<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1998
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT I
TABLE OF CONTENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Independent Auditors' Report ................... A-3
Financial Statements:
Statements of Assets and Liabilities .......... A-4
Statements of Operations ...................... A-5
Statements of Changes in Net Assets ........... A-6
Notes to Financial Statements .................. A-9
</TABLE>
A-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
Policyholders
Life of Virginia Separate Account I
and
The Board of Directors
The Life Insurance Company of Virginia:
We have audited the accompanying statements of assets and liabilities of
Life of Virginia Separate Account I (the Account) (comprising the GE
Investments Funds, Inc. -- S&P 500 Index, Money Market, Total Return and Income
Funds) as of December 31, 1998 and the related statements of operations and
changes in net assets for the aforementioned funds and the GE Investments
Funds, Inc. -- Government Securities Fund of Life of Virginia Separate Account
I for each of the years or lesser periods in the three year period then ended.
These financial statements are the responsibility of the Account's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1998,
by correspondence with the underlying mutual funds or their transfer agent. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of each of the respective
portfolios constituting Life of Virginia Separate Account I as of December 31,
1998 and the results of their operations and changes in their net assets for
each of the years or lesser periods in the three year period then ended in
conformity with generally accepted accounting principles.
KPMG LLP
Richmond, Virginia
February 12, 1999
A-3
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT I
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
--------------------------------------------------------
S&P 500 MONEY TOTAL
INDEX MARKET RETURN INCOME
FUND FUND FUND FUND
ASSETS --------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
Investment in GE Investments Funds, Inc., at fair value
(note 2):
S&P 500 Index Fund (149,697 shares; cost - $2,459,364).......... $ 3,549,315 -- -- --
Money Market Fund (114,738 shares; cost - $113,677)............. -- 114,738 -- --
Total Return Fund (38,523 shares; cost - $504,130).............. -- -- 564,742 --
Income Fund (98,271 shares; cost-$1,192,566).................... -- -- -- 1,212,663
Receivable from affiliate ...................................... 44 -- 40 --
----------- ------- ------- ---------
TOTAL ASSETS ................................................ 3,549,359 114,738 564,782 1,212,663
----------- ------- ------- ---------
LIABILITIES
Accrued expenses payable to affiliate (note 3) ................. 3,880 4,923 1,769 5,691
----------- ------- ------- ---------
TOTAL LIABILITIES ........................................... 3,880 4,923 1,769 5,691
----------- ------- ------- ---------
Net assets ..................................................... $ 3,545,479 109,815 563,013 1,206,972
=========== ======= ======= =========
ANALYSIS OF NET ASSETS
Attributable to:
Flexible premium variable life insurance policyholders ......... $ 3,545,479 104,783 563,013 41,431
The Life Insurance Company of Virginia ......................... -- 5,032 -- 1,165,541
----------- ------- ------- ---------
Net assets ..................................................... $ 3,545,479 109,815 563,013 1,206,972
=========== ======= ======= =========
Outstanding units attributable to policyholders ................ 38,078 5,492 11,911 3,850
=========== ======= ======= =========
Net asset value per unit ....................................... $ 93.11 19.08 47.27 10.76
=========== ======= ======== ==========
</TABLE>
See accompanying notes to financial statements.
A-4
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT I
STATEMENTS OF OPERATIONS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
----------------------------------------------------------------
S&P 500 GOVERNMENT
INDEX SECURITIES
FUND FUND
----------------------------------- ----------------------------
PERIOD FROM
JANUARY 1,
1997 TO YEAR ENDED
YEAR ENDED DECEMBER 31, DECEMBER 11, DECEMBER 31,
1998 1997 1996 1997 1996
----------- --------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income - Dividends from GE Investments Funds, Inc. ........ $133,992 74,868 951,740 - 107,728
Expenses - Mortality and expense risk charges (note 3)..... 15,812 13,073 10,184 275 322
-------- ------ ------- --- -------
Net investment income (loss) ............................... 118,180 61,795 941,556 (275) 107,406
-------- ------ ------- ---- -------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) .................................. 95,254 25,044 64,036 14,693 550
Unrealized appreciation (depreciation) on investments ..... 565,867 576,234 (567,960) 52,703 (93,943)
-------- ------- -------- ------ -------
Net realized and unrealized gain (loss) on investments ..... 661,121 601,278 (503,924) 67,396 (93,393)
-------- ------- -------- ------ -------
Increase in net assets from operations ..................... $779,301 663,073 437,632 67,121 14,013
======== ======= ======== ====== =======
</TABLE>
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
------------------------------------------------------------
MONEY MARKET FUND TOTAL RETURN FUND
----------------------------- ------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
----------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income - Dividends from GE Investments
Funds, Inc. ............................................... $ 60,571 93,738 90,233 28,953 67,322 125,517
Expenses - Mortality and expense risk charges (note 3) ..... 576 413 304 2,625 2,387 2,159
--------- ------ ------ ------ ------ -------
Net investment income (loss) ................................. 59,995 93,325 89,929 26,328 64,935 123,358
--------- ------ ------ ------ ------ -------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) .................................... 35,355 243 606 4,570 9,612 17,898
Unrealized appreciation (depreciation) on investments ....... (35,355) 4,052 2,824 49,885 2,077 (99,638)
--------- ------ ------ ------ ------ -------
Net realized and unrealized gain (loss) on investments ....... -- 4,295 3,430 54,455 11,689 (81,740)
--------- ------ ------ ------ ------ -------
Increase in net assets from operations ....................... $ 59,995 97,620 93,359 80,783 76,624 41,618
========= ====== ====== ====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
------------------------------
INCOME FUND
------------------------------
PERIOD FROM
DECEMBER 12,
YEAR ENDED 1997 TO
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- -------------
<S> <C> <C>
Investment income:
Income - Dividends from GE Investments Funds, Inc. ............. $ 67,672 2,969
Expenses - Mortality and expense risk charges (note 3) ......... 210 13
-------- -----
Net investment income (loss) .................................... 67,462 2,956
-------- -----
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) ....................................... 592 (144)
Unrealized appreciation (depreciation) on investments .......... 20,898 (800)
-------- -----
Net realized and unrealized gain (loss) on investments .......... 21,490 (944)
-------- -----
Increase in net assets from operations .......................... $ 88,952 2,012
======== =====
</TABLE>
See accompanying notes to financial statements.
A-5
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT I
STATEMENTS OF CHANGES IN NET ASSETS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
----------------------------------------------------------------------
GOVERNMENT
S&P 500 500 INDEX FUND SECURITIES FUND
----------------------------------------- ----------------------------
PERIOD FROM
JANUARY 1, YEAR
1997 TO ENDED
YEAR ENDED DECEMBER 31, DECEMBER 11, DECEMBER 31,
1998 1997 1996 1997 1996
------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (loss) ..................... $ 118,180 61,795 941,556 (275) 107,406
Net realized gain (loss) ......................... 95,254 25,044 64,036 14,693 550
Unrealized appreciation (depreciation) on
investments .................................... 565,867 576,234 (567,960) 52,703 (93,943)
---------- ------- -------- ------ -------
Increase in net assets from operations ............ 779,301 663,073 437,632 67,121 14,013
---------- ------- -------- ------ -------
From capital transactions:
Net premiums ..................................... 130,672 135,730 138,008 5,808 7,582
Loan interest .................................... (3,856) (4,224) (3,229) (75) (49)
Transfers (to) from the general account of
Life of Virginia:
Death benefits ................................. (7,089) (1,896) (108) -- --
Surrenders ..................................... (93,428) (28,932) (32,971) (2,083) (4,713)
Loans .......................................... 974 (803) (12,258) 467 (2,224)
Cost of insurance (note 3) ..................... (138,225) (126,732) (118,130) (4,109) (7,286)
Transfer gain (loss) and transfer fees ......... (781) (3,324) 2,021 1,728 (60)
Capital contribution (withdrawal) .............. -- -- -- (1,077,814) --
Transfers from the Guarantee Account ............. 106 -- -- -- --
Interfund transfers .............................. 283 (25,477) (2,210) (65,455) (180)
---------- -------- -------- ---------- -------
Increase (decrease) in net assets from capital
transactions ..................................... (111,344) (55,658) (28,877) (1,141,533) (6,930)
---------- -------- -------- ---------- -------
Increase (decrease) in net assets ................. 667,957 607,415 408,755 (1,074,412) 7,083
Net assets at beginning of year ................... 2,877,522 2,270,107 1,861,352 1,074,412 1,067,329
---------- --------- --------- ---------- ---------
Net assets at end of year ......................... $3,545,479 2,877,522 2,270,107 -- 1,074,412
========== ========= ========= ========== =========
</TABLE>
A-6
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT I
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
--------------------------------------------
MONEY MARKET FUND
--------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- ------------ ---------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (loss) .................... $ 59,995 93,325 89,929
Net realized gain (loss) ........................ 35,355 243 606
Unrealized appreciation (depreciation) on
investments ................................... (35,355) 4,052 2,824
------------- ------ ------
Increase in net assets from operations ........... 59,995 97,620 93,359
------------- ------ ------
From capital transactions:
Net premiums .................................... 5,705 6,957 6,570
Loan interest ................................... (81) (22) (1)
Transfers (to) from the general account of
Life of Virginia:
Death benefits ................................ -- -- --
Surrenders .................................... (3,904) -- (3,587)
Loans ......................................... (120) (74) (2,071)
Cost of insurance (note 3) .................... (11,292) (10,681) (9,090)
Transfer gain (loss) and transfer fees ........ (6,072) 17,954 (1,597)
Capital contribution (withdrawal) ............. (1,918,081) -- --
Transfers from the Guarantee Account ............ -- -- --
Interfund transfers ............................. 18,769 30,083 3,403
------------- ------- ------
Increase (decrease) in net assets from capital
transactions .................................... (1,915,076) 44,217 (6,373)
------------- ------- ------
Increase (decrease) in net assets ................ (1,855,081) 141,837 86,986
Net assets at beginning of year .................. 1,964,896 1,823,059 1,736,073
------------- --------- ---------
Net assets at end of year ........................ $ 109,815 1,964,896 1,823,059
============= ========= =========
<CAPTION>
GE INVESTMENTS FUNDS, INC.
(CONTINUED)
------------------------------------
TOTAL RETURN FUND
------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
----------- ----------- ------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (loss) .................... 26,328 64,935 123,358
Net realized gain (loss) ........................ 4,570 9,612 17,898
Unrealized appreciation (depreciation) on
investments ................................... 49,885 2,077 (99,638)
------ ------ -------
Increase in net assets from operations ........... 80,783 76,624 41,618
------ ------ -------
From capital transactions:
Net premiums .................................... 34,420 34,821 37,434
Loan interest ................................... (1,133) (1,356) (725)
Transfers (to) from the general account of
Life of Virginia:
Death benefits ................................ -- (1,883) --
Surrenders .................................... (4,083) (30,483) (15,541)
Loans ......................................... 1,137 (6,398) (10,486)
Cost of insurance (note 3) .................... (37,929) (35,165) (34,260)
Transfer gain (loss) and transfer fees ........ (85) (1,218) (19)
Capital contribution (withdrawal) ............. -- -- --
Transfers from the Guarantee Account ............ -- -- --
Interfund transfers ............................. -- 2,778 (1,013)
------- ------- -------
Increase (decrease) in net assets from capital
transactions .................................... (7,673) (38,904) (24,610)
------- ------- -------
Increase (decrease) in net assets ................ 73,110 37,720 17,008
Net assets at beginning of year .................. 489,903 452,183 435,175
------- ------- -------
Net assets at end of year ........................ 563,013 489,903 452,183
======= ======= =======
</TABLE>
A-7
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT I
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
(CONTINUED)
------------------------------
INCOME FUND
------------------------------
PERIOD FROM
DECEMBER 12,
YEAR 1997
ENDED TO
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- -------------
<S> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (loss) ....................................... $ 67,462 2,956
Net realized gain (loss) ........................................... 592 (144)
Unrealized appreciation (depreciation) on investments .............. 20,898 (800)
---------- -----
Increase in net assets from operations .............................. 88,952 2,012
---------- -----
From capital transactions:
Net premiums ....................................................... 5,397 229
Loan interest ...................................................... (149) 12
Transfers (to) from the general account of Life of Virginia:
Death benefits ................................................... -- --
Surrenders ....................................................... (2,195) --
Loans ............................................................ (316) --
Cost of insurance (note 3) ....................................... (3,628) (161)
Transfer gain (loss) and transfer fees ........................... 25 (39)
Capital contribution (withdrawal) ................................ -- 1,077,814
Transfers from the Guarantee Account ............................... -- --
Interfund transfers ................................................ (19,052) 58,071
---------- ---------
Increase (decrease) in net assets from capital transactions ......... (19,918) 1,135,926
---------- ---------
Increase (decrease) in net assets ................................... 69,034 1,137,938
Net assets at beginning of year ..................................... 1,137,938 --
---------- ---------
Net assets at end of year ........................................... $1,206,972 1,137,938
========== =========
</TABLE>
See accompanying notes to financial statements.
A-8
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
(1) DESCRIPTION OF ENTITY
Life of Virginia Separate Account I (the Account) is a separate investment
account established in 1984 by The Life Insurance Company of Virginia (Life of
Virginia) under the laws of the Commonwealth of Virginia. The Account operates
as a unit investment trust under the Investment Company Act of 1940. The
Account is used to fund certain benefits for flexible premium variable life
insurance policies issued by Life of Virginia prior to December 31, 1988. The
Life Insurance Company of Virginia is a stock life insurance company operating
under a charter granted by the Commonwealth of Virginia on March 21, 1871.
Eighty percent of the capital stock of Life of Virginia is owned by General
Electric Capital Assurance Company. The remaining 20% is owned by GE Financial
Assurance Holdings, Inc. General Electric Capital Assurance Company and GE
Financial Assurance Holdings, Inc. are indirect, wholly-owned subsidiaries of
General Electric Capital Corporation ("GE Capital"). GE Capital, a diversified
financial services company, is a wholly-owned subsidiary of General Electric
Company (GE), a New York corporation. Prior to April 1, 1996, Life of Virginia
was an indirect wholly-owned subsidiary of Aon Corporation.
On December 12, 1997, the Account added the GE Investments Funds, Inc. --
Income Fund as a new investment subdivision and made a substitution of shares
of the GE Investments Funds, Inc. -- Government Securities for shares of the GE
Investments Funds, Inc. -- Income Fund. The foregoing substitution was carried
out pursuant to an order of the Securities and Exchange Commission (Commission)
issued on December 11, 1997, with the approval of any necessary department of
insurance.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) INVESTMENTS
Investments are stated at fair value which is based on the underlying net
asset value per share of the respective funds. Purchases and sales of
investments are recorded on the trade date and income distributions are
recorded on the ex-dividend date. Realized gains and losses on investments are
determined on the average cost basis. The units and unit values are disclosed
as of the last business day in the applicable year or period.
The aggregate cost of investments acquired and the aggregate proceeds of
investments sold, for the year ended December 31, 1998 were:
<TABLE>
<CAPTION>
COST OF PROCEEDS
SHARES FROM
FUND ACQUIRED SHARES SOLD
- --------------------------- ---------- ------------
<S> <C> <C>
GE Investments Funds, Inc.:
S&P 500 Index ............ $387,195 368,555
Money Market ............. 193,264 2,027,234
Total Return ............. 71,901 53,052
Income ................... 83,705 35,960
</TABLE>
A-9
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
(B) CAPITAL TRANSACTIONS
The increase (decrease) in outstanding units from capital transactions for
the years or lesser periods ended December 31, 1998, 1997 and 1996 are as
follows:
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
-------------------------------------------------------------------
S&P 500 GOVERNMENT MONEY TOTAL
INDEX SECURITIES MARKET RETURN INCOME
FUND FUND FUND FUND FUND
------------- -------------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1995 ......... 40,981 2,913 3,746 13,859 --
------ ----- ------- ------ -----
Net premiums .................................. 2,880 328 390 1,180 --
Loan interest ................................. (67) (2) -- (23) --
Transfers (to) from the general
account of Life of Virginia:
Death benefits .............................. (2) -- -- -- --
Surrenders .................................. (688) (204) (213) (490) --
Loans ....................................... (256) (96) (123) (330) --
Cost of insurance ........................... (2,466) (316) (539) (1,080) --
Interfund transfers ........................... (46) (8) 202 (32) --
-------- ------ ------ ----- -----
Net increase (decrease) in units
from capital transactions ..................... (645) (298) (283) (775) --
-------- ------ ------ ------ -----
Units outstanding at December 31, 1996 ......... 40,336 2,615 3,463 13,084 --
-------- ------- ------ ------ -----
Net premiums .................................. 2,340 231 396 931 23
Loan interest ................................. (73) (3) (1) (36) 1
Transfers (to) from the general
account of Life of Virginia:
Death benefits .............................. (33) -- -- (50) --
Surrenders .................................. (499) (83) -- (816) --
Loans ....................................... (14) 19 (4) (171) --
Cost of insurance ........................... (2,184) (164) (608) (941) (16)
Interfund transfers ........................... (439) (2,615) 1,712 74 5,807
-------- -------- ------ ------ -----
Net increase (decrease) in units
from capital transactions ..................... (902) (2,615) 1,495 (1,009) 5,815
-------- -------- ------ ------ -----
Units outstanding at December 31, 1997 ......... 39,434 -- 4,958 12,075 5,815
-------- -------- ------ ------ -----
From capital transactions:
Net premiums .................................. 1,603 -- 336 743 531
Loan interest ................................. (47) -- (5) (24) (15)
Transfers (to) from the general
account of Life of Virginia:
Death benefits .............................. (87) -- -- -- --
Surrenders .................................. (1,146) -- (230) (88) (216)
Loans ....................................... 12 -- (7) 25 (31)
Cost of insurance ........................... (1,695) -- (664) (820) (357)
Transfers from the Guarantee Account .......... 1 -- -- -- --
Interfund transfers ........................... 3 -- 1,104 -- (1,877)
-------- -------- ------ ------ ------
Net increase (decrease) in units
from capital transactions ..................... (1,356) -- 534 (164) (1,965)
-------- -------- ------ ------ ------
Units outstanding at December 31, 1998 ......... 38,078 -- 5,492 11,911 3,850
======== ======== ======= ====== ======
</TABLE>
A-10
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
(C) FEDERAL INCOME TAXES
The Account is not taxed separately because the operations of the Account
are part of the total operations of Life of Virginia. Life of Virginia is taxed
as a life insurance company under the Internal Revenue Code (the Code). Life of
Virginia is included in the General Electric Capital Assurance Company
consolidated federal income tax return. Under existing federal income tax law,
no taxes are payable on the investment income or on the capital gains of the
Account.
(D) USE OF ESTIMATES
Financial statements prepared in conformity with generally accepted
accounting principles require management to make estimates and assumptions that
affect amounts and disclosures reported therein. Actual results could differ
from those estimates.
(3) RELATED PARTY TRANSACTIONS
Net premiums transferred from Life of Virginia to the Account represent
gross premiums recorded by Life of Virginia on its flexible premium variable
life insurance policies, less deductions retained as compensation for certain
distribution expenses and premium taxes. A charge equal to the lesser of $25 or
2% of the amount paid on a partial surrender is made to compensate Life of
Virginia for the costs incurred in connection with accomplishing the surrender.
A charge based on the policy specified amount of insurance, death benefit
option, cash values, duration, the insured's sex, issue age and risk class is
deducted from the policy cash values each month to compensate Life of Virginia
for the cost of insurance and any benefits added by rider. In addition, Life of
Virginia charges the Account for the mortality and expense (M&E) risk that Life
of Virginia assumes. This M&E charge is deducted daily at an effective annual
rate of .50% of the net assets of the Account.
GE Investments Funds, Inc. (the Fund) is an open-end diversified
management investment company.
Capital Brokerage Corporation, an affiliate of Life of Virginia, is a
Washington corporation registered with the Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. Capital Brokerage Corporation serves as
principal underwriter for variable life insurance policies issued by Life of
Virginia.
GE Investment Management Incorporated (Investment Advisor), a wholly-owned
subsidiary of GE, currently serves as investment advisor to GE Investments
Funds, Inc. As compensation for its services, the Investment Advisor is paid an
investment advisory fee by the Fund based on the average daily net assets at an
effective annual rate of .35% for the S&P 500 Index Fund, .10% for the Money
Market Fund and .50% for the Total Return and Income Funds. Prior to May 1,
1997, Aon Advisors, Inc. served as investment advisor to the Fund and was
subject to the same compensation arrangement as GE Investment Management
Incorporated.
Certain officers and directors of Life of Virginia are also officers and
directors of Capital Brokerage Corporation.
(4) SUBSEQUENT EVENT
Effective January 1, 1999, The Life Insurance Company of Virginia merged
with The Harvest Life Insurance Company to form GE Life and Annuity Assurance
Company. Concurrently, the Account changes its name to GE Life & Annuity
Separate Account I. Neither of these events have an impact on net assets or
unit values.
A-11
