LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Assets and Liabilities (Audited)
Year ended December 31, 1997
(With Independent Auditors' Report Thereon)
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Table of Contents
Year ended December 31, 1997
======================================================================
Page
Independent Auditors' Report....................................1
Financial Statements:
Statements of Assets and Liabilities......................3
Statements of Operations..................................9
Statements of Changes in Net Assets......................20
Notes to Financial Statements..................................31
======================================================================
<PAGE>
1
Report of Independent Auditors
Policyholders
Life of Virginia Separate Account III
and 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 III (the Account) (comprising the GE Investments
Funds, Inc.--S&P 500 Index, Money Market, Total Return, International Equity,
Real Estate Securities, Global Income, Value Equity and Income Funds; the
Oppenheimer Variable Account Funds--Bond, Capital Appreciation, Growth, High
Income and Multiple Strategies Funds; the Variable Insurance Products
Fund--Equity-Income, Growth and Overseas Portfolios; the Variable Insurance
Products Fund II--Asset Manager and Contrafund Portfolios; the Variable
Insurance Products Fund III--Growth & Income and Growth Opportunities
Portfolios; the Federated Investors Insurance Series--American Leaders, High
Income Bond and Utility Funds II; the Alger American--Small Cap and Growth
Portfolios; the PBHG Insurance Series Fund--PBHG Large Cap Growth and Growth II
Portfolios; and the Janus Aspen Series--Aggressive Growth, Growth, Worldwide
Growth, Balanced, Flexible Income, International Growth and Capital Appreciation
Portfolios) as of December 31, 1997 and the related statements of operations and
changes in net assets for the aforementioned funds and the GE Investments Funds,
Inc.--Government Securities Fund; Oppenheimer Variable Account Funds--Money
Fund; Variable Insurance Products Fund--Money Market and High Income Portfolios;
and Neuberger & Berman Advisers Management Trust--Balanced, Bond and Growth
Portfolios of Life of Virginia Separate Account III for each of the two years or
lesser periods 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. The accompanying statements of
operations and changes in net assets of Life of Virginia Separate Account III
for the year or period ended December 31, 1995, were audited by other auditors,
whose report thereon dated February 8, 1996 expressed an unqualified opinion on
those statements.
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, 1997, by correspondence with
the underlying mutual funds or their transfer agent. An audit also includes
<PAGE>
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 1997 and 1996 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 III as of
December 31, 1997 and the results of their operations and changes in their net
assets for each of the two years or lesser periods then ended in conformity with
generally accepted accounting principles.
Richmond, Virginia
February 13, 1998
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.)
-------------------------------------------------------------------
S&P 500 Money Total International Real Estate
Index Market Return Equity Securities
Assets Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment in GE Investments
Funds, Inc., at fair value (note 2):
S&P 500 Index Fund (166,350
shares; cost - $3,234,024) $ 3,198,902 - - - -
Money Market Fund (11,872,653 shares;
cost - $11,874,757) - 11,872,653 - - -
Total Return Fund (126,372 shares;
cost - $1,789,876) - - 1,669,370 - -
International Equity Fund
(25,601 shares; cost - $305,010) - - - 273,419 -
Real Estate Securities Fund
(70,455 shares; cost - $1,144,713) - - - - 1,076,552
Global Income Fund
(1,392 shares; cost - $14,378) - - - - -
Value Equity Fund
(19,186 shares; cost - $249,548) - - - - -
Income Fund (105,855
shares; cost - $1,280,455) - - - - -
Receivable from affiliate 3,956 - 46 - -
Receivable for units sold 498 - 250 - -
- -----------------------------------------------------------------------------------------------------------------------------
Total assets $ 3,203,356 11,872,653 1,669,666 273,419 1,076,552
- -----------------------------------------------------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) $ 2,217 606,806 1,042 16,178 6,225
Payable for units withdrawn - 11,523 - - -
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities 2,217 618,329 1,042 16,178 6,225
- -----------------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable life policyholders $ 3,201,139 11,254,324 1,668,624 257,241 1,070,327
- -----------------------------------------------------------------------------------------------------------------------------
Outstanding units 93,601 747,796 64,351 20,612 58,202
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value per unit $ 34.20 15.05 25.93 12.48 18.39
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.)
----------------------------------------------
Global Value
Income Equity Income
Assets Fund Fund Fund
- --------------------------------------------------------------------------------------------------
<S> <C>
Investment in GE Investments
Funds, Inc., at fair value (note 2):
S&P 500 Index Fund (166,350
shares; cost - $3,234,024) - - -
Money Market Fund (11,872,653 shares;
cost - $11,874,757) - - -
Total Return Fund (126,372 shares;
cost - $1,789,876) - - -
International Equity Fund
(25,601 shares; cost - $305,010) - - -
Real Estate Securities Fund
(70,455 shares; cost - $1,144,713) - - -
Global Income Fund
(1,392 shares; cost - $14,378) 13,709 - -
Value Equity Fund
(19,186 shares; cost - $249,548) - 251,525 -
Income Fund (105,855
shares; cost - $1,280,455) - - 1,281,909
Receivable from affiliate - 358 -
Receivable for units sold - - -
- --------------------------------------------------------------------------------------------------
Total assets 13,709 251,883 1,281,909
- --------------------------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) 10 177 61,452
Payable for units withdrawn - - 260
- --------------------------------------------------------------------------------------------------
Total liabilities 10 177 61,712
- --------------------------------------------------------------------------------------------------
Net assets attributable to variable life policyholders 13,699 251,706 1,220,197
- --------------------------------------------------------------------------------------------------
Outstanding units 1,336 19,156 121,898
- --------------------------------------------------------------------------------------------------
Net asset value per unit 10.25 13.14 10.01
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Assets and Liabilities, Continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
----------------------------------------------------------------
Capital High Multiple
Bond Appreciation Growth Income Strategies
Assets Fund Fund Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment in Oppenheimer Variable
Account Funds, at fair value (note 2):
Bond Fund (295,692 shares;
cost - $3,477,793) $ 3,521,693 - - - -
Capital Appreciation Fund
(166,976 shares; cost - $5,835,273) - 6,839,322 - - -
Growth Fund (119,872 shares;
cost - $3,232,519) - - 3,888,638 - -
High Income Fund (579,437
shares; cost - $6,650,297) - - - 6,675,119 -
Multiple Strategies Fund
(188,461 shares; cost - $2,701,408) - - - - 3,205,723
Receivable from affiliate 6,297 10,218 10,665 7,311 7,339
Receivable for units sold 2,415 19 - - 250
- --------------------------------------------------------------------------------------------------------------------------
Total assets $ 3,530,405 6,849,559 3,899,303 6,682,430 3,213,312
- --------------------------------------------------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) $ 2,509 4,834 2,781 4,709 2,287
Payable for units withdrawn - - - - -
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities 2,509 4,834 2,781 4,709 2,287
- --------------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable life policyholders $ 3,527,896 6,844,725 3,896,522 6,677,721 3,211,025
- --------------------------------------------------------------------------------------------------------------------------
Outstanding units 160,651 205,918 127,881 207,125 123,075
- --------------------------------------------------------------------------------------------------------------------------
Net asset value per unit $ 21.96 33.24 30.47 32.24 26.09
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Assets and Liabilities, Continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund
----------------------------------------
Equity-
Income Growth Overseas
Assets Portfolio Portfolio Portfolio
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Investment in Variable Insurance Products
Fund, at fair value (note 2):
Equity-Income Portfolio (653,078 shares;
cost - $12,703,478) $ 15,856,739 - -
Growth Portfolio (279,070 shares;
cost - $9,356,526) - 10,353,485 -
Overseas Portfolio (238,791 shares;
cost - $4,674,883) - - 4,584,789
Receivable from affiliate 184,301 49,128 -
Receivable for units sold 103 - -
- -------------------------------------------------------------------------------------------------------------
Total assets $ 16,041,143 10,402,613 4,584,789
- -------------------------------------------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) $ 11,464 7,760 22,217
Payable for units withdrawn - 2,301 -
- -------------------------------------------------------------------------------------------------------------
Total liabilities 11,464 10,061 22,217
- -------------------------------------------------------------------------------------------------------------
Net assets attributable to variable life policyholders $ 16,029,679 10,392,552 4,562,572
- -------------------------------------------------------------------------------------------------------------
Outstanding units 489,456 310,040 243,467
- -------------------------------------------------------------------------------------------------------------
Net asset value per unit $ 32.75 33.52 18.74
- -------------------------------------------------------------------------------------------------------------
</TABLE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Assets and Liabilities, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Variable Insurance Variable Insurance
Products Fund II Products Fund III
------------------------ -----------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities
Assets Portfolio Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------- -----------------------------
<S> <C>
Investment in Variable Insurance Products
Fund II, at fair value (note 2):
Asset Manager Portfolio (532,712 shares;
cost - $7,829,920) $ 9,594,141 - - -
Contrafund Portfolio (388,534 shares;
cost - $6,383,696) - 7,747,364 - -
Investment in Variable Insurance Products
Fund III, at fair value (note 2):
Growth & Income Portfolio (32,799
shares; cost - $399,654) - - 410,968 -
Growth Opportunities Portfolio (18,252
shares; cost - $312,482) - - - 351,717
Receivable from affiliate - 102,245 - -
Receivable for units sold - 5,811 - -
- -----------------------------------------------------------------------------------------------------------------
Total assets $ 9,594,141 7,855,420 410,968 351,717
- -----------------------------------------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) $ 17,812 5,617 523 270
Payable for units withdrawn 196 - - -
- -----------------------------------------------------------------------------------------------------------------
Total liabilities 18,008 5,617 523 270
- -----------------------------------------------------------------------------------------------------------------
Net assets attributable to variable life policyholders $ 9,576,133 7,849,803 410,445 351,447
- -----------------------------------------------------------------------------------------------------------------
Outstanding units 395,218 385,172 33,181 28,619
- -----------------------------------------------------------------------------------------------------------------
Net asset value per unit $ 24.23 20.38 12.37 12.28
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Assets and Liabilities, Continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Federated Investors
Insurance Series Alger American
------------------------------------- ------------------------
American High Income Small
Leaders Bond Utility Cap Growth
Assets Fund II Fund II Fund II Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment in Federated Investors Insurance Series,
at fair value (note 2):
American Leaders Fund II (26,307 shares; cost - $460,397) $ 516,400 - - - -
High Income Bond Fund II (204,140 shares; cost - $2,150,785) - 2,235,337
Utility Fund II (27,389 shares; cost - $323,552) - - 391,392 - -
Investment in Alger American, at fair value (note 2):
Small Cap Portfolio (33,219 shares; cost - $1,489,796) - - - 1,453,328 -
Growth Portfolio (40,804 shares; cost - $1,519,356) - - - - 1,744,760
Investment in PBHG Insurance Series Fund, at fair value (note 2):
PBHG Large Cap Growth Portfolio (2,696 shares; cost - $31,213) - - - - -
PBHG Growth II Portfolio (8,450 shares; cost - $91,682) - - - - -
Receivable from affiliate 1,079 1 2,220 5,039 13,014
Receivable for units sold 648 - - 2,844 205
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $ 518,127 2,235,338 393,612 1,461,211 1,757,979
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) $ 367 1,586 272 1,054 1,203
Payable for units withdrawn - 138 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 367 1,724 272 1,054 1,203
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable life policyholders $ 517,760 2,233,614 393,340 1,460,157 1,756,776
- ------------------------------------------------------------------------------------------------------------------------------------
Outstanding units 35,856 148,413 23,413 137,751 131,397
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value per unit $ 14.44 15.05 16.80 10.60 13.37
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
PBHG
Insurance
Series Fund
---------------------------
PBHG
Large Cap PBHG
Growth Growth II
Assets Portfolio Portfolio
- ---------------------------------------------------------------------------------------------------
<S> <C>
Investment in Federated Investors Insurance Series,
at fair value (note 2):
American Leaders Fund II (26,307 shares; cost - $460,397) $ - -
High Income Bond Fund II (204,140 shares; cost - $2,150,785)
Utility Fund II (27,389 shares; cost - $323,552) - -
Investment in Alger American, at fair value (note 2):
Small Cap Portfolio (33,219 shares; cost - $1,489,796) - -
Growth Portfolio (40,804 shares; cost - $1,519,356) - -
Investment in PBHG Insurance Series Fund, at fair value (note 2):
PBHG Large Cap Growth Portfolio (2,696 shares; cost - $31,213) 31,869 -
PBHG Growth II Portfolio (8,450 shares; cost - $91,682) - 90,836
Receivable from affiliate 8 1,335
Receivable for units sold - -
- ---------------------------------------------------------------------------------------------------
Total assets $ 31,877 92,171
- ---------------------------------------------------------------------------------------------------
Liabilities
- ---------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate (note 3) $ 23 65
Payable for units withdrawn - -
- ---------------------------------------------------------------------------------------------------
Total liabilities 23 65
- ---------------------------------------------------------------------------------------------------
Net assets attributable to variable life policyholders $ 31,854 92,106
- ---------------------------------------------------------------------------------------------------
Outstanding units 2,718 8,640
- ---------------------------------------------------------------------------------------------------
Net asset value per unit $ 11.72 10.66
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Assets and Liabilities, Continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series
----------------------------------------------------
Aggressive Worldwide
Growth Growth Growth Balanced
Assets Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment in Janus Aspen Series, at fair value (note 2):
Aggressive Growth Portfolio
(129,799 shares; cost - $2,557,497) $ 2,667,374 - - -
Growth Portfolio (248,877 shares; cost - $3,896,519) - 4,599,246 - -
Worldwide Growth Portfolio
(350,595 shares; cost - $6,833,877) - - 8,200,412 -
Balanced Portfolio (200,937 shares; cost - $3,297,524) - - - 3,510,378
Flexible Income Portfolio
(14,658 shares; cost - $167,567) - - - -
International Growth Portfolio
(95,980 shares; cost - $1,710,371) - - - -
Capital Appreciation Portfolio
(948 shares; cost - $12,540) - - - -
Receivable from affiliate 123,091 8,199 31,385 226
Receivable for units sold 19 - 435 37,330
- ------------------------------------------------------------------------------------------------------------------------
Total assets $ 2,790,484 4,607,445 8,232,232 3,547,934
- ------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate
(note 3) $ 2,012 3,239 5,842 2,416
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities 2,012 3,239 5,842 2,416
- ------------------------------------------------------------------------------------------------------------------------
Net assets attributable to variable life policyholders $ 2,788,472 4,604,206 8,226,390 3,545,518
- ------------------------------------------------------------------------------------------------------------------------
Outstanding units 164,512 259,831 440,385 241,520
- ------------------------------------------------------------------------------------------------------------------------
Net asset value per unit $ 16.95 17.72 18.68 14.68
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Janus Aspen Series
--------------------------------------
Flexible International Capital
Income Growth Appreciation
Assets Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------------------------------
<S> <C>
Investment in Janus Aspen Series, at fair value (note 2):
Aggressive Growth Portfolio
(129,799 shares; cost - $2,557,497) $ - - -
Growth Portfolio (248,877 shares; cost - $3,896,519) - - -
Worldwide Growth Portfolio
(350,595 shares; cost - $6,833,877) - - -
Balanced Portfolio (200,937 shares; cost - $3,297,524) - - -
Flexible Income Portfolio
(14,658 shares; cost - $167,567) 172,668 - -
International Growth Portfolio
(95,980 shares; cost - $1,710,371) - 1,773,714 -
Capital Appreciation Portfolio
(948 shares; cost - $12,540) - - 11,958
Receivable from affiliate - 12,521 -
Receivable for units sold - 2,844 -
- ---------------------------------------------------------------------------------------------------------
Total assets $ 172,668 1,789,079 11,958
- ---------------------------------------------------------------------------------------------------------
Liabilities
- ---------------------------------------------------------------------------------------------------------
Accrued expenses payable to affiliate
(note 3) $ 664 1,261 33
- ---------------------------------------------------------------------------------------------------------
Total liabilities 664 1,261 33
- ---------------------------------------------------------------------------------------------------------
Net assets attributable to variable life policyholders $ 172,004 1,787,818 11,925
- ---------------------------------------------------------------------------------------------------------
Outstanding units 13,793 130,880 950
- ---------------------------------------------------------------------------------------------------------
Net asset value per unit $ 12.47 13.66 12.55
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Operations
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.)
-------------------------------------------------------------------
S&P 500 Government
Index Securities
Fund Fund
------------------------------- -----------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $ 83,460 652,254 16,395 - 77,670 47,230
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 30,270 15,181 5,726 9,821 10,265 11,615
- ----------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 53,190 637,073 10,669 (9,821) 67,405 35,615
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) 125,533 70,710 5,027 2,596 4,093 12,380
Unrealized appreciation (depreciation) on
investments 337,547 (460,582) 109,436 46,607 (68,909) 79,507
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments 463,080 (389,872) 114,463 49,203 (64,816) 91,887
- ----------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations $ 516,270 247,201 125,132 39,382 2,589 127,502
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.)
---------------------------------------------------------------------
Money Market Total Return
Fund Fund
---------------------------------- ----------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 524,091 500,346 259,698 228,688 387,179 78,232
Expenses - Mortality and expense risk charge
and administrative expenses (note 3) 134,484 131,290 60,222 20,274 16,395 11,743
- ------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 389,607 369,056 199,476 208,414 370,784 66,489
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) (256,503) 137,112 128,436 1,710 37,094 10,068
Unrealized appreciation (depreciation) on
investments 287,655 (89,338) (122,638) 26,729 (292,293) 134,624
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments 31,152 47,774 5,798 28,439 (255,199) 144,692
- ------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 420,759 416,830 205,274 236,853 115,585 211,181
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Operations, Continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly
Life of Virginia Series Fund, Inc.) (continued)
-----------------------------------------------------
International
Equity Fund
-----------------------------------------------------
Period from
June 30,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 86,245 46,694 3,880
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 11,206 5,198 737
- ------------------------------------------------------------------------------------------------------------------------
Net investment income 75,039 41,496 3,143
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) 146,386 19,981 44
Unrealized appreciation (depreciation) on investments (6,150) (29,424) 3,983
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 140,236 (9,443) 4,027
- ------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 215,275 32,053 7,170
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly
Life of Virginia Series Fund, Inc.) (continued)
-----------------------------------------------------
Real Estate
Securities Fund
-------------------------------------------------------------
Period from
December 6,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 111,357 14,330 22
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 10,398 1,294 -
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income 100,959 13,036 22
- ----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) 142,744 3,590 -
Unrealized appreciation (depreciation) on investments (97,672) 29,513 (2)
- ----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 45,072 33,103 (2)
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 146,031 46,139 20
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly
Life of Virginia Series Fund, Inc.) (continued)
-----------------------------------------------------
Global Value
Income Equity Income
Fund Fund Fund
------------------------------------------------------
Periods from Periods from Periods from
September 15, June 17, December 12,
1997 to 1997 to 1997 to
December 31, December 31, December 31,
1997 1997 1997
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 684 2,631 3,329
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 19 710 733
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 665 1,921 2,596
- ---------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) - 208 (2,508)
Unrealized appreciation (depreciation) on investments (669) 1,977 1,454
- ---------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (669) 2,185 (1,054)
- ---------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations (4) 4,106 1,542
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Operations, Continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
----------------------------------------------------
Money
Fund
----------------------------------------------------
Year ended December 31,
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $ 7,779 12,118 20,916
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 1,958 2,973 4,563
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 5,821 9,145 16,353
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain - - -
Unrealized appreciation (depreciation) on investments - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations $ 5,821 9,145 16,353
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
-----------------------------------------------
Bond
Fund
-----------------------------------------------
Year ended December 31,
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $ 128,635 106,583 89,363
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 21,914 22,427 21,561
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 106,721 84,156 67,802
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain 11,410 31,061 16,138
Unrealized appreciation (depreciation) on investments 14,947 (44,892) 167,799
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 26,357 (13,831) 183,937
- -------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations $ 133,078 70,325 251,739
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
-----------------------------------------------------
Capital
Appreciation
Fund
-----------------------------------------------------
Year ended December 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $271,809 216,310 9,020
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 80,784 58,271 29,001
- ----------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 191,025 158,039 (19,981)
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain 362,326 207,037 18,656
Unrealized appreciation (depreciation) on investments 69,894 284,866 654,277
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 432,220 491,903 672,933
- ----------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations $623,245 649,942 652,952
- ----------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
------------------------------------------------------
Growth
Fund
------------------------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 137,266 100,033 20,599
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 39,859 18,585 12,467
- -----------------------------------------------------------------------------------------------------------------
Net investment income (expense) 97,407 81,448 8,132
- -----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain 211,799 104,773 58,948
Unrealized appreciation (depreciation) on investments 311,259 101,309 212,160
- -----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 523,058 206,082 271,108
- -----------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 620,465 287,530 279,240
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Operations, Continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued)
--------------------------------------------------------------
High Multiple
Income Strategies
Fund Fund
--------------------------------------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $395,329 317,982 157,280 204,231 161,518 142,518
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 56,210 39,512 22,782 36,789 29,130 25,397
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income 339,119 278,470 134,498 167,442 132,388 117,121
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain 180,406 57,827 18,618 34,009 53,160 24,327
Unrealized appreciation (depreciation) on investments (53,341) 72,516 83,576 206,122 106,953 206,074
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 127,065 130,343 102,194 240,131 160,113 230,401
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations $466,184 408,813 236,692 407,573 292,501 347,522
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Operations, Continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund
-----------------------------------------------------------
High
Money Market Income
Portfolio Portfolio
-------------------------- -----------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $91,625 75,804 237,224 105,638 201,481 186,422
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 10,228 18,807 54,127 15,435 20,933 28,004
- -------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 81,397 56,997 183,097 90,203 180,548 158,418
- -------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) - - - 185,532 (17,100) 137,054
Unrealized appreciation (depreciation) on investments - - - (92,552) 27,229 66,195
- -------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments - - - 92,980 10,129 203,249
- -------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations $81,397 56,997 183,097 183,183 190,677 361,667
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund
-----------------------------------------------------------------------
Equity-
Income Growth
Portfolio Portfolio
-------------------------------------- --------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 1,283,339 413,062 399,376 315,208 461,083 20,548
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 186,346 140,373 82,498 121,040 101,913 65,478
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 1,096,993 272,689 316,878 194,168 359,170 (44,930)
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) 1,197,816 500,603 130,101 1,766,746 536,491 280,133
Unrealized appreciation (depreciation) on investments 1,016,128 539,174 1,347,468 (282,336) 31,232 1,091,397
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 2,213,944 1,039,777 1,477,569 1,484,410 567,723 1,371,530
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 3,310,937 1,312,466 1,794,447 1,678,578 926,893 1,326,600
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Operations, Continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Variable Insurance
Products Fund (continued) Products Fund II
-------------------------------------- -----------------------
Asset
Overseas Manager
Portfolio Portfolio
-------------------------------------- -----------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 506,300 176,637 25,524 1,006,221 555,062 156,409
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 73,250 81,887 70,739 120,291 107,941 96,822
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 433,050 94,750 (45,215) 885,930 447,121 59,587
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain 801,884 517,315 383,399 187,349 168,152 13,225
Unrealized appreciation (depreciation) on investments (489,713) (15,497) 356,600 534,401 400,455 1,011,885
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 312,171 501,818 739,999 721,750 568,607 1,025,110
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 745,221 596,568 694,784 1,607,680 1,015,728 1,084,697
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Variable Insurance
Products Fund II Product Fund III
-------------------------------------------------------------------------
Growth & Growth
Contrafund Income Opportunities
Portfolio Portfolio Portfolio
-----------------------------------------------------------------------
Period from Period from Period from
January 16, May 16, May 16,
Year ended Year ended 1995 to 1997 to 1997 to
December 31, December 31, December 31, December 31, December 31,
1997 1996 1995 1997 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 150,006 15,826 18,917 - -
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 81,691 38,668 5,771 1,712 1,910
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 68,315 (22,842) 13,146 (1,712) (1,910)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain 268,831 100,260 10,744 6,219 876
Unrealized appreciation (depreciation) on investments 823,917 476,601 63,150 11,314 39,235
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1,092,748 576,861 73,894 17,533 40,111
- --------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 1,161,063 554,019 87,040 15,821 38,201
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Operations, Continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust
-------------------------------------------------------------
Balanced Bond
Portfolio Portfolio
------------------------------ ----------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $ 123,193 293,957 47,572 36,455 67,433 51,824
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 24,999 24,806 27,169 6,443 9,529 11,324
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income 98,194 269,151 20,403 30,012 57,904 40,500
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) 315,380 13,816 103,017 (3,318) (5,135) (637)
Unrealized appreciation (depreciation) on investments (146,827) (182,324) 294,095 (1,629) (34,909) 39,427
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 168,553 (168,508) 397,112 (4,947) (40,044) 38,790
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations $ 266,747 100,643 417,515 25,065 17,860 79,290
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers
Management Trust
------------------------------
Growth
Portfolio
------------------------------
Year ended December 31,
1997 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 64,488 68,654 11,027
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 9,747 9,845 6,161
- -------------------------------------------------------------------------------------------------
Net investment income 54,741 58,809 4,866
- -------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) 150,610 5,513 3,921
Unrealized appreciation (depreciation) on investments (55,310) (6,856) 87,810
- -------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 95,300 (1,343) 91,731
- -------------------------------------------------------------------------------------------------
Increase in net assets from operations 150,041 57,466 96,597
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Operations, Continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Federated Investors
Insurance Series
-------------------------------------------------------------------
American High Income
Leaders Bond
Fund II Fund II
-------------------------- ------------------------------------------
Period from Period from
September 5, February 7,
Year ended 1996 to Year ended Year ended 1995 to
December 31, December 31, December 31, December 31, December 31,
1997 1996 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $ 1,480 96 45,217 36,032 1,350
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 3,437 60 10,943 5,378 190
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) (1,957) 36 34,274 30,654 1,160
- -----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments:
Net realized gain 11,788 19 5,827 1,726 8
Unrealized appreciation on investments 53,148 2,855 55,167 27,920 1,465
- -----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 64,936 2,874 60,994 29,646 1,473
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 62,979 2,910 95,268 60,300 2,633
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------
Federated Investors
Insurance Series
--------------------------------------------
Utility
Fund II
--------------------------------------------
Period from
February 7,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 12,197 6,514 2,908
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 3,837 2,042 839
- -------------------------------------------------------------------------------------------------
Net investment income (expense) 8,360 4,472 2,069
- -------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments:
Net realized gain 11,484 9,190 237
Unrealized appreciation on investments 50,092 5,651 12,097
- ------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 61,576 14,841 12,334
- ------------------------------------------------------------------------------------------------
Increase in net assets from operations 69,936 19,313 14,403
- ------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Operations, Continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Alger American
-----------------------------------------------------------------------------
Small
Cap Growth
Portfolio Portfolio
-------------------------------------- --------------------------------------
Period from Period from
October 6, November 2,
Year ended Year ended 1995 to Year ended Year ended 1995 to
December 31, December 31, December 31, December 31, December 31, December 31,
1997 1996 1995 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $ 42,941 3,785 - 15,712 14,003 -
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 18,711 10,887 312 21,426 7,612 81
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 24,230 (7,102) (312) (5,714) 6,391 (81)
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) 155,266 (13,977) 912 121,886 (8,548) 1
Unrealized appreciation (depreciation)
on investments (23,084) (18,580) 5,196 195,886 27,545 1,973
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 132,182 (32,557) 6,108 317,772 18,997 1,974
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations $156,412 (39,659) 5,796 312,058 25,388 1,893
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------
PBHG Insurance
Series Fund
----------------------------
PBHG
Large Cap PBHG
Growth Growth II
Portfolio Portfolio
----------------------------
Period from Period from
July 22, May 22,
1997 to 1997 to
December 31, December 31,
1997 1997
- -------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends - -
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 205 540
- -------------------------------------------------------------------------------
Net investment income (expense) (205) (540)
- -------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) (1) 1,296
Unrealized appreciation (depreciation)
on investments 656 (846)
- -------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 655 450
- -------------------------------------------------- -----------------------------
Increase (decrease) in net assets from operations 450 (90)
- -------------------------------------------------- -----------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
<TABLE>
<CAPTION>
Statements of Operations, Continued
- -----------------------------------------------------------------------------------------------------------------
Janus Aspen Series
--------------------------------------------------------------
Aggressive
Growth Growth
Portfolio Portfolio
----------------------------- --------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $ - 16,844 23,054 112,727 59,031 27,427
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 28,915 23,442 12,371 49,779 27,643 11,359
- ------------------------------------------------------------------------------------------------------------------
Net investment income (expense) (28,915) (6,598) 10,683 62,948 31,388 16,068
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain 192,226 267,683 127,218 243,734 132,138 22,274
Unrealized appreciation
(depreciation) on investments 99,444 (112,622) 116,589 376,858 144,223 180,762
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 291,670 155,061 243,807 620,592 276,361 203,036
- ------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations $ 262,755 148,463 254,490 683,540 307,749 219,104
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series
-----------------------------------------------------------------------------
Worldwide
Growth Balanced
Portfolio Portfolio
---------------------------- ----------------------------------------------
Period from
October 27,
Year ended Year ended 1995 to
Year ended December 31, December 31, December 31, December 31,
1997 1996 1995 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends 114,020 59,279 5,062 54,275 10,644 242
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 91,422 40,177 10,890 15,089 4,138 70
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 22,598 19,102 (5,828) 39,186 6,506 172
- --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain 457,649 156,316 17,153 16,368 3,534 6
Unrealized appreciation
(depreciation) on investments 666,571 498,790 203,456 172,861 38,227 1,767
- --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 1,124,220 655,106 220,609 189,229 41,761 1,773
- --------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 1,146,818 674,208 214,781 228,415 48,267 1,945
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Operations, Continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series (continued)
-------------------------------------------------------------------------------
Flexible International Capital
Income Growth Appreciation
Portfolio Portfolio Portfolio
---------------------------------------- ------------------------------------
Period from Period from Period from
November 1, June 5, May 22,
Year ended Year ended 1995 to Year ended 1996 to 1997 to
December 31, December 31, December 31, December 31, December 31, December 31,
1997 1996 1995 1997 1996 1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Income - Dividends $12,042 9,499 182 13,292 2,339 37
Expenses - Mortality and expense risk charges
and administrative expenses (note 3) 2,246 1,046 11 19,234 1,253 112
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (expense) 9,796 8,453 171 (5,942) 1,086 (75)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) 3,107 111 - 145,208 2,328 (7,519)
Unrealized appreciation
(depreciation) on investments 4,489 585 26 45,943 17,399 (582)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 7,596 696 26 191,151 19,727 (8,101)
- ---------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations $17,392 9,149 197 185,209 20,813 (8,176)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.)
-------------------------------------------------------------------
S&P 500 Government
Index Securities
Fund Fund
--------------------------------- -------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income $ 53,190 637,073 10,669 (9,821) 67,405 35,615
Net realized gain (loss) 125,533 70,710 5,027 2,596 4,093 12,380
Unrealized appreciation (depreciation)
on investments 337,547 (460,582) 109,436 46,607 (68,909) 79,507
- -----------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 516,270 247,201 125,132 39,382 2,589 127,502
- -----------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 29,621 - - 13,143 - -
Loan interest (472) (45) (19) (455) (35) (29)
Transfers (to) from the general account of
Life of Virginia:
Death benefits (1,802) (70,983) - - - -
Surrenders (50,594) (8,805) - (262,974) (27,170) (57,612)
Loans (10,019) (23,690) - (23,924) (1,574) (2,218)
Cost of insurance and administrative
expense (note 3) (24,852) (12,093) (4,705) (8,334) (8,533) (9,352)
Transfer gain (loss) and transfer fees (2,909) (3,844) 2,612 (3,207) (829) (845)
Transfers (to) from the Guarantee Account (note 1) 33,241 40,800 8,390 288 (3,299) -
Interfund transfers 1,154,053 531,241 493,348 (529,174) 12,746 35,175
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
transactions 1,126,267 452,581 499,626 (814,637) (28,694) (34,881)
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 1,642,537 699,782 624,758 (775,255) (26,105) 92,621
Net assets at beginning of year 1,558,602 858,820 234,062 775,255 801,360 708,739
- -----------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $3,201,139 1,558,602 858,820 - 775,255 801,360
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc.
(formerly Life of Virginia Series Fund, Inc.)
--------------------------------------------------------------------------
Money Market Total Return
Fund Fund
--------------------------------------- ---------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income 389,607 369,056 199,476 208,414 370,784 66,489
Net realized gain (loss) (256,503) 137,112 128,436 1,710 37,094 10,068
Unrealized appreciation (depreciation)
on investments 287,655 (89,338) (122,638) 26,729 (292,293) 134,624
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 420,759 416,830 205,274 236,853 115,585 211,181
- ----------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 14,800,378 21,281,538 14,618,729 37,415 - -
Loan interest 25,356 843 2 77 (130) (90)
Transfers (to) from the general account of
Life of Virginia:
Death benefits - (30,581) - (122,969) - -
Surrenders (81,503) (292,797) (83,593) (9,555) (105,824) (52,620)
Loans (259,694) (1,123,153) - (31,550) - 5,060
Cost of insurance and administrative
expense (note 3) (124,687) (120,240) (49,685) (16,232) (13,237) (9,674)
Transfer gain (loss) and transfer fees (135,353) (46,805) (455,729) (3,467) 1,607 1,184
Transfers (to) from the Guarantee Account (note 1) (32,069) (480,716) 35,940 45,496 40,576 2,000
Interfund transfers (13,250,370) (15,451,140) (12,260,599) 134,091 264,670 180,662
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
transactions 942,058 3,736,949 1,805,065 33,306 187,662 126,522
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 1,362,817 4,153,779 2,010,339 270,159 303,247 337,703
Net assets at beginning of year 9,891,507 5,737,728 3,727,389 1,398,465 1,095,218 757,515
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year 11,254,324 9,891,507 5,737,728 1,668,624 1,398,465 1,095,218
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly Life
of Virginia Series Fund, Inc.) (continued)
------------------------------------------
International
Equity Fund
----------------------------------------
Period from
June 30,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income $ 75,039 41,496 3,143
Net realized gain (loss) 146,386 19,981 44
Unrealized appreciation (depreciation) on investments (6,150) (29,424) 3,983
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 215,275 32,053 7,170
- -------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 1,056 - -
Loan interest (12) - -
Transfers (to) from the general account of Life of Virginia:
Death benefits - - -
Surrenders - 750 -
Loans 1,860 - -
Cost of insurance and administrative expense (note 3) (9,446) (4,299) (624)
Transfer gain (loss) and transfer fees (16,723) 320 (13)
Transfer (to) from the Guarantee Account (note 1) - - 14,623
Interfund transfers (727,513) 551,175 191,589
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions (750,778) 547,946 205,575
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (535,503) 579,999 212,745
Net assets at beginning of period 792,744 212,745 -
- -------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 257,241 792,744 212,745
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly Life
of Virginia Series Fund, Inc.) (continued)
-----------------------------------------
Real Estate
Securities Fund
-----------------------------------------
Period from
December 6,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income 100,959 13,036 22
Net realized gain (loss) 142,744 3,590 -
Unrealized appreciation (depreciation) on investments (97,672) 29,513 (2)
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 146,031 46,139 20
- -----------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 62,904 9,377 -
Loan interest - - -
Transfers (to) from the general account of Life of Virginia:
Death benefits - - -
Surrenders - - -
Loans (16,740) - -
Cost of insurance and administrative expense (note 3) (9,178) (1,186) -
Transfer gain (loss) and transfer fees (5,456) (277) (1)
Transfer (to) from the Guarantee Account (note 1) 3,269 - -
Interfund transfers 661,463 173,587 375
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 696,262 181,501 374
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 842,293 227,640 394
Net assets at beginning of period 228,034 394 -
- -----------------------------------------------------------------------------------------------------------
Net assets at end of year 1,070,327 228,034 394
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
GE Investments Funds, Inc. (formerly Life
of Virginia Series Fund, Inc.) (continued)
-----------------------------------------
Global Value
Income Equity Income
Fund Fund Fund
------------- ------------ ------------
Period from Period from Period from
September 15, June 17, December 12,
1997 to 1997 to 1997 to
December 31, December 31, December 31,
1997 1997 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income 665 1,921 2,596
Net realized gain (loss) - 208 (2,508)
Unrealized appreciation (depreciation) on investments (669) 1,977 1,454
- ----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from operations (4) 4,106 1,542
- ----------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums - 4,596 -
Loan interest - - -
Transfers (to) from the general account of Life of Virginia:
Death benefits - - -
Surrenders - - -
Loans - - (2,396)
Cost of insurance and administrative expense (note 3) (18) (615) (742)
Transfer gain (loss) and transfer fees - 360 (202)
Transfer (to) from the Guarantee Account (note 1) - - -
Interfund transfers 13,721 243,259 1,221,995
- ----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 13,703 247,600 1,218,655
- ----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 13,699 251,706 1,220,197
Net assets at beginning of period - - -
- ----------------------------------------------------------------------------------------------------------
Net assets at end of year 13,699 251,706 1,220,197
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
----------------------------------------------------------------------
Money Bond
Fund Fund
------------------------------- -------------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) $ 5,821 9,145 16,353 106,721 84,156 67,802
Net realized gain - - - 11,410 31,061 16,138
Unrealized appreciation (depreciation)
on investments - - - 14,947 (44,892) 167,799
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 5,821 9,145 16,353 133,078 70,325 251,739
- ----------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums - - - 12,401 - -
Loan interest - (247) - 224 (240) (521)
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - - - - -
Surrenders - - - - (19,035) (89,985)
Loans - (7,000) - (20,518) (46,361) (3)
Cost of insurance and administrative
expense (note 3) (1,618) (2,228) (4,184) (17,321) (18,368) (15,660)
Transfer gain (loss) and transfer fees 26 (1,331) (1,197) 4,175 5,246 (11,174)
Transfers (to) from the Guarantee Account (note 1) - - - 10,164 9,597 -
Interfund transfers (160,456) (178,397) 64,757 1,749,977 49,462 (1,051,342)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
transactions (162,048) (189,203) 59,376 1,739,102 (19,699) (1,168,685)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (156,227) (180,058) 75,729 1,872,180 50,626 (916,946)
Net assets at beginning of year 156,227 336,285 260,556 1,655,716 1,605,090 2,522,036
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ - 156,227 336,285 3,527,896 1,655,716 1,605,090
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds
------------------------------------------------------------------------
Capital
Appreciation Growth
Fund Fund
---------------------------------- ---------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) 191,025 158,039 (19,981) 97,407 81,448 8,132
Net realized gain 362,326 207,037 18,656 211,799 104,773 58,948
Unrealized appreciation (depreciation)
on investments 69,894 284,866 654,277 311,259 101,309 212,160
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 623,245 649,942 652,952 620,465 287,530 279,240
- ---------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 160,331 - - 136,857 - -
Loan interest (478) (1,349) (876) (1,570) (58) (8)
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - - - - -
Surrenders (5,632) (22,921) (9,862) - (5,002) (16,486)
Loans (76,259) (37,406) (7,659) (52,908) (31,288) -
Cost of insurance and administrative
expense (note 3) (69,581) (48,816) (23,791) (33,074) (15,042) (10,195)
Transfer gain (loss) and transfer fees (10,950) 6,558 (1,288) 5,703 5,414 (304)
Transfers (to) from the Guarantee Account (note 1) 86,490 38,369 15,348 67,111 22,600 2,000
Interfund transfers 786,921 1,391,680 1,211,520 1,239,168 515,014 81,977
- ---------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
transactions 870,842 1,326,115 1,183,392 1,361,287 491,638 56,984
- ---------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 1,494,087 1,976,057 1,836,344 1,981,752 779,168 336,224
Net assets at beginning of year 5,350,638 3,323,128 1,486,784 1,914,770 1,135,602 799,378
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year 6,844,725 5,299,185 3,323,128 3,896,522 1,914,770 1,135,602
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds (continued)
-------------------------------------------------------------
High Multiple
Income Strategies
Fund Fund
--------------------------------- --------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income $ 339,119 278,470 134,498 167,442 132,388 117,121
Net realized gain 180,406 57,827 18,618 34,009 53,160 24,327
Unrealized appreciation (depreciation) on investments (53,341) 72,516 83,576 206,122 106,953 206,074
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 466,184 408,813 236,692 407,573 292,501 347,522
- ---------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 94,743 8,422 - 12,358 23,572 -
Loan interest (628) (50) (42) (722) (207) (433)
Transfers (to) from the general account of Life of Virginia:
Death benefits - - - (2,000) (60,123) (3,955)
Surrenders (9,092) (4,708) (24,217) - (212,502) (179,975)
Loans (29,617) (37,253) (18,152) 8,746 (9,140) (63,108)
Cost of insurance and administrative expense
(note 3) (45,518) (32,765) (15,109) (29,942) (23,520) (20,637)
Transfer gain (loss) and transfer fees 32,059 4,282 8,580 356 789 928
Transfers (to) from the Guarantee Account (note 1) - - 9,748 23,966 4,000 -
Interfund transfers 2,226,116 1,526,214 760,586 447,254 240,604 222,736
- ---------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital transactions 2,268,063 1,464,142 721,394 460,016 (36,527) (44,444)
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 2,734,247 1,872,955 958,086 867,589 255,974 303,078
Net assets at beginning of year 3,943,474 2,070,519 1,112,433 2,343,436 2,087,462 1,784,384
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $6,677,721 3,943,474 2,070,519 3,211,025 2,343,436 2,087,462
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund
-------------------------------------------------------------------
High
Money Market Income
Portfolio Portfolio
------------------------------------ -----------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) $ 81,397 56,997 183,097 90,203 180,548 158,418
Net realized gain (loss) - - - 185,532 (17,100) 137,054
Unrealized appreciation (depreciation)
on investments - - - (92,552) 27,229 66,195
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 81,397 56,997 183,097 183,183 190,677 361,667
- ----------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums - - - - - 4,082
Loan interest (8,013) 720 (2,227) 6 (361) (11)
Transfers (to) from the general account
of Life of Virginia:
Death benefits - - (18,745) - (59,986) -
Surrenders (11,729) (129,716) (442,432) (163,901) (136,277) (28,969)
Loans (17,933) (17,326) (37,441) (6,459) (1,885) (9,125)
Cost of insurance and administrative expense (8,075) (14,528) (43,910) (11,738) (16,160) (21,564)
Transfer gain (loss) and transfer fees (66,375) (2,554) (6,558) (44,309) 4,523 (1,538)
Transfers (to) from the Guarantee Account (note 1) - 5,528 59,781 - - (32,657)
Interfund transfers (1,079,728) (1,016,677) (1,749,674) (1,280,202) (873,671) (572,358)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from capital transactions (1,191,853) (1,174,553) (2,241,206) (1,506,603) (1,083,817) (662,140)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (1,110,456) (1,117,556) (2,058,109) (1,323,420) (893,140) (300,473)
Net assets at beginning of year 1,110,456 2,228,012 4,286,121 1,323,420 2,216,560 2,517,033
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ - 1,110,456 2,228,012 - 1,323,420 2,216,560
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund
-------------------------------------------------------------------------
Equity-
Income Growth
Portfolio Portfolio
-------------------------------------- --------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) 1,096,993 272,689 316,878 194,168 359,170 (44,930)
Net realized gain (loss) 1,197,816 500,603 130,101 1,766,746 536,491 280,133
Unrealized appreciation (depreciation)
on investments 1,016,128 539,174 1,347,468 (282,336) 31,232 1,091,397
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 3,310,937 1,312,466 1,794,447 1,678,578 926,893 1,326,600
- ----------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 215,369 77,436 10,886 78,875 27,587 -
Loan interest (5,772) (6,953) (1,495) (3,060) (3,910) (717)
Transfers (to) from the general account
of Life of Virginia:
Death benefits (18,249) (92,711) (4,351) (1,634) (73,221) (10,299)
Surrenders (71,914) (373,251) (112,902) (28,946) (32,373) (120,929)
Loans (121,271) (215,646) (106,657) (153,343) (43,837) (117,116)
Cost of insurance and administrative expense (151,529) (114,634) (66,845) (99,653) (83,276) (53,507)
Transfer gain (loss) and transfer fees 58,911 41,116 14,451 26,694 14,043 (7,004)
Transfers (to) from the Guarantee Account (note 1) 112,723 127,788 4,600 44,630 135,064 (33,912)
Interfund transfers 311,215 3,056,657 2,227,097 44,400 1,429,513 1,797,003
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from capital transactions 329,483 2,499,802 1,964,784 (92,037) 1,369,590 1,453,519
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 3,640,420 3,812,268 3,759,231 1,586,541 2,296,483 2,780,119
Net assets at beginning of year 12,389,259 8,576,991 4,817,760 8,806,011 6,509,528 3,729,409
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year 16,029,679 12,389,259 8,576,991 10,392,552 8,806,011 6,509,528
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Variable Insurance Variable Insurance
Products Fund (continued) Products Fund II
--------------------------------------------------------------------
Asset
Overseas Manager
Portfolio Portfolio
----------------------------------- ------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) $ 433,050 94,750 (45,215) 885,930 447,121 59,587
Net realized gain 801,884 517,315 383,399 187,349 168,152 13,225
Unrealized appreciation (depreciation)
on investments (489,713) (15,497) 356,600 534,401 400,455 1,011,885
- -------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 745,221 596,568 694,784 1,607,680 1,015,728 1,084,697
- -------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 12,810 10,673 2,721 98,687 - -
Loan interest (2,436) (326) (240) (4,946) (3,433) (675)
Transfers (to) from the general account
of Life of Virginia
Death benefits - (10,056) - (149,074) - -
Surrenders (26,126) (99,794) (7,562) (8,956) (497,465) (202,275)
Loans (140,934) (49,140) 2,467 (97,092) (368,309) (244,730)
Cost of insurance and administrative
expense (note 3) (59,162) (67,126) (58,660) (98,131) (86,595) (78,782)
Transfer gain (loss) and transfer fees (12,801) 30,035 (8,973) 397 2,356 100,982
Transfers (to) from Guarantee Account (note 1) 61,472 47,987 (35,445) 33,707 1,000 -
Interfund transfers (1,392,016) (2,098,908) 3,279,602 (59,803) (122,445) 363,603
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from capital transactions (1,559,193) (2,236,655) 3,173,910 (285,211) (1,074,891) (61,877)
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (813,972) (1,640,087) 3,868,694 1,322,469 (59,163) 1,022,820
Net assets at beginning of period 5,376,544 7,016,631 3,147,937 8,253,664 8,312,827 7,290,007
- -------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 4,562,572 5,376,544 7,016,631 9,576,133 8,253,664 8,312,827
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Variable Insurance
Variable Insurance Products Fund II Products Fund III
------------------------------------------------------------------------------
Growth & Growth
Contrafund Income Opportunities
Portfolio Portfolio Portfolio
-------------------------------------------- --------------------------------
Period from Period from Period from
January 16, May 16, May 16,
Year ended Year ended 1995 to 1997 to 1997 to
December 31, December 31, December 31, December 31, December 31,
1997 1996 1995 1997 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) 68,315 (22,842) 13,146 (1,712) (1,910)
Net realized gain 268,831 100,260 10,744 6,219 876
Unrealized appreciation (depreciation)
on investments 823,917 476,601 63,150 11,314 39,235
- --------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 1,161,063 554,019 87,040 15,821 38,201
- --------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 171,916 139,592 - 12,486 18,354
Loan interest (3,288) (465) - - -
Transfers (to) from the general account
of Life of Virginia
Death benefits (1,797) (20,796) - - -
Surrenders (9,456) (35,592) (22,360) - -
Loans (118,554) (41,285) (2,010) - -
Cost of insurance and administrative
expense (note 3) (72,675) (34,864) (4,851) (1,616) (1,627)
Transfer gain (loss) and transfer fees 34,177 58,463 464 10,283 (20)
Transfers (to) from Guarantee Account (note 1) 150,028 105,233 100 - 2,963
Interfund transfers 1,827,255 2,524,438 1,404,008 373,471 293,576
- -------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from capital transactions 1,977,606 2,694,724 1,375,351 394,624 313,246
- -------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 3,138,669 3,248,743 1,462,391 410,445 351,447
Net assets at beginning of period 4,711,134 1,462,391 - - -
- ------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period 7,849,803 4,711,134 1,462,391 410,445 351,447
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust
-----------------------------------------------------------------
Balanced Bond
Portfolio Portfolio
----------------------------- ----------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income $ 98,194 269,151 20,403 30,012 57,904 40,500
Net realized gain (loss) 315,380 13,816 103,017 (3,318) (5,135) (637)
Unrealized appreciation (depreciation)
on investments (146,827) (182,324) 294,095 (1,629) (34,909) 39,427
- ----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 266,747 100,643 417,515 25,065 17,860 79,290
- ----------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums - - 4,082 - - 2,721
Loan interest (669) (657) (420) (2,301) 258 851
Transfers (to) from the general account
of Life of Virginia:
Death benefits - - - - - -
Surrenders (19,398) (27,861) (186,754) - (43,768) -
Loans (4,103) (34,817) (73,079) 53,065 (55,969) 3,998
Cost of insurance and administrative expense
(note 3) (19,558) (20,292) (22,223) (5,054) (7,634) (9,345)
Transfer gain (loss) and transfer fees 669 5,371 6,489 (38,185) (5,840) 1,033
Transfers (to) from the Guarantee Account (note 1) - - - - - -
Interfund transfers (2,096,250) (79,871) (102,681) (670,024) (163,478) 5,402
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from capital transactions (2,139,309) (158,127) (374,586) (662,499) (276,431) 4,660
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (1,872,562) (57,484) 42,929 (637,434) (258,571) 83,950
Net assets at beginning of year 1,872,562 1,930,046 1,887,117 637,434 896,005 812,055
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ - 1,872,562 1,930,046 - 637,434 896,005
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers Management Trust
-------------------------------------------------------------
Growth
Portfolio
----------------------------------------------------
Year ended December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income 54,741 58,809 4,866
Net realized gain (loss) 150,610 5,513 3,921
Unrealized appreciation (depreciation)
on investments (55,310) (6,856) 87,810
- -------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 150,041 57,466 96,597
- -------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums - - 2,721
Loan interest (894) (1,215) -
Transfers (to) from the general account
of Life of Virginia:
Death benefits - - -
Surrenders - - -
Loans (7,618) - (710)
Cost of insurance and administrative expense
(note 3) (7,810) (7,938) (5,013)
Transfer gain (loss) and transfer fees (1,185) (482) (693)
Transfers (to) from the Guarantee Account (note 1) - - -
Interfund transfers (881,910) (74,169) 380,756
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from capital transactions (899,417) (83,804) 377,061
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (749,376) (26,338) 473,658
Net assets at beginning of year 749,376 775,714 302,056
- -------------------------------------------------------------------------------------------------------------
Net assets at end of year - 749,376 775,714
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Federated Investors Insurance Series
---------------------------------------------------------------------------
American High Income
Leaders Bond
Fund II Fund II
---------------------------- --------------------------------------------
Period from Period from
September 5, February 7,
Year ended 1996 to Year ended Year ended 1995 to
December 31, December 31, December 31, December 31, December 31,
1997 1996 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase in net assets
From operations:
Net investment income (expense) $ (1,957) 36 34,274 30,654 1,160
Net realized gain 11,788 19 5,827 1,726 8
Unrealized appreciation on investments 53,148 2,855 55,167 27,920 1,465
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from operations 62,979 2,910 95,268 60,300 2,633
- ---------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 92,480 - 43,594 - -
Loan interest (3) - (1,353) - -
Transfers (to) from the general account
of Life of Virginia:
Death benefits - - - - -
Surrenders - - - - -
Loans 205 - (11,473) (40,000) -
Cost of insurance and administrative
expense (note 3) (3,145) (65) (8,961) (4,447) (151)
Transfer gain (loss) and transfer fees 1,084 (1,522) (359) 100 73
Transfer (to) from the Guarantee Account (note 1) 5,323 300 5,441 (6,742) -
Interfund transfers 341,074 16,140 1,432,858 571,170 95,663
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from
capital transactions 437,018 14,853 1,459,747 520,081 95,585
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 499,997 17,763 1,555,015 580,381 98,218
Net assets at beginning of period 17,763 - 678,599 98,218 -
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $517,760 17,763 2,233,614 678,599 98,218
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Federated Investors Insurance Series
-------------------------------------------------
Utility
Fund II
-------------------------------------------------
Period from
February 7,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C>
Increase in net assets
From operations:
Net investment income (expense) 8,360 4,472 2,069
Net realized gain 11,484 9,190 237
Unrealized appreciation on investments 50,092 5,651 12,097
- -------------------------------------------------------------------------------------------------------
Increase in net assets from operations 69,936 19,313 14,403
- -------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums - - -
Loan interest (55) (110) (40)
Transfers (to) from the general account
of Life of Virginia:
Death benefits - - -
Surrenders - - -
Loans (34,631) (2,022) (1,207)
Cost of insurance and administrative
expense (note 3) (3,486) (1,683) (686)
Transfer gain (loss) and transfer fees 2,314 (364) 65
Transfer (to) from the Guarantee Account (note 1) 10,521 3,000 -
Interfund transfers 107,029 130,977 80,066
- -------------------------------------------------------------------------------------------------------
Increase in net assets from
capital transactions 81,692 129,798 78,198
- -------------------------------------------------------------------------------------------------------
Increase in net assets 151,628 149,111 92,601
Net assets at beginning of period 241,712 92,601 -
- -------------------------------------------------------------------------------------------------------
Net assets at end of period 393,340 241,712 92,601
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Alger American
----------------------------------------------------------
Small
Cap
Portfolio
-----------------------------------------------
Period from
October 6,
Year ended Year ended 1995 to
December 31, December 31, December 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) $ 24,230 (7,102) (312)
Net realized gain (loss) 155,266 (13,977) 912
Unrealized appreciation (depreciation)
on investments (23,084) (18,580) 5,196
- ----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations 156,412 (39,659) 5,796
- ----------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 88,579 22,914 -
Loan interest 2 68 -
Transfers (to) from the general account
of Life of Virginia:
Death benefits - (11,290) -
Surrenders (1,243) (40,820) -
Loans (51,090) (33,607) -
Cost of insurance and administrative expense (note 3) (17,890) (10,161) (243)
Transfer gain (loss) and transfer fees (6,935) 5,384 (5,081)
Transfer (to) from the Guarantee Account (note 1) 72,126 929 -
Interfund transfers 148,081 863,942 313,943
- ----------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 231,630 797,359 308,619
- ----------------------------------------------------------------------------------------------------------
Increase in net assets 388,042 757,700 314,415
Net assets at beginning of period 1,072,115 314,415 -
- ----------------------------------------------------------------------------------------------------------
Net assets at end of period $1,460,157 1,072,115 314,415
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PBHG
Insurance
Alger American Series Fund
-----------------------------------------------------------------------
PBHG
Large Cap PBHG
Growth Growth Growth
Portfolio Portfolio Portfolio
---------------------------------------------------------- -----------
Period from Period from Period from,
November 2, July 22, May 22,
Year ended Year ended 1995 to 1997 to 1997 to
December 31, December 31, December 31, December 31, December 31,
1997 1996 1995 1997 1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) (5,714) 6,391 (81) (205) (540)
Net realized gain (loss) 121,886 (8,548) 1 (1) 1,296
Unrealized appreciation (depreciation)
on investments 195,886 27,545 1,973 656 (846)
- ---------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations 312,058 25,388 1,893 450 (90)
- ---------------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 23,449 11,882 - - 4,615
Loan interest (449) (11,178) - - -
Transfers (to) from the general account
of Life of Virginia:
Death benefits - - - - -
Surrenders (4,963) (716) - - -
Loans (60,475) (10,642) - - -
Cost of insurance and administrative expense (note 3) (20,884) (7,424) (84) (134) (460)
Transfer gain (loss) and transfer fees (16,706) 9,692 (530) 53 1,309
Transfer (to) from the Guarantee Account (note 1) 25,127 5,392 - 3,269 2,518
Interfund transfers 147,496 1,228,789 99,661 28,216 84,214
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from capital transactions 92,595 1,225,795 99,047 31,404 92,196
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets 404,653 1,251,183 100,940 31,854 92,106
Net assets at beginning of period 1,352,123 100,940 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period 1,756,776 1,352,123 100,940 31,854 92,106
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series
------------------------------------------------------------------------
Aggressive
Growth Growth
Portfolio Portfolio
-------------------------------- ---------------------------------------
Year ended December 31, Year ended December 31,
1997 1996 1995 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income
(expense) $ (28,915) (6,598) 10,683 62,948 31,388 16,068
Net realized gain 192,226 267,683 127,218 243,734 132,138 22,274
Unrealized appreciation
(depreciation) on investments 99,444 (112,622) 116,589 376,858 144,223 180,762
- ------------------------------------------------------------------------------------------------------------------------
Increase in net assets
from operations 262,755 148,463 254,490 683,540 307,749 219,104
- ------------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 60,192 3,031 - 100,831 24,787 -
Loan interest (77) (266) - (600) (1,074) -
Transfers (to) from the general
account of Life of Virginia:
Death benefits - - - - -
Surrenders (318) (48,757) (5,038) (11,331) (24,314) -
Loans (68,184) (2,874) (2,322) (101,750) (75,374) (22,537)
Cost of insurance and administrative
expense (note 3) (24,702) (20,310) (12,055) (43,347) (23,158) (9,297)
Transfer gain (loss) and
transfer fees 43,699 (3,623) 55,524 594 435 (777)
Transfers (to) from the
Guarantee Account
(note 1) 34,546 10,008 10,848 84,063 65,687 2,500
Interfund transfers 503,885 (61,164) 1,209,599 1,105,318 1,204,517 471,417
- ------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from capital transactions 549,041 (123,955) 1,256,556 1,133,778 1,171,506 441,306
- ------------------------------------------------------------------------------------------------------------------------
Increase in net assets 811,796 24,508 1,511,046 1,817,318 1,479,255 660,410
Net assets at beginning of
period 1,976,676 1,952,168 441,122 2,786,888 1,307,633 647,223
- ------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $2,788,472 1,976,676 1,952,168 4,604,206 2,786,888 1,307,633
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Janus Aspen Series
-------------------------------------------------------------------------
Worldwide
Growth Balanced
Portfolio Portfolio
-------------------------------- ----------------------------------------
Period from
October 27,
Year ended Year ended 1995 to
Year ended December 31, December 31, December 31, December 31,
1997 1996 1995 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Increase (decrease) in net assets
From operations:
Net investment income
(expense) 22,598 19,102 (5,828) 39,186 6,506 172
Net realized gain 457,649 156,316 17,153 16,368 3,534 6
Unrealized appreciation
(depreciation) on investments 666,571 498,790 203,456 172,861 38,227 1,767
- -------------------------------------------------------------------------------------------------------------------
Increase in net assets
from operations 1,146,818 674,208 214,781 228,415 48,267 1,945
- -------------------------------------------------------------------------------------------------------------------
From capital transactions:
Net premiums 334,686 (533) - 32,001 - -
Loan interest (933) 95,498 9 (48) 53,887 -
Transfers (to) from the general
account of Life of Virginia:
Death benefits (1,737) - - - - -
Surrenders (5,393) (27,186) (4,667) (2,416) - -
Loans (74,934) (15,174) (2,293) 26,990 (1,996) -
Cost of insurance and administrative
expense (note 3) (79,593) (34,706) (8,860) (13,436) (3,985) (54)
Transfer gain (loss) and
transfer fees 14,879 685 2,987 606 (851) (185)
Transfers (to) from the
Guarantee Account
(note 1) 109,443 43,645 - 41,217 45,923 -
Interfund transfers 1,831,317 2,870,698 729,507 2,601,676 457,706 29,856
- -------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from capital transactions 2,127,735 2,932,927 716,683 2,686,590 550,684 29,617
- -------------------------------------------------------------------------------------------------------------------
Increase in net assets 3,274,553 3,607,135 931,464 2,915,005 598,951 31,562
Net assets at beginning of
period 4,951,837 1,344,702 413,238 630,513 31,562 -
- -------------------------------------------------------------------------------------------------------------------
Net assets at end of period 8,226,390 4,951,837 1,344,702 3,545,518 630,513 31,562
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series (continued)
----------------------------------------------------------------------
Flexible International Capital
Income Growth Appreciation
Portfolio Portfolio Portfolio
-------------------------------------- ----------------------------------------------
Period from Period from Period from
November 1, June 5, May 22,
Year ended Year ended 1995 to Year ended 1996 to 1997 to
December 31, December 31, December 31, December 31, December 31, December 31,
1997 1996 1995 1997 1996 1997
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net investment income
(expense) $ 9,796 8,453 171 (5,942) 1,086 (75)
Net realized gain (loss) 3,107 111 - 145,208 2,328 (7,519)
Unrealized appreciation
(depreciation) on investments 4,489 585 26 45,943 17,399 (582)
- -----------------------------------------------------------------------------------------------------------------------
assets from operations 17,392 9,149 197 185,209 20,813 (8,176)
- -----------------------------------------------------------------------------------------------------------------------
Net premiums 21,946 (18) - 60,001 - -
Loan interest (28) - - (1,662) - -
Transfers (to) from the general
account of Life of Virginia:
Death benefits - - - - - -
Surrenders - - - - - -
Loans (30,720) (4,791) - (10,000) - -
Cost of insurance and administrative
expense (note 3) (1,977) (963) (12) (16,021) (958) (181)
Transfer gain (loss) and
transfer fees (429) (200) 17 12,507 58 (24)
Transfers (to) from the
Guarantee Account
(note 1) 3,243 - - 122,804 10,500 -
Interfund transfers 3,106 149,346 6,746 1,044,932 359,635 20,306
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from capital transactions (4,859) 143,374 6,751 1,212,561 369,235 20,101
- -----------------------------------------------------------------------------------------------------------------------
12,533 152,523 6,948 1,397,770 390,048 11,925
Net assets at beginning of
period 159,471 6,948 - 390,048 - -
- -----------------------------------------------------------------------------------------------------------------------
$172,004 159,471 6,948 1,787,818 390,048 11,925
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Notes to Financial Statements
December 31, 1997
================================================================================
(Continued)
1
(1) Description of Entity
Life of Virginia Separate Account III (the Account) is a separate
investment account established in 1986 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 variable life insurance policies issued by Life of
Virginia. 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
Corporation. The remaining 20% is owned by GE Financial Assurance
Holdings, Inc. General Electric Capital Assurance Corporation and GE
Financial Assurance Holdings, Inc. are indirectly, wholly-owned
subsidiaries of General Electric Capital ("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 (Aon).
In May 1997, seven new investment subdivisions were added to the
Account. The Growth & Income Portfolio and Growth Opportunities
Portfolio each invest solely in a designated portfolio of the Variable
Insurance Products Fund III. The Global Income Fund and the Value
Equity Fund each invest solely in a designated portfolio of the GE
Investments Funds, Inc. The Capital Appreciation Portfolio invests
solely in a designated portfolio of the Janus Aspen Series. The Growth
II Portfolio and the Large Cap Growth Portfolio each invest solely in a
designated portfolio of the PBHG Insurance Series Fund. All designated
portfolios described above are series type mutual funds.
During 1997, the Life of Virginia Series Fund, Inc. changed its name to
the GE Investments Funds, Inc. As a result the Life of Virginia Series
Funds, Inc.--Common Stock Index, Government Securities, Money Market,
Total Return, International Equity, and Real Estate Securities
Portfolios were renamed the GE Investments Funds, Inc.--S&P 500 Index,
Government Securities, Money Market, Total Return, International
Equity, and Real Estate Securities Funds, respectively. On December 12,
1997, the Account added the GE Investments Funds, Inc.--Income Fund as
a new investment subdivision and made the following substitutions of
shares held by the investment subdivisions:
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Notes to Financial Statements
================================================================================
(Continued)
1
(1) Continued
<TABLE>
<CAPTION>
Before the Substitution After the Substitution
<S> <C>
Shares of Money Market Shares of Money Market
Portfolio -Variable Fund -
Insurance Products Fund GE Investments Funds, Inc.
Shares of Money Fund - Shares of Money Market
Oppenheimer Variable Fund -
Account Funds GE Investments Funds, Inc.
Shares of Government Securities Fund - Shares of Income Fund -
GE Investments Funds, Inc. GE Investments Funds, Inc.
Shares of Bond Portfolio- Shares of Income Fund -
Neuberger & Berman Advisers Management Trust GE Investments Funds, Inc.
Shares of High Income Portfolio - Shares of High Income Fund -
Variable Insurance Products Fund Oppenheimer Variable
Account Funds
Shares of Growth Portfolio - Shares of Growth Portfolio -
Neuberger & Berman Advisers Variable Insurance
Management Trust Products Fund
Shares of Balanced Portfolio - Shares of Balanced
Neuberger & Berman Advisers Portfolio -
Management Trust Janus Aspen Series
</TABLE>
The foregoing substitutions were 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.
The effect of such a share substitution was to replace certain
portfolios of Variable Insurance Products Fund, Oppenheimer Variable
Account Funds, GE Investments Funds, Inc., and Neuberger & Berman
Advisers Management Trust with those of GE Investments Funds, Inc.,
Oppenheimer Variable Account Funds, Variable Insurance Products Fund,
and Janus Aspen Series as investment options.
<PAGE>
(1) Continued
In May 1996, two new investment subdivisions were added to the Account.
One of these subdivisions, the International Growth Portfolio, invests
solely in a designated portfolio of the Janus Aspen Series, a series
type mutual fund. The other new subdivision, the American Leaders Fund
II, invests solely in a designated portfolio of the Federated Investors
Insurance Series, a series type mutual fund.
During 1995, nine new investment subdivisions were added to the
Account. The Utility Fund II and High Income Bond Fund II each invest
solely in a designated portfolio of the Federated Investors Insurance
Series, a series type mutual fund. The Contrafund Portfolio invest
solely in a designated portfolio of the Variable Insurance Products
Fund II, a series type mutual fund. The International Equity Portfolio
and the Real Estate Securities Portfolio each invest solely in a
designated portfolio of GE Investments Funds, Inc., a series type
mutual fund. The Balanced Portfolio and Flexible Income Portfolio each
invest solely in a designated portfolio of the Janus Aspen Series, a
series type mutual fund. The Growth and Small Cap Portfolio each invest
solely in a designated portfolio of the Alger American Fund, a series
type mutual fund.
In November 1995, six subdivisions were closed to new money. Three of
these subdivisions, the Balanced Portfolio, Bond Portfolio, and Growth
Portfolio each invest solely in a designated portfolio of the Advisers
Management Trust, a series type mutual fund. The fourth and fifth
closed subdivisions, the Money Market Portfolio and High Income
Portfolio, each invest solely in a designated portfolio of the Variable
Insurance Products Fund, a series type mutual fund. The sixth closed
subdivision, the Money Fund, invests solely in a designated portfolio
of the Oppenheimer Variable Account Funds, a series type mutual fund.
For policies issued after May 1, 1995, some policyowners may transfer
cash values between the Account's portfolios and the Guarantee Account
that is part of the general account of Life of Virginia. Amounts
transferred to the Guarantee Account earn interest at the interest rate
effective at the time of such transfer and remain in effect for one
year, after which a new rate may be declared.
<PAGE>
(2) Summary of Significant Accounting Policies
Investments
Investments are stated at fair value which is based on the underlying
net asset value per share of the respective portfolios or 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.
<PAGE>
(2) Continued
The aggregate cost of the investments acquired and the aggregate
proceeds of investments sold, for the year or period ended December 31,
1997, were:
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- --------------------------------------------------------------------------------
GE Investments Funds, Inc.:
S&P 500 Index $ 8,032,050 6,194,365
Government Securities 1,251,481 2,001,175
Money Market 61,002,543 58,778,814
Total Return 922,950 290,364
International Equity 7,620,532 8,233,219
Real Estate Securities 4,069,320 3,251,803
Global Income 14,406 28
Value Equity 261,813 12,473
Income 2,508,341 1,225,378
Oppenheimer Variable Account Funds:
Money 7,779 165,577
Bond 2,411,856 570,092
Capital Appreciation 3,174,508 2,084,978
Growth 2,656,616 1,202,158
High Income 12,173,121 9,559,231
Multiple Strategies 856,625 231,073
Variable Insurance Products Fund:
Money Market 117,746 1,224,804
High Income 106,897 1,523,682
Equity-Income 8,750,306 7,375,355
Growth 12,824,108 12,755,174
Overseas 13,987,950 15,115,740
Variable Insurance Products Fund II:
Asset Manager 1,899,086 1,291,429
Contrafund 4,530,147 2,527,307
Variable Insurance Products Fund III:
Growth & Income 477,203 83,768
Growth Opportunities 320,493 8,887
- --------------------------------------------------------------------------------
<PAGE>
(2) Continued
Cost of Proceeds
Shares from
Fund/Portfolio Acquired Shares Sold
- --------------------------------------------------------------------------------
Advisers Management Trust:
Balanced $ 130,321 2,161,304
Bond 540,253 1,164,453
Growth 82,552 931,033
Federated Investors Insurance Series:
American Leaders II 640,382 206,557
High Income Bond II 1,613,788 117,984
Utility II 255,252 167,395
Alger American:
Small Cap 5,205,381 4,935,939
Growth 3,218,130 3,130,436
PBHG Insurance Series Fund:
PBHG Large Cap Growth 31,499 285
PBHG Growth II 131,457 41,071
Janus Aspen Series:
Aggressive Growth 6,708,660 6,232,353
Growth 2,700,020 1,514,310
Worldwide Growth 4,750,673 2,597,729
Balanced 2,844,427 154,435
Flexible Income 185,899 180,506
International Growth 3,209,551 2,017,055
Capital Appreciation 110,111 90,052
- --------------------------------------------------------------------------------
Capital Transactions
The increase (decrease) of outstanding units from capital transactions
for the years or periods ended December 31, 1997, 1996 and 1995 are as
follows:
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Notes to Financial Statements
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
(2) Continued
GE Investments Funds, Inc.
-----------------------------------------------------------------
S&P 500 Government Money Total International
Index Securities Market Return Equity
Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Units outstanding at December 31, 1994 14,529 46,022 279,834 46,934 -
Net premiums - - 855,859 - -
Loan interest (1) (1) - (5) -
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - - - -
Surrenders - (1,652) (4,894) (2,846) -
Loans - (64) - 274 -
Cost of insurance and administrative expense (238) (268) (2,909) (523) (61)
Transfers (to) from the Guarantee Account 425 - 2,104 108 1,432
Interfund transfers 24,972 1,009 (717,801) 9,771 18,757
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 25,158 (976) 132,359 6,779 20,127
- ------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 39,687 45,046 412,193 53,713 20,127
Net premiums - - 1,523,788 - -
Loan interest (2) (1) 60 (7) -
Transfers (to) from the general account
of Life of Virginia:
Death benefits (2,944) - (2,190) - -
Surrenders (365) (1,455) (20,965) (5,166) -
Loans (982) (84) (80,419) - 67
Cost of insurance and administrative expense (502) (457) (8,609) (646) (384)
Transfers (to) from the Guarantee Account 1,692 (177) (34,420) 1,981 -
Interfund transfers 22,032 682 (1,106,323) 12,921 49,244
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 18,929 (1,492) 270,922 9,083 48,927
- ------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 58,616 43,554 683,115 62,796 69,054
Net premiums 918 705 888,521 1,582 69
Loan interest (15) (24) 1,522 3 (1)
Transfers (to) from the general account of
Life of Virginia:
Death benefits (56) - - (5,200) -
Surrenders (1,568) (14,115) (4,893) (404) -
Loans (310) (1,284) (15,590) (1,334) 123
Cost of insurance and administrative expense (770) (447) (7,485) (686) (623)
Transfers (to) from the Guarantee Account 1,030 15 (1,925) 1,924 -
Interfund transfers 35,756 (28,404) (795,469) 5,670 (48,010)
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 34,985 (43,554) 64,681 1,555 (48,442)
- ------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 93,601 - 747,796 64,351 20,612
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
(2) Continued
GE Investments Funds, Inc.
---------------------------------------------------
Real Estate Global Value
Securities Income Equity Income
Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Units outstanding at December 31, 1994 - - - -
Net premiums - - - -
Loan interest - - - -
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - - -
Surrenders - - - -
Loans - - - -
Cost of insurance and administrative expense - - - -
Transfers (to) from the Guarantee Account - - - -
Interfund transfers 34 - - -
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 34 - - -
- ----------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 34 - - -
Net premiums 753 - - -
Loan interest - - - -
Transfers (to) from the general account
of Life of Virginia:
Death benefits - - - -
Surrenders - - - -
Loans - - - -
Cost of insurance and administrative expense (95) - - -
Transfers (to) from the Guarantee Account - - - -
Interfund transfers 13,935 - - -
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 14,593 - - -
- ----------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 14,627 - - -
Net premiums 3,906 - 356 -
Loan interest - - - -
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - - -
Surrenders - - - -
Loans (1,039) - - (240)
Cost of insurance and administrative expense (570) (2) (48) (74)
Transfers (to) from the Guarantee Account 203 - - -
Interfund transfers 41,075 1,338 18,848 122,212
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 43,575 1,336 19,156 121,898
- ----------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 58,202 1,336 19,156 121,898
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Notes to Financial Statements
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
(2) Continued
Oppenheimer Variable Account Funds
---------------------------------------------------------------------
Capital High Multiple
Money Bond Appreciation Growth Income Strategies
Fund Fund Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Units outstanding at December 31, 1994 18,745 147,920 76,520 54,677 51,645 108,079
Net premiums - - - - - -
Loan interest - 4 25 (3) (5) (24)
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - - - - (222)
Surrenders - 2,256 4,214 (24) (8,422) (10,095)
Loans - 1,691 - (19) - (3,540)
Cost of insurance and administrative expense (307) 1,407 733 (58) (5,208) (1,158)
Transfers (to) from the Guarantee Account - (908) - 38 1,022 -
Interfund transfers 4,754 (70,852) 49,237 2,975 41,879 12,494
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 4,447 (66,402) 54,209 2,909 29,266 (2,545)
- ----------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 23,192 81,518 130,729 57,586 80,911 105,534
Net premiums - (1) - 789 - 1,018
Loan interest (17) - 449 (21) (6) (9)
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - - - - (2,597)
Surrenders - 1 35,618 (351) (561) (9,180)
Loans (477) 5 86,753 (573) (3,511) (395)
Cost of insurance and administrative expense (152) 4 34,370 (747) (1,688) (1,016)
Transfers (to) from the Guarantee Account - - (17,958) 587 2,536 173
Interfund transfers (12,159) (205) (92,553) 21,301 57,787 10,394
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (12,805) (196) 46,679 20,985 54,557 (1,612)
- ----------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 10,387 81,322 177,408 78,571 135,468 103,922
Net premiums - 567 5,184 4,979 3,036 515
Loan interest - 10 (15) (57) (20) (30)
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - - - - (83)
Surrenders - - (182) - (291) -
Loans - (938) (2,466) (1,925) (949) 364
Cost of insurance and administrative expense (104) (792) (2,250) (1,203) (1,459) (1,248)
Transfers (to) from the Guarantee Account - 465 2,796 2,441 - 999
Interfund transfers (10,283) 80,017 25,443 45,075 71,340 18,636
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units (10,387) 79,329 28,510 49,310 71,657 19,153
- ----------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 - 160,651 205,918 127,881 207,125 123,075
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund
---------------------------------------------------------
Money High Equity-
Market Income Income Growth Overseas
Portfolio Portfolio Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
Units outstanding at December 31, 1994 307,911 137,168 279,777 205,138 223,734
Net premiums - 221 523 - 202
Loan interest (155) (1) (72) (31) (18)
Transfers (to) from the general account of
Life of Virginia:
Death benefits (1,297) - (209) (442) -
Surrenders (30,624) (1,567) (5,420) (5,195) (563)
Loans (2,592) (493) (5,120) (5,031) 184
Cost of insurance and administrative expense (3,039) (1,166) (3,209) (2,299) (4,367)
Transfers (to) from the Guarantee Account 4,138 (1,766) 221 (1,457) (2,639)
Interfund transfers (121,109) (30,952) 106,909 77,199 244,178
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (154,678) (35,724) 93,623 62,744 236,977
- ---------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 153,233 101,444 373,400 267,882 460,711
Net premiums - - 3,304 1,064 682
Loan interest 49 (17) (297) (151) (21)
Transfers (to) from the general account of
Life of Virginia:
Death benefits - (2,625) (3,957) (2,821) (642)
Surrenders (8,837) (5,963) (15,932) (1,247) (6,376)
Loans (1,180) (82) (9,205) (1,689) (3,139)
Cost of insurance and administrative expense (990) (707) (4,893) (3,208) (4,289)
Transfers (to) from the Guarantee Account 377 - 5,455 5,203 3,066
Interfund transfers (69,258) (38,231) 130,475 55,069 (134,096)
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (79,839) (47,625) 104,950 52,220 (144,815)
- ---------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 73,394 53,819 478,350 320,102 315,896
Net premiums - - 8,841 6,684 600
Loan interest (523) - (237) (259) (114)
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - (749) (139) -
Surrenders (765) (6,032) (2,952) (2,453) (1,224)
Loans (1,169) (238) (4,978) (12,995) (6,601)
Cost of insurance and administrative expense (526) (432) (6,220) (8,445) (2,771)
Transfers (to) from the Guarantee Account - - 4,627 3,782 2,879
Interfund transfers (70,411) (47,117) 12,774 3,763 (65,198)
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units (73,394) (53,819) 11,106 (10,062) (72,429)
- ---------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 - - 489,456 310,040 243,467
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Notes to Financial Statements
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Variable Insurance Products
Fund II Fund III
--------------------------- ------------------------
Asset Growth & Growth
Manager Contrafund Income Opportunities
Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Units outstanding at December 31, 1994 467,908 - - -
Net premiums - - - -
Loan interest (24) - - -
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - - -
Surrenders (7,239) (1,711) - -
Loans (8,758) (154)
Cost of insurance and administrative expense (2,819) (371) - -
Transfers (to) from the Guarantee Account - 8 - -
Interfund transfers 13,012 107,436 - -
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (5,828) 105,208 - -
- ----------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995
462,080 105,208 - -
Net premiums
Loan interest - 9,420
Transfers (to) from the general account of (180) (31) - -
Life of Virginia:
Death benefits - (1,403) - -
Surrenders (26,089) (2,402) - -
Loans (19,316) (2,786) - -
Cost of insurance and administrative expense (4,541) (2,353) - -
Transfers (to) from the Guarantee Account 52 7,102 - -
Interfund transfers (6,421) 170,366 - -
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (56,495) 177,913 - -
- ----------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 405,585 283,121 - -
Net premiums 3,583 9,027 1,078 1,677
Loan interest (180) (173) - -
Transfers (to) from the general account of
Life of Virginia:
Death benefits (5,411) (94) - -
Surrenders (325) (497) - -
Loans (3,524) (6,225) - -
Cost of insurance and administrative expense (3,562) (3,816) (139) (149)
Transfers (to) from the Guarantee Account 1,223 7,878 - 271
Interfund transfers (2,171) 95,951 32,242 26,820
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units (10,367) 102,051 33,181 28,619
- ----------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 395,218 385,172 33,181 28,619
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Federated Investors Insurance
Advisers Management Trust Series
------------------------------------ ----------------------------------
American High
Balanced Bond Growth Leaders Income Bond Utility
Portfolio Portfolio Portfolio Fund II Fund II Fund II
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Units outstanding at December 31, 1994 148,475 75,260 27,788 - - -
Net premiums (18,152) 4 (291) - - -
Loan interest (5,677) - 30 - - (4)
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - - - - -
Surrenders - - 13,267 - - -
Loans (26,671) (1) 5,192 - - (117)
Cost of insurance and administrative expense 62,341 (8) 1,579 - (13) (67)
Transfers (to) from the Guarantee Account - - - - - -
Interfund transfers (36,037) 613 7,295 - 8,287 7,772
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (24,196) 608 27,072 - 8,274 7,584
- -------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995
124,279 75,868 54,860 - 8,274 7,584
Net premiums
Loan interest - - - - - -
Transfers (to) from the general account of 10 (344) (23) - - (9)
Life of Virginia:
Death benefits - - - - - -
Surrenders (1,611) - (964) - - -
Loans (2,060) - (1,204) - (3,262) (162)
Cost of insurance and administrative expense (281) (2,251) (702) (6) (363) (134)
Transfers (to) from the Guarantee Account - - - 29 (550) 240
Interfund transfers (6,017) (21,032) (2,763) 1,583 46,581 10,466
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions (9,959) (23,627) (5,656) 1,606 42,406 10,401
- -------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 114,320 52,241 49,204 1,606 50,680 17,985
Net premiums - - - 7,266 2,919 -
Loan interest (36) (192) (49) - (91) (4)
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - - - - -
Surrenders (1,036) - - - - -
Loans (219) 4,440 (417) 16 (768) (2,368)
Cost of insurance and administrative expense (1,045) (423) (428) (247) (600) (238)
Transfers (to) from the Guarantee Account - - - 418 364 719
Interfund transfers (111,984) (56,066) (48,310) 26,797 95,909 7,319
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units (114,320) (52,241) (49,204) 34,250 97,733 5,428
- -------------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997 - - - 35,856 148,413 23,413
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
Notes to Financial Statements
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PBHG Insurance
Alger American Series Fund Janus Aspen Series
----------------------- ---------------------- ----------------------
Large Cap Aggressive
Small Cap Growth Growth Growth II Growth Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C>
Units outstanding at December 31, 1994 - - - - 38,797 66,450
Net premiums - - - - - -
Loan interest - - - - - -
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - - - - -
Surrenders - - - - - (160)
Loans - - - - - (74)
Cost of insurance and administrative expense (26) (9) - - (177) (382)
Transfers (to) from the Guarantee Account - - - - - 344
Interfund transfers 33,546 10,491 - - 97,800 38,349
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 33,520 10,482 - - 97,623 38,077
- ----------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 33,520 10,482 - - 136,420 104,527
Net premiums 2,249 1,125 - - (657) (2,168)
Loan interest 7 - - - - 190
Transfers (to) from the general account of
Life of Virginia:
Death benefits (1,108) (1,058) - - - -
Surrenders (4,005) (68) - - - 34,885
Loans (3,297) (1,007) - - 24 2,056
Cost of insurance and administrative expense (997) (702) - - 49 14,531
Transfers (to) from the Guarantee Account 91 510 - - (559) (7,160)
Interfund transfers 84,755 116,263 - - (5,574) 43,761
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 77,695 115,063 - - (6,717) 86,095
- ----------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 111,215 125,545 129,703 190,622
Net premiums 9,853 1,256 - 439 4,146 6,158
Loan interest - (24) - - (5) (37)
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - - - - -
Surrenders (138) (266) - - (22) (692)
Loans (5,683) (3,238) - - (4,697) (6,214)
Cost of insurance and administrative expense (1,990) (1,118) (11) (44) (1,702) (2,647)
Transfers (to) from the Guarantee Account 8,023 1,345 283 239 2,380 5,134
Interfund transfers 16,471 7,897 2,446 8,006 34,709 67,507
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units 26,536 5,852 2,718 8,640 34,809 69,209
- ----------------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997
137,751 131,397 2,718 8,640 164,512 259,831
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Series
--------------------------------------------------------------
Flexible International Capital
Worldwide Balanced Income Growth Appreciation
Portfolio Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------ ---------- ---------- ---------- ---------- ------------
<S> <C>
Units outstanding at December 31, 1994 42,734 - - - -
Net premiums - - - - -
Loan interest - - - - -
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - - - -
Surrenders - (19) - - -
Loans (3,459) (10) - - -
Cost of insurance and administrative expense (1,427) (37) (1) - -
Transfers (to) from the Guarantee Account 384 - - - -
Interfund transfers 72,352 3,038 663 - -
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 67,850 2,972 662 - -
- --------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1995 110,584 2,972 662 - -
Net premiums 4,425 1,590 - - -
Loan interest (192) (9) (2) - -
Transfers (to) from the general account of
Life of Virginia:
Death benefits - - - - -
Surrenders (4,341) (452) - - -
Loans (13,458) (253) (448) - -
Cost of insurance and administrative expense (4,135) (578) (90) (87) -
Transfers (to) from the Guarantee Account 11,729 726 - 951 -
Interfund transfers 215,068 47,770 13,978 32,559 -
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units
from capital transactions 209,096 48,794 13,438 33,423 -
- --------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1996 319,680 51,766 14,100 33,423 -
Net premiums 19,120 2,260 1,522 4,872 -
Loan interest (53) (3) (2) (135) -
Transfers (to) from the general account of
Life of Virginia:
Death benefits (99) - - - -
Surrenders (308) (171) - - -
Loans (4,281) 1,907 (2,130) (812) -
Cost of insurance and administrative expense (4,547) (949) (137) (1,301) (9)
Transfers (to) from the Guarantee Account 6,252 2,912 225 9,973 -
Interfund transfers 104,621 183,798 215 84,860 959
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in units 120,705 189,754 (307) 97,457 950
- --------------------------------------------------------------------------------------------------------------------
Units outstanding at December 31, 1997
440,385 241,520 13,793 130,880 950
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Continued
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. The Account will not be taxed as a
regulated investment company under subchapter M of the Code. Under
existing federal income tax law, no taxes are payable on the
investment income or on the capital gains of the Account.
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
The premiums transferred from Life of Virginia to the Account represent
gross premiums recorded by Life of Virginia on its variable life
insurance policies. During the first ten years following a premium
payment, a charge is deducted monthly at an effective annual rate of
.50% of the premium payment from the policy cash value to cover
distribution expenses and premiums taxes. If a policy is surrendered or
lapses during the first nine years, a charge is made by Life of
Virginia to cover the expenses of issuing the policy. Subject to
certain limitations, the charge generally equals 6% of the premium
withdrawn in the first four years, and this charge decreases 1% per
year for every year thereafter. A charge equal to the lesser of $25 or
2% of the amount paid on a partial surrender will be made to compensate
Life of Virginia for the costs incurred in connection with the partial
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. In addition,
Life of Virginia charges the Account for the mortality and expense risk
that Life of Virginia assumes. This charge is deducted daily and equals
the effective annual rate of .90% of the net assets of the Account.
Life of Virginia also charges the Account for
<PAGE>
(3) Continued
certain administrative charges which are deducted daily and equal the
effective annual rate of .40% 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 also 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 Government Securities Fund, .50%
for the Money Market and Total Return Funds, 1.00% for the
International Equity Fund and .85% for the Real Estate Securities Fund.
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.
================================================================================
