $ 10.20 $ $ 10.00 $ 10.47 $ $ 10.89 $ 18.30
10.19 10.25
=================================================================================================================
Ending Unit Value $ 10.95 $ 11.15 $ 11.12 $ 11.04 $ $ 10.28 $ 10.95 $ $ 11.34 $ 19.01
11.05 10.70
=================================================================================================================
Number of Units
Outstanding 177,087.47 - 338,437.20 4,110.80
354,140.45 80,123.80 719,236.73 1,613,050.25 352,052.98 3,758,054.92
=================================================================================================================
Net Assets (000's)$ 1,940 $ - $ 3,763 $ 45 $ $ 824 $ 7,874 $ $ 3,992 $ 71,428
3,913 17,260
=================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ $ $ 10.00 $ $ 10.44 $ 17.60
10.00 10.00 10.00
============================================ ================================================
Ending Unit Value $ 10.21 $ 10.21 $ $ $ 10.47 $ $ 10.89 $ 18.30
10.20 10.19 10.25
============================================ ================================================
Number of Units
Outstanding - 53,438.52
- 53,608.55 875,612.10 11,698.04 1,402,319.60 3,877,164.14
============================================ ================================================
Net Assets (000's) $ - $ - $ 545 $ $ 9,168 $ $ 15,271 $ 70,952
546 120
============================================ ================================================
1996
Beginning Unit
Value $ 10.04 $
16.96
=========================
Ending Unit Value $ 10.44 $
17.60
=========================
Number of Units
Outstanding
343,499.44 3,129,281.92
=========================
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
Outstanding
169,096.04 2,880,571.67
=========================
Net Assets (000's) $ 1,697 $
48,860
=====================================================================================================
(Continued)
5. SELECTED DATA
------------------------------------------------------------------------------------------------------
Maxim Stock Index Portfolio Maxim T. Rowe Price Equity/Income 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 06/10/98 01/01/97 06/13/97 12/04/95 11/09/94
1999
Beginning Unit
Value 11.09 $ 16.58 $ 13.78 $ 20.44 $ $ 10.17 $ 13.88 $ 12.04 $ 16.99 $ 20.94
71.93
=================================================================================================================
Ending Unit Value $ 13.28 $ 19.74 $ 16.37 $ 24.24 $ $ 10.51 $ 14.27 $ 12.36 $ 17.40 $ 21.39
85.06
=================================================================================================================
Number of Units 560,272.75 610,676.95 3,812,823.61 ,877,727.40 6,767,826.02 104,951.02
Outstanding 132,978.09 625,382.39 427,608.57 3,377,050.02
=================================================================================================================
Net Assets(000's) 7,443 $ $ 62,432 $ 45,520 $ $ 1,103 $ 1,898 $ 7,729 $ 7,439 $ 72,219
12,056 575,651
=================================================================================================================
1998
Beginning Unit
Value 10.00 $ 13.15 $ 10.95 $ 16.27 $ $ 10.00 $ 12.81 $ 11.14 $ 15.74 $ 19.47
57.44
=================================================================================================================
Ending Unit Value $ 11.09 $ 16.58 $ 13.78 $ 20.44 $ $ 10.17 $ 13.88 $ 12.04 $ 16.99 $ 20.94
71.93
=================================================================================================================
Number of Units 444,254.02 106,369.29 3,382,583.01 ,470,364.97 114,503.07
Outstanding 7,484,324.11 119,756.04 614,261.17 379,091.37 3,756,224.78
=================================================================================================================
Net Assets(000's) 4,929 $ 1,763 $ 46,606 $ 30,053 $ $ 1,164 $ 1,662 $ 7,398 $ 6,440 $ 78,674
538,337
=================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ 12.43 $ $ 10.00 $ 10.00 $ 12.34 $ 15.30
44.00
============================================== ==============================================
Ending Unit Value $ 13.15 $ 10.95 $ 16.27 $ $ 12.81 $ 11.14 $ 15.74 $ 19.47
57.44
============================================== ==============================================
Number of Units 94,900.40 167,748.34 2,328,852.188,215,445.99
Outstanding 136,599.23 1,715.12 561,621.67 3,595,375.07
============================================== ==============================================
Net Assets (000's) $ 1,248 $ 1,837 $ 37,890 $ $ 1,750 $ 19 $ 8,840 $ 70,002
471,895
============================================== ==============================================
1996
Beginning Unit
Value $ 10.30 $ $ 10.43 $ 12.98
36.57
========================= =========================
Ending Unit Value $ 12.43 $ $ 12.34 $ 15.30
44.00
========================= =========================
Number of Units 2,057,207.66
Outstanding 7,884,581.79 276,648.63 1,702,863.67
========================= =========================
Net Assets (000's) $ 25,565 $ $ 3,413 $ 26,057
346,883
========================= =========================
1995
Beginning Unit
Value $ 10.00 $ $ 10.00 $ 9.85
27.30
========================= =========================
Ending Unit Value $ 10.30 $ $ 10.43 $ 12.98
36.57
========================= =========================
Number of Units 937,180.75
Outstanding 7,636,165.40 1,324.94 550,610.66
========================= =========================
Net Assets (000's) $ 9,653 $ $ 14 $ 7,146
279,234
======================================================================================================
(Continued)
5. SELECTED DATA
------------------------------------------------------------------------------------------------------
Maxim T. Rowe Price Mid-Cap Growth Portfolio Maxim Templeton International Equity 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 04/13/94
1999
Beginning Unit
Value $ 12.28 $ 12 56 $ 12.53 $ 12.49 $ 12.45 $ 8.73 $ 9.58 $ 8.88 $ 11.66 $ 12.59
===================================================================================================================
Ending Unit Value$ 15.30 $ 15.56 $ 15.49 $ 15.42 $ 15.32 $ 11.35 $ 12.38 $ 11.45 $ 15.01 $ 16.16
===================================================================================================================
Number of Units 450,551.56 13,098.81 51,474.65 31,627.04
Outstanding 93,445.15 470,150.71 57,822.77 180,091.70 492,141.77 2,107,351.45
===================================================================================================================
Net Assets(000's) 6,892 $ 204 $ 797 $ 1,441 $ 7,201 $ 359 $ 716 $ 2,062 $ 7,385 $ 34,051
===================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 10.33 $ 10.33 $ 10.32 $ 10.31 $ 10.00 $ 10.14 $ 9.42 $ 12.39 $ 13.43
===================================================================================================================
Ending Unit Value $ 2.28 $ 12.56 $ 12.53 $ 12.49 $ 12.45 $ 8.73 $ 9.58 $ 8.88 $ 11.66 $ 12.59
===================================================================================================================
Number of Units
Outstanding 176,746.72 3,908.23 36,548.42 55,481.56 384,828.79 28,867.69 32,162.34 122,570.24 498,703.59 2,333,665.81
===================================================================================================================
Net Assets(000's) 2,170 $ 49 $ 458 $ 693 $ 4,789 $ 252 $ 308 $ 1,089 $ 5,815 $ 29,389
===================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 12.27 $ 13.33
============================================== ===============================================
Ending Unit Value $ 10.33 $ 10.33 $ 10.32 $ 10.31 $ 10.14 $ 9.42 $ 12.39 $ 13.43
============================================== ===============================================
Number of Units
Outstanding 1,741.25 - 12,739.10 128,683.86 39,222.20 2,087.94 557,569.31 2,831,592.94
============================================== ===============================================
Net Assets(000's) $ 18 $ - $ 131 $ 1,327 $ 398 $ 20 $ 6,908 $ 38,028
============================================== ===============================================
1996
Beginning Unit
Value $ 10.36 $
11.29
========================
Ending Unit Value $ 12.27 $
13.33
========================
Number of Units
Outstanding 548,157.84 2,249,181.67
========================
Net Assets(000's) $ 6,725 $
29,981
========================
1995
Beginning Unit
Value $ 10.00 $
10.49
========================
Ending Unit Value $ 10.36 $
11.29
========================
Number of Units
Outstanding 290,190.44 1,645,237.34
========================
Net Assets(000's) $ $
3,006 18,570
======================================================================================================
(Continued)
5. SELECTED DATA
------------------------------------------------------------------------------------
Maxim Total
Return Portfolio Maxim U.S. Government Securities Portfolio
------------------------------------------------------------------------------------
0.95 1.25 0.00 0.55 0.75 0.95 1.25
Date Commenced Operations 12/04/95 04/20/94 06/10/98 01/01/97 06/13/97 12/04/95 04/01/85
1999
Beginning Unit Value $ - $ $ 10.43 $ 11.33 $ 11.14 $ 11.93 $ 14.31
-
====================================================================================
Ending Unit Value $ $ $ $ 11.85 $ 14.18
10.46 11.30 11.09
====================================================================================
Number of Units 55,109.13
Outstanding 19,724.89 350,532.03 217,847.85 2,599,233.40
====================================================================================
Net Assets (000's) $ - $ - $ 576 $ 223 $ 3,888 $ 2,582 $ 36,846
====================================================================================
1998
Beginning Unit Value $ 13.79 $ 15.69 $ 10.00 $ 10.62 $ 10.47 $ 11.23 $ 13.51
====================================================================================
Ending Unit Value $ $ - $ 10.43 $ 11.33 $ 11.14 $ 11.93 $ 14.31
-
====================================================================================
Number of Units
Outstanding - - 6,374.10 13,389.95 341,859.87 151,304.43 3,217,525.64
====================================================================================
Net Assets (000's) $ - $ - $ 66 $ 152 $ 3,809 $ 1,805 $ 46,046
====================================================================================
1997
Beginning Unit Value $ 11.27 $ 12.87 $ 10.00 $ 10.00 $ 10.45 $ 12.61
====================== ===================================================
Ending Unit Value $ 13.79 $ 15.69 $ 10.62 $ 10.47 $ 11.23 $ 13.51
====================== ===================================================
Number of Units 285.72 112,314.59
Outstanding - 3,531.32 739.30 3,225,407.45
====================== ===================================================
Net Assets (000's) $ $ $ 38 $ 8 $ 1,261 $ 43,575
- 4
====================== ======================== =============
==============
1996
Beginning Unit Value $ 10.18 $ 11.66 $ 10.15 $ 12.29
===========
=========== ===========================
Ending Unit Value $ 11.27 $ 12.87 $ 10.45 $ 12.61
===========
=========== ===========================
Number of Units 26,145.88 382,179.84 119,989.13
Outstanding 3,234,023.68
===========
=========== ===========================
Net Assets (000's) $ 295 $ 4,918 $ 1,254 $ 40,777
====================== ===========================
1995
Beginning Unit Value $ 10.00 $ 9.62 $ 10.00 $ 10.71
===========
=========== ===========================
Ending Unit Value $ 10.18 $ 11.66 $ 10.15 $ 12.29
===========
=========== ===========================
Number of Units 39,695.16
Outstanding 4,862.59 214,442.71 3,165,425.83
====================== =============
==============
Net Assets (000's) $ 50 $ 2,501 $ $
403 38,890
===================================================================================
(Continued)
5. SELECTED DATA
------------------------------------------------------------------------------------------------------------------
Maxim Value Index Portfolio Alger American Balanced Fund
------------------------------------------------------------------------------------------------------------------
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 09/13/99 09/13/99 09/13/99 09/13/99 09/13/99
1999
Beginning Unit
Value $ 10.26 $ $ $ $ $ 10.00 $ 10.00 $ $ 10.00 $ 10.00
12.34 12.31 12.28 12.23 10.00
==================================================================================================================
Ending Unit Value $ 11.42 $ $ $ $ $ 11.41 $ 11.39 $ $ 11.37 $ 11.36
13.67 13.61 13.55 13.46 11.38
==================================================================================================================
Number of Units 7,980.97 13,235.05 69,752.97 40,924.99
Outstanding 424,659.62 - 3,334.40 3,327.96 15,039.58 94,918.42
==================================================================================================================
Net Assets(000's) $ 91 $ 181 $ 949 $ 554 $ $ - $ 38 $ 38 $ 171 $ 1,079
5,714
==================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ $ $ $
10.84 10.84 10.83 10.82
========================================================
Ending Unit Value $ 10.26 $ $ $ $
12.34 12.31 12.28 12.23
========================================================
Number of Units 2,711.68 8,915.02 23,951.01
Outstanding 41,993.96 362,062.57
========================================================
Net Assets(000's) $ 28 $ 110 $ 517 $ 294 $
4,428
========================================================
1997
Beginning Unit
Value $ $ $ $
10.00 10.00 10.00 10.00
==============================================
Ending Unit Value $ $ $ $
10.84 10.84 10.83 10.82
==============================================
Number of Units 12,307.01
Outstanding - - 55,506.37
==============================================
Net Assets(000's) $ - $ - $ 133 $
601
==============================================
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)
===================================================================================================================================
(Continued)
5. SELECTED DATA
--------------------------------------------------------------------------------
American Century VP
Alger American MidCap Growth Fund Balanced Fund
--------------------------------------------------------------------------------
0.00 0.55 0.75 0.95 1.25 0.95 1.25
Date Commenced
Operations 09/13/99 09/13/99 09/13/99 09/13/99 09/13/99 12/04/95 08/03/92
1999
Beginning Unit
Value $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 14.88 $
18.77
================================================================================
Ending Unit Value $ 12.24 $ 12.21 $ 12.21 $ 12.20 $ 12.19 $ 16.15 $
20.36
================================================================================
Number of Units
Outstanding 4,468.96 2,819.93 4,173.07 13,680.57 126,221.16 588.23 1,841.07
================================================================================
Net Assets(000's) $ 55 $ 34 $ 51 $ 167 $ 1,539 $ 10 $ 37
================================================================================
1998
Beginning Unit
Value $ 12.98 $
16.41
=======================
Ending Unit Value $ 14.88
$
18.77
=======================
Number of Units 1,003.91
Outstanding 1,510.32
=======================
Net Assets(000's) $ 15 $ 28
=======================
1997
Beginning Unit
Value $ 11.31 $
14.36
=======================
Ending Unit Value $ 12.98 $
16.41
=======================
Number of Units
Outstanding 3,607.78 1,890.46
=======================
Net Assets (000's) $ 47 $ 31
=======================
1996
Beginning Unit
Value $ 10.18 $
12.96
=======================
Ending Unit Value $ 11.31 $
14.36
=======================
Number of Units
Outstanding 237,929.35 3,238,207.89
=======================
Net Assets (000's) $ 2,692 $
46,492
=======================
1995
Beginning Unit
Value $ 10.00 $
10.83
=======================
Ending Unit Value $ 10.18 $
12.96
=======================
Number of Units
Outstanding 84,634.10 3,153,172.39
=======================
Net Assets (000's) $ 861 $
40,853
=============================================================================================================
(Continued)
5. SELECTED DATA
-----------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation Fund Fidelity Investments VIP 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 08/07/92 06/10/98 01/01/97 06/13/97 12/04/95 04/21/94
1999
Beginning Unit
Value 9.72 $ $ $ $ $ $
$ $ $ 13.02 12.18 17.04 14.98 18.46 24.48
9.36 9.80 8.73
=================================================================================================================
Ending Unit Value $ 15.99 $ $ $ $ $ 16.74 $ $ $ $
15.32 16.01 14.23 21.16 23.29 20.43 25.14 33.23
=================================================================================================================
Number of Units 83,735.91 166,119.99 275,889.98 755,950.03
Outstanding 41,010.46 1,402,602.44 82,726.28 279,463.28 727,652.01 3,970,113.1
=================================================================================================================
Net Assets(000's) $ 656 $ $ $ $ $ 1,385 $ $ $ $
1,283 2,659 3,925 29,684 6,508 15,444 18,292 131,938
=================================================================================================================
1998
Beginning Unit
Value $ 10.00 $ 9.62 $ $ $ $ 10.00 $ $ $ $
10.09 9.01 13.48 12.28 10.82 13.36 17.77
=================================================================================================================
Ending Unit Value $ 9.72 $ 9.36 $ $ $ $ 12.18 $ $ $ $
9.80 8.73 13.02 17.04 14.98 18.46 24.48
=================================================================================================================
Number of Units 25,906.23 10,882.95 164,721.68 304,341.17 593,071.00
Outstanding 2,088,303.72 56,691.14 157,481.96 503,651.35 3,681,235.6
=================================================================================================================
Net Assets(000's) $ 252 $ 102 $ $ $ $ 691 $ $ $ $
1,615 2,656 27,197 2,683 8,882 9,300 90,127
=================================================================================================================
1997
Beginning Unit
Value $ 10.00 $ $ $ $ $ $ $
10.00 9.40 14.11 10.00 10.00 10.93 14.57
==============================================
=============================================
Ending Unit Value $ 9.62 $ $ $ $ $ $ $
10.09 9.01 13.48 12.28 10.82 13.36 17.77
==============================================
=============================================
Number of Units 14,859.84 449.77 331,874.62 3,446.98
Outstanding 3,207,248.87 157,223.90 588,801.03 3,352,899.8
============================================== =============================================
Net Assets(000's) $ 143 $ $ $ $ 37 $ $
$ 2,990 43,234 1,931 7,866 59,581
5
============================================== =============================================
1996
Beginning Unit
Value $ $ $ 9.62 $
9.92 14.93 12.86
======================== =======================
Ending Unit Value $ $ $ $
9.40 14.11 10.93 14.57
======================== =======================
Number of Units 585,432.85
Outstanding 4,560,706.32 463,651.69 2,500,808.02
======================== =======================
Net Assets (000's) $ $ $ $
5,503 64,356 5,068 36,439
======================== =======================
1995
Beginning Unit
Value $ $ $ $
10.00 11.53 10.00 9.62
======================== =======================
Ending Unit Value $ $ $ 9.62 $
9.92 14.93 12.86
======================== =======================
Number of Units
Outstanding 292,581.15 4,954,474.12 164,201.34 1,502,634.51
======================== =======================
Net Assets (000's) $ 2,902 $ $ 1,580 $
73,995 19,328
====================================================================================================================================
(Continued)
5. SELECTED DATA
------------------------------------------------------------------------------------------------------------------
Fidelity Investments VIP II Asset Manager Portfolio Fidelity Investments VIP II Contrafund 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 04/21/94 11/12/98 11/12/98 11/12/98 11/12/98 11/12/98
1999
Beginning Unit
Value $ $ $ $ $ $ 11.71 $ $ 11.70 $ 11.70 $
10.58 13.73 12.27 16.26 16.47 11.70 11.69
==================================================================================================================
Ending Unit Value $ $ $ $ $ 14.55 $ $ 14.43 $ 14.40 $
11.75 15.17 13.53 17.89 18.07 14.46 14.35
==================================================================================================================
Number of Units 39,365.73 44,428.26 289,063.48 166,809.69 19,034.82
Outstanding 1,383,474.11 1,704.69 24,132.61 84,529.68 490,770.66
==================================================================================================================
Net Assets (000's)$ 463 $ 674 $ $ $ $ 25 $ 349 $ 275 $ 1,217 $
3,911 2,985 25,005 7,041
==================================================================================================================
1998
Beginning Unit
Value $ $ 12.00 $ $ $ $ 10.00 $ $ 10.00 $ 10.00 $
10.00 10.74 14.27 14.50 10.00 10.00
==================================================================================================================
Ending Unit Value $ $ $ $ $ 11.71 $ $ 11.70 $ 11.70 $
10.58 13.73 12.27 16.26 16.47 11.70 11.69
==================================================================================================================
Number of Units 32,619.73 38,527.01 287,339.45 163,995.76 545.53
Outstanding 2,065,741.39 - - 1,792.37 79,502.22
==================================================================================================================
Net Assets (000's)$ 345 $ 529 $ $ $ $ - $ - $ 6 $ 21 $ 930
3,526 2,667 34,030
==================================================================================================================
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 1,232.17 243,166.13
Outstanding 2,104,778.43
==============================================
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
Outstanding 1,593,034.53
========================
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
Outstanding 1,202,943.32
========================
Net Assets (000's) 1,239
12,939
=======================================================================================
(Continued)
5. SELECTED DATA
-------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Pioneer VCT Equity Income Fund - Class II SteinRoe
Growth Portfolio Balanced
Fund
-------------------------------------------------------------------------------------------------------------
0.75 0.95 0.00 0.55 0.75 0.95 1.25 0.75
Date Commenced
Operations 06/02/98 10/12/98 09/13/99 09/13/99 09/13/99 09/13/99 09/13/99 06/02/98
1999
Beginning Unit
Value $
$ $ 10.00 $ $ $ $ $
10.65 12.59 10.00 10.00 10.00 10.00 10.72
=============================================================================================================
Ending Unit Value
$ $ $ $ $ $ $ $
17.31 20.54 9.76 9.74 9.74 9.73 9.72 11.98
=============================================================================================================
Number of Units
Outstanding 123,401.32 105,742.62 - 270.05 1,471.60 1,756.46 17,679.99 8,242.99
=============================================================================================================
Net Assets (000's
$ $ $ $ $ $ $ $
2,136 2,172 - 3 14 17 172 99
=============================================================================================================
1998
Beginning Unit
Value
$ $ $
10.00 10.00 10.00
=============
========================== =============
Ending Unit Value
$ $ $
10.65 12.59 10.72
=============
========================== =============
Number of Units
Outstanding 17,591.36 48,118.83 4,142.27
=============
========================== =============
Net Assets(000's)
$ $ $
187 606 44
========================== =============
=============
1997
Beginning Unit
Value
Ending Unit Valu
Number of Units
Outstanding
Net Assets (000's
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)
</TABLE>
=====================================================================
(Continued)
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, 1999, 1998, and 1997 and
Independent Auditors' Report
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,
1999 and 1998, 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, 1999. 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, 1999 and 1998, and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1999 in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, effective
January 1, 1999, the Company adopted Statement of Position No. 98-1,
"Accounting for the Cost of Computer Software Developed or Obtained for
Internal Use" and, accordingly, changed its method of accounting for
software development costs.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
January 31, 2000
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
===================================================================================================================================
1999 1998
---------------------- -----------------------
ASSETS
INVESTMENTS:
Fixed Maturities:
Held-to-maturity, at amortized cost (fair value
$2,238,581 and $2,298,936) $ 2,260,581 $ 2,199,818
Available-for-sale, at fair value (amortized cost
$6,953,383 and $6,752,532) 6,727,922 6,936,726
Common stock, at fair value (cost $43,978 and 69,240 48,640
$41,932)
Mortgage loans on real estate, net 974,645 1,133,468
Real estate, net 103,731 73,042
Policy loans 2,681,132 2,858,673
Short-term investments, available-for-sale (cost
approximates fair value) 240,804 420,169
---------------------- -----------------------
Total Investments 13,058,055 13,670,536
Cash 257,840 176,119
Reinsurance receivable
Related party 5,015 5,006
Other 168,307 187,952
Deferred policy acquisition costs 282,295 238,901
Investment income due and accrued 137,810 157,587
Other assets 308,419 311,078
Premiums in course of collection 142,199 84,940
Deferred income taxes 253,323 191,483
Separate account assets 12,780,016 10,099,543
---------------------- -----------------------
TOTAL ASSETS $ 27,393,279 $ 25,123,145
====================== =======================
</TABLE>
See notes to consolidated financial statements.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
1999 1998
----------------- -----------------
LIABILITIES AND STOCKHOLDER'S EQUITY
POLICY BENEFIT LIABILITIES:
Policy reserves
Related party $ 555,783 $ 555,300
Other 11,181,900 11,347,548
Policy and contract claims 391,968 428,798
Policyholders' funds 185,623 181,779
Provision for policyholders' dividends 70,726 69,530
GENERAL LIABILITIES:
Due to Parent Corporation 35,979 52,877
Due to GWL&A Financial 175,035
Repurchase agreements 80,579 244,258
Commercial paper 39,731
Other liabilities 638,469 761,505
Undistributed earnings on participating business 130,638 143,717
Separate account liabilities 12,780,016 10,099,543
----------------- -----------------
Total Liabilities 26,226,716 23,924,586
----------------- -----------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Preferred stock, $1 par value, 50,000,000 shares authorized, 0 shares issued
and outstanding 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 700,316 699,556
Accumulated other comprehensive income (loss) (84,861) 61,560
Retained earnings 544,076 430,411
----------------- -----------------
Total Stockholder's Equity 1,166,563 1,198,559
----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 27,393,279 $ 25,123,145
================= =================
</TABLE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
===================================================================================================================================
1999 1998 1997
---------------- ---------------- ----------------
REVENUES:
Premiums
Related party (including premiums
recaptured totaling $0,
$0, and $155,798) $ $ 46,191 $ 155,798
Other (net of premiums ceded totaling
$85,803, $86,511 and $61,194) 1,163,183 948,672 677,381
Fee income 635,147 516,052 420,730
Net investment income
Related party (10,923) (9,416) (8,957)
Other 886,869 906,776 890,630
Net realized gains on investments 1,084 38,173 9,800
---------------- ---------------- ----------------
2,675,360 2,446,448 2,145,382
---------------- ---------------- ----------------
BENEFITS AND EXPENSES:
Life and other policy benefits (net of
reinsurance recoveries totaling $80,681,
$81,205, and $44,871) 970,250 768,474 543,903
Increase in reserves
Related party 46,191 155,798
Other 33,631 78,851 90,013
Interest paid or credited to contractholders 494,081 491,616 527,784
Provision for policyholders' share of earnings
on participating business 13,716 5,908 3,753
Dividends to policyholders 70,161 71,429 63,799
---------------- ---------------- ----------------
1,581,839 1,462,469 1,385,050
Commissions 173,405 144,246 102,150
Operating expenses (income):
Related party (768) (5,094) (6,292)
Other 593,575 518,228 431,714
Premium taxes 38,329 30,848 24,153
---------------- ---------------- ----------------
2,386,380 2,150,697 1,936,775
INCOME BEFORE INCOME TAXES 288,980 295,751 208,607
---------------- ---------------- ----------------
PROVISION FOR INCOME TAXES:
Current 72,039 81,770 61,644
Deferred 11,223 17,066 (11,797)
---------------- ---------------- ----------------
83,262 98,836 49,847
---------------- ---------------- ----------------
NET INCOME $ 205,718 $ 196,915 $ 158,760
================ ================ ================
</TABLE>
See notes to consolidated financial statements.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(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 (Loss) Earnings Total
------------------------ -------------------- --------- ------------------------ ------------
BALANCE, JANUARY 1, 1997 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
Net income 205,718 205,718
Other comprehensive loss (146,421) (146,421)
------------
Total comprehensive loss 59,297
------------
Capital contributions
Dividends (92,053) (92,053)
Income tax benefit on stock
Compensation 760 760
------------------------ -------------------- --------- ------------------------ ------------
BALANCE, DECEMBER 31, 1999 0 0 7,032,000 7,032 $ 700,316 (84,861) 544,076 $ 1,166,563
======================== ==================== ========= ======================== ============
</TABLE>
See notes to consolidated financial statements.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
===================================================================================================================================
1999 1998 1997
---------------- ---------------- ----------------
OPERATING ACTIVITIES:
Net income $ 205,718 $ 196,915 $ 158,760
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain allocated to participating
policyholders 13,716 5,908 3,753
Amortization of investments (22,514) (15,068) 409
Net realized gains on investments (1,084) (38,173) (9,800)
Depreciation and amortization 47,339 55,550 46,929
Deferred income taxes 11,223 17,066 (11,824)
Changes in assets and liabilities:
Policy benefit liabilities 650,959 938,444 498,114
Reinsurance receivable 19,636 (43,643) 112,594
Accrued interest and other receivables (37,482) 28,467 30,299
Other, net (146,150) (184,536) 64,465
---------------- ---------------- ----------------
Net cash provided by operating activities 741,361 960,930 893,699
---------------- ---------------- ----------------
INVESTING ACTIVITIES:
Proceeds from sales, maturities, and
redemptions of investments:
Fixed maturities
Held-to maturity
Sales 9,920
Maturities and redemptions 520,511 471,432 359,021
Available-for-sale
Sales 3,176,802 6,169,678 3,174,246
Maturities and redemptions 822,606 1,268,323 771,737
Mortgage loans 165,104 211,026 248,170
Real estate 5,098 16,456 36,624
Common stock 18,116 3,814 17,211
Purchases of investments:
Fixed maturities
Held-to-maturity (563,285) (584,092) (439,269)
Available-for-sale (4,019,465) (7,410,485) (4,314,722)
Mortgage loans (2,720) (100,240) (2,532)
Real estate (41,482) (4,581) (64,205)
Common stock (19,698) (10,020) (29,608)
---------------- ---------------- ----------------
Net cash provided by (used in)
investing activities $ 61,587 $ 41,231 $ (243,327)
================ ================ ================
</TABLE>
(Continued)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(Dollars in Thousands)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
==================================================================================================================================
1999 1998 1997
---------------- ---------------- ----------------
FINANCING ACTIVITIES:
Contract withdrawals, net of deposits $ (583,900) $ (507,237) $ (577,538)
Due to Parent Corporation (16,898) (73,779) (19,522)
Due to GWL&A Financial 175,035
Dividends paid (92,053) (80,036) (71,394)
Net commercial paper repayments (39,731) (14,327) (30,624)
Net repurchase agreements (repayments)
borrowings (163,680) (81,280) 38,802
Capital contributions 8,808 11,000
Purchase of preferred shares (121,800)
Acquisition of subsidiary (82,669)
---------------- ---------------- ----------------
---------------- ---------------- ----------------
Net cash used in financing activities (721,227) (952,320) (649,276)
---------------- ---------------- ----------------
NET INCREASE IN CASH 81,721 49,841 1,096
CASH, BEGINNING OF YEAR 176,119 126,278 125,182
---------------- ---------------- ----------------
CASH, END OF YEAR $ 257,840 $ 176,119 $ 126,278
================ ================ ================
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the year for:
Income taxes $ 76,150 $ 111,493 $ 86,829
Interest 14,125 13,849 15,124
</TABLE>
See notes to consolidated financial statements. (Concluded)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1999, 1998,
AND 1997 (Amounts in Thousands, except Share Amounts)
===============================================================================
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization - Great-West Life & Annuity Insurance Company (the Company) is
a wholly-owned subsidiary of GWL&A Financial Inc., a holding company formed
in 1998 (GWL&A Financial) and 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 inter-company transactions and balances have been eliminated in
consolidation.
Certain reclassifications have been made to the 1998 and 1997 financial
statements to conform to the 1999 presentation.
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 (loss) 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 (loss).
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 credit losses on its impaired
loans. Management's judgement 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.
Internal Use Software - Effective January 1, 1999, the Company adopted
Statement of Position (SOP) No. 98-1, "Accounting for the Cost of Computer
Software Developed or Obtained for Internal Use". SOP 98-1 provides
guidance on accounting for costs associated with computer software
developed or obtained for internal use. As a result of the adoption of SOP
98-1, the Company capitalized $18,373 in internal use software development
costs for the year ended December 31, 1999.
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 $43,512, $51,724, and $44,298 in 1999, 1998, and 1997,
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 $7,169,885 and $6,866,478 at December
31, 1999 and 1998, 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 $4,468,685 and $4,908,964
at December 31, 1999 and 1998, 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 $4,297,823 and $4,108,314 at December 31, 1999 and 1998, respectively.
Participating business approximates 31.0%, 32.7%, and 50.5% of the
Company's ordinary life insurance in force and 94.0%, 71.9% and 91.1% of
ordinary life insurance premium income for the years ended December 31,
1999, 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 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 charges, are recognized
when due. Benefits and expenses on policies with life contingencies impact
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 6.2%, 6.3%,
and 6.6% in 1999, 1998, and 1997.
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.
Derivatives - The Company makes limited use of derivative financial
instruments to manage interest rate, market, and foreign exchange risk.
Such hedging activity consists primarily of interest rate swap agreements,
interest rate floors and caps, foreign currency exchange contracts, options
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. Written call
options are stock conversion protection agreements that require the
counter-party to automatically call the bond for cash when the issuer
elects to convert the bond to common stock. 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.
The Financial Accounting Standards Board has issued Statement No. 133,
"Accounting for Derivative Instruments and for Hedging Activities", which,
as amended, is required to be adopted in years beginning after June 15,
2000. This Statement provides a comprehensive and consistent standard for
the recognition and measurement of derivatives and hedging activities.
Although management has not completed its analysis of the impact of this
Statement, management does not anticipate that the adoption of the new
Statement will have a significant effect on earnings or the financial
position of the Company because of the Company's minimal use of
derivatives.
Stock Options - The Company applies the intrinsic value measurement
approach under APB Opinion No. 25 to stock-based compensation awards to
employees.
2. ACQUISITION
On July 8, 1998, the Company paid $82,669 in cash to acquire all of the
outstanding shares of Alta Health & Life Insurance Company (Alta), formerly
known as Anthem Health & Life Insurance Company. The purchase price was
based on Alta's adjusted book value, and was subject to further minor
adjustments. The results of Alta's operations, which had an insignificant
effect on net income in 1998, 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 goodwill representing the purchase price in excess of
fair value of net assets acquired is included in other assets and is being
amortized over 30 years on a straight-line basis.
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
increase in reserves, associated with certain policies, as a result of this
transaction. Of the $137,638 in reserves that was 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:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
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
============ ============
</TABLE>
===========================================================================
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
increase in reserves as a result of this transaction. Of the $428,152 in
reserves that was 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:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Assets Liabilities and Stockholder's Equity
===========================================
===========================================
Bonds $ 147,475 Policy reserves $ 428,152
===========================================
Mortgages 82,637 Due to Parent Corporation 20,820
===========================================
Cash 134,900
===========================================
Deferred policy acquisition costs 9,724
===========================================
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 its 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 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:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
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
==================================== ================ ================
</TABLE>
In connection with this transaction, the Parent Corporation made a capital
contribution of $11,000 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.
The Company performs administrative services for the U.S. operations of the
Parent Corporation. The following represents revenue from 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>
<S> <C>
Years Ended December 31,
---------------------------------------------------
1999 1998 1997
--------------- --------------- ---------------
Investment management revenue $ 130 $ 475 $ 801
Administrative and underwriting revenue 768 5,094 6,292
</TABLE>
At December 31, 1999 and 1998, due to Parent Corporation includes $10,641
and $17,930 due on demand and $25,338 and $34,947 of notes payable which
bear interest and mature on October 1, 2006. 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 (6.7% and 6.1% at
December 31, 1999 and 1998, respectively) while the note payable bears
interest at 5.4%.
On May 4, 1999, the Company issued a $175,000 subordinated note to GWL&A
Financial, the proceeds of which were used for general corporate purposes.
The subordinated note bears interest at 7.25% and is due June 30, 2048.
Payments of principal and interest under this subordinated note shall be
made only with prior written approval of the Commissioner of Insurance of
the State of Colorado. Payments of principal and interest on this
subordinated note are payable only out of surplus funds of the Company and
only at such time as the financial condition of the Company is such that at
the time of payment of principal or interest, its surplus after the making
of any such payment would exceed the greater of $1,500 or 1.25 times the
company action level amount as required by the most recent risk based
capital calculations.
Interest expense attributable to these related party obligations was
$11,053, $9,891, and $9,758 for the years ended December 31, 1999, 1998 and
1997, 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, 1999 and 1998, the
reinsurance receivable had a carrying value of $173,322 and $192,958,
respectively.
The following schedule details life insurance in force and life and
accident/health premiums:
<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, 1999:
Life insurance in force:
Individual $ 35,362,934 $ 5,195,961 $ 8,467,877 $ 38,634,850 21.9%
Group 80,717,198 2,212,741 82,929,939 2.7%
--------------- ---------------- ---------------- ----------------
Total $ 116,080,132 $ 5,195,961 $ 10,680,618 $ 121,564,789
=============== ================ ================ ================
Premium Income:
Life insurance $ 306,101 $ 27,399 $ 46,715 $ 325,417 14.4%
Accident/health 801,755 58,247 79,753 823,261 9.7%
--------------- ---------------- ---------------- ----------------
Total $ 1,107,856 $ 85,646 $ 126,468 $ 1,148,678
=============== ================ ================ ================
December 31, 1998:
Life insurance in force:
Individual $ 34,017,379 $ 4,785,079 $ 8,948,442 $ 38,180,742 23.4%
Group 81,907,539 2,213,372 84,120,911 2.6%
--------------- ---------------- ---------------- ----------------
Total $ 115,924,918 $ 4,785,079 $ 11,161,814 $ 122,301,653
=============== ================ ================ ================
Premium Income:
Life insurance $ 352,710 $ 24,720 $ 65,452 $ 393,442 16.6%
Accident/health 571,992 61,689 74,284 584,587 12.7%
--------------- ---------------- ---------------- ----------------
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 insurance $ 320,456 $ (127,388) $ 19,923 $ 467,767 4.3%
Accident/health 341,837 32,645 34,994 344,186 10.2%
--------------- ---------------- ---------------- ----------------
Total $ 662,293 $ (94,743) $ 54,917 $ 811,953
=============== ================ ================ ================
</TABLE>
5. NET INVESTMENT INCOME AND NET REALIZED GAINS (LOSSES) ON INVESTMENTS
<TABLE>
<S> <C> <C> <C> <C> <C> <C> Net investment income is summarized as follows:
Years Ended December 31,
---------------------------------------------------
1999 1998 1997
--------------- --------------- ---------------
Investment income:
Fixed maturities and short-term investments $ 636,946 $ 638,079 $ 633,975
Mortgage loans on real estate 88,033 110,170 118,274
Real estate 19,618 20,019 20,990
Policy loans 167,109 180,933 194,826
Other 138 285 18
--------------- --------------- ---------------
911,844 949,486 968,083
Investment expenses, including interest on
amounts charged by the related parties
of $11,053, $9,891, and $9,758 35,898 52,126 86,410
--------------- --------------- ---------------
Net investment income $ 875,946 $ 897,360 $ 881,673
=============== =============== ===============
Net realized gains (losses) on investments are as follows:
Years Ended December 31,
---------------------------------------------------
1999 1998 1997
--------------- --------------- ---------------
Realized gains (losses):
Fixed maturities $ (7,858) $ 38,391 $ 15,966
Mortgage loans on real estate 1,429 424 1,081
Real estate 513 363
Provisions 7,000 (642) (7,610)
--------------- --------------- ---------------
Net realized gains on investments $ 1,084 $ 38,173 $ 9,800
=============== =============== ===============
6. SUMMARY OF INVESTMENTS
Fixed maturities owned at December 31, 1999 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 $ 63,444 $ 448 $ 687 $ 63,205 $ 63,444
Collateralized mortgage
obligations 115,357 9,360 105,997 115,357
Public utilities 223,705 2,773 3,011 223,467 223,705
Corporate bonds 1,724,915 19,179 30,753 1,713,341 1,724,915
Foreign governments 10,000 213 10,213 10,000
State and municipalities 123,160 738 1,540 122,358 123,160
------------ -------------- ------------- ------------ ------------
$ 2,260,581 $ 23,351 $ 45,351 $ 2,238,581 $ 2,260,581
============ ============== ============= ============ ============
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 $ 752,130 $ 2,342 $ 21,459 $ 733,013 $ 733,013
Direct mortgage pass-
through certificates 304,099 1,419 11,704 293,814 293,814
Other 178,142 77 1,431 176,788 176,788
Collateralized mortgage
obligations 909,105 1,183 39,980 870,308 870,308
Public utilities 468,087 1,106 14,242 454,951 454,951
Corporate bonds 3,929,160 24,287 148,923 3,804,524 3,804,524
Foreign governments 41,224 654 1,256 40,622 40,622
State and municipalities 371,436 108 17,642 353,902 353,902
------------ -------------- ------------- ------------ ------------
$ 6,953,383 $ 31,176 $ 256,637 $ 6,727,922 $ 6,727,922
============ ============== ============= ============ ============
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 U.S.
Government Agencies $ 34,374 $ 1,822 $ $ 36,196 $ 34,374
Collateralized mortgage
obligations 10,135 194 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 10,133 782 10,915 10,133
State and municipalities 121,963 9,298 131,261 121,963
------------ -------------- ------------- ------------ ------------
$ 2,199,818 $ 103,755 $ 4,637 $ 2,298,936 $ 2,199,818
============ ============== ============= ============ ============
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 $ 863,479 $ 39,855 $ 1,704 $ 901,630 $ 901,630
Direct mortgage pass-
through certificates 467,100 4,344 692 470,752 470,752
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 56,505 2,732 59,237 59,237
State and municipalities 226,208 4,588 1,008 229,788 229,788
------------ -------------- ------------- ------------ ------------
$ 6,752,532 $ 207,791 $ 23,597 $ 6,936,726 $ 6,936,726
============ ============== ============= ============ ============
</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, 1999, by projected maturity, are shown below. Actual
maturities will likely differ from these projections because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Held-to-Maturity Available-for-Sale
------------------------------------- ------------------------------------
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
----------------- ----------------- ----------------- ----------------
Due in one year or less $ 221,172 $ 220,644 $ 323,466 $ 334,701
Due after one year
through five years 945,199 941,685 1,286,402 1,251,690
Due after five years
through ten years 684,729 677,531 716,353 684,513
Due after ten years 118,170 121,921 690,073 650,432
Mortgage-backed
securities 115,357 105,997 1,965,334 1,897,135
Asset-backed securities 175,954 170,803 1,971,755 1,909,451
----------------- ----------------- ----------------- ----------------
$ 2,260,581 $ 2,238,581 $ 6,953,383 $ 6,727,922
================= ================= ================= ================
</TABLE>
Proceeds from sales of securities available-for-sale were $3,176,802,
$6,169,678, and $3,174,246 during 1999, 1998, and 1997, respectively. The
realized gains on such sales totaled $10,080, $41,136, and $20,543 for
1999, 1998, and 1997, respectively. The realized losses totaled $19,720,
$8,643, and $10,643 for 1999, 1998, and 1997, respectively. During the
years 1999, 1998, and 1997, held-to-maturity securities with and amortized
cost of $0, $9,920 and $0 were sold due to deterioration with insignificant
gains and losses.
At December 31, 1999 and 1998, pursuant to fully collateralized securities
lending arrangements, the Company had loaned $0 and $115,168 of fixed
maturities, respectively.
The Company engages in hedging activities to manage interest rate, market
and foreign exchange risk. The following table summarizes the 1999
financial hedge instruments:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Notional Strike/Swap
December 31, 1999 Amount Rate Maturity
----------------------------- --------------- ------------------------------ -------------------------
Interest Rate Caps $ 1,362,000 7.64% - 11.82% (CMT) 6/00 - 12/04
Interest Rate Swaps 217,528 4.94%-6.8% 02/00 - 12/06
Foreign Currency
Exchange Contracts 19,478 N/A 03/00 - 07/06
Equity Swap 104,152 5.15% - 5.93% 01/01
Options 54,100 Various 01/02 - 12/02
The following table summarizes the 1998 financial hedge instruments:
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
LIBOR - London Interbank Offered Rate
CMT - Constant Maturity Treasury Rate
</TABLE>
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, 1999, approximately 34% 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 mortgage loans:
<TABLE>
<S> <C> <C>
1999 1998
====================================================================== ---------------- ----------------
======================================================================
Loans with related allowance for credit losses of
======================================================================
$14,727 and $2,492 $ 25,877 $ 13,192
======================================================================
Loans with no related allowance for credit losses 17,880 10,420
======================================================================
Average balance of impaired loans during the year 43,866 31,193
======================================================================
Interest income recognized (while impaired) 1,877 2,308
======================================================================
Interest income received and recorded (while impaired)
======================================================================
using the cash basis method of recognition 1,911 2,309
======================================================================
</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, aggregated
$75,691 and $52,913 at December 31, 1999 and 1998, respectively.
The following table presents changes in allowance for credit losses:
<TABLE>
<S> <C> <C> <C>
1999 1998 1997
--------------- --------------- ---------------
Balance, beginning of year $ 67,242 $ 67,242 $ 65,242
Provision for loan losses (7,000) 642 4,521
Chargeoffs - (787) (2,521)
Recoveries 1,000 145
--------------- --------------- ---------------
Balance, end of year $ 61,242 $ 67,242 $ 67,242
=============== =============== ===============
</TABLE>
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, 1999, no commercial paper
was outstanding. 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%.
8. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
<TABLE>
<S> <C>
December 31,
---------------------------------------------------------------------
1999 1998
--------------------------------- --------------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
--------------- -------------- -------------- --------------
ASSETS:
Fixed maturities and
short-term investments $ 9,229,307 $ 9,207,307 $ 9,556,713 $ 9,655,831
Mortgage loans on real
Estate 974,645 968,964 1,133,468 1,160,568
Policy loans 2,681,132 2,681,132 2,858,673 2,858,673
Common stock 69,240 69,240 48,640 48,640
LIABILITIES:
Annuity contract reserves
without life contingencies 4,468,685 4,451,465 4,908,964 4,928,800
Policyholders' funds 185,623 185,623 181,779 181,779
Due to Parent Corporation 35,979 33,590 52,877 52,877
Due to GWL&A Financial 175,035 137,445 - - - -
Repurchase agreements 80,579 80,579 244,258 244,258
Commercial paper - - - - 39,731 39,731
</TABLE>
<TABLE>
<S> <C>
December 31,
---------------------------------------------------------------------
1999 1998
--------------------------------- --------------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
--------------- -------------- -------------- --------------
HEDGE CONTRACTS:
Interest rate floor - - - - 17 17
Interest rate caps 4,140 4,140 971 971
Interest rate swaps (1,494) (1,494) 6,125 6,125
Foreign currency exchange
contracts (10) (10) 689 689
Equity swap (7,686) (7,686) (8,150) (8,150)
Options (6,220) (6,220) - - - -
</TABLE>
The estimated fair values of financial instruments have been determined
using available information and appropriate valuation methodologies.
However, considerable judgement is 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 discounted cash
flows. 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 rates on high quality investments.
The fair value of due to GWL&A Financial reflects the price determined in
the public market at December 31, 1999.
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 loss position for interest rates swaps are $772 and $0
of unrealized losses in 1999 and 1998, respectively. Included in the net
gain position for foreign currency exchange contracts are $518 and $932 of
loss exposures in 1999 and 1998, respectively.
The carrying amounts for receivables and liabilities reported in the
balance sheet approximate fair value due to their short term nature.
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:
<TABLE>
<S> <C> <C>
Prepaid pension cost $ 19,091 Undistributed earnings on $ 3,608
====================================
Participating business
====================================
Stockholder's equity 15,483
====================================
---------------- ----------------
$ 19,091 $ 19,091
==================================== ================ ================
</TABLE>
The following table summarizes changes for the three years December 31,
1999, 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 Alta.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Post-Retirement
Pension Benefits Medical Plan
-------------------------------------- --------------------------------------
1999 1998 1997 1999 1998 1997
----------- ---------- ----------- ----------- ---------- ----------
Change in benefit obligation
Benefit obligation at beginning
of year $ 131,305 $ 115,057 $ 96,417 $ 19,944 $ 19,454 $ 16,160
Service cost 7,853 6,834 5,491 2,186 1,365 1,158
Interest cost 8,359 7,927 7,103 1,652 1,341 1,191
Addition of former Alta employees 4,155
Actuarial (gain) loss (22,363) 5,117 9,470 3,616 (1,613) 1,500
Prior service for former Alta
employees 2,471
Benefits paid (3,179) (3,630) (3,424) (641) (603) (555)
----------- ---------- ----------- ----------- ---------- ----------
Benefit obligation at end of year 126,130 131,305 115,057 29,228 19,944 19,454
----------- ---------- ----------- ----------- ---------- ----------
Change in plan assets
Fair value of plan assets at
beginning of year $ 183,136 $ 162,879 $ 138,221 $ $ $
Actual return on plan assets 12,055 23,887 28,082
Addition of former Alta employees
and other adjustments 81
Benefits paid (3,179) (3,630) (3,424)
----------- ---------- ----------- ----------- ---------- ----------
Fair value of plan assets at
end of year 192,093 183,136 162,879
----------- ---------- ----------- ----------- ---------- ----------
Funded status 65,963 51,831 47,822 (29,228) (19,944) (19,454)
Unrecognized net actuarial
(gain) loss (30,161) (11,405) (6,326) 3,464 (113) 1,500
Unrecognized prior service cost 3,614 2,310
Unrecognized net obligation or
(asset) at transition (18,170) (19,684) (21,198) 13,736 14,544 15,352
----------- ---------- ----------- ----------- ---------- ----------
Prepaid (accrued) benefit cost $ 21,246 $ 20,742 $ 20,298 $ (9,718) $ (5,513) $ (2,602)
=========== ========== =========== =========== ========== ==========
Weighted-average
assumptions as of
December 31
Discount rate 7.50% 6.50% 7.00% 7.50% 6.50% 7.00%
Expected return on plan assets 8.50% 8.50% 8.50% 8.50% 8.50% 8.50%
Rate of compensation increase 5.00% 4.00% 4.50% 5.00% 4.00% 4.50%
Components of net
periodic benefit
Cost
Service cost $ 7,853 $ 6,834 $ 5,491 $ 2,186 $ 1,365 $ 1,158
Interest cost 8,360 7,927 7,103 1,652 1,341 1,191
Expected return on plan assets (15,664) (13,691) (12,286)
Amortization of transition (1,514) (1,514) (1,514) 808 808 808
obligation
Amortization of unrecognized prior
service cost 541 162
Amortization of gain from earlier
periods (80) 38
----------- ---------- ----------- ---------- ----------
----------- ---------- ----------- ----------- ---------- ----------
Net periodic (benefit) cost $ (504) $ (444) $ (1,206) $ 4,846 $ 3,514 $ 3,157
=========== ========== =========== =========== ========== ==========
</TABLE>
The Company-sponsored post-retirement medical plan (medical plan) provides
health benefits to retired 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. The Company made no contributions to this plan in
1999, 1998, or 1997.
Assumed health care cost trend rates have a significant effect on the
amounts reported for the medical plan. For measurement purposes, a 7.5%
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:
<TABLE>
<S> <C> <C>
1-Percentage 1-Percentage
Point Point
Increase Decrease
-------------------- --------------------
Increase (decrease) on total of service and interest cost
on components $ 1,678 $ (1,285)
Increase (decrease) on post-retirement benefit obligation 7,897 (6,186)
</TABLE>
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. For employees hired after January 1, 1999, the
Company matches 50% of the first 8% of participant pre-tax contributions.
Company contributions for the years ended December 31, 1999, 1998, and 1997
totaled $5,504, $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
$17,367, $16,102, and $13,952 for years ending December 31, 1999, 1998, and
1997, respectively. The participant deferrals earn interest at a rate based
on the average ten-year composite government securities rate plus 1.5%. The
interest expense related to the plan for the years ending December 31,
1999, 1998, and 1997 were $1,231, $1,185, and $1,019, 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 1999, 1998, and 1997 was $3,002, $2,840, and $2,531,
respectively. The total liability of $14,608, $11,323, and $8,828 as of
December 31, 1999, 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:
<TABLE>
<S> <C> <C> <C>
1999 1998 1997
------------ ------------- ------------
Federal tax rate 35.0 % 35.0 % 35.0 %
Change in tax rate resulting from:
Settlement of Parent tax exposures (5.9) (20.2)
Provision for contingencies (0.5) 7.7
Policyholder share of earnings 1.7 0.7 0.6
Other, net (1.5) (2.3) 0.8
------------ ------------- ------------
Total 28.8 % 33.4 % 23.9 %
============ ============= ============
</TABLE>
The Company's income tax provision was favorably impacted in 1999 and 1997
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 release recorded
in 1999 reflected the resolution of certain tax issues with the Internal
Revenue Service (IRS) relating to the 1992 - 1993 audit years. The release
recorded in 1997 reflected the resolution of certain tax issues with the
IRS relating to the 1990-1991 audit years. The release totaled $17,150 for
1999 and $42,150 for 1997; however, $8,900 of the 1999 release and $15,100
of the 1997 release 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).
In addition to this release of contingent tax liabilities, the Company's
income tax provision for 1997 also reflects 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. This increase in contingent tax liabilities
has been reflected as a component of the deferred income tax provisions as
the Company does not expect near term resolution of these contingencies.
Excluding the effect of the 1999 and 1997 tax items discussed above, the
effective tax rate for 1999 and 1997 was 35.2% and 36.4%.
Temporary differences which give rise to the deferred tax assets and
liabilities as of December 31, 1999 and 1998 are as follows:
<TABLE>
<S> <C> <C>
1999 1998
--------------------------------- ------------------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Asset Liability Asset Liability
--------------- --------------- -------------- -------------
Policyholder reserves $ 131,587 $ $ 143,244 $
Deferred policy acquisition costs 49,455 39,933
Deferred acquisition cost proxy
tax 103,529 100,387
Investment assets 69,561 19,870
Net operating loss carryforwards 444 2,867
Other 582 6,566
--------------- --------------- -------------- -------------
Subtotal 305,121 50,037 253,064 59,803
Valuation allowance (1,761) (1,778)
--------------- --------------- -------------- -------------
Total Deferred Taxes $ 303,360 $ 50,037 $ 251,286 $ 59,803
=============== =============== ============== =============
</TABLE>
Amounts included in investment assets above include $58,711 and $(34,556)
related to the unrealized gains/(losses) on the Company's fixed maturities
available-for-sale at December 31, 1999 and 1998, respectively.
The Company will file a consolidated tax return for 1999. Losses incurred
by subsidiaries in prior years cannot be offset against operating income of
the Company. At December 31, 1999, the Company's subsidiaries had
approximately $1,271 of net operating loss carryforwards, expiring through
the year 2014. The tax benefit of subsidiaries' net operating loss
carryforwards are included in the deferred tax assets at December 31, 1999
and 1998, respectively.
The Company's valuation allowance was increased (decreased) in 1999, 1998,
and 1997 by $(17), $(1,792), and $34, 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 established 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 stockholder's 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. The 1997 financial
statements have been reclassified to conform to the requirements of
Statement No. 130.
Other comprehensive loss at December 31, 1999 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 (losses) arising
==================================================
during the period $ (303,033) $ 106,061 $ (196,972)
==================================================
Less: reclassification adjustment for
==================================================
(gains) losses realized in net income (9,958) 3,485 (6,473)
==================================================
---------------- ---------------- -----------------
Net unrealized gains (losses) (312,991) 109,546 (203,445)
==================================================
==================================================
Reserve and DAC adjustment 87,729 (30,705) 57,024
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Other comprehensive loss $ (225,262) $ 78,841 $ (146,421)
================================================== ================ ================ =================
</TABLE>
<TABLE>
<S> <C> <C>
Other comprehensive income at December 31, 1998 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 $ 39,430 $ (13,800) $ 25,630
Less: reclassification adjustment for
(gains) losses realized in net income (14,350) 5,022 (9,328)
---------------- ---------------- -----------------
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 (losses) arising
==================================================
during the period $ 80,821 $ (28,313) $ 52,508
==================================================
Less: reclassification adjustment for
==================================================
(gains) losses realized in net income 2,012 (704) 1,308
==================================================
---------------- ---------------- -----------------
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
================================================== ================ ================ =================
</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. At December 31, 1999 and 1998, the Company has 1,500 authorized
shares each of Series A, Series B, Series C and Series D cumulative
preferred stock; and 2,000,000 authorized shares of non-cumulative
preferred stock.
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:
1999 1998 1997
-------------- --------------- ---------------
(Unaudited)
Net income 253,123 $ 225,863 $ 181,312
Capital and surplus 1,007,245 727,124 759,429
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,
1999 were $1,007,245 and $245,148 (unaudited), respectively. The Company
should be able to pay up to $245,148 (unaudited) of dividends in 2000.
Dividends of $0, $6,692, and $8,854 were paid on preferred stock in 1999,
1998, and 1997, respectively. In addition, dividends of $92,053, $73,344,
and $62,540 were paid on common stock in 1999, 1998, and 1997,
respectively. Dividends are paid as determined by the Board of Directors.
13. STOCK OPTIONS
Great-West Lifeco Inc. (Lifeco) is the parent of the Parent Corporation.
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, 1999, 1998, and 1997, stock available for
award to Company employees under the Lifeco plan aggregated 885,150,
1,424,400, and 3,440,000 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 1998 and
1997 to Company employees totaling 278,000 and 1,832,000, 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 1999
and 1998, 11,250 and 30,000 of these options vested and accordingly, the
Company recognized compensation expense of $23 and $116, respectively. 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 granted to Company employees which are 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>
1999 1998 1997
-------------------------- -------------------------- -------------------------
Options WAEP Options WAEP Options WAEP
------------- ---------- ------------- ---------- ------------- ---------
Outstanding, Jan. 1, 6,544,824 $ 8.07 5,736,000 $ 7.71 4,104,000 $ 6.22
Granted 575,500 16.48 988,000 13.90 1,932,000 11.56
Exercised 234,476 5.69 99,176 5.93 16,000 5.95
Expired or canceled 318,750 13.81 80,000 13.05 284,000 6.17
------------- ---------- ------------- ---------- ------------- ---------
Outstanding, Dec. 31, 6,567,098 9.04 6,544,824 8.07 5,736,000 7.71
============= ========== ============= ========== ============= =========
Options exercisable
at year-end 2,215,998 $ 6.31 1,652,424 $ 5.72 760,800 $ 5.96
============= ========== ============= ========== ============= =========
Weighted average fair
value of options
granted during year $ 5.23 $ 4.46 $ 2.83
============= ============= =============
The following table summarizes the range of exercise prices for outstanding
Lifeco common stock options granted to Company employees at December 31,
1999:
Outstanding Exercisable
======================== ------------------------------------------------ ---------------------------------
Average Average
========================
Exercise Average Exercise Exercise
========================
Price Range Options Life Price Options Price
------------------------ ---------------- ------------ ------------- ---------------- --------------
$ 5.87 - 7.80 3,554,348 6.63 $ 5.95 2,108,748 $ 5.92
========================
$11.25 - 15.81 2,842,000 7.86 $ 12.37 107,250 $ 14.03
========================
$16.53 - 18.65 170,500 9.18 17.93 - -
========================
</TABLE>
Of the exercisable Lifeco options, 2,174,748 relate to basic option grants
and 41,250 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 in Canada.
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, 1999, 1998 and
1997, stock available for award under the PFC plan aggregated 4,340,800,
4,400,800, and 4,400,800 shares.
Options granted to officers of the Company under the PFC plan became
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
granted to Company officers which remain 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>
1999 1998 1997
-------------------------- -------------------------- -------------------------
Options WAEP Options WAEP Options WAEP
------------- ---------- ------------- ---------- ------------- ---------
Outstanding, Jan. 1, 355,054 $ 2.89 1,076,000 $ 3.05 1,329,200 $ 3.14
Exercised 70,000 2.28 720,946 2.98 253,200 2.93
------------- ---------- ------------- ---------- ------------- ---------
Outstanding, Dec. 31, 285,054 3.23 355,054 2.89 1,076,000 3.05
============= ========== ============= ========== ============= =========
Options exercisable
at year-end 285,054 $ 3.23 355,054 $ 2.89 1,076,000 $ 3.05
============= ========== ============= ========== ============= =========
</TABLE>
As of December 31, 1999, the PFC options outstanding have exercise prices
between $2.38 and $3.65 and a weighted-average remaining contractual life
of 1.7 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 $1,039,
$727, and $608, in 1999, 1998, and 1997, 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
assumptions used for those options granted in 1999, 1998, and 1997,
respectively: dividend yields of 3.63%, 3.0% and 3.0%, expected volatility
of 32.4%, 34.05%, and 24.04%, risk-free interest rates of 6.65%, 4.79%, and
4.72%, 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:
<TABLE>
Year ended December 31, 1999
Operations:
<S> <C> <C> <C> <C> <C> <C>
Employee Financial Total
================================================
Benefits Services U.S.
================================================ ----------------- ----------------- -----------------
Revenue:
================================================
Premium income $ 990,449 $ 172,734 $ 1,163,183
================================================
Fee income 548,580 86,567 635,147
================================================
Net investment income 80,039 795,907 875,946
================================================
Realized investment gains (losses) (1,224) 2,308 1,084
================================================ ----------------- ----------------- -----------------
Total revenue 1,617,844 1,057,516 2,675,360
================================================
Benefits and Expenses:
================================================
Benefits 789,084 792,755 1,581,839
================================================
Operating expenses 661,119 143,422 804,541
================================================ ----------------- ----------------- -----------------
Total benefits and expenses 1,450,203 936,177 2,386,380
================================================ ----------------- ----------------- -----------------
----------------- ----------------- -----------------
================================================
================================================
Net operating income before income 167,641 121,339 288,980
taxes
================================================
Income taxes 51,003 32,259 83,262
----------------- ----------------- -----------------
Net income $ 116,638 $ 89,080 $ 205,718
================================================ ================= ================= =================
Assets:
Employee Financial Total
================================================
Benefits Services U.S.
================================================ ----------------- ----------------- -----------------
Investment assets $ 1,467,464 $ 11,590,591 $ 13,058,055
================================================
Other assets 646,036 909,172 1,555,208
================================================
Separate account assets 7,244,145 5,535,871 12,780,016
================================================ ----------------- ----------------- -----------------
Total assets $ 9,357,645 $ 18,035,634 $ 27,393,279
================================================ ================= ================= =================
Year ended December 31, 1998
Operations:
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 157,793 137,958 295,751
taxes
================================================
Income taxes 50,678 48,158 98,836
----------------- ----------------- -----------------
Net income $ 107,115 $ 89,800 $ 196,915
================================================ ================= ================= =================
Assets:
Employee Financial Total
================================================
Benefits Services U.S.
================================================ ----------------- ----------------- -----------------
Investment assets $ 1,434,691 $ 12,235,845 $ 13,670,536
================================================
Other assets 567,126 785,940 1,353,066
================================================
Separate account assets 5,704,313 4,395,230 10,099,543
================================================ ----------------- ----------------- -----------------
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 126,972 81,635 208,607
taxes
================================================
Income taxes 28,726 21,121 49,847
----------------- ----------------- -----------------
Net income $ 98,246 $ 60,514 $ 158,760
================================================ ================= ================= =================
The following table, which summarizes premium and fee income by segment,
represents supplemental information.
1999 1998 1997
====================================== ---------------- ---------------- -----------------
----------------
Premium Income:
======================================
======================================
Employee Benefits
======================================
Group Life & Health $ 990,449 $ 746,898 $ 465,143
====================================== ---------------- ---------------- -----------------
Total Employee Benefits 990,449 746,898 465,143
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Financial Services
======================================
======================================
Savings 14,344 16,765 22,634
======================================
Individual Insurance 158,390 231,200 345,402
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Total Financial Services 172,734 247,965 368,036
====================================== ---------------- ---------------- -----------------
Total premium income $ 1,163,183 $ 994,863 $ 833,179
====================================== ================ ================ =================
----------------
Fee Income:
======================================
======================================
Employee Benefits
======================================
Group Life & Health $ 454,071 $ 366,805 $ 305,302
======================================
(uninsured plans)
======================================
401(k) 94,509 77,844 52,703
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Total Employee Benefits 548,580 444,649 358,005
====================================== ---------------- ---------------- -----------------
---------------- ---------------- -----------------
Financial Services
======================================
======================================
Savings 81,331 71,403 62,725
======================================
Individual Insurance 5,236
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Total Financial Services 86,567 71,403 62,725
====================================== ---------------- ---------------- -----------------
Total fee income $ 635,147 $ 516,052 $ 420,730
====================================== ================ ================ =================
</TABLE>
15. COMMITMENTS AND CONTINGENCIES
On October 6, 1999, the Company entered into a purchase and sale agreement
(the Agreement) with Allmerica Financial Corporation (Allmerica) to acquire
Allmerica's group life and health insurance business on March 1, 2000. This
business primarily consists of administrative services only and stop loss
policies. The in-force business is expected to be underwritten and retained
by the Company upon each policy renewal date. The purchase price, as
defined in the Agreement, will be based on a percentage of the amount
in-force at March 1, 2000 contingent on the persistency of the block of
business through March 2001. Management does not expect the purchase price
to have a material impact on the Company's consolidated financial
statements.
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.
16. SUBSEQUENT EVENTS
Effective January 1, 2000, the Company coinsured the majority of General
American Life Insurance Company's (General American) group life and health
insurance business which primarily consists of administrative services only
and stop loss policies. The agreement is expected to convert to an
assumption reinsurance agreement by January 1, 2001, pending regulatory
approval. The Company assumed approximately $150,000 of policy reserves and
miscellaneous liabilities in exchange for an equal amount of cash and
miscellaneous assets from General American.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The consolidated financial statements of GWL&A as of
December 31, 1999 and 1998 and each of the three years in
the period ended December 31, 1999, as well as the
financial statements of the Series Account for the years
ended December 31, 1999 and 1998, 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
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
(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.
</TABLE>
(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) Powers of Attorney are incorporated by reference
to Registrant's Post Effective Amendment Nos. 14, 20 and 22.
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
Andre Desmarais (4) Director
Position and Offices
Name Principal Business Address with Depositor
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
Brian E. Walsh Trinity L.P. Director
115 Putnam Ave.
Greenwich, Connecticut
Michael R. Bracco (2) Senior Vice-President,
Employee Benefits
John A. Brown (3) Senior Vice-President,
Healthcare Markets
Donna A. Goldin (2) Executive Vice President
Chief Operating Officer,
One Corporation
Mitchell T. Graye (3) Executive Vice President,
Chief Financial Officer
Mark S. Hollen (3) Senior Vice President,
FASCorp
John T. Hughes (3) Senior Vice-President,
Chief Investment Officer
D. Craig Lennox (6) Senior Vice-President,
General Counsel and
Secretary
Position and Offices
Name Principal Business Address with Depositor
Steve H. Miller (2) Senior Vice-President,
Employee Benefits, Sales
James D. Motz (2) Executive Vice-President,
Employee Benefits
Charles P. Nelson (3) Senior Vice-President,
Public Non-Profit Markets
Marty Rosenbaum (2) Senior Vice-President,
Employee Benefits
Gregg E. Seller (3) Senior Vice-President,
Government Markets
Robert K. Shaw (3) Senior Vice-President,
Individual Markets
George D. Webb (3) Senior Vice-President,
Public/Non-Profit Operations
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.
Power Financial Corporation, 751 Victoria Square, Montreal, Quebec, Canada H2Y 2J3.
(6) 8525 East Orchard Road, Englewood, Colorado 80111.
</TABLE>
Item 26. Persons controlled by or under common control with the Depositor or
Registrant
------------------------------------------------------------------------------
See attached organizational chart on starting on page C-4.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
ORGANIZATIONAL CHART
Power Corporation of Canada
100% - 2795957 Canada Inc.
100% - 171263 Canada Inc.
67.5% - Power Financial Corporation 81.1%
- Great-West Lifeco Inc.
100% - The Great-West Life Assurance Company
100% - GWL&A Financial (Nova Scotia) Co.
100% GWL&A Financial, Inc.
100% - Great-West Life & Annuity Insurance Capital I
100% - Great-West Life & Annuity Insurance Company
100% - Alta Health & Life Insurance Company
100% - Alta Agency, Inc.
100% - First Great-West Life & Annuity Insurance
Company
100% -GWCapital Management,LLC
100% - Orchard Capital Management,LLC
100% - Greenwood Investments, Inc.
100% - Financial Administrative Services Corporation
100% - One Corporation
100% - One Health Plan of Illinois, Inc.
100% - One Health Plan of Texas, Inc.
100% - One Health Plan of California, Inc.
100% - One Health Plan of Colorado, Inc.
100% - One Health Plan of Georgia, Inc.
100% - One Health Plan of North Carolina, Inc.
100% - One Health Plan of Washington, Inc.
100% - One 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, Inc.
100% - One Health Plan of Alaska, Inc.
100% - One Health Plan of Arizona, Inc.
100% - One of Arizona, Inc.
100% - One Health Plan of Maine, Inc.
100% - One Health Plan of Nevada, Inc.
100% - One Health Plan of New Hampshire, Inc.
100% - One Health Plan of New Jersey, Inc.
100% - One Health Plan of South Carolina,Inc.
100% - One Health Plan of Wisconsin, Inc.
100% - One Health Plan of Wyoming, Inc.
100% - One Orchard Equities, Inc.
100% - Great-West Benefit Services, Inc.
100% - Benefits Communication Corporation
100% - BenefitsCorp Equities, Inc.
100% - Benefits Advisors, Inc.
100% - Greenwood Property Corporation
95% - Maxim Series Fund, Inc.*
100% - GWL Properties Inc.
100% - Great-West Realty Investments, Inc.
50% - Westkin Properties Ltd.
92%**- Orchard Series Fund
100% - Orchard Trust Company
100% - National Plan Coordinators of Delaware, Inc.
100% - NPC Securities, Inc.
100% - Deferred Comp of Michigan, Inc.
100% - National Plan Coordinators of
Washington, Inc.
100% - National Plan Coordinators of Ohio, Inc.
100% - Renco, Inc.
100% - P.C. Enrollment Services & Insurance
Brokerage, Inc.
</TABLE>
* 5% New England Life Insurance Company
** 8% New England Life Insurance Company
Item 27. Number of Contractowners
On March 31, 2000, there were 22 owners of non-qualified contracts
and 35,949 of qualified contracts offered by Registrant.
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.
<PAGE>
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.
<PAGE>
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 willful 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.
<PAGE>
(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
Mark S. Hollen (1) Director
David G. McLeod (1) Director
Gregg E. Seller 18101 Von Karman Ave. Director and Vice President
Suite 1460 Major Accounts
Irvine, CA 92715
Glen R. Derback (1) Treasurer
Beverly A. Byrne (1) Secretary
Teresa L. Buckley (1) Compliance Officer
- ------------
</TABLE>
(1) 8515 E. Orchard Road, Englewood, Colorado 80111
(c) Commissions and other compensation received by Principal Underwriter
during registrant's last fiscal year:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
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>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets the
requirements for effectiveness under Rule 485(b) and has duly caused this
Post-Effective Amendment No. 28 Registration Statement on Form N-4 to be signed
on its behalf, in the City of Englewood, State of Colorado, on this 25th day of
April, 2000.
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
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Date
/s/ Robert Gratton* April 25, 2000
- -------------------------------------------------- -----------------------
Director and Chairman of the Board
(Robert Gratton)
/s/ William T. McCallum April 25, 2000
- ------------------------------------------- ----------------------
Director, President and Chief Executive
Officer (William T. McCallum)
/s/ Mitchell T. G. Graye April 25, 2000
- ----------------------------------------------- -----------------------
Executive Vice President and
Chief Financial Officer
(Mitchell T.G. Graye)
/s/ James Balog* April
25, 2000
- --------
Director, (James Balog)
<PAGE>
Signature and Title Date
/s/ James W. Burns* April 25, 2000
- ------------------------------------------------ ------------------------
Director, (James W. Burns)
/s/ Orest T. Dackow* April 25, 2000
- ------------------------------------------------ ------------------------
Director (Orest T. Dackow)
April
25, 2000
Director Andre Desmarais
/s/ Paul Desmarais, Jr*. April 25, 2000
- ------------------------------------------------- ------------------------
Director (Paul Desmarais, Jr.)
, 1999
- -------------------------------------------- -----------------
Director (Robert G. Graham)
/s/ N. Berne Hart * April 25, 2000
- --------------------------------------- -----------------------
Director (N. Berne Hart)
/s/ Kevin P. Kavanagh* April 25, 2000
- --------------------------------------- -----------------------
Director (Kevin P. Kavanagh)
, 1999
- -------------------------------------- -----------------
Director (William Mackness)
/s/ Jerry E.A. Nickerson* April 25, 2000
- ---------------------------------------- -----------------------
Director (Jerry E.A. Nickerson)
/s/ P. Michael Pitfield * April 25, 2000
- ---------------------------------------- ----------------------
Director (P. Michael Pitfield)
/s/ Michel Plessis-Belair* April 25, 2000
- ------------ ---------------------------- -----------------------
Director (Michel Plessis-Belair)
/s/ Brian E. Walsh * April
25, 2000
- --------
Director (Brian E. Walsh)
*By: /s/ D.C. Lennox April 25, 2000
D. C. Lennox
Attorney-in-fact pursuant to Powers of Attorney.
</TABLE>
<PAGE>
EXHIBIT 10 (a)
WRITTEN CONSENT OF
JORDEN BURT BOROS CICCHETTI BERENSON & JOHNSON, LLP
<PAGE>
April 26, 2000
Great-West Life & Annuity Insurance Company
8525 East Orchard Road
Englewood, Colorado 80111
Re: FutureFunds Series Account
Post-Effective Amendment No. 28 to the Registration Statement on Form N-4
File Nos. 2-89550
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
caption "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.28 to Registration
Statement No. 2-89550 of FutureFunds Series Account of Great-West Life & Annuity
Insurance Company of our report dated February 22,2000, on the financial
statements of FutureFunds Series Account and our report dated January 31, 2000
on the financial statements of Great-West Life & Annuity Insurance Company and
to the reference to us under the heading "Independent Auditors" in the Statement
of Additional Information, which are part of such Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
April 24, 2000
