<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 3, 1996
Registration Nos. 33-23351, 811-5626
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 25
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 39
SEPARATE ACCOUNT B
(EXACT NAME OF REGISTRANT)
GOLDEN AMERICAN LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
1001 Jefferson Street
Wilmington, DE 19801
302-576-3400
(ADDRESS AND TELEPHONE NUMBER OF DEPOSITOR'S PRINCIPAL OFFICES)
MARILYN TALMAN, ESQ. COPY TO:
Golden American Life Insurance Company Stephen Roth, ESQ.
1001 Jefferson Street, Suite 400 Sutherland, Asbill & Brennan
Wilmington, DE 19801 1275 Pennsylvania Avenue, N.W.
(NAME AND ADDRESS OF AGENT FOR SERVICE Washington, D.C. 20004-2404
OF PROCESS)
Approximate date of commencement of proposed sale to the public:
A soon as practical after the effective date of the Registration Statement
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
[X] immediately upon filing pursuant to paragraph (b)
[ ] on _________ pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on _________ pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on _________ pursuant to paragraph (a)(ii) of Rule 485
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
[ ] this Post-Effective Amendment designates a new effective date for
a previously filed Post-Effective Amendment.
DECLARATION PURSUANT TO RULE 24F-2
The Registrant has previously filed a declaration of indefinite registration of
its shares pursuant to Rule 24f-2 under the Investment Company Act of 1940. The
Rule 24f-2 Notice for the year ended December 31, 1995 was filed on February 28,
1996.
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<PAGE>
PART A
N-4 Item Prospectus Heading
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1 Cover Page Cover Page
2. Definitions Definition of Terms
3. Synopsis Summary of the Contracts
4. Condensed Financial Information Condensed Financial Information
5. General Description of Registrant Facts About the Company
Depositor, and Portfolio Companies and the Accounts
6. Deductions and Expenses Charges and Fees
7. General Description of Variable Facts About the Contracts
Annuity Contracts
8. Annuity Period Choosing an Income Plan
9. Death Benefit Facts About the Contracts
10. Purchases and Contract Value Facts About the Contracts,
Charges and Fees
11. Redemptions Facts About the Contracts
12. Taxes Federal Tax Considerations
Additional Considerations
13. Legal Proceedings Regulatory Information
14. Table of Contents of the Statement of Additional Information
Statement of Additional Information
PART B
Statement of Additional
N-4 Item Information Heading
- --------------------------------------- --------------------------------------
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History Description of Golden American
Life Insurance Company
18. Services Safekeeping of Assets, Independent
Auditors
19. Purchase of Securities Being Offered Distribution of Contracts
20. Underwriters Distribution of Contracts
21. Calculation of Performance Data Performance Information
22. Annuity Payments Part A
23. Financial Statements Financial Statements of Separate
Account B,
Financial Statements of Golden
American Life Insurance Company
PART C
Items required in Part C are located therein.
<PAGE>
PART A
<PAGE>
PROSPECTUS SUPPLEMENT
Dated September 3, 1996
Supplement to the
Prospectuses dated September 3, 1996 for
DEFERRED VARIABLE ANNUITY CONTRACTS issued
by Golden American Life Insurance Company
(the "GoldenSelect DVA and DVA Series 100 Prospectuses")
__________
THIS SUPPLEMENT SHOULD BE RETAINED WITH YOUR PROSPECTUS.
A new Fixed Interest Division option is now available through the group and
individual deferred variable annuity contracts offered by Golden American Life
Insurance Company. The Fixed Interest Division is part of the Golden American
General Account. Interests in the Fixed Interest Division have not been
registered under the Securities Act of 1933, and neither the Fixed Interest
Division nor the General Account are registered under the Investment Company Act
of 1940.
Interests in the Fixed Interest Division are offered through an Offering
Brochure, dated September 3, 1996. When reading through the GoldenSelect DVA
Prospectus, the Fixed Interest Division should be counted among the various
divisions available for the allocation of your premiums. The Fixed Interest
Division may not be available in some states. Some restrictions may apply.
More complete information relating to the Fixed Interest Division is found in
the Offering Brochure. Please read it carefully before you send money.
IN 3107 FID 9/96
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
DEFERRED VARIABLE ANNUITY PROSPECTUS
GOLDENSELECT DVA
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This prospectus describes group and individual deferred variable annuity
contracts (the "contract") offered by Golden American Life Insurance Company
("Golden American," "we," "our" or "us"). The owner ("you" or "your") purchases
the contract with an initial premium and is permitted to make additional premium
payments.
The contract is funded by Separate Account B ("Account B").
Sixteen divisions of Account B are currently available under the contract. The
investments available through the divisions of Account B include mutual fund
portfolios (the "Series") of The GCG Trust (the GCG "Trust") and the Equi-Select
Series Trust (the "ESS Trust").
This prospectus describes the contract and provides background information
regarding Account B. The prospectuses for the GCG Trust and the ESS Trsut
(individually a "Trust," and collectively, the "Trusts"), which must accompany
this prospectus, provide information regarding investment activities and
policies of the Trusts.
You may allocate your premiums among the sixteen divisions currently available
under the contract in any way you choose, subject to certain restrictions. You
may change the allocation of your accumulation value up to five times per
contract year free of charge.
You may surrender the contract for its cash surrender value at any time before
the annuity commencement date provided the annuitant and owner are living. The
cash surrender value will vary daily with the investment results of the
contract. We do not guarantee any minimum cash surrender value. You may make
partial withdrawals under the contract, subject to certain restrictions.
We will pay a death benefit to the beneficiary if the annuitant (when there is
no contingent annuitant) or owner dies prior to the annuity commencement date.
See Proceeds Payable to the Beneficiary.
This prospectus describes your principal rights and limitations and sets forth
the information concerning Account B that investors should know before
investing. A Statement of Additional Information dated September 3, 1996
relating to Account B has been filed with the Securities and Exchange
Commission ("SEC") and is available without charge upon request. To obtain a
copy of this document call or write our Customer Service Center. The Table of
Contents of the Statement of Additional Information may be found on the last
page of this prospectus. The Statement of Additional Information is incorporated
herein by reference.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
CONTRACTS AND UNDERLYING SERIES SHARES WHICH FUND THE CONTRACTS ARE NOT INSURED
BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF
ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO MARKET FLUCTUATION,
REINVESTMENT RISK AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS NOT VALID
UNLESS ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE GCG TRUST AND ESS TRUST.
<TABLE>
<S> <C> <C>
ISSUED BY: DISTRIBUTED BY: ADMINISTERED AT:
Golden American Life Directed Services, Inc. Customer Service Center
Insurance Company Wilmington, Delaware 19801 Mailing Address: P.O. Box 8794
Wilmington, Delaware 19899-8794
1-800-366-0066
</TABLE>
PROSPECTUS DATED: SEPTEMBER 3, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
DEFINITION OF TERMS..................................... 3
FEE TABLE............................................... 5
SUMMARY OF THE CONTRACT................................. 7
CONDENSED FINANCIAL INFORMATION......................... 10
Index of Investment Experience
Financial Statements
Performance Related Information
INTRODUCTION............................................ 13
FACTS ABOUT THE COMPANY AND ACCOUNT B................... 14
Golden American
The Accounts
Account B Divisions
Changes Within the Account B
FACTS ABOUT THE CONTRACT................................ 18
The Owner
The Annuitant
The Beneficiary
Change of Owner or Beneficiary
Availability of the Contract
Types of Contracts
Your Right to Select or Change Contract Options
Premiums
Making Additional Premium Payments
Crediting Premium Payments
Restrictions on Allocation of Premium Payments
Your Right to Reallocate
Dollar Cost Averaging Option
What Happens if a Division is Not Available
Your Accumulation Value
Accumulation Value in Each Division
Measurement of Investment Experience
Cash Surrender Value
Surrendering to Receive the Cash Surrender Value
Partial Withdrawals
Proceeds Payable to the Beneficiary
Reports to Owners
When We Make Payments
CHARGES AND FEES........................................ 28
Charge Deduction Division
Charges Deducted from the Accumulation Value
Charges Deducted from the Divisions
Trust Expenses
<CAPTION>
PAGE
<S> <C>
CHOOSING AN INCOME PLAN................................. 30
The Income Plan
Annuity Commencement Date Selection
Frequency Selection
The Annuity Options
Payment When Named Person Dies
OTHER INFORMATION....................................... 32
Other Contract Provisions
Contract Changes -- Applicable Tax Law
Your Right to Cancel or Exchange Your Contract
Other Contract Changes
Group or Sponsored Arrangements
Selling the Contract
Reinsurance
REGULATORY INFORMATION.................................. 33
Voting Rights
State Regulation
Legal Proceedings
Legal Matters
Experts
FEDERAL TAX CONSIDERATIONS.............................. 34
Introduction
Golden American Tax Status
Taxation of Non-Qualified Annuities
Taxation of Individual Retirement Annuities
ADDITIONAL CONSIDERATIONS............................... 39
Distribution-at-Death Rules
Taxation of Death Benefit Proceeds
Transfer of Annuity Contracts
Section1035 Exchanges
Assignments
Multiple Contracts Rule
STATEMENT OF ADDITIONAL INFORMATION..................... 54
Table of Contents
APPENDIX................................................ A1
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.
2
<PAGE>
DEFINITION OF TERMS
ACCOUNT
Separate Account B.
ACCUMULATION VALUE
The amount that the contract provides for investment at any time. Initially,
this amount is equal to the premium paid. Thereafter, the accumulation value
will reflect the premiums paid, investment experience, charges deducted and
partial withdrawals taken.
ANNUITANT
The person designated by the owner to receive the annuity payments and whose
death initiates payment of the death benefit.
ANNUITY COMMENCEMENT DATE
The date on which annuity payments begin.
ANNUITY OPTIONS
Options the owner selects that determine the form and amount of annuity
payments.
ANNUITY PAYMENT
The periodic payment an annuitant receives. It may be either a fixed or a
variable amount based on the annuity option chosen.
ATTAINED AGE
The issue age of the annuitant plus the number of full years elapsed since the
contract date.
BENEFICIARY
The person designated to receive benefits in the case of the death of the
annuitant (when there is no contingent annuitant) or owner.
BUSINESS DAY
Any day the New York Stock Exchange ("NYSE") is open for trading, exclusive of
Federal holidays, or any day on which the SEC requires that mutual funds, unit
investment trusts or other investment portfolios be valued.
CASH SURRENDER VALUE
The amount the owner receives if the owner surrenders the contract.
CHARGE DEDUCTION DIVISION
The Liquid Asset Division, which is the division from which all charges are
deducted if so designated on the application or enrollment form, or later
elected by the owner.
CONTINGENT ANNUITANT
The person designated by the owner who, upon the annuitant's death prior to the
annuity commencement date, becomes the annuitant.
CONTRACT
The entire contract consisting of the basic contract, the application or
enrollment form and any riders or endorsements.
CONTRACT ANNIVERSARY
The anniversary of the contract date.
CONTRACT DATE
The date on which we have received the initial premium and upon which we begin
determining the contract values. It may or may not be the same as the issue
date. This date is used to determine contract months, processing dates, years
and anniversaries.
CONTRACT PROCESSING DATES
The days when we deduct certain charges from the accumulation value. If the
contract processing date is not a valuation date, it will be on the next
succeeding valuation date. The contract processing dates will be once each year
on the contract anniversary.
CONTRACT PROCESSING PERIOD
The period between successive contract processing dates unless it is the first
contract processing period. In that case, it is the period from the contract
date to the first contract processing date.
CONTRACT YEAR
The period between contract anniversaries.
CUSTOMER SERVICE CENTER
Where service is provided to our contract owners. The mailing address and
telephone number of the Customer Service Center are shown on the cover.
DEFERRED ANNUITY
A contract which provides for the accumulation of funds that will reflect
investment experience. These funds may be applied under an annuity option at the
annuity commencement date.
ENDORSEMENTS
An endorsement changes or adds provisions to the contract.
3
<PAGE>
DEFINITION OF TERMS (CONTINUED)
EXPERIENCE FACTOR
The factor which reflects the investment experience of the portfolio in which a
division invests and also reflects the charges assessed against the division for
a valuation period.
FREE LOOK PERIOD
The period of time within which the contract owner may examine the contract and
return it for a refund.
GENERAL ACCOUNT
The account which contains all of our assets other than those held in our
separate accounts.
INDEX OF INVESTMENT EXPERIENCE
The index that measures the performance of a separate account division.
INITIAL PREMIUM
The payment amount required to put a contract into effect.
ISSUE AGE
The annuitant's age on his or her last birthday on or before the contract date.
ISSUE DATE
The date the contract is issued at our Customer Service Center.
OWNER
The person who owns the contract and is entitled to exercise all rights under
the contract. This person's death also initiates payment of the death benefit.
RIDER
A rider adds benefits to the contract.
SPECIALLY DESIGNATED DIVISION
The Liquid Asset Division. Distributions from a portfolio underlying a division
in which reinvestment is not available will be allocated to this division unless
you specify otherwise.
VALUATION DATE
The day at the end of a valuation period when each division is valued.
VALUATION PERIOD
Each business day together with any non-business days before it.
4
<PAGE>
FEE TABLE
<TABLE>
<S> <C>
OWNER TRANSACTION EXPENSES (deducted from accumulation value)
DISTRIBUTION FEE (ANNUAL SALES LOAD) AS A PERCENTAGE OF THE INITIAL AND EACH ADDITIONAL PREMIUM,
deducted at the end of each contract processing period following receipt of each premium over a
six year period from the date we receive and accept each premium payment.......................... 1.00%(1)(2)
</TABLE>
<TABLE>
<CAPTION>
DURING YEAR
-------------
<S> <C> <C>
SURRENDER CHARGE AS A PERCENTAGE OF THE INITIAL OR ADDITIONAL PREMIUM deducted upon surrender as
measured from the date the premium is accepted.......................................................... 1............ 6.00 %
2............ 5.00
3............ 4.00
4............ 3.00
5............ 2.00
6............ 1.00
7+........... 0.00
</TABLE>
<TABLE>
<S> <C>
EXCESS ALLOCATION CHARGE for each allocation change in excess of the five
free allocation changes allowed per contract year................................................... $25
PARTIAL WITHDRAWAL CHARGE (2.0% of the withdrawal for each additional conventional partial withdrawal
after the first in a contract year) not to exceed................................................... $25
ANNUAL CONTRACT FEES (deducted from the accumulation value)
ADMINISTRATIVE CHARGE
If total premiums paid in the first contract year are less than $100,000............................. $40
If total premiums paid in the first contract year are $100,000 or more............................... $0
SEPARATE ACCOUNT ANNUAL EXPENSES (percentage of assets in each separate account division)
MORTALITY AND EXPENSE RISK CHARGE.................................................................... 0.90 %(2)
ASSET BASED ADMINISTRATIVE CHARGE.................................................................... 0.10 %
Total Separate Account Annual Expenses............................................................... 1.00 %
THE GCG TRUST ANNUAL EXPENSES (based on combined assets of the indicated
groups of Series)
</TABLE>
<TABLE>
<CAPTION>
OTHER TOTAL
SERIES FEES(3) EXPENSES(4) EXPENSES
- ------------------------------------------------------ ------------ --------------- -------------
<S> <C> <C> <C>
Multiple Allocation, Fully Managed, Capital
Appreciation,
Rising Dividends, All-Growth, Real Estate, 1.00% 0.01% 1.01%
Natural Resources, Value Equity, Strategic Equity, and
Small Cap Series:
Emerging Markets Series: 1.50% 0.03% 1.53%
Managed Global Series (5): 1.25% 0.01% 1.26%
Limited Maturity Bond and Liquid Asset Series: 0.60% 0.01% 0.61%
</TABLE>
THE ESS TRUST ANNUAL EXPENSES:
<TABLE>
<CAPTION>
OTHER TOTAL
SERIES FEES(6) EXPENSES(7) EXPENSES
- ------------------------------------------------------ ------------ --------------- -------------
<S> <C> <C> <C>
OTC Portfolio 0.80% 0.75% 1.55%
Growth & Income Portfolio: 0.95% 0.75% 1.70%
</TABLE>
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(1) Contracts with a contract date prior to May 3, 1993 and the prospectus
delivered in connection with such contracts described the sales load as a
deferred load, which is equivalent to the combination of the distribution
fee and surrender charge described above. Limited Edition contracts
purchased through Account D and the prospectus delivered in connection with
such contracts also described the sales load as a deferred load.
(2)
If your initial premium will be $25,000 or more, we also offer DVA Series
100 through another prospectus, which is a contract with a different
charging structure.
(3) Fees decline as combined assets increase (see Account B Divisions
and the Trust prospectus for details).
(4) Other expenses generally consist of independent trustees fees and expenses.
(5) The estimated expenses for the Managed Global Series are based on the
actual experience of its predecessor for accounting purposes, the Managed
Global Account of Separate Account D. On September 3, 1996, the Managed
Global Account was reorganized into the Managed Global Division of Account B
and the Managed Global Series of the GCG Trust.
(6) Prior to October 6, 1995, EISI waived its management fee for the OTC
Portfolio.
(7) Other expenses shown take into account the effect of EISI's agreement to
reimburse the portfolios for all operating expenses, excluding management
fees, that exceed 0.75% of its average daily net assets. This reimbursement
agreement commenced October 6, 1995 for the OTC Portfolio and April 1, 1996
for the Growth & Income Portfolio. This reimbursement is voluntary and can
be terminated at any time. In the absence of such reimbursement agreement,
Other Expenses would have been 1.72% for the OTC Portfolio for the year
ended December 31, 1995. The Growth & Income Portfolio commenced operations
on April 1, 1996 and has no prior operating history.
5
<PAGE>
FEE TABLE (CONTINUED)
EXAMPLES:
If you surrender your contract at the end of the applicable time period, you
would pay the following expenses for each $1,000 of initial premium assuming a
5% annual return on assets:
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<TABLE>
<CAPTION>
DIVISION ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C> <C>
Multiple Allocation..................................................... $ 80.81 $ 123.55 $ 167.88 $ 287.51
Fully Managed........................................................... 80.81 123.55 167.88 287.51
Capital Appreciation.................................................... 80.81 123.55 167.88 287.51
Rising Dividends........................................................ 80.81 123.55 167.88 287.51
All-Growth.............................................................. 80.81 123.55 167.88 287.51
Real Estate............................................................. 80.81 123.55 167.88 287.51
Natural Resources....................................................... 80.81 123.55 167.88 287.51
Value Equity............................................................ 80.81 123.55 167.88 287.51
Strategic Equity........................................................ 80.81 123.55 167.88 287.51
Small Cap............................................................... 80.81 123.55 167.88 287.51
Emerging Markets........................................................ 85.83 138.51 192.62 336.12
Managed Global.......................................................... 83.12 130.48 179.37 310.25
OTC..................................................................... 86.51 140.60 196.14 343.43
Growth & Income......................................................... 88.01 145.03 203.41 357.45
Limited Maturity Bond................................................... 76.94 111.93 148.49 248.42
Liquid Asset............................................................ 76.94 111.93 148.49 248.42
</TABLE>
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If you do not surrender your contract or if you annuitize, you would pay the
following expenses for each $1,000 of initial premium assuming a 5% annual
return on assets:
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<TABLE>
<CAPTION>
DIVISION ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C> <C>
Multiple Allocation..................................................... $ 30.81 $ 93.55 $ 157.88 $ 287.51
Fully Managed........................................................... 30.81 93.55 157.88 287.51
Capital Appreciation.................................................... 30.81 93.55 157.88 287.51
Rising Dividends........................................................ 30.81 93.55 157.88 287.51
All-Growth.............................................................. 30.81 93.55 157.88 287.51
Real Estate............................................................. 30.81 93.55 157.88 287.51
Natural Resources....................................................... 30.81 93.55 157.88 287.51
Value Equity............................................................ 30.81 93.55 157.88 287.51
Strategic Equity........................................................ 30.81 93.55 157.88 287.51
Small Cap............................................................... 30.81 93.55 157.88 287.51
Emerging Markets........................................................ 35.83 108.51 182.62 336.12
Managed Global.......................................................... 33.12 100.48 169.37 310.25
OTC..................................................................... 36.51 110.60 186.14 343.43
Growth & Income......................................................... 38.01 115.03 193.41 357.45
Limited Maturity Bond................................................... 26.94 81.93 138.49 248.42
Liquid Asset............................................................ 26.94 81.93 138.49 248.42
</TABLE>
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For purposes of computing the annual per contract administrative charge, the
dollar amounts shown in the examples are based on an initial premium of $50,000.
The purpose of the fee table is to assist you in understanding the various costs
and expenses that you may bear directly or indirectly. The fee table reflects
expenses of Account B as well as the Trusts. Premium taxes may also be
applicable. See Charges and Fees, PREMIUM TAXES. For a complete description of
contract costs and expenses, see the section titled Charges and Fees. For a
more complete description of the costs and expenses of the Trusts, see the Trust
prospectuses.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN, SUBJECT TO
THE GUARANTEES UNDER THE CONTRACT.
6
<PAGE>
SUMMARY OF THE CONTRACT
This prospectus has been designed to provide you with information regarding the
contract and Account B which funds the contract. Information concerning the
Series underlying the divisions of Account B is set forth in the Trust
prospectuses.
This summary is intended to provide only a very brief overview of the more
significant aspects of the contract. Further detail is provided in this
prospectus and in the contract. The contract, together with its attached
application or enrollment form and any riders or endorsements, constitutes the
entire agreement between you and us and should be retained.
This prospectus has been designed to provide you with the necessary information
to make a decision on purchasing the contract offered by Golden American and
funded by Account B.
You have a choice of investments. We do not promise that your accumulation value
will increase. Depending on the contract's investment experience for funds
invested in the Accounts, the accumulation value, cash surrender value and death
benefit may increase or decrease on any day. You bear the investment risk.
DESCRIPTION OF THE CONTRACT
The contract is designed to establish retirement benefits for two types of
purchasers. The first type of purchaser is one who is eligible to participate
in, and purchases a contract for use with, an individual retirement annuity
("IRA") meeting the requirements of section 408(b) of the Internal Revenue Code
of 1986 ("qualified plan"). For a contract funding a qualified plan,
distribution must commence not later than April 1st of the calendar year
following the calendar year in which you attain age 70 1/2. The second type of
purchaser is one who purchases a contract outside of a qualified plan
("non-qualified plan").
The contract also offers a choice of annuity options to which you may apply the
accumulation value on the annuity commencement date or the cash surrender value
upon surrender of the contract. See Choosing an Income Plan.
AVAILABILITY
We can issue a contract if both the annuitant and the owner are not older than
age 85 and accept additional premium payments until either the annuitant or
owner reaches the attained age of 85 for non-qualified plans (age 70 1/2 for
qualified plans, except for rollover contributions). The minimum initial premium
is $10,000 for a non-qualified plan and $1,500 for a qualified plan. If your
initial premium will be $25,000 or more we also offer GoldenSelect DVA Series
100 through another prospectus, which is a contract with a different charging
structure. We may change the minimum initial or additional premium requirements
for certain group or sponsored arrangements. See Group or Sponsored
Arrangements.
The minimum additional premium payment we will accept is $500 for a
non-qualified plan and $250 for a qualified plan. We will take under
consideration and may refuse to accept a premium payment if the sum of all
premium payments received under the contract totals more than $1,500,000.
THE DIVISIONS
There are sixteen divisions of Account B currently available under the contract.
Each of the sixteen divisions offered under this prospectus have their own
distinct investment objectives and policies. Each division of Account B
invests in a corresponding Series of the GCG Trust, managed by Directed
Services, Inc. ("DSI") or a corresponding Series of the ESS Trust, managed
by Equitable Investment Services, Inc. ("EISI," and together with DSI, the
"Managers"). The Trusts and the Managers have retained several portfolio
managers to manage the assets of each Series. See Facts About the Company
and the Accounts, and Account B Divisions.
HOW THE ACCUMULATION VALUE VARIES
The accumulation value varies each day based on investment results. You bear the
risk of poor investment performance and you receive the benefits from favorable
investment performance. The accumulation value also reflects premium payments,
charges deducted and partial withdrawals. See Accumulation Value in Each
Division.
SURRENDERING YOUR CONTRACT
The cash surrender value varies each day depending on investment results. We do
not guarantee any minimum cash surrender value. You may surrender the contract
and receive its cash surrender value at any time while both the annuitant and
owner are living and before the annuity commencement date. See Cash
Surrender Value and Surrendering to Receive the Cash Surrender Value.
7
<PAGE>
SUMMARY OF THE CONTRACT (CONTINUED)
TAKING PARTIAL WITHDRAWALS
After the free look period, prior to the annuity commencement date and while the
contract is in effect, you may take partial withdrawals from the accumulation
value of the contract. You may take conventional partial withdrawals once per
contract year without charge. Alternatively, you may elect in advance to take
systematic partial withdrawals on a monthly or quarterly basis. If you have an
IRA contract, you may elect IRA partial withdrawals on a monthly, quarterly or
annual basis.
Partial withdrawals are subject to certain restrictions as defined in this
prospectus and partial withdrawals above a specified percentage of your
accumulated value may be subject to a surrender charge. See Partial
Withdrawals.
DOLLAR COST AVERAGING
Under this option, you may choose to have a specified dollar amount transferred
from either the Limited Maturity Bond Division or Liquid Asset Division to the
other divisions on a monthly basis with the objective of shielding your
investment from short term price fluctuations. See Dollar Cost Averaging
Option.
YOUR RIGHT TO CANCEL THE CONTRACT
You may cancel your contract within the free look period which is a ten day
period of time beginning when you receive the contract. For purposes of
administering our allocation and certain other administrative rules, we deem
this period to end 15 days after the contract is mailed from our Customer
Service Center. Some states may require that we provide a longer free look
period. In some states we restrict the initial premium allocation during the
free look period. See Your Right to Cancel or Exchange Your Contract.
YOUR RIGHT TO CHANGE THE CONTRACT
The contract may be changed to another annuity plan subject to our rules at the
time of the change. See Other Contract Changes.
DEATH BENEFIT PROCEEDS
The contract provides a death benefit to the beneficiary if the annuitant (when
there is no contingent annuitant) or an owner dies prior to the annuity
commencement date. See Proceeds Payable to the Beneficiary. We may
reduce the death benefit proceeds payable under certain group or sponsored
arrangements. See Group or Sponsored Arrangements.
CONTRACT PROCESSING PERIODS
The first contract processing period begins with the contract date and ends at
the close of business on the first contract processing date. All subsequent
contract processing periods begin at the close of business on the most recent
contract processing date and extend to the close of business on the next
contract processing date. There is one contract processing period each year.
DEDUCTIONS FOR CHARGES AND FEES
We invest the entire amount of the initial and any additional premium payments
in the divisions you select, subject to certain restrictions we impose. See Part
I, Restrictions on Allocation of Premium Payments. We then periodically deduct
certain amounts from your accumulation value. See Charges and Fees. We
may reduce certain charges under group or sponsored arrangements. See
Group or Sponsored Arrangements. We may also reduce certain charges for
contracts purchased in combination with certain flexible premium variable life
products that we offer. Charges are deducted proportionately from all divisions
in which you are invested, unless you have elected the Charge Deduction
Division. The charges we deduct are:
DISTRIBUTION FEE
We deduct a sales load in an annual amount of 1.00% of each premium at the end
of each contract processing period for a period of six years from the date we
receive and accept each premium payment.
We also offer through other prospectuses other DVAs which are contracts with
different charging structures.
SURRENDER CHARGE
A surrender charge is imposed as a percentage of premium if the contract is
surrendered or an excess partial withdrawal is taken during the six year
period from the date we receive and accept each premium payment. The
percentage imposed at the time of surrender or excess partial withdrawal
depends on the distribution fee collected to the time the contract is
surrendered or the excess partial withdrawal is taken. The surrender charge in
the first contract year is 6.00% and reduces by 1.00% each year during the six
year period from the date we receive and accept each premium payment.
CONTRACTS WITH A CONTRACT DATE PRIOR TO MAY 3, 1993 AND THE PROSPECTUS
DELIVERED IN CONNECTION WITH SUCH CONTRACTS, DESCRIBED THE SALES LOAD AS A
8
<PAGE>
SUMMARY OF THE CONTRACT (CONTINUED)
DEFERRED LOAD, WHICH IS EQUIVALENT TO THE COMBINATION OF THE DISTRIBUTION FEE
AND SURRENDER CHARGE DESCRIBED ABOVE. GOLDENSELECT LIMITED EDITION CONTRACTS
PURCHASED THROUGH GOLDEN AMERICAN ACCOUNT D AND THE PROSPECTUS DELIVERED IN
CONNECTION WITH SUCH CONTRACTS ALSO DESCRIBED THE SALES LOAD AS A DEFERRED
LOAD.
IF YOUR INITIAL PREMIUM WILL BE $25,000 OR MORE WE ALSO OFFER DVA SERIES 100
THROUGH ANOTHER PROSPECTUS, WHICH IS A CONTRACT WITH A DIFFERENT CHARGING
STRUCTURE.
MORTALITY AND EXPENSE RISK CHARGE
We charge each division of Account B with a daily asset based charge for
mortality and expense risks equivalent to an annual rate of 0.90%.
PREMIUM TAXES
Generally, premium taxes are incurred on the annuity commencement date, and a
charge for premium taxes is then deducted from the accumulation value on such
date. Some jurisdictions impose a premium tax at the time the initial or
additional premiums are paid, regardless of the annuity commencement date.
ADMINISTRATIVE CHARGE
The amount deducted is $40 per contract year if total premiums paid in the
first contract year are less than $100,000. If the total premiums paid in the
first contract year equals $100,000 or more, the charge is zero.
EXCESS ALLOCATION CHARGE
The first five allocation changes in any contract year may be made without
charge. Each subsequent allocation change is subject to a $25 excess
allocation charge.
PARTIAL WITHDRAWAL CHARGE
If you take more than one conventional partial withdrawal during a contract
year, we impose a charge of the lesser of $25 and 2.0% of the amount withdrawn
for each additional conventional partial withdrawal. See Partial
Withdrawals, Conventional Partial Withdrawal Option.
ASSET BASED ADMINISTRATIVE CHARGE
We charge each division of Account B with a daily asset based charge to
cover a portion of contract administration equivalent to an annual rate of
0.10%.
TRUST EXPENSES
There are fees and expenses deducted from each Series. The investment
performance of the Series and deductions for fees and expenses from the Trusts
will affect your accumulation value. Please read the Trust prospectuses for
details.
TAX PENALTIES
The ultimate effect of Federal income taxes on the amounts held under an annuity
contract, on annuity payments and on the economic benefits to the owner,
annuitant or beneficiary depends on Golden American's tax status and upon the
tax status of the individuals concerned. In general, an owner is not taxed on
increases in value under an annuity contract until some form of distribution is
made under it. There may be tax penalties if you make a withdrawal or surrender
the contract before reaching age 59 1/2. See Federal Tax Considerations.
9
<PAGE>
CONDENSED FINANCIAL INFORMATION
INDEX OF INVESTMENT EXPERIENCE
The upper table gives the index of investment experience for each division of
Account B on their respective commencement of operations and on December 31,
1989, 1990, 1991, 1992, 1993, 1994 and 1995, as applicable. The index of
investment experience is equal to the value of a unit for each division of
the Accounts. The total value of each division as of the end of each period
indicated is shown in the lower table.
<TABLE>
<CAPTION>
INDEX OF INVESTMENT EXPERIENCE
-----------------------------------------------------------------------------------------------------
1/25/89 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
-------- ------------ ------------ ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Multiple
Allocation... $10.00 $ 10.82 $ 11.19 $ 13.30 $ 13.41 $ 14.75 $ 14.43
Fully
Managed...... 10.00 10.38 9.87 12.59 13.24 14.11 12.95
Capital
Appreciation... --(1) --(1) --(1) --(1) 11.01 11.81 11.50
Rising
Dividends.... --(3) --(3) --(3) --(3) --(3) 10.29 10.25
All-Growth.... 10.00 10.71 9.74 13.16 12.69 13.39 11.83
Real Estate... 10.00 9.90 7.68 10.19 11.48 13.33 14.04
Natural
Resources.... 10.00 11.86 10.05 10.42 9.30 13.81 14.02
Value
Equity....... --(4) --(4) --(4) --(4) --(4) --(4) --(4)
Strategic
Equity....... --(5) --(5) --(5) --(5) --(5) --(5) --(5)
Small Cap..... --(6) --(6) --(6) --(6) --(6) --(6) --(6)
Emerging
Markets...... --(3) --(3) --(3) --(3) --(3) 12.41 10.42
Managed
Global....... --(2) --(2) --(2) --(2) 10.01 10.52 9.09
OTC........... --(7) --(7) --(7) --(7) --(7) --(7) --(7)
Growth &
Income....... --(7) --(7) --(7) --(7) --(7) --(7) --(7)
Limited
Maturity
Bond......... 10.00 10.88 11.61 12.78 13.27 13.95 13.65
Liquid
Asset........ 10.00 10.68 11.38 11.90 12.15 12.35 12.68
<CAPTION>
12/31/95
-------------
<S> <C> <C>
Multiple
Allocation... $ 17.00
Fully
Managed...... 15.48
Capital
Appreciation.. 14.83
Rising
Dividends.... 13.30
All-Growth.... 14.34
Real Estate... 16.20
Natural
Resources.... 15.36
Value
Equity....... 13.39
Strategic
Equity....... 10.01
Small Cap..... --(6)
Emerging
Markets...... 9.27
Managed
Global....... 9.66
OTC........... --(7)
Growth &
Income....... --(7)
Limited
Maturity
Bond......... 15.10
Liquid
Asset........ 13.24
</TABLE>
<TABLE>
<CAPTION>
TOTAL ACCUMULATION VALUE
------------------------------------------------------------------------------------------
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
------------ ------------ ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Multiple
Allocation... $ 15,556,366 $ 23,963,356 $ 57,739,245 $ 115,124,744 $ 273,158,122 $ 297,507,994
Fully
Managed...... 5,333,885 5,414,160 9,834,436 37,352,585 108,290,963 98,836,207
Capital
Appreciation... --(1) --(1) --(1) 18,366,222 86,798,642 88,344,684
Rising
Dividends.... --(3) --(3) --(3) --(3) 14,387,382 50,384,765
All-Growth.... 3,077,542 4,528,380 11,159,814 23,418,811 56,055,565 70,623,784
Real Estate... 650,003 309,556 696,180 3,600,461 28,772,896 36,936,728
Natural
Resources.... 2,320,696 2,460,399 2,646,183 2,882,417 21,436,544 32,746,767
Value
Equity....... --(4) --(4) --(4) --(4) --(4) --(4)
Strategic
Equity....... --(5) --(5) --(5) --(5) --(5) --(5)
Small Cap..... --(6) --(6) --(6) --(6) --(6) --(6)
Emerging
Markets...... --(3) --(3) --(3) --(3) 30,488,589 59,747,048
Managed
Global....... --(2) --(2) --(2) 38,699,402 88,477,493 86,208,555
OTC........... --(7) --(7) --(7) --(7) --(7) --(7)
Growth &
Income....... --(7) --(7) --(7) --(7) --(7) --(7) --(7)
Limited
Maturity
Bond......... 2,595,966 8,009,970 15,935,184 39,861,202 71,622,231 71,573,009
Liquid
Asset........ 2,190,649 8,419,953 9,224,303 12,769,536 16,497,588 45,364,989
<CAPTION>
12/31/95
-------------
<S> <C> <C>
Multiple
Allocation... $ 305,499,995
Fully
Managed...... 117,325,242
Capital
Appreciation.. 121,047,204
Rising
Dividends.... 80,341,660
All-Growth.... 91,960,166
Real Estate... 34,814,825
Natural
Resources.... 26,991,780
Value
Equity....... 28,447,742
Strategic
Equity....... 8,030,333
Small Cap..... --(6)
Emerging
Markets...... 36,887,958
Managed
Global....... 72,375,222
OTC........... --(7)
Growth &
Income....... --(7)
Limited
Maturity
Bond......... 67,838,218
Liquid
Asset........ 36,490,508
</TABLE>
- ------------------------
(1) The Capital Appreciation Division became available for investment on May 4,
1992 starting with an index of investment experience of $10.00.
(2) The Managed Global Division became available for investment on October 21,
1992 starting with an index of investment experience of $10.00.
(3) The Rising Dividends and Emerging Markets Divisions became available for
investment on October 4, 1993 starting with an index of investment
experience of $10.00.
(4) The Value Equity Division became available for investment on January 1, 1995
starting with an index of investment experience of $10.00.
(5) The Strategic Equity Division became available for investment in October 2,
1995 starting with an index of investment experience of $10.00.
(6) The Small Cap Division became available for investment on January 2, 1996
starting with an index of investment experience of $10.00.
(7) The OTC Division and the Growth & Income Division became available for
investment on September 3, 1996 starting with an index of investment
experience of $_________ and $____________, respectively.
In order to provide for continuity in results, the above table is based on
charges for the contract described in this prospectus. Contracts issued prior to
May 1, 1991, were based on lower asset charges and, thus, would have higher
values for the indices of investment experience.
10
<PAGE>
CONDENSED FINANCIAL INFORMATION (CONTINUED)
FINANCIAL STATEMENTS
The audited financial statements of Separate Account B (as well as the auditors'
report thereon), the audited financial statements of The Managed Global Account
of Separate Account D (as well as the auditors' report thereon) and the audited
financial statements of Golden American Life Insurance Company (as well as the
auditors' reports thereon) are included in the Statement of Additional
Information.
PERFORMANCE RELATED INFORMATION
Performance information for the divisions of Account B, including the yield
and effective yield of the Liquid Asset Division, the yield of the remaining
divisions, and the total return of all divisions may appear in reports and
promotional literature to current or prospective owners.
Current yield for the Liquid Asset Division will be based on income received by
a hypothetical investment over a given 7-day period (less expenses accrued
during the period), and then "annualized" (I.E., assuming that the 7-day yield
would be received for 52 weeks, stated in terms of an annual percentage return
on the investment). "Effective yield" for the Liquid Asset Division is
calculated in a manner similar to that used to calculate yield, but when
annualized, the income earned by the investment is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of earnings.
For the remaining divisions, quotations of yield will be based on all investment
income per unit (accumulation value divided by the index of investment
experience -- see Measurement of Investment Experience, INDEX OF
INVESTMENT EXPERIENCE AND UNIT VALUE) earned during a given 30-day period, less
expenses accrued during the period ("net investment income"). Quotations of
average annual total return for any division will be expressed in terms of the
average annual compounded rate of return on a hypothetical investment in a
contract over a period of one, five, and ten years (or, if less, up to the life
of the division), and will reflect the deduction of the applicable distribution
fee and/or surrender charge, the administrative charge and the mortality and
expense risk charge. Quotations of total return may simultaneously be shown for
other periods that do not take into account certain contractual charges, such as
the distribution fee and surrender charge for example.
Performance information for a division may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P
500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money Market
Institutional Averages, or other indices measuring performance of a pertinent
group of securities so that investors may compare a division's results with
those of a group of securities widely regarded by investors as representative of
the securities markets in general; (ii) other variable annuity separate accounts
or other investment products tracked by Lipper Analytical Services, a widely
used independent research firm which ranks mutual funds and other investment
companies by overall performance, investment objectives, and assets, or tracked
by other ratings services, including VARDS, companies, publications, or persons
who rank separate accounts or other investment products on overall performance
or other criteria; and (iii) the Consumer Price Index (measure for inflation) to
assess the real rate of return from an investment in the contract. Unmanaged
indices may assume the reinvestment of dividends but generally do not reflect
deductions for administrative and management costs and expenses.
Performance information for any division reflects only the performance of a
hypothetical contract under which the accumulation value is allocated to a
division during a particular time period on which the calculations are based.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the portfolio of the
Series of the respective Trust in which the division invests and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future. For a description of
the methods used to determine yield and total return for the divisions, see
the Statement of Additional Information.
Reports and promotional literature may also contain other information including
the ranking of any division derived from rankings of variable annuity separate
accounts or other investment products tracked by Lipper Analytical Services or
by rating services, companies, publications, or other persons who rank separate
accounts or other investment products on overall performance or other criteria.
11
<PAGE>
(This page has been left blank intentionally.)
12
<PAGE>
INTRODUCTION THE FOLLOWING INFORMATION DESCRIBES THE CONTRACT AND ACCOUNT B.
ACCOUNT B INVESTS IN MUTUAL FUND PORTFOLIOS OF THE GCG TRUST AND THE ESS TRUST.
13
<PAGE>
FACTS ABOUT THE COMPANY AND ACCOUNT B
GOLDEN AMERICAN
Golden American Life Insurance Company ("Golden American") is a stock life
insurance company organized under the laws of the State of Delaware and is
a wholly owned subsidiary of Equitable of Iowa Companies ("Equitable of
Iowa"). Prior to December 30, 1993, Golden American was a Minnesota
corporation. Prior to August 13, 1996, Golden American was a wholly owned
indirect subsidiary of Bankers Trust Company. We are authorized to do
business in all jurisdictions except New York. We offer variable annuities
and variable life insurance. Administrative services for the Contract are
provided at our Customer Service Center, the address is shown on the
cover. As of December 31, 1995 Golden American had stockholder's equity of
approximately $98.1 million and total assets of approximately $1.2 billion,
including approximately $1.05 billion of separate account assets.
Equitable of Iowa is the holding company for Equitable Life Insurance
Company of Iowa, USG Annuity & Life Company, Locust Street Securities,
Inc., Equitable Investment Services, Inc. ("EISI"), EIC Variable, Inc.,
Directed Services, Inc. ("DSI"), and Golden American.
SEPARATE ACCOUNT B
All obligations under the contract are general obligations of Golden American.
Account B is a separate investment account used to support our variable
annuity contracts and for other purposes as permitted by applicable laws and
regulations. The assets of Account B are kept separate from our general
account and any other separate accounts we may have. We may offer other variable
annuity contracts investing in Account B which are not discussed in this
prospectus. Account B may also invest in other series which are not available
to the contract described in this prospectus.
We own all the assets in Account B. Income and realized and unrealized gains
or losses from assets in Account B are credited to or charged against that
account without regard to other income, gains or losses in our other investment
accounts. As required, the assets in Account B are at least equal to the
reserves and other liabilities of that account. These assets may not be charged
with liabilities from any other business we conduct.
They may, however, be subject to liabilities arising from divisions of
Account B whose assets are attributable to other variable annuity contracts
supported by Account B. If the assets exceed the required reserves and other
liabilities, we may transfer the excess to our general account.
Account B was established on July 14, 1988, and may invest in mutual funds,
unit investment trusts or other investment portfolios which we determine to be
suitable for the contract's purposes. Account B is treated as a unit
investment trust under Federal securities laws. It is registered with the SEC
under the Investment Company Act of 1940 (the "1940 Act") as an investment
company. It is governed by the laws of Delaware, our state of domicile, and
may also be governed by the laws of other states in which we do business.
Registration with the SEC does not involve any supervision by the SEC of the
management or investment policies or practices of Account B.
14
<PAGE>
FACTS ABOUT THE COMPANY AND ACCOUNT B (CONTINUED)
ACCOUNT B DIVISIONS
Account B is divided into Divisions. The Managed Global Division was a
division of Separate Account D of Golden American until September 3, 1996
when it was converted to a division of Account B. Currently, each
Division of Account B offered under this prospectus invests in a
portfolio of the GCG Trust or the ESS Trust. DSI serves as the Manager to
each Series of the GCG Trust, and EISI serves as the Manager to each Series
of the ESS Trust. See the Trusts' prospectuses for details. The Trusts, DSI
and EISI have retained several portfolio managers to manage the assets of
each Series as indicated below. There may be restrictions on the amount of
the allocation to certain Divisions based on state laws and regulations.
The investmentobjectives of the various Series in the Trusts are described
below. There is no guarantee that any portfolio or Series will meet its
investment objectives. Meeting objectives depends on various factors,
including, in certain cases, how well the portfolio managers anticipate
changing economic and market conditions. Account B also has other
Divisions investing in other series which are not available to the
Contract described in this prospectus.
DSI and EISI provide the overall business management and administrative
services necessary for the Series' operation and provide or procure the
services and information necessary to the proper conduct of the business
of the Series. See the Trust's prospectuses for details.
DSI is responsible for providing or procuring, at DSI's expense, the
services reasonably necessary for the ordinary operation of the Series of
the GCG Trust. DSI does not bear the expense of brokerage fees and other
transactional expenses for securities or other assets (which are generally
considered part of the cost for assets), taxes (if any) paid by a Series
of the GCG Trust, interest on borrowing, fees and expenses of the
independent trustees, and extraordinary expenses, such as litigation or
indemnification expenses. See the GCG Trust prospectus for details.
Each Trust pays its respective Manager for its services a fee, payable
monthly, based on the annual rates of the average daily net assets of the
Series shown in the tables below. DSI and EISI (and not the Trusts) pay
each portfolio manager a monthly fee for managing the assets of the
Series.
THE GCG TRUST
- ------------------------------------------------------------------------------
Series Fees (based on combined assets of
the indicated groups of Series)
------ ---------------------------------
Multiple Allocation, Fully Managed, 1.00% of first $750 million;
Capital Appreciation, Rising 0.95% of next $1.250 billion;
Dividends, All-Growth, Real Estate, 0.90% of next $1.5 billion; and
Natural Resources, Value Equity, 0.85% of amount in excess of
Strategic Equity, and Small Cap $3.5 billion
Series:
Emerging Markets Series: 1.50% of average daily net
assets
Managed Global 1.25% of first $500 million;
1.05% of amount in excess of
$500 million
Limited Maturity Bond and 0.60% of first $200 million;
Liquid Asset Series: 0.55% of next $300 million; and
0.50% of amount in excess of
$500 million
- -----------------------------------------------------------------------------
The ESS Trust
- -----------------------------------------------------------------------------
Series Fees
------ ----
OTC Portfolio: 0.80% of first $300 million;
0.55% of amount in excess of
$300 million
Growth & Income Portfolio: 0.95% of first $200 million;
0.75% of amount in excess of
$200 million
- -----------------------------------------------------------------------------
15
<PAGE>
FACTS ABOUT THE COMPANY AND THE ACCOUNT B (CONTINUED)
The following Divisions invest in designated Series of the GCG Trust.
MULTIPLE ALLOCATION DIVISION
MULTIPLE ALLOCATION SERIES
OBJECTIVE
The highest total return, consisting of capital appreciation and current
income, consistent with the preservation of capital and elimination of
unnecessary risk.
INVESTMENTS
Investment in equity and debt securities and the use of certain
sophisticated investment strategies and techniques.
PORTFOLIO MANAGER
Zweig Advisors Inc.
FULLY MANAGED DIVISION
FULLY MANAGED SERIES
OBJECTIVE
High total investment return over the long term, consistent with the
preservation of capital and prudent investment risk.
INVESTMENTS
Pursues an active asset allocation strategy whereby investments are
allocated, based upon an evaluation of economic and market trends and the
anticipated relative total return available, among three asset
classes-debt securities, equity securities and money market instruments.
PORTFOLIO MANAGER
T. Rowe Price Associates, Inc.
CAPITAL APPRECIATION DIVISION
CAPITAL APPRECIATION SERIES
OBJECTIVE
Long-term capital growth.
INVESTMENTS
Invests in common stocks and preferred stock that will be allocated among
various categories of stocks referred to as "components" which consist of
the following: (i) The Growth Component-Securities that the portfolio
manager believes have the following characteristics: stability and quality
of earnings and positive earnings momentum; dominant competitive
positions; and demonstrate above-average growth rates as compared to
published S&P 500 earnings projections; and (ii) The Value
Component-Securities that the portfolio manager regards as fundamentally
undervalued, i.e., securities selling at a discount to asset value and
securities with a relatively low price/earnings ratio. The securities
eligible for this component may include real estate stocks, such as
securities of publicly-owned companies that, in the portfolio manager's
judgement, offer an optimum combination of current dividend yield,
expected dividend growth, and discount to current real estate value.
PORTFOLIO MANAGER
Chancellor Trust Company
RISING DIVIDENDS DIVISION
RISING DIVIDENDS SERIES
OBJECTIVE
Capital appreciation, with dividend income as a secondary objective.
INVESTMENTS
Investment in equity securities of high quality companies that meet the
following four criteria: consistent dividend increases; substantial
dividend increases; reinvested profits; and an under-leveraged balance
sheet.
PORTFOLIO MANAGER
Kayne, Anderson Investment Management, Inc.
ALL-GROWTH DIVISION
ALL-GROWTH SERIES
OBJECTIVE
Capital appreciation.
INVESTMENTS
Investment in securities selected for their long term growth prospects.
PORTFOLIO MANAGER
Warburg, Pincus Counsellors, Inc.
REAL ESTATE DIVISION
REAL ESTATE SERIES
OBJECTIVE
Capital appreciation, with current income as a secondary objective.
INVESTMENTS
Investment in publicly traded equity securities of companies in the real
estate industry listed on national exchanges or on the National
Association of Securities Dealers Automated Quotation System.
PORTFOLIO MANAGER
E.I.I. Realty Securities, Inc.
15
<PAGE>
FACTS ABOUT THE COMPANY AND ACCOUNT B (CONTINUED)
NATURAL RESOURCES DIVISION
NATURAL RESOURCES SERIES
OBJECTIVE
Long-term capital appreciation.
INVESTMENTS
Investment in equity and debt securities of companies engaged in the
exploration, development, production, and distribution of natural
resources.
PORTFOLIO MANAGER
Van Eck Associates Corporation
VALUE EQUITY DIVISION
VALUE EQUITY SERIES
OBJECTIVE
Capital appreciation with a secondary objective of dividend income.
INVESTMENTS
Investment primarily in equity securities of U.S. and foreign issuers
which, when purchased, meet quantitative standards believed by the
Portfolio Manager to indicate above average financialsoundness and high
intrinsic value relative to price.
PORTFOLIO MANAGER
Eagle Asset Management, Inc.
STRATEGIC EQUITY DIVISION
STRATEGIC EQUITY SERIES
OBJECTIVE
Long term capital appreciation.
INVESTMENTS
Investment primarily in equity securities based on various equity market
timing techniques. The amount of the Series' assets allocated to equities
shall vary from time to time to seek positive investment performance from
advancing equity markets and to reduce exposure to equities when
risk/reward characteristics are believed to be less attractive.
PORTFOLIO MANAGER
Zweig Advisors Inc.
SMALL CAP DIVISION
SMALL CAP SERIES
OBJECTIVE
Long term capital appreciation.
INVESTMENTS
Investment primarily in equity securities of companies that, at the time
of purchase, have a total market capitalization - present market value per
share multiplied by the total number of shares outstanding - of less than
$1 billion.
PORTFOLIO MANAGER
Fred Alger Management, Inc.
EMERGING MARKETS DIVISION
EMERGING MARKETS SERIES
OBJECTIVE
Long term growth of capital.
INVESTMENTS
Investment primarily in equity securities of companies that are considered
to be in emerging market countries in the Pacific Basin and Latin America.
Income is not an objective, and any production of current income is
considered incidental to the objective of growth of capital.
PORTFOLIO MANAGER
Bankers Trust Company
MANAGED GLOBAL DIVISION
MANAGED GLOBAL SERIES
OBJECTIVE
High total investment return, consistent with a prudent regard for capital
preservation.
INVESTMENTS
Investment in a wide range of equity and debt securities and money market
instruments of both domestic and foreign issuers.
PORTFOLIO MANAGER
Warburg, Pincus Counsellors, Inc.
LIMITED MATURITY BOND DIVISION
LIMITED MATURITY BOND SERIES
OBJECTIVE
Highest current income consistent with low risk to principal and
liquidity. Also seeks to enhance its total return through capital
appreciation when market factors indicate that capital appreciation may be
available without significant risk to principal.
INVESTMENTS
Investment primarily in a diversified portfolio of limited maturity debt
securities. No individual security will at the time of purchase have a
remaining maturity longer than seven years and the dollar-weighted average
maturity of the Series will not exceed five years.
PORTFOLIO MANAGER
Equitable Investment Services, Inc.
16
<PAGE>
FACTS ABOUT THE COMPANY AND ACCOUNT B (CONTINUED)
LIQUID ASSET DIVISION
LIQUID ASSET SERIES
OBJECTIVE
High level of current income consistent with the preservation of capital
and liquidity.
INVESTMENTS
Obligations of the U.S. Government and its agencies and instrumentalities;
bank obligations; commercial paper and short-term corporate debt
securities.
TERM
All issues maturing in less than one year.
PORTFOLIO MANAGER
Equitable Investment Services, Inc.
The following Divisions invest in designated Series of the ESS Trust.
OTC DIVISION
OTC PORTFOLIO
OBJECTIVE
Long term growth of capital.
INVESTMENTS
Investment primarily in securities of companies that are traded
principally on the over-the-counter (OTC) market.
PORTFOLIO MANAGER
Massachusetts Financial Services Company
GROWTH & INCOME DIVISION
GROWTH & INCOME PORTFOLIO
OBJECTIVE
Long term total return.
INVESTMENTS
Investment primarily in equity and debt securities, focusing on small- and
mid-cap companies that offer potential appreciation, current income, or
both.
PORTFOLIO MANAGER
Robertson, Stephens & Company Investment Management, L.P.
THE GCG TRUST AND THE ESS TRUST
The GCG Trust is an open-end management investment company, more commonly
called a mutual fund. The GCG Trust's shares may also be available to
certain separate accounts funding variable life insurance policies offered
by Golden American. This is called "mixed funding."
The GCG Trust may also sell its shares to separate accounts of other
insurance companies, both affiliated and not affiliated with Golden
American. This is called "shared funding." Although we do not anticipate
any inherent difficulties arising from either mixed or shared funding, it
is theoretically possible that, due to differences in tax treatment or
other considerations, the interest of Owners of various Contracts
participating in the GCG Trust might at sometime be in conflict. After the
GCG Trust receives the requisite order from the SEC, shares of the GCG
Trust may also be sold to certain qualified pension and retirement plans.
The Board of Trustees of the GCG Trust, the GCG Trust's Manager, and we
and any other insurance companies participating in the GCG Trust are
required to monitor events to identify any material conflicts that arise
from the use of the GCG Trust for mixed and/or shared funding or between
various policy Owners and pension and retirement plans. For more
information about the risks of mixed and shared funding, please refer to
the GCG Trust prospectus.
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FACTS ABOUT THE COMPANY AND ACCOUNT B (CONTINUED)
The ESS Trust is also an open-end management investment company.
Currently, the ESS Trust's shares are not available to separate accounts
of other insurance companies except affiliated insurance companies such as
Golden American. It is anticipated that in the future the ESS Trust will
become available to separate accounts of unaffiliated companies as well as
to separate accounts funding variable life insurance policies offered by
Golden American.
You will find complete information about both the GCG Trust and the ESS
Trust, including the risks associated with each Series, in the
accompanying Trusts' prospectuses. You should read them carefully in
conjunction with this prospectus before investing. Additional copies of
the Trusts' prospectuses may be obtained by contacting our Customer
Service Center.
CHANGES WITHIN ACCOUNT B
We may from time to time make additional Divisions available. These
Divisions will invest in investment portfolios we find suitable for the
Contract. We also have the right to eliminate investment Divisions from
Account B, to combine two or more Divisions, or to substitute a new
portfolio for the portfolio in which a Division invests. A substitution
may become necessary if, in our judgment, a portfolio no longer suits the
purposes of the Contract. This may happen due to a change in laws or
regulations, or a change in a portfolio's investment objectives or
restrictions, or because the portfolio is no longer available for
investment, or for some other reason. In addition, we reserve the right to
transfer assets of Account B, which we determine to be associated with the
class of Contracts to which your Contract belongs, to another account. If
necessary, we will get prior approval from the insurance department of our
state of domicile before making such a substitution or transfer. We will
also get any required approval from the SEC and any other required
approvals before making such a substitution or transfer. We will notify
you as soon as practicable of any proposed changes.
When permitted by law, we reserve the right to:
(1) deregister an account under the 1940 Act;
(2) operate an account as a management company
under the 1940 Act if it is operating as a unit investment trust;
(3) operate an account as a unit investment trust
under the 1940 Act if it is operating as a managed separate account;
(4) restrict or eliminate any voting rights as to the
accounts; and
(5) combine an account with other accounts.
FACTS ABOUT THE CONTRACT
THE OWNER
You are the owner. You are also the annuitant unless another annuitant is named
in the application or enrollment form. You have the rights and options described
in the contract. One or more persons may own the contract.
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FACTS ABOUT THE CONTRACT (CONTINUED)
Death of an owner activates the death benefit provision. In the case of a sole
owner who dies prior to the annuity commencement date, we will pay the
beneficiary the death benefit then due. The sole owner's estate will be the
beneficiary if no beneficiary designation is in effect, or if the designated
beneficiary has predeceased the owner. In the case of a joint owner of the
contract dying prior to the annuity commencement date, we will designate the
surviving owner(s) as the beneficiary(ies). This supersedes any previous
beneficiary designation. In the case where the owner is a trust, the beneficial
owner of the trust will be treated as the owner of the contract solely for the
purpose of activating the death benefit provision. See Contracts Owned by
Non-Natural Persons.
THE ANNUITANT
The annuitant will receive the annuity benefits of the contract if living on the
annuity commencement date. If the annuitant dies before the annuity commencement
date, and a contingent annuitant has been named, the contingent annuitant
becomes the annuitant. Once named, neither the annuitant nor the contingent
annuitant, if any, may be changed at any time.
If there is no contingent annuitant when the annuitant dies prior to the annuity
commencement date, we will pay the beneficiary the death benefit then due. The
beneficiary will be as provided in the beneficiary designation then in effect.
If no beneficiary designation is in effect, or if there is no designated
beneficiary living, the owner will be the beneficiary. If the annuitant was the
sole owner and there is no beneficiary designation, the annuitant's estate will
be the beneficiary.
THE BENEFICIARY
The beneficiary is the person to whom we pay death benefit proceeds if the
annuitant (when there is no contingent annuitant) or owner dies prior to the
annuity commencement date. We pay death benefit proceeds to the primary
beneficiary. See Proceeds Payable to the Beneficiary.
If the beneficiary dies before the annuitant or owner, the death benefit
proceeds are paid to the contingent beneficiary, if any. If there is no
surviving beneficiary, we pay the death benefit proceeds to the owner (if other
than the annuitant). If the owner was the annuitant, we pay any death benefit
proceeds to the annuitant's estate.
One or more persons who must be individuals may be named as beneficiary or
contingent beneficiary. In the case of more than one beneficiary, we will assume
any death benefit proceeds are to be paid in equal shares to the surviving
beneficiaries. You may specify other than equal shares.
You have the right to change beneficiaries during the annuitant's lifetime
unless you have designated an irrevocable beneficiary. When an irrevocable
beneficiary has been designated, you and the irrevocable beneficiary must act
together to exercise the rights and options under the contract.
CHANGE OF OWNER OR BENEFICIARY
During the annuitant's lifetime and while the contract is in effect, you may
transfer ownership of the contract (if purchased in connection with a non-
qualified plan) subject to our published rules at the time of the change. You
may also change the beneficiary. To make either of these changes, you must send
us written notice of the change in a form satisfactory to us. The change will
take effect as of the day the notice is signed. The change will not affect any
payment made or action taken by us before recording the change at our Customer
Service Center. See Additional Considerations, Transfer of Annuity Contracts,
and Assignments.
AVAILABILITY OF THE CONTRACT
We can issue a contract if both the annuitant and the owner are not older than
age 85.
TYPES OF CONTRACTS
QUALIFIED CONTRACTS
The contract may be issued as an Individual Retirement Annuity or in
connection with an individual retirement account. In the latter case, the
contract will be issued without an Individual Retirement Annuity endorsement,
and the rights of the participant under the contract will be affected by the
terms and conditions of the particular individual retirement trust or
custodial account, and by provisions of the Code and the regulations
thereunder. For example, the individual retirement trust or custodial account
will impose minimum distribution rules, which require distributions to
commence not later than April 1st of the calendar year following the calendar
year in which you attain age 70 1/2. For both Individual Retirement Annuities
and individual retirement accounts, the minimum initial premium is $1,500.
IF THE CONTRACT IS PURCHASED TO FUND A QUALIFIED PLAN, DISTRIBUTION MUST
COMMENCE NOT LATER
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FACTS ABOUT THE CONTRACT (CONTINUED)
THAN APRIL 1ST OF THE CALENDAR YEAR FOLLOWING THE CALENDAR YEAR IN WHICH YOU
ATTAIN AGE 70 1/2.
NON-QUALIFIED CONTRACTS
The contract may fund any non-qualified plan. Non-qualified contracts do not
qualify for any tax-favored treatment other than the benefits provided for by
annuities.
YOUR RIGHT TO SELECT OR CHANGE
CONTRACT OPTIONS
Before the annuity commencement date, you may change the annuity commencement
date, frequency of annuity payments or the annuity option by sending a written
request to the Customer Service Center. The annuitant named on the application
or enrollment form may not be changed at any time.
PREMIUMS
You purchase the contract with an initial premium. After the end of the free
look period, you may make additional premium payments. See Making Additional
Premium Payments. The minimum initial premium is $10,000 for a non-qualified
contract and $1,500 for a qualified contract. If your initial premium will be
$25,000 or more, we also offer DVA Series 100 through another prospectus, which
is a contract with a different charging structure.
We may refuse a premium payment if an initial premium or the sum of all premium
payments is more than $1,500,000. We may change the minimum initial or
additional premium requirements for certain group or sponsored arrangements. See
Group or Sponsored Arrangements.
QUALIFIED PLANS
For IRA contracts, the annual premium on behalf of any individual contract may
not exceed $2,000. Provided your spouse does not make a contribution to an
IRA, you may set up a spousal IRA even if your spouse has earned some
compensation during the year. The maximum deductible amount for a spousal IRA
program is the lesser of $2,250 or 100% of your compensation reduced by the
contribution (if any) made by you for the taxable year to your own IRA.
However, no more than $2,000 can go to either your or your spouse's IRA in any
one year. For example, $1,750 may go to your IRA and $500 to your spouse's
IRA. These maximums are not applicable if the premium is the result of a
rollover from another qualified plan.
WHERE TO MAKE PAYMENTS
Remit premium payments to our Customer Service Center. The address is shown on
the cover. We will send you a confirmation notice.
MAKING ADDITIONAL PREMIUM PAYMENTS
You may make additional premium payments after the end of the free look period.
We can accept additional premium payments until either the annuitant or owner
reaches the attained age of 85 under non-qualified plans. For qualified plans,
no contributions may be made to an IRA contract for the taxable year in which
you attain age 70 1/2 and thereafter (except for rollover contributions). The
minimum additional premium payment we will accept is $500 for a non-qualified
plan and $250 for a qualified plan.
CREDITING PREMIUM PAYMENTS
The initial premium will be accepted or rejected within two business days of
receipt by us of a completed application or enrollment form. We may retain the
initial premium for up to five days while attempting to complete an incomplete
application or enrollment form. If the application or enrollment form cannot be
made complete within five valuation days, the applicant or enrollee will be
informed of the reasons for the delay and the initial premium will be returned
immediately unless the applicant or enrollee specifically consents to our
retaining the initial premium until the application or enrollment form is made
complete. Thereafter, all premiums will be accepted on the day received.
We will accept, by agreement with broker-dealers who use wire transmittals,
transmittal of initial and additional premium payments by wire order from the
broker-dealer to the Customer Service Center. Such transmittals must be
accompanied by a simultaneous telephone facsimile transmission containing the
essential information we require to open an account and allocate the premium
payment.
Premium payments accepted via wire order and accompanying facsimile
transmissions will be invested at the value next determined following receipt.
Wire orders not accompanied by facsimile transmissions, or accompanied by
facsimile transmissions which do not contain the essential information we
require to open an account and allocate the premium payment, may be retained for
a period not exceeding five business days while an attempt is made to obtain the
required facsimile transmission. If the required facsimile transmission cannot
be obtained within five business days, the Customer
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FACTS ABOUT THE CONTRACT (CONTINUED)
Service Center will inform the broker-dealer, on behalf of the
applicant/enrollee, of the reasons for the delay and return the premium payment
immediately to the broker-dealer for return to the applicant/enrollee, unless
the applicant/enrollee specifically consents to allow us to retain the premium
payment until the required facsimile transmission is received by the Customer
Service Center.
We will issue the contract; however, until we have received and accepted at the
Customer Service Center a properly completed application or enrollment form, we
reserve the right to rescind the contract. If an application or enrollment form
is not received within ten days of receipt of the initial premium via wire
order, or if an incomplete application or enrollment form is received and cannot
be completed within ten days of receipt of the initial premium, the amount of
the initial premium, with any gain, will be returned to the broker-dealer for
return to the applicant/enrollee. In no event will less than the full amount of
the initial premium be returned to the applicant/enrollee.
On the date we receive and accept your initial or additional premium payment:
(1) We allocate the initial premium among the
divisions according to your instructions, subject to any restrictions. See
Restrictions on Allocation of Premium Payments. For additional premium
payments, the accumulation value will increase by the amount of the premium.
If we do not receive instructions from you, the increase in the accumulation
value will be allocated among the divisions in proportion to the amount of
accumulation value in each division as of the date we receive and accept the
additional premium payment.
(2) For an initial premium, we calculate the
distribution fee and any charge for premium taxes, if applicable. When an
additional premium payment is made we increase any distribution fee and any
charge for premium taxes, if applicable. These charges will be collected by
us from the contract's accumulation value. HOWEVER, WE CURRENTLY WAIVE THE
DEDUCTION OF THE CHARGE FOR PREMIUM TAXES. (See Charges and Fees, PREMIUM
TAXES).
(3) For an initial premium, we calculate the
guaranteed death benefit. When an additional premium payment is made we increase
the guaranteed death benefit.
ELECTRONIC DATA TRANSMISSION OF
APPLICATION INFORMATION
In certain states, we will also accept, by agreement with broker-dealers who
use electronic data transmissions of application information, wire
transmittals of initial premium payments from the broker-dealer to the
Customer Service Center for purchase of the contract. Contact the Customer
Service Center to find out about state availability.
Upon receipt of the electronic data and wire transmittal, we will open an
account and allocate the premium payment according to the client's
instructions. Based on the information provided, we will generate an
application or enrollment form and contract to be forwarded to the
applicant/enrollee for signature.
During the period from receipt of the initial premium until the signed
application or enrollment form is received, the owner may not execute any
financial transactions with respect to the contract unless such transactions
are requested in writing and signature guaranteed.
RESTRICTIONS ON ALLOCATION OF
PREMIUM PAYMENTS
We may require that the initial premium be allocated to the Specially Designated
Division during the free look period for initial premiums received from some
states. After the free look period, if your initial premium was allocated to the
Specially Designated Division, we will transfer the accumulation value to the
divisions you previously selected based on the index of investment experience
next computed for each division. See Measurement of Investment Experience, INDEX
OF INVESTMENT EXPERIENCE AND UNIT VALUE.
YOUR RIGHT TO REALLOCATE
You may reallocate your accumulation value among the divisions of Account B
at the end of the free look period. You are allowed five allocation changes per
contract year without charge. There will be a charge of $25 deducted from the
accumulation value for each additional allocation change. When a reallocation is
made, we redeem shares of the Series underlying the divisions you are
transferring from at their net asset value. Reinvestment is then made in shares
of the Series of the divisions you are transferring to at their net asset value.
To make a reallocation change, you must provide us with satisfactory notice at
our Customer Service Center.
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FACTS ABOUT THE CONTRACT (CONTINUED)
RESTRICTIONS ON REALLOCATIONS
Some restrictions may apply based on the free look provisions of the state
where the contract is issued. See Your Right to Cancel or Exchange Your
Contract.
DOLLAR COST AVERAGING OPTION
If you have at least $10,000 of accumulation value in the Limited Maturity Bond
Division or the Liquid Asset Division, you may choose to have a specified dollar
amount transferred from this division to other divisions in Account B on a
monthly basis. The main objective of dollar cost averaging is to attempt to
shield your investment from short term price fluctuations. Since the same dollar
amount is transferred to other divisions each month, more units are purchased in
a division if the value per unit is low and less units are purchased if the
value per unit is high.
Therefore, a lower than average value per unit may be achieved over the long
term. This plan of investing allows investors to take advantage of market
fluctuations but does not assure a profit or protect against a loss in declining
markets. See Measurement of Investment Experience, INDEX OF INVESTMENT
EXPERIENCE AND UNIT VALUE.
This dollar cost averaging option may be elected at the time the application or
enrollment form is completed or at a later date. The minimum amount that may be
transferred each month is $250. The maximum amount which may be transferred is
equal to the accumulation value in the Limited Maturity Bond Division or the
Liquid Asset Division when elected, divided by 12.
The transfer date will be the same calendar day each month as the contract date.
The dollar amount will be allocated to the divisions in which you are invested
in proportion to your accumulation value in each division unless you specify
otherwise. If, on any transfer date, the accumulation value is equal to or less
than the amount you have elected to have transferred, the entire amount will be
transferred and the option will end. You may change the transfer amount once
each contract year, or cancel this option by sending us satisfactory notice to
the Customer Service Center at least seven days before the next transfer date.
Any allocation under this option will not be included in determining if the
excess allocation charge will apply.
WHAT HAPPENS IF A DIVISION IS NOT AVAILABLE
When a distribution is made from an investment portfolio supporting a division
of Account B or The Managed Global Account Division of Account D in which
reinvestment is not available, we will allocate the distribution, unless you
specify otherwise, to the Specially Designated Division.
Such a distribution can occur when (a) an investment portfolio matures, or (b) a
distribution from a portfolio or division cannot be reinvested in the portfolio
or division due to the unavailability of securities for acquisition. When an
investment portfolio matures, we will notify you in writing 30 days in advance
of that date. To elect an allocation to other than the Specially Designated
Division, you must provide satisfactory notice to us at least seven days prior
to the date the portfolio matures. Such allocations are not counted as an
allocation change of the accumulation value for purposes of the number of free
allocation changes permitted. When a distribution from a portfolio or division
cannot be reinvested in the portfolio due to the unavailability of securities
for acquisition, we will notify you promptly after the allocation has occurred.
If within 30 days you allocate the accumulation value from the Specially
Designated Division to other divisions of your choice, such allocations are not
counted as an allocation change of the accumulation value for purposes of the
number of free allocation changes permitted.
YOUR ACCUMULATION VALUE
Your accumulation value is the sum of the amounts in each of the divisions in
which you are invested, and is the amount available for investment at any time.
You select the divisions to which to allocate the accumulation value. We adjust
your accumulation value on each Valuation Date to reflect the divisions'
investment performance and on each contract processing date to reflect the
removal of any charges. The accumulation value is applied to your choice of an
annuity option on the annuity commencement date. See Choosing an Income Plan.
You may choose up to sixteen divisions and allocate your accumulation value
among them in any way you choose.
ACCUMULATION VALUE IN EACH DIVISION
ON THE CONTRACT DATE
On the contract date, the accumulation value is allocated to each division as
specified on the application or enrollment form, unless the contract is issued
in a state that requires the return of premium payments during the free look
period, in which case, your initial premium will be
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FACTS ABOUT THE CONTRACT (CONTINUED)
allocated to the Specially Designated Division during the free look period.
See Your Right to Cancel or Exchange Your Contract.
ON EACH VALUATION DATE
At the end of each subsequent valuation period, the amount of accumulation
value in each division will be calculated as follows:
(1) We take the accumulation value in the
division at the end of the preceding valuation period.
(2) We multiply (1) by the division's net rate of
return for the current valuation period.
(3) We add (1) and (2).
(4) We add to (3) any additional premium
payments allocated to the division during the current valuation period.
(5) We add or subtract allocations to or from
that division during the current valuation period.
(6) We subtract from (5) any partial withdrawals
and any associated charges allocated to that division during the current
valuation period.
(7) We subtract from (6) the amounts allocated
to that division for:
(a) any contract fees; and
(b) any distribution fee and any charge for
premium taxes. HOWEVER, WE CURRENTLY WAIVE THE DEDUCTION OF THE CHARGE
FOR PREMIUM TAXES. (See Charges and Fees, PREMIUM TAXES.)
All amounts in (7) are allocated to each division in the proportion that (6)
bears to the accumulation value, unless the Charge Deduction Division has been
specified.
MEASUREMENT OF INVESTMENT EXPERIENCE
INDEX OF INVESTMENT EXPERIENCE
AND UNIT VALUE
The investment experience of a division is determined on each valuation date.
We use an index to measure changes in each division's experience during a
valuation period. We set the index at $10 when the first investments in a
division are made. The index for a current valuation period equals the index
for the preceding valuation period multiplied by the experience factor for the
current valuation period.
We may express the value of amounts allocated to the divisions in terms of
units. We determine the number of units for a given amount on a valuation date
by dividing the dollar value of that amount by the index of investment
experience for that date. The index of investment experience is equal to the
value of a unit.
HOW WE DETERMINE THE
EXPERIENCE FACTOR
For divisions of Account B the experience factor reflects the investment
experience of the Series in which a division invests as well as the charges
assessed against the division for a valuation period. The factor is calculated
as follows:
(1) We take the net asset value of the portfolio
in which the division invests at the end of the current valuation period.
(2) We add to (1) the amount of any dividend or
capital gains distribution declared for the investment portfolio and
reinvested in such portfolio during the current valuation period. We
subtract from that amount a charge for our taxes, if any.
(3) We divide (2) by the net asset value of the
portfolio at the end of the preceding valuation period.
(4) We subtract the daily mortality and expense
risk charge from each division for each day in the valuation period.
(5) We subtract the daily asset based
administrative charge from each division for each day in the valuation period.
Calculations for divisions investing in a Series are made on a per share
basis.
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FACTS ABOUT THE CONTRACT (CONTINUED)
NET RATE OF RETURN FOR A DIVISION
OF ACCOUNT B
The net rate of return for a division during a valuation period is the
experience factor for that valuation period minus one.
CASH SURRENDER VALUE
Your contract's cash surrender value fluctuates daily with the investment
results of the divisions you have selected. We do not guarantee any minimum. On
any date before the annuity commencement date while the contract is in effect,
the cash surrender value is calculated as follows:
(1)We take the contract's accumulation value;
(2)We deduct any surrender charge and any
unrecovered charge for premium taxes. (See Charges and Fees, PREMIUM TAXES);
(3)We deduct any charges incurred but not yet
deducted. (See Charges and Fees, ADMINISTRATIVE CHARGE, EXCESS ALLOCATION
CHARGE, PARTIAL WITHDRAWAL CHARGE).
SURRENDERING TO RECEIVE THE
CASH SURRENDER VALUE
The contract may be surrendered by the owner at any time while the annuitant is
living and before the annuity commencement date.
A surrender will be effective on the date your written request and the contract
are received by us at our Customer Service Center and the cash surrender value
is determined accordingly as of that date. All benefits under the contract will
then be terminated as of that date. You may receive the cash surrender value in
a single sum payment or apply it under one or more annuity options. See The
Annuity Options. We will usually pay the cash surrender value within seven days
but we may delay payment as described in the When We Make Payments provision.
PARTIAL WITHDRAWALS
Prior to the annuity commencement date, while the annuitant is living and the
contract is in effect, you may take partial withdrawals from the accumulation
value by sending satisfactory notice to the Customer Service Center. Unless you
specify otherwise, the amount of the withdrawal will be taken in proportion to
the amount of accumulation value in each division in which you are invested.
There are three options available for selecting partial withdrawals, the
Conventional Partial Withdrawal Option, the Systematic Partial Withdrawal Option
and the IRA Partial Withdrawal Option. All three options are described below.
Partial withdrawals may not be repaid, and in no event may a withdrawal amount
be greater than 90% of the cash surrender value.
CONVENTIONAL PARTIAL WITHDRAWAL OPTION
After the free look period, you may take a conventional partial withdrawal
once each contract year without charge. If you take more than one conventional
partial withdrawal in a contract year, we impose a charge of the lesser of $25
and 2.0% of the amount withdrawn. The minimum amount you may withdraw under
this option is $1,000 and the maximum amount that may be withdrawn without
incurring a surrender charge (assuming no systematic or IRA partial
withdrawals are in place during that contract year) is 15% of the accumulation
value. SEE SURRENDER CHARGES FOR EXCESS PARTIAL WITHDRAWALS, below.
SYSTEMATIC PARTIAL WITHDRAWAL OPTION
This option may be elected at the time the application or enrollment form is
completed, or at a later date. This option may be elected to commence in a
contract year where a conventional partial withdrawal has been taken. However,
it may not be elected while the IRA partial withdrawal option is in effect.
You may choose to receive systematic partial withdrawals on a monthly or
quarterly basis from the accumulation value in the divisions of Account B.
The commencement of payments under this option may not be elected to start
sooner
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FACTS ABOUT THE CONTRACT (CONTINUED)
than 28 days after the contract issue date. You select the date of the quarter
or month when the withdrawals will be made but no later than the 28th day of
the month. If no date is selected, the withdrawals will be made on the same
calendar day of each month as the contract date. You may select a dollar
amount or a percentage of the accumulation value as the amount of your
withdrawal subject to the following maximums, but in no event can a payment be
less than $100:
<TABLE>
<CAPTION>
FREQUENCY MAXIMUM PERCENTAGE
- ------------------------ ------------------------
<S> <C>
Monthly 1.25%
Quarterly 3.75%
</TABLE>
If a dollar amount is selected and the amount to be systematically withdrawn
would exceed the applicable maximum percentage of the accumulation value on
the withdrawal date, the amount withdrawn will be reduced so that it equals
such percentage. For example, if a $500 monthly withdrawal was elected and on
the withdrawal date 1.25% of the accumulation value equaled $300, the
withdrawal amount would be reduced to $300. If a percentage is selected and
the amount to be systematically withdrawn based on that percentage would be
less than the minimum of $100, we would increase the amount to $100 provided
it does not exceed the maximum percentage. If it is below the maximum
percentage we will send the minimum. If it is above the maximum percentage we
will send the amount and then cancel the option. For example, if you selected
1.0% to be systematically withdrawn on a monthly basis and that amount equaled
$90, and since $100 is less than 1.25% of the accumulation value, we would
send $100. If 1.0% equaled $75, since $100 is more than 1.25% of the
accumulation value we would send $75 and then cancel the option. In such a
case, in order to receive systematic partial withdrawals in the future, you
would be required to submit a new notice to our Customer Service Center.
You may change the amount or percentage of your withdrawal once each contract
year or cancel this option at any time by sending satisfactory notice to us at
our Customer Service Center at least seven days prior to the next scheduled
withdrawal date. However, you may not change the amount or percentage of your
withdrawals in any contract year during which you have previously taken a
conventional partial withdrawal.
There may be a surrender charge associated with a partial withdrawal in any
contract year in which you receive systematic partial withdrawals and also
take a conventional partial withdrawal. See SURRENDER CHARGES FOR EXCESS
PARTIAL WITHDRAWALS, below.
IRA PARTIAL WITHDRAWAL OPTION
If you have an IRA contract and will attain age 70 1/2 in the current calendar
year, distributions will be made to you to satisfy requirements imposed by
Federal tax law. IRA partial withdrawals provide payout of amounts required to
be distributed by the Internal Revenue Service rules governing mandatory
distributions under qualified plans. See Federal Tax Considerations, Taxation
of Individual Retirement Annuities. We will send you a notice before your
distributions must commence, and you may elect this option at that time, or at
a later date. You may not elect IRA partial withdrawals while the systematic
partial withdrawal option is in effect. If you do not elect the IRA partial
withdrawal option, and distributions are required by Federal tax law,
distributions adequate to satisfy the requirements imposed by Federal tax law
will be made. Thus, if the systematic partial withdrawal option is in effect,
distribution under that option must be adequate to satisfy the mandatory
distribution rules imposed by Federal tax law.
You may choose to receive IRA partial withdrawals on a monthly, quarterly or
annual frequency. You select the day of the month when the withdrawals will be
made, but it cannot be later than the 28th day of the month. If no date is
selected, the withdrawals will be made on the same calendar day of the month
as the contract date.
We will determine the amount that is required to be withdrawn from your
contract each year based on the information you give us and various choices
you make. For information regarding the calculation and choices you have to
make, see the Statement of Additional Information. The minimum dollar amount
you can withdraw is $100. At the time we determine the required partial
withdrawal amount for a taxable year based on the frequency you select, if
that amount is less than $100, we will pay $100. At any time where the partial
withdrawal amount is greater than the accumulation value, we will cancel the
contract and send you the amount of the cash surrender value.
You may change the payment frequency of your withdrawals once each contract
year or cancel this option at any time by sending us satisfactory
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FACTS ABOUT THE CONTRACT (CONTINUED)
notice to our Customer Service Center at least seven days prior to the next
scheduled withdrawal date.
There may be a surrender charge associated with a partial withdrawal in any
contract year during which you receive IRA partial withdrawals and take a
conventional partial withdrawal. See SURRENDER CHARGES FOR EXCESS PARTIAL
WITHDRAWALS, below.
SURRENDER CHARGES FOR EXCESS
PARTIAL WITHDRAWALS
An excess partial withdrawal is the amount by which annualized partial
withdrawals for a contract year exceed 15% of the accumulation value on the
date of the withdrawal. Any partial withdrawal and any combination of partial
withdrawals either taken during a contract year or expected to be received in
a contract year will be taken into account in determining the amount of the
excess partial withdrawal. An excess partial withdrawal will be considered a
partial surrender of the contract and we will impose a surrender charge
applicable to the accumulation value. Such amount will be deducted from the
accumulation value in proportion to the accumulation value in each division
from which the excess partial withdrawal was taken.
An excess partial withdrawal will result in the imposition of a surrender
charge and a corresponding reduction in the remaining surrender charge that
subsequently can be imposed under the contract. For example the following
assumes a conventional partial withdrawal of $17,200 is taken at the beginning
of the fourth contract year. A contract with a current surrender charge of
$3,000 (an initial surrender charge of $6,000 reducing at the rate of $1,000
per contract year for six years), has an accumulation value of $100,000.
In this example, $15,000 (15% of accumulation value) may be withdrawn during
the contract year without the imposition of a surrender charge. The excess
partial withdrawal is the amount by which the withdrawal is in excess of the
maximum ($17,200 - $15,000 = $2,200). The excess is calculated as a percentage
of the accumulation value ($2,200/$100,000 = .022). Applying this percentage
to the current amount of the surrender charge ($3,000 x .022 = $66) determines
the amount to be deducted from the accumulation value as of the date of the
withdrawal.
If the contract were surrendered following the partial withdrawal, the
surrender charge would be $2,934 ($3,000 - $66). If instead, the contract were
surrendered at the beginning of the fifth year assuming no further partial
withdrawals, the surrender charge would be $1,934 ($2,000 - $66).
CONTRACTS WITH A CONTRACT DATE PRIOR TO MAY 3, 1993 AND THE PROSPECTUS
DELIVERED IN CONNECTION WITH SUCH CONTRACTS, DESCRIBED THIS PROVISION AS
ACCELERATION OF RECOVERY OF DEFERRED LOADING, WHICH IS THE FUNCTIONAL
EQUIVALENT OF THE ASSESSMENT OF A SURRENDER CHARGE FOR EXCESS PARTIAL
WITHDRAWALS. LIMITED EDITION CONTRACTS PURCHASED THROUGH GOLDEN AMERICAN
SEPARATE ACCOUNT D AND THE PROSPECTUS DELIVERED IN CONNECTION WITH SUCH
CONTRACTS ALSO DESCRIBED THIS PROVISION AS ACCELERATION OF RECOVERY OF
DEFERRED LOADING.
PARTIAL WITHDRAWALS IN GENERAL
CONSULT YOUR TAX ADVISOR REGARDING THE TAX CONSEQUENCES ASSOCIATED WITH TAKING
PARTIAL WITHDRAWALS. A partial withdrawal made before the taxpayer reaches age
59 1/2 may result in imposition of a tax penalty of 10% of the taxable portion
withdrawn. Please refer to Federal Tax Considerations for more details.
PROCEEDS PAYABLE TO THE BENEFICIARY
If either the annuitant (when there is no contingent annuitant) or owner dies
prior to the annuity commencement date, we will pay the beneficiary the death
benefit proceeds under the contract. Such amount may be received in a single sum
or applied to any of the annuity options. See The Annuity Options. If we do not
receive a request to apply the death benefit proceeds to an annuity option, a
single sum distribution will be made. We may reduce the death benefit proceeds
payable under certain group or sponsored arrangements. See Part 1, Group or
Sponsored Arrangements.
If the annuitant and owner are both age 75 or younger at issue (age 80 or
younger for contracts with a contract date before November 6, 1992) the death
benefit is the greater of the accumulation value and the guaranteed death
benefit.
MAXIMUM GUARANTEED DEATH BENEFIT
This amount is calculated as follows:
(1) We determine the total premiums paid;
(2) We multiply (1) by two;
(3) We determine the total partial withdrawals
taken; and
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FACTS ABOUT THE CONTRACT (CONTINUED)
(4) We subtract (3) from (2).
GUARANTEED DEATH BENEFIT
On the contract date the guaranteed death benefit is equal to the initial
premium. On subsequent valuation dates, the guaranteed death benefit is
calculated as follows:
(1) We take the guaranteed death benefit from
the prior valuation date;
(2) We calculate interest on (1) for the current
valuation period at an annual rate of 7% (the GUARANTEED DEATH BENEFIT
INTEREST RATE), except that with respect to amounts in the Liquid Asset
Division, the interest rate applied to such amounts will be the net rate
of return for the Liquid Asset Division during the current valuation
period, if it is less than 7%; (Under contracts with a contract date
before November 6, 1992, the 7% test for the Liquid Asset Division does
not apply.);
(3) We add (1) and (2);
(4) We add to (3) any additional premiums paid
during the current valuation period; and,
(5) We subtract from (4) any partial withdrawals
made during the current valuation period.
If (5) is greater than the maximum guaranteed death benefit, we will pay the
maximum guaranteed death benefit.
If the annuitant or owner is age 76 or older at issue (age 81 or older for
contracts with a contract date before November 6, 1992), the death benefit is
the greater of:
(1) The cash surrender value; and
(2) The sum of the premiums paid, less any
partial withdrawals.
DEATH BENEFIT FOR CONTRACTS PURCHASED IN NORTH CAROLINA WITH A CONTRACT DATE
BEFORE NOVEMBER 6, 1992
If the annuitant and owner are both age 80 or younger at issue the death
benefit is the greater of:
(1) The accumulation value; and
(2) The sum of the premiums paid, less any
partial withdrawals.
If the annuitant or owner is age 81 or older at issue, the death benefit is
the greater of:
(1)The cash surrender value; and
(2)The sum of the premiums paid, less any
partial withdrawals.
HOW TO CLAIM PAYMENTS TO BENEFICIARY
We must receive due proof of the death of the annuitant or owner (such as an
official death certificate) at our Customer Service Center before we will make
any payments to the beneficiary. We will calculate the death benefit as of the
date we receive due proof of death. The beneficiary should contact our
Customer Service Center for instructions.
REPORTS TO OWNERS
We will send you a report once each contract quarter within 31 days after the
end of each contract quarter. The report will show the accumulation value, the
cash surrender value, and the death benefit as of the end of the contract
quarter.
The report will also show the allocation of the accumulation value as of such
date and the amounts deducted from or added to the accumulation value since the
last report. The report will also include any other information that may be
currently required by the insurance supervisory official of the jurisdiction in
which the contract is delivered. We will also send you copies of any shareholder
reports of the portfolios or securities in which Account B invests, as well as
any other reports, notices or documents required by law to be furnished to
contract owners.
WHEN WE MAKE PAYMENTS
We will pay death benefit proceeds and the cash surrender value within seven
days after our Customer Service Center receives all the information needed to
process the payment.
However, we may delay payment of amounts derived from the divisions if it is not
practical for us to value or dispose of shares of Account B because:
(1) The NYSE is closed for trading;
(2) The SEC determines that a state of emergency
exists;
(3) An order or pronouncement of the SEC permits
a delay for the protection of contract owners; or,
(4) The check used to pay the premium has not
cleared through the banking system. This may take up to 15 days.
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FACTS ABOUT THE CONTRACT (CONTINUED)
During such times, as to amounts allocated to the divisions, we may delay:
(1) Determination and payment of any cash
surrender value;
(2) Determination and payment of any death
benefit if death occurs before the annuity commencement date;
(3) Allocation changes of the accumulation value;
or,
(4) Application under an annuity option of the
accumulation value.
CHARGES AND FEES
CHARGE DEDUCTION DIVISION
You may specify on the application or enrollment form if you wish to use the
Charge Deduction Division Option. If you so specify, all charges against the
accumulation value will be deducted from the Liquid Asset Division. If the
amount of the charge is greater than the amount in the division, the charge will
be deducted proportionately from all the divisions in which you are invested.
You may also choose to elect or cancel this option while the contract is in
force by sending us satisfactory notice to our Customer Service Center. If you
do not elect this option, the charges will be deducted proportionately from all
the divisions in which you are invested.
CHARGES DEDUCTED FROM THE
ACCUMULATION VALUE
We invest the entire amount of the initial and any additional premium payments
in the divisions you select, subject to certain restrictions. See Restrictions
on Allocation of Premium Payments. We then periodically deduct certain amounts
from your accumulation value. We may reduce certain fees and charges, including
any distribution fees, surrender, administration, and mortality and expense risk
charges, under group or sponsored arrangements. See Group or Sponsored
Arrangements. Charges are deducted proportionately from all divisions in which
you are invested, unless you have elected the Charge Deduction Division. The
charges we deduct are:
DISTRIBUTION FEE
We deduct a sales load in an annual amount of 1.00% of each premium at the end
of each contract processing period for a period of six years from the date we
receive and accept each premium payment.
SURRENDER CHARGE
A surrender charge is imposed as a percentage of premium if the contract is
surrendered or an excess partial withdrawal is taken during the six year
period from the date we receive and accept each premium payment. The
percentage imposed at the time of surrender or excess partial withdrawal
depends on the distribution fee collected to the time the contract is
surrendered or the excess partial withdrawal is taken. The surrender charge in
the first contract year is 6.00% and reduces by 1.00% each year during the six
year period from the date we receive and accept each premium payment.
CONTRACTS WITH A CONTRACT DATE PRIOR TO MAY 3, 1993 AND THE PROSPECTUS
DELIVERED IN CONNECTION WITH SUCH CONTRACTS, DESCRIBED THE SALES LOAD AS A
DEFERRED LOAD, WHICH IS EQUIVALENT TO THE COMBINATION OF THE DISTRIBUTION FEE
AND SURRENDER CHARGE DESCRIBED ABOVE. LIMITED EDITION CONTRACTS PURCHASED
THROUGH GOLDEN AMERICAN SEPARATE ACCOUNT D AND THE PROSPECTUS DELIVERED IN
CONNECTION WITH SUCH CONTRACTS ALSO DESCRIBED THE SALES LOAD AS A DEFERRED
LOAD.
If your initial premium will be $25,000 or more, we also offer DVA Series 100
through another prospectus, which is a contract with a different charging
structure.
PREMIUM TAXES
We make a charge for state and local premium taxes in certain states which can
range from 0% to 3.5% of premium. The charge depends on the annuitant's or
owner's state of residence, as applicable. We reserve the right to change this
amount to conform with changes in the law or if the annuitant changes state of
residence.
Premium taxes are generally incurred on the annuity commencement date and a
charge for such premium taxes is then deducted from your accumulation value on
such date. However, some jurisdictions impose a premium tax at the time the
initial and additional premiums are paid, regardless of the annuity
commencement date. In those states we initially advance the amount of the
charge for premium taxes to your accumulation value and then deduct it in
equal installments on each contract processing date over a six year period.
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CHARGES AND FEES (CONTINUED)
CURRENTLY, IN THOSE STATES WHERE WE ADVANCE THE CHARGE FOR PREMIUM TAXES, WE
WILL WAIVE THE DEDUCTION OF THE APPLICABLE INSTALLMENTS OF THE CHARGE FOR
PREMIUM TAXES ON EACH CONTRACT PROCESSING DATE. HOWEVER, WE WILL DEDUCT THE
UNRECOVERED CHARGE FOR PREMIUM TAXES (NOT INCLUDING INSTALLMENTS WHICH WERE
WAIVED) WHEN DETERMINING THE CASH SURRENDER VALUE PAYABLE IF YOU SURRENDER
YOUR CONTRACT. WE RESERVE THE RIGHT TO DEDUCT THE TOTAL AMOUNT OF THE CHARGE
FOR PREMIUM TAXES PREVIOUSLY WAIVED AND UNRECOVERED ON THE ANNUITY
COMMENCEMENT DATE.
In those cases when we advance the charge for premium taxes, since the charge
for premium taxes is advanced to the accumulation value, a positive net rate
of return will give a higher cash surrender value and a negative net rate of
return will give a lower cash surrender value than would be the case had the
charge for premium taxes been deducted from your premium payment.
ADMINISTRATIVE CHARGE
The administrative charge is incurred at the beginning of the contract
processing period and deducted at the end of each contract processing period.
We deduct this charge when determining the cash surrender value payable if you
surrender the contract prior to the end of a contract processing period. The
amount deducted is $40 per contract year if total premiums paid in the first
contract year are less than $100,000. If the total premium paid in the first
contract year equals $100,000 or more, the charge is zero. This charge is to
cover a portion of our administrative expenses. See ASSET BASED ADMINISTRATIVE
CHARGE, below.
EXCESS ALLOCATION CHARGE
We allow you five free allocation changes between divisions per contract year.
For each additional allocation change, we will charge you $25 at the time each
allocation change is processed. This amount represents the maximum we will
charge. The charge is deducted from the division(s) from which each such
reallocation is made in proportion to the amount being transferred from each
such division unless you have chosen to use the Charge Deduction Division. The
excess allocation charge is set at a level that is not designed to produce
profit for Golden American or any affiliate. Any allocation(s) or transfer(s)
due to the election of the Dollar Cost Averaging Option and reallocation under
the provision What Happens if a Division is Not Available will not be included
in determining if the excess allocation charge should apply.
PARTIAL WITHDRAWAL CHARGE
If you take more than one conventional partial withdrawal during a contract
year, we impose a charge of the lesser of $25 and 2.0% of the amount withdrawn
for each additional conventional partial withdrawal. The charge is deducted
from the division(s) from which each such partial withdrawal is made in
proportion to the amount being withdrawn from each division unless you have
chosen to use the Charge Deduction Division. See Partial Withdrawals,
CONVENTIONAL PARTIAL WITHDRAWAL OPTION.
CHARGES DEDUCTED FROM THE DIVISIONS
MORTALITY AND EXPENSE RISK CHARGE
The daily charge is at the rate of 0.002477% (equivalent to an annual rate of
0.90%) on the assets in each division. Approximately 0.575% of this annual
charge is allocated to the mortality risk and 0.325% is allocated to the
expense risk.
This charge will compensate us for mortality and expense risks we assume under
the contract. We will realize a gain from this charge to the extent it is not
needed to provide for benefits and expenses under the contract. We will use
any gain for any lawful purpose including any shortfalls on paying
distribution expenses.
The mortality risk assumed is the risk that annuitants as a group will live
for a longer time than our actuarial tables predict. As a result, we would be
paying more in annuity income than we planned. Golden American also assumes a
risk under the contract for paying a guaranteed death benefit.
The expense risk assumed is the risk that it will cost us more to issue and
administer the contract than we expect.
ASSET BASED ADMINISTRATIVE CHARGE
We will deduct a daily charge from the assets in each division of the
Accounts, to compensate Golden American for a portion of the administrative
expenses under the contract. The daily charge is at a rate of 0.000276%
(equivalent to an annual rate of 0.10%) on the assets in each division.
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CHARGES AND FEES (CONTINUED)
This asset based administrative charge plus the administrative charge above
will not exceed the cost of the services to be provided over the life of the
contract.
TRUST EXPENSES
There are fees and charges deducted from each Series of the GCG Trust and the
ESS Trust. Please read the respective Trust prospectus for details.
CHOOSING AN INCOME PLAN
THE INCOME PLAN
If the annuitant and owner are living on the annuity commencement date, we will
begin making payments to the annuitant under an income plan. We will make these
payments under the annuity option chosen in the application or enrollment form
or as subsequently changed. You may change an annuity option by making a written
request to us at least 30 days prior to the annuity commencement date of the
contract. The amount of the payments will be determined by applying the
accumulation value on the annuity commencement date in accordance with The
Annuity Options section below. See When We Make Payments.
You may also elect an annuity option on surrender of the contract for its cash
surrender value or, you may choose one or more annuity options for the payment
of death benefit proceeds while it is in effect and before the annuity
commencement date. If, at the time of the annuitant's or owner's death, no
option has been chosen for paying death benefit proceeds, the beneficiary may
choose an option within one year.
The minimum monthly annuity income payment that we will make is $20. We may
require that a single sum payment be made if the accumulation value is less than
$2,000 or if the calculated monthly annuity income payment is less than $20.
For each option we will issue a separate written agreement putting the option
into effect. Before we pay any annuity benefits, we require the return of the
contract. If your contract has been lost, we will require that you complete and
return the applicable lost contract form. Various factors will affect the level
of annuity benefits including the annuity option chosen, the assumed interest
rate used and the investment results of the division(s) in which the
accumulation value has been invested.
Fixed annuity payments are regular payments, the amount of which is fixed and
guaranteed by us. The amount of the payments will depend only on the form and
duration of payments chosen, the age of the annuitant or beneficiary (and sex,
where appropriate), the total accumulation value applied to purchase the fixed
option, and the applicable payment rate.
Our approval is needed for any option where:
(1) The person named to receive payment is other
than the owner or beneficiary;
(2) The person named is not a natural person,
such as a corporation; or
(3) Any income payment would be less than the
minimum annuity income payment allowed.
ANNUITY COMMENCEMENT DATE SELECTION
You select the annuity commencement date in the application or enrollment form.
You may select any date following the third contract anniversary but before the
contract processing date in the month
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CHOOSING AN INCOME PLAN (CONTINUED)
following the annuitant's 90th birthday. If you do not select a date, the
annuity commencement date will be in the month following the annuitant's 90th
birthday. However, in the state of Pennsylvania the annuity commencement date
may not be later than in the month following the annuitant's 85th birthday for
annuitants with an issue age of 80 and under. FOR CONTRACTS WITH CONTRACT DATES
BEFORE MAY 3, 1993, DIFFERENT ANNUITY COMMENCEMENT DATE LIMITATIONS MAY APPLY.
If the annuity commencement date occurs when the annuitant is at an advanced
age, such as over age 85, it is possible that the contract will not be
considered an annuity for Federal tax purposes. See Federal Tax Considerations.
For a contract purchased in connection with a qualified plan, distribution must
commence not later than April 1st of the calendar year following the calendar
year in which you attain age 70 1/2. Consult your tax advisor.
FREQUENCY SELECTION
You choose the frequency of the annuity payments. They may be monthly,
quarterly, semi-annually or annually. If we do not receive written notice from
you, the payments will be made monthly. There may be certain restrictions on
minimum payments that we will allow.
THE ANNUITY OPTIONS
There are four options to choose from as shown below. Options 1 through 3 are
fixed and option 4 is variable. For a fixed option, the accumulation value is
transferred to the general account.
OPTION 1. INCOME FOR A FIXED PERIOD
Payment is made in equal installments for a fixed number of years based on the
accumulation value as of the annuity commencement date. We guarantee that each
monthly payment will be at least the amount set forth in the contract.
Guaranteed amounts for annual, semi-annual and quarterly payments are
available upon request. Illustrations are available upon request. If the cash
surrender value or accumulation value is applied under this option, a 10%
penalty tax may apply to the taxable portion of each income payment until the
annuitant reaches age 59 1/2.
OPTION 2. INCOME FOR LIFE
Payment is made in equal monthly installments and guaranteed for at least a
period certain. The period certain can be 10 or 20 years. Other periods
certain are available on request. A refund certain may be chosen instead.
Under this arrangement, income is guaranteed until payments equal the amount
applied. If the person named lives beyond the guaranteed period, payments
continue until his or her death. We guarantee that each payment will be at
least the amount set forth in the contract corresponding to the person's age
on his or her last birthday before the option's effective date. Amounts for
ages not shown in the contract are available upon request.
OPTION 3. JOINT LIFE INCOME
This option is available if there are two persons named to receive payments.
At least one of the persons named must be either the owner or beneficiary of
the contract. Monthly payments are guaranteed and are made as long as at least
one of the named persons is living. There is no minimum number of payments.
Monthly payment amounts are available upon request.
OPTION 4. ANNUITY PLAN
An amount can be used to buy any single premium annuity we offer on the
option's effective date.
PAYMENT WHEN NAMED PERSON DIES
When the person named to receive payment dies, we will pay any amounts still due
as provided by the option agreement. The amounts still due are determined as
follows:
(1) For options 1, 2, or any remaining guaranteed
payments, payments will be continued. Under options 1 and 2, the discounted
values of the remaining guaranteed payments may be paid in a single sum.
This means we deduct the amount of the interest each remaining guaranteed
payment would have earned had it not been paid out early. The discount
interest rate is 3% for option 1 and 3.50% for option 2 per year. We will
however, base the discount interest rate on the interest rate used to
calculate the payments for options 1 and 2 if such payments were not based
on the tables in the contract.
(2) For option 3, no amounts are payable after
both named persons have died.
(3) For option 4, the annuity agreement will state
the amount due, if any.
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OTHER INFORMATION
OTHER CONTRACT PROVISIONS
IN CASE OF ERRORS ON THE APPLICATION OR ENROLLMENT FORM
If an age or sex given in the application or enrollment form is misstated, the
amounts payable or benefits provided by the contract shall be those that the
premium payment would have bought at the correct age or sex.
SENDING NOTICE TO US
Any written notices, inquiries or requests should be sent to our Customer
Service Center. Please include your name, your contract number and, if you are
not the annuitant, the name of the annuitant.
ASSIGNING THE CONTRACT AS COLLATERAL
You may assign a non-qualified contract as collateral security for a loan or
other obligation. This does not change the ownership. However, your rights and
any beneficiary's rights are subject to the terms of the assignment. See
Additional Considerations, Transfer of Annuity Contracts, and Assignments. An
assignment may have Federal tax consequences. See Federal Tax Considerations.
You must give us satisfactory written notice at our Customer Service Center in
order to make or release an assignment. We are not responsible for the
validity of any assignment.
NON-PARTICIPATING
The contract does not participate in the divisible surplus of Golden American.
AUTHORITY TO MAKE AGREEMENTS
All agreements made by us must be signed by our president or a vice president
and by our secretary or an assistant secretary. No other person, including an
insurance agent or broker, can change any of the contract's terms, make any
agreements binding on us or extend the time for premium payments.
CONTRACT CHANGES -- APPLICABLE TAX LAW
We reserve the right to make changes in the contract to the extent we deem it
necessary to continue to qualify the contract as an annuity. Any such changes
will apply uniformly to all contracts that are affected. You will be given
advance written notice of such changes.
YOUR RIGHT TO CANCEL OR EXCHANGE YOUR CONTRACT
CANCELLING YOUR CONTRACT
You may cancel your contract within your free look period, which is ten days
after you receive your contract. For purposes of administering our allocation
and administrative rules, we deem this period to expire 15 days after the
contract is mailed to you. Some states may require a longer free look period.
If you decide to cancel, you may mail or deliver the contract to us at our
Customer Service Center. We will refund the accumulation value plus any
charges we deducted, and the contract will be voided as of the date we receive
the contract and your request. Some states require that we return the premium
paid. In these states, we require that your premium be allocated to the
Specially Designated Division during the free look period. If you exercise
your right to cancel, we will return the greater of (a) the premium invested
and (b) the accumulation value of your contract plus any amounts deducted
under the contract or by the Trust for taxes, charges or fees. If you do not
choose to exercise your right to cancel during the free look period, then at
the end of the free look period your money will be invested in the division(s)
chosen by you, based on the index of investment experience next computed for
each division. See Measurement of Investment Experience, INDEX OF EXPERIENCE
AND UNIT VALUE.
EXCHANGING YOUR CONTRACT
For information regarding Section1035 exchanges, see Federal Tax
Considerations.
OTHER CONTRACT CHANGES
You may change the contract to another annuity plan subject to our rules at the
time of the change.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce any distribution fee,
surrender, administration, and mortality and expense risk charges. We may also
change the minimum initial and additional premium requirements, or reduce the
death benefit proceeds payable. Group arrangements include those in which a
trustee or an employer, for example, purchases contracts covering a group of
individuals on a group basis. Sponsored arrangements include those in which an
employer allows us to sell contracts to its employees on an individual basis.
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OTHER INFORMATION (CONTINUED)
Our costs for sales, administration, and mortality generally vary with the size
and stability of the group among other factors. We take all these factors into
account when reducing charges. To qualify for reduced charges, a group or
sponsored arrangement must meet certain requirements, including our requirements
for size and number of years in existence. Group or sponsored arrangements that
have been set up solely to buy contracts or that have been in existence less
than six months will not qualify for reduced charges.
We will make these and any similar reductions according to our rules in effect
when an application or enrollment form for a contract is approved. We may change
these rules from time to time. Any variation in the distribution fee or
administrative charge will reflect differences in costs or services and will not
be unfairly discriminatory.
SELLING THE CONTRACT
DSI is also principal underwriter and distributor of the contract as well as for
other contracts issued through Account B and other separate accounts of
Golden American. We pay DSI for acting as principal underwriter under a
distribution agreement. The offering of the contract will be continuous.
DSI has entered into and will continue to enter into sales agreements with
broker-dealers to solicit for the sale of the contract through registered
representatives who are licensed to sell securities and variable insurance
products including variable annuities. These agreements provide that
applications for contracts may be solicited by registered representatives of the
broker-dealers appointed by Golden American to sell its variable life insurance
and variable annuities. These broker-dealers are registered with the SEC and are
members of the National Association of Securities Dealers, Inc. ("NASD"). The
registered representatives are authorized under applicable state regulations to
sell variable life insurance and variable annuities. The writing agent will
receive commissions of up to 6% of any initial or additional premium payments
made.
REINSURANCE
Golden American reinsures its mortality risk associated with one or more
appropriately licensed insurance companies. Golden American also, effective June
1, 1994, entered into a reinsurance agreement on a modified coinsurance basis
with an affiliate of a broker-dealer which distributes Golden American's
products with respect to 25% of the business produced by that broker-dealer.
REGULATORY INFORMATION
VOTING RIGHTS
We will vote the shares of the Trust owned by Account B according to your
instructions. However, if the Investment Company Act of 1940 or any related
regulations should change, or if interpretations of it or related regulations
should change, and we decide that we are permitted to vote the shares of the
Trusts in our own right, we may decide to do so.
We determine the number of shares that you have in a division by dividing the
contract's accumulation value in that division by the net asset value of one
share of the portfolio in which a division invests. Fractional votes will be
counted. We will determine the number of shares you can instruct us to vote
180 days or less before a Trust's meeting. We will ask you for voting
instructions by mail at least 10 days before the meeting.
If we do not get your instructions in time, we will vote the shares in the
same proportion as the instructions received from all contracts in that
division. We will also vote shares we hold in Account B which are not
attributable to owners in the same proportion.
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REGULATORY INFORMATION (CONTINUED)
STATE REGULATION
We are regulated and supervised by the Insurance Department of the State of
Delaware, which periodically examines our financial condition and operations. We
are also subject to the insurance laws and regulations of all jurisdictions
where we do business. The variable contract offered by this prospectus has been
approved by the Insurance Department of the State of Delaware and by the
Insurance Departments of other jurisdictions.
We are required to submit annual statements of our operations, including
financial statements, to the Insurance Departments of the various jurisdictions
in which we do business to determine solvency and compliance with state
insurance laws and regulations.
LEGAL PROCEEDINGS
Golden American, as an insurance company, is ordinarily involved in litigation.
We do not believe that any current litigation is material and we do not expect
to incur significant losses from such actions.
LEGAL MATTERS
The legal validity of the contract described in this prospectus has been passed
on by Myles R. Tashman, Executive Vice President and Secretary of Golden
American. Sutherland, Asbill & Brennan of Washington, D.C. has provided advice
on certain matters relating to Federal securities laws.
EXPERTS
The financial statements of Golden American Life Insurance Company, Separate
Account B and The Managed Global Account of Separate Account D, appearing in the
Statement of Additional Information and in the Registration Statement, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon appearing in the Statement of Additional Information and in the
Registration Statement and are included in reliance upon such reports given upon
the authority of such firm as experts in accounting and auditing.
FEDERAL TAX CONSIDERATIONS
INTRODUCTION
The contract is designed for use by individuals or groups in retirement plans
which are qualified under Section 408 or non-qualified under the provisions of
the Internal Revenue Code of 1986, as amended (the "Code"). The ultimate effect
of Federal income taxes on the amounts paid for the contract, on the investment
return on assets held under the contract, on annuity payments and on the
economic benefits to the owner, annuitant or beneficiary depends upon the terms
of the contract, upon Golden American's tax status and upon the tax status of
the individuals concerned.
The following discussion is general in nature and is not intended as tax advice.
Each person concerned should consult a competent tax advisor. No attempt is made
to consider any applicable state or other tax laws. Moreover, the discussion is
based upon Golden American's understanding of the Federal income tax laws as
they are currently interpreted. No representation is made regarding the
likelihood of continuation of the Federal income tax laws, the Treasury
Regulations, or the current interpretations by the Internal Revenue Service (the
"IRS"). For a discussion of Federal income taxes as they relate to the Trusts,
please see the accompanying prospectus for the respective Trust.
34
<PAGE>
FEDERAL TAX CONSIDERATIONS (CONTINUED)
GOLDEN AMERICAN TAX STATUS
Golden American is taxed as a life insurance company under Part I of Subchapter
L of the Code. Since Account B is not a separate entity from Golden American
and its operations form a part of Golden American, it will not be taxed
separately as a "regulated investment companys" under Subchapter M of the Code.
Investment income and realized capital gains on the assets of Account B are
reinvested and taken into account in determining the accumulation value. Under
existing Federal income tax law, Golden American does not incur tax on the
Account B' investment income, including realized net capital gains. Golden
American reserves the right to make a deduction for taxes should they be imposed
with respect to such items in the future.
TAXATION OF NON-QUALIFIED ANNUITIES
1. IN GENERAL
Code Section72 generally governs the taxation of non-qualified annuities.
Under this provision, except as described below, any increase in the
contract's value is generally not taxable to the owner until a distribution is
made from the contract, either in the form of annuity payments as contemplated
by the contract, or in some other form of distribution. (For purposes of this
rule, the amount of any indebtedness that is secured by a pledge or assignment
of the contract is treated as a payment received on account of a partial
withdrawal from the contract.) However, this rule applies only if (1) the
investments of Account B are "adequately diversified" in accordance with
Treasury Department regulations, (2) Golden American, rather than the owner,
is considered the owner of the assets of Account B for Federal income tax
purposes, and (3) the owner is an individual.
DIVERSIFICATION REQUIREMENTS. Treasury Department regulations ("Regulations")
issued under Code Section817 (h) prescribe the manner in which the investments
of a segregated asset account, such as Account B, are to be "adequately
diversified." The Regulations generally require that on the last day of each
quarter of a calendar year (i) no more than 55% of the value of each
segregated asset account is represented by any one investment; (ii) no more
than 70% is represented by any two investments; (iii) no more than 80% is
represented by any three investments; and (iv) no more than 90% is represented
by any four investments. For purposes of complying with these requirements,
all securities of the same issuer are treated as a single investment, and each
U.S. government agency or instrumentality will be treated as a separate
issuer. In addition, where a segregated asset account invests in other
regulated investment companies or certain other entities (E.G., the divisions
of Account B do), a "look-through" rule applies and, as a result, each
division of an account must be tested for compliance with the percentage
limitations by looking through to the assets of that division.
If Account B failed to comply with these diversification standards, the
contract would not be treated as an annuity contract for Federal income tax
purposes and the owner would generally be taxable currently on the income on
the contract (as defined in the tax law) beginning with the first period of
non-diversification. Golden American expects that Account B, including each
of the divisions, will comply with the diversification requirements prescribed
by the Regulations.
OWNERSHIP TREATMENT. In certain circumstances, variable annuity contract
owners may be considered the owners, for Federal income tax purposes, of the
assets of the segregated asset account, such as Account B, used to support
their contracts. In those circumstances, income and gains from the segregated
asset account would be includible in the contract owners' gross income. The
IRS has stated in published rulings that a variable contract owner will be
considered the owner of the assets of the segregated asset account if the
owner possesses incidents of ownership in those assets, such as the ability to
exercise investment control over the assets. In addition, the Treasury
Department announced, in connection with the issuance of regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor, rather than
the insurance company, to be treated as the owner of the assets in the
account." This announcement also stated that guidance would be issued by way
of regulations or rulings on the "extent to which policyholders may direct
their investments to particular sub-accounts [of a segregated asset account]
without being treated as owners of the underlying assets." As of the date of
this prospectus, no such guidance has been issued.
35
<PAGE>
FEDERAL TAX CONSIDERATIONS (CONTINUED)
The ownership rights under the contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of the assets of a segregated
asset account. For example, the owner of this contract has the choice of more
investment options to which to allocate premium payments and accumulation
values, and may be able to transfer among investment options more frequently,
than in such rulings. In addition, the owner of this contract has the choice
of certain investment options which may be more similar to each other in their
investment objectives than in such rulings. These differences could result in
the owner being treated as the owner of a portion of the assets of Accounts B.
In addition, Golden American does not know what standards will be
set forth in the regulations or rulings which the Treasury Department has
stated it expects to issue. Golden American therefore reserves the right to
modify the contract as necessary to attempt to prevent contract owners from
being considered the owners of the assets of Account B.
Frequently, if the IRS or the Treasury Department sets forth a new position
which is adverse to taxpayers, the position is applied on a prospective basis
only. Thus, if the IRS or the Treasury Department were to issue regulations or
a ruling which treated an owner of this contract as the owner of Account B,
that treatment might apply on a prospective basis. However, if the ruling or
regulations were not considered to set forth a new position, an owner might
retroactively be determined to be the owner of the assets of Account B.
NON-NATURAL OWNER. As a general rule, contracts held by "non-natural persons"
such as a corporation, trust or other similar entity, as opposed to a natural
person, are not treated as annuity contracts for Federal tax purposes. The
income on such contracts (as defined in the tax law) is taxed as ordinary
income that is received or accrued by the owner of the contract during the
taxable year. There are several exceptions to this general rule for
non-natural owners. First, contracts will generally be treated as held by a
natural person if the nominal owner is a trust or other entity which holds the
contract as an agent for a natural person. However, this special exception
will not apply in the case of any employer who is the nominal owner of a
contract under a non-qualified deferred compensation arrangement for its
employees.
In addition, exceptions to the general rule for non-natural owners will apply
with respect to (1) contracts acquired by an estate of a decedent by reason of
the death of the decedent, (2) contracts issued in connection with certain
qualified plans, (3) contracts purchased by employers upon the termination of
certain qualified plans, (4) certain contracts used in connection with
structured settlement agreements, and (5) contracts purchased with a single
purchase payment when the annuity starting date is no later than a year from
purchase of the contract and substantially equal periodic payments are made,
not less frequently than annually, during the annuity period.
In addition to the foregoing, if the contract's annuity commencement date
occurs at a time when the annuitant is at an advanced age, such as over age
85, it is possible that the owner will be taxable currently on the annual
increase in the accumulation value. The remainder of this discussion assumes
that the contract will be treated as an annuity contract for Federal income
tax purposes.
2. WITHDRAWALS PRIOR TO THE ANNUITY COMMENCEMENT DATE
Code Section72 provides that the proceeds of a total surrender of a contract
prior to the annuity commencement date will be taxed to the extent that the
amount distributed exceeds the "investment in the contract" and that any
conventional or systematic partial withdrawal from a contract prior to the
annuity commencement date will be treated as taxable income to the extent the
amount held under the contract immediately before the withdrawal occurs
exceeds the "investment in the contract." The "investment in the contract" is
defined in the Code as that portion, if any, of premium payments by or on
behalf of an individual under a contract which was not excluded from the
individual's gross income at the time of such payment less any amounts
previously received under the contract which were excluded from the
individual's gross income at the time of their receipt. The taxable portion of
any distribution received prior to the annuity commencement date will be
subject to tax at ordinary income tax rates. For purposes of this rule, a
pledge or assignment of a contract is treated as a payment received on account
of a partial withdrawal of a contract.
36
<PAGE>
FEDERAL TAX CONSIDERATIONS (CONTINUED)
In the case of systematic partial withdrawals, the amount of each withdrawal
should be considered as a distribution and taxed in the same manner as a
partial withdrawal prior to the annuity commencement date, as described above.
However, there is some uncertainty regarding the tax treatment of systematic
partial withdrawals, and it is possible that additional amounts may be
includible in income.
In addition, the contract provides a death benefit that in certain
circumstances may exceed the greater of the premium payments and the
accumulation value. As described elsewhere in this prospectus, Golden American
imposes certain charges with respect to, among other things, the death
benefit. It is possible that some portion of those charges could be treated
for Federal tax purposes as a partial withdrawal from the contract.
3. ANNUITY PAYMENTS AND WITHDRAWALS ON OR AFTER THE ANNUITY COMMENCEMENT DATE
Proceeds of a total surrender of the contract after the annuity commencement
date are taxable to the extent the proceeds exceed the investment in the
contract. In addition, proceeds of a partial withdrawal after the annuity
commencement date are fully taxable. Also, a portion of each annuity payment
under the contract is taxable if the value of the contract exceeds the
investment in the contract. The taxable portion of an annuity payment will be
subject to tax at ordinary income tax rates.
For fixed annuity payments, the taxable portion of each payment is determined
by using a formula known as the "exclusion ratio," which establishes the ratio
that the investment in the contract (allocated to the fixed annuity option)
bears to the total expected amount of fixed annuity payments for the term of
the contract. That ratio is then applied to each payment to determine the
non-taxable portion of the payment. The remaining portion of each payment is
taxed at ordinary income rates.
For variable annuity payments, in general, the taxable portion is determined
by a formula which establishes a specific dollar amount of each payment that
is not taxed. The dollar amount is determined by dividing the investment in
the contract (allocated to the variable annuity option) by the total number of
expected periodic payments. The remaining portion of each payment is taxed at
ordinary income rates.
Once the excludable portion of annuity payments to date equals the investment
in the contract, the balance of the annuity payments will be fully taxable.
If amounts have become payable under the contract (such as where the owner
elects to surrender an amount) and if the distribution-at-death rules do not
apply to such amount, the amount will be treated as a partial or full
surrender for Federal income tax purposes if applied under an annuity option
later than 60 days after the time when the amount became payable. Thus, if
such an amount is applied under an annuity option after the 60 day period, it
will be treated as a partial or full surrender, even if the full amount has
not been distributed from the contract.
4. WITHHOLDING AND REPORTING REQUIREMENTS
Golden American will withhold and remit to the U.S. government a part of the
taxable portion of each distribution made under a contract unless the taxpayer
notifies Golden American at or before the time of the distribution that he or
she elects not to have any amounts withheld. The withholding rates applicable
to the taxable portion of periodic annuity payments typically are the same as
the withholding rates generally applicable to payments of wages. In addition,
the withholding rate applicable to the taxable portion of non-periodic
payments (including surrenders prior to the annuity commencement date) is 10%.
Golden American also has tax reporting obligations with respect to
distributions from the contract.
5. PENALTY TAX ON CERTAIN WITHDRAWALS
With respect to amounts withdrawn or distributed before the taxpayer reaches
age 59 1/2, a penalty tax is imposed equal to 10% of the taxable portion of
amounts withdrawn or distributed. However, the penalty tax will not apply to
withdrawals: (i) made on or after the death of the owner, or where the owner
is not an individual, the death of the "primary annuitant" (i.e., the
individual the events in whose life are of primary importance in affecting the
timing or amount of the payout under the contract); (ii) attributable to the
taxpayer's becoming totally disabled within the meaning of Code
Section72(m)(7); (iii) which are part of a series of substantially equal
periodic payments made at least annually for the life (or life expectancy) of
the taxpayer, or the joint lives (or joint life expectancies) of the taxpayer
and his beneficiary; (iv) from a qualified plan; (v) allocable to investment
in the contract before
37
<PAGE>
FEDERAL TAX CONSIDERATIONS (CONTINUED)
August 14, 1982; (vi) under a qualified funding asset (as defined in Code
Section130(d)); (vii) under an immediate annuity contract, or (viii) which are
purchased by an employer on termination of certain types of qualified plans
and which are held by the employer until the employee separates from service.
If the penalty tax does not apply to a withdrawal as a result of the
application of item (iii) above, and the series of payments is subsequently
modified (other than by reason of death or disability), the tax for the year
when the modification occurs will be increased by an amount (as determined by
regulations) equal to the tax that would have been imposed but for item (iii)
above, plus interest for the deferral period, if the modification takes place
(a) before the close of the period which is within five years of the date of
the first payment and after the taxpayer attains age 59 1/2, or (b) before the
taxpayer reaches age 59 1/2.
In the case of systematic withdrawals, it is unclear whether such withdrawals
will qualify for exception (iii) above.
TAXATION OF INDIVIDUAL RETIREMENT ANNUITIES
Code Section408 permits individuals or their employers to contribute to an
individual retirement program known as an Individual Retirement Annuity. If the
contract is used for this purpose, the owner must be the annuitant. In addition,
distributions from certain other types of qualified retirement plans may be
placed into an Individual Retirement Annuity on a tax deferred basis.
Individual Retirement Annuities are subject to limitations on the amount which
may be contributed and the time when distributions may commence. Tax penalties
may apply to contributions in excess of specified limits, loans or assignments,
distributions in excess of a specified amount annually or that do not meet
specified requirements, and in certain other circumstances.
Under the Internal Revenue Code, distributions from qualified retirement plans,
including Individual Retirement Annuities, Simplified Employee Pensions, and Tax
Sheltered Annuities, generally must begin not later than April 1st of the
calendar year following the calendar year in which an owner attains age 70 1/2.
If the required minimum distribution is not withdrawn, there may be a penalty
tax in an amount equal to 50% of the difference between the amount required to
be withdrawn and the amount actually withdrawn. See the Statement of Additional
Information for a discussion of the various special rules concerning the minimum
distribution requirements.
If all premium payments made to an Individual Retirement Annuity were
deductible, all amounts distributed from the contract are included in the
recipient's income when distributed. However, if nondeductible premium payments
were made to the Individual Retirement Annuity (within the limits allowed by the
tax law), a portion of each distribution from the contract typically is included
in income when it is distributed. In such a case, any amount distributed as an
annuity payment or in a lump sum upon death or a full surrender is taxed as
described above in connection with such a distribution from a non-qualified
contract, treating the investment in the contract as the sum of the
non-deductible premium payments at the end of the taxable year in which the
distribution commences or is made (less any amounts previously distributed that
were excluded from income). Also in such a case, any amount distributed upon a
partial surrender is partially includible in income. The includible amount is
the excess of the distribution over the exclusion amount, which in turn equals
the distribution multiplied by the ratio of the investment in the contract to
the amount held under the contract. The amount includible in income may be
subject to a 10% penalty tax if the recipient is under age 59 1/2.
Individual Retirement Annuities generally may not provide life insurance
coverage, but they may provide a death benefit that equals the greater of the
premiums paid and the contract value. The contract provides a death benefit that
in certain circumstances may exceed the greater of the premium payments and the
accumulation value. It is possible that the death benefit could be viewed as
violating the prohibition on investment in life insurance contracts with the
result that the contract would not be viewed as satisfying the requirements of
an IRA.
Subject to certain direct rollover and mandatory withholding requirements
(discussed below), amounts generally may be "rolled over" from a qualified
retirement plan to an Individual Retirement Annuity (or from an Individual
Retirement Annuity or individual retirement account to an Individual Retirement
Annuity) without incurring tax if certain conditions are met. Only certain types
of distributions from qualified retirement plans or Individual Retirement
Annuities may be rolled over.
In the case of annuity contracts used in connection with a pension,
profit-sharing, or annuity plan
38
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FEDERAL TAX CONSIDERATIONS (CONTINUED)
qualified under Code Section401(a) or Section403(a), or in the case of a Code
Section403(b) "Tax Sheltered Annuity," any "eligible rollover distribution" from
the contract will be subject to direct rollover and mandatory withholding
requirements. An eligible rollover distribution generally is any taxable
distribution from a qualified pension plan under Code Section401(a), qualified
annuity plan under Code Section403(a), or Code Section403(b) Tax Sheltered
Annuity or custodial account, excluding certain amounts (such as minimum
distributions required under Code Section401 (a) (9) and distributions which are
part of a "series of substantially equal periodic payments" made for life or a
specified period of 10 years or more. Under these requirements, withholding at a
rate of 20 percent will be imposed on any eligible rollover distribution. In
addition, the participant in these qualified retirement plans cannot elect out
of withholding with respect to an eligible rollover distribution. However, this
20 percent withholding will not apply if, instead of receiving the eligible
rollover distribution, the participant elects to have amounts directly
transferred to certain qualified retirement plans (such as to this contract when
issued as an Individual Retirement Annuity).
It is important that you consult your tax advisor before purchasing an
Individual Retirement Annuity.
ADDITIONAL CONSIDERATIONS
DISTRIBUTION-AT-DEATH RULES
In order to be treated as an annuity contract for Federal tax purposes, a
non-qualified contract must provide the following two distribution rules: (a) if
any holder dies on or after the annuity commencement date, and before the entire
interest in the contract has been distributed, the remainder of his or her
interest will be distributed at least as quickly as under the method of
distribution in effect on the holder's death; and (b) if any holder dies before
the annuity commencement date, the entire interest in the contract must
generally be distributed within five years after the date of death, or to the
extent such interest is payable to a designated beneficiary, such interest must
be distributed over the life of that designated beneficiary or over a period not
extending beyond the life expectancy of that beneficiary, so long as the
distributions begin within one year after the date of death. If the beneficiary
is the surviving spouse of the holder, the contract (together with the deferral
of tax on the accrued and future income thereunder) may be continued in the name
of the spouse. Before the annuity commencement date, the holder will generally
be the owner, and after the annuity commencement date, the holder generally may
be the annuitant and the owner.
Where the holder is not an individual, solely for the purpose of the
distribution at death rules, the primary annuitant is considered the holder. The
primary annuitant is the individual the events in the life of whom are of
primary importance in affecting the timing or amount of payment under a
contract. Finally, in the case of joint holders, the distribution will be
required at the death of the first of the holders to die.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a non-qualified contract because of the death of
an owner or annuitant. Generally, such amounts are includible in the income of
the recipient as follows: (a) if distributed in a lump sum, they are taxed in
the same manner as a full surrender of the contract, as described above, or (b)
if distributed under an annuity option, they are taxed in the same manner as
annuity payments, as described above.
TRANSFER OF ANNUITY CONTRACTS
Transfers of non-qualified annuity contracts for less than the full and adequate
consideration will trigger tax on the gain in the contract, at the time of such
transfer, with the transferee getting a step-up in basis for the amount included
in the owner's income. Such a transfer could result on the annuity commencement
date if the annuitant is not the owner or the owner's spouse. This provision
does not apply to transfers between spouses or incident to a divorce.
SECTION1035 EXCHANGES
Code Section1035 provides that no gain or loss shall be recognized on the
exchange of an annuity contract for another. If the exchanged contract was
issued prior to August 14, 1982, the tax rules which formerly provided that the
surrender was taxable only to the extent the amount received exceeds the owner's
investment in the contract, will continue to apply to the new contract. In
contrast, contracts issued on or after January 19, 1985, in a Code Section1035
exchange are treated as new contracts for purposes of the penalty tax and
distribution-at-death rules. Special rules and procedures apply to Code
Section1035 transactions. Prospective owners wishing to take advantage of Code
Section1035 should consult their tax advisors.
39
<PAGE>
ADDITIONAL CONSIDERATIONS (CONTINUED)
ASSIGNMENTS
A transfer of ownership, a collateral assignment, or the designation of an
annuitant or other beneficiary who is not also the owner may result in tax
consequences to the owner, annuitant or beneficiary that are not discussed
herein. An owner contemplating such a transfer or assignment of a contract
should contact a competent tax advisor with respect to the potential tax effects
of such a transaction.
MULTIPLE CONTRACTS RULE
For purposes of determining the amount of any distribution under Code
Section72(e) (amounts not received as annuities) that is includible in gross
income, all non-qualified deferred annuity contracts issued by the same (or
affiliate) insurer to the same owner during any calendar year are to be
aggregated and treated as one contract. Thus, any amount received under any such
contract prior to the contract's annuity starting date (as defined in the tax
law), such as a partial surrender, dividend, or loan, will be taxable (and
possibly subject to the 10% penalty tax) to the extent of the combined income in
all such contracts. The Treasury Department has specific authority to issue
regulations that prevent the avoidance of Section72(e) through the serial
purchase of annuity contracts or otherwise. In addition, there may be other
situations in which the Treasury Department may conclude that it would be
appropriate to aggregate two or more contracts purchased by the same owner.
Accordingly, an owner should consult a competent tax advisor before purchasing
more than one annuity contract.
40
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STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
<S> <C>
Introduction......................................................................................................... 1
Description of Golden American Life Insurance Company................................................................ 1
Safekeeping of Assets................................................................................................ 1
The Administrator.................................................................................................... 1
Independent Auditors................................................................................................. 1
Reinsurance.......................................................................................................... 1
Distribution of Contracts............................................................................................ 2
Performance Information.............................................................................................. 2
IRA Partial Withdrawal Option........................................................................................ 6
Other Information.................................................................................................... 6
Financial Statements of Separate Account B........................................................................... 21
Financial Statements of The Managed Global Account of Separate Account D............................................. 21
Financial Statements of Golden American Life Insurance Company....................................................... 21
Appendix -- Description of Bond Ratings
</TABLE>
41
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(This page has been left blank intentionally.)
42
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
PLEASE TEAR OFF, COMPLETE AND RETURN THE FORM BELOW TO ORDER A FREE STATEMENT OF
ADDITIONAL INFORMATION FOR THE CONTRACTS OFFERED UNDER THE PROSPECTUS. ADDRESS
THE FORM TO OUR CUSTOMER SERVICE CENTER, THE ADDRESS IS SHOWN ON THE COVER.
...............................................................................
PLEASE SEND ME A FREE COPY OF THE STATEMENT OF ADDITIONAL INFORMATION FOR
SEPARATE ACCOUNT B.
PLEASE PRINT OR TYPE
--------------------------------------------
NAME
--------------------------------------------
SOCIAL SECURITY NUMBER
--------------------------------------------
STREET ADDRESS
--------------------------------------------
CITY, STATE, ZIP
(DVA 5/95 6%)
...............................................................................
43
<PAGE>
APPENDIX
GOLDENSELECT SERVICE FORMS
- - Deferred Variable Annuity Application -- Use in all states except MN
- - Contact the Sales Desk for the Special Form to be used in MN
(Golden Select DVA is currently Not Available in ME and NY)
- - Absolute Assignment to Effect Section 1035(a) Exchange
- - Request to Effect IRA Or Other Qualified Account Transfer
- - Certificate of Deposit Transfer Form
Submit all forms (with all other necessary documents) to the Customer Service
Center
WITHHOLDING ELECTION INSTRUCTIONS (BEFORE THE WITHHOLDING ELECTION SECTION ON
THE APPLICATION IS COMPLETED, PLEASE HAVE THE OWNER READ THE FOLLOWING
CAREFULLY)
Your withdrawals under annuity contracts may be subject to Federal income tax
withholding unless you elect not to have withholding apply. You may elect not to
have withholding apply by checking the box by line A and signing in the
signature section. Check the box by line B to make an election to have
withholding apply. If you want additional withholding made, check the box by
line C.
Withholding will only apply to the portion of your withdrawal that is subject to
Federal income tax and it will be like wage withholding. Thus, there will be no
withholding on the portion of each payment representing a return of your
premium. You may change your withholding as often as you wish by sending in IRS
Form W-4P to Golden American. Your election will remain in effect until you
revoke it. You may revoke it at any time.
If you elect not to have withholding apply to your withdrawals, or if you do not
have enough Federal income tax withheld from your withdrawal payments, you may
be responsible for payment of estimated tax. You may incur penalties under the
estimated tax rules if your withholding and estimated tax payments are not
sufficient.
By signing the application and completing the withholding election, you certify
that no bankruptcy proceeding, attachment or other lien or claims are pending
against you.
A1
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE
COMPANY
DEFERRED VARIABLE ANNUITY
APPLICATION
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
<TABLE>
<S> <C> <C>
1. OWNER(S) (FIRST, MIDDLE, LAST NAME)
Street, City, State, Zip Code Date of Birth (Mo. Day Yr.)
/ /
Social Security No./TIN
Phone Number(s): / / Male / / Female
2. ANNUITANT (IF OTHER THAN OWNER)
Street, City, State, Zip Code Date of Birth (Mo. Day Yr.)
/ /
Social Security No./TIN
Relation to Owner: / / Male / / Female
3. CONTINGENT ANNUITANT (OPTIONAL)
Street, City, State, Zip Code Date of Birth (Mo. Day Yr.)
/ /
Social Security No./TIN
Relation to Annuitant: / / Male / / Female
4. PRIMARY BENEFICIARY(IES) (IF MORE THAN ONE - INDICATE
%)
Relation to Annuitant:
5. CONTINGENT BENEFICIARY(IES) (IF MORE THAN ONE - INDICATE
%)
Relation to Annuitant:
6. PLAN (CHECK ONE) / / DVA / / Other
7. ANNUITY OPTION AND COMMENCEMENT DATE
Annuity Option (CHECK ONE): / / Variable Annuity Certain / / Income for Life with 10 Years Certain / / Other
Annuity Commencement Date:
/ / Check here for maximum age (specified in the prospectus) or fill in date: / / (month, day, year)
8. (A) INITIAL PREMIUM AND ALLOCATION INFORMATION
Initial Premium Paid $ MAKE CHECK PAYABLE TO GOLDEN AMERICAN LIFE INSURANCE COMPANY
Fill in percentages for initial allocation in INITIAL column below.
(B) OPTIONAL DOLLAR COST AVERAGING ("DCA"): / / CHECK BOX TO ELECT.
(MINIMUM OF $10,000 MUST BE ALLOCATED TO THE DIVISION CHECKED BELOW)
Amount of Monthly Transfer $ (minimum $250)
Division Transferred From: / / Limited Maturity Bond Division or
/ / Liquid Asset Division
Divisions Transferred To: Fill in percentages in DCA column below.
ACCOUNT DIVISION INVESTMENT ADVISER (A) INITIAL
MULTIPLE ALLOCATION ZWEIG ADVISORS INC. %
FULLY MANAGED T. ROWE PRICE ASSOCIATES, INC. %
ALL-GROWTH WARBURG, PINCUS COUNSELLORS INC. %
CAPITAL APPRECIATION CHANCELLOR TRUST CO. %
VALUE EQUITY EAGLE ASSET MANAGEMENT, INC. %
RISING DIVIDENDS KAYNE, ANDERSON INV. MGMT., L.P. %
REAL ESTATE EII REALTY SECURITIES, INC. %
NATURAL RESOURCES VAN ECK ASSOCIATES CORP. %
MANAGED GLOBAL WARBURG, PINCUS COUNSELLORS, INC. %
EMERGING MARKETS BANKERS TRUST COMPANY %
OTC MASSACHESETTS FINANCIAL SERVICES, CO %
GROWTH & INCOME ROBERTSON, STEPHENS & COMPANY INV. SERVICES, LP %
LIMITED MATURITY BOND EQUITABLE INVESTMENT SERVICES, INC. %
LIQUID ASSET EQUITABLE INVESTMENT SERVICES, INC. %
TOTAL 100%
<CAPTION>
ACCOUNT DIVISION (B) DCA
MULTIPLE ALLOCATION %
FULLY MANAGED %
ALL-GROWTH %
CAPITAL APPRECIATION %
VALUE EQUITY %
RISING DIVIDENDS %
REAL ESTATE %
NATURAL RESOURCES %
MANAGED GLOBAL %
EMERGING MARKETS %
LIMITED MATURITY BOND
LIQUID ASSET
100%
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY, CUSTOMER SERVICE CENTER, P.O. Box 8794,
Wilmington, DE 19899-8794
<PAGE>
<TABLE>
<S> <C> <C>
9. OPTIONAL SYSTEMATIC PARTIAL WITHDRAWALS
FREQUENCY: / / Monthly or / / Quarterly START DATE: / (month, day).
WITHDRAWAL: / / % of Accumulation Value or / / $.
(THE MINIMUM WITHDRAWAL IS $100, NOT TO EXCEED 1.25% MONTHLY / 3.75% QUARTERLY OF THE ACCUMULATION VALUE.)
WITHHOLDING ELECTION INFORMATION (MUST BE COMPLETED IF SYSTEMATIC PARTIAL WITHDRAWALS ARE CHOSEN)
A. / / I do not want to have Federal income tax withheld.
B. / / I want to have Federal income tax withheld from each withdrawal using the number of allowances and marital status
indicated. (You may also designate an ADDITIONAL amount in Section "C".)
Allowances ; / / Single / / Married / / Married, but withhold at a higher single rate.
C. / / I want the following ADDITIONAL amount withheld from each withdrawal $. (You must also complete Section "B".)
SEE PAGE A1 OF THE PROSPECTUS FOR WITHHOLDING ELECTION INSTRUCTIONS.
10. TELEPHONE REALLOCATION AUTHORIZATION OWNER'S INITIALS
I authorize Golden American to act upon reallocation instructions given by telephone from (name of your registered
representative) upon furnishing his/her social security number. Neither Golden American nor any person authorized by Golden
American will be responsible for any claim, loss, liability or expense in connection with reallocation instructions
received by telephone from such person if Golden American or such other person acted on such telephone instructions in good
faith in reliance upon this authorization. Golden American will continue to act upon this authorization until such time as
the person indicated above is no longer affiliated with the broker/dealer under which my contract was purchased or until
such time that I notify Golden American otherwise in writing.
11. TAX-QUALIFIED PLANS IF YOU ARE FUNDING A QUALIFIED PLAN, PLEASE SPECIFY WHAT TYPE:
/ / IRA / / IRA Rollover / / SEP/IRA / / Other
12. REPLACEMENT Will the contract applied for replace any existing annuity or life insurance on the annuitant's life? /
/ No / / Yes IF "YES", PLEASE OUTLINE IN THE REMARKS SECTION.
13. REMARKS
14. READ THE FOLLOWING STATEMENTS CAREFULLY AND SIGN BELOW:
- - BY SIGNING BELOW I ACKNOWLEDGE RECEIPT OF THE PROSPECTUS. I UNDERSTAND THAT THIS CONTRACT'S CASH SURRENDER VALUE MAY
INCREASE OR DECREASE ON ANY DAY DEPENDING ON THE INVESTMENT RESULTS. NO MINIMUM CASH SURRENDER VALUE IS GUARANTEED. THIS
CONTRACT IS IN ACCORD WITH MY ANTICIPATED FINANCIAL NEEDS.
- -I AGREE THAT, TO THE BEST OF MY KNOWLEDGE AND BELIEF, ALL STATEMENTS AND ANSWERS IN THE APPLICATION ARE COMPLETE AND TRUE
AND MAY BE RELIED UPON IN DETERMINING WHETHER TO ISSUE THE CONTRACT. MY ANSWERS WILL FORM A PART OF ANY CONTRACT TO BE
ISSUED, AND ONLY THE OWNER AND GOLDEN AMERICAN HAVE THE AUTHORITY TO MODIFY THIS APPLICATION.
- -IF GOLDEN AMERICAN AMENDS THE APPLICATION AS INDICATED IN THE AMENDMENTS SECTION BELOW, I WILL APPROVE OF THE CHANGE BY
ACCEPTING THE CONTRACT WHERE PERMITTED BY STATE REGULATION. I UNDERSTAND THAT ANY CHANGE IN PLAN, ANNUITY OPTION, BENEFITS
APPLIED FOR, OR AGE AT ISSUE MUST BE AGREED TO IN WRITING.
Signature of Owner Signed at (City, State) Date
Signature of Joint Owner (IF APPLICABLE) Signed at (City, State) Date
Signature of Annuitant (IF OTHER THAN OWNER) Signed at (City, State) Date
Client Account No. (IF APPLICABLE)
DO YOU HAVE REASON TO BELIEVE THAT THE CONTRACT APPLIED FOR WILL REPLACE ANY EXISTING ANNUITY OR LIFE INSURANCE ON THE
LIFE OF THE ANNUITANT? / / YES / / NO
(In Florida Only) Florida License ID#
Agent Signature Print Name & No. of Agent Social Security
No. Broker/Dealer/Branch
AMENDMENTS TO THE APPLICATION
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY, CUSTOMER SERVICE CENTER, P.O. Box 8794,
Wilmington, DE 19899-8794
GAL-DVA-9/96
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
ABSOLUTE ASSIGNMENT TO EFFECT SECTION 1035(A) EXCHANGE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
OWNER: ANNUITANT OR INSURED:
CURRENT CONTRACT NO.: EXISTING INSURANCE CO.:
</TABLE>
I hereby make a complete and absolute assignment and transfer all rights, titles
and interest of every nature and character in and to the above contract to
Golden American Life Insurance Company ("Golden American") in an exchange
intended to qualify under Section 1035 of the Internal Revenue Code.
Upon receipt, Golden American is directed to surrender the above contract and
apply the value to the GoldenSelect product for which I have submitted an
application.
I understand that, by executing this assignment, I irrevocably waive all rights,
claims and demands under the above contract.
I acknowledge that Golden American is furnishing this form and participating in
this transaction as an accommodation to me, and that Golden American assumes no
responsibility or liability for my tax treatment under Section 1035 of the
Internal Revenue Code or otherwise.
Signed this ______________ day of ________________, 19 __________ at ___________
<TABLE>
<S> <C>
X X
- -------------------------------------------------
WITNESS SIGNATURE OF OWNER
</TABLE>
- -
NOTIFICATION OF ASSIGNMENT AND SURRENDER
<TABLE>
<S> <C>
To (Existing Insurance Company): Re: Contract No.
</TABLE>
This is to notify you that an absolute assignment of all rights, title and
interest in and to the above contract has been made to Golden American Life
Insurance Company, for the purpose of making an exchange under Section 1035 of
the Internal Revenue Code. Golden American, owner of the above contract, hereby
surrenders it and requests its full surrender value for the purpose of an
exchange under Section 1035 of the Internal Revenue Code. Upon surrender of this
contract, please issue a check for its cash value to Golden American Life
Insurance Company, and mail to Golden American Life Insurance Company, Customer
Service Center, P.O. Box 8794, Wilmington, DE, 19899-8794, Attn: New Business
Department. Please provide Golden American with the cost basis, issue date and
other payment information along with your check.
<TABLE>
<S> <C>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
By:
DATE OFFICER OF ABOVE-NAMED INSURANCE COMPANY
</TABLE>
Golden American Life Insurance Company, Customer Service Center, P.O. Box 8794,
Wilmington, DE 19899-8974 1-800-366-0066
GAL-1035-9/96
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
REQUEST TO EFFECT IRA OR OTHER QUALIFIED ACCOUNT TRANSFER
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
TO: -------------------------------------
PRESENT SPONSOR
------------------------------------- ACCOUNT NO.
ADDRESS
------------------------------------- -----------------------------------------------------
ADDRESS PARTICIPANT'S NAME
RE: IRA OR OTHER QUALIFIED ACCOUNT TRANSFER
</TABLE>
ATTN: QUALIFIED TRANSFER DEPARTMENT
Dear Sirs:
I wish to transfer the entire value of my present Qualified Account to the
"GoldenSelect IRA" sponsored by Golden American Life Insurance Company.
I adopted the "GoldenSelect IRA" on ____________________________________________
DATE OF APPLICATION
Please make the check payable to GoldenSelect/Golden American Life Insurance
Company. As indicated below, Golden American has already indicated its
willingness to accept from you all my Qualified Account assets.
Please send all such proceeds and details to:
Golden American Life Insurance Company
IRA and Pension Operations
P.O. Box 8794
Wilmington, DE 19899-8794
Your prompt attention to this matter is appreciated.
<TABLE>
<S> <C> <C>
Sincerely, (Signature Guarantee if Required)
X ----------------------------------------
- -------------------------------------------
PARTICIPANT'S SIGNATURE (NAME OF BANK/FIRM)
----------------------------------------
(SIGNATURE OF OFFICER/TITLE)
</TABLE>
- -
GOLDEN AMERICAN APPROVAL FOR QUALIFIED ACCOUNT TRANSFER
Golden American Life Insurance Company has established the "GoldenSelect IRA"
application number
- ------------------------- for the participant named above. We are willing to
accept the transfer. Please forward all proceeds accordingly.
<TABLE>
<S> <C>
By: -------------------------------------- Date: ----------------------------------------------
Name: ----------------------------------- Title: ----------------------------------------------
</TABLE>
Golden American Life Insurance Company, Customer Service Center, P.O. Box 8794,
Wilmington, DE 19899-8974 1-800-366-0066
GAL-IRA-9/96
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
CERTIFICATE OF DEPOSIT TRANSFER FORM
- --------------------------------------------------------------------------------
APPOINTMENT OF ATTORNEY-IN-FACT TO SURRENDER CERTIFICATE OF DEPOSIT
(NON-QUALIFIED ONLY)
CERTIFICATE(S) OF DEPOSIT
Issued By: _____________________________________________________________________
INSTITUTION
Address: _______________________________________________________________________
Certificate Number(s): _________________________ Issued to: ____________________
Maturity Date(s): ______________________________________________________________
Estimated Amount(s): ___________________________________________________________
I/We do hereby name and appoint Golden American Life Insurance Company ("Golden
American") through its duly authorized officers as lawful agent and
attorney-in-fact for me/us, to surrender the above Certificate(s) of Deposit
upon the respective maturity date(s).
I/We request that upon maturity all funds available be transferred to Golden
American. Golden American will apply all such funds received to a variable
contract issued to me/us.
I/We understand that Golden American assumes no responsibility for the tax
treatment of this matter and that I/ we shall be responsible for the payment of
all federal, state and local taxes and any other fees and charges incurred with
respect to the Certificate(s).
I/We acknowledge that the investment earnings credited under the variable
contract will begin to accrued when Golden American receives the proceeds from
the Certificate(s). Golden American has the responsibility only to present the
Certificate(s) for payment upon maturity and shall not be responsible for the
solvency of the issuing Financial Institution.
Dated at ______________________________ on this ______ day of
____________________, 19________________________________________________________
<TABLE>
<S> <C>
X X
Witness Signature of Certificate Owner
X X
Witness Signature of Joint Certificate Owner
</TABLE>
Special Handling Instructions: _________________________________________________
________________________________________________________________________________
ACKNOWLEDGMENT
Golden American will accept any and all funds which discharge the obligation
listed above and request that such funds be sent to: Golden American Life
Insurance Company, Customer Service Center, P.O. Box 8794, Wilmington, DE
19899-8794
By _____________________________________________________________________________
Name Title Date
Golden American Life Insurance Company, Customer Service Center, P.O. Box 8794,
Wilmington, DE 19899-8974 1-800-366-0066
GAL-CDTF-9/96
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY
DOMICILED IN WILMINGTON, DELAWARE
IN 3107 9/96
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
DEFERRED VARIABLE ANNUITY PROSPECTUS
GOLDENSELECT DVA SERIES 100
- --------------------------------------------------------------------------------
This prospectus describes group and individual deferred variable annuity
contracts (the "contract") offered by Golden American Life Insurance Company
("Golden American," "we," "our" or "us"). The owner ("you" or "your") purchases
the contract with an initial premium of $25,000 or more and is permitted to make
additional premium payments.
The contract is funded by Separate Account B ("Account B").
Sixteen divisions of Account B are currently available under the contract. The
investments available through the divisions of Account B include mutual fund
portfolios (the "Series") of The GCG Trust (the GCG "Trust") and the Equi-Select
Series Trust (the "ESS Trust").
This prospectus describes the contract and provides background information
regarding Account B. The prospectuses for the GCG Trust and the ESS Trsut
(individually a "Trust," and collectively, the "Trusts"), which must accompany
this prospectus, provide information regarding investment activities and
policies of the Trusts.
You may allocate your premiums among the sixteen divisions currently available
under the contract in any way you choose, subject to certain restrictions. You
may change the allocation of your accumulation value up to five times per
contract year free of charge.
You may surrender the contract for its cash surrender value at any time before
the annuity commencement date provided the annuitant and owner are living. The
cash surrender value will vary daily with the investment results of the
contract. We do not guarantee any minimum cash surrender value. You may make
partial withdrawals under the contract, subject to certain restrictions.
We will pay a death benefit to the beneficiary if the annuitant (when there is
no contingent annuitant) or owner dies prior to the annuity commencement date.
See Proceeds Payable to the Beneficiary.
This prospectus describes your principal rights and limitations and sets forth
the information concerning Account B that investors should know before
investing. A Statement of Additional Information dated September 3, 1996
relating to Account B has been filed with the Securities and Exchange
Commission ("SEC") and is available without charge upon request. To obtain a
copy of this document call or write our Customer Service Center. The Table of
Contents of the Statement of Additional Information may be found on the last
page of this prospectus. The Statement of Additional Information is incorporated
herein by reference.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
CONTRACTS AND UNDERLYING SERIES SHARES WHICH FUND THE CONTRACTS ARE NOT INSURED
BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF
ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO MARKET FLUCTUATION,
REINVESTMENT RISK AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS NOT VALID
UNLESS ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE GCG TRUST AND ESS TRUST.
<TABLE>
<S> <C> <C>
ISSUED BY: DISTRIBUTED BY: ADMINISTERED AT:
Golden American Life Directed Services, Inc. Customer Service Center
Insurance Company Wilmington, Delaware 19801 Mailing Address: P.O. Box 8794
Wilmington, Delaware 19899-8794
1-800-366-0066
</TABLE>
PROSPECTUS DATED: SEPTEMBER 3, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
DEFINITION OF TERMS.................................. 3
FEE TABLE............................................ 5
SUMMARY OF THE CONTRACT.............................. 7
CONDENSED FINANCIAL INFORMATION...................... 10
Index of Investment Experience
Financial Statements
Performance Related Information
PART I
Introduction....................................... 13
FACTS ABOUT THE COMPANY AND ACCOUNT B................ 14
Golden American
The Accounts
Account B Divisions
Changes Within Account B
FACTS ABOUT THE CONTRACT............................. 19
The Owner
The Annuitant
The Beneficiary
Change of Owner or Beneficiary
Availability of the Contract
Types of Contracts
Your Right to Select or Change Contract Options
Premiums
Making Additional Premium Payments
Crediting Premium Payments
Restrictions on Allocation of Premium Payments
Your Right to Reallocate
Dollar Cost Averaging Option
What Happens if a Division is Not Available
Your Accumulation Value
Accumulation Value in Each Division
Measurement of Investment Experience
Cash Surrender Value
Surrendering to Receive the Cash Surrender Value
Partial Withdrawals
Proceeds Payable to the Beneficiary
Reports to Owners
When We Make Payments
CHARGES AND FEES..................................... 27
Charge Deduction Division
Charges Deducted from the Accumulation Value
Charges Deducted from the Divisions
Trust Expenses
<CAPTION>
PAGE
<S> <C>
CHOOSING AN INCOME PLAN.............................. 29
The Income Plan
Annuity Commencement Date Selection
Frequency Selection
The Annuity Options
Payment When Named Person Dies
OTHER INFORMATION.................................... 30
Other Contract Provisions
Contract Changes -- Applicable Tax Law
Your Right to Cancel or Exchange Your Contract
Other Contract Changes
Group or Sponsored Arrangements
Selling the Contract
Reinsurance
REGULATORY INFORMATION............................... 32
Voting Rights
State Regulation
Legal Proceedings
Legal Matters
Experts
FEDERAL TAX CONSIDERATIONS........................... 33
Introduction
Golden American Tax Status
Taxation of Non-Qualified Annuities
Taxation of Individual Retirement Annuities
ADDITIONAL CONSIDERATIONS............................ 37
Distribution-at-Death Rules
Taxation of Death Benefit Proceeds
Transfer of Annuity Contracts
Section1035 Exchanges
Assignments
Multiple Contracts Rule
STATEMENT OF ADDITIONAL INFORMATION.................. 51
Table of Contents
APPENDIX............................................. A1
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.
2
<PAGE>
DEFINITION OF TERMS
ACCOUNTS
Separate Account B.
ACCUMULATION VALUE
The amount that the contract provides for investment at any time. Initially,
this amount is equal to the premium paid. Thereafter, the accumulation value
will reflect the premiums paid, investment experience, charges deducted and
partial withdrawals taken.
ANNUITANT
The person designated by the owner to receive the annuity payments and whose
death initiates payment of the death benefit.
ANNUITY COMMENCEMENT DATE
The date on which annuity payments begin.
ANNUITY OPTIONS
Options the owner selects that determine the form and amount of annuity
payments.
ANNUITY PAYMENT
The periodic payment an annuitant receives. It may be either a fixed or a
variable amount based on the annuity option chosen.
ATTAINED AGE
The issue age of the annuitant plus the number of full years elapsed since the
contract date.
BENEFICIARY
The person designated to receive benefits in the case of the death of the
annuitant (when there is no contingent annuitant) or owner.
BUSINESS DAY
Any day the New York Stock Exchange ("NYSE") is open for trading, exclusive of
Federal holidays, or any day on which the SEC requires that mutual funds, unit
investment trusts or other investment portfolios be valued.
CASH SURRENDER VALUE
The amount the owner receives if the owner surrenders the contract.
CHARGE DEDUCTION DIVISION
The Liquid Asset Division, which is the division from which all charges are
deducted if so designated on the application or enrollment form, or later
elected by the owner.
CONTINGENT ANNUITANT
The person designated by the owner who, upon the annuitant's death prior to the
annuity commencement date, becomes the annuitant.
CONTRACT
The entire contract consisting of the basic contract, the application or
enrollment form and any riders or endorsements.
CONTRACT ANNIVERSARY
The anniversary of the contract date.
CONTRACT DATE
The date on which we have received the initial premium and upon which we begin
determining the contract values. It may or may not be the same as the issue
date. This date is used to determine contract months, processing dates, years
and anniversaries.
CONTRACT PROCESSING DATES
The days when we deduct certain charges from the accumulation value. If the
contract processing date is not a valuation date, it will be on the next
succeeding valuation date. The contract processing dates will be once each year
on the contract anniversary.
CONTRACT PROCESSING PERIOD
The period between successive contract processing dates unless it is the first
contract processing period. In that case, it is the period from the contract
date to the first contract processing date.
CONTRACT YEAR
The period between contract anniversaries.
CUSTOMER SERVICE CENTER
Where service is provided to our contract owners. The mailing address and
telephone number of the Customer Service Center are shown on the cover.
DEFERRED ANNUITY
A contract which provides for the accumulation of funds that will reflect
investment experience. These funds may be applied under an annuity option at the
annuity commencement date.
ENDORSEMENTS
An endorsement changes or adds provisions to the contract.
3
<PAGE>
DEFINITION OF TERMS (CONTINUED)
EXPERIENCE FACTOR
The factor which reflects the investment experience of the portfolio in which a
division invests and also reflects the charges assessed against the division for
a valuation period.
FREE LOOK PERIOD
The period of time within which the contract owner may examine the contract and
return it for a refund.
GENERAL ACCOUNT
The account which contains all of our assets other than those held in our
separate accounts.
INDEX OF INVESTMENT EXPERIENCE
The index that measures the performance of a separate account division.
INITIAL PREMIUM
The payment amount required to put a contract into effect.
ISSUE AGE
The annuitant's age on his or her last birthday on or before the contract date.
ISSUE DATE
The date the contract is issued at our Customer Service Center.
OWNER
The person who owns the contract and is entitled to exercise all rights under
the contract. This person's death also initiates payment of the death benefit.
RIDER
A rider adds benefits to the contract.
SPECIALLY DESIGNATED DIVISION
The Liquid Asset Division. Distributions from a portfolio underlying a division
in which reinvestment is not available will be allocated to this division unless
you specify otherwise.
VALUATION DATE
The day at the end of a valuation period when each division is valued.
VALUATION PERIOD
Each business day together with any non-business days before it.
4
<PAGE>
FEE TABLE
<TABLE>
<S> <C>
OWNER TRANSACTION EXPENSES (deducted from accumulation value)
DISTRIBUTION FEE (ANNUAL SALES LOAD) AS A PERCENTAGE OF THE INITIAL AND EACH ADDITIONAL PREMIUM,
deducted at the end of each contract processing period following receipt of each premium (or at the
time of surrender if surrendered before the end of a contract processing period) over a ten year
period from the date we receive and accept each premium payment..................................... 0.65%(1)
EXCESS ALLOCATION CHARGE for each allocation change in excess of the five free allocation changes
allowed per contract year........................................................................... $25
PARTIAL WITHDRAWAL CHARGE (2.0% of the withdrawal for each additional conventional partial withdrawal
after the first in a contract year) not to exceed:.................................................. $25
ANNUAL CONTRACT FEES (deducted from the accumulation value)
ADMINISTRATIVE CHARGE................................................................................ $0
SEPARATE ACCOUNT ANNUAL EXPENSES (percentage of assets in each separate account division)
MORTALITY AND EXPENSE RISK CHARGE.................................................................... 1.25 %(1)
ASSET BASED ADMINISTRATIVE CHARGE.................................................................... 0.10 %
Total Separate Account Annual Expenses............................................................... 1.35 %
</TABLE>
The GCG TRUST ANNUAL EXPENSES (based on combined assets of the indicated groups
of Series)
<TABLE>
<CAPTION>
OTHER TOTAL
SERIES FEES(2) EXPENSES(3) EXPENSES
- ------------------------------------------------------ ------------ --------------- ------------
<S> <C> <C> <C>
Multiple Allocation, Fully Managed, Capital
Appreciation, Rising Dividends, All-Growth, 1.00% 0.01% 1.01%
Real Estate, Natural Resources, Value Equity,
Strategic Equity, and Small Cap Series:
Emerging Markets Series: 1.50% 0.03% 1.53%
Managed Global Series(4): 1.25% 0.01% 1.26%
Limited Maturity Bond and Liquid Asset Series: 0.60% 0.01% 0.61%
</TABLE>
F-
THE ESS TRUST ANNUAL EXPENSES:
<TABLE>
<CAPTION>
OTHER TOTAL
SERIES FEES(6) EXPENSES(7) EXPENSES
- ------------------------------------------------------ ------------ --------------- -------------
<S> <C> <C> <C>
OTC Portfolio 0.80% 0.75% 1.55%
Growth & Income Portfolio: 0.95% 0.75% 1.70%
</TABLE>
- --------------------------
(1) We also offer a DVA through another prospectus, which is a contract with a
different charging structure.
(2) Fees decline as combined assets increase (see Account B Divisions
and the Trust prospectus for details).
(3) Other expenses generally consist of independent trustees fees and expenses.
(4) The estimated expenses for the Managed Global Series are based on the
actual experience of its predecessor for accounting purposes, the Managed
Global Account of Separate Account D. On September 3, 1996, the Managed
Global Account was reorganized into the Managed Global Division of Account B
and the Managed Global Series of the GCG Trust.
(5) Prior to October 6, 1995, EISI waived its management fee for the OTC
Portfolio.
(6) Other expenses shown take into account the effect of EISI's agreement to
reimburse the portfolios for all operating expenses, excluding management
fees, that exceed 0.75% of its average daily net assets. This reimbursement
agreement commenced October 6, 1995 for the OTC Portfolio and April 1, 1996
for the Growth & Income Portfolio. This reimbursement is voluntary and can
be terminated at any time. In the absence of such reimbursement agreement,
Other Expenses would have been 1.72% for the OTC Portfolio for the year
ended December 31, 1995. The Growth & Income Portfolio commenced operations
on April 1, 1996 and has no prior operating history.
5
<PAGE>
FEE TABLE (CONTINUED)
EXAMPLE:
Whether you surrender or do not surrender your contract at the end of the
applicable time period, you would pay the following expenses for each $1,000 of
initial premium, assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
<CAPTION>
DIVISION ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C> <C>
Multiple Allocation....................................... $ 29.96 $ 91.26 $ 154.49 $ 321.64
Fully Managed............................................. 29.96 91.26 154.49 321.64
Capital Appreciation...................................... 29.96 91.26 154.49 321.64
Rising Dividends.......................................... 29.96 91.26 154.49 321.64
All-Growth................................................ 29.96 91.26 154.49 321.64
Real Estate............................................... 29.96 91.26 154.49 321.64
Natural Resources......................................... 29.96 91.26 154.49 321.64
Value Equity.............................................. 29.96 91.26 154.49 321.64
Strategic Equity.......................................... 29.96 91.26 154.49 321.64
Small Cap................................................. 29.96 91.26 154.49 321.64
Emerging Markets.......................................... 35.06 106.42 179.47 369.98
Managed Global............................................ 32.37 98.43 166.34 344.75
OTC....................................................... 35.80 108.67 183.27 377.84
Growth & Income........................................... 37.30 113.07 190.47 391.51
Limited Maturity Bond..................................... 26.21 80.01 135.76 284.46
Liquid Asset.............................................. 26.21 80.01 135.76 284.46
<CAPTION>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
</TABLE>
For purposes of computing the annual per contract administrative charge, the
dollar amounts shown in the examples are based on an initial premium of $50,000.
The purpose of the fee table is to assist you in understanding the various costs
and expenses that you may bear directly or indirectly. The fee table reflects
expenses of Acount B as well as the Trust. Premium taxes may also be applicable.
See Charges and Fees, PREMIUM TAXES. For a complete description of contract
costs and expenses see the section titled Charges and Fees. For a more complete
description of costs and expenses of the Trusts, see the Trust prospectuses.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN, SUBJECT TO
THE GUARANTEES UNDER THE CONTRACT.
6
<PAGE>
SUMMARY OF THE CONTRACT
This prospectus has been designed to provide you with information regarding the
contract and Account B which fund the contract. Information concerning the
divisions of Account B is set forth in the Trust prospectuses.
This summary is intended to provide only a very brief overview of the more
significant aspects of the contract. Further detail is provided in this
prospectus and in the contract. The contract, together with its attached
application or enrollment form and any riders or endorsements, constitutes the
entire agreement between you and us and should be retained.
This prospectus has been designed to provide you with the necessary information
to make a decision on purchasing the contract offered by Golden American and
funded by Account B.
You have a choice of investments. We do not promise that your accumulation value
will increase. Depending on the contract's investment experience for funds
invested in the Accounts, the accumulation value, cash surrender value and death
benefit may increase or decrease on any day. You bear the investment risk.
DESCRIPTION OF THE CONTRACT
The contract is designed to establish retirement benefits for two types of
purchasers. The first type of purchaser is one who is eligible to participate
in, and purchases a contract for use with, an individual retirement annuity
("IRA") meeting the requirements of section 408(b) of the Internal Revenue Code
of 1986 ("qualified plan"). For a contract funding a qualified plan,
distribution must commence not later than April 1st of the calendar year
following the calendar year in which you attain age 70 1/2. The second type of
purchaser is one who purchases a contract outside of a qualified plan
("non-qualified plan").
The contract also offers a choice of annuity options to which you may apply the
accumulation value on the annuity commencement date or the cash surrender value
upon surrender of the contract. See Choosing an Income Plan.
AVAILABILITY
We can issue a contract if both the annuitant and the owner are not older than
age 85 and accept additional premium payments until either the annuitant or
owner reaches the attained age of 85 for non-qualified plans (age 70 1/2 for
qualified plans, except for rollover contributions). The minimum initial premium
is $25,000 for qualified and non-qualified plans. In connection with qualified
plans, we will only accept rollover contributions of $25,000 or more as the
initial premium. We also offer a DVA through another prospectus, which is a
contract with a different charging structure. We may change the minimum initial
or additional premium requirements for certain group or sponsored arrangements.
See Group or Sponsored Arrangements.
The minimum additional premium payment we will accept is $500 for a
non-qualified plan and $250 for a qualified plan. We will take under
consideration and may refuse to accept a premium payment if the sum of all
premium payments received under the contract totals more than $1,500,000.
THE DIVISIONS
There are sixteen divisions of Account B currently available under the contract.
Each of the sixteen divisions offered under this prospectus have their own
distinct investment objectives and policies. Each division of Account B
invests in a corresponding Series of the GCG Trust, managed by Directed
Services, Inc. ("DSI") or a corresponding Series of the ESS Trust, managed
by Equitable Investment Services, Inc. ("EISI," and together with DSI, the
"Managers"). The Trusts and the Managers have retained several portfolio
managers to manage the assets of each Series. See Facts About the Company
and the Accounts, and Account B Divisions.
HOW THE ACCUMULATION VALUE VARIES
The accumulation value varies each day based on investment results. You bear the
risk of poor investment performance and you receive the benefits from favorable
investment performance. The accumulation value also reflects premium payments,
charges deducted and partial withdrawals. See Accumulation Value in Each
Division.
SURRENDERING YOUR CONTRACT
The cash surrender value varies each day depending on investment results. We do
not guarantee any minimum cash surrender value. You may surrender the contract
and receive its cash surrender value at any time while both the annuitant and
owner are living and before the annuity commencement date. See Cash
Surrender Value and Surrendering to Receive the Cash Surrender Value.
7
<PAGE>
SUMMARY OF THE CONTRACT (CONTINUED)
TAKING PARTIAL WITHDRAWALS
After the free look period, prior to the annuity commencement date and while the
contract is in effect, you may take partial withdrawals from the accumulation
value of the contract. You may take conventional partial withdrawals once per
contract year without charge. Alternatively, you may elect in advance to take
systematic partial withdrawals on a monthly or quarterly basis. If you have an
IRA contract, you may elect IRA partial withdrawals on a monthly, quarterly or
annual basis.
Partial withdrawals are subject to certain restrictions as defined in this
prospectus. See Partial Withdrawals.
DOLLAR COST AVERAGING
Under this option, you may choose to have a specified dollar amount transferred
from either the Limited Maturity Bond Division or Liquid Asset Division to the
other divisions on a monthly basis with the objective of shielding your
investment from short term price fluctuations. See Dollar Cost Averaging
Option.
YOUR RIGHT TO CANCEL THE CONTRACT
You may cancel your contract within the free look period which is a ten day
period of time beginning when you receive the contract. For purposes of
administering our allocation and certain other administrative rules, we deem
this period to end 15 days after the contract is mailed from our Customer
Service Center. Some states may require that we provide a longer free look
period. In some states we restrict the initial premium allocation during the
free look period. See Your Right to Cancel or Exchange Your Contract.
YOUR RIGHT TO CHANGE THE CONTRACT
The contract may be changed to another annuity plan subject to our rules at the
time of the change. See Other Contract Changes.
DEATH BENEFIT PROCEEDS
The contract provides a death benefit to the beneficiary if the annuitant (when
there is no contingent annuitant) or an owner dies prior to the annuity
commencement date. See Proceeds Payable to the Beneficiary. We may
reduce the death benefit proceeds payable under certain group or sponsored
arrangements. See Group or Sponsored Arrangements.
CONTRACT PROCESSING PERIODS
The first contract processing period begins with the contract date and ends at
the close of business on the first contract processing date. All subsequent
contract processing periods begin at the close of business on the most recent
contract processing date and extend to the close of business on the next
contract processing date. There is one contract processing period each year.
DEDUCTIONS FOR CHARGES AND FEES
We invest the entire amount of the initial and any additional premium payments
in the divisions you select, subject to certain restrictions we impose. See Part
I, Restrictions on Allocation of Premium Payments. We then periodically deduct
certain amounts from your accumulation value. See Charges and Fees. We
may reduce certain charges under group or sponsored arrangements. See Part I,
Group or Sponsored Arrangements. We may also reduce certain charges for
contracts purchased in combination with certain flexible premium variable life
products that we offer. Charges are deducted proportionately from all divisions
in which you are invested, unless you have elected the Charge Deduction
Division. The charges we deduct are:
DISTRIBUTION FEE
We deduct a sales load in an annual amount of 0.65% of each premium at the end
of each contract processing period (or at the time of surrender if surrendered
before the end of the processing period) for a period of ten years from the
date we receive and accept each premium payment.
We also offer through other prospectuses, other DVAs which are contracts with
a different charging structures.
MORTALITY AND EXPENSE RISK CHARGE
We charge each division of the Accounts with a daily asset based charge for
mortality and expense risks equivalent to an annual rate of 1.25%.
PREMIUM TAXES
Generally, premium taxes are incurred on the annuity commencement date, and a
charge for premium taxes is then deducted from the accumulation value on such
date. Some jurisdictions impose a premium tax at the time the initial or
additional premiums are paid, regardless of the annuity commencement date.
8
<PAGE>
SUMMARY OF THE CONTRACT (CONTINUED)
EXCESS ALLOCATION CHARGE
The first five allocation changes in any contract year may be made without
charge. Each subsequent allocation change is subject to a $25 excess
allocation charge.
PARTIAL WITHDRAWAL CHARGE
If you take more than one conventional partial withdrawal during a contract
year, we impose a charge of the lesser of $25 and 2.0% of the amount withdrawn
for each additional conventional partial withdrawal. See Partial
Withdrawals, Conventional Partial Withdrawal Option.
ASSET BASED ADMINISTRATIVE CHARGE
We charge each division of the Accounts with a daily asset based charge to
cover contract administration equivalent to an annual rate of 0.10%.
TRUST EXPENSES
There are fees and expenses deducted from each Series. The investment
performance of the Series and deductions for fees and expenses from the Trusts
will affect your accumulation value. Please read the Trust prospectuses for
details.
TAX PENALTIES
The ultimate effect of Federal income taxes on the amounts held under an annuity
contract, on annuity payments and on the economic benefits to the owner,
annuitant or beneficiary depends on Golden American's tax status and upon the
tax status of the individuals concerned. In general, an owner is not taxed on
increases in value under an annuity contract until some form of distribution is
made under it. There may be tax penalties if you make a withdrawal or surrender
the contract before reaching age 59 1/2. See Federal Tax Considerations.
9
<PAGE>
CONDENSED FINANCIAL INFORMATION
INDEX OF INVESTMENT EXPERIENCE
The upper table gives the index of investment experience for each division of
Account B on their respective commencement of operations and on December 31,
1989, 1990, 1991, 1992, 1993, 1994 and 1995, as applicable. The index of
investment experience is equal to the value of a unit for each division of
Account B. The total value of each division as of the end of each period
indicated is shown in the lower table.
<TABLE>
<CAPTION>
INDEX OF INVESTMENT EXPERIENCE
----------------------------------------------------------------------------------------------
DIVISION 1/25/89 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
- ----------------------- ----- ----------- ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Multiple Allocation.... $10.00 $ 10.76 $ 11.12 $ 13.16 $ 13.22 $ 14.50 $ 14.13
Fully Managed.......... 10.00 10.38 9.78 12.46 13.06 13.86 12.68
Capital Appreciation... --(1) --(1) --(1) --(1) 10.99 11.74 11.40
Rising Dividends....... --(3) --(3) --(3) --(3) --(3) 10.28 10.20
All-Growth............. 10.00 10.71 9.74 13.03 12.52 13.16 11.58
Real Estate............ 10.00 9.85 7.65 10.08 11.32 13.10 13.74
Natural Resources...... 10.00 11.71 9.91 10.31 9.17 13.57 13.73
Value Equity........... --(4) --(4) --(4) --(4) --(4) --(4) --(4)
Strategic Equity....... --(5) --(5) --(5) --(5) --(5) --(5) --(5)
Small Cap.............. --(6) --(6) --(6) --(6) --(6) --(6) --(6)
Emerging Markets....... --(3) --(3) --(3) --(3) --(3) 12.40 10.38
Managed Global......... --(2) --(2) --(2) --(2) 10.01 10.48 9.03
OTC.................... --(7) --(7) --(7) --(7) --(7) --(7) --(7)
Growth & Income....... --(7) --(7) --(7) --(7) --(7) --(7) --(7)
Limited Maturity
Bond.................. 10.00 10.83 11.55 12.65 13.09 13.71 13.36
Liquid Asset........... 10.00 10.64 11.31 11.78 11.98 12.13 12.41
<CAPTION>
TOTAL ACCUMULATION VALUE
------------------------------------------------------------------------------------
DIVISION 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
- ----------------------- ----------- ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Multiple Allocation.... $15,556,366 $23,963,356 $57,739,245 $115,124,744 $273,158,122 $297,507,994
Fully Managed.......... 5,333,885 5,414,160 9,834,436 37,352,585 108,290,963 98,836,207
Capital Appreciation... --(1) --(1) --(1) 18,366,222 86,798,642 88,344,684
Rising Dividends....... --(3) --(3) --(3) --(3) 14,387,382 50,384,765
All-Growth............. 3,077,542 4,528,380 11,159,814 23,418,811 56,055,565 70,623,784
Real Estate............ 650,003 309,556 696,180 3,600,461 28,772,896 36,936,728
Natural Resources...... 2,320,696 2,460,399 2,646,183 2,882,417 21,436,544 32,746,767
Value Equity........... --(4) --(4) --(4) --(4) --(4) --(4)
Strategic Equity....... --(5) --(5) --(5) --(5) --(5) --(5)
Small Cap.............. --(6) --(6) --(6) --(6) --(6) --(6)
Emerging Markets....... --(3) --(3) --(3) --(3) 30,488,589 59,747,048
Global Account......... --(2) --(2) --(2) 38,699,402 88,477,493 86,208,555
Limited Maturity
Bond.................. 2,595,966 8,009,970 15,935,184 39,861,202 71,622,231 71,573,009
Liquid Asset........... 2,190,649 8,419,953 9,224,303 12,769,536 16,497,588 45,364,989
<CAPTION>
DIVISION 12/31/95
- ----------------------- ------------
<S> <C> <C>
Multiple Allocation.... $ 16.58
Fully Managed.......... 15.10
Capital Appreciation... 14.63
Rising Dividends....... 13.19
All-Growth............. 13.98
Real Estate............ 15.80
Natural Resources...... 14.99
Value Equity........... 13.34
Strategic Equity....... 10.00
Small Cap.............. --(6)
Emerging Markets....... 9.20
Global Account......... 9.56
Limited Maturity
Bond.................. 14.73
Liquid Asset........... 12.92
DIVISION 12/31/95
- ----------------------- ------------
<S> <C> <C>
Multiple Allocation.... $305,499,995
Fully Managed.......... 117,325,242
Capital Appreciation... 121,047,204
Rising Dividends....... 80,341,660
All-Growth............. 91,960,166
Real Estate............ 34,814,825
Natural Resources...... 26,991,780
Value Equity........... 28,447,742
Strategic Equity....... 8,030,333
Small Cap.............. --(6)
Emerging Markets....... 36,887,958
Managed Global......... 72,375,222
OTC.................... --(7)
Growth & Income........ --(7)
Limited Maturity
Bond.................. 67,838,218
Liquid Asset........... 36,490,508
</TABLE>
- --------------------------
(1) The Capital Appreciation Division became available for investment on May
4, 1992 starting with an index of investment experience of $10.00.
(2) The Global Account Division of Account D became available for investment
on October 21, 1992 starting with an index of investment experience of
$10.00
(3) The Rising Dividends and Emerging Markets Divisions became available for
investment on October 4, 1993 starting with an index of investment
experience of $10.00.
(4) The Value Equity Division became available for investment on January 1,
1995 starting with an index of investment experience of $10.00.
(5) The Strategic Equity Division became available for investment on October
2, 1995 starting with an index of investment experience of $10.00.
(6) The Small Cap Division became available for investment on January 2, 1996
starting with an index of investment experience of $10.00.
(7) The OTC Division and the Growth & Income Division became available for
investment on September 3, 1996 starting with an index of investment
experience of $_________ and $____________, respectively.
In order to provide for continuity in results, the above table is based on
charges for the contract described in this prospectus. Contracts issued prior to
May 1, 1993, were based on lower asset charges and, thus, would have higher
values for the indices of investment experience.
10
<PAGE>
CONDENSED FINANCIAL INFORMATION (CONTINUED)
FINANCIAL STATEMENTS
The audited financial statements of Separate Account B (as well as the auditors'
report thereon), the audited financial statements of The Managed Global Account
of Separate Account D (as well as the auditors' report thereon) and the audited
financial statements of Golden American Life Insurance Company (as well as the
auditors' reports thereon) are included in the Statement of Additional
Information.
PERFORMANCE RELATED INFORMATION
Performance information for the divisions of Account B, including the yield
and effective yield of the Liquid Asset Division, the yield of the remaining
divisions, and the total return of all divisions may appear in reports and
promotional literature to current or prospective owners.
Current yield for the Liquid Asset Division will be based on income received by
a hypothetical investment over a given 7-day period (less expenses accrued
during the period), and then "annualized" (I.E., assuming that the 7-day yield
would be received for 52 weeks, stated in terms of an annual percentage return
on the investment). "Effective yield" for the Liquid Asset Division is
calculated in a manner similar to that used to calculate yield, but when
annualized, the income earned by the investment is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of earnings.
For the remaining divisions, quotations of yield will be based on all investment
income per unit (accumulation value divided by the index of investment
experience -- see Measurement of Investment Experience, INDEX OF
INVESTMENT EXPERIENCE AND UNIT VALUE) earned during a given 30-day period, less
expenses accrued during the period ("net investment income"). Quotations of
average annual total return for any division will be expressed in terms of the
average annual compounded rate of return on a hypothetical investment in a
contract over a period of one, five, and ten years (or, if less, up to the life
of the division), and will reflect the deduction of the applicable distribution
fee, the asset based administrative charge and the mortality and expense risk
charge. Quotations of total return may simultaneously be shown for other periods
that do not take into account certain contractual charges such as the
distribution fee for example.
Performance information for a division may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P
500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money Market
Institutional Averages, or other indices measuring performance of a pertinent
group of securities so that investors may compare a division's results with
those of a group of securities widely regarded by investors as representative of
the securities markets in general; (ii) other variable annuity separate accounts
or other investment products tracked by Lipper Analytical Services, a widely
used independent research firm which ranks mutual funds and other investment
companies by overall performance, investment objectives, and assets, or tracked
by other ratings services, including VARDS, companies, publications, or persons
who rank separate accounts or other investment products on overall performance
or other criteria; and (iii) the Consumer Price Index (measure for inflation) to
assess the real rate of return from an investment in the contract. Unmanaged
indices may assume the reinvestment of dividends but generally do not reflect
deductions for administrative and management costs and expenses.
Performance information for any division reflects only the performance of a
hypothetical contract under which the accumulation value is allocated to a
division during a particular time period on which the calculations are based.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the portfolio of the
Series of the respective Trust in which the division invests or and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future. For a description of the
methods used to determine yield and total return for the divisions, see the
Statement of Additional Information.
Reports and promotional literature may also contain other information including
the ranking of any division derived from rankings of variable annuity separate
accounts or other investment products tracked by Lipper Analytical Services or
by rating services, companies, publications, or other persons who rank separate
accounts or other investment products on overall performance or other criteria.
11
<PAGE>
(This page has been left blank intentionally.)
12
<PAGE>
PART I
INTRODUCTION THE FOLLOWING INFORMATION DESCRIBES THE CONTRACT AND ACCOUNT B.
ACCOUNT B INVESTS IN MUTUAL FUND PORTFOLIOS OF THE GCG TRUST AND THE ESS TRUST.
13
<PAGE>
FACTS ABOUT THE COMPANY AND THE ACCOUNTS
GOLDEN AMERICAN
Golden American Life Insurance Company ("Golden American") is a stock life
insurance company organized under the laws of the State of Delaware and is
a wholly owned subsidiary of Equitable of Iowa Companies ("Equitable of
Iowa"). Prior to December 30, 1993, Golden American was a Minnesota
corporation. Prior to August 13, 1996, Golden American was a wholly owned
indirect subsidiary of Bankers Trust Company. We are authorized to do
business in all jurisdictions except New York. We offer variable annuities
and variable life insurance. Administrative services for the Contract are
provided at our Customer Service Center, the address is shown on the
cover. As of December 31, 1995 Golden American had stockholder's equity of
approximately $98.1 million and total assets of approximately $1.2 billion,
including approximately $1.05 billion of separate account assets.
Equitable of Iowa is the holding company for Equitable Life Insurance
Company of Iowa, USG Annuity & Life Company, Locust Street Securities,
Inc., Equitable Investment Services, Inc. ("EISI"), EIC Variable, Inc.,
Directed Services, Inc. ("DSI"), and Golden American.
SEPARATE ACCOUNT B
All obligations under the contract are general obligations of Golden American.
Account B is a separate investment account used to support our variable
annuity contracts and for other purposes as permitted by applicable laws and
regulations. The assets of Account B are kept separate from our general
account and any other separate accounts we may have. We may offer other variable
annuity contracts investing in Account B which are not discussed in this
prospectus. Account B may also invest in other series which are not available
to the contract described in this prospectus.
We own all the assets in Account B. Income and realized and unrealized gains
or losses from assets in Account B are credited to or charged against that
account without regard to other income, gains or losses in our other investment
accounts. As required, the assets in Account B are at least equal to the
reserves and other liabilities of that account. These assets may not be charged
with liabilities from any other business we conduct.
They may, however, be subject to liabilities arising from divisions of
Account B whose assets are attributable to other variable annuity contracts
supported by Account B. If the assets exceed the required reserves and other
liabilities, we may transfer the excess to our general account.
Account B was established on July 14, 1988, and may invest in mutual funds,
unit investment trusts or other investment portfolios which we determine to be
suitable for the contract's purposes. Account B is treated as a unit
investment trust under Federal securities laws. It is registered with the SEC
under the Investment Company Act of 1940 (the "1940 Act") as an investment
company. It is governed by the laws of Delaware, our state of domicile, and
may also be governed by the laws of other states in which we do business.
Registration with the SEC does not involve any supervision by the SEC of the
management or investment policies or practices of Account B.
14
<PAGE>
FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
ACCOUNT B DIVISIONS
Account B is divided into Divisions. The Managed Global Division was a
division of Separate Account D of Golden American until September 3, 1996
when it was converted to a division of Account B. Currently, each
Division of Account B offered under this prospectus invests in a
portfolio of the GCG Trust or the ESS Trust. DSI serves as the Manager to
each Series of the GCG Trust, and EISI serves as the Manager to each Series
of the ESS Trust. See the Trusts' prospectuses for details. The Trusts, DSI
and EISI have retained several portfolio managers to manage the assets of
each Series as indicated below. There may be restrictions on the amount of
the allocation to certain Divisions based on state laws and regulations.
The investmentobjectives of the various Series in the Trusts are described
below. There is no guarantee that any portfolio or Series will meet its
investment objectives. Meeting objectives depends on various factors,
including, in certain cases, how well the portfolio managers anticipate
changing economic and market conditions. Account B also has other
Divisions investing in other series which are not available to the
Contract described in this prospectus.
DSI and EISI provide the overall business management and administrative
services necessary for the Series' operation and provide or procure the
services and information necessary to the proper conduct of the business
of the Series. See the Trust's prospectuses for details.
DSI is responsible for providing or procuring, at DSI's expense, the
services reasonably necessary for the ordinary operation of the Series of
the GCG Trust. DSI does not bear the expense of brokerage fees and other
transactional expenses for securities or other assets (which are generally
considered part of the cost for assets), taxes (if any) paid by a Series
of the GCG Trust, interest on borrowing, fees and expenses of the
independent trustees, and extraordinary expenses, such as litigation or
indemnification expenses. See the GCG Trust prospectus for details.
Each Trust pays its respective Manager for its services a fee, payable
monthly, based on the annual rates of the average daily net assets of the
Series shown in the tables below. DSI and EISI (and not the Trusts) pay
each portfolio manager a monthly fee for managing the assets of the
Series.
THE GCG TRUST
- ------------------------------------------------------------------------------
Series Fees (based on combined assets of
the indicated groups of Series)
------ ---------------------------------
Multiple Allocation, Fully Managed, 1.00% of first $750 million;
Capital Appreciation, Rising 0.95% of next $1.250 billion;
Dividends, All-Growth, Real Estate, 0.90% of next $1.5 billion; and
Natural Resources, Value Equity, 0.85% of amount in excess of
Strategic Equity, and Small Cap $3.5 billion
Series:
Emerging Markets Series: 1.50% of average daily net
assets
Managed Global 1.25% of first $500 million;
1.05% of amount in excess of
$500 million
Limited Maturity Bond and 0.60% of first $200 million;
Liquid Asset Series: 0.55% of next $300 million; and
0.50% of amount in excess of
$500 million
- -----------------------------------------------------------------------------
The ESS Trust
- -----------------------------------------------------------------------------
Series Fees
------ ----
OTC Portfolio: 0.80% of first $300 million;
0.55% of amount in excess of
$300 million
Growth & Income Portfolio: 0.95% of first $200 million;
0.75% of amount in excess of
$200 million
- -----------------------------------------------------------------------------
15
<PAGE>
FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
The following Divisions invest in designated Series of the GCG Trust.
MULTIPLE ALLOCATION DIVISION
MULTIPLE ALLOCATION SERIES
OBJECTIVE
The highest total return, consisting of capital appreciation and current
income, consistent with the preservation of capital and elimination of
unnecessary risk.
INVESTMENTS
Investment in equity and debt securities and the use of certain sophisticated
investment strategies and techniques.
PORTFOLIO MANAGER
Zweig Advisors Inc.
FULLY MANAGED DIVISION
FULLY MANAGED SERIES
OBJECTIVE
High total investment return over the long term, consistent with the
preservation of capital and prudent investment risk.
INVESTMENTS
Invests primarily in common stocks. The Series also may invest in fixed income
securities and money market instruments to preserve its principal value during
uncertain or declining market conditions. The Series' strategy is based on the
premise that, from time to time, certain asset classes are more attractive
long term investments than others.
PORTFOLIO MANAGER
T. Rowe Price Associates, Inc.
CAPITAL APPRECIATION DIVISION
CAPITAL APPRECIATION SERIES
OBJECTIVE
Long-term capital growth.
INVESTMENTS
Invests in common stocks and preferred stock that will be allocated among
various categories of stocks referred to as "components" which consist of the
following: (i) The Growth Component -- Securities that the portfolio manager
believes have the following characteristics: stability and quality of earnings
and positive earnings momentum; dominant competitive positions; and
demonstrate above-average growth rates as compared to published S&P 500
earnings projections; and (ii) The Value Component -- Securities that the
portfolio manager regards as fundamentally undervalued, i.e., securities
selling at a discount to asset value and securities with a relatively low
price/earnings ratio. The securities eligible for this component may include
real estate stocks, such as securities of publicly-owned companies that, in
the portfolio manager's judgement, offer an optimum combination of current
dividend yield, expected dividend growth, and discount to current real estate
value.
PORTFOLIO MANAGER
Chancellor Trust Company
RISING DIVIDENDS DIVISION
RISING DIVIDENDS SERIES
OBJECTIVE
Capital appreciation, with dividend income as a secondary objective.
INVESTMENTS
Investment in equity securities of high quality companies that meet the
following four criteria: consistent dividend increases; substantial dividend
increases; reinvested profits; and an under-leveraged balance sheet.
PORTFOLIO MANAGER
Kayne, Anderson Investment Management, Inc.
ALL-GROWTH DIVISION
ALL-GROWTH SERIES
OBJECTIVE
Capital appreciation.
INVESTMENTS
Investment in securities selected for their long term growth prospects.
PORTFOLIO MANAGER
Warburg, Pincus Counsellors, Inc.
REAL ESTATE DIVISION
REAL ESTATE SERIES
OBJECTIVE
Capital appreciation, with current income as a secondary objective.
INVESTMENTS
Investment in publicly traded equity securities of companies in the real
estate industry listed on national exchanges or on the National Association of
Securities Dealers Automated Quotation System.
PORTFOLIO MANAGER
E.I.I. Realty Securities, Inc.
NATURAL RESOURCES DIVISION
NATURAL RESOURCES SERIES
OBJECTIVE
Long-term capital appreciation.
INVESTMENTS
Investment in equity and debt securities of companies engaged in the
exploration, development, production, and distribution of natural resources.
PORTFOLIO MANAGER
Van Eck Associates Corporation
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FACTS ABOUT THE COMPANY AND ACCOUNT B (CONTINUED)
VALUE EQUITY DIVISION
VALUE EQUITY SERIES
OBJECTIVE
Capital appreciation, with dividend income as a secondary objective.
INVESTMENTS
Investment primarily in equity securities of U.S. and foreign issuers which,
when purchased, meet quantitative standards believed by the Portfolio Manager
to indicate above average financial soundness and high intrinsic value
relative to price.
PORTFOLIO MANAGER
Eagle Asset Management, Inc.
EMERGING MARKETS DIVISION
EMERGING MARKETS SERIES
OBJECTIVE
Long term growth of capital.
INVESTMENTS
Investment primarily in equity securities of companies that are considered to
be in emerging market countries in the Pacific Basin and Latin America. Income
is not an objective, and any production of current income is considered
incidental to the objective of growth of capital.
PORTFOLIO MANAGER
Bankers Trust Company
MANAGED GLOBAL DIVISION
MANAGED GLOBAL SERIES
OBJECTIVE
High total investment return, consistent with a prudent regard for capital
preservation.
INVESTMENTS
Investment in a wide range of equity and debt securities and money market
instruments of both domestic and foreign issuers.
PORTFOLIO MANAGER
Warburg, Pincus Counsellors, Inc.
LIMITED MATURITY BOND DIVISION
LIMITED MATURITY BOND SERIES
OBJECTIVE
Highest current income consistent with low risk to principal and liquidity.
Also seeks to enhance its total return through capital appreciation when
market factors indicate that capital appreciation may be available without
significant risk to principal.
INVESTMENTS
Investment primarily in a diversified portfolio of limited maturity debt
securities. No individual security will at the time of purchase have a
remaining maturity longer than seven years and the dollar-weighted average
maturity of the Series will not exceed five years.
PORTFOLIO MANAGER
Equitable Investment Services, Inc.
LIQUID ASSET DIVISION
LIQUID ASSET SERIES
OBJECTIVE
High level of current income consistent with the preservation of capital and
liquidity.
INVESTMENTS
Obligations of the U.S. Government and its agencies and instrumentalities;
bank obligations; commercial paper and short-term corporate debt securities.
TERM
All issues maturing in less than one year.
PORTFOLIO MANAGER
Equitable Investment Services, Inc.
STRATEGIC EQUITY DIVISION
STRATEGIC EQUITY SERIES
OBJECTIVE
Long term capital appreciation.
INVESTMENTS
Investment primarily in equity securities based on various equity market
timing techniques. The amount of the Series' assets allocated to equities
shall vary from time to time to seek positive investment performance from
advancing equity markets and to reduce exposures to equities when risk/reward
characteristics are believed to be less attractive.
PORTFOLIO MANAGER
Zweig Advisors Inc.
SMALL CAP DIVISION
SMALL CAP SERIES
OBJECTIVE
Long term capital appreciation.
INVESTMENTS
Investment primarily in equity securities of companies that, at the time of
purchase, have a total market capitalization -- present market value per share
multiplied by the total number of shares outstanding -- of less than $1
billion.
PORTFOLIO MANAGER
Fred Alger Management, Inc.
The following Divisions invest in designated Series of the ESS Trust.
OTC DIVISION
OTC PORTFOLIO
OBJECTIVE
Long term growth of capital.
INVESTMENTS
Investment primarily in securities of companies that are traded
principally on the over-the-counter (OTC) market.
PORTFOLIO MANAGER
Massachusetts Financial Services Company
GROWTH & INCOME DIVISION
GROWTH & INCOME PORTFOLIO
OBJECTIVE
Long term total return.
INVESTMENTS
Investment primarily in equity and debt securities, focusing on small- and
mid-cap companies that offer potential appreciation, current income, or
both.
PORTFOLIO MANAGER
Robertson, Stephens & Company Investment Management, L.P.
The following Divisions invest in designated Series of the ESS Trust.
OTC DIVISION
OTC PORTFOLIO
OBJECTIVE
Long term growth of capital.
INVESTMENTS
Investment primarily in securities of companies that are traded
principally on the over-the-counter (OTC) market.
PORTFOLIO MANAGER
Massachusetts Financial Services Company
GROWTH & INCOME DIVISION
GROWTH & INCOME PORTFOLIO
OBJECTIVE
Long term total return.
INVESTMENTS
Investment primarily in equity and debt securities, focusing on small- and
mid-cap companies that offer potential appreciation, current income, or
both.
PORTFOLIO MANAGER
Robertson, Stephens & Company Investment Management, L.P.
THE GCG TRUST AND THE ESS TRUST
The GCG Trust is an open-end management investment company, more commonly
called a mutual fund. The GCG Trust's shares may also be available to
certain separate accounts funding variable life insurance policies offered
by Golden American. This is called "mixed funding."
The GCG Trust may also sell its shares to separate accounts of other
insurance companies, both affiliated and not affiliated with Golden
American. This is called "shared funding." Although we do not anticipate
any inherent difficulties arising from either mixed or shared funding, it
is theoretically possible that, due to differences in tax treatment or
other considerations, the interest of Owners of various Contracts
participating in the GCG Trust might at sometime be in conflict. After the
GCG Trust receives the requisite order from the SEC, shares of the GCG
Trust may also be sold to certain qualified pension and retirement plans.
The Board of Trustees of the GCG Trust, the GCG Trust's Manager, and we
and any other insurance companies participating in the GCG Trust are
required to monitor events to identify any material conflicts that arise
from the use of the GCG Trust for mixed and/or shared funding or between
various policy Owners and pension and retirement plans. For more
information about the risks of mixed and shared funding, please refer to
the GCG Trust prospectus.
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FACTS ABOUT THE COMPANY AND ACCOUNT B (CONTINUED)
The ESS Trust is also an open-end management investment company.
Currently, the ESS Trust's shares are not available to separate accounts
of other insurance companies except affiliated insurance companies such as
Golden American. It is anticipated that in the future the ESS Trust will
become available to separate accounts of unaffiliated companies as well as
to separate accounts funding variable life insurance policies offered by
Golden American.
You will find complete information about both the GCG Trust and the ESS
Trust, including the risks associated with each Series, in the
accompanying Trusts' prospectuses. You should read them carefully in
conjunction with this prospectus before investing. Additional copies of
the Trusts' prospectuses may be obtained by contacting our Customer
Service Center.
CHANGES WITHIN THE ACCOUNTS
We may from time to time make additional Divisions available. These
Divisions will invest in investment portfolios we find suitable for the
Contract. We also have the right to eliminate investment Divisions from
Account B, to combine two or more Divisions, or to substitute a new
portfolio for the portfolio in which a Division invests. A substitution
may become necessary if, in our judgment, a portfolio no longer suits the
purposes of the Contract. This may happen due to a change in laws or
regulations, or a change in a portfolio's investment objectives or
restrictions, or because the portfolio is no longer available for
investment, or for some other reason. In addition, we reserve the right to
transfer assets of Account B, which we determine to be associated with the
class of Contracts to which your Contract belongs, to another account. If
necessary, we will get prior approval from the insurance department of our
state of domicile before making such a substitution or transfer. We will
also get any required approval from the SEC and any other required
approvals before making such a substitution or transfer. We will notify
you as soon as practicable of any proposed changes.
When permitted by law, We reserve the right to:
(1) deregister an account under the 1940 Act;
(2) operate an account as a management company
under the 1940 Act if it is operating as a unit investment trust;
(3) operate an account as a unit investment trust
under the 1940 Act if it is operating as a managed separate account;
(4) restrict or eliminate any voting rights as to the
accounts; and
(5) combine an account with other accounts.
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FACTS ABOUT THE CONTRACT
THE OWNER
You are the owner. You are also the annuitant unless another annuitant is named
in the application or enrollment form. You have the rights and options described
in the contract. One or more persons may own the contract.
Death of an owner activates the death benefit provision. In the case of a sole
owner who dies prior to the annuity commencement date, we will pay the
beneficiary the death benefit then due. The sole owner's estate will be the
beneficiary if no beneficiary designation is in effect, or if the designated
beneficiary has predeceased the owner. In the case of a joint owner of the
contract dying prior to the annuity commencement date, we will designate the
surviving owner(s) as the beneficiary(ies). This supersedes any previous
beneficiary designation. In the case where the owner is a trust, the beneficial
owner of the trust will be treated as the owner of the contract solely for the
purpose of activating the death benefit provision. See Contracts Owned by
Non-Natural Persons.
THE ANNUITANT
The annuitant will receive the annuity benefits of the contract if living on the
annuity commencement date. If the annuitant dies before the annuity commencement
date, and a contingent annuitant has been named, the contingent annuitant
becomes the annuitant. Once named, neither the annuitant nor the contingent
annuitant, if any, may be changed at any time.
If there is no contingent annuitant when the annuitant dies prior to the annuity
commencement date, we will pay the beneficiary the death benefit then due. The
beneficiary will be as provided in the beneficiary designation then in effect.
If no beneficiary designation is in effect, or if there is no designated
beneficiary living, the owner will be the beneficiary. If the annuitant was the
sole owner and there is no beneficiary designation, the annuitant's estate will
be the beneficiary.
THE BENEFICIARY
The beneficiary is the person to whom we pay death benefit proceeds if the
annuitant (when there is no contingent annuitant) or owner dies prior to the
annuity commencement date. We pay death benefit proceeds to the primary
beneficiary. See Proceeds Payable to the Beneficiary.
If the beneficiary dies before the annuitant or owner, the death benefit
proceeds are paid to the contingent beneficiary, if any. If there is no
surviving beneficiary, we pay the death benefit proceeds to the owner (if other
than the annuitant). If the owner was the annuitant, we pay any death benefit
proceeds to the annuitant's estate.
One or more persons who must be individuals may be named as beneficiary or
contingent beneficiary. In the case of more than one beneficiary, we will assume
any death benefit proceeds are to be paid in equal shares to the surviving
beneficiaries. You may specify other than equal shares.
You have the right to change beneficiaries during the annuitant's lifetime
unless you have designated an irrevocable beneficiary. When an irrevocable
beneficiary has been designated, you and the irrevocable beneficiary must act
together to exercise the rights and options under the contract.
CHANGE OF OWNER OR BENEFICIARY
During the annuitant's lifetime and while the contract is in effect, you may
transfer ownership of the contract (if purchased in connection with a non-
qualified plan) subject to our published rules at the time of the change. You
may also change the beneficiary. To make either of these changes, you must send
us written notice of the change in a form satisfactory to us. The change will
take effect as of the day the notice is signed. The change will not affect any
payment made or action taken by us before recording the change at our Customer
Service Center. See Additional Considerations, Transfer of Annuity Contracts,
and Assignments.
AVAILABILITY OF THE CONTRACT
We can issue a contract if both the annuitant and the owner are not older than
age 85.
TYPES OF CONTRACTS
QUALIFIED CONTRACTS
The contract may be issued as an Individual Retirement Annuity or in
connection with an individual retirement account. In the latter case, the
contract will be issued without an Individual Retirement Annuity endorsement,
and the rights of the participant under the contract will be affected by the
terms and conditions of the particular individual retirement trust or
custodial
account, and by provisions of the Code and the regulations thereunder. For
example, the individual retirement trust or custodial account will impose
minimum distribution rules, which require distributions to commence not later
than April 1st of the calendar year following the calendar year in which you
attain age 70 1/2. For
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FACTS ABOUT THE CONTRACT (CONTINUED)
both Individual Retirement Annuities and individual retirement accounts, we
will only accept a $25,000 rollover contribution as the minimum initial
premium.
IF THE CONTRACT IS PURCHASED TO FUND A QUALIFIED PLAN, DISTRIBUTION MUST
COMMENCE NOT LATER THAN APRIL 1ST OF THE CALENDAR YEAR FOLLOWING THE CALENDAR
YEAR IN WHICH YOU ATTAIN AGE 70 1/2.
NON-QUALIFIED CONTRACTS
The contract may fund any non-qualified plan. Non-qualified contracts do not
qualify for any tax-favored treatment other than the benefits provided for by
annuities.
YOUR RIGHT TO SELECT OR CHANGE
CONTRACT OPTIONS
Before the annuity commencement date, you may change the annuity commencement
date, frequency of annuity payments or the annuity option by sending a written
request to the Customer Service Center. The annuitant named on the application
or enrollment form may not be changed at any time.
PREMIUMS
You purchase the contract with an initial premium. After the end of the free
look period, you may make additional premium payments. See Making Additional
Premium Payments. The minimum initial premium is $25,000 for qualified and
non-qualified contracts. In connection with qualified plans, we will only accept
rollover contributions of $25,000 or more as the initial premium. We also offer
other DVAs through other prospectuses which are contracts with different
charging structures.
We may refuse a premium payment if an initial premium or the sum of all premium
payments is more than $1,500,000. We may change the minimum initial or
additional premium requirements for certain group or sponsored arrangements. See
Group or Sponsored Arrangements.
QUALIFIED PLANS
For IRA contracts, the annual premium on behalf of any individual contract may
not exceed $2,000. Provided your spouse does not make a contribution to an
IRA, you may set up a spousal IRA even if your spouse has earned some
compensation during the year. The maximum deductible amount for a spousal IRA
program is the lesser of $2,250 or 100% of your compensation reduced by the
contribution (if any) made by you for the taxable year to your own IRA.
However, no more than $2,000 can go to either your or your spouse's IRA in any
one year. For example, $1,750 may go to your IRA and $500 to your spouse's
IRA. These maximums are not applicable if the premium is the result of a
rollover from another qualified plan.
WHERE TO MAKE PAYMENTS
Remit premium payments to our Customer Service Center. The address is shown on
the cover. We will send you a confirmation notice.
MAKING ADDITIONAL PREMIUM PAYMENTS
You may make additional premium payments after the end of the free look period.
We can accept additional premium payments until either the annuitant or owner
reaches the attained age of 85 under non-qualified plans. For qualified plans,
no contributions may be made to an IRA contract for the taxable year in which
you attain age 70 1/2 and thereafter (except for rollover contributions). The
minimum additional premium payment we will accept is $500 for a non-qualified
plan and $250 for a qualified plan.
CREDITING PREMIUM PAYMENTS
The initial premium will be accepted or rejected within two business days of
receipt by us of a completed application or enrollment form. We may retain the
initial premium for up to five days while attempting to complete an incomplete
application or enrollment form. If the application or enrollment form cannot be
made complete within five valuation days, the applicant or enrollee will be
informed of the reasons for the delay and the initial premium will be returned
immediately unless the applicant or enrollee specifically consents to our
retaining the initial premium until the application or enrollment form is made
complete. Thereafter, all premiums will be accepted on the day received.
We will accept, by agreement with broker-dealers who use wire transmittals,
transmittal of initial and additional premium payments by wire order from the
broker-dealer to the Customer Service Center. Such transmittals must be
accompanied by a simultaneous telephone facsimile transmission containing the
essential information we require to open an account and allocate the premium
payment.
Premium payments accepted via wire order and accompanying facsimile
transmissions will be invested at the value next determined following receipt.
Wire orders not accompanied by facsimile
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FACTS ABOUT THE CONTRACT (CONTINUED)
transmissions, or accompanied by facsimile transmissions which do not contain
the essential information we require to open an account and allocate the premium
payment, may be retained for a period not exceeding five business days while an
attempt is made to obtain the required facsimile transmission. If the required
facsimile transmission cannot be obtained within five business days, the
Customer Service Center will inform the broker-dealer, on behalf of the
applicant/enrollee, of the reasons for the delay and return the premium payment
immediately to the broker-dealer for return to the applicant/enrollee, unless
the applicant/enrollee specifically consents to allow us to retain the premium
payment until the required facsimile transmission is received by the Customer
Service Center.
We will issue the contract; however, until we have received and accepted at the
Customer Service Center a properly completed application or enrollment form, we
reserve the right to rescind the contract. If an application or enrollment form
is not received within ten days of receipt of the initial premium via wire
order, or if an incomplete application or enrollment form is received and cannot
be completed within ten days of receipt of the initial premium, the amount of
the initial premium, with any gain, will be returned to the broker-dealer for
return to the applicant/enrollee. In no event will less than the full amount of
the initial premium be returned to the applicant/enrollee.
On the date we receive and accept your initial or additional premium payment:
(1) We allocate the initial premium among the
divisions according to your instructions, subject to any restrictions. See
Restrictions on Allocation of Premium Payments. For additional premium
payments, the accumulation value will increase by the amount of the premium.
If we do not receive instructions from you, the increase in the accumulation
value will be allocated among the divisions in proportion to the amount of
accumulation value in each division as of the date we receive and accept the
additional premium payment.
(2) For an initial premium, we calculate the
distribution fee and any charge for premium taxes, if applicable. When an
additional premium payment is made we increase any distribution fee and any
charge for premium taxes, if applicable. These charges will be collected by
us from the contract's accumulation value. HOWEVER, WE CURRENTLY WAIVE THE
DEDUCTION OF THE CHARGE FOR PREMIUM TAXES. (See Charges and Fees, PREMIUM
TAXES).
(3) For an initial premium, we calculate the
guaranteed death benefit. When an additional premium payment is made we increase
the guaranteed death benefit.
ELECTRONIC DATA TRANSMISSION OF
APPLICATION INFORMATION
In certain states, we will also accept, by agreement with broker-dealers who
use electronic data transmissions of application information, wire
transmittals of initial premium payments from the broker-dealer to the
Customer Service Center for purchase of the contract. Contact the Customer
Service Center to find out about state availability.
Upon receipt of the electronic data and wire transmittal, we will open an
account and allocate the premium payment according to the client's
instructions. Based on the information provided, we will generate an
application or enrollment form and contract to be forwarded to the
applicant/enrollee for signature.
During the period from receipt of the initial premium until the signed
application or enrollment form is received, the owner may not execute any
financial transactions with respect to the contract unless such transactions
are requested in writing and signature guaranteed.
RESTRICTIONS ON ALLOCATION OF
PREMIUM PAYMENTS
We may require that the initial premium be allocated to the Specially Designated
Division during the free look period for initial premiums received from some
states. After the free look period, if your initial premium was allocated to the
Specially Designated Division, we will transfer the accumulation value to the
divisions you previously selected based on the index of investment experience
next computed for each division. See Measurement of Investment Experience, INDEX
OF INVESTMENT EXPERIENCE AND UNIT VALUE.
YOUR RIGHT TO REALLOCATE
You may reallocate your accumulation value among the divisions of Account B
at the end of the free look period. You are allowed five allocation changes per
contract year without charge. There will be a charge of $25 deducted from the
accumulation value for each additional allocation change. When a reallocation is
made, we redeem shares of the Series underlying the divisions you are
transferring from at their net asset value. Reinvestment is then made in shares
of the Series of the divisions you are
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FACTS ABOUT THE CONTRACT (CONTINUED)
transferring to at their net asset value. To make a reallocation change, you
must provide us with satisfactory notice at our Customer Service Center.
RESTRICTIONS ON REALLOCATIONS
Some restrictions may apply based on the free look provisions of the state
where the contract is issued. See Your Right to Cancel or Exchange Your
Contract.
DOLLAR COST AVERAGING OPTION
If you have at least $10,000 of accumulation value in the Limited Maturity Bond
Division or the Liquid Asset Division, you may choose to have a specified dollar
amount transferred from this division to other divisions in Account B on a
monthly basis. The main objective of dollar cost averaging is to attempt to
shield your investment from short term price fluctuations. Since the same dollar
amount is transferred to other divisions each month, more units are purchased in
a division if the value per unit is low and less units are purchased if the
value per unit is high.
Therefore, a lower than average value per unit may be achieved over the long
term. This plan of investing allows investors to take advantage of market
fluctuations but does not assure a profit or protect against a loss in declining
markets. See Measurement of Investment Experience, INDEX OF INVESTMENT
EXPERIENCE AND UNIT VALUE.
This dollar cost averaging option may be elected at the time the application or
enrollment form is completed or at a later date. The minimum amount that may be
transferred each month is $250. The maximum amount which may be transferred is
equal to the accumulation value in the Limited Maturity Bond Division or the
Liquid Asset Division when elected, divided by 12.
The transfer date will be the same calendar day each month as the contract date.
The dollar amount will be allocated to the divisions in which you are invested
in proportion to your accumulation value in each division unless you specify
otherwise. If, on any transfer date, the accumulation value is equal to or less
than the amount you have elected to have transferred, the entire amount will be
transferred and the option will end. You may change the transfer amount once
each contract year, or cancel this option by sending us satisfactory notice to
the Customer Service Center at least seven days before the next transfer date.
Any allocation under this option will not be included in determining if the
excess allocation charge will apply.
WHAT HAPPENS IF A DIVISION IS
NOT AVAILABLE
When a distribution is made from an investment portfolio supporting a division
of Account B in which reinvestment is not available, we will allocate the
distribution, unless you specify otherwise, to the Specially Designated
Division.
Such a distribution can occur when (a) an investment portfolio matures, or (b) a
distribution from a portfolio or division cannot be reinvested in the portfolio
or division due to the unavailability of securities for acquisition. When an
investment portfolio matures, we will notify you in writing 30 days in advance
of that date. To elect an allocation to other than the Specially Designated
Division, you must provide satisfactory notice to us at least seven days prior
to the date the portfolio matures. Such allocations are not counted as an
allocation change of the accumulation value for purposes of the number of free
allocation changes permitted. When a distribution from a portfolio or division
cannot be reinvested in the portfolio due to the unavailability of securities
for acquisition, we will notify you promptly after the allocation has occurred.
If within 30 days you allocate the accumulation value from the Specially
Designated Division to other divisions of your choice, such allocations are not
counted as an allocation change of the accumulation value for purposes of the
number of free allocation changes permitted.
YOUR ACCUMULATION VALUE
Your accumulation value is the sum of the amounts in each of the divisions in
which you are invested, and is the amount available for investment at any time.
You select the divisions to which to allocate the accumulation value. We adjust
your accumulation value on each Valuation Date to reflect the divisions'
investment performance and on each contract processing date to reflect the
removal of any charges. The accumulation value is applied to your choice of an
annuity option on the annuity commencement date. See Choosing an Income Plan.
You may choose up to sixteen divisions and allocate your accumulation value
among them in any way you choose.
ACCUMULATION VALUE IN EACH DIVISION
ON THE CONTRACT DATE
On the contract date, the accumulation value is allocated to each division as
specified on the
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FACTS ABOUT THE CONTRACT (CONTINUED)
application or enrollment form, unless the contract is issued in a state that
requires the return of premium payments during the free look period, in which
case, your initial premium will be allocated to the Specially Designated
Division during the free look period. See Your Right to Cancel or Exchange
Your Contract.
ON EACH VALUATION DATE
At the end of each subsequent valuation period, the amount of accumulation
value in each division will be calculated as follows:
(1) We take the accumulation value in the
division at the end of the preceding valuation period.
(2) We multiply (1) by the division's net rate of
return for the current valuation period.
(3) We add (1) and (2).
(4) We add to (3) any additional premium
payments allocated to the division during the current valuation period.
(5) We add or subtract allocations to or from
that division during the current valuation period.
(6) We subtract from (5) any partial withdrawals
and any associated charges allocated to that division during the current
valuation period.
(7) We subtract from (6) the amounts allocated
to that division for:
(a) any contract fees; and
(b) any distribution fee and any charge for
premium taxes. HOWEVER, WE CURRENTLY WAIVE THE DEDUCTION OF THE CHARGE
FOR PREMIUM TAXES. (See Charges and Fees, PREMIUM TAXES.)
All amounts in (7) are allocated to each division in the proportion that (6)
bears to the accumulation value, unless the Charge Deduction Division has been
specified.
MEASUREMENT OF INVESTMENT EXPERIENCE
INDEX OF INVESTMENT EXPERIENCE
AND UNIT VALUE
The investment experience of a division is deter-
mined on each valuation date. We use an index to measure changes in each
division's experience during a valuation period. We set the index at $10 when
the first investments in a division are made. The index for a current
valuation period equals the index for the preceding valuation period
multiplied by the experience factor for the current valuation period.
We may express the value of amounts allocated to the divisions in terms of
units. We determine the number of units for a given amount on a valuation date
by dividing the dollar value of that amount by the index of investment
experience for that date. The index of investment experience is equal to the
value of a unit.
HOW WE DETERMINE THE EXPERIENCE FACTOR
For divisions of Account B the experience factor reflects the investment
experience of the Series in which a division invests as well as the charges
assessed against the division for a valuation period. The factor is calculated
as follows:
(1) We take the net asset value of the portfolio
in which the division invests at the end of the current valuation period.
(2) We add to (1) the amount of any dividend or
capital gains distribution declared for the investment portfolio and
reinvested in such portfolio during the current valuation period. We
subtract from that amount a charge for our taxes, if any.
(3) We divide (2) by the net asset value of the
portfolio at the end of the preceding valuation period.
(4) We subtract the daily mortality and expense
risk charge from each division for each day in the valuation period.
(5) We subtract the daily asset based
administrative charge from each division for each day in the valuation period.
Calculations for divisions investing in a Series are made on a per share
basis.
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NET RATE OF RETURN FOR A DIVISION
OF ACCOUNT B
The net rate of return for a division during a valuation period is the
experience factor for that valuation period minus one.
CASH SURRENDER VALUE
Your contract's cash surrender value fluctuates daily with the investment
results of the divisions you have selected. We do not guarantee any minimum. On
any date before the annuity commencement date while the contract is in effect,
the cash surrender value is calculated as follows:
(1) We take the contract's accumulation value;
(2) We deduct any incurred distribution fee and
any unrecovered charge for premium taxes. (See Charges and Fees, PREMIUM
TAXES);
(3) We deduct any charges incurred but not yet
deducted.
SURRENDERING TO RECEIVE THE
CASH SURRENDER VALUE
The contract may be surrendered by the owner at any time while the annuitant is
living and before the annuity commencement date.
A surrender will be effective on the date your written request and the contract
are received by us at our Customer Service Center and the cash surrender value
is determined accordingly as of that date. All benefits under the contract will
then be terminated as of that date. You may receive the cash surrender value in
a single sum payment or apply it under one or more annuity options. See The
Annuity Options. We will usually pay the cash surrender value within seven days
but we may delay payment as described in the When We Make Payments provision.
PARTIAL WITHDRAWALS
Prior to the annuity commencement date, while the annuitant is living and the
contract is in effect, you may take partial withdrawals from the accumulation
value by sending satisfactory notice to the Customer Service Center. Unless you
specify otherwise, the amount of the withdrawal will be taken in proportion to
the amount of accumulation value in each division in which you are invested.
There are three options available for selecting partial withdrawals, the
Conventional Partial Withdrawal Option, the Systematic Partial Withdrawal Option
and the IRA Partial Withdrawal Option. All three options are described below.
Partial withdrawals may not be repaid.
CONVENTIONAL PARTIAL WITHDRAWAL OPTION
After the free look period, you may take a conventional partial withdrawal
once each contract year without charge. If you take more than one conventional
partial withdrawal in a contract year, we impose a charge of the lesser of $25
and 2.0% of the amount withdrawn. The minimum amount you may withdraw under
this option is $1,000. In no event may a conventional partial withdrawal or a
combination of a conventional partial withdrawal and systematic partial
withdrawals received or expected to be received during the contract year,
exceed 25% of the accumulation value as of the date of the current withdrawal.
Also, in no event may a combination of a conventional partial withdrawal and
IRA partial withdrawals received or expected to be received during a contract
year, exceed 25% of the accumulation value as of the date of the conventional
partial withdrawal.
SYSTEMATIC PARTIAL WITHDRAWAL OPTION
This option may be elected at the time the application or enrollment form is
completed, or at a later date. This option may be elected to commence in a
contract year where a conventional partial withdrawal has been taken. However,
it may not be elected while the IRA partial withdrawal option is in effect.
You may choose to receive systematic partial withdrawals on a monthly or
quarterly basis from the accumulation value in the divisions of Account B.
The commencement of payments under this option may not be elected to start
sooner than 28 days after the contract issue date. You
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FACTS ABOUT THE CONTRACT (CONTINUED)
select the date of the quarter or month when the withdrawals will be made but
no later than the 28th day of the month. If no date is selected, the
withdrawals will be made on the same calendar day of each month as the
contract date. You may select a dollar amount or a percentage of the
accumulation value as the amount of your withdrawal subject to the following
maximums, but in no event can a payment be less than $100:
<TABLE>
<CAPTION>
FREQUENCY MAXIMUM PERCENTAGE
- ------------ -------------------------
<S> <C>
Monthly..... 1.25 %
Quarterly... 3.75 %
</TABLE>
If a dollar amount is selected and the amount to be systematically withdrawn
would exceed the applicable maximum percentage of the accumulation value on
the withdrawal date, the amount withdrawn will be reduced so that it equals
such percentage. For example, if a $2,500 monthly withdrawal was elected and
on the withdrawal date 1.25% of the accumulation value equaled $1,500, the
withdrawal amount would be reduced to $1,500. If a percentage is selected and
the amount to be systematically withdrawn based on that percentage would be
less than the minimum of $100, we would increase the amount to $100 provided
it does not exceed the maximum percentage. If it is below the maximum
percentage we will send the minimum. If it is above the maximum percentage we
will send the amount and then cancel the option. For example, if you selected
1.0% to be systematically withdrawn on a monthly basis and that amount equaled
$90, and since $100 is less than 1.25% of the accumulation value, we would
send $100. If 1.0% equaled $75, since $100 is more than 1.25% of the
accumulation value we would send $75 and then cancel the option. In such a
case, in order to receive systematic partial withdrawals in the future, you
would be required to submit a new notice to our Customer Service Center.
You may change the amount or percentage of your withdrawal once each contract
year or cancel this option at any time by sending satisfactory notice to us at
our Customer Service Center at least seven days prior to the next scheduled
withdrawal date. However, you may not change the amount or percentage of your
withdrawals in any contract year during which you have previously taken a
conventional partial withdrawal.
In no event may a systematic partial withdrawal or a combination of a
conventional partial withdrawal and systematic partial withdrawals received or
expected to be received during the contract year, exceed 25% of the
accumulation value as of the date of the current withdrawal.
IRA PARTIAL WITHDRAWAL OPTION
If you have an IRA contract and will attain age 70 1/2 in the current calendar
year, distributions will be made to you to satisfy requirements imposed by
Federal tax law. IRA partial withdrawals provide payout of amounts required to
be distributed by the Internal Revenue Service rules governing mandatory
distributions under qualified plans. See Federal Tax Considerations, Taxation
of Individual Retirement Annuities. We will send you a notice before your
distributions must commence, and you may elect this option at that time, or at
a later date. You may not elect IRA partial withdrawals while the systematic
partial withdrawal option is in effect. If you do not elect the IRA partial
withdrawal option, and distributions are required by Federal tax law,
distributions adequate to satisfy the requirements imposed by Federal tax law
will be made. Thus, if the systematic partial withdrawal option is in effect,
distribution under that option must be adequate to satisfy the mandatory
distribution rules imposed by Federal tax law.
You may choose to receive IRA partial withdrawals on a monthly, quarterly or
annual frequency. You select the day of the month when the withdrawals will be
made, but it cannot be later than the 28th day of the month. If no date is
selected, the withdrawals will be made on the same calendar day of the month
as the contract date.
We will determine the amount that is required to be withdrawn from your
contract each year based on the information you give us and various choices
you make. For information regarding the calculation and choices you have to
make, see the Statement of Additional Information. The minimum dollar amount
you can withdraw is $100. At the time we determine the required partial
withdrawal amount for a taxable year based on the frequency you select, if
that amount is less than $100, we will pay $100. At any time where the partial
withdrawal amount is greater than the accumulation value, we will cancel the
contract and send you the amount of the cash surrender value.
You may change the payment frequency of your withdrawals once each contract
year or cancel
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<PAGE>
FACTS ABOUT THE CONTRACT (CONTINUED)
this option at any time by sending us satisfactory notice to our Customer
Service Center at least seven days prior to the next scheduled withdrawal
date.
PARTIAL WITHDRAWALS IN GENERAL
CONSULT YOUR TAX ADVISOR REGARDING THE TAX CONSEQUENCES ASSOCIATED WITH TAKING
PARTIAL WITHDRAWALS. A partial withdrawal made before the taxpayer reaches age
59 1/2 may result in imposition of a tax penalty of 10% of the taxable portion
withdrawn. Please refer to Federal Tax Considerations for more details.
PROCEEDS PAYABLE TO THE BENEFICIARY
If either the annuitant (when there is no contingent annuitant) or owner dies
prior to the annuity commencement date, we will pay the beneficiary the death
benefit proceeds under the contract. Such amount may be received in a single sum
or applied to any of the annuity options. See The Annuity Options. If we do not
receive a request to apply the death benefit proceeds to an annuity option, a
single sum distribution will be made. We may reduce the death benefit proceeds
payable under certain group or sponsored arrangements. See Group or
Sponsored Arrangements.
If the annuitant and owner are both age 75 or younger at issue the death benefit
is the greater of the accumulation value and the guaranteed death benefit.
MAXIMUM GUARANTEED DEATH BENEFIT
This amount is calculated as follows:
(1) We determine the total premiums paid;
(2) We multiply (1) by two;
(3) We determine the total partial withdrawals
taken; and
(4) We subtract (3) from (2).
GUARANTEED DEATH BENEFIT
On the contract date the guaranteed death benefit is equal to the initial
premium. On subsequent valuation dates, the guaranteed death benefit is
calculated as follows:
(1) We take the guaranteed death benefit from
the prior valuation date;
(2) We calculate interest on (1) for the current
valuation period at an annual rate of 7% (THE GUARANTEED DEATH BENEFIT
INTEREST RATE), except that with respect to amounts in the Liquid Asset
Division, the interest rate applied to such amounts will be the net rate
of return for the Liquid Asset Division during the current valuation
period, if it is less than 7%;
(3) We add (1) and (2);
(4) We add to (3) any additional premiums paid
during the current valuation period; and,
(5) We subtract from (4) any partial withdrawals
made during the current valuation period.
If (5) is greater than the maximum guaranteed death benefit, we will pay the
maximum guaranteed death benefit.
If the annuitant or owner is age 76 or older at issue, the death benefit is
the greater of:
(1) The cash surrender value; and
(2) The sum of the premiums paid, less any
partial withdrawals.
HOW TO CLAIM PAYMENTS TO BENEFICIARY
We must receive due proof of the death of the annuitant or owner (such as an
official death certificate) at our Customer Service Center before we will make
any payments to the beneficiary. We will calculate the death benefit as of the
date we receive due proof of death. The beneficiary should contact our
Customer Service Center for instructions.
REPORTS TO OWNERS
We will send you a report once each contract quarter within 31 days after the
end of each contract quarter. The report will show the accumulation value, the
cash surrender value, and the death benefit as of the end of the contract
quarter.
The report will also show the allocation of the accumulation value as of such
date and the amounts deducted from or added to the accumulation value since the
last report. The report will also include any other information that may be
currently required by the insurance supervisory official of the jurisdiction in
which the contract is delivered.
We will also send you copies of any shareholder reports of the portfolios or
securities in which Account B invests, as well as any other reports, notices
or documents required by law to be furnished to contract owners.
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<PAGE>
FACTS ABOUT THE CONTRACT (CONTINUED)
WHEN WE MAKE PAYMENTS
We will pay death benefit proceeds and the cash surrender value within seven
days after our Customer Service Center receives all the information needed to
process the payment.
However, we may delay payment of amounts derived from the divisions if it is not
practical for us to value or dispose of shares of Account B because:
(1) The NYSE is closed for trading;
(2) The SEC determines that a state of emergency
exists;
(3) An order or pronouncement of the SEC permits
a delay for the protection of contract owners; or,
(4) The check used to pay the premium has not
cleared through the banking system. This may take up to 15 days.
During such times, as to amounts allocated to the divisions, we may delay:
(1) Determination and payment of any cash
surrender value;
(2) Determination and payment of any death
benefit if death occurs before the annuity commencement date;
(3) Allocation changes of the accumulation value;
or,
(4) Application under an annuity option of the
accumulation value.
CHARGES AND FEES
CHARGE DEDUCTION DIVISION
You may specify on the application or enrollment form if you wish to use the
Charge Deduction Division Option. If you so specify, all charges against the
accumulation value will be deducted from the Liquid Asset Division. If the
amount of the charge is greater than the amount in the division, the charge will
be deducted proportionately from all the divisions in which you are invested.
You may also choose to elect or cancel this option while the contract is in
force by sending us satisfactory notice to our Customer Service Center. If you
do not elect this option, the charges will be deducted proportionately from all
the divisions in which you are invested.
CHARGES DEDUCTED FROM THE
ACCUMULATION VALUE
We invest the entire amount of the initial and any additional premium payments
in the divisions you select, subject to certain restrictions. See Restrictions
on Allocation of Premium Payments. We then periodically deduct certain amounts
from your accumulation value. We may reduce certain fees and charges, including
any distribution fees, surrender, administration, and mortality and expense risk
charges, under group or sponsored arrangements. See Group or Sponsored
Arrangements. Charges are deducted proportionately from all divisions in which
you are invested, unless you have elected the Charge Deduction Division. The
charges we deduct are:
DISTRIBUTION FEE
We deduct a sales load in an annual amount of 0.65% of each premium. This
charge is incurred at the beginning of each contract processing period and
deducted at the end of each contract processing period (or at the time of
surrender if surrendered before the end of a contract processing period) for a
period of ten years from the date we receive and accept each premium payment.
We also offer a DVA through another prospectus, which is a contract with a
different charging structure.
PREMIUM TAXES
We make a charge for state and local premium taxes in certain states which can
range from 0% to 3.5% of premium. The charge depends on the annuitant's state
of residence. We reserve the right to change this amount to conform with
changes in the law or if the annuitant or owner changes state of residence, as
applicable.
Premium taxes are generally incurred on the annuity commencement date and a
charge for such premium taxes is then deducted from your accumulation value on
such date. However, some jurisdictions impose a premium tax at the time the
initial and additional premiums are paid, regardless of the annuity
commencement date. In those states we initially advance the amount of the
charge for premium taxes to your accumulation value and then deduct it in
equal installments on each contract processing date over a six year period,as
applicable.
Currently, in those states where we advance the charge for premium taxes, we
will waive the deduction of the applicable installments of the charge for
premium taxes on each contract processing date. However, we will deduct the
27
<PAGE>
CHARGES AND FEES (CONTINUED)
unrecovered charge for premium taxes (not including installments which were
waived) when determining the cash surrender value payable if you surrender
your contract. We reserve the right to deduct the total amount of the charge
for premium taxes previously waived and unrecovered on the annuity
commencement date.
In those cases when we advance the charge for premium taxes, since the charge
for premium taxes is advanced to the accumulation value, a positive net rate
of return will give a higher cash surrender value and a negative net rate of
return will give a lower cash surrender value than would be the case had the
charge for premium taxes been deducted from your premium payment.
EXCESS ALLOCATION CHARGE
We allow you five free allocation changes between divisions per contract year.
For each additional allocation change, we will charge you $25 at the time each
allocation change is processed. This amount represents the maximum we will
charge. The charge is deducted from the division(s) from which each such
reallocation is made in proportion to the amount being transferred from each
such division unless you have chosen to use the Charge Deduction Division. The
excess allocation charge is set at a level that is not designed to produce
profit for Golden American or any affiliate. Any allocation(s) or transfer(s)
due to the election of the Dollar Cost Averaging Option and reallocation under
the provision What Happens if a Division is Not Available will not be included
in determining if the excess allocation charge should apply.
PARTIAL WITHDRAWAL CHARGE
If you take more than one conventional partial withdrawal during a contract
year, we impose a charge of the lesser of $25 and 2.0% of the amount withdrawn
for each additional conventional partial withdrawal. The charge is deducted
from the division(s) from which each such partial withdrawal is made in
proportion to the amount being withdrawn from each division unless you have
chosen to use the Charge Deduction Division. See Partial Withdrawals,
CONVENTIONAL PARTIAL WITHDRAWAL OPTION.
CHARGES DEDUCTED FROM THE DIVISIONS
Mortality and Expense Risk Charge The daily charge is at the rate of 0.003446%
(equivalent to an annual rate of 1.25%) on the assets in each division.
Approximately 0.60% of this annual charge is allocated to the mortality risk and
0.65% is allocated to the expense risk.
This charge will compensate us for mortality and expense risks we assume
under the contract. We will realize a gain from this charge to the extent it
is not needed to provide for benefits and expenses under the contract. We
will use any gain for any lawful purpose including any shortfalls on paying
distribution expenses.
The mortality risk assumed is the risk that annuitants as a group will live
for a longer time than our actuarial tables predict. As a result, we would
be paying more in annuity income than we planned. Golden American also
assumes a risk under the contract for paying a guaranteed death benefit.
The expense risk assumed is the risk that it will cost us more to issue and
administer the contract than we expect.
ASSET BASED ADMINISTRATIVE CHARGE
We will deduct a daily charge from the assets in each division of the
Accounts, to compensate Golden American for administrative expenses under the
contract. The daily charge is at a rate of 0.000276% (equivalent to an annual
rate of 0.10%) on the assets in each division.
This asset based administrative charge will not exceed the cost of the
services to be provided over the life of the contract.
TRUST EXPENSES
There are fees and charges deducted from each Series of the GCG Trust and the
ESS Trust. Please read the respective Trust prospectus for details.
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CHARGES AND FEES (CONTINUED)
CHOOSING AN INCOME PLAN
THE INCOME PLAN
If the annuitant and owner are living on the annuity commencement date, we will
begin making payments to the annuitant under an income plan. We will make these
payments under the annuity option chosen in the application or enrollment form
or as subsequently changed. You may change an annuity option by making a written
request to us at least 30 days prior to the annuity commencement date of the
contract. The amount of the payments will be determined by applying the
accumulation value on the annuity commencement date in accordance with The
Annuity Options section below. See When We Make Payments.
You may also elect an annuity option on surrender of the contract for its cash
surrender value or, you may choose one or more annuity options for the payment
of death benefit proceeds while it is in effect and before the annuity
commencement date. If, at the time of the annuitant's or owner's death, no
option has been chosen for paying death benefit proceeds, the beneficiary may
choose an option within one year.
The minimum monthly annuity income payment that we will make is $20. We may
require that a single sum payment be made if the accumulation value is less than
$2,000 or if the calculated monthly annuity income payment is less than $20. For
each option we will issue a separate written agreement putting the option into
effect. Before we pay any annuity benefits, we require the return of the
contract. If your contract has been lost, we will require that you complete and
return the applicable lost contract form. Various factors will affect the level
of annuity benefits including the annuity option chosen, the assumed interest
rate used and the investment results of the division(s) in which the
accumulation value has been invested.
Fixed annuity payments are regular payments, the amount of which is fixed and
guaranteed by us. The amount of the payments will depend only on the form and
duration of payments chosen, the age of the annuitant or beneficiary (and sex,
where appropriate), the total accumulation value applied to purchase the fixed
option, and the applicable payment rate.
Our approval is needed for any option where:
(1) The person named to receive payment is other
than the owner or beneficiary;
(2) The person named is not a natural person,
such as a corporation; or
(3) Any income payment would be less than the
minimum annuity income payment allowed.
ANNUITY COMMENCEMENT DATE SELECTION
You select the annuity commencement date in the application or enrollment form.
You may select any date following the third contract anniversary but before the
contract processing date in the month following the annuitant's 90th birthday.
If you do not select a date, the annuity commencement date will be in the month
following the annuitant's 90th birthday. However, in the state of Pennsylvania
the annuity commencement date may not be later than in the month following the
annuitant's 85th birthday for annuitants with an issue age of 80 and under. If
the annuity commencement date occurs when the annuitant is at an advanced age,
such as over age 85, it is possible that the contract will not be considered an
annuity for Federal tax purposes. See Federal Tax Considerations. For a contract
purchased in connection with a qualified plan, distribution must commence not
later than April 1st of the calendar year following the calendar year in which
you attain age 70 1/2. Consult your tax advisor.
FREQUENCY SELECTION
You choose the frequency of the annuity payments. They may be monthly,
quarterly, semi-annually or annually. If we do not receive written notice from
you, the payments will be made monthly. There may be certain restrictions on
minimum payments that we will allow.
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<PAGE>
CHOOSING AN INCOME PLAN (CONTINUED)
THE ANNUITY OPTIONS
There are four options to choose from as shown below. Options 1 through 3 are
fixed and option 4 is variable. For a fixed option, the accumulation value is
transferred to the general account.
OPTION 1. INCOME FOR A FIXED PERIOD
Payment is made in equal installments for a fixed number of years based on the
accumulation value as of the annuity commencement date. We guarantee that each
monthly payment will be at least the amount set forth in the contract.
Guaranteed amounts for annual, semi-annual and quarterly payments are
available upon request. Illustrations are available upon request. If the cash
surrender value or accumulation value is applied under this option, a 10%
penalty tax may apply to the taxable portion of each income payment until the
annuitant reaches age 59 1/2.
OPTION 2. INCOME FOR LIFE
Payment is made in equal monthly installments and guaranteed for at least a
period certain. The period certain can be 10 or 20 years. Other periods
certain are available on request. A refund certain may be chosen instead.
Under this arrangement, income is guaranteed until payments equal the amount
applied. If the person named lives beyond the guaranteed period, payments
continue until his or her death.
WE GUARANTEE THAT EACH PAYMENT WILL BE AT LEAST THE AMOUNT SET FORTH IN THE
CONTRACT CORRESPONDING TO THE PERSON'S AGE ON HIS OR HER LAST BIRTHDAY BEFORE
THE OPTION'S EFFECTIVE DATE. AMOUNTS FOR AGES NOT SHOWN IN THE CONTRACT ARE
AVAILABLE UPON REQUEST.
OPTION 3. JOINT LIFE INCOME
This option is available if there are two persons named to receive payments.
At least one of the persons named must be either the owner or beneficiary of
the contract. Monthly payments are guaranteed and are made as long as at least
one of the named persons is living. There is no minimum number of payments.
Monthly payment amounts are available upon request.
OPTION 4. ANNUITY PLAN
An amount can be used to buy any single premium annuity we offer on the
option's effective date.
PAYMENT WHEN NAMED PERSON DIES
When the person named to receive payment dies, we will pay any amounts still due
as provided by the option agreement. The amounts still due are determined as
follows:
(1) For options 1, 2, or any remaining guaranteed
payments, payments will be continued. Under options 1 and 2, the discounted
values of the remaining guaranteed payments may be paid in a single sum.
This means we deduct the amount of the interest each remaining guaranteed
payment would have earned had it not been paid out early. The discount
interest rate is 3% for option 1 and 3.50% for option 2 per year. We will
however, base the discount interest rate on the interest rate used to
calculate the payments for options 1 and 2 if such payments were not based
on the tables in the contract.
(2) For option 3, no amounts are payable after
both named persons have died.
(3) For option 4, the annuity agreement will state
the amount due, if any.
OTHER INFORMATION
OTHER CONTRACT PROVISIONS
IN CASE OF ERRORS ON THE APPLICATION OR ENROLLMENT FORM
If an age or sex given in the application or enrollment form is misstated, the
amounts payable or benefits provided by the contract shall be those that the
premium payment would have bought at the correct age or sex.
SENDING NOTICE TO US
Any written notices, inquiries or requests should be sent to our Customer
Service Center. Please include your name, your contract number and, if you are
not the annuitant, the name of the annuitant.
ASSIGNING THE CONTRACT AS COLLATERAL
You may assign a non-qualified contract as collateral security for a loan or
other obligation. This does not change the ownership. However, your rights and
any beneficiary's rights are subject to the terms of the assignment. See
Additional Considerations, Transfer of Annuity Contracts, and Assignments. An
assignment may have Federal tax consequences. See Federal Tax Considerations.
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OTHER INFORMATION (CONTINUED)
You must give us satisfactory written notice at our Customer Service Center in
order to make or release an assignment. We are not responsible for the validity
of any assignment.
NON-PARTICIPATING
The contract does not participate in the divisible surplus of Golden American.
AUTHORITY TO MAKE AGREEMENTS
All agreements made by us must be signed by our president or a vice president
and by our secretary or an assistant secretary. No other person, including an
insurance agent or broker, can change any of the contract's terms, make any
agreements binding on us or extend the time for premium payments.
CONTRACT CHANGES -- APPLICABLE TAX LAW
We reserve the right to make changes in the contract to the extent we deem it
necessary to continue to qualify the contract as an annuity. Any such changes
will apply uniformly to all contracts that are affected. You will be given
advance written notice of such changes.
YOUR RIGHT TO CANCEL OR
EXCHANGE YOUR CONTRACT
CANCELLING YOUR CONTRACT
You may cancel your contract within your free look period, which is ten days
after you receive your contract. For purposes of administering our allocation
and administrative rules, we deem this period to expire 15 days after the
contract is mailed to you. Some states may require a longer free look period.
If you decide to cancel, you may mail or deliver the contract to us at our
Customer Service Center. We will refund the accumulation value plus any
charges we deducted, and the contract will be voided as of the date we receive
the contract and your request. Some states require that we return the premium
paid. In these states, we require that your premium be allocated to the
Specially Designated Division during the free look period. If you exercise
your right to cancel, we will return the greater of (a) the premium invested
and (b) the accumulation value of your contract plus any amounts deducted
under the contract or by the Trust for taxes, charges or fees. If you do not
choose to exercise your right to cancel during the free look period, then at
the end of the free look period your money will be invested in the division(s)
chosen by you, based on the index of investment experience next computed for
each division. See Measurement of Investment Experience, INDEX OF EXPERIENCE
AND UNIT VALUE.
EXCHANGING YOUR CONTRACT
For information regarding Section1035 exchanges, see Federal Tax
Considerations.
OTHER CONTRACT CHANGES
You may change the contract to another annuity plan subject to our rules at the
time of the change.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce any distribution fee,
surrender, administration, and mortality and expense risk charges. We may also
change the minimum initial and additional premium requirements, or reduce the
death benefit proceeds payable. Group arrangements include those in which a
trustee or an employer, for example, purchases contracts covering a group of
individuals on a group basis. Sponsored arrangements include those in which an
employer allows us to sell contracts to its employees on an individual basis.
Our costs for sales, administration, and mortality generally vary with the size
and stability of the group among other factors. We take all these factors into
account when reducing charges. To qualify for reduced charges, a group or
sponsored arrangement must meet certain requirements, including our requirements
for size and number of years in existence. Group or sponsored arrangements that
have been set up solely to buy contracts or that have been in existence less
than six months will not qualify for reduced charges.
We will make these and any similar reductions according to our rules in effect
when an application or enrollment form for a contract is approved. We may change
these rules from time to time. Any variation in the distribution fee will
reflect differences in costs or services and will not be unfairly
discriminatory.
SELLING THE CONTRACT
DSI is also principal underwriter and distributor of the contract as well as for
other contracts issued through Account B and other separate accounts of
Golden American. We pay DSI for acting as principal underwriter under a
distribution agreement. The offering of the contract will be continuous.
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OTHER INFORMATION (CONTINUED)
DSI has entered into and will continue to enter into sales agreements with
broker-dealers to solicit for the sale of the contract through registered
representatives who are licensed to sell securities and variable insurance
products including variable annuities. These agreements provide that
applications for contracts may be solicited by registered representatives of the
broker-dealers appointed by Golden American to sell its variable life insurance
and variable annuities. These broker-dealers are registered with the SEC and are
members of the National Association of Securities Dealers, Inc. ("NASD"). The
registered representatives are authorized under applicable state regulations to
sell variable life insurance and variable annuities. The writing agent will
receive commissions of up to 0.75% of average annual contract assets per year
over the life of the contract.
REINSURANCE
Golden American reinsures its mortality risk associated with the contract's
guaranteed death benefit with one or more appropriately licensed insurance
companies. Golden American also, effective June 1, 1994, entered into a
reinsurance agreement on a modified coinsurance basis with an affiliate of a
broker-dealer which distributes Golden American's products with respect to 25%
of the business produced by that broker-dealer.
REGULATORY INFORMATION
VOTING RIGHTS
ACCOUNT B
We will vote the shares of the Trusts owned by Account B according to your
instructions. However, if the Investment Company Act of 1940 or any related
regulations should change, or if interpretations of it or related regulations
should change, and we decide that we are permitted to vote the shares of the
Trusts in our own right, we may decide to do so.
We determine the number of shares that you have in a division by dividing the
contract's accumulation value in that division by the net asset value of one
share of the portfolio in which a division invests. Fractional votes will be
counted. We will determine the number of shares you can instruct us to vote
180 days or less before a Trust's meeting. We will ask you for voting
instructions by mail at least 10 days before the meeting.
If we do not get your instructions in time, we will vote the shares in the
same proportion as the instructions received from all contracts in that
division. We will also vote shares we hold in Account B which are not
attributable to owners in the same proportion.
STATE REGULATION
We are regulated and supervised by the Insurance Department of the State of
Delaware, which periodically examines our financial condition and operations. We
are also subject to the insurance laws and regulations of all jurisdictions
where we do business. The variable contract offered by this prospectus has been
approved by the Insurance Department of the State of Delaware and by the
Insurance Departments of other jurisdictions.
We are required to submit annual statements of our operations, including
financial statements, to the
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REGULATORY INFORMATION (CONTINUED)
Insurance Departments of the various jurisdictions in which we do business to
determine solvency and compliance with state insurance laws and regulations.
LEGAL PROCEEDINGS
Golden American, as an insurance company, is ordinarily involved in litigation.
We do not believe that any current litigation is material and we do not expect
to incur significant losses from such actions.
LEGAL MATTERS
The legal validity of the contract described in this prospectus has been passed
on by Myles R. Tashman, Executive Vice President and Secretary of Golden
American. Sutherland, Asbill & Brennan of Washington, D.C. has provided advice
on certain matters relating to Federal securities laws.
EXPERTS
The financial statements of Golden American Life Insurance Company, Separate
Account B and The Managed Global Account of Separate Account D, appearing in the
Statement of Additional Information and in the Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon appearing in the Statement of Additional Information and in the
Registration Statement and are included in reliance upon such reports given upon
the authority of such firm as experts in accounting and auditing.
FEDERAL TAX CONSIDERATIONS
INTRODUCTION
The contract is designed for use by individuals or groups in retirement plans
which are qualified under Section 408 or non-qualified under the provisions of
the Internal Revenue Code of 1986, as amended (the "Code"). The ultimate effect
of Federal income taxes on the amounts paid for the contract, on the investment
return on assets held under the contract, on annuity payments and on the
economic benefits to the owner, annuitant or beneficiary depends upon the terms
of the contract, upon Golden American's tax status and upon the tax status of
the individuals concerned.
The following discussion is general in nature and is not intended as tax advice.
Each person concerned should consult a competent tax advisor. No attempt is made
to consider any applicable state or other tax laws. Moreover, the discussion is
based upon Golden American's understanding of the Federal income tax laws as
they are currently interpreted. No representation is made regarding the
likelihood of continuation of the Federal income tax laws, the Treasury
Regulations, or the current interpretations by the Internal Revenue Service (the
"IRS"). For a discussion of Federal income taxes as they relate to the Trusts,
please see the accompanying prospectus for the respective Trust.
GOLDEN AMERICAN TAX STATUS
Golden American is taxed as a life insurance company under Part I of Subchapter
L of the Code. Since Account B is not a separate entity from Golden American
and its operations form a part of Golden American, it will not be taxed
separately as a "regulated investment companys" under Subchapter M of the Code.
Investment income and realized capital gains on the assets of Account B are
reinvested and taken into account in determining the accumulation value. Under
existing Federal income tax law, Golden American does not incur tax on the
Account B' investment income, including realized net capital gains. Golden
American reserves the right to make a deduction for taxes should they be imposed
with respect to such items in the future.
TAXATION OF NON-QUALIFIED ANNUITIES
1. IN GENERAL
Code Section72 generally governs the taxation of non-qualified annuities.
Under this provision, except as described below, any increase in the
contract's value is generally not taxable to the owner until a distribution is
made from the contract, either in the form of annuity payments as contemplated
by the contract, or in some other form of distribution. (For purposes of this
rule, the amount of any indebtedness that is secured by a pledge or assignment
of the contract is treated as a payment received on account of a partial
withdrawal from the contract.) However, this rule applies only if (1) the
investments of Account B are "adequately diversified" in accordance with
Treasury Department regulations, (2) Golden American, rather than the owner,
is considered the owner of the assets of Account B for Federal income tax
purposes, and (3) the owner is an individual.
DIVERSIFICATION REQUIREMENTS. Treasury Department regulations
("Regulations") issued under Code Section817 (h) prescribe the manner in
which the investments of a segregated asset account, such as Account B,
are to be
33
<PAGE>
FEDERAL TAX CONSIDERATIONS (CONTINUED)
"adequately diversified." The Regulations generally require that on the last
day of each quarter of a calendar year (i) no more than 55% of the value of
each segregated asset account is represented by any one investment; (ii) no
more than 70% is represented by any two investments; (iii) no more than 80%
is represented by any three investments; and (iv) no more than 90% is
represented by any four investments. For purposes of complying with these
requirements, all securities of the same issuer are treated as a single
investment, and each U.S. government agency or instrumentality will be
treated as a separate issuer. In addition, where a segregated asset account
invests in other regulated investment companies or certain other entities
(E.G., the divisions of Account B do), a "look-through" rule applies and, as
a result, each division of an Account must be tested for compliance with the
percentage limitations by looking through to the assets of that division.
If Account B failed to comply with these diversification standards, the
contract would not be treated as an annuity contract for Federal income tax
purposes and the owner would generally be taxable currently on the income on
the contract (as defined in the tax law) beginning with the first period of
non-diversification. Golden American expects that Account B, including
each of the divisions, will comply with the diversification requirements
prescribed by the Regulations.
OWNERSHIP TREATMENT. In certain circumstances, variable annuity contract
owners may be considered the owners, for Federal income tax purposes, of the
assets of the segregated asset account, such as Account B, used to
support their contracts. In those circumstances, income and gains from the
segregated asset account would be includible in the contract owners' gross
income. The IRS has stated in published rulings that a variable contract
owner will be considered the owner of the assets of the segregated asset
account if the owner possesses incidents of ownership in those assets, such
as the ability to exercise investment control over the assets. In addition,
the Treasury Department announced, in connection with the issuance of
regulations concerning investment diversification, that those regulations
"do not provide guidance concerning the circumstances in which investor
control of the investments of a segregated asset account may cause the
investor, rather than the insurance company, to be treated as the owner of
the assets in the account." This announcement also stated that guidance
would be issued by way of regulations or rulings on the "extent to which
policyholders may direct their investments to particular sub-accounts [of a
segregated asset account] without being treated as owners of the underlying
assets." As of the date of this prospectus, no such guidance has been
issued.
The ownership rights under the contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of the assets of a
segregated asset account. For example, the owner of this contract has the
choice of more investment options to which to allocate premium payments and
accumulation values, and may be able to transfer among investment options
more frequently, than in such rulings. In addition, the owner of this
contract has the choice of certain investment options which may be more
similar to each other in their investment objectives than in such rulings.
These differences could result in the owner being treated as the owner of a
portion of the assets of Account B. In addition, Golden American does not
know what standards will be set forth in the regulations or rulings which
the Treasury Department has stated it expects to issue. Golden American
therefore reserves the right to modify the contract as necessary to attempt
to prevent contract owners from being considered the owners of the assets of
the Account B.
Frequently, if the IRS or the Treasury Department sets forth a new position
which is adverse to taxpayers, the position is applied on a prospective
basis only. Thus, if the IRS or the Treasury Department were to issue
regulations or a ruling which treated an owner of this contract as the owner
of Account B, that treatment might apply on a prospective basis. However,
if the ruling or regulations were not considered to set forth a new
position, an owner might retroactively be determined to be the owner of the
assets of Account B.
NON-NATURAL OWNER. As a general rule, contracts held by "non-natural
persons" such as a corporation, trust or other similar entity, as opposed to
a natural person, are not treated as annuity contracts for Federal tax
purposes. The income on such contracts (as defined in the tax law) is taxed
as ordinary income that is received or accrued by the owner of the contract
34
<PAGE>
FEDERAL TAX CONSIDERATIONS (CONTINUED)
during the taxable year. There are several exceptions to this general rule
for non-natural owners. First, contracts will generally be treated as held
by a natural person if the nominal owner is a trust or other entity which
holds the contract as an agent for a natural person. However, this special
exception will not apply in the case of any employer who is the nominal
owner of a contract under a non-qualified deferred compensation arrangement
for its employees.
In addition, exceptions to the general rule for non-natural owners will
apply with respect to (1) contracts acquired by an estate of a decedent by
reason of the death of the decedent, (2) contracts issued in connection with
certain qualified plans, (3) contracts purchased by employers upon the
termination of certain qualified plans, (4) certain contracts used in
connection with structured settlement agreements, and (5) contracts
purchased with a single purchase payment when the annuity starting date is
no later than a year from purchase of the contract and substantially equal
periodic payments are made, not less frequently than annually, during the
annuity period.
In addition to the foregoing, if the contract's annuity commencement date
occurs at a time when the annuitant is at an advanced age, such as over age
85, it is possible that the owner will be taxable currently on the annual
increase in the accumulation value. The remainder of this discussion assumes
that the contract will be treated as an annuity contract for Federal income
tax purposes.
2. WITHDRAWALS PRIOR TO THE ANNUITY COMMENCEMENT DATE
Code Section72 provides that the proceeds of a total surrender of a contract
prior to the annuity commencement date will be taxed to the extent that the
amount distributed exceeds the "investment in the contract" and that any
conventional or systematic partial withdrawal from a contract prior to the
annuity commencement date will be treated as taxable income to the extent the
amount held under the contract immediately before the withdrawal occurs
exceeds the "investment in the contract." The "investment in the contract" is
defined in the Code as that portion, if any, of premium payments by or on
behalf of an individual under a contract which was not excluded from the
individual's gross income at the time of such payment less any amounts
previously received under the contract which were excluded from the
individual's gross income at the time of their receipt. The taxable portion of
any distribution received prior to the annuity commencement date will be
subject to tax at ordinary income tax rates. For purposes of this rule, a
pledge or assignment of a contract is treated as a payment received on account
of a partial withdrawal of a contract.
In the case of systematic partial withdrawals, the amount of each withdrawal
should be considered as a distribution and taxed in the same manner as a
partial withdrawal prior to the annuity commencement date, as described above.
However, there is some uncertainty regarding the tax treatment of systematic
partial withdrawals, and it is possible that additional amounts may be
includible in income.
In addition, the contract provides a death benefit that in certain
circumstances may exceed the greater of the premium payments and the
accumulation value. As described elsewhere in this prospectus, Golden American
imposes certain charges with respect to, among other things, the death
benefit. It is possible that some portion of those charges could be treated
for Federal tax purposes as a partial withdrawal from the contract.
3. ANNUITY PAYMENTS AND WITHDRAWALS ON OR AFTER THE ANNUITY COMMENCEMENT DATE
Proceeds of a total surrender of the contract after the annuity commencement
date are taxable to the extent the proceeds exceed the investment in the
contract. In addition, proceeds of a partial withdrawal after the annuity
commencement date are fully taxable. Also, a portion of each annuity payment
under the contract is taxable if the value of the contract exceeds the
investment in the contract. The taxable portion of an annuity payment will be
subject to tax at ordinary income tax rates.
For fixed annuity payments, the taxable portion of each payment is determined
by using a formula known as the "exclusion ratio," which establishes the ratio
that the investment in the contract (allocated to the fixed annuity option)
bears to the total expected amount of fixed annuity payments for the term of
the contract. That ratio is then applied to each payment to determine the
non-taxable portion of the payment. The remaining portion of each payment is
taxed at ordinary income rates.
35
<PAGE>
FEDERAL TAX CONSIDERATIONS (CONTINUED)
For variable annuity payments, in general, the taxable portion is determined
by a formula which establishes a specific dollar amount of each payment that
is not taxed. The dollar amount is determined by dividing the investment in
the contract (allocated to the variable annuity option) by the total number of
expected periodic payments. The remaining portion of each payment is taxed at
ordinary income rates.
Once the excludable portion of annuity payments to date equals the investment
in the contract, the balance of the annuity payments will be fully taxable.
If amounts have become payable under the contract (such as where the owner
elects to surrender an amount) and if the distribution-at-death rules do not
apply to such amount, the amount will be treated as a partial or full
surrender for Federal income tax purposes if applied under an annuity option
later than 60 days after the time when the amount became payable. Thus, if
such an amount is applied under an annuity option after the 60 day period, it
will be treated as a partial or full surrender, even if the full amount has
not been distributed from the contract.
4. WITHHOLDING AND REPORTING REQUIREMENTS
Golden American will withhold and remit to the U.S. government a part of the
taxable portion of each distribution made under a contract unless the taxpayer
notifies Golden American at or before the time of the distribution that he or
she elects not to have any amounts withheld. The withholding rates applicable
to the taxable portion of periodic annuity payments typically are the same as
the withholding rates generally applicable to payments of wages. In addition,
the withholding rate applicable to the taxable portion of non-periodic
payments (including surrenders prior to the annuity commencement date) is 10%.
Golden American also has tax reporting obligations with respect to
distributions from the contract.
5. PENALTY TAX ON CERTAIN WITHDRAWALS
With respect to amounts withdrawn or distributed before the taxpayer reaches
age 59 1/2, a penalty tax is imposed equal to 10% of the taxable portion of
amounts withdrawn or distributed. However, the penalty tax will not apply to
withdrawals: (i) made on or after the death of the owner, or where the owner
is not an individual, the death of the "primary annuitant" (i.e., the
individual the events in whose life are of primary importance in affecting the
timing or amount of the payout under the contract); (ii) attributable to the
taxpayer's becoming totally disabled within the meaning of Code
Section72(m)(7); (iii) which are part of a series of substantially equal
periodic payments made at least annually for the life (or life expectancy) of
the taxpayer, or the joint lives (or joint life expectancies) of the taxpayer
and his beneficiary; (iv) from a qualified plan; (v) allocable to investment
in the contract before August 14, 1982; (vi) under a qualified funding asset
(as defined in Code Section130(d)); (vii) under an immediate annuity contract,
or (viii) which are purchased by an employer on termination of certain types
of qualified plans and which are held by the employer until the employee
separates from service.
If the penalty tax does not apply to a withdrawal as a result of the
application of item (iii) above, and the series of payments is subsequently
modified (other than by reason of death or disability), the tax for the year
when the modification occurs will be increased by an amount (as determined by
regulations) equal to the tax that would have been imposed but for item (iii)
above, plus interest for the deferral period, if the modification takes place
(a) before the close of the period which is within five years of the date of
the first payment and after the taxpayer attains age 59 1/2, or (b) before the
taxpayer reaches age 59 1/2.
In the case of systematic withdrawals, it is unclear whether such withdrawals
will qualify for exception (iii) above.
TAXATION OF INDIVIDUAL RETIREMENT ANNUITIES
Code Section408 permits individuals or their employers to contribute to an
individual retirement program known as an Individual Retirement Annuity. If the
contract is used for this purpose, the owner must be the annuitant. In addition,
distributions from certain other types of qualified retirement plans may be
placed into an Individual Retirement Annuity on a tax deferred basis.
Individual Retirement Annuities are subject to limitations on the amount which
may be contributed and the time when distributions may commence. Tax penalties
may apply to contributions in excess of specified limits, loans or assignments,
distributions in excess of a specified amount annually or that do not meet
specified requirements, and in certain other circumstances.
Under the Internal Revenue Code, distributions from qualified retirement plans,
including Individual Retirement Annuities, Simplified Employee Pensions, and Tax
Sheltered Annuities, generally must
36
<PAGE>
FEDERAL TAX CONSIDERATIONS (CONTINUED)
begin not later than April 1st of the calendar year following the calendar year
in which an owner attains age 70 1/2. If the required minimum distribution is
not withdrawn, there may be a penalty tax in an amount equal to 50% of the
difference between the amount required to be withdrawn and the amount actually
withdrawn. See the Statement of Additional Information for a discussion of the
various special rules concerning the minimum distribution requirements.
If all premium payments made to an Individual Retirement Annuity were
deductible, all amounts distributed from the contract are included in the
recipient's income when distributed. However, if nondeductible premium payments
were made to the Individual Retirement Annuity (within the limits allowed by the
tax law), a portion of each distribution from the contract typically is included
in income when it is distributed. In such a case, any amount distributed as an
annuity payment or in a lump sum upon death or a full surrender is taxed as
described above in connection with such a distribution from a non-qualified
contract, treating the investment in the contract as the sum of the
non-deductible premium payments at the end of the taxable year in which the
distribution commences or is made (less any amounts previously distributed that
were excluded from income). Also in such a case, any amount distributed upon a
partial surrender is partially includible in income. The includible amount is
the excess of the distribution over the exclusion amount, which in turn equals
the distribution multiplied by the ratio of the investment in the contract to
the amount held under the contract. The amount includible in income may be
subject to a 10% penalty tax if the recipient is under age 59 1/2.
Individual Retirement Annuities generally may not provide life insurance
coverage, but they may provide a death benefit that equals the greater of the
premiums paid and the contract value. The contract provides a death benefit that
in certain circumstances may exceed the greater of the premium payments and the
accumulation value. It is possible that the death benefit could be viewed as
violating the prohibition on investment in life insurance contracts with the
result that the contract would not be viewed as satisfying the requirements of
an IRA.
Subject to certain direct rollover and mandatory withholding requirements
(discussed below), amounts generally may be "rolled over" from a qualified
retirement plan to an Individual Retirement Annuity (or from an Individual
Retirement Annuity or individual retirement account to an Individual Retirement
Annuity) without incurring tax if certain conditions are met. Only certain types
of distributions from qualified retirement plans or Individual Retirement
Annuities may be rolled over.
In the case of annuity contracts used in connection with a pension,
profit-sharing, or annuity plan qualified under Code Section401(a) or 403(a), or
in the case of a Code Section403(b) "Tax Sheltered Annuity," any "eligible
rollover distribution" from the contract will be subject to direct rollover and
mandatory withholding requirements. An eligible rollover distribution generally
is any taxable distribution from a qualified pension plan under Code
Section401(a), qualified annuity plan under Code Section403(a), or Code
Section403(b) Tax Sheltered Annuity or custodial account, excluding certain
amounts (such as minimum distributions required under Code Section401 (a) (9)
and distributions which are part of a "series of substantially equal periodic
payments" made for life or a specified period of 10 years or more. Under these
requirements, withholding at a rate of 20 percent will be imposed on any
eligible rollover distribution. In addition, the participant in these qualified
retirement plans cannot elect out of withholding with respect to an eligible
rollover distribution. However, this 20 percent withholding will not apply if,
instead of receiving the eligible rollover distribution, the participant elects
to have amounts directly transferred to certain qualified retirement plans (such
as to this contract when issued as an Individual Retirement Annuity). It is
important that you consult your tax advisor before purchasing an Individual
Retirement Annuity.
ADDITIONAL CONSIDERATIONS
DISTRIBUTION-AT-DEATH RULES
In order to be treated as an annuity contract for Federal tax purposes, a
non-qualified contract must provide the following two distribution rules: (a) if
any holder dies on or after the annuity commencement date, and before the entire
interest in the contract has been distributed, the remainder of his or her
interest will be distributed at least as quickly as under the method of
distribution in effect on the holder's death; and (b) if the holder dies before
the annuity commencement date, his or her entire interest in the contract must
generally be distributed within five years after the date of death, or to the
extent such interest is payable to a designated beneficiary, such interest must
be distributed over the life of that designated beneficiary or over a period not
extending beyond the life expectancy of that beneficiary, so long as the
distributions begin
37
<PAGE>
ADDITIONAL CONSIDERATIONS (CONTINUED)
within one year after the date of death. If the beneficiary is the surviving
spouse of the holder, the contract (together with the deferral of tax on the
accrued and future income thereunder) may be continued in the name of the
spouse. Before the annuity commencement date, the holder will generally be the
owner, and after the annuity commencement date, the holder generally may be the
annuitant and the owner.
Where the holder is not an individual, solely for the purpose of the
distribution at death rules, the primary annuitant is considered the holder. The
primary annuitant is the individual the events in the life of whom are of
primary importance in affecting the timing or amount of payment under a
contract. Finally, in the case of joint holders, the distribution will be
required at the death of the first of the holders to die.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a non-qualified contract because of the death of
an owner or annuitant. Generally, such amounts are includible in the income of
the recipient as follows: (a) if distributed in a lump sum, they are taxed in
the same manner as a full surrender of the contract, as described above, or (b)
if distributed under an annuity option, they are taxed in the same manner as
annuity payments, as described above.
TRANSFER OF ANNUITY CONTRACTS
Transfers of non-qualified annuity contracts for less than the full and adequate
consideration will trigger tax on the gain in the contract, at the time of such
transfer, with the transferee getting a step-up in basis for the amount included
in the owner's income. Such a transfer could result on the annuity commencement
date if the annuitant is not the owner or the owner's spouse. This provision
does not apply to transfers between spouses or incident to a divorce.
SECTION1035 EXCHANGES
Code Section1035 provides that no gain or loss shall be recognized on the
exchange of an annuity contract for another. If the exchanged contract was
issued prior to August 14, 1982, the tax rules which formerly provided that the
surrender was taxable only to the extent the amount received exceeds the owner's
investment in the contract, will continue to apply to the new contract. In
contrast, contracts issued on or after January 19, 1985, in a Code Section1035
exchange are treated as new contracts for purposes of the penalty tax and
distribution-at-death rules. Special rules and procedures apply to Code
Section1035 transactions. Prospective owners wishing to take advantage of Code
Section1035 should consult their tax advisors.
ASSIGNMENTS
A transfer of ownership, a collateral assignment, or the designation of an
annuitant or other beneficiary who is not also the owner may result in tax
consequences to the owner, annuitant or beneficiary that are not discussed
herein. An owner contemplating such a transfer or assignment of a contract
should contact a competent tax advisor with respect to the potential tax effects
of such a transaction.
MULTIPLE CONTRACTS RULE
For purposes of determining the amount of any distribution under Code
Section72(e) (amounts not received as annuities) that is includible in gross
income, all non-qualified deferred annuity contracts issued by the same (or
affiliate) insurer to the same owner during any calendar year are to be
aggregated and treated as one contract. Thus, any amount received under any such
contract prior to the contract's annuity starting date (as defined in the tax
law), such as a partial surrender, dividend, or loan, will be taxable (and
possibly subject to the 10% penalty tax) to the extent of the combined income in
all such contracts. The Treasury Department has specific authority to issue
regulations that prevent the avoidance of Section72(e) through the serial
purchase of annuity contracts or otherwise. In addition, there may be other
situations in which the Treasury Department may conclude that it would be
appropriate to aggregate two or more contracts purchased by the same owner.
Accordingly, an owner should consult a competent tax advisor before purchasing
more than one annuity contract.
38
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STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
<S> <C>
Introduction......................................................................................................... 1
Description of Golden American Life Insurance Company................................................................ 1
Safekeeping of Assets................................................................................................ 1
The Administrator.................................................................................................... 1
Independent Auditors................................................................................................. 1
Reinsurance.......................................................................................................... 1
Distribution of Contracts............................................................................................ 2
Performance Information.............................................................................................. 2
IRA Partial Withdrawal Option........................................................................................ 6
Other Information.................................................................................................... 6
Financial Statements of Separate Account B........................................................................... 21
Financial Statements of The Managed Global Account of Separate Account D............................................. 21
Financial Statements of Golden American Life Insurance Company....................................................... 21
Appendix -- Description of Bond Ratings
</TABLE>
41
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(This page has been left blank intentionally.)
42
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
PLEASE TEAR OFF, COMPLETE AND RETURN THE FORM BELOW TO ORDER A FREE STATEMENT OF
ADDITIONAL INFORMATION FOR THE CONTRACTS OFFERED UNDER THE PROSPECTUS
(CONTRACT FORMS WC-GAL-DVA-11/88 and WC-GAL-GDA-9/88). ADDRESS
THE FORM TO OUR CUSTOMER SERVICE CENTER, P.O. BOX 8794, WILMINGTON, DE 19899-
8794.
...............................................................................
PLEASE SEND ME A FREE COPY OF THE STATEMENT OF ADDITIONAL INFORMATION FOR
SEPARATE ACCOUNT B.
PLEASE PRINT OR TYPE
--------------------------------------------
NAME
--------------------------------------------
SOCIAL SECURITY NUMBER
--------------------------------------------
STREET ADDRESS
--------------------------------------------
CITY, STATE, ZIP
(6.0% 9/96 DVA100)
...............................................................................
43
<PAGE>
APPENDIX
GOLDENSELECT SERVICE FORMS
- - Deferred Variable Annuity Application -- Use in all states except MN
- - Contact the Sales Desk for the Special Form to be used in MN
(Golden Select DVA is currently Not Available in ME and NY)
- - Absolute Assignment to Effect Section 1035(a) Exchange
- - Request to Effect IRA Or Other Qualified Account Transfer
- - Certificate of Deposit Transfer Form
Submit all forms (with all other necessary documents) to the Customer Service
Center
WITHHOLDING ELECTION INSTRUCTIONS (BEFORE THE WITHHOLDING ELECTION SECTION ON
THE APPLICATION IS COMPLETED, PLEASE HAVE THE OWNER READ THE FOLLOWING
CAREFULLY)
Your withdrawals under annuity contracts may be subject to Federal income tax
withholding unless you elect not to have withholding apply. You may elect not to
have withholding apply by checking the box by line A and signing in the
signature section. Check the box by line B to make an election to have
withholding apply. If you want additional withholding made, check the box by
line C.
Withholding will only apply to the portion of your withdrawal that is subject to
Federal income tax and it will be like wage withholding. Thus, there will be no
withholding on the portion of each payment representing a return of your
premium. You may change your withholding as often as you wish by sending in IRS
Form W-4P to Golden American. Your election will remain in effect until you
revoke it. You may revoke it at any time.
If you elect not to have withholding apply to your withdrawals, or if you do not
have enough Federal income tax withheld from your withdrawal payments, you may
be responsible for payment of estimated tax. You may incur penalties under the
estimated tax rules if your withholding and estimated tax payments are not
sufficient.
By signing the application and completing the withholding election, you certify
that no bankruptcy proceeding, attachment or other lien or claims are pending
against you.
A1
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE
COMPANY
DEFERRED VARIABLE ANNUITY
APPLICATION
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
<TABLE>
<S> <C> <C>
1. OWNER(S) (FIRST, MIDDLE, LAST NAME)
Street, City, State, Zip Code Date of Birth (Mo. Day Yr.)
/ /
Social Security No./TIN
Phone Number(s): / / Male / / Female
2. ANNUITANT (IF OTHER THAN OWNER)
Street, City, State, Zip Code Date of Birth (Mo. Day Yr.)
/ /
Social Security No./TIN
Relation to Owner: / / Male / / Female
3. CONTINGENT ANNUITANT (OPTIONAL)
Street, City, State, Zip Code Date of Birth (Mo. Day Yr.)
/ /
Social Security No./TIN
Relation to Annuitant: / / Male / / Female
4. PRIMARY BENEFICIARY(IES) (IF MORE THAN ONE - INDICATE
%)
Relation to Annuitant:
5. CONTINGENT BENEFICIARY(IES) (IF MORE THAN ONE - INDICATE
%)
Relation to Annuitant:
6. PLAN (CHECK ONE) / / DVA / / Other
7. ANNUITY OPTION AND COMMENCEMENT DATE
Annuity Option (CHECK ONE): / / Variable Annuity Certain / / Income for Life with 10 Years Certain / / Other
Annuity Commencement Date:
/ / Check here for maximum age (specified in the prospectus) or fill in date: / / (month, day, year)
8. (A) INITIAL PREMIUM AND ALLOCATION INFORMATION
Initial Premium Paid $ MAKE CHECK PAYABLE TO GOLDEN AMERICAN LIFE INSURANCE COMPANY
Fill in percentages for initial allocation in INITIAL column below.
(B) OPTIONAL DOLLAR COST AVERAGING ("DCA"): / / CHECK BOX TO ELECT.
(MINIMUM OF $10,000 MUST BE ALLOCATED TO THE DIVISION CHECKED BELOW)
Amount of Monthly Transfer $ (minimum $250)
Division Transferred From: / / Limited Maturity Bond Division or
/ / Liquid Asset Division
Divisions Transferred To: Fill in percentages in DCA column below.
ACCOUNT DIVISION INVESTMENT ADVISER (A) INITIAL
MULTIPLE ALLOCATION ZWEIG ADVISORS INC. %
FULLY MANAGED T. ROWE PRICE ASSOCIATES, INC. %
ALL-GROWTH WARBURG, PINCUS COUNSELLORS INC. %
CAPITAL APPRECIATION CHANCELLOR TRUST CO. %
VALUE EQUITY EAGLE ASSET MANAGEMENT, INC. %
RISING DIVIDENDS KAYNE, ANDERSON INV. MGMT., L.P. %
REAL ESTATE EII REALTY SECURITIES, INC. %
NATURAL RESOURCES VAN ECK ASSOCIATES CORP. %
MANAGED GLOBAL WARBURG, PINCUS COUNSELLORS, INC. %
EMERGING MARKETS BANKERS TRUST COMPANY %
OTC MASSACHESETTS FINANCIAL SERVICES, CO %
GROWTH & INCOME ROBERTSON, STEPHENS & COMPANY INV. SERVICES, LP %
LIMITED MATURITY BOND EQUITABLE INVESTMENT SERVICES, INC. %
LIQUID ASSET EQUITABLE INVESTMENT SERVICES, INC. %
TOTAL 100%
<CAPTION>
ACCOUNT DIVISION (B) DCA
MULTIPLE ALLOCATION %
FULLY MANAGED %
ALL-GROWTH %
CAPITAL APPRECIATION %
VALUE EQUITY %
RISING DIVIDENDS %
REAL ESTATE %
NATURAL RESOURCES %
MANAGED GLOBAL %
EMERGING MARKETS %
LIMITED MATURITY BOND
LIQUID ASSET
100%
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY, CUSTOMER SERVICE CENTER, P.O. Box 8794,
Wilmington, DE 19899-8794
<PAGE>
<TABLE>
<S> <C> <C>
9. OPTIONAL SYSTEMATIC PARTIAL WITHDRAWALS
FREQUENCY: / / Monthly or / / Quarterly START DATE: / (month, day).
WITHDRAWAL: / / % of Accumulation Value or / / $.
(THE MINIMUM WITHDRAWAL IS $100, NOT TO EXCEED 1.25% MONTHLY / 3.75% QUARTERLY OF THE ACCUMULATION VALUE.)
WITHHOLDING ELECTION INFORMATION (MUST BE COMPLETED IF SYSTEMATIC PARTIAL WITHDRAWALS ARE CHOSEN)
A. / / I do not want to have Federal income tax withheld.
B. / / I want to have Federal income tax withheld from each withdrawal using the number of allowances and marital status
indicated. (You may also designate an ADDITIONAL amount in Section "C".)
Allowances ; / / Single / / Married / / Married, but withhold at a higher single rate.
C. / / I want the following ADDITIONAL amount withheld from each withdrawal $. (You must also complete Section "B".)
SEE PAGE A1 OF THE PROSPECTUS FOR WITHHOLDING ELECTION INSTRUCTIONS.
10. TELEPHONE REALLOCATION AUTHORIZATION OWNER'S INITIALS
I authorize Golden American to act upon reallocation instructions given by telephone from (name of your registered
representative) upon furnishing his/her social security number. Neither Golden American nor any person authorized by Golden
American will be responsible for any claim, loss, liability or expense in connection with reallocation instructions
received by telephone from such person if Golden American or such other person acted on such telephone instructions in good
faith in reliance upon this authorization. Golden American will continue to act upon this authorization until such time as
the person indicated above is no longer affiliated with the broker/dealer under which my contract was purchased or until
such time that I notify Golden American otherwise in writing.
11. TAX-QUALIFIED PLANS IF YOU ARE FUNDING A QUALIFIED PLAN, PLEASE SPECIFY WHAT TYPE:
/ / IRA / / IRA Rollover / / SEP/IRA / / Other
12. REPLACEMENT Will the contract applied for replace any existing annuity or life insurance on the annuitant's life? /
/ No / / Yes IF "YES", PLEASE OUTLINE IN THE REMARKS SECTION.
13. REMARKS
14. READ THE FOLLOWING STATEMENTS CAREFULLY AND SIGN BELOW:
- - BY SIGNING BELOW I ACKNOWLEDGE RECEIPT OF THE PROSPECTUS. I UNDERSTAND THAT THIS CONTRACT'S CASH SURRENDER VALUE MAY
INCREASE OR DECREASE ON ANY DAY DEPENDING ON THE INVESTMENT RESULTS. NO MINIMUM CASH SURRENDER VALUE IS GUARANTEED. THIS
CONTRACT IS IN ACCORD WITH MY ANTICIPATED FINANCIAL NEEDS.
- -I AGREE THAT, TO THE BEST OF MY KNOWLEDGE AND BELIEF, ALL STATEMENTS AND ANSWERS IN THE APPLICATION ARE COMPLETE AND TRUE
AND MAY BE RELIED UPON IN DETERMINING WHETHER TO ISSUE THE CONTRACT. MY ANSWERS WILL FORM A PART OF ANY CONTRACT TO BE
ISSUED, AND ONLY THE OWNER AND GOLDEN AMERICAN HAVE THE AUTHORITY TO MODIFY THIS APPLICATION.
- -IF GOLDEN AMERICAN AMENDS THE APPLICATION AS INDICATED IN THE AMENDMENTS SECTION BELOW, I WILL APPROVE OF THE CHANGE BY
ACCEPTING THE CONTRACT WHERE PERMITTED BY STATE REGULATION. I UNDERSTAND THAT ANY CHANGE IN PLAN, ANNUITY OPTION, BENEFITS
APPLIED FOR, OR AGE AT ISSUE MUST BE AGREED TO IN WRITING.
Signature of Owner Signed at (City, State) Date
Signature of Joint Owner (IF APPLICABLE) Signed at (City, State) Date
Signature of Annuitant (IF OTHER THAN OWNER) Signed at (City, State) Date
Client Account No. (IF APPLICABLE)
DO YOU HAVE REASON TO BELIEVE THAT THE CONTRACT APPLIED FOR WILL REPLACE ANY EXISTING ANNUITY OR LIFE INSURANCE ON THE
LIFE OF THE ANNUITANT? / / YES / / NO
(In Florida Only) Florida License ID#
Agent Signature Print Name & No. of Agent Social Security
No. Broker/Dealer/Branch
AMENDMENTS TO THE APPLICATION
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY, CUSTOMER SERVICE CENTER, P.O. Box 8794,
Wilmington, DE 19899-8794
GAL-DVA-9/96
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
ABSOLUTE ASSIGNMENT TO EFFECT SECTION 1035(A) EXCHANGE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
OWNER: ANNUITANT OR INSURED:
CURRENT CONTRACT NO.: EXISTING INSURANCE CO.:
</TABLE>
I hereby make a complete and absolute assignment and transfer all rights, titles
and interest of every nature and character in and to the above contract to
Golden American Life Insurance Company ("Golden American") in an exchange
intended to qualify under Section 1035 of the Internal Revenue Code.
Upon receipt, Golden American is directed to surrender the above contract and
apply the value to the GoldenSelect product for which I have submitted an
application.
I understand that, by executing this assignment, I irrevocably waive all rights,
claims and demands under the above contract.
I acknowledge that Golden American is furnishing this form and participating in
this transaction as an accommodation to me, and that Golden American assumes no
responsibility or liability for my tax treatment under Section 1035 of the
Internal Revenue Code or otherwise.
Signed this ______________ day of ________________, 19 __________ at ___________
<TABLE>
<S> <C>
X X
- -------------------------------------------------
WITNESS SIGNATURE OF OWNER
</TABLE>
- -
NOTIFICATION OF ASSIGNMENT AND SURRENDER
<TABLE>
<S> <C>
To (Existing Insurance Company): Re: Contract No.
</TABLE>
This is to notify you that an absolute assignment of all rights, title and
interest in and to the above contract has been made to Golden American Life
Insurance Company, for the purpose of making an exchange under Section 1035 of
the Internal Revenue Code. Golden American, owner of the above contract, hereby
surrenders it and requests its full surrender value for the purpose of an
exchange under Section 1035 of the Internal Revenue Code. Upon surrender of this
contract, please issue a check for its cash value to Golden American Life
Insurance Company, and mail to Golden American Life Insurance Company, Customer
Service Center, P.O. Box 8794, Wilmington, DE, 19899-8794, Attn: New Business
Department. Please provide Golden American with the cost basis, issue date and
other payment information along with your check.
<TABLE>
<S> <C>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
By:
DATE OFFICER OF ABOVE-NAMED INSURANCE COMPANY
</TABLE>
Golden American Life Insurance Company, Customer Service Center, P.O. Box 8794,
Wilmington, DE 19899-8974 1-800-366-0066
GAL-1035-9/96
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
REQUEST TO EFFECT IRA OR OTHER QUALIFIED ACCOUNT TRANSFER
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
TO: -------------------------------------
PRESENT SPONSOR
------------------------------------- ACCOUNT NO.
ADDRESS
------------------------------------- -----------------------------------------------------
ADDRESS PARTICIPANT'S NAME
RE: IRA OR OTHER QUALIFIED ACCOUNT TRANSFER
</TABLE>
ATTN: QUALIFIED TRANSFER DEPARTMENT
Dear Sirs:
I wish to transfer the entire value of my present Qualified Account to the
"GoldenSelect IRA" sponsored by Golden American Life Insurance Company.
I adopted the "GoldenSelect IRA" on ____________________________________________
DATE OF APPLICATION
Please make the check payable to GoldenSelect/Golden American Life Insurance
Company. As indicated below, Golden American has already indicated its
willingness to accept from you all my Qualified Account assets.
Please send all such proceeds and details to:
Golden American Life Insurance Company
IRA and Pension Operations
P.O. Box 8794
Wilmington, DE 19899-8794
Your prompt attention to this matter is appreciated.
<TABLE>
<S> <C> <C>
Sincerely, (Signature Guarantee if Required)
X ----------------------------------------
- -------------------------------------------
PARTICIPANT'S SIGNATURE (NAME OF BANK/FIRM)
----------------------------------------
(SIGNATURE OF OFFICER/TITLE)
</TABLE>
- -
GOLDEN AMERICAN APPROVAL FOR QUALIFIED ACCOUNT TRANSFER
Golden American Life Insurance Company has established the "GoldenSelect IRA"
application number
- ------------------------- for the participant named above. We are willing to
accept the transfer. Please forward all proceeds accordingly.
<TABLE>
<S> <C>
By: -------------------------------------- Date: ----------------------------------------------
Name: ----------------------------------- Title: ----------------------------------------------
</TABLE>
Golden American Life Insurance Company, Customer Service Center, P.O. Box 8794,
Wilmington, DE 19899-8974 1-800-366-0066
GAL-IRA-9/96
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
CERTIFICATE OF DEPOSIT TRANSFER FORM
- --------------------------------------------------------------------------------
APPOINTMENT OF ATTORNEY-IN-FACT TO SURRENDER CERTIFICATE OF DEPOSIT
(NON-QUALIFIED ONLY)
CERTIFICATE(S) OF DEPOSIT
Issued By: _____________________________________________________________________
INSTITUTION
Address: _______________________________________________________________________
Certificate Number(s): _________________________ Issued to: ____________________
Maturity Date(s): ______________________________________________________________
Estimated Amount(s): ___________________________________________________________
I/We do hereby name and appoint Golden American Life Insurance Company ("Golden
American") through its duly authorized officers as lawful agent and
attorney-in-fact for me/us, to surrender the above Certificate(s) of Deposit
upon the respective maturity date(s).
I/We request that upon maturity all funds available be transferred to Golden
American. Golden American will apply all such funds received to a variable
contract issued to me/us.
I/We understand that Golden American assumes no responsibility for the tax
treatment of this matter and that I/ we shall be responsible for the payment of
all federal, state and local taxes and any other fees and charges incurred with
respect to the Certificate(s).
I/We acknowledge that the investment earnings credited under the variable
contract will begin to accrued when Golden American receives the proceeds from
the Certificate(s). Golden American has the responsibility only to present the
Certificate(s) for payment upon maturity and shall not be responsible for the
solvency of the issuing Financial Institution.
Dated at ______________________________ on this ______ day of
____________________, 19________________________________________________________
<TABLE>
<S> <C>
X X
Witness Signature of Certificate Owner
X X
Witness Signature of Joint Certificate Owner
</TABLE>
Special Handling Instructions: _________________________________________________
________________________________________________________________________________
ACKNOWLEDGMENT
Golden American will accept any and all funds which discharge the obligation
listed above and request that such funds be sent to: Golden American Life
Insurance Company, Customer Service Center, P.O. Box 8794, Wilmington, DE
19899-8794
By _____________________________________________________________________________
Name Title Date
Golden American Life Insurance Company, Customer Service Center, P.O. Box 8794,
Wilmington, DE 19899-8974 1-800-366-0066
GAL-CDTF-9/96
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK
COMPANY DOMICILED IN WILMINGTON, DELAWARE
IN 3207 9/96
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
GOLDENSELECT DVA
DEFERRED COMBINATION VARIABLE
AND FIXED ANNUITY CONTRACT
issued by
SEPARATE ACCOUNT B ("Account B")
of
GOLDEN AMERICAN LIFE INSURANCE COMPANY
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. THE INFORMATION
CONTAINED HEREIN SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE
GOLDEN AMERICAN LIFE INSURANCE COMPANY DEFERRED VARIABLE ANNUITY CONTRACT WHICH
IS REFERRED TO HEREIN.
THE PROSPECTUS SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR OUGHT TO KNOW
BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS, SEND A WRITTEN REQUEST TO
GOLDEN AMERICAN LIFE INSURANCE COMPANY, CUSTOMER SERVICE CENTER, P.O. BOX 8794,
WILMINGTON, DE 19899-8794 OR TELEPHONE 1-800-366-0066.
DATE OF PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION: SEPTEMBER 3, 1996
<PAGE>
TABLE OF CONTENTS
ITEM PAGE
---- ----
Introuction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Description of Golden American Life Insurance Company. . . . . . . . . . . . 1
Safekeeping of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Distribution of Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Performance Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
IRA Partial Withdrawal Option. . . . . . . . . . . . . . . . . . . . . . . . 6
Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Financial Statements of Separate Account B . . . . . . . . . . . . . . . . . 7
Financial Statements of The Managed Global Account of Separate Account D . . 7
Appendix - Description of Bond Ratings
<PAGE>
INTRODUCTION
This Statement of Additional Information provides background information
regarding Account B.
DESCRIPTION OF GOLDEN AMERICAN LIFE INSURANCE COMPANY
Golden American Life Insurance Company ("Golden American") is a stock life
insurance company organized under the laws of the State of Delaware. Prior to
December 30, 1993, Golden American was a Minnesota corporation. From January 2,
1973 through December 31, 1987, the name of the company was St. Paul Life
Insurance Company. On December 31, 1987, after all of St. Paul Life Insurance
Company's business was sold, the name was changed to Golden American. On March
7, 1988, all of the stock of Golden American was acquired by The Golden
Financial Group, Inc. ("GFG"), a financial services holding company. On October
19, 1990, GFG merged with and into MBL Variable, Inc. ("MBLV"), a wholly owned
direct subsidiary of The Mutual Benefit Life Insurance Company ("MBL"). On
January 1, 1991, MBLV became a wholly owned indirect subsidiary of MBL and
Golden American became a wholly owned direct subsidiary of MBL. Golden
American's name had been changed to MB Variable Life Insurance Company in the
state of Minnesota but subsequently has been changed back to Golden American.
In a transaction that closed on September 30, 1992, Golden American was acquired
by a subsidiary of Bankers Trust Company ("Bankers Trust"). As of December 31,
1995, Golden American had over $98.1 million in stockholders' equity and
approximately $1.2 billion in total assets, including approximately $1.05
billion of separate account assets. On August 13, 1996, Equitable of Iowa
Companies acquired all of the interest in BT Variable, Inc., the corporate
parent of Golden American and Directed Services, Inc. and changed the name of
BT Variable, Inc.'s name to EIC Variable, Inc. (EIC Variable"). Golden American
is authorized to do business in all jurisdictions except New York. Golden
American offers variable annuities and variable life insurance.
SAFEKEEPING OF ASSETS
Golden American acts as its own custodian for Account B.
THE ADMINISTRATOR
Effective January 1, 1994, Bankers Trust (Delaware), a subsidiary of
Bankers Trust New York Corporation, and Golden American became parties to a
service agreement pursuant to which Bankers Trust (Delaware) has agreed to
provide certain accounting, actuarial, tax, underwriting, sales, management and
other services to Golden American. Expenses incurred by Bankers Trust
(Delaware) in relation to this service agreement are reimbursed by Golden
American on an allocated cost basis. Charges billed to Golden American by
Bankers Trust (Delaware) pursuant to the service agreement in 1995 and 1994 were
$749,741 and $816,264, respectively.
Prior to 1994, Golden American had arranged with EIC Variable, at that
time, BT Variable, Inc., to perform services related to the development and
administration of its products. For the year 1993 and the period from
September 30, 1992 to December 31, 1992, fees earned by EIC Variable from
Golden American for these services aggregated $2,701,000 and $209,000,
respectively. The agreement was terminated as of January 1, 1994.
In addition, EIC Variable provided to Golden American certain of its
personnel to perform management, administrative and clerical services and the
use of certain of its facilities. EIC Variable charged Golden American for such
expenses and all other general and administrative costs, first on the basis of
direct charges when identifiable, and second allocated based on the estimated
amount of time spent by EIC Variable's employees on behalf of Golden American.
For the year 1993 and the period from September 30, 1992 to December 31, 1992,
EIC Variable allocated to Golden American $1,503,000 and $450,000, respectively.
The agreement was terminated on January 1, 1994.
1
<PAGE>
INDEPENDENT AUDITORS
Ernst & Young LLP, 2001 Market Street, Philadelphia, Pennsylvania 19103,
independent auditors, will perform annual audits of Golden American and the
Accounts.
DISTRIBUTION OF CONTRACTS
Prior to 1994, Golden American had entered into agreements with DSI to
perform services related to the management of its investments and the
distribution of its products. For the year 1993, Golden American incurred
$311,000 for such services. The agreement was terminated as of January 1, 1994.
DSI acts as the principal underwriter (as defined in the Securities Act of
1933 and the Investment Company Act of 1940, as amended) of the variable
insurance products issued by Golden American which, as of December 31, 1994, are
sold primarily through two broker/dealer institutions. For the years ended
1995, 1994 and 1993, commissions paid by Golden American to DSI aggregated
$8,440,000, $17,569,000 and $34,260,00, respectively.
Golden American provided to DSI certain of its personnel to perform
management, administrative and clerical services and the use of certain
facilities. Golden American charged DSI for such expenses and all other general
and administrative costs, first on the basis of direct charges when
identifiable, and the remainder allocated based on the estimated amount of time
spent by Golden American's employees on behalf of DSI. In the opinion of
management, this method of cost allocation is reasonable. For the years ended
December 31, 1994 and 1993, expenses allocated to DSI were $1,983,000 and
$2,013,000, respectively. In 1995, the service agreement between DSI and Golden
American was amended to provide for a management fee from DSI to Golden American
for managerial and supervisory services provided by Golden American. This fee,
calculated as a percentage of average assets in the variable separate accounts,
was $986,650 for 1995.
PERFORMANCE INFORMATION
Performance information for the divisions of Account B, including the
yield and effective yield of the Liquid Asset Division, the yield of the
remaining divisions, and the total return of all divisions, may appear in
reports or promotional literature to current or prospective owners. Negative
values are denoted by parentheses. Performance information for measures other
than total return do not reflect sales load which can have a maximum level of
6.% of premium, and any applicable premium tax that can range from 0% to 3.5%.
SEC STANDARD MONEY MARKET DIVISION YIELDS
Current yield for the Liquid Asset Division will be based on the change in
the value of a hypothetical investment (exclusive of capital changes) over a
particular 7-day period, less a pro-rata share of division expenses accrued over
that period (the "base period"), and stated as a percentage of the investment at
the start of the base period (the "base period return"). The base period return
is then annualized by multiplying by 365/7, with the resulting yield figure
carried to at least the nearest hundredth of one percent. Calculation of
"effective yield" begins with the same "base period return" used in the
calculation of yield, which is then annualized to reflect weekly compounding
pursuant to the following formula:
2
<PAGE>
365/7
Effective Yield = [(Base Period Return) +1) ] - 1
For the 7-day period March 22, 1996 to March 29, 1996, the current yield of
the Liquid Asset Division was 3.78% and the effective yield of the Division was
3.85%.
SEC STANDARD 30-DAY YIELD FOR NON-MONEY MARKET DIVISIONS
Quotations of yield for the remaining divisions will be based on all
investment income per Unit (accumulation value divided by the index of
investment experience) earned during a particular 30-day period, less expenses
accrued during the period ("net investment income"), and will be computed by
dividing net investment income by the value of an accumulation unit on the last
day of the period, according to the following formula:
6
YIELD = 2 [ ( a - b +1) - 1]
-----
cd
Where:
[a] equals the net investment income earned during the
period by the Series attributable to shares owned by
a division
[b] equals the expenses accrued for the period (net of
reimbursements)
[c] equals the average daily number of Units outstanding
during the period based on the index of investment
experience
[d] equals the value (maximum offering price) per index
of investment experience on the last day of the
period
Yield on divisions of Account B is earned from the increase in net asset
value of shares of the Series in which the Division invests and from dividends
declared and paid by the Series, which are automatically reinvested in shares of
the Series. Yield on the Global Account is earned from the increase in asset
value of shares of the securities in which the Global Account invests.
SEC STANDARD AVERAGE ANNUAL TOTAL RETURN FOR NON-MONEY MARKET DIVISIONS
Quotations of average annual total return for any division will be
expressed in terms of the average annual compounded rate of return of a
hypothetical investment in a contract over a period of one, five and 10 years
(or, if less, up to the life of the division), calculated pursuant to the
formula:
n
P(1+T) =ERV
Where:
(1) [P] equals a hypothetical initial premium payment of
$1,000
(2) [T] equals an average annual total return
(3) [n] equals the number of years
(4) [ERV] equals the ending redeemable value of a
hypothetical $1,000 initial premium payment made at
the beginning of the period (or fractional portion
thereof)
All total return figures reflect the deduction of the maximum sales load,
the administrative charges, and the mortality and expense risk charges. The SEC
requires that an assumption be made that the contract owner surrenders the
entire contract at the end of the one, five and 10 year periods (or, if less, up
to the life of the security) for which performance is required to be calculated.
This assumption may not be consistent with the typical contract owner's
intentions in purchasing a contract and may adversely affect returns.
Quotations of total return may simultaneously be shown for other periods, as
well as quotations of total return that do not take into account certain
contractual charges such as sales load.
3
<PAGE>
<TABLE>
<CAPTION>
One Year Period Five Year Period Inception to
Division Ending 12/31/95 Ending 12/31/95 12/31/95 Inception Date
- -------- --------------- ---------------- ------------ --------------
<S> <C> <C> <C> <C>
Multiple Allocation 11.68% 7.66%* 7.14%* 1/24/89
Fully Managed 13.44% 8.41%* 5.65%* 1/24/89
Capital Appreciation 22.79% N/A 9.87%* 5/4/92
Rising Dividends 23.69% N/A 10.98% 10/4/93
All-Growth 15.13% 7.00%* 4.47%* 1/24/89
Real Estate 9.35% 15.24%* 6.26%* 1/24/89
Natural Resources 3.52% 7.72%* 5.47%* 1/24/89
Value Equity 27.84% N/A 27.84% 1/1/95
Strategic Equity N/A N/A -5.70%* 10/2/95
Small Cap N/A N/A N/A 1/2/96
Emerging Markets -17.07% N/A -6.09% 10/4/93
Managed Global ** .18%* N/A -3.10%* 10/21/92
Limited Maturity Bond 4.54% 4.23%* 5.31%* 1/24/89
Liquid Asset -1.60% 1.87%* 3.29%* 1/24/89
- -----------------------------------------------------------------------------------------------
</TABLE>
* Total return calculation reflects partial waiver of fees and expenses.
** From it inception date until September 3, 1996, the Managed Global Account
of Separate Account D was a registered management investment company.
On that date it was reorganized into two entities: the Managed Global
Division of Separate Account B and the Managed Global Series of The
GCG Trust. Its historical performance for the purposes of the Managed
Global Division remains unchanged by the reorganization.
NON-STANDARD AVERAGE ANNUAL TOTAL RETURN FOR NON-MONEY MARKET DIVISIONS
Quotations of non-standard average annual total return for any division will be
expressed in terms of the average annual compounded rate of return of a
hypothetical investment in a contract over a period of one, five and 10 years
(or, if less, up to the life of the division), calculated pursuant to the
formula:
n
[P(1+T) ]=ERV
Where:
(1) [P] equals a hypothetical initial premium
payment of $1,000
(2) [T] equals an average annual total return
(3) [n] equals the number of years
(4) [ERV] equals the ending redeemable value of a
hypothetical $1,000 initial premium payment made at the
beginning of the period (or fractional portion thereof)
assuming certain loading and charges are zero.
All total return figures reflect the deduction of the mortality and expense risk
charge and the administrative charges, but not the deduction of the maximum
sales load and the annual contract fee.
AVERAGE ANNUALIZED TOTAL RETURN FOR PERIODS ENDING 12/31/95 -- NON-STANDARDIZED
<TABLE>
<CAPTION>
One Year Period Five Year Period Inception to
Division Ending 12/31/95 Ending 12/31/95 12/31/95 Inception Date
- -------- --------------- ---------------- ------------ --------------
<S> <C> <C> <C> <C>
Multiple Allocation 17.80% 8.72%* 7.96%* 1/24/89
Fully Managed 19.57% 9.43%* 6.51%* 1/24/89
Capital Appreciation 28.95% N/A 11.35%* 5/4/92
Rising Dividends 29.85% N/A 13.59% 10/4/93
All-Growth 21.26% 8.04%* 5.34%* 1/24/89
Real Estate 15.47% 16.13%* 7.21%* 1/24/89
Natural Resources 9.62% 8.86%* 6.39%* 1/24/89
Value Equity 34.02% N/A 34.02% 1/1/95
Strategic Equity N/A N/A .38%* 10/2/95
Small Cap N/A N/A N/A 1/2/96
Emerging Markets -11.03% N/A -3.31% 10/4/93
Managed Global ** 6.27%* N/A -1.08%* 10/21/92
Limited Maturity Bond 10.64% 5.40%* 6.12%* 1/24/89
Liquid Asset 4.48% 3.08%* 4.14%* 1/24/99
- -----------------------------------------------------------------------------------------------
</TABLE>
* Total return calculation reflects partial waiver of fees and expenses.
** From it inception date until September 3, 1996, the Managed Global Account
of Separate Account D was a registered management investment company.
On that date it was reorganized into two entities: the Managed Global
Division of Separate Account B and the Managed Global Series of The
GCG Trust. Its historical performance for the purposes of the Managed
Global Division remains unchanged by the reorganization.
4
<PAGE>
Performance information for a division may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P
500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money Market
Institutional Averages, or other indices that measure performance of a pertinent
group of securities so that investors may compare a division's results with
those of a group of securities widely regarded by investors as representative of
the securities markets in general; (ii) other groups of variable annuity
separate accounts or other investment products tracked by Lipper Analytical
Services, a widely used independent research firm which ranks mutual funds and
other investment companies by overall performance, investment objectives, and
assets, or tracked by other services, companies, publications, or persons who
rank such investment companies on overall performance or other criteria; and
(iii) the Consumer Price Index (measure for inflation) to assess the real rate
of return from an investment in the contract. Unmanaged indices may assume the
reinvestment of dividends but generally do not reflect deductions for
administrative and management costs and expenses.
Performance information for any division reflects only the performance of a
hypothetical contract under which accumulation value is allocated to a division
during a particular time period on which the calculations are based.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the portfolio of the
Series of the Trust in which the Account B divisions invest, and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future.
Reports and promotional literature may also contain other information
including the ranking of any division derived from rankings of variable annuity
separate accounts or other investment products tracked by Lipper Analytical
Services or by other rating services, companies, publications, or other persons
who rank separate accounts or other investment products on overall performance
or other criteria.
PUBLISHED RATINGS
From time to time, the rating of Golden American as an insurance company by
A.M. Best may be referred to in advertisements or in reports to contract owners.
Each year the A.M. Best Company reviews the financial status of thousands of
insurers, culminating in the assignment of Best's Ratings. These ratings
reflect their current opinion of the relative financial strength and operating
performance of an insurance company in comparison to the norms of the
life/health insurance industry. Best's ratings range from A+ to C. An A+
rating means, in the opinion of A.M. Best, that the insurer has demonstrated the
strongest ability to meet its respective policyholder and other contractual
obligations.
INDEX OF INVESTMENT EXPERIENCE
The calculation of the Index of Investment Experience ("IIE") is discussed
in the prospectus for the Contracts under Measurement of Investment Experience.
The following illustrations show a calculation of a new IIE and the purchase of
Units (using hypothetical examples):
5
<PAGE>
ILLUSTRATION OF CALCULATION OF IIE
EXAMPLE 1.
1. IIE, beginning of period . . . . . . . . . . . . . . . . . . $1.80000000
2. Value of securities, beginning of period . . . . . . . . . . . . .$21.20
3. Change in value of securities. . . . . . . . . . . . . . . . . . . .$.50
4. Gross investment return (3) divided by (2) . . . . . . . . . . .02358491
5. Less daily mortality and expense charge. . . . . . . . . . . . .00002477
6. Less asset based administrative charge . . . . . . . . . . . . .00000276
7. Net investment return (4) minus (5) minus (6). . . . . . . . . .02355738
8. Net investment factor (1.000000) plus (7). . . . . . . . . . .1.02355738
9. IIE, end of period (1) multiplied by (8) . . . . . . . . . . $1.84240328
ILLUSTRATION OF PURCHASE OF UNITS (ASSUMING NO STATE PREMIUM TAX)
EXAMPLE 2.
1. Initial Premium Payment. . . . . . . . . . . . . . . . . . . . . $100.00
2. IIE on effective date of purchase (see Example 1) . . . . . .$1.8000000
3. Number of Units purchased [(1) divided by (2)] . . . . . . . . .55.55556
4. IIE for valuation date following purchase (see Example 1). . $1.84240328
5. Accumulation Value in account for valuation date
following purchase [(3) multiplied by (4)]. . . . . . . . . . . $102.36
IRA PARTIAL WITHDRAWAL OPTION
If the contract owner has an IRA contract and will attain age 70 1/2 in the
current calendar year, distributions will be made in accordance with the
requirements of Federal tax law. This option is available to assure that the
required minimum distributions from qualified plans under the Internal Revenue
Code (the "Code") are made. Under the Code, distributions must begin no later
than April 1st of the calendar year following the calendar year in which the
contract owner attains age 70 1/2. If the required minimum distribution is not
withdrawn, there may be a penalty tax in an amount equal to 50% of the
difference between the amount required to be withdrawn and the amount actually
withdrawn. Even if the IRA Partial Withdrawal Option is not elected,
distributions must nonetheless be made in accordance with the requirements of
Federal tax law.
Golden American notifies the contract owner of these regulations with a
letter mailed on January 1st of the calendar year in which the contract owner
reaches age 70 1/2 which explains the IRA Partial Withdrawal Option and supplies
an election form. If electing this option, the owner specifies whether the
withdrawal amount will be based on a life expectancy calculated on a single life
basis (contract owner's life only) or, if the contract owner is married, on a
joint life basis (contract owner's and spouse's lives combined). The contract
owner selects the payment mode on a monthly, quarterly or annual basis. If the
payment mode selected on the election form is more frequent than annually, the
payments in the first calendar year in which the option is in effect will be
based on the amount of payment modes remaining when Golden American receives the
completed election form.
Golden American calculates the IRA Partial Withdrawal amount each year
based on the minimum distribution rules. We do this by dividing the
accumulation value by the life expectancy. In the first year withdrawals begin,
we use the accumulation value as of the date of the first payment. Thereafter,
we use the accumulation value on December 31st of each year. The life
expectancy is recalculated each year. Certain minimum distribution rules govern
payouts if the designated beneficiary is other than the contract owner's spouse
and the beneficiary is more than ten years younger than the contract owner.
6
<PAGE>
OTHER INFORMATION
Registration statements have been filed with the Securities and Exchange
Commission under the Securities Act of 1933 as amended, with respect to the
Contracts discussed in this Statement of Additional Information. Not all of the
information set forth in the registration statements, amendments and exhibits
thereto has been included in this Statement of Additional Information.
Statements contained in this Statement of Additional Information concerning the
content of the Contracts and other legal instruments are intended to be
summaries. For a complete statement of the terms of these documents, reference
should be made to the instruments filed with the Securities and Exchange
Commission.
FINANCIAL STATEMENTS OF SEPARATE ACCOUNT B
The audited financial statements of Separate Account B are listed below and
are included in this Statement of Additional Information:
Report of Independent Auditors
Financial Statements -- Audited
Statement of Assets and Liabilities as of December 31, 1995
Combined Statement of Operations for the Year ended December 31, 1995
Combined Statements of Changes in Net Assets for the Years ended
December 31, 1995 and 1994
Notes to Audited Financial Statements
FINANCIAL STATEMENTS OF THE MANAGED GLOBAL ACCOUNT OF SEPARATE ACCOUNT D
The audited financial statements of The Managed Global Account of Separate
Account D listed below appear in the Annual Report of The Managed Global
Account of Separate Account D which was filed with the SEC and are included
in this Statement of Additional Information .
Report of Independent Auditors
Financial Statements -- Audited
Statement of Assets and Liabilities as of December 31, 1995
Statement of Operations for the Year ended December 31, 1995
Statements of Changes in Net Assets for the Years ended December 31,
1995 and 1994
Statement of Investments as of December 31, 1995
Notes to Audited Financial Statements
FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE COMPANY
The audited financial statements of Golden American Life Insurance Company
listed below are prepared in accordance with generally accepted accounting
principles ("GAAP") and are incorporated by reference in this Statement of
Additional Information from the GoldenSelect DVA PLUS Deferred Combination
Variable and Fixed Annuity Prospectus, dated May, 1996, which was filed with the
SEC.
Report of Independent Auditors
Financial Statements -- GAAP
Balance Sheets as of December 31, 1995, 1994 and 1993
Statements of Operations for the Years ended December 31, 1995, 1994
and 1993
Statement changes in Stockholder's Equity for the Years ended
December 31, 1995, 1994 and 1993
Statements of Cash Flows for the Years ended December 31, 1995, 1994
and 1993
Notes to Audited Financial Statements
7
<PAGE>
<PAGE>
ANNUAL REPORT
FOR
SEPARATE ACCOUNT B
------------------
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
SEPARATE ACCOUNT B
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Auditors.................................................................................... B-1
Statement of Assets and Liabilities............................................................................... B-2
Combined Statements of Operations................................................................................. B-3
Combined Statements of Changes in Net Assets...................................................................... B-7
Notes to Financial Statements..................................................................................... B-11
</TABLE>
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Variable Annuity Contract Owners
Separate Account B
We have audited the accompanying statement of assets and liabilities of
Separate Account B (the 'Account') as of December 31, 1995 and the related
combined statements of operations and changes in net assets for each of the
three years in the period then ended. These fianancial statements are the
responsibility of the Account's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit 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, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides 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 Separate Account B at
December 31, 1995, and the related combined statements of operations and changes
in net assets for each of the three years in the period then ended in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 12, 1996
B-1
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
SEPARATE ACCOUNT B
DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS)
<S> <C>
ASSETS
Investment in The GCG Trust, at Net Asset Value:
Liquid Asset Series, 36,511 shares (Cost -- $36,511)............................................................... $ 36,511
Limited Maturity Bond Series, 6,087 shares (Cost -- $64,804)....................................................... 67,870
Natural Resources Series, 1,796 shares (Cost -- $25,708)........................................................... 27,008
All-Growth Series, 6,678 shares (Cost -- $85,681).................................................................. 92,018
Real Estate Series, 2,758 shares (Cost -- $32,426)................................................................. 34,836
Fully Managed Series, 8,519 shares (Cost -- $109,183).............................................................. 117,394
Multiple Allocation Series, 24,417 shares (Cost -- $293,213)....................................................... 305,697
Capital Appreciation Series, 8,965 shares (Cost -- $107,313)....................................................... 121,118
Rising Dividends Series, 6,044 shares (Cost -- $64,959)............................................................ 80,391
Emerging Markets Series, 4,074 shares (Cost -- $45,132)............................................................ 36,913
Market Manager Series, 495 shares (Cost -- $5,008)................................................................. 5,951
Value Equity Series, 2,159 shares (Cost -- $26,592)................................................................ 28,462
Strategic Equity Series, 803 shares (Cost -- $8,008)............................................................... 8,035
----------
Total Invested Assets (Cost -- $904,538)........................................................................... 962,204
LIABILITIES
Payable to Golden American for Charges and Fees (Note 3).............................................................. 1,326
----------
Total Net Assets................................................................................................... $ 960,878
----------
----------
NET ASSETS
For Variable Annuity Insurance Contracts.............................................................................. $ 924,596
Retained in Separate Account B by Golden American (Note 3)............................................................ 36,282
----------
Total Net Assets................................................................................................... $ 960,878
----------
----------
</TABLE>
B-2
<PAGE>
Separate Account B
Combined Statements of Operations
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
<TABLE>
<CAPTION>
Divisions Investing In
-------------------------------------------------------------------------------------------
Liquid Asset Series Limited Maturity Bond Series Natural Resources Series
--------------------------- ----------------------------- -----------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income
Dividends $ 2,242 $ 1,444 $ 390 $ -- $ 3,501 $ 2,606 $ 570 $ 287 $ 104
Capital gain distribution -- -- 1 -- -- 289 -- 540 --
------- ------- ------- ------- ------- ------- ------- ------- -------
Total investment income 2,242 1,444 391 -- 3,501 2,895 570 827 104
Expenses
Mortality and expense risk and
administrative charges 411 362 139 700 736 550 284 283 95
------- ------- ------- ------- ------- ------- ------- ------- -------
Net investment income (loss) 1,831 1,082 252 (700) 2,765 2,345 286 544 9
------- ------- ------- ------- ------- ------- ------- ------- -------
Net realized gain (loss) on
investments -- -- -- (138) 66 677 1,545 1,686 427
------- ------- ------- ------- ------- ------- ------- ------- -------
Unrealized appreciation
(depreciation)
of investments
Beginning of period -- -- -- (4,836) (408) 27 805 2,954 (341)
End of period -- -- -- 3,066 (4,836) (408) 1,300 805 2,954
------- ------- ------- ------- ------- ------- ------- ------- -------
Net change in unrealized
appreciation
(depreciation)
of investments -- -- -- 7,902 (4,428) (435) 495 (2,149) 3,295
------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease) in net
assets resulting from operations $ 1,831 $ 1,082 $ 252 $ 7,064 $(1,597) $ 2,587 $ 2,326 $ 81 $ 3,731
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
Separate Account B
Combined Statements of Operations
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
Divisions Investing In
--------------------------------------------------------------------------------------------------------
All-Growth Series Real Estate Series Fully Managed Series
-------------------------------- ---------------------------------- -------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income
Dividends $ 4,685 $ 668 $ 202 $ 1,399 $ 1,863 $ 810 $ 2,846 $ 2,839 $ 1,566
Capital gain distribution -- -- -- -- -- -- -- -- 1,549
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total investment income 4,685 668 202 1,399 1,863 810 2,846 2,839 3,115
Expenses
Mortality and expense
risk and administrative
charges 833 613 380 347 348 170 1,101 1,079 731
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net investment
income (loss) 3,852 55 (178) 1,052 1,515 640 1,745 1,760 2,384
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net realized gain
(loss) on
investments 1,011 77 477 369 539 514 1,311 1,060 525
-------- -------- -------- -------- -------- -------- -------- -------- --------
Unrealized appreciation
(depreciation) of
investments
Beginning of period (4,165) 3,650 1,002 (1,015) (374) 175 (8,104) 4,425 2,725
End of period 6,336 (4,165) 3,650 2,410 (1,015) (374) 8,210 (8,104) 4,425
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net change in unrealized
appreciation
(depreciation)
of investments 10,501 (7,815) 2,647 3,425 (641) (549) 16,314 (12,529) 1,700
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in net assets
resulting from
operations $ 15,364 $ (7,683) $ 2,946 $ 4,846 $ 1,413 $ 605 $ 19,370 $ (9,709) $ 4,609
======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
Separate Account B
Combined Statements of Operations
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
Divisions Investing In
------------------------------------------------------------------------------------------------------
Multiple Allocation Series Capital Appreciation Rising Dividends Series
---------------------------------- ------------------------------- ------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993(a)
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income
Dividends $ 21,644 $ 10,656 $ 5,181 $ 10,216 $ 1,777 $ 933 $ 567 $ 685 $ 19
Capital gain
distribution -- -- 11,777 -- -- 188 -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total investment
income 21,644 10,656 16,958 10,216 1,777 1,121 567 685 19
Expenses
Mortality and
expense risk and
administrative
charges 3,043 2,955 1,833 1,065 909 554 648 368 14
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net investment
income (loss) 18,601 7,701 15,125 9,151 868 567 (81) 317 5
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net realized gain
(loss) on investments 4,715 2,844 295 2,221 1,427 247 776 55 --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Unrealized appreciation
(depreciation) of
investments
Beginning of period (13,754) 3,296 2,624 (726) 4,005 1,050 (605) 221 --
End of period 12,485 (13,754) 3,296 13,805 (726) 4,005 15,432 (605) 221
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net change in unrealized
appreciation
(depreciation)
of investments 26,239 (17,050) 672 14,531 (4,731) 2,955 16,037 (826) 221
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in net assets
resulting from
operations $ 49,555 $ (6,505) $ 16,092 $ 25,903 $ (2,436) $ 3,769 $ 16,732 $ (454) $ 226
======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
- ------------------------------------------------------------------------
(a) Commencement of operations, October, 1993
B-5
<PAGE>
<TABLE>
<CAPTION>
Separate Account B
Combined Statements of Operations
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
Division Investing In
-------------------------------------------------------------------------
Value Strategic
Market Equity Equity
Emerging Markets Series Manager Series Series Series Combined
------------------------------- ----------------- ------- ------- --------------------------------
1995 1994 1993(a) 1995 1994(b) 1995(c) 1995(d) 1995 1994 1993
-------- --------- ------- ------- ------ ------- ------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income
Dividends $ 6 $ -- $ -- $ 203 $ 7 $ 711 $ 19 $ 45,108 $ 23,727 $ 11,812
Capital gain
distribution -- 2,686 -- -- -- -- -- -- 3,226 13,803
-------- --------- ------- ------- ------ ------- ------- --------- --------- --------
Total investment
income 6 2,686 -- 203 7 711 19 45,108 26,953 25,615
Expenses
Mortality and
expense risk and
administrative
charges 440 561 24 -- -- 110 12 8,994 8,214 4,490
-------- --------- ------- ------- ------ ------- ------- --------- --------- --------
Net investment
income (loss) (434) 2,125 (24) 203 7 601 7 36,114 18,739 21,125
-------- --------- ------- ------- ------ ------- ------- --------- --------- --------
Net realized
gain (loss)
on investments (7,448) 836 -- 29 -- 687 (1) 5,077 8,590 3,161
-------- --------- ------- ------- ------ ------- ------- --------- --------- --------
Unrealized
appreciation
(depreciation) of
investments
Beginning of period (9,822) 3,971 -- (1) -- -- -- (42,223) 21,740 7,261
End of period (8,219) (9,822) 3,971 942 (1) 1,870 28 57,665 (42,223) 21,740
-------- --------- ------- ------- ------ ------- ------- --------- --------- --------
Net change in
unrealized
appreciation
(depreciation)
of investments 1,603 (13,793) 3,971 943 (1) 1,870 28 99,888 (63,963) 14,479
-------- --------- ------- ------- ------ ------- ------- --------- --------- --------
Net increase
(decrease)
in net assets
resulting from
operations $ (6,279) $(10,832) $ 3,947 $ 1,175 $ 6 $ 3,158 $ 34 $141,079 $(36,634) $ 38,765
======== ========= ======= ======= ====== ======= ======= ========= ========= ========
</TABLE>
- ------------------------------------------------------------------------
(a) Commencement of operations, October, 1993
(b) Commencement of operations, November, 1994
(c) Commencement of operations, January, 1995
(d) Commencement of operations, October, 1995
B-6
<PAGE>
<TABLE>
<CAPTION>
Separate Account B
Combined Statements of Changes in Net Assets
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
Division Investing In
--------------------------------------------------------------------------------------------------------
Liquid Asset Series Limited Maturity Bond Series Natural Resources Series
-------------------------------- -------------------------------- --------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease)
in net assets
Operations:
Net investment
income (loss) $ 1,831 $ 1,082 $ 252 $ (700) $ 2,765 $ 2,345 $ 286 $ 544 $ 9
Net realized gain
(loss) on
investments -- -- -- (138) 66 677 1,545 1,686 427
Net change in
unrealized
appreciation
(depreciation)
of
investments -- -- -- 7,902 (4,428) (435) 495 (2,149) 3,295
Net increase
(decrease) in net
assets resulting
from operations -------- -------- -------- -------- -------- -------- -------- -------- --------
1,831 1,082 252 7,064 (1,597) 2,587 2,326 81 3,731
-------- -------- -------- -------- -------- -------- -------- -------- --------
Policy related
transactions:
Premiums 11,323 43,297 22,808 7,579 32,041 54,680 2,111 8,595 10,191
Net transfers
among Divisions
and Guaranteed
Interest
Division
of Golden
American (5,926) 4,159 (15,605) (6,694) (22,002) (19,820) (6,167) 5,716 5,177
Surrenders and
other
withdrawals (11,794) (18,470) (3,497) (9,461) (7,604) (5,188) (3,402) (2,768) (465)
Policy related
charges and
fees (4,309) (1,201) (229) (2,224) (887) (498) (624) (314) (80)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase
(decrease)
in net assets
resulting from
policy related
transactions (10,706) 27,785 3,477 (10,800) 1,548 29,174 (8,082) 11,229 14,823
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase
(decrease)
in net assets (8,875) 28,867 3,729 (3,736) (49) 31,761 (5,756) 11,310 18,554
Net assets:
Beginning of
period 45,366 16,499 12,770 71,573 71,622 39,861 32,746 21,436 2,882
-------- -------- -------- -------- -------- -------- -------- -------- --------
End of period $ 36,491 $ 45,366 $ 16,499 $ 67,837 $ 71,573 $ 71,622 $ 26,990 $ 32,746 $ 21,436
======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
B-7
<PAGE>
<TABLE>
<CAPTION>
Separate Account B
Combined Statements of Changes in Net Assets
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
Divisions Investing In
-------------------------------------------------------------------------------------------------------------
All-Growth Series Real Estate Series Fully Managed Series
--------------------------------- ---------------------------------- -----------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease)
in net assets
Operations:
Net investment
income (loss) $ 3,852 $ 55 $ (178) $ 1,052 $ 1,515 $ 640 $ 1,745 $ 1,760 $ 2,384
Net realized gain
(loss) on
investments 1,011 77 477 369 539 514 1,311 1,060 525
Net change in
unrealized
appreciation
depreciation)
of
investments 10,501 (7,815) 2,647 3,425 (641) (549) 16,314 (12,529) 1,700
Net increase
(decrease)
in net assets
resulting
from operations --------- --------- --------- --------- --------- --------- --------- --------- ---------
15,364 (7,683) 2,946 4,846 1,413 605 19,370 (9,709) 4,609
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Policy related
transactions:
Premiums 11,880 18,242 34,573 1,928 9,862 22,416 10,129 21,742 70,789
Net transfers
among
Divisions and
Guaranteed
Interest
Division
of Golden
American 6,292 9,624 (2,152) (2,903) 208 4,008 5,315 (11,098) 109
Surrenders and
other
withdrawals (10,712) (4,906) (2,430) (4,799) (2,919) (1,717) (13,651) (9,050) (4,050)
Policy related
charges
and fees (1,489) (709) (303) (1,193) (401) (141) (2,673) (1,341) (517)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net increase
(decrease)
in net assets
resulting
from policy
related
transactions 5,971 22,251 29,688 (6,967) 6,750 24,566 (880) 253 66,331
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net increase
(decrease)
in net assets 21,335 14,568 32,634 (2,121) 8,163 25,171 18,490 (9,456) 70,940
Net assets:
Beginning of
period 70,621 56,053 23,419 36,934 28,771 3,600 98,837 108,293 37,353
--------- --------- --------- --------- --------- --------- --------- --------- ---------
End of period $ 91,956 $ 70,621 $ 56,053 $ 34,813 $ 36,934 $ 28,771 $ 117,327 $ 98,837 $ 108,293
========= ========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
See Accompanying Notes.
B-8
<PAGE>
<TABLE>
<CAPTION>
Separate Account B
Combined Statements of Changes in Net Assets
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
Divisions Investing In
---------------------------------------------------------------------------------------------
Multiple Allocation Series Capital Appreciation Rising Dividends Series
------------------------------ ----------------------------- -------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993(a)
---------- -------- -------- --------- -------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss) $ 18,601 $ 7,701 $ 15,125 $ 9,151 $ 868 $ 567 $ (81) $ 317 $ 5
Net realized gain (loss) on
investments 4,715 2,844 295 2,221 1,427 247 776 55 --
Net change in unrealized
appreciation (depreciation)
of investments 26,239 (17,050) 672 14,531 (4,731) 2,955 16,037 (826) 221
--------- -------- -------- -------- ------- ------- ------- ------- -------
Net increase (decrease) in net
assets resulting
from operations 49,555 (6,505) 16,092 25,903 (2,436) 3,769 16,732 (454) 226
--------- -------- -------- -------- ------- ------- ------- ------- -------
Policy related transactions:
Premiums 17,865 74,594 150,789 9,240 19,196 63,986 11,968 25,150 11,566
Net transfers among Divisions
and Guaranteed Interest
Division of Golden American (9,426) (9,842) 5,675 12,826 (6,163) 3,403 12,320 15,544 2,633
Surrenders and other withdrawals (42,733) (30,150) (12,915) (13,162) (7,902) (2,393) (9,800) (3,844) (25)
Policy related charges and fees (7,267) (3,746) (1,609) (2,104) (1,149) (331) (1,263) (399) (12)
--------- -------- -------- -------- ------- ------- ------- ------- -------
Net increase (decrease) in net
assets resulting from policy
related transactions (41,561) 30,856 141,940 6,800 3,982 64,665 13,225 36,451 14,162
--------- -------- -------- -------- ------- ------- ------- ------- -------
Net increase (decrease)
in net assets 7,994 24,351 158,032 32,703 1,546 68,434 29,957 35,997 14,388
Net assets:
Beginning of period 297,508 273,157 115,125 88,346 86,800 18,366 50,385 14,388 --
--------- -------- -------- -------- ------- ------- ------- ------- -------
End of period $ 305,502 $297,508 $273,157 $121,049 $88,346 $86,800 $80,342 $50,385 $14,388
========= ======== ======== ======== ======= ======= ======= ======= =======
</TABLE>
- ------------------------------------------------------------------------
(a) Commencement of operations, October, 1993
B-9
<PAGE>
<TABLE>
<CAPTION>
Separate Account B
Combined Statements of Changes in Net Assets
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
Divisions Investing In
-----------------------------------------------------------------
Value Strategic
Market Manager Equity Equity
Emerging Markets Series Series Series Series Combined
------------------------------- --------------- -------- ------- ----------------------------
1995 1994 1993(a) 1995 1994(b) 1995(c) 1995(d) 1995 1994 1993
----------- ------- -------- ------ -------- -------- ------- -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income
(loss) $ (434) $ 2,125 $ (24) $ 203 $ 7 $ 601 $ 7 $ 36,114 $ 18,739 $ 21,125
Net realized gain (loss)
on investments (7,448) 836 -- 29 -- 687 (1) 5,077 8,590 3,162
Net change in unrealized
appreciation (depreciation)
of investments 1,603 (13,793) 3,971 943 (1) 1,870 28 99,888 (63,963) 14,477
-------- -------- ------- ------ ------ ------- ------ --------- -------- --------
Net increase (decrease) in
net assets resulting
from operations (6,279) (10,832) 3,947 1,175 6 3,158 34 141,079 (36,634) 38,764
-------- -------- ------- ------ ------ ------- ------ --------- -------- --------
Policy related transactions:
Premiums 8,150 30,113 13,923 2,298 1,414 9,018 3,240 106,729 284,246 455,721
Net transfers among Divisions
and Guaranteed Interest Division
of Golden American (15,911) 14,778 12,702 301 1,335 17,110 4,868 12,005 2,259 (3,870)
Surrenders and other withdrawals (7,740) (4,285) (62) (767) -- (776) (172) (128,969) (91,898) (32,742)
Policy related charges and fees (1,079) (517) (21) (553) (3) (63) 61 (24,780) (10,667) (3,741)
-------- -------- ------- ------ ------ ------- ------ --------- -------- --------
Net increase (decrease) in net
assets resulting from policy
related transactions (16,580) 40,089 26,542 1,279 2,746 25,289 7,997 (35,015) 183,940 415,368
-------- -------- ------- ------ ------ ------- ------ --------- -------- --------
Net increase (decrease)
in net assets (22,859) 29,257 30,489 2,454 2,752 28,447 8,031 106,064 147,306 454,132
Net assets:
Beginning of period 59,746 30,489 -- 2,752 -- -- -- 854,814 707,508 253,376
-------- -------- ------- ------ ------ ------- ------ --------- -------- --------
End of period $ 36,887 $ 59,746 $30,489 $5,206 $2,752 $28,447 $8,031 $ 960,878 $854,814 $707,508
======== ======== ======= ====== ====== ======= ====== ========= ======== ========
</TABLE>
- ------------------------------------------------------------------------
(a) Commencement of operations, October, 1993
(b) Commencement of operations, November, 1994
(c) Commencement of operations, January, 1995
(d) Commencement of operations, October, 1995
B-10
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
SEPARATE ACCOUNT B
DECEMBER 31, 1995
1. ORGANIZATION
Separate Account B (the 'Account') was established on June 14, 1988, by
Golden American Life Insurance Company ('Golden American'), under Minnesota
insurance law to support the operations of variable annuity contracts
('Contracts'). Effective September 30, 1992, Golden American became a
wholly-owned subsidiary of BT Variable, Inc. ('BTV'), an indirect wholly-owned
subsidiary of Bankers Trust Company ('Bankers Trust'). Previously, Golden
American was owned by Mutual Benefit Life Insurance Company in Rehabilitation
('Mutual Benefit'). In a transaction that closed on September 30, 1992, Bankers
Trust acquired from Mutual Benefit, in accordance with the terms of an Exchange
Agreement, all of the issued and outstanding capital stock of Golden American
and Directed Services, Inc. ('DSI'), an affiliate of Golden American, and
certain related assets and contributed them to BTV. The transaction had no
effect on the accompanying financial statements. Golden American is primarily
engaged in the issuance of variable insurance products and is licensed as a life
insurance company in the District of Columbia and all states except New York.
Effective December 30, 1993, Golden American was redomesticated from the State
of Minnesota to the State of Delaware.
Operations of the Account commenced on January 25, 1989. Golden American
provides for variable accumulation and benefits under the contracts by crediting
annuity considerations to one or more divisions within the Account or to the
Golden American Guaranteed Interest Division, the Golden American Fixed Interest
Division, the Fixed Separate Account, and the Managed Global Division of
Separate Account D, which are not part of the Account, as elected by the
Contractowners. The assets of the Account are owned by Golden American. The
portion of the Account's assets applicable to Contracts will not be chargeable
with liabilities arising out of any other business Golden American may conduct,
but obligations of the Account, including the promise to make benefit payments,
are obligations of Golden American.
The Account makes available, under Golden Select Contracts, thirteen investment
divisions: the Liquid Asset, the Limited Maturity Bond, the Natural Resources,
the All-Growth, the Real Estate, the Fully Managed, the Multiple Allocation, the
Capital Appreciation, the Rising Dividends (commenced operations October, 1993),
the Emerging Markets (commenced operations on October 4, 1993), the Market
Manager (commenced operations November, 1994) the Value Equity (commenced
operations January, 1995) and the Strategic Equity (commenced operations
October, 1995) Divisions ('Divisions'). The assets in each Division are
invested in shares of a designated series ('Series') of a mutual fund, The GCG
Trust (the 'Trust'). The Account also includes The Fund For Life Division, which
is not included in the accompanying financial statements, and which ceased to
accept new Contracts effective December 31, 1994.
The Account is a unit investment trust and is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended.
The net assets maintained in the Account provide the basis for the periodic
determination of the amount of benefits under the Contracts. The net assets may
not be less than the amount required under state law to provide for death
benefits (without regard to the minimum death benefit guarantee) and other
Contract benefits. Additional assets are held in Golden American's general
account to cover the contingency that the guaranteed minimum death benefit might
exceed the death benefit which would have been payable in the absence of such
guarantee. Golden American has entered into reinsurance agreements with
unaffiliated reinsurers to cover substantially all the insurance risk under the
Contracts. Golden American remains liable to the extent that the reinsurers do
not meet their obligations under the reinsurance agreements.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies of the
Account:
USE OF ESTIMATES: The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
INVESTMENTS: Investments are made in shares of a Series of the Trust and are
valued at the net asset value per share of the respective Series of the Trust.
Investment transactions in each Series of the Trust are recorded on the trade
date. Distributions of net investment income and capital gains of each Series of
the Trust are recognized on the ex-distribution date. Realized gains and losses
on redemptions of the shares of the Series of the Trust are determined on the
identified cost basis.
For the years ended December 31, 1995 and 1994 the cost of purchases of shares
of the Trust aggregated $228,738,000 and $352,605,000, respectively and the
proceeds from sales of shares of the Trust aggregated $226,848,000 and
$149,774,000, respectively.
B-11
- --------------------------------------------------------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
SEPARATE ACCOUNT B
DECEMBER 31, 1995
2. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
FEDERAL INCOME TAXES: Operations of the Account form a part of, and are taxed
with, the total operations of Golden American which is taxed as a life insurance
company under the Internal Revenue Code. Earnings and realized capital gains of
the Account attributable to the Contractowners are excluded in the determination
of the federal income tax liability of Golden American.
3. CHARGES AND FEES
Under the terms of the Contracts, certain charges are allocated to the Contracts
to cover Golden American's expenses in connection with the issuance and
administration of the Contracts. Following is a summary of these charges:
MORTALITY AND EXPENSE RISK CHARGES: Golden American assumes mortality and
expense risks related to the operations of the Account and, in accordance with
the terms of the Contracts, deducts a daily charge from the assets of the
Account at annual rates of .80%, .90%, 1.25%, 1.10%, 1.25% and 1.40% of the
assets attributable to the DVA 80, DVA 100, DVA Series 100, DVA Plus-Standard,
DVA Plus-Annual Ratchet, and DVA Plus-7% Solution, respectively to cover these
risks.
ASSET BASED ADMINISTRATIVE CHARGE: A daily charge at an annual rate of .10% is
deducted from assets attributable to DVA 100 and DVA Series 100 Contracts. A
daily charge at an annual rate of .15% is deducted from the assets attributable
to DVA Plus Contracts.
MINIMUM DEATH BENEFIT GUARANTEE CHARGE: For certain Contracts, a minimum death
benefit guarantee charge of up to $1.20 per $1,000 of guaranteed death benefit
per Contract year is deducted from the accumulation value of Deferred Annuity
Contracts on each Contract processing date.
PREMIUM TAXES: For certain contracts, premium taxes are deducted, where
applicable, from the accumulation value of each Contract. The amount and timing
of the deduction depend on the annuitant's state of residence and currently
ranges up to 3.5% of premiums.
OTHER CONTRACT CHARGES: An administrative charge of $40 per Contract year is
deducted from accumulation value of Deferred Annuity Contracts to cover ongoing
administrative expenses. The charge is deducted on the Contract processing date
at the end of the Contract processing period. This charge has been waived for
certain offerings of the Contract.
DEFERRED SALES LOAD: Under contracts offered prior to October 1995, a sales load
of up to 7 1/2% was applicable to each premium payment for sales-related
expenses as specified in the Contracts. For DVA Series 100 the sales load is
deducted in equal annual installments over the period the Contract is in force,
not to exceed 10 years. For other DVA 80 and DVA 100 Contracts, although the
sales load is chargeable to each premium when it is received by Golden American,
the amount of such charge is initially advanced by Golden American to
Contractowners and included in the accumulation value and then deducted in equal
installments on each Contract processing date over a period of six years. Upon
surrender of the Contract, the unamortized deferred sales load is deducted from
the accumulation value by Golden American. In addition, when partial withdrawal
limits are exceeded, a portion of the unamortized deferred sales load is
deducted.
CONTINGENT DEFERRED SALES CHARGE: Under DVA Plus Contracts issued subsequent to
September 1995, a contingent sales charge ('Surrender Charges') is imposed as a
percentage of each premium payment if the Contract is surrendered or an excess
partial withdrawal is taken during the seven year period from the date a premium
payment is received. The Surrender Charges are imposed at a rate of 7% during
the first two complete years after purchase declining to 6%, 5%, 4%, 3%, and 1%
after the second, third, fourth, fifth, and sixth years, respectively.
The net assets retained in the Account by Golden American in the accompanying
financial statements represent the unamortized deferred sales load, surrender
charges and premium taxes advanced by Golden American, noted above.
B-12
- --------------------------------------------------------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
SEPARATE ACCOUNT B
DECEMBER 31, 1995
3. CHARGES AND FEES--(CONTINUED)
Net assets retained in the Account by Golden American are as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Balance at beginning of year.............................................. $ 44,008 $ 37,364
Sales load advanced and additions to surrender charges.................... 6,572 16,138
Premium tax advanced...................................................... 76 73
Net transfer (to) from Separate Account D, Fixed Account and Golden
American................................................................ (1,303) 666
Amortization of deferred sales load, surrender charges and premium tax.... (13,071) (10,233)
----------------- -----------------
Balance at end of year.................................................... $ 36,282 $ 44,008
----------------- -----------------
----------------- -----------------
</TABLE>
4. OTHER RELATED PARTY TRANSACTIONS
DSI, a registered broker/dealer, acts as the distributor and principal
underwriter (as defined in the Securities Act of 1933 and the Investment Company
Act of 1940, as amended) of the Contracts issued through the Account. For 1995
and 1994, fees paid by Golden American to DSI aggregated $7,621,000 and
$15,939,000 respectively.
B-13
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
SEPARATE ACCOUNT B
DECEMBER 31, 1995
5. UNIT VALUES
Presented below is accumulation unit value information for units outstanding by
Contract type as of December 31, 1995
<TABLE>
<CAPTION>
TOTAL UNIT
SERIES UNITS UNIT VALUE VALUE
- ------------------------------------------------------------------------------------ ------------ ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Liquid Asset
DVA 80......................................................................... 398,563 $ 13.429 $ 5,352
DVA 100........................................................................ 2,096,044 13.243 27,757
DVA Series 100................................................................. 70,999 12.921 917
DVA Plus -- Standard........................................................... 37,887 13.029 494
DVA Plus -- Annual Ratchet..................................................... 62,084 12.895 801
DVA Plus -- 7% Solution........................................................ 93,239 12.762 1,190
-------------
36,511
Limited Maturity Bond
DVA 80......................................................................... 206,399 15.307 3,160
DVA 100........................................................................ 4,103,020 15.095 61,935
DVA Series 100................................................................. 14,356 14.729 212
DVA Plus -- Standard........................................................... 26,976 14.865 401
DVA Plus -- Annual Ratchet..................................................... 11,834 14.711 174
DVA Plus -- 7% Solution........................................................ 136,553 14.559 1,988
-------------
67,870
Natural Resources
DVA 80......................................................................... 249,344 15.578 3,884
DVA 100........................................................................ 1,433,795 15.362 22,026
DVA Series 100................................................................. 19,158 14.989 287
DVA Plus -- Standard........................................................... 24,828 15.114 375
DVA Plus -- Annual Ratchet..................................................... 2,847 14.958 42
DVA Plus -- 7% Solution........................................................ 26,605 14.803 394
-------------
27,008
All-Growth
DVA 80......................................................................... 260,857 14.537 3,792
DVA 100........................................................................ 5,828,945 14.335 83,560
DVA Series 100................................................................. 46,215 13.987 647
DVA Plus -- Standard........................................................... 21,908 14.104 309
DVA Plus -- Annual Ratchet..................................................... 16,567 13.959 231
DVA Plus -- 7% Solution........................................................ 251,872 13.814 3,479
-------------
92,018
Real Estate
DVA 80......................................................................... 105,134 16.428 1,727
DVA 100........................................................................ 1,965,015 16.201 31,835
DVA Series 100................................................................. 14,556 15.808 230
DVA Plus -- Standard........................................................... 2,716 15.940 43
DVA Plus -- Annual Ratchet..................................................... 2,910 15.775 46
DVA Plus -- 7% Solution........................................................ 61,143 15.612 955
-------------
34,836
Fully Managed
DVA 80......................................................................... 258,587 15.694 4,058
DVA 100........................................................................ 7,054,994 15.476 109,184
DVA Series 100................................................................. 29,312 15.101 443
DVA Plus -- Standard........................................................... 49,153 15.227 748
DVA Plus -- Annual Ratchet..................................................... 13,988 15.070 211
DVA Plus -- 7% Solution........................................................ 184,364 14.914 2,750
-------------
117,394
Multiple Allocation
DVA 80......................................................................... 1,217,849 17.235 20,989
DVA 100........................................................................ 16,134,381 16.996 274,218
DVA Series 100................................................................. 140,336 16.584 2,327
DVA Plus -- Standard........................................................... 104,463 16.722 1,747
DVA Plus -- Annual Ratchet..................................................... 21,073 16.550 348
DVA Plus -- 7% Solution........................................................ 370,515 16.378 6,068
-------------
305,697
</TABLE>
B-14
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
SEPARATE ACCOUNT B
DECEMBER 31, 1995
5. UNIT VALUES--(CONTINUED)
<TABLE>
<CAPTION>
TOTAL UNIT
SERIES UNITS UNIT VALUE VALUE
------------------------------------------------------------------------------------ ------------ ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Capital Appreciation
DVA 80......................................................................... 154,271 $ 14.935 $ 2,304
DVA 100........................................................................ 7,627,317 14.825 113,076
DVA Series 100................................................................. 26,783 14.634 392
DVA Plus -- Standard........................................................... 24,117 14.707 355
DVA Plus -- Annual Ratchet..................................................... 16,369 14.627 239
DVA Plus -- 7% Solution........................................................ 326,610 14.548 4,752
-------------
121,118
Rising Dividends
DVA 80......................................................................... 102,616 13.356 1,370
DVA 100........................................................................ 5,536,766 13.296 73,617
DVA Series 100................................................................. 50,637 13.191 668
DVA Plus -- Standard........................................................... 22,934 13.237 304
DVA Plus -- Annual Ratchet..................................................... 36,100 13.194 476
DVA Plus -- 7% Solution........................................................ 300,820 13.151 3,956
-------------
80,391
Emerging Markets
DVA 80......................................................................... 227,757 9.317 2,122
DVA 100........................................................................ 3,533,661 9.275 32,775
DVA Series 100................................................................. 30,591 9.202 281
DVA Plus -- Standard........................................................... 15,670 9.234 145
DVA Plus -- Annual Ratchet..................................................... 12,465 9.204 115
DVA Plus -- 7% Solution........................................................ 160,820 9.174 1,475
-------------
36,913
Market Manager
DVA 100........................................................................ 480,472 12.386 5,951
Value Equity
DVA 80......................................................................... 202,148 13.417 2,712
DVA 100........................................................................ 1,676,442 13.391 22,449
DVA Series 100................................................................. 10,226 13.345 136
DVA Plus -- Standard........................................................... 34,272 13.374 458
DVA Plus -- Annual Ratchet..................................................... 23,394 13.356 313
DVA Plus -- 7% Solution........................................................ 179,453 13.339 2,394
-------------
28,462
Strategic Equity
DVA 80......................................................................... 137,215 10.013 1,374
DVA 100........................................................................ 362,606 10.009 3,629
DVA Series 100................................................................. 26,760 9.999 267
DVA Plus -- Standard........................................................... 76,095 10.014 762
DVA Plus -- Annual Ratchet..................................................... 47,478 10.011 475
DVA Plus -- 7% Solution........................................................ 152,633 10.009 1,528
-------------
8,035
-------------
Total........................................................................ $ 962,204
-------------
-------------
</TABLE>
B-15
<PAGE>
[GOLDEN AMERICAN LIFE INSURANCE LOGO ]
ANNUAL REPORT
------------------
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
OF
GOLDEN AMERICAN LIFE INSURANCE COMPANY
------------------
DECEMBER 31, 1995
GoldenSelect products are issued by Golden American Life Insurance Company and
distributed by
Directed Services, Inc., both subsidiaries of Bankers Trust Company
<PAGE>
Golden American Life Insurance Company
A SUBSIDIARY OF BANKERS TRUST COMPANY
1001 JEFFERSON STREET, SUITE 400, WILMINGTON, DE 19801 TEL: 302-576-3400
FAX: 302-576-3450
February 21, 1996
Dear Contractholder:
I am pleased to provide you with the 1995 Annual Report for The Managed Global
Account of Separate Account D. This portfolio invests in a wide range of equity,
debt securities and money market instruments worldwide. It has been managed by
Warburg, Pincus Counsellors, Inc. since July, 1994 and seeks high total
investment returns consistent with prudent regard for capital preservation.
Included in the Annual Report is a report of Warburg, Pincus Counsellors, Inc.
Warburg, Pincus' comments reflect their views as of the date written, and are
subject to change at any time.
If you have any questions or would like additional information, please call
Golden American customer service: 1-800-366-0066. We would be pleased to assist
you.
Thank you for your continued support of GoldenSelect products. We look forward
to serving you in 1996 and beyond.
Sincerely.
/s/ Terry L. Kendall
Terry L. Kendall
President
D-1
<PAGE>
MANAGED GLOBAL ACCOUNT
The objective of the GoldenSelect Managed Global Account of Separate Account D
is long-term capital appreciation and international diversification.
The year saw fairly wide divergences in performance among foreign markets. Most
European exchanges recorded solid gains, while many of the emerging markets,
particularly in Asia, suffered losses. Japan, after falling sharply in the
year's first six months, staged a powerful recovery at midyear and finished the
year even.
Japan remains the Account's largest commitment to a single country, at 32% of
the portfolio. The Portfolio Manager is encouraged by developments in the
Japanese economy, and is equally optimistic about the stock market's prospects
in 1996.
Emerging markets, collectively, suffered in 1995, and as a result valuations are
now lower than they have been in several years. The Portfolio Manager sees many
attractive opportunities in emerging markets as 1996 begins, particularly in
Asia, which represents the major focus of the Account's emerging-market
exposure.
As 1996 begins, the Portfolio Manager's outlook on international equity markets
is, in general, positive, and believes that the Account is well-positioned with
regard to its regional and country allocations and its specific holdings.
WARBURG, PINCUS COUNSELLORS, INC.
TOP FIVE HOLDINGS AS OF DECEMBER 31, 1995:
<TABLE>
<S> <C>
1. Banco De Santander S.A., ADR................................................... 4.0%
2. Canon Inc...................................................................... 3.7%
3. East Japan Railway Company..................................................... 3.1%
4. Nippon Telegraph & Telephone Corporation....................................... 3.0%
5. VA Technologie AG.............................................................. 3.0%
</TABLE>
ASSET DISTRIBUTION BY COUNTRY
The following table replaces a pie chart showing asset distribution by country
as a precentage of total investments.
Other............................... 36.4%
Argentina........................... 4.0%
Spain............................... 4.0%
Hong Kong........................... 4.1%
New Zealand......................... 6.0%
France.............................. 6.1%
Great Britain....................... 7.4%
Japan............................... 32.0%
D-2
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost $67,478,262) (Notes 1 and 3)........................................................... $ 70,981,052
Cash............................................................................................................... 78,896
Receivables:
Investment securities sold...................................................................................... 1,336,669
Dividends and interest.......................................................................................... 99,399
Premium payments and reallocations.............................................................................. 20,839
Net unrealized appreciation of forward foreign currency exchange contracts......................................... 351,688
Prepaid expenses and other assets.................................................................................. 9,271
-------------
Total Assets.................................................................................................... 72,877,814
LIABILITIES
Payables:
Investment securities purchased................................................................................. 334,419
Surrenders, withdrawals and reallocations....................................................................... 58,577
Golden American for contract related expenses (Note 2).......................................................... 43,558
Accrued management and organization fees (Note 2).................................................................. 1,684
Accrued expenses................................................................................................... 64,469
-------------
Total Liabilities............................................................................................... 502,707
-------------
Total Net Assets................................................................................................ $ 72,375,107
-------------
-------------
NET ASSETS
For variable annuity contracts..................................................................................... $ 69,499,713
Retained in The Managed Global Account of Separate Account D by Golden American (Note 2)........................... 2,875,394
-------------
Total Net Assets................................................................................................ $ 72,375,107
-------------
-------------
</TABLE>
See Notes to Financial Statements.
D-3
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding taxes of $3,203).............................................................. $ 92,139
Dividends (net of foreign withholding taxes of $149,639)........................................................... 1,207,385
------------
Total Investment Income......................................................................................... 1,299,524
------------
EXPENSES:
Mortality and expense risk and asset based administrative charges (Note 2)......................................... 739,881
Management and advisory fees (Note 2).............................................................................. 734,700
Custodian fees (Note 2)............................................................................................ 111,693
Accounting fees.................................................................................................... 51,766
Auditing fees...................................................................................................... 23,639
Printing and mailing............................................................................................... 14,268
Board of governors' fees and expenses (Note 2)..................................................................... 5,987
Legal fees......................................................................................................... 3,818
Other.............................................................................................................. 40,556
------------
Total Expenses.................................................................................................. 1,726,308
Less amounts paid by the investment manager pursuant to expense limitation agreement (Note 2)...................... (63,386)
------------
Net Expenses.................................................................................................... 1,662,922
------------
NET INVESTMENT LOSS.................................................................................................. (363,398)
------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) from:
Security transactions........................................................................................... (6,119,111)
Forward foreign currency exchange contracts..................................................................... 1,952,175
Foreign currency transactions................................................................................... (4,990)
Net change in unrealized appreciation of:
Securities...................................................................................................... 7,765,310
Forward foreign currency exchange contracts..................................................................... 351,688
Other assets and liabilities denominated in foreign currencies.................................................. 3,323
------------
Net realized and unrealized gain on investments.................................................................... 3,948,395
------------
Net increase in net assets resulting from operations............................................................ $ 3,584,997
------------
------------
</TABLE>
See Notes to Financial Statements.
D-4
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
------------- -------------
INCREASE/(DECREASE) IN NET ASSETS
<S> <C> <C>
OPERATIONS:
Net investment loss................................................................................ $ (363,398) $ (259,767)
Net realized loss on securities, forward foreign currency exchange contracts and foreign currency
transactions.................................................................................... (4,171,926) (1,363,558)
Net unrealized appreciation/(depreciation) of securities, forward foreign currency exchange
contracts and other assets and liabilities denominated in foreign currencies.................... 8,120,321 (11,511,952)
------------- -------------
Net increase/(decrease) in net assets resulting from operations.................................... 3,584,997 (13,135,277)
------------- -------------
CONTRACT RELATED TRANSACTIONS:
Premiums........................................................................................... 6,235,725 22,680,207
Benefits, surrenders and other withdrawals......................................................... (9,881,861) (8,496,158)
Net transfers (to) from Separate Account B, Fixed Account and Golden American...................... (12,563,025) (2,244,552)
Contract related charges and fees (Note 2)......................................................... (1,209,284) (1,073,158)
------------- -------------
Net increase/(decrease) in net assets resulting from contract related transactions................. (17,418,445) 10,866,339
------------- -------------
Net decrease in net assets......................................................................... (13,833,448) (2,268,938)
NET ASSETS:
Beginning of year.................................................................................. 86,208,555 88,477,493
------------- -------------
End of year........................................................................................ $ 72,375,107 $ 86,208,555
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements.
D-5
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT EACH YEAR FOR THE DVA 100.
<TABLE>
<CAPTION>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
12/31/95 12/31/94** 12/31/93 12/31/92*
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning of year................................. $ 9.091 $ 10.518 $ 10.008 $ 10.000
--------- ----------- --------- -----------
INCOME/(LOSS) FROM INVESTMENT OPERATIONS:
Net investment income/(loss) #............................................. (0.044) (0.030) (0.046) 0.022
Net realized and unrealized gain/(loss) on investments..................... 0.612 (1.397) 0.556 (0.014)
--------- ----------- --------- -----------
Total from investment operations........................................... 0.568 (1.427) 0.510 0.008
--------- ----------- --------- -----------
Accumulation unit value, end of year....................................... $ 9.659 $ 9.091 $ 10.518 $ 10.008
--------- ----------- --------- -----------
--------- ----------- --------- -----------
Total return............................................................... 6.25% (13.57)% 5.10% 0.08%++
--------- ----------- --------- -----------
--------- ----------- --------- -----------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)......................................... $ 68,283 $ 83,702 $ 85,702 $ 38,699
Ratio of operating expenses to average net assets.......................... 2.27% 2.31% 2.68% 2.46%+
Decrease reflected in above expense ratio due to expense limitations....... 0.08% 0.09% 0.03% --
Ratio of net investment income/(loss) to average net assets................ (0.50)% (0.31)% (0.44)% 1.78%+
</TABLE>
- ------------------
* These units were available for sale on October 21, 1992.
** On July 1, 1994 Warburg, Pincus Counsellors, Inc. became Portfolio Manager of
the Account. Prior to that date the Account had been advised by another
Portfolio Manager.
+ Annualized
++ Non-annualized
# Per unit numbers have been calculated using the average unit method, which
more appropriately presents the per unit data for the period.
See Notes to Financial Statements.
D-6
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT EACH YEAR FOR THE DVA 80.
<TABLE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
12/31/95 12/31/94** 12/31/93*
----------- ----------- ---------
<S> <C> <C> <C>
Accumulation unit value, beginning of year................................................. $ 9.130 $ 10.541 $ 10.420
----------- ----------- ---------
INCOME/(LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss #...................................................................... (0.027) (0.011) (0.005)
Net realized and unrealized gain/(loss) on investments..................................... 0.617 (1.400) 0.126
----------- ----------- ---------
Total from investment operations........................................................... 0.590 (1.411) 0.121
----------- ----------- ---------
Accumulation unit value, end of year....................................................... $ 9.720 $ 9.130 $ 10.541
----------- ----------- ---------
----------- ----------- ---------
Total return............................................................................... 6.46% (13.39)% 1.16%++
----------- ----------- ---------
----------- ----------- ---------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)......................................................... $ 1,047 $ 1,877 $ 2,087
Ratio of operating expenses to average net assets.......................................... 2.07% 2.11% 2.48%+
Decrease reflected in above expense ratio due to expense limitations....................... 0.08% 0.09% 0.03%+
Ratio of net investment loss to average net assets......................................... (0.30)% (0.11)% (0.24)%+
</TABLE>
- ------------------
* These units were available for sale on October 14, 1993.
** On July 1, 1994 Warburg, Pincus Counsellors, Inc. became Portfolio Manager of
the Account. Prior to that date the Account had been advised by another
Portfolio Manager.
+ Annualized
++ Non-annualized
# Per unit numbers have been calculated using the average unit method, which
more appropriately presents the per unit data for the period.
See Notes to Financial Statements.
D-7
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
<TABLE>
<CAPTION>
FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT EACH YEAR FOR THE DVA SERIES 100.
YEAR YEAR PERIOD
ENDED ENDED ENDED
12/31/95 12/31/94** 12/31/93*
----------- ----------- ---------
<S> <C> <C> <C>
Accumulation unit value, beginning of year................................................. $ 9.027 $ 10.481 $ 10.536
----------- ----------- ---------
INCOME/(LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss #...................................................................... (0.076) (0.066) (0.036)
Net realized and unrealized gain/(loss) on investments..................................... 0.607 (1.388) (0.019)
----------- ----------- ---------
Total from investment operations........................................................... 0.531 (1.454) (0.055)
----------- ----------- ---------
Accumulation unit value, end of year....................................................... $ 9.558 $ 9.027 $ 10.481
----------- ----------- ---------
----------- ----------- ---------
Total return............................................................................... 5.87% (13.87)% (0.52)%++
----------- ----------- ---------
----------- ----------- ---------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)......................................................... $ 545 $ 630 $ 688
Ratio of operating expenses to average net assets.......................................... 2.62% 2.66% 3.02%+
Decrease reflected in above expense ratio due to expense limitations....................... 0.08% 0.09% 0.03%+
Ratio of net investment loss to average net assets......................................... (0.85)% (0.66)% (0.79)%+
</TABLE>
- ------------------
* These units were available for sale on April 27, 1993.
** On July 1, 1994 Warburg, Pincus Counsellors, Inc. became Portfolio Manager of
the Account. Prior to that date the Account had been advised by another
Portfolio Manager.
+ Annualized
++ Non-annualized
# Per unit numbers have been calculated using the average unit method, which
more appropriately presents the per unit data for the period.
See Notes to Financial Statements.
D-8
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
DVA PLUS- DVA PLUS- DVA PLUS-
STANDARD ANNUAL RATCHET 7% SOLUTION
----------- --------------- -------------
PERIOD PERIOD PERIOD
ENDED ENDED ENDED
12/31/95* 12/31/95* 12/31/95*
----------- --------------- -------------
<S> <C> <C> <C>
Accumulation unit value, beginning of period................................... $ 9.323 $ 9.282 $ 9.240
----------- --------------- -------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss #.......................................................... (0.013) (0.013) (0.013)
Net realized and unrealized gain on investments................................ 0.266 0.262 0.259
----------- --------------- -------------
Total from investment operations............................................... 0.253 0.249 0.246
----------- --------------- -------------
Accumulation unit value, end of period......................................... $ 9.576 $ 9.531 $ 9.486
----------- --------------- -------------
----------- --------------- -------------
Total return................................................................... 2.71%++ 2.69%++ 2.66%++
----------- --------------- -------------
----------- --------------- -------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........................................... $ 256 $ 262 $ 1,982
Ratio of operating expenses to average net assets.............................. 2.40%+ 2.55%+ 2.60%+
Decrease reflected in above expense ratio due to expense limitations........... 0.08%+ 0.08%+ 0.08%+
Ratio of net investment loss to average net assets............................. (0.63)%+ (0.78)%+ (0.83)%+
</TABLE>
- ------------------
* These units were available for sale on October 2, 1995.
+ Annualized
++ Non-annualized
# Per unit numbers have been calculated using the average unit method, which
more appropriately presents the per unit data for the period.
See Notes to Financial Statements.
D-9
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- -------------- -----------
COMMON STOCKS -- 93.7%
ARGENTINA -- 3.9%
<S> <C> <C>
2,318 Banco de Galicia Y Buenos Aires
S.A............................. $ 47,809
21,045 Banco Frances del Rio de la Plata
S.A............................. 186,220
19,320 Banco Frances del Rio de la Plata
S.A., ADR....................... 519,225
61,900 Capex S.A., Class A, GDR**........ 897,550
25,600 Telefonica de Argentina S.A.,
ADR............................. 697,600
21,800 Y.P.F. S.A........................ 471,425
-----------
2,819,829
-----------
AUSTRALIA -- 2.6%
71,312 BTR Ltd. Class A.................. 348,227
51,375 Niugini Mining Ltd.+.............. 98,898
274,500 Pasminco Ltd.+.................... 336,637
212,900 Woodside Petroleum Ltd............ 1,088,677
-----------
1,872,439
-----------
AUSTRIA -- 3.0%
17,000 VA Technologie AG+................ 2,159,051
-----------
BRAZIL -- 0.4%
9,000 Panamerican Beverages Inc., Class
A............................... 288,000
-----------
CHINA -- 0.4%
15,000 Jilan Chemical, ADR............... 322,500
-----------
DENMARK -- 0.3%
11,100 International Service Systems AS,
Class B......................... 249,865
-----------
FINLAND -- 1.1%
15,650 Metsa-Serla, Class B.............. 482,070
500 Metra AB, Class B................. 20,688
11,600 Valmet, Class A................... 287,987
-----------
790,745
-----------
FRANCE -- 6.0%
9,507 Bouygues.......................... 956,907
4,000 Cetelem........................... 750,145
47,300 Largardere Groupe................. 868,598
8,351 Scor S.A.......................... 260,703
19,671 Total S.A., Class B............... 1,326,518
4,597 Total S.A., ADS................... 156,298
-----------
4,319,169
-----------
GERMANY -- 2.9%
12,400 Adidas AG......................... 656,318
11,500 Adidas AG, ADR**.................. 302,158
3,400 Deutsche Bank AG.................. 161,156
13,000 SGL Carbon AG..................... 1,006,276
-----------
2,125,908
-----------
GREAT BRITAIN -- 7.2%
173,956 British Airport Authority Ord..... 1,310,242
11,600 Cookson Group PLC................. 55,125
50,000 Govett & Company Ltd., Ord. PLC... 180,148
64,000 Grand Metropolitan PLC Ord........ 460,682
156,223 Prudential Corporation PLC........ 1,005,637
31,232 Reckitt & Colman PLC Ord.......... 345,589
630,000 Singer & Friedlander Group PLC.... 1,061,553
295,400 Takare PLC........................ 825,761
-----------
5,244,737
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- -------------- -----------
<S> <C> <C>
HONG KONG -- 4.1%
359,000 Citic Pacific Ltd................. $ 1,228,005
48,737 HSBC Holdings Ltd................. 737,437
141,201 Jardine Matheson Holdings Ltd..... 967,227
-----------
2,932,669
-----------
INDIA -- 3.1%
33,000 Hindalco Industries Ltd., GDR**... 1,126,290
41,400 India Fund (The) Inc.............. 367,425
51,200 Reliance Industries Ltd., GDS..... 716,800
-----------
2,210,515
-----------
INDONESIA -- 2.3%
34,500 Bank International Indonesia
(Foreign)....................... 114,296
99,000 PT Mulia Industrindo Ord.
(Foreign)....................... 279,270
79,500 PT Semen Gresik (Foreign)......... 222,523
10,500 PT Telekomunikas, ADR............. 265,125
410,000 PT Telekomunikas (Foreign)........ 537,940
19,800 PT Tri Polyta Indonesia, ADR...... 272,250
-----------
1,691,404
-----------
ISRAEL -- 1.8%
75,000 Ampal American Israel Corporation,
Class A......................... 393,750
38,500 ECI Telecom, Ltd.................. 878,281
-----------
1,272,031
-----------
JAPAN -- 29.5%
149,000 Canon Inc......................... 2,698,596
22,000 Circle K Japan Company Ltd........ 969,491
170 DDI Corporation................... 1,317,191
458 East Japan Railway Company........ 2,226,789
89,000 Hitachi Ltd....................... 896,465
2,500 Keyence Corporation............... 288,136
75,000 Kirin Beverage Corporation........ 1,009,685
5,000 Kyocera Corporation............... 371,429
11,000 Murata Manufacturing Company
Ltd............................. 404,843
94,000 NEC Corporation................... 1,147,119
27,000 Nippon Communication Systems
Corporation..................... 285,036
267 Nippon Telegraph & Telephone
Corporation..................... 2,161,215
54 NTT Data Communication Systems
Corporation..................... 1,814,818
40,800 Orix Corporation.................. 1,679,419
6,000 Rohm Company...................... 338,789
20,000 Sony Corporation.................. 1,199,031
33,000 TDK Corporation................... 1,684,358
3,000 UNY Company....................... 56,368
21,600 York-Benimaru Company Ltd......... 826,344
-----------
21,375,122
-----------
KOREA -- 2.5%
6,600 Mando Machinery Corporation,
GDR............................. 173,250
40,300 Mando Machinery Corporation,
GDR**........................... 1,057,875
5,800 Samsung Electric, GDR............. 559,700
-----------
1,790,825
-----------
MALAYSIA -- 0.4%
75,000 Westmont BHD...................... 259,873
-----------
MEXICO -- 0.4%
93,000 Gruma S.A., Series B.............. 261,581
-----------
</TABLE>
See Notes to Financial Statements.
D-10
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS --(CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- -------------- -----------
COMMON STOCKS -- (CONTINUED)
<S> <C> <C>
NEW ZEALAND -- 5.9%
1,313,354 Brierley Investments Ltd.......... $ 1,038,912
266,300 Fletcher Challenge Ltd............ 614,550
502,522 Fletcher Challenge (Forest
Division) Ltd................... 716,182
538,800 Lion Nathan Ltd................... 1,285,678
30,000 Sky City Ltd...................... 622,697
-----------
4,278,019
-----------
NORWAY -- 1.0%
17,100 Norsk Hydro, ADR.................. 716,063
-----------
PAKISTAN -- 0.3%
241,000 Pakistan Telecommunications
Corporation..................... 216,589
-----------
SINGAPORE -- 2.5%
9,000 D.B.S. Land Ltd................... 30,414
119,000 Development Bank of Singapore
Ltd............................. 1,480,665
464,000 I.P.C. Corporation................ 308,349
-----------
1,819,428
-----------
SPAIN -- 4.0%
58,100 Banco de Santander S.A., ADR...... 2,861,425
-----------
SWEDEN -- 3.0%
8,100 Asea AB, Class B.................. 787,983
35,200 Astra AB, Class B................. 1,394,112
-----------
2,182,095
-----------
SWITZERLAND -- 1.5%
615 Brown Boveri & Cie AG, Class A.... 714,744
200 Ciba-Geigy AG..................... 175,195
150 Danza Holding AG.................. 163,920
-----------
1,053,859
-----------
TAIWAN -- 2.5%
1,680,000 GP Taiwan Index Fund.............. 1,325,268
75,511 Tuntex Distinct Corporation,
GDS **.......................... 509,701
-----------
1,834,969
-----------
THAILAND -- 1.1%
146,800 Industrial Finance Corporation of
Thailand (Foreign).............. 498,269
81,400 Thai Military Bank Public Company
Ltd. (Foreign).................. 329,607
-----------
827,876
-----------
Total Common Stocks
(Cost $64,252,583).............. 67,776,586
-----------
WARRANTS -- 0.0%# COST ($20,647)
SWITZERLAND -- 0.0%#
600 Danza Holding AG, Expires
08/02/1996...................... 2,667
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- -------------- -----------
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS -- 3.8%
JAPAN -- 1.8%
JPY Matasushita Electric Works Ltd.,
111,000,000 2.700% due 05/31/2002........... $ 1,313,724
-----------
TAIWAN -- 2.0%
$1,070,000 President Enterprises Corporation,
Zero coupon due 07/22/2001...... 1,358,900
70,000 Yang Ming Marine Transport
Corporation,
2.000% due 10/06/2001........... 77,175
-----------
1,436,075
-----------
Total Convertible Corporate Bonds
(Cost $2,753,032)............... 2,749,799
-----------
REPURCHASE AGREEMENT -- 0.6% Cost ($452,000)
452,000 Agreement with PNC Securities
Corporation, 5.600% dated
12/29/1995 to be repurchased at
$452,281 on 01/02/1996,
collateralized by $445,000 U.S.
Treasury Notes, 5.750% due
09/30/1997 (value $455,324)..... 452,000
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
PRINCIPAL AMOUNT (NOTE 1)
- ------------------------------------------ -----------
<S> <C> <C>
TOTAL INVESTMENTS (COST $67,478,262)
(NOTES 1 AND 3).......... 98.1% 70,981,052
OTHER ASSETS AND LIABILITIES (NET)........ 1.9 1,394,055
--------- -----------
NET ASSETS................................ 100.0% $72,375,107
--------- -----------
--------- -----------
</TABLE>
- ----------------------
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registration
to qualified institutional buyers.
+ Non-income producing security.
# Amount is less than 0.1%.
<TABLE>
<S> <C> <C>
GLOSSARY OF TERMS
American Depositary
ADR -- Receipt.
American Depositary
ADS -- Share.
Global Depositary
GDR -- Receipt.
GDS -- Global Depositary Share.
JPY -- Japanese Yen.
</TABLE>
See Notes to Financial Statements.
D-11
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS --(CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
DECEMBER 31, 1995
DECEMBER 31, 1995, INDUSTRY CLASSIFICATION OF THE FUND WAS AS FOLLOWS
(UNAUDITED):
<TABLE>
<CAPTION>
% OF NET VALUE
INDUSTRY CLASSIFICATION ASSETS (NOTE 1)
- ------------------------------------- ------------- ------------
<S> <C> <C>
LONG TERM INVESTMENTS:
Electric Machinery
Equipment/Electronics.............. 9.6% $6,970,456
Telecommunications................... 8.4 6,073,941
Investment Companies................. 8.0 5,795,435
Banking/Financials................... 7.7 5,539,247
Financial Services................... 7.5 5,461,877
Durable Goods -- Consumer............ 5.5 3,999,903
Transportation....................... 5.2 3,778,127
Oil/Gas Extraction................... 5.2 3,758,981
Computer Software.................... 2.5 1,814,818
Forest Products/Paper................ 2.5 1,812,802
Industrial........................... 2.4 1,707,127
Technology........................... 2.3 1,684,358
Pharmaceuticals...................... 2.2 1,569,307
Metal/Metal Products................. 2.2 1,561,824
Chemicals/Allied Products............ 1.8 1,311,550
Beverages............................ 1.8 1,297,685
Brewery.............................. 1.8 1,285,678
Insurance............................ 1.8 1,266,339
Automobile Parts..................... 1.7 1,231,125
Industrial/Commercial Machinery...... 1.7 1,199,031
Engineering/Construction............. 1.6 1,179,431
Metals -- Diversified................ 1.4 1,006,276
Convenience Stores................... 1.3 969,492
Shoes/Leather........................ 1.3 958,476
Energy............................... 1.2 897,550
Retail -- Grocery.................... 1.2 882,712
Health Care Services................. 1.1 825,761
Food/Kindred Products................ 1.0 722,263
Electronics -- Semiconductor......... 1.0 710,218
Entertainment........................ 0.9 622,697
Textiles............................. 0.7 509,701
Nondurable Goods -- Consumer......... 0.5 345,589
Computer Industry.................... 0.4 308,349
Communication........................ 0.4 285,036
</TABLE>
<TABLE>
<CAPTION>
% OF NET VALUE
INDUSTRY CLASSIFICATION (CONTINUED) ASSETS (NOTE 1)
- ------------------------------------- ------------- ------------
<S> <C> <C>
Capital Goods........................ 0.4% $279,270
Business Services.................... 0.4 249,865
Other................................ 0.9 656,755
----- ------------
TOTAL LONG TERM INVESTMENTS.......... 97.5 70,529,052
REPURCHASE AGREEMENT................. 0.6 452,000
----- ------------
TOTAL INVESTMENTS.................... 98.1 70,981,052
OTHER ASSETS AND LIABILITIES (NET)... 1.9 1,394,055
----- ------------
NET ASSETS........................... 100.0% $72,375,107
-----
----- ------------
------------
</TABLE>
SCHEDULE OF
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS TO SELL
<S> <C> <C> <C> <C> <C>
CONTRACTS TO DELIVER
- ---------------------------------- IN
EXCHANGE UNREALIZED
EXPIRATION LOCAL FOR U.S. VALUE IN APPRECIATION/
DATE CURRENCY $ U.S. $ (DEPRECIATION)
- ---------- ---------------------- --------- ----------- -------------
03/21/1996 JPY 302,112,500 2,999,915 2,961,061 $ 38,854
03/21/1996 JPY 958,387,500 9,514,420 9,393,333 121,087
03/21/1996 FRF 19,600,000 4,000,000 4,004,659 (4,659)
06/17/1996 JPY 282,690,000 3,000,000 2,803,594 196,406
-------------
Net Unrealized Appreciation of Forward Foreign Currency
Exchange Contracts...................................... $ 351,688
-------------
-------------
</TABLE>
<TABLE>
<S> <C> <C>
GLOSSARY OF TERMS
FRF -- French Franc
JPY -- Japanese Yen
</TABLE>
See Notes to Financial Statements.
D-12
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Managed Global Account of Separate Account D (the 'Account') is registered
with the Securities and Exchange Commission under the Investment Company Act of
1940, as amended, as a non-diversified open-end investment company and meets the
definition of a separate account under federal securities laws. The Account was
established on April 18, 1990, by Golden American Life Insurance Company
('Golden American'), to support the operations of variable annuity contracts
('Contracts'). Golden American, a wholly-owned subsidiary of BT Variable, Inc.
('BTV'), an indirect subsidiary of Bankers Trust Company ('Bankers Trust'), is a
stock life insurance company organized under the laws of the state of Delaware.
Golden American is primarily engaged in the issuance of variable insurance
products and is authorized to do business in the District of Columbia and in all
states except New York.
Operations on the Account commenced on October 21, 1992. Golden American
provides for variable accumulation and benefits under the Contracts by crediting
annuity considerations to the Account at the direction of contractholders. The
assets of the Account are owned by Golden American. The portion of the Account's
assets applicable to Contracts will not be chargeable with liabilities arising
out of any other business Golden American may conduct, but obligations of the
Account, including the promise to make benefit payments, are obligations of
Golden American.
The net assets maintained in the Account provide the basis for the periodic
determination of the amount of benefits under the Contracts. The net assets may
not be less than the reserves and other contract liabilities with respect to the
Account. Golden American has entered into a reinsurance agreement with an
affiliated reinsurer to cover insurance risks under the Contracts. Golden
American remains liable to the extent that the reinsurer does not meet its
obligations under the reinsurance agreement.
The preparation of financial statements in accordance with Generally Accepted
Accounting Principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies consistently followed by the Account in the
preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles.
(A) VALUATION: Domestic and foreign portfolio securities, except as noted below,
for which market quotations are readily available are stated at market value.
Market value is determined on the basis of the last reported sales price in the
principal market where such securities are traded or, if no sales are reported,
the mean between representative bid and asked quotations obtained from a
quotation reporting system or from established market makers.
Long-term debt securities, including those to be purchased under firm commitment
agreements, are normally valued on the basis of quotes obtained from brokers and
dealers or pricing services, which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data. Under certain circumstances, long-term debt securities having a maturity
of sixty days or less may be valued at amortized cost. Short-term debt
securities are valued at their amortized cost which approximates fair value.
Amortized cost involves valuing a portfolio security instrument at its cost,
initially, and thereafter, assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument.
Securities for which market quotations are not readily available are valued at
fair value as determined in good faith by, or under the direction of the Board
of Governors.
(B) DERIVATIVE FINANCIAL INSTRUMENTS: The Account may engage in various
portfolio strategies, as described below, to seek to manage its exposure to
equity markets and to manage fluctuations in foreign currency rates. Forward
foreign currency exchange contracts to buy, writing puts and buying calls tend
to increase the Account's exposure to the underlying market or currency. Forward
foreign currency exchange contracts to sell, buying puts and writing calls tend
to decrease the Account's exposure to the underlying market or currency. In some
instances, investments in derivative financial instruments may involve, to
varying degrees, elements of market risk and risks in excess of the amount
recognized in the Statement of Assets and Liabilities. Losses may arise under
these contracts due to the existence of an illiquid secondary market for the
contracts, or if the counterparty does not perform under the contract. An
additional primary risk associated with the use of certain of these contracts
may be caused by an imperfect correlation between movements in the price of the
derivative financial instruments and the price of the underlying securities,
indices or currency.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS: The Account may enter into forward
foreign currency exchange contracts. The Account will enter in forward foreign
currency exchange contracts to hedge against fluctuations in currency exchange
D-13
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
rates. Forward foreign currency exchange contracts are valued at the applicable
forward rate, and are marked to market daily. The change in market value is
recorded by the Account as an unrealized gain or loss. When a contract is
closed, the Account records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at the
time it was closed. Although forward foreign currency exchange contracts limit
the risk of loss due to a decline in the value of the hedged currency, they also
limit any potential gain that might result should the value of the currency
increase. In addition, the Account could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts.
Open contracts at December 31, 1995 and their related unrealized appreciation
(depreciation) are set forth in the Schedule of Forward Foreign Currency
Exchange Contracts which accompanies the Portfolio of Investments. Realized and
unrealized gain/(loss) arriving from forward foreign currency exchange contracts
are included in net realized and unrealized gain/(loss) on forward foreign
currency exchange contracts.
OPTIONS: The Account may engage in option transactions. When the Account writes
an option, an amount equal to the premium received by the Account is reflected
as an asset and an equivalent liability. The amount of the liability is
subsequently marked to market on a daily basis to reflect the current value of
the option written.
When a security is sold through an exercise of an option, the related premium
received (or paid) is deducted from (or added to) the basis of the security
sold. When an option expires (or the Account enters into a closing transaction),
the Account realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the premium paid or received). The Account
did not write options during the year ended December 31, 1995. Realized gains
arising from purchased options are included in the net realized gain/(loss) on
security transactions.
(C) FOREIGN CURRENCY: Assets and liabilities denominated in foreign currencies
and commitments under forward foreign currency exchange contracts are translated
into U.S. dollars at the mean of the quoted bid and asked prices of such
currencies against the U.S. dollar as of the close of business immediately
preceding the time of valuation. Purchases and sales of portfolio securities are
translated at the rates of exchange prevailing when such securities were
acquired or sold. Income and expenses are translated at rates of exchange
prevailing when accrued.
The Account does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain/(loss) from securities.
Reported net realized gains or losses on foreign currency transactions arise
from sales and maturities of short-term securities, sales of foreign currencies,
currency gains or losses realized between the trade and settlement dates on
securities transactions, and the difference between the amounts of dividends,
interest and foreign withholding taxes recorded on the Account's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
gains and losses on other assets and liabilities denominated in foreign
currencies arise from changes in the value of assets and liabilities other than
investments in securities at the end of the reporting period, resulting from
changes in the exchange rate.
(D) REPURCHASE AGREEMENTS: The Account may enter into repurchase agreements in
accordance with guidelines approved by the Board of Governors of the Account.
The Account bears a risk of loss in the event that the other party to a
repurchase agreement defaults on its obligations and the Account is delayed or
prevented from exercising its rights to dispose of the underlying securities
received as collateral including the risk of a possible decline in the value of
the underlying securities during the period while the Account seeks to exercise
its rights. The Account takes possession of the collateral and reviews the value
of the collateral and the creditworthiness of those banks and dealers with which
the Account enters into repurchase agreements to evaluate potential risks. The
market value of the underlying securities received as collateral must be at
least equal to the total amount of the repurchase obligation. In the event of
counterparty default, the Account has the right to use the underlying securities
to offset the loss.
(E) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
recorded on the trade date. Dividend income is recorded on the ex-dividend date.
Interest income (including amortization of premium and discount on securities)
and expenses are accrued daily. Realized gains and losses from investment
transactions are recorded on the identified cost basis which is the same basis
used for federal income tax purposes.
(F) FEDERAL INCOME TAXES: Operations of the Account form a part of, and are
taxed with, the total operations of Golden American, which is taxed as a life
insurance company under the Internal Revenue Code. Earnings and realized capital
gains of the Account attributable to the contractowners are excluded in the
determination of the federal income tax liability of Golden American.
D-14
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
OPERATING EXPENSES: Directed Services, Inc. ('DSI'), a wholly owned subsidiary
of BTV, serves as Manager to the Account pursuant to a Management Agreement.
Under the Management Agreement, DSI has overall responsibility, subject to the
supervision of the Board of Governors, for administrating all operations of the
Account and for monitoring and evaluating the management of the assets of the
Account by the Portfolio Manager. In consideration for these services, the
Account pays DSI a management fee based upon the following annual percentage of
the Account's average daily net assets: 0.40% of the first $500 million and
0.30% of the amount over $500 million. Warburg, Pincus Counsellors, Inc.
('Warburg') serves as the Portfolio Manager of the Account and in that capacity
provides investment advisory services for the Account including asset allocation
and security selection. In consideration for these services, Warburg is paid an
advisory fee by the Account, payable monthly, based on the average daily net
assets of the Account at an annual rate of 0.60% of the first $500 million and
0.50% on the excess thereof. For the year ended December 31, 1995, the Account
incurred management and advisory fees of $293,930 and $440,770, respectively.
The Account bears the expenses of its investment management operations,
including expenses associated with custody of securities, portfolio accounting,
the Board of Governors, legal and auditing services, registration fees and other
related operating expenses. Bankers Trust is the custodian of the assets in the
Account. For the year ended December 31, 1995, the Account incurred $111,693 for
custodian fees. In addition, the Account reimburses Golden American for certain
organization expenses (See Note 4). At December 31, 1995, a total of $1,684 was
payable to DSI and Golden American for management and reimbursement of
organization expenses.
Certain officers and governors of the Account are also officers and/or directors
of the Manager, Golden American, BTV and Bankers Trust.
MORTALITY AND EXPENSE RISK CHARGES: Golden American assumes mortality and
expense risks related to the operations of the Account and, in accordance with
the terms of the Contracts, deducts a daily charge from the assets of the
Account at annual rates of 0.80%, 0.90%, 1.25%, 1.10%, 1.25% and 1.40% of the
assets attributable to DVA 80, DVA 100, DVA Series 100, DVA Plus-Standard, DVA
Plus-Annual Ratchet and DVA Plus-7% Solution, respectively, to cover these
risks. Golden American did not deduct mortality and expense risk charges and
asset based administrative charges from the DVA Plus Contract assets until
November 1995, upon which it received exemptive relief from the Securities and
Exchange Commission.
ASSET BASED ADMINISTRATIVE CHARGE: To compensate Golden American for the
administrative expenses under the Contracts, a daily charge at an annual rate of
0.10% is deducted from assets attributable to the DVA 100 and DVA Series 100
Contracts. A daily charge of 0.15% is deducted from the assets attributable to
DVA Plus Contracts.
OTHER CONTRACT CHARGES: An administrative fee of $40 per Contract year is
deducted from the accumulation value of certain DVA 80 and DVA 100 Contracts.
Under DVA Plus Contracts issued subsequent to September of 1995, an excess
allocation charge of $25 per allocation may be imposed by Golden American after
the twelfth allocation change in a contract year. Under DVA 80, DVA 100 and DVA
Series 100 Contracts ('Previous Contracts'), a partial withdrawal charge of the
lower of 2% of the withdrawal or $25 is deducted from the accumulation for each
additional partial withdrawal in a Contract year. In addition, under the
Previous Contracts, there is an excess allocation charge of $25 for each
allocation change between divisions in excess of the five free changes allowed
per contract year.
DEFERRED SALES LOAD: Under contracts offered prior to October of 1995, a sales
load of up to 6.50% was applicable to each premium payment for sales related
expenses as specified in the Contracts. For DVA Series 100 Contracts, the sales
load is deducted in equal annual installments over the period the Contract is in
force, not to exceed 10 years. For DVA 80 and DVA 100 Contracts, although the
sales load is chargeable to each premium when it is received by Golden American,
the amount of such charge is initially advanced by Golden American to
Contractowners and included in the accumulation value and then deducted in equal
installments on each Contract processing date over a period of six years. For
the year ended December 31, 1995, contract sales loads of $1,124,480 initially
advanced by Golden American to the Account were deducted from contractowners'
accumulation value. Upon surrender of the Contract, the unamortized deferred
sales load is deducted from the accumulation value by Golden American. In
addition, when partial withdrawal limits are exceeded, a portion of the
unamortized deferred sales load is deducted.
CONTINGENT DEFERRED SALES CHARGE: Under DVA Plus Contracts issued subsequent to
September of 1995, a contingent deferred sales charge ('Surrender Charges') is
imposed as a percentage of each premium payment if the Contract is surrendered
or an excess partial withdrawal is taken during the seven year period from the
date a premium payment is received. The Surrender Charges are imposed at a rate
of 7% of the premium payment during the first two complete years after purchase
declining to 6%, 5%, 4%, 3%, and 1% after the second, third, fourth, fifth and
sixth complete years, respectively. For the year ended December 31, 1995, Golden
American collected Surrender Charges in the amount of $15.
D-15
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
The net assets retained in the Account by Golden American in the accompanying
financial statements represent the unamortized deferred sales load, surrender
charges and premium taxes advanced by Golden American reduced to conform with
the Commissioner's Annuity Reserve Valuation Methodology ('CARVM') noted above.
Net Assets Retained in the Account by Golden American are as follows:
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
12/31/95 12/31/94
------------ ------------
<S> <C> <C>
Balance at beginning of year........................................................... $ 4,533,964 $ 4,668,658
Sales load advanced and additions to surrender charges................................. 379,811 1,338,526
Premium tax advanced................................................................... 2,628 6,823
Net transfer (to) from Separate Account B, Fixed Account and Golden American........... (899,808) (427,829)
Amortization of deferred sales load, surrender charges and premium tax................. (1,141,201) (1,052,214)
------------ ------------
$ 2,875,394 $ 4,533,964
------------ ------------
------------ ------------
</TABLE>
PREMIUM TAXES: Premium taxes are deducted, where applicable, from the
accumulation value of each Contract. The amount and timing of the deduction
depend on the annuitant's state of residence and currently ranges up to 3.5% of
premiums. Premium taxes are generally incurred on the annuity commencement date
and a charge for such premium taxes is then deducted from the accumulation value
on such date. However, some jurisdictions impose a premium tax at the time the
initial and additional premiums are paid, regardless of the annuity commencement
date. In those states, Golden American advances the amount of the charge for
premium taxes to Contractowners and then deducts it from the accumulation value
in equal installments on each contract processing date over a six year period.
Golden American is currently waiving the deduction of the applicable
installments of the charge for premium taxes previously advanced by Golden
American to Contractowners. Golden American reserves the right to deduct the
total amount of the charge for premium taxes previously waived and unrecovered
on the annuity commencement date or upon surrender of the Contract.
EXPENSE LIMITATION: The Account and DSI entered into an agreement to limit the
ordinary operating expenses of the Account, excluding, among other things,
mortality and expense risk charges, asset based administrative charges, interest
expense, and other contractual charges, through December 31, 1995, so that such
expenses do not exceed on an annual basis 1.25% of the first $500 million of the
average daily net assets and 1.05% of the excess over $500 million. For the year
ended December 31, 1995, $63,386 was reimbursed by DSI to the Account pursuant
to this limitation. Such agreement existed under the same terms for the year
ended December 31, 1994.
DSI, a registered broker/dealer, acts as the distributor and principal
underwriter (as defined in the Securities Act of 1933 and the Investment Company
Act of 1940, as amended) of the Contracts issued through the Account. For the
years ended December 31, 1995 and December 31, 1994, fees paid by Golden
American to DSI in connection with sales of the contracts aggregated
approximately $446,000 and $1,343,000, respectively.
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities, excluding short-term securities,
during the year ended December 31, 1995, were $30,992,571 and $4,817,671,
respectively.
At December 31, 1995, aggregate gross unrealized appreciation for all securities
in which there is an excess of value over tax cost and aggregate gross
unrealized depreciation for all securities in which there is an excess of tax
cost over value were $8,320,461 and $4,817,671, respectively.
For the year ended December 31, 1995, the portfolio turnover rate was 44%.
4. ORGANIZATION COSTS
The initial organizational expenses of the Account of approximately $150,000
were paid by Golden American. The Account reimburses Golden American monthly for
such expenses ratably over a period of sixty months from the date of the
Account's commencement of operations. At December 31, 1995, the unamortized
balance of such expenses was $75,090. It is Golden American's intention not to
seek reimbursement for any unpaid amounts should the account cease operations.
D-16
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
5. INCREASE/(DECREASE) IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
DVA 100
Units purchased...................................................................... 409,418 2,267,150
Units redeemed....................................................................... (2,561,328) (1,161,000)
------------ ------------
Net Increase/(Decrease)......................................................... (2,151,910) 1,106,150
Units at the beginning of the period................................................... 9,225,615 8,119,465
------------ ------------
Units at the end of the period......................................................... 7,073,705 9,225,615
------------ ------------
------------ ------------
DVA 80
Units purchased...................................................................... 66,593 154,827
Units redeemed....................................................................... (164,429) (147,275)
------------ ------------
Net Increase/(Decrease)......................................................... (97,836) 7,552
Units at the beginning of the period................................................... 205,564 198,012
------------ ------------
Units at the end of the period......................................................... 107,728 205,564
------------ ------------
------------ ------------
DVA Series 100
Units purchased...................................................................... 27,026 55,550
Units redeemed....................................................................... (39,838) (51,428)
------------ ------------
Net Increase/(Decrease)......................................................... (12,812) 4,124
Units at the beginning of the period................................................... 69,795 65,671
------------ ------------
Units at the end of the period......................................................... 56,983 69,795
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD
ENDED
12/31/95*
------------
<S> <C> <C>
DVA Plus -- Standard
Units purchased...................................................................... 43,964
Units redeemed....................................................................... (17,239)
------------
Net Increase.................................................................... 26,725
Units at the beginning of the period................................................... 0
------------
Units at the end of the period......................................................... 26,725
------------
------------
DVA Plus -- Annual Ratchet
Units purchased...................................................................... 29,267
Units redeemed....................................................................... (1,811)
------------
Net Increase.................................................................... 27,456
Units at the beginning of the period................................................... 0
------------
Units at the end of the period......................................................... 27,456
------------
------------
DVA Plus -- 7% Solution
Units purchased...................................................................... 209,355
Units redeemed....................................................................... (345)
------------
Net Increase.................................................................... 209,010
Units at the beginning of the period................................................... 0
------------
Units at the end of the period......................................................... 209,010
------------
------------
</TABLE>
- ------------------
* The DVA Plus -- Standard, Annual Ratchet and 7% Solution units were offered
for sale commencing October 2, 1995.
D-17
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
6. SUBSEQUENT EVENT
On August 13, 1996, under the terms of a stock purchase agreement, Equitable
of Iowa Companies acquired all of the interest in BTV from Whitewood Properties
Corp., a subsidiary of Bankers Trust Company. DSI and Golden American are
wholly owned subsidiaries of BTV.
In addition at a special meeting held on August 8, 1996, the contractholders
approved the reorganization of the Account from a separate account of Golden
American register as a management investment company toa newly created division
(the "Division") of Separate Account B, an existing separate account of Golden
American which is registered as a unit investment trust. On the date of
reorganization, which is anticipated to be September 3, 1996, the Account will
transfer all of its assets to the Division. The Division will simultaneously
exchange these assets to the Managed Global Series of the The GCG Trust in
consideration for shares of the Series. The Managed Global Series is a newly
created Series of The GCG Trust. Ths GCG Trust is and existing open-end
management investment company registered under the Investment Company Act of
1940.
If this reorganization, described above, had taken place on December 31, 1995,
the unit values and net assets of the Division would have been the same as
reflected in the Account's financial statements contained herein.
D-18
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Contractowners and Board of Governors
The Managed Global Account of Separate Account D
We have audited the accompanying statement of assets and liabilities of The
Managed Global Account of Separate Account D, including the portfolio of
investments, as of December 31, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended and the financial highlights for each of
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Account's management. Our responsibility is to
express an opinion on these financial statements and financial highlights 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 and financial
highlights 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 verification by examination of securities
held by the custodian as of December 31, 1995 and confirmation of securities not
held by the custodian by correspondence with others. 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 and financial highlights referred
to above present fairly, in all material respects, the financial position of The
Managed Global Account of Separate Account D at December 31, 1995, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended and the financial highlights for
each of the indicated periods in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
New York, New York
February 9, 1996
except for Note 6, as to which the date is August 27, 1996
D-19
<PAGE>
APPENDIX: DESCRIPTION OF BOND RATINGS
Excerpts from Moody's Investors Service, Inc. ("Moody's) description of its
bond ratings:
Aaa: Judged to be the best quality; they carry the smallest degree of
investment risk.
Aa: Judged to be of high quality by all standards; together with the Aaa
group, they comprise what are generally known as high grade bonds.
A: Possess many favorable investment attributes and are to be considered
as "upper medium grade obligations."
Baa: Considered as medium grade obligations, i.e., they are neither highly
protected nor poorly secured; interest payments and principal security
appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of
time.
Ba: Judged to have speculative elements; their future cannot be considered
as well assured.
B: Generally lack characteristics of the desirable investment.
Caa: Are of poor standing; such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca: Speculative in a high degree; often in default.
C: Lowest rate class of bonds; regarded as having extremely poor
prospects.
Moody's also applies numerical indicators 1, 2 and 3 to rating categories. The
modifier 1 indicates that the security is in the higher end of its rating
category; 2 indicates a mid-range ranking; and 3 indicates a ranking toward the
lower end of the category.
Excerpts from Standard & Poor's Rating Group ("Standard & Poor's") description
of its bond ratings:
AAA: Highest grade obligations; capacity to pay interest and repay
principal is extremely strong.
AA: Also qualify as high grade obligations; a very strong capacity to pay
interest and repay principal and differs from AAA issues only in small
degree.
A: Regarded as upper medium grade; they have a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions
than debt in higher rated categories.
BBB: Regarded as having an adequate capacity to pay interest and repay
principal; whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity than in higher rated categories -- this group
is the lowest which qualifies for commercial bank investment.
BB, B,
CCC,
CC: Predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with terms of the obligation: BB indicates
the lowest degree of speculation and CC the highest.
Standard & Poor's applies indicators "+," no character, and "-" to its rating
categories. The indicators show relative standing within the major rating
categories.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
GOLDENSELECT DVA SERIES 100
DEFERRED COMBINATION VARIABLE
AND FIXED ANNUITY CONTRACT
issued by
SEPARATE ACCOUNT B ("Account B")
of
GOLDEN AMERICAN LIFE INSURANCE COMPANY
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. THE INFORMATION
CONTAINED HEREIN SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE
GOLDEN AMERICAN LIFE INSURANCE COMPANY DEFERRED VARIABLE ANNUITY CONTRACT WHICH
IS REFERRED TO HEREIN.
THE PROSPECTUS SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR OUGHT TO KNOW
BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS, SEND A WRITTEN REQUEST TO
GOLDEN AMERICAN LIFE INSURANCE COMPANY, CUSTOMER SERVICE CENTER, P.O. BOX 8794,
WILMINGTON, DE 19899-8794 OR TELEPHONE 1-800-366-0066.
DATE OF PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION: SEPTEMBER 3, 1996
<PAGE>
TABLE OF CONTENTS
-------------------
ITEM PAGE
- ---- ----
Introuction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Description of Golden American Life Insurance Company. . . . . . . . . . . . 1
Safekeeping of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Distribution of Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Performance Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
IRA Partial Withdrawal Option. . . . . . . . . . . . . . . . . . . . . . . . 5
Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Financial Statements of Separate Account B . . . . . . . . . . . . . . . . . 6
Financial Statements of The Managed Global Account of Separate Account D . . 6
Appendix - Description of Bond Ratings
<PAGE>
INTRODUCTION
This Statement of Additional Information provides background information
regarding Account B.
DESCRIPTION OF GOLDEN AMERICAN LIFE INSURANCE COMPANY
Golden American Life Insurance Company ("Golden American") is a stock life
insurance company organized under the laws of the State of Delaware. Prior to
December 30, 1993, Golden American was a Minnesota corporation. From January 2,
1973 through December 31, 1987, the name of the company was St. Paul Life
Insurance Company. On December 31, 1987, after all of St. Paul Life Insurance
Company's business was sold, the name was changed to Golden American. On March
7, 1988, all of the stock of Golden American was acquired by The Golden
Financial Group, Inc. ("GFG"), a financial services holding company. On October
19, 1990, GFG merged with and into MBL Variable, Inc. ("MBLV"), a wholly owned
direct subsidiary of The Mutual Benefit Life Insurance Company ("MBL"). On
January 1, 1991, MBLV became a wholly owned indirect subsidiary of MBL and
Golden American became a wholly owned direct subsidiary of MBL. Golden
American's name had been changed to MB Variable Life Insurance Company in the
state of Minnesota but subsequently has been changed back to Golden American.
In a transaction that closed on September 30, 1992, Golden American was acquired
by a subsidiary of Bankers Trust Company ("Bankers Trust"). As of December 31,
1995, Golden American had over $98.1 million in stockholders' equity and
approximately $1.2 billion in total assets, including approximately $1.05
billion of separate account assets. On August 13, 1996, Equitable of Iowa
Companies acquired all of the interest in BT Variable, Inc., the corporate
parent of Golden American and Directed Services, Inc. and changed the name of
BT Variable, Inc.'s name to EIC Variable, Inc. (EIC Variable"). Golden American
is authorized to do business in all jurisdictions except New York. Golden
American offers variable annuities and variable life insurance.
SAFEKEEPING OF ASSETS
Golden American acts as its own custodian for Account B.
THE ADMINISTRATOR
Effective January 1, 1994, Bankers Trust (Delaware), a subsidiary of Bankers
Trust New York Corporation, and Golden American became parties to a service
agreement pursuant to which Bankers Trust (Delaware) has agreed to provide
certain accounting, actuarial, tax, underwriting, sales, management and other
services to Golden American. Expenses incurred by Bankers Trust (Delaware) in
relation to this service agreement are reimbursed by Golden American on an
allocated cost basis. Charges billed to Golden American by Bankers Trust
(Delaware) pursuant to the service agreement in 1995 and 1994 were $749,741 and
$816,264, respectively.
Prior to 1994, Golden American had arranged with EIC Variable, at that time ,
BT Variable, Inc., to perform services related to the development and
administration of its products. For the year 1993 and the period from
September 30, 1992 to December 31, 1992, fees earned by EIC Variable from
Golden American for these services aggregated $2,701,000 and $209,000,
respectively. The agreement was terminated as of January 1, 1994.
In addition, EIC Variable provided to Golden American certain of its personnel
to perform management, administrative and clerical services and the use of
certain of its facilities. EIC Variable charged Golden American for such
expenses and all other general and administrative costs, first on the basis of
direct charges when identifiable, and second allocated based on the estimated
amount of time spent by EIC Variable's employees on behalf of Golden American.
For the year 1993 and the period from September 30, 1992 to December 31, 1992,
EIC Variable allocated to Golden American $1,503,000 and $450,000, respectively.
The agreement was terminated on January 1, 1994.
INDEPENDENT AUDITORS
Ernst & Young LLP, 2001 Market Street, Philadephia, Pennsylvania 19103,
independent auditors, will perform annual audits of Golden American and the
Accounts.
1
<PAGE>
DISTRIBUTION OF CONTRACTS
Prior to 1994, Golden American had entered into agreements with DSI to perform
services related to the management of its investments and the distribution of
its products. For the year 1993, Golden American incurred $311,000 for such
services. The agreement was terminated as of January 1, 1994.
DSI acts as the principal underwriter (as defined in the Securities Act of 1933
and the Investment Company Act of 1940, as amended) of the variable insurance
products issued by Golden American which, as of December 31, 1994, are sold
primarily through two broker/dealer institutions. For the years ended 1995,
1994 and 1993, commissions paid by Golden American to DSI aggregated $8,440,000,
$17,569,000 and $34,260,000 respectively.
Golden American provided to DSI certain of its personnel to perform management,
administrative and clerical services and the use of certain facilities. Golden
American charged DSI for such expenses and all other general and administrative
costs, first on the basis of direct charges when identifiable, and the remainder
allocated based on the estimated amount of time spent by Golden American's
employees on behalf of DSI. In the opinion of management, this method of cost
allocation is reasonable. For the years ended December 31, 1994 and 1993,
expenses allocated to DSI were $1,983,000 and $2,013,000, respectively. In
1995, the service agreement between DSI and Golden American was amended to
provide for a management fee from DSI to Golden American for managerial and
supervisory services provided by Golden American. This fee calculated as a
percentage of average assets in the variable separate accounts, was $986,650 for
1995.
PERFORMANCE INFORMATION
Performance information for the divisions of Account B, including the yield and
effective yield of the Liquid Asset Division, the yield of the remaining
divisions, and the total return of all divisions, may appear in reports or
promotional literature to current or prospective owners. Negative values are
denoted by parentheses. Performance information for measures other than total
return do not reflect sales load which can have a maximum level of 6.5% of
premium, and any applicable premium tax that can range from 0% to 3.5%.
SEC STANDARD MONEY MARKET DIVISION YIELDS
Current yield for the Liquid Asset Division will be based on the change in the
value of a hypothetical investment (exclusive of capital changes) over a
particular 7-day period, less a pro-rata share of division expenses accrued over
that period (the "base period"), and stated as a percentage of the investment at
the start of the base period (the "base period return"). The base period return
is then annualized by multiplying by 365/7, with the resulting yield figure
carried to at least the nearest hundredth of one percent. Calculation of
"effective yield" begins with the same "base period return" used in the
calculation of yield, which is then annualized to reflect weekly compounding
pursuant to the following formula:
365/7
Effective Yield = [(Base Period Return) + 1) ] - 1
For the 7-day period March 22, 1996 toMarch 29, 1996, the current yield of
the Liquid Asset Division was 3.42% and the effective yield of the Division was
3.48%.
SEC STANDARD 30-DAY YIELD FOR NON-MONEY MARKET DIVISIONS
Quotations of yield for the remaining divisions will be based on all investment
income per Unit (accumulation value divided by the index of investment
experience) earned during a particular 30-day period, less expenses accrued
during the period ("net investment income"), and will be computed by dividing
net investment income by the value of an accumulation unit on the last day of
the period, according to the following formula:
2
<PAGE>
6
YIELD = 2 [ ( a - b +1) - 1]
-----
cd
Where:
[a] equals the net investment income earned during the period by the
Series attributable to shares owned by a division
[b] equals the expenses accrued for the period (net of reimbursements)
[c] equals the average daily number of Units outstanding during the
period based on the index of investment experience
[d] equals the value (maximum offering price) per index of investment
experience on the last day of the period
Yield on divisions of Account B is earned from the increase in net asset value
of shares of the Series in which the Division invests and from dividends
declared and paid by the Series, which are automatically reinvested in shares of
the Series.
SEC STANDARD AVERAGE ANNUAL TOTAL RETURN FOR NON-MONEY MARKET DIVISIONS
Quotations of average annual total return for any division will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in a Contract over a period of one, five and 10 years (or, if less,
up to the life of the division), calculated pursuant to the formula:
n
P(1+T) =ERV
Where:
(1) [P] equals a hypothetical initial premium payment of $1,000
(2) [T] equals an average annual total return
(3) [n] equals the number of years
(4) [ERV] equals the ending redeemable value of a hypothetical $1,000
initial premium payment made at the beginning of the period (or
fractional portion thereof)
All total return figures reflect the deduction of the maximum sales load, the
asset based administrative charge, and the mortality and expense risk charge.
The SEC requires that an assumption be made that the contract owner surrenders
the entire contract at the end of the one, five and 10 year periods (or, if
less, up to the life of the security) for which performance is required to be
calculated. This assumption may not be consistent with the typical contract
owner's intentions in purchasing a contract and may adversely affect returns.
Quotations of total return may simultaneously be shown for other periods, as
well as quotations of total return that do not take into account certain
contractual charges such as sales load.
AVERAGE ANNUALIZED TOTAL RETURN FOR PERIODS ENDING 12/31/95 -- STANDARDIZED
<TABLE>
<CAPTION>
One Year Period Five Year Period Inception to
Division Ending 12/31/95 Ending 12/31/95 12/31/95 Inception Date
- -------- --------------- --------------- -------- --------------
<S> <C> <C> <C> <C>
Multiple Allocation 16.68% 7.78%* 7.02%* 1/24/89
Fully Managed 18.44% 8.51%* 5.55%* 1/24/89
Capital Appreciation 27.76% N/A 10.31%* 5/4/92
Rising Dividends 28.65% N/A 12.29% 10/4/93
All-Growth 20.12% 7.12%* 4.37%* 1/24/89
Real Estate 14.37% 15.24%* 6.19%* 1/24/89
Natural Resources 8.55% 7.87%* 5.39%* 1/24/89
Value Equity 32.80% N/A 32.80% 1/1/95
Strategic Equity N/A N/A -.63%* 10/2/95
Small Cap N/A N/A N/A 1/2/96
Emerging Markets -11.97% N/A -4.46% 10/4/93
Managed Global ** 5.22%* N/A -2.23%* 10/21/92
Limited Maturity Bond 9.57% 4.44%* 5.19%* 1/24/89
Liquid Asset 3.45% 2.09%* 3.18%* 1/24/89
- ----------------------------
</TABLE>
* Total return calculation reflects partial waiver of fees and expenses.
** From it inception date until September 3, 1996, the Managed Global Account
of Separate Account D was a registered management investment company.
On that date it was reorganized into two entities: the Managed Global
Division of Separate Account B and the Managed Global Series of The
GCG Trust. Its historical performance for the purposes of the Managed
Global Division remains unchanged by the reorganization.
3
<PAGE>
NON-STANDARD AVERAGE ANNUAL TOTAL RETURN FOR NON-MONEY MARKET DIVISIONS
Quotations of non-standard average annual total return for any division will be
expressed in terms of the average annual compounded rate of return of a
hypothetical investment in a Contract over a period of one, five and 10 years
(or, if less, up to the life of the division), calculated pursuant to the
formula:
n
[P(1+T) ]=ERV
Where:
(1) [P] equals a hypothetical initial premium payment of $1,000
(2) [T] equals an average annual total return
(3) [n] equals the number of years
(4) [ERV] equals the ending redeemable value of a hypothetical $1,000
initial premium payment made at the beginning of the period (or
fractional portion thereof) assuming certain loading and charges
are zero.
All total return figures reflect the deduction of the mortality and expense risk
charge and the administrative charges, but not the deduction of the maximum
sales load.
AVERAGE ANNUALIZED TOTAL RETURN FOR PERIODS ENDING 12/31/95 -- NON-STANDARDIZED
<TABLE>
<CAPTION>
One Year Period Five Year Period Inception to
Division Ending 12/31/95 Ending 12/31/95 12/31/95 Inception Date
- -------- --------------- --------------- -------- --------------
<S> <C> <C> <C> <C>
Multiple Allocation 17.39% 8.34%* 7.57%* 1/24/89
Fully Managed 19.14% 9.04%* 6.13%* 1/24/89
Capital Appreciation 28.50% N/A 10.95%* 5/4/92
Rising Dividends 29.39% N/A 13.19% 10/4/93
All-Growth 20.83% 7.65%* 4.96%* 1/24/89
Real Estate 15.06% 15.71%* 6.83%* 1/24/89
Natural Resources 9.23% 8.47%* 6.02%* 1/24/89
Value Equity 33.56% N/A 33.56% 1/1/95
Strategic Equity N/A N/A .02%* 10/2/95
Small Cap N/A N/A N/A 1/2/96
Emerging Markets -11.35% N/A -3.65% 10/4/93
Global Account ** 5.89%* N/A -1.41%* 10/21/92
Limited Maturity Bond 10.25% 5.03%* 5.75%* 1/24/89
Liquid Asset 4.11% 2.72%* 3.77%* 1/24/89
- ----------------------------
</TABLE>
* Total return calculation reflects partial waiver of fees and expenses.
** From it inception date until September 3, 1996, the Managed Global Account
of Separate Account D was a registered management investment company.
On that date it was reorganized into two entities: the Managed Global
Division of Separate Account B and the Managed Global Series of The
GCG Trust. Its historical performance for the purposes of the Managed
Global Division remains unchanged by the reorganization.
Performance information for a division may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P
500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money Market
Institutional Averages, or other indices that measure performance of a pertinent
group of securities so that investors may compare a division's results with
those of a group of securities widely regarded by investors as representative of
the securities markets in general; (ii) other groups of variable annuity
separate accounts or other investment products tracked by Lipper Analytical
Services, a widely used independent research firm which ranks mutual funds and
other investment companies by overall performance, investment objectives, and
assets, or tracked by other services, companies, publications, or persons who
rank such investment companies on overall performance or other criteria; and
(iii) the Consumer Price Index (measure for inflation) to assess the real rate
of return from an investment in the Contract. Unmanaged indices may assume the
reinvestment of dividends but generally do not reflect deductions for
administrative and management costs and expenses.
Performance information for any division reflects only the performance of a
hypothetical Contract under which accumulation value is allocated to a division
during a particular time period on which the calculations are based.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the portfolio of the
4
<PAGE>
Series of the Trust in which the Account B divisions invest, and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future.
Reports and promotional literature may also contain other information including
the ranking of any division derived from rankings of variable annuity separate
accounts or other investment products tracked by Lipper Analytical Services or
by other rating services, companies, publications, or other persons who rank
separate accounts or other investment products on overall performance or other
criteria.
PUBLISHED RATINGS
From time to time, the rating of Golden American as an insurance company by A.M.
Best may be referred to in advertisements or in reports to contract owners.
Each year the A.M. Best Company reviews the financial status of thousands of
insurers, culminating in the assignment of Best's Ratings. These ratings
reflect their current opinion of the relative financial strength and operating
performance of an insurance company in comparison to the norms of the
life/health insurance industry. Best's ratings range from A+ to C. An A+
rating means, in the opinion of A.M. Best, that the insurer has demonstrated the
strongest ability to meet its respective policyholder and other contractual
obligations.
PORTFOLIO TURNOVER
For reporting purposes, the Global Account's portfolio turnover rate is
calculated by dividing the value of the lesser of purchases or sales of
portfolio securities for the fiscal year by the monthly average of the value of
the portfolio securities owned by the Global Account during the fiscal year. In
determining such portfolio turnover, all securities whose maturities at the time
of acquisition were one year or less are excluded. A 100% portfolio turnover
rate would occur, for example, if all the securities in the portfolio (other
than short-term securities) were replaced once during the fiscal year.
INDEX OF INVESTMENT EXPERIENCE
The calculation of the Index of Investment Experience ("IIE") is discussed in
the prospectus for the Contracts under Measurement of Investment Experience.
The following illustrations show a calculation of a new IIE and the purchase of
Units (using hypothetical examples):
ILLUSTRATION OF CALCULATION OF IIE
<TABLE>
<CAPTION>
EXAMPLE 1.
<S> <C>
1. IIE, beginning of period . . . . . . . . . . . . . . . . . $1.80000000
2. Value of securities, beginning of period . . . . . . . . . . . .$21.20
3. Change in value of securities. . . . . . . . . . . . . . . . . . .$.50
4. Gross investment return (3) divided by (2) . . . . . . . . . .02358491
5. Less daily mortality and expense charge. . . . . . . . . . . .00003446
6. Less asset based administrative charge . . . . . . . . . . . .00000276
7. Net investment return (4) minus (5) minus (6). . . . . . . . .02354769
8. Net investment factor (1.000000) plus(7) . . . . . . . . . .1.02354769
9. IIE, end of period (1) multiplied by (8) . . . . . . . . . $1.84238584
</TABLE>
ILLUSTRATION OF PURCHASE OF UNITS (ASSUMING NO STATE PREMIUM TAX)
<TABLE>
<CAPTION>
EXAMPLE 2.
<S> <C>
1. Initial Premium Payment. . . . . . . . . . . . . . . . . . ....$100.00
2. IIE on effective date of purchase (see Example 1). . . . . .$1.8000000
3. Number of Units purchased [(1) divided by (2)] . . . . . . . .55.55556
4. IIE for valuation date following purchase (see Example 1). $1.84238584
5. Accumulation Value in account for valuation date following
purchase [(3) multiplied by (4)] . . . . . . . . . . . . . . . $102.35
</TABLE>
5
<PAGE>
IRA PARTIAL WITHDRAWAL OPTION
If the contract owner has an IRA contract and will attain age 70 1/2 in the
current calendar year, distributions will be made in accordance with the
requirements of Federal tax law. This option is available to assure that the
required minimum distributions from qualified plans under the Internal Revenue
Code (the "Code") are made. Under the Code, distributions must begin no later
than April 1st of the calendar year following the calendar year in which the
contract owner attains age 70 1/2. If the required minimum distribution is not
withdrawn, there may be a penalty tax in an amount equal to 50% of the
difference between the amount required to be withdrawn and the amount actually
withdrawn. Even if the IRA partial withdrawal option is not elected,
distributions must nonetheless be made in accordance with the requirements of
Federal tax law.
Golden American notifies the contract owner of these regulations with a letter
mailed on January 1st of the calendar year in which the contract owner reaches
age 70 1/2 which explains the IRA Partial Withdrawal Option and supplies an
election form. If electing this option, the owner specifies whether the
withdrawal amount will be based on a life expectancy calculated on a single life
basis (contract owner's life only) or, if the contract owner is married, on a
joint life basis (contract owner's and spouse's life combined). The contract
owner selects the payment mode on a monthly, quarterly or annual basis. If the
payment mode selected on the election form is more frequent than annually, the
payments in the first calendar year in which the option is in effect will be
based on the amount of payment modes remaining when Golden American receives the
completed election form.
Golden American calculates the IRA Partial Withdrawal amount each year based on
the minimum distribution rules. We do this by dividing the accumulation value
by the life expectancy. In the first year withdrawals begin, we use the
accumulation value as of the date of the first payment. Thereafter, we use the
accumulation value on December 31st of each year. The life expectancy is
recalculated each year. Certain minimum distribution rules govern payouts if
the designated beneficiary is other than the contract owner's spouse and the
beneficiary is more than ten years younger than the contract owner.
OTHER INFORMATION
Registration statements have been filed with the Securities and Exchange
Commission under the Securities Act of 1933 as amended, with respect to the
Contracts discussed in this Statement of Additional Information. Not all of the
information set forth in the registration statements, amendments and exhibits
thereto has been included in this Statement of Additional Information.
Statements contained in this Statement of Additional Information concerning the
content of the Contracts and other legal instruments are intended to be
summaries. For a complete statement of the terms of these documents, reference
should be made to the instruments filed with the Securities and Exchange
Commission.
FINANCIAL STATEMENTS OF SEPARATE ACCOUNT B
The audited Financial Statements of Separate Account B are listed below and
included in this Statement of Additional Information:
Report of Independent Auditors
Financial Statements -- Audited
Statement of Assets and Liabilities as of December 31, 1995
Combined Statement of Operations for the Year ended December 31, 1995
Combined Statements of Changes in Net Assets for the Years ended
December 31, 1995 and 1994
Notes to Audited Financial Statements
FINANCIAL STATEMENTS OF THE MANAGED GLOBAL ACCOUNT OF SEPARATE ACCOUNT D
The audited financial statements of The Managed Global Account of Separate
Account D listed below appear in the Annual Report of The Managed Global
Account of Separate Account D which was filed with the SEC and is included
this Statement of Additional Information .
Report of Independent Auditors
Financial Statements -- Audited
Statement of Assets and Liabilities as of December 31, 1995
Statement of Operations for the Year ended December 31, 1995
Statements of Changes in Net Assets for the Year ended December 31,
1995 and 1994
Statement of Investments as of December 31, 1995
Notes to Audited Financial Statements
FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE COMPANY
The audited financial statements of Golden American Life Insurance Company
listed below are prepared in accordance with generally accepted accounting
principles ("GAAP") and are incorporated by reference in this Statement of
Additional Information from the GoldenSelect DVA PLUS Deferred Combination
Variable and Fixed Annuity Prospectus, dated May, 1996, which was filed with the
SEC.
Report of Independent Auditors
Financial Statements -- GAAP
Balance Sheets as of December 31, 1995 and 1994
Statements of Operations for the Years ended December 31, 1995, 1994
and 1993
Statements of Changes in Stockholder's Equity for the Years ended
December 31, 1995, 1994 and 1993
Statements of Cash Flows for the Years ended December 31, 1995, 1994
and 1993
Notes to Audited Financial Statements
6
<PAGE>
ANNUAL REPORT
FOR
SEPARATE ACCOUNT B
------------------
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
SEPARATE ACCOUNT B
Page
----
Report of Independent Auditors..................................... B-1
Statement of Assets and Liabilities................................ B-2
Combined Statements of Operations.................................. B-3
Combined Statements of Changes in Net Assets....................... B-7
Notes to Financial Statements...................................... B-11
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Variable Annuity Contract Owners
Separate Account B
We have audited the accompanying statement of assets and liabilities of
Separate Account B (the 'Account') as of December 31, 1995 and the related
combined statements of operations and changes in net assets for each of the
three years in the period then ended. These fianancial statements are the
responsibility of the Account's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit 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, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides 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 Separate Account B at
December 31, 1995, and the related combined statements of operations and changes
in net assets for each of the three years in the period then ended in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 12, 1996
B-1
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
SEPARATE ACCOUNT B
DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investment in The GCG Trust, at Net Asset Value:
Liquid Asset Series, 36,511 shares (Cost --$36,511)............ $ 36,511
Limited Maturity Bond Series, 6,087 shares (Cost -- $64,804)... 67,870
Natural Resources Series, 1,796 shares (Cost -- $25,708)....... 27,008
All-Growth Series, 6,678 shares (Cost -- $85,681).............. 92,018
Real Estate Series, 2,758 shares (Cost -- $32,426)............. 34,836
Fully Managed Series, 8,519 shares (Cost -- $109,183).......... 117,394
Multiple Allocation Series, 24,417 shares (Cost -- $293,213)... 305,697
Capital Appreciation Series, 8,965 shares (Cost -- $107,313)... 121,118
Rising Dividends Series, 6,044 shares (Cost -- $64,959)........ 80,391
Emerging Markets Series, 4,074 shares (Cost -- $45,132)........ 36,913
Market Manager Series, 495 shares (Cost -- $5,008)............. 5,951
Value Equity Series, 2,159 shares (Cost -- $26,592)............ 28,462
Strategic Equity Series, 803 shares (Cost -- $8,008)........... 8,035
----------
Total Invested Assets (Cost -- $904,538)....................... 962,204
LIABILITIES
Payable to Golden American for Charges and Fees (Note 3).......... 1,326
----------
Total Net Assets............................................... $ 960,878
----------
----------
NET ASSETS
For Variable Annuity Insurance Contracts.......................... $ 924,596
Retained in Separate Account B by Golden American (Note 3)........ 36,282
----------
Total Net Assets............................................... $ 960,878
----------
----------
</TABLE>
B-2
<PAGE>
Separate Account B
Combined Statements of Operations
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
<TABLE>
<CAPTION>
Divisions Investing In
-------------------------------------------------------------------------------------------
Liquid Asset Series Limited Maturity Bond Series Natural Resources Series
--------------------------- ----------------------------- -----------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income
Dividends $ 2,242 $ 1,444 $ 390 $ -- $ 3,501 $ 2,606 $ 570 $ 287 $ 104
Capital gain distribution -- -- 1 -- -- 289 -- 540 --
------- ------- ------- ------- ------- ------- ------- ------- -------
Total investment income 2,242 1,444 391 -- 3,501 2,895 570 827 104
Expenses
Mortality and expense risk and
administrative charges 411 362 139 700 736 550 284 283 95
------- ------- ------- ------- ------- ------- ------- ------- -------
Net investment income (loss) 1,831 1,082 252 (700) 2,765 2,345 286 544 9
------- ------- ------- ------- ------- ------- ------- ------- -------
Net realized gain (loss) on
investments -- -- -- (138) 66 677 1,545 1,686 427
------- ------- ------- ------- ------- ------- ------- ------- -------
Unrealized appreciation
(depreciation)
of investments
Beginning of period -- -- -- (4,836) (408) 27 805 2,954 (341)
End of period -- -- -- 3,066 (4,836) (408) 1,300 805 2,954
------- ------- ------- ------- ------- ------- ------- ------- -------
Net change in unrealized
appreciation
(depreciation)
of investments -- -- -- 7,902 (4,428) (435) 495 (2,149) 3,295
------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease) in net
assets resulting from operations $ 1,831 $ 1,082 $ 252 $ 7,064 $(1,597) $ 2,587 $ 2,326 $ 81 $ 3,731
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
B-3
<PAGE>
Separate Account B
Combined Statements of Operations
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
<TABLE>
<CAPTION>
Divisions Investing In
--------------------------------------------------------------------------------------------------------
All-Growth Series Real Estate Series Fully Managed Series
-------------------------------- -------------------------------- --------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income
Dividends $ 4,685 $ 668 $ 202 $ 1,399 $ 1,863 $ 810 $ 2,846 $ 2,839 $ 1,566
Capital gain distribution -- -- -- -- -- -- -- -- 1,549
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total investment income 4,685 668 202 1,399 1,863 810 2,846 2,839 3,115
Expenses
Mortality and expense
risk and administrative
charges 833 613 380 347 348 170 1,101 1,079 731
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net investment
income (loss) 3,852 55 (178) 1,052 1,515 640 1,745 1,760 2,384
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net realized gain
(loss) on
investments 1,011 77 477 369 539 514 1,311 1,060 525
-------- -------- -------- -------- -------- -------- -------- -------- --------
Unrealized appreciation
(depreciation) of
investments
Beginning of period (4,165) 3,650 1,002 (1,015) (374) 175 (8,104) 4,425 2,725
End of period 6,336 (4,165) 3,650 2,410 (1,015) (374) 8,210 (8,104) 4,425
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net change in unrealized
appreciation
(depreciation)
of investments 10,501 (7,815) 2,647 3,425 (641) (549) 16,314 (12,529) 1,700
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in net assets
resulting from
operations $ 15,364 $ (7,683) $ 2,946 $ 4,846 $ 1,413 $ 605 $ 19,370 $ (9,709) $ 4,609
======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
B-4
<PAGE>
Separate Account B
Combined Statements of Operations
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
<TABLE>
<CAPTION>
Divisions Investing In
------------------------------------------------------------------------------------------------------
Multiple Allocation Series Capital Appreciation Rising Dividends Series
-------------------------------- -------------------------------- --------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993(a)
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income
Dividends $ 21,644 $ 10,656 $ 5,181 $ 10,216 $ 1,777 $ 933 $ 567 $ 685 $ 19
Capital gain
distribution -- -- 11,777 -- -- 188 -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total investment
income 21,644 10,656 16,958 10,216 1,777 1,121 567 685 19
Expenses
Mortality and
expense risk and
administrative
charges 3,043 2,955 1,833 1,065 909 554 648 368 14
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net investment
income (loss) 18,601 7,701 15,125 9,151 868 567 (81) 317 5
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net realized gain
(loss) on investments 4,715 2,844 295 2,221 1,427 247 776 55 --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Unrealized appreciation
(depreciation) of
investments
Beginning of period (13,754) 3,296 2,624 (726) 4,005 1,050 (605) 221 --
End of period 12,485 (13,754) 3,296 13,805 (726) 4,005 15,432 (605) 221
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net change in unrealized
appreciation
(depreciation)
of investments 26,239 (17,050) 672 14,531 (4,731) 2,955 16,037 (826) 221
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in net assets
resulting from
operations $ 49,555 $ (6,505) $ 16,092 $ 25,903 $ (2,436) $ 3,769 $ 16,732 $ (454) $ 226
======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
- ------------------------------------------------------------------------
(a) Commencement of operations, October, 1993
B-5
<PAGE>
Separate Account B
Combined Statements of Operations
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
<TABLE>
<CAPTION>
Division Investing In
-------------------------------------------------------------------------
Value Strategic
Market Equity Equity
Emerging Markets Series Manager Series Series Series Combined
------------------------------- ----------------- ------- ------- --------------------------------
1995 1994 1993(a) 1995 1994(b) 1995(c) 1995(d) 1995 1994 1993
-------- --------- ------- ------- ------ ------- ------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income
Dividends $ 6 $ -- $ -- $ 203 $ 7 $ 711 $ 19 $ 45,108 $ 23,727 $ 11,812
Capital gain
distribution -- 2,686 -- -- -- -- -- -- 3,226 13,803
-------- --------- ------- ------- ------ ------- ------- --------- --------- --------
Total investment
income 6 2,686 -- 203 7 711 19 45,108 26,953 25,615
Expenses
Mortality and
expense risk and
administrative
charges 440 561 24 -- -- 110 12 8,994 8,214 4,490
-------- --------- ------- ------- ------ ------- ------- --------- --------- --------
Net investment
income (loss) (434) 2,125 (24) 203 7 601 7 36,114 18,739 21,125
-------- --------- ------- ------- ------ ------- ------- --------- --------- --------
Net realized
gain (loss)
on investments (7,448) 836 -- 29 -- 687 (1) 5,077 8,590 3,161
-------- --------- ------- ------- ------ ------- ------- --------- --------- --------
Unrealized
appreciation
(depreciation) of
investments
Beginning of period (9,822) 3,971 -- (1) -- -- -- (42,223) 21,740 7,261
End of period (8,219) (9,822) 3,971 942 (1) 1,870 28 57,665 (42,223) 21,740
-------- --------- ------- ------- ------ ------- ------- --------- --------- --------
Net change in
unrealized
appreciation
(depreciation)
of investments 1,603 (13,793) 3,971 943 (1) 1,870 28 99,888 (63,963) 14,479
-------- --------- ------- ------- ------ ------- ------- --------- --------- --------
Net increase
(decrease)
in net assets
resulting from
operations $ (6,279) $(10,832) $ 3,947 $ 1,175 $ 6 $ 3,158 $ 34 $141,079 $(36,634) $ 38,765
======== ========= ======= ======= ====== ======= ======= ========= ========= ========
</TABLE>
- ------------------------------------------------------------------------
(a) Commencement of operations, October, 1993
(b) Commencement of operations, November, 1994
(c) Commencement of operations, January, 1995
(d) Commencement of operations, October, 1995
B-6
<PAGE>
Separate Account B
Combined Statements of Changes in Net Assets
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
<TABLE>
<CAPTION>
Division Investing In
--------------------------------------------------------------------------------------------------------
Liquid Asset Series Limited Maturity Bond Series Natural Resources Series
-------------------------------- -------------------------------- --------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease)
in net assets
Operations:
Net investment
income (loss) $ 1,831 $ 1,082 $ 252 $ (700) $ 2,765 $ 2,345 $ 286 $ 544 $ 9
Net realized gain
(loss) on
investments -- -- -- (138) 66 677 1,545 1,686 427
Net change in
unrealized
appreciation
(depreciation)
of
investments -- -- -- 7,902 (4,428) (435) 495 (2,149) 3,295
Net increase
(decrease) in net
assets resulting
from operations -------- -------- -------- -------- -------- -------- -------- -------- --------
1,831 1,082 252 7,064 (1,597) 2,587 2,326 81 3,731
-------- -------- -------- -------- -------- -------- -------- -------- --------
Policy related
transactions:
Premiums 11,323 43,297 22,808 7,579 32,041 54,680 2,111 8,595 10,191
Net transfers
among Divisions
and Guaranteed
Interest
Division
of Golden
American (5,926) 4,159 (15,605) (6,694) (22,002) (19,820) (6,167) 5,716 5,177
Surrenders and
other
withdrawals (11,794) (18,470) (3,497) (9,461) (7,604) (5,188) (3,402) (2,768) (465)
Policy related
charges and
fees (4,309) (1,201) (229) (2,224) (887) (498) (624) (314) (80)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase
(decrease)
in net assets
resulting from
policy related
transactions (10,706) 27,785 3,477 (10,800) 1,548 29,174 (8,082) 11,229 14,823
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase
(decrease)
in net assets (8,875) 28,867 3,729 (3,736) (49) 31,761 (5,756) 11,310 18,554
Net assets:
Beginning of
period 45,366 16,499 12,770 71,573 71,622 39,861 32,746 21,436 2,882
-------- -------- -------- -------- -------- -------- -------- -------- --------
End of period $ 36,491 $ 45,366 $ 16,499 $ 67,837 $ 71,573 $ 71,622 $ 26,990 $ 32,746 $ 21,436
======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
B-7
<PAGE>
Separate Account B
Combined Statements of Changes in Net Assets
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
<TABLE>
<CAPTION>
Divisions Investing In
-------------------------------------------------------------------------------------------------------------
All-Growth Series Real Estate Series Fully Managed Series
--------------------------------- ---------------------------------- -----------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease)
in net assets
Operations:
Net investment
income (loss) $ 3,852 $ 55 $ (178) $ 1,052 $ 1,515 $ 640 $ 1,745 $ 1,760 $ 2,384
Net realized gain
(loss) on
investments 1,011 77 477 369 539 514 1,311 1,060 525
Net change in
unrealized
appreciation
depreciation)
of
investments 10,501 (7,815) 2,647 3,425 (641) (549) 16,314 (12,529) 1,700
Net increase
(decrease)
in net assets
resulting
from operations --------- --------- --------- --------- --------- --------- --------- --------- ---------
15,364 (7,683) 2,946 4,846 1,413 605 19,370 (9,709) 4,609
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Policy related
transactions:
Premiums 11,880 18,242 34,573 1,928 9,862 22,416 10,129 21,742 70,789
Net transfers
among
Divisions and
Guaranteed
Interest
Division
of Golden
American 6,292 9,624 (2,152) (2,903) 208 4,008 5,315 (11,098) 109
Surrenders and
other
withdrawals (10,712) (4,906) (2,430) (4,799) (2,919) (1,717) (13,651) (9,050) (4,050)
Policy related
charges
and fees (1,489) (709) (303) (1,193) (401) (141) (2,673) (1,341) (517)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net increase
(decrease)
in net assets
resulting
from policy
related
transactions 5,971 22,251 29,688 (6,967) 6,750 24,566 (880) 253 66,331
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net increase
(decrease)
in net assets 21,335 14,568 32,634 (2,121) 8,163 25,171 18,490 (9,456) 70,940
Net assets:
Beginning of
period 70,621 56,053 23,419 36,934 28,771 3,600 98,837 108,293 37,353
--------- --------- --------- --------- --------- --------- --------- --------- ---------
End of period $ 91,956 $ 70,621 $ 56,053 $ 34,813 $ 36,934 $ 28,771 $ 117,327 $ 98,837 $ 108,293
========= ========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
See Accompanying Notes.
B-8
<PAGE>
Separate Account B
Combined Statements of Changes in Net Assets
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
<TABLE>
<CAPTION>
Divisions Investing In
---------------------------------------------------------------------------------------------
Multiple Allocation Series Capital Appreciation Rising Dividends Series
------------------------------ ----------------------------- -------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993(a)
---------- -------- -------- --------- -------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss) $ 18,601 $ 7,701 $ 15,125 $ 9,151 $ 868 $ 567 $ (81) $ 317 $ 5
Net realized gain (loss) on
investments 4,715 2,844 295 2,221 1,427 247 776 55 --
Net change in unrealized
appreciation (depreciation)
of investments 26,239 (17,050) 672 14,531 (4,731) 2,955 16,037 (826) 221
--------- -------- -------- -------- ------- ------- ------- ------- -------
Net increase (decrease) in net
assets resulting
from operations 49,555 (6,505) 16,092 25,903 (2,436) 3,769 16,732 (454) 226
--------- -------- -------- -------- ------- ------- ------- ------- -------
Policy related transactions:
Premiums 17,865 74,594 150,789 9,240 19,196 63,986 11,968 25,150 11,566
Net transfers among Divisions
and Guaranteed Interest
Division of Golden American (9,426) (9,842) 5,675 12,826 (6,163) 3,403 12,320 15,544 2,633
Surrenders and other withdrawals (42,733) (30,150) (12,915) (13,162) (7,902) (2,393) (9,800) (3,844) (25)
Policy related charges and fees (7,267) (3,746) (1,609) (2,104) (1,149) (331) (1,263) (399) (12)
--------- -------- -------- -------- ------- ------- ------- ------- -------
Net increase (decrease) in net
assets resulting from policy
related transactions (41,561) 30,856 141,940 6,800 3,982 64,665 13,225 36,451 14,162
--------- -------- -------- -------- ------- ------- ------- ------- -------
Net increase (decrease)
in net assets 7,994 24,351 158,032 32,703 1,546 68,434 29,957 35,997 14,388
Net assets:
Beginning of period 297,508 273,157 115,125 88,346 86,800 18,366 50,385 14,388 --
--------- -------- -------- -------- ------- ------- ------- ------- -------
End of period $ 305,502 $297,508 $273,157 $121,049 $88,346 $86,800 $80,342 $50,385 $14,388
========= ======== ======== ======== ======= ======= ======= ======= =======
</TABLE>
- ------------------------------------------------------------------------
(a) Commencement of operations, October, 1993
B-9
<PAGE>
Separate Account B
Combined Statements of Changes in Net Assets
Years ended December 31, 1995, 1994 and 1993
(amounts in thousands)
<TABLE>
<CAPTION>
Divisions Investing In
-----------------------------------------------------------------
Value Strategic
Market Manager Equity Equity
Emerging Markets Series Series Series Series Combined
------------------------------ --------------- -------- ------- ----------------------------
1995 1994 1993(a) 1995 1994(b) 1995(c) 1995(d) 1995 1994 1993
--------- -------- -------- ------ -------- -------- ------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income
(loss) $ (434) $ 2,125 $ (24) $ 203 $ 7 $ 601 $ 7 $ 36,114 $ 18,739 $ 21,125
Net realized gain (loss)
on investments (7,448) 836 -- 29 -- 687 (1) 5,077 8,590 3,162
Net change in unrealized
appreciation (depreciation)
of investments 1,603 (13,793) 3,971 943 (1) 1,870 28 99,888 (63,963) 14,477
-------- -------- ------- ------ ------ ------- ------ --------- -------- --------
Net increase (decrease) in
net assets resulting
from operations (6,279) (10,832) 3,947 1,175 6 3,158 34 141,079 (36,634) 38,764
-------- -------- ------- ------ ------ ------- ------ --------- -------- --------
Policy related transactions:
Premiums 8,150 30,113 13,923 2,298 1,414 9,018 3,240 106,729 284,246 455,721
Net transfers among Divisions
and Guaranteed Interest Division
of Golden American (15,911) 14,778 12,702 301 1,335 17,110 4,868 12,005 2,259 (3,870)
Surrenders and other withdrawals (7,740) (4,285) (62) (767) -- (776) (172) (128,969) (91,898) (32,742)
Policy related charges and fees (1,079) (517) (21) (553) (3) (63) 61 (24,780) (10,667) (3,741)
-------- -------- ------- ------ ------ ------- ------ --------- -------- --------
Net increase (decrease) in net
assets resulting from policy
related transactions (16,580) 40,089 26,542 1,279 2,746 25,289 7,997 (35,015) 183,940 415,368
-------- -------- ------- ------ ------ ------- ------ --------- -------- --------
Net increase (decrease)
in net assets (22,859) 29,257 30,489 2,454 2,752 28,447 8,031 106,064 147,306 454,132
Net assets:
Beginning of period 59,746 30,489 -- 2,752 -- -- -- 854,814 707,508 253,376
-------- -------- ------- ------ ------ ------- ------ --------- -------- --------
End of period $ 36,887 $ 59,746 $30,489 $5,206 $2,752 $28,447 $8,031 $ 960,878 $854,814 $707,508
======== ======== ======= ====== ====== ======= ====== ========= ======== ========
</TABLE>
- ------------------------------------------------------------------------
(a) Commencement of operations, October, 1993
(b) Commencement of operations, November, 1994
(c) Commencement of operations, January, 1995
(d) Commencement of operations, October, 1995
B-10
- --------------------------------------------------------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
SEPARATE ACCOUNT B
DECEMBER 31, 1995
1. ORGANIZATION
Separate Account B (the 'Account') was established on June 14, 1988, by
Golden American Life Insurance Company ('Golden American'), under Minnesota
insurance law to support the operations of variable annuity contracts
('Contracts'). Effective September 30, 1992, Golden American became a
wholly-owned subsidiary of BT Variable, Inc. ('BTV'), an indirect wholly-owned
subsidiary of Bankers Trust Company ('Bankers Trust'). Previously, Golden
American was owned by Mutual Benefit Life Insurance Company in Rehabilitation
('Mutual Benefit'). In a transaction that closed on September 30, 1992, Bankers
Trust acquired from Mutual Benefit, in accordance with the terms of an Exchange
Agreement, all of the issued and outstanding capital stock of Golden American
and Directed Services, Inc. ('DSI'), an affiliate of Golden American, and
certain related assets and contributed them to BTV. The transaction had no
effect on the accompanying financial statements. Golden American is primarily
engaged in the issuance of variable insurance products and is licensed as a life
insurance company in the District of Columbia and all states except New York.
Effective December 30, 1993, Golden American was redomesticated from the State
of Minnesota to the State of Delaware.
Operations of the Account commenced on January 25, 1989. Golden American
provides for variable accumulation and benefits under the contracts by crediting
annuity considerations to one or more divisions within the Account or to the
Golden American Guaranteed Interest Division, the Golden American Fixed Interest
Division, the Fixed Separate Account, and the Managed Global Division of
Separate Account D, which are not part of the Account, as elected by the
Contractowners. The assets of the Account are owned by Golden American. The
portion of the Account's assets applicable to Contracts will not be chargeable
with liabilities arising out of any other business Golden American may conduct,
but obligations of the Account, including the promise to make benefit payments,
are obligations of Golden American.
The Account makes available, under Golden Select Contracts, thirteen investment
divisions: the Liquid Asset, the Limited Maturity Bond, the Natural Resources,
the All-Growth, the Real Estate, the Fully Managed, the Multiple Allocation, the
Capital Appreciation, the Rising Dividends (commenced operations October, 1993),
the Emerging Markets (commenced operations on October 4, 1993), the Market
Manager (commenced operations November, 1994) the Value Equity (commenced
operations January, 1995) and the Strategic Equity (commenced operations
October, 1995) Divisions ('Divisions'). The assets in each Division are
invested in shares of a designated series ('Series') of a mutual fund, The GCG
Trust (the 'Trust'). The Account also includes The Fund For Life Division, which
is not included in the accompanying financial statements, and which ceased to
accept new Contracts effective December 31, 1994.
The Account is a unit investment trust and is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended.
The net assets maintained in the Account provide the basis for the periodic
determination of the amount of benefits under the Contracts. The net assets may
not be less than the amount required under state law to provide for death
benefits (without regard to the minimum death benefit guarantee) and other
Contract benefits. Additional assets are held in Golden American's general
account to cover the contingency that the guaranteed minimum death benefit might
exceed the death benefit which would have been payable in the absence of such
guarantee. Golden American has entered into reinsurance agreements with
unaffiliated reinsurers to cover substantially all the insurance risk under the
Contracts. Golden American remains liable to the extent that the reinsurers do
not meet their obligations under the reinsurance agreements.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies of the
Account:
USE OF ESTIMATES: The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
INVESTMENTS: Investments are made in shares of a Series of the Trust and are
valued at the net asset value per share of the respective Series of the Trust.
Investment transactions in each Series of the Trust are recorded on the trade
date. Distributions of net investment income and capital gains of each Series of
the Trust are recognized on the ex-distribution date. Realized gains and losses
on redemptions of the shares of the Series of the Trust are determined on the
identified cost basis.
For the years ended December 31, 1995 and 1994 the cost of purchases of shares
of the Trust aggregated $228,738,000 and $352,605,000, respectively and the
proceeds from sales of shares of the Trust aggregated $226,848,000 and
$149,774,000, respectively.
B-11
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
SEPARATE ACCOUNT B
DECEMBER 31, 1995
2. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
FEDERAL INCOME TAXES: Operations of the Account form a part of, and are taxed
with, the total operations of Golden American which is taxed as a life insurance
company under the Internal Revenue Code. Earnings and realized capital gains of
the Account attributable to the Contractowners are excluded in the determination
of the federal income tax liability of Golden American.
3. CHARGES AND FEES
Under the terms of the Contracts, certain charges are allocated to the Contracts
to cover Golden American's expenses in connection with the issuance and
administration of the Contracts. Following is a summary of these charges:
MORTALITY AND EXPENSE RISK CHARGES: Golden American assumes mortality and
expense risks related to the operations of the Account and, in accordance with
the terms of the Contracts, deducts a daily charge from the assets of the
Account at annual rates of .80%, .90%, 1.25%, 1.10%, 1.25% and 1.40% of the
assets attributable to the DVA 80, DVA 100, DVA Series 100, DVA Plus-Standard,
DVA Plus-Annual Ratchet, and DVA Plus-7% Solution, respectively to cover these
risks.
ASSET BASED ADMINISTRATIVE CHARGE: A daily charge at an annual rate of .10% is
deducted from assets attributable to DVA 100 and DVA Series 100 Contracts. A
daily charge at an annual rate of .15% is deducted from the assets attributable
to DVA Plus Contracts.
MINIMUM DEATH BENEFIT GUARANTEE CHARGE: For certain Contracts, a minimum death
benefit guarantee charge of up to $1.20 per $1,000 of guaranteed death benefit
per Contract year is deducted from the accumulation value of Deferred Annuity
Contracts on each Contract processing date.
PREMIUM TAXES: For certain contracts, premium taxes are deducted, where
applicable, from the accumulation value of each Contract. The amount and timing
of the deduction depend on the annuitant's state of residence and currently
ranges up to 3.5% of premiums.
OTHER CONTRACT CHARGES: An administrative charge of $40 per Contract year is
deducted from accumulation value of Deferred Annuity Contracts to cover ongoing
administrative expenses. The charge is deducted on the Contract processing date
at the end of the Contract processing period. This charge has been waived for
certain offerings of the Contract.
DEFERRED SALES LOAD: Under contracts offered prior to October 1995, a sales load
of up to 7 1/2% was applicable to each premium payment for sales-related
expenses as specified in the Contracts. For DVA Series 100 the sales load is
deducted in equal annual installments over the period the Contract is in force,
not to exceed 10 years. For other DVA 80 and DVA 100 Contracts, although the
sales load is chargeable to each premium when it is received by Golden American,
the amount of such charge is initially advanced by Golden American to
Contractowners and included in the accumulation value and then deducted in equal
installments on each Contract processing date over a period of six years. Upon
surrender of the Contract, the unamortized deferred sales load is deducted from
the accumulation value by Golden American. In addition, when partial withdrawal
limits are exceeded, a portion of the unamortized deferred sales load is
deducted.
CONTINGENT DEFERRED SALES CHARGE: Under DVA Plus Contracts issued subsequent to
September 1995, a contingent sales charge ('Surrender Charges') is imposed as a
percentage of each premium payment if the Contract is surrendered or an excess
partial withdrawal is taken during the seven year period from the date a premium
payment is received. The Surrender Charges are imposed at a rate of 7% during
the first two complete years after purchase declining to 6%, 5%, 4%, 3%, and 1%
after the second, third, fourth, fifth, and sixth years, respectively.
The net assets retained in the Account by Golden American in the accompanying
financial statements represent the unamortized deferred sales load, surrender
charges and premium taxes advanced by Golden American, noted above.
B-12
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
SEPARATE ACCOUNT B
DECEMBER 31, 1995
3. CHARGES AND FEES--(CONTINUED)
Net assets retained in the Account by Golden American are as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Balance at beginning of year.............................................. $ 44,008 $ 37,364
Sales load advanced and additions to surrender charges.................... 6,572 16,138
Premium tax advanced...................................................... 76 73
Net transfer (to) from Separate Account D, Fixed Account and Golden
American................................................................ (1,303) 666
Amortization of deferred sales load, surrender charges and premium tax.... (13,071) (10,233)
----------------- -----------------
Balance at end of year.................................................... $ 36,282 $ 44,008
----------------- -----------------
----------------- -----------------
</TABLE>
4. OTHER RELATED PARTY TRANSACTIONS
DSI, a registered broker/dealer, acts as the distributor and principal
underwriter (as defined in the Securities Act of 1933 and the Investment Company
Act of 1940, as amended) of the Contracts issued through the Account. For 1995
and 1994, fees paid by Golden American to DSI aggregated $7,621,000 and
$15,939,000 respectively.
B-13
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
SEPARATE ACCOUNT B
DECEMBER 31, 1995
5. UNIT VALUES
Presented below is accumulation unit value information for units outstanding by
Contract type as of December 31, 1995
<TABLE>
<CAPTION>
TOTAL UNIT
SERIES UNITS UNIT VALUE VALUE
- ------------------------------------------------------------------------------------ ------------ ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Liquid Asset
DVA 80......................................................................... 398,563 $ 13.429 $ 5,352
DVA 100........................................................................ 2,096,044 13.243 27,757
DVA Series 100................................................................. 70,999 12.921 917
DVA Plus -- Standard........................................................... 37,887 13.029 494
DVA Plus -- Annual Ratchet..................................................... 62,084 12.895 801
DVA Plus -- 7% Solution........................................................ 93,239 12.762 1,190
-------------
36,511
Limited Maturity Bond
DVA 80......................................................................... 206,399 15.307 3,160
DVA 100........................................................................ 4,103,020 15.095 61,935
DVA Series 100................................................................. 14,356 14.729 212
DVA Plus -- Standard........................................................... 26,976 14.865 401
DVA Plus -- Annual Ratchet..................................................... 11,834 14.711 174
DVA Plus -- 7% Solution........................................................ 136,553 14.559 1,988
-------------
67,870
Natural Resources
DVA 80......................................................................... 249,344 15.578 3,884
DVA 100........................................................................ 1,433,795 15.362 22,026
DVA Series 100................................................................. 19,158 14.989 287
DVA Plus -- Standard........................................................... 24,828 15.114 375
DVA Plus -- Annual Ratchet..................................................... 2,847 14.958 42
DVA Plus -- 7% Solution........................................................ 26,605 14.803 394
-------------
27,008
All-Growth
DVA 80......................................................................... 260,857 14.537 3,792
DVA 100........................................................................ 5,828,945 14.335 83,560
DVA Series 100................................................................. 46,215 13.987 647
DVA Plus -- Standard........................................................... 21,908 14.104 309
DVA Plus -- Annual Ratchet..................................................... 16,567 13.959 231
DVA Plus -- 7% Solution........................................................ 251,872 13.814 3,479
-------------
92,018
Real Estate
DVA 80......................................................................... 105,134 16.428 1,727
DVA 100........................................................................ 1,965,015 16.201 31,835
DVA Series 100................................................................. 14,556 15.808 230
DVA Plus -- Standard........................................................... 2,716 15.940 43
DVA Plus -- Annual Ratchet..................................................... 2,910 15.775 46
DVA Plus -- 7% Solution........................................................ 61,143 15.612 955
-------------
34,836
Fully Managed
DVA 80......................................................................... 258,587 15.694 4,058
DVA 100........................................................................ 7,054,994 15.476 109,184
DVA Series 100................................................................. 29,312 15.101 443
DVA Plus -- Standard........................................................... 49,153 15.227 748
DVA Plus -- Annual Ratchet..................................................... 13,988 15.070 211
DVA Plus -- 7% Solution........................................................ 184,364 14.914 2,750
-------------
117,394
Multiple Allocation
DVA 80......................................................................... 1,217,849 17.235 20,989
DVA 100........................................................................ 16,134,381 16.996 274,218
DVA Series 100................................................................. 140,336 16.584 2,327
DVA Plus -- Standard........................................................... 104,463 16.722 1,747
DVA Plus -- Annual Ratchet..................................................... 21,073 16.550 348
DVA Plus -- 7% Solution........................................................ 370,515 16.378 6,068
-------------
305,697
</TABLE>
B-14
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
SEPARATE ACCOUNT B
DECEMBER 31, 1995
5. UNIT VALUES--(CONTINUED)
<TABLE>
<CAPTION>
TOTAL UNIT
SERIES UNITS UNIT VALUE VALUE
------------------------------------------------------------------------------------ ------------ ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Capital Appreciation
DVA 80......................................................................... 154,271 $ 14.935 $ 2,304
DVA 100........................................................................ 7,627,317 14.825 113,076
DVA Series 100................................................................. 26,783 14.634 392
DVA Plus -- Standard........................................................... 24,117 14.707 355
DVA Plus -- Annual Ratchet..................................................... 16,369 14.627 239
DVA Plus -- 7% Solution........................................................ 326,610 14.548 4,752
-------------
121,118
Rising Dividends
DVA 80......................................................................... 102,616 13.356 1,370
DVA 100........................................................................ 5,536,766 13.296 73,617
DVA Series 100................................................................. 50,637 13.191 668
DVA Plus -- Standard........................................................... 22,934 13.237 304
DVA Plus -- Annual Ratchet..................................................... 36,100 13.194 476
DVA Plus -- 7% Solution........................................................ 300,820 13.151 3,956
-------------
80,391
Emerging Markets
DVA 80......................................................................... 227,757 9.317 2,122
DVA 100........................................................................ 3,533,661 9.275 32,775
DVA Series 100................................................................. 30,591 9.202 281
DVA Plus -- Standard........................................................... 15,670 9.234 145
DVA Plus -- Annual Ratchet..................................................... 12,465 9.204 115
DVA Plus -- 7% Solution........................................................ 160,820 9.174 1,475
-------------
36,913
Market Manager
DVA 100........................................................................ 480,472 12.386 5,951
Value Equity
DVA 80......................................................................... 202,148 13.417 2,712
DVA 100........................................................................ 1,676,442 13.391 22,449
DVA Series 100................................................................. 10,226 13.345 136
DVA Plus -- Standard........................................................... 34,272 13.374 458
DVA Plus -- Annual Ratchet..................................................... 23,394 13.356 313
DVA Plus -- 7% Solution........................................................ 179,453 13.339 2,394
-------------
28,462
Strategic Equity
DVA 80......................................................................... 137,215 10.013 1,374
DVA 100........................................................................ 362,606 10.009 3,629
DVA Series 100................................................................. 26,760 9.999 267
DVA Plus -- Standard........................................................... 76,095 10.014 762
DVA Plus -- Annual Ratchet..................................................... 47,478 10.011 475
DVA Plus -- 7% Solution........................................................ 152,633 10.009 1,528
-------------
8,035
-------------
Total........................................................................ $ 962,204
-------------
-------------
</TABLE>
B-15
<PAGE>
[GOLDEN AMERICAN LIFE INSURANCE LOGO ]
ANNUAL REPORT
------------------
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
OF
GOLDEN AMERICAN LIFE INSURANCE COMPANY
------------------
DECEMBER 31, 1995
GoldenSelect products are issued by Golden American Life Insurance Company and
distributed by
Directed Services, Inc., both subsidiaries of Bankers Trust Company
<PAGE>
Golden American Life Insurance Company
A SUBSIDIARY OF BANKERS TRUST COMPANY
1001 JEFFERSON STREET, SUITE 400, WILMINGTON, DE 19801 TEL: 302-576-3400
FAX: 302-576-3450
February 21, 1996
Dear Contractholder:
I am pleased to provide you with the 1995 Annual Report for The Managed Global
Account of Separate Account D. This portfolio invests in a wide range of equity,
debt securities and money market instruments worldwide. It has been managed by
Warburg, Pincus Counsellors, Inc. since July, 1994 and seeks high total
investment returns consistent with prudent regard for capital preservation.
Included in the Annual Report is a report of Warburg, Pincus Counsellors, Inc.
Warburg, Pincus' comments reflect their views as of the date written, and are
subject to change at any time.
If you have any questions or would like additional information, please call
Golden American customer service: 1-800-366-0066. We would be pleased to assist
you.
Thank you for your continued support of GoldenSelect products. We look forward
to serving you in 1996 and beyond.
Sincerely.
/s/ Terry L. Kendall
Terry L. Kendall
President
D-1
<PAGE>
MANAGED GLOBAL ACCOUNT
The objective of the GoldenSelect Managed Global Account of Separate Account D
is long-term capital appreciation and international diversification.
The year saw fairly wide divergences in performance among foreign markets. Most
European exchanges recorded solid gains, while many of the emerging markets,
particularly in Asia, suffered losses. Japan, after falling sharply in the
year's first six months, staged a powerful recovery at midyear and finished the
year even.
Japan remains the Account's largest commitment to a single country, at 32% of
the portfolio. The Portfolio Manager is encouraged by developments in the
Japanese economy, and is equally optimistic about the stock market's prospects
in 1996.
Emerging markets, collectively, suffered in 1995, and as a result valuations are
now lower than they have been in several years. The Portfolio Manager sees many
attractive opportunities in emerging markets as 1996 begins, particularly in
Asia, which represents the major focus of the Account's emerging-market
exposure.
As 1996 begins, the Portfolio Manager's outlook on international equity markets
is, in general, positive, and believes that the Account is well-positioned with
regard to its regional and country allocations and its specific holdings.
WARBURG, PINCUS COUNSELLORS, INC.
TOP FIVE HOLDINGS AS OF DECEMBER 31, 1995:
<TABLE>
<S> <C>
1. Banco De Santander S.A., ADR................................................... 4.0%
2. Canon Inc...................................................................... 3.7%
3. East Japan Railway Company..................................................... 3.1%
4. Nippon Telegraph & Telephone Corporation....................................... 3.0%
5. VA Technologie AG.............................................................. 3.0%
</TABLE>
ASSET DISTRIBUTION BY COUNTRY
The following table replaces a pie chart showing asset distribution by country
as a precentage of total investments.
Other............................... 36.4%
Argentina........................... 4.0%
Spain............................... 4.0%
Hong Kong........................... 4.1%
New Zealand......................... 6.0%
France.............................. 6.1%
Great Britain....................... 7.4%
Japan............................... 32.0%
D-2
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost $67,478,262) (Notes 1 and 3)........................................................... $ 70,981,052
Cash............................................................................................................... 78,896
Receivables:
Investment securities sold...................................................................................... 1,336,669
Dividends and interest.......................................................................................... 99,399
Premium payments and reallocations.............................................................................. 20,839
Net unrealized appreciation of forward foreign currency exchange contracts......................................... 351,688
Prepaid expenses and other assets.................................................................................. 9,271
-------------
Total Assets.................................................................................................... 72,877,814
LIABILITIES
Payables:
Investment securities purchased................................................................................. 334,419
Surrenders, withdrawals and reallocations....................................................................... 58,577
Golden American for contract related expenses (Note 2).......................................................... 43,558
Accrued management and organization fees (Note 2).................................................................. 1,684
Accrued expenses................................................................................................... 64,469
-------------
Total Liabilities............................................................................................... 502,707
-------------
Total Net Assets................................................................................................ $ 72,375,107
-------------
-------------
NET ASSETS
For variable annuity contracts..................................................................................... $ 69,499,713
Retained in The Managed Global Account of Separate Account D by Golden American (Note 2)........................... 2,875,394
-------------
Total Net Assets................................................................................................ $ 72,375,107
-------------
-------------
</TABLE>
See Notes to Financial Statements.
D-3
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding taxes of $3,203).............................................................. $ 92,139
Dividends (net of foreign withholding taxes of $149,639)........................................................... 1,207,385
------------
Total Investment Income......................................................................................... 1,299,524
------------
EXPENSES:
Mortality and expense risk and asset based administrative charges (Note 2)......................................... 739,881
Management and advisory fees (Note 2).............................................................................. 734,700
Custodian fees (Note 2)............................................................................................ 111,693
Accounting fees.................................................................................................... 51,766
Auditing fees...................................................................................................... 23,639
Printing and mailing............................................................................................... 14,268
Board of governors' fees and expenses (Note 2)..................................................................... 5,987
Legal fees......................................................................................................... 3,818
Other.............................................................................................................. 40,556
------------
Total Expenses.................................................................................................. 1,726,308
Less amounts paid by the investment manager pursuant to expense limitation agreement (Note 2)...................... (63,386)
------------
Net Expenses.................................................................................................... 1,662,922
------------
NET INVESTMENT LOSS.................................................................................................. (363,398)
------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) from:
Security transactions........................................................................................... (6,119,111)
Forward foreign currency exchange contracts..................................................................... 1,952,175
Foreign currency transactions................................................................................... (4,990)
Net change in unrealized appreciation of:
Securities...................................................................................................... 7,765,310
Forward foreign currency exchange contracts..................................................................... 351,688
Other assets and liabilities denominated in foreign currencies.................................................. 3,323
------------
Net realized and unrealized gain on investments.................................................................... 3,948,395
------------
Net increase in net assets resulting from operations............................................................ $ 3,584,997
------------
------------
</TABLE>
See Notes to Financial Statements.
D-4
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
------------- -------------
INCREASE/(DECREASE) IN NET ASSETS
<S> <C> <C>
OPERATIONS:
Net investment loss................................................................................ $ (363,398) $ (259,767)
Net realized loss on securities, forward foreign currency exchange contracts and foreign currency
transactions.................................................................................... (4,171,926) (1,363,558)
Net unrealized appreciation/(depreciation) of securities, forward foreign currency exchange
contracts and other assets and liabilities denominated in foreign currencies.................... 8,120,321 (11,511,952)
------------- -------------
Net increase/(decrease) in net assets resulting from operations.................................... 3,584,997 (13,135,277)
------------- -------------
CONTRACT RELATED TRANSACTIONS:
Premiums........................................................................................... 6,235,725 22,680,207
Benefits, surrenders and other withdrawals......................................................... (9,881,861) (8,496,158)
Net transfers (to) from Separate Account B, Fixed Account and Golden American...................... (12,563,025) (2,244,552)
Contract related charges and fees (Note 2)......................................................... (1,209,284) (1,073,158)
------------- -------------
Net increase/(decrease) in net assets resulting from contract related transactions................. (17,418,445) 10,866,339
------------- -------------
Net decrease in net assets......................................................................... (13,833,448) (2,268,938)
NET ASSETS:
Beginning of year.................................................................................. 86,208,555 88,477,493
------------- -------------
End of year........................................................................................ $ 72,375,107 $ 86,208,555
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements.
D-5
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT EACH YEAR FOR THE DVA 100.
<TABLE>
<CAPTION>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
12/31/95 12/31/94** 12/31/93 12/31/92*
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning of year................................. $ 9.091 $ 10.518 $ 10.008 $ 10.000
--------- ----------- --------- -----------
INCOME/(LOSS) FROM INVESTMENT OPERATIONS:
Net investment income/(loss) #............................................. (0.044) (0.030) (0.046) 0.022
Net realized and unrealized gain/(loss) on investments..................... 0.612 (1.397) 0.556 (0.014)
--------- ----------- --------- -----------
Total from investment operations........................................... 0.568 (1.427) 0.510 0.008
--------- ----------- --------- -----------
Accumulation unit value, end of year....................................... $ 9.659 $ 9.091 $ 10.518 $ 10.008
--------- ----------- --------- -----------
--------- ----------- --------- -----------
Total return............................................................... 6.25% (13.57)% 5.10% 0.08%++
--------- ----------- --------- -----------
--------- ----------- --------- -----------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)......................................... $ 68,283 $ 83,702 $ 85,702 $ 38,699
Ratio of operating expenses to average net assets.......................... 2.27% 2.31% 2.68% 2.46%+
Decrease reflected in above expense ratio due to expense limitations....... 0.08% 0.09% 0.03% --
Ratio of net investment income/(loss) to average net assets................ (0.50)% (0.31)% (0.44)% 1.78%+
</TABLE>
- ------------------
* These units were available for sale on October 21, 1992.
** On July 1, 1994 Warburg, Pincus Counsellors, Inc. became Portfolio Manager of
the Account. Prior to that date the Account had been advised by another
Portfolio Manager.
+ Annualized
++ Non-annualized
# Per unit numbers have been calculated using the average unit method, which
more appropriately presents the per unit data for the period.
See Notes to Financial Statements.
D-6
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT EACH YEAR FOR THE DVA 80.
<TABLE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
12/31/95 12/31/94** 12/31/93*
----------- ----------- ---------
<S> <C> <C> <C>
Accumulation unit value, beginning of year................................................. $ 9.130 $ 10.541 $ 10.420
----------- ----------- ---------
INCOME/(LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss #...................................................................... (0.027) (0.011) (0.005)
Net realized and unrealized gain/(loss) on investments..................................... 0.617 (1.400) 0.126
----------- ----------- ---------
Total from investment operations........................................................... 0.590 (1.411) 0.121
----------- ----------- ---------
Accumulation unit value, end of year....................................................... $ 9.720 $ 9.130 $ 10.541
----------- ----------- ---------
----------- ----------- ---------
Total return............................................................................... 6.46% (13.39)% 1.16%++
----------- ----------- ---------
----------- ----------- ---------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)......................................................... $ 1,047 $ 1,877 $ 2,087
Ratio of operating expenses to average net assets.......................................... 2.07% 2.11% 2.48%+
Decrease reflected in above expense ratio due to expense limitations....................... 0.08% 0.09% 0.03%+
Ratio of net investment loss to average net assets......................................... (0.30)% (0.11)% (0.24)%+
</TABLE>
- ------------------
* These units were available for sale on October 14, 1993.
** On July 1, 1994 Warburg, Pincus Counsellors, Inc. became Portfolio Manager of
the Account. Prior to that date the Account had been advised by another
Portfolio Manager.
+ Annualized
++ Non-annualized
# Per unit numbers have been calculated using the average unit method, which
more appropriately presents the per unit data for the period.
See Notes to Financial Statements.
D-7
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
<TABLE>
<CAPTION>
FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT EACH YEAR FOR THE DVA SERIES 100.
YEAR YEAR PERIOD
ENDED ENDED ENDED
12/31/95 12/31/94** 12/31/93*
----------- ----------- ---------
<S> <C> <C> <C>
Accumulation unit value, beginning of year................................................. $ 9.027 $ 10.481 $ 10.536
----------- ----------- ---------
INCOME/(LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss #...................................................................... (0.076) (0.066) (0.036)
Net realized and unrealized gain/(loss) on investments..................................... 0.607 (1.388) (0.019)
----------- ----------- ---------
Total from investment operations........................................................... 0.531 (1.454) (0.055)
----------- ----------- ---------
Accumulation unit value, end of year....................................................... $ 9.558 $ 9.027 $ 10.481
----------- ----------- ---------
----------- ----------- ---------
Total return............................................................................... 5.87% (13.87)% (0.52)%++
----------- ----------- ---------
----------- ----------- ---------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)......................................................... $ 545 $ 630 $ 688
Ratio of operating expenses to average net assets.......................................... 2.62% 2.66% 3.02%+
Decrease reflected in above expense ratio due to expense limitations....................... 0.08% 0.09% 0.03%+
Ratio of net investment loss to average net assets......................................... (0.85)% (0.66)% (0.79)%+
</TABLE>
- ------------------
* These units were available for sale on April 27, 1993.
** On July 1, 1994 Warburg, Pincus Counsellors, Inc. became Portfolio Manager of
the Account. Prior to that date the Account had been advised by another
Portfolio Manager.
+ Annualized
++ Non-annualized
# Per unit numbers have been calculated using the average unit method, which
more appropriately presents the per unit data for the period.
See Notes to Financial Statements.
D-8
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
DVA PLUS- DVA PLUS- DVA PLUS-
STANDARD ANNUAL RATCHET 7% SOLUTION
----------- --------------- -------------
PERIOD PERIOD PERIOD
ENDED ENDED ENDED
12/31/95* 12/31/95* 12/31/95*
----------- --------------- -------------
<S> <C> <C> <C>
Accumulation unit value, beginning of period................................... $ 9.323 $ 9.282 $ 9.240
----------- --------------- -------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss #.......................................................... (0.013) (0.013) (0.013)
Net realized and unrealized gain on investments................................ 0.266 0.262 0.259
----------- --------------- -------------
Total from investment operations............................................... 0.253 0.249 0.246
----------- --------------- -------------
Accumulation unit value, end of period......................................... $ 9.576 $ 9.531 $ 9.486
----------- --------------- -------------
----------- --------------- -------------
Total return................................................................... 2.71%++ 2.69%++ 2.66%++
----------- --------------- -------------
----------- --------------- -------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........................................... $ 256 $ 262 $ 1,982
Ratio of operating expenses to average net assets.............................. 2.40%+ 2.55%+ 2.60%+
Decrease reflected in above expense ratio due to expense limitations........... 0.08%+ 0.08%+ 0.08%+
Ratio of net investment loss to average net assets............................. (0.63)%+ (0.78)%+ (0.83)%+
</TABLE>
- ------------------
* These units were available for sale on October 2, 1995.
+ Annualized
++ Non-annualized
# Per unit numbers have been calculated using the average unit method, which
more appropriately presents the per unit data for the period.
See Notes to Financial Statements.
D-9
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- -------------- -----------
COMMON STOCKS -- 93.7%
ARGENTINA -- 3.9%
<S> <C> <C>
2,318 Banco de Galicia Y Buenos Aires
S.A............................. $ 47,809
21,045 Banco Frances del Rio de la Plata
S.A............................. 186,220
19,320 Banco Frances del Rio de la Plata
S.A., ADR....................... 519,225
61,900 Capex S.A., Class A, GDR**........ 897,550
25,600 Telefonica de Argentina S.A.,
ADR............................. 697,600
21,800 Y.P.F. S.A........................ 471,425
-----------
2,819,829
-----------
AUSTRALIA -- 2.6%
71,312 BTR Ltd. Class A.................. 348,227
51,375 Niugini Mining Ltd.+.............. 98,898
274,500 Pasminco Ltd.+.................... 336,637
212,900 Woodside Petroleum Ltd............ 1,088,677
-----------
1,872,439
-----------
AUSTRIA -- 3.0%
17,000 VA Technologie AG+................ 2,159,051
-----------
BRAZIL -- 0.4%
9,000 Panamerican Beverages Inc., Class
A............................... 288,000
-----------
CHINA -- 0.4%
15,000 Jilan Chemical, ADR............... 322,500
-----------
DENMARK -- 0.3%
11,100 International Service Systems AS,
Class B......................... 249,865
-----------
FINLAND -- 1.1%
15,650 Metsa-Serla, Class B.............. 482,070
500 Metra AB, Class B................. 20,688
11,600 Valmet, Class A................... 287,987
-----------
790,745
-----------
FRANCE -- 6.0%
9,507 Bouygues.......................... 956,907
4,000 Cetelem........................... 750,145
47,300 Largardere Groupe................. 868,598
8,351 Scor S.A.......................... 260,703
19,671 Total S.A., Class B............... 1,326,518
4,597 Total S.A., ADS................... 156,298
-----------
4,319,169
-----------
GERMANY -- 2.9%
12,400 Adidas AG......................... 656,318
11,500 Adidas AG, ADR**.................. 302,158
3,400 Deutsche Bank AG.................. 161,156
13,000 SGL Carbon AG..................... 1,006,276
-----------
2,125,908
-----------
GREAT BRITAIN -- 7.2%
173,956 British Airport Authority Ord..... 1,310,242
11,600 Cookson Group PLC................. 55,125
50,000 Govett & Company Ltd., Ord. PLC... 180,148
64,000 Grand Metropolitan PLC Ord........ 460,682
156,223 Prudential Corporation PLC........ 1,005,637
31,232 Reckitt & Colman PLC Ord.......... 345,589
630,000 Singer & Friedlander Group PLC.... 1,061,553
295,400 Takare PLC........................ 825,761
-----------
5,244,737
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- -------------- -----------
<S> <C> <C>
HONG KONG -- 4.1%
359,000 Citic Pacific Ltd................. $ 1,228,005
48,737 HSBC Holdings Ltd................. 737,437
141,201 Jardine Matheson Holdings Ltd..... 967,227
-----------
2,932,669
-----------
INDIA -- 3.1%
33,000 Hindalco Industries Ltd., GDR**... 1,126,290
41,400 India Fund (The) Inc.............. 367,425
51,200 Reliance Industries Ltd., GDS..... 716,800
-----------
2,210,515
-----------
INDONESIA -- 2.3%
34,500 Bank International Indonesia
(Foreign)....................... 114,296
99,000 PT Mulia Industrindo Ord.
(Foreign)....................... 279,270
79,500 PT Semen Gresik (Foreign)......... 222,523
10,500 PT Telekomunikas, ADR............. 265,125
410,000 PT Telekomunikas (Foreign)........ 537,940
19,800 PT Tri Polyta Indonesia, ADR...... 272,250
-----------
1,691,404
-----------
ISRAEL -- 1.8%
75,000 Ampal American Israel Corporation,
Class A......................... 393,750
38,500 ECI Telecom, Ltd.................. 878,281
-----------
1,272,031
-----------
JAPAN -- 29.5%
149,000 Canon Inc......................... 2,698,596
22,000 Circle K Japan Company Ltd........ 969,491
170 DDI Corporation................... 1,317,191
458 East Japan Railway Company........ 2,226,789
89,000 Hitachi Ltd....................... 896,465
2,500 Keyence Corporation............... 288,136
75,000 Kirin Beverage Corporation........ 1,009,685
5,000 Kyocera Corporation............... 371,429
11,000 Murata Manufacturing Company
Ltd............................. 404,843
94,000 NEC Corporation................... 1,147,119
27,000 Nippon Communication Systems
Corporation..................... 285,036
267 Nippon Telegraph & Telephone
Corporation..................... 2,161,215
54 NTT Data Communication Systems
Corporation..................... 1,814,818
40,800 Orix Corporation.................. 1,679,419
6,000 Rohm Company...................... 338,789
20,000 Sony Corporation.................. 1,199,031
33,000 TDK Corporation................... 1,684,358
3,000 UNY Company....................... 56,368
21,600 York-Benimaru Company Ltd......... 826,344
-----------
21,375,122
-----------
KOREA -- 2.5%
6,600 Mando Machinery Corporation,
GDR............................. 173,250
40,300 Mando Machinery Corporation,
GDR**........................... 1,057,875
5,800 Samsung Electric, GDR............. 559,700
-----------
1,790,825
-----------
MALAYSIA -- 0.4%
75,000 Westmont BHD...................... 259,873
-----------
MEXICO -- 0.4%
93,000 Gruma S.A., Series B.............. 261,581
-----------
</TABLE>
See Notes to Financial Statements.
D-10
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS --(CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- -------------- -----------
COMMON STOCKS -- (CONTINUED)
<S> <C> <C>
NEW ZEALAND -- 5.9%
1,313,354 Brierley Investments Ltd.......... $ 1,038,912
266,300 Fletcher Challenge Ltd............ 614,550
502,522 Fletcher Challenge (Forest
Division) Ltd................... 716,182
538,800 Lion Nathan Ltd................... 1,285,678
30,000 Sky City Ltd...................... 622,697
-----------
4,278,019
-----------
NORWAY -- 1.0%
17,100 Norsk Hydro, ADR.................. 716,063
-----------
PAKISTAN -- 0.3%
241,000 Pakistan Telecommunications
Corporation..................... 216,589
-----------
SINGAPORE -- 2.5%
9,000 D.B.S. Land Ltd................... 30,414
119,000 Development Bank of Singapore
Ltd............................. 1,480,665
464,000 I.P.C. Corporation................ 308,349
-----------
1,819,428
-----------
SPAIN -- 4.0%
58,100 Banco de Santander S.A., ADR...... 2,861,425
-----------
SWEDEN -- 3.0%
8,100 Asea AB, Class B.................. 787,983
35,200 Astra AB, Class B................. 1,394,112
-----------
2,182,095
-----------
SWITZERLAND -- 1.5%
615 Brown Boveri & Cie AG, Class A.... 714,744
200 Ciba-Geigy AG..................... 175,195
150 Danza Holding AG.................. 163,920
-----------
1,053,859
-----------
TAIWAN -- 2.5%
1,680,000 GP Taiwan Index Fund.............. 1,325,268
75,511 Tuntex Distinct Corporation,
GDS **.......................... 509,701
-----------
1,834,969
-----------
THAILAND -- 1.1%
146,800 Industrial Finance Corporation of
Thailand (Foreign).............. 498,269
81,400 Thai Military Bank Public Company
Ltd. (Foreign).................. 329,607
-----------
827,876
-----------
Total Common Stocks
(Cost $64,252,583).............. 67,776,586
-----------
WARRANTS -- 0.0%# COST ($20,647)
SWITZERLAND -- 0.0%#
600 Danza Holding AG, Expires
08/02/1996...................... 2,667
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- -------------- -----------
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS -- 3.8%
JAPAN -- 1.8%
JPY Matasushita Electric Works Ltd.,
111,000,000 2.700% due 05/31/2002........... $ 1,313,724
-----------
TAIWAN -- 2.0%
$1,070,000 President Enterprises Corporation,
Zero coupon due 07/22/2001...... 1,358,900
70,000 Yang Ming Marine Transport
Corporation,
2.000% due 10/06/2001........... 77,175
-----------
1,436,075
-----------
Total Convertible Corporate Bonds
(Cost $2,753,032)............... 2,749,799
-----------
REPURCHASE AGREEMENT -- 0.6% Cost ($452,000)
452,000 Agreement with PNC Securities
Corporation, 5.600% dated
12/29/1995 to be repurchased at
$452,281 on 01/02/1996,
collateralized by $445,000 U.S.
Treasury Notes, 5.750% due
09/30/1997 (value $455,324)..... 452,000
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
PRINCIPAL AMOUNT (NOTE 1)
- ------------------------------------------ -----------
<S> <C> <C>
TOTAL INVESTMENTS (COST $67,478,262)
(NOTES 1 AND 3).......... 98.1% 70,981,052
OTHER ASSETS AND LIABILITIES (NET)........ 1.9 1,394,055
--------- -----------
NET ASSETS................................ 100.0% $72,375,107
--------- -----------
--------- -----------
</TABLE>
- ----------------------
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registration
to qualified institutional buyers.
+ Non-income producing security.
# Amount is less than 0.1%.
<TABLE>
<S> <C> <C>
GLOSSARY OF TERMS
American Depositary
ADR -- Receipt.
American Depositary
ADS -- Share.
Global Depositary
GDR -- Receipt.
GDS -- Global Depositary Share.
JPY -- Japanese Yen.
</TABLE>
See Notes to Financial Statements.
D-11
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS --(CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
DECEMBER 31, 1995
DECEMBER 31, 1995, INDUSTRY CLASSIFICATION OF THE FUND WAS AS FOLLOWS
(UNAUDITED):
<TABLE>
<CAPTION>
% OF NET VALUE
INDUSTRY CLASSIFICATION ASSETS (NOTE 1)
- ------------------------------------- ------------- ------------
<S> <C> <C>
LONG TERM INVESTMENTS:
Electric Machinery
Equipment/Electronics.............. 9.6% $6,970,456
Telecommunications................... 8.4 6,073,941
Investment Companies................. 8.0 5,795,435
Banking/Financials................... 7.7 5,539,247
Financial Services................... 7.5 5,461,877
Durable Goods -- Consumer............ 5.5 3,999,903
Transportation....................... 5.2 3,778,127
Oil/Gas Extraction................... 5.2 3,758,981
Computer Software.................... 2.5 1,814,818
Forest Products/Paper................ 2.5 1,812,802
Industrial........................... 2.4 1,707,127
Technology........................... 2.3 1,684,358
Pharmaceuticals...................... 2.2 1,569,307
Metal/Metal Products................. 2.2 1,561,824
Chemicals/Allied Products............ 1.8 1,311,550
Beverages............................ 1.8 1,297,685
Brewery.............................. 1.8 1,285,678
Insurance............................ 1.8 1,266,339
Automobile Parts..................... 1.7 1,231,125
Industrial/Commercial Machinery...... 1.7 1,199,031
Engineering/Construction............. 1.6 1,179,431
Metals -- Diversified................ 1.4 1,006,276
Convenience Stores................... 1.3 969,492
Shoes/Leather........................ 1.3 958,476
Energy............................... 1.2 897,550
Retail -- Grocery.................... 1.2 882,712
Health Care Services................. 1.1 825,761
Food/Kindred Products................ 1.0 722,263
Electronics -- Semiconductor......... 1.0 710,218
Entertainment........................ 0.9 622,697
Textiles............................. 0.7 509,701
Nondurable Goods -- Consumer......... 0.5 345,589
Computer Industry.................... 0.4 308,349
Communication........................ 0.4 285,036
</TABLE>
<TABLE>
<CAPTION>
% OF NET VALUE
INDUSTRY CLASSIFICATION (CONTINUED) ASSETS (NOTE 1)
- ------------------------------------- ------------- ------------
<S> <C> <C>
Capital Goods........................ 0.4% $279,270
Business Services.................... 0.4 249,865
Other................................ 0.9 656,755
----- ------------
TOTAL LONG TERM INVESTMENTS.......... 97.5 70,529,052
REPURCHASE AGREEMENT................. 0.6 452,000
----- ------------
TOTAL INVESTMENTS.................... 98.1 70,981,052
OTHER ASSETS AND LIABILITIES (NET)... 1.9 1,394,055
----- ------------
NET ASSETS........................... 100.0% $72,375,107
-----
----- ------------
------------
</TABLE>
SCHEDULE OF
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS TO SELL
<S> <C> <C> <C> <C> <C>
CONTRACTS TO DELIVER
- ---------------------------------- IN
EXCHANGE UNREALIZED
EXPIRATION LOCAL FOR U.S. VALUE IN APPRECIATION/
DATE CURRENCY $ U.S. $ (DEPRECIATION)
- ---------- ---------------------- --------- ----------- -------------
03/21/1996 JPY 302,112,500 2,999,915 2,961,061 $ 38,854
03/21/1996 JPY 958,387,500 9,514,420 9,393,333 121,087
03/21/1996 FRF 19,600,000 4,000,000 4,004,659 (4,659)
06/17/1996 JPY 282,690,000 3,000,000 2,803,594 196,406
-------------
Net Unrealized Appreciation of Forward Foreign Currency
Exchange Contracts...................................... $ 351,688
-------------
-------------
</TABLE>
<TABLE>
<S> <C> <C>
GLOSSARY OF TERMS
FRF -- French Franc
JPY -- Japanese Yen
</TABLE>
See Notes to Financial Statements.
D-12
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Managed Global Account of Separate Account D (the 'Account') is registered
with the Securities and Exchange Commission under the Investment Company Act of
1940, as amended, as a non-diversified open-end investment company and meets the
definition of a separate account under federal securities laws. The Account was
established on April 18, 1990, by Golden American Life Insurance Company
('Golden American'), to support the operations of variable annuity contracts
('Contracts'). Golden American, a wholly-owned subsidiary of BT Variable, Inc.
('BTV'), an indirect subsidiary of Bankers Trust Company ('Bankers Trust'), is a
stock life insurance company organized under the laws of the state of Delaware.
Golden American is primarily engaged in the issuance of variable insurance
products and is authorized to do business in the District of Columbia and in all
states except New York.
Operations on the Account commenced on October 21, 1992. Golden American
provides for variable accumulation and benefits under the Contracts by crediting
annuity considerations to the Account at the direction of contractholders. The
assets of the Account are owned by Golden American. The portion of the Account's
assets applicable to Contracts will not be chargeable with liabilities arising
out of any other business Golden American may conduct, but obligations of the
Account, including the promise to make benefit payments, are obligations of
Golden American.
The net assets maintained in the Account provide the basis for the periodic
determination of the amount of benefits under the Contracts. The net assets may
not be less than the reserves and other contract liabilities with respect to the
Account. Golden American has entered into a reinsurance agreement with an
affiliated reinsurer to cover insurance risks under the Contracts. Golden
American remains liable to the extent that the reinsurer does not meet its
obligations under the reinsurance agreement.
The preparation of financial statements in accordance with Generally Accepted
Accounting Principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies consistently followed by the Account in the
preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles.
(A) VALUATION: Domestic and foreign portfolio securities, except as noted below,
for which market quotations are readily available are stated at market value.
Market value is determined on the basis of the last reported sales price in the
principal market where such securities are traded or, if no sales are reported,
the mean between representative bid and asked quotations obtained from a
quotation reporting system or from established market makers.
Long-term debt securities, including those to be purchased under firm commitment
agreements, are normally valued on the basis of quotes obtained from brokers and
dealers or pricing services, which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data. Under certain circumstances, long-term debt securities having a maturity
of sixty days or less may be valued at amortized cost. Short-term debt
securities are valued at their amortized cost which approximates fair value.
Amortized cost involves valuing a portfolio security instrument at its cost,
initially, and thereafter, assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument.
Securities for which market quotations are not readily available are valued at
fair value as determined in good faith by, or under the direction of the Board
of Governors.
(B) DERIVATIVE FINANCIAL INSTRUMENTS: The Account may engage in various
portfolio strategies, as described below, to seek to manage its exposure to
equity markets and to manage fluctuations in foreign currency rates. Forward
foreign currency exchange contracts to buy, writing puts and buying calls tend
to increase the Account's exposure to the underlying market or currency. Forward
foreign currency exchange contracts to sell, buying puts and writing calls tend
to decrease the Account's exposure to the underlying market or currency. In some
instances, investments in derivative financial instruments may involve, to
varying degrees, elements of market risk and risks in excess of the amount
recognized in the Statement of Assets and Liabilities. Losses may arise under
these contracts due to the existence of an illiquid secondary market for the
contracts, or if the counterparty does not perform under the contract. An
additional primary risk associated with the use of certain of these contracts
may be caused by an imperfect correlation between movements in the price of the
derivative financial instruments and the price of the underlying securities,
indices or currency.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS: The Account may enter into forward
foreign currency exchange contracts. The Account will enter in forward foreign
currency exchange contracts to hedge against fluctuations in currency exchange
D-13
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
rates. Forward foreign currency exchange contracts are valued at the applicable
forward rate, and are marked to market daily. The change in market value is
recorded by the Account as an unrealized gain or loss. When a contract is
closed, the Account records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at the
time it was closed. Although forward foreign currency exchange contracts limit
the risk of loss due to a decline in the value of the hedged currency, they also
limit any potential gain that might result should the value of the currency
increase. In addition, the Account could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts.
Open contracts at December 31, 1995 and their related unrealized appreciation
(depreciation) are set forth in the Schedule of Forward Foreign Currency
Exchange Contracts which accompanies the Portfolio of Investments. Realized and
unrealized gain/(loss) arriving from forward foreign currency exchange contracts
are included in net realized and unrealized gain/(loss) on forward foreign
currency exchange contracts.
OPTIONS: The Account may engage in option transactions. When the Account writes
an option, an amount equal to the premium received by the Account is reflected
as an asset and an equivalent liability. The amount of the liability is
subsequently marked to market on a daily basis to reflect the current value of
the option written.
When a security is sold through an exercise of an option, the related premium
received (or paid) is deducted from (or added to) the basis of the security
sold. When an option expires (or the Account enters into a closing transaction),
the Account realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the premium paid or received). The Account
did not write options during the year ended December 31, 1995. Realized gains
arising from purchased options are included in the net realized gain/(loss) on
security transactions.
(C) FOREIGN CURRENCY: Assets and liabilities denominated in foreign currencies
and commitments under forward foreign currency exchange contracts are translated
into U.S. dollars at the mean of the quoted bid and asked prices of such
currencies against the U.S. dollar as of the close of business immediately
preceding the time of valuation. Purchases and sales of portfolio securities are
translated at the rates of exchange prevailing when such securities were
acquired or sold. Income and expenses are translated at rates of exchange
prevailing when accrued.
The Account does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain/(loss) from securities.
Reported net realized gains or losses on foreign currency transactions arise
from sales and maturities of short-term securities, sales of foreign currencies,
currency gains or losses realized between the trade and settlement dates on
securities transactions, and the difference between the amounts of dividends,
interest and foreign withholding taxes recorded on the Account's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
gains and losses on other assets and liabilities denominated in foreign
currencies arise from changes in the value of assets and liabilities other than
investments in securities at the end of the reporting period, resulting from
changes in the exchange rate.
(D) REPURCHASE AGREEMENTS: The Account may enter into repurchase agreements in
accordance with guidelines approved by the Board of Governors of the Account.
The Account bears a risk of loss in the event that the other party to a
repurchase agreement defaults on its obligations and the Account is delayed or
prevented from exercising its rights to dispose of the underlying securities
received as collateral including the risk of a possible decline in the value of
the underlying securities during the period while the Account seeks to exercise
its rights. The Account takes possession of the collateral and reviews the value
of the collateral and the creditworthiness of those banks and dealers with which
the Account enters into repurchase agreements to evaluate potential risks. The
market value of the underlying securities received as collateral must be at
least equal to the total amount of the repurchase obligation. In the event of
counterparty default, the Account has the right to use the underlying securities
to offset the loss.
(E) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
recorded on the trade date. Dividend income is recorded on the ex-dividend date.
Interest income (including amortization of premium and discount on securities)
and expenses are accrued daily. Realized gains and losses from investment
transactions are recorded on the identified cost basis which is the same basis
used for federal income tax purposes.
(F) FEDERAL INCOME TAXES: Operations of the Account form a part of, and are
taxed with, the total operations of Golden American, which is taxed as a life
insurance company under the Internal Revenue Code. Earnings and realized capital
gains of the Account attributable to the contractowners are excluded in the
determination of the federal income tax liability of Golden American.
D-14
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
OPERATING EXPENSES: Directed Services, Inc. ('DSI'), a wholly owned subsidiary
of BTV, serves as Manager to the Account pursuant to a Management Agreement.
Under the Management Agreement, DSI has overall responsibility, subject to the
supervision of the Board of Governors, for administrating all operations of the
Account and for monitoring and evaluating the management of the assets of the
Account by the Portfolio Manager. In consideration for these services, the
Account pays DSI a management fee based upon the following annual percentage of
the Account's average daily net assets: 0.40% of the first $500 million and
0.30% of the amount over $500 million. Warburg, Pincus Counsellors, Inc.
('Warburg') serves as the Portfolio Manager of the Account and in that capacity
provides investment advisory services for the Account including asset allocation
and security selection. In consideration for these services, Warburg is paid an
advisory fee by the Account, payable monthly, based on the average daily net
assets of the Account at an annual rate of 0.60% of the first $500 million and
0.50% on the excess thereof. For the year ended December 31, 1995, the Account
incurred management and advisory fees of $293,930 and $440,770, respectively.
The Account bears the expenses of its investment management operations,
including expenses associated with custody of securities, portfolio accounting,
the Board of Governors, legal and auditing services, registration fees and other
related operating expenses. Bankers Trust is the custodian of the assets in the
Account. For the year ended December 31, 1995, the Account incurred $111,693 for
custodian fees. In addition, the Account reimburses Golden American for certain
organization expenses (See Note 4). At December 31, 1995, a total of $1,684 was
payable to DSI and Golden American for management and reimbursement of
organization expenses.
Certain officers and governors of the Account are also officers and/or directors
of the Manager, Golden American, BTV and Bankers Trust.
MORTALITY AND EXPENSE RISK CHARGES: Golden American assumes mortality and
expense risks related to the operations of the Account and, in accordance with
the terms of the Contracts, deducts a daily charge from the assets of the
Account at annual rates of 0.80%, 0.90%, 1.25%, 1.10%, 1.25% and 1.40% of the
assets attributable to DVA 80, DVA 100, DVA Series 100, DVA Plus-Standard, DVA
Plus-Annual Ratchet and DVA Plus-7% Solution, respectively, to cover these
risks. Golden American did not deduct mortality and expense risk charges and
asset based administrative charges from the DVA Plus Contract assets until
November 1995, upon which it received exemptive relief from the Securities and
Exchange Commission.
ASSET BASED ADMINISTRATIVE CHARGE: To compensate Golden American for the
administrative expenses under the Contracts, a daily charge at an annual rate of
0.10% is deducted from assets attributable to the DVA 100 and DVA Series 100
Contracts. A daily charge of 0.15% is deducted from the assets attributable to
DVA Plus Contracts.
OTHER CONTRACT CHARGES: An administrative fee of $40 per Contract year is
deducted from the accumulation value of certain DVA 80 and DVA 100 Contracts.
Under DVA Plus Contracts issued subsequent to September of 1995, an excess
allocation charge of $25 per allocation may be imposed by Golden American after
the twelfth allocation change in a contract year. Under DVA 80, DVA 100 and DVA
Series 100 Contracts ('Previous Contracts'), a partial withdrawal charge of the
lower of 2% of the withdrawal or $25 is deducted from the accumulation for each
additional partial withdrawal in a Contract year. In addition, under the
Previous Contracts, there is an excess allocation charge of $25 for each
allocation change between divisions in excess of the five free changes allowed
per contract year.
DEFERRED SALES LOAD: Under contracts offered prior to October of 1995, a sales
load of up to 6.50% was applicable to each premium payment for sales related
expenses as specified in the Contracts. For DVA Series 100 Contracts, the sales
load is deducted in equal annual installments over the period the Contract is in
force, not to exceed 10 years. For DVA 80 and DVA 100 Contracts, although the
sales load is chargeable to each premium when it is received by Golden American,
the amount of such charge is initially advanced by Golden American to
Contractowners and included in the accumulation value and then deducted in equal
installments on each Contract processing date over a period of six years. For
the year ended December 31, 1995, contract sales loads of $1,124,480 initially
advanced by Golden American to the Account were deducted from contractowners'
accumulation value. Upon surrender of the Contract, the unamortized deferred
sales load is deducted from the accumulation value by Golden American. In
addition, when partial withdrawal limits are exceeded, a portion of the
unamortized deferred sales load is deducted.
CONTINGENT DEFERRED SALES CHARGE: Under DVA Plus Contracts issued subsequent to
September of 1995, a contingent deferred sales charge ('Surrender Charges') is
imposed as a percentage of each premium payment if the Contract is surrendered
or an excess partial withdrawal is taken during the seven year period from the
date a premium payment is received. The Surrender Charges are imposed at a rate
of 7% of the premium payment during the first two complete years after purchase
declining to 6%, 5%, 4%, 3%, and 1% after the second, third, fourth, fifth and
sixth complete years, respectively. For the year ended December 31, 1995, Golden
American collected Surrender Charges in the amount of $15.
D-15
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
The net assets retained in the Account by Golden American in the accompanying
financial statements represent the unamortized deferred sales load, surrender
charges and premium taxes advanced by Golden American reduced to conform with
the Commissioner's Annuity Reserve Valuation Methodology ('CARVM') noted above.
Net Assets Retained in the Account by Golden American are as follows:
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
12/31/95 12/31/94
------------ ------------
<S> <C> <C>
Balance at beginning of year........................................................... $ 4,533,964 $ 4,668,658
Sales load advanced and additions to surrender charges................................. 379,811 1,338,526
Premium tax advanced................................................................... 2,628 6,823
Net transfer (to) from Separate Account B, Fixed Account and Golden American........... (899,808) (427,829)
Amortization of deferred sales load, surrender charges and premium tax................. (1,141,201) (1,052,214)
------------ ------------
$ 2,875,394 $ 4,533,964
------------ ------------
------------ ------------
</TABLE>
PREMIUM TAXES: Premium taxes are deducted, where applicable, from the
accumulation value of each Contract. The amount and timing of the deduction
depend on the annuitant's state of residence and currently ranges up to 3.5% of
premiums. Premium taxes are generally incurred on the annuity commencement date
and a charge for such premium taxes is then deducted from the accumulation value
on such date. However, some jurisdictions impose a premium tax at the time the
initial and additional premiums are paid, regardless of the annuity commencement
date. In those states, Golden American advances the amount of the charge for
premium taxes to Contractowners and then deducts it from the accumulation value
in equal installments on each contract processing date over a six year period.
Golden American is currently waiving the deduction of the applicable
installments of the charge for premium taxes previously advanced by Golden
American to Contractowners. Golden American reserves the right to deduct the
total amount of the charge for premium taxes previously waived and unrecovered
on the annuity commencement date or upon surrender of the Contract.
EXPENSE LIMITATION: The Account and DSI entered into an agreement to limit the
ordinary operating expenses of the Account, excluding, among other things,
mortality and expense risk charges, asset based administrative charges, interest
expense, and other contractual charges, through December 31, 1995, so that such
expenses do not exceed on an annual basis 1.25% of the first $500 million of the
average daily net assets and 1.05% of the excess over $500 million. For the year
ended December 31, 1995, $63,386 was reimbursed by DSI to the Account pursuant
to this limitation. Such agreement existed under the same terms for the year
ended December 31, 1994.
DSI, a registered broker/dealer, acts as the distributor and principal
underwriter (as defined in the Securities Act of 1933 and the Investment Company
Act of 1940, as amended) of the Contracts issued through the Account. For the
years ended December 31, 1995 and December 31, 1994, fees paid by Golden
American to DSI in connection with sales of the contracts aggregated
approximately $446,000 and $1,343,000, respectively.
3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities, excluding short-term securities,
during the year ended December 31, 1995, were $30,992,571 and $4,817,671,
respectively.
At December 31, 1995, aggregate gross unrealized appreciation for all securities
in which there is an excess of value over tax cost and aggregate gross
unrealized depreciation for all securities in which there is an excess of tax
cost over value were $8,320,461 and $4,817,671, respectively.
For the year ended December 31, 1995, the portfolio turnover rate was 44%.
4. ORGANIZATION COSTS
The initial organizational expenses of the Account of approximately $150,000
were paid by Golden American. The Account reimburses Golden American monthly for
such expenses ratably over a period of sixty months from the date of the
Account's commencement of operations. At December 31, 1995, the unamortized
balance of such expenses was $75,090. It is Golden American's intention not to
seek reimbursement for any unpaid amounts should the account cease operations.
D-16
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
5. INCREASE/(DECREASE) IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
DVA 100
Units purchased...................................................................... 409,418 2,267,150
Units redeemed....................................................................... (2,561,328) (1,161,000)
------------ ------------
Net Increase/(Decrease)......................................................... (2,151,910) 1,106,150
Units at the beginning of the period................................................... 9,225,615 8,119,465
------------ ------------
Units at the end of the period......................................................... 7,073,705 9,225,615
------------ ------------
------------ ------------
DVA 80
Units purchased...................................................................... 66,593 154,827
Units redeemed....................................................................... (164,429) (147,275)
------------ ------------
Net Increase/(Decrease)......................................................... (97,836) 7,552
Units at the beginning of the period................................................... 205,564 198,012
------------ ------------
Units at the end of the period......................................................... 107,728 205,564
------------ ------------
------------ ------------
DVA Series 100
Units purchased...................................................................... 27,026 55,550
Units redeemed....................................................................... (39,838) (51,428)
------------ ------------
Net Increase/(Decrease)......................................................... (12,812) 4,124
Units at the beginning of the period................................................... 69,795 65,671
------------ ------------
Units at the end of the period......................................................... 56,983 69,795
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD
ENDED
12/31/95*
------------
<S> <C> <C>
DVA Plus -- Standard
Units purchased...................................................................... 43,964
Units redeemed....................................................................... (17,239)
------------
Net Increase.................................................................... 26,725
Units at the beginning of the period................................................... 0
------------
Units at the end of the period......................................................... 26,725
------------
------------
DVA Plus -- Annual Ratchet
Units purchased...................................................................... 29,267
Units redeemed....................................................................... (1,811)
------------
Net Increase.................................................................... 27,456
Units at the beginning of the period................................................... 0
------------
Units at the end of the period......................................................... 27,456
------------
------------
DVA Plus -- 7% Solution
Units purchased...................................................................... 209,355
Units redeemed....................................................................... (345)
------------
Net Increase.................................................................... 209,010
Units at the beginning of the period................................................... 0
------------
Units at the end of the period......................................................... 209,010
------------
------------
</TABLE>
- ------------------
* The DVA Plus -- Standard, Annual Ratchet and 7% Solution units were offered
for sale commencing October 2, 1995.
D-17
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
THE MANAGED GLOBAL ACCOUNT
OF
SEPARATE ACCOUNT D
6. SUBSEQUENT EVENT
On August 13, 1996, under the terms of a stock purchase agreement, Equitable
of Iowa Companies acquired all of the interest in BTV from Whitewood Properties
Corp., a subsidiary of Bankers Trust Company. DSI and Golden American are
wholly owned subsidiaries of BTV.
In addition at a special meeting held on August 8, 1996, the contractholders
approved the reorganization of the Account from a separate account of Golden
American register as a management investment company toa newly created division
(the "Division") of Separate Account B, an existing separate account of Golden
American which is registered as a unit investment trust. On the date of
reorganization, which is anticipated to be September 3, 1996, the Account will
transfer all of its assets to the Division. The Division will simultaneously
exchange these assets to the Managed Global Series of the The GCG Trust in
consideration for shares of the Series. The Managed Global Series is a newly
created Series of The GCG Trust. Ths GCG Trust is and existing open-end
management investment company registered under the Investment Company Act of
1940.
If this reorganization, described above, had taken place on December 31, 1995,
the unit values and net assets of the Division would have been the same as
reflected in the Account's financial statements contained herein.
D-18
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Contractowners and Board of Governors
The Managed Global Account of Separate Account D
We have audited the accompanying statement of assets and liabilities of The
Managed Global Account of Separate Account D, including the portfolio of
investments, as of December 31, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended and the financial highlights for each of
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Account's management. Our responsibility is to
express an opinion on these financial statements and financial highlights 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 and financial
highlights 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 verification by examination of securities
held by the custodian as of December 31, 1995 and confirmation of securities not
held by the custodian by correspondence with others. 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 and financial highlights referred
to above present fairly, in all material respects, the financial position of The
Managed Global Account of Separate Account D at December 31, 1995, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended and the financial highlights for
each of the indicated periods in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
New York, New York
February 9, 1996
except for Note 6, as to which the date is August 27, 1996
D-19
<PAGE>
APPENDIX: DESCRIPTION OF BOND RATINGS
Excerpts from Moody's Investors Service, Inc. ("Moody's) description of its bond
ratings:
Aaa: Judged to be the best quality; they carry the smallest degree of
investment risk.
Aa: Judged to be of high quality by all standards; together with the Aaa
group, they comprise what are generally known as high grade bonds.
A: Possess many favorable investment attributes and are to be considered
as "upper medium grade obligations."
Baa: Considered as medium grade obligations, i.e., they are neither highly
protected nor poorly secured; interest payments and principal security
appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of
time.
Ba: Judged to have speculative elements; their future cannot be considered
as well assured.
B: Generally lack characteristics of the desirable investment.
Caa: Are of poor standing; such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca: Speculative in a high degree; often in default.
C: Lowest rate class of bonds; regarded as having extremely poor
prospects.
Moody's also applies numerical indicators 1, 2 and 3 to rating categories. The
modifier 1 indicates that the security is in the higher end of its rating
category; 2 indicates a mid-range ranking; and 3 indicates a ranking toward the
lower end of the category.
Excerpts from Standard & Poor's Rating Group ("Standard & Poor's") description
of its bond ratings:
AAA: Highest grade obligations; capacity to pay interest and repay
principal is extremely strong.
AA: Also qualify as high grade obligations; a very strong capacity to pay
interest and repay principal and differs from AAA issues only in small
degree.
A: Regarded as upper medium grade; they have a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions
than debt in higher rated categories.
BBB: Regarded as having an adequate capacity to pay interest and repay
principal; whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity than in higher rated categories -- this group
is the lowest which qualifies for commercial bank investment.
BB, B,
CCC,
CC: Predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with terms of the obligation: BB indicates
the lowest degree of speculation and CC the highest.
Standard & Poor's applies indicators "+," no character, and "-" to its rating
categories. The indicators show relative standing within the major rating
categories.
<PAGE>
PART C -- OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS
(a) All financial statements are included in either the Prospectuses or the
Statements of Additional Information, as indicated therein.
EXHIBITS
(b) (1) Resolution of the board of directors of Depositor authorizing the
establishment of the Registrant (1)
(2) Form of Custodial Agreement (2)
(3) (a) Form of Distribution Agreement between the Depositor and Directed
Services, Inc. (2)
(b) Form of Dealers Agreement (2)
(c) Organizational Agreement (5)
(d) (i) Addendum to Organizational Agreement (3)
(ii) Expense Reimbursement Agreement (5)
(e) Form of Assignment Agreement for Organizational Agreement (5)
(4) (a) Individual Deferred Variable Annuity Contract (2)
(b) Individual Variable Annuity Certain Contract (2)
(c) Discretionary Group Deferred Variable Annuity Contract (4)
(d) Discretionary Group Variable Annuity Certain (4)
(e) Amended Individual Deferred Variable Annuity Contract (5)
(f) Amended Individual Variable Annuity Certain Contract (5)
(g) Amended Discretionary Group Deferred Variable Annuity
Contract (5)
(h) Amended Discretionary Group Variable Annuity Certain (5)
(i) Amended Individual Deferred Variable Annuity Contract Schedule
Pages (6)
(j) Amended Individual Variable Annuity Certain Contract Schedule
Pages (6)
(k) Amended Discretionary Group Deferred Variable Annuity Contract
Schedule Pages (6)
(l) Amended Discretionary Group Variable Annuity Certain Contract
Schedule Pages (6)
(m) Amended Discretionary Group Deferred Variable Annuity Certificate
Schedule Pages (6)
(n) Amended Discretionary Group Variable Annuity Certain Certificate
Schedule Pages (6)
(o) Amended Individual Variable Annuity Certain Contract Schedule
Pages (7)
(p) Amended Discretionary Group Deferred Variable Annuity Contract
Schedule Pages (7)
(q) Amended Discretionary Group Variable Annuity Certain Contract
Schedule Pages (7)
(r) Amended Discretionary Group Variable Annuity Certain Certificate
Schedule Pages (7)
(s) Contract Riders (6)
(t) Certificate Riders (6)
(u) Amended Individual Variable Annuity Certain Contract Schedule
Pages (5/91) (8)
(v) Amended Individual Deferred Variable Annuity Contract Schedule
Pages( (5/91) (8)
<PAGE>
(w) Amended Discretionary Group Variable Annuity Certain Contract
Schedule Pages (5/91) (8)
(x) Amended Discretionary Group Deferred Variable Annuity Contract
Schedule Pages (5/91) (8)
(y) Individual Deferred Variable Annuity Contract Schedule Pages
(5/92) (9)
(z) Individual Variable Annuity Certain Contract Schedule Pages
(5/92) (9)
(aa) Discretionary Group Variable Annuity Certain Contract Schedule
Pages (5/92) (9)
(bb) Discretionary Group Variable Annuity Certain Contract Schedule
Pages (5/92) (9)
(cc) Individual Deferred Variable Annuity Contract Schedule Pages
(5/93) (10)
(dd) Individual Variable Annuity Certain Contract Schedule Pages
(5/93) (10)
(ee) Discretionary Group Deferred Variable Annuity Contract Schedule
Pages (5/93) (10)
(ff) Discretionary Group Variable Annuity Certain Contract Schedule
Pages (5/93) (10)
(gg) Individual Deferred Variable Annuity Contract Schedule Pages
(10/93) (11)
(hh) Individual Variable Annuity Certain Contract Schedule Pages
(10/93) (11)
(ii) Discretionary Group Deferred Variable Annuity Contract Schedule
Pages (10/93) (11)
(jj) Discretionary Group Variable Annuity Certain Contract Schedule
Pages (10/93) (11)
(kk) External Exchange Program Endorsement (9)
(ll) DVA Update Program Schedule Page (9)
(mm) Individual Retirement Annuity Rider Page (9)
(5) (a) Individual Deferred Variable Annuity Application (2)
(b) Group Deferred Variable Annuity Enrollment Form (2)
(6) (a) (i) Articles of Incorporation of Golden American Life
Insurance Company (1)
(ii) Certificate of Amendment of the Restated Articles of
Incorporation of Golden American Life Insurance Company
(4)
(iii) Certificate of Amendment of the Restated Articles of
Incorporation of MB Variable Life Insurance Company (6)
(iv) Certificate of Amendment of the Restated Articles of
Incorporation of Golden American Life Insurance Company
(12/28/93) (7)
(b) (i) By-Laws of Golden American Life Insurance Company (1)
(ii) By-Laws of Golden American Life Insurance Company, as
amended (4)
(iii) Certificate of Amendment of the By-Laws of MB Variable
Life Insurance Company, as amended (6)
(iv) By-Laws of Golden American, as amended (12/21/93) (7)
(c) Resolution of Board of Directors for Powers of Attorney (8)
(d) Powers of Attorney
(7) Not applicable
(8) Not applicable
(9) Opinion of Myles R. Tashman (9)
(10) (a) Consent of Sutherland, Asbill & Brennan
(b) Consent of Ernst & Young LLP
(c) Consent of Myles R. Tashman
(11) Not applicable
(12) Not applicable
<PAGE>
(13) Schedule of Performance Data (5)
_______________
(1) Incorporated herein by reference to an initial registration statement for
Separate Account B filed with the Securities and Exchange Commission on
July 27, 1988 (File No. 33-23351).
(2) Incorporated herein by reference to pre-effective amendment No. 1 to a
registration statement for Separate Account B filed with the Securities and
Exchange Commission on October 6, 1988 (File No. 33-23351).
(3) Incorporated herein by reference to post-effective amendment No. 2 to a
registration statement for The Specialty Managers Separate Account A filed
on Form S-6 with the Securities and Exchange Commission on September 13,
1989 (File No. 33-23458).
(4) Incorporated herein by reference to pre-effective amendment No. 2 to a
registration statement filed for Separate Account B with the Securities and
Exchange Commission on November 28, 1988 (File No. 33-23351).
(5) Incorporated herein by reference to post-effective amendment No. 1 to a
registration statement filed for Separate Account B with the Securities and
Exchange Commission on September 13, 1989 (File No. 33-23351).
(6) Incorporated herein by reference to post-effective amendment No. 2 to a
registration statement filed for Separate Account B with the Securities and
Exchange Commission on March 9, 1990 (File No. 33-23351).
(7) Incorporated herein by reference to post-effective amendment No. 3 to a
registration statement filed for Separate Account B with the Securities and
Exchange Commission on April 30, 1990 (File No. 33-23351).
(8) Incorporated herein by reference to post-effective amendment No. 5 to a
registration statement for Separate Account B filed with the Securities and
Exchange Commission on May 2, 1991 (File No. 33-23351).
(9) Incorporated herein by reference to post-effective amendment No. 8 to a
registration statement for Separate Account B filed with the Securities and
Exchange Commission on May 1, 1992 (File No. 33-23351).
(10) Incorporated herein by reference to post-effective amendment No. 12 to a
registration statement for Separate Account B filed with the Securities and
Exchange Commission on May 3, 1993 (File No. 33-23351).
(11) Incorporated herein by reference to post-effective amendment No. 14 to a
registration statement for Separate Account B filed with the Securities and
Exchange Commission on October 12, 1993 (File No. 33-23351).
(12) Incorporated herein by reference to an initial registration statement on
Form N-3 for Golden American Life insurance Company Separate Account D
filed with the Securities and Exchange Commission on August 19, 1992 (File
No. 33-51028).
(13) Incorporated herein by reference to post-effective amendment No. 17 to a
registration statement for Separate Account B filed with the Securities and
Exchange Commission on May 2, 1994 (File No. 33-23351).
<PAGE>
ITEM 25: DIRECTORS AND OFFICERS OF THE DEPOSITOR
Principal Position(s)
Name Business Address with Depositor
---- ---------------- --------------
Terry L. Kendall Golden American Life Ins. Co. Chairman,
1001 Jefferson Street President and
Wilmington, DE 19801 Chief Executive
Officer
Fred S. Hubell Equitable of Iowa Companies Director
604 Locust Street
Des Moines, IA 50309
Lawrence V. Durland Equitable of Iowa Companies Director
604 Locust Street
Des Moines, IA 50309
Paul E. Larson Equitable of Iowa Companies Director
604 Locust Street
Des Moines, IA 50309
Thomas L. May Equitable Life Insurance Director
Company of Iowa
604 Locust Street
Des Moines, IA 50309
John A. Merriman Equitable of Iowa Companies Director
604 Locust Street
Des Moines, IA 50309
Beth B. Neppl Equitable of Iowa Companies Director
604 Locust Street
Des Moines, IA 50309
Paul R. Schlaack Equitable Investment Director
Services, Inc.
604 Locust Street
Des Moines, IA 50309
Barnett Chernow Golden American Life Ins. Co. Executive Vice
1001 Jefferson Street President
Wilmington, DE 19801
Myles R. Tashman Golden American Life Ins. Co. Executive Vice
1001 Jefferson Street President
Wilmington, DE 19801 and Secretary
Edward C. Wilson Golden American Life Ins. Co. Executive Vice
1001 Jefferson Street President
Wilmington, DE 19801
Stephen J. Preston Golden American Life Ins. Co. Senior Vice
1001 Jefferson Street President,
Wilmington, DE 19801 Chief Actuary
and Controller
Mary Bea Wilkinson Golden American Life Ins. Co. Senior Vice
1001 Jefferson Street President and
Wilmington, DE 19801 Treasurer
David L. Jacobson Golden American Life Ins. Co. Senior Vice
1001 Jefferson Street President
Wilmington, DE 19801
Elizabeth J. Crandall, M.D. American International Group Medical Director
70 Pine Street
New York, NY 10270
ITEM 26: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Depositor does not directly or indirectly control any person.
The following persons control or are under common control with the Depositor:
EIC VARIABLE, INC. ("EICV") - This corporation is a general
business corporation organized under the laws of the State of New
York. The primary purpose of EICV is to serve in an advisory,
managerial and consultative capacity to the Depositor and to
engage generally in the business of
<PAGE>
providing, promoting and establishing systems, methods and controls
for managerial efficiency and operation for such company, as well as
others. EIC Variable, Inc. is a wholly owned subsidiary of Equitable
of Iowa Companies.
DIRECTED SERVICES, INC. ("DSI") - This corporation is a general
business corporation organized under the laws of the State of New
York, and is wholly owned by EICV. The primary purpose of DSI is
to act as a broker-dealer in securities. It acts as the
principal underwriter and distributor of variable insurance
products including variable annuities as required by the SEC.
The contracts are issued by the Depositor. DSI also has the
power to carry on a general financial, securities, distribution,
advisory or investment advisory business; to act as a general
agent or broker for insurance companies and to render advisory,
managerial, research and consulting services for maintaining and
improving managerial efficiency and operation. DSI is also
registered with the SEC as an investment adviser.
As of August 15, 1996, the subsidiaries of Equitable of Iowa
Companies are as follows:
Equitable Life Insurance Company of Iowa
USG Annuity & Life Company
Equitable of Iowa Securities Network, Inc.
Equitable Investment Services, Inc.
Locust Street Securities
EIC Variable, Inc.
Golden American Life Insurance Company
Directed Services, Inc.
Item 27: Number of Contract Owners
20,342 as of August 20, 1996.
ITEM 28: INDEMNIFICATION
Golden American shall indemnify (including therein the prepayment of expenses)
any person who is or was a director, officer or employee, or who is or was
serving at the request of Golden American as a director, officer or employee of
another corporation, partnership, joint venture, trust or other enterprise for
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him with respect to any
threatened, pending or completed action, suit or proceedings against him by
reason of the fact that he is or was such a director, officer or employee to the
extent and in the manner permitted by law.
Golden American may also, to the extent permitted by law, indemnify any other
person who is or was serving Golden American in any capacity. The Board of
Directors shall have the power and authority to determine who may be indemnified
under this paragraph and to what extent (not to exceed the extent provided in
the above paragraph) any such person may be indemnified.
Golden American may purchase and maintain insurance on behalf of any such person
or persons to be indemnified under the provision in the above paragraphs,
against any such liability to the extent permitted by law.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant, as provided above or otherwise, the Registrant has
been advised that in the opinion of the SEC such indemnification by the
Depositor is against public policy, as expressed in the Securities Act of 1933,
and therefore may be unenforceable. In the event that a claim of such
indemnification (except insofar as it provides for the payment by the Depositor
of expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted against the
Depositor by such director, officer or controlling person and the SEC is still
of the same opinion, the Depositor or Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by the Depositor is against public policy as expressed by the Securities Act of
1933 and will be governed by the final adjudication of such issue.
ITEM 29: PRINCIPAL UNDERWRITER
(a) At present, Directed Services, Inc., the Registrant's Distributor, also
serves as principal underwriter for all contracts issued by Golden
American. DSI is the principal underwriter for Separate Account A,
Separate Account B and Alger Separate Account A of Golden American.
(b) The following information is furnished with respect to the principal
officers and directors of Directed Services, Inc., the Registrant's
Distributor:
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ---------------- ---------------- ---------------
<S> <C> <C>
Terry L. Kendall Chairman and Chairman and President of
Directed Services, Inc. Chief Executive Officer Board of Governors
1001 Jefferson Street
Wilmington, DE 19801
Mary Bea Wilkinson President and None
Directed Services, Inc. Treasurer
1001 Jefferson Street
Wilmington, DE 19801
Fred S. Hubell Director None
Equitable of Iowa Companies
604 Locust Street
Des Moines, IA 50309
Lawrence V. Durland Director None
Equitable of Iowa Companies
604 Locust Street
Des Moines, IA 50309
Paul E. Larson Director None
Equitable of Iowa Companies
604 Locust Street
Des Moines, IA 50309
Thomas L. May Director None
Equitable Life Insurance
Company of Iowa
604 Locust Street
Des Moines, IA 50309
John A. Merriman Director None
Equitable of Iowa Companies
604 Locust Street
Des Moines, IA 50309
Beth B. Neppl Director None
Equitable of Iowa Companies
604 Locust Street
Des Moines, IA 50309
Paul R. Schlaack Director None
Equitable Investment Services,
Inc.
604 Locust Street
Des Moines, IA 50309
Barnett Chernow Executive Vice President None
Directed Services, Inc.
1001 Jefferson Street
Wilmington, DE 19801
Myles R. Tashman Executive Vice President None
Directed Services, Inc. and Secretary
1001 Jefferson Street
Wilmington, DE 19801
Stephen J. Preston Senior Vice President Chief Financial Officer
Directed Services, Inc.
1001 Jefferson Street
Wilmington, DE 19801
</TABLE>
(c)
1995 Net
Name of Underwriting Compensation
Principal Discounts and on Brokerage
Underwriter Commissions Redemption Commissions Compensation
----------- ----------- ---------- ----------- ------------
DSI $6,435,636 $0 $0 $0
<PAGE>
ITEM 30: LOCATION OF ACCOUNTS AND RECORDS
Accounts and records are maintained by BT Variable, Inc. and Golden American
Life Insurance Company at 1001 Jefferson Street, Suite 400, Wilmington, DE
19801.
ITEM 31: MANAGEMENT SERVICES
None.
ITEM 32: UNDERTAKINGS
(a) N/A;
(b) Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of Additional
Information; and,
(c) Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
REPRESENTATION
Registrant makes the following representation -- The account meets definition of
a "separate account" under federal securities laws.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets the
requirements of Securities Act Rule 485(b) for effectiveness of
this Registration Statement and has caused this Registration
Statement to be signed on its behalf in the City of Wilmington
and Delaware, on the 30th day of August, 1995.
SEPARATE ACCOUNT B
(Registrant)
By: GOLDEN AMERICAN LIFE
INSURANCE COMPANY
(Depositor)
By: _________________________
Terry L. Kendall*
Chairman, President and
Chief Executive Officer
Attest: /s/ Marilyn Talman
------------------------
Marilyn Talman
Vice President, Associate General Counsel
and Assistant Secretary of Depositor
As required by the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the
capacities indicated on August 30, 1996.
Signature Title
--------- -----
________________________ Chairman, President,
Terry L. Kendall* Director and Chief
Executive Officer of
Depositor
________________________ Principal Financial Officer
Stephen J. Preston* and Controller
DIRECTORS OF DEPOSITOR
________________________ ________________________
Fred S. Hubbell* Lawrence V. Durland*
________________________ ________________________
Paul E. Larson* Thomas L. May*
________________________ ________________________
John A. Merriman* Beth B. Neppl*
________________________
Paul R. Schlaack
By: /s/ Marilyn Talman Attorney-in-Fact
-----------------------
Marilyn Talman
_______________________
*Executed by Marilyn Talman on behalf of those indicated pursuant
to Power of Attorney.
<PAGE>
EHIBIT INDEX
ITEM EXHIBIT PAGE #
6(d) Powers of Attorney. . . . . . . . . . . . . . . . .
10(a) Consent of Sutherland, Asbill & Brennan . . . . . .
10(b) Written Consent of Ernst & Young LLP. . . . . . . .
10(c) Consent of Myles R. Tashman, Esq. . . . . . . . . .
<PAGE>
<PAGE>
Exhibit 6(d) Powers of Attorney
<PAGE>
Exhibit 6(d)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being the duly elected Chairman, President and
Chief Executive Officer of Golden American Life Insurance
Company ("Golden American"), constitutes and appoints Myles
R. Tashman, and Marilyn Talman, and each of them, his true
and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him in his name, place
and stead, in any and all capacities, to sign Golden
American's registration statements and applications for
exemptive relief, and any and all amendments thereto, and to
file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each
and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do
in person, hereby ratifying and affirming all that said
attorneys-in-fact and agents, or any of them, or his or her
substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
Date: August 26, 1996
/s/ Terry L. Kendall
-------------------------------
Terry L. Kendall
Chairman, President and
Chief Executive Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being a duly elected Senior Vice President,
Chief Actuary and Controller (Chief Financial Officer) of
Golden American Life Insurance Company ("Golden American"),
constitutes and appoints Myles R. Tashman, and Marilyn
Talman, and each of them, his true and lawful attorneys-in-
fact and agents with full power of substitution and
resubstitution for him in his name, place and stead, in any
and all capacities, to sign Golden American's registration
statements and applications for exemptive relief, and any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and affirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
Date: April 22, 1996
/s/ Stephen J. Preston
-------------------------------
Stephen J. Preston
Senior Vice President, Chief
Actuary and Controller
(Chief Financial Officer)
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being a duly elected Director of Golden
American Life Insurance Company ("Golden American"),
constitutes and appoints Myles R. Tashman, and Marilyn
Talman, and each of them, his true and lawful attorneys-in-
fact and agents with full power of substitution and
resubstitution for him in his name, place and stead, in any
and all capacities, to sign Golden American's registration
statements and applications for exemptive relief, and any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and affirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
Date: August 26, 1996
/s/ Fred S. Hubbell
-------------------------------
Fred S. Hubbell
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being a duly elected Director of Golden
American Life Insurance Company ("Golden American"),
constitutes and appoints Myles R. Tashman, and Marilyn
Talman, and each of them, his true and lawful attorneys-in-
fact and agents with full power of substitution and
resubstitution for him in his name, place and stead, in any
and all capacities, to sign Golden American's registration
statements and applications for exemptive relief, and any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and affirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
Date: August 26, 1996
/s/ Lawrence V. Durland
-------------------------------
Lawrence V. Durland
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being a duly elected Director of Golden
American Life Insurance Company ("Golden American"),
constitutes and appoints Myles R. Tashman, and Marilyn
Talman, and each of them, his true and lawful attorneys-in-
fact and agents with full power of substitution and
resubstitution for him in his name, place and stead, in any
and all capacities, to sign Golden American's registration
statements and applications for exemptive relief, and any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and affirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
Date: August 26, 1996
/s/ Paul E. Larson
-------------------------------
Paul E. Larson
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being a duly elected Director of Golden
American Life Insurance Company ("Golden American"),
constitutes and appoints Myles R. Tashman, and Marilyn
Talman, and each of them, his true and lawful attorneys-in-
fact and agents with full power of substitution and
resubstitution for him in his name, place and stead, in any
and all capacities, to sign Golden American's registration
statements and applications for exemptive relief, and any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and affirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
Date: August 26, 1996
/s/ Thomas L. May
-------------------------------
Thomas L. May
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being a duly elected Director of Golden
American Life Insurance Company ("Golden American"),
constitutes and appoints Myles R. Tashman, and Marilyn
Talman, and each of them, his true and lawful attorneys-in-
fact and agents with full power of substitution and
resubstitution for him in his name, place and stead, in any
and all capacities, to sign Golden American's registration
statements and applications for exemptive relief, and any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and affirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
Date: August 26, 1996
/s/ John A. Merriman
-------------------------------
John A. Merriman
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being a duly elected Director of Golden
American Life Insurance Company ("Golden American"),
constitutes and appoints Myles R. Tashman, and Marilyn
Talman, and each of them, her true and lawful attorneys-in-
fact and agents with full power of substitution and
resubstitution for her in her name, place and stead, in any
and all capacities, to sign Golden American's registration
statements and applications for exemptive relief, and any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents
and purposes as she might or could do in person, hereby
ratifying and affirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
Date: August 26, 1996
/s/ Beth B. Neppl
-------------------------------
Beth B. Neppl
Director
<PAGE>
10(a) Written Consent of Sutherland, Asbill & Brennan
<PAGE>
Sutherland, Asbill & Brennan ATLANTA
Tel: (202) 383-0100 1275 Pennsylvania Ave, NW AUSTIN
Fax: (202) 637-3593 Washington, DC 20004-2404 NEW YORK
WASHINGTON
STEPHEN E. ROTH
DIRECT LINE: (202) 383-0158
INTERNET: [email protected]
August 29, 1996
Board of Directors
Golden American Life Insurance Company
1001 Jefferson Street, Suite 400
Wilmington, DE 19801
Ladies and Gentlemen:
We hereby consent to the reference to our name under the caption "Legal
Matters" in the Statement of Additional Information filed as part of Post-
Effective Amendment No. 25 to the registration statement on Form N-4 for the
Separate Account B (File No. 33-23351). In giving this consent, we do not admit
that we are in the category of persons whose consent is required under Section 7
of the Securities Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN
By /s/ Stephen E. Roth
-------------------------
Stephen E. Roth
<PAGE>
10(b) Written Consent of Ernst & Young LLP
<PAGE>
Exhibit 10(b)
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated February 12, 1996, with respect to the
financial statements of Separate Account B and to the use of our report dated
February 12, 1996, except for Note 6, as to which the date is August 27, 1996,
with respect to the financial statements of The Managed Global Account of
Separate Account D in the Statement of Additional Information. We also consent
to the use of our report dated February 12, 1996, with respect to the financial
statements of Golden American Life Insurance Company prepared in accordance with
generally accepted accounting principles and to the reference to our firm under
the captions "Experts" and "Financial Statements" in the Prospectuses included
in this Post-Effective Amendment No. 25 to the Registration Statement (Form N-4
No. 33-23351) of Separate Account B.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
August 28, 1996
<PAGE>
10(c) Consent of Myles R. Tashman
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY Exhibit 10(c)
1001 Jefferson Street, Wilmington, DE 19801 Tel: (302) 576-3400
Fax: (302) 576-3540
August 28, 1996
Members of the Board of Directors
Golden American Life Insurance Company
1001 Jefferson Street, Suite 400
Wilmington, DE 19801
Gentlemen:
I consent to the reference to my name under the heading "Legal Matters" in the
prospectus. In giving this consent I do not thereby admit that I come within
the category of persons whose consent is required under section 7 of the
Securities Act of 1933 or the Rules and Regulations of the Securities and
Exchange Commission thereunder.
Sincerely,
/s/ Myles R. Tashman
Myles R. Tashman
Executive Vice President and Secretary
