<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1998
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
LIFE OF VIRGINIA SEPARATE ACCOUNT III
TABLE OF CONTENTS
DECEMBER 31, 1998
PAGE
-----
Independent Auditors' Report ................... A-3
Financial Statements:
Statements of Assets and Liabilities .......... A-4
Statements of Operations ...................... A-11
Statements of Changes in Net Assets ........... A-21
Notes to Financial Statements .................. A-43
<PAGE>
INDEPENDENT AUDITORS' REPORT
Policyholders
Life of Virginia Separate Account III
and
The Board of Directors
The Life Insurance Company of Virginia:
We have audited the accompanying statements of assets and
liabilities of Life of Virginia Separate Account 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, Income and U.S. Equity 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 PBHG Growth
II Portfolios; the Janus Aspen Series -- Aggressive Growth, Growth,
Worldwide Growth, Balanced, Flexible Income, International Growth and
Capital Appreciation Portfolios; and the Goldman Sachs Variable
Insurance Trust Fund -- Growth and Income, and Mid Cap Equity Funds) as
of December 31, 1998 and the related statements of operations and
changes in net assets for the aforementioned funds and the GE
Investments Funds, Inc. Government Securities Fund; the Oppenheimer
Variable Account Money Fund; the Variable Insurance Products Fund --
Money Market and High Income Portfolios; and the Neuberger & Berman
Advisers Management Trust -- Balanced, Bond and Growth Portfolios, of
Life of Virginia Separate Account III for each of the years or lesser
periods in the three year period then ended. These financial statements
are the responsibility of the Account's management. Our responsibility
is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1998, by
correspondence with the underlying mutual funds or their transfer agent.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of each of the
respective portfolios constituting Life of Virginia Separate Account III
as of December 31, 1998 and the results of their operations and changes
in their net assets for each of the years or lesser periods in the three
year period then ended in conformity with generally accepted accounting
principles.
KPMG LLP
Richmond, Virginia
February 12, 1999
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
-------------------------------------------------------------
S&P 500 MONEY TOTAL INTERNATIONAL
INDEX MARKET RETURN EQUITY
FUND FUND FUND FUND
ASSETS --------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment in GE Investments Funds, Inc., at fair value
(note 2):
S&P 500 Index Fund (262,906 shares;
cost -- $5,771,156).......................................... $ 6,233,508 -- -- --
Money Market Fund (11,242,128 shares;
cost -- $11,242,128)......................................... -- 11,242,128 -- --
Total Return Fund (122,092 shares;
cost -- $1,726,565).......................................... -- -- 1,789,863 --
International Equity Fund (26,863 shares;
cost -- $345,138)............................................ -- -- -- 319,402
Real Estate Securities Fund (61,643 shares;
cost -- $935,562)............................................ -- -- -- --
Global Income Fund (2,709 shares;
cost -- $27,899)............................................. -- -- -- --
Value Equity Fund (39,257 shares;
cost -- $528,175)............................................ -- -- -- --
Income Fund (119,139 shares; cost of $1,455,472)............... -- -- -- --
U.S. Equity Fund (366 shares; cost $11,012).................... -- -- -- --
Receivable for units sold ...................................... -- 198,856 231 --
----------- ---------- --------- -------
TOTAL ASSETS ................................................ 6,233,508 11,440,984 1,790,094 319,402
----------- ---------- --------- -------
LIABILITIES
Accrued expenses payable to affiliate (note 3) ................. 13,115 602,160 2,542 19,163
Payable for units withdrawn .................................... 140,870 -- -- --
----------- ---------- --------- -------
TOTAL LIABILITIES ........................................... 153,985 602,160 2,542 19,163
----------- ---------- --------- -------
Net assets attributable to variable life policyholders ......... $ 6,079,523 10,838,824 1,787,552 300,239
=========== ========== ========= =======
Outstanding units .............................................. 140,437 692,577 59,645 20,749
=========== ========== ========= =======
Net asset value per unit ....................................... $ 43.29 15.65 29.97 14.47
=========== =========== ========== ========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
(CONTINUED)
-------------------------
REAL ESTATE GLOBAL
SECURITIES INCOME
FUND FUND
ASSETS ------------- -----------
<S> <C> <C>
Investment in GE Investments Funds, Inc., at fair value
(note 2):
S&P 500 Index Fund (262,906 shares;
cost -- $5,771,156).......................................... -- --
Money Market Fund (11,242,128 shares;
cost -- $11,242,128)......................................... -- --
Total Return Fund (122,092 shares;
cost -- $1,726,565).......................................... -- --
International Equity Fund (26,863 shares;
cost -- $345,138)............................................ -- --
Real Estate Securities Fund (61,643 shares;
cost -- $935,562)............................................ $ 712,358 --
Global Income Fund (2,709 shares;
cost -- $27,899)............................................. -- 28,521
Value Equity Fund (39,257 shares;
cost -- $528,175)............................................ -- --
Income Fund (119,139 shares; cost of $1,455,472)............... -- --
U.S. Equity Fund (366 shares; cost $11,012).................... -- --
Receivable for units sold ...................................... -- --
--------- ------
TOTAL ASSETS ................................................ 712,358 28,521
--------- ------
LIABILITIES
Accrued expenses payable to affiliate (note 3) ................. 5,517 36
Payable for units withdrawn .................................... -- --
--------- ------
TOTAL LIABILITIES ........................................... 5,517 36
--------- ------
Net assets attributable to variable life policyholders ......... $ 706,841 28,485
========= ======
Outstanding units .............................................. 47,312 2,483
========= ======
Net asset value per unit ....................................... $ 14.94 11.47
========= =======
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
---------------------------------------
VALUE U.S.
EQUITY INCOME EQUITY
FUND FUND FUND
ASSETS ------------ -------------- -----------
<S> <C> <C> <C>
Investment in GE Investments Funds, Inc., at fair value
(note 2):
S&P 500 Index Fund (262,906 shares;
cost -- $5,771,156).......................................... -- -- --
Money Market Fund (11,242,128 shares;
cost -- $11,242,128)......................................... -- -- --
Total Return Fund (122,092 shares;
cost -- $1,726,565).......................................... -- -- --
International Equity Fund (26,863 shares;
cost -- $345,138)............................................ -- -- --
Real Estate Securities Fund (61,643 shares;
cost -- $935,562)............................................ -- -- --
Global Income Fund (2,709 shares;
cost -- $27,899)............................................. -- -- --
Value Equity Fund (39,257 shares;
cost -- $528,175)............................................ 532,724 -- --
Income Fund (119,139 shares; cost of $1,455,472)............... -- 1,470,171 --
U.S. Equity Fund (366 shares; cost $11,012).................... -- -- 11,255
Receivable for units sold ...................................... 1,652 -- --
------- --------- ------
TOTAL ASSETS ................................................ 534,376 1,470,171 11,255
------- --------- ------
LIABILITIES
Accrued expenses payable to affiliate (note 3) ................. 1,668 2,862 1,093
Payable for units withdrawn .................................... -- 260 --
------- --------- ------
TOTAL LIABILITIES ........................................... 1,668 3,122 1,093
------- --------- ------
Net assets attributable to variable life policyholders ......... 532,708 1,467,049 10,162
======= ========= ======
Outstanding units .............................................. 38,490 137,493 952
======= ========= ======
Net asset value per unit ....................................... 13.84 10.67 10.67
======== ========== =======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT
FUNDS
------------------------------
CAPITAL
BOND APPRECIATION
FUND FUND
ASSETS --------------- --------------
<S> <C> <C>
Investment in Oppenheimer Variable Account Funds,
at fair value (note 2):
Bond Fund (201,259 shares; cost -- $2,458,255)................. $ 2,479,515 --
Capital Appreciation Fund (145,202 shares;
cost -- $5,897,978).......................................... -- 6,509,425
Growth Fund (130,689 shares; cost -- $4,333,754)............... -- --
High Income Fund (748,152 shares;
cost -- $8,219,409)..........................................
Multiple Strategies Fund (190,787 shares;
cost -- $3,121,234).......................................... -- --
Receivable from affiliate ..................................... -- 22,545
Receivable for units sold ..................................... 7,506 --
----------- ---------
TOTAL ASSETS ................................................ 2,487,021 6,531,970
----------- ---------
LIABILITIES
Accrued expenses payable to affiliate (note 3) ................. 13,416 8,732
Payable for units withdrawn .................................... -- 24,554
----------- ---------
TOTAL LIABILITIES ........................................... 13,416 33,286
----------- ---------
Net assets attributable to variable life policyholders ......... $ 2,473,605 6,498,684
=========== =========
Outstanding units .............................................. 106,851 176,259
=========== =========
Net asset value per unit ....................................... $ 23.15 36.87
=========== ==========
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
--------------------------------------------
HIGH MULTIPLE
GROWTH INCOME STRATEGIES
FUND FUND FUND
ASSETS -------------- -------------- --------------
<S> <C> <C> <C>
Investment in Oppenheimer Variable Account Funds,
at fair value (note 2):
Bond Fund (201,259 shares; cost -- $2,458,255)................. -- -- --
Capital Appreciation Fund (145,202 shares;
cost -- $5,897,978).......................................... -- -- --
Growth Fund (130,689 shares; cost -- $4,333,754)............... 4,792,364 -- --
High Income Fund (748,152 shares;
cost -- $8,219,409).......................................... 8,244,634
Multiple Strategies Fund (190,787 shares;
cost -- $3,121,234).......................................... -- -- 3,252,924
Receivable from affiliate ..................................... 137,978 4,235 --
Receivable for units sold ..................................... 2,064,446 -- 471
--------- --------- ---------
TOTAL ASSETS ................................................ 6,994,788 8,248,869 3,253,395
--------- --------- ---------
LIABILITIES
Accrued expenses payable to affiliate (note 3) ................. 5,971 9,985 5,073
Payable for units withdrawn .................................... -- 2,077,629 --
--------- --------- ---------
TOTAL LIABILITIES ........................................... 5,971 2,087,614 5,073
--------- --------- ---------
Net assets attributable to variable life policyholders ......... 6,988,817 6,161,255 3,248,322
========= ========= =========
Outstanding units .............................................. 187,368 193,022 118,293
========= ========= =========
Net asset value per unit ....................................... 37.30 31.92 27.46
========== ========== ==========
</TABLE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
-----------------------------------------------
EQUITY-
INCOME GROWTH OVERSEAS
PORTFOLIO PORTFOLIO PORTFOLIO
ASSETS ---------------- --------------- --------------
<S> <C> <C> <C>
Investment in Variable Insurance Products Fund, at fair value (note 2):
Equity -- Income Portfolio (664,659 shares; cost -- $14,237,287).......... $ 16,895,621 -- --
Growth Portfolio (300,426 shares; cost -- $11,816,014).................... -- 13,480,127 --
Overseas Portfolio (251,510 shares; cost -- $4,783,827)................... -- -- 5,042,784
Receivable for units sold ................................................. -- 130 --
------------ ---------- ---------
TOTAL ASSETS ........................................................... 16,895,621 13,480,257 5,042,784
------------ ---------- ---------
LIABILITIES
Accrued expenses payable to affiliate (note 3) ............................ 24,419 22,742 34,286
Payable for units withdrawn ............................................... 45,269 -- 1,974
------------ ---------- ---------
TOTAL LIABILITIES ...................................................... 69,688 22,742 36,260
------------ ---------- ---------
Net assets attributable to variable life policyholders .................... $ 16,825,933 13,457,515 5,006,524
============ ========== =========
Outstanding units ......................................................... 466,221 291,541 240,006
============ ========== =========
Net asset value per unit .................................................. $ 36.09 46.16 20.86
============ =========== ==========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUND II
--------------------------------
ASSET
MANAGER CONTRAFUND
PORTFOLIO PORTFOLIO
ASSETS ---------------- ---------------
<S> <C> <C>
Investment in Variable Insurance Products Fund II, at fair value
(note 2):
Asset Manager Portfolio (571,650 shares;
cost -- $8,684,598)............................................. $ 10,381,159 --
Contrafund Portfolio (456,973 shares; cost -- $9,156,256)......... 11,168,410
Investment in Variable Insurance Products Fund III, at fair
value (note 2):
Growth & Income Portfolio (62,378 shares;
cost -- $904,305)............................................... -- --
Growth Opportunities Portfolio (28,242 shares;
cost -- $531,813)............................................... -- --
Receivable for units sold ......................................... 602 26,319
------------ ----------
TOTAL ASSETS ................................................... 10,381,761 11,194,729
------------ ----------
LIABILITIES
Accrued expenses payable to affiliate (note 3) .................... 33,831 17,505
Payable for units withdrawn ....................................... -- --
------------ ----------
TOTAL LIABILITIES .............................................. 33,831 17,505
------------ ----------
Net assets attributable to variable life policyholders ............ $ 10,347,930 11,177,224
============ ==========
Outstanding units ................................................. 376,015 427,427
============ ==========
Net asset value per unit .......................................... $ 27.52 26.15
============ ==========
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUND III
-----------------------------
GROWTH & GROWTH
INCOME OPPORTUNITIES
PORTFOLIO PORTFOLIO
ASSETS -------------- --------------
<S> <C> <C>
Investment in Variable Insurance Products Fund II, at fair value
(note 2):
Asset Manager Portfolio (571,650 shares;
cost -- $8,684,598)............................................. -- --
Contrafund Portfolio (456,973 shares; cost -- $9,156,256)......... -- --
Investment in Variable Insurance Products Fund III, at fair
value (note 2):
Growth & Income Portfolio (62,378 shares;
cost -- $904,305)............................................... 1,007,398 --
Growth Opportunities Portfolio (28,242 shares;
cost -- $531,813)............................................... -- 646,169
Receivable for units sold ......................................... -- --
--------- -------
TOTAL ASSETS ................................................... 1,007,398 646,169
--------- -------
LIABILITIES
Accrued expenses payable to affiliate (note 3) .................... 2,201 1,866
Payable for units withdrawn ....................................... -- --
--------- -------
TOTAL LIABILITIES .............................................. 2,201 1,866
--------- -------
Net assets attributable to variable life policyholders ............ 1,005,197 644,303
========= =======
Outstanding units ................................................. 63,540 42,641
========= =======
Net asset value per unit .......................................... 15.82 15.11
========= ========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FEDERATED INVESTORS
INSURANCE SERIES
-------------------------------------------
HIGH
AMERICAN INCOME
LEADERS BOND UTILITY
FUND II FUND II FUND II
ASSETS --------------- -------------- ------------
<S> <C> <C> <C>
Investment in Federated Investors Insurance
Series, at fair value (note 2):
American Leaders Fund II (48,004 shares;
cost $925,846).......................... $ 1,040,734 -- --
High Income Bond Fund II (103,662
shares; cost $1,137,446)................ -- 1,131,985
Utility Fund II (34,595 shares; cost
$451,952)............................... -- -- 528,269
Investment in Alger American Fund, at fair
value (note 2):
Small Cap Portfolio (68,735 shares; cost
$2,646,898)............................. -- -- --
Growth Portfolio (62,855 shares; cost
$2,787,627)............................. -- -- --
Investment in PBHG Insurance Series Fund,
at fair value (note 2): ..................
PBHG Large Cap Growth Portfolio (3,394
shares; cost $40,380)................... -- -- --
PBHG Growth II Portfolio (11,982 shares;
cost $124,222)..........................
Receivable for units sold ................. 150 -- --
----------- --------- -------
TOTAL ASSETS ........................... 1,040,884 1,131,985 528,269
----------- --------- -------
LIABILITIES
Accrued expenses payable to affiliate
(note 3) ................................. 2,299 2,462 1,699
Payable for units withdrawn ............... -- -- --
----------- --------- -------
TOTAL LIABILITIES ...................... 2,299 2,462 1,699
----------- --------- -------
Net assets attributable to variable life
policyholders ............................ $ 1,038,585 1,129,523 526,570
=========== ========= =======
Outstanding units ......................... 61,968 74,067 27,861
=========== ========= =======
Net asset value per unit .................. $ 16.76 15.25 18.90
=========== ========== ========
<CAPTION>
PBHG INSURANCE
ALGER AMERICAN SERIES FUND
----------------------------- ------------------------
PBHG
SMALL LARGE CAP PBHG
CAP GROWTH GROWTH GROWTH II
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
ASSETS -------------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Investment in Federated Investors Insurance
Series, at fair value (note 2):
American Leaders Fund II (48,004 shares;
cost $925,846).......................... -- -- -- --
High Income Bond Fund II (103,662
shares; cost $1,137,446)................
Utility Fund II (34,595 shares; cost
$451,952)............................... -- -- -- --
Investment in Alger American Fund, at fair
value (note 2):
Small Cap Portfolio (68,735 shares; cost
$2,646,898)............................. 3,022,287 -- -- --
Growth Portfolio (62,855 shares; cost
$2,787,627)............................. -- 3,345,134 -- --
Investment in PBHG Insurance Series Fund,
at fair value (note 2): ..................
PBHG Large Cap Growth Portfolio (3,394
shares; cost $40,380)................... -- -- 52,401 --
PBHG Growth II Portfolio (11,982 shares;
cost $124,222).......................... 139,355
Receivable for units sold ................. 2,517 4,979 -- --
--------- --------- ------ -------
TOTAL ASSETS ........................... 3,024,804 3,350,113 52,401 139,355
--------- --------- ------ -------
LIABILITIES
Accrued expenses payable to affiliate
(note 3) ................................. 2,518 4,561 16,706 1,362
Payable for units withdrawn ............... -- -- -- --
--------- --------- ------ -------
TOTAL LIABILITIES ...................... 2,518 4,561 16,706 1,362
--------- --------- ------ -------
Net assets attributable to variable life
policyholders ............................ 3,022,286 3,345,552 35,695 137,993
========= ========= ====== =======
Outstanding units ......................... 249,982 171,128 2,362 12,126
========= ========= ====== =======
Net asset value per unit .................. 12.09 19.55 15.11 11.38
========== ========== ======= ========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
JANUS ASPEN SERIES
----------------------------------------------
AGGRESSIVE WORLDWIDE
GROWTH GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
ASSETS --------------- -------------- ---------------
<S> <C> <C> <C>
Investment in Janus Aspen Series,
at fair value (note 2):
Aggressive Growth Portfolio
(100,752 shares;
cost -- $2,362,322)...................... $ 2,779,743 -- --
Growth Portfolio (266,304 shares;
cost -- $5,131,723)...................... -- 6,268,803 --
Worldwide Growth Portfolio
(386,227 shares;
cost -- $9,451,759)...................... -- -- 11,235,329
Balanced Portfolio (226,585
shares; cost -- $3,863,437).............. -- -- --
Flexible Income Portfolio (36,259
shares; cost -- $428,786)................ -- -- --
International Growth Portfolio
(143,362 shares;
cost -- $2,827,850)...................... -- -- --
Capital Appreciation Portfolio
(46,288 shares;
cost -- $866,820)........................
Investment in Goldman Sachs
Variable Insurance Trust Fund,
at fair value (note 2):
Growth and Income Fund
(507 shares; cost -- $5,246)............. -- -- --
Mid Cap Equity Fund
(9,388 shares; cost -- $80,260).......... -- -- --
Receivable from affiliate .................. 38,714 -- --
Receivable for units sold .................. -- 195 --
----------- --------- ----------
TOTAL ASSETS ............................ 2,818,457 6,268,998 11,235,329
----------- --------- ----------
LIABILITIES
Accrued expenses payable to affiliate
(note 3) .................................. 4,331 8,950 14,807
Payable for units withdrawn ................ 39,837 -- 20,210
----------- --------- ----------
TOTAL LIABILITIES ....................... 44,168 8,950 35,017
----------- --------- ----------
Net assets attributable to variable life
policyholders ............................. $ 2,774,289 6,260,048 11,200,312
=========== ========= ==========
Outstanding units .......................... 123,521 263,803 471,394
=========== ========= ==========
Net asset value per unit ................... $ 22.46 23.73 23.76
=========== ========== ===========
<CAPTION>
JANUS ASPEN SERIES
--------------------------------------------------------
FLEXIBLE INTERNATIONAL CAPITAL
BALANCED INCOME GROWTH APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
ASSETS -------------- ----------- --------------- -------------
<S> <C> <C> <C> <C>
Investment in Janus Aspen Series,
at fair value (note 2):
Aggressive Growth Portfolio
(100,752 shares;
cost -- $2,362,322)...................... -- -- -- --
Growth Portfolio (386,227 shares;
cost -- $9,451,759)...................... -- -- -- --
Worldwide Growth Portfolio
(386,227 shares;
cost -- $9,451,759)...................... -- -- -- --
Balanced Portfolio (226,585
shares; cost -- $3,863,437).............. 5,098,156 -- -- --
Flexible Income Portfolio (36,259
shares; cost -- $428,786)................ -- 437,285 -- --
International Growth Portfolio
(143,362 shares;
cost -- $2,827,850)...................... -- -- 3,049,316 --
Capital Appreciation Portfolio
(46,288 shares;
cost -- $866,820)........................ 922,990
Investment in Goldman Sachs
Variable Insurance Trust Fund,
at fair value (note 2):
Growth and Income Fund
(507 shares; cost -- $5,246)............. -- -- -- --
Mid Cap Equity Fund
(9,388 shares; cost -- $80,260).......... -- -- -- --
Receivable from affiliate .................. -- -- -- 11,776
Receivable for units sold .................. -- -- -- --
--------- ------- --------- -------
TOTAL ASSETS ............................ 5,098,156 437,285 3,049,316 934,766
--------- ------- --------- -------
LIABILITIES
Accrued expenses payable to affiliate
(note 3) .................................. 7,715 1,199 3,711 1,329
Payable for units withdrawn ................ 5,495 -- 2,199 5,578
--------- ------- --------- -------
TOTAL LIABILITIES ....................... 13,210 1,199 5,910 6,907
--------- ------- --------- -------
Net assets attributable to variable life
policyholders ............................. 5,084,946 436,086 3,043,406 927,859
========= ======= ========= =======
Outstanding units .......................... 261,302 32,471 192,621 47,461
========= ======= ========= =======
Net asset value per unit ................... 19.46 13.43 15.80 19.55
========== ======== ========== ========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GOLDMAN SACHS
VARIABLE INSURANCE
TRUST FUND
----------------------------
GROWTH AND MID CAP
INCOME FUND EQUITY FUND
ASSETS ------------- ------------
<S> <C> <C>
Investment in Janus Aspen Series, at fair value (note 2):
Aggressive Growth Portfolio (100,752 shares; cost -- $2,362,322)..................... -- --
Growth Portfolio (386,227 shares; cost -- $9,451,759)................................ -- --
Worldwide Growth Portfolio (386,227 shares; cost -- $9,451,759)...................... -- --
Balanced Portfolio (226,585 shares; cost -- $3,863,437).............................. -- --
Flexible Income Portfolio (36,259 shares; cost -- $428,786)..........................
International Growth Portfolio (143,362 shares; cost -- $2,827,850).................. -- --
Capital Appreciation Portfolio (46,288 shares; cost -- $866,820).....................
Investment in Goldman Sachs Variable Insurance Trust Fund, at fair value (note 2):
Growth and Income Fund (507 shares; cost -- $5,246).................................. $ 5,295 --
Mid Cap Equity Fund (9,388 shares; cost -- $80,260).................................. -- 80,456
Receivable from affiliate ............................................................ -- --
Receivable for units sold ............................................................ -- --
------- ------
TOTAL ASSETS ...................................................................... 5,295 80,456
------- ------
LIABILITIES
Accrued expenses payable to affiliate (note 3) ....................................... 6 187
Payable for units withdrawn .......................................................... -- --
------- ------
TOTAL LIABILITIES ................................................................. 6 187
------- ------
Net assets attributable to variable life policyholders ............................... $ 5,289 80,269
======= ======
Outstanding units .................................................................... 598 9,377
======= ======
Net asset value per unit ............................................................. $ 8.85 8.56
======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF OPERATIONS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
--------------------------------------------------------------------------
S&P 500 GOVERNMENT
INDEX SECURITIES
FUND FUND
----------------------------------------- ------------------------------
PERIOD YEAR
ENDED ENDED
YEAR ENDED DECEMBER 31, DECEMBER 11, DECEMBER 31,
1998 1997 1996 1997 1996
------------- --------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ............................ $ 231,479 83,460 652,254 -- 77,670
Expenses -- Mortality and expense risk charges
and administrative expenses (note 3) ......... 62,371 30,270 15,181 9,821 10,265
---------- ------ ------- ----- ------
Net investment income (expense) ................. 169,108 53,190 637,073 (9,821) 67,405
---------- ------ ------- ------ ------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) ....................... 398,018 125,533 70,710 2,596 4,093
Unrealized appreciation (depreciation) on
investments .................................. 497,472 337,547 (460,582) 46,607 (68,909)
---------- ------- -------- ------ -------
Net realized and unrealized gain (loss) on
investments .................................... 895,490 463,080 (389,872) 49,203 (64,816)
---------- ------- -------- ------ -------
Increase in net assets from operations .......... $1,064,598 516,270 247,201 39,382 2,589
========== ======= ======== ====== =======
</TABLE>
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
------------------------------------------------------------------------
MONEY MARKET TOTAL RETURN
FUND FUND
-------------------------------------- ---------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
----------- ------------- ------------ --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends .............................. $667,640 524,091 500,346 91,033 228,688 387,179
Expenses -- Mortality and expense risk charges
and administrative expenses (note 3) ........... 165,220 134,484 131,290 22,215 20,274 16,395
-------- ------- ------- ------ ------- -------
Net investment income (expense) ................... 502,420 389,607 369,056 68,818 208,414 370,784
-------- ------- ------- ------ ------- -------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) ......................... (2,104) (256,503) 137,112 4,509 1,710 37,094
Unrealized appreciation (depreciation) on
investments .................................... 2,104 287,655 (89,338) 183,805 26,729 (292,293)
-------- -------- ------- ------- ------- --------
Net realized and unrealized gain (loss) on
investments ...................................... -- 31,152 47,774 188,314 28,439 (255,199)
-------- -------- ------- ------- ------- --------
Increase in net assets from operations ............ $502,420 420,759 416,830 257,132 236,853 115,585
======== ======== ======= ======= ======= ========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
(CONTINUED)
-----------------------------------
INTERNATIONAL
EQUITY FUND
-----------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
---------- ----------- ------------
<S> <C> <C> <C>
Investment income:
Income -- Dividends ...................................... $16,301 86,245 46,694
Expenses -- Mortality and expense risk charges ...........
and administrative expenses (note 3) ................... 4,237 11,206 5,198
------- ------ ------
Net investment income ..................................... 12,064 75,039 41,496
------- ------ ------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) ................................. 1,173 146,386 19,981
Unrealized appreciation (depreciation) on
investments ............................................ 5,854 (6,150) (29,424)
------- ------- -------
Net realized and unrealized gain (loss) on
investments .............................................. 7,027 140,236 (9,443)
------- ------- -------
Increase (decrease) in net assets from operations ......... $19,091 215,275 32,053
======= ======= =======
<CAPTION>
GE INVESTMENTS FUNDS, INC.
(CONTINUED)
-----------------------------------
REAL ESTATE
SECURITIES FUND
-----------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------ ------------ ---------
<S> <C> <C> <C>
Investment income:
Income -- Dividends ...................................... 54,408 111,357 14,330
Expenses -- Mortality and expense risk charges ...........
and administrative expenses (note 3) ................... 11,845 10,398 1,294
------ ------- ------
Net investment income ..................................... 42,563 100,959 13,036
------ ------- ------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) ................................. (76,333) 142,744 3,590
Unrealized appreciation (depreciation) on
investments ............................................ (155,043) (97,672) 29,513
-------- ------- ------
Net realized and unrealized gain (loss) on
investments .............................................. (231,376) 45,072 33,103
-------- ------- ------
Increase (decrease) in net assets from operations ......... (188,813) 146,031 46,139
======== ======= ======
</TABLE>
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
------------------------------------------------------------
GLOBAL INCOME FUND VALUE EQUITY FUND
------------------------------ -----------------------------
PERIOD FROM PERIOD FROM
YEAR SEPTEMBER 15, YEAR JUNE 17,
ENDED 1997 TO ENDED 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Dividends ............. $1,611 684 15,311 2,631
Expenses -- Mortality
and expense risk
charges and adminis-
trative expenses
(note 3) ...................... 292 19 7,471 710
------ --- ------ -----
Net investment income ............ 1,319 665 7,840 1,921
------ --- ------ -----
Net realized and unrealized
gain (loss) on
investments:
Net realized gain (loss) ........ 11 -- 1,355 208
Unrealized appreciation
(depreciation) on
investments ................... 1,291 (669) 2,571 1,977
------ ---- ------ -----
Net realized and unrealized
gain (loss) on
investments ..................... 1,302 (669) 3,926 2,185
------ ---- ------ -----
Increase (decrease) in net
assets from operations .......... $2,621 (4) 11,766 4,106
====== ====== ====== =====
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
-----------------------------------------------
INCOME FUND U.S. EQUITY FUND
----------------------------- -----------------
PERIOD FROM PERIOD FROM
YEAR DECEMBER 12, MAY 5, 1998
ENDED 1997 TO TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998
-------------- -------------- -----------------
<S> <C> <C> <C>
Investment income:
Income -- Dividends ............. 82,066 3,329 289
Expenses -- Mortality
and expense risk
charges and adminis-
trative expenses
(note 3) ...................... 18,068 733 39
------ ----- ---
Net investment income ............ 63,998 2,596 250
------ ----- ---
Net realized and unrealized
gain (loss) on
investments:
Net realized gain (loss) ........ 9,720 (2,508) 89
Unrealized appreciation
(depreciation) on
investments ................... 13,245 1,454 243
------ ------ ---
Net realized and unrealized
gain (loss) on
investments ..................... 22,965 (1,054) 332
------ ------ ---
Increase (decrease) in net
assets from operations .......... 86,963 1,542 582
====== ====== ===
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
------------------------------------------------------------------------
MONEY FUND BOND FUND
------------------------------ ---------------------------------------
PERIOD YEAR
ENDED ENDED
DECEMBER 11, DECEMBER 31, YEAR ENDED DECEMBER 31,
1997 1996 1998 1997 1996
-------------- ------------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ............................ $7,779 12,118 58,921 128,635 106,583
Expenses -- Mortality and expense risk charges
and administrative expenses (note 3) ......... 1,958 2,973 44,412 21,914 22,427
------ ------ ------ ------- -------
Net investment income ........................... 5,821 9,145 14,509 106,721 84,156
------ ------ ------ ------- -------
Net realized and unrealized gain (loss) on
investments:
Net realized gain .............................. -- -- 140,916 11,410 31,061
Unrealized appreciation (depreciation) on
investments .................................. -- -- (22,639) 14,947 (44,892)
------ ------ ------- ------- -------
Net realized and unrealized gain (loss) on
investments .................................... -- -- 118,277 26,357 (13,831)
------ ------ ------- ------- -------
Increase in net assets from operations .......... $5,821 9,145 132,786 133,078 70,325
====== ====== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS (CONTINUED)
--------------------------------------------------------------------
CAPITAL APPRECIATION FUND GROWTH FUND
--------------------------------- ----------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
------------- --------- --------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends .......................... $ 188,573 271,809 216,310 381,828 137,266 100,033
Expenses -- Mortality and expense risk charges
and administrative expenses (note 3) ....... 92,177 80,784 58,271 56,132 39,859 18,585
---------- ------- ------- ------- ------- -------
Net investment income ......................... 96,396 191,025 158,039 325,696 97,407 81,448
---------- ------- ------- ------- ------- -------
Net realized and unrealized gain (loss) on
investments:
Net realized gain ............................ 1,139,675 362,326 207,037 779,763 211,799 104,773
Unrealized appreciation (depreciation) on
investments ................................ (392,601) 69,894 284,866 (197,508) 311,259 101,309
---------- ------- ------- -------- ------- -------
Net realized and unrealized gain (loss) on
investments .................................. 747,074 432,220 491,903 582,255 523,058 206,082
---------- ------- ------- -------- ------- -------
Increase in net assets from operations ........ $ 843,470 623,245 649,942 907,951 620,465 287,530
========== ======= ======= ======== ======= =======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS (CONTINUED)
-----------------------------------------------------------------------
HIGH INCOME FUND MULTIPLE STRATEGIES FUND
------------------------------------ ----------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
------------- ------------ --------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ............................ $ 268,182 395,329 317,982 196,071 204,231 161,518
Expenses -- Mortality and expense risk charges
and administrative expenses (note 3) ......... 83,415 56,210 39,512 42,195 36,789 29,130
---------- ------- ------- ------- ------- -------
Net investment income ........................... 184,767 339,119 278,470 153,876 167,442 132,388
---------- ------- ------- ------- ------- -------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) ....................... (157,587) 180,406 57,827 353,554 34,009 53,160
Unrealized appreciation (depreciation) on
investments .................................. 402 (53,341) 72,516 (372,624) 206,122 106,953
---------- ------- ------- -------- ------- -------
Net realized and unrealized gain (loss) on
investments .................................... (157,185) 127,065 130,343 (19,070) 240,131 160,113
---------- ------- ------- -------- ------- -------
Increase in net assets from operations .......... $ 27,582 466,184 408,813 134,806 407,573 292,501
========== ======= ======= ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
----------------------------------------------------------
MONEY MARKET PORTFOLIO HIGH INCOME PORTFOLIO
----------------------------- ----------------------------
PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED
DECEMBER 11, DECEMBER 31, DECEMBER 11, DECEMBER 31,
1997 1996 1997 1996
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Dividends ........................................... $91,625 75,804 105,638 201,481
Expenses -- Mortality and expense risk charges and
administrative expenses (note 3) ............................ 10,228 18,807 15,435 20,933
------- ------ ------- -------
Net investment income .......................................... 81,397 56,997 90,203 180,548
------- ------ ------- -------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) ...................................... -- -- 185,532 (17,100)
Unrealized appreciation (depreciation) on investments ......... -- -- (92,552) 27,229
------- ------ ------- -------
Net realized and unrealized gain on investments ................ -- -- 92,980 10,129
------- ------ ------- -------
Increase in net assets from operations ......................... $81,397 56,997 183,183 190,677
======= ====== ======= =======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND (CONTINUED)
--------------------------------------------------------------------------
EQUITY-INCOME PORTFOLIO GROWTH PORTFOLIO
-------------------------------------- -----------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
------------- ----------- ------------ ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ......................... $1,007,037 1,283,339 413,062 1,413,289 315,208 461,083
Expenses -- Mortality and expense risk
charges and administrative expenses
(note 3) .................................. 217,902 186,346 140,373 156,899 121,040 101,913
---------- --------- ------- --------- ------- -------
Net investment income ........................ 789,135 1,096,993 272,689 1,256,390 194,168 359,170
---------- --------- ------- --------- ------- -------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) .................... 1,283,354 1,197,816 500,603 1,619,202 1,766,746 536,491
Unrealized appreciation (depreciation) on
investments ............................... (494,927) 1,016,128 539,174 667,154 (282,336) 31,232
---------- --------- ------- --------- --------- -------
Net realized and unrealized gain on
investments ................................. 788,427 2,213,944 1,039,777 2,286,356 1,484,410 567,723
---------- --------- --------- --------- --------- -------
Increase in net assets from operations ....... $1,577,562 3,310,937 1,312,466 3,542,746 1,678,578 926,893
========== ========= ========= ========= ========= =======
</TABLE>
<TABLE>
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUND (CONTINUED) VARIABLE INSURANCE PRODUCTS FUND II
---------------------------------------- --------------------------------------
OVERSEAS PORTFOLIO ASSET MANAGER PORTFOLIO
---------------------------------------- --------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
------------- ------------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ........................... $ 351,924 506,300 176,637 1,219,238 1,006,221 555,062
Expenses -- Mortality and expense risk
charges and administrative expenses
(note 3) .................................... 62,196 73,250 81,887 131,037 120,291 107,941
---------- ------- ------- --------- --------- -------
Net investment income (expense) ................ 289,728 433,050 94,750 1,088,201 885,930 447,121
---------- ------- ------- --------- --------- -------
Net realized and unrealized gain (loss) on
investments: ..................................
Net realized gain (loss) ...................... (178,639) 801,884 517,315 252,067 187,349 168,152
Unrealized appreciation (depreciation) on
investments ................................. 349,052 (489,713) (15,497) (67,659) 534,401 400,455
---------- -------- ------- --------- --------- -------
Net realized and unrealized gain on
investments ................................... 170,413 312,171 501,818 184,408 721,750 568,607
---------- -------- ------- --------- --------- -------
Increase in net assets from operations ......... $ 460,141 745,221 596,568 1,272,609 1,607,680 1,015,728
========== ======== ======= ========= ========= =========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUND II (CONTINUED)
---------------------------------------
CONTRAFUND PORTFOLIO
---------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------- ------------ ------------
<S> <C> <C> <C>
Investment income:
Income -- Dividends ........... $ 458,019 150,006 15,826
Expenses -- Mortality and
expense risk charges
and administrative
expenses (note 3) ........... 110,295 81,691 38,668
---------- ------- ------
Net investment income
(expense) ..................... 347,724 68,315 (22,842)
---------- ------- -------
Net realized and unrealized
gain (loss) on investments:
Net realized gain (loss) ...... 1,254,204 268,831 100,260
Unrealized appreciation
(depreciation) on
investments ................. 648,485 823,917 476,601
---------- ------- -------
Net realized and unrealized
gain on investments ........... 1,902,689 1,092,748 576,861
---------- --------- -------
Increase in net assets from
operations .................... $2,250,413 1,161,063 554,019
========== ========= =======
<CAPTION>
VARIABLE INSURANCE
PRODUCT FUND III
----------------------------------------------------------
GROWTH & INCOME GROWTH OPPORTUNITIES
PORTFOLIO PORTFOLIO
----------------------------- ----------------------------
PERIOD FROM PERIOD FROM
YEAR MAY 16, YEAR MAY 16,
ENDED 1997 TO ENDED 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Dividends ........... 1,681 -- 18,246 --
Expenses -- Mortality and
expense risk charges
and administrative
expenses (note 3) ........... 10,395 1,712 5,891 1,910
------ ----- ------ -----
Net investment income
(expense) ..................... (8,714) (1,712) 12,355 (1,910)
------ ------ ------ ------
Net realized and unrealized
gain (loss) on investments:
Net realized gain (loss) ...... 100,071 6,219 15,522 876
Unrealized appreciation
(depreciation) on
investments ................. 91,779 11,314 75,120 39,235
------- ------ ------ ------
Net realized and unrealized
gain on investments ........... 191,850 17,533 90,642 40,111
------- ------ ------ ------
Increase in net assets from
operations .................... 183,136 15,821 102,997 38,201
======= ====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
----------------------------------------------------------------------------------------
BALANCED BOND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------- ----------------------------- ----------------------------
PERIOD YEAR PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 11, DECEMBER 31, DECEMBER 11, DECEMBER 31, DECEMBER 11, DECEMBER 31,
1997 1996 1997 1996 1997 1996
-------------- -------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends .............. $ 123,193 293,957 36,455 67,433 64,488 68,654
Expenses -- Mortality and
expense risk charges
and administrative expenses
(note 3) ....................... 24,999 24,806 6,443 9,529 9,747 9,845
---------- ------- ------ ------ ------ ------
Net investment income ............. 98,194 269,151 30,012 57,904 54,741 58,809
---------- ------- ------ ------ ------ ------
Net realized and unrealized gain
(loss) on investments: ...........
Net realized gain (loss) ......... 315,380 13,816 (3,318) (5,135) 150,610 5,513
Unrealized depreciation on
investments .................... (146,827) (182,324) (1,629) (34,909) (55,310) (6,856)
---------- -------- ------ ------- ------- ------
Net realized and unrealized gain
(loss) on investments ............ 168,553 (168,508) (4,947) (40,044) 95,300 (1,343)
---------- -------- ------ ------- ------- ------
Increase in net assets from
operations ....................... $ 266,747 100,643 25,065 17,860 150,041 57,466
========== ======== ====== ======= ======= ======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FEDERATED INVESTORS INSURANCE SERIES
----------------------------------------------------------------------------------------------
AMERICAN LEADERS HIGH INCOME UTILITY
FUND II BOND FUND II FUND II
------------------------------------ ------------------------------ --------------------------
PERIOD FROM
SEPTEMBER 5,
YEAR ENDED DECEMBER 1996 TO
31, DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996 1998 1997 1996
---------- ----------- ------------- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ...... $ 42,271 1,480 96 62,046 45,217 36,032 28,948 12,197 6,514
Expenses -- Mortality
and expense risk
charges and
administrative
expenses (note 3) ...... 11,035 3,437 60 17,967 10,943 5,378 6,146 3,837 2,042
-------- ----- -- ------ ------ ------ ------ ------ -----
Net investment income
(expense) ................ 31,236 (1,957) 36 44,079 34,274 30,654 22,802 8,360 4,472
-------- ------ -- ------ ------ ------ ------ ------ -----
Net realized and
unrealized gain on
investments:
Net realized gain
(loss) ................. (4,077) 11,788 19 85,989 5,827 1,726 25,956 11,484 9,190
Unrealized
appreciation
(depreciation) on
investments ............ 58,884 53,148 2,855 (90,012) 55,167 27,920 8,478 50,092 5,651
-------- ------ ----- ------- ------ ------ ------ ------ -----
Net realized and
unrealized gain (loss)
on investments ........... 54,807 64,936 2,874 (4,023) 60,994 29,646 34,434 61,576 14,841
-------- ------ ----- ------- ------ ------ ------ ------ ------
Increase in net assets
from operations .......... $ 86,043 62,979 2,910 40,056 95,268 60,300 57,236 69,936 19,313
======== ====== ===== ======= ====== ====== ====== ====== ======
</TABLE>
<PAGE>
LIFE OF VIRGINIA
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ALGER AMERICAN FUND
--------------------------------------
SMALL CAP PORTFOLIO
--------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------- ------------ -----------
<S> <C> <C> <C>
Investment income:
Income -- Dividends ...................................... $ 207,517 42,941 3,785
Expenses -- Mortality and expense risk charges
and administrative expenses (note 3) ................... 21,533 18,711 10,887
----------- ------ ------
Net investment income (expense) ........................... 185,984 24,230 (7,102)
----------- ------ ------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) ................................. (361,335) 155,266 (13,977)
Unrealized appreciation (depreciation)
on investments ......................................... 411,856 (23,084) (18,580)
----------- ------- -------
Net realized and unrealized gain (loss)
on investments ........................................... 50,521 132,182 (32,557)
----------- ------- -------
Increase (decrease) in net assets from operations ......... $ 236,505 156,412 (39,659)
=========== ======= =======
<CAPTION>
ALGER AMERICAN FUND
------------------------------------
GROWTH PORTFOLIO
------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------ ----------- -----------
<S> <C> <C> <C>
Investment income:
Income -- Dividends ...................................... 360,690 15,712 14,003
Expenses -- Mortality and expense risk charges
and administrative expenses (note 3) ................... 31,716 21,426 7,612
------- ------ ------
Net investment income (expense) ........................... 328,974 (5,714) 6,391
------- ------ ------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) ................................. 342,335 121,886 (8,548)
Unrealized appreciation (depreciation)
on investments ......................................... 332,102 195,886 27,545
------- ------- ------
Net realized and unrealized gain (loss)
on investments ........................................... 674,437 317,772 18,997
------- ------- ------
Increase (decrease) in net assets from operations ......... 1,003,411 312,058 25,388
========= ======= ======
</TABLE>
<TABLE>
<CAPTION>
PBHG INSURANCE SERIES FUND
----------------------------------------------------------------
PBHG LARGE CAP
GROWTH PORTFOLIO PBHG GROWTH II PORTFOLIO
------------------------------- ------------------------------
PERIOD FROM PERIOD FROM
YEAR JULY 22, YEAR MAY 22,
ENDED 1997 TO ENDED 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Dividends ...................................... $ -- -- -- --
Expenses -- Mortality and expense risk charges
and administrative expenses (note 3) ................... 1,340 205 1,328 540
-------- --- ----- ---
Net investment income (expense) ........................... (1,340) (205) (1,328) (540)
-------- ---- ------ ----
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) ................................. 12,396 (1) 36,908 1,296
Unrealized appreciation (depreciation)
on investments ......................................... 11,365 656 15,978 (846)
-------- ------ ------ -----
Net realized and unrealized gain (loss)
on investments ........................................... 23,761 655 52,886 450
-------- ------ ------ -----
Increase (decrease) in net assets from operations ......... $ 22,421 450 51,558 (90)
======== ====== ====== =====
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
JANUS ASPEN SERIES
------------------------------------------------------------------------
AGGRESSIVE GROWTH PORTFOLIO GROWTH PORTFOLIO
--------------------------------------- --------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
------------ ------------ ------------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ........................... $ -- -- 16,844 336,326 112,727 59,031
Expenses -- Mortality and expense risk
charges and administrative expenses
(note 3) .................................... 31,583 28,915 23,442 67,687 49,779 27,643
--------- ------ ------ ------- ------- ------
Net investment income (expense) ................ (31,583) (28,915) (6,598) 268,639 62,948 31,388
--------- ------- ------ ------- ------- ------
Net realized and unrealized gain
on investments: ...............................
Net realized gain ............................. 678,326 192,226 267,683 870,857 243,734 132,138
Unrealized appreciation
(depreciation) on investments ................. 307,545 99,444 (112,622) 434,354 376,858 144,223
--------- ------- -------- ------- ------- -------
Net realized and unrealized gain
on investments ................................ 985,871 291,670 155,061 1,305,211 620,592 276,361
--------- ------- -------- --------- ------- -------
Increase in net assets from operations ......... $ 954,288 262,755 148,463 1,573,850 683,540 307,749
========= ======= ======== ========= ======= =======
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN SERIES (CONTINUED)
---------------------------------------------------------------------
WORLDWIDE GROWTH PORFOLIO BALANCED PORTFOLIO
------------------------------------ --------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
------------- ------------ --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ........................... $ 398,345 114,020 59,279 183,223 54,275 10,644
Expenses -- Mortality and expense risk
charges and administrative expenses
(note 3) .................................... 132,642 91,422 40,177 53,807 15,089 4,138
---------- ------- ------ ------- ------ ------
Net investment income (expense) ................ 265,703 22,598 19,102 129,416 39,186 6,506
---------- ------- ------ ------- ------ ------
Net realized and unrealized gain
on investments: ...............................
Net realized gain ............................. 1,535,984 457,649 156,316 75,042 16,368 3,534
Unrealized appreciation
(depreciation) on investments ................. 417,036 666,571 498,790 1,021,865 172,861 38,227
---------- ------- ------- --------- ------- ------
Net realized and unrealized gain
on investments ................................ 1,953,020 1,124,220 655,106 1,096,907 189,229 41,761
---------- --------- ------- --------- ------- ------
Increase in net assets from operations ......... $2,218,723 1,146,818 674,208 1,226,323 228,415 48,267
========== ========= ======= ========= ======= ======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF OPERATIONS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
JANUS ASPEN SERIES (CONTINUED)
-------------------------------------------------------------------------
FLEXIBLE INCOME PORTFOLIO INTERNATIONAL GROWTH PORTFOLIO
------------------------------- ---------------------------------------
PERIOD FROM
JUNE 5,
1996 TO
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, DECEMBER 31,
1998 1997 1996 1998 1997 1996
---------- -------- ------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Income -- Dividends ..................... $23,382 12,042 9,499 62,083 13,292 2,339
Expenses -- Mortality and expense risk
charges and administrative expenses
(note 3) .............................. 4,450 2,246 1,046 31,407 19,234 1,253
------- ------ ----- ------ ------ -----
Net investment income (expense) ......... 18,932 9,796 8,453 30,676 (5,942) 1,086
------- ------ ----- ------ ------ -----
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) ................ 2,524 3,107 111 171,620 145,208 2,328
Unrealized appreciation
(depreciation) on investments ......... 3,399 4,489 585 158,124 45,943 17,399
------- ------ ----- ------- ------- ------
Net realized and unrealized gain
(loss) on investments ................... 5,923 7,596 696 329,744 191,151 19,727
------- ------ ----- ------- ------- ------
Increase (decrease) in net assets
from operations ......................... $24,855 17,392 9,149 360,420 185,209 20,813
======= ====== ===== ======= ======= ======
</TABLE>
<TABLE>
<CAPTION>
GOLDMAN SACHS
VARIABLE INSURANCE
JANUS ASPEN SERIES (CONTINUED) TRUST FUND
------------------------------- ------------------------------
CAPITAL GROWTH AND MID CAP
APPRECIATION INCOME EQUITY
PORTFOLIO FUND FUND
------------------------------- -------------- -------------
PERIOD FROM PERIOD FROM PERIOD FROM
MAY 22, OCTOBER 6, JUNE 25,
YEAR ENDED 1997 TO 1998 TO 1998 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1998
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Investment income:
Income -- Dividends ............................ $ 555 37 48 662
Expenses -- Mortality and expense risk charges
and administrative expenses (note 3) ......... 6,271 112 11 237
-------- --- -- ---
Net investment income (expense) ................ (5,716) (75) 37 425
-------- --- -- ---
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) ....................... 225,641 (7,519) 58 (16)
-------- ------ -- ---
Unrealized appreciation
(depreciation) on investments ................ 56,754 (582) 49 196
-------- ------ -- ---
Net realized and unrealized gain
(loss) on investments .......................... 282,395 (8,101) 107 180
-------- ------ --- ---
Increase (decrease) in net assets
from operations ................................ $276,679 (8,176) 144 605
======== ====== === ===
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
----------------------------------------------------------------------
S&P 500 INDEX FUND GOVERNMENT SECURITIES FUND
----------------------------------------- ----------------------------
PERIOD YEAR
ENDED ENDED
YEAR ENDED DECEMBER 31, DECEMBER 11, DECEMBER 31,
1998 1997 1996 1997 1996
------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (loss) ..................... $ 169,108 53,190 637,073 (9,821) 67,405
Net realized gain (loss) ......................... 398,018 125,533 70,710 2,596 4,093
Unrealized appreciation (depreciation) on
investments .................................... 497,472 337,547 (460,582) 46,607 (68,909)
---------- ------- -------- ------ -------
Increase in net assets from operations ............ 1,064,598 516,270 247,201 39,382 2,589
---------- ------- -------- ------ -------
From capital transactions:
Net premiums ..................................... 364,101 29,621 -- 13,143 --
Loan interest .................................... (1,758) (472) (45) (455) (35)
Transfers (to) from the general account of
Life of Virginia:
Death benefits ................................. (26,898) (1,802) (70,983) -- --
Surrenders ..................................... (122,586) (50,594) (8,805) (262,974) (27,170)
Loans .......................................... (8,955) (10,019) (23,690) (23,924) (1,574)
Cost of insurance and administrative
expense (note 3) .............................. (54,690) (24,852) (12,093) (8,334) (8,533)
Transfer gain (loss) and transfer fees ......... 190,048 (2,909) (3,844) (3,207) (829)
Transfers (to) from the Guarantee Account
(note 1) ....................................... 156,285 33,241 40,800 288 (3,299)
Interfund transfers .............................. 1,318,239 1,154,053 531,241 (529,174) 12,746
---------- --------- -------- -------- -------
Increase (decrease) in net assets from capital
transactions ..................................... 1,813,786 1,126,267 452,581 (814,637) (28,694)
---------- --------- -------- -------- -------
Increase (decrease) in net assets ................. 2,878,384 1,642,537 699,782 (775,255) (26,105)
Net assets at beginning of year ................... 3,201,139 1,558,602 858,820 775,255 801,360
---------- --------- -------- -------- -------
Net assets at end of year ......................... $6,079,523 3,201,139 1,558,602 -- 775,255
========== ========= ========= ======== =======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENT FUNDS, INC. (CONTINUED)
------------------------------------------------
MONEY MARKET FUND
------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
-------------- ---------------- ----------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (loss) ............. $ 502,420 389,607 369,056
Net realized gain (loss) ................. (2,104) (256,503) 137,112
Unrealized appreciation
(depreciation) on investments .......... 2,104 287,655 (89,338)
------------ -------- -------
Increase in net assets from
operations ............................... 502,420 420,759 416,830
------------ -------- -------
From capital transactions:
Net premiums ............................. 10,323,239 14,800,378 21,281,538
Loan interest ............................ 15,680 25,356 843
Transfers (to) from the general
account of Life of Virginia:
Death benefits ......................... (9,663) -- (30,581)
Surrenders ............................. (492,391) (81,503) (292,797)
Loans .................................. (1,044,167) (259,694) (1,123,153)
Cost of insurance and
administrative expense
(note 3) .............................. (149,692) (124,687) (120,240)
Transfer gain (loss) and
transfer fees ......................... 3,729 (135,353) (46,805)
Transfers (to) from the Guarantee
Account (note 1) ....................... (57,398) (32,069) (480,716)
Interfund transfers ...................... (9,507,257) (13,250,370) (15,451,140)
------------ ----------- -----------
Increase (decrease) in net assets from
capital transactions ..................... (917,920) 942,058 3,736,949
------------ ----------- -----------
Increase (decrease) in net assets ......... (415,500) 1,362,817 4,153,779
Net assets at beginning of year ........... 11,254,324 9,891,507 5,737,728
------------ ----------- -----------
Net assets at end of year ................. $ 10,838,824 11,254,324 9,891,507
============ =========== ===========
<CAPTION>
GE INVESTMENT FUNDS, INC. (CONTINUED)
-----------------------------------------
TOTAL RETURN FUND
-----------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (loss) ............. 68,818 208,414 370,784
Net realized gain (loss) ................. 4,509 1,710 37,094
Unrealized appreciation
(depreciation) on investments .......... 183,805 26,729 (292,293)
------- ------- --------
Increase in net assets from
operations ............................... 257,132 236,853 115,585
------- ------- --------
From capital transactions:
Net premiums ............................. 13,446 37,415 --
Loan interest ............................ (107) 77 (130)
Transfers (to) from the general
account of Life of Virginia:
Death benefits ......................... -- (122,969) --
Surrenders ............................. (163,264) (9,555) (105,824)
Loans .................................. (33,631) (31,550) --
Cost of insurance and
administrative expense
(note 3) .............................. (17,774) (16,232) (13,237)
Transfer gain (loss) and
transfer fees ......................... 643 (3,467) 1,607
Transfers (to) from the Guarantee
Account (note 1) ....................... 10,426 45,496 40,576
Interfund transfers ...................... 52,057 134,091 264,670
-------- -------- --------
Increase (decrease) in net assets from
capital transactions ..................... (138,204) 33,306 187,662
-------- -------- --------
Increase (decrease) in net assets ......... 118,928 270,159 303,247
Net assets at beginning of year ........... 1,668,624 1,398,465 1,095,218
--------- --------- ---------
Net assets at end of year ................. 1,787,552 1,668,624 1,398,465
========= ========= =========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
-----------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND REAL ESTATE SECURITIES FUND
--------------------------------------- -------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
------------ ------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income ............................ $ 12,064 75,039 41,496 42,563 100,959 13,036
Net realized gain (loss) ......................... 1,173 146,386 19,981 (76,333) 142,744 3,590
Unrealized appreciation (depreciation) on
investments .................................... 5,854 (6,150) (29,424) (155,043) (97,672) 29,513
--------- ------- ------- -------- ------- ------
Increase (decrease) in net assets from
operations ....................................... 19,091 215,275 32,053 (188,813) 146,031 46,139
--------- ------- ------- -------- ------- ------
From capital transactions:
Net premiums ..................................... 1,056 1,056 -- 41,531 62,904 9,377
Loan interest .................................... (50) (12) -- (188) -- --
Transfers (to) from the general account of
Life of Virginia:
Death benefits ................................. -- -- -- -- -- --
Surrenders ..................................... -- -- 750 (2,915) -- --
Loans .......................................... 3,954 1,860 -- (15,423) (16,740) --
Cost of insurance and administrative
expense (note 3) .............................. (3,955) (9,446) (4,299) (11,347) (9,178) (1,186)
Transfer gain (loss) and transfer fees ......... 26,258 (16,723) 320 1,201 (5,456) (277)
Transfers (to) from the Guarantee Account
(note 1) ....................................... 25,276 -- -- 35,000 3,269 --
Interfund transfers .............................. (28,632) (727,513) 551,175 (222,532) 661,463 173,587
--------- -------- ------- -------- ------- -------
Increase (decrease) in net assets from capital
transactions ..................................... 23,907 (750,778) 547,946 (174,673) 696,262 181,501
--------- -------- ------- -------- ------- -------
Increase (decrease) in net assets ................. 42,998 (535,503) 579,999 (363,486) 842,293 227,640
Net assets at beginning of period ................. 257,241 792,744 212,745 1,070,327 228,034 394
--------- -------- ------- --------- ------- -------
Net assets at end of year ......................... $ 300,239 257,241 792,744 706,841 1,070,327 228,034
========= ======== ======= ========= ========= =======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
-----------------------------------------------------------
GLOBAL INCOME FUND VALUE EQUITY FUND
------------------------------ ----------------------------
PERIOD FROM
PERIOD FROM JUNE 17,
SEPTEMBER 15, 1997
YEAR ENDED 1997 TO YEAR ENDED TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- --------------- -------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income .............................................. $1,319 665 7,840 1,921
Net realized gain (loss) ........................................... 11 -- 1,355 208
Unrealized appreciation (depreciation) on investments .............. 1,291 (669) 2,571 1,977
------- ----- ----- -----
Increase (decrease) in net assets from operations .................. 2,621 (4) 11,766 4,106
------- ------- ------ -----
From capital transactions:
Net premiums ....................................................... -- -- 19,404 4,596
Loan interest ...................................................... -- -- (1,009) --
Transfers (to) from the general account of Life of
Virginia:
Death benefits ................................................... -- -- -- --
Surrenders ....................................................... -- -- -- --
Loans ............................................................ -- -- (1,441) --
Cost of insurance and administrative expense (note 3) ............ (264) (18) (5,910) (615)
Transfer gain (loss) and transfer fees ........................... (3) -- (39,597) 360
Transfers (to) from the Guarantee Account (note 1) ................. -- -- -- --
Interfund transfers ................................................ 12,432 13,721 297,789 243,259
-------- ------- ------- -------
Increase (decrease) in net assets from capital transactions ......... 12,165 13,703 269,236 247,600
-------- ------- ------- -------
Increase (decrease) in net assets ................................... 14,786 13,699 281,002 251,706
Net assets at beginning of period ................................... 13,699 -- 251,706 --
-------- ------- ------- -------
Net assets at end of year ........................................... $28,485 13,699 532,708 251,706
======= ======= ======= =======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
--------------------------------------------------------
INCOME FUND U.S. EQUITY FUND
------------------------------------ -----------------
YEAR PERIOD FROM PERIOD FROM
ENDED DECEMBER 12, 1997 MAY 5, 1998
DECEMBER 31, TO DECEMBER 31, TO DECEMBER 31,
1998 1997 1998
-------------- ------------------- -----------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income .............................................. $ 63,998 2,596 250
Net realized gain (loss) ........................................... 9,720 (2,508) 89
Unrealized appreciation (depreciation) on investments .............. 13,245 1,454 243
---------- ------ ---
Increase (decrease) in net assets from operations .................. 86,963 1,542 582
---------- ------ ---
From capital transactions:
Net premiums ....................................................... -- -- --
Loan interest ...................................................... (3,764) -- --
Transfers (to) from the general account of Life of Virginia:
Death benefits ................................................... -- -- --
Surrenders ....................................................... (2,594) -- --
Loans ............................................................ (21,862) (2,396) --
Cost of insurance and administrative expense (note 3) ............ (15,101) (742) (30)
Transfer gain (loss) and transfer fees ........................... (703) (202) (108)
Transfers (to) from the Guarantee Account (note 1) ................. 7,872 -- --
Interfund transfers ................................................ 196,041 1,221,995 9,718
---------- --------- -----
Increase (decrease) in net assets from capital transactions ......... 159,889 1,218,655 9,580
---------- --------- -----
Increase (decrease) in net assets ................................... 246,852 1,220,197 10,162
Net assets at beginning of period ................................... 1,220,197 -- --
---------- --------- ------
Net assets at end of year ........................................... $1,467,049 1,220,197 10,162
========== ========= ======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
----------------------------------------------------------------------
MONEY FUND BOND FUND
---------------------------- -----------------------------------------
PERIOD YEAR
ENDED ENDED
DECEMBER 11, DECEMBER 31, YEAR ENDED DECEMBER 31,
1997 1996 1998 1997 1996
-------------- ------------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income ............................ $ 5,821 9,145 14,509 106,721 84,156
Net realized gain ................................ -- -- 140,916 11,410 31,061
Unrealized appreciation (depreciation) on
investments .................................... -- -- (22,639) 14,947 (44,892)
---------- ----- ------- ------- -------
Increase in net assets from operations ............ 5,821 9,145 132,786 133,078 70,325
---------- ----- ------- ------- -------
From capital transactions:
Net premiums ..................................... -- -- 63,953 12,401 --
Loan interest .................................... -- (247) 1,867 224 (240)
Transfers (to) from the general account of Life of
Virginia:
Death benefits ................................. -- -- -- -- --
Surrenders ..................................... -- -- (80,793) -- (19,035)
Loans .......................................... -- (7,000) (717) (20,518) (46,361)
Cost of insurance and administrative expense
(note 3) ...................................... (1,618) (2,228) (29,054) (17,321) (18,368)
Transfer gain (loss) and transfer fees ......... 26 (1,331) (48,553) 4,175 5,246
Transfers (to) from the Guarantee Account
(note 1) ....................................... -- -- 8,443 10,164 9,597
Interfund transfers .............................. (160,456) (178,397) (1,102,223) 1,749,977 49,462
---------- -------- ---------- --------- -------
Increase (decrease) in net assets from capital
transactions ..................................... (162,048) (189,203) (1,187,077) 1,739,102 (19,699)
---------- -------- ---------- --------- -------
Increase (decrease) in net assets ................. (156,227) (180,058) (1,054,291) 1,872,180 50,626
Net assets at beginning of year ................... 156,227 336,285 3,527,896 1,655,716 1,605,090
---------- -------- ---------- --------- ---------
Net assets at end of year ......................... $ -- 156,227 2,473,605 3,527,896 1,655,716
========== ======== ========== ========= =========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
(CONTINUED)
-----------------------------------------
CAPITAL APPRECIATION FUND
-----------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- ------------ ------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income ............................ $ 96,396 191,025 158,039
Net realized gain ................................ 1,139,675 362,326 207,037
Unrealized appreciation (depreciation) on
investments .................................... (392,601) 69,894 284,866
------------- ------- -------
Increase in net assets from operations ............ 843,470 623,245 649,942
------------- ------- -------
From capital transactions:
Net premiums ..................................... 106,960 160,331 --
Loan interest .................................... 7,156 (478) (1,349)
Transfers (to) from the general account
of Life of Virginia:
Death benefits ................................. -- -- --
Surrenders ..................................... (235,363) (5,632) (22,921)
Loans .......................................... (644,066) (76,259) (37,406)
Cost of insurance and administrative
expense (note 3) .............................. (81,387) (69,581) (48,816)
Transfer gain (loss) and transfer fees ......... (865,659) (10,950) 6,558
Transfers from the Guarantee Account
(note 1) ....................................... 7,563 86,490 38,369
Interfund transfers .............................. 515,285 786,921 1,391,680
------------- ------- ---------
Increase (decrease) in net assets from
capital transactions ............................. (1,189,511) 870,842 1,326,115
------------- ------- ---------
Increase (decrease) in net assets ................. (346,041) 1,494,087 1,976,057
Net assets at beginning of year ................... 6,844,725 5,350,638 3,323,128
------------- --------- ---------
Net assets at end of year ......................... $ 6,498,684 6,844,725 5,299,185
============= ========= =========
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
(CONTINUED)
-----------------------------------------
GROWTH FUND
-----------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income ............................ 325,696 97,407 81,448
Net realized gain ................................ 779,763 211,799 104,773
Unrealized appreciation (depreciation) on
investments .................................... (197,508) 311,259 101,309
-------- ------- -------
Increase in net assets from operations ............ 907,951 620,465 287,530
-------- ------- -------
From capital transactions:
Net premiums ..................................... 130,707 136,857 --
Loan interest .................................... (2,818) (1,570) (58)
Transfers (to) from the general account
of Life of Virginia:
Death benefits ................................. -- -- --
Surrenders ..................................... (143,689) -- (5,002)
Loans .......................................... (119,579) (52,908) (31,288)
Cost of insurance and administrative
expense (note 3) .............................. (46,695) (33,074) (15,042)
Transfer gain (loss) and transfer fees ......... 130,682 5,703 5,414
Transfers from the Guarantee Account
(note 1) ....................................... 58,430 67,111 22,600
Interfund transfers .............................. 2,177,306 1,239,168 515,014
--------- --------- -------
Increase (decrease) in net assets from
capital transactions ............................. 2,184,344 1,361,287 491,638
--------- --------- -------
Increase (decrease) in net assets ................. 3,092,295 1,981,752 779,168
Net assets at beginning of year ................... 3,896,522 1,914,770 1,135,602
--------- --------- ---------
Net assets at end of year ......................... 6,988,817 3,896,522 1,914,770
========= ========= =========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS (CONTINUED)
-------------------------------------------------------------------------------
HIGH INCOME FUND MULTIPLE STRATEGIES FUND
--------------------------------------- ---------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
------------- ------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income ......................... $ 184,767 339,119 278,470 153,876 167,442 132,388
Net realized gain (loss) ...................... (157,587) 180,406 57,827 353,554 34,009 53,160
Unrealized appreciation (depreciation)
on investments .............................. 402 (53,341) 72,516 (372,624) 206,122 106,953
---------- ------- ------- -------- ------- -------
Increase in net assets from operations ......... 27,582 466,184 408,813 134,806 407,573 292,501
---------- ------- ------- -------- ------- -------
From capital transactions:
Net premiums .................................. 11,471 94,743 8,422 1,000 12,358 23,572
Loan interest ................................. (1,733) (628) (50) (877) (722) (207)
Transfers (to) from the general
account of Life of Virginia:
Death benefits .............................. (45,936) -- -- (18,545) (2,000) (60,123)
Surrenders .................................. (576,832) (9,092) (4,708) (140,865) -- (212,502)
Loans ....................................... (34,516) (29,617) (37,253) (50,344) 8,746 (9,140)
Cost of insurance and
administrative expense (note 3) ............ (62,108) (45,518) (32,765) (31,968) (29,942) (23,520)
Transfer gain (loss) and transfer
fees ....................................... (53,899) 32,059 4,282 6,332 356 789
Transfers from the Guarantee Account
(note 1) .................................... 28,238 -- -- 29,334 23,966 4,000
Interfund transfers ........................... 191,267 2,226,116 1,526,214 108,424 447,254 240,604
---------- --------- --------- -------- ------- --------
Increase (decrease) in net assets from
capital transactions .......................... (544,048) 2,268,063 1,464,142 (97,509) 460,016 (36,527)
---------- --------- --------- -------- ------- --------
Increase (decrease) in net assets .............. (516,466) 2,734,247 1,872,955 37,297 867,589 255,974
Net assets at beginning of year ................ 6,677,721 3,943,474 2,070,519 3,211,025 2,343,436 2,087,462
---------- --------- --------- --------- --------- ---------
Net assets at end of year ...................... $6,161,255 6,677,721 3,943,474 3,248,322 3,211,025 2,343,436
========== ========= ========= ========= ========= =========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
------------------------------------------------------------------
MONEY MARKET PORTFOLIO HIGH INCOME PORTFOLIO
------------------------------- --------------------------------
PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED
DECEMBER 11, DECEMBER 31, DECEMBER 11, DECEMBER 31,
1997 1996 1997 1996
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) ............... $ 81,397 56,997 90,203 180,548
Net realized gain (loss) ...................... -- -- 185,532 (17,100)
Unrealized appreciation (depreciation)
on investments .............................. -- -- (92,552) 27,229
------------ ------ ------- -------
Increase in net assets from operations ......... 81,397 56,997 183,183 190,677
------------ ------ ------- -------
From capital transactions:
Net premiums .................................. -- -- -- --
Loan interest ................................. (8,013) 720 6 (361)
Transfers (to) from the general
account of Life of Virginia:
Death benefits .............................. -- -- -- (59,986)
Surrenders .................................. (11,729) (129,716) (163,901) (136,277)
Loans ....................................... (17,933) (17,326) (6,459) (1,885)
Cost of insurance and
administrative expense ..................... (8,075) (14,528) (11,738) (16,160)
Transfer gain (loss) and transfer
fees ....................................... (66,375) (2,554) (44,309) 4,523
Transfers from the Guarantee Account
(note 1) .................................... -- 5,528 -- --
Interfund transfers ........................... (1,079,728) (1,016,677) (1,280,202) (873,671)
------------ ---------- ---------- --------
Increase (decrease) in net assets from
capital transactions .......................... (1,191,853) (1,174,553) (1,506,603) (1,083,817)
------------ ---------- ---------- ----------
Increase (decrease) in net assets .............. (1,110,456) (1,117,556) (1,323,420) (893,140)
Net assets at beginning of year ................ 1,110,456 2,228,012 1,323,420 2,216,560
------------ ---------- ---------- ----------
Net assets at end of year ...................... $ -- 1,110,456 -- 1,323,420
============ ========== ========== ==========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND (CONTINUED)
---------------------------------------------
EQUITY-INCOME PORTFOLIO
---------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- -------------- --------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income
(expense) .............................. $ 789,135 1,096,993 272,689
Net realized gain (loss) ................. 1,283,354 1,197,816 500,603
Unrealized appreciation
(depreciation) on investments .......... (494,927) 1,016,128 539,174
----------- --------- -------
Increase in net assets from
operations ............................... 1,577,562 3,310,937 1,312,466
----------- --------- ---------
From capital transactions:
Net premiums ............................. 146,903 215,369 77,436
Loan interest ............................ (10,898) (5,772) (6,953)
Transfers (to) from the general
account of Life of Virginia:
Death benefits ......................... (61,020) (18,249) (92,711)
Surrenders ............................. (222,133) (71,914) (373,251)
Loans .................................. (402,392) (121,271) (215,646)
Cost of insurance and
administrative expense ................ (167,638) (151,529) (114,634)
Transfer gain (loss) and transfer
fees .................................. 15,304 58,911 41,116
Transfers (to) from the Guarantee
Account (note 1) ....................... 122,727 112,723 127,788
Interfund transfers ...................... (202,161) 311,215 3,056,657
----------- --------- ---------
Increase (decrease) in net assets from
capital transactions ..................... (781,308) 329,483 2,499,802
----------- --------- ---------
Increase (decrease) in net assets ......... 796,254 3,640,420 3,812,268
Net assets at beginning of year ........... 16,029,679 12,389,259 8,576,991
----------- ---------- ---------
Net assets at end of year ................. $16,825,933 16,029,679 12,389,259
=========== ========== ==========
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
(CONTINUED)
-----------------------------------------
GROWTH PORTFOLIO
-----------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
-------------- ------------- ------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income
(expense) .............................. 1,256,390 194,168 359,170
Net realized gain (loss) ................. 1,619,202 1,766,746 536,491
Unrealized appreciation
(depreciation) on investments .......... 667,154 (282,336) 31,232
--------- --------- -------
Increase in net assets from
operations ............................... 3,542,746 1,678,578 926,893
--------- --------- -------
From capital transactions:
Net premiums ............................. 50,433 78,875 27,587
Loan interest ............................ (17,111) (3,060) (3,910)
Transfers (to) from the general
account of Life of Virginia:
Death benefits ......................... (24,255) (1,634) (73,221)
Surrenders ............................. (572,105) (28,946) (32,373)
Loans .................................. (532,091) (153,343) (43,837)
Cost of insurance and
administrative expense ................ (123,718) (99,653) (83,276)
Transfer gain (loss) and transfer
fees .................................. 177,115 26,694 14,043
Transfers (to) from the Guarantee
Account (note 1) ....................... 100,312 44,630 135,064
Interfund transfers ...................... 463,637 44,400 1,429,513
--------- --------- ---------
Increase (decrease) in net assets from
capital transactions ..................... (477,783) (92,037) 1,369,590
--------- --------- ---------
Increase (decrease) in net assets ......... 3,064,963 1,586,541 2,296,483
Net assets at beginning of year ........... 10,392,552 8,806,011 6,509,528
---------- --------- ---------
Net assets at end of year ................. 13,457,515 10,392,552 8,806,011
========== ========== =========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND (CONTINUED)
-------------------------------------------------
OVERSEAS PORTFOLIO
-------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------- --------------- ---------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) .................................... $ 289,728 433,050 94,750
Net realized gain (loss) ........................................... (178,639) 801,884 517,315
Unrealized appreciation (depreciation) on investments .............. 349,052 (489,713) (15,497)
---------- -------- -------
Increase in net assets from operations .............................. 460,141 745,221 596,568
---------- -------- -------
From capital transactions:
Net premiums ....................................................... 19,010 12,810 10,673
Loan interest ...................................................... (1,529) (2,436) (326)
Transfers (to) from the general account of Life of Virginia:
Death benefits ................................................... (30,475) -- (10,056)
Surrenders ....................................................... (214,745) (26,126) (99,794)
Loans ............................................................ (93,248) (140,934) (49,140)
Cost of insurance and administrative expense (note 3) ............ (47,188) (59,162) (67,126)
Transfer gain (loss) and transfer fees ........................... 66,028 (12,801) 30,035
Transfers (to) from Guarantee Account (note 1) ..................... (8,627) 61,472 47,987
Interfund transfers ................................................ 294,585 (1,392,016) (2,098,908)
---------- ---------- ----------
Increase (decrease) in net assets from capital transactions ......... (16,189) (1,559,193) (2,236,655)
---------- ---------- ----------
Increase (decrease) in net assets ................................... 443,952 (813,972) (1,640,087)
Net assets at beginning of period ................................... 4,562,572 5,376,544 7,016,631
---------- ---------- ----------
Net assets at end of period ......................................... $5,006,524 4,562,572 5,376,544
========== ========== ==========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II
-------------------------------------------------------------------------------------
ASSET MANAGER PORTFOLIO CONTRAFUND PORTFOLIO
-------------------------------------------- ----------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
--------------- ------------ --------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) ........... $ 1,088,201 885,930 447,121 347,724 68,315 (22,842)
Net realized gain (loss) .................. 252,067 187,349 168,152 1,254,204 268,831 100,260
Unrealized appreciation (depreciation)
on investments .......................... (67,659) 534,401 400,455 648,485 823,917 476,601
----------- ------- ------- --------- ------- -------
Increase in net assets from operations ..... 1,272,609 1,607,680 1,015,728 2,250,413 1,161,063 554,019
----------- --------- --------- --------- --------- -------
From capital transactions:
Net premiums .............................. 2,300 98,687 -- 177,753 171,916 139,592
Loan interest ............................. (7,000) (4,946) (3,433) (6,910) (3,288) (465)
Transfers (to) from the general account
of Life of Virginia:
Death benefits .......................... (41,112) (149,074) -- (24,991) (1,797) (20,796)
Surrenders .............................. (325,417) (8,956) (497,465) (22,516) (9,456) (35,592)
Loans ................................... (241,371) (97,092) (368,309) (85,784) (118,554) (41,285)
Cost of insurance and administrative
expense (note 3) ....................... (101,341) (98,131) (86,595) (94,295) (72,675) (34,864)
Transfer gain (loss) and transfer
fees ................................... (13,045) 397 2,356 59,824 34,177 58,463
Transfers (to) from Guarantee Account
(note 1) ................................ 69,851 33,707 1,000 84,180 150,028 105,233
Interfund transfers ....................... 156,323 (59,803) (122,445) 989,747 1,827,255 2,524,438
----------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets from
capital transactions ...................... (500,812) (285,211) (1,074,891) 1,077,008 1,977,606 2,694,724
----------- --------- ---------- --------- --------- ---------
Increase (decrease) in net assets .......... 771,797 1,322,469 (59,163) 3,327,421 3,138,669 3,248,743
Net assets at beginning of period .......... 9,576,133 8,253,664 8,312,827 7,849,803 4,711,134 1,462,391
----------- --------- ---------- --------- --------- ---------
Net assets at end of period ................ $10,347,930 9,576,133 8,253,664 11,177,224 7,849,803 4,711,134
=========== ========= ========== ========== ========= =========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND III
----------------------------------------------------------------
GROWTH & INCOME PORTFOLIO GROWTH OPPORTUNITIES PORTFOLIO
------------------------------- ------------------------------
PERIOD FROM PERIOD FROM
YEAR MAY 16, YEAR MAY 16,
ENDED 1997 TO ENDED 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) ............... $ (8,714) (1,712) 12,355 (1,910)
Net realized gain (loss) ...................... 100,071 6,219 15,522 876
Unrealized appreciation (depreciation)
on investments .............................. 91,779 11,314 75,120 39,235
---------- ------ ------ ------
Increase in net assets from operations ......... 183,136 15,821 102,997 38,201
---------- ------ ------- ------
From capital transactions:
Net premiums .................................. 23,295 12,486 39,535 18,354
Loan interest ................................. (393) -- (134) --
Transfers (to) from the general
account of Life of Virginia:
Death benefits .............................. -- -- -- --
Surrenders .................................. -- -- -- --
Loans ....................................... (3,183) -- -- --
Cost of insurance and
administrative expense (note 3) ............ (7,686) (1,616) (5,140) (1,627)
Transfer gain (loss) and transfer
fees ....................................... 28,249 10,283 1,640 (20)
Transfers (to) from Guarantee
Account (note 1) ............................ 13,857 -- 8,711 2,963
Interfund transfers ........................... 357,477 373,471 145,247 293,576
---------- ------- ------- -------
Increase (decrease) in net assets from
capital transactions .......................... 411,616 394,624 189,859 313,246
---------- ------- ------- -------
Increase (decrease) in net assets .............. 594,752 410,445 292,856 351,447
Net assets at beginning of period .............. 410,445 -- 351,447 --
---------- ------- ------- -------
Net assets at end of period .................... $1,005,197 410,445 644,303 351,447
========== ======= ======= =======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST
------------------------------
BALANCED PORTFOLIO
------------------------------
PERIOD YEAR
ENDED ENDED
DECEMBER 11, DECEMBER 31,
1997 1996
--------------- --------------
<S> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income .................. $ 98,194 269,151
Net realized gain (loss) ............... 315,380 13,816
Unrealized appreciation
(depreciation) on
investments .......................... (146,827) (182,324)
------------- --------
Increase in net assets from
operations ............................. 266,747 100,643
------------- --------
From capital transactions:
Net premiums ........................... -- --
Loan interest .......................... (669) (657)
Transfers (to) from the general
account of Life of Virginia:
Death benefits ....................... -- --
Surrenders ........................... (19,398) (27,861)
Loans ................................ (4,103) (34,817)
Cost of insurance and
administrative expense
(note 3) ............................ (19,558) (20,292)
Transfer gain (loss) and
transfer fees ....................... 669 5,371
Interfund transfers .................... (2,096,250) (79,871)
------------- --------
Decrease in net assets from capital
transactions ........................... (2,139,309) (158,127)
------------- --------
Decrease in net assets .................. (1,872,562) (57,484)
Net assets at beginning of year ......... 1,872,562 1,930,046
------------- ---------
Net assets at end of year ............... $ -- 1,872,562
============= =========
<CAPTION>
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
----------------------------------------------------------
BOND PORTFOLIO GROWTH PORTFOLIO
----------------------------- ----------------------------
PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED
DECEMBER 11, DECEMBER 31, DECEMBER 11, DECEMBER 31,
1997 1996 1997 1996
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income .................. 30,012 57,904 54,741 58,809
Net realized gain (loss) ............... (3,318) (5,135) 150,610 5,513
Unrealized appreciation
(depreciation) on
investments .......................... (1,629) (34,909) (55,310) (6,856)
------ ------- ------- ------
Increase in net assets from
operations ............................. 25,065 17,860 150,041 57,466
------ ------- ------- ------
From capital transactions:
Net premiums ........................... -- -- -- --
Loan interest .......................... (2,301) 258 (894) (1,215)
Transfers (to) from the general
account of Life of Virginia:
Death benefits ....................... -- -- -- --
Surrenders ........................... -- (43,768) -- --
Loans ................................ 53,065 (55,969) (7,618) --
Cost of insurance and
administrative expense
(note 3) ............................ (5,054) (7,634) (7,810) (7,938)
Transfer gain (loss) and
transfer fees ....................... (38,185) (5,840) (1,185) (482)
Interfund transfers .................... (670,024) (163,478) (881,910) (74,169)
-------- -------- -------- -------
Decrease in net assets from capital
transactions ........................... (662,499) (276,431) (899,417) (83,804)
-------- -------- -------- -------
Decrease in net assets .................. (637,434) (258,571) (749,376) (26,338)
Net assets at beginning of year ......... 637,434 896,005 749,376 775,714
-------- -------- -------- -------
Net assets at end of year ............... -- 637,434 -- 749,376
======== ======== ======== =======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FEDERATED INVESTORS INSURANCE SERIES
------------------------------------------
AMERICAN LEADERS FUND II
------------------------------------------
PERIOD FROM
SEPTEMBER 5,
1996 TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
1998 1997 1996
-------------- ------------- -------------
<S> <C> <C> <C>
Increase in net assets
From operations:
Net investment income (expense) ................. $ 31,236 (1,957) 36
Net realized gain (loss) ........................ (4,077) 11,788 19
Unrealized appreciation (depreciation)
on investments ................................ 58,884 53,148 2,855
---------- -------- -----
Increase in net assets from operations ........... 86,043 62,979 2,910
---------- -------- -----
From capital transactions:
Net premiums .................................... 96,517 92,480 --
Loan interest ................................... (225) (3) --
Transfers (to) from the general account of
Life of Virginia:
Death benefits ................................ -- -- --
Surrenders .................................... -- -- --
Loans ......................................... (12,883) 205 --
Cost of insurance and administrative
expense (note 3) ............................. (11,161) (3,145) (65)
Transfer gain (loss) and transfer fees ........ 2,778 1,084 (1,522)
Transfers (to) from the Guarantee Account
(note 1) ...................................... 16,071 5,323 300
Interfund transfers ............................. 343,685 341,074 16,140
---------- -------- ------
Increase (decrease) in net assets from capital
transactions .................................... 434,782 437,018 14,853
---------- -------- ------
Increase (decrease) in net assets ................ 520,825 499,997 17,763
Net assets at beginning of period ................ 517,760 17,763 --
---------- -------- ------
Net assets at end of period ...................... $1,038,585 517,760 17,763
========== ======== ======
<CAPTION>
FEDERATED INVESTORS INSURANCE SERIES
------------------------------------------
HIGH INCOME BOND FUND II
------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- ------------- ------------
<S> <C> <C> <C>
Increase in net assets
From operations:
Net investment income (expense) ................. 44,079 34,274 30,654
Net realized gain (loss) ........................ 85,989 5,827 1,726
Unrealized appreciation (depreciation)
on investments ................................ (90,012) 55,167 27,920
------- ------ ------
Increase in net assets from operations ........... 40,056 95,268 60,300
------- ------ ------
From capital transactions:
Net premiums .................................... 28,358 43,594 --
Loan interest ................................... (409) (1,353) --
Transfers (to) from the general account of
Life of Virginia:
Death benefits ................................ -- -- --
Surrenders .................................... -- -- --
Loans ......................................... (14,686) (11,473) (40,000)
Cost of insurance and administrative
expense (note 3) ............................. (14,411) (8,961) (4,447)
Transfer gain (loss) and transfer fees ........ 706 (359) 100
Transfers (to) from the Guarantee Account
(note 1) ...................................... 6,031 5,441 (6,742)
Interfund transfers ............................. (1,149,736) 1,432,858 571,170
---------- --------- -------
Increase (decrease) in net assets from capital
transactions .................................... (1,144,147) 1,459,747 520,081
---------- --------- -------
Increase (decrease) in net assets ................ (1,104,091) 1,555,015 580,381
Net assets at beginning of period ................ 2,233,614 678,599 98,218
---------- --------- -------
Net assets at end of period ...................... 1,129,523 2,233,614 678,599
========== ========= =======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FEDERATED INVESTORS INSURANCE SERIES
(CONTINUED)
----------------------------------------
UTILITY FUND II
----------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------ ------------ ----------
<S> <C> <C> <C>
Increase in net assets
From operations:
Net investment income (expense) .................................... $ 22,802 8,360 4,472
Net realized gain (loss) ........................................... 25,956 11,484 9,190
Unrealized appreciation (depreciation) on investments .............. 8,478 50,092 5,651
--------- ------ -----
Increase in net assets from operations .............................. 57,236 69,936 19,313
--------- ------ ------
From capital transactions:
Net premiums ....................................................... 21,133 -- --
Loan interest ...................................................... (807) (55) (110)
Transfers (to) from the general account of Life of Virginia:
Death benefits ................................................... -- -- --
Surrenders ....................................................... -- -- --
Loans ............................................................ (18,860) (34,631) (2,022)
Cost of insurance and administrative expense (note 3) ............ (5,595) (3,486) (1,683)
Transfer gain (loss) and transfer fees ........................... 690 2,314 (364)
Transfers (to) from the Guarantee Account (note 1) ................. -- 10,521 3,000
Interfund transfers ................................................ 79,433 107,029 130,977
--------- ------- -------
Increase (decrease) in net assets from capital transactions ......... 75,994 81,692 129,798
--------- ------- -------
Increase (decrease) in net assets ................................... 133,230 151,628 149,111
Net assets at beginning of period ................................... 393,340 241,712 92,601
--------- ------- -------
Net assets at end of period ......................................... $ 526,570 393,340 241,712
========= ======= =======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ALGER AMERICAN FUND
---------------------------------------------------------------------------------
SMALL CAP PORTFOLIO GROWTH PORTFOLIO
---------------------------------------- ----------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1998 1997 1996 1998 1997 1996
------------- ------------ ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) ............ $ 185,984 24,230 (7,102) 328,974 (5,714) 6,391
Net realized gain (loss) ................... (361,335) 155,266 (13,977) 342,335 121,886 (8,548)
Unrealized appreciation (depreciation)
on investments ........................... 411,856 (23,084) (18,580) 332,102 195,886 27,545
---------- ------- ------- ------- ------- ------
Increase (decrease) in net assets from
operations ................................. 236,505 156,412 (39,659) 1,003,411 312,058 25,388
---------- ------- ------- --------- ------- ------
From capital transactions:
Net premiums ............................... 53,010 88,579 22,914 49,615 23,449 11,882
Loan interest .............................. (394) 2 68 (929) (449) (11,178)
Transfers (to) from the general
account of Life of Virginia:
Death benefits ........................... (13,545) -- (11,290) (19,533) -- --
Surrenders ............................... (70,773) (1,243) (40,820) (43,795) (4,963) (716)
Loans .................................... 22,480 (51,090) (33,607) (69,736) (60,475) (10,642)
Cost of insurance and
administrative expense (note 3) ......... (19,635) (17,890) (10,161) (27,911) (20,884) (7,424)
Transfer gain (loss) and transfer
fees .................................... 68,756 (6,935) 5,384 30,431 (16,706) 9,692
Transfers (to) from the Guarantee
Account (note 1) ......................... 23,461 72,126 929 35,331 25,127 5,392
Interfund transfers ........................ 1,262,264 148,081 863,942 631,892 147,496 1,228,789
---------- ------- ------- --------- ------- ---------
Increase (decrease) in net assets from
capital transactions ....................... 1,325,624 231,630 797,359 585,365 92,595 1,225,795
---------- ------- ------- --------- ------- ---------
Increase in net assets ...................... 1,562,129 388,042 757,700 1,588,776 404,653 1,251,183
Net assets at beginning of period ........... 1,460,157 1,072,115 314,415 1,756,776 1,352,123 100,940
---------- --------- ------- --------- --------- ---------
Net assets at end of period ................. $3,022,286 1,460,157 1,072,115 3,345,552 1,756,776 1,352,123
========== ========= ========= ========= ========= =========
</TABLE>
<PAGE>
IFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PBHG INSURANCE SERIES FUND
----------------------------------------------------------
PBHG LARGE CAP GROWTH
PORTFOLIO PBHG GROWTH II PORTFOLIO
----------------------------- ----------------------------
PERIOD FROM PERIOD FROM
YEAR JULY 22, YEAR MAY 22,
ENDED 1997 TO ENDED 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) .................................... $ (1,340) (205) (1,328) (540)
Net realized gain (loss) ........................................... 12,396 (1) 36,908 1,296
Unrealized appreciation (depreciation) on investments .............. 11,365 656 15,978 (846)
--------- ------ ------ -----
Increase (decrease) in net assets from operations ................... 22,421 450 51,558 (90)
--------- ------ ------ -----
From capital transactions:
Net premiums ....................................................... -- -- 3,717 4,615
Loan interest ...................................................... -- -- (58) --
Transfers (to) from the general account of Life of
Virginia:
Death benefits ................................................... -- -- -- --
Surrenders ....................................................... (3,629) -- -- --
Loans ............................................................ (817) -- -- --
Cost of insurance and administrative expense
(note 3) ........................................................ (2,407) (134) (1,168) (460)
Transfer gain (loss) and transfer fees ........................... (2,844) 53 (36,339) 1,309
Transfers (to) from the Guarantee Account (note 1) ................. -- 3,269 25,929 2,518
Interfund transfers ................................................ (8,883) 28,216 2,248 84,214
--------- ------- ------- ------
Increase (decrease) in net assets from capital transactions ......... (18,580) 31,404 (5,671) 92,196
--------- ------- ------- ------
Increase in net assets .............................................. 3,841 31,854 45,887 92,106
Net assets at beginning of period ................................... 31,854 -- 92,106 --
--------- ------- ------- ------
Net assets at end of period ......................................... $ 35,695 31,854 137,993 92,106
========= ======= ======= ======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
JANUS ASPEN SERIES
----------------------------------------
AGGRESSIVE GROWTH PORTFOLIO
----------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------- ------------ -------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) .................. $ (31,583) (28,915) (6,598)
Net realized gain ................................ 678,326 192,226 267,683
Unrealized appreciation (depreciation)
on investments ................................. 307,545 99,444 (112,622)
---------- ------- --------
Increase in net assets from operations ............ 954,288 262,755 148,463
---------- ------- --------
From capital transactions:
Net premiums ..................................... 42,148 60,192 3,031
Loan interest .................................... (1,997) (77) (266)
Transfers (to) from the general account
of Life of Virginia:
Death benefits ................................. -- -- --
Surrenders ..................................... (9,219) (318) (48,757)
Loans .......................................... (24,856) (68,184) (2,874)
Cost of insurance and administrative
expense (note 3) .............................. (25,282) (24,702) (20,310)
Transfer gain (loss) and transfer fees ......... (164,381) 43,699 (3,623)
Transfers (to) from the Guarantee
Account (note 1) ............................... 8,345 34,546 10,008
Interfund transfers .............................. (793,229) 503,885 (61,164)
---------- ------- --------
Increase (decrease) in net assets from
capital transactions ............................. (968,471) 549,041 (123,955)
---------- ------- --------
Increase (decrease) in net assets ................. (14,183) 811,796 24,508
Net assets at beginning of period ................. 2,788,472 1,976,676 1,952,168
---------- --------- ---------
Net assets at end of period ....................... $2,774,289 2,788,472 1,976,676
========== ========= =========
<CAPTION>
JANUS ASPEN SERIES
----------------------------------------
GROWTH PORTFOLIO
----------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------ ------------- -------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) .................. 268,639 62,948 31,388
Net realized gain ................................ 870,857 243,734 132,138
Unrealized appreciation (depreciation)
on investments ................................. 434,354 376,858 144,223
------- ------- -------
Increase in net assets from operations ............ 1,573,850 683,540 307,749
--------- ------- -------
From capital transactions:
Net premiums ..................................... 64,698 100,831 24,787
Loan interest .................................... (5,496) (600) (1,074)
Transfers (to) from the general account
of Life of Virginia:
Death benefits ................................. -- -- --
Surrenders ..................................... (103,135) (11,331) (24,314)
Loans .......................................... (159,214) (101,750) (75,374)
Cost of insurance and administrative
expense (note 3) .............................. (55,256) (43,347) (23,158)
Transfer gain (loss) and transfer fees ......... 16,223 594 435
Transfers (to) from the Guarantee
Account (note 1) ............................... 18,355 84,063 65,687
Interfund transfers .............................. 305,817 1,105,318 1,204,517
--------- --------- ---------
Increase (decrease) in net assets from
capital transactions ............................. 81,992 1,133,778 1,171,506
--------- --------- ---------
Increase (decrease) in net assets ................. 1,655,842 1,817,318 1,479,255
Net assets at beginning of period ................. 4,604,206 2,786,888 1,307,633
--------- --------- ---------
Net assets at end of period ....................... 6,260,048 4,604,206 2,786,888
========= ========= =========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
JANUS ASPEN SERIES (CONTINUED)
------------------------------------------
WORLDWIDE GROWTH PORTFOLIO
------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------------- ------------ -------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) .................. $ 265,703 22,598 19,102
Net realized gain ................................ 1,535,984 457,649 156,316
Unrealized appreciation (depreciation) on
investments .................................... 417,036 666,571 498,790
----------- ------- -------
Increase in net assets from operations ............ 2,218,723 1,146,818 674,208
----------- --------- -------
From capital transactions:
Net premiums ..................................... 276,172 334,686 (533)
Loan interest .................................... (3,134) (933) 95,498
Transfers (to) from the general account
of Life of Virginia:
Death benefits ................................. (68,985) (1,737) --
Surrenders ..................................... (104,833) (5,393) (27,186)
Loans .......................................... (97,145) (74,934) (15,174)
Cost of insurance and administrative
expense (note 3) .............................. (110,038) (79,593) (34,706)
Transfer gain (loss) and transfer fees ......... 12,636 14,879 685
Transfers (to) from the Guarantee
Account (note 1) ............................... (12,929) 109,443 43,645
Interfund transfers .............................. 863,455 1,831,317 2,870,698
----------- --------- ---------
Increase (decrease) in net assets from
capital transactions ............................. 755,199 2,127,735 2,932,927
----------- --------- ---------
Increase (decrease) in net assets ................. 2,973,922 3,274,553 3,607,135
Net assets at beginning of period ................. 8,226,390 4,951,837 1,344,702
----------- --------- ---------
Net assets at end of period ....................... $11,200,312 8,226,390 4,951,837
=========== ========= =========
<CAPTION>
JANUS ASPEN SERIES (CONTINUED)
--------------------------------------
BALANCED PORTFOLIO
--------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------ ------------- -----------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) .................. 129,416 39,186 6,506
Net realized gain ................................ 75,042 16,368 3,534
Unrealized appreciation (depreciation) on
investments .................................... 1,021,865 172,861 38,227
--------- ------- ------
Increase in net assets from operations ............ 1,226,323 228,415 48,267
--------- ------- ------
From capital transactions:
Net premiums ..................................... 20,390 32,001 --
Loan interest .................................... (4,091) (48) 53,887
Transfers (to) from the general account
of Life of Virginia:
Death benefits ................................. (18,660) -- --
Surrenders ..................................... (5,329) (2,416) --
Loans .......................................... (78,415) 26,990 (1,996)
Cost of insurance and administrative
expense (note 3) .............................. (43,371) (13,436) (3,985)
Transfer gain (loss) and transfer fees ......... 989 606 (851)
Transfers (to) from the Guarantee
Account (note 1) ............................... 46,495 41,217 45,923
Interfund transfers .............................. 395,097 2,601,676 457,706
--------- --------- -------
Increase (decrease) in net assets from
capital transactions ............................. 313,105 2,686,590 550,684
--------- --------- -------
Increase (decrease) in net assets ................. 1,539,428 2,915,005 598,951
Net assets at beginning of period ................. 3,545,518 630,513 31,562
--------- --------- -------
Net assets at end of period ....................... 5,084,946 3,545,518 630,513
========= ========= =======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
JANUS ASPEN SERIES (CONTINUED)
-------------------------------------
FLEXIBLE INCOME PORTFOLIO
-------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996
------------ ------------ -----------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) .................. $ 18,932 9,796 8,453
Net realized gain (loss) ......................... 2,524 3,107 111
Unrealized appreciation (depreciation) on
investments .................................... 3,399 4,489 585
--------- ----- -----
Increase (decrease) in net assets from
operations ....................................... 24,855 17,392 9,149
--------- ------ -----
From capital transactions:
Net premiums ................................... 5,245 21,946 (18)
Loan interest .................................. (324) (28) --
Transfers (to) from the general
account of Life of Virginia:
Death benefits ................................. -- -- --
Surrenders ..................................... (52,087) -- --
Loans .......................................... 21,183 (30,720) (4,791)
Cost of insurance and administrative
expense (note 3) .............................. (3,675) (1,977) (963)
Transfer gain (loss) and transfer fees ......... (208) (429) (200)
Transfers (to) from the Guarantee
Account (note 1) ............................... 85 3,243 --
Interfund transfers .............................. 269,008 3,106 149,346
--------- ------- -------
Increase (decrease) in net assets from
capital transactions ............................. 239,227 (4,859) 143,374
--------- ------- -------
Increase in net assets ............................ 264,082 12,533 152,523
Net assets at beginning of period ................. 172,004 159,471 6,948
--------- ------- -------
Net assets at end of period ....................... $ 436,086 172,004 159,471
========= ======= =======
<CAPTION>
JANUS ASPEN SERIES (CONTINUED)
-----------------------------------------
INTERNATIONAL GROWTH PORTFOLIO
-----------------------------------------
PERIOD FROM
JUNE 5,
1996 TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) .................. 30,676 (5,942) 1,086
Net realized gain (loss) ......................... 171,620 145,208 2,328
Unrealized appreciation (depreciation) on
investments .................................... 158,124 45,943 17,399
------- ------- ------
Increase (decrease) in net assets from
operations ....................................... 360,420 185,209 20,813
------- ------- ------
From capital transactions:
Net premiums ................................... 36,145 60,001 --
Loan interest .................................. (617) (1,662) --
Transfers (to) from the general
account of Life of Virginia:
Death benefits ................................. (11,677) -- --
Surrenders ..................................... (60,448) -- --
Loans .......................................... 4,516 (10,000) --
Cost of insurance and administrative
expense (note 3) .............................. (24,306) (16,021) (958)
Transfer gain (loss) and transfer fees ......... 59,856 12,507 58
Transfers (to) from the Guarantee
Account (note 1) ............................... 77,727 122,804 10,500
Interfund transfers .............................. 813,972 1,044,932 359,635
------- --------- -------
Increase (decrease) in net assets from
capital transactions ............................. 895,168 1,212,561 369,235
------- --------- -------
Increase in net assets ............................ 1,255,588 1,397,770 390,048
Net assets at beginning of period ................. 1,787,818 390,048 --
--------- --------- -------
Net assets at end of period ....................... 3,043,406 1,787,818 390,048
========= ========= =======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GOLDMAN SACHS VARIABLE
INSURANCE
JANUS ASPEN SERIES (CONTINUED) TRUST FUND
------------------------------- ------------------------------
GROWTH AND MID CAP
CAPITAL APPRECIATION PORTFOLIO INCOME FUND EQUITY FUND
------------------------------- -------------- -------------
PERIOD FROM PERIOD FROM PERIOD FROM
YEAR MAY 22, OCTOBER 6, JUNE 25,
ENDED 1997 TO 1998 TO 1998 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1998
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
From operations:
Net investment income (expense) .......................... $ (5,716) (75) 37 425
Net realized gain (loss) ................................. 225,641 (7,519) 58 (16)
Unrealized appreciation (depreciation) on
investments ............................................ 56,754 (582) 49 196
--------- ------ -- ---
Increase (decrease) in net assets from operations ......... 276,679 (8,176) 144 605
--------- ------ --- ---
From capital transactions:
Net premiums ........................................... 12,000 -- -- --
Loan interest .......................................... -- -- -- --
Transfers (to) from the general account of
Life of Virginia:
Death benefits ......................................... -- -- -- --
Surrenders ............................................. -- -- -- --
Loans .................................................. (37,337) -- -- --
Cost of insurance and administrative expense
(note 3) .............................................. (8,261) (181) (10) (279)
Transfer gain (loss) and transfer fees ................. (4,436) (24) 63 116
Transfers (to) from the Guarantee Account
(note 1) ............................................... -- -- -- --
Interfund transfers ...................................... 677,289 20,306 5,092 79,827
--------- ------ ----- ------
Increase (decrease) in net assets from capital
transactions ............................................. 639,255 20,101 5,145 79,664
--------- ------ ----- ------
Increase in net assets .................................... 915,934 11,925 5,289 80,269
Net assets at beginning of period ......................... 11,925 -- -- --
--------- ------ ----- ------
Net assets at end of period ............................... $ 927,859 11,925 5,289 80,269
========= ====== ===== ======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
(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. Life of Virginia is a stock life insurance
company operating under a charter granted by the Commonwealth of Virginia on
March 21, 1871. Eighty percent of the capital stock of Life of Virginia is
owned by General Electric Capital Assurance Company. The remaining 20% is owned
by GE Financial Assurance Holdings, Inc. General Electric Capital Assurance
Company and GE Financial Assurance Holdings, Inc. are indirect, wholly-owned
subsidiaries of General Electric Capital Corporation ("GE Capital"). GE
Capital, a diversified financial services company, is a wholly-owned subsidiary
of General Electric Company (GE), a New York corporation. Prior to April 1,
1996, Life of Virginia was an indirect wholly-owned subsidiary of Aon
Corporation (Aon).
In October 1998, three new investment subdivisions were added to the
Account. The Investors Fund, Strategic Bond Fund, and the Total Return Fund
each invest solely in a designated portfolio of the Salomon Brothers Variable
Series Fund. All designated portfolios described above are series type mutual
funds.
In May 1998, three new investment subdivisions were added to the Account.
The U.S. Equity Fund invests solely in a designated portfolio of the GE
Investments Funds, Inc. The Growth and Income, and Mid Cap Equity Funds each
invest solely in a designated portfolio of the Goldman Sachs Variable Insurance
Trust Fund. All designated portfolios described above are series type mutual
funds.
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.
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:
<TABLE>
<CAPTION>
BEFORE THE SUBSTITUTION AFTER THE SUBSTITUTION
<S> <C>
Shares of Money Market Portfolio -- Variable Shares of Money Market Fund -- GE Investments
Insurance Products Fund Funds, Inc.
Shares of Money Fund -- Oppenheimer Variable Shares of Money Market Fund -- GE Investments
Account Funds Funds, Inc.
Shares of Government Securities Fund -- GE Shares of Income Fund -- GE Investments Funds, Inc.
Investments Funds, Inc.
Shares of Bond Portfolio -- Neuberger & Berman Shares of Income Fund -- GE Investments Funds, Inc.
Advisers Management Trust
Shares of High Income Portfolio -- Variable Shares of High Income Fund -- Oppenheimer Variable
Insurance Products Fund Account Funds
Shares of Growth Portfolio -- Neuberger & Berman Shares of Growth Portfolio -- Variable Insurance
Advisers Management Trust Products Fund
Shares of Balanced Portfolio -- Neuberger & Shares of Balanced Portfolio -- Janus Aspen Series
Berman Advisers Management Trust
</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.
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
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(1) DESCRIPTION OF ENTITY -- Continued
new subdivision, the American Leaders Fund II, invests solely in a designated
portfolio of the Federated Investors Insurance Series, 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.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) INVESTMENTS
Investments are stated at fair value which is based on the underlying net
asset value per share of the respective 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.
The aggregate cost of the investments acquired and the aggregate proceeds
of investments sold, for the year or period ended December 31, 1998, were:
<TABLE>
<CAPTION>
COST OF PROCEEDS
SHARES FROM
FUND/PORTFOLIO ACQUIRED SHARES SOLD
- ------------------------------------- --------------- --------------
<S> <C> <C>
GE Investments Funds, Inc.:
S&P 500 Index ...................... $ 27,218,449 25,079,333
Money Market ....................... 264,936,313 265,566,838
Total Return ....................... 378,075 445,895
International Equity ............... 1,059,286 1,020,330
Real Estate Securities ............. 448,245 581,063
Global Income ...................... 14,054 544
Value Equity ....................... 6,058,766 5,781,494
Income ............................. 436,325 271,027
U.S. Equity ........................ 25,071 14,149
Oppenheimer Variable Account Funds:
Bond ............................... 29,944,577 31,105,031
Capital Appreciation ............... 52,671,648 53,748,619
Growth ............................. 12,723,537 12,402,066
High Income ........................ 34,470,779 32,744,079
Multiple Strategies ................ 4,786,911 4,720,639
Variable Insurance Products Fund:
Equity-Income ...................... 9,090,858 8,840,402
Growth ............................. 111,621,940 110,781,654
Overseas ........................... 16,515,111 16,227,529
Variable Insurance Products Fund II:
Asset Manager ...................... 2,526,675 1,924,064
Contrafund ......................... 13,766,933 12,248,577
Variable Insurance Products Fund III:
Growth and Income .................. 6,255,114 5,850,535
Growth Opportunities ............... 341,093 137,283
Federated Investors Insurance Series:
American Leaders II ................ 831,620 362,093
High Income Bond II ................ 4,254,817 5,354,145
Utility II ......................... 338,932 236,489
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
COST OF PROCEEDS
SHARES FROM
FUND/PORTFOLIO ACQUIRED SHARES SOLD
- --------------------------------------- ------------- ------------
<S> <C> <C>
Alger American Fund:
Small Cap ............................ $ 5,870,967 4,352,529
Growth ............................... 6,196,569 5,270,632
PBHG Insurance Series Fund:
PBHG Large Cap Growth ................ 4,106,152 4,109,381
PBHG Growth II ....................... 2,556,295 2,560,662
Janus Aspen Series:
Aggressive Growth .................... 9,329,303 10,202,804
Growth ............................... 8,188,817 7,824,471
Worldwide Growth ..................... 10,623,313 9,541,416
Balanced ............................. 998,549 507,678
Flexible Income ...................... 362,164 103,470
International Growth ................. 13,627,793 12,681,934
Capital Appreciation ................. 28,579,287 27,950,648
Goldman Sachs Variable Insurance Trust:
Growth and Income .................... 6,855 1,667
Mid Cap Equity ....................... 80,916 640
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
(B) CAPITAL TRANSACTIONS
The increase (decrease) of outstanding units from capital transactions for
the years or lesser periods ended December 31, 1998, 1997 and 1996 are as
follows:
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC.
---------------------------
S&P 500 GOVERNMENT
INDEX SECURITIES
FUND FUND
------------ --------------
<S> <C> <C>
Units outstanding at December 31, 1995 .................. 39,687 45,046
-------- ------
Net premiums ........................................... -- --
Loan interest .......................................... (2) (1)
Transfers (to) from the general account of
Life of Virginia:
Death benefits ....................................... (2,944) --
Surrenders ........................................... (365) (1,455)
Loans ................................................ (982) (84)
Cost of insurance and administrative expense ......... (502) (457)
Transfers (to) from the Guarantee Account .............. 1,692 (177)
Interfund transfers .................................... 22,032 682
-------- --------
Net increase (decrease) in units from capital
transactions ........................................... 18,929 (1,492)
-------- --------
Units outstanding at December 31, 1996 .................. 58,616 43,554
-------- --------
Net premiums ........................................... 918 705
Loan interest .......................................... (15) (24)
Transfers (to) from the general account of
Life of Virginia:
Death benefits ....................................... (56) --
Surrenders ........................................... (1,568) (14,115)
Loans ................................................ (310) (1,284)
Cost of insurance and administrative expense ......... (770) (447)
Transfers (to) from the Guarantee Account .............. 1,030 15
Interfund transfers .................................... 35,756 (28,404)
-------- ---------
Net increase (decrease) in units from capital
transactions ........................................... 34,985 (43,554)
-------- ---------
Units outstanding at December 31, 1997 .................. 93,601 --
-------- ---------
Net premiums ........................................... 10,503 --
Loan interest .......................................... (51) --
Transfers (to) from the general account of
Life of Virginia:
Death benefits ....................................... (776) --
Surrenders ........................................... (3,536) --
Loans ................................................ (258) --
Cost of insurance and administrative expense ......... (1,578) --
Transfers (to) from the Guarantee Account .............. 4,508 --
Interfund transfers .................................... 38,024 --
-------- ---------
Net increase (decrease) in units from capital
transactions ........................................... 46,836 --
-------- ---------
Units outstanding at December 31, 1998 .................. 140,437 --
======== =========
<CAPTION>
GE INVESTMENTS FUNDS, INC.
---------------------------------------------
MONEY TOTAL INTERNATIONAL
MARKET RETURN EQUITY
FUND FUND FUND
--------------- -------------- --------------
<S> <C> <C> <C>
Units outstanding at December 31, 1995 .................. 412,193 53,713 20,127
------- -------- ------
Net premiums ........................................... 1,523,788 -- --
Loan interest .......................................... 60 (7) --
Transfers (to) from the general account of
Life of Virginia:
Death benefits ....................................... (2,190) -- --
Surrenders ........................................... (20,965) (5,166) --
Loans ................................................ (80,419) -- 67
Cost of insurance and administrative expense ......... (8,609) (646) (384)
Transfers (to) from the Guarantee Account .............. (34,420) 1,981 --
Interfund transfers .................................... (1,106,323) 12,921 49,244
---------- -------- ------
Net increase (decrease) in units from capital
transactions ........................................... 270,922 9,083 48,927
---------- -------- ------
Units outstanding at December 31, 1996 .................. 683,115 62,796 69,054
---------- -------- ------
Net premiums ........................................... 888,521 1,582 69
Loan interest .......................................... 1,522 3 (1)
Transfers (to) from the general account of
Life of Virginia:
Death benefits ....................................... -- (5,200) --
Surrenders ........................................... (4,893) (404) --
Loans ................................................ (15,590) (1,334) 123
Cost of insurance and administrative expense ......... (7,485) (686) (623)
Transfers (to) from the Guarantee Account .............. (1,925) 1,924 --
Interfund transfers .................................... (795,469) 5,670 (48,010)
---------- -------- ---------
Net increase (decrease) in units from capital
transactions ........................................... 64,681 1,555 (48,442)
---------- -------- ---------
Units outstanding at December 31, 1997 .................. 747,796 64,351 20,612
---------- -------- ---------
Net premiums ........................................... 618,502 457 (63)
Loan interest .......................................... 939 (4) 3
Transfers (to) from the general account of
Life of Virginia:
Death benefits ....................................... (579) -- --
Surrenders ........................................... (29,501) (5,534) --
Loans ................................................ (62,560) (1,140) (230)
Cost of insurance and administrative expense ......... (8,969) (602) 231
Transfers (to) from the Guarantee Account .............. (3,439) 353 (1,473)
Interfund transfers .................................... (569,612) 1,764 1,669
---------- -------- ---------
Net increase (decrease) in units from capital
transactions ........................................... (55,219) (4,706) 137
---------- -------- ---------
Units outstanding at December 31, 1998 .................. 692,577 59,645 20,749
========== ======== =========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
GE INVESTMENTS FUNDS, INC. (CONTINUED)
-----------------------------------------------------------
REAL ESTATE GLOBAL VALUE U.S.
SECURITIES INCOME EQUITY INCOME EQUITY
FUND FUND FUND FUND FUND
------------- ------------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
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 --
------ ------ ------ ------- ----
Net premiums ...................................................... 2,573 -- 1,214 1 --
Loan interest ..................................................... (12) -- (63) (366) --
Transfers (to) from the general account of Life of Virginia:
Death benefits .................................................. -- -- -- -- --
Surrenders ...................................................... (181) -- -- (252) --
Loans ........................................................... (955) -- (90) (2,123) --
Cost of insurance and administrative expense .................... (703) (25) (370) (1,466) (3)
Transfers (to) from the Guarantee Account ......................... 2,167 -- -- 764 --
Interfund transfers ............................................... (13,779) 1,172 18,643 19,037 955
------- ------ ------ ------- ----
Net increase (decrease) in units from capital transactions ......... (10,890) 1,147 19,334 15,595 952
------- ------ ------ ------- ----
Units outstanding at December 31, 1998 ............................. 47,312 2,483 38,490 137,493 952
======= ====== ====== ======= ====
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
------------------------------------------
CAPITAL
MONEY BOND APPRECIATION
FUND FUND FUND
------------ -------------- --------------
<S> <C> <C> <C>
Units outstanding at December 31, 1995 23,192 81,518 130,729
------ ------- -------
Net premiums ........................ -- (1) --
Loan interest ....................... (17) -- 449
Transfers (to) from the general
account of Life of Virginia:
Death benefits .................... -- -- --
Surrenders ........................ -- 1 35,618
Loans ............................. (477) 5 86,753
Cost of insurance and adminis-
trative expense .................. (152) 4 34,370
Transfers (to) from the Guarantee
Account ........................... -- -- (17,958)
Interfund transfers ................. (12,159) (205) (92,553)
------- -------- -------
Net increase (decrease) in units from
capital transactions ................ (12,805) (196) 46,679
------- -------- -------
Units outstanding at December 31, 1996 10,387 81,322 177,408
------- -------- -------
Net premiums ........................ -- 567 5,184
Loan interest ....................... -- 10 (15)
Transfers (to) from the general
account of Life of Virginia:
Death benefits .................... -- -- --
Surrenders ........................ -- -- (182)
Loans ............................. -- (938) (2,466)
Cost of insurance and adminis-
trative expense .................. (104) (792) (2,250)
Transfers (to) from the Guarantee
Account ........................... -- 465 2,796
Interfund transfers ................. (10,283) 80,017 25,443
------- -------- -------
Net increase (decrease) in units from
capital transactions ................ (10,387) 79,329 28,510
------- -------- -------
Units outstanding at December 31, 1997 -- 160,651 205,918
------- --------- -------
Net premiums ........................ -- 3,023 9,796
Loan interest ....................... -- 88 655
Transfers (to) from the general
account of Life of Virginia:
Death benefits .................... -- -- --
Surrenders ........................ -- (3,818) (21,555)
Loans ............................. -- (34) (58,985)
Cost of insurance and adminis-
trative expense .................. -- (1,373) (7,454)
Transfers (to) from the Guarantee
Account ........................... -- 399 693
Interfund transfers ................. -- (52,085) 47,191
------- --------- -------
Net increase (decrease) in units from
capital transactions ................ -- (53,800) (29,659)
------- --------- -------
Units outstanding at December 31, 1998 -- 106,851 176,259
======= ========= =======
<CAPTION>
OPPENHEIMER VARIABLE ACCOUNT FUNDS
------------------------------------------------------------------
HIGH MULTIPLE MONEY HIGH
GROWTH INCOME STRATEGIES MARKET INCOME
FUND FUND FUND PORTFOLIO PORTFOLIO
----------- -------------- -------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1995 57,586 80,911 105,534 153,233 101,444
------ ------- -------- ------- -------
Net premiums ........................ 789 -- 1,018 -- --
Loan interest ....................... (21) (6) (9) 49 (17)
Transfers (to) from the general
account of Life of Virginia:
Death benefits .................... -- -- (2,597) -- (2,625)
Surrenders ........................ (351) (561) (9,180) (8,837) (5,963)
Loans ............................. (573) (3,511) (395) (1,180) (82)
Cost of insurance and adminis-
trative expense .................. (747) (1,688) (1,016) (990) (707)
Transfers (to) from the Guarantee
Account ........................... 587 2,536 173 377 --
Interfund transfers ................. 21,301 57,787 10,394 (69,258) (38,231)
------ -------- -------- ------- -------
Net increase (decrease) in units from
capital transactions ................ 20,985 54,557 (1,612) (79,839) (47,625)
------ -------- -------- ------- -------
Units outstanding at December 31, 1996 78,571 135,468 103,922 73,394 53,819
------ --------- -------- ------- -------
Net premiums ........................ 4,979 3,036 515 -- --
Loan interest ....................... (57) (20) (30) (523) --
Transfers (to) from the general
account of Life of Virginia:
Death benefits .................... -- -- (83) -- --
Surrenders ........................ -- (291) -- (765) (6,032)
Loans ............................. (1,925) (949) 364 (1,169) (238)
Cost of insurance and adminis-
trative expense .................. (1,203) (1,459) (1,248) (526) (432)
Transfers (to) from the Guarantee
Account ........................... 2,441 -- 999 -- --
Interfund transfers ................. 45,075 71,340 18,636 (70,411) (47,117)
------ --------- -------- ------- -------
Net increase (decrease) in units from
capital transactions ................ 49,310 71,657 19,153 (73,394) (53,819)
------ --------- -------- ------- -------
Units outstanding at December 31, 1997 127,881 207,125 123,075 -- --
------- --------- -------- ------- -------
Net premiums ........................ 3,787 331 45 -- --
Loan interest ....................... (82) (50) (40) -- --
Transfers (to) from the general
account of Life of Virginia:
Death benefits .................... -- (1,322) (854) -- --
Surrenders ........................ (4,162) (16,597) (6,487) -- --
Loans ............................. (3,464) (993) (2,318) -- --
Cost of insurance and adminis-
trative expense .................. (1,353) (1,787) (1,472) -- --
Transfers (to) from the Guarantee
Account ........................... 1,693 812 1,351 -- --
Interfund transfers ................. 63,068 5,503 4,993 -- --
------- --------- -------- ------- -------
Net increase (decrease) in units from
capital transactions ................ 59,487 (14,103) (4,782) -- --
------- --------- -------- ------- -------
Units outstanding at December 31, 1998 187,368 193,022 118,293 -- --
======= ========= ======== ======= =======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
-----------------------------------------
EQUITY-
INCOME GROWTH OVERSEAS
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- -------------
<S> <C> <C> <C>
Units outstanding at December 31, 1995 ............................. 373,400 267,882 460,711
------- ------- -------
Net premiums ...................................................... 3,304 1,064 682
Loan interest ..................................................... (297) (151) (21)
Transfers (to) from the general account of Life of Virginia:
Death benefits .................................................. (3,957) (2,821) (642)
Surrenders ...................................................... (15,932) (1,247) (6,376)
Loans ........................................................... (9,205) (1,689) (3,139)
Cost of insurance and administrative expense .................... (4,893) (3,208) (4,289)
Transfers (to) from the Guarantee Account ......................... 5,455 5,203 3,066
Interfund transfers ............................................... 130,475 55,069 (134,096)
------- ------- --------
Net increase (decrease) in units from capital transactions ......... 104,950 52,220 (144,815)
------- ------- --------
Units outstanding at December 31, 1996 ............................. 478,350 320,102 315,896
------- ------- --------
Net premiums ...................................................... 8,841 6,684 600
Loan interest ..................................................... (237) (259) (114)
Transfers (to) from the general account of Life of Virginia:
Death benefits .................................................. (749) (139) --
Surrenders ...................................................... (2,952) (2,453) (1,224)
Loans ........................................................... (4,978) (12,995) (6,601)
Cost of insurance and administrative expense .................... (6,220) (8,445) (2,771)
Transfers (to) from the Guarantee Account ......................... 4,627 3,782 2,879
Interfund transfers ............................................... 12,774 3,763 (65,198)
------- ------- --------
Net increase (decrease) in units from capital transactions ......... 11,106 (10,062) (72,429)
------- ------- --------
Units outstanding at December 31, 1997 ............................. 489,456 310,040 243,467
------- ------- --------
Net premiums ...................................................... 4,285 1,424 799
Loan interest ..................................................... (318) (483) (64)
Transfers (to) from the general account of Life of Virginia:
Death benefits .................................................. (1,780) (685) (1,283)
Surrenders ...................................................... (6,479) (16,160) (9,040)
Loans ........................................................... (11,737) (15,030) (3,925)
Cost of insurance and administrative expense .................... (4,890) (3,495) (1,986)
Transfers (to) from the Guarantee Account ......................... 3,580 2,834 (363)
Interfund transfers ............................................... (5,896) 13,096 12,401
------- ------- --------
Net increase (decrease) in units from capital transactions ......... (23,235) (18,499) (3,461)
------- ------- --------
Units outstanding at December 31, 1998 ............................. 466,221 291,541 240,006
======= ======= ========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
VARIABLE INSURANCE VARIABLE INSURANCE
PRODUCTS FUND II PRODUCTS FUND III
-------------------------- ----------------------------
ASSET GROWTH & GROWTH
MANAGER CONTRAFUND INCOME OPPORTUNITIES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
Units outstanding at December 31, 1995 ............................. 462,080 105,208 -- --
------- ------- -- --
Net premiums ...................................................... -- 9,420 -- --
Loan interest ..................................................... (180) (31) -- --
Transfers (to) from the general account of 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 from capital transactions ......... (10,367) 102,051 33,181 28,619
------- ------- ------ ------
Units outstanding at December 31, 1997 ............................. 395,218 385,172 33,181 28,619
------- ------- ------ ------
Net premiums ...................................................... 92 7,384 1,845 2,945
Loan interest ..................................................... (276) (287) (31) (10)
Transfers (to) from the general account of Life of Virginia:
Death benefits .................................................. (1,619) (1,038) -- --
Surrenders ...................................................... (12,811) (935) -- --
Loans ........................................................... (9,503) (3,564) (252) --
Cost of insurance and administrative expense .................... (3,990) (3,917) (609) (383)
Transfers (to) from the Guarantee Account ......................... 2,750 3,497 1,097 649
Interfund transfers ............................................... 6,154 41,115 28,309 10,821
------- ------- ------ ------
Net increase (decrease) in units from capital transactions ......... (19,203) 42,255 30,359 14,022
------- ------- ------ ------
Units outstanding at December 31, 1998 ............................. 376,015 427,427 63,540 42,641
======= ======= ====== ======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
FEDERATED INVESTORS
ADVISERS MANAGEMENT TRUST INSURANCE SERIES
------------------------------------- ------------------------------------------
AMERICAN HIGH
BALANCED BOND GROWTH LEADERS INCOME BOND UTILITY
PORTFOLIO PORTFOLIO PORTFOLIO FUND II FUND II FUND II
------------- ----------- ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1995 ......... 124,279 75,868 54,860 -- 8,274 7,584
------- ------ ------ ---- ----- --------
Net premiums .................................. -- -- -- -- -- --
Loan interest ................................. 10 (344) (23) -- -- (9)
Transfers (to) from the general account
of 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 from
capital transactions .......................... (114,320) (52,241) (49,204) 34,250 97,733 5,428
-------- ------- ------- ------- ------ ---------
Units outstanding at December 31, 1997 ......... -- -- -- 35,856 148,413 23,413
-------- ------- ------- ------- ------- ---------
Net premiums .................................. -- -- -- 5,835 1,842 1,248
Loan interest ................................. -- -- -- (14) (27) (48)
Transfers (to) from the general account
of Life of Virginia:
Death benefits .............................. -- -- -- -- -- --
Surrenders .................................. -- -- -- -- -- --
Loans ....................................... -- -- -- (779) (954) (1,114)
Cost of insurance and administrative
expense .................................... -- -- -- (675) (936) (330)
Transfers (to) from the Guarantee
Account ..................................... -- -- -- 971 392 --
Interfund transfers ........................... -- -- -- 20,774 (74,663) 4,692
-------- ------- ------- ------- ------- ---------
Net increase (decrease) in units from
capital transactions .......................... -- -- -- 26,112 (74,346) 4,448
-------- ------- ------- ------- ------- ---------
Units outstanding at December 31, 1998 ......... -- -- -- 61,968 74,067 27,861
======== ======= ======= ======= ======= =========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
ALGER AMERICAN PBHG INSURANCE
FUND SERIES FUND
------------------------- --------------------------
LARGE CAP
SMALL CAP GROWTH GROWTH GROWTH II
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Units outstanding at December 31, 1995 ............................. 33,520 10,482 -- --
------ ------ --- ---
Net premiums ...................................................... 2,249 1,125 -- --
Loan interest ..................................................... 7 -- -- --
Transfers (to) from the general account of Life of Virginia:
Death benefits .................................................. (1,108) (1,058) -- --
Surrenders ...................................................... (4,005) (68) -- --
Loans ........................................................... (3,297) (1,007) -- --
Cost of insurance and administrative expense .................... (997) (702) -- --
Transfers (to) from the Guarantee Account ......................... 91 510 -- --
Interfund transfers ............................................... 84,755 116,263 -- --
------ ------- --- ---
Net increase (decrease) in units from capital transactions ......... 77,695 115,063 -- --
------ ------- --- ---
Units outstanding at December 31, 1996 ............................. 111,215 125,545 -- --
------- ------- --- ---
Net premiums ...................................................... 9,853 1,256 -- 439
Loan interest ..................................................... -- (24) -- --
Transfers (to) from the general account of Life of Virginia:
Death benefits .................................................. -- -- -- --
Surrenders ...................................................... (138) (266) -- --
Loans ........................................................... (5,683) (3,238) -- --
Cost of insurance and administrative expense .................... (1,990) (1,118) (11) (44)
Transfers (to) from the Guarantee Account ......................... 8,023 1,345 283 239
Interfund transfers ............................................... 16,471 7,897 2,446 8,006
------- ------- ----- ------
Net increase (decrease) in units from capital transactions ......... 26,536 5,852 2,718 8,640
------- ------- ----- ------
Units outstanding at December 31, 1997 ............................. 137,751 131,397 2,718 8,640
------- ------- ----- ------
Net premiums ...................................................... 4,733 3,551 (1) 424
Loan interest ..................................................... (35) (66) -- (7)
Transfers (to) from the general account of Life of Virginia:
Death benefits .................................................. (1,209) (1,398) -- --
Surrenders ...................................................... (6,320) (3,136) (82) --
Loans ........................................................... 2,007 (4,993) (18) --
Cost of insurance and administrative expense .................... (1,753) (1,998) (54) (133)
Transfers (to) from the Guarantee Account ......................... 2,095 2,530 -- 2,947
Interfund transfers ............................................... 112,713 45,241 (201) 255
------- ------- ------ -------
Net increase (decrease) in units from capital transactions ......... 112,231 39,731 (356) 3,486
------- ------- ------ -------
Units outstanding at December 31, 1998 ............................. 249,982 171,128 2,362 12,126
======= ======= ====== =======
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
JANUS ASPEN SERIES
---------------------------------------
AGGRESSIVE
GROWTH GROWTH WORLD WIDE
PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ----------- ------------
<S> <C> <C> <C>
Units outstanding at December 31, 1995 136,420 104,527 110,584
-------- ------- -------
Net premiums ............................. (657) (2,168) 4,425
Loan interest ............................ -- 190 (192)
Transfers (to) from the general
account of Life of Virginia:
Death benefits ......................... -- -- --
Surrenders ............................. -- 34,885 (4,341)
Loans .................................. 24 2,056 (13,458)
Cost of insurance and
administrative expense ................ 49 14,531 (4,135)
Transfers (to) from the Guarantee
Account ................................ (559) (7,160) 11,729
Interfund transfers ...................... (5,574) 43,761 215,068
-------- ------- -------
Net increase (decrease) in units from
capital transactions ..................... (6,717) 86,095 209,096
-------- ------- -------
Units outstanding at December 31, 1996 129,703 190,622 319,680
-------- ------- -------
Net premiums ............................. 4,146 6,158 19,120
Loan interest ............................ (5) (37) (53)
Transfers (to) from the general
account of Life of Virginia:
Death benefits ......................... -- -- (99)
Surrenders ............................. (22) (692) (308)
Loans .................................. (4,697) (6,214) (4,281)
Cost of insurance and
administrative expense ................ (1,702) (2,647) (4,547)
Transfers (to) from the Guarantee
Account ................................ 2,380 5,134 6,252
Interfund transfers ...................... 34,709 67,507 104,621
--------- ------- -------
Net increase (decrease) in units from
capital transactions ..................... 34,809 69,209 120,705
--------- ------- -------
Units outstanding at December 31, 1997 164,512 259,831 440,385
--------- ------- -------
Net premiums ............................. 2,149 3,907 11,534
Loan interest ............................ (102) (332) (131)
Transfers (to) from the general
account of Life of Virginia:
Death benefits ......................... -- -- (2,881)
Surrenders ............................. (470) (6,229) (4,378)
Loans .................................. (1,267) (9,616) (4,057)
Cost of insurance and
administrative expense ................ (1,289) (3,337) (4,595)
Transfers (to) from the Guarantee
Account ................................ 425 1,109 (540)
Interfund transfers ...................... (40,437) 18,470 36,057
--------- ------- -------
Net increase (decrease) in units from
capital transactions ..................... (40,991) 3,972 31,009
--------- ------- -------
Units outstanding at December 31, 1998 123,521 263,803 471,394
========= ======= =======
<CAPTION>
JANUS ASPEN SERIES
-------------------------------------------------------------
FLEXIBLE INTERNATIONAL CAPITAL
BALANCED INCOME GROWTH APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
Units outstanding at December 31, 1995 2,972 662 -- --
------ --- -- --
Net premiums ............................. 1,590 -- -- --
Loan interest ............................ (9) (2) -- --
Transfers (to) from the general
account of Life of Virginia:
Death benefits ......................... -- -- -- --
Surrenders ............................. (452) -- -- --
Loans .................................. (253) (448) -- --
Cost of insurance and
administrative expense ................ (578) (90) (87) --
Transfers (to) from the Guarantee
Account ................................ 726 -- 951 --
Interfund transfers ...................... 47,770 13,978 32,559 --
-------- -------- ------ --
Net increase (decrease) in units from
capital transactions ..................... 48,794 13,438 33,423 --
-------- -------- ------ --
Units outstanding at December 31, 1996 51,766 14,100 33,423 --
-------- -------- ------ --
Net premiums ............................. 2,260 1,522 4,872 --
Loan interest ............................ (3) (2) (135) --
Transfers (to) from the general
account of Life of Virginia:
Death benefits ......................... -- -- -- --
Surrenders ............................. (171) -- -- --
Loans .................................. 1,907 (2,130) (812) --
Cost of insurance and
administrative expense ................ (949) (137) (1,301) (9)
Transfers (to) from the Guarantee
Account ................................ 2,912 225 9,973 --
Interfund transfers ...................... 183,798 215 84,860 959
-------- -------- ------ -----
Net increase (decrease) in units from
capital transactions ..................... 189,754 (307) 97,457 950
-------- -------- ------ -----
Units outstanding at December 31, 1997 241,520 13,793 130,880 950
-------- -------- ------- -----
Net premiums ............................. 1,293 409 2,672 867
Loan interest ............................ (259) (25) (46) --
Transfers (to) from the general
account of Life of Virginia:
Death benefits ......................... (1,183) -- (863) --
Surrenders ............................. (338) (4,063) (4,468) --
Loans .................................. (4,970) 1,652 334 (2,698)
Cost of insurance and
administrative expense ................ (2,749) (287) (1,797) (597)
Transfers (to) from the Guarantee
Account ................................ 2,947 7 5,745 --
Interfund transfers ...................... 25,041 20,985 60,164 48,939
-------- -------- ------- --------
Net increase (decrease) in units from
capital transactions ..................... 19,782 18,678 61,741 46,511
-------- -------- ------- --------
Units outstanding at December 31, 1998 261,302 32,471 192,621 47,461
======== ======== ======= ========
</TABLE>
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
<TABLE>
<CAPTION>
GOLDMAN SACHS
VARIABLE INSURANCE
TRUST FUND
-----------------------
GROWTH AND MID CAP
INCOME EQUITY
FUND FUND
------------ --------
<S> <C> <C>
Units outstanding at December 31, 1995 ............................. -- --
-- --
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 ............................................... -- --
-- --
Net increase (decrease) in units from capital transactions ......... -- --
-- --
Units outstanding at December 31, 1996 ............................. -- --
-- --
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 ............................................... -- --
-- --
Net increase (decrease) in units from capital transactions ......... -- --
-- --
Units outstanding at December 31, 1997 ............................. -- --
-- --
Net premiums ...................................................... -- --
Loan interest ..................................................... -- --
Transfers (to) from the general account of Life of Virginia:
Death benefits .................................................. -- --
Surrenders ...................................................... -- --
Loans ........................................................... -- --
Cost of insurance and administrative expense .................... -- (33)
Transfers (to) from the Guarantee Account ......................... -- --
Interfund transfers ............................................... 598 9,410
--- -----
Net increase (decrease) in units from capital transactions ......... 598 9,377
--- -----
Units outstanding at December 31, 1998 ............................. 598 9,377
=== =====
</TABLE>
(C) FEDERAL INCOME TAXES
The Account is not taxed separately because the operations of the Account
are part of the total operations of Life of Virginia. Life of Virginia is taxed
as a life insurance company under the Internal Revenue Code (the Code). Life of
Virginia is included in the General Electric Capital Assurance Company
consolidated federal income tax return. Under existing federal income tax law,
no taxes are payable on the investment income or on the capital gains of the
Account.
<PAGE>
LIFE OF VIRGINIA SEPARATE ACCOUNT III
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued
(D) USE OF ESTIMATES
Financial statements prepared in conformity with generally accepted
accounting principles require management to make estimates and assumptions that
affect amounts and disclosures reported therein. Actual results could differ
from those estimates.
(3) RELATED PARTY TRANSACTIONS
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 (M&E) risk that Life of Virginia assumes. This
M&E 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
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 serves as
principal underwriter for variable life insurance policies and variable
annuities 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.
(4) SUBSEQUENT EVENT
Effective January 1, 1999, The Life Insurance Company of Virginia merged
with The Harvest Life Insurance Company to form GE Life and Annuity Assurance
Company. Concurrently, the Account changed its name to GE Life & Annuity
Separate Account III. Neither of those events have an impact on net assets or
unit values.
