<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON February 7, 1997
Registration Nos. 33-59261, 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. 5
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 41
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>
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
PART A
N-4 Item Prospectus Heading
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 Facts About the Company
Registrant Depositor, and the Accounts
and Portfolio Companies
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
<PAGE>
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 Description of Golden American
History Life Insurance Company
18. Services Safekeeping of Assets,
Independent Auditors
19. Purchase of Securities Distribution of Contracts
Being Offered
20. Underwriters Distribution of Contracts
21. Calculation of Performance Performance Information
Data
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.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ GOLDENSELECT DVA PLUS +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Golden American Life Insurance Company is a stock company domiciled in
Wilmington, Delaware
DEFERRED COMBINATION VARIABLE AND
FIXED ANNUITY PROSPECTUS
GOLDENSELECT DVA PLUS
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This prospectus describes group and individual deferred variable annuity Con-
tracts (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 pre-
mium payments.
The Contract is funded by two accounts, Separate Account B ("Account B") and
the Fixed Account (collectively, the "Accounts").
Nineteen 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-Se-
lect Series Trust (the "ESS Trust"). The investments available through the
Fixed Account include various Fixed Allocations which we credit with fixed
rates of interest for the Guarantee Periods you select. We currently offer
Guarantee Periods with durations of 1, 3, 5, 7 and 10 years. We reserve the
right at any time to increase or decrease the number of Guarantee Periods of-
fered. Not all Guarantee Periods may be available.
This prospectus describes the Contract and provides background information re-
garding Account B and the Fixed Account. The prospectuses for the GCG Trust and
the ESS Trust (individually, "a Trust," and collectively, "the Trusts"), which
must accompany this prospectus, provide information regarding investment activ-
ities and policies of the Trusts.
You may allocate your premiums among the nineteen Divisions and the Fixed Allo-
cations available under the Contract in any way you choose, subject to certain
restrictions. You may change the allocation of your Accumulation Value during a
Contract Year free of charge. We reserve the right, however, to assess a charge
for each allocation change after the twelfth allocation change in a Contract
Year.
Your Accumulation Value in Account B will vary in accordance with the invest-
ment performance of the Divisions selected by you. Therefore, you bear the en-
tire investment risk for all amounts allocated to Account B. You also bear in-
vestment risk with respect to surrenders, partial withdrawals, transfers and
annuitization from a Fixed Allocation prior to the end of the applicable Guar-
antee Period. Such surrender, partial withdrawal, transfer or annuitization may
be subject to a Market Value Adjustment, which could have the effect of either
increasing or decreasing your Accumulation Value.
We will pay a death benefit to the Beneficiary if the Owner dies prior to the
Annuity Commencement Date or the Annuitant dies prior to the Annuity
Commencement Date when the Owner is other than an individual.
This prospectus describes your principal rights and limitations and sets forth
the information concerning the Accounts that investors should know before in-
vesting. A Statement of Additional Information, dated February 3, 1997, about
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 State-
ment of Additional Information may be found on the last page of this prospec-
tus. The Statement of Additional Information is incorporated herein by refer-
ence.
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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 AC-
CURACY 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 THE ESS
TRUST.
THE FIXED ACCOUNT AND ENHANCED DEATH BENEFITS MAY NOT BE AVAILABLE IN ALL
STATES. YOU MAY CONTACT OUR CUSTOMER SERVICE CENTER TO FIND OUT ABOUT STATE
AVAILABILITY.
ISSUED BY: DISTRIBUTED BY: ADMINISTERED AT:
Golden American Directed Serv- Customer Service
Life ices, Inc. Center
Insurance Com- Wilmington, Mailing Address:
pany Delaware 19801 P.O. Box 8794
Wilmington, Dela-
ware 19899-8794
1-800-366-0066
PROSPECTUS DATED: FEBRUARY 3, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
DEFINITION OF TERMS....................................................... 3
SUMMARY OF THE CONTRACT................................................... 5
FEE TABLE................................................................. 7
CONDENSED FINANCIAL AND OTHER INFORMATION................................. 10
Index of Investment Experience
Financial Statements
Performance Related Information
INTRODUCTION.............................................................. 12
FACTS ABOUT THE COMPANY AND THE ACCOUNTS.................................. 12
Golden American
The GCG Trust and the ESS Trust
Separate Account B
Account B Divisions
Changes Within Account B
The Fixed Account
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
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
Automatic Rebalancing
Proceeds Payable to the Beneficiary
Death Benefit Options
Reports to Owners
When We Make Payments
</TABLE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
CHARGES AND FEES........................................................... 29
Charge Deduction Division
Charges Deducted from the Accumulation Value
Charges Deducted from the Divisions
Trust Expenses
CHOOSING YOUR ANNUITIZATION OPTIONS........................................ 31
Annuitization of Your Contract
Annuity Commencement Date Selection
Frequency Selection
The Annuitization Options
Payment When Named Person Dies
OTHER CONTRACT PROVISIONS.................................................. 33
In Case of Errors in Application Information
Contract Changes -- Applicable Tax Law
Your Right to Cancel or Exchange Your Contract
Other Contract Changes
Group or Sponsored Arrangements
Selling the Contract
REGULATORY INFORMATION..................................................... 35
Voting Rights
State Regulation
Legal Proceedings
Legal Matters
Experts
MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY.............. 35
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Directors and Executive Officers
Compensation Tables and Other Information
FEDERAL TAX CONSIDERATIONS................................................. 48
Introduction
Tax Status of Golden American
Taxation on Non-Qualified Annuities
IRA Contracts and Other Qualified Retirement Plans
Federal Income Tax Withholding
UNAUDITED FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE COMPANY... 56
AUDITED FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE COMPANY..... 64
STATEMENT OF ADDITIONAL INFORMATION........................................ 77
Table of Contents
APPENDIX A................................................................. A1
Market Value Adjustment Examples
</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 and the Fixed Account.
ACCUMULATION VALUE
The total amount invested under the Contract. Initially, this amount is equal
to the premium paid. Thereafter, the Accumulation Value will reflect the pre-
miums paid, investment experience of the Divisions and interest credited to
your Fixed Allocations, charges deducted and any partial withdrawals.
ANNUAL RATCHET ENHANCED DEATH BENEFIT OPTION
An enhanced death benefit option that may be elected only at issue and only if
the Owner or Annuitant (when the Owner is other than an individual) is age 79
or younger. The enhanced death benefit provided by this option is the highest
Accumulation Value on any Contract Anniversary on or prior to the Owner turn-
ing age 80, as adjusted for additional premiums and partial withdrawals.
ANNUITANT
The person designated by the Owner to be the measuring life in determining An-
nuity Payments.
ANNUITY COMMENCEMENT DATE
The date on which Annuity Payments begin.
ANNUITY OPTIONS
Options the Owner selects that determine the form and amount of Annuity Pay-
ments.
ANNUITY PAYMENT
The periodic payment an Owner receives. It may be either a fixed or a variable
amount based on the Annuity Option chosen.
ATTAINED AGE
The Issue Age of the Owner or 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
Owner or the Annuitant (when the Owner is other than an individual).
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 upon surrender of the Contract, including any
Market ValueAdjustment.
CHARGE DEDUCTION DIVISION
The Division from which all charges are deducted if so designated by you. The
Charge Deduction Division currently is the Liquid Asset Division.
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 and any riders or en-
dorsements.
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 suc-
ceeding Valuation Date. The Contract Processing Dates will be once each year
on the Contract Anniversary.
CONTRACT PROCESSING PERIOD
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 Con-
tract Processing Date. There is one Contract processing period each year.
CONTRACT YEAR
The period between Contract anniversaries.
CUSTOMER SERVICE CENTER
Where service is provided to you. The mailing address and telephone number of
the Customer Service Center are shown on the cover.
3
<PAGE>
DEFINITION OF TERMS (CONTINUED)
DIVISIONS
The investment options available under Account B.
ENDORSEMENTS
An endorsement changes or adds provisions to the Contract.
EXCHANGE CONTRACTS
Contracts issued by insurance companies not affiliated with Golden American.
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.
FIXED ACCOUNT
An Account which contains all of our assets that support Owner Fixed Alloca-
tions and any interest credited thereto.
FIXED ALLOCATION
An amount allocated to the Fixed Account that is credited with a Guaranteed
Interest Rate for a specified Guarantee Period.
FREE LOOK PERIOD
The period of time within which the Owner may examine the Contract and return
it for a refund.
GUARANTEED INTEREST RATE
The effective annual interest rate which we will credit for a specified Guar-
antee Period. The Guaranteed Interest Rate will never be less than 3%.
GUARANTEE PERIOD
The period of time for which a rate of interest is guaranteed to be credited
to a Fixed Allocation. We currently offer Guarantee Periods with durations of
1, 3, 5, 7 and 10 years.
INDEX OF INVESTMENT EXPERIENCE
The index that measures the performance of a Division.
INITIAL PREMIUM
The payment required to put a Contract into effect.
ISSUE AGE
The Owner's or 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.
MARKET VALUE ADJUSTMENT
A positive or negative adjustment made to a Fixed Allocation. It may apply to
certain withdrawals and transfers, whether in whole or in part, and
annuitizations of all or part of a Fixed Allocation prior to the end of a
Guarantee Period.
MATURITY DATE
The date on which a Guarantee Period matures.
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 amends the Contract, in certain instances adding benefits.
7% SOLUTION ENHANCED DEATH BENEFIT OPTION
An enhanced death benefit option that may be elected only at issue and only if
the Owner or Annuitant (when the Owner is other than an individual) is age 75
or younger. The enhanced death benefit provided by this option is equal to an
annual rate of return of 7% on all assets, except those invested in the Liquid
Asset Division, Limited Maturity Bond Division, and the Fixed Account, as ad-
justed for additional premiums and partial withdrawals. Each accumulated ini-
tial or additional premium payment reduced by any partial withdrawals taken
will continue to grow at 7% until it reaches the maximum enhanced death bene-
fit.
SPECIALLY DESIGNATED DIVISION
The Division to which distributions from a portfolio underlying a Division in
which reinvestment is not available will be allocated unless you specify oth-
erwise. The Specially Designated Division currently is the Liquid Asset Divi-
sion.
STANDARD DEATH BENEFIT OPTION
The death benefit option that you will receive under the Contact unless one of
the enhanced death benefit options is elected. The death benefit provided by
this option is equal to the greatest of (i) Accumulation Value; (ii) total
premium payments less any partial withdrawals; and (iii) Cash Surrender Value.
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>
SUMMARY OF THE CONTRACT
This prospectus has been designed to provide you with information regarding
the Contract and the Accounts which fund the Contract. Information concerning
the Series underlying the Divisions of Account B and the Fixed Account is set
forth in the Trusts' 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 pro-
spectus and in the Contract. The Contract, together with any riders or en-
dorsements, constitutes the entire agreement between you and us and should be
retained.
This prospectus has been designed to provide you with the necessary informa-
tion to make a decision on purchasing the Contract. You have a choice of in-
vestments. We do not promise that your Accumulation Value will increase. De-
pending on the investment experience of the Divisions and interest credited to
the Fixed Allocations in which you are invested, your 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, dis-
tributions may be made to you to satisfy requirements imposed by Federal tax
law. 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
all or a portion of the Accumulation Value on the annuity commencement date or
the Cash Surrender Value upon surrender of the Contract. See Choosing Your An-
nuity Options.
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 for qual-
ified plans, except for rollover contributions). The minimum Initial Premium
is $10,000 for a non-qualified plan and $1,500 for a qualified plan. We may
change the minimum initial or additional premium requirements for certain
group or sponsored arrangements. See Other Contract Provisions, Group or Spon-
sored Arrangements.
The minimum additional premium payment we will accept is $500 for a non-quali-
fied plan and $250 for a qualified plan. You must receive our prior approval
before making a premium payment that causes the Accumulation Value of all an-
nuities that you maintain with us to exceed $1,000,000.
THE DIVISIONS
Each of the nineteen Divisions of Account B offered under this prospectus in-
vests in a mutual fund portfolio with its 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, Account B Divisions.
HOW THE ACCUMULATION VALUE VARIES
The Accumulation Value in the Divisions 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 Facts
About the Contract, Accumulation Value in Each Division.
THE FIXED ACCOUNT
The investments available through the Fixed Account include various Fixed Al-
locations which we credit with fixed rates of interest for the Guarantee Peri-
ods you select. We reset the interest rates for new Guarantee Periods periodi-
cally based on our sole discretion. We may offer Guarantee Periods from one to
ten years. We currently offer Guarantee Periods with durations of 1, 3, 5, 7
and 10 years.
You bear investment risk with respect to surrenders, partial withdrawals,
transfers and annuitization from your Fixed Allocations. A surrender, partial
withdrawal, transfer or annuitization made prior to the end of a Guarantee Pe-
riod may be subject to a Market Value Adjustment, which could have the effect
of either increasing or decreasing your Accumulation Value. We will not apply
a Market Value Adjustment on a surrender, partial withdrawal, transfer or
annuitization made within 30 days prior to the Maturity Date of the applicable
Guarantee Period or certain transfers made in connection with the dollar cost
averaging program.
5
<PAGE>
SUMMARY OF THE CONTRACT (CONTINUED)
Systematic withdrawals from a Fixed Allocation also are not subject to a Mar-
ket Value Adjustment.
MARKET VALUE ADJUSTMENT
We will apply a Market Value Adjustment, subject to certain exceptions, to a
surrender, partial withdrawal, transfer or annuitization from a Fixed Alloca-
tion made prior to the end of a Guarantee Period. The Market Value Adjustment
does not apply to amounts invested in Account B.
SURRENDERING YOUR CONTRACT
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 Com-
mencement Date. See Facts About the Contract, Cash Surrender Value and Surren-
dering to Receive the Cash Surrender Value.
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 Accumula-
tion Value of your Contract. You may elect in advance to take systematic par-
tial withdrawals on a monthly, quarterly, or annual basis. If you have an IRA
Contract, you may elect IRA partial withdrawals on a monthly, quarterly or an-
nual basis.
Partial withdrawals are subject to certain restrictions as defined in this
prospectus, including a surrender charge and a Market Value Adjustment. Par-
tial withdrawals above a specified percentage of your Accumulation Value may
be subject to a surrender charge. See Facts About the Contract, Partial
Withdrawals.
DOLLAR COST AVERAGING
Under this program, you may choose to have a specified dollar amount trans-
ferred from either the Limited Maturity Bond Division, Liquid Asset Division
or a Fixed Allocation with a one year Guarantee Period to the other Divisions
of Account B on a monthly basis with the objective of shielding your invest-
ment from short-term price fluctuations. See Facts About the Contract, Dollar
Cost Averaging.
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 once you receive the Contract. For purposes of admin-
istering 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 Other Contract Provisions, 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 Provisions, Other Contract Changes.
DEATH BENEFIT OPTIONS
The Contract provides a death benefit to the beneficiary if the Owner dies
prior to the Annuity Commencement Date. Subject to our rules, there are three
death benefit options that may be available to you under the Contract: the
Standard Death Benefit Option; the 7% Solution Enhanced Death Benefit Option;
and the Annual Ratchet Enhanced Death Benefit Option. See Facts About the Con-
tract, Death Benefit Options. We may offer a reduced death benefit under cer-
tain group and sponsored arrangements. See Other Contract Provisions, Group or
Sponsored Arrangements.
DEDUCTIONS FOR CHARGES AND FEES
We invest the entire amount of the initial and any additional premium payments
in the Divisions and the Fixed Allocations you select, subject to certain re-
strictions we impose. See Facts About the Contract, Restrictions on Allocation
of Premium Payments. We then may deduct an annual Contract fee from your Accu-
mulation Value. See Other Contract Provisions, Charges and Fees. We may reduce
certain charges under group or sponsored arrangements. See Other Contract Pro-
visions, Group or Sponsored Arrangements. Unless you have elected the Charge
Deduction Division, charges are deducted proportionately from all Account B
Divisions in which you are invested. If there is no Accumulation Value in
these Divisions, charges will be deducted from your Fixed Allocations starting
with Guarantee Periods nearest their Maturity Dates until such charges have
been deducted.
6
<PAGE>
SUMMARY OF THE CONTRACT (CONTINUED)
FEDERAL INCOME TAXES
The ultimate effect of Federal income taxes on the amounts held under an annu-
ity 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 sur-
render the Contract before reaching age 59 1/2. See Federal Tax Considera-
tions.
FEE TABLE
TRANSACTION EXPENSES(/1/)
- -------------------------
Contingent Deferred Sales Charge(/2/) (imposed as a percentage of premium
pay-ments withdrawn upon excess partial withdrawal or surrender):(/3/)
<TABLE>
<CAPTION>
COMPLETE YEARS ELAPSED SURRENDER
SINCE PREMIUM PAYMENT CHARGE
<S> <C>
0 7%
1 7%
2 6%
3 5%
4 4%
5 3%
6 1%
7+ 0%
</TABLE>
<TABLE>
<S> <C>
Excess Allocation Charge........................................ $0(/4/)
</TABLE>
ANNUAL CONTRACT FEES:
- --------------------
<TABLE>
<S> <C>
Administrative Charge........................................... $40
(Waived if the Accumulation Value equals or exceeds $100,000 at the
end of the Contract Year, or once the sum of premiums paid equals or
exceeds $100,000.)
</TABLE>
SEPARATE ACCOUNT ANNUAL EXPENSES (percentage of assets in each Division)(/5/):
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD ENHANCED DEATH BENEFIT
-------- --------------------------
ANNUAL RATCHET 7% SOLUTION
<S> <C> <C> <C>
Mortality and Expense Risk Charge.... 1.10% 1.25% 1.40%
Asset Based Administrative Charge.... 0.15% 0.15% 0.15%
----- ----- -----
Total Separate Account Expenses...... 1.25% 1.40% 1.55%
</TABLE>
THE GCG TRUST ANNUAL EXPENSES (based on combined net assets of the indicated
- ----------------------------------------------------------------------------
groups of Series):
- -----------------
<TABLE>
<CAPTION>
OTHER TOTAL
SERIES FEES(/6/) EXPENSES(/7/) EXPENSES
------ -------------- ---------------- --------
<S> <C> <C> <C>
Multiple Allocation, Fully
Managed, Capital Appreciation,
Rising Dividends, All-Growth,
Real Estate, Hard Assets, Value 1.00% 0.01% 1.01%
Equity, Strategic Equity, and
Small Cap Series:
Emerging Markets Series: 1.50% 0.03% 1.53%
Managed Global Series:(/8/) 1.25% 0.01% 1.26%
Limited Maturity Bond and 0.60% 0.01% 0.61%
Liquid Asset Series:
THE ESS TRUST ANNUAL EXPENSES:
- -----------------------------
<CAPTION>
OTHER TOTAL
SERIES FEES(/6/)(/9/) EXPENSES(/1//0/) EXPENSES
------ -------------- ---------------- --------
<S> <C> <C> <C>
OTC, Research, and Total Return 0.80% 0.40% 1.20%
Portfolios:
Growth & Income and Value +
Growth Portfolios: 0.95% 0.40% 1.35%
</TABLE>
- -------------------
(1) A Market Value Adjustment, which may increase or decrease your Accumula-
tion Value, may apply to certain transactions. See Market Value Adjust-
ment.
(2) We also deduct a charge for premium taxes (which can range from 0% to
3.5% of premium) from your Accumulation Value upon surrender, excess par-
tial withdrawals or on the Annuity Commencement Date. See Premium Taxes.
7
<PAGE>
FEE TABLE (CONTINUED)
(3) For purposes of calculating the surrender charge for the excess partial
withdrawal, (i) we treat premium payments as being withdrawn on a first-
in first-out basis, and (ii) amounts withdrawn which are not considered
an excess partial withdrawal are not treated as a withdrawal of any pre-
mium payments. See Charges Deducted from the Accumulation Value, Surren-
der Charge for Excess Partial Withdrawals.
(4) We reserve the right to impose a charge in the future at a maximum of $25
for each allocation change in excess of twelve per Contract Year. See Ex-
cess Allocation Charge.
(5) See Facts About the Contract, Death Benefit Options, for a description of
the Contract's Standard and Enhanced Death Benefit Options.
(6) Fees decline as combined assets increase (see Account B Divisions and the
Trust prospectuses for details).
(7) Other Expenses generally consist of independent trustees fees and ex-
penses.
(8) The estimated expenses for the Managed Global Series are based on the ac-
tual 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 Ac-
count B and the Managed Global Series of the GCG Trust.
(9) Prior to October 6, 1995, EISI waived its management fee for the OTC, Re-
search, and Total Return Portfolios.
(10) 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 0.40% of their average daily net assets. This reim-
bursement agreement commenced February 1, 1997. Prior to February 1,
1997, EISI reimbursed the portfolios for all operating expenses, exclud-
ing management fees, that exceeded 0.75% of their average daily net as-
sets. 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%, 1.68%, and 1.56%, respectively, for the OTC, Research and To-
tal Return Portfolios for the year ended December 31, 1995. The Growth &
Income and Value + Growth Portfolios commenced operations on April 1,
1996 and have no prior operating history.
Examples:
The examples do not take into account any deduction for premium taxes. Premium
taxes currently range from 0% to 3.5% of premium payments. There may be sur-
render charges if you choose to annuitize within the first three Contract
Years.
If at issue you elect the 7% Solution Enhanced Death Benefit Option and 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:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVISION ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C> <C>
Multiple Allocation................... $ 96.39 $140.94 $177.95 $292.08
Fully Managed......................... $ 96.39 $140.94 $177.95 $292.08
Capital Appreciation.................. $ 96.39 $140.94 $177.95 $292.08
Rising Dividends...................... $ 96.39 $140.94 $177.95 $292.08
All-Growth............................ $ 96.39 $140.94 $177.95 $292.08
Real Estate........................... $ 96.39 $140.94 $177.95 $292.08
Hard Assets........................... $ 96.39 $140.94 $177.95 $292.08
Value Equity.......................... $ 96.39 $140.94 $177.95 $292.08
Strategic Equity...................... $ 96.39 $140.94 $177.95 $292.08
Small Cap............................. $ 96.39 $140.94 $177.95 $292.08
Emerging Markets...................... $101.38 $155.80 $202.48 $339.67
Managed Global........................ $ 98.69 $147.81 $189.34 $314.34
OTC................................... $ 98.61 $147.65 $189.22 $314.94
Research.............................. $ 98.61 $147.65 $189.22 $314.94
Total Return.......................... $ 98.61 $147.65 $189.22 $314.94
Growth & Income....................... $100.10 $152.10 $196.57 $329.23
Value + Growth........................ $100.10 $152.10 $196.57 $329.23
Limited Maturity Bond................. $ 92.54 $129.40 $158.73 $253.82
Liquid Asset.......................... $ 92.54 $129.40 $158.73 $253.82
</TABLE>
- -------------------------------------------------------------------------------
8
<PAGE>
FEE TABLE (CONTINUED)
If at issue you elect the 7% Solution Enhanced Death Benefit Option and you do
not surrender your Contract or if you annuitize on the Annuity Commencement
Date, you would pay the following expenses for each $1,000 of initial premium
assuming a 5% annual return on assets:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVISION ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C> <C>
Multiple Allocation................... $26.39 $80.94 $137.95 $292.08
Fully Managed......................... $26.39 $80.94 $137.95 $292.08
Capital Appreciation.................. $26.39 $80.94 $137.95 $292.08
Rising Dividends...................... $26.39 $80.94 $137.95 $292.08
All-Growth............................ $26.39 $80.94 $137.95 $292.08
Real Estate........................... $26.39 $80.94 $137.95 $292.08
Hard Assets........................... $26.39 $80.94 $137.95 $292.08
Value Equity.......................... $26.39 $80.94 $137.95 $292.08
Strategic Equity...................... $26.39 $80.94 $137.95 $292.08
Small Cap............................. $26.39 $80.94 $137.95 $292.08
Emerging Markets...................... $31.38 $95.80 $162.48 $339.67
Managed Global........................ $28.69 $87.81 $149.34 $314.34
OTC................................... $28.61 $87.65 $149.22 $314.94
Research.............................. $28.61 $87.65 $149.22 $314.94
Total Return.......................... $28.61 $87.65 $149.22 $314.94
Growth & Income....................... $30.10 $92.10 $156.57 $329.23
Value + Growth........................ $30.10 $92.10 $156.57 $329.23
Limited Maturity Bond................. $22.54 $69.40 $118.73 $253.82
Liquid Asset.......................... $22.54 $69.40 $118.73 $253.82
</TABLE>
- -------------------------------------------------------------------------------
The purpose of the Fee Table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. 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 examples reflect the election at issue of the 7% Solution Enhanced Death
Benefit Option. If the Standard Death Benefit Option or the Annual Ratchet En-
hanced Death Benefit Option is elected, the actual expenses incurred will be
less than those represented in the Examples.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN, SUBJECT TO
THE GUARANTEES UNDER THE CONTRACT.
9
<PAGE>
CONDENSED FINANCIAL AND OTHER INFORMATION
INDEX OF INVESTMENT EXPERIENCE
The upper table gives the index of investment experience for each Division of
Account B available under the Contract for each death benefit option. Informa-
tion for 1996 was not available for this prospectus. Except for the Small Cap,
OTC, Research, Total Return, Growth & Income, and Value + Growth Divisions,
each Division commenced operations on October 2, 1995 (The Managed Global Di-
vision commenced operations initially as a division of another separate ac-
count, the Managed Global Account of Separate Account D; however, the index of
investment experience is unchanged). The index of investment experience is
equal to the value of a unit for each Division of the Accounts. The total in-
vestment value of each Division as of the end of each period is shown in the
lower table.
<TABLE>
<CAPTION>
INDEX OF INVESTMENT EXPERIENCE
-------------------------------------------------------------------------
ENHANCED DEATH BENEFIT
-----------------------------------------------
STANDARD ANNUAL RACHET 7% SOLUTION
--------------------- --------------------- ---------------------
10/2/95 12/31/95 10/2/95 12/31/95 10/2/95 12/31/95
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Multiple Allocation..... $16.10 $16.72 $15.94 $16.55 $15.78 $16.38
Fully Managed........... 14.77 15.23 14.62 15.07 14.47 14.91
Capital Appreciation.... 14.31 14.71 14.23 14.63 14.16 14.55
Rising Dividends........ 12.16 13.24 12.12 13.19 12.09 13.15
All-Growth.............. 13.88 14.10 13.74 13.96 13.60 13.81
Real Estate............. 15.06 15.94 14.91 15.78 14.76 15.61
Hard Assets............. 14.86 15.11 14.71 14.96 14.57 14.80
Value Equity............ 12.43 13.37 12.41 13.36 12.40 13.34
Strategic Equity........ 10.00(/1/) 10.01 10.00(/1/) 10.01 10.00(/1/) 10.01
Small Cap............... --(/2/) --(/2/) --(/2/) --(/2/) --(/2/) --(/2/)
Emerging Markets........ 9.50 9.23 9.47 9.20 9.44 9.17
Managed Global.......... 9.32 9.58 9.28 9.53 9.24 9.49
OTC..................... --(/3/) --(/3/) --(/3/) --(/3/) --(/3/) --(/3/)
Research................ --(/4/) --(/4/) --(/4/) --(/4/) --(/4/) --(/4/)
Total Return............ --(/4/) --(/4/) --(/4/) --(/4/) --(/4/) --(/4/)
Growth & Income......... --(/3/) --(/3/) --(/3/) --(/3/) --(/3/) --(/3/)
Value + Growth.......... --(/4/) --(/4/) --(/4/) --(/4/) --(/4/) --(/4/)
Limited Maturity Bond... 14.49 14.86 14.35 14.71 14.20 14.56
Liquid Asset............ 12.89 13.03 12.76 12.89 12.63 12.76
</TABLE>
<TABLE>
<CAPTION>
TOTAL INVESTMENT VALUE
--------------------------------------------
ENHANCED DEATH BENEFITS
----------------------------
STANDARD ANNUAL RACHET 7% SOLUTION
---------- ------------- -----------
12/31/95 12/31/95 12/31/95
---------- ------------- -----------
<S> <C> <C> <C>
Multiple Allocation............ $1,746,847 $348,748 $6,068,413
Fully Managed.................. 748,453 210,790 2,749,555
Capital Appreciation........... 354,685 239,431 4,751,529
Rising Dividends............... 303,580 476,311 3,956,113
All-Growth..................... 308,996 231,255 3,479,441
Real Estate.................... 43,296 45,908 954,578
Hard Assets.................... 375,257 42,591 393,850
Value Equity................... 458,353 312,457 2,393,664
Strategic Equity............... 761,998(/1/) 475,319(/1/) 1,527,707(/1/)
Small Cap...................... --(/2/) --(/2/) --(/2/)
Emerging Markets............... 144,699 114,726 1,475,334
Managed Global................. 255,906 261,677 1,982,653
OTC............................ --(/3/) --(/3/) --(/3/)
Research....................... --(/4/) --(/4/) --(/4/)
Total Return................... --(/4/) --(/4/) --(/4/)
Growth & Income................ --(/3/) --(/3/) --(/3/)
Value + Growth................. --(/4/) --(/4/) --(/4/)
Limited Maturity Bond.......... 400,999 174,099 1,988,103
Liquid Asset................... 493,644 800,574 1,189,883
</TABLE>
- -------------------
(1) The Strategic Equity Division became available for investment on October
2, 1995, starting with an index of investment experience of $10.00.
(2) The Small Cap Equity Division became available for investment on January
2, 1996, starting with an index of investment experience of $10.00.
(3) The OTC Division and the Growth & Income Divisions became available for
investment on September 3, 1996, starting with indices of investment expe-
rience of $14.64 and $10.94, respectively.
(4) The Research, Total Return and Value + Growth Divisions became available
for investment on January 20, 1997, starting with indices of investment
experience of $16.43, $13.76, and $11.99, respectively.
10
<PAGE>
CONDENSED FINANCIAL AND OTHER INFORMATION (CONTINUED)
FINANCIAL STATEMENTS
The audited financial statements of Separate Account B for the years ended De-
cember 31, 1995 and 1994 (as well as the auditors' report thereon), the unau-
dited financial statements of Separate Account B for the period ended Septem-
ber 30, 1996, and the audited financial statements of The Managed Global
Account of Separate Account D, the predecessor entity of the Managed Global
Series for accounting purposes, for the years ended December 31, 1995 and 1994
(as well as the auditors' report thereon) appear in the Statement of Addi-
tional Information. The audited financial statements of Golden American pre-
pared in accordance with generally accepted accounting principles for the
years ended December 31, 1995, 1994 and 1993 (as well as the auditors' report
thereon) are contained in the Prospectus. In addition, the unaudited September
30, 1996 financial statements of Golden American prepared in accordance with
generally accepted accounting principles are contained in the Prospectus.
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 calcu-
lated 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 invest-
ment income per unit (Accumulation Value divided by the index of investment
experience, see Facts About the Contract, Measurement of Investment Experi-
ence, 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 in-
vestment 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 appli-
cable surrender charge, the administrative charge and the applicable mortality
and expense risk charge. See Charges and Fees. Quotations of total return may
simultaneously be shown for other periods that do not take into account cer-
tain contractual charges, such as the surrender charge. Quotations of yield
and average annual total return for the Managed Global Division take into ac-
count the period prior to September 3, 1996, during which it was maintained as
a division of Account D.
Performance information for a Division may be compared, in reports and promo-
tional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P 500"),
Dow Jones Industrial Average ("DJIA"), Donoghue Money Market Institutional Av-
erages, or other indices measuring performance of a pertinent group of securi-
ties 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 in-
vestment products tracked by Lipper Analytical Services, a widely used inde-
pendent 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 Di-
vision during a particular time period on which the calculations are based.
Performance information should be considered in light of the investment objec-
tives and policies, characteristics and quality of the portfolio of the Series
of the respective Trust in which the Division invests and the market condi-
tions during the given time period, and should not be considered as a repre-
sentation 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 includ-
ing the ranking of any Division derived from rankings of variable annuity sep-
arate accounts or other investment products tracked by Lipper Analytical Serv-
ices 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>
INTRODUCTION
FACTS ABOUT THE COMPANY AND THE ACCOUNTS
The following information describes the Contract and the Accounts which fund
the Contract, Account B and the Fixed Account. Account B invests in mutual
fund portfolios of the Trusts. The Fixed Account contains all of the assets
that support Owner Fixed Allocations which we credit with Guaranteed Interest
Rates for the Guarantee Periods you select.
GOLDEN AMERICAN
Golden American Life Insurance Company ("Golden American" or the "Company") is
a stock life insurance company organized under the laws of the State of Dela-
ware and is an indirect wholly owned subsidiary of Equitable of Iowa Companies
("Equitable of Iowa"). Prior to December 30, 1993, Golden American was a Min-
nesota 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.
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"), Equitable of Iowa Securities Network,
Inc., EIC Variable, Inc., Directed Services, Inc. ("DSI"), and Golden Ameri-
can.
As of September 30, 1996, Equitable of Iowa had over $11.9 billion in assets.
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 difficul-
ties arising from either mixed or shared funding, it is theoretically possible
that, due to differences in tax treatment or other considerations, the inter-
est 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.
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 insur-
ance companies other than insurance companies affiliated with Equitable of
Iowa 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 prospec-
tus before investing. Additional copies of the Trusts' prospectuses may be ob-
tained by contacting our Customer Service Center.
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 annu-
ity Contracts and for other purposes as permitted by applicable laws and regu-
lations. 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 annu-
ity Contracts investing in Account B which are not discussed in this prospec-
tus. 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 the account are credited to or charged against that
account without regard to other income, gains or losses in our other invest-
ment accounts. As
12
<PAGE>
FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
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 whose as-
sets 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 to invest in mutual funds, unit in-
vestment trusts or other investment portfolios which we determine to be suit-
able 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 and
meets the definition of a separate account under the Federal securities laws.
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.
ACCOUNT B DIVISIONS
Account B is divided into Divisions. The Managed Global Division was a divi-
sion 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' pro-
spectuses for details. The Trusts, DSI and EISI have retained several portfo-
lio 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 investment objectives 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 var-
ious factors, including, in certain cases, how well the portfolio managers an-
ticipate changing economic and market conditions. Account B also has other Di-
visions 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 serv-
ices 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 Trusts' 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, in-
terest on borrowing, fees and expenses of the independent trustees, and ex-
traordinary 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 month-
ly, 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 portfo-
lio manager a monthly fee for managing the assets of the Series.
THE GCG TRUST
<TABLE>
<CAPTION>
FEES (based on combined
assets of the indicated
SERIES groups of Series)
------------------------------------------------ -----------------------------
<C> <S>
Multiple Allocation, Fully Managed, Capital 1.00% of first $750 million;
Appreciation, Rising Dividends, All-Growth, 0.95% of next $1.250 billion;
0.90% of next $1.5 billion;
Real Estate, Hard Assets, Value Equity, and
0.85% of amount in excess of
Strategic Equity, and Small Cap Series: $3.5 billion
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;
0.55% of next $300 million;
Liquid Asset Series: and
0.50% of amount in excess of
$500 million
- -------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
THE ESS TRUST
<TABLE>
<CAPTION>
SERIES FEES
------------------------------------------------ ----------------------------
<C> <S>
OTC, Research, and Total Return Portfolios: 0.80% of first $300 million;
0.55% of amount in excess of
$300 million
Growth & Income and Value + Growth Portfolios: 0.95% of first $200 million;
0.75% of amount in excess of
$200 million
- ------------------------------------------------------------------------------
</TABLE>
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 in-
come, consistent with the preservation of capital and elimination of unneces-
sary 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 preser-
vation of capital and prudent investment risk.
INVESTMENTS
Pursues an active asset allocation strategy whereby investments are allocat-
ed, based upon an evaluation of economic and market trends and the antici-
pated relative total return available, among three asset classes -- debt se-
curities, 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 earn-
ings and positive earnings momentum; dominant competitive positions; and dem-
onstrate above-average growth rates as compared to published S&P 500 earnings
projections; and (ii) The Value Component-Securities that the portfolio man-
ager regards as fundamentally undervalued, i.e., securities selling at a dis-
count 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 LGT Asset Management, Inc.
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 fol-
lowing four criteria: consistent dividend increases; substantial dividend in-
creases; reinvested profits; and an under-leveraged balance sheet.
PORTFOLIO MANAGER
Kayne, Anderson Investment Management, L.P.
ALL-GROWTH DIVISION
ALL-GROWTH SERIES
OBJECTIVE
Capital appreciation.
INVESTMENTS
Investment in securities selected for their long- term growth prospects.
PORTFOLIO MANAGER
Pilgrim Baxter & Associates, Ltd.
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 es-
tate industry listed on national exchanges or on the National Associa-
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FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
tion of Securities Dealers Automated Quotation System.
PORTFOLIO MANAGER
E.I.I. Realty Securities, Inc.
HARD ASSETS DIVISION (FORMERLY NATURAL RESOURCES)
HARD ASSETS SERIES
OBJECTIVE
Long-term capital appreciation.
INVESTMENTS
Investment in equity and debt securities of companies engaged in the explora-
tion, development, production, management, and distribution of hard assets.
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 financial soundness and high intrinsic value rela-
tive 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 tim-
ing 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 character-
istics 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 -- within the
range of companies included in the Russell 2000 Growth Index.
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. In-
come 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 in-
struments 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 mar-
ket factors indicate that capital appreciation may be available without sig-
nificant risk to principal.
INVESTMENTS
Investment primarily in a diversified portfolio of limited maturity debt se-
curities. No individual security will at the time of purchase have a remain-
ing 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.
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FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
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
RESEARCH DIVISION
RESEARCH PORTFOLIO
OBJECTIVE
Long term growth of capital and future income.
INVESTMENTS
Investment primarily in common stocks or securities convertible into common
stocks of companies believed to possess better than average prospects for
long-term growth.
PORTFOLIO MANAGER
Massachusetts Financial Services Company
TOTAL RETURN DIVISION
TOTAL RETURN PORTFOLIO
OBJECTIVE
Above-average income consistent with prudent employment of capital.
INVESTMENTS
Investment primarily in equity securities.
PORTFOLIO MANAGER
Massachusetts Financial Services Company
GROWTH & INCOME DIVISION
GROWTH & INCOME PORTFOLIO
OJECTIVE
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.
VALUE + GROWTH DIVISION
VALUE + GROWTH PORTFOLIO
OBJECTIVE
Capital appreciation.
INVESTMENTS
Investment primarily in mid-cap growth companies with favorable relationships
between price/earnings ratios and growth rates. Mid-cap companies are those
with market capitalizations ranging from $750 million to approximately $2
billion.
PORTFOLIO MANAGER
Robertson, Stephens & Company Investment Management, L.P.
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 com-
bine 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 ac-
count. 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 ap-
provals 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 Account B under the 1940 Act;
(2) operate Account B as a management company under the 1940 Act if it is op-
erating as a unit investment trust;
(3) operate Account B as a unit investment trust under the 1940 Act if it is
operating as a managed separate account;
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FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
(4) restrict or eliminate any voting rights as to Account B; and
(5) combine Account B with other accounts.
THE FIXED ACCOUNT
Premium payments may be allocated to the Fixed Account at the time of the Ini-
tial Premium payment or as subsequently made. In addition, all or part of of
your Accumulation Value may be transferred to the Fixed Account. Assets sup-
porting amounts allocated to the Fixed Account are available to fund the
claims of all classes of our customers, Owners and other creditors. Interests
under your Contract relating to the Fixed Account are registered under the Se-
curities Act of 1933 but the Fixed Account is not registered under the 1940
Act.
SELECTING A GUARANTEE PERIOD
You may select one or more Fixed Allocations with specified Guarantee Periods
for investment. We currently offer Guarantee Periods with durations of 1, 3,
5, 7 and 10 years. We reserve the right at any time to decrease or increase
the number of Guarantee Periods offered. Not all Guarantee Periods may be
available for new allocations. Each Fixed Allocation will have a Maturity
Date corresponding to the last day of the calendar month of the applicable
Guarantee Period.
Your Accumulation Value in the Fixed Account equals the sum of your Fixed Al-
locations plus the interest credited thereto, as adjusted for any partial
withdrawals, reallocations or other charges we may impose. Your Fixed Alloca-
tion will be credited with the Guaranteed Interest Rate in effect on the date
we receive and accept your premium or reallocation of Accumulation Value. The
Guaranteed Interest Rate will be credited daily to yield the quoted Guaran-
teed Interest Rate.
GUARANTEED INTEREST RATES
Each Guarantee Period will have an interest rate that is guaranteed. We do
not have a specific formula for establishing the Guaranteed Interest Rates
for the different Guarantee Periods. The determination made will be influ-
enced by, but not necessarily correspond to, interest rates available on
fixed income investments which we may acquire with the amounts we receive as
premium payments or reallocations of Accumulation Value under the Contracts.
These amounts will be invested primarily in investment-grade fixed income se-
curities including: securities issued by the United States Government or its
agencies or instrumentalities, which issues may or may not be guaranteed by
the United States Government; debt securities that have an investment grade
rating, at the time of purchase, within the four highest grades assigned by
Moody's Investor Services, Inc. (Aaa, Aa, A or Baa), Standard & Poor's Rat-
ings Group (AAA, AA, A or BBB) or any other nationally recognized rating
service; mortgage-backed securities collateralized by the Federal Home Loan
Mortgage Association, the Federal National Mortgage Association or the Gov-
ernment National Mortgage Association, or that have an investment grade rat-
ing at the time of purchase within the four highest grades described above;
other debt investments; commercial paper; and cash or cash equivalents. You
will have no direct or indirect interest in these investments. We will also
consider other factors in determining the Guaranteed Interest Rates, includ-
ing regulatory and tax requirements, sales commissions and administrative ex-
penses borne by us, general economic trends and competitive factors. We can-
not predict or guarantee the level of future interest rates. However, no
Fixed Allocation will ever have a Guaranteed Interest Rate of less than 3%
per year.
While the foregoing generally describes our investment strategy with respect
to the Fixed Account, we are not obligated to invest according to any partic-
ular strategy, except as may be required by Delaware and other state insur-
ance laws.
TRANSFERS FROM A FIXED ALLOCATION
You may transfer your Accumulation Value from a Fixed Allocation to one or
more new Fixed Allocations with new Guarantee Periods of any length offered
by us or to the Divisions of Account B. Unless you specify in writing the
Fixed Allocations from which such transfers will be made, we will transfer
amounts from the Fixed Allocations starting with the Guarantee Period nearest
its Maturity Date, until we have honored your transfer request.
Transfers from a Fixed Allocation made within 30 days prior to the Maturity
Date of the applicable Guarantee Period or pursuant to the dollar cost aver-
aging program will not be subject to a Market Value Adjustment. All other
transfers from your Fixed Allocations will be subject to a Market Value Ad-
justment. The minimum amount that can be transferred to or from any Fixed Al-
location is $250. If a transfer request would reduce the Accumulation Value
remaining in your Fixed Allocation to less than $250, we will treat such
transfer request as a request to
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FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
transfer the entire Accumulation Value in such Fixed Allocation.
At the end of a Fixed Allocation's Guarantee Period, you may transfer amounts
in that Fixed Allocation to the Divisions and one or more new Fixed Alloca-
tions with Guarantee Periods of any length then offered by us. You may not,
however, transfer amounts to any Fixed Allocation with a Guarantee Period
that extends beyond your Annuity Commencement Date.
At least 30 calendar days prior to a Maturity Date of any of your Fixed Allo-
cations, or earlier if required by state law, we will send you a notice of
the Guarantee Periods then available. Prior to the Maturity Date of your
Fixed Allocations you must notify us as to which Division or new Guarantee
Period you have selected. If timely instructions are not received, we will
transfer your Accumulation Value in the maturing Fixed Allocation to a Fixed
Allocation with a Guarantee Period equal in length to the expiring Guarantee
Period. If such Guarantee Period is not available or extends beyond your an-
nuity commencement date, we will transfer your Accumulation Value in the ma-
turing Fixed Allocation to the next shortest Guarantee Period which does not
extend beyond the Annuity Commencement Date. If no such Guarantee Period is
available, we will transfer your Accumulation Value to the Specially Desig-
nated Division.
PARTIAL WITHDRAWALS FROM A FIXED ALLOCATION
Prior to the Annuity Commencement Date and while your Contract is in effect,
you may take partial withdrawals from the Accumulation Value in a Fixed Allo-
cation by sending satisfactory notice to our Customer Service Center. You may
make systematic withdrawals of interest earnings only from a Fixed Allocation
under our Systematic Partial Withdrawal Option. (See, Partial Withdrawals,
Systematic Partial Withdrawal Option.) Systematic withdrawals from a Fixed
Allocation are not permitted if such Fixed Allocation participates in the
dollar cost averaging program. Withdrawals from a Fixed Allocation taken
within 30 days prior to the Maturity Date and systematic withdrawals are not
subject to a Market Value Adjustment; however, a surrender charge may be im-
posed. Withdrawals may have federal income tax consequences, including a 10%
penalty tax. See Surrender Charge, Surrender Charge for Excess Partial With-
drawals and Federal Tax Considerations.
If you specify a Fixed Allocation from which your partial withdrawal will be
made, we will assess the partial withdrawal against that Fixed Allocation. If
you do not specify the investment option from which the partial withdrawal
will be taken, we will not assess your partial withdrawal against any Fixed
Allocations unless the partial withdrawal exceeds the Accumulation Value in
the Divisions of Account B. If there is no Accumulation Value in those Divi-
sions, partial withdrawals will be deducted from your Fixed Allocations
starting with the Guarantee Periods nearest their Maturity Dates until we
have honored your request.
MARKET VALUE ADJUSTMENT
We will apply a Market Value Adjustment, determined by application of the
formula described below, in the following circumstances: (i) whenever you
make a withdrawal or transfer from a Fixed Allocation, other than withdrawals
or transfers made within 30 days prior to the Maturity Date of the applicable
Guarantee Period, systematic partial withdrawals, or pursuant to the dollar
cost averaging program; and (ii) on the Annuity Commencement Date with re-
spect to any Fixed Allocation having a Guarantee Period that does not end on
or within 30 days after the annuity commencement date.
The Market Value Adjustment is determined by multiplying the amount with-
drawn, transferred or annuitized by the following factor:
( 1+I -) N//3//6//5/
(-------------) -1
( 1+J+.0025 )
Where "I" is the Index Rate for a Fixed Allocation as of the first day of the
applicable Guarantee Period; "J" is the Index Rate for new Fixed Allocations
with Guarantee Periods equal to the number of years (fractional years are
rounded up to the next full year except in Pennsylvania) remaining in the
Guarantee Period at the time of the withdrawal, transfer or annuitization;
and "N" is the remaining number of days in the Guarantee Period at the time
of the withdrawal, transfer or annuitization.
The Index Rate is the average of the Ask Yields for U.S. Treasury Strips as
reported by a national quoting service for the applicable maturity. The aver-
age currently is based on the period from the 22nd day of the calendar month
two months prior to the calendar month of the Index Rate determination to the
21st day of the calendar month
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FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
immediately prior to the month of determination. The applicable maturity is
the maturity date for these U.S. Treasury Strips on or next following the
last day of the Guarantee Period. If the Ask Yields are no longer available,
the Index Rate will be determined using a suitable replacement method ap-
proved where required.
We currently calculate the Index Rate once each calendar month. However, we
reserve the right to calculate the Index Rate more frequently than monthly,
but in no event will such Index Rate be based upon a period of less than 28
days.
The Market Value Adjustment may result in either an increase or decrease in
the Accumulation Value of your Fixed Allocation. If a full surrender, trans-
fer or annuitization from the Fixed Allocation has been requested, the bal-
ance of the Market Value Adjustment will be added to or subtracted from the
amount surrendered, transferred or annuitized. If a partial withdrawal,
transfer or annuitization has been requested, the Market Value Adjustment
will be calculated on the total amount that must be withdrawn, transferred or
annuitized in order to provide the amount requested. If a negative Market
Value Adjustment exceeds the Accumulation Value in the Fixed Allocation, such
transaction will be considered a full surrender, transfer or annuitization.
The Appendix contains several examples which illustrate the application of
the Market Value Adjustment.
Because of the Market Value Adjustment provision of the Contract, you bear
the investment risk that the Guaranteed Interest Rates offered by us at the
time you make a withdrawal or transfer from a Fixed Allocation or start re-
ceiving annuity payments may be higher or lower than the Guaranteed Interest
Rate of the Fixed Allocation to which the Market Value Adjustment is applied,
with the result that the Accumulation Value of your Fixed Allocation may be
substantially reduced or increased. This will depend on the relationship of
(1) the Guaranteed Interest Rate credited to the Fixed Allocation from which
the withdrawal, transfer or annuitization is made to (2) the current Guaran-
teed Interest Rate offered by us for the Guarantee Period equal to the number
of years remaining in the Guarantee Period as of such date. If the Guaranteed
Interest Rate of (1) is higher than the then current Guaranteed Interest Rate
of (2) plus .0025, application of the Market Value Adjustment will result in
an increase in your Accumulation Value. If the Guaranteed Interest Rate of
(1) is lower than the then current Guaranteed Interest Rate of (2) plus
.0025, application of the Market Value Adjustment will result in a decrease
in your Accumulation Value.
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. If there
are multiple Owners named, the age of the oldest Owner shall determine the ap-
plicable death benefit.
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 Benefi-
ciary the death benefit when due. The sole Owner's estate will be the Benefi-
ciary if no Beneficiary designation is in effect, or if the designated Benefi-
ciary 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 and a beneficial Owner of the trust has
been designated, the beneficial Owner will be treated as the Owner of the Con-
tract solely for the purpose of determining the death benefit provisions. If a
beneficial Owner is changed or added after the Contract Date, this will be
treated as a change of Owner for purposes of determining the death benefit.
See Change of Owner or Beneficiary. If no beneficial Owner of the Trust has
been designated, the availability of enhanced death benefits will be deter-
mined by the age of the Annuitant at issue.
THE ANNUITANT
The Annuitant is the person designated by the Owner to be the measuring life
in determining Annuity Payments. The Owner will receive the annuity benefits
of the Contract if the Annuitant is 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 (un-
less the Owner is not an individual, in which case the death benefit becomes
payable). Once named, the Annuitant may not be changed at any time.
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FACTS ABOUT THE CONTRACT (CONTINUED)
If there is no contingent Annuitant when the Annuitant dies prior to the Annu-
ity Commencement Date, the Owner will become the Annuitant. The Owner may des-
ignate a new Annuitant within 60 days of the death of the Annuitant.
If there is no contingent Annuitant when the Annuitant dies prior to the Annu-
ity Commencement Date and the Owner is not an individual, we will pay the Ben-
eficiary 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 Benefi-
ciary designation, the Annuitant's estate will be the Beneficiary.
Regardless of whether a death benefit is payable, if the Annuitant dies and
any Owner is not an individual, such death will trigger application of the
distribution rules imposed by Federal tax law.
THE BENEFICIARY
The Beneficiary is the person to whom we pay death benefit proceeds and who
becomes the successor Owner if the Owner dies prior to the annuity commence-
ment date. We pay death benefit proceeds to the primary Beneficiary (unless
there are joint Owners, in which case death proceeds are payable to the sur-
viving Owner(s)). See Proceeds Payable to the Beneficiary.
If the Beneficiary dies before the Annuitant or Owner, the death benefit pro-
ceeds are paid to the contingent Beneficiary, if any. If there is no surviving
Beneficiary, we pay the death benefit proceeds to the Owner's estate.
One or more persons may be named as Beneficiary or contingent Beneficiary. In
the case of more than one Beneficiary, unless otherwise specified, we will as-
sume any death benefit proceeds are to be paid in equal shares to the surviv-
ing beneficiaries.
You have the right to change beneficiaries during the Annuitant's lifetime un-
less you have designated an irrevocable Beneficiary. When an irrevocable Bene-
ficiary has been designated, you and the irrevocable Beneficiary may have to
act together to exercise certain rights and options under the Contract.
CHANGE OF OWNER OR BENEFICIARY
During the Annuitant's lifetime and while your 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. A
change in Ownership may affect the amount of the death benefit and the
guaranteed death benefit. 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 Federal Tax
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 connec-
tion 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 ac-
count, and by provisions of the Code and the regulations thereunder. For ex-
ample, the individual retirement trust or custodial account will impose mini-
mum distribution rules, which may 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 THAN APRIL 1ST OF THE CALENDAR YEAR FOLLOWING THE CALENDAR
YEAR IN WHICH YOU ATTAIN AGE 70 1/2. IF YOU OWN MORE THAN ONE QUALIFIED PLAN,
YOU SHOULD CONSULT YOUR TAX ADVISOR.
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, fre-
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FACTS ABOUT THE CONTRACT (CONTINUED)
quency of Annuity Payments or the Annuity Option by sending a written request
to our Customer Service Center. The Annuitant 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.
You must receive our prior approval before making a premium payment that
causes the Accumulation Value of all annuities that you maintain with us to
exceed $1,000,000. We may change the minimum initial or additional premium re-
quirements 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 com-
pensation 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. How-
ever, 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 Peri-
od. 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 contribu-
tions). 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 if accompanied by information sufficient to permit us to deter-
mine if we are able to issue a Contract. We may retain an Initial Premium for
up to five business days while attempting to obtain information sufficient to
enable us to issue the Contract. If we are unable to do so within five busi-
ness days, the applicant or enrollee will be informed of the reasons for the
delay and the Initial Premium will be returned immediately unless the appli-
cant or enrollee consents to our retaining the Initial Premium until we have
received the information we require. Thereafter, all additional premiums will
be accepted on the day received.
In certain states we will also accept, by agreement with broker-dealers,
transmittal of initial and additional premium payments by wire order from the
broker-dealer to our Customer Service Center. Such transmittals must be accom-
panied by a simultaneous telephone facsimile or other electronic data trans-
mission containing the essential information we require to open an account and
allocate the premium payment. Contact our Customer Service Center to find out
about state availability and broker-dealer requirements.
Upon our acceptance of premium payments received via wire order and accompa-
nied by sufficient electronically transmitted data, we will issue the Con-
tract, allocate the premium payment according to your instructions, and invest
the payment at the value next determined following receipt. See Restrictions
on Allocation of Premium Payments. Wire orders not accompanied by sufficient
data to enable us to accept the premium payment may be retained for up to five
business days while we attempt to obtain information sufficient to enable us
to issue the Contract. If we are unable to do so, our Customer Service Center
will inform the broker-dealer, on behalf of the applicant or enrollee, of the
reasons for the delay and return the premium payment immediately to the bro-
ker-dealer for return to the applicant or enrollee, unless the applicant or
enrollee specifically consents to allow us to retain the premium payment until
our Customer Service Center receives the required information.
On the date we receive and accept your initial or additional premium payment:
(1) We allocate the Initial Premium among the Divisions and Fixed Allocations
according to your instructions, subject to any restrictions. See Restric-
tions on Allocation of Premium Pay-
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FACTS ABOUT THE CONTRACT (CONTINUED)
ments. For additional premium payments, the Accumulation Value will in-
crease 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 Di-
visions in proportion to the amount of Accumulation Value in each Division
as of the date we receive and accept the additional premium payment. If
there is no Accumulation Value in the Divisions, the increase in the Accu-
mulation Value will be allocated to a Fixed Allocation with the shortest
Guarantee Period then available.
(2) For an Initial Premium, we calculate your applicable death benefit. When
an additional premium payment is made, we increase your applicable death
benefit in accordance with the death benefit option in effect for your
Contract.
Following receipt and acceptance of the wire order and accompanying data, and
investment of the premium payment, we will follow one of the two procedures
set forth below. The one we follow is determined by state availability and the
procedures of the broker-dealer which submitted the wire order.
(1) We will issue the Contract. However, until we have received and accepted a
properly completed application or enrollment form, we reserve the right to
rescind the Contract. If the form is not received within fifteen days of
receipt of the premium payment, we will refund the Accumulation Value plus
any charges we deducted, and the Contract will be voided. Some states re-
quire that we return the premium paid. In these states, different rules
will apply.
(2) Based on the information provided, we will issue the Contract. We will
mail the Contract to you, together with an Application Acknowledgement
Statement. You must execute the Application Acknowledgement Statement and
return it to us at our Customer Service Center. Until we receive the exe-
cuted Application Acknowledgement Statement, neither you nor the broker-
dealer may execute any financial transactions with respect to the Contract
unless such transactions are appropriately requested in writing by you.
RESTRICTIONS ON ALLOCATION OF PREMIUM PAYMENTS
We may require that an Initial Premium designated for a Division of Account B
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 Facts About the Contract, Measurement of Investment Experience, Index of
Investment Experience and Unit Value. Initial premiums designated for the
Fixed Account will be allocated to a Fixed Allocation with the Guarantee Pe-
riod you have chosen.
YOUR RIGHT TO REALLOCATE
You may reallocate your Accumulation Value among the Divisions and Fixed Allo-
cations at the end of the free look period. We currently do not assess a
charge for allocation changes made during a Contract Year. We reserve the
right, however, to assess a $25 charge for each allocation change after the
twelfth allocation change in a Contract Year. We require that each realloca-
tion of your Accumulation Value equal at least $250 or, if less, your entire
Accumulation Value within a Division or Fixed Allocation. We reserve the right
to limit, upon notice, the maximum number of reallocations you may make within
a Contract Year. In addition, we reserve the right to defer the reallocation
privilege at any time we are unable to purchase or redeem shares of the GCG
Trust or the ESS Trust. We also reserve the right to modify or terminate your
right to reallocate your Accumulation Value at any time in accordance with ap-
plicable law. Reallocations from the Fixed Account are subject to the Market
Value Adjustment unless taken as part of the dollar cost averaging program or
within 30 days prior to the Maturity Date of the applicable Guarantee Period.
To make a reallocation change, you must provide us with satisfactory notice at
our Customer Service Center.
We reserve the right to limit the number of reallocations of your Accumulation
Value among the Divisions and Fixed Allocations or refuse any reallocation re-
quest if we believe that: (a) excessive trading by you or a specific realloca-
tion request may have a detrimental effect on unit values or the share prices
of the underlying Series; or (b) we are informed by the GCG Trust or the ESS
Trust that the purchase or redemption of shares is to be restricted because of
excessive trading or a specific reallocation or group of reallocations is
deemed to have a detrimental effect on share prices of the GCG Trust or the
ESS Trust.
22
<PAGE>
FACTS ABOUT THE CONTRACT (CONTINUED)
Where permitted by law, we may accept your authorization of third party real-
location on your behalf, subject to our rules. We may suspend or cancel such
acceptance at any time. We will notify you of any such suspension or cancella-
tion. We may restrict the Divisions and Fixed Allocations that will be avail-
able to you for reallocations of premiums during any period in which you au-
thorize such third party to act on your behalf. We will give you prior
notification of any such restrictions. However, we will not enforce such re-
strictions if we are provided evidence satisfactory to us that: (a) such third
party has been appointed by a court of competent jurisdiction to act on your
behalf; or (b) such third party has been appointed by you to act on your be-
half for all your financial affairs.
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
If you have at least $10,000 of Accumulation Value in the Limited Maturity
Bond Division, the Liquid Asset Division or a Fixed Allocation with a one year
Guarantee Period, you may elect the dollar cost averaging program and have a
specified dollar amount transferred from those Divisions or such Fixed Alloca-
tion on a monthly basis.
The main objective of dollar cost averaging is to attempt to shield your in-
vestment from short-term price fluctuations. Since the same dollar amount is
transferred to other Divisions each month, more units are purchased in a Divi-
sion 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 declin-
ing markets.
Dollar cost averaging may be elected at issue 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 your Accumulation Value in the Limited Maturity
Bond Division, the Liquid Asset Division or a Fixed Allocation with a one year
Guarantee Period when you elect the dollar cost averaging program, 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, your Accumulation Value is equal
to or less than the amount you have elected to have transferred, the entire
amount will be transferred and the program will end. You may change the trans-
fer amount once each Contract Year, or cancel this program by sending satis-
factory notice to our Customer Service Center at least seven days before the
next transfer date. Any allocation under this program will not be included in
determining if the excess allocation charge will apply. We currently do not
permit transfers under the dollar cost averaging program from Fixed Alloca-
tions with other than one year Guarantee Periods. Transfers from a Fixed Allo-
cation under the dollar cost averaging program will not be subject to a Market
Value Adjustment. See, Market Value Adjustment. A Fixed Allocation may not
participate simultaneously in both the dollar cost averaging program and the
Systematic Partial Withdrawal Option.
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 dis-
tribution, 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 port-
folio 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 of the distribution 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 for purposes of the number of free allocation changes permit-
ted. 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 or Fixed Allocations of your choice, such allocations will not
be included in determining if the excess allocation charge will apply.
YOUR ACCUMULATION VALUE
Your Accumulation Value is the sum of the amounts in each of the Divisions and
the Fixed Allocations in which you are invested, and is the amount available
for investment at any time. You
23
<PAGE>
FACTS ABOUT THE CONTRACT (CONTINUED)
select the Divisions and Fixed Allocations to which to allocate your Accumula-
tion Value. We adjust your Accumulation Value on each Valuation Date to re-
flect the Divisions' investment performance and interest credited to your
Fixed Allocations, any additional premium payments or partial withdrawals
since the previous Valuation Date, and on each Contract processing date to re-
flect any deduction of the annual Contract fee. Your Accumulation Value is ap-
plied to your choice of an Annuity Option on the Annuity Commencement Date
subject to our published rules at such time. See Choosing an Income Plan.
ACCUMULATION VALUE IN EACH DIVISION
ON THE CONTRACT DATE
On the Contract Date, your Accumulation Value is allocated to each Division
as you have specified, unless the Contract is issued in a state that requires
the return of premium payments during the Free Look Period, in which case,
the portion of your Initial Premium not allocated to a Fixed Allocation will
be allocated to the Specially Designated Division during the Free Look Peri-
od. 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 preced-
ing Valuation Period.
(2) We multiply (1) by the Division's net rate of return for the current Val-
uation 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 cur-
rent 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 charge for premium taxes.
All amounts in (7) are allocated to each Division in the proportion that (6)
bears to the Accumulation Value in Account B, unless the Charge Deduction Di-
vision has been specified. See Charges Deducted from the Accumulation Value.
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 Di-
vision are made, except for the OTC, Research, Total Return, Growth and In-
come, and Value + Growth Divisions, which started with indices of $14.64,
$16.43, $13.76, $10.94, and $11.99, respectively. The index for a current
Valuation Period equals the index for the preceding Valuation Period multi-
plied 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 ex-
perience of the Series of the Trust 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 in-
vests 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 applicable daily mortality and expense risk charge from
each Division for each day in the valuation period.
24
<PAGE>
FACTS ABOUT THE CONTRACT (CONTINUED)
(5) We subtract the daily asset based administrative charge from each Divi-
sion for each day in the valuation period.
Calculations for Divisions investing in a Series are made on a per share ba-
sis.
NET RATE OF RETURN FOR A DIVISION
The net rate of return for a Division during a valuation period is the expe-
rience factor for that Valuation Period minus one.
CASH SURRENDER VALUE
Your Contract's Cash Surrender Value fluctuates daily with the investment re-
sults of the Divisions, interest credited to Fixed Allocations and any Market
Value Adjustment. We do not guarantee any minimum Cash Surrender Value. 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 from (1) any surrender charge and any charge for premium taxes;
(3) We deduct from (2) any charges incurred but not yet deducted; and
(4) We adjust (3) for any Market Value Adjustment.
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 Con-
tract are received at our Customer Service Center. The Cash Surrender Value is
determined and 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 pay-
ment. See When We Make Payments.
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 our Customer Service Center. Unless
you specify otherwise, the amount of the withdrawal, including any surrender
charge and Market Value Adjustment, will be taken in proportion to the amount
of Accumulation Value in each Division in which you are invested. If there is
no Accumulation Value in those Divisions, partial withdrawals will be deducted
from your Fixed Allocations starting with the Guarantee Periods nearest their
Maturity Dates until we have honored your request.
There are three options available for selecting partial withdrawals, the Con-
ventional Partial Withdrawal Option, the Systematic Partial Withdrawal Option
and the IRA Partial Withdrawal Option. All three options are described below.
The maximum amount you may withdraw each Contract Year without incurring a
surrender charge is 15% of your Accumulation Value. See Surrender Charge for
Excess Partial Withdrawals. Partial withdrawals may not be repaid. A partial
withdrawal request for an amount in excess of 90% of the Cash Surrender Value
will be treated as a request to surrender the Contract.
CONVENTIONAL PARTIAL WITHDRAWAL OPTION
After the Free Look Period, you may take conventional partial withdrawals.
The minimum amount you may withdraw under this option is $1,000. A conven-
tional partial withdrawal from a Fixed Allocation may be subject to a Market
Value Adjustment.
SYSTEMATIC PARTIAL WITHDRAWAL OPTION
This option may be elected at the time you apply for a Contract, 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, quar-
terly, or annual basis from your Accumulation Value in the Divisions or the
Fixed Allocations. The commencement of payments under this option may not be
elected to start sooner than 28 days after the Contract Issue Date. You se-
lect the date 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 from
the Divisions in which you are invested as the amount of your withdrawal sub-
ject 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%
Annual 15.00%
</TABLE>
25
<PAGE>
FACTS ABOUT THE CONTRACT (CONTINUED)
If a dollar amount is selected and the amount to be systematically withdrawn
would exceed the applicable maximum percentage of your 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 with-
drawal 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, and since $100 is more than 1.25% of the Accumula-
tion 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.
Systematic Partial Withdrawals from Fixed Allocations are limited to interest
earnings during the prior month, quarter, or year, depending on the frequency
chosen. Systematic withdrawals are not subject to a Market Value Adjustment.
A Fixed Allocation, however, may not participate simultaneously in both the
dollar cost averaging program and the Systematic Partial Withdrawal Option.
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 our
Customer Service Center at least seven days prior to the next scheduled with-
drawal 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.
IRA PARTIAL WITHDRAWAL OPTION
If you have an IRA Contract and will attain age 70 1/2 in the current calen-
dar year, distributions may 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. We will
send you a notice before your distributions commence, and you may elect this
option at that time, or at a later date. You may not elect IRA partial with-
drawals while the Systematic Partial Withdrawal Option is in effect. If you
do not elect the IRA Partial Withdrawal Option, and distributions are re-
quired by Federal tax law, distributions adequate to satisfy the requirements
imposed by Federal tax law may be made. Thus, if the Systematic Partial With-
drawal Option is in effect, distributions 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.
At your request, we will determine the amount that is required to be with-
drawn 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 notice to
our Customer Service Center at least seven days prior to the next scheduled
withdrawal date.
An IRA partial withdrawal in excess of the amount allowed under the System-
atic Partial Withdrawal Option may be subject to a Market Value Adjustment.
PARTIAL WITHDRAWALS IN GENERAL
CONSULT YOUR TAX ADVISOR REGARDING THE TAX CONSEQUENCES ASSOCIATED WITH TAK-
ING 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
26
<PAGE>
FACTS ABOUT THE CONTRACT (CONTINUED)
portion withdrawn. See Federal Tax Considerations for more details.
AUTOMATIC REBALANCING
If you have at least $10,000 of Accumulation Value invested in the Divisions,
you may elect to participate in our automatic rebalancing program. Automatic
rebalancing provides you with an easy way to maintain the particular asset al-
location that you and your financial advisor have determined are most suitable
for your individual long-term investment goals. We do not charge a fee for
participating in our automatic rebalancing program.
Under the program you may elect to have all your allocations among the Divi-
sions rebalanced on a quarterly, semi-annual, or annual calendar basis. The
minimum size of an allocation to a Division must be in full percentage points.
Rebalancing does not affect any amounts that you have allocated to the Fixed
Account. The program may be used in conjunction with the systematic partial
withdrawal option only where such withdrawals are taken pro rata. Automatic
rebalancing is not available if you participate in dollar cost averaging. Au-
tomatic rebalancing will not take place during the free look period.
To participate in automatic rebalancing you must submit to our Customer Serv-
ice Center written notice in a form satisfactory to us. We will begin the pro-
gram on the last Valuation Date of the applicable calendar period in which we
receive the notice. You may cancel the program at any time. The program will
automatically terminate if you choose to reallocate your Accumulation Value
among the Divisions or if you make an additional premium payment or partial
withdrawal on other than a pro rata basis. Additional premium payments and
partial withdrawals effected on a pro rata basis will not cause the automatic
rebalancing program to terminate.
PROCEEDS PAYABLE TO THE BENEFICIARY
If the Owner or the Annuitant (when the Owner is other than an individual)
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 Annu-
ity Option, a single sum distribution will be made. Any distributions from
non-qualified Contracts must comply with applicable Federal tax law distribu-
tion requirements.
DEATH BENEFIT OPTIONS
Subject to our rules, there are three death benefit options that may be
elected by you at issue under the Contract: the Standard Death Benefit Option;
the 7% Solution Enhanced Death Benefit Option; and the Annual Ratchet Enhanced
Death Benefit Option.
The 7% Solution enhanced Death Benefit Option may only be elected at issue and
only if the Owner or Annuitant (when the Owner is other than an individual) is
age 75 or younger at issue. The 7% Solution Enhanced Death Benefit Option may
not be available where a Contract is held by joint Owners. The Annual Ratchet
Enhanced Death Benefit Option may only be elected at issue and only if the
Owner or Annuitant (when the Owner is other than an individual) is age 79 or
younger at issue.
If an enhanced death benefit is elected, the death benefit under the Contract
is equal to the greatest of: (i) the Accumulation Value; (ii) total premium
payments less any partial withdrawals; (iii) the Cash Surrender Value; and
(iv) the enhanced death benefit (see below).
We may offer a reduced death benefit under certain group and sponsored ar-
rangements. See Other Contract Provisions, Group or Sponsored Arrangements.
STANDARD DEATH BENEFIT OPTION
You will automatically receive the Standard Death Benefit Option unless you
elect one of the enhanced death benefits. The Standard Death Benefit Option
for the Contract is equal to the greatest of: (i) your Accumulation Value;
(ii) total premiums less any partial withdrawals; and (iii) the Cash Surren-
der Value.
7% SOLUTION ENHANCED DEATH BENEFIT OPTION
(1) We take the enhanced death benefit from the prior Valuation Date. On the
Contract Date, the enhanced death benefit is equal to the Initial Premium.
(2) We calculate interest on (1) for the current Valuation Period at the en-
hanced death benefit interest rate, which rate is an annual rate of 7%;
except that with respect to amounts in the Liquid Asset Division and Lim-
ited Maturity Bond Division, the interest rate applied to such amounts
will be the respective net rate of return for such Divisions during the
current Valuation Period, if it is less than an annual rate of 7%; and ex-
cept with respect to amounts in a Fixed Allocation, the interest rate ap-
plied to such amounts will be the interest credited to
27
<PAGE>
FACTS ABOUT THE CONTRACT (CONTINUED)
such Fixed Allocation during the current Valuation Period, if it is less
than an annual rate of 7%.
Each accumulated initial or additional premium payment reduced by any par-
tial withdrawals (including any associated Market Value Adjustment and sur-
render charge incurred) allocated to such premium will continue to grow at
the enhanced death benefit interest rate until reaching the maximum en-
hanced death benefit. Such maximum enhanced death benefit is equal to two
times the initial or each additional premium paid, as reduced by partial
withdrawals. Each partial withdrawal reduces the maximum enhanced death
benefit as follows: first, the maximum enhanced death benefit is reduced by
the amount of any partial withdrawal of earnings; second, the maximum en-
hanced death benefit is reduced in proportion to the reduction in the Accu-
mulation Value for any partial withdrawal of premium (in each case, includ-
ing any associated market value adjustment and surrender charge incurred).
To the extent that partial withdrawals in a contract year do not exceed 7%
of cumulative premiums and did not exceed 7% of cumulative premiums in any
prior contract year, such withdrawals will be treated as withdrawals of
earnings for the purpose of calculating the maximum enhanced death benefit.
(3) We add (1) and (2).
(4) We add to (3) any additional premiums paid during the current Valuation Pe-
riod.
(5) We subtract from (4) any partial withdrawals (including any Market Value
Adjustments and surrender charges incurred) made during the current Valua-
tion Period.
ANNUAL RATCHET ENHANCED DEATH BENEFIT OPTION
(1) We take the enhanced death benefit from the prior Valuation Date. On the
Contract Date, the enhanced death benefit is equal to the Initial Premium.
(2) We add to (1) any additional premiums paid since the prior Valuation Date
and subtract from (1) any partial withdrawals (including any Market Value
Adjustments and surrender charges incurred) taken since the prior Valuation
Date.
(3) On a Valuation Date that occurs on or prior to the Owner's Attained Age 80
which is also a Contract Anniversary, we set the enhanced death benefit
equal to the greater of (2) or the Accumulation Value as of such date.
On all other Valuation Dates, the enhanced death benefit is equal to (2).
HOW TO CLAIM PAYMENTS TO BENEFICIARY
We must receive due proof of the death of the Owner or the Annuitant (if the
Owner is other than an individual) (such as an official death certificate) at
our Customer Service Center before we will make any payments to the Benefi-
ciary. 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 calendar quarter within 31 days after the
end of each calendar quarter. The report will show the Accumulation Value, the
Cash Surrender Value, and the death benefit as of the end of the calendar quar-
ter. The report will also show the allocation of your 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 juris-
diction 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 Owners.
WHEN WE MAKE PAYMENTS
We will generally pay death benefit proceeds and the cash surrender value
within seven days after our Customer Service Center receives all the informa-
tion 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
Owners; or,
(4) The check used to pay the premium has not cleared through the banking sys-
tem. This may take up to 15 days.
28
<PAGE>
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.
We reserve the right to delay payment of amounts from the Fixed Account for up
to six months.
CHARGES AND FEES
CHARGE DEDUCTION DIVISION
You may specify at issue if you wish to have all charges against the Accumula-
tion Value deducted from the Liquid Asset Division. We call this the Charge
Deduction Division Option, and within this context refer to the Liquid Asset
Division as the Charge Deduction Division. If you do not elect this option, or
if the amount of the charges is greater than the amount in the Division, the
charges will be deducted as discussed below. You may also choose to elect or
cancel this option while the Contract is in force by sending satisfactory no-
tice to our Customer Service Center.
CHARGES DEDUCTED FROM THE ACCUMULATION VALUE
We invest the entire amount of the initial and any additional premium payments
in the Divisions and the Fixed Allocations you select, subject to certain re-
strictions. See Restrictions on Allocation of Premium Payments. We then may
deduct certain amounts from your Accumulation Value. We may reduce certain
fees and charges, including any surrender, administration, and mortality and
expense risk charges, under group or sponsored arrangements. See Group or
Sponsored Arrangements. Unless you have elected the Charge Deduction Division,
charges are deducted proportionately from all affected Divisions in which you
are invested. If there is no Accumulation Value in those Divisions, we will
deduct charges from your Fixed Allocations starting with the Guarantee Periods
nearest their Maturity Dates until such charges have been paid. The charges we
deduct are:
SURRENDER CHARGE
A contingent deferred sales charge ("Surrender Charge") is imposed as a per-
centage of each premium payment if the Contract is surrendered or an excess
partial withdrawal is taken during the seven year period from the date we re-
ceive and accept such premium payment. The percentage of premium payments de-
ducted at the time of surrender or excess partial withdrawal depends upon the
number of complete years that have elapsed since that premium payment was
made. We determine the surrender charge as a percentage of each premium pay-
ment as follows:
<TABLE>
<CAPTION>
Complete Years Elapsed Surrender
Since Premium Payment Charge
------------------- ---------
<S> <C>
0 7%
1 7%
2 6%
3 5%
4 4%
5 3%
6 1%
7+ 0%
</TABLE>
Subject to our rules and as described in the Contract, the surrender charge
arising from a surrender or excess partial withdrawal will be waived in the
following events:
(1) you begin receiving qualified extended medical care on or after the first
Contract anniversary for at least 45 days during any continuous sixty-day
period, and your request for the surrender or withdrawal, together with
all required proof of such qualified extended medical care, must be re-
ceived at our Customer Service Center during the term of such care or
within ninety days after the last day upon which you received such care.
(2) you are first diagnosed by a qualifying medical professional, on or after
the first Contract Anniversary, as having a Qualifying Terminal Illness.
Written proof of terminal illness,
29
<PAGE>
CHARGES AND FEES (CONTINUED)
satisfactory to us, must be received at our Customer Service Center. We
reserve the right to require an examination by a physician of our choice.
See your Contract for more information. The waiver of surrender charge may
not be available in all states.
SURRENDER CHARGE FOR EXCESS PARTIAL WITHDRAWALS
There is considered to be an excess partial withdrawal in any Contract Year
in which the amount withdrawn exceeds 15% of your Accumulation Value on the
date of the withdrawal minus any amount withdrawn during that Contract Year.
Where you are receiving systematic partial withdrawals, any combination of
conventional partial withdrawals taken and any systematic partial withdrawals
expected to be received in a Contract Year will be considered in determining
the amount of the excess partial withdrawal. Such a withdrawal will be con-
sidered a partial surrender of the Contract and we will impose a surrender
charge and any associated premium tax. See Facts About the Contract, The
Fixed Account, Market Value Adjustment. Such charges will be deducted from
the Accumulation Value in proportion to the Accumulation Value in each Divi-
sion or Fixed Allocation from which the excess partial withdrawal was taken.
In instances where the excess partial withdrawal equals the entire Accumula-
tion Value in each such Division or Fixed Allocation, charges will be de-
ducted proportionately from all other Divisions and Fixed Allocations in
which you are invested.
For purposes of calculating the surrender charge for the excess partial with-
drawal, (i) we treat premium payments as being withdrawn on a first-in first-
out basis, and (ii) amounts withdrawn which are not considered an excess par-
tial withdrawal are not treated as a withdrawal of any premium payments.
Although we treat premium payments as being withdrawn before earnings for
purposes of calculating the surrender charge for excess partial withdrawals,
the Federal income tax law treats earnings as withdrawn first. See Federal
Tax Considerations, Taxation of Non-Qualified Annuities.
For example, the following assumes an Initial Premium payment of $10,000 and
additional premium payments of $10,000 in each of the second and third Con-
tract Years, for total premium payments under the Contract of $30,000. It
also assumes a partial withdrawal at the beginning of the fourth Contract
Year of 20% of the Accumulation Value of $35,000.
In this example, $5,250 ($35,000 x .15) is the maximum partial withdrawal
that may be withdrawn during the Contract Year without the imposition of a
surrender charge. The total partial withdrawal would be $7,000 ($35,000 x
.2). Therefore, $1,750 ($7,000-$5,250) is considered an excess partial with-
drawal of a part of the Initial Premium payment of $10,000 and would be sub-
ject to a 5% surrender charge of $87.50 ($1,750 x .05). This example does not
take into account any Market Value Adjustment or deduction of any premium
taxes.
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 Owner's state
of residence. We reserve the right to change this amount to conform with
changes in the law or if the Owner 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
that initial and additional premiums are paid, regardless of the Annuity Com-
mencement Date. In those states we may initially defer collection of the
amount of the charge for premium taxes from your Accumulation Value and de-
duct it against Accumulation Value on surrender of the Contract, excess par-
tial withdrawals or on the Annuity Commencement Date.
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.
If the Accumulation Value at the end of the Contract processing period equals
or exceeds $100,000 or the sum of the premiums paid equals or exceeds
$100,000, the charge is zero. Otherwise, the amount deducted is $40 per Con-
tract Year. This charge is to cover a portion of our administrative expenses.
See Asset Based Administrative Charge, below.
EXCESS ALLOCATION CHARGE
We currently do not assess a charge for allocation changes made during a Con-
tract Year. We re-
30
<PAGE>
CHARGES AND FEES (CONTINUED)
serve the right, however, to assess a $25 charge for each allocation change
after the twelfth allocation change in a Contract Year. This amount repre-
sents the maximum we will charge. The charge would be deducted from the Divi-
sions and the Fixed Allocations from which each such reallocation is made in
proportion to the amount being transferred from each such Division and Fixed
Allocation 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 allocations or transfers due
to the election of dollar cost averaging and reallocation under the provision
What Happens if a Division is Not Available will not be included in determin-
ing if the excess allocation charge should apply.
CHARGES DEDUCTED FROM THE DIVISIONS
MORTALITY AND EXPENSE RISK CHARGE
The amount of the mortality and expense risk charge depends on the death ben-
efit option that has been elected. If the Standard Death Benefit Option is
elected, the charge is equivalent, on an annual basis, to 1.10% of the assets
in each Division. The charge is deducted on each Valuation Date at the rate
of .003030% for each day in the Valuation Period. Approximately .75% is allo-
cated to the mortality risk and .35% is allocated to the expense risk. If an
enhanced death benefit is elected, the charge is equivalent, on an annual ba-
sis, to 1.25% for the Annual Ratchet Death Benefit Option, or 1.40% for the
7% Solution Death Benefit Option, of the assets in each Division. The charge
is deducted on each Valuation Date at the rate of .003446% or .003863%, re-
spectively, for each day in the Valuation Period. For the Annual Ratchet ap-
proximately .90%, or for the 7% Solution approximately 1.05%, is allocated to
the mortality risk.
This charge will compensate us for mortality and expense risks we assume un-
der 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 dis-
tribution 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, to compensate
us for a portion of the administrative expenses under the Contract. The daily
charge is at a rate of 0.000411% (equivalent to an annual rate of 0.15%) on
the assets in each Division.
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 YOUR ANNUITIZATION OPTIONS
ANNUITIZATION OF YOUR CONTRACT
If the Annuitant and Owner are living on the Annuity Commencement Date, we
will begin making payments to the Owner under an income plan. We will make
these payments under the Annuity Option chosen. You may change an Annuity Op-
tion 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 deter-
mined by applying your Accumulation Value adjusted for any applicable Market
Value Adjustment on the Annuity Commencement Date in accordance with The Annu-
ity Options section below, subject to our published rules at such time. 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 Com-
mencement Date. If, at the time of the Owner's death or the Annuitant's death
(if the Owner is not an individual), no option has been chosen for paying
death benefit proceeds, the Beneficiary may choose an option within 60 days.
In all events, payments of death benefit proceeds must comply with the distri-
bution requirements of applicable Federal tax law.
The minimum monthly annuity income payment that we will make is $20. We may
require that a
31
<PAGE>
CHOOSING YOUR ANNUITIZATION OPTIONS (CONTINUED)
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 Contract form. Various factors will affect the level
of annuity benefits including the Annuity Option chosen, the applicable pay-
ment rate used and the investment results of the Divisions and interest cred-
ited to the Fixed Allocations in which the Accumulation Value has been invest-
ed.
Some annuity options may provide only for fixed payments. Fixed Annuity Pay-
ments 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 pay-
ments chosen, the age of the Annuitant or Beneficiary (and sex, where
appropriate), the total Accumulation Value applied to purchase the fixed op-
tion, 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 Beneficia-
ry;
(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. 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, on the Annuity Commencement
Date, a Surrender Charge remains, the elected Annuity Option must include a
period certain of at least five years duration. 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 birth-
day for Annuitants with an Issue Age of 80 and under. If the Annuity Commence-
ment 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, quar-
terly, 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 ANNUITIZATION OPTIONS
There are four options to choose from as shown below. Options 1 through 3 are
fixed and option 4 may be fixed or variable. For a fixed option, the Accumula-
tion Value in the Divisions 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 avail-
able upon request. Illustrations are available upon request. If the Cash Sur-
render Value or Accumulation Value is applied under this option, a 10% pen-
alty tax may apply to the taxable portion of each income payment until the
Owner 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 cer-
tain may be available on request. A refund certain may be chosen instead. Un-
der 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
32
<PAGE>
CHOOSING YOUR ANNUITIZATION OPTIONS (CONTINUED)
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 op-
tion'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 option 1, or any remaining guaranteed payments under option 2, pay-
ments 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 never less than 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 CONTRACT PROVISIONS
IN CASE OF ERRORS IN APPLICATION INFORMATION
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
Transfer of Annuity Contracts, and Assignments. An assignment may have Fed-
eral 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 va-
lidity of any assignment.
NON-PARTICIPATING
The Contract does not participate in the divisible surplus of Golden Ameri-
can.
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
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 ad-
vance 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 our Customer
Service Center. We will refund the Accumulation Value plus any charges we de-
ducted, and the Contract will be voided as of the date we receive the Con-
tract and your request. Some states require that we return the premium paid.
In these states, we require your premiums designated for investment in the
Divisions of Account B be allocated to the Specially Designated Division dur-
ing the Free Look Period. Premiums designated for the Fixed Account will be
allocated to a Fixed Allocation with the Guarantee Period you have cho-
33
<PAGE>
OTHER CONTRACT PROVISIONS (CONTINUED)
sen. 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 in-
vested in the Divisions chosen by you, based on the index of investment expe-
rience next computed for each Division. See Facts About the Contract, Mea-
surement of Investment Experience, Index of Experience and Unit Value.
EXCHANGING YOUR CONTRACT
For information regarding exchanges under Section 1035 of the Internal Reve-
nue Code of 1986, as amended, 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 surrender, ad-
ministration, and mortality and expense risk charges. We may also change the
minimum initial and additional premium requirements, or offer a reduced death
benefit. 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 require-
ments for size and number of years in existence. Group or sponsored arrange-
ments that have been set up solely to buy Contracts or that have been in ex-
istence 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 administrative
charge will reflect differences in costs or services and will not be unfairly
discriminatory.
SELLING THE CONTRACT
DSI is 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 rep-
resentatives who are licensed to sell securities and variable insurance prod-
ucts 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 6.0% of any initial or additional premium pay-
ments made.
34
<PAGE>
REGULATORY INFORMATION
VOTING RIGHTS
ACCOUNT B
We will vote the shares of a Trust owned by Account B according to your in-
structions. 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 a
Trust 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 in-
structions 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 Divi-
sion. We will also vote shares we hold in Account B which are not attribut-
able 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 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 litiga-
tion. 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, Esquire, Executive Vice President, General
Counsel 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 audited financial statements of Golden American Life Insurance Company,
Separate Account B and The Managed Global Account of Separate Account D ap-
pearing or incorporated by reference in the Statement of Additional Informa-
tion and Registration Statement have been audited by Ernst & Young LLP, inde-
pendent auditors, as set forth in their reports thereon appearing or
incorporated by reference in the Statement of Additional Information and in
the Registration Statement and are included or incorporated by reference in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY
SELECTED FINANCIAL DATA
The following selected financial data prepared in accordance with generally
accepted accounting principles ("GAAP") for Golden American should be read in
conjunction with the financial statements and notes thereto included in this
Prospectus.
On August 13, 1996, Equitable of Iowa acquired all the outstanding capital
stock of BT Variable, Inc., the parent of Golden American. For GAAP financial
statement purposes, the change in control of Golden American through the ac-
quisition was accounted for as a purchase acquisition. As a result, the GAAP
financial data presented below for periods subsequent to August 13, 1996, are
presented on the Post-Acquisition new basis of accounting while the financial
statement data prior to August 14, 1996 is presented on a Pre-Acquisition his-
torical basis of accounting.
35
<PAGE>
MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY (CONTINUED)
<TABLE>
<CAPTION>
SELECTED GAAP BASIS FINANCIAL DATA
(IN THOUSANDS)
--------------------------------------------------------------------------------------
POST-
ACQUISITION PRE-ACQUISITION
--------------- ----------------------------------------------------------------------
FOR THE PERIOD FOR THE PERIOD FOR THE
AUGUST 14, 1996 JANUARY 1, 1996 9 MONTHS
THROUGH THROUGH ENDED FOR THE FISCAL YEARS ENDED DECEMBER 31
SEPTEMBER 30, AUGUST 13, SEPTEMBER 30, ----------------------------------------
1996 1996 1995 1995 1994 1993 1992(A)
--------------- --------------- ------------- ---------- ---------- -------- --------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Annuity and Life Product
Fees and Changes....... $ 2,397 $12,259 $ 13,922 $ 18,388 $ 17,519 $ 10,192 $ 694
Net Income before
Federal Income Tax..... $ 420 $ 1,736 $ 2,176 $ 3,364 $ 2,222 $ (1,793) $ (508)
Net Income (Loss)....... $ 273 $ 3,199 $ 2,176 $ 3,364 $ 2,222 $ (1,793) $ (508)
Total Assets............ $1,500,983 N/A $1,148,467 $1,197,688 $1,044,760 $886,155 $320,539
Total Liabilities....... $1,360,982 N/A $1,055,807 $1,099,563 $ 955,254 $857,558 $306,197
Total Stockholder's
Equity................. $ 140,001 N/A $ 92,660 $ 98,125 $ 89,506 $ 28,597 $ 14,342
</TABLE>
(a) Results for 1992 are for the period September 30, 1992 (date of acquisi-
tion) to December 31, 1992.
The following selected financial data was prepared on the basis of statutory
accounting practices ("SAP"), which have been prescribed by the Department of
Insurance of the State of Delaware and the National Association of Insurance
Commissioners. These practices differ in certain respects from GAAP. The se-
lected financial data should be read in conjunction with the financial state-
ments and notes thereto included in this Prospectus, which describe the dif-
ferences between SAP and GAAP. See the Company's Annual Report for more
detail.
<TABLE>
<CAPTION>
SELECTED STATUTORY FINANCIAL DATA
(IN THOUSANDS)
--------------------------------------------------------------------------
FOR THE 9 MONTHS
ENDED
SEPTEMBER 30
(UNAUDITED) FOR THE FISCAL YEARS ENDED DECEMBER 31
---------------------- --------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Premiums & Annuity
Considerations......... $ 302,971 $ 84,597 $ 124,687 $294,550 $505,465 $191,039 $ 41,615
Net Income (Loss) before
Federal Income Tax..... $ (5,648) $ (2,672) $ (4,117) $(11,260) $ (9,417) $ (4,225) $ (2,086)
Net Income (Loss)....... $ (5,795) $ (2,672) $ (4,117) $(11,260) $ (9,401) $ (3,986) $ (1,752)
Total Assets............ $1,375,480 $1,078,174 $1,124,840 $988,180 $834,123 $302,200 $119,652
Total Liabilities....... $1,315,903 $1,013,895 $1,058,483 $921,888 $815,301 $289,995 $106,199
Total Capital &
Surplus................ $ 59,577 $ 64,279 $ 66,357 $ 66,292 $ 18,822 $ 12,205 $ 13,453
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results
of Operations should be read in conjunction with the GAAP Basis Financial
Statements and Notes to Financial Statements included herein.
CHANGE IN CONTROL
On August 13, 1996, Equitable of Iowa Companies ("Equitable") acquired all of
the outstanding capital stock of BT Variable, Inc. ("BT Variable") from
Whitewood Properties Corp. ("Whitewood"), a wholly-owned subsidiary of Bank-
ers Trust, pursuant to the terms of a Stock Purchase Agreement dated as of
May 3, 1996 between Equitable and Whitewood (the "Purchase Agreement"). BT
Variable owned all the outstanding capital stock of Golden American Life In-
surance Company ("Golden American") and all of the outstanding capital stock
of Directed Services, Inc. ("DSI"). In exchange for the outstanding capital
stock of BT Variable, Equitable paid the sum of $93,000,000 in cash to White-
wood in accordance with the terms of the Purchase Agreement. Equitable also
paid the sum of $51,000,000 in cash to Bankers Trust to retire certain debt
owed by BT Variable to Bankers Trust pursuant to a revolving credit arrange-
ment. On August 14, 1996, BT Variable, Inc. was formally renamed EIC Vari-
able, Inc. ("EIC Variable").
For financial statement purposes, the change in control of Golden American
through the acquisition to BT Variable was accounted for as a pur-
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<PAGE>
MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY (CONTINUED)
chase acquisition effective August 14, 1996. The effects of the acquisition
have resulted in a new basis of accounting reflecting estimated fair values
for assets and liabilities at that date. As a result, Golden American's fi-
nancial statements for periods subsequent to August 13, 1996, are presented
on the Post-Acquisition new basis of accounting, while the financial state-
ments for August 13, 1996 and prior periods are presented on the Pre-Acquisi-
tion historical cost basis of accounting.
The purchase price was allocated to the three companies purchased--BT Vari-
able, DSI, and Golden American. Goodwill relating to the acquisition was es-
tablished for the excess of the acquisition cost over the fair value of the
net assets acquired plus $965,000 of estimated acquisition costs and pushed
down to Golden American. The purchase price is preliminary with respect to
the final settlement of taxes with Bankers Trust and estimated acquisition
costs and as a result, goodwill may change. The allocation of the purchase
price to Golden American was approximately $139,872,000. The amount of good-
will relating to the acquisition was $39,207,000 at August 13, 1996, and is
being amortized over 25 years on a straight line basis.
BUSINESS ENVIRONMENT
The current business and regulatory environment remains challenging for the
insurance industry. Increasing competition from traditional insurance carri-
ers as well as banks and mutual fund companies means that investors have many
more choices. However, overall demand for variable annuity product remains
strong for several reasons: (1) dynamic stock market performance over the
last 4 years; (2) relatively low interest rates; and (3) baby boomers reach-
ing ages where they are beginning to put aside large amounts for retirement.
In 1995 Golden American experienced a significant decline in sales, due to a
number of factors. First, some portfolio managers performed poorly in 1993
and 1994. Second, as more products came to market the cost structure of the
DVA product became less competitive. Third, because no fixed interest rate
options were available in 1994 during a time of rising interest rates and
flat or declining equity markets, market share was lost. Consequently, the
Company took steps to respond to these business challenges. Several portfolio
managers were replaced and new funds were added to give contractholders more
options. In October of 1995, the Company introduced the Combination Deferred
Variable and Fixed Annuity (GoldenSelect DVA PLUS) and the GoldenSelect Gene-
sis I and Genesis Flex life insurance products. These actions have proven
successful, as these new products generated higher sales since their intro-
duction, a trend which management expects will continue in 1996.
RESULTS OF OPERATIONS
3 AND 9 MONTHS ENDED 9/30/96 COMPARED TO 1995
The analysis following combines the post-acquisition and pre-acquisition ac-
tivity for 1996 in order to compare the results to 1995. Such a comparison
does not recognize the impact of the purchase accounting and goodwill amorti-
zation except for the period after August 13, 1996.
<TABLE>
PREMIUMS
<CAPTION>
POST-
ACQUISITION COMBINED PRE-ACQUISITION
--------------- -------------- ------------------------------
FOR THE PERIOD
AUGUST 14, 1996 QUARTER ENDED FOR THE PERIOD
THROUGH SEPTEMBER 30, JULY 1, 1996 QUARTER ENDED
SEPTEMBER 30, 1996 THROUGH SEPTEMBER 30,
QUARTER 1996 COMBINED AUGUST 13, 1996 1995
- ------- --------------- -------------- --------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Variable annuity premi-
ums.................... 29,986 67,230 37,244 33,074
Variable life premiums.. 1,451 4,390 2,939 318
------- -------- -------- -------
Total premiums......... $31,437 $ 71,620 $ 40,183 $33,392
======= ======== ======== =======
<CAPTION>
POST-
ACQUISITION COMBINED PRE-ACQUISITION
--------------- -------------- ------------------------------
FOR THE PERIOD
AUGUST 14, 1996 9 MONTHS ENDED FOR THE PERIOD
THROUGH SEPTEMBER 30, JANUARY 1, 1996 9 MONTHS ENDED
SEPTEMBER 30, 1996 THROUGH SEPTEMBER 30,
YEAR TO DATE 1996 COMBINED AUGUST 13, 1996 1995
- ------------ --------------- -------------- --------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Variable annuity premi-
ums.................... 29,986 288,358 258,372 91,726
Variable life premiums.. 1,451 11,957 10,506 2,254
------- -------- -------- -------
Total premiums......... $31,437 $300,315 $268,878 $93,980
======= ======== ======== =======
</TABLE>
37
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MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY (CONTINUED)
Variable annuity premiums increased $34,156,000, or 103.3%, in the third
quarter and $196,632,000, or 214.4%, in the first nine months of 1996.
Variable life premiums increased $4,072,000 or 1,281.9% in the third quar-
ter and $9,703,000 or 430.4%, in the first nine months of 1996.
REVENUES
<TABLE>
<CAPTION>
POST-
ACQUISITION COMBINED PRE-ACQUISITION
--------------- -------------- ------------------------------
FOR THE PERIOD
AUGUST 14, 1996 QUARTER ENDED FOR THE PERIOD
THROUGH SEPTEMBER 30, JULY 1, 1996 QUARTER ENDED
SEPTEMBER 30, 1996 THROUGH SEPTEMBER 30,
QUARTER 1996 COMBINED AUGUST 13, 1996 1995
- ------- --------------- -------------- --------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Annuity and life product fees and policy charges............... $2,397 $ 5,087 $ 2,690 $ 4,838
Management fee revenue......................................... 280 560 280 740
Net investment income.......................................... 1,656 3,037 1,381 857
Realized gains (losses) on investments......................... -- (2) (2) 83
Other income................................................... 143 159 16 16
------ ------- ------- -------
$4,476 $ 8,841 $ 4,365 $ 6,534
====== ======= ======= =======
<CAPTION>
POST-
ACQUISITION COMBINED PRE-ACQUISITION
--------------- -------------- ------------------------------
FOR THE PERIOD
AUGUST 14, 1996 9 MONTHS ENDED FOR THE PERIOD
THROUGH SEPTEMBER 30, JANUARY 1, 1996 9 MONTHS ENDED
SEPTEMBER 30, 1996 THROUGH SEPTEMBER 30,
YEAR TO DATE 1996 COMBINED AUGUST 13, 1996 1995
- ------------ --------------- -------------- --------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Annuity and life product fees and policy charges............... $2,397 $14,656 $12,259 $13,922
Management fee revenue......................................... 280 1,670 1,390 740
Net investment income.......................................... 1,656 6,646 4,990 1,978
Realized gains (losses) on investments......................... -- (420) (420) 71
Other income................................................... 143 213 70 44
------ ------- ------- -------
$4,476 $22,765 $18,289 $16,755
====== ======= ======= =======
</TABLE>
Total revenues increased $2,307,000, or 35.3%, in the third quarter and
$6,010,000 or 35.9%, in the first nine months of 1996. Annuity and life
product fees and policy charges increased $249,000, or 5.1%, in the third
quarter and $734,000, or 5.3%, in the first nine months of 1996, in con-
junction with the growth in the company's policyholder liabilities.
In the fourth quarter of 1995, the service agreement between DSI and Golden
American was amended to provide for a management fee from DSI to Golden
American for certain managerial and supervisory services provided by Golden
American. This fee, calculated as a percentage of average assets in the
variable separate accounts, was $560,000 for the third quarter of 1996 and
$1,670,000 for the first nine months of 1996.
Net investment income increased $2,180,000, or 254.5%, in the third quarter
and $4,668,000, or 236.0%, in the first nine months of 1996 due to the in-
crease in invested assets. The company had realized losses on the sale of
investments of $2,000 in the third quarter and $420,000 in the first nine
months of 1996, compared to gains of $83,000 and $71,000 in the same peri-
ods of 1995. Realized losses in the first nine months of 1996 were the re-
sult of voluntary sales of investments.
38
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MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY (CONTINUED)
EXPENSES
<TABLE>
<CAPTION>
POST-
ACQUISITION COMBINED PRE-ACQUISITION
--------------- ------------- -----------------------------
FOR THE PERIOD FOR THE PERIOD
AUGUST 14, 1996 QUARTER ENDED JULY 1, 1996
THROUGH SEPTEMBER 30, THROUGH QUARTER ENDED
SEPTEMBER 30, 1996 AUGUST 13, SEPTEMBER 30,
QUARTER 1996 COMBINED 1996 1995
- ------- --------------- ------------- --------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Insurance operation benefits:
Interest credited to account balances........................... $ 1,624 $ 2,894 $ 1,270 $ 440
Benefit claims incurred in excess of account balances........... (25) 133 158 273
Underwriting, acquisition, and insurance expenses:
Commissions..................................................... 2,118 4,814 2,696 1,968
General expenses................................................ 1,517 3,437 1,920 3,738
Insurance taxes................................................. 160 886 726 140
Policy acquisition costs deferred............................... (2,625) (5,702) (3,077) (2,390)
Amortization:
Deferred policy acquisition costs............................... 176 1,318 1,142 763
Present value of in force acquired.............................. 915 1,212 297 537
Goodwill........................................................ 196 196 -- --
------- -------- -------- -------
$ 4,056 $ 9,188 $ 5,132 $ 5,469
======= ======== ======== =======
<CAPTION>
POST-
ACQUISITION COMBINED PRE-ACQUISITION
--------------- ------------- -----------------------------
FOR THE PERIOD 9 MONTHS FOR THE PERIOD
AUGUST 14, 1996 ENDED JANUARY 1, 1996 9 MONTHS
THROUGH SEPTEMBER 30, THROUGH ENDED
SEPTEMBER 30, 1996 AUGUST 13, SEPTEMBER 30,
YEAR TO DATE 1996 COMBINED 1996 1995
- ------------ --------------- ------------- --------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Insurance operation benefits:
Interest credited to account balances........................... $ 1,624 $ 5,979 $ 4,355 $ 842
Benefit claims incurred in excess of account balances........... (25) 890 915 1,460
Underwriting, acquisition, and insurance expenses:
Commissions..................................................... 2,118 18,667 16,549 5,344
General expenses................................................ 1,517 10,939 9,422 10,058
Insurance taxes................................................. 160 1,385 1,225 652
Policy acquisition costs deferred............................... (2,625) (21,925) (19,300) (7,101)
Amortization:
Deferred policy acquisition costs............................... 176 2,612 2,436 2,121
Present value of in force acquired.............................. 915 1,866 951 1,203
Goodwill........................................................ 196 196 -- --
------- -------- -------- -------
$ 4,056 $ 20,609 $ 16,553 $14,579
======= ======== ======== =======
</TABLE>
Interest credited to account balances increased $2,454,000 or 557.5% in the
third quarter and $5,137,000 or 610.4% in the first nine months of 1996 as
a result of increases in policy account values.
General expenses decreased $301,000 or 8.0% in the third quarter and in-
creased $881,000 or 8.8% in the first nine months of 1996. The increase in
the first nine months of 1996 was primarily a result of the increase in
policies in force. Commissions increased $2,846,000 or 144.6% in the third
quarter and $13,323,000 or 249.3% in the first nine months of 1996. Insur-
ance taxes increased $746,000 or 530.6% in the third quarter and $733,000
or 112.2% in the first nine months of 1996. Deferral of policy acquisition
costs increased $3,312,000 or 138.6%
in the third quarter and $14,824,000 or 208.8% in the first nine months of
1996. The increase in the above expenses is the result of the growth in
sales.
The company's deferred policy acquisition costs ("DPAC"), previous balance
of present value of in force acquired ("PVIF") and unearned revenue re-
serve, as of the purchase date, were eliminated and an asset representing
the PVIF was established for all policies in force at the acquisition date.
PVIF is amortized into income over the expected gross profits of the in
force acquired in a manner similar to DPAC amortization. Any expenses which
vary with the sales of the company's products subsequent to the acquisition
date are deferred and amortized. The amortization of PVIF and DPAC in-
|(w
39
<PAGE>
MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY (CONTINUED)
creased $1,230,000 or 94.5% in the third quarter and $1,154,000 or 34.7% in
the first nine months of 1996. This increase is the result of an increase
in balances for DPAC and PVIF. The elimination of the unearned revenue re-
serve, related to in force acquired at the acquisition date, will result in
lower annuity and universal life product fees and policy charges.
INCOME
Net income on a combined basis for the third quarter of 1996 was $964,000,
a decrease of $101,000 or 9.5% from the third quarter of 1995. Net income
on a combined basis for the first nine months of 1996 was $3,472,000, an
increase of $1,296,000 or 59.6% from the first nine months of 1995.
1995 COMPARED TO 1994
Net income for 1995 was $3.4 million, an increase of $1.1 million or 51%
from 1994.
Variable life and annuity product fees and policy charges were $18.4 mil-
lion in 1995, an increase of $0.9 million or 5% from 1994. This increase
was due to an additional $0.9 million in fees earned from the increasing
block of business under management in the separate accounts, an increase of
$1.5 million in the collection of surrender charges, and a decrease of $1.5
million in the revenue recognition of net distribution fees.
Net investment income was $2.8 million for 1995, an increase of $2.3 mil-
lion or 403% over the comparable 1994 period. Approximately $1.5 million of
the increase was due to the additional investment income earned on invested
assets held to back the fixed interest divisions that were introduced in
1995. The balance of the increase in investment income was attributable to
an increase in the investment income on surplus.
In 1995, the service agreement between DSI and Golden American was amended
to provide for a management fee from DSI to Golden American for certain
managerial and supervisory services provided by Golden American. This fee,
calculated as a percentage of average assets in the variable separate ac-
counts, was $1.0 million for 1995.
Policy benefits were $3.2 million for 1995, an increase of $3.1 million
from 1994. In 1995, benefit expenses increased $1.3 million as a result of
interest credited to policyholders related to the fixed interest divisions
introduced in 1995. Additionally, death benefit costs net of reinsurance
increased by $.3 million in 1995 as compared to 1994. Additionally, 1994
policy benefits reflected a $1.5 million decrease in mortality reserves.
Commissions and overrides were $7.7 million in 1995, a decrease of $9.1
million or 54% from 1994. The decrease in commissions resulted from the de-
crease in new business premium receipts which went from $310.7 million in
1994 to $130.5 million in 1995, a decrease of 55%.
Employee related expenses and general administrative and operating expenses
were a combined $13.7 million for 1995, an increase of $.3 million or 2.5%
from 1994.
Interest expense was $0 for 1995 as compared to $2.0 million in 1994. The
elimination of interest expense in 1995 resulted from the retirement of the
Company's debt in December 1994 with the proceeds from the issuance of pre-
ferred stock. In 1995, the Company paid dividends on preferred stock of
$3.4 million. There were no preferred stock dividends in 1994.
Amortization of intangible assets, deferred policy acquisition costs and
unamortized cost assigned to insurance contracts in force, was $4.3 million
for 1995, a decrease of $2.5 million or 37% from the prior year. The intan-
gible assets are being amortized over the lives of the policies in relation
to the present value of estimated future gross profits. The relatively
strong performance of the funds in 1995 has slowed the amortization in 1995
as compared to 1994. Additionally, amortization was increased in 1994 due
to the decrease in mortality reserves during 1994.
1994 COMPARED TO 1993
Golden American realized net GAAP income (loss) of $2.22 million and
$(1.79) million for 1994 and 1993, respectively. The increase in net GAAP
earnings for 1994 is attributable to the increase in average Separate Ac-
count assets in 1994, as compared to 1993.
Variable life and annuity product fees and policy charges were $17.52 mil-
lion for 1994 as compared to $10.19 million for 1993. The increase is pri-
marily attributable to increased fees from the increasing block of business
under management in the separate accounts. Separate account assets have in-
creased from $295 million at December 31, 1992 to $810 million at December
31, 1993 to $950 million at Decem-
40
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MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY (CONTINUED)
ber 31, 1994. The increase in separate account assets and liabilities of
$515 million during 1993 was primarily due to 1993 premiums and annuity
considerations of $505 million.
Golden American's earnings are principally derived from the charges imposed
on variable annuity products and, to a lesser extent, variable life products.
The primary revenues from these products consist of charges for mortality and
expense risk, the cost of insurance and Contract administration charges that
have been assessed against account balances during the period. In addition, a
sales load ranging from 3% to 7.5% is assessed to premium payments and col-
lected over a number of years for certain other GoldenSelect variable annuity
and life products. These sales loads are earned over the life of the insur-
ance Contract in relation to estimated future gross profits. Sales loads that
have been deducted but not yet earned are not recognized in current income
and are reported as unearned revenue. The costs associated with acquiring new
business are deferred at issue and amortized over the lives of the policies
in relation to the present value of estimated future gross profits. Golden
American also incurs expenses associated with the maintenance of in-force
Contracts.
Cash required to fund the acquisition costs associated with deferred sales
load products written in 1992, 1993 and 1994 was provided by short-term
borrowings with an unaffiliated bank. Accordingly, the cost of these borrowed
funds increased in line with the general increase in the Federal Funds rates.
Beginning in 1994, the insurance industry saw a slow-down in the recent trend
of individuals moving away from traditional fixed products and into variable
products. Golden American experienced a similar slow-down as sales for 1995
were down 55% compared to 1994, following sales for 1994 which were down 39%
compared to 1993.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Any forward-looking statement contained herein or in any other oral or writ-
ten statement by the company or any of its officers, directors or employees
is qualified by the fact that actual results of the company may differ mate-
rially from such statement due to the following important factors, among
other risks and uncertainties inherent in the company's business:
1. Prevailing interest rate levels which may affect the ability of the Com-
pany to sell its products, the market value of the Company's investments
and the lapse rate of the Company's policies, notwithstanding product de-
sign features intended to enhance persistency of the Company's products.
2. Changes in the federal income tax laws and regulations which may affect
the relative tax advantages of the Company's products.
3. Changes in the regulation of financial services, including bank sales
and underwriting of insurance products, which may affect the competitive
environment for the Company's products.
4. Other factors affecting the performance of the company, including, but
not limited to, stock market performance, litigation, insurance industry
insolvencies, investment performance of the underlying portfolios of the
variable annuity products, variable annuity product design and sales volume
by significant sellers of the company's variable annuity products.
LIQUIDITY AND CAPITAL RESOURCES
Golden American's liquidity requirements include the payment of sales commis-
sions, and other acquisition and underwriting expenses on the annuity and
life business that it writes. Overall, the Company had negative cash flow
from operations in 1994 because it sold variable products exclusively; total
premiums received were invested immediately in the Company's separate ac-
counts which purchased shares of portfolios of The GCG Trust, an open-end,
management investment company, or directly purchased portfolio securities.
Because 100% of the premium was invested as described above, the payment of
commissions and other acquisition costs resulted in negative cash flow from
operations during the Company's early growth years.
Positive cash flow elements from operations are produced primarily from two
sources. Fees are collected from the in-force book of business. In addition,
during 1995, Golden American began to distribute a fixed account option with
its variable annuity product. Premium amounts directed to the fixed account
option produce positive cash flow from operations as amounts are retained
within the general account of the Company and are used to fund an investment
portfolio that finances future benefit payments. Investments are made in
fixed-rate investments such as bonds, and short-term investments in order to
provide a sufficient return as well as to match the duration of the obliga-
tion for future benefit payments.
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MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY (CONTINUED)
Golden American products also contain surrender charge features which reward
persistency and penalize the early withdrawal of funds.
Golden American has developed and utilizes a projection system which fore-
casts cash flow. Cash flow from operations will vary depending on the amount
of premium written and the product mix. The Company also periodically per-
forms asset/ liability matching in the management of its asset and liability
portfolios. Those matching practices involve the monitoring of asset and lia-
bility durations for various product lines, cash flow testing under various
interest rate scenarios, and the continuous rebalancing of assets and liabil-
ities with respect to yield, risk, and cash flow characteristics.
In the past, Golden American has funded those past expenses described above
for its variable annuity and life business in-force at the beginning of 1995
by the issuance of $50 million redeemable preferred stock with its immediate
parent, EIC Variable, Inc., formerly BT Variable, Inc. ("EIC Variable"), on
December 30, 1994. This $50 million preferred stock transaction accounted for
a majority of the large increase in total Stockholder's Equity (as reported
on a GAAP basis) from 1993 to 1994. The short-term debt discussed previously
in the Results of Operations was retired by Golden American and assumed by
EIC Variable as of December 30, 1994. Dividends on this preferred stock issue
were payable on the last business day of each quarter, beginning March 31,
1995. For 1995, $3.35 million of preferred stock dividends were paid. With
the prior approval of the Delaware Department of Insurance, the preferred
stock was redeemed and the proceeds were contributed to Golden American as a
capital contribution on September 23, 1996.
The NAIC has developed and implemented the Risk Based Capital "RBC" adequacy
monitoring system. The RBC calculates the amount of adjusted capital which a
life insurance company should have based upon that company's risk profile.
The NAIC has established four different levels of regulatory action with re-
spect to the RBC adequacy monitoring system. Each of these levels may be
triggered if an insurer's total adjusted capital is less than a corresponding
level of RBC. As of December 31, 1995, based on the RBC formula, Golden Amer-
ican's total adjusted capital level exceeded the minimum amount of capital
required to avoid regulatory action. Under currently effective funding agree-
ments, expected RBC levels will remain well in excess of levels required to
avoid regulatory actions. There is no assurance, however, that Golden Ameri-
can will continue to maintain its current RBC level.
During 1995, EIC Variable made capital contributions to Golden American of
$7.94 million. Golden American believes that it will be able to fund the cap-
ital and surplus required for projected new business from existing statutory
capital and surplus, statutory earnings on the existing book of business as
well as future surplus contributions from its parent. Golden American also
believes that it will be able to fund the above liquidity requirements of
sales commissions and acquisition costs of projected new business from affil-
iated borrowings and/or borrowings with non-affiliated banks. Golden American
expects to continue to receive capital contributions from EIC Variable if
necessary. Golden American's future marketing efforts could be hampered
should its parent and/or affiliates be unable to provide additional funding.
SEGMENT INFORMATION
During the period since the acquisition by Bankers Trust, September 30, 1992
to date of this Prospectus, Golden American's operations consisted of one
business segment, the sale of annuity and life insurance products. Golden
American and its affiliate Directed Services, Inc., are party to in excess of
140 sales agreements with broker-dealers, one of whom, Locust Street Securi-
ties, Inc., is an affiliate of Golden American. Two of those broker-dealers
sell a substantial portion of its business.
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 rein-
surance agreement on a modified coinsurance basis with an affiliate of a bro-
ker-dealer which distributes Golden American's products with respect to 25%
of the business produced by that broker-dealer.
RESERVES
In accordance with the life insurance laws and regulations under which Golden
American operates, it is obligated to carry on its books, as liabilities, ac-
tuarially determined reserves to meet its obligations on outstanding Con-
tracts. Reserves, based on valuation mortality tables in general use in the
United States, where applicable, are computed to equal amounts which, to-
gether with interest on such reserves computed
42
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MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY (CONTINUED)
annually at certain assumed rates, make adequate provision according to pres-
ently accepted actuarial standards of practice, for the anticipated cash
flows required by the contractual obligations and related expenses of Golden
American.
INVESTMENTS
Golden American's assets are invested in accordance with applicable state
laws. These laws govern the nature and the quality of investments that may be
made by life insurance companies and the percentage of their assets that may
be committed to any particular type of investment. In general, these laws
permit investments, within specified limits subject to certain qualifica-
tions, in federal, state, and municipal obligations, corporate bonds, pre-
ferred or common stocks, real estate mortgages, real estate and certain other
investments. All of Golden American's assets, except variable separate ac-
count assets supporting variable products, are available to meet its obliga-
tions under the Contracts.
Golden American makes investments in accordance with investment guidelines
that take into account investment quality, liquidity and diversification, and
invests assets supporting the Contract guarantees primarily in fixed income
assets issued or guaranteed by the U.S. government or its agencies and in-
strumentalities. At December 31, 1995, Golden American had invested assets of
$67.29 million consisting of $49.63 million of bonds and $15.61 million of
short-term securities and $2.0 million of policy loans.
At December 31, 1995, 100% of Golden American's invested assets and cash
equivalents supporting Contract guarantees consisted of liquid and readily
marketable securities.
At December 31, 1995, 100% of the total invested assets were invested in in-
vestment grade bonds and 0% were invested in non-investment grade securities.
Golden American defines non-investment grade as unsecured corporate debt ob-
ligations which do not have a rating equivalent to Standard & Poor's (or sim-
ilar rating agency) BBB or higher and are not guaranteed by an agency of the
federal government.
During the second half of 1996, Golden American began proceedings to estab-
lish a wholly owned subsidiary, First Golden American Life Insurance Company
of New York ("First Golden"), whose primary purpose will be to offer insur-
ance products in the state of New York, where Golden American does not cur-
rently do business. To finance these activities, Golden American issued to
Equitable of Iowa a surplus note for $25,000,000 in return for $25,000,000
cash of which $2,000,000 was used to purchase 200,000 shares of the capital
stock of First Golden and the remaining $23,000,000 became a capital contri-
bution to First Golden.
COMPETITION
Golden American is engaged in a business that is highly competitive because
of the large number of stock and mutual life insurance companies and other
entities marketing insurance products comparable to those of Golden American.
There are approximately 2,350 stock, mutual and other types of insurers in
the life insurance business in the United States, a substantial number of
which are significantly larger than Golden American.
CERTAIN AGREEMENTS
Beginning in 1994 and continuing until August 13, 1996, Bankers Trust (Dela-
ware), a subsidiary of Bankers Trust New York Corporation ("BT New York Cor-
poration"), and Golden American became parties to a service agreement pursu-
ant to which Bankers Trust (Delaware) 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 were reimbursed by Golden American on an allocated cost ba-
sis. Charges billed to Golden American by Bankers Trust (Delaware) pursuant
to the service agreement for 1996 through July, 1995 and 1994 were $464,734,
$816,264 and $290,248, respectively. This agreement was terminated as of Au-
gust 13, 1996.
Prior to 1994, Golden American had arranged with EIC Variable to perform
services related to the development and administration of its products. For
the year 1993, fees earned by EIC Variable from Golden American for these
services aggregated $2,701,000. The agreement was terminated as of January 1,
1994.
In addition, EIC Variable provided to Golden American certain of its person-
nel 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 esti-
mated amount of time spent by EIC Variable's employees on behalf of Golden
American.
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MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY (CONTINUED)
For the year 1993, EIC Variable allocated to Golden American $1,503,000. The
agreement was terminated on January 1, 1994. During 1994, such expenses were
allocated directly by BT New York Corporation to Golden American and totaled
$1,395,966 for the year.
DISTRIBUTION AGREEMENT
Prior to 1994, Golden American had entered into agreements with DSI to per-
form services related to the management of its investments and the distribu-
tion of its products. For the year 1993, Golden American incurred $311,000,
respectively, for such services. The agreement was terminated as of January
1, 1994.
Under a distribution agreement, DSI acts as the principal underwriter (as de-
fined 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, 1996, 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 manage-
ment, administrative and clerical services and the use of certain facilities.
Golden American charged DSI for such expenses and all other general and ad-
ministrative 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, which were comprised of allocated salary charges, premise and
equipment charges, and other expenses.
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 $987,000
for 1995.
EMPLOYEES
Golden American, as a result of its Service Agreements with each of Bankers
Trust (Delaware) and EIC Variable had very few direct employees. Instead,
various management services were provided by Bankers Trust (Delaware), EIC
Variable and Bankers Trust New York Corporation, as described above under
"Certain Agreements." The cost of these services were allocated to Golden
American. Since August 14, 1996, Golden American has looked to EIC Variable
and Equitable of Iowa and its affiliates for management services.
Certain officers of Golden American are also officers of EIC Variable and
DSI, and their salaries are allocated among the three companies. Certain of-
ficers of Golden American is also an officer of Equitable of Iowa. See "Di-
rectors and Executive Officers."
PROPERTIES
Golden American's principal office is located at 1001 Jefferson Street, Suite
400, Wilmington, Delaware 19801, where all of Golden American's records are
maintained. This office space is sub-leased from Bankers Trust (Delaware) un-
der a separate agreement.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
POSITIONS(S) WITH THE
NAME (AGE) COMPANY
- ----------------------------- ---------------------------
<S> <C>
Terry L. Kendall (50) Chairman, President and
Chief Executive Officer
Fred S. Hubbell (45) Director
Lawrence V. Durland, Jr. (50) Director
Paul E. Larson (44) Director, Executive Vice
President, CFO and
Assistant Secretary
Thomas L. May (48) Director
John A. Merriman (54) Director and Assistant
Secretary
Beth B. Neppl (39) Director and Vice President
Paul R. Schlaack (50) Director
Jerome L. Sychowski (54) Director, Senior Vice
President and Chief
Information Officer
Barnett Chernow (47) Executive Vice President
Dennis D. Hargens (54) Treasurer
David L. Jacobson (47) Senior Vice President
and Assistant Secretary
Stephen J. Preston (39) Senior Vice President
and Chief Actuary
Myles R. Tashman (54) Executive Vice President,
General Counsel
and Secretary
David A. Terwilliger (39) Vice President, Controller,
Assistant Secretary and
Assistant Treasurer
Edward C. Wilson (51) Executive Vice President
</TABLE>
Each director is elected to serve for one year or until the next annual meet-
ing of shareholders or until his or her successor is elected. Most directors
are directors of insurance company subsidiaries of Golden American's ultimate
parent, Equitable of Iowa Companies.
44
<PAGE>
MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY (CONTINUED)
The principal positions of Golden American's directors and senior executive
officers for the past five years are listed below:
Mr. Terry L. Kendall joined Bankers Trust Company in September 1993 as Manag-
ing Director. He is Chairman of the Board, President and Chief Executive Offi-
cer of the Golden American. From 1982 through June 1993, he was President and
Chief Executive Officer of United Pacific Life Insurance Company.
Mr. Fred S. Hubbell became Chairman, President and Chief Executive Officer of
Equitable of Iowa in 1991. He also has served as Chairman and President of Eq-
uitable Life Insurance Company of Iowa since 1987. He was elected to serve as
a director of Golden American in August 1996.
Mr. Lawrence V. Durland, Jr. joined Equitable of Iowa in 1986 as a Senior Vice
President. He was elected to serve as a director of Golden American in August
1996.
Mr. Paul E. Larson joined Equitable of Iowa in 1977 and is currently an Execu-
tive Vice President, Treasurer and Chief Financial Officer (CFO). He was
elected to serve as a director of Golden American in August 1996. He was
elected to serve as Executive Vice President, CFO, and Assistant Secretary of
Golden American in December 1996.
Mr. Thomas L. May joined Equitable Life Insurance Company of Iowa in 1990 and
is currently Senior Vice President. He was elected to serve as a director of
Golden American in August 1996.
Mr. John A. Merriman joined Equitable of Iowa in 1987 and is currently Secre-
tary and General Counsel. He was elected to serve as a director of Golden
American in August 1996.
Ms. Beth B. Neppl joined Equitable of Iowa in 1987 and is currently a Vice
President. She was elected to serve as a director of Golden American in August
1996.
Mr. Paul R. Schlaack joined Equitable Investment Services, Inc. in 1984 and is
currently President and Chief Executive Officer. He was elected to serve as a
director of Golden American in August 1996.
Mr. Jerome L. Sychowski joined Equitable of Iowa in 1996 as Senior Vice Presi-
dent and Chief Information Officer. He was elected to serve as a director of
Golden American in December 1996.
Mr. Barnett Chernow joined Golden American in October 1993 as Executive Vice
President. From 1977 through 1993 he held various positions with Reliance In-
surance Companies and was Senior Vice President and Chief Financial Officer of
United Pacific Life Insurance Company from 1984 through 1993.
Mr. Dennis D. Hargens was elected Treasurer of Golden American in December
1996. He joined Equitable Life Insurance Company of Iowa in 1961 and is cur-
rently Treasurer and was elected Treasurer of USG Annuity & Life Company in
1996.
Mr. David L. Jacobson joined Golden American in November 1993 as Senior Vice
President and Assistant Secretary. From April 1974 through November 1993 he
held various positions with United Pacific Life Insurance Company and was Vice
President upon leaving.
Mr. Stephen J. Preston joined Golden American in December 1993 as Senior Vice
President, Chief Actuary and Controller. From September 1993 through November
1993 he was Senior Vice President and Actuary for Mutual of America Insurance
Company. From July 1987 through August 1993 he held various positions with
United Pacific Life Insurance Company and was Vice President and Actuary upon
leaving.
Mr. Myles R. Tashman joined Golden American in August 1994 as Senior Vice
President and was named Executive Vice President, General Counsel and Secre-
tary effective January 1, 1996. From 1986 through 1993 he was Senior Vice
President and General Counsel of United Pacific Life Insurance Company.
Mr. David A. Terwilliger was elected Vice President, Controller, Assistant
Secretary and Assistant Treasurer of Golden American in December 1996. He
joined Equitable Life Insurance Company of Iowa in 1979 and presently serves
as Vice President and Controller of Equitable of Iowa and several of its af-
filiates.
Mr. Edward C. Wilson joined Golden American in December, 1995 as Executive
Vice President. From August, 1994 to December, 1995 he was Senior Managing Di-
rector at Van Eck Global Investors. From July, 1990 to August, 1994 he was
Vice President and National Sales Manager at Keyport Life Insurance Company.
45
<PAGE>
MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY (CONTINUED)
COMPENSATION TABLES AND OTHER INFORMATION
The following sets forth information with respect to the Chief Executive Offi-
cer of Golden American as well as the annual salary and bonus for the next
five highly compensated executive officers for the fiscal year ended December
31, 1995. Certain executive officers of Golden American are also officers of
Directed Services, Inc. ("DSI"). The salaries of such individuals are allo-
cated between Golden American and DSI. With the exception of Mr. Kendall, ex-
ecutive officers of Golden American are also officers of EIC Variable and DSI.
The salaries of such individuals are allocated between Golden American, EIC
Variable and DSI pursuant to an arrangement among these companies. Throughout
1995 and until August 13, 1996, Mr. Kendall served as a Managing Director at
Bankers Trust New York Corporation. Compensation amounts for Mr. Kendall which
are reflected throughout these tables were not charged to Golden American, but
were instead absorbed by Bankers Trust New York Corporation.
EXECUTIVE COMPENSATION TABLE
The following table sets forth information with respect to the annual salary
and bonus for Golden American's Chief Executive Officer and the next five most
highly compensated executive officers for the fiscal year ended December 31,
1995. (Information for 1996 is not yet available.)
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- ------------------------
RESTRICTED SECURITIES
NAME AND STOCK AWARDS UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (/1/) OPTIONS (/2/) OPTIONS COMPENSATION
- ------------------ ---- -------- ----------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Terry Lee Kendall,...... 1994 $250,000 $200,000 $103,551 8,000
Chairman, President and 1995 $250,000 $400,000 8,000 $ 6,706(/4/)
Chief Executive
Officer(/3/) (September
1993 to Present)
Barnett Chernow,........ 1994 $185,000 $ 35,000 $98,212(/5/)
Executive Vice 1995 $190,000 $165,000 $15,444(/4/)(/5/)
President
Mitchell R. Katcher,.... 1994 $175,000 $ 62,500 $ 9,389(/4/)
Executive Vice 1995 $175,000 $150,000
President
Robert Benjamin Lan- 1994 $150,000 $289,000 $18,750(/4/)
gel,...................
Former Executive Vice 1995 $150,000 $ 90,200 $ 9,000(/4/)
President
Myles R. Tashman,....... 1994 $ 66,667
Executive Vice 1995 $160,000 $ 25,000
President, General
Counsel and Secretary
Stephen J. Preston,..... 1994 $131,667 $ 4,721
Senior Vice President 1995 $140,000 $ 50,000
and Chief Actuary and
Controller
</TABLE>
- -------------------
(1) The amount shown relates to bonuses paid in 1995 and 1994. Mr. Chernow's
bonus paid in 1994 represents a signing bonus.
(2) The number of shares underlying the restricted stock award granted in 1994
represented 1,870 shares of Bankers Trust New York Corporation. The value
shown above was computed using the price of common stock of Bankers Trust
New York Corporation at the end of 1994. The number and value of re-
stricted stock holdings of the common stock of Bankers Trust New York Cor-
poration at the end of 1995 are: Mr. Kendall 3,000 shares, value $199,500;
Mr. Chernow 500 shares, value $33,250. For these purposes, the stated val-
ues of restricted stock holdings are the current market values at December
31, 1995 without giving effect to the diminution of values attributable to
the restrictions on such stock. Dividends are paid quarterly on the above
restricted stock.
(3) Mr. Kendall has served as Chairman, President and Chief Executive Officer
of Golden American Life since September of 1993. Mr. Kendall's salary and
bonuses in 1995 were paid directly by Bankers Trust New York Corporation.
(4) Contributions are made by the Company on behalf of the employee to
PartnerShare, the deferred compensation plan sponsored by Bankers Trust
New York Corporation and its affiliates for the benefit of all Bankers
Trust employees, in February of the current year to employees on record as
of December 31 of the previous year, after the employee completes one year
of service with the Company. This contribution may be in the form of de-
ferred compensation and/or a cash payment. In 1995, Mr. Kendall received
$2,956 of deferred compensation and $3,750 of cash payment from the plan.
Mr. Chernow received $1,013 of deferred compensation and $1,267 of cash
payment. Mr. Katcher received $4,139 of deferred compensation and $5,250
of cash payment. Mr. Langel received $9,000 of cash payment. Mr. Tashman
and Mr. Preston were not eligible for contributions to the PartnerShare
Plan in 1995. In 1994, Mr. Langel received $16,495 of deferred compensa-
tion and $2,250 of cash payment from the plan. All other executives listed
above were not eligible for contributions to the PartnerShare Plan in
1994.
(5) Amounts shown for 1994 and 1995 represent relocation expenses paid on be-
half of the employee.
46
<PAGE>
MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY (CONTINUED)
OPTION GRANTS IN LAST FISCAL YEAR (1995)
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
% OF TOTAL RATES OF STOCK
NUMBER OF OPTIONS PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES OPTION TERM (/4/)
OPTIONS IN FISCAL EXERCISE EXPIRATION -----------------
NAME GRANTED (/1/) YEAR PRICE (/2/) DATE (/3/) 5% 10%
- ---- ------------- ---------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Terry Lee Kendall....... 8,000 .302 $62.1875 6/21/2005 $312,900 $792,900
</TABLE>
- -------------------
(1) Stock options granted on June 6, 1995 by Bankers Trust New York Corpora-
tion to the Chief Executive Officer of Golden American Life become exer-
cisable one year after grant.
(2) The exercise price was equal to the fair market value of the Common Stock
on the date of grant. The exercise price may be paid in cash, or by deliv-
ery of already-owned shares subject to certain conditions. Tax withholding
obligations relating to the exercise may be paid in cash or by offset of
the underlying shares, subject to certain conditions.
(3) Incentive Stock Options have a term of ten years. They are subject to ear-
lier termination in certain events related to termination of employment.
(4) Total dollar gains based on indicated rates of appreciation of share price
over a ten-year term. Assumed future share prices for the indicated rates
of appreciation of 5% and 10%, are $101.30 and $161.30, respectively.
OPTION EXERCISES AND FISCAL YEAR END VALUE TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUE (1995)
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
SHARES UNEXERCISED OPTIONS AT OPTIONS AT FISCAL
ACQUIRED FISCAL YEAR END YEAR END (/2/)
ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED ($) (/1/) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- ------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Terry Kendall........... 0 0 8,000 8,000 $ 0 $34,500
</TABLE>
- -------------------
(1) Market value of underlying securities at exercise minus option price.
(2) Market value of underlying securities at year end minus option price. The
value of unexercised in-the-money stock options at December 31, 1995,
shown above, are presented pursuant to SEC rules. The actual amount, if
any, realized upon exercise of stock options will depend upon the market
value of the Common Stock relative to the exercise price per share of Com-
mon Stock of the stock option at the time the stock option is exercised.
There is no assurance that the values of unexercised in-the-market stock
options reflected in the table will be realized.
Directors of Golden American receive no additional compensation for serving as
a director.
OTHER COMPENSATION
On November 29, 1993, Mr. Jerome Golden resigned as President of Golden Amer-
ican. He had served as President from July 1987 through November 29, 1993. In
accordance with the terms of a Separation Agreement between Mr. Golden and
the Company, Mr. Golden was paid $425,000 in 1994 and again in 1995. The
amounts represent a full settlement with no future payments required.
47
<PAGE>
FEDERAL TAX CONSIDERATIONS
INTRODUCTION
The following discussion of the federal income tax treatment of the Contract
is not exhaustive, does not purport to cover all situations, and is not in-
tended as tax advice. The federal income tax treatment of the Contract is un-
clear in certain circumstances, and a qualified tax adviser should always be
consulted with regard to the application of the tax law to individual circum-
stances. This discussion is based on the Internal Revenue Code of 1986, as
amended (the "Code"). Treasury Department regulations, and interpretations ex-
isting on the date of this prospectus. These authorities, however, are subject
to change by Congress, the Treasury Department, and judicial decisions.
This discussion does not address state or local tax consequences associated
with the purchase of the contract. In addition, GOLDEN AMERICAN MAKES NO GUAR-
ANTEE REGARDING ANY TAX TREATMENT -- FEDERAL, STATE OR LOCAL -- OF ANY CON-
TRACT OR OF ANY TRANSACTION INVOLVING A CONTRACT.
TAX STATUS OF GOLDEN AMERICAN
Golden American is taxed as a life insurance company under the Code. Since the
operations of Account B are a part of, and are taxed with, the operations of
Golden American, Account B is not separately taxed as a "regulated investment
company" under the Code. Under existing federal income tax laws, investment
income and capital gains of Account B are not taxed to Golden American to the
extent they are applied to increase reserves under a contract. Since, under
the contracts, investment income and realized capital gains of Account B at-
tributable to contract obligations are automatically applied to increase re-
serves, Golden American does not anticipate that it will incur any federal in-
come tax liability in Account B attributable to contract obligations, and
therefore Golden American does not intend to make provision for any such tax-
es. If Golden American is taxed on investment income or capital gains of Ac-
count B, then Golden American may impose a charge against Account B, as appro-
priate, in order to make provision for such taxes.
TAXATION OF NON-QUALIFIED ANNUITIES
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code, except as described below, any in-
crease in an owner's Accumulation Value is generally not taxable to the owner
until amounts are received from the Contract, either in the form of annuity
payments as contemplated by the Contract, or in some other form of distribu-
tion. However, this rule allowing deferral applies only if (1) the invest-
ments of Account B are "adequately diversified" in accordance with Treasury
Department regulations, (2) Golden American, rather than the owner, is con-
sidered the owner of the assets of Account B for federal income tax purposes,
and (3) the owner is an individual. In addition to the foregoing, if the Con-
tract'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.
Diversification Requirements. The Code and Treasury Department regulations
prescribe the manner in which the investments of a segregated asset ac-
count, such as the Divisions of Account B, are to be "adequately diversi-
fied." If a Division of Account B failed to comply with these diversifica-
tion standards, contracts based on that segregated asset account 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 period of non-diversifica-
tion. Golden American expects that the Divisions of Account B will comply
with the diversification requirements prescribed by the Code and Treasury
Department regulations.
Ownership Treatment. In certain circumstances, variable annuity contract
owners may be considered the owners, for federal income tax purposes, of
the assets of a segregated asset account, such as the Divisions of 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 Internal Revenue Service (the "IRS") has stated
in published rulings that a variable contract owner will be considered the
owner of the assets of a segregated asset account if the owner possesses
incidents of ownership in those assets, such as the ability to exercise in-
vestment control over the assets. In addition, the Treasury Department an-
nounced, in connection with the issuance of regulations concerning invest-
ment 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 in-
surance company, to be treated as the owner of the assets in the
48
<PAGE>
FEDERAL TAX CONSIDERATIONS (CONTINUED)
account." This announcement also stated that guidance would be issued by
way of regulations or rulings on the "extent to which policyholders may di-
rect 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 seg-
regated asset account. For example, the owner of this Contract has the
choice of more investment options to which to allocate purchase payments
and the Accumulation Value, and may be able to transfer among investment
options more frequently, than in such rulings. These differences could re-
sult in the owner being treated as the owner of all or a portion of the as-
sets of Account B. In addition, Golden American does not know what stan-
dards will be set forth in the regulations or rulings which the Treasury
Department has stated it expects to issue. Golden American therefore re-
serves 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. However, there is no assurance that such efforts would be successful.
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 ba-
sis only. Thus, if the IRS or the Treasury Department were to issue regula-
tions 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 regulations or ruling 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 per-
sons" such as a corporation, trust or other similar entity, as opposed to a
natural person, are not treated as annuity contracts for federal tax pur-
poses. 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 ap-
ply with respect to (1) contracts acquired by an estate of a decedent by
reason of the death of the decedent, (2) certain contracts issued in con-
nection with qualified retirement plans, (3) contracts purchased by employ-
ers upon the termination of certain qualified retirement plans, (4) certain
contracts used in connection with structured settlement agreements, and (5)
contracts purchased with a single purchase payment when the annuity start-
ing date (as defined in the tax law) 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.
The remainder of this discussion assumes that the Contract will be treated
as an annuity contract for federal income tax purposes.
TAXATION OF PARTIAL WITHDRAWALS AND SURRENDERS
In the case of a partial withdrawal prior to the annuity commencement date,
amounts received generally are includible in income to the extent the owner's
cash value (determined without regard to any surrender charge, within the
meaning of the tax law) before the surrender exceeds his or her "investment
in the contract." In the case of a surrender of the Contract for the cash
surrender value, amounts received are includible in income to the extent they
exceed the "investment in the contract." For these purposes, the investment
in the Contract at any time equals the total of the premium payments made un-
der the Contract to that time (to the extent such payments were neither de-
ductible when made nor excludable from income as, for example, in the case of
certain contributions to IRAs and other qualified retirement plans) less any
amounts previously received from the Contract which were not includible in
income.
In the case of systematic partial withdrawals, the amount of each withdrawal
will generally be taxed in the same manner as a partial withdrawal made prior
to the annuity commencement date, as described above. However, there is some
uncertainty
49
<PAGE>
FEDERAL TAX CONSIDERATIONS (CONTINUED)
regarding the tax treatment of systematic partial withdrawals, and it is pos-
sible that additional amounts may be includible in income.
The Contract provides a death benefit that in certain circumstances may ex-
ceed the greater of the premium payments and the Accumulation Value. As de-
scribed elsewhere in this prospectus, Golden American imposes certain charges
with respect to 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.
In certain circumstances, surrender charges may be waived because of the own-
er's need for extended medical care or because of the owner's terminal ill-
ness. Distributions made in respect of which surrender charges are waived are
treated as partial withdrawals or surrenders, as the case may be, for income
tax purposes.
TAXATION OF ANNUITY PAYMENTS
Normally, the portion of each annuity payment taxable as ordinary income is
equal to the excess of the payment over the exclusion amount. In the case of
fixed annuity payments, the exclusion amount is the amount determined by mul-
tiplying (1) the fixed annuity payment by (2) the ratio of the "investment in
the contract" (defined above), adjusted for any period certain or refund fea-
ture, allocated to the fixed annuity option to the total expected amount of
fixed annuity payments for the period of the Contract (determined under Trea-
sury Department regulations). In the case of variable annuity payments, the
exclusion amount for each variable annuity payment is a specified dollar
amount equal to the investment in the Contract allocated to the variable an-
nuity option when payments begin divided by the number of variable payments
expected to be made (determined by Treasury Department regulations).
Once the total amount of the investment in the Contract is excluded using
these formulas, annuity payments will be fully taxable. If annuity payments
cease because of the death of the annuitant and before the total amount of
the investment in the Contract is recovered, the unrecovered amount generally
will be allowed as a deduction to the annuitant or beneficiary (depending
upon the circumstances).
If any amount is constructively received, within the meaning of the tax law,
from a contract (which may occur when a death benefit becomes payable), such
amount will be treated as a partial withdrawal or surrender for federal in-
come tax purposes unless it is applied under an annuity option within 60 days
after the time when such amount was constructively received. In any event,
however, payments must comply with applicable Federal tax law distribution
requirements.
TAXATION OF DEATH BENEFIT PROCEEDS
Prior to the annuity commencement date, amounts may be distributed from a
contract because of the death of an owner or, in certain circumstances, the
death of the annuitant. Such death benefit proceeds are includible in income
as follows: (1) if distributed in a lump sum, they are taxed in the same man-
ner as a surrender, as described above, or (2) if distributed under an annu-
ity option, they are taxed in the same manner as annuity payments, as de-
scribed above. After the annuity commencement date, where a guaranteed period
exists under an annuity option and the annuitant dies before the end of that
period, payments made to the beneficiary for the remainder of that period are
includible in income as follows: (1) if received in a lump sum, they are in-
cludible in income to the extent that they exceed the unrecovered investment
in the contract at that time, or (2) if distributed in accordance with the
existing annuity option selected, they are fully excludable from income until
the remaining investment in the contract is deemed to be recovered, and all
annuity payments thereafter are fully includible in income.
ASSIGNMENTS, PLEDGES, AND GRATUITOUS TRANSFERS
Other than in the case of contracts issued as IRAs or in connection with cer-
tain other qualified retirement plans (which generally cannot be assigned or
pledged), any assignment or pledge (or agreement to assign or pledge) of any
portion of the value of the contract is treated for federal income tax pur-
poses as a partial withdrawal of such amount or portion. The investment in
the Contract is increased by the amount includible as income with respect to
such assignment or pledge, though it is not affected by any other aspect of
the assignment or pledge (including its release). If an owner transfers a
contract without adequate consideration to a person other than the owner's
spouse (or to a former spouse incident to divorce), the owner will be taxed
on the difference between the cash surrender value (within the meaning of the
tax law) and the investment in the contract at the time of transfer. In such
case, the transferee's investment in the contract will be increased to re-
flect the increase in the transferor's income.
50
<PAGE>
FEDERAL TAX CONSIDERATIONS (CONTINUED)
SECTION 1035 EXCHANGES
Code section 1035 provides that no gain or loss is recognized when an annuity
contract is received in exchange for a life, endowment, or annuity contract,
provided that no cash or other property is received in the exchange transac-
tion. Special rules and procedures apply in order for an exchange to meet the
requirements of section 1035. Also, there are additional tax considerations
involved when the contracts are issued in connection with qualified retire-
ment plans. Prospective owners of this Contract should consult a tax advisor
before entering into a section 1035 exchange (with respect to non-qualified
annuity contracts) or a trustee-to-trustee transfer or rollover (with respect
to qualified annuity contracts).
PENALTY TAX ON PREMATURE DISTRIBUTIONS
Where a contract has not been issued as an IRA or in connection with another
qualified retirement plan, there generally is a 10% penalty tax on the tax-
able amount of any payment from the contract unless the payment is: (a) re-
ceived on or after the owner reaches age 59 1/2; (b) attributable to the own-
er's becoming disabled (as defined in the tax law); (c) made on or after the
death of the owner or, if the owner is not an individual, on or after the
death of the primary annuitant (as defined in the tax law); (d) made as a se-
ries of substantially equal periodic payments (not less frequently than annu-
ally) for the life (or life expectancy) of the owner or the joint lives (or
joint life expectancies) of the owner and a designated beneficiary (as de-
fined in the tax law), or (e) made under a contract purchased with a single
purchase payment when the annuity starting date (as defined in the tax law)
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 an-
nuity period.
In the case of systematic partial withdrawals, it is unclear whether such
withdrawals will qualify for exception (d) above. (For reporting purposes, we
currently treat such withdrawals as if they do not qualify for this excep-
tion). In addition, if withdrawals are of interest amounts only, as is the
case with systematic partial withdrawals from a Fixed Allocation, exception
(d) will not apply.
AGGREGATION OF CONTRACTS
In certain circumstances, the amount of an annuity payment, withdrawal or
surrender from a contract that is includible in income is determined by com-
bining some or all of the annuity contracts owned by an individual not issued
in connection with qualified retirement plans. For example, if a person pur-
chases two or more deferred annuity contracts from the same insurance company
(or its affiliates) during any calendar year, all such contracts will be
treated as one contract for purposes of determining whether any payment not
received as an annuity (including withdrawals and surrenders prior to the an-
nuity commencement date) is includible in income. In addition, if a person
purchases a Contract offered by this prospectus and also purchases at approx-
imately the same time an immediate annuity, the IRS may treat the two con-
tracts as one contract. The effects of such aggregation are not clear, howev-
er, it could affect the time when income is taxable and the amount which
might be subject to the 10% penalty tax described above.
IRA CONTRACTS AND OTHER QUALIFIED RETIREMENT PLANS
IN GENERAL
In addition to issuing the Contracts as non-qualified annuities, Golden Amer-
ican also currently issues the Contracts as IRAs. (As indicated above, in
this prospectus, IRAs are referred to as "qualified plans.") Golden American
may also issue the Contracts in connection with certain other types of quali-
fied retirement plans which receive favorable treatment under the Code. Nu-
merous special tax rules apply to the owners under IRAs and other qualified
retirement plans and to the contracts used in connection with such plans.
These tax rules vary according to the type of plan and the terms and condi-
tions of the plan itself. For example, for both surrenders and annuity pay-
ments under certain contracts issued in connection with qualified retirement
plans, there may be no "investment in the contract" and the total amount re-
ceived may be taxable. Also, special rules apply to the time at which distri-
butions must commence and the form in which the distributions must be paid.
Therefore, no attempt is made to provide more than general information about
the use of contracts with the various types of qualified retirement plans. A
qualified tax advisor should be consulted before purchase of a Contract in
connection with a qualified retirement plan.
When issued in connection with a qualified retirement plan, a Contract will
be amended as necessary to conform to the requirements of the plan. However,
owners, annuitants, and beneficiaries are cautioned that the rights of any
person to any benefits under qualified retirement plans may be subject to the
terms and conditions of the plans themselves, regardless of the terms
51
<PAGE>
FEDERAL TAX CONSIDERATIONS (CONTINUED)
and conditions of the Contract. In addition, Golden American is not bound by
terms and conditions of qualified retirement plans to the extent such terms
and conditions contradict the Contract, unless Golden American consents.
INDIVIDUAL RETIREMENT ANNUITIES
As indicated above, Golden American currently issues the Contract as an IRA.
If the Contract is used for this purpose, the owner must be the annuitant.
Premium Payments. Both the premium payments that may be paid, and the tax
deduction that the owner may claim for such premium payments, are limited
under an IRA. In general, the premium payments that may be made for an IRA
for any year are limited to the lesser of $2,000 or 100% of the owner's
earned income for the year. Also, in the case of an individual who has a
noncompensated spouse, premium payments may be made into an IRA for the
benefit of the spouse. In such a case, however, the premium payments that
may be made for the spouse's IRA for any year are limited to the lesser of
$2,000 or the excess of (1) $2,250 (or, if less, 100% of the individual's
earned income) over (2) the individual's premium payments for his or her
own IRA. An excise tax is imposed on IRA contributions that exceed the
law's limits.
The deductible amount of the premium payments made for an IRA for any tax-
able year (including a contract for a noncompensated spouse) is limited to
the amount of premium payments that may be paid for the contract for that
year, or a lesser amount where the individual or his or her spouse is an
active participant in certain qualified retirement plans. For a single per-
son who is an active participant in a qualified retirement plan (including
a qualified pension, profit-sharing, or annuity plan, a simplified employee
pension plan, or a "section 403(b)" annuity plan, as discussed below) and
who has adjusted gross income in excess of $35,000 may not deduct premium
payments, and such a person with adjusted gross income between $25,000 and
$35,000 may deduct only a portion of such payments. Also, married persons
who file a joint return, one of whom is an active participant in a quali-
fied retirement plan, and who have adjusted gross income in excess of
$50,000 may not deduct premium payments, and those with adjusted gross in-
come between $40,000 and $50,000 may deduct only a portion of such pay-
ments. Married persons filing separately may not deduct premium payments if
either the taxpayer or the taxpayer's spouse is an active participant in a
qualified retirement plan.
In applying these and other rules applicable to an IRA, all individual re-
tirement accounts and IRAs owned by an individual are treated as one con-
tract, and all amounts distributed during any taxable year are treated as
one distribution.
Tax Deferral During Accumulation Period. Until distributions are made from
an IRA, increases in the Accumulation Value of the contract are not taxed.
IRAs and individual retirement accounts (that may invest in this contract)
generally may not invest in life insurance contracts, but an annuity con-
tract that is issued as an IRA (or that is purchased by an individual re-
tirement account) may provide a death benefit that equals the greater of
the premiums paid and the contract's cash value. The Contract provides a
death benefit that in certain circumstances may exceed the greater of the
premium payments and the Accumulation Value. The IRS has approved the use
of the Contract, as to form, as an IRA.
Taxation of Distributions and Rollovers. If all premium payments made to an
IRA were deductible, all amounts distributed from the Contract are included
in the recipient's income when distributed. However, if nondeductible pre-
mium payments were made to an IRA (within the limits allowed by the tax
laws), a portion of each distribution from the Contract typically is in-
cludible in income when it is distributed. In such a case, any amount dis-
tributed as an annuity payment or in a lump sum upon death or surrender is
taxed as described above in connection with such a distribution from a non-
qualified contract, treating as the investment in the contract the sum of
the nondeductible premium payments at the end of the taxable year in which
the distribution commences or is made (less any amounts previously distrib-
uted that were excluded from income). Also, in such a case, any amount dis-
tributed upon a partial withdrawal 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 Accumulation Value.
In any event, subject to the direct rollover and mandatory withholding re-
quirements (discussed below), amounts may be "rolled over"
52
<PAGE>
FEDERAL TAX CONSIDERATIONS (CONTINUED)
from certain qualified retirement plans to an IRA (or from one IRA or indi-
vidual retirement account to an IRA) without incurring current income tax
if certain conditions are met. Only certain types of distributions to eli-
gible individuals from qualified retirement plans, individual retirement
accounts, and IRAs may be rolled over.
Penalty Taxes. Subject to certain exceptions, a penalty tax is imposed on
distributions from an IRA equal to 10% of the amount of the distribution
includible in income. (Amounts rolled over from an IRA generally are ex-
cludable from income.) The exceptions provide, however, that this penalty
tax does not apply to distributions made to the owner (1) on or after age
59 1/2, (2) on or after death or because of disability (as defined in the
tax law), or (3) as part of a series of substantially equal periodic pay-
ments over the life (or life expectancy) of the owner or the joint lives
(or joint life expectancies) of the owner and his or her beneficiary (as
defined in the tax law). In addition to the foregoing, failure to comply
with a minimum distribution requirement will result in the imposition of a
penalty tax of 50% of the amount by which a minimum required distribution
exceeds the actual distribution from an IRA. Under this requirement, dis-
tributions of minimum amounts from an IRA as specified in the tax law must
generally commence by April 1 of the calendar year following the calendar
year in which the owner attains age 70 1/2.
OTHER TYPES OF QUALIFIED RETIREMENT PLANS
The following sections describe tax considerations of contracts used in con-
nection with various types of qualified retirement plans other than IRAs.
Golden American does not currently offer all of the types of qualified re-
tirement plans described and may not offer them in the future. Prospective
purchasers of contracts for use in connection with such qualified retirement
plans should therefore contact Golden American's Customer Service Center to
ascertain the availability of the Contract for qualified retirement plans at
any given time.
Simple Incentive Match Plans for Employees of Small Employers (Simple).
Section 408(p) of the Code allows employers to establish Simple retirement
account plans for its employees. The Code permits establishment of a plan
under which employees may make contributions pursuant to salary reduction
agreements, subject to limits as to amount. These plans may be adopted by
employers with no more than 100 employees, if the employer has no other
pension plan. Contributions to the plan by the employer on behalf of the
employees match a percentage of the employees' contributions, subject to
certain prescribed limits. Accounts established for the employees are IRAs
with certain added restrictions on premature distributions and contribu-
tions. Employers intending to use the contract in connection with such
plans should seek competent advice.
Simplified Employee Pensions (SEP-IRAs). Section 408(k) of the Code allows
employers to establish simplified employee pension plans for their employ-
ees, using the employees' IRAs for such purposes, if certain criteria are
met. Under these plans the employer may, within specified limits, make de-
ductible contributions on behalf of the employees to IRAs. Employers in-
tending to use the contract in connection with such plans should seek com-
petent advice.
Corporate and Self-Employed ("H.R. 10" or "Keogh") Pension and Profit-Shar-
ing Plans. Sections 401(a) and 403(a) of the Code permit corporate employ-
ers to establish various types of tax-favored retirement plans for employ-
ees. The Self-Employed Individuals' Tax Retirement Act of 1962, as amended,
commonly referred to as "H.R. 10" or "Keogh," permits self-employed indi-
viduals also to establish such tax-favored retirement plans for themselves
and their employees. Such retirement plans may permit the purchase of the
Contract in order to provide benefits under the plans. The contract pro-
vides a death benefit that in certain circumstances may exceed the greater
of the premium payments and the Accumulation Value. It is possible that
such death benefit could be characterized as an incidental death benefit.
There are limitations on the amount of incidental benefits that may be pro-
vided under pension and profit sharing plans. In addition, the provision of
such benefits may result in currently taxable income to participants. Em-
ployers intending to use the contract in connection with such plans should
seek competent advice.
Section 403(b) Annuity Contracts. Section 403(b) of the Code permits public
school employees, employees of certain types of charitable, educational and
scientific organizations exempt from tax under section 501(c)(3) of the
Code, and employees of certain types of State educa-
53
<PAGE>
FEDERAL TAX CONSIDERATIONS (CONTINUED)
tional organizations specified in section 170(b)(l)(A)(ii), to have their
employers purchase annuity contracts for them and, subject to certain limi-
tations, to exclude the amount of premium payments from gross income for
federal income tax purposes. Purchasers of the contracts for use as a "Sec-
tion 403(b) Annuity Contract" should seek competent advice as to eligibili-
ty, limitations on permissible amounts of premium payments and other tax
consequences associated with such contacts. In particular, purchasers and
their advisors should consider that this contract provides a death benefit
that in certain circumstances may exceed the greater of the premium pay-
ments and the Accumulation Value. It is possible that such death benefit
could be characterized as an incidental death benefit. If the death benefit
were so characterized, this could result in currently taxable income to
purchasers. In addition, there are limitations on the amount of incidental
death benefits that may be provided under a Section 403(b) Annuity Con-
tract. Even if the death benefit under the contract were characterized as
an incidental death benefit, it is unlikely to violate those limits unless
the purchaser also purchases a life insurance contract as part of his or
her Section 403(b) Annuity Contract.
Section 403(b) Annuity Contracts contain restrictions on withdrawals of (i)
contributions made pursuant to a salary reduction agreement in years begin-
ning after December 31, 1988, (ii) earnings on those contributions, and
(iii) earnings after 1988 on amounts attributable to salary reduction con-
tributions (and earnings on those contributions) held as of the last year
beginning before January 1, 1989. These amounts can be paid only if
theemployee has reached age 59 1/2, separated from service, died, become
disabled (within the meaning of the tax law), or in the case of hardship.
Amounts permitted to be distributed in the event of hardship are limited to
actual contributions; earnings thereon cannot be distributed on account of
hardship. (These limitations on withdrawals do not apply to the extent
Golden American is directed to transfer some or all of the Accumulation
Value as a tax-free direct transfer to the issue of another Section 403(b)
Annuity Contract or into a section 403(b)(7) custodial account subject to
withdrawal restrictions which are at least as stringent.)
Eligible Deferred Compensation Plans of State and Local Governments and
Tax-Exempt Organizations. Section 457 of the Code permits employees of
state and local governments and tax-exempt organizations to defer a portion
of their compensation without paying current federal income taxes. The em-
ployees must be participants in an eligible deferred compensation plan. To
the extent the contract is used in connection with an eligible plan, the
employer as owner of the contract has the sole right to the proceeds of the
contract, until paid or made available to the participant or other recipi-
ent, subject only to the claims of the employer's general creditors. Gener-
ally, a contract purchased by a state or local government or a tax-exempt
organization will not be treated as an annuity contract for federal income
tax purposes. Those who intend to use the contracts in connection with such
plans should seek competent advice.
SIMPLE SAVINGS PLANS
Contracts funding Simple plans are subject to the same general rules as IRAs,
however, there are several unique differences relating to contribution lim-
its, employers contributions and premature distributions. In addition, be-
cause this is an employer sponsored plan, certain Simple plan requirements
are applicable to the employer and not the individual tax payer.
Plan Requirements. Only employers with no more than 100 eligible employees
may adopt a Simple plan. Eligible employees are those who have had at least
$5,000 of compensation in the preceding year. The employer may not be a
plan sponsor of any other qualified plan.
Employer Contributions. The employer may elect to make non-elective 2% con-
tributions for each employee or may elect a matching contribution from 1 to
3% varying each year, subject to certain restrictions. All employer contri-
butions are immediately fully vested to the employee when made.
Employee Contributions. Employee contributions of up to $6,000 of compensa-
tion may be made by eligible employees. All employee contributions must be
made by a salary reduction arrangement with their employer. Employee con-
tributions may be for any percent of compensation.
Distributions. Distributions from a Simple retirement account by an em-
ployee are subject to the same rules as IRAs and the following additional
rule. Any amount received from a Simple retirement account during the two
year period
54
<PAGE>
FEDERAL TAX CONSIDERATIONS (CONTINUED)
and employee first participated in any qualified salary reduction arrange-
ment is subject to a penalty equal to 25% of the amount of the distribution
in addition to being fully taxable.
DIRECT ROLLOVERS AND FEDERAL INCOME TAX WITHHOLDING FOR "ELIGIBLE ROLLOVER
DISTRIBUTIONS"
In the case of an annuity contract used in connection with a pension, profit-
sharing, or annuity plan qualified under sections 401(a) or 403(a) of the
Code, or that is a Section 403(b) Annuity Contract, any "eligible rollover
distribution" from the contract will be subject to direct rollover and manda-
tory withholding requirements. An eligible rollover distribution generally is
the taxable portion of any distribution from a qualified pension plan under
section 401(a) of the Code, qualified annuity plan under Section 403(a) of
the Code, or Section 403(b) Annuity or custodial account, excluding certain
amounts (such as minimum distributions required under section 401(a)(9) of
the Code and distributions which are part of a "series of substantially equal
periodic payments" made for the life (or life expectancy) of the employee, or
for the joint lives (or joint life expectancies) of the employee and the em-
ployee's designated beneficiary (within the meaning of the tax law), or for a
specified period of 10 years or more).
Under these new requirements, federal income tax equal to 20% of the eligible
rollover distribution will be withheld from the amount of the distribution.
Unlike withholding on certain other amounts distributed from the contract,
discussed below, the taxpayer cannot elect out of withholding with respect to
an eligible rollover distribution. However, this 20% withholding will not ap-
ply to that portion of the eligible rollover distribution which, instead of
receiving, the taxpayer elects to have directly transferred to certain eligi-
ble retirement plans (such as to this contract when issued as an IRA).
If this contract is issued in connection with a pension, profit-sharing, or
annuity plan qualified under sections 401(a) or 403(a) of the Code, or is a
Section 403(b) Annuity Contract, then, prior to receiving an eligible
rollover distribution, the owner will receive a notice (from the plan admin-
istrator or Golden American) explaining generally the direct rollover and
mandatory withholding requirements and how to avoid the 20% withholding by
electing a direct transfer.
FEDERAL INCOME TAX WITHHOLDING
Golden American will withhold and remit to the federal government a part of
the taxable portion of each distribution made under the Contract unless the
distributee notifies Golden American at or before the time of the distribution
that he or she elects not to have any amounts withheld. In certain circum-
stances, Golden American may be required to withhold tax, as explained above.
The withholding rates applicable to the taxable portion of periodic annuity
payments (other than eligible rollover distributions) 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%. Regard-
less of whether you elect to have federal income tax withheld, you are still
liable for payment of federal income tax on the taxable portion of the pay-
ment. As discussed above, the withholding rate applicable to eligible rollover
distributions is 20%.
55
<PAGE>
UNAUDITED FINANCIAL STATEMENTS
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
POST-ACQUISITION PRE-ACQUISITION
------------------ ----------------------------------
FOR THE PERIOD FOR THE PERIOD
AUGUST 14, 1996 JULY 1, 1996 FOR THE THREE
THROUGH THROUGH MONTHS ENDED
SEPTEMBER 30, 1996 AUGUST 13, 1996 SEPTEMBER 30, 1995
------------------ --------------- ------------------
(CURRENT YEAR) (CURRENT YEAR) (PRECEDING YEAR)
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUES:
Annuity and life product fees and policy charges........................ $ 2,397 $ 2,690 $ 4,838
Management fee revenue.................................................. 280 280 740
Net investment income................................................... 1,656 1,381 857
Realized gains (losses) on investments.................................. -- (2) 83
Other income............................................................ 143 16 16
------- ------- -------
4,476 4,365 6,534
BENEFITS AND EXPENSES:
Insurance operation benefits:
Interest credited to account balances.................................. 1,624 1,270 440
Benefit claims incurred in excess of account balances.................. (25) 158 273
Underwriting, acquisition, and insurance expenses:
Commissions............................................................ 2,118 2,696 1,968
General expenses....................................................... 1,517 1,920 3,738
Insurance taxes........................................................ 160 726 140
Policy acquisition costs deferred...................................... (2,625) (3,077) (2,390)
Amortization:
Deferred policy acquisition costs..................................... 176 1,142 763
Present value of in force acquired.................................... 915 297 537
Goodwill.............................................................. 196 -- --
------- ------- -------
4,056 5,132 5,469
------- ------- -------
420 (767) 1,065
Income tax expense (benefit):
Current................................................................ 147 -- --
Deferred............................................................... -- (1,463) --
------- ------- -------
147 (1,463) --
------- ------- -------
Net Income.............................................................. $ 273 $ 696 $ 1,065
======= ======= =======
</TABLE>
See accompanying notes.
56
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
POST-ACQUISITION PRE-ACQUISITION
------------------ ----------------------------------
FOR THE PERIOD FOR THE PERIOD
AUGUST 14, 1996 JANUARY 1, 1996 FOR THE NINE
THROUGH THROUGH MONTHS ENDED
SEPTEMBER 30, 1996 AUGUST 13, 1996 SEPTEMBER 30, 1995
------------------ --------------- ------------------
(CURRENT YEAR) (CURRENT YEAR) (PRECEDING YEAR)
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUES:
Annuity and life product fees and policy charges........................ $2,397 $12,259 $13,922
Management fee revenue.................................................. 280 1,390 740
Net investment income................................................... 1,656 4,990 1,978
Realized gains (losses) on investments.................................. -- (420) 71
Other income............................................................ 143 70 44
------ ------- -------
4,476 18,289 16,755
BENEFITS AND EXPENSES:
Insurance operation benefits:
Interest credited to account balances.................................. 1,624 4,355 842
Benefit claims incurred in excess of account balances.................. (25) 915 1,460
Underwriting, acquisition, and insurance expenses:
Commissions............................................................ 2,118 16,549 5,344
General expenses....................................................... 1,517 9,422 10,058
Insurance taxes........................................................ 160 1,225 652
Policy acquisition costs deferred...................................... (2,625) (19,300) (7,101)
Amortization:
Deferred policy acquisition costs..................................... 176 2,436 2,121
Present value of in force acquired.................................... 915 951 1,203
Goodwill.............................................................. 196 -- --
------ ------- -------
4,056 16,553 14,579
------ ------- -------
420 1,736 2,176
Income tax expense (benefit):
Current................................................................ 147 -- --
Deferred............................................................... -- (1,463) --
------ ------- -------
147 (1,463) --
------ ------- -------
Net Income.............................................................. $ 273 $ 3,199 $ 2,176
====== ======= =======
</TABLE>
See accompanying notes.
57
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
POST-ACQUISITION PRE-ACQUISITION
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS:
Investments:
Fixed maturities, available for sale, at market
(cost: 1996 -- $175,339; 1995 -- $48,671)............................................... $ 175,199 $ 49,629
Equity securities, at market (cost: 1996 -- $31;
1995 -- $27)............................................................................ 27 29
Policy loans............................................................................. 4,159 2,021
Short-term investments................................................................... 27,887 15,614
---------- ----------
Total Investments....................................................................... 207,272 67,293
Cash and cash equivalents................................................................ 9,529 5,046
Accrued investment income................................................................ 3,699 768
Deferred policy acquisition costs........................................................ 2,449 67,314
Intangible assets........................................................................ 39,011 --
Present value of in force acquired....................................................... 84,881 6,057
Other assets............................................................................. 2,528 7,626
Separate account assets.................................................................. 1,151,614 1,048,953
---------- ----------
Total Assets............................................................................ $1,500,983 $1,203,057
========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY:
Policy liabilities and accruals:
Annuity and insurance reserves........................................................... $ 194,239 $ 33,673
Unearned revenue reserve................................................................. 749 6,556
Current income taxes...................................................................... 147 --
Due to affiliates......................................................................... 2,766 675
Accrued expenses and other liabilities.................................................... 11,467 15,075
Separate account liabilities.............................................................. 1,151,614 1,048,953
---------- ----------
Total Liabilities....................................................................... 1,360,982 1,104,932
Commitments and contingent liabilities
SHAREHOLDER'S EQUITY:
Common stock............................................................................. 2,500 2,500
Preferred stock.......................................................................... -- 50,000
Additional paid-in capital............................................................... 137,372 45,030
Unrealized appreciation (depreciation) of fixed maturities............................... (140) 656
Unrealized appreciation (depreciation) of equity securities.............................. (4) 2
Retained earnings (deficit).............................................................. 273 (63)
---------- ----------
Total Shareholder's Equity.............................................................. 140,001 98,125
---------- ----------
Total Liabilities and Shareholder's Equity.............................................. $1,500,983 $1,203,057
========== ==========
</TABLE>
See accompanying notes.
58
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
POST-ACQUISITION PRE-ACQUISITION
------------------ ----------------------------------
FOR THE PERIOD FOR THE PERIOD
AUGUST 14, 1996 JANUARY 1, 1996 FOR THE NINE
THROUGH THROUGH MONTHS ENDED
SEPTEMBER 30, 1996 AUGUST 13, 1996 SEPTEMBER 30, 1995
------------------ --------------- ------------------
(CURRENT YEAR) (CURRENT YEAR) (PRECEDING YEAR)
(IN THOUSANDS)
<S> <C> <C> <C>
Net cash provided by (used in) operating activities..................... $ (3,813) $ (4,750) $ 3,451
INVESTING ACTIVITIES
Sale, maturity or repayment of investments:
Fixed maturities -- available for sale................................. 391 55,511 13,078
Short-term investments -- net.......................................... -- 364 --
-------- --------- --------
391 55,875 13,078
Acquisition of investments:
Fixed maturities -- available for sale................................. -- (184,589) (41,648)
Policy loans -- net.................................................... (161) (1,977) (847)
Short-term investments -- net.......................................... (12,626) -- (4,548)
-------- --------- --------
(12,787) (186,566) (47,043)
Purchase of property and equipment...................................... (15) -- --
-------- --------- --------
Net cash used in investing activities................................... (12,411) (130,691) (33,965)
FINANCING ACTIVITIES
Investment contract deposits............................................ 18,938 149,750 29,937
Investment contract withdrawals......................................... (840) (10,981) (1,043)
Contributions of capital by parent...................................... -- -- 3,443
Dividends paid on preferred stock....................................... -- (719) (2,557)
-------- --------- --------
Net cash provided by financing activities............................... 18,098 138,050 29,780
-------- --------- --------
Increase (decrease) in cash and cash equivalents........................ 1,874 2,609 (734)
Cash and cash equivalents at beginning of period........................ 7,655 5,046 3,316
-------- --------- --------
Cash and cash equivalents at end of period.............................. $ 9,529 $ 7,655 $ 2,582
======== ========= ========
</TABLE>
See accompanying notes.
59
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim finan-
cial information and the instructions to Form 10-Q and Article 10 of Regula-
tion S-X. Accordingly, they do not include all of the information and foot-
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. All adjustments were of
a normal recurring nature, unless otherwise noted in Management's Discussion
and Analysis and the Notes to Financial Statements. Operating results for the
periods August 14, 1996 through September 30, 1996, July 1, 1996 through Au-
gust 13, 1996 and January 1, 1996 through August 13, 1996 are not necessarily
indicative of the results that may be expected for periods reported at Decem-
ber 31, 1996. For further information, refer to the financial statements and
footnotes thereto included in the Golden American Life Insurance Company An-
nual Report on Form 10-K for the year ended December 31, 1995.
On August 13, 1996, Equitable of Iowa Companies ("Equitable") acquired all
of the outstanding capital stock of BT Variable, Inc. (Golden American Life
Insurance Company's parent) from Whitewood Properties Corporation ("White-
wood") pursuant to the terms of a Stock Purchase Agreement dated as of May 3,
1996 between Equitable and Whitewood (the "Purchase Agreement"). Refer to Note
6 for additional information.
For financial statement purposes, the change in control of Golden American
Life Insurance Company ("Golden American") through the acquisition to BT Vari-
able, Inc. ("BT Variable") was accounted for as a purchase acquisition effec-
tive August 14, 1996. The effects of the acquisition have resulted in a new
basis of accounting reflecting estimated fair values for assets and liabili-
ties at that date. As a result, Golden American's financial statements for pe-
riods subsequent to August 13, 1996, are presented on the Post-Acquisition new
basis of accounting, while the financial statements for August 13, 1996 and
prior periods are presented on the Pre-Acquisition historical cost basis of
accounting.
For purposes of the condensed statements of cash flows, the company consid-
ers all demand deposits and interest bearing accounts not related to the in-
vestment function to be cash equivalents. All interest-bearing accounts clas-
sified as cash equivalents have original maturities of three months or less.
Certain amounts in the 1995 financial statements have been reclassified to
conform to the 1996 financial statement presentation.
60
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 2--INVESTMENTS
At September 30, 1996 and December 31, 1995, amortized cost, gross
unrealized gains and losses and estimated market values of fixed maturity se-
curities designated as available for sale are as follows:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE POST-ACQUISITION
- ------------------ ------------------------------------------------------------
AMORTIZED GROSS UNREALIZED GROSS UNREALIZED ESTIMATED MARKET
SEPTEMBER 30, 1996 COST GAINS LOSSES VALUE
- ------------------ --------- ---------------- ---------------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. government and
governmental agencies
and authorities:
Mortgage-backed
securities............ $ 2,855 $ 3 $ 2,858
Other.................. 2,680 -- $ (4) 2,676
Public utilities........ 39,536 78 (80) 39,534
Investment grade
corporate.............. 127,628 183 (322) 127,489
Mortgage-backed
securities............. 2,640 3 (1) 2,642
-------- ---- ----- --------
Total available for
sale................... $175,339 $267 $(407) $175,199
======== ==== ===== ========
</TABLE>
<TABLE>
<CAPTION>
PRE-ACQUISITION
------------------------------------------------------------
AMORTIZED GROSS UNREALIZED GROSS UNREALIZED ESTIMATED MARKET
DECEMBER 31, 1995 COST GAINS LOSSES VALUE
- ----------------- --------- ---------------- ---------------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. government and
governmental agencies
and authorities--
Other.................. $13,334 $176 $13,510
Public utilities........ 5,276 26 5,302
Investment grade
corporate.............. 27,042 700 $(31) 27,711
Mortgage-backed
securities............. 3,019 87 -- 3,106
------- ---- ---- -------
Total available for
sale................... $48,671 $989 $(31) $49,629
======= ==== ==== =======
</TABLE>
No fixed maturity securities were designated as held for investment at Sep-
tember 30, 1996 or December 31, 1995. Short-term investments with maturities
of 30 days or less have been excluded from the above schedules. Amortized cost
approximates market value for these securities.
Amortized cost and estimated market value of debt securities at September
30, 1996, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
ESTIMATED MARKET
AVAILABLE FOR SALE AMORTIZED COST VALUE
------------------ -------------- ----------------
(IN THOUSANDS)
<S> <C> <C>
Due within one year......................... $ 15,033 $ 15,046
Due after one year through five years....... 129,852 129,787
Due after five years through ten years...... 22,109 21,990
Due after ten years......................... 2,850 2,876
-------- --------
169,844 169,699
Mortgage-backed securities.................. 5,495 5,500
-------- --------
Total available for sale.................... $175,339 $175,199
======== ========
</TABLE>
NOTE 3--RELATED PARTY TRANSACTIONS
In the fourth quarter of 1995, the service agreement between Directed Serv-
ices, Inc. ("DSI") and Golden American was amended to provide for a management
fee from DSI to Golden Ameri-
61
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
can for certain managerial and supervisory services provided by Golden Ameri-
can. This fee, calculated as a percentage of average assets in the variable
separate accounts was $560,000 in the third quarter of 1996 and $1,670,000 in
the first nine months of 1996.
NOTE 4--SHAREHOLDER'S EQUITY
On September 23, 1996, EIC Variable, Inc. (formally known as BT Variable,
Inc.) contributed $50,000,000 of Preferred Stock to the company's additional
paid-in capital.
NOTE 5--COMMITMENTS AND CONTINGENCIES
In a transaction that closed on September 30, 1992, Bankers Trust Company
("Bankers Trust") acquired from Mutual Benefit Life Insurance Company in Reha-
bilitation ("Mutual Benefit"), in accordance with the terms of an Exchange
Agreement, all of the issued and outstanding capital stock of Golden American
and DSI and certain related assets for consideration with an aggregate value
of $13,200,000 and contributed them to BT Variable. The transaction involved
settlement of pre-existing claims of Bankers Trust against Mutual Benefit. The
ultimate value of these claims has not yet been determined by the Superior
Court of New Jersey and, prior to August 13, 1996, was contingently supported
by a $5,000,000 note payable from Golden American and a $6,000,000 letter of
credit from Bankers Trust. Bankers Trust had estimated that the contingent li-
ability due from Golden American amounted to $439,000 at August 13, 1996 and
December 31, 1995. At August 13, 1996 the balance of the escrow account estab-
lished to fund the contingent liability was $4,293,000 ($4,150,000 at December
31, 1995).
On August 13, 1996, Bankers Trust made a cash payment to Golden American in
an amount equal to the balance of the escrow account less the $439,000 contin-
gent liability discussed above. In exchange, Golden American irrevocably as-
signed to Bankers Trust all of Golden American's rights to receive any amounts
to be disbursed from the escrow account in accordance with the terms of the
Exchange Agreement. Bankers Trust also irrevocably agreed to make all payments
becoming due under the Golden American note and to indemnify Golden American
for any liability arising from the note.
In the ordinary course of business, the company is engaged in litigation,
none of which management believes is material.
NOTE 6--ACQUISITION
On August 13, 1996, Equitable acquired all of the outstanding capital stock
of BT Variable from Whitewood, a wholly-owned subsidiary of Bankers Trust,
pursuant to the terms of the Purchase Agreement dated as of May 3, 1996 be-
tween Equitable and Whitewood. As noted above, BT Variable, in turn, owned all
the outstanding capital stock of Golden American and all of the outstanding
capital stock of DSI. In exchange for the outstanding capital stock of BT
Variable, Equitable paid the sum of $93,000,000 in cash to Whitewood in accor-
dance with the terms of the Purchase Agreement. Equitable also paid the sum of
$51,000,000 in cash to Bankers Trust to retire certain debt owed by BT Vari-
able to Bankers Trust pursuant to a revolving credit arrangement. On August
14, 1996, BT Variable, Inc. was formally renamed EIC Variable, Inc.
The purchase price was allocated to the three companies purchased--BT Vari-
able, DSI and Golden American. Goodwill was established for the excess cost
over net assets acquired plus $965,000 of estimated acquisition costs and
pushed down to Golden American. The allocation of the purchase price is pre-
liminary with respect to the final settlement of taxes with Bankers Trust and
estimated acquisition costs and, as a result, goodwill may change. The alloca-
tion of the purchase price to Golden American was approximately $139,872,000.
The amount of goodwill relating to the acquisition was $39,207,000 at August
13, 1996, and is being amortized over 25 years on a straight line basis.
62
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The following unaudited pro forma information is presented as if the acqui-
sition had occurred on January 1, 1995. The information is combined to reflect
the purchase accounting in the pre-acquisition periods of January 1, 1996
through August 13, 1996 and for the nine months ended September 30, 1995. This
information is intended for informational purposes only and may not be indica-
tive of the company's future results of operations.
<TABLE>
<CAPTION>
9 MONTHS ENDED 9 MONTHS ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------ ------------------
(IN THOUSANDS)
<S> <C> <C>
Revenues............................... $23,878 $18,446
Net income............................. 854 684
</TABLE>
The primary pro forma effects are revised amortization of deferred policy
acquisition costs, present value of in force acquired, unearned revenue, good-
will and the elimination of deferred tax benefits.
A portion of the acquisition cost was allocated to the right to receive fu-
ture cash flows from the insurance contracts existing with Golden American at
the date of acquisition. This allocated cost represents the present value of
in force acquired ("PVIF") which reflects the estimated fair value of those
purchased policies. The expected future cash flows used to determine the fair
value are based on actuarially determined projected net cash flows from the
acquired insurance contracts.
An analysis of the PVIF asset is as follows:
<TABLE>
<CAPTION>
POST-ACQUISITION PRE-ACQUISITION
------------------ ---------------
FOR THE PERIOD FOR THE PERIOD
AUGUST 14, 1996 JANUARY 1, 1996
THROUGH THROUGH
SEPTEMBER 30, 1996 AUGUST 13, 1996
------------------ ---------------
(IN THOUSANDS)
<S> <C> <C>
Beginning balance........................................................................ $85,796 $ 6,057
Imputed interest......................................................................... 822 273
Amortization............................................................................. (1,737) (1,229)
Adjustment for unrealized gains on available for sale securities......................... -- 16
------- -------
Ending balance........................................................................... $84,881 $ 5,117
======= =======
</TABLE>
Interest is imputed on the unamortized balance of PVIF at rates of 7.70% to
7.80%. PVIF is charged to expense and adjusted for the unrealized gains (loss-
es) on available for sale securities. Based on current conditions and assump-
tions as to the effect of future events on acquired policies in force, the ex-
pected approximate amortization for the fourth quarter of 1996 and the next
five years, relating to the balance of the PVIF as of September 30, 1996, is
as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- --------------
(IN THOUSANDS)
<S> <C>
4th quarter 1996............................................. $ 1,830
1997....................................................... 9,664
1998....................................................... 10,109
1999....................................................... 9,243
2000....................................................... 7,919
2001....................................................... 6,798
</TABLE>
63
<PAGE>
AUDITED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholder
Golden American Life Insurance Company
We have audited the accompanying balance sheets of Golden American Life In-
surance Company (the "Company") as of December 31, 1995 and 1994 and the re-
lated statements of operations, changes in stockholder's equity, and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of mate-
rial misstatement. An audit includes examining, on a test basis, evidence sup-
porting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement pre-
sentation. We believe that our audits provide a reasonable basis for our opin-
ion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Golden American Life In-
surance Company at December 31, 1995 and 1994, and the results of its opera-
tions and its cash flows for each of the three years in the period ended De-
cember 31, 1995, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
February 12, 1996,
except for Note 10, as to
which the date is August 13, 1996
64
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNT)
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1995 1994
---------- ----------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities at market value (amortized cost $48,671
and $ --)............................................... $ 49,629 $ --
Fixed maturities held to maturity, at amortized cost
(market -- $2,659)...................................... -- 2,749
Short-term investments, at cost, which approximates
market.................................................. 15,614 13,933
Equity securities, at market (cost $27 and $17)......... 29 16
Policy loans............................................ 2,021 513
---------- ----------
Total investments...................................... 67,293 17,211
Cash..................................................... (323) 3,316
Accrued investment income................................ 768 92
Due from affiliates and separate accounts................ 1,127 963
Deferred policy acquisition costs........................ 67,314 60,662
Unamortized cost assigned to insurance contracts in
force.................................................... 6,057 7,620
Funds held in escrow pursuant to an Exchange Agreement... 4,150 2,757
Due from reinsurers...................................... 2,062 1,713
Other assets............................................. 287 134
Separate account assets.................................. 1,048,953 950,292
---------- ----------
Total assets........................................... $1,197,688 $1,044,760
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Insurance and annuity reserves (including $1,641 and $17
of unamortized deferred sales load)..................... $ 33,673 $ 1,051
Due to affiliates and separate accounts................. 675 660
Accrued expenses and other liabilities.................. 1,329 1,053
Payable for investment purchases........................ 7,938 --
Unearned revenue........................................ 6,556 1,759
Adjustable principal amount promissory note, 7.50%, due
1997.................................................... 439 439
Separate account liabilities (including $41,566 and
$48,924 of unamortized deferred sales load)............. 1,048,953 950,292
---------- ----------
Total liabilities...................................... 1,099,563 955,254
Commitments and contingencies
STOCKHOLDER'S EQUITY
Common stock, par value $10 per share, authorized,
issued, and outstanding 250,000 shares................... 2,500 2,500
Redeemable preferred stock, par value $5,000 per share,
50,000 shares authorized, 10,000 issued and outstanding.. 50,000 50,000
Additional paid-in capital............................... 45,030 37,086
Net unrealized appreciation/(depreciation) of
securities............................................... 658 (1)
Retained earnings (deficit).............................. (63) (79)
---------- ----------
Total stockholder's equity.............................. 98,125 89,506
---------- ----------
Total liabilities and stockholder's equity............. $1,197,688 $1,044,760
========== ==========
</TABLE>
See accompanying notes.
65
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------
1995 1994 1993
------- -------- --------
<S> <C> <C> <C>
REVENUES
Variable life and annuity product fees and policy
charges.......................................... $18,388 $ 17,519 $ 10,192
Management fee revenue........................... 987 -- --
Net investment income............................ 2,818 560 216
Realized capital gain (loss)..................... 297 65 35
------- -------- --------
Total revenues................................... 22,490 18,144 10,443
EXPENSES
Policy benefits.................................. 3,146 35 1,747
Commissions and overrides........................ 7,653 16,741 34,260
Salaries, benefits and other employee-related
costs............................................ 6,601 5,866 --
Financing charges and interest................... -- 1,962 726
Other general, administrative, and operating
expenses......................................... 7,268 7,665 9,248
Deferral of policy acquisition costs............. (9,804) (23,119) (37,129)
Amortization of deferred policy acquisition
costs............................................ 2,710 4,608 2,027
Amortization of cost assigned to insurance
contracts in force............................... 1,552 2,164 1,357
------- -------- --------
Total expenses................................... 19,126 15,922 12,236
------- -------- --------
Net income (loss)................................ $ 3,364 $ 2,222 $ (1,793)
======= ======== ========
</TABLE>
See accompanying notes.
66
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS, EXCEPT SHARE AMOUNT)
<TABLE>
<CAPTION>
UNREALIZED
SHARES SHARES ADDITIONAL APPRECIATION RETAINED TOTAL
COMMON PREFERRED COMMON PREFERRED PAID-IN (DEPRECIATION) OF EARNINGS STOCKHOLDER'S
STOCK STOCK STOCK STOCK CAPITAL SECURITIES (DEFICIT) EQUITY
------- --------- ------ --------- ---------- ----------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at January 1,
1993.................... 150,000 $1,500 $13,336 $ 14 $ (508) $14,342
Issuance of common
stock................... 100,000 1,000 1,000
Contribution of
capital................. 15,000 15,000
Net loss................ (1,793) (1,793)
Change in unrealized
appreciation of
securities.............. 48 -- 48
------- ------- ------ ------- ------- ---- ------- -------
Balances at December 31,
1993.................... 250,000 -- 2,500 -- 28,336 62 (2,301) 28,597
Issuance of preferred
stock................... 10,000 $50,000 50,000
Contribution of
capital................. 8,750 8,750
Net income.............. 2,222 2,222
Change in unrealized
depreciation of
securities.............. (63) (63)
------- ------- ------ ------- ------- ---- ------- -------
Balances at December 31,
1994.................... 250,000 10,000 2,500 50,000 37,086 (1) (79) 89,506
Contribution of
capital................. 7,944 7,944
Net income.............. 3,364 3,364
Preferred stock
dividends............... (3,348) (3,348)
Change in unrealized
appreciation of
securities.............. 659 659
------- ------- ------ ------- ------- ---- ------- -------
Balances at December 31,
1995.................... 250,000 10,000 $2,500 $50,000 $45,030 $658 $ (63) $98,125
======= ======= ====== ======= ======= ==== ======= =======
</TABLE>
See accompanying notes.
67
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................................ $ 3,364 $ 2,222 $ (1,793)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Amortization of deferred policy acquisition
costs........................................... 2,710 4,608 2,027
Amortization of costs assigned to insurance
contracts in force.............................. 1,552 2,164 1,357
Change in unearned revenue...................... 4,949 1,594 (1,141)
Increase in accrued investment income........... (676) (24) (1)
Change in due to/from affiliates and separate
accounts........................................ (149) (3,299) 2,976
Changes in other assets, accrued expenses and
other liabilities............................... (226) (1,552) 42
Policy acquisition costs deferred............... (9,804) (23,119) (37,129)
Change in insurance and annuity reserves........ 4,664 (1,370) 550
Net amortization of premium (discount) on fixed
maturity investments and funds held in escrow... (142) 13 --
-------- -------- --------
Net cash provided by (used in) operating
activities....................................... 6,242 (18,763) (33,112)
INVESTING ACTIVITIES
Purchases of fixed maturities.................... (61,723) (857) (543)
Sales of fixed maturities........................ 23,729 319 552
Purchases of common stock........................ (10) (7) (260)
Sales of common stock............................ -- 250 240
(Increase) decrease in policy loans.............. (1,508) (369) 202
Funds held in escrow pursuant to an Exchange
Agreement........................................ (1,242) (1,382) (1,375)
-------- -------- --------
Net cash used in investing activities............ (40,754) (2,046) (1,184)
FINANCING ACTIVITIES
(Retirement) issuances of short-term debt........ -- (40,000) 33,600
Investment contract deposits..................... 29,501 -- --
Investment contract withdrawals.................. (1,543) -- --
Issuance of common stock......................... -- -- 1,000
Issuance of preferred stock...................... -- 50,000 --
Preferred stock dividend paid.................... (3,348) -- --
Contribution of capital by parent................ 7,944 8,750 15,000
-------- -------- --------
Net cash provided by financing activities........ 32,554 18,750 49,600
-------- -------- --------
Net (decrease) increase in cash and short-term
investments...................................... (1,958) (2,059) 15,304
Cash and short-term investments at beginning of
year............................................. 17,249 19,308 4,004
-------- -------- --------
Cash and short-term investments at end of year... $ 15,291 $ 17,249 $ 19,308
======== ======== ========
</TABLE>
See accompanying notes.
68
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. ORGANIZATION
Effective September 30, 1992, Golden American Life Insurance Company
("Golden American") became a wholly-owned subsidiary of BT Variable, Inc.
("BTV"), an indirect wholly-owned subsidiary of Bankers Trust Company ("Bank-
ers Trust"). Previously, Golden American was owned by Mutual Benefit Life In-
surance Company in Rehabilitation ("Mutual Benefit"). Golden American is pri-
marily 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.
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 Di-
rected Services, Inc. ("DSI"), an affiliate of Golden American, and certain
related assets and contributed them to BTV. The portion of the aggregate con-
sideration exchanged by Bankers Trust, allocable to Golden American, was val-
ued at approximately $11,600 thousand, subject to subsequent adjustment pursu-
ant to the Exchange Agreement. This allocation was based primarily on the
estimated value of insurance contracts in force and also included the acquisi-
tion of net tangible assets of $400 thousand. The transaction involved settle-
ment of pre-existing claims of Bankers Trust against Mutual Benefit. The ulti-
mate value of these claims has not yet been determined by the Superior Court
of New Jersey and is contingently supported by a $5,000 thousand note payable
from Golden American and a $6,000 thousand letter of credit from Bankers
Trust. The Golden American note is secured by a pledge of Golden American's
right to receive certain deferred sales loads. Bankers Trust has estimated
that the contingent liability due from Golden American amounted to $439 thou-
sand at December 31, 1995 and 1994. Golden American deposited with an escrow
agent $1,225 thousand and $1,300 thousand in 1995 and 1994, respectively, pur-
suant to certain provisions of the Exchange Agreement.
In addition, concurrent with the closing, Bankers Trust entered into an
agreement with Golden American to cause Golden American, commencing with the
closing and for so long as Bankers Trust continues to own, directly or indi-
rectly, all the issued and outstanding capital stock of Golden American, to
have at all times statutory capital and surplus of no less than the sum of (i)
$5,000 thousand and (ii) an amount equal to 1% of the statutory-basis separate
account liabilities of Golden American. During 1995, 1994, and 1993 BTV con-
tributed additional capital and paid-in surplus of $7,944 thousand, $8,750
thousand, and $16,000 thousand, respectively, to Golden American. In 1994,
Golden American issued $50,000 thousand of preferred stock that was purchased
by BTV for $50,000 thousand in cash.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The preparation of the financial statements in conformity with generally ac-
cepted accounting principles requires management to make estimates and assump-
tions that affect the amounts reported in the financial statements and accom-
panying notes. Actual results could differ from those estimates.
Basis of Presentation
The accompanying financial statements have been presented in accordance with
generally accepted accounting principles ("GAAP"). The acquisition of Golden
American has been accounted for as a purchase by Bankers Trust and, according-
ly, the acquired assets and liabilities were recorded at their estimated fair
values at September 30, 1992. In accordance with requirements of the Securi-
ties and Exchange Commission, this new basis of accounting has been "pushed
down" to Golden American.
Investments
Fixed maturities are considered available for sale and are carried at market
in 1995. Previously fixed maturities were treated as held until maturity and
carried at cost. Short-term investments are carried at cost, which approxi-
mates market. Equity securities, principally investments
69
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
in mutual funds, are carried at market based on quoted market prices. Net
unrealized appreciation of equity securities is included as a component of
stockholder's equity. The cost of investments sold is determined by using the
specific identification method.
Variable Life and Annuity Products
Variable life and annuity products include individual and group flexible
premium variable life insurance policies and annuity products. Golden American
provides for variable accumulation and benefits under the policies and con-
tracts by crediting life and annuity considerations in accordance with
contractholder direction to one or more divisions within various variable sep-
arate accounts or fixed interest divisions. Golden American's fixed interest
divisions include the Guaranteed Interest Division, the Fixed Interest Divi-
sion, and the Market Value Adjusted Fixed Interest separate account.
Separate Accounts
Variable separate accounts assets and liabilities reported in the accompany-
ing balance sheets represent funds that are separately administered princi-
pally for variable life policies and annuity contracts and for which the poli-
cyholders and contractholders rather than Golden American bear the investment
risk. At the direction of the policyowners and contractholders, the separate
accounts invest the premium and annuity considerations from the sale of vari-
able life and annuity products either in shares of specified mutual funds or
directly in other investments. The assets and liabilities of Golden American's
separate accounts are clearly identified and segregated from other assets and
liabilities of Golden American. The portion of the separate account assets ap-
plicable to variable life policies and variable annuity contracts cannot be
charged with liabilities arising out of any other business Golden American may
conduct.
Variable separate account assets carried at fair value of the underlying in-
vestments generally represent policyowner and contractholder investment values
maintained in the accounts. Variable separate account liabilities represent
account balances for the variable life policies and annuity contracts invested
in the separate accounts. Net investment income and realized and unrealized
capital gains and losses related to separate account assets are not reflected
in the accompanying statements of operations of Golden American.
Revenue Recognition
Revenues from variable life and annuity products consists of charges for
mortality and expense risk, cost of insurance, contract administration, and
surrender charges, as applicable to each contract. In addition, most life and
annuity contracts provide for a distribution fee collected for a limited num-
ber of years after each premium deposit, as defined in each applicable con-
tract. For life contracts, the distribution fee is based on the premiums col-
lected, the face amount issued, and the underwriting characteristics of each
insured. For annuity contracts, the distribution fee is based on the amount of
premiums collected and allocated to the variable separate accounts. Revenue
recognition of collected distribution fees is amortized over the life of the
contract in proportion to its expected gross profits. The balance of unrecog-
nized revenue related to the distribution fees is reported as unearned reve-
nue.
Costs Assigned to Insurance Contracts in Force
The costs assigned to insurance contracts in force represents the value of
the right to receive future profits from the life insurance and annuity poli-
cies existing at the date of acquisition from Mutual Benefit. Such value is
the actuarially-determined present value of projected future profits from the
acquired contracts discounted at an interest rate of 15%. Costs assigned to
insurance contracts in force is being amortized over the estimated life of the
applicable insurance contracts in relation to estimated future gross profits.
70
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The following is a reconciliation of the costs assigned to insurance con-
tracts in force for the years ended December 31, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------
1995 1994 1993
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Beginning balance................................. $ 7,620 $ 9,784 $11,140
Interest accrued.................................. 548 696 942
Amortization...................................... (2,100) (2,860) (2,298)
------- ------- -------
Ending Balance.................................... $ 6,068 $ 7,620 $ 9,784
======= ======= =======
</TABLE>
The following table presents the expected amortization of the costs assigned
to insurance contracts in force over the next five years. The amortization may
be adjusted based on periodic evaluation of the expected gross profits.
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996.......................................................... $1,424
1997.......................................................... 1,200
1998.......................................................... 918
1999.......................................................... 559
2000.......................................................... 430
</TABLE>
Deferred Policy Acquisition Costs
Deferred policy acquisition costs consist primarily of commissions, certain
underwriting expenses and the costs of issuing policies that vary with and are
directly related to the production of new and renewal business. Acquisition
costs for variable life and annuity products are being amortized over the
lives of the policies in relation to the present value of estimated future
gross profits. The future gross profit estimates are subject to periodic eval-
uation with necessary revisions applied against amortization to date.
Insurance and Annuity Reserves
Insurance and annuity reserves represent variable life and annuity account
balances invested in the fixed interest divisions, policy loan balances on
variable life policies, and supplementary contract reserves on annuitized pol-
icies. Interest credited rates for the fixed interest divisions ranged from 4%
to 7% during 1995 and 1994.
Policy Benefits
Policy benefits that are charged to expense include benefits incurred in the
period in excess of the related policy account balances and interest credited
to policy account balances invested in the fixed interest divisions.
Reinsurance
Included in the accompanying financial statements are net considerations to
reinsurers of $2,800 thousand and $2,400 thousand and net policy benefits re-
coveries of $3,500 thousand and $1,900 thousand in 1995 and 1994, respective-
ly. Effective September 30, 1992, Golden American terminated all reinsurance
agreements with Mutual Benefit. Subsequently, Golden American entered into
agreements covering substantially all of the mortality risks under both life
policies and annuity contracts with unaffiliated reinsurers. Golden American
remains liable to the extent that its reinsurers do not meet their obligations
under the reinsurance agreements. Reinsurance in-force for life mortality
risks were $24,700 thousand and $23,000 thousand at December 31, 1995 and 1994
and for annuity mortality risks were $83,500 thousand and $149,600 thousand at
December 31, 1995 and 1994, respectively.
71
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Effective June 1, 1994, Golden American entered into a reinsurance agreement
on a modified coinsurance basis with an unaffiliated reinsurer. The accompany-
ing financial statements are presented net of the effects of the treaty which
reduced net income by $109 thousand and $27 thousand in 1995 and 1994, respec-
tively.
Cash Equivalents
The Company considers all short-term investments (including commercial pa-
per, money markets, and certificates of deposit) with a maturity of three
months or less when purchased to be cash equivalents.
3. FAIR VALUE OF FINANCIAL INSTRUMENTS
Golden American has evaluated its financial instruments, principally short-
term investments, policy loans, the adjustable principal amount promissory
note, and insurance and annuity reserves and determined that carrying amounts
reported in the balance sheets approximate fair value.
4. INVESTMENTS
The major categories of investment income for 1995, 1994 and 1993 are summa-
rized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Fixed maturities......................................... $1,610 $142 $114
Short-term investments................................... 899 226 90
Equity securities........................................ -- 1 1
Policy loans............................................. 56 11 11
Cash..................................................... 148 99 --
Funds held in escrow..................................... 166 83 --
------ ---- ----
Gross investment income.................................. 2,879 562 216
Investment expenses...................................... (61) (2) --
------ ---- ----
Net investment income.................................... $2,818 $560 $216
====== ==== ====
</TABLE>
A summary of investments in debt securities, including fixed maturities and
short-term investments, at December 31, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
GROSS
UNREALIZED ESTIMATED
AMORTIZED GAINS MARKET
COST (LOSSES) VALUE
--------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
At December 31, 1995:
U.S. Treasury securities..................... $17,832 $ 92 $17,924
U.S. Government-backed securities............ 2,037 86 2,123
Corporate securities......................... 44,416 780 45,196
------- ---- -------
$64,285 $958 $65,243
======= ==== =======
At December 31, 1994:
U.S. Treasury securities..................... $16,682 $(90) $16,592
======= ==== =======
</TABLE>
72
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
4. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
1995 1994
------------------- -------------------
ESTIMATED ESTIMATED
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
--------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Due in one year or less............ $17,398 $17,408 $14,634 $14,622
Due after one year through five
years.............................. 39,023 39,467 850 827
Due after five years through ten
years.............................. 6,818 7,201 1,198 1,143
Due after ten years through twenty
years.............................. 1,046 1,167 -- --
------- ------- ------- -------
$64,285 $65,243 $16,682 $16,592
======= ======= ======= =======
</TABLE>
At December 31, 1995 and 1994, gross unrealized (depreciation) appreciation
of marketable equity securities recognized directly in stockholder's equity
was $3 thousand and $(1) thousand, respectively.
At December 31, 1995 and 1994, $2,711 thousand and $2,695 thousand, respec-
tively, in principal amount of fixed maturity investments were on deposit with
regulatory authorities pursuant to certain statutory requirements.
5. STOCKHOLDER'S EQUITY
The payment of cash dividends by Golden American is subject to statutory re-
strictions equal to the higher of 10% of surplus as regards policyholders or
100% of the prior year's net gain, not to exceed unassigned surplus. The maxi-
mum dividend payout which may be made without prior approval in 1996 is $6,636
thousand. Golden American is required to maintain a minimum total statutory-
basis capital and surplus of not less than $5,000 thousand under the provi-
sions of the insurance laws of certain states in which it is presently li-
censed to sell variable life and annuity products.
A reconciliation of Golden American's GAAP-basis stockholder's equity as of
December 31, 1995 and 1994 and net loss for the years ended December 31, 1995
and 1994 to its statutory-basis capital and surplus and net loss included in
the accompanying financial statements is as follows:
<TABLE>
<CAPTION>
CAPITAL AND NET INCOME
SURPLUS (LOSS)
------------------ -----------------
1995 1994 1995 1994
-------- -------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
GAAP-basis.......................... $ 98,125 $ 89,506 $ 3,364 $ 2,222
Asset valuation reserve/interest
maintenance reserve................. (506) (42) 28 3
Fixed maturities from acquisition... (2) (76) 74 14
Deferred policy acquisition costs... (67,314) (60,662) (7,094) (18,511)
Cost assigned to insurance contracts
in force............................ (6,057) (7,620) 1,552 2,164
Deferred sales loads, surrender
charges and policy charges.......... 40,150 49,223 (9,073) 7,000
Reserves............................ (1,972) (4,985) 3,013 (5,017)
Unearned revenue.................... 6,556 1,759 4,949 1,594
Other............................... (1,665) (811) (930) (729)
Unrealized appreciation of fixed
maturity investments................ (958) -- -- --
-------- -------- ------- --------
Statutory-basis..................... $ 66,357 $ 66,292 $(4,117) $(11,260)
======== ======== ======= ========
</TABLE>
During 1992, the NAIC approved certain Risk-Based Capital ("RBC") require-
ments for life/health insurance companies. Those requirements were effective
beginning in 1993 and require
73
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
5. STOCKHOLDER'S EQUITY (CONTINUED)
that the amount of capital maintained by an insurance company is to be deter-
mined based on the various risk factors related to it. At December 31, 1995
and 1994, Golden American met the RBC requirements.
On December 30, 1994, Golden American issued 10,000 shares of Redeemable
Preferred Stock. Dividends declared and paid on the Redeemable Preferred Stock
were $3.35 million or $334.79 per share in 1995. As of December 31, 1994, Div-
idends in Arrears on the Redeemable Preferred Stock were $17.9 thousand or
$1.79 per share. The dividends are cumulative and are calculated based on a
rate not to exceed the sum of the Prime Rate and 1.5%. The Redeemable Pre-
ferred Stock is redeemable at the option of Golden American at the redemption
price of $5 thousand per share subject to appropriate regulatory approvals.
6. RELATED PARTY TRANSACTIONS
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 in-
surance products issued by Golden American which as of December 31, 1995, are
sold primarily through two broker/dealer institutions. For the years ended De-
cember 31, 1995, 1994 and 1993, commissions paid by Golden American to DSI ag-
gregated $8,440 thousand, $17,569 thousand, and $34,260 thousand, respective-
ly.
Golden American provided to DSI certain of its personnel to perform manage-
ment, administrative and clerical services and the use of certain facilities.
Golden American charged DSI for such expenses and all other general and admin-
istrative 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 thousand and $2,013 thousand,
respectively, which were comprised of allocated salary charges, premise and
equipment charges, and other expenses.
In 1995, the service agreement between DSI and Golden American was amended
to provide for a management fee from DSI to Golden American. This fee, for
managerial and supervisory services provided by Golden American calculated as
a percentage of average assets in the variable separate accounts, was $987
thousand for 1995.
Prior to 1994, Golden American had entered into agreements with DSI to per-
form services related to the management of its investments and the distribu-
tion of its products. For the year 1993, Golden American incurred $311 thou-
sand for such services. The agreement was terminated as of January 1, 1994.
Prior to 1994, Golden American had arranged with BTV to perform services re-
lated to the development and administration of its products. For the year
1993, fees earned by BTV from Golden American for these services aggregated
$2,701 thousand. The agreement was terminated as of January 1, 1994.
In addition, prior to 1994, BTV provided to Golden American certain of its
personnel to perform management, administrative and clerical services and the
use of certain of its facilities. BTV charged Golden American for such ex-
penses 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 BTV's employees on behalf of Golden American. For the
year 1993, BTV allocated to Golden American $1,503 thousand. The agreement was
terminated on January 1, 1994.
Golden American maintains cash on deposit at Bankers Trust.
7. INCOME TAXES
Golden American is taxed, on a separate company basis, as a life insurance
company pursuant to applicable provisions of the Internal Revenue Code (the
"Code"). At December 31, 1995 and
74
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
7. INCOME TAXES (CONTINUED)
1994, Golden American had net operating loss ("NOL") carryforwards for federal
income tax purposes of approximately $22,600 thousand and $17,400 thousand,
respectively. Approximately $2,400 thousand of these NOL's, relating to opera-
tions prior to ownership by Mutual Benefit, can be used to offset future tax-
able income of Golden American only through the year 2005, subject to annual
limitations. Approximately $800 thousand, $4,100 thousand, $10,100 thousand
and $5,200 thousand are available through the years 2007, 2008, 2009, and
2010, respectively.
Significant components of Golden American's deferred tax liabilities and as-
sets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
---------------
1995 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities:
Deferred policy acquisition costs......................... $23,560 $21,200
Unamortized cost assigned to insurance contracts in
force..................................................... 2,120 2,700
Other..................................................... 598 --
------- -------
26,278 23,900
Deferred tax assets:
Net operating loss carryforwards.......................... 7,891 6,000
Insurance liabilities..................................... 15,520 15,200
Deferred policy acquisition costs proxy tax............... 3,666 3,700
Other..................................................... 57 700
------- -------
27,134 25,600
Valuation allowance for deferred tax assets............... 856 1,700
------- -------
Net deferred tax liabilities............................. $ -- $ --
======= =======
</TABLE>
The following is an analysis of the difference between the U.S. Federal
statutory income tax rate and the effective tax rate on income (loss) before
income taxes:
<TABLE>
<CAPTION>
1995 1994 1993
------ ----- ------
<S> <C> <C> <C>
Federal statutory rate............................... 35% 35% 35%
====== ===== ======
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
Taxes at statutory rate.............................. $1,177 $ 778 $ (627)
Dividends received deduction......................... (350) (368) (194)
Other, net........................................... 17 (210) (379)
Valuation allowance.................................. (844) (200) 1,200
------ ----- ------
Taxes based on income (loss)....................... $ -- $ -- $ --
====== ===== ======
</TABLE>
8. SHORT-TERM DEBT
All short-term debt was repaid as of December 30, 1994. Interest paid during
1994 and 1993 was $1,962 thousand and $726 thousand, respectively. The repay-
ment of amounts borrowed under this loan had been guaranteed by Bankers Trust.
9. PENSION AND PROFIT SHARING PLAN AND OTHER EMPLOYEE BENEFITS
The Company's employees are covered under the Parent's benefit plans. The
noncontributory pension plan and the profit sharing plan of the Parent are
also available to eligible employees of the Company. Total 1995 and 1994 ex-
penses relating to these Parent company benefit plans were $200 thousand and
$200 thousand, respectively.
75
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
10. SUBSEQUENT EVENT
Equitable of Iowa Companies ("Equitable of Iowa") and BTV entered into a de-
finitive agreement on May 3, 1996 providing for the acquisition by Equitable
of Iowa of all interest in BTV and its subsidiaries, Golden American and DSI.
The acquisition was completed on August 13, 1996. Equitable of Iowa is the
holding company for Equitable Life Insurance Company of Iowa, USG Annuity &
Life Company, Locust Street Securities, Inc. and Equitable Investment Servic-
es, Inc.
76
<PAGE>
- -------------------------------------------------------------------------------
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.... 2
Reinsurance............. 2
Distribution of
Contracts............... 2
Performance
Information............. 2
IRA Partial Withdrawal
Option.................. 7
Other Information....... 8
Financial Statements of
Separate Account B...... 8
Financial Statements of
The Managed Global
Account of Separate
Account D............... 8
Appendix -- Description
of Bond Ratings......... A-1
</TABLE>
77
<PAGE>
(This page has been intentionally left blank.)
78
<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. AD-
DRESS THE FORM TO OUR CUSTOMER SERVICE CENTER, THE ADDRESS IS SHOWN ON THE COV-
ER.
...............................................................................
PLEASE SEND ME A FREE COPY OF THE STATEMENT OF ADDITIONAL INFORMATION FOR SEPA-
RATE ACCOUNT B
PLEASE PRINT OR TYPE
_____________________________________
NAME
_____________________________________
SOCIAL SECURITY NUMBER
_____________________________________
STREET ADDRESS
_____________________________________
CITY, STATE, ZIP
(IN 6050 DVA PLUS (2/97)
...............................................................................
79
<PAGE>
APPENDIX A
MARKET VALUE ADJUSTMENT EXAMPLES
EXAMPLE #1: FULL SURRENDER -- EXAMPLE OF A NEGATIVE MARKET VALUE ADJUSTMENT
Assume $100,000 was allocated to a Fixed Allocation with a Guarantee Period
of ten years, a Guaranteed Interest Rate of 7.50%, an initial Index Rate ("I")
of 7.00%; that a full surrender is requested three years into the Guarantee
Period; that the then Index Rate for a seven year Guarantee Period ("J") is
8.0%; and that no prior transfers or partial withdrawals affecting this Fixed
Allocation have been made.
CALCULATE THE MARKET VALUE ADJUSTMENT
1. The Accumulation Value of the Fixed Allocation on the date of surrender
is $124,230 ($100,000 X 1.075/3/)
2. N = 2,555 (365 X 7)
3. Market Value Adjustment = $124,230 X [( 1.07 ) /2,555/365/) ] = $9,700
[(------) ]
[(1.0825) -1]
Therefore, the amount paid to you on full surrender ignoring any surrender
charge is $114,530 ($124,230 - $9,700).
EXAMPLE #2: FULL SURRENDER -- EXAMPLE OF A POSITIVE MARKET VALUE ADJUSTMENT
Assume $100,000 was allocated to a Fixed Allocation with a Guarantee Period
of ten years, a Guaranteed Interest Rate of 7.5%, an initial Index Rate ("I")
of 7.00%; that a full surrender is requested three years into the Guarantee
Period; that the then Index Rate for a seven year Guarantee Period ("J") is
6.0%; and that no prior transfers or partial withdrawals affecting this Fixed
Allocation have been made.
CALCULATE THE MARKET VALUE ADJUSTMENT
1. The Accumulation Value of the Fixed Allocation on the date of surrender
is $124,230 ($100,000 X 1.075)
2. N = 2,555 (365 X 7)
3. Market Value Adjustment = $124,230 X [( 1.07 ) (/2,555/365/) ] = $6,270
[(------) ]
[(1.0625) -1]
Therefore, the amount paid to you on full surrender ignoring any surrender
charge is $130,500 ($124,230 + $6,270).
EXAMPLE #3: PARTIAL WITHDRAWAL -- EXAMPLE OF A NEGATIVE MARKET VALUE
ADJUSTMENT
Assume $200,000 was allocated to a Fixed Allocation with a Guarantee Period
of ten years, a Guaranteed Interest Rate of 7.5%, an initial Index Rate ("I")
of 7.00%; that a partial withdrawal of $114,530 is requested three years into
the Guarantee period; that the then Index Rate ("J") for a seven year Guaran-
tee Period is 8.0%; and that no prior transfers or partial withdrawals affect-
ing this Fixed Allocation have been made.
First calculate the amount that must be withdrawn from the Fixed Allocation
to provide the amount requested.
1. The Accumulation Value of the Fixed Allocation on the date of withdrawal
is $248,459 ($200,000 X 1.075)
2. N = 2,555 (365 X 7)
3. Amount that must be withdrawn = [$114,530/ (1.07 ) /2,555/365/]=$124,230
[ (------) ]
[ (1.0825) ]
Then calculate the Market Value Adjustment on that amount
4. Market Value Adjustment = $124,230 X [( 1.07 ) (/2,555/365/) ] = $9,700
[(------) ]
[(1.0825) -1]
A1
<PAGE>
Therefore, the amount of the partial withdrawal paid to you is $114,530, as
requested. The Fixed Allocation will be reduced by the amount of the partial
withdrawal, $114,530, and also reduced by the Market Value Adjustment of
$9,700, for a total reduction in the Fixed Allocation of $124,230.
EXAMPLE #4: PARTIAL WITHDRAWAL -- EXAMPLE OF A POSITIVE MARKET VALUE
ADJUSTMENT
Assume $200,000 was allocated to a Fixed Allocation with a Guarantee Period
of ten years, a Guaranteed Interest Rate of 7.5%, an initial Index Rate of
7.0%; that a partial withdrawal of $130,500 requested three years into the
Guarantee Period; that the then Index Rate ("J") for a seven year Guarantee
Period is 6.0%; and that no prior transfers or partial withdrawals affecting
this Fixed Allocation have been made.
First calculate the amount that must be withdrawn from the Fixed Allocation
to provide the amount requested.
1. The Accumulation Value of Fixed Allocation on the date of surrender is
$248,459 ($200,000 X 1.075)
2.N = 2,555 (365 X 7)
3. Amount that must be withdrawn = [$130,500/( 1.07 ) /2,555/365/] = $124,230
[ (------) ]
[ (1.0625) ]
Then calculate the Market Value Adjustment on that amount
4. Market Value Adjustment = $124,230 X [( 1.07 ) /2,555/365/ ] = $6,270
[(------) ]
[(1.0625) -1]
Therefore, the amount of the partial withdrawal paid to you is $130,500, as
requested. The Fixed Allocation will be reduced by the amount of the partial
withdrawal, $130,500, but increased by the Market Value Adjustment of $6,270,
for a total reduction in the Fixed Allocation of $124,230.
A2
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Golden American Life Insurance Company is a stock company
domiciled in Wilmington, Delaware
IN 3306 DVA PLUS 2/97
PART B
STATEMENT OF ADDITIONAL INFORMATION
GOLDENSELECT DVA PLUS
DEFERRED COMBINATION VARIABLE
AND FIXED ANNUITY CONTRACT
ISSUED BY
SEPARATE ACCOUNT B
("Account B")
(or the "Account")
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:
FEBRUARY 3, 1997
TABLE OF CONTENTS
ITEM PAGE
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . 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. . . . . . . . . . . . . . . . . . . 7
Other Information. . . . . . . . . . . . . . . . . . . . . . . . . 8
Financial Statements of Separate Account B . . . . . . . . . . . . 8
Financial Statements of The Managed Global Account of Separate
Account D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Appendix - Description of Bond Ratings . . . . . . . . . . . . . . A-1
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 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.
Golden American has formed a subsidiary, First Golden American Life Insurance
Company of New York ("First Golden"), who will write variable life and annuity
business in the state of New York. The initial capitalization of First
Golden was $25 million.
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)
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
were 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 toperform 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, 801 Grand Avenue, Des Moines, Iowa 50309, independent
auditors, will perform annual audits of Golden American and the Account.
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 administrativecosts, first on the basis of direct charges when
identifiable, and the remainderallocated 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 be a maximum level of 6% of
premium, and any applicable premium tax that can range from 0% to 3.5%. As
described in the prospectus, three death benefit options are available. The
following performance values reflect the election at issue of the 7% Solution
Enhanced Death Benefit Option providing values reflecting the highest
aggregate contract charges. If one of the other death benefit options had
been elected, the historical performance values would be higher than those
represented in the examples.
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:
EFFECTIVE YIELD = [(BASE PERIOD RETURN) +1) ^ (365/7)] - 1
The current yield and effective yield of the Liquid Asset Division for the 7-
day period September 23, 1996 to September 30, 1996 were 3.35% and 3.41%,
respectively.
SEC STANDARD 30-DAY YIELD FOR NON-MONEY MARKET DIVISIONS
Quotations of yield for the remaining divisions will be based on all investment
incomeper 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 valueof an accumulation unit on the last day of
the period, according to the following formula:
YIELD = 2 [ ( a - b +1)^(6) - 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:
P(1+T)^(n)=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.
Average Annualized Total Return for the Divisions presented on a standardized
basis for the period ending September 30, 1996 were as follows:
<TABLE>
<CAPTION>
Average Annualized Total Return for Periods Ending 9/30/96 -- Standardized
- ---------------------------------------------------------------------------
One Year Period Five Year Period Inception to
Division Ending 9/30/96 Ending 9/30/96 9/30/96 Inception Date
- -------- --------------- ---------------- ------------ --------------
<S> <C> <C> <C> <C>
Division Ending 9/30/96 Ending 9/30/96 9/30/96 Inception Date
Multiple Allocation -0.93% 5.71%* 6.92%* 1/25/89
Fully Managed 5.10% 6.77%* 6.46%* 1/25/89
Capital Appreciation 8.46% N/A 11.29%* 5/4/92
Rising Dividends 15.04% N/A 12.44% 10/4/93
All-Growth -12.01% 1.92%* 3.45%* 1/25/89
Real Estate 10.80% 12.59%* 7.51%* 1/25/89
Hard Assets 14.59% 10.72%* 7.73%* 1/25/89
Value Equity 1.66% N/A 15.18% 1/1/95
Strategic Equity N/A N/A 4.35%* 10/2/95
Small Cap N/A N/A 17.37% 1/2/96
Emerging Markets -3.34% N/A -2.48% 10/4/93
Managed Global ** 2.08% N/A -1.02%* 10/21/92
Limited Maturity Bond -3.53% 3.29%* 5.09%* 1/25/89
</TABLE>
* Total return calculation reflects partial waiver of fees and expenses.
** From its 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.
The historical performance 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:
[P(1+T)^(n)]=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 the Divisions presented on a non-
standardized basis for the period ending September 30, 1996 were as follows:
<TABLE>
<CAPTION>
Average Annualized Total Return for Periods Ending 9/30/96 -- Non-Standardized
- -------------------------------------------------------------------------------
One Year Period Five Year Period Inception to
Division Ending 9/30/96 Ending 9/30/96 9/30/96 Inception Date
- -------- --------------- ---------------- ------------ --------------
<S> <C> <C> <C> <C>
Multiple Allocation 6.14% 6.23%* 6.96%* 1/25/89
Fully Managed 12.17% 7.27%* 6.51%* 1/25/89
Capital Appreciation 15.53% N/A 11.94%* 5/4/92
Rising Dividends 22.11% N/A 14.05% 10/4/93
All-Growth -4.94% 2.54%* 3.50%* 1/25/89
Real Estate 17.87% 12.99%* 7.56%* 1/25/89
Hard Assets 21.66% 11.15%* 7.78%* 1/25/89
Value Equity 8.73% N/A 18.74% 1/1/95
Strategic Equity N/A N/A 11.40% 10/2/95
Small Cap N/A N/A 19.80% 1/2/96
Emerging Markets 3.73% N/A -0.35% 10/4/93
Managed Global ** 9.15%* N/A 0.33%* 10/21/92
Limited Maturity Bond 3.54% 3.86%* 5.15%* 1/25/89
- --------------------------------------------------------------------------------------------
</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 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
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 F. An
A++ and A+ ratings mean, 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). Note that the examples below are
calculated for a Contract issued with the 7% Solution Enhanced Death Benefit
Option, the death benefit option with the highest mortality and expense risk
charge. The mortality and expense risk charge associated with the Annual
Ratchet Enhanced Death Benefit Option and the Standard Death Benefit are lower
than that used in the examples and would result in higher IIE's or
Accumulation Values.
<TABLE>
<CAPTION>
<S> <C>
1. IIE, beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.00
2. Value of securities, beginning of period. . . . . . . . . . . . . . . . . . $ 10.00
3. Change in value of securities . . . . . . . . . . . . . . . . . . . . . . . $ 0.10
4. Gross investment return (3) divided by (2). . . . . . . . . . . . . . . . . 0.01
5. Less daily mortality and expense charge . . . . . . . . . . . . . . . . . . 0.00003863
6. Less asset based administrative charge. . . . . . . . . . . . . . . . . . . 0.00000411
7. Net investment return (4) minus (5) minus (6) . . . . . . . . . . . . . . . 0.00995726
8. Net investment factor (1.000000) plus (7) . . . . . . . . . . . . . . . . . 1.00995726
9. IIE, end of period (1) multiplied by (8). . . . . . . . . . . . . . . . . . $ 10.09957261
ILLUSTRATION OF PURCHASE OF UNITS (ASSUMING NO STATE PREMIUM TAX)
Example 2.
1. Initial Premium Payment . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000
2. IIE on effective date of purchase (see Example 1) . . . . . . . . . . . . . $ 10.00
3. Number of Units purchased [(1) divided by (2)] . . . . . . . . . . . . . . 100
4. IIE for valuation date following purchase
(see Example 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.09957261
5. Accumulation Value in account for valuation date following
purchase [(3) multiplied by (4)]. . . . . . . . . . . . . . . . . . . . . . $ 1,009.96
</TABLE>
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.
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
Since the Managed Global Account of Separate Account D is the Accounting
predecessor of the Managed Global Divison of Accuout B, 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
The following unaudited financial statements of Separate Account B are included
in Part B hereof:
Statement of Assets and Liabilities - September 30, 1996 (Unaudited).
Statements of Operations - For the period January 1, 1996 or Commencement of
Operations through September 30, 1996 (Unaudited).
Statements of Changes in Net Assets - For the period January 1, 1995 or
Commencement of Operations through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations through September 30, 1996
(Unaudited).
Notes to the Financial Statements - September 30, 1996 (Unaudited).
The following unaudited financial statements of the Golden American Life
Insurance Company are included in Part B hereof:
Condensed Statements of Income - Post-Acquisition for the period August 14,
1996 through September 30, 1996 and Pre-Acquisition for the period July 1,
1996 through August 13, 1996 and for the three months ended September 30,
1995 (Unaudited).
Condensed Statements of Income - Post-Acquisition for the period August 14,
1996 through September 30, 1996 and Pre-Acquisition for the period January 1,
1996 through August 13, 1996 and for the nine months ended September 30, 1995
(Unaudited).
Condensed Balance Sheets - Post-Acquisition as of September 30, 1996 and Pre-
Acquisition as of December 31, 1995 (Unaudited).
Condensed Statements of Cash Flows - Post-Acquisition for the period August
14, 1996 through September 30, 1996 and Pre-Acquisition for the period January
1, 1996 through August 13, 1996 and for the nine months ended September 30,
1995 (Unaudited).
Notes to Condensed Financial Statements - September 30, 1996 (Unaudited).
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 results of their operations and
changes in their 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
(commencedoperations 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 with-
drawal 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 to a 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
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1996 (Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments at net asset value:
The GCG Trust Liquid Asset Series,
37,891,728 shares at $1.00 per share (cost - $37,892) $37,892
The GCG Trust Limited Maturity Bond Series,
5,365,942 shares at $10.68 per share (cost - $56,882) 57,308
The GCG Trust Natural Resources Series,
2,140,619 shares at $18.02 per share (cost - $33,559) 38,574
The GCG Trust All-Growth Series,
6,456,489 shares at $12.95 per share (cost - $83,927) 83,612
The GCG Trust Real Estate Series,
2,768,076 shares at $14.10 per share (cost - $33,126) 39,030
The GCG Trust Fully Managed Series,
8,622,166 shares at $15.07 per share (cost - $111,967) 129,936
The GCG Trust Multiple Allocation Series,
21,952,515 shares at $12.69 per share (cost - $265,731) 278,577
The GCG Trust Capital Appreciation Series,
9,010,717 shares at $15.30 per share (cost - $111,536) 137,864
The GCG Trust Rising Dividends Series,
6,984,930 shares at $15.13 per share (cost - $81,480) 105,682
The GCG Trust Emerging Markets Series,
4,067,182 shares at $9.89 per share (cost - $42,376) 40,224
The GCG Trust Market Manager Series,
404,454 shares at $13.37 per share (cost - $4,104) 5,408
The GCG Trust Value Equity Series,
3,010,633 shares at $13.44 per share (cost - $38,881) 40,463
The GCG Trust Strategic Equity Series,
2,232,084 shares at $11.26 per share (cost - $23,309) 25,133
The GCG Trust Small Cap Series,
2,246,450 shares at $12.12 per share (cost - $26,505) 27,227
The GCG Trust Managed Global Series,
7,793,374 shares at $10.76 per share (cost - $82,191) 83,857
Equi-Select Series Trust OTC Portfolio,
5,275 shares at $14.40 per share (cost - $76) 76
Equi-Select Series Trust Growth & Income Portfolio,
22,378 shares at $11.74 per share (cost - $263) 263
____________
TOTAL INVESTMENTS (cost - $1,033,805) 1,131,126
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1996 (Unaudited) (Continued)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
<S> <C>
LIABILITIES
Payable to Golden American for charges and fees (Note 3) 839
____________
TOTAL NET ASSETS $1,130,287
============
NET ASSETS
For Variable Annuity Insurance Contracts $1,103,659
Retained in Separate Account B by Golden American (Note 3) 26,628
____________
TOTAL NET ASSETS $1,130,287
============
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS
For the period January 1, 1996 or Commencement of Operations*
through September 30, 1996
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Limited
Liquid Maturity Natural
Asset Bond Resources
Division Division Division
__________ _________ __________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $1,394 $3,589 $45
Capital gains distributions -- -- 488
__________ _________ __________
TOTAL INVESTMENT INCOME 1,394 3,589 533
Expenses (Note 3):
Mortality and expense risk and other charges (301) (481) (269)
Annual administrative charges (11) (16) (16)
Minimum death benefit guarantee charges (6) (2) (4)
Contingent deferred sales charges (1) (2) (3)
Other contract charges -- (4) (3)
Amortization of deferred charges related to:
Deferred sales load (462) (570) (270)
Premium taxes (7) (7) (4)
__________ _________ __________
TOTAL EXPENSES BEFORE WAIVER (788) (1,082) (569)
Fees waived by Golden American 7 10 5
__________ _________ __________
NET EXPENSES (781) (1,072) (564)
__________ _________ __________
NET INVESTMENT INCOME (LOSS) 613 2,517 (31)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments -- 321 1,750
Net unrealized appreciation (depreciation)
of investments -- (2,640) 3,715
__________ _________ __________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $613 $198 $5,434
========== ========= ==========
<FN>
*Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS
For the period January 1, 1996 or Commencement of Operations*
through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
All- Real Fully
Growth Estate Managed
Division Division Division
__________ _________ __________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $1,069 $606 $889
Capital gains distributions $252 -- --
__________ _________ __________
TOTAL INVESTMENT INCOME 1,321 606 889
Expenses (Note 3):
Mortality and expense risk and other charges (735) (279) (978)
Annual administrative charges (34) (15) (52)
Minimum death benefit guarantee charges (3) (1) (3)
Contingent deferred sales charges (7) (1) (13)
Other contract charges (2) (1) (3)
Amortization of deferred charges related to:
Deferred sales load (793) (301) (1,086)
Premium taxes (20) (6) (26)
__________ _________ __________
TOTAL EXPENSES BEFORE WAIVER (1,594) (604) (2,161)
Fees waived by Golden American 27 6 30
__________ _________ __________
NET EXPENSES (1,567) (598) (2,131)
__________ _________ __________
NET INVESTMENT INCOME (LOSS) (246) 8 (1,242)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 1,144 413 1,321
Net unrealized appreciation (depreciation)
of investments (6,652) 3,494 9,758
__________ _________ __________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ($5,754) $3,915 $9,837
========== ========= ==========
<FN>
*Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS
For the period January 1, 1996 or Commencement of Operations*
through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Multiple Capital
Alloca- Apprecia- Rising
tion tion Dividends
Division Division Division
__________ _________ __________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $4,447 $373 $221
Capital gains distributions 1,659 1,058 --
__________ _________ __________
TOTAL INVESTMENT INCOME 6,106 1,431 221
Expenses (Note 3):
Mortality and expense risk and other charges (2,267) (1,025) (753)
Annual administrative charges (118) (54) (42)
Minimum death benefit guarantee charges (14) (2) (1)
Contingent deferred sales charges (26) (11) (11)
Other contract charges (12) (3) (6)
Amortization of deferred charges related to:
Deferred sales load (2,612) (1,048) (767)
Premium taxes (40) (31) (11)
__________ _________ __________
TOTAL EXPENSES BEFORE WAIVER (5,089) (2,174) (1,591)
Fees waived by Golden American 51 34 19
__________ _________ __________
NET EXPENSES (5,038) (2,140) (1,572)
__________ _________ __________
NET INVESTMENT INCOME (LOSS) 1,068 (709) (1,351)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 3,834 3,574 2,910
Net unrealized appreciation (depreciation)
of investments 362 12,523 8,770
__________ _________ __________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $5,264 $15,388 $10,329
========== ========= ==========
<FN>
*Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS
For the period January 1, 1996 or Commencement of Operations*
through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Emerging Market Value
Markets Manager Equity
Division Division Division
__________ _________ __________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends -- -- $218
Capital gains distributions -- $1 --
__________ _________ __________
TOTAL INVESTMENT INCOME -- 1 218
Expenses (Note 3):
Mortality and expense risk and other charges $(321) -- (310)
Annual administrative charges (17) (1) (16)
Minimum death benefit guarantee charges (2) -- (1)
Contingent deferred sales charges (8) -- (13)
Other contract charges (2) -- (3)
Amortization of deferred charges related to:
Deferred sales load (389) (42) (247)
Premium taxes (5) -- (2)
__________ _________ __________
TOTAL EXPENSES BEFORE WAIVER (744) (43) (592)
Fees waived by Golden American 6 -- 8
__________ _________ __________
NET EXPENSES (738) (43) (584)
__________ _________ __________
NET INVESTMENT INCOME (LOSS) (738) (42) (366)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments (2,673) 272 822
Net unrealized appreciation (depreciation)
of investments 6,067 361 (288)
__________ _________ __________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $2,656 $591 $168
========== ========= ==========
<FN>
*Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS
For the period January 1, 1996 or Commencement of Operations*
through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Strategic Managed
Equity Small Cap Global
Division Division* Division*
__________ _________ __________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $27 -- --
Capital gains distributions -- -- --
__________ _________ __________
TOTAL INVESTMENT INCOME 27 -- --
Expenses (Note 3):
Mortality and expense risk and other charges (159) ($125) ($68)
Annual administrative charges (10) (17) (38)
Minimum death benefit guarantee charges (1) (1) --
Contingent deferred sales charges (10) (8) (1)
Other contract charges (1) (3) (5)
Amortization of deferred charges related to:
Deferred sales load (71) (66) (85)
Premium taxes (1) (1) (1)
__________ _________ __________
TOTAL EXPENSES BEFORE WAIVER (253) (221) (198)
Fees waived by Golden American 5 2 2
__________ _________ __________
NET EXPENSES (248) (219) (196)
__________ _________ __________
NET INVESTMENT INCOME (LOSS) (221) (219) (196)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 61 153 11
Net unrealized appreciation (depreciation)
of investments 1,797 722 1,666
__________ _________ __________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $1,637 $656 $1,481
========== ========= ==========
<FN>
*Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF OPERATIONS
For the period January 1, 1996 or Commencement of Operations*
through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Growth &
OTC Income
Division* Division* Combined
__________ _________ __________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends -- -- $12,878
Capital gains distributions -- -- 3,458
__________ _________ __________
TOTAL INVESTMENT INCOME -- -- 16,336
Expenses (Note 3):
Mortality and expense risk and other charges -- -- (8,071)
Annual administrative charges -- -- (457)
Minimum death benefit guarantee charges -- -- (41)
Contingent deferred sales charges -- -- (115)
Other contract charges -- -- (48)
Amortization of deferred charges related to:
Deferred sales load -- -- (8,809)
Premium taxes -- -- (162)
__________ _________ __________
TOTAL EXPENSES BEFORE WAIVER -- -- (17,703)
Fees waived by Golden American -- -- 212
__________ _________ __________
NET EXPENSES -- -- (17,491)
__________ _________ __________
NET INVESTMENT INCOME (LOSS) -- -- (1,155)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments -- -- 13,913
Net unrealized appreciation (depreciation)
of investments -- -- 39,655
__________ _________ __________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS -- -- $52,413
========== ========= ==========
<FN>
*Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Liquid
Asset
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $45,366
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 1,059
Net realized gain (loss) on investments --
Net unrealized appreciation of investments --
__________
Net increase (decrease) in net assets resulting from operations 1,059
Changes from principal transactions:
Purchase payments 10,242
Contract distributions and terminations (11,794)
Transfer payments from (to) Fixed Accounts and other Divisions (8,292)
Addition to (reallocation from) assets retained in the Account
by Golden American (90)
__________
Increase (decrease) in net assets derived from principal
transactions (9,934)
__________
Total increase (decrease) (8,875)
__________
NET ASSETS AT DECEMBER 31, 1995 36,491
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Liquid
Asset
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $613
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations 613
Changes from principal transactions:
Purchase payments 10,735
Contract distributions and terminations (9,379)
Transfer payments from (to) Fixed Accounts and other Divisions (612)
Addition to (reallocation from) assets retained in the Account
by Golden American 30
__________
Increase (decrease) in net assets derived from principal
transactions 774
__________
Total increase (decrease) 1,387
__________
NET ASSETS AT SEPTEMBER 30, 1996 $37,878
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Limited
Maturity
Bond
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $71,573
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) (1,721)
Net realized gain (loss) on investments (138)
Net unrealized appreciation of investments 7,902
__________
Net increase (decrease) in net assets resulting from operations 6,043
Changes from principal transactions:
Purchase payments 7,209
Contract distributions and terminations (9,461)
Transfer payments from (to) Fixed Accounts and other Divisions (7,297)
Addition to (reallocation from) assets retained in the Account
by Golden American (230)
__________
Increase (decrease) in net assets derived from principal
transactions (9,779)
__________
Total increase (decrease) (3,736)
__________
NET ASSETS AT DECEMBER 31, 1995 67,837
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Limited
Maturity
Bond
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $2,517
Net realized gain (loss) on investments 321
Net unrealized appreciation (depreciation) of investments (2,640)
__________
Net increase (decrease) in net assets resulting from operations 198
Changes from principal transactions:
Purchase payments 4,016
Contract distributions and terminations (6,225)
Transfer payments from (to) Fixed Accounts and other Divisions (8,099)
Addition to (reallocation from) assets retained in the Account
by Golden American (446)
__________
Increase (decrease) in net assets derived from principal
transactions (10,754)
__________
Total increase (decrease) (10,556)
__________
NET ASSETS AT SEPTEMBER 30, 1996 $57,281
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Natural
Resources
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $32,746
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) (112)
Net realized gain (loss) on investments 1,545
Net unrealized appreciation of investments 495
__________
Net increase (decrease) in net assets resulting from operations 1,928
Changes from principal transactions:
Purchase payments 2,021
Contract distributions and terminations (3,402)
Transfer payments from (to) Fixed Accounts and other Divisions (6,045)
Addition to (reallocation from) assets retained in the Account
by Golden American (258)
__________
Increase (decrease) in net assets derived from principal
transactions (7,684)
__________
Total increase (decrease) (5,756)
__________
NET ASSETS AT DECEMBER 31, 1995 26,990
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Natural
Resources
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($31)
Net realized gain (loss) on investments 1,750
Net unrealized appreciation (depreciation) of investments 3,715
__________
Net increase (decrease) in net assets resulting from operations 5,434
Changes from principal transactions:
Purchase payments 4,323
Contract distributions and terminations (3,109)
Transfer payments from (to) Fixed Accounts and other Divisions 4,703
Addition to (reallocation from) assets retained in the Account
by Golden American 213
__________
Increase (decrease) in net assets derived from principal
transactions 6,130
__________
Total increase (decrease) 11,564
__________
NET ASSETS AT SEPTEMBER 30, 1996 $38,554
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
All-Growth
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $70,621
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 2,642
Net realized gain (loss) on investments 1,011
Net unrealized appreciation of investments 10,501
__________
Net increase (decrease) in net assets resulting from operations 14,154
Changes from principal transactions:
Purchase payments 11,312
Contract distributions and terminations (10,713)
Transfer payments from (to) Fixed Accounts and other Divisions 5,721
Addition to (reallocation from) assets retained in the Account
by Golden American 861
__________
Increase (decrease) in net assets derived from principal
transactions 7,181
__________
Total increase (decrease) 21,335
__________
NET ASSETS AT DECEMBER 31, 1995 91,956
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
All-Growth
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($246)
Net realized gain (loss) on investments 1,144
Net unrealized appreciation (depreciation) of investments (6,652)
__________
Net increase (decrease) in net assets resulting from operations (5,754)
Changes from principal transactions:
Purchase payments 9,188
Contract distributions and terminations (8,553)
Transfer payments from (to) Fixed Accounts and other Divisions (2,798)
Addition to (reallocation from) assets retained in the Account
by Golden American (475)
__________
Increase (decrease) in net assets derived from principal
transactions (2,638)
__________
Total increase (decrease) (8,392)
__________
NET ASSETS AT SEPTEMBER 30, 1996 $83,564
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Real
Estate
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $36,934
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 521
Net realized gain (loss) on investments 369
Net unrealized appreciation of investments 3,425
__________
Net increase (decrease) in net assets resulting from operations 4,315
Changes from principal transactions:
Purchase payments 1,833
Contract distributions and terminations (4,799)
Transfer payments from (to) Fixed Accounts and other Divisions (3,325)
Addition to (reallocation from) assets retained in the Account
by Golden American (145)
__________
Increase (decrease) in net assets derived from principal
transactions (6,436)
__________
Total increase (decrease) (2,121)
__________
NET ASSETS AT DECEMBER 31, 1995 34,813
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Real
Estate
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $8
Net realized gain (loss) on investments 413
Net unrealized appreciation (depreciation) of investments 3,494
__________
Net increase (decrease) in net assets resulting from operations 3,915
Changes from principal transactions:
Purchase payments 3,278
Contract distributions and terminations (3,062)
Transfer payments from (to) Fixed Accounts and other Divisions 88
Addition to (reallocation from) assets retained in the Account
by Golden American (22)
__________
Increase (decrease) in net assets derived from principal
transactions 282
__________
Total increase (decrease) 4,197
__________
NET ASSETS AT SEPTEMBER 30, 1996 $39,010
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Fully
Managed
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $98,837
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 179
Net realized gain (loss) on investments 1,311
Net unrealized appreciation of investments 16,314
__________
Net increase (decrease) in net assets resulting from operations 17,804
Changes from principal transactions:
Purchase payments 9,654
Contract distributions and terminations (13,651)
Transfer payments from (to) Fixed Accounts and other Divisions 4,159
Addition to (reallocation from) assets retained in the Account
by Golden American 524
__________
Increase (decrease) in net assets derived from principal
transactions 686
__________
Total increase (decrease) 18,490
__________
NET ASSETS AT DECEMBER 31, 1995 117,327
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Fully
Managed
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($1,242)
Net realized gain (loss) on investments 1,321
Net unrealized appreciation (depreciation) of investments 9,758
__________
Net increase (decrease) in net assets resulting from operations 9,837
Changes from principal transactions:
Purchase payments 12,683
Contract distributions and terminations (12,345)
Transfer payments from (to) Fixed Accounts and other Divisions 2,428
Addition to (reallocation from) assets retained in the Account
by Golden American (60)
__________
Increase (decrease) in net assets derived from principal
transactions 2,706
__________
Total increase (decrease) 12,543
__________
NET ASSETS AT SEPTEMBER 30, 1996 $129,870
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Multiple
Allocation
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $297,508
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 14,068
Net realized gain (loss) on investments 4,715
Net unrealized appreciation of investments 26,239
__________
Net increase (decrease) in net assets resulting from operations 45,022
Changes from principal transactions:
Purchase payments 17,072
Contract distributions and terminations (42,733)
Transfer payments from (to) Fixed Accounts and other Divisions (11,292)
Addition to (reallocation from) assets retained in the Account
by Golden American (75)
__________
Increase (decrease) in net assets derived from principal
transactions (37,028)
__________
Total increase (decrease) 7,994
__________
NET ASSETS AT DECEMBER 31, 1995 305,502
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Multiple
Allocation
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $1,068
Net realized gain (loss) on investments 3,834
Net unrealized appreciation (depreciation) of investments 362
__________
Net increase (decrease) in net assets resulting from operations 5,264
Changes from principal transactions:
Purchase payments 14,309
Contract distributions and terminations (31,299)
Transfer payments from (to) Fixed Accounts and other Divisions (14,352)
Addition to (reallocation from) assets retained in the Account
by Golden American (1,007)
__________
Increase (decrease) in net assets derived from principal
transactions (32,349)
__________
Total increase (decrease) (27,085)
__________
NET ASSETS AT SEPTEMBER 30, 1996 $278,417
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Capital
Appreciation
Division
____________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $88,346
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 7,594
Net realized gain (loss) on investments 2,221
Net unrealized appreciation of investments 14,531
____________
Net increase (decrease) in net assets resulting from operations 24,346
Changes from principal transactions:
Purchase payments 8,831
Contract distributions and terminations (13,163)
Transfer payments from (to) Fixed Accounts and other Divisions 11,592
Addition to (reallocation from) assets retained in the Account
by Golden American 1,097
____________
Increase (decrease) in net assets derived from principal
transactions 8,357
____________
Total increase (decrease) 32,703
____________
NET ASSETS AT DECEMBER 31, 1995 121,049
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Capital
Appreciation
Division
____________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($709)
Net realized gain (loss) on investments 3,574
Net unrealized appreciation (depreciation) of investments 12,523
____________
Net increase (decrease) in net assets resulting from operations 15,388
Changes from principal transactions:
Purchase payments 11,716
Contract distributions and terminations (10,665)
Transfer payments from (to) Fixed Accounts and other Divisions 178
Addition to (reallocation from) assets retained in the Account
by Golden American 130
____________
Increase (decrease) in net assets derived from principal
transactions 1,359
____________
Total increase (decrease) 16,747
____________
NET ASSETS AT SEPTEMBER 30, 1996 $137,796
============
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Rising
Dividends
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $50,385
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) (1,130)
Net realized gain (loss) on investments 776
Net unrealized appreciation of investments 16,037
__________
Net increase (decrease) in net assets resulting from operations 15,683
Changes from principal transactions:
Purchase payments 11,422
Contract distributions and terminations (9,800)
Transfer payments from (to) Fixed Accounts and other Divisions 11,423
Addition to (reallocation from) assets retained in the Account
by Golden American 1,229
__________
Increase (decrease) in net assets derived from principal
transactions 14,274
__________
Total increase (decrease) 29,957
__________
NET ASSETS AT DECEMBER 31, 1995 80,342
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Rising
Dividends
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($1,351)
Net realized gain (loss) on investments 2,910
Net unrealized appreciation (depreciation) of investments 8,770
__________
Net increase (decrease) in net assets resulting from operations 10,329
Changes from principal transactions:
Purchase payments 17,073
Contract distributions and terminations (9,104)
Transfer payments from (to) Fixed Accounts and other Divisions 6,705
Addition to (reallocation from) assets retained in the Account
by Golden American 280
__________
Increase (decrease) in net assets derived from principal
transactions 14,954
__________
Total increase (decrease) 25,283
__________
NET ASSETS AT SEPTEMBER 30, 1996 $105,625
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Emerging
Markets
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $59,746
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) (1,137)
Net realized gain (loss) on investments (7,448)
Net unrealized appreciation of investments 1,603
__________
Net increase (decrease) in net assets resulting from operations (6,982)
Changes from principal transactions:
Purchase payments 7,739
Contract distributions and terminations (7,740)
Transfer payments from (to) Fixed Accounts and other Divisions (14,939)
Addition to (reallocation from) assets retained in the Account
by Golden American (937)
__________
Increase (decrease) in net assets derived from principal
transactions (15,877)
__________
Total increase (decrease) (22,859)
__________
NET ASSETS AT DECEMBER 31, 1995 36,887
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Emerging
Markets
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($738)
Net realized gain (loss) on investments (2,673)
Net unrealized appreciation (depreciation) of investments 6,067
__________
Net increase (decrease) in net assets resulting from operations 2,656
Changes from principal transactions:
Purchase payments 5,558
Contract distributions and terminations (4,680)
Transfer payments from (to) Fixed Accounts and other Divisions (144)
Addition to (reallocation from) assets retained in the Account
by Golden American (76)
__________
Increase (decrease) in net assets derived from principal
transactions 658
__________
Total increase (decrease) 3,314
__________
NET ASSETS AT SEPTEMBER 30, 1996 $40,201
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Market
Manager
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $2,752
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 144
Net realized gain (loss) on investments 29
Net unrealized appreciation of investments 944
__________
Net increase (decrease) in net assets resulting from operations 1,117
Changes from principal transactions:
Purchase payments 2,140
Contract distributions and terminations (767)
Transfer payments from (to) Fixed Accounts and other Divisions (208)
Addition to (reallocation from) assets retained in the Account
by Golden American 172
__________
Increase (decrease) in net assets derived from principal
transactions 1,337
__________
Total increase (decrease) 2,454
__________
NET ASSETS AT DECEMBER 31, 1995 5,206
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Market
Manager
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($42)
Net realized gain (loss) on investments 272
Net unrealized appreciation (depreciation) of investments 361
__________
Net increase (decrease) in net assets resulting from operations 591
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations (483)
Transfer payments from (to) Fixed Accounts and other Divisions (132)
Addition to (reallocation from) assets retained in the Account
by Golden American (14)
__________
Increase (decrease) in net assets derived from principal
transactions (629)
__________
Total increase (decrease) (38)
__________
NET ASSETS AT SEPTEMBER 30, 1996 $5,168
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Value
Equity
Division*
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $478
Net realized gain (loss) on investments 687
Net unrealized appreciation of investments 1,870
__________
Net increase (decrease) in net assets resulting from operations 3,035
Changes from principal transactions:
Purchase payments 8,619
Contract distributions and terminations (776)
Transfer payments from (to) Fixed Accounts and other Divisions 16,429
Addition to (reallocation from) assets retained in the Account
by Golden American 1,140
__________
Increase (decrease) in net assets derived from principal
transactions 25,412
__________
Total increase (decrease) 28,447
__________
NET ASSETS AT DECEMBER 31, 1995 28,447
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Value
Equity
Division*
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($366)
Net realized gain (loss) on investments 822
Net unrealized appreciation (depreciation) of investments (288)
__________
Net increase (decrease) in net assets resulting from operations 168
Changes from principal transactions:
Purchase payments 13,472
Contract distributions and terminations (2,854)
Transfer payments from (to) Fixed Accounts and other Divisions 1,209
Addition to (reallocation from) assets retained in the Account
by Golden American (1)
__________
Increase (decrease) in net assets derived from principal
transactions 11,826
__________
Total increase (decrease) 11,994
__________
NET ASSETS AT SEPTEMBER 30, 1996 $40,441
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Strategic
Equity
Division*
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($8)
Net realized gain (loss) on investments (1)
Net unrealized appreciation of investments 28
__________
Net increase (decrease) in net assets resulting from operations 19
Changes from principal transactions:
Purchase payments 3,211
Contract distributions and terminations (172)
Transfer payments from (to) Fixed Accounts and other Divisions 4,796
Addition to (reallocation from) assets retained in the Account
by Golden American 177
__________
Increase (decrease) in net assets derived from principal
transactions 8,012
__________
Total increase (decrease) 8,031
__________
NET ASSETS AT DECEMBER 31, 1995 8,031
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Strategic
Equity
Division*
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($221)
Net realized gain (loss) on investments 61
Net unrealized appreciation (depreciation) of investments 1,797
__________
Net increase (decrease) in net assets resulting from operations 1,637
Changes from principal transactions:
Purchase payments 10,135
Contract distributions and terminations (1,104)
Transfer payments from (to) Fixed Accounts and other Divisions 6,247
Addition to (reallocation from) assets retained in the Account
by Golden American 174
__________
Increase (decrease) in net assets derived from principal
transactions 15,452
__________
Total increase (decrease) 17,089
__________
NET ASSETS AT SEPTEMBER 30, 1996 $25,120
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Small Cap
Division*
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1995 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Small Cap
Division*
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($219)
Net realized gain (loss) on investments 153
Net unrealized appreciation (depreciation) of investments 722
__________
Net increase (decrease) in net assets resulting from operations 656
Changes from principal transactions:
Purchase payments 12,664
Contract distributions and terminations (859)
Transfer payments from (to) Fixed Accounts and other Divisions 14,361
Addition to (reallocation from) assets retained in the Account
by Golden American 388
__________
Increase (decrease) in net assets derived from principal
transactions 26,554
__________
Total increase (decrease) 27,210
__________
NET ASSETS AT SEPTEMBER 30, 1996 $27,210
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Managed
Global
Division*
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1995 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Managed
Global
Division*
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($196)
Net realized gain (loss) on investments 11
Net unrealized appreciation (depreciation) of investments 1,666
__________
Net increase (decrease) in net assets resulting from operations 1,481
Changes from principal transactions:
Purchase payments 755
Contract distributions and terminations (939)
Transfer payments from (to) Fixed Accounts and other Divisions 80,441
Addition to (reallocation from) assets retained in the Account
by Golden American 2,075
__________
Increase (decrease) in net assets derived from principal
transactions 82,332
__________
Total increase (decrease) 83,813
__________
NET ASSETS AT SEPTEMBER 30, 1996 $83,813
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
OTC
Division*
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1995 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
OTC
Division*
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments $42
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions 33
Addition to (reallocation from) assets retained in the Account
by Golden American 1
__________
Increase (decrease) in net assets derived from principal
transactions 76
__________
Total increase (decrease) 76
__________
NET ASSETS AT SEPTEMBER 30, 1996 $76
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Growth &
Income
Division*
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account --
by Golden American --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1995 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Growth &
Income
Division*
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments $32
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions 230
Addition to (reallocation from) assets retained in the Account
by Golden American 1
__________
Increase (decrease) in net assets derived from principal
transactions 263
__________
Total increase (decrease) 263
__________
NET ASSETS AT SEPTEMBER 30, 1996 $263
==========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Combined
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1995 $854,814
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 22,577
Net realized gain (loss) on investments 5,077
Net unrealized appreciation of investments 99,889
__________
Net increase (decrease) in net assets resulting from operations $127,543
Changes from principal transactions:
Purchase payments 101,305
Contract distributions and terminations (128,971)
Transfer payments from (to) Fixed Accounts and other Divisions 2,722
Addition to (reallocation from) assets retained in the Account
by Golden American 3,465
__________
Increase (decrease) in net assets derived from principal
transactions (21,479)
__________
Total increase (decrease) 106,064
__________
NET ASSETS AT DECEMBER 31, 1995 960,878
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 1, 1995 or Commencement of Operations*
through December 31, 1995 and for the period
January 1, 1996 or Commencement of Operations* through September 30, 1996
(Unaudited) (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Combined
___________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($1,155)
Net realized gain (loss) on investments 13,913
Net unrealized appreciation (depreciation) of investments 39,655
___________
Net increase (decrease) in net assets resulting from operations 52,413
Changes from principal transactions:
Purchase payments 129,979
Contract distributions and terminations (104,660)
Transfer payments from (to) Fixed Accounts and other Divisions 90,486
Addition to (reallocation from) assets retained in the Account
by Golden American 1,191
___________
Increase (decrease) in net assets derived from principal
transactions 116,996
___________
Total increase (decrease) 169,409
___________
NET ASSETS AT SEPTEMBER 30, 1996 $1,130,287
===========
<FN>
* Commencement of operations - See Note 1
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
NOTE 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
and Directed Services, Inc. ("DSI"), an affiliate of Golden American,
became wholly-owned subsidiaries of BT Variable, Inc. ("BTV"), an
indirect wholly-owned subsidiary of Bankers Trust Company. Effective
December 30, 1993, Golden American was redomesticated from the State of
Minnesota to the State of Delaware. Effective August 13, 1996,
Equitable of Iowa Companies acquired all of the outstanding capital
stock of BTV and changed its name to EIC Variable, Inc. These
transactions 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.
Operations of the Account commenced on January 25, 1989. The Account is
registered as a unit investment trust with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended. 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 and the Fixed
Separate Account, which are not part of the Account, as directed 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 assets and liabilities of the Account are clearly identified and
distinguished from the other assets and liabilities of Golden American.
The Account has, under GoldenSelect Contracts, eighteen 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, the
Emerging Markets, the Market Manager, the Value Equity (commenced
operations January, 1995), the Strategic Equity (commenced operations
October, 1995), the Small Cap (commenced operations January, 1996), the
Managed Global, the OTC (commenced operations September, 1996) and the
Growth & Income (commenced operations September, 1996) Divisions
("Divisions"). The Managed Global Division was formerly the Managed
Global Account of Golden American's Separate Account D from October 12,
1992 until September 3, 1996. The assets in each Division are invested
in shares of a designated series ("Series", which may also be referred
to as "Portfolio") of mutual funds of The GCG Trust or the Equi-Select
Series Trust (the "Trusts"). Effective January 1997, the Natural
Resources Series was renamed to Hard Assets. 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.
NOTE 1 - ORGANIZATION (Continued)
The Market Manager Division was open for investment for only a brief
period during 1994 and 1995. This Division is now closed and
contractowners are not allowed to direct their investments into this
Division. Contractowners with investments in the Market Manager
Division were allowed to elect to update their contracts to DVA Plus
contracts.
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.
Certain amounts in the 1995 financial statements have been reclassified
to conform to the 1996 financial statement presentation.
NOTE 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 or Portfolio of
the Trusts and are valued at the net asset value per share of the
respective Series or Portfolio of the Trusts. Investment transactions
in each Series or Portfolio of the Trusts are recorded on the trade
date. Distributions of net investment income and capital gains of each
Series or Portfolio of the Trusts are recognized on the ex-distribution
date. Realized gains and losses on redemptions of the shares of the
Series or Portfolio of the Trusts are determined on the specific
identification basis.
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.
NOTE 3 - CHARGES AND FEES
Contracts currently being sold include the DVA Series 100 and the DVA
Plus. The DVA Plus has three different death benefit options referred
to as Standard, Annual Ratchet and 7% Solution. Golden American
discontinued external sales of DVA 80 and DVA 100 contracts in May 1991
and December 1995, respectively. DVA 100 contracts are still available
to Golden American employees and agents. Under the terms of the
NOTE 3 - CHARGES AND FEES (Continued)
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 and Other 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. Daily
charges are deducted 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 Charges: 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.
Annual Administrative Charges: An administrative charge of $40 per
Contract year is deducted from the accumulation value of Deferred
Annuity Contracts to cover ongoing administrative expenses. The
charge is incurred on the Contract anniversary date and deducted at the
end of the Contract anniversary period. This charge has been waived for
certain offerings of the Contract.
Minimum Death Benefit Guarantee Charges: 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
anniversary date.
Contingent Deferred Sales Charges: Under DVA Plus Contracts issued
subsequent to September 1995, a contingent deferred sales charge
("Surrender Charge") 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 Charge is 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.
Other Contract Charges: Under DVA 80, DVA 100 and DVA Series 100
contracts, a charge is deducted from the accumulation value for
contracts taking more than one conventional partial withdrawal during a
contract year. For DVA 80 and DVA 100 contracts, annual distribution
fees are deducted from contract accumulation values.
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 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
NOTE 3 - CHARGES AND FEES (Continued)
Deferred Sales Load (continued): the accumulation value and then
deducted in equal installments on each Contract anniversary 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.
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.
Certain charges and fees for various types of Contracts are currently
waived by Golden American. Golden American reserves the right to
discontinue these waivers at its discretion or to conform with changes
in the law.
The net assets retained in the Account by Golden American in the
accompanying financial statements represent the unamortized deferred
sales load and premium taxes advanced by Golden American, noted above.
Net assets retained in the Account by Golden American are as follows:
<TABLE>
<CAPTION>
1996* 1995**
_______________ _______________
(Dollars in thousands)
<S> <C> <C>
Balance at beginning of period $34,408 $44,008
Sales load advanced 675 5,370
Premium tax advanced 8 51
Net transfer (to) from Separate Account
D, Fixed Account and other Divisions 508 (1,956)
Amortization of deferred sales load (8,971) (13,065)
_______________ _______________
Balance at end of period $26,628 $34,408
=============== ===============
<FN>
* For the period January 1, 1996 or Commencement of Operations through
September 30, 1996.
** For the period January 1, 1995 or Commencement of Operations through
December 31, 1995.
</TABLE>
NOTE 4 - PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments
were as follows:
<TABLE>
<CAPTION>
Period From Period From
January 1, 1996 or Com- January 1, 1995 or Com-
mencement of Operations mencement of Operations
to September 30, 1996 to December 31, 1995
_________________________ _________________________
Purchases Sales Purchases Sales
____________ ____________ ____________ ____________
(Dollars in thousands)
<S> <C> <C> <C> <C>
The GCG Trust Liquid
Asset Series $44,317 $42,936 $36,373 $45,249
The GCG Trust Limited
Maturity Bond Series 9,461 17,704 13,148 24,648
The GCG Trust Natural
Resources Series 14,863 8,762 11,278 19,076
The GCG Trust All-Growth
Series 8,720 11,618 21,261 11,424
The GCG Trust Real
Estate Series 4,607 4,320 4,524 10,440
The GCG Trust Fully
Managed Series 10,451 8,988 13,980 13,106
The GCG Trust Multiple
Allocation Series 9,948 41,264 29,322 52,281
The GCG Trust Capital
Appreciation Series 17,376 16,727 28,436 12,469
The GCG Trust Rising
Dividends Series 24,530 10,919 19,522 6,361
The GCG Trust Emerging
Markets Series 10,068 10,151 10,584 27,621
The GCG Trust Market
Manager Series -- 1,176 3,057 832
The GCG Trust Value
Equity Series 16,210 4,743 29,104 3,199
The GCG Trust Strategic
Equity Series 16,197 957 8,151 142
The GCG Trust Small
Cap Series 37,089 10,737 -- --
The GCG Trust Managed
Global Series 83,024 844 -- --
Equi-Select Series Trust
OTC Portfolio 142 66 -- --
Equi-Select Series Trust
Growth & Income Portfolio 263 -- -- --
</TABLE>
NOTE 5 - SUMMARY OF CHANGES FROM UNIT TRANSACTIONS
Contractowners transactions shown in the following table reflect gross
inflows ("Purchases") and outflows ("Sales") in units for each Division.
The activity includes contractowners electing to update a DVA contract
to a DVA Plus contract beginning in October 1995. Updates to DVA Plus
contracts result in both a sale (surrender of the old contract) and a
purchase (acquisition of the new contract). All of the purchase
transactions for the Market Manager Division resulted from such updates.
Contractowner transactions in units were as follows:
<TABLE>
<CAPTION>
Period From Period From
January 1, 1996 or Com- January 1, 1995 or Com-
mencement of Operations mencement of Operations
to September 30, 1996 to December 31, 1995
________________________ ________________________
Purchases Sales Purchases Sales
____________ ___________ ____________ ___________
<S> <C> <C> <C> <C>
Liquid Asset Division 4,213,505 4,179,672 3,119,370 3,934,332
Limited Maturity Bond Division 657,575 1,402,347 1,096,937 1,842,599
Natural Resources Division 1,035,221 701,004 835,272 1,412,435
All-Growth Division 1,036,565 1,270,620 1,548,525 1,094,131
Real Estate Division 392,948 394,667 322,375 802,601
Fully Managed Division 1,137,830 1,010,020 1,020,546 1,063,678
Multiple Allocation Division 1,102,027 3,113,399 1,057,363 3,678,129
Capital Appreciation Division 1,521,417 1,489,428 1,740,091 1,248,056
Rising Dividends Division 2,273,866 1,276,456 1,883,516 753,983
Emerging Markets Division 1,354,099 1,322,002 1,386,840 3,143,521
Market Manager Division 7,958 92,591 282,507 142,437
Value Equity Division 1,551,112 698,201 2,459,134 333,200
Strategic Equity Division 1,655,655 207,333 848,555 45,767
Small Cap Division 3,767,720 1,499,791 -- --
Managed Global Division 8,254,789 132,101 -- --
OTC Division 9,959 5,208 -- --
Growth & Income Division 22,500 -- -- --
</TABLE>
NOTE 6 - NET ASSETS
Net assets at September 30, 1996 consisted of the following:
<TABLE>
<CAPTION>
Limited
Liquid Maturity Natural All-
Asset Bond Resources Growth
Division Division Division Division
____________ _____________ ____________ _____________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $32,957 $46,448 $27,856 $77,005
Accumulated net investment
income (loss) 4,921 10,407 5,683 6,874
Net unrealized appreciation
(depreciation) of
investments -- 426 5,015 (315)
____________ _____________ ____________ _____________
$37,878 $57,281 $38,554 $83,564
============ ============= ============ =============
</TABLE>
<TABLE>
<CAPTION>
Real Fully Multiple Capital
Estate Managed Allocation Appreciation
Division Division Division Division
____________ _____________ ____________ _____________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $28,008 $102,346 $203,897 $94,060
Accumulated net investment
income (loss) 5,098 9,555 61,674 17,408
Net unrealized appreciation
(depreciation) of
investments 5,904 17,969 12,846 26,328
____________ _____________ ____________ _____________
$39,010 $129,870 $278,417 $137,796
============ ============= ============ =============
</TABLE>
<TABLE>
<CAPTION>
Rising Emerging Market Value
Dividends Markets Manager Equity
Division Division Division Division
____________ _____________ ____________ _____________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $78,792 $50,708 $3,514 $37,114
Accumulated net
investment income (loss) 2,631 (8,355) 350 1,745
Net unrealized appreciation
(depreciation) of
investments 24,202 (2,152) 1,304 1,582
____________ _____________ ____________ _____________
$105,625 $40,201 $5,168 $40,441
============ ============= ============ =============
</TABLE>
NOTE 6 - NET ASSETS - (Continued)
<TABLE>
<CAPTION>
Strategic Managed
Equity Small Cap Global
Division Division Division
____________ _____________ ____________
(Dollars in thousands)
<S> <C> <C> <C>
Unit transactions $23,447 $26,554 $82,332
Accumulated net
investment income (loss) (151) (66) (185)
Net unrealized appreciation
(depreciation) of
investments 1,824 722 1,666
____________ _____________ ____________
$25,120 $27,210 $83,813
============ ============= ============
</TABLE>
<TABLE>
<CAPTION>
Growth &
OTC Income
Division Division Combined
____________ _____________ ____________
(Dollars in thousands)
<S> <C> <C> <C>
Unit transactions $76 $263 $915,377
Accumulated net
investment income (loss) -- -- 117,589
Net unrealized appreciation
(depreciation) of
investments -- -- 97,321
____________ _____________ ____________
$76 $263 $1,130,287
============ ============= ============
</TABLE>
NOTE 7 - UNIT VALUES
Accumulation unit value information for units outstanding by contract
type as of September 30, 1996 is as follows:
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
____________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
LIQUID ASSET
DVA 80 402,847 $13.842 $5,576
DVA 100 1,860,767 13.629 25,361
DVA Series 100 20,476 13.263 272
DVA Plus - Standard 60,342 13.385 808
DVA Plus - Annual Ratchet 83,032 13.231 1,099
DVA Plus - 7% Solution 365,185 13.079 4,776
____________
37,892
LIMITED MATURITY BOND
DVA 80 136,742 15.548 2,126
DVA 100 3,216,802 15.310 49,248
DVA Series 100 43,079 14.898 642
DVA Plus - Standard 74,826 15.048 1,126
DVA Plus - Annual Ratchet 36,772 14.875 547
DVA Plus - 7% Solution 246,145 14.704 3,619
____________
57,308
NATURAL RESOURCES
DVA 80 251,026 18.816 4,723
DVA 100 1,477,716 18.527 27,378
DVA Series 100 28,042 18.029 506
DVA Plus - Standard 57,786 18.194 1,051
DVA Plus - Annual Ratchet 23,539 17.986 423
DVA Plus - 7% Solution 252,685 17.779 4,493
____________
38,574
ALL-GROWTH
DVA 80 188,722 13.789 2,602
DVA 100 4,974,854 13.577 67,543
DVA Series 100 37,980 13.212 502
DVA Plus - Standard 126,427 13.333 1,686
DVA Plus - Annual Ratchet 125,380 13.180 1,652
DVA Plus - 7% Solution 738,946 13.029 9,627
____________
83,612
REAL ESTATE
DVA 80 91,729 18.525 1,699
DVA 100 1,747,165 18.240 31,869
DVA Series 100 13,485 17.750 239
DVA Plus - Standard 31,389 17.912 562
DVA Plus - Annual Ratchet 23,100 17.707 409
DVA Plus - 7% Solution 242,887 17.504 4,252
____________
39,030
</TABLE>
NOTE 7 - UNIT VALUES (Continued)
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
___________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
FULLY MANAGED
DVA 80 245,657 17.178 $4,220
DVA 100 6,337,603 16.914 107,195
DVA Series 100 27,105 16.460 446
DVA Plus - Standard 175,412 16.610 2,914
DVA Plus - Annual Ratchet 138,443 16.420 2,273
DVA Plus - 7% Solution 793,988 16.231 12,888
____________
129,936
MULTIPLE ALLOCATION
DVA 80 828,012 17.751 14,698
DVA 100 13,619,005 17.478 238,036
DVA Series 100 111,165 17.009 1,891
DVA Plus - Standard 321,380 17.164 5,516
DVA Plus - Annual Ratchet 131,219 16.967 2,226
DVA Plus - 7% Solution 966,464 16.773 16,210
____________
278,577
CAPITAL APPRECIATION
DVA 80 135,400 16.995 2,301
DVA 100 6,890,256 16.844 116,062
DVA Series 100 29,446 16.583 488
DVA Plus - Standard 142,048 16.678 2,369
DVA Plus - Annual Ratchet 130,099 16.569 2,156
DVA Plus - 7% Solution 880,207 16.460 14,488
____________
137,864
RISING DIVIDENDS
DVA 80 94,221 15.135 1,426
DVA 100 5,202,327 15.044 78,266
DVA Series 100 71,778 14.886 1,069
DVA Plus - Standard 200,767 14.949 3,001
DVA Plus - Annual Ratchet 240,620 14.884 3,581
DVA Plus - 7% Solution 1,237,570 14.818 18,339
____________
105,682
EMERGING MARKETS
DVA 80 179,381 10.109 1,813
DVA 100 3,025,602 10.048 30,401
DVA Series 100 29,299 9.942 291
DVA Plus - Standard 81,078 9.984 810
DVA Plus - Annual Ratchet 90,605 9.941 901
DVA Plus - 7% Solution 607,096 9.897 6,008
____________
40,224
</TABLE>
NOTE 7 - UNIT VALUES (Continued)
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
___________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
MARKET MANAGER
DVA 100 387,881 13.664 $5,300
DVA Plus - 7% Solution 7,958 13.506 108
____________
5,408
VALUE EQUITY
DVA 80 49,795 13.673 681
DVA 100 1,591,925 13.626 21,691
DVA Series 100 28,180 13.543 381
DVA Plus - Standard 172,797 13.583 2,347
DVA Plus - Annual Ratchet 209,299 13.549 2,836
DVA Plus - 7% Solution 926,850 13.515 12,527
____________
40,463
STRATEGIC EQUITY
DVA 80 121,512 11.208 1,362
DVA 100 757,951 11.186 8,479
DVA Series 100 31,468 11.146 351
DVA Plus - Standard 320,206 11.170 3,577
DVA Plus - Annual Ratchet 190,548 11.155 2,125
DVA Plus - 7% Solution 829,424 11.140 9,239
____________
25,133
SMALL CAP
DVA 80 83,073 12.048 1,001
DVA 100 901,240 12.030 10,841
DVA Series 100 39,308 11.998 472
DVA Plus - Standard 154,029 12.007 1,849
DVA Plus - Annual Ratchet 152,988 11.994 1,835
DVA Plus - 7% Solution 937,291 11.980 11,229
____________
27,227
MANAGED GLOBAL
DVA 80 84,011 10.442 877
DVA 100 6,517,490 10.361 67,528
DVA Series 100 69,295 10.225 709
DVA Plus - Standard 174,689 10.252 1,791
DVA Plus - Annual Ratchet 190,184 10.192 1,938
DVA Plus - 7% Solution 1,087,019 10.132 11,014
____________
83,857
</TABLE>
NOTE 7 - UNIT VALUES (Continued)
<TABLE>
<CAPTION>
Total Unit
Series Units Unit Value Value
___________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
OTC
DVA 100 2,440 15.754 $39
DVA Plus - Standard 973 15.676 16
DVA Plus - Annual Ratchet 64 15.607 1
DVA Plus - 7% Solution 1,274 15.582 20
____________
76
GROWTH & INCOME
DVA 100 18,871 11.682 221
DVA Plus - Standard 1,307 11.667 15
DVA Plus - Annual Ratchet 86 11.660 1
DVA Plus - 7% Solution 2,236 11.650 26
____________
</TABLE> 263
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.
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 Combination Variable and Fixed Annuity
Contract (10)
(b) Discretionary Group Deferred Combination Variable and Fixed
Annuity Contract (10)
(c) Individual Deferred Variable Annuity Contract (10)
(d) External Exchange Program Endorsement (9)
(e) DVA Update Program Schedule Page (9)
(f) Individual Retirement Annuity Rider Page (9)
(5) (a) Individual Deferred Combination Variable and Fixed Annuity
Application (10)
(b) Group Deferred Combination Variable and Fixed Annuity Enrollment
Form (10)
(c) Individual Deferred Variable Annuity Application (10)
(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
(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 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).
(5) 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).
(6) 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).
(7) 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).
(8) Incorporated herein by reference to post-effective amendment No. 2 to the
registration statement for The Specialty Managers Separate Account A on Form
S-6 filed with the Securities and Exchange Commission on September 13, 1989
(File No. 33-23458).
(9) Incorporated herein by reference to pre-effective amendment No. 1 to the
registration statement for Separate Account B filed with the Securities and
Exchange Commission on September 7, 1995 (File No. 33-59261).
(10)Incorporated herein by reference to post-effective amendment No. 2 to the
registration statement for Separate Account B filed with the Securities and
Exchange Commission on May 1, 1996 (File No. 33-59261).
ITEM 25: DIRECTORS AND OFFICERS OF THE DEPOSITOR
Principal Position(s)
Name Business Address with Depositor
Terry L. Kendall Golden American Life Ins. Co. President and
1001 Jefferson Street Chief Executive Officer
Wilmington, DE 19801
Fred S. Hubbell Equitable of Iowa Companies Director and
604 Locust Street Chairman
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, Executive
604 Locust Street Vice President, Chief
Des Moines, IA 50309 Financial Officer and
Assistant Secretary
Thomas L. May Equitable of Iowa Companies Director
604 Locust Street
Des Moines, IA 50309
John A. Merriman Equitable of Iowa Companies Director and Assistant
604 Locust Street Secretary
Des Moines, IA 50309
Beth B. Neppl Equitable of Iowa Companies Director and
604 Locust Street Vice President
Des Moines, IA 50309
Paul R. Schlaack Equitable Investment Director
Services, Inc.
604 Locust Street
Des Moines, IA 50309
Jerome L. Sychowski Equitable of Iowa Companies Director
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 President
1001 Jefferson Street, and Chief Actuary
Wilmington, DE 19801
David L. Jacobson Golden American Life Ins. Co. Senior Vice
1001 Jefferson Street President
Wilmington, DE 19801
David A. Terwilliger Equitable of Iowa Companies Vice President,
604 Locust Street Controller, Assistant
Des Moines, IA 50309 Secretary and
Assistant Treasurer
Dennis D. Hargens Equitable of Iowa Companies Treasurer
604 Locust Street
Des Moines, IA 50309
Lawrence W. Porter, M.D. Equitable of Iowa Companies Medical Director
604 Locust Street
Des Moines, IA 50309
ITEM 26: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Depositor owns 100% of the stock of a newly formed New York company, First
Golden American Life Insuarnce Company of New York ("First Golden"). The
primary purpose for the formation of First Golden is to offer variable products
in the state of New York.
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 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
First Golden American Life Insurance Company of
New York
Directed Services, Inc.
Item 27: Number of Contract Owners
22,965 as of December 31, 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:
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
Terry L. Kendall Chairman and Director President of
Directed Services, Inc. Chief Executive Officer Board of Governors
1001 Jefferson Street Chief Executive Officer
Wilmington, DE 19801
Fred S. Hubbell Director Chairman
Equitable of Iowa Companies
604 Locust Street
Des Moines, IA 50309
Lawrence V. Durland Director Director
Equitable of Iowa Companies
604 Locust Street
Des Moines, IA 50309
Paul E. Larson Director Executive Vice President,
Equitable of Iowa Companies Chief Financial Officer, and
604 Locust Street
Des Moines, IA 50309
Thomas L. May Director Director
Equitable of Iowa Companies
604 Locust Street
Des Moines, IA 50309
John A. Merriman Director and Director and
Equitable of Iowa Assistant Secretary Assistant Secretary
Companies
604 Locust Street
Des Moines, IA 50309
Beth B. Neppl Director Director
Equitable of Iowa Companies
604 Locust Street
Des Moines, IA 50309
Paul R. Schlaack Director Director
Equitable Investment Services,
Inc.
604 Locust Street
Des Moines, IA 50309
Jerome L. Sychowski Director Director and Senior
Equitable of Iowa Companies Vice President - Chief
604 Locust Street Information Officer
Des Moines, IA 50309
Barnett Chernow Executive Vice Executive Vice President
Directed Services, Inc. President
1001 Jefferson Street
Wilmington, DE 19801
Myles R. Tashman Executive Vice President Executive Vice President
Directed Services, Inc. and Secretary and Secretary
1001 Jefferson Street
Wilmington, DE 19801
Stephen J. Preston Senior Vice President Senior Vice President
Directed Services, Inc.
1001 Jefferson Street
Wilmington, DE 19801
Edward C. Wilson President Senior Vice President
Directed Services, Inc.
1001 Jefferson Street
Wilmington, DE 19801
David A. Terwilliger Vice President and Vice Preseident, Controller
Equitable of Iowa Controller Assistant Treasurer and
Companies Assistant Secretary
604 Locust Street
Des Moines, IA 50309
Dennis D. Hargens Assistant Treasurer Treasurer
Equitable of Iowa Companies
604 Locust Street
Des Moines, IA 50309
Merle P. Schwickerath Treasurer None
Equitable of Iowa Companies
604 Locust Street
(c)
1996 Net
Name of Underwriting Compensation
Principal Discounts and on Brokerage
Underwriter Commissions Redemption Commissions Compensation
----------- ----------- ---------- ----------- ------------
DSI $27,064,887 $0 $0 $0
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
1. The account meets definition of a "separate account" under federal
securities laws.
2. Golden American Life Insurance Company hereby represents that the fees
and charges deducted under the Contract described in the Prospectus, in
the aggregate, are reasonable in relation to the services rendered, the
expenses to be incurred and the risks assumed by the Company.
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 5 day of February, 1996.
SEPARATE ACCOUNT B
(Registrant)
By: GOLDEN AMERICAN LIFE
INSURANCE COMPANY
(Depositor)
By: /s/Terry L. Kendall
--------------------
Terry L. Kendall*
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 February
5, 1997.
Signature Title
/s/Terry L. Kendall President, Director
- -------------------- and Chief Executive
Terry L. Kendall* Officer of Depositor
/s/Paul E. Larson Executive Vice President,
- -------------------- Director, Chief Financial
Paul E. Larson* Officer and Assistant Secretary
DIRECTORS OF DEPOSITOR
/s/Fred S. Hubbell* /s/Lawrence V. Durland*
- ---------------------- -----------------------
Fred S. Hubbell* Lawrence V. Durland*
/s/Thomas L. May* /s/John A. Merriman*
- ---------------------- -----------------------
Thomas L. May* John A. Merriman*
/s/Beth B. Neppl* /s/Paul R. Schlaack*
- ---------------------- -----------------------
Beth B. Neppl* Paul R. Schlaack*
- ----------------------
Jerome L. Sychowski
By: /s/ Marilyn Talman Attorney-in-Fact
-----------------------
Marilyn Talman
_______________________
*Executed by Marilyn Talman on behalf of those indicated pursuant
to Power of Attorney.
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>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, being the duly
elected President, Director 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
President, Director and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, being a duly
elected Chairman 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
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
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, being a duly
elected Chief Financial Officer and 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
Chief Finacial Officer and Director
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
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
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
Sutherland, Asbill & Brennan, L.P.P. ATLANTA
Tel: (202) 383-0100 1275 Pennsylvania Ave, NW AUSTIN
Fax: (202) 637-3593 Washington, DC 20004-2404 NEW YORK
WASHINGTON
February 4, 1997
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. 5 to the registration statement on Form N-4 for
the Separate Account B (File No. 33-59261). 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/Susan S. Krawczyk
----------------------------
Susan S. Krawczyk
<PAGE>
Exhibit 10(b) Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the caption "Independent
Auditors", "Experts" and "Financial Statements" and to the incorporation by
reference therein of our report dated February 12, 1996 (except Note 10, as
to which the date is August 13, 1996), with respect to the financial
statements of Golden American Life Insurance Company included in the Golden
Select DVA Plus Deferred Combination Variable and Fixed Annuity Prospectus;
and to the use of our reports dated February 12, 1996 with respect to the
financial statements of Separate Account B, and February 9, 1996 (except
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 included in
Post-Effective Amendment No. 5 to the Registration Statement (Form N-4 No.
33-59261)and related Prospectus of Separate Account B.
/s/Ernst & Young LLP
Des Moines, Iowa
February 5, 1997
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10(c) Consent of Myles R. Tashman
GOLDEN AMERICAN LIFE INSURANCE COMPANY Exhibit 10(c)
1001 Jefferson Street, Wilmington, DE 19801 Tel: (302) 576-3400
Fax: (302) 576-3540
February 7, 1997
Members of the Board of Directors
Golden American Life Insurance Company
1001 Jefferson Street, Suite 400
Wilmington, DE 19801
Ms. Neppl and 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
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Myles R. Tashman
Executive Vice President and Secretary
